Is Gamedev alive?
Despite the clickbait title, the issue I want to raise is quite serious. For the last 17 years, I have been working in game development and teaching game design. This helps to structure thoughts and facts. And this is exactly what we will do in this article: we will put on the shelves the facts that shape the appearance of the modern game development industry and see what the future will be.
Why this article?
It may seem that we are philosophizing for the sake of philosophizing. But as I see from my students, people often see problems well, but do not understand the root causes that led to them.
Having worked in companies ranging from an indie studio to a corporation with ten thousand employees, I have seen how top managers make decisions, and I have even been lucky enough to participate in some processes. Now I am making a collectible card game based on the Amazon series Wheel of Time.
Our huge and beloved gamedev includes games on different platforms: from small mobiles to huge AAA projects. And each segment has its own problems. Let's consider them separately.
Computer games
The situation with PC games is actually the most favorable. Yes, if you think that it's f$%&c here, just read on to consoles and mobiles =)
The main driving force in game development is money. Perhaps in the future, AI will allow us to assemble games ourselves for the evening, depending on our mood, but for now the cost of developing large products is extremely high. The success of a game is largely predetermined by the investor: if you are not given enough time and funding, no matter how brilliant the team is, it will have to crunch and release a raw product. A striking example of this is the Time of Troubles: a case when a developer signed up to make a “Russian answer to The Witcher” in just 2 years without having sufficient developments and specialized experience. As a result, a potentially cool idea could not touch the hearts of players.
In any project, the investor is only interested in ROI – what will be the annual return on my investments. Yes, there are not only investors, but also philanthropists, sponsors, business angels… But in practice, the share of their investments in the total amount tends to zero percent.
It is important to understand that game development is a venture. That is, no one can give a 100% guarantee of what the ROI will be. Moreover, the game may not pay off at all. When working with venture investors, realizing that their money can simply disappear, invest in several projects at once. They demand big X's from each. That is, since each game can fail, it must potentially bring in so much money that one success will cover 5-10 failures. What follows from this in practice?
Growing share of games-as-services (since they can make money much longer than story games: potentially have 5+ times more revenue)
The trend of remasters and remakes (one of the risks is that the game will not appeal to the audience; to reduce it, the game is made for an existing audience, which is highly likely to buy it)
Long series franchise (the next NFS and Assassin's Creed won't be long in coming for the same reason: there is already an audience waiting for the sequel)
Budget growth (a new idea is an additional risk, from the point of view of the corporation it is more profitable to make a game with cooler graphics, a larger amount of content, but not to risk adding new mechanics)
Ultimately, the high cost of developing and marketing big PC games means that there is less variety in them, because it adds new risks. It is often easier for decision makers to greenlight a game that won't wow players but will reliably return the investment, than to take a stab at something that will be really interesting but carries more risks.
Fortunately, the market is not limited to large PC studios. Mid-sized companies operate here in many ways by the same principles, only their investors allocate significantly less money. But there is also a huge indie segment.
What's the difference between indie and AAA and average games? The lack of budgets. It may seem that this is the main curse of indie: the inability to show the required quality due to a lack of money. But this is also their main advantage. All you risk is relatively small amounts, which, if lost, you won't have to fire hundreds of employees. At the same time, indie cannot compete with AAA in terms of quality and volume of content.
It turns out that the only way for indies is to create original mechanics. In this case, the risk of doing something wrong becomes a competitive advantage. This is especially important from a marketing perspective. Corporations have money to buy advertising, bloggers, and articles. Indies don't, which means the only way to interest a potential player and bloggers is to show something original.
It is thanks to them that the situation on the PC market looks more stable:
Big corporations are making another Call of Duty
Mid-sized companies periodically offer us new games in proven genres
Indie studios release everyone's favorite trash, riot and punk
Mobile games
Although the problems of mobile game development differ from the PC segment, the root cause is the same – money. Only this time the problem is not in the cost of development, but in the costs of marketing. Let's figure it out.
The mobile market has been growing throughout its existence and has pumped the entire industry with big money. And in recent years, this growth has stopped. In the mobile segment, the main expenses are spent on marketing. A full-fledged game can be made for 0.5-1 million dollars. At the same time, monthly advertising costs can exceed 10 million. The top games, such as Gardenscapes from Playrix, AFK Arena or Mobile Legends, can spend hundreds of millions of dollars on marketing annually.
Profit in the mobile segment is the difference between how much it costs to attract a player and how much he will donate. For a long time, the monetization burden has been growing, increasing LTV – lifetime income from a player. But due to the increase in the number of games and competition, the CPI – the price tag for buying a new player. By the way, I talk about metrics in more detail on our program Game Project Managementin whose blog you are reading this article.
At some point, the cost of advertising became so high that the diversity of genres began to shrink. For example, Tower Defense, beloved by many, is simply not capable of generating the same revenue per player as Match-3. This means that the publisher of Match-3 games will not allow the developer of Tower Defense to buy an audience by simply buying it at auction for a higher price. After all, he can afford to pay more for advertising, but his competitor cannot.
In response to this increased competition and CPI a new segment emerged – hyper-casual games, where attracting a player was very cheap, and showing ads was enough to generate revenue. However, this segment quickly became oversaturated, becoming just