What does "hit-driven" market mean?  That a game has to be good in order to sell?  Isn't this how EVERY industry works?  I don't see industries where you just invest in products of subpar quality and then it just sells.  Being "hit-driven" makes sense.  That's how the movie industry works.  That's how the music industry works.  If no one likes your game you don't make money.  Success isn't a right.

I wonder why it took them 3 years to release this report. Hasn't the industry been this way since mid 2007?

That theory doesn't apply to the transport industry or other one-size-fits-all industries.

I think it means that only a select group of titles is taking in all the earnings.  Meanwhile a lot of quality games are ignored, not because people wouldn't like them, but because the industry isn't promoting them.

Being hit-driven makes sense, if all you want to see is sequels to major franchises.

I'm of the idea that this is the fault of the companies, not the consumers.  And I apply this to film and television as well.  Making the same shit takes less effort and has less risk so every company milks franchises and makes copycats.  But as a result all we get are derivative works so that's what we buy.  They'll say that such-and-such percent of the hit games each year are sequels but then around that same percentage of games that are even made are sequels.  How often does a great game with original IP, that is given the sort of marketing push a major title should get, bomb?  How often does anyone actually push the shit out of something like that and have it blow up in their face?  Pikmin doesn't do as well as Mario but Mario is out there in everyone's face and Pikmin is in the corner by itself without any fanfare.  And of course an existing IP has the luxury that it can overcome a weak, flubbed or non-existent marketing campaign which creates the illusion that that's the key to success.

Every generation new IP becomes a franchise.  What the fuck was Wii Sports or Uncharted before this gen?  Somehow these no-names became a big deal overnight.  Almost as if they're good games that got a decent marketing push.  The whole Xbox brand is tied in with Halo.  Halo wasn't a name when the original Xbox launched but it sold systems.  You only succeed when you try.

More importantly, who is NWR_Karlie?

It means they put all their money into a small number of large bets and if one fails they suffer badly. Investors apparently don't like that. Most large console publishers produce games in exactly one size: AAA. It's GOTY or bust, they don't cover the whole range of gaming, just the top segment of the market. The other industries are NOT hit driven, they operate on multiple levels from small productions to full on summer blockbusters. Most music labels have a handful of standout artists but they also have a GIGANTIC list of less popular ones that fill different niches and whatnot so the label covers all levels of the market instead of only going for the top part.

This also means that customers who are looking for something less than AAA (e.g. a small arcade game to play on their iPhone while waiting in a queue, I can recommend Doodle Jump BTW) will go to other companies that aren't part of the industry majors to get their fix because the big companies see these games as inadequate. That's a sizable market, possibly even larger than the core market that buys the AAA games and it's underserved by the big publishers, being dominated by a completely different set of companies.

I think Hit Driven game refers to the idea that the costs to produce game to current HD standards is such that unless the game SELLS above average numbers for this industry it will not make a profit.  No profit means of course no revenue being generated with the game.  It is a big risk, and since video games have such a smaller market than industries such as movies, and just as much competition if not more it becomes exceedingly more difficult to be a big revenue product in the HD gaming market. 

It has nothing to do with being good or bad.  Several good games don't do very well in a market where one single game costs $60.00.  I barely have enough expendable money to buy 1 game every other month.  I could stretch it to 1 game every month, but won't.  So that means I am a going to be a very hard sell and only buy what I MUST have. 

With Nintendo Wii, games can be cheaper to make, and have a chance to make more revenue.  Smaller simple games also have a chance...where on the other systems they are usually only produced as downloadable games.

This is personally why I hate the direction of bigger and more involved stories, CGI, voice acting in video games.  It adds higher costs to games and adds very little to the actual GAME part of the game.  And the truth is, I can read a great book or see a great movie or just watch even great television for a story.  I want to play a game on my Nintendo.

Revenue is just the income, profit is revenue minus expenses. Even if it sells only one copy that's already revenue, it's just nowhere close to a profit.

I was going to answer Ian's question but KDR pretty much wrote my post before I even got here.  Well done, sir.

KDR:  Oops, you are right.  Sorry...I have been outta the loop.