Category: business

Have you watched The Bridge?

Its an excellent TV series. Its a Danish/Swedish crime series, with some fairly creepy storylines, thats likely either dubbed or subtitled for you. That means that it contains NOBODY you have heard of. Its complex, and not trivially easy to get into. You have to pay attention ALL the time. You have to read all the time. It can be a bit dark. It has a low budget, and doesn’t make any effort to be accessible. It’s fucking amazing. Plus commercially very successful. Almost 2 million people in the UK (note: no Danish or Swedish speaking) watched each episode, despite being hidden on BBC4.

Why? Because if you like serious foreign-language drama series about serial killers with a clearly autistic female protagonist and don’t mind reading subtitles it is THE BEST. Also because… there isn’t a hell of a lot of competition there.

Have you tried Holopoint?  It’s an archery training game for the Vive. It uses the proper room-scale setup. You need an $800 vive plus a $1500 PC to play it, plus some space to swing your arms around in. It has apparently, according to steamspy sold 31,000 at $15. Assume only $10 for discounts and thats $300k. I hope the makers won’t mind me guessing that it cost a LOT less to make. It is not Call of Duty, it is not No Mans Sky, it is not <insert name of blockbuster game here>. For the majority of the time your ‘enemies’ are blue cubes. Yup, Blue cubes. Sometimes you get orange cubes. Later you get an animated soldier. Its not exactly Elder Scrolls. BTW the game is AWESOME and you should buy it.

What links these two (and many other examples)?

They are the best X that money can buy, where X is something extremely specific.

I happen to own the IP of the best political strategy game you can buy (there are many election games, but few actual government ones). It is VERY profitable. This means two things:

1. I have a very nice car and
2. You would be nuts trying to make a political strategy game to compete directly with it.

OK, maybe not *nuts* but you are making things hard for yourself. In short, there is a lot more low hanging fruit out there. In the past, people were annoyed that those ‘Deer Hunter’ games made money despite looking dreadful. The target market didn’t care, they were the only Deer hunting games, they aren’t comparing it to Call Of Duty because COD is not about deer hunting. The same is true of Farming Simulator, or Street-Cleaning Simulator, or <WEIRD FUCKING THING> simulator. Those games can be ‘the best’ in their niche without spending 10 years, the unreal engine and a ton of features/polish/cool stuff.

Developers tend to commodify games in their mind and treat them as substitute goods, but they rarely are, unless they are complete clones. Nobody who has just added Democracy 3 to their shopping basket will remove it for Death Bastard Knife Massacre IX because they notice its cheaper. Nobody is going to swap Holopoint for Prison Architect, or The Bridge for The Waltons. If you make something that serves a specific niche (VR archery game or nordic noir with autistic crime fighting), then there is no competition. You get to sell to them merely by saying ‘Look, a game about this thing’ (which is cheaper than traditional marketing) PLUS you get to charge more for them.

If you want to make a successful game, think about the very specific niche thing you REALLY like, and make a game about that. Trust me, there are 10,000 people out there who WILL be looking for it and WILL buy it. maybe even 100,000. There are currently 35 million active users on steam. If your niche is so fucking obscure only one in 1,000 of them will like your premise, you potentially have a commercially viable game with zero competition. Thats just on steam.

One of the questions about your game that you SHOULD struggle to answer is ‘what is the direct competition?’

When you are the only person taking a salary from game development, the simple question of whether or not a game has made a profit becomes a bit fuzzy. Normally everyone takes their salary, and after other costs are paid, if money is left over, there is profit. The thing is, as the company owner, you normally take a tiny salary and thus working out if ‘game x’ made a profit is not as simple as it seems. Do you consider a game profitable if it makes more than the bare minimum salary you pay yourself? or if it makes ANY money at all? or if it earns more than the average salary you would get in a comparable job elsewhere? and WTF is a comparable job anyway?

Democracy 3:Electioneering is new DLC for my political strategy game Democracy 3. It was released just over a month ago. So far, total revenue from all sources for this DLC is $18,600.  The total development and marketing cost of the DLC stands at $21,500 so I have (so far) lost $2,900. Thats a ROI of -13%.

Ouch.

But that’s kinda nonsense. Firstly, that’s for 1 month. if I look at the one month sales for Democracy 3:Clones & Drones, then compare it to the one month of D3:Electioneering and project to a year out, I should earn a net of $87,042 from the DLC. YAY!

But again, that’s nonsense because it doesn’t take into account my work. I put roughly 3 months full time work into the DLC (over a longer period), so how much should I be charging myself for the purposes of working out if this DLC was a good move? This brings us back to the whole ‘what do I pay myself question.

Looking at game developer salary surveys, it looks like a typical ‘lead coder’ earns around £47,000. I also run the studio, so lets assume I am a ‘development director’ and earn £59k. A salaried employee would have a pension too, plus sick pay and so-on, so lets add another £6k to that and say a reasonable salary for me is £65,000 a year. I’m 45, been coding on and off since age 11. I’m worth it :D. So 3 months at that rate costs me £16,250. Given exchange rates right now at about 1.3 £/$, lets plug it in…

Whoah thats more like it.  Of course that assumes that the sales of D3:E are the same curve as D3:C&D over time, which they may not be. On the other hand, this is a US election year, and a fairly crazy one, people might be really into a game about election strategy. Or they might be fed up with politics entirely. who knows.

Now before you all quit your jobs to ‘go indie’, its really not this simple. I also released Democracy 3:Africa recently and that game LOST money (so far). It’s close to breaking even, but right now, that cost me money, even assuming I personally earned zero from doing any work on it. Gratuitous Space Battles 2 DID make me a five figure profit (yay!) assuming I worked for free (boo!). Luckily other games, notable Democracy 3 and Big Pharma, are big hits and continue to bring in money, so it all kind of evens out.

