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A new perspective on the dark side of the 'race to the bottom'
A new perspective on the dark side of the 'race to the bottom'
August 18, 2014 | By Alex Wawro




"That’s how much we sell our games for. One dollar. They’re meant to be $10, but nobody buys them at $10."
- Indie developer Caspian Prince laments the drop in perceived value for digital games caused by phenomena like Steam sales and bundle deals.

One of the developers at Puppygames (Revenge of the Titans, Alien Flux) has published a vicious rant on his company blog that evinces some of the uncomfortable truths of the digital game market -- even as it eviscerates some of its participants.

Developers, take note: while some of Prince's rhetoric savages the industry, the experience he relates -- watching the value of Puppy Games' titles plummet in the wake of Steam's sale scheme and bundle dealerships like Humble Bundle -- is common.

"Once upon a time, back in the early 2000s or so, games would sell for about $20 or so. Some developers did really well at that price point – I mean really well. Most of us didn’t do that well, and made beer money, but we carried on making games anyway because that’s what we liked to do, even if nobody wanted them," writes Prince.

But then Steam rose to prominence, and according to Prince, "within 5 short years, the value of an independent game plummeted from about $20 to approximately $1, with very few exceptions. Steam is great! You can sell loads of games! But only if they’re less than $10."

And as the revenue from individual customers drops, argues Prince, so does the value of that customer in the eyes of the developer. Thus, developers are discouraged from providing post-release support for their games because the value of a repeat customer is close to nil.

Better to focus on making more games to feed the "black hole" of the various digital distribution platforms, says Prince, than to help troubleshoot the PCs of customers who probably paid a dollar for your game.

"No-one cares," writes Prince, addressing his most critical customers. "You can 'take your money elsewhere' and 'never buy another product from you again, EVER,' and the black hole will continue to treat you exactly as you deserve – with impassive, voracious, inexorable silence, and still ever-growing. Because you’re worthless."

Prince goes into much more (savage) detail in the full rant, which can be read over on the Puppygames blog.

He's not alone, either -- Castle Doctrine developer Jason Rohrer has written at length about the dangers rampant game sales pose to the industry, while Gamesbrief founder Nicholas Lovell recently suggested that Valve's decision to let developers set their own discounts on Steam would see the average price of Steam games race to the bottom.


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Comments


Kyle Redd
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It's understandable why Prince is upset. His studio is under financial pressure and may not survive much longer, and so he wants to lash out at those he feels are responsible. But there are numerous problems with his argument.

His point that is reproduced here - that Steam sales and Humble bundles have driven the expected price of independent games to $1 "with very few exceptions" - is obvious, provable horseshit.

Take a look at the current Steam top 100 bestseller list. Scroll all the way down. How many $1 games did you spot? I counted about 50 independently-published games and DLC. Of those, exactly one (the just-released Mountain) is selling for $1. There are a few others that are on sale for $5 or less. And all the rest are selling for their base, non-discounted launch price, spread out fairly evenly from $10 on the low end to $50 on the high end. So that means roughly 90% of indie games on Steam are "exceptions" to Prince's rule.

-----

Here's some more points he makes that warrant pushback:

"We’re especially careful in comments sections on the internet. Our own blog is mercilessly and ruthlessly moderated with a low-orbit ion cannon. We’re even more ruthless on the Steam community forums, because we’ve got even less control and they don’t even technically belong to us."

This is not a shred of truth to that statement. All developers of games sold on Steam have 100% authority and control over every single word that is uttered anywhere on their games' community page. They can delete any post they like, for any reason they like, with no justification needed whatsoever. They can also *permanently* ban any user from their community, for any reason. I received official confirmation from Steam support that Valve will never overturn any moderation decision by a developer in the Steam community, under any circumstances. So yes, those forums DO technically belong to the developers.

They can even hide negative reviews of their products so potential consumers can't read them (which several developers have actually done: http://tinyurl.com/nsx27m2). Can you imagine Amazon giving this power to product sellers on their site? There would be mass outrage. But for some reason this sort of behavior is acceptable for Steam.

-----

"Once upon a time, back in the early 2000s or so, games would sell for about $20 or so... When we got a customer we were able to treat them like royalty... We were fixing customers computers for them. It’s a pretty tedious affair. When the same problem turns up 20 times in a day (or even, during a sale, 200 times), and the answer is always the same, that’s the very definition of tedium. So we jokingly used to say that we sold you a game for a dollar and then $19 of support.

