Category: business

I try not to be *too* doom and gloom, but I’ve been keeping an eye on things, industry wise and lately a few things have darkened my mood. I’ve been ‘hearing reports’ about fellow indies new releases doing very badly, and a quick glance at some titles on steamspy seems to confirm those rumors. Because we are, in effect, just apes with keyboards, we are very vulnerable to following the crowd, and few indies who know *anything* about marketing will admit on twitter/blog/gamasutra that their game has flopped and they are looking for contract work unless they have completely given up hope.

I suspect a lot of indies are currently coasting on savings, sitting depressed and hitting F5 on the steam sales figures…

..hoping its all an error.

I don’t think it is.

Lots of people have speculated on the possible reasons for this, and they include the prevalence of easy-to-use tools like unity, and its asset store, the many tales of ‘teh indie riches‘, the opening up of steam with greenlight, and so on. These may all be contributing factors. There are also various theories on how to survive and thrive despite this going on, such as concentrating on owning a small niche, slimming down development costs, hedging your bets with multiple games, or just gritting your teeth and riding it out and hoping other people go bust before you do. Again, these may all be sensible strategies.

But what occurs to me today is not ‘is it bad?’ or ‘how do we make it through?’, but the slightly more ominous question of how ‘how bad can this really get?’. To quote silicon valley, is it ‘apple maps bad’?

Maybe it really is.

In a situation of perfect competition, prices drop until ‘normal’ profits are generated for the people supplying the product.  perfect competition doesn’t exist, but lets be honest, PC gaming is quite close. Almost anyone can make a game, almost anyone now can get it on steam, you can set whatever price you like and sell to the whole world. Thats pretty close. That also means that there is huge downward price pressure for commodity goods, such as generic shooters & platformers & clones of existing games. It also means that ultimately, all the games get made in China or India, where the cost of production is lowest. In theory, this means that developers in the US and Europe making indie games are kinda fucked. Why did you think outsourcing to china wouldnt work for PC games?

Lets forget for a moment the indies with established fan-bases, their own recognizable IP, or sufficient scale that they can throw around big marketing budgets, and lets look at the ‘new’ indies making their first game, maybe 2-3 people working on it. My question here, is how is the situation over the next few years for such a developer going to differ *in any way* from the situation with iphone apps?

Depressingly, I do not think it will. We have an overloaded media, who have neither the time, or the staff (thanks to everyone using adblock) to actually cover new games and tell us which ones are worth checking out. We have a ‘popular myth’ that you can make a game and become a millionaire overnight. We have almost no barriers to entry at all, and we have a marketplace based around deep discounting, sales and bundles that are driving prices through the floor. Oh…and lets not forget that there are AAA publishers with huge back-catalogs they can dump on app stores for pennies, despite them originally costing millions to make.

The popularity of free-to-play facebook games, and other web games show that its delusional to think that people gaming on a beige box are any less-likely to demand ‘free’ as the price, than those same people are on mobile. Just look at the money made by world of tanks, or DOTA or LoL. Free is the new price, whether you like it or not….in almost all cases. At the other end is Star Citizen and its associated craziness…

The big problem with that, from a small business POV, is that the ‘free’ marketplace does not scale *that easily* down to indie size. The popular F2P games tend to be rather large affairs, backed by hedge fund money and run by big publishers who may have a dozen or more such games in their portfolio, happily leveraging this scale to populate databases of customer behavior between games. Indies can’t do this. I can email Democracy 3 buyers and tell them about big pharma, but its small beer. Very small beer.

When I look around at games that seem to punch through all this and make mega-bucks even now, I struggle to see any new names there. Lots of names I already know, but who is new? Who is the latest PC indie millionaire? All the names of my mental list of indie success stories have been around 5 years or more. I have to conclude that the ‘smart money’ is not on making an indie PC games right now. A bit of a bummer, as I’m making one, partly outsourcing another, and funding two more. Yikes.

FWIW I think the ‘smart’ money is in renewable energy, electric cars and biotech.

