Photo of Rose Dick

Oh, autumn. Time to reap the seeds and see the change of seasons.

If you are a small game developer, you probably noticed some cyclical changes in the game creation process. Games now look more beautiful than they ever were, do they? The level of quality rises to an unattainable height. Due to the increased workload, your team is expanding. Now you need to feed so many mouths that it seems risky to experiment with new crazy game mechanics. Fortunately, it is well understood which games of genres will become breakthrough hits. Unfortunately, there is an abundance of similar games: you probably can't stand the competition with them.

What has changed?

Remember how the revolution happened? One person orchestra could create an original game with minimal content and break the bank. Doodle Jump was awesome! Creating a hit indie game like Braid required only 200 thousand dollars. Developer and nice art - that's all that was needed to complete the most popular game. And the press wrote about her.
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But there is a feeling that if such games were released today, they would have faded into obscurity. The modern hit from the “small” team is games like Battlerite. 25 developers, glamorous 3D graphics, external investing. The order of costs for eight years has increased.

Each vegetable has its own season, and gaming markets also follow predictable patterns of growth, reaping, and, if you are lucky enough, stockpiling for the coming cold.

Do you make games less than 10 years old? Are you a young, small indie developer who knows only the glowing fields of Steam capabilities, downloadable games for consoles and mobile platforms?

That's what awaits you. This is what happens when gaming markets mature.

The memory of spring

The historical context is important.

A new gaming market emerges with the advent of a new way to reach out to thirsty new players. In the early 2000s, digital distribution became the technology that abruptly opened the door to an industry that was previously dominated by retail sales. Apple and Google gave us phone numbers for downloading games. Microsoft, Sony and Nintendo created consoles into which games could be downloaded. And Steam has organized a holistic and reliable ecosystem for downloading PC games.

If you do not remember the era of "boxed" games, then I will explain: it is difficult to overestimate the radical changes made by digital distribution in the dominant business models. With retail sales, the developer got about 15% of the profits. The rest was divided between those involved in marketing, publishing and the retail store itself. This created differences in levels of influence that were squeezed out by the creative powers of game developers. Forget all the stories about idealists with wide eyes. The development of “boxed” games was an industrial labor in a factory baking games commissioned by a huge box delivery mechanism. It was a mature market in which the soul and creativity of most major game developers were owned by an intermediary in the person of publishers and platform owners. AAA games still largely follow this model. Good people, bad system.

With the advent of digital distribution, two things happened. For the first time in many centuries, we have a great demand and low supply.

High demand

Platform owners have begun to actively use the new game distribution platforms. It is more profitable for the platform to get a guaranteed share of 30% from digital sales, especially compared to a measly 0-20% in retail. Valve posted their bestsellers on Steam. Microsoft distributed its best games on the console control screen. Apple and Google sent users to their stores to perform almost all tasks. The result was a flood of customers who flooded these digital stores and wanted to buy interesting games for their new mobile “toys”. Put on the facade a beautiful picture and the "Buy" button, bam! - and sales will go.

Low supply

But there was nothing to buy. Many traditional game developers didn’t want to risk lining up with owners of new platforms. Each digital store is actually a monopoly with the potential to expand authority to absolute dictatorial control. Therefore, many publishers have abstained. Laid out the game rare marginal developers. They were hippies and hobos whose products would never hit the mature retail markets.

And their games began to sell like hot cakes. Mostly because there was nothing to buy except for them. For a while, it seemed that anything could be put on the digital market, and that would be profitable.

Short warm summer

Thanks to digital distribution, anyone with a computer could create and release a game. And since they had 70% of their income, it was enough to sell fewer copies to make ends meet. This caused the emergence of many small gaming companies. Let's call them "indie."

Most had no experience. They did not even understand how to do business. Many have never done professional games before. Therefore, they experimented, sometimes insanely. Freakish mutants appeared. Journey. Day Z. Tower Defense. What can be done using the Internet? Or Flash? Or touch screen? Or alone? Who knows, let's just try. Will Wright compared it with the Cambrian explosion. New genres were born. It was 2008.

Well, there was a time. I remember him with pride.

The end of the harvest season

Low entry barriers

But low barriers to entering the market meant that new developers would constantly appear. And the nature of digital distribution means that games do not have a "shelf life." Therefore, the catalog of excellent games continued to grow and grow. Now it was not a market with low supply.

