The downfall of the gaming industry?

Game Business and Its Crisis of Attention is a blog post by Wagner James Au that I recently read and found intriguing. The article talks about the video gaming industry's various failures to adapt to a changing gaming environment over the last several years, and how it has negatively effected the attention that they are getting from both advertisers and gamers.

They (meaning major consoles and game publishers) are a highly insulated industry, meaning that young men are creating games for young men and being reviewed by young men who have all been gamers since before they could talk. They are only interested in epic, Hollywood-esqe games such as Halo 3 and Gears of War which appeal only to their own niche market, and have been ignoring the much more simple user-generated and flash computer gaming trends that have popped up recently.

The rise of non-game virtual worlds such as World of Warcraft and Secondlife as well as casual, web-based games, which do not originate from major publishers have been slowly chipping away at the attention given to the gaming industry. However, they continue to ignore these gaming alternatives as if they expect them to go away and for the content of their own big-budget games alone to be enough to hold their consumers attention.

Real evidence of the difference between the interests of the gaming industry and that of their consumers can be seen in the latest generation of consoles. While the PS3 and the Xbox 360 were expected to dominate, the Nintendo Wii, with it's low resolution graphics and few major games, has vastly outsold either system. This made EA, a major game publisher, cut its profit estimates dramatically for their lack of titles for the Wii.

This raises several questions for the future of the gaming industry as a whole. Can they regain the attention they have lost? The Au certainly doesn't seem to think so, as he predicts that user-created online worlds will dominate. Other questions to arise are, how do we catch the attention of young males now? As gaming becomes an increasingly universal pastime, how does advertising in video-games change? When the extremely sectionalized young male market can no longer be reached by their traditional medium of choice, where do advertisers turn? And lastly, are we really seeing the downfall of the gaming industry?