overwhelming odds why you should run away screaming from the games industry

Overwhelming Odds

Overwhelming Odds

Why you should run away screaming from the games industry

Why you should run away screaming from the games industry

What are the proven options for success?

• Traditional Retail-Focused Publisher Backed Development

What are the proven options for success?

• Traditional Retail-Focused Publisher Backed Development

• Free-to-Play Web and Mobile Development

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

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

The cost of large teams

• Estimated total cost per head is roughly$10,000 per month.

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.

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.

The perils of publishers

• The good: they generally have money. Lots of money.

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 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.

Large Projected Costs

• A project that costs a lot of money is going to need to make a lot of money.

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.

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.

Console at Retail

• The only reliably proven way to make that money back is to sell millions of copies at $60 per copy.

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.

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.

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.

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.

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?

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.

What Does All That Mean For Developers?

• Your job will almost never be secure and getting another has challenges.

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.

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.

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.

Job Security

• Layoffs, especially for younger staff, are almost a requirement given the realities of the project life-cycle.

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.

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?

No Money For You

• Back in the day developers bought Ferraris. Those days are long gone.

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.

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.

Endless Crunch

• Nobody likes crunch. Nobody thinks crunch is a good idea. Everyone crunches.

Endless Crunch

• Nobody likes crunch. Nobody thinks crunch is a good idea. Everyone crunches.

• In the beginning it is usually a scoping problem.

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.

Any Bright Sides?

• There are a few franchises that will be around for a long time.

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.

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!

More Information

• Ben Cousins

• http://www.slideshare.net/bcousins/when-the-consoles-die-what-comes-next

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.

The Future of Gaming!

• Well... maybe...

The Good News

• There are several recent examples of small teams creating massively profitable games.

The Good News

• There are several recent examples of small teams creating massively profitable games.

• Smaller teams mean you can and should generalize.

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.

The Immediate Challenges

• The truth is that nobody really understands the App Store.

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.

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.

What Does That Mean?

• Similar games must differentiate in order to win an audience.

What Does That Mean?

• Similar games must differentiate in order to win an audience.

• Traditionally this means production values will need to increase.

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.

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.

Venture Capital and New Publishing

• There is money available!

• The publisher’s role is changing.

• There are obviously strings attached.

The Zynga Legacy

• Investors now take gaming seriously.

The Zynga Legacy

• Investors now take gaming seriously.

• So much money is being generated and so little is really understood about why.

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.

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.

Software As A Service

• You no longer go gold. You soft launch.

Software As A Service

• You no longer go gold. You soft launch.

• Analytics will try to sit at the head of your table.

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.

What Do You Mean We’re Not Done Yet?

• To create something viable you must think in terms of loops rather than arcs.

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.

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.

Let’s Break That Down

• So your game cost $1 million up front.

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.

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.

It is all about ROI

• Just making back your money isn’t acceptable in the investment world.

It is all about ROI

• Just making back your money isn’t acceptable in the investment world.

• Investors are looking for 7-10x.

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.

Think about 10 Million Players For a Second

• Very few traditional retail games have ever had 10 million sales.

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.

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.

The Consequences of Mass Market

• You can’t count on much of an existing game literacy.

The Consequences of Mass Market

• You can’t count on much of an existing game literacy.

• Real challenge becomes difficult to incorporate.

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.

It Gets Worse!

• This game is free to try so players have zero vested interest to stick with it.

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.

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.

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.

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.

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.

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.

What Does All This Mean For Developers

• The great news is that you can get truly paid. Maybe.

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.

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.

For More Information

• Jonathan Blow

• http://www.youtube.com/watch?v=AxFzf6yIfcc

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.

The Good News

• This is probably the only way you will ever get to make your dream game.

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.

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.

The Immediate Challenges

• You will likely be poor. Very poor especially considering the skills required to actually pull this off.

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.

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.

More Good News

• Low costs means more chance at profitability.

More Good News

• Low costs means more chance at profitability.

• Creativity and risk are the primary differentiators.

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.

But Wait...

• This all sounds pretty hard but it also sounds really fulfilling!

But Wait...

• This all sounds pretty hard but it also sounds really fulfilling!

• Says literally armies of game developers all across the globe.

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.

Always Hustling

• This means that visibility is what your world becomes about to some extent.

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.

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.

This Might Just Be High school Again

• You are going to need friends and allies.

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.

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.

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

What Can You Do

• Know what is really important to you in life.

What Can You Do

• Know what is really important to you in life.

• Prepare for the worst while expecting the best.

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.