The two takeaways from this are:

1. its VERY RISKY to be dependent on just one game. It really is a hit driven business.
2. If you have a contract with someone that mentions ‘profit’ relating to bonuses etc, make SURE you know how they are defining their costs. It really is open to interpretation.

I do not know a single developer who has not knocked back a neat whiskey and, in the manner of someone who has seen things no man should see, when discussing the woes of the battlefield and the horrors of war…found themselves mumbling to their comrades, wiping the dribble of 100% neat alcohol from their chin and expressing the common sentiment… “fucking steam reviews eh?” before sobbing and falling off their bar stool.

Its not just a problem for steam obviously, or games in general, biut all online reviews. Anyone who runs a restaurant or a bed-and-breakfast or small hotel will tell you that ‘consumer reviews’ are not the panacea they are sometimes described as by businesspeople who run online portals.

In a sense, the theory behind reviews given freely by users are perfectly sensible. By definition, the seller of a good (me) is only going to promote it in a positive light. We are going to tell you our game is amazing (even if it isn’t) and we will not draw your attention to defects or bugs, because we have a financial interest not to do so. The other side of this, obviously is the consumer, whose interests (in the short term) are the complete opposite. They have a financial incentive (they do not wish to waste money on an inferior product) to know all the faults of a product before purchase.

So to quote pretty much every character in a Tolstoy epic. “What is to be done?”

The uniformly accepted decision is to allow customer reviews. Theoretically the customer is unbiased, and only interested in reporting facts, Thus the customers have a shared objective and can trust one another, as nothing is to be gained from leaving an unjustified bad review. Thus, sanity prevails, reviews are free, and everyone is happy.

The system described above is based on what is called ‘classical economics’ or what, when I was at the London School of Economics was called ‘Economics’, because back then, we didn’t know any different. Thankfully since then, the whole field of behavioural Economics has grown up, and we know now that Classical Economics, at least at a micro level, is 50% bollocks.

Classical Economics makes assumptions that turn out mostly to be wrong, and the design of customer reviews makes many of those assumptions.

Assumption #1: The customer has nothing to benefit from dishonesty. This is 99.9% true, and thankfully I do not see it as a problem on steam (at least not personally), but the area of restaurants, books and so on suffer hugely from this error. Where reviews are anonymous, chaos reins! As a seller, in theory I have much to be gained from reviewing competing products badly, and theoretically, from creating shill accounts to review my own games positively. More likely (thankfully also rare) is the possibility of extreme fanboys of game A giving negative reviews of game B, because its a ‘rival’ game, or because the developer supported gamergate, or because the developer is female, or whatever…

Assumption #2: The customer has perfect information. In terms of steam reviews, this would mean that the customer is fully aware of the product they are reviewing. To do this, they would need to experience it on multiple PCs, on Windows and Mac, and Linux (if supported), also in multiple languages, and to have completed the entire game, plus tried modding, co-op, multiplayer and so on. In short, they would have to dedicate several weeks of in depth research to completely evaluating the experience. In practice, many reviews are based on one PC, one platform, one language and a relatively short playtime of limited features. This is a partial experience, not an in depth evaluation.

Assumption #3: The reviews represent a representative sample of players. I’m tempted to just type HA! at this, but it requires more explanation. A game that draws people in to play for hours and hours may well get negative reviews in the first day of release, simply because the only people leaving reviews are people who hit a bug, or otherwise stopped playing. In other words, the silent majority who like the game are too busy playing to review it. This is definitely true on steam where you are forbidden from encouraging reviews from the app itself (unlike on mobile), and where there is no minimum playtime AFAIK.

Of the Democracy 3 sales, I can tell that roughly 1% of players have left reviews. The chances of the 1% being a poor cross section is very high. Angry people are more motivated to write reviews than happy people. People with time on their hands (kids & students) are more likely to leave reviews than busy gamers (20+ 30+ and parents).

So what is to be done?

I think if you want to keep reviews you have to accept that the only real way to fix 1) 2) and 3) is to have at least some paid reviews. If I owned steam (I’ll get this on a t-shirt one day), I think I’d take a chunk of the sales profits (steamspy suggest roughly $200 million this sale, so say 30% is $60 million, lets spend 2% of that, $1,200,000) and hire a bunch of reviewers, full-time. I’m sure the world of games journalism has a bunch of unemployed writers that would love the job. Lets pay them $60k each, with admin & health insurance and all that, we get 12x$100k reviewers. So that’s 12 full time games reviewers working for valve.  Not a lot, but not insignificant. They don’t have to review all the shovelware, just the games selling thousands of copies.

Suddenly we have a bunch of ‘pro’ reviews mixed in with the wider range of existing ones. Now a big part of the problem is solved, but I’d go further and do some weighting based on another metric.

Time played.

Frankly if you play a game for 40 hours then give it a negative review you need therapy, or a job. That makes no sense. Also, TBH if you play a game for 40 minutes, you really shouldn’t be reviewing it *at all*. The beauty of ‘time-played’ on a game is that steam already calculates and stores this for ALL the players, not just the vocal 1% who leave reviews. The stat is not perfect (some people ‘idle’ a game to get trading cards’, but its not bad. Presumably steam *could* write some code that detects a player being really AFK and fix that anyway.

I think some combination of pro review scores (let them give 0-100% not just positive or negative) combined with user review scores combined with player time will be a far better (and harder to ‘cheat) version of what we have now. Just my opinion, and I’;d like to read your thoughts.

BTW before anyone starts yelling, I’m not complaining specifically about my scores, I have generally good reviews, and to state it for the billionth time, my games sell fine. You can criticize without ‘whining’ if you lay out your arguments sensibly :D.