Universal Disclaimer
The Positive Effects of Games

A Template for the Future Games Industry

In order to attempt to clarify my position on the games industry and the market for games, I'm going to attempt to express a complete vision for the games industry. This is not necessarily what I would wish for, nor what I predict - it is merely what I'm thinking about at the moment.

The market as I see it is divided broadly into five tiers:

  • Top tier development, where AAA games are made on budgets of $1-5 million or more
  • High tier development, where games are made on budgets from half to $1 million (and currently, many games are licenses)
  • Mid tier development, where games are made on budgets from $250-500K. Most successful niche market games probably belong in this tier.
  • Low tier development, with budgets from $50-250K. This is what I sometimes refer to as 'the budget market'.
  • Bottom tier development, where games are made for less than $50K. Most of these games are for mobile phones, or use Flash or something similar.

Of course, there are also those games made as a labour of love, without payment - but these have much in common with the bottom tier.

What are the problems we currently face?

Firstly, that most top and high tier games are commercial failures, costing more to develop than they make in sales. Less than 10% of games produced are responsible for about 50% of all revenue generated by games, and of these the top 2.5% are responsible for 25% of the revenue generated (quoted from our book). The result is scattershot economics, where hundreds of projects are pursued in the hope that just a few will prove profitable.

Secondly, that support for innovation is lacking. Publishers don't have mechanisms for supporting innovation, and there are no organisations promoting artistry outside of the commercial sphere. Consequently, most non-commercial games projects are fan games which rarely show any innovation - although of course, there are exceptions.

Third, that publishers and developers in the mid to low market are all striving either to grow rapidly so that they can be in the high and top market - or are producing games which they are attempting to pass off as AAA games, when clearly they aren't. Essentially, that the middle of the market is suffering from commercial schizophrenia.

Fourthly, that too much money is invested targeting a narrow audience (what broadly corresponds to our C1/C2 clusters) - the result is that this channel is overexploited - leading to the problems I mentioned first. This log jam means that other profitable avenues are not being explored, preventing the games industry from growing evenly. When you look at the games on the shelves and see many very similar products, it's because of this attempt by many parties to target the same audience. This market is saturated, while the others are under-developed.

Lastly, that the majority of people who make games have a narrow definition of what constitutes a game - which leads to excessive focus on Type 1 Conqueror and (to some extent) Type 2 Manager style games. The blocks both innovation in game design, and commercial prospects for the industry at large.

Art House Games

The solution I currently envision begins with more capacity for innovation at the lower end of the scale. An 'art house' games market is an essential element we are missing at the moment - and this is largely because funding is absent. The art house games market should ideally be funded in multiple ways.

It should be possible to sustain a commercially viable art house games market in the low to mid tier - this is something we are currently experimenting with; we have several game projects which can explore whether or not it is possible to make confident returns on relatively small budgets (less than $100K).

In addition, the largest publishers should invest a proportion of their turnover in art house game projects. They publish the games they support (on a suitable game label), and share the IP rights with the small teams and individuals making these games. This would serve as a breeding ground for new talent and innovation that should more than pay for itself if all the benefits are considered, and not just the sales of the games themselves.

Ideally, there should also be state-supported programmes for investing in non-commercial games - a games equivalent of the Art Council in Great Britain, for instance. This could be similar to the publisher-funded art house games market, but because it would be entirely non-commercial, the games could afford to be unusual and offbeat. Pragmatically, most players would not be able to play or enjoy many of these games - just as many people don't connect with modern art. But it would be an important cultural facet that deserves some support.

Because all these games are being made on relatively small budgets, the games that result should naturally have tight design - much as early video games had tight design because technological limits forced their game designs to be focused.

Innovation to Refinement

Most innovation would probably take place in the art house market - because here, commercial pressures do not strangle the freedom to be creative. These innovations would then trickle up through the other markets, since advances in game design thought do gradually percolate throughout the industry. (Witness the gradual elimination of the concept of 'lives' as it becomes apparent that this is a mechanism which made more sense in the arcades than it does in people's homes - Type 1 play not withstanding).

Licensed games would operate much as they do now, in the sense that they would tend to adopt existing templates. There might be some inventive design work on licensed games, however - certainly, it would be a greater possibility. If there are many interesting ideas being played with in the art house market, it will be easier for teams to identify game design possibilities that support the content of a license - rather than trying to shoehorn an existing formula into an inappropriate setting.

The AAA games market would largely exist for the purposes of refinement. Those game design templates which have the potential to hit the mass market squarely would warrant the investment of millions of dollars... Such games would have the capacity to offer play experiences which would be difficult or impossible to offer on lower budgets (playground world games, for instance, are very expensive to develop), but their core game activities would be established, and have proven commercial value. There should be no need to gamble excessively at this end of the market.

A few innovative AAA games would exist - largely as flagship titles for larger publishers, helmed by veterans who have earned the right. I may not have enjoyed any of Wil Wright's games except arguably Raid on Bungling Bay, but he has my eternal respect for The Sims. Spore doesn't seem like a safe commercial investment on paper, but EA should be investing some of their vast turnover in original concepts. These flagship titles would largely springboard off new technology, I suppose.

