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The Glorious Lie of the Indie Bubble
by Ben Serviss on 12/10/13 10:16:00 am   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

This article originally appeared on dashjump.com.

fez-indie-game-movie
Grab your laptops and head for the hills! The bursting of the great indie game bubble is upon us!

Surely by now you’ve heard about the surfeit of worthwhile games available on Steam and elsewhere, the Kickstarter fatigue that’s stricken gamers and thing-purchasers around the world, the mounting competition in terms of rising quality and sheer numbers, and the logic-defying, margin-erasing pay-what-you-want model of all the indie game bundles nowadays.

I mean, it’s clear from these factual observations that not only will there be not enough money to go around, but that some deserving games will get lost in the shuffle, right?

Surely that state of affairs is tantamount to a massive bubble bursting!

Just picture it: One minute you’re happily game dev-ing away, minting thousands of dollars at a time, then BANG! Thick, viscous indie bubble juice everywhere!

But hold on – don’t break out those ponchos just yet. The idea of the indie bubble itself is more than just understandable paranoia in a world where change comes fast and the threat of disaster is a constant.

It’s also a fantastic opportunity to take a deeper look at the state of this indie thing of ours and discover, in detail, how indie game developers are going to fare in the years to come.

This Is Not the ‘80s

In the 1980s, the video game market crashed thanks to a spate of cheaply-produced, poor quality games churned out to suck as much money as possible from an unwitting populace taken with the novelty of the medium – only to be rescued by the coming of Nintendo’s flagship system and their fierce commitment to quality. This was a true games bubble, and when it popped, it almost took the entire industry with it.

Today’s indie scene could not be more different. What’s the main concern now? There are not only too many games, but from a developer's point of view, the quality of the competition is getting too high! Far from exhausting consumers’ patience with our products, they can’t get enough of them because there is always something worthwhile to play.

kickstarter button

But ah, of course – there’s that Kickstarter fatigue. Yet Kickstarted games show no sign of going away. If anything, Kickstarter fatigue is an observation about how the nature of crowdfunded games get covered in the press has changed.

What was once a novel press item about a random two-person operation in the middle of nowhere making a neat game has now come to be an accepted method of development. Of course, truly special games that warrant coverage will get it regardless of their funding models, as recent success stories can prove.

But the Steam sales, and Humble Bundles, and Indie Royales of the world – they’re driving down the price of games! Surely they aren’t innocent in perpetuating the indie bubble!

Again, look to recent history for perspective: In the old model of the ‘90s, you would spend anywhere from $40 to $70 on one of the few new releases that month, and proceed to play the crap out of it because A. the average game cost much more then than today, and B. since fewer games were released, it made sense to maximize every game’s replay value as much as possible.

Today, that model is also inverted. The amount of quality indie games that come out every month is so mind-boggling, and the average price is so much lower than in the ‘90s, that it makes total sense to buy a few and spread your gaming hours around. Plus, because modern titles generally take much less time to complete than ones from decades ago, gamers have more excuses for buying more games.

Far from this being a destructive trend – gamers literally have to spread their money around to more developers if they want to play everything worth playing!

Nay, I Say

"A lot of good titles won't ever get that press. They just can't. There's not room... The gaming press knows that gamers only want to hear about so many indies. Soon, they'll start picking who lives and who dies."
–Jeff Vogel, from "Marketing, Dumb Luck, and the Popping of the Indie Bubble"

“Now hold on,” I can feel you naysayers thinking. “In Vogel’s piece, he talks about the ‘indie bubble’ mainly being a sharp decline in the amount of coverage the gaming press grants to indies. What if *this* changes? What then?”

Say this happened. What would gamers do? Would everyone go back to playing only console games and mainstream PC titles? Would IndieCade, the IGF, the Indie Fund, and all the indie-centric institutions that have been popping up just go away?

Or just maybe… indie-loving games writers would pick up the ball dropped by the IGNs and Gamespots of the world and create new game media sites that focused on niche games to meet an underserved market.

