Ninten-woes

I bet you think Nintendo made a ton of money from the Wii and DS?  Their turnover since 2006 has been exceptional, but you’d be surprised at the relatively small amount of profit they made, considering the boatloads of cash spent by folk on the little black and white boxes of motion controlled joy.  In fact, based on last years performance, and this years interim results, Nintendo could be in for a rocky few years ahead.  So why are they in trouble now?

Back in 2003/4*, Nintendo wasn’t looking great.  Their flagship products were either stillborn, the Gamecube, or were on their last legs, the Gameboy.  In a prescient opening to the 2004 Nintendo financial report, Saturo Iwata said the following:

‘Unfortunately, in the current market, increasing numbers of casual gamers are not picking up controllers because games created using the old formula for success are no longer as appealing as they once were. Increasingly complex games with intricate game controls, while popular with avid game enthusiasts, are not what the majority of the game playing public is seeking. Most players are not looking for games that require them to invest large amounts of time and energy, instead most want games they can enjoy periodically, when there’s a free moment in their day.

In Japan, the software market has been shrinking for the past few years and the North American market, which used to experience significant growth year after year, is seeing a slowing of that trend. Under such circumstances, a revolutionary approach to video game creation is required more than ever.

Currently, the game play skills of avid gamers far surpass those of novice players. Led by Nintendo, the industry needs to present a style of play that levels the playing field, so players of all skill levels can enjoy video games. In order to expand the market, we need to place everybody back at the same starting point.’

It was easy to dispute this viewpoint at the time, Nintendo were flagging behind Sony and Microsoft in the sixth console generation, and hadn’t grown as a company for about six years.

A product called the Nintendo DS was released in November ’04 in the US, and it wasn’t clear that it was going to be the monster smash it became, largely because it looked like it had been designed in the soviet bloc.  The DS only sold 5 million units in 2004/5, the Gameboy Advance sold 15 million in the same year, and the Gamecube sold less than the DS.  Sales were flat and profits were falling.  Dire predictions about the future of Nintendo, comparing them to Sega and suggesting they’d be better off as a software only publishing house, were abound.  2005/6 was little better, while DS sales picked up slightly, GBA sales halved, it was as if there was a limit to the number of handheld sales of around 20 million a year.

It was then that Nintendo revealed the Wii.  It was largely rejected by the mainstream gaming press as a pile of old rubbish (much grist was generated by looking at its internal hardware and comparing it to the much more powerful Xbox 360 and Playstation 3 consoles which it was supposed to be competing against).  But, if the gaming press had been paying attention, Nintendo were trying to do something else, they were trying to halt the stagnation of the gaming market.  The Wii had two significant advantages over its main rivals, it was cheap, as it used relatively inexpensive hardware and eschewed HD fidelity, and it was great for playing in groups.  Its no surprise that the Wii sells out at Christmas, what other system was so heavily geared towards party and family games?

To say that the Wii was a success is an understatement.  It is now one of the most successful consoles of all time, selling over 85 million units since launch.  After a redesign, the Nintendo DS has sold nearly 150 million units which makes it the most successful handheld console ever.  So why do I think that Nintendo are in trouble?

While Nintendo have sold a lot of consoles, they have also had to spend a tremendous amount of money designing and buying hardware, building or renting facilities to manufacture and assemble units, on warehousing, distribution and marketing and on the salaries of all the new staff they’ve had to employ to keep up with demand.  The success of Nintendo at this time is unprecedented in their history, and they’ve gone from manufacturing around 20 million handheld and home consoles a year to nearly 60 million in 2008/9.  The tales of shortages at Christmas might be exaggerated, but I wouldn’t say they are entirely unjustifiable.

So revenue is up, but costs are also up.  Take a look at the following graph and you’ll see what I mean:

The spike in revenue is striking, but the bottom line, the net profit, the profit after the cost of all of Nintendo operations is deducted, doesn’t have quite the same dramatic shape.  In 2008/9 Nintendo’s revenue was up 260% but it’s profits were only up by 180%.  In an ideal world you’d want those figures to be pretty much the same, but because of the reasons above, they’re never going to be.  It’s not even a major problem, until the sales start dropping off.

