The Coming Indie Bust
The Coming Indie Bust
In a New York Times op-ed piece today, Irreplaceable Exuberance, Henry Blogdet talks about the typical industry life-cycle:
… [All industries progress through] four phases of development: boom, bust, mature growth and decay.
During the boom phase, the success of a few visionary companies like Netscape inspires frantic experimentation and speculation, as entrepreneurs and investors try to cash in on the trend. Early entrants usually enjoy temporary success, but the number of competitors soon comes to exceed the initial opportunity, leading to a collapse. After the shakeout, a handful of survivors enjoy an extended period of growth and profitability. Finally, another technology shift leads to an era of decline, and giants often find themselves reduced to the stature of today’s buggy-whip makers – or worse. (emphasis added)
Actually, I’m predicting more of a casual game bust, but since so many indies have hitched their wagon to the casual game gravy train, when the casual game market peaks and passes, it’s going to take a lot of indies with it.
Less than 5 years ago, most game developers wouldn’t be caught dead playing a casual game, much less designing one. That all changed when the mass market logged into the Internet and started playing Hearts online. Add to that new companies like PopCap making millions, and game developers decided that casual games weren’t so bad after all.
In the last 3 years, the phrase “game portal” was added to the lexicon. When I started writing The Indie Game Development Survival Guide in late 2002, Real was the only prominent example of such a beast, and even they were more interested in “real games”, none of this silly “casual” stuff.
My, how things have changed.
It’s arguable that indie developers created the casual games market. Though retail publishers have created casual games throughout the years, they never pushed them. The so-called “core market” for video games was seen as young males and young males didn’t want Freecell, they wanted photorealistic gore, breasts, and BFG’s. Indies, with their limited resources, though, latched onto casual games as something they could do. And they discovered that people would pay them for their little games. Lots of people. Thus began the boom.
During the Internet Boom people wanted to believe that the Internet Boom had redefined business and that the old rules didn’t apply. I think many indies delude themselves similarly.
Ever since I saw EA buy into the casual game space, and after I attended the casual game summit at GDC 2004, I’ve been convinced that’s it time for indies to do what they do best: Find a new market. Since that time, the cost of building a casual game has ballooned. The cost of finding a market for that game has exploded. The demands of game portals have become nearly identical to those of the retail publishers. And the slice of the pie allocated to the game developer has become smaller and smaller as everyone in the value chain insists on a bigger and bigger piece.
I think that indies will always be able to create smaller, more intense, more personally significant, games than their larger-staffed, better-funded brethren. I think a single, cohesive vision will always be more powerful than anything built by a committee. I think the tools for making games will only get more powerful and easier to use. But I also think that indies had better get used to the idea that they will create markets that they will eventually be too small to operate in profitably.
There’s more to indie game development than casual games. That niche is no longer a niche. It’s a full-sized market and consolidation is well on its way.
Boom boom boom. The bust is coming.
-David
I think that you are right about the casual games market, although I don’t think the shakedown will occur for a while.
However, electronic distribution is still going to eventually spread to be the dominant distribution method. This opens up the market more to indies, so I think there will be a long term boom in indie games across all genres.
If you check out Brian Hook’s Pyrogon postmortem, ther’s some indication that the bust has already started – at least among developers. In the publisher / portal space, the market seems to still be growing at a rapid enough pace to allow some serious elbowing for market share dominance. But the developers are once again occupying the low place in the totem compared to the guys who OWN THE CUSTOMER LIST. And they are carefully filing off anything resembling franchisable (is that a word?) IP or developer-related branding in favor of generic, replaceable games to make certain the developers are commoditized.
One of the biggest mistakes new indies make is assuming that now that the boom is coming to an end, it’s “impossible” to do it again. No, you can’t exactly copy what Steve Pavlina or PopCap did and wait for the money to come rolling in. But the opportunity is still there.
Do you see the entire indie market affected by this bust or are you expecting that only the casual games market will bust?
I think there is a big difference between the two markets. It seems to me that the casual games bust may be looming, but for the niche between “A” titles and casual games, like SpiderWeb Software’s RPGs for example it may be business as usual.
I’m not sure their market really changed during this huge casual games growth. I acutally believe the growth of the overall games market actually helps this niche over time.
[...] [Update] Boy this article really is stirring up the pot. Joe Indie has written about The Coming Indie Bust. [...]
>Dustin Sacks Says:
>I think that you are right about the casual
>games market, although I don’t think the
>shakedown will occur for a while.
I can’t help but think that’s wishful thinking.
Though the cost of building casual is still very low compared to a typical retail title, it’s exceeding the top of the feasible range available to most self-funded indies. But it’s chickenfeed for an established company. This is why any new casual game that makes an impact is cloned 100 times by the following Tuesday. That’s not a sustainable market proposition.
>Jon Trainer says:
>Do you see the entire indie market affected by
>this bust or are you expecting that only the
>casual games market will bust?
It’s mostly gonna make it annoying to call yourself an “indie” again, for at least a while. It’s already had that effect…as so many indies and the rest of the industry seem to have equated “indie” with “casual game developer.”
SpiderWeb, Pretty Good Solitaire, et al, will likely be unaffected. Their income streams have little to do with the portals. To them the portals were just another option…and maybe they exercised it or didn’t.
Of the “Classic Indies”…Dexterity might be hit pretty hard as their market was the same one the portals target. On the other hand, Steve has a big list of customers and a strong Web presence.
Following the me-too clone-and-ship strategy of the retail publishers has never been a good idea for indies. Chasing the easily cloned dollar is always going to fail, unless you can live off an insanely thin profit margin while dominating the market (think Walmart).
-David
>David Says:
>Their income streams have little to do with the portals
Ah, so it’s a portal thing … both relying on them and competing directly against them. That makes sense.
Oh, by the way… I’m about 1/2 way through your “Indie Game Development Survival Guide”. Great book. It’s nice to finally read a game development book that focuses on the business side of things.