Maybe, this is what was put in motion years ago, and just maybe, it’s the direction that the industry as a whole is traveling in. Maybe what some people perceive as ‘the indie bubble’ is just a gradual re-orienting of the industry to a new normal, where individuals and small teams release games that do battle on the charts with multi-million dollar productions made by hundreds.

Harder, But Still Worth It

Is it hard to become a Hollywood screenwriter? Is it hard to get a book deal? Is it hard to become a professional musician? Yes, of course it is – but the people in charge of finding the next hit are always scouring the talent pool for the next thing to blow them away.

Just like how games writers are always looking for a great game to discover. Just like how gamers are always looking for the next game to thrill, delight, and move them like never before.

It is hard to be an indie game developer, and it will get harder. Better and easier tools are leveling the playing field, collaboration is easier than ever, and the quality of your competition will never stop rising.

That’s fine. Get used to it. Keep making, iterating, improving. But know that the world will always be hungry for amazing, personal experiences – the kind that indie developers do best.

Ben Serviss is a game designer and producer at NYC indie developer collective Studio Mercato. Follow him on Twitter at @benserviss.


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Comments


Wendelin Reich
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You do realize that nothing in your article actually disproves the notion of an indie bubble, right?

All this talk of the indie bubble vs. the golden age of indie games! What we need at this point is DATA!

- How many indie developers are out there? How many are working full-time / part-time / on the side? What is the total amount of (initially) unpaid work? How does this vary by country?

- What is the percentage of developers who actually finish a game? Release a game? What are the average *revenues* of those who release? What are their gross *profits* (after subtracting things like tool licenses, platform costs, store fees etc.)? Into what hourly wages does this translate?

- How are these revenues and profits distributed? What does this mean for the amount of financial *risk* an indie developer faces (no earnings, very limited earnings etc.)? What strategies exist to reduce this risk?

So. Many. Questions. Sorry Ben, I appreciate your effort, but I'm getting tired of reading more arguments in a debate that should focus on DATA. (Which, unfortunately, no one seems willing to collect or share, but that is another matter.)

Ben Serviss
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All really good points! I'd love to read the article you're describing - maybe a news org with a full-time staff could dig that deep and get the info (hi Christian!), but as you say, devs are probably averse to sharing so much detailed info about their operations.

What I was more interested in was looking at the possible effects of oversaturation and what it could mean for indie gaming in general, with the conclusion that despite the increasing volume of games being released, indie games are regardless becoming a stronger part of the industry and that doesn't seem to be fading anytime soon.

Just seeing how the major console players are incorporating indies on larger and larger scales is indicative of this shift, in my opinion, and more proof that indies will continue to thrive even in a more competitive market.

Daniel Cook
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Folks tend to talk about the indie bubble in terms of a crash. That's a strawman. That isn't what Jeff Vogel is saying, nor is it what historically tends to happen. What we are seeing is a maturing market. The impact is instead:

A) Fewer small developers make a living wage
B) Larger, better organized groups absorb the majority of the market growth.

This dynamic can exist in a *growing* market and does not require a 'crash' to wreck the livelihoods of indie developers.

The factors are simple:

1) Older opportunities for distributing indie games to large number of players cheaply are diminishing. Mobile is a good example of this.

Then: Distribution on mobile was mostly free and folks got huge lifts from being featured. Premium mobile titles were financially viable.

Now: Most distribution on mobile is currently paid, which favors large companies or companies that have games with an LTV > $4. (During the holidays, cost of acquisition apparently topped $7). Note that this is happening despite dramatic growth of the market overall.

2) Crowded markets: You release into a crowded market and don't get the attention, distribution or sales you may have previously expected.

Then: You release a game in an underserved genre like platformers, space games, adventure games and people desperate for those titles buy your games because very few people are serving their needs.

Now: Most of the niche genres have several (if not dozens) of high quality titles with solid brands and years of press. I would expect the median revenue for a Steam game for example to start declining.

3) The quality bar is rising. With more competition comes higher production costs.

Then: You could release a game with solid gameplay and okay graphics and do quite well. Less competition and easy distribution lets you get away with a lot.