Limited demand

Nor was it a high-demand market. Consoles are stable. The proliferation of smartphones (which have become simply “phones”) no longer sets growth records. PC sales are down. There are a certain number of digital buyers, divided almost as in a zero-sum game into feudal principalities of different platforms with DRM-blocking.

What happens to a market where demand is limited and supply high? There is competition. Here is the traditional logic, such a sequence was played for thousands of games and dozens of markets:

• Standardization : players form communities around the most popular types of games. This creates a standardized demand.
• Competition : developers are trying to squeeze dollars out of these communities, releasing games of the same genre. For example, they can release MOBA.
• The winner gets it all: players gather around one or two quality examples of the genre with good marketing. These games earn the majority of all profits.
• Rising costs : to climb to the top, developers are actively investing in art, narrative, promotion and monetization. Maybe it will be possible to overtake competitors, focusing on the number?
• Swelling : this leads to an increase in development teams. Big teams spend more money and they have less right to make mistakes.
• Risk avoidance: risk avoidance culture dominates. It is necessary to make proven games with a proven theme, based on proven mechanics and for a proven audience. Layers of decision hierarchy are growing, absorbing all the bursts of fantasy. "Costly" experimentation is ignored. Everything is focused on servicing specific requests of experienced (high-income) players of the established genre.

What does success look like?

There are three common long-term success strategies for independent developers in this new market with competition.

• Become the king of the genre: create a hit game in the popular genre. Invest the proceeds from it in attracting the best developers, community and marketing to get hold of your audience. Set a standard that everyone else will try to achieve. Become what Blizzard has become for MMO. If you choose the right mature genre, get 10-20 years of stability.
• Dominate a niche : find a niche that is attractive to a rich but enthusiastic audience. Become hyper-efficient in servicing this niche. It does not seem to be very different from becoming the king of the genre, but in this case no one knows about you. The press rarely writes about you. Most players don't even know that you exist. But a small committed community loves you. If you are aiming at such a tiny scale, expect to work in a tiny market. Good examples: Artemis Spaceship Bridge Simulator or SpiderWeb retro RPG.
• Brand creation : There are several companies that have created a powerful brand that is used for reliable financing. In difficult times, companies are “frozen”, which allows to minimize costs until the next profit. The most famous example in the gaming industry is Jackbox.

Fake success creating a hit game

A huge array of money flows through mature markets, which suddenly falls on an occasional indie developer who happens to be in the right place at the right time. Tink Jigawatt profits feed them for years (!) Without additional income.

But the result is a lesson about exponential growth. Have you ever played one of these new games like Cookie Clicker? As markets mature, growing costs exponentially destroy savings. For example: the most popular last indie game of class III (it's like AAA, only indie) cost 200,000 dollars. She earned 2 million dollars. But the next game costs $ 2,500,000. Perhaps she, too, will pay off. Or maybe not. Accumulated money in the bank gives developers 1-2 chances of success, not 10.

We now use the term "Triple I" (III) to mean the average size of teams that have hit games. But earlier, the same point in the ecosystem was called “mid-level developers”. They all died when the market matured. It becomes incredibly difficult to roll out a hit every time. In the end, they have no long-term advantage.

Farm sale

Therefore, not everyone can remain independent. There are three common choices for those who have to part with independence.

• Hobbies : the team ceases to be commercial. Employees or work during the day at work and are engaged in their projects a couple of hours in the evening, or they are supported by the family. They may also be given grants by any institution interested in their work. Or they can make games as students, and then change careers.
• Go to the mercenaries : the team becomes a contractor and hired to someone with money. This may be a publishing agreement. Or full sale of the product. Or she signs a contract to do a certain job — porting or developing a multiplayer mode. Huge studios love to hire assistants.
• Extinction: the studio goes out of business. It's nice to be indie, but it all ends sometime.

First frost

You are probably curious what the winter will be like. This is what awaits PC, consoles and mobile platforms.

Consolidation

When a large company absorbs a small or small company falling apart, and a large one hires its employees, we observe what is called consolidation. A lot of small studios turns into a small number of large ones.

Consolidation is a leisurely process that will unfold over the next 4-8 years. Its impact will not be the same on all studios. Some developers who have received quite a lot from the sale of the hit game may exist for several years until they are faced with the problem of the inability to create the next hit. Others would prefer to starve for several years before venturing on a difficult decision. Be patient.

Lack of distribution

It is becoming increasingly difficult to present your game to new players. The abundance of existing games is only part of the problem. Limit the availability of free buyers as the cost of capturing an audience and advertising (more below).