Ah.  Now we’ve got a problem.  Nintendo’s revenue has been dropping off a cliff for the past few years and net income is back to pre-Wii and DS levels.  So even though Nintendo are turning over more than twice as much money as they were in 2004/5 (1,014 Billion JPY vs 508 Billion JPY), their profit levels are actually worse than 2004/5 (77.6 Billion JPY vs 98.4 Billion JPY).  You would normally expect to see profit increase relative to revenue, all other things being equal, as products are made more cheaply or more effectively and companies engineer out expense by replacing expensive hardware with less costly alternatives, but because the Wii was already a streamlined product at launch, it must have proved difficult to take out more cost.  It could be that it is actually becoming more expensive to make the Wii, as older chips are no longer mass-produced for other non-Nintendo products, reducing the significant economies of scale in chip production.

The other explanation for the reduced profits is the increased budget required to launch a new console.  We can see in 2003/4 Nintendo’s net profit takes a nose dive, before the release of the DS, so perhaps the costs of the Wii U and 3DS are having a significant impact.  What if this is just a blip and Nintendo are going to bounce back to their Wii/DS revenue of 2008/9 in the next few years?

The stars aligned when the DS and Wii both turned out to be massively successful.  There hasn’t been a better time to be at Nintendo than the past few years, as the cycles of their handheld and home console popularity converged like a perfect storm.  But, while this amounted to a massive boom, the waning popularity of both products at the same time means that both of their next projects had better be at least successful on their own terms. 

Looking at the 3DS, its not had the greatest of starts.  It sold 3.6 million units in its first six months, which is below the 4 million Nintendo forecast, but still higher than the DS sold in its first six months.  The problem is that Nintendo sold 7 million less hand held consoles than they did the year before.  The issues the 3DS has with player nausea, the difficulty of advertising a 3D product in 2D media, and lack of killer titles, mean that it isn’t assured of the same level of success as the DS.  That’s not a problem as long as the Wii U works out.  But I don’t think the Wii U is going to be a success, and it goes back to Saturo Iwata and the 2003/4 financial report. 

For all of the fuss about hardcore and casual gamers, there is one thing that is undeniable, Nintendo did grow the market for video games, for everyone.  That’s the reason for Sony’s Playstation Move and Microsoft’s Kinect, they saw massive amounts of cash to be had and ‘innovated’ in that direction.  Nintendo have effectively levelled the market, but Sony and Microsoft have now joined them in the casual market.  It may be cheaper to buy a Wii U than an XBox360 + Kinetic or a Playstation 3 + Move, but the essential Wii U package isn’t different enough to make people want to buy an additional console or upgrade from the Wii.

This is because the Wii U will not expand the market the way the Wii did, and its the same reason the 3DS won’t expand the market like the DS did.  The Wii U is not innovating in the right direction.  The unique selling point of the Wii was that you could play the Wii with your family on a standard definition telly.  The unique selling point of the Wii U, compared to everything else available, is that you can play on the controller when the telly is being used by someone else.  It is essentially changing the experience from a group activity to a single player activity.  It is a regressive move, not innovative.

I would love to be surprised by the success of the 3DS and the Wii U, as Nintendo is an innovative company, but I remain pessimistic.

* Dates are all based on Nintendo’s Financial year which run April to March.

World of Warcraft Anxiety

I think I should get this off my chest. I am a casual player of World of Warcraft. I have a full-time job, a fiancee, I roleplay with my friends and I sing a bit too. I love videogaming, but it is only one part of my life, so I try to moderate my time spent sat in front of a monitor. I’m not sure whether or not I’ve had a typical World of Warcraft experience, but I do think I fit the typical casual mmo-gamer niche that everyone is talking about. A little history might help here.

