overwhelming odds why you should run away screaming from the games industry
TRANSCRIPT
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Overwhelming Odds
Overwhelming Odds
Why you should run away screaming from the games industry
Why you should run away screaming from the games industry
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What are the proven options for success?
• Traditional Retail-Focused Publisher Backed Development
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What are the proven options for success?
• Traditional Retail-Focused Publisher Backed Development
• Free-to-Play Web and Mobile Development
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What are the proven options for success?
• Traditional Retail-Focused Publisher Backed Development
• Free-to-Play Web and Mobile Development
• Independent Small Team Digital Download Focused Development
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Traditional Development
• Teams of 50-200 developers
• Financially supported by a major publicly traded company
• Large projected costs (~$100 million) 2-3 year projects with a large percentage devoted to marketing
• Console at retail is the priority
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The cost of large teams
• Estimated total cost per head is roughly$10,000 per month.
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The cost of large teams
• Estimated total cost per head is roughly$10,000 per month.
• A 100 person studio would cost roughly $1 million per month to operate.
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The cost of large teams
• Estimated total cost per head is roughly$10,000 per month.
• A 100 person studio would cost roughly $1 million per month to operate.
• Getting your money’s worth every month from every employee isn’t easy.
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The perils of publishers
• The good: they generally have money. Lots of money.
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The perils of publishers
• The good: they generally have money. Lots of money.
• The bad: they generally want to use that money to make more money in the safest way possible.
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The perils of publishers
• The good: they generally have money. Lots of money.
• The bad: they generally want to use that money to make more money in the safest way possible.
• The really bad: their share-holders and Wall Street doesn’t have much tolerance for any underperformance at all.
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Large Projected Costs
• A project that costs a lot of money is going to need to make a lot of money.
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Large Projected Costs
• A project that costs a lot of money is going to need to make a lot of money.
• That also means that a lot of money is going to need to be spent that doesn’t directly support development.
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Large Projected Costs
• A project that costs a lot of money is going to need to make a lot of money.
• That also means that a lot of money is going to need to be spent that doesn’t directly support development.
• New is very dangerous and late is even more dangerous.
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Console at Retail
• The only reliably proven way to make that money back is to sell millions of copies at $60 per copy.
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Console at Retail
• The only reliably proven way to make that money back is to sell millions of copies at $60 per copy.
• The only way to charge that premium is to focus on console gamers.
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Console at Retail
• The only reliably proven way to make that money back is to sell millions of copies at $60 per copy.
• The only way to charge that premium is to focus on console gamers.
• The only way to reach them is through retail.
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The Value Problem
• People who like games have more options than ever.
• Many of those options cost less than a cup of coffee.
• It becomes increasingly difficult to justify a $60 purchase price for a console game.
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Ways Retailers Combat This Value Problem
• Focus on sequels because they have large fan-bases who already appreciate the value.
• Offer to buy back games and then resell them at a lower cost.
• Focus on selling the idea that $60 gets you hundreds of hours of entertainment.
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More Money More Problems
• How many sequels will people actually buy? How long can we keep increasing the value with each iteration?
• How can developers continue to operate if the used games business continues to grow?
• What does it do to the games when we have to focus on price per hour?
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The Retail Future is Bleak
• Stock prices of retailers are dropping fast.
• This next console generation is projected to have 1/3 the lifetime sales of the previous generation.
• Used games have accelerated the downfall.
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What Does All That Mean For Developers?
• Your job will almost never be secure and getting another has challenges.
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What Does All That Mean For Developers?
• Your job will almost never be secure and getting another has challenges.
• You will almost certainly never see a cent of profit.
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What Does All That Mean For Developers?
• Your job will almost never be secure and getting another has challenges.
• You will almost certainly never see a cent of profit.
• Working conditions will never be great.
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What Does All That Mean For Developers?
• Your job will almost never be secure and getting another has challenges.
• You will almost certainly never see a cent of profit.
• Working conditions will never be great.
• You will be required to specialize.
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Job Security
• Layoffs, especially for younger staff, are almost a requirement given the realities of the project life-cycle.