Now: Costs are escalating. At PAX this year, it was fascinating to notice that the gameplay was surprisingly conservative, but the visual quality had increased substantially. People are getting caught up in the production cost curve and investing more in art. I'd expect profits to also start declining. Where a moderate success might have cost 100k to make and paid out 500k, you start paying 200k and making 300k. That may seem like not a big deal. However, each success needs to pay for multiple failures if you are trying to do this long term (Not all your projects will be hits). So where you might have been able to pay for 5 experiments previously, now you can pay for half of an experiment. (Maybe you'll turn to publishers to make up the rest. So much for being indie)

4) Shorter revenue streams (The hits come faster) With crowded markets, the churn on successful titles happens more quickly.

Then: You release a game and slowly improve it over a year. Money comes in for the next two years.

Now: The hot new thing is out a month or a week after you release. Your income from that game you worked on for 3 years falters after 6-8 months.

These are trends. Averages. Not all these factors are obvious in every game. However, the basics are really straight forward: There will of course be hits, most indies will make less money, most hits will not be made by indies.

Now, these declining averages are going to be hidden by several things. And because people like spectacle over data, they'll often find themselves intentionally ignoring the trends:

- Hits: There will be hits. These are sexy and exciting. We have an entire industry devoted to making them seem sexy and exciting. However, just like how there is always a famous child actor, it doesn't' change the reality that being a child actor sucks for 99.99% of all child actors. Just because someone else had a hit does not mean you have a sustainable business model.

- Low barriers to entry. Easy dev tools plus helpful communities plus overfilled game dev schools means the flow of people making games is only going to increase. Most folks are young, have made 0-1 games and know nothing of business. The blind excitement is infectious. I'd expect a huge boom in hobbyist games just as there are hobbyist novelists. The overwhelming majority will make $0-$100. Game development becomes a hobby and less a profession. Like knitting.

- Promises of new platforms: Platform builder love promising developers that they'll make them the next big star. They need developers early on to add value so that customers will adopt the platform. They'll spend major money and be very willing to promote success stories in order to get devs to jump on their bandwagon. The successes are often smaller than suggests "Critics love it" for example does not mean the game made enough to fund the next game. And often the opportunity is gone by the time you hear about it.

Current 'hot' markets and where they are in the maturation life cycle:

Maturing markets:
- Mobile
- Steam

Opening markets
- New consoles: There's ~1 year window here. Then the successful platforms will get crazy greedy. Unless you have existing leverage or relationships. It is the console circle of life.

Dying markets
- Flash portals

Embryonic markets: These are places that no one is making any money because there is no meaningful platform penetration. No customers = no money. Some are desperate for content, but it is a chicken and egg problem. Revisit each year to see if they've grown.
- HTML (Mostly massive fragmentation)
- Microconsoles
- Virtual reality

So the old strategies don't generally work. The opportunities are shorter lived. It is never impossible to succeed, but the modern reality for small indies is much harsher than it has been in the previous 5 years.

All the best,
Danc.

Josh Sutphin
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> Most distribution on mobile is currently paid, which favors large companies or companies that have games with an LTV > $4. (During the holidays, cost of acquisition apparently topped $7).

The way you phrased that, it almost sounds like watching a price on the stock market. Where does one come by - and keep an eye on - this kind of number?

Daniel Cook
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LTV comes from metrics on your own game. Cost of Acquisition comes from buying ads. Less a stock ticker and more of an active process. Generally these are for service-based games or some paymium titles.

The rules are somewhat different for a paid game (PC, console).

K Gadd
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Two factors helping cripple revenue potential for HTML5 games:

1) There is no established solution for monetizing them. The amount of work you have to go through to monetize a HTML5 game is bigger than for the established platforms, and it's harder to get players to buy.
2) Piracy is a much bigger problem due to the fact that the HTML5 model intentionally makes it trivial to rehost and/or modify any content you put up. The only sure-fire solution is to make everything run on your server, even if you're building a single-player game.