I started playing World of Warcraft in November 2006. I spent years levelling my first characters and I had an absolute blast without stepping foot in a dungeon, raid or battleground. I didn’t hit a level cap until Wrath of the Lich King, December 2009 in fact. This is primarily because I didn’t know what I was doing. Because I rarely interacted with other players, as everyone else seemed intent on hitting the level cap as soon as possible, I had time to explore every area and fight every monster. I think one reason I fell in love with Warcraft was the size of the place. I once tried swimming around Kalimdor with a level 25 character. I managed to swim from Darkshore to Azshara before a passing lobster cut me to ribbons, but I didn’t care, it felt awesome to be somewhere new, exciting and off-limits.

While I was a little anxious, the excitement of the new and the relatively small penalty for failure meant that I spent a very long time levelling and exploring and never really got bored. Sadly, even with the new continent, I will never feel that rush of excitement as I come to a new area, even with Cataclysm, as I know too much now for levelling to be truly challenging. It can still be fun, but I’m not excited by it any more.

When I finally hit the level cap in Wrath, I jumped into dungeons, heroics and all that with gusto. I quickly learnt the ropes and became competent enough to stay out of the fire and hit the buttons in the order required to produce adequate damage. I figured out how to gem and enchant gear to maximise my numbers, got into a small guild and started running raid content. While we never troubled with heroics modes, we had a great time hammering our heads against the wall because we did advance, no matter how slowly. I dabbled with healing and tanking, the former more successfully than the latter, and enjoyed myself all the same. I started to read Warcraft sites and forums to make sure I wasn’t doing it all wrong.

I don’t think that in my four years of playing WoW up to the release of Cataclysm I’d experienced true anxiety or boredom. I’d played WoW the way I wanted to play it, had fun and all the time I was trying new and interesting content, I was feeling Flow. Flow is an interesting concept that I think is really important in videogames. It’s the feeling you get when you are neither anxious nor bored but feel challenged and in control of your situation. You might get it when you’re on a perfect-win streak in Tekken or if you’re in the middle of a speed run in Mirror’s Edge; you’re doing something difficult, not impossible, and you’re nailing it. Obviously, Flow is based on your own perception of difficulty and ability, so I wouldn’t claim that any of the content I was doing was difficult at all to the average player.

An interesting side-effect of my research is my increasing awareness of the WoW meta-game – optimisation of gear done via spreadsheet or website, strategy guides and theorycrafting. It was intruding slightly, but because I wasn’t a guild or raid leader and strategies would be talked through during the raid, I never really paid that much mind to it. I could read up on strategies, and frequently did, but it wasn’t strictly speaking necessary for day to day play. You could easily take part in heroic dungeons and battlegrounds without checking Wowhead for example.

The release of Cataclysm changed all that. What makes Cataclysm interesting is the schizophrenic way it caters to casual players in one way, by introducing time saving devices in-game (LFD, Heirlooms, ‘Welfare’ Epics) while upping the meta-game requirements and the amount of time required to complete group content.

The WoW meta-game has become intrusive. Evidence that it is impossible to play the game without strategy guides is the inclusion of them as standard in the form of the dungeon journal. I might agree that heroics and raids should be difficult if it weren’t for the fact that since the release of Cataclysm there is very little content that isn’t heroic dungeon or raid related. In fact if you take away the heroic only dungeons casual level 85’s have a handful of Tol Barad and Firelands daily quests, four non-heroic dungeons and a few non-repeatable questlines to play through.

You might be asking yourself, if you’re so interested in heroic content, why don’t you read up on the tactics and get stuck in? If only it were that simple. There are two points here, firstly, the finding, reading and understanding of the tactics for the heroic bosses in Cataclysm is not trivial. There were 42 bosses at launch with unique tactics for each. As the LFD is random, you had to know all the tactics before queuing or risk not knowing the one you finally end up in. Secondly, the number of bosses in each dungeon on average increased. This with the increased difficulty means that the potential amount of time spent in dungeons also increased significantly. Even if you have read up on the tactics and prepared yourself for a long run, you could find yourself in a group with people who haven’t, increasing the chances that you’ll be in one dungeon all night.