Then came the Humble Bundle and all its little imitators... Suddenly you’ve got a massive problem on your hands. You’ve sold 40,000 games! But you’ve only made enough money to survive full-time for two weeks because you’re selling them for 10 cents each. And several hundred new customers suddenly want their computers fixing for free."

Speaking of the community, this part completely ignores the benefits that come with all those new customers who've purchased your game "for pennies" (setting aside the fact that, although the minimum price for Humble bundles would amount to pennies per copy, the average price paid per customer is always much higher).

Technical support comes not just from you anymore, as it did back in the early 2000s. Now tech support comes from you, AND from your customers, many of whom only purchased your game because it was dirt cheap. They perform this service for you free of charge, because they like your game and want others to enjoy it just as much as they have.

And let's not forget that in this terrible new world, your customers are also play-testing your game (in early access and beyond) for free. And they are developing new content for your game for free. And they are writing reviews, making gameplay videos, promoting your game to their friends, and creating guides and FAQs for your game. All for free. What an awful burden all these customers have become!

-----

And then there is the overall thrust of his rant. He clearly longs for the good old days, before Steam and before Humble. No more massive discounts. No more worthless customers. What would that world look like?

A whole mess of developers wouldn't exist anymore, for starters (like Introversion: http://tinyurl.com/p2kkx7x). And since we know from the public information Valve provides that Steam's annual sale events perennially result in massive increases to their user base, it's also safe to assume that many other developers wouldn't even have gotten started in the first place.

Does anyone think that someone like Tom Francis would've been able to quit his job and develop games full-time if he had released Gunpoint to a service that had only 5 to 10 million active users, instead of the 75 million or so it does today? More to the point, does anyone think Gunpoint would've ever been created in the first place?

How about a game like Spintires? Or Goat Simulator? Or Space Engineers? Does anyone believe they'd be seeing these games on the shelves of their local Best Buy in a world in which Steam didn't grow into the force that it is?

Robert Gill
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Kyle, spot on my friend.

Joaquin Bello
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This is a big problem in the current market. Steam should limit discount on there products to protect users too. I bought battle block theater made by the behemoth at launch at full price, the next month at the summer sale, they drop the price 90% on a bundle with castle crasher for 48h. I love Puppygames, but I must admit I pay $10 for all there games on a humble bundle.

Steam should limit there discounts based on the launch date, 6 month 20% to 30% one year up to 60% two years 80% and dont allow more than 80% discount.

Tim Knauf
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I'm confused: why would users need 'protection' from discounts? Were you, at the time, happy to buy Battle Block Theater at the price you did? If so, then enjoy the fun you got, and can still get, from it. Surely a discount that *other* people got doesn't affect you directly in any way? It certainly doesn't make the game already installed on your computer any less of a good game.

Joaquin Bello
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Don't you think I took a bad decision at buying it at full price? Don't I have the right to feel upset for taking a bad decision? What Im going to do next time, buy at full price or wait for a 90% 75% sale?

Marketing is about feelings it doesn't matter if they are logical or not, that's why you assume I should fell 'happy' for buying something. My perceive value of the product was reduce, why do you think nintendo gave free software to all early adopters after the price drop.

Kyle Redd
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@Joaquin

When you purchased BattleBlock Theater at full price, did you think that it would never go on sale? Of course not. Pretty much every game that is sold on Steam gets a discount and/or a price drop at some point. So why did you buy the game for full price? Why not wait for the inevitable sale?

Was it because you were willing to pay the price set for the game, in exchange for being able to play the game *now*, instead of having to wait 'x' number of days/weeks/months for an unknown discount?

Buying games is not an investment. You're making a purchase because you believe the enjoyment you will get from the product is worth the price the sellers are asking. If you didn't think BattleBlock Theater was worth $15, you shouldn't have paid $15 for it.

Joaquin Bello
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You can't go 90% sale on a month old game, you just can't. I think the Behemoth are a relevant player in our industry, and when they drop the price of a brand new game near to $1, they are giving the users the idea that there game is overprice. Not only there game all indie games, because there games are among the top indie games. You should always work on rising the perceive value of a product.

With an intangible product sales can be an easy way to promote a product, but at the same time they can be dangerous on the long run.

James Coote
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The price of tools has hit rock bottom, so anyone can make a game, and digital distribution now means if you are a game creator, you're competing with the best game developers in the world. Most gamedevs (myself included) are merely good or average, and as a result are getting left in the dust. The race to the bottom is just a symptom of that.