To a degree #2 has always been true for Flash games, but portals more or less solved #1 for them. Sadly the same thing won't work - advertisers that were interested in paying money to put ads on Flash games are not doing the same thing for HTML5 games, even on the same portals (Newgrounds, for example, generates far less ad revenue for HTML5 games than it does for Flash games.)

Ben Serviss
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Thanks Daniel - reading your comment made writing this post worth it :)

I believe you're right, I had been looking at the issue as more of a crash situation than a maturing market.

If this ends up being the case, it seems that the next wave of indies who profit will be the ones who ruthlessly target hidden opportunities, be it through mechanics, branding, (still) under-served markets or some other measure.

Most of all though, it looks like the plateau in hardware and software tools is setting the stage for a weird future - what with the high barrier to entry / exponentially increasing horesepower paradigm settling into a low barrier to entry / generally stable horesepower one. If you look at how Apple's devices have rocked the industry, you could argue that usability is the new horsepower.

Jamie Fristrom
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Yes, it's brutal out there. There are a couple rays of hope:

Kickstarter probably doesn't want to be called a market but it is. It's somewhere between the maturity of Steam / Mobile and the embryonic/new markets. It has lost its initial luster but is still viable, and has additional legs beyond a typical market where a product will sit cluttering the shelves forever, because Kickstarter kicks products off its shelves after a month or two. (When's a Spry Fox kickstarter coming?)

The vast proliferation of tiny markets and marketing channels (who knew youtubers were going to be a thing?) means the road to success is no longer about being picked by One Big Channel - instead of getting picked to be a launch title on a console, instead of being picked to win IGF, instead of being picked to be featured in the app store, get picked by dozens of smaller websites/ youtubers/ channels/ markets and maybe a tiny-ass dev like myself can get by. Getting picked a few times leads to get picked more.

It's not like knitting (or having an etsy shop), where even the world's best knitter probably isn't making much money. It's more like being a novelist or a musician, where the richest are set for life and the next tier might be able to scratch by.

Clay Hayes
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Agree. The main self-imploding problem with indie saturation is lack business understanding. Publishing/sales/marketing can have a team of people working fulltime. Everything you spend time doing is money you have to make back, more sales to increase.

With increased production costs and reduced sales yes that means less money. This is the problem with AAA. Now the problem is upon indies; However indie independent creative freedom will allow crazy risky experiment games that can have the potential to break through more so than new ip's for AAA. Indie big business advantage is keeping company overhead low. $50k is easier to maintain than $1millon overhead. Indies can stay lean mean deving machines better than big-business.

Yes its easy to be a novelist, musician, stand-up comedy, and now Game Designer, anyone can do anything with enough time/discipline/practice its alot harder to be a business man/woman and pay your salary to live your dream but it is possible, just really really hard. Enter any business AT YOUR RISK. Majority will fail, but thats just capitalism, nothing personal.

Tanya X Short
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Dan, can you pretty please copy and paste this and post it as its own article, so I can link it to a few people I've been trying to communicate this to? I don't think there's anything earthshattering announced here, but it's the most eloquent, to-the-point description of the maturing indie market I've seen.

Christian Nutt
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Re: Tanya's comment... Seconded. =)

Colm Larkin
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Super comment Dan. This could be its own blog post!

Robert Green
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@Ben - "Plus, because modern titles generally take much less time to complete than ones from decades ago, gamers have more excuses for buying more games."

Perhaps that's true for some of the PC games, but on mobile it's entirely the opposite. It used to be that for your 99c, you'd get a game like Cut The Rope, which was really fun, but you could finish every level in a couple of days. Now, the games are given away and, because of the F2P model, a couple of days is barely enough to get started. Just how far could you get in Candy Crush or Clash of Clans in one weekend? Every company in mobile is now trying to be that game that you keep playing for months on end, and designing their games accordingly.

I suspect this largely isn't true on PC yet, but even there it could happen. Indie devs don't just have to compete with other developers and older retail games now selling for a similar price, they're also up against high-quality F2P games like DOTA2 and TF2, made by a developer who doesn't even need them to be profitable.