Well, I did read all the guides, made a few notes of my own and spent a good few weeks battering my head against the wall of heroic dungeons. I battled through the gear barrier just in time for 4.2 and the introduction of Zul’Aman and Zul’Gurub, and I don’t think I’ve been quite so disheartened. While the potential number of bosses has decreased, as you can queue for only ZA and ZG, the time requirement in the dungeon is much higher because of the increased difficulty, the lack of preparation by players and the number of bosses. I’ve lost count of the number of times the group has been disbanded because of wipes and the lack of friendliness is really appalling. The first time I stepped into Zul’Aman I didn’t meet the DPS requirements the tank felt necessary to continue ON THE FIRST TRASH PACK! Never mind my gear or experience, I wasn’t good enough. Sheepishly, I left the group…

Now whenever I go into a heroic dungeon I have this gnawing anxiety eating away at me. Even when I’m doing well I have this fear that we won’t finish the run or it will take another hour to clear because someone will die once and they’ll be kicked. People don’t even have to wipe the group to be labelled idiots they just have to screw up a little. Surely it’s quicker to explain a strategy to someone who doesn’t know than to kick and re-queue?

Where once you might pick yourself up and try again, now you’ll be verbally abused and vote-kicked out. When you complete a heroic dungeon now it’s not the positive feeling of flow you’re getting, it’s a feeling of relief.

You’re probably thinking again ‘if you don’t like it, don’t play it, it’s your choice.’ You’re right, of course, I don’t have to get involved with WoW. At the very least I don’t have to take part in any of the heroic content. But I do wonder if the reason WoW subscriber numbers are declining is a combination of the increased difficulty, rise of the meta-game and the negative atmosphere present in dungeons, raids and battlegrounds. There’s a whole lot of negative reinforcement going on at each of these points, forums and blogs are full of trash-talk, braggadocio and flaming, so you can’t help but bump into reasons not to even attempt more challenging content.

In Time

The great question that drives Sci-Fi literature is what if?  In Time posits the scenario that it is possible to arrest a person’s physical deterioration in the prime of their life at 25.  The only downside is that Time, not money, becomes the global currency.  Everyone is gifted a single year at birth, which starts to run down the moment the individual reaches twenty-five, and can get more Time by working.  To keep track of your remaining Time, a subcutaneous green LED is installed in your arm, a handy torch in times of need but a lousy way of conspicuously showboating your wealth.

What if you could live forever?

Time as a currency is a great concept, and the film tries to explore what that would mean for the people living in that type of world.  The bits that work in this film are those examining this conceit, the idea that people are now explicitly working to live is heavy-handed but effective and the global cabal of super-rich immortals managing the system is intriguing.

One of the great joys of any sci-fi film is to see how the world has been altered from our own and trying to figure out the reasons for those alterations.  If you can see how the filmmaker’s choices flow from the ‘What If’ then the film is halfway there.  Problems arise when the choices don’t appear to be obviously related to the central premise or directly contradict what reasonable viewer might expect in the circumstances.  As I watched In Time I started thinking about the choices made by the filmmakers and came up with a few questions about the world itself.  I think in the main the world of the film behaves consistently, but I just think it is consistently incorrect in its basic premises of what a Time based economic future world would look like.

Where are the mobile phones?  There are a bunch of times in this film when using a mobile phone would save countless lives.  Where have they all gone?  The conceit that a minute of talk time would cost not just a minute of your life but also an additional minute to pay for the call is pretty funny and dark.  It would destroy the tension in the film though, so mobile phones have uninvented in the In Time universe.  The Internet also appears to be completely absent from this world too, but that’s not a major plot point….

Why are some time transactions done wirelessly and some require physical contact?  Why store Time in vaults?  It’s shown that individuals can easily wire Time from one location to another, so why would you need to store Time physically?  And if you can wire Time electronically, why can’t you wire from one individual to another?  The Time system employs contactless technology, why isn’t it possible to control Time via a mobile network?  It would be easier to control the masses if you could easily freeze their assets, so to speak, and also ensure that you’re never caught short away from the bank, as so often happens in this film.  Again, current technology has been uninvented to make the story work.