This is happening across industries. It's a long read, but I highly recommend this article on the literary business, as it has huge parallels to exactly the debate we're having here with games: http://www.vqronline.org/articles/what-business-literature

There is an argument within economics that says we've got so good at replacing workers with automation/robots, there's now got a glut of workers that we've not really worked out how to use. The example often given is of the hollowing out of America's middle class manufacturing base. What has replaced it is IT / Tech industries. But they don't require anything like the numbers of workers as an equivalent market-cap company in manufacturing.

I think we're seeing as a result, a lot of middle class skilled workers going into video games, which in turn is creating an excess of game developers. Equals too many games, and so supply and demand rules take their course.

Moreover, in other industries with physical products, when a company fails to sell its goods, it runs out of working capital, can't replenish its stocks, and so folds, exiting the market and freeing it up to a certain extent, for those companies who are that bit leaner.

In games and apps, that doesn't happen. The working capital requirements are tiny (website hosting, github subscription maybe?) so developers can continue to pour time and money into the aforementioned "black holes", so long as they have enough money coming in from elsewhere to actually feed themselves. Worse still, the visibility problem means often, consumers are not being connected with the best games (for them). Especially on mobile app stores.

I.e. market failure.

I've not read the full rant, but when you're battling against that, it's hard not to get angry from time to time

Wendelin Reich
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These are excellent points James. Many, many psychological studies have shown that people (on average) vastly overestimate their own skills and the 'value' (already an elusive concept) of their creations. So whats missing in rants like the one discussed here is that most games just aren't worth more - at least to the average customer - than the 1-5 bucks people end up paying on Steam or with bundles.

A huge downside of indie games of which I'm becoming more and more concious is that it is very hard to be innovative when you're a small team on a shoestring buget. Technical innovation is almost out of the question, and high-quality artistic innovation is a very tricky beast. It requires not only talent but also courage, because the market may not value what you value and punish you for it. I'm just finding fewer and fewer indie games that genuinely excite me these days...

James Coote
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Absolutely. Most indies are subconsciously being creatively conservative, because they have one (or both!) eyes on the commercial side.

I even find it hard to do truly innovative stuff, despite being both aware of this, and having a stable financial situation.

Long term, it feels like we should encourage most indies to just have fun experimenting and making crazy/off-the-wall stuff, and completely forget about the commercial side.

However, that rather leaves unanswered how developers are supposed to fund themselves (or perhaps it remains as it is now, with people scraping by however they can). Plus how not to flood the commercial distribution channels with experiments / art.

Babak Kaveh
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"Now you’re worth $1 to us. If you buy every one of our games, you’re worth $5. After Valve and the tax man and the bank take their cuts, you’re not even worth half a cup of coffee. "....

I think our Caspian Prince needs a shift in perspective. It is true that extraordinary sales are driving down income per user, but sales on massive sites like Steam, GOG, etc. also create immense visibility. So even though a single customer is now worth very little, since the number of customers is large you are still getting an OK return. Try selling a game only on your own website with no advertising on major portals, and you will see that the calculations pan out in favor of Steam sales more often than not.

So, what if we have to spend 10 minutes helping a single user, are we wasting our money and making a total loss? Absolutely not. If e.g. 1% of all customers need help and we provide it, the cost is considered operational cost, and if allocated properly, will be covered by your total revenue. When a supermarket chain sets aside a 5% budget for loss through theft, does this mean that the small number of customers who may steal, are diminishing the worth of all customers? Absolutely not! It's a reality of business, and you deal with it. You accept loss of profit from those customers, because you know that you cannot make the shopping experience a security hell for the 99% honest customers. Customer support seen in isolation always operates at a loss, but the fact that it is there drives consumer confidence, and helps with overall sales. If at the end of the day, you have spent more on customer support than all of your income you are either crazy, or a saint, and in real life/business you should be neither - moderation and budgeting is key.

Now, to address the point about "There are truths you may not tell, in the world of public relations"... all out honesty towards an uncontrolled, unlimited, eternal audience is unwarranted IMO. The world (i.e. The Internet) does not need to know what you think of them at a particular moment, and they don't need that momentary opinion immortalized either. The reason many of us don't blabber out all kinds of "truths" is because we are aware that what may be true for some of our customers, is not true when it comes to others. Also, what is true today, e.g. "you are worth half a cup of coffee", might not be true tomorrow. And what is true for our company, again, does not apply to other companies - a single customer might be worth thousands to Blizzard. If you don't have a universal truth, don't share it publicly, or at least do the extra work and qualify it.