Capture the audience

Free audiences will diminish because high-income players are already tied to long-term games like MMOs and other F2Ps. The player can not "pass" a game like Clash of Clans. He plays only one game for years. F2P companies tend to stretch the life of the game for decades. Such players are no longer looking for fresh new games, that is, they are lost to studios creating new games or trying to replace the outgoing players.

Most studios do not have enough money to buy advertising.

The advertising market sells its services to the highest bidder (in a variety of categories). And in games, the maximum bet is offered by the game with the highest consumer life cycle (LTV). Does your game have a big LTV in some category? Great, you can buy ads that attract even more players. If you have a low LTV (all paid games, most experimental games, most indie games), then you will not be able to afford effective distribution through advertising.

Larger, but rarer hits

After consolidating the market around a handful of genre leaders, they will begin to receive huge sums. The bad thing is that fewer and smaller developers will be able to get enough sales to remain independent.

The emergence of new publishers

Large organizations with powerful marketing and business development can mitigate some of the trends for themselves. They can accumulate a product portfolio that will keep them afloat even if some games fail. Such organizations are usually called publishers. Expect many publishers to start making contacts on games with the most capable indie developers. Indie developers will get the money by shifting the risk of failing the game, and publishers will get another chance to buy the hit game.

Platform Lifting

Long-lived platforms will begin to seize power over genres that are guaranteed to bring money. This vertical integration pays off. Platforms will be able to get all the profits generated by the game, attract players to their games through advertising and reduce the risk of working with unreliable third-party developers.

Coming springs

Let us rejoice at the perennial plants grown in this amazing cycle. Or at least for tulip bulbs that will bloom one day.

Real independent developers will continue to grow.

I do not think that we will ever return to the old, unkind times of the early 2000s, when “breaking into the gaming industry” was a real problem. Trends tell us that the tide of new developers will not subside.

• Tools : the cost of development tools has decreased significantly. Tools already available, such as Unreal or Unity, have unmatched power and quality. Anyone who has time and passion can create games and, I suspect, everything will only get easier over time.
• Schools : students want to make games. Schools can take a lot of money from students to learn how to develop games. Such dynamics will continue, regardless of whether paid students will be waiting for such students.
• Open distribution : there are many ways to introduce players to your game. Steam, Android, and iOS stores have a minimum entry threshold. On sites like itch.io there are no thresholds at all. Most of humanity will never know about your game in this way, but at least it can be published. For an amateur developer, even a couple of dozen copies downloaded by friends and relatives can be enough inspiration for creating new games.

The situation will be similar to the one we see with writers, artists and musicians. Schools offer the necessary, but time-consuming, game design skills. It is still difficult to enter the commercial market with such skills without having an elite portfolio. However, there is a wide community of extremely low-income developers making games because their passion is stronger than the thirst for wealth. I imagine how a company of amateur developers gets together regularly to drink wine and get moral support. Or even establishes the collection indiegogo, when one of them needs a new liver.

There will be new markets

One of the obvious new markets is VR. Virtual reality is obviously not yet able to stand on its own feet, but the owners of the platforms are aimed at creating a market. If they spend a billion together to sow the seeds of VR content, a billion-dollar market for game developers will emerge. And VR is not the only new market. In the next decade, a wave of several VR and AR markets will emerge as soon as a new technology gets rid of the burden of old attempts. Each technology will be formed by technical giants involved in creating markets. And there is potential in it. For early PC developers, the sequence was almost the same. We may have several Cambrian explosions.

Change of seasons

I write this in eastern Maine, where the harvest seasons are short and stingy. Spring is the (mud) gift of heaven. Summer is a long-awaited miracle. Even autumn is welcomed with a joyful smile. Yes, the winds are blowing so hard that it is difficult to walk to their full height. Yes, the frost will destroy our entire stately garden. But if we did a good job, then our cellars are full. And we have hot apple cider. And if it is not, we do everything to get it. Even if we do not have our own garden.

But I am glad because I realize that the world is moving in a circle. We may mourn the departure of summer, but that will not help much. When winter comes, it is better to throw firewood into the oven, brew tea and allow the endless snowfall to muffle the cacophony of the world. It is time to think. What did I miss when I had a big chance? It's time to dream. What would we change if we had the opportunity to grow again? Looking to the future tells us that there will be many more seasons of growth, harvest and frost.

Sooner or later, spring will come back.