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Job Security
• Layoffs, especially for younger staff, are almost a requirement given the realities of the project life-cycle.
• As more developers are shuttered, finding a job will likely require moving.
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Job Security
• Layoffs, especially for younger staff, are almost a requirement given the realities of the project life-cycle.
• As more developers are shuttered, finding a job will likely require moving.
• Specialization is the best way to combat this. What happens when what you’ve specialized in no longer matters?
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No Money For You
• Back in the day developers bought Ferraris. Those days are long gone.
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No Money For You
• Back in the day developers bought Ferraris. Those days are long gone.
• Typical bonuses on a super successful project will be 5 figures max.
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No Money For You
• Back in the day developers bought Ferraris. Those days are long gone.
• Typical bonuses on a super successful project will be 5 figures max.
• You will not escape this cycle from within.
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Endless Crunch
• Nobody likes crunch. Nobody thinks crunch is a good idea. Everyone crunches.
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Endless Crunch
• Nobody likes crunch. Nobody thinks crunch is a good idea. Everyone crunches.
• In the beginning it is usually a scoping problem.
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Endless Crunch
• Nobody likes crunch. Nobody thinks crunch is a good idea. Everyone crunches.
• In the beginning it is usually a scoping problem.
• In the end it is all about marketing spends.
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Any Bright Sides?
• There are a few franchises that will be around for a long time.
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Any Bright Sides?
• There are a few franchises that will be around for a long time.
• You could contribute to something that inspired you to join the industry in the first place.
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Any Bright Sides?
• There are a few franchises that will be around for a long time.
• You could contribute to something that inspired you to join the industry in the first place.
• It is fun to have a sugar daddy!
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More Information
• Ben Cousins
• http://www.slideshare.net/bcousins/when-the-consoles-die-what-comes-next
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Free To Play Web and Mobile Games
• Relatively small teams of 5-50 developers.
• Often self-funded but these days more and more venture capital is involved.
• Development costs range from $200,000 to ~$4 million and typically last 18 months.
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The Future of Gaming!
• Well... maybe...
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The Good News
• There are several recent examples of small teams creating massively profitable games.
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The Good News
• There are several recent examples of small teams creating massively profitable games.
• Smaller teams mean you can and should generalize.
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The Good News
• There are several recent examples of small teams creating massively profitable games.
• Smaller teams mean you can and should generalize.
• Smaller teams and less outside investment means that you personally can make a lot of money.
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The Immediate Challenges
• The truth is that nobody really understands the App Store.
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The Immediate Challenges
• The truth is that nobody really understands the App Store.
• There are a lot of very wealthy people out there who want to make the next Puzzles & Dragons or Candy Crush.
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The Immediate Challenges
• The truth is that nobody really understands the App Store.
• There are a lot of very wealthy people out there who want to make the next Puzzles & Dragons or Candy Crush.
• There are probably at least 100 teams out there working on clones of each successful game right now.
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What Does That Mean?
• Similar games must differentiate in order to win an audience.
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What Does That Mean?
• Similar games must differentiate in order to win an audience.
• Traditionally this means production values will need to increase.
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What Does That Mean?
• Similar games must differentiate in order to win an audience.
• Traditionally this means production values will need to increase.
• That means costs will need to increase.
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What Does That Mean?
• Similar games must differentiate in order to win an audience.
• Traditionally this means production values will need to increase.
• That means costs will need to increase.
• That means self-funding gets harder.
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Venture Capital and New Publishing
• There is money available!
• The publisher’s role is changing.
• There are obviously strings attached.
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The Zynga Legacy
• Investors now take gaming seriously.
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The Zynga Legacy
• Investors now take gaming seriously.
• So much money is being generated and so little is really understood about why.
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The Zynga Legacy
• Investors now take gaming seriously.
• So much money is being generated and so little is really understood about why.
• The new requirements: multiplayer and free to play.
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Those Strings I Mentioned
• You are not creating a product. You are creating a service.
• You are never really done.
• The consequences of the free to play model run very very deep.
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Software As A Service
• You no longer go gold. You soft launch.