Ben Serviss
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Good point, thanks Robert. For your first point, I think there's still enough differentiation between mobile and desktop game experiences, but who knows what that gap will look like in a few years.

Carsten Germer
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"Every company in mobile is now trying to be that game that you keep playing for months on end, and designing their games accordingly."
I had my sights on this development for a long time, even before the exploding mobile-market. Why not make shorter games with high(-ish) production values? That might meet the changing habits of consumers, allows to keep the price low and release games in shorter cycles?
I think, that's one of the "new opportunities for small devs" that we talk about here.

Robert Green
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"Why not make shorter games with high(-ish) production values?"
The problem with that is that it basically requires that the game be paid up-front, and the paid games market on mobile is largely gone at this point. Even highly anticipated and very highly polished games like XCOM generally arrive with a splash, but quickly fall down the charts, while much cheaper looking F2P titles hang around for months.

Carsten Germer
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That's right and exactly what I was trying to start us thinking about.
A new opportunity, "niche" if you so like, could be exactly that: Drop out of the race to the bottom, justify an upfront price (or first level free, rest payed ingame) by good production value, keep the price low enough by "short length" of the game, re-use the code to make "sequels" in short timeframes.
Just something to think about ;-)

Guido Gautsch
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Now I feel like a nice cup of viscous indie bubble juice...it sounds delicious!

Alfa Etizado
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Bubbles burst. I see no way the "indie scene", if such thing can even be defined, can burst. How could things go catastrophically wrong over a short period of time?

Florian Putz
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I would not exactly call it bubble and I would not compare it to the video game crisis of 1984 - But I would call it goldrush and I would compare it to the goldrush in 1849. It even started with a similarity. A game called - minecraft! Ever since notch stroke this rich vein and started to mine "gold" with his game, thousands of devs try to do similar by going indie. With all the tools around it has never been easier to do so. But who is making the real big buck? In 1849 it wasn't the thousands of gold diggers that rushed to alaska - only very few of them got rich. The majority was lucky if they made it out alive and in one piece where as not a small amount of people never even made it to a claim, they died already along the trail.
It was the people that sold the supplies and the gold dealers that got rich - and they didn't even have to get their hands dirty. And in 2013? It's again the people that sell the supplies and the ones that sell the games. Companies like unity, epic, crytec that sell the engines and tools and companies like valve and apple that own the storefronts. Yet again, the dealers make money by literally doing nothing - Steam and the appstores are selfrunners, they make money by almost doing nothing. It's not the indies that get rich - most of them die along the road and dont even make it to the store. Of the ones that make it, very few become rich and famous - and even then they lose a third just to the "dealer".
Imho the market is almost fully saturated. Sometimes I feel there are more games out there than people that can play it. Seriously - if you start an indie studio now and ignore these facts - well, good luck. Most indies tend to suffer from survivorship bias. Dnt look at the studios that made it. You have to look at the thousands that died along the path to get a clear idea of what u will have to deal with. There might be still niches out there to fill in, but dnt expect that you will be the one that discovers them. Get real! That's just my two cents...

Amir Barak
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“People will kill you over time, and how they’ll kill you is with tiny, harmless phrases, like “be realistic”, Dylan Moran.

Florian Putz
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Be realistic does not mean don't do it.Be realistic is not a discouragement. It just says don't follow the crowd blindly and ignore the obvious. There are more chances out there than ever before but it has also become a real challenge to stick out of the crowd. That's just how it is.

Dane MacMahon
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Good article. The market is saturated in my opinion but the cream can definitely rise to the top. The tools, delivery systems and audience are there, you just have to make something worth attention.

Thomas Happ
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Kickstarter launched in April 2009.

I'd first heard of Kickstarter Fatigue in April 2012, when I made the first Axiom Verge trailer, and people said not to do a Kickstarter because of it.

I'm probably going to finally give in and do a Kickstarter in April 2014. People will then have been fatigued from Kickstarter for at least full 2 years, or 40% of its 5 year lifespan.

I'm doomed.