Tech companies drive me bananas. IO deal with lots of them, as a developer. I won’t list the ones I’m talking about, but we all know the names of the big ones. Most (not all) of them seem incredibly incompetent when dealing with small business partners, and of course…customers.

More than one big tech company has assigned me an ‘account manager’ who insists on telephoning me to ‘catch up’ or to ‘discuss how I might use the service better’. Not when I want to talk to them, but when they decide to phone me. I’ve threatened one such company that if they ever phone me again I’ll stop working with them.

(Obviously its insanely crazy for an INTERNET company to decide that they should talk to their customers by phone rather than…I dunno, maybe email? a far superior asynchronous means of communication that comes with free perfect logging of all information… but I digress…)

Much more annoying than this weird phone fetish that these companies occasionally have is when they decide the best way to deal with customer support is not to have any, or at best, to deal with it at the end of a two hundred step process of making people go through menus and drop down lists. I’ve just been trying to communicate to one such company about a problem they have, which they assume is mine (but is not), and there is literally no way to email them. None. nada. I have gone through the endless drop down lists for the ‘frequently asked questions’ about my problem, but it isn’t there. And like many of these genius companies, they have firmly refused to have a ‘my problem isn’t listed here, please contact me’ option.

Odf course its absolutely hilariously when companies like this have some major bug or website glitch causing mayhem, but nobody has any way to tell them about it. Pure Schadenfreude. I could reply to one of the many emails I get from them DEMANDING that I sign the updated 45 page legal agreement that changes every week, but obviously thats from one of those lovely ‘donotreply’ email addresses…

What I don’t get is the reasoning behind all this. If these tech companies were operating on tiny profit margins and had no money, and desperately needed to cut costs and run slimmed down operations…then sure. But these companies are often making billions, or tens of billions of dollars every year. Hiring some staff to reply to emails is NOT expensive, it really isn’t. And even hiring high quality staff, sending them on dedicated raining courses about the companies products, and giving them decent employee perks and bonuses and so on…it really isn’t going to break the bank for these guys. (They do not do this. I’ve never spoken to anyone at google who knows how their systems work even half as well as I do, a casual user…).

And yet instead…they sit on vast piles of cash so huge that it defies calculation, money that they neither return to stockholders or invest in new ventures. Its like they are trying to pretend that the money does not exist and that the *worst possible thing* they could do with that money is to give people jobs doing something their customers would appreciate.

I just do not get it.

So….it always bugs me, when I live in this glorious 2560 res world of mine, when I visit a website that has this tiny thin little column of ‘site’ in the middle and then…blankness. I get it, designing a website that scales in the x axis is a pain. and yet…

I have managed it, and recently tweaked it a bit more. Here is the positech.co.uk website at low res:

…at medium res (oooh extra boxes!)…

…and at big big res: (oooh even more)

Basically I don’t want people to have to scroll when they don’t have to, and if the visitor is staring at the screen I want it full of screenshots and logos for all of my games. Hey, people still buy Kudos 2 in non trivial numbers, kinda :D

Plus I need to have a site that supports more games as positech gradually (like a snail carrying heavy shopping) expands… By the Summer of 2016, I hope to add Shadowhand to this site, PLUS another game that I have not announced yet, PLUS maybe be teasing yet another game that…I haven’t announced yet. Strength through diversity and all that kind of thing. Plus who knows, I may finally get some crazy VR thing working and put that up there :D.

I know we all have to start somewhere. I started with a game that looked like this:

But that was 1997, unity didn’t exist, steam didn’t exist and buying games online was a no-no for most people. Plus I had a fairly well-paid day job working for an exciting it company in places like this:Times have changed. The competition is more global. More people have access to the internet, to unity, to computers fast enough to actually develop on. Plus Notch made everybody think you could become a billionaire from indie game dev, and now everybody wants to do it, despite endless horror stories of how people fail and lose money doing so.

So given all that…why do people keep making so many basic, obvious mistakes such as…

MISTAKE #1: Your game idea is bland.

You are a plucky hjero who has inherited a magic sword and will claim your rightful place as the king of la-la-land by defeating the evil prince doodad who is some relation to you. Blah Blah. Why don’t you just replace your whole plot with <INSERT HEROES JOURNEY HERE> and be done with it? Perhaps you have been really radical and made a game where you build a world out of blocks? or your character runs sideways and jumps over stuff and collects other stuff? Or maybe its a space strategy game where you build an empire, mine resources and research technology? RADICAL!  Peter Thiel has the right idea when he says competition kills profits. Seriously, WHY would I buy your space 4X instead of Galactic Civilisations 3?

MISTAKE #2: Your game will market itself.

No it won’t. Do you have ANY IDEA how many emails about new games land in the inboxes of the editors of Rock Paper Shotgun or Kotaku or similar sites? ANY IDEA how many offers of free games the popular youtubers get? Do you think they ignore all of them in preference to randomly googling ‘new indie game’ to try and find your opus? hint: no.

MISTAKE #3: Listen to the wrong advice.

Do you know whether or not you should charge $10 or $5 or $25? Whether you should bother with the smaller stores or not? whether you should advertise? and if so where? Whether its worth having your own website & domain? how about if steam achievements & trading cards are worth it? or if a mac port is a good ROI, or if you need a contract with your artist? I can tell you who knows the definitive answers to all your questions: THE INTERNET! Yes it’s true! random strangers on reddit and twitter are absolute experts on all these topics and will share the fruits of the careful peer-reviewed research with you. You can be 100% sure that they have powerful insights based on multiple experiments they carried out with their own hit games. hint: this is sarcasm. Take careful note who you listen to. And when a sentence starts with ‘everybody knows that…’, its likely bullshit. Smart people know that they don’t know anything for sure.

MISTAKE #4: Make what is easy.

Most of the post-mortems and reddit threads that start with ‘I made a game and it flopped badly’ contain the words ‘mobile’ or ‘retro’ or even ‘clone’. Its just simple economics that dictates that profits will drop to zero when there is no barrier to entry. If you don’t understand this, read up on it. When its very easy to use unity to make a generic side scroller game for mobile, guess what happens? the profits drop to the level where a kid with a laptop living in Vietnam can just about pay for his computer/internet connection/food. Food is cheap, and mum probably provides it anyway. If you cannot live on the income of a vietnamese teenager, then do not make a game a vietnamese teenager is going to be able to clone. (You *might* get lucky like flappy bird, but thats what it is: LUCK. You get better odds putting a bet on a roulette wheel.) Do you know why there are not dozens of Democracy 3 clones? Because it is crushingly hard to make a game like that.

MISTAKE #5. Copy AAA.

I worked at two big AAA studios. They were good ones, widely respected, makers of quality games, not cheap knock-off studios who churned out movie tie-ins. They were profitable and successful (for a while anyway :D). I enjoyed it, I found it fascinating, and I learned a lot.

About programming.

I learned very very little about how to run a business and make a profit. I won’t bore you with my anecdote about the finance director saying ‘no cliff, we aren’t going to do what valve are doing. this steam idea of theirs wont go anywhere’, but suffice it to say I learned a lot about what not to do. Just because triple A studios rent an office doesn’t mean it makes sense for an indie. Just because they have a big team doesn’t mean you need one. They sent 6 people to every trades how in existence? that doesn’t mean you have to. Ask how successful indies do things, don’t think you can just copy AAA but do things smaller. Not everything scales down.

Obviously I don’t have all the answers. If I did, I’d be sat on a purpose-built island covered in wind turbines and shaped like the emblem of the klingon empire. I have, however been making indie games since 1997, and I’m still doing it. And I’ve done ok :D.

So everyone is talking about indiepocalypse, or however we pronounce it. Basically there is a fairly broad consensus online that about a year ago indie development was like this:

And that now it is like this:

Here is my take. Short answer: yeah, sort of, and it was pretty obviously coming.

I think it is MUCH harder now than it was a few years ago, at least for indies, but I don’t blame (as many people do) all of this on steam ‘opening the floodgates’. It wasn’t like it was *illegal* to sell games on the PC without being on steam. I managed quite fine (even bought my house) before I ever managed to get a game on steam. The opening of steam to thousands of new indie devs made it much ‘easier’ to sell online…and that is the core thing here.

Basic classical economics tells us that corporations in a working market will earn ‘normal’ profit. That is, given the chances of failure and thus the risks of investment, the return of investment in a market will equate to the general market rate of interest. In other words, if I can get 2% on my savings in a bank, then the normal profit for a low-risk occupation is likely to be about 3-4%, with that extra earnings level added in because self-employment is more risky. Basically whenever you see a ROI earned by a company thats really high, the market has either failed, or an adjustment is under way.

There were a lot of indie Games making a lot of money a few years ago, such as Minecraft, Prison Architect and all of the Indie Game:the Movie hits. Suddenly the idea that indie gmers could make not just the same but MORE money from indie dev than a ‘normal’ coding job was accepted. This generates factor 1:

ATTRACTION FACTOR 1: Perception of riches from indie game development.

In a perfect market, everyone then quits their AAA job and makes indie games, until the likes of Mojang and Introversion make less of a profit. Thats a market correction. However, it was not an immediate correction due to three drag factors:

DRAG FACTOR 1: Making indie games with a small team/solo is FUCKING HARD.

DRAG FACTOR 2: Production costs for even an indie game are out of the reach of the average person.

DRAG FACTOR 3: Access to the market is difficult. (Hard to get on steam).

So the apocalypse has happened because (in my opinion), these drag factors have stopped acting as a block. Why? Well 3 is obvious, steam introduced greenlight, then lowered the requirements to get through it. A lot of indies couldn’t even be bothered to read a handy article on how to sell their games before greenlight. Thats no longer a problem.

Factor 2 has almost vanished for 2 reasons. Firstly kickstarter/early-access is so prevalent that raising money to make a game is no longer impossible (Plus there are now indie publishers like Positech and Indie Fund). Secondly, the production costs have come thundering down due to my controversial opinion that…. drumroll…

…People have started going fucking gaga over ‘retro’ pixel art graphics in a silly way…

Not in a cool, stylish, re-interpretation of such graphics bought up to date in the style of puppygames, or in a ‘amazing twist on the old look whilst still paying homage to it like Fez. Nope. I mean like this:

Now, I’m not saying its a good or bad game (shower with your dad simulator), I haven’t spent any of my precious waking life playing it. All I’m saying is that if you look at that screenshot and then look at this:

Thats $63,000 gross in 2 weeks. Thats pretty good. Thats not an *indie hit*, but its GOOD. That is probably $200,000 for the developer this year, maybe $250-300k lifetime. Lets be clear, this game did NOT have a high art budget. I’m not sure it had an art budget. Or an artist. But it *doesn’t matter*, because people are quite happy to see through that and thus buy it. Lets be even more clear, I’m not criticizing the game or people who bought it. I’m saying… Costs of development for a game people will buy seem to be insanely low right now…

So it turns out nowadays we can get funding for our art budget easily, if we even need one…we may not do. So that leaves the final factor… Making games is fucking hard.

But wait! Look at the screenshot above. Maybe it isn’t? There wasn’t a lot of complex shader optimization going on there I suspect. Maybe this love of retro games makes the whole argument that ‘games are hard to make’ moot? And even if it does not… Then we have the rise and rise and rise of unity and stuff like it. Plus lets remember that simpler tool like gamemaker can now churn out stuff that runs reasonably well because we all have astonishingly fast video cards these days.

So what do I conclude?

Well conclusion 1) is that none of this is steams fault. Or at least…very little. Its more a shift in tastes and technology than anything else. If greenlight had never been invented, maybe we would have a ‘unity app store’ that was going great-guns right now.

Conclusion 2) is that profits are going to go down…down..down for indie development. These are not the same glory days. This is a market correction, arguably a much needed one.

Conclusion 3) is that there is no ‘solution’ to this other than making great, original games. Even that may not be a solution. Game development is like being an actor or a musician, there are more people that want to do it than there is a market big enough to sustain all of them in jobs. Don’t assume the market equilibrium always happens at a level where you can eat.

Sorry I don’t have happier news. here is a picture i took that amused me instead: