Economics and Video Game Sequels
Overview
Much like the movie and book industries, there are video game series that receive multiple sequels and spin-offs after receiving initial success. Examples of these series that seemingly get endless sequels are franchises like Madden, Sid Meyers Civilization, Mario, Zelda, etc. However, there are also games that were very successful that never received any sequels or continuations to the series. Examples of the games that do well but never receive a sequel are Skyrim, Terraria, etc. Despite these games seeing similar economic success, some don't get sequels.
Research Question
What level of economic success does a game have to reach in order to receive a sequel? What other factors dictate whether or not a game gets a sequel, or is it just dictated by economic success?
Economic Concepts
Cost-Benefit Analysis
In the video game industry, companies have to make decisions on what games concepts they think will be successful. A lot of factors go into this, how much the game will cost to make, how much the game is projected to make (or just combine the two and call it the projected profit margin), etc. With already established games or franchises, it's easier to make these decisions for sequels, as you can guess that the sales figures will be similar to the previous entries in the series. This makes cost-benefit analysis much easier, and gives developers more confidence that their game will be well received as they have a measuring stick.
Risk-Reward
No matter how well a previous entry in the series did economically, it can still fail. Just like with movies, there are bad sequels, so when developing a sequel there is an element of risk involved. There's always the chance a sequel will do horribly, so developers have to take the risk when releasing a game that it won't live up to the expectations of the last entry in the series and sell very poorly because of it. This risk is a huge reason that there are so many beloved games that never received sequels.
Behavioral Economics
Buying behavior is a very important element of game development, as not all game genres are created equal. There are periods of time where certain genres are very popular, where as others aren't as successful. Developers have to take the current trends into account when deciding on a game concept, which also influences the development of sequels. If a game doesn't line up with the current trends, it will likely not get a sequel until the public preference lines up with it better.
Economic Conclusions
So, the answer to the question I asked at the beginning is this; despite demand and the pleas for sequels for certain games, the ultimate decider is the economic success of the game and the buying behavior of consumers at the time. While demand does play a role in a sequel being developed, it seems that there has to be a favorable market landscape and the numbers of the original have to be satisfactory. If the market doesn't benefit the type of game it is or the original didn't sell well (even in spite of critical acclaim) it likely will not receive a sequel.