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Software As A Service
• You no longer go gold. You soft launch.
• Analytics will try to sit at the head of your table.
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Software As A Service
• You no longer go gold. You soft launch.
• Analytics will try to sit at the head of your table.
• You will need to continue development until the financial investment no longer makes sense.
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What Do You Mean We’re Not Done Yet?
• To create something viable you must think in terms of loops rather than arcs.
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What Do You Mean We’re Not Done Yet?
• To create something viable you must think in terms of loops rather than arcs.
• Your content pipeline becomes critical. You must consider if you can produce quickly enough to keep pace with demand.
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It Gets Worse
• Here’s the real kicker: You are going to need millions and millions of active players before you have any shot at profitability.
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Let’s Break That Down
• So your game cost $1 million up front.
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Let’s Break That Down
• So your game cost $1 million up front.
• Say you have an incredibly generous conversion rate of 10% and ARPPU of $10.
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Let’s Break That Down
• So your game cost $1 million up front.
• Say you have an incredibly generous conversion rate of 10% and ARPPU of $10.
• To make back your initial investment you’ll need at least 1 million players.
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It is all about ROI
• Just making back your money isn’t acceptable in the investment world.
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It is all about ROI
• Just making back your money isn’t acceptable in the investment world.
• Investors are looking for 7-10x.
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It is all about ROI
• Just making back your money isn’t acceptable in the investment world.
• Investors are looking for 7-10x.
• So your 1 million players just turned into 10 million players and that is before your cut.
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Think about 10 Million Players For a Second
• Very few traditional retail games have ever had 10 million sales.
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Think about 10 Million Players For a Second
• Very few traditional retail games have ever had 10 million sales.
• This is mass market on a new scale for this industry.
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Think about 10 Million Players For a Second
• Very few traditional retail games have ever had 10 million sales.
• This is mass market on a new scale for this industry.
• Mass market has a lot of consequences to your game design.
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The Consequences of Mass Market
• You can’t count on much of an existing game literacy.
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The Consequences of Mass Market
• You can’t count on much of an existing game literacy.
• Real challenge becomes difficult to incorporate.
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The Consequences of Mass Market
• You can’t count on much of an existing game literacy.
• Real challenge becomes difficult to incorporate.
• Thematically you’re going to need to be A LOT more universally appealing.
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It Gets Worse!
• This game is free to try so players have zero vested interest to stick with it.
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It Gets Worse!
• This game is free to try so players have zero vested interest to stick with it.
• This means that you literally hemorrhage players by the second.
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It Gets Worse!
• This game is free to try so players have zero vested interest to stick with it.
• This means that you literally hemorrhage players by the second.
• If you can’t get at least 20% back the next day then the math just doesn’t work.
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It Gets Even More Worse!
• Of the players who remain with the game long enough to get it. Some large number of them will NEVER spend a dime.
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It Gets Even More Worse!
• Of the players who remain with the game long enough to get it. Some large number of them will NEVER spend a dime.
• That means you need a lot of ways to spend money and they need to be presented frequently.
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Oh So Much Worse!
• The scale of what you are building means that you’re going to still need to try to get some value out of those non-paying players.
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Oh So Much Worse!
• The scale of what you are building means that you’re going to still need to try to get some value out of those non-paying players.
• If you aren’t sure what the product is then you are the product.
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What Does All This Mean For Developers
• The great news is that you can get truly paid. Maybe.
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What Does All This Mean For Developers
• The great news is that you can get truly paid. Maybe.
• The games you make can’t look like the ones you played growing up.
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What Does All This Mean For Developers
• The great news is that you can get truly paid. Maybe.
• The games you make can’t look like the ones you played growing up.
• You will need to target the lowest common denominator and do things that can and should make you feel icky.
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For More Information
• Jonathan Blow
• http://www.youtube.com/watch?v=AxFzf6yIfcc
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Indie Development
• Teams of 1-5 developers.
• Self-funded and/or crowd funded.
• Projected costs of less than $200k and often times a lot less.
• Development cycles of 1 month to five years.