The focus of most AAA games would be taking existing models of play that people enjoy and presenting them in lush, impressive landscapes with the latest technology, quality game designs with attention paid to the play needs of the audience (not always present in AAA games today) and showcasing the best programmers and artists the industry has to offer. These games would be the public face of the games industry, and as such would be slick and polished, rather than freshly creative. They can still show 'kitchen sink' creativity, much as games like the recent Grand Theft Autos do - the core game play is tried and tested, but the games contain a lot of rich details as every idea the developers could think of is thrown in along with the kitchen sink.

There would also, presumably, be fewer AAA games - or the same number as there is now, but targeting a wider variety of audiences. This is the riskiest end of the market, but by moving the focus of innovation to cheaper projects, it could become more stable.

The Niche Markets

The space between the art house and AAA market would be the niche markets. Here, publishers and developers would be making games for specific audiences. These audiences would not be strictly mass market, but would be profitable niches. One could argue that id are already there - their products only barely scratch the mass market audience, but they have a stable niche market they are hitting.

There could be tremendous variety in the niche markets, and most of the genres being pursued will be well troden ground. But there can be innovation within the game designs (and, where applicable) the stories of the game. There should and could be a niche market for every type of game genre in principle - it's just a case of finding the correct scale.

And from the stable niche markets, larger mass market outreach might be possible. For instance, if we can create a stable niche market for adventure games (which on paper must be possible) we might be able to demonstrate that story-driven games (those which de-emphasise challenge and instead emphasise narrative or dynamic narrative) could exist as a part of the AAA market as well.

The niche markets, then, sustain existing genres, and innovate in terms of how these are presented. They learn from the art house market, and inform the AAA market. Future AAA game franchises breed in the niche markets... The first two GTA games sold around half a million units; they had a Hardcore following, and only when this following was in place could the franchise transition to the mass market.

Motivations and Obligations

The larger publishers would still be motivated by profit, of course, this is beyond anyone's capacity to change, but this would come with the obligation to invest in cheap and innovative projects. They would also be obligated to understand the play needs of the mass market.

Smaller publishers - those in the niche markets - would also be profit-motivated of course. They would be obligated to understand the play needs of their audiences, and to make games that meet those needs on budgets that reflect the size of the niche audiences.

The development community can pursue whatever motivations it has - provided it meets the obligation to its investors (publishers mostly) to be profitable. As such, innovative projects should generally be delivered on lower budgets. In general, developers would be obligated to pay closer heed to the size of the budget relative to the size of the audience being courted. No more multi-million dollar projects which could only ever hit half a million (say) Hardcore players.

The audience for games would be motivated to buy and play games they enjoy, and some (but by no means all) would be motivated to play the art house games. Their obligation would be that of the consumer - to talk with their money. Don't buy into what you don't want, do buy more of the games you do want.

I doubt all this will happen. I doubt that if it did, it would solve all of the problems we face. But we can't keep going the way we have, because it's commercially naive not to match project budget to expected audience, and it's commercial insanity to make decisions without understanding the needs of the audience.

Comments

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One solution to the myriad issues facing the industry is the emphasization of character and story. By developing games that engage the Player emotionally and intellectually, in addition to the more shallowly involving action foundation we see over and over ad nauseum.
PlaySpace is developing "Games That Get To Know You." Games that get to know the Player's attitudes and behaviors and that adapt to challenge the Player on a personal level. The key is to reduce the burden on programmers and redistribute it to writers, authors. What is genuinely surprising is that means by which we'll see lower development costs will also serve as the foundation for believable characters and deeply immersive story lines.

I believe there are definite possibilities for this sort of niche in the current market. We have been looking at ways we might be able to build a single narrative engine and then use it to deploy a variety of different narratively-driven games without racking up extra development costs. I'll be interested to see how your games turn out.

Excellent piece, Chris.

>>we have several game projects which can explore whether or not it is possible to make confident returns on relatively small budgets (less than $100K).

I'm currently developing a business plan to do exactly this and one which takes the publisher out of the equation altogether. :)

I think another viable model to compare the current game market system, is to that of the "studio system" for film, which existed before the rise of auturism, in the 30's and 40's, only a few studios were accountable for the majority of films released, and those studios of course took in all the profits. A Fordian model was applied to production, writers and directors were just part of the "machine". At some point, because of the influence of the French new wave, as well as the considerable changes in how much it cost to make a film, individual visionaries were able to see their stories become films. I think the same will be true of the gaming industry. While there will always be blockbuster games, perhaps once the Hollywood industry is better incorporated into the gaming world, bigger studios will be able to take risks on "independent" videogames, and we will see a rise in "art house" games.

Thanks for the comment! It's nice to hear a little optimism about the future of the industry. :)

In order to see the same pattern in the games industry, would we not need to see changes that would bring down the cost of making games? I think what you're suggesting may well happen, but it's harder to see exactly how at the moment.

I do wonder about the extent to which the audience has become addicted to cutting edge production values... It's still possible to make games cheaply, provided one doesn't try to compete with the upper market in terms of production values, but we still have to prove that one can match development cost to the potential returns in the lower and mid markets with any reliability.

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