How do people younger than 25 pay for anything?  It is clearly shown twice that the individuals clock only starts running at the age of 25, and in both cases it is clear that they are starting with exactly one year left to run.  How have they managed to survive for so long without being able to buy anything or gain any additional Time?  I’m guessing that the world doesn’t allow under-25’s unrestricted access to anything they want, so do they have rationed supplies or some other means of sustenance?  If I knew that my clock was running at 25, I’d want to get a head start and start working early, but that doesn’t seem to be an option.

Why set up the system in such a way that people can steal time so easily?  Firstly, in the middle part of the film the protagonists go on a bank-robbing spree in a series of jobs that clearly echo Bonnie & Clyde.  Given that they are amateurs, with only two pistols, and that current banks are sophisticated buildings designed to stop that sort of thing, why are the future banks so easily robbed?  Have people forgotten how to lock safes? Secondly, throughout the film it is shown that you can steal Time from individuals by making physical contact, it is even implied that you could steal Time from someone sleeping without their consent.  A sure-fire way of protecting yourself from physical harm is to ensure that there is no way to steal Time this way.  I could understand if there was a piece of black market technology employed by the Minutemen to steal Time, this would actually be pretty cool, but there is no explanation for the ridiculous ease of Time stealing.

Aside from the Time Keepers, can anyone else alter the amount of Time someone has?  Could someone hack himself or herself to become immortal?  Clearly the Time Keepers are monitoring the amount of Time in the system, but enterprising ‘criminals’ would sure devise a method of counterfeiting/laundering Time, given the shoddy nature of the banking sector.

Why do people just stop?  Is there a kill switch implanted in the individual?  Leaving aside the ridiculous notion that any sane person would willingly allow themselves to enter into this devil’s bargain, how is this regulated?  Has the entire human race been genetically engineered to work this way or is the technology implanted at birth?  As it is a global economy, I’d assume that the human race has been genetically engineered with this kill-switch, otherwise there would be an out for anyone willing to have a natural birth, and who wouldn’t want that in the ghetto of Dayton?  If you could eke out a subsistence existence from the land, why get involved in the Time economy at all?  Why subject your child to the horror of this system?

I’m trying to think of why some of these things are the way they are, and I think its because the film maker’s want to use the way Time as a currency works as a direct metaphor for how Money works now.  Because of this they have to have Time be as easily disposable, stealable and storable as money is now.  Money can be in the form of a coin in your pocket, a series of digits in a computer or a block of gold in a central bank.  In Time wants to mirror these so that it can have bank robberies, Time theft and still have a massive linked global economy, but the problem is, if you were to start from scratch, which they obviously would need to do, why would you copy the current system?  All of its flaws are obvious and could be designed out if you could start again.

If you were in this situation where people are clearly dying around you, you had an ever present clock telling you when you were going to die and nothing to lose except the eight hours you had left, why the fuck wouldn’t you try to take something back from the bastards who have everything?  This is my main problem with this film.  One of the things that stops revolutions is the fear that you’ve still got something to lose.  If you’ve clearly got nothing to lose, or at the least only a few hours left to live, why wouldn’t you do something about it?  Dayton is a shit place to live, where there is essentially nothing to do except be jumped/killed by gangsters and/or work in a crappy job which screws you over when you don’t make quota.  The world isn’t shown to be oppressive enough to stop any sort of real resistance, as the first two that try are a metal shop worker and a dizzy socialite and they succeed in crashing the global economy without any support.  The question isn’t why they succeeded, but why no one else tried before them?  I can’t think of a reasonable answer.

You Owe It To Yourself…

Designers & Dragons

I think you’d struggle to find a more comprehensive history of roleplaying than this mighty tome.  The story of every major publisher from AEG to White Wolf via TSR and Wizards of the Coast has been chronicled in impressive detail.  This isn’t just a nostalgic look back on the highs of the industry it takes a look at the crashes, and also looks forward to those stretching the boundaries of the medium, either through the type of games they’re creating or the method they take in creation, distribution and development.

Game Changers

GTA 3 Coming to iPhone/Android

This might be the first toe-in-the-water experiment by 2K/Rockstar, but if it sells like you would expect, which it probably will, then you can bet your bottom dollar that it won’t be the last.  Expect further publishers to follow suit with portable versions of classic games.
High-end smartphones are more powerful and have more capable graphics processors than the Wii and what with the rapid turnover of hardware in the phone/tablet markets, how soon before they are genuine rivals to the PS3 and XBox360?  If these mobile devices are DLNA compliant, they could easily replace consoles as the premier gaming platform.  Who needs a console gathering dust under your telly if you can whip out your phone and play Angry Birds on the big screen one minute and GTA 3 the next?

What this portends is that iOS and Android are very real threats to not only the hand held market share of Nintendo but also the console market share of Sony and Microsoft.  The big two companies are trying to carve out a space for themselves in the front room, to be the centre of the multimedia experience.  You can see this in the deals that they’ve done with media streaming companies such as Netflix, Sky and the BBC, to shore up their position.  But what if you already have a device that can stream this stuff in hi-definition in your pocket? 
The future of content delivery is purely digital, for the simple reason that it can be controlled more effectively than physical media.  Unless you want to jailbreak your phone, running the risk of being cut off from all of your paid for services, it would be impossible to install software that could crack a video stream from Netflix, for example, as it would be instantly rejected by the closed system of Apple and quickly removed by Google on the Android Marketplace.  Also consider that very minor changes can be made to digital delivery systems to thwart hackers, whereas Blu-Ray is a standard that is likely to be very difficult to change.  Media machines based on physical media are increasingly archaic, which leaves the XBox360 and PS3 as pure gaming machines with a few tacked on bells and whistles that are nearing obsolescence.
So is there anything that is stopping mobile phones being used for big triple-A titles like Call of Duty?  There are technical limitations in the current graphical and processing hardware, but these will certainly be overcome in the next few years.  Some might argue that it is difficult to control an FPS with a phone or a tablet device, but with good developers this is not something insurmountable.  Even if it was a major problem, you could have a bluetooth controller linked to the phone/tablet for use at home.
Even if you can’t play Call of Duty on your mobile, who cares?  The most played games at the moment are those on the Wii, mobile phones and Facebook.  Popular games on the Wii with motion control, like Wii Fit and Wii Sports, could be easily replicated on phones with internal motion sensors.  You can already play Facebook games on your iPads and tablets.  The smartphone, in essence is already better than the Wii at playing games, and it’s already sold more units (the iPhone alone has sold 130,000,000 units compared to the Wii’s 89,000,000).

What’s missing is the belief that iOS and Android are also mainstream gaming platforms.  With the release of GTA 3, that could change dramatically.

Engines or Assets

A strange thought occurred to me a few days ago – is it feasible to license gameworlds?  Probably one of the most time-consuming and expensive parts of games creation is the extensive art design, asset building and debugging of virtual worlds.  This is particularly true of 3D games, but is also a factor in 2D games.  What if there were companies whose sole output is original area/world designs for use with other people’s game ideas? 

Rockstar could license Liberty City, for example, to third-party developers, why don’t they do it?
The most obvious benefit would be ease of development for smaller companies and lower costs.  While certain engines come with Software Development Kits and pre-built assets, there is still a great deal of work to do putting all of that together.  If a company could use a pre-built city or area, they would be free to concentrate on what makes their game unique.  It would be possible for game companies to produce AAA looking titles without the same cost. 
Its not all about the little guy, larger asset creation companies could re-coup development costs by licensing their worlds.  Movies, TV shows and the Music industry have been doing something similar for years.  Movies are sold again on DVD and Blu-ray, TV Shows are syndicated in different territories across the world and can be co-funded by several companies and music is licensed effectively on radio, TV, film and in games.  While individual games can be licensed for use in TV and Films, usually as a minor plot point or backdrop item, and companies are keen to license game engines, I don’t think that world assets have ever been exploited in this way.  If you could sign up several companies to co-fund a world for all of your games, or agree to use the assets you’re developing before starting work, then you could increase your budget and produce more impressive assets as a result.
Maybe there is a niche market for specialist asset houses, like movie prop companies, that focus solely on creating and maintaining interesting and unique worlds for licensing?  A talented bunch of artists could create worlds unlike any we’ve seen, free from the constraints of writer and game designer pressure.
There are a few small issues with this naive utopic vision.
Game companies are fiercely protective of their intellectual property, so are unlikely to license AAA content.  If the licensed content was used to create a superior game this would be doubly embarrassing.  The most likely source for game words would seem to be third parties.  The problem with this is that it is very niche.  If you develop a hi-fidelity city, like Detroit in Deus Ex Human Revolution, the cost would be in the millions, to make it cost-effective it would need to be licensed many times, or else the producer wouldn’t make any money.  How many games developers are looking for, and able to afford the licensing costs of, a futuristic cyberpunk city?  The cost of the license would be less than the cost of development, but you wouldn’t own the assets.
Unless game companies agree on a defacto standard for modelling, physics engines, game engines and sound design then there will always be different choices for each: 3DS Max or Lightwave, Source or Unreal, Havok or Euphoria?  Dependent on the engine there are going to be limitations to what types of games are more naturally inclined to each.  The problem is that the game company doesn’t get to choose what systems are used; they have to go with whatever the asset creator used.  This is great if you’re making a FPS in New York and someone already made an Unreal version of the city, but if you’re making an isometric crime simulator, it could be less than useful.
If you don’t own the world, then you can’t change it.  If your game is set in London and you want to move the location of Big Ben to be slightly closer to St Paul’s Cathedral, because it would take too long to get between the areas otherwise, well, tough, you’re stuck with what you’ve got.  There are ways around this, but depending on the design choices you’ve made in the game, an obvious cut to a different location might be jarring and take the player out of the game.
Game companies don’t generally use shared assets internally.  What I mean by this is that if a company, like Take-Two Interactive, has a Baseball Bat model for their Baseball games, developed by Visual Concepts, they don’t use that baseball bat model in GTA4, developed by Rockstar North.  I realise that Take-two is a publisher, not a game developer, but if they can’t get their in-house teams working from a shared asset pool to reduce costs, then I think its a stretch for companies in competition to work from a shared asset pool.
While digital assets don’t degrade, they don’t age very well either.  When graphics capabilities increase, the relative worth of the assets decreases as it becomes obvious the models don’t look as real as they could, and it becomes less and less desirable to use outdated content.  You can update the content, but that means updating all of it, otherwise you’re left with mismatched items that have the potential to be seen side by side.
If these could be overcome you’ve still got a few more esoteric problems to contend with.
Everything would look like Unreal Tournament or GTA4.  If you think that all games look alike now, with brown-grey space marines running around brown-grey war-torn environments, then its going to be even worse when you realise that you’ve just run down the same corridor for the millionth time in two completely separate games.  A related issue is that if the Gears of War assets were used to create another run and gun cover shooter what would be the point?  If game companies can see that certain games are selling well and that you can buy the assets of the games off the shelf, you can be sure that they’ll attempt to cash in on the craze and produce an identical game.
There are other things we could potentially lose if people have a lower-cost option, as some of the best games have been defined by their limitations.  If you take away the need to create interesting low-cost graphics, you are less likely to get games like Darwinia or Space Giraffe that had to creatively overcome the lack of budget with interesting gameplay and graphics.

So, I think we’ve established it’s an interesting idea that’s not going anywhere, anytime soon, right?

EDIT: I spoke to soon, after a little digging: Battlefield 3 shares technology with EA Sports titles