Daap Lok
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The independent developer opportunity is evergreen. We are always biased by the biggest trees in the forest. Especially in mobile the independent developer has unlimited opportunity. The users will ultimately help each other find the best apps wherever and however they may be found. Revenues may be concentrating but costs are falling fastest for independent developers with marketing patience. It is the impatience of investors that forces developers to ignore the obvious pathway that is the organic growth that is inevitable for games of quality. Our time compressing modern times does not have to compress our patience. It is the biggest trees that fall hardest. There is never a bubble on the human imagination or human ingenuity.

Judy Tyrer
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As long as Indies don't open new markets, we may well be in a "bubble". But there are huge untapped markets out there. I see far too few Indies going for them and far too many building yet another rendition of Zombie Post-Apocolypse. Game developers should be setting the next trend that will hit the market in 5 years, not trailing behind everyone else like a bunch of Linuses dragging our security blankets behind us.

On the other hand, I don't want to advocate TOO strongly because the more of you who keep making zombie games, the more of those untapped markets are there for me. I'll take them. You keep the zombies.

Matt Mirrorfish
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Just wanted to say thanks to all participating for a great conversation. I think the fact is that in any creative field many will play, few will win, irrespective of bubbles, mature markets etc. We all just have to keep telling we are the few and not the many.

As a musician I have seen the same thing happening in the music world where the barrier to entry is even lower and getting lower faster than in games. It doesn't mean that making a living is impossible, I do it, but you have to be more resourceful, creative and determined. And usually your income is not just from doing the fun part, like making stuff, it becomes about some teaching, some side gigs, some fun stuff, some residuals and you piece it all together.

At least games have somehow avoided the basically TOTAL piracy rates that music has seen, even if it's a similar problem. And if you think Steam is bad, look at what musicians get paid by Spotify. Yet still people like me, make a living as musicians.

Anyway, great thoughts. Don't get too discouraged guys. The process is it's own reward.

M.

Chris Parsons
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One thing that complicates data-gathering is that right now the definition of "Indie" is kind of a moving target. Is it just small shops with a few people? How about mid-sized studios who've been under publishers and now are back on their own, making use of new distribution channels?

However you choose to define it, it's pretty clear the minimal data available indicates a massively over-saturated market. And I have very little confidence that the best games will rise to the top. Some will, but it's like standing on stage at a giant rock concert, looking into the crowd and trying to see who has the coolest t-shirt. Doing something to stand out will be as important as making a good game.

I really liked Florian's analogy about the tool suppliers and the dealers, although I'll bet those people are working pretty hard on their end as well. Steam, for example, is incredibly successful but it's been around for ten years.

I agree with Judy about developers looking to set trends rather than follow them. I would add that they should also be on the lookout for whatever the next revenue model is. A few years ago Kickstarter didn't exist. It's clearly already showing some wear, but what new model will be next? Seeing that sooner than someone else will continue to be very important to a team's success.

SD Marlow
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*Eh* post but great comment section, lol. It's all of the above. The people that have found success in the past would not have done so well if they started today, which is really the bursting part. The beginners bubble being crushed under the weight of "trickle-down crapware." The issues of coverage and discovery are still the same, regardless of the number and quality of games being made. Game hype and the wobbly future of Kickstater sites may actually keep the polished gems from rising to the top while doing nothing to slow down the clone churn from Faceless Foreign Games, Inc.

Want to secure the future of the game industry... stop talking about iTunes having a million apps as a good thing. I'd love to see a version of Hot or Not that lets people "idle thru" the archive of games, voting some up and others down. Or maybe require that the first hundred or so copies of a new title are free during an "open review" period. If no one cares for or liked the game enough to even give it 1 star, then it isn't added to the marketplace.

Pedro Guida
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I was just about to write a long comment but then I read Daniel Cook's first post. I agree with him.

Phil Maxey
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Just make great games, everything else is just the wind.

Steven Christian
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I used to enjoy Kickstarter, but the amount of rubbish, poorly thought out, and just plain 'joke' projects is overwhelming.

Nowadays I wait for the media coverage, except these days there is less coverage of Kickstarter projects..

It's a lose/lose situation.


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