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The Good News
• This is probably the only way you will ever get to make your dream game.
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The Good News
• This is probably the only way you will ever get to make your dream game.
• There is a very small chance that you can generate a relatively large amount of profit.
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The Good News
• This is probably the only way you will ever get to make your dream game.
• There is a very small chance that you can generate a relatively large amount of profit.
• This is one of the only viable ways that you can become Internet famous if you are into that sort of thing.
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The Immediate Challenges
• You will likely be poor. Very poor especially considering the skills required to actually pull this off.
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The Immediate Challenges
• You will likely be poor. Very poor especially considering the skills required to actually pull this off.
• You will need to do literally everything yourself.
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The Immediate Challenges
• You will likely be poor. Very poor especially considering the skills required to actually pull this off.
• You will need to do literally everything yourself.
• I honestly have no idea how people stick it out long enough to learn everything that is required. Seriously.
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More Good News
• Low costs means more chance at profitability.
![Page 93: Overwhelming Odds Why you should run away screaming from the games industry](https://reader036.vdocuments.site/reader036/viewer/2022062517/56649ead5503460f94bb38f6/html5/thumbnails/93.jpg)
More Good News
• Low costs means more chance at profitability.
• Creativity and risk are the primary differentiators.
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More Good News
• Low costs means more chance at profitability.
• Creativity and risk are the primary differentiators.
• Creative solutions to overcome constraints becomes your bread and butter.
![Page 95: Overwhelming Odds Why you should run away screaming from the games industry](https://reader036.vdocuments.site/reader036/viewer/2022062517/56649ead5503460f94bb38f6/html5/thumbnails/95.jpg)
But Wait...
• This all sounds pretty hard but it also sounds really fulfilling!
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But Wait...
• This all sounds pretty hard but it also sounds really fulfilling!
• Says literally armies of game developers all across the globe.
![Page 97: Overwhelming Odds Why you should run away screaming from the games industry](https://reader036.vdocuments.site/reader036/viewer/2022062517/56649ead5503460f94bb38f6/html5/thumbnails/97.jpg)
But Wait...
• This all sounds pretty hard but it also sounds really fulfilling!
• Says literally armies of game developers all across the globe.
• Including all of those industry vets who know how to do this already.
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Always Hustling
• This means that visibility is what your world becomes about to some extent.
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Always Hustling
• This means that visibility is what your world becomes about to some extent.
• On the bright side the math is still good so you only need to get 100,000 sales or so at $10 a pop to be really profitable.
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Always Hustling
• This means that visibility is what your world becomes about to some extent.
• On the bright side the math is still good so you only need to get 100,000 sales or so at $10 a pop to be really profitable.
• It is a lot harder than you think to get 100,000 sales without a marketing budget.
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This Might Just Be High school Again
• You are going to need friends and allies.
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This Might Just Be High school Again
• You are going to need friends and allies.
• You are going to need a clear community that you are trying to appeal to.
![Page 103: Overwhelming Odds Why you should run away screaming from the games industry](https://reader036.vdocuments.site/reader036/viewer/2022062517/56649ead5503460f94bb38f6/html5/thumbnails/103.jpg)
This Might Just Be High school Again
• You are going to need friends and allies.
• You are going to need a clear community that you are trying to appeal to.
• You are going to need to understand exactly what makes you so special.
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More Thoughts
• Jeff Vogel
• http://jeff-vogel.blogspot.com/2013/11/marketing-dumb-luck-and-popping-of.html
• Nathan Vella
• http://www.youtube.com/watch?v=CQfCXEvyoqw
![Page 105: Overwhelming Odds Why you should run away screaming from the games industry](https://reader036.vdocuments.site/reader036/viewer/2022062517/56649ead5503460f94bb38f6/html5/thumbnails/105.jpg)
What Can You Do
• Know what is really important to you in life.
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What Can You Do
• Know what is really important to you in life.
• Prepare for the worst while expecting the best.
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What Can You Do
• Know what is really important to you in life.
• Prepare for the worst while expecting the best.
• Appreciate that the only thing that is constant is change and embrace that.