Kevin Fishburne
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I think the eventual solution to the incomprehensibly vast number of games is better curation methods, whether algorithmic or social. You have people making games for fun, people making them for profit, and every combination of skill and invested time spread between the two. The skilled should at least make enough money to survive, whether or not it's their intention, while the rest should either make games as a hobby or find another line of work. I think the price point of games is secondary to discoverability. There's a big enough market with big enough wallets to support small studios that make good games, but without proper curation, their work, at any price point, may never earn enough to keep them alive. Then again, McDonalds does sell a lot of "hamburgers" and "chicken nuggets", so maybe a big gold star saying "THIS IS A GREAT GAME!" won't in the end count for much.

Daniel Pang
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I - I'm sorry. Just -christ, he would have lost his shit about a decade ago if he was a musician. You didn't even matter enough for the price of a cup of coffee.

In a economic situation where supply drastically outweighs demand, then there is going to be a race to the bottom. This is true of everything that has ever been bought or sold. Let's not mince words - you're selling toys! Everyone who is making games is selling toys. You can doll it up however you want but you're selling distractions. The world as it is today is chock-a-fucking-block full of distractions! And that was before this whole movement where AAA game studios decided to start competing in the f2p space, or smartphones became the default platform where the masses went to in order to get their distractions. You can cry to high heaven about discoverability or curation all you want.

It sounds coldblooded but this is true of every industry!

At the same time, the cream still rises to the top. Rust exists. DayZ exists. Divinity: Original Sin exists. Those are expensive products and they're being sold at comparatively high prices, even on the cutthroat service of Steam filled with notoriously cheap users.

Also, as it is in every industry, absolutely nobody knows what will be a success. Nobody could have guessed that Flappy Bird would turn a poor Asian guy into the most cloned iOS developer on the planet. Everyone is just as clueless as everyone else.

In this situation, as volatile as it is, he's going to damn the userbase?

Are you kidding?

We care about games so much that we're actually willing to pay money for GAMES THAT DON'T EXIST YET and waste our time SCREAMING out into the void whenever a creative decision is made public that we don't agree with. That kind of passion is something that can't be bought or sold, and watching developers piss it all away either through horrifically mismanaged PR or flat out fucking lying to their audience is a joke. Ian Jones-Quartey once wrote something that has stuck with me for a full decade. "You can tell I'm a fan because I hate it more than anyone else." You don't get that kind of hate from people who don't care about your product. We want it to succeed. We want it to be good so we can play it and talk about how awesome it is. We WANT YOU TO MAKE MONEY. TAKE OUR MONEY. TAKE ALL OF IT.

"They're meant to be $10, but nobody buys them at $10."

Well who decided it was meant to be $10? You? Making projections on a budget sheet during development?

The market - THE MARKET - not the industry, not the fucking developers, even - decide how much your game is worth. If 90% of your sales come from a steam sale where your product was slashed to five bucks, then that's how much they think your product is worth. The market drives demand. It's why certain games hold their value so well while others languish, utterly forgotten, at the bottom of the well with occasional sales spikes on every discount. Why do you think Blizzard still gets away with charging as much as they do for Starcraft 2? The market doesn't care about you. It doesn't care about me either. It just cares about whether or not you're offering them something they want.

To quote Jim Sterling:
"Tomb Raider should sell six million copies, we want it to sell six million copies therefore it's going to - That's how a ten year old thinks. They're allowed to, legally, because of some loophole that says they can because they're children. Publishers can't afford that freedom... It's not Sesame Street."

"They're meant to be $10, but nobody buys them at $10..." This is the behavior of a ten year old. It couldn't be possible that Prince is offering something that the market doesn't want, right? Because there's something special about Puppydog which makes all their products so much better than the competition?

Whining about how you can't compete with the AAA studios is utterly ridiculous. In case you forget, Minecraft was put together by pretty much one guy, and it was missing a lot of the elements we attribute to AAA games, like the vaunted graphical fidelity and killer production values, and spread thanks to good community relations, kept promises, and word-of-mouth.

Michael Hartman
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"The market - THE MARKET - not the industry, not the fucking developers, even - decide how much your game is worth. "

The market is going to be 100% F2P Games with ads soon, and a huge portion of them with celebrity tie-ins like the Kim Kardashian game.

When the only way to get noticed is to have a reality sex tape star attached, and the only way to make money is F2P + ads, how great will the games be then?

There's your market.

John Paduch
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That's the MOBILE market, not the Steam/GOG PC market.

You're in the wrong thread.

Michael Hartman
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Hahahahaha.

It is funny that you think the PC market is going to be any different.

What you see in mobile/iTunes is a preview of what you are going to see on PC/Steam unless something changes... FAST.

Daniel Pang
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Who devalued the games on the market?

It sure as fuck wasn't the consumers.

One of the cardinal rules of selling anything is that you never, ever, under any circumstances, insult your customers. This is the death knell for any industry and any business.

XCOM: Enemy Unknown was being sold at $20. On iOS.
It is a success on that platform, even before they cut the price to $10 and did the android port.

All whining about ecosystem and discoverability aside, how about you make something that the market thinks is worth $20 on a phone?

Mike Jenkins
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That's a fun rant and I loved the first half, but the second half (the focus of this Gamasutra article/link) is silly. Steam isn't the cause of the drop in value of games. The incredible amount of competition is the cause of that. I think Jeff Vogel has a far more intelligent take on this subject here:
http://jeff-vogel.blogspot.de/2014/05/the-indie-bubble-is-popping
.html

Ivan Moreira
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I concur with Mr. Jenkins (Leroy?) above. Reason why puppygames dont sell higher? Because the market shows me they are not worth it.

I have all their games. I like them, really do. But only bought one at full price, the others came from a steam bundle during the summer sale. Still, I played every one of his games and liked it. But, if you look right now to my wishlist on steam (http://steamcommunity.com/profiles/76561198010641857/) , there are 50 or so games for 10$ or less. And I have around 70 games installed waiting to be played (both AAA and indie games). Thats what an indie has to fight against right now. Huge backlogs from average players and a immense and ridiculous amount of games being released every day.

Its not gamers that are worthless. Its games. Games, saved from a few bunch here and there (and, yes, 100 games IS a few bunch right now) are worth next to nothing for the average player. Theres absolutely no reason for me to buy any other game this year. I have no real expectation to finish my backlog even if I quit my job and my family till the next big steam sale. Yet, I buy around 4 to 10 every month, when they get 60% to 90% sale. Just because I want the opportunity to play them someday.

Thats the reallity right now. And I think its best the way it is now, then how it was before. 7 years ago I would have never had the chance to buy his games. Simply because it wouldnt sell in Brasil. Now, I can.
You know what you guys are still doing wrong? Ignoring a simple rule: seek the market that are not crowded yet. Brazil, India, Russia (getting crowded), China...these are huge markets, being noticed just a few years ago from AAA tittles and not really doing a great job. Yet, you have huge gamers here, that love to buy and play games. People that go to an extent to have pieces of hardware imported from another country just to play these distractions. And, yet, we are still hugelly overlooked.

So...come here. Market your game to other markets. Be a pioneer. Maybe you will see a bigger sell when you try to yell to a market that are not, yet, abundant in people yelling. Or not. And keep banging your head in to that USA wall.

Will Hendrickson
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Guys, the platform holders *want* a race to the bottom. It gives them control over the supposedly "open" content market, by taking control away from devs.

Michael Hartman
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Bingo.

They control the eyeballs, and they make the developers fight each other in a giant cage match for the right to be seen by those eyeballs.

There's a reason why the discoverability tools are garbage and the only way given to compete is on price. That's not an accident.

Tyler Shogren
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“We can’t direct the wind, but we can adjust the sails. For maximum happiness, peace, and contentment, may we choose a positive attitude.”

― Thomas S. Monson

Robert Gill
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First and foremost: Gamasutra, why am I getting the first time poster? Been on here for awhile now :)

In regards to the article, here's my two cents (sorry it's not twenty bucks worth!):

If you're customer and fan base isn't worth the dollar they spent to you, then you definitely don't deserve the twenty they may or may not spend.

Steam isn't the problem. Games such as Day Z, Contagion, Goat Simulator, and others sell fine without being constantly discounted. I think the issue is creating a game that is fairly unique, and getting in touch with your fan base and actually be a fan of your own game. Stay constantly in the loop of what the community is up to.

The author of the article seems very out of touch to me, and may want to reconsider why he is making games. I always bring up the Contagion team: Those guys are constantly playing with the community, allowing community people to add direct insight and ideas to the game. The developers and fanbase has a nice synergy going on that can't be bought for twenty dollars.

As Tyler Shogren above stated, it really is about the attitude.

R G
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EDIT: Gamasutra team, figured out why :) thanks!


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