Can the videogame market be segmented, and still generate cashflow? It’s a question I find myself asking more and more frequently. Put another, more specific, way the question becomes: is an indie games market a viable commercial possibility, or simply the place where those who love games sacrifice themselves on their vanity and dreams?
The question comes down to whether the economics of videogames can be made to work on a smaller scale, or whether we are locked now into what we might call Moore’s Law of Gaming: the demand for ever more impressive games drives the demand for ever more complex hardware, which drives increasing retail costs, which in turn requires bigger and more impressive games, which in turn require ever more expensive development budgets.
The upper market – the place where the
games we’ve all heard of exist – thrives on giant game budgets, now routinely
exceeding $10 million for development, and the same again on marketing. Lost
Planet, for instance, cost $20 million to make and $20 million to promote
according to an article on Kotaku. And most of these games make a loss.
The top 3% of games are responsible for roughly 25% of game industry revenues;
the top 7% of games are responsible for roughly 50% of that revenue. Publishers
only survive by having portfolios, as I have discussed before.
Money is like mass: when enough of it accumulates, it creates its own gravity well. It’s inevitable when you’re dealing with a multi-million dollar development that it generates its own necessity, and that in turn attracts more promotional money which drives the process, like a white dwarf star sucking in the mass of a red giant companion. This financial gravity seemingly cannot be resisted. The specialist press increasingly appears to exist for the sole purpose of servicing the PR departments of the larger publishers; devoted satellites caught in the orbit of the industry’s gas giants… they yearn to report on the next big thing, and to do so they obsequiously dote upon the upper market.
A viable indie market depends upon
successful segmentation of the market – it must be possible to divide a certain
amount of money into smaller portions, to make games on smaller budgets, and
ultimately to still see a return on that investment. It doesn’t have to be as
large a return as the most successful videogames – but there must be a return
of some kind, or else the indie market is nothing but a sinkhole, the blackhole
of wayward developers, who are sucked down into oblivion.
Is it possible? Certainly. Is it probable? Much harder to say.
We could use to know how many “boutique”
MMOGs survive, and how many indie games make a loss on their implied
development budgets (remembering that even a game with no formal budget has an
implict budget proportional to the time spent developing it). Even if these
figures are not too depressing, it won’t be quite enough. The indie market
necessarily needs its own self-sustaining portals – it’s own centres of mass.
Manifesto are valiantly trying. I fear they may need more capital to make it
And that’s where it all comes back to: money. It takes money to make games, and in a capitalist society money flows to where more money can be made. If indie games are to survive, they must prove their profitability – not as individual titles, but as a successful market segment.
I believe the market can be successfully segmented,
but I am concerned that the stable slices will be all-too familiar. On the one
hand, the extremely simplistic “Casual” game, as epitomised by PopCap – games
for people who think they don’t play games. On the other, those videogames that
suit the core gamers who have been cast aside by the spiralling greed of the
upper market (Type 2 Managers by DGD1, Strategic players by Temperament Theory),
epitomized by Introversion Software, the self-styled “last of the bedroom
programmers”, making the games programmers enjoy for players with the same
I love that both these niches exist, but I naturally wonder if these segments can support more companies, or if these lucky few are merely anomalies in an otherwise bleak independent wasteland. But more than this, I hope that there are more niche markets out there, waiting to be discovered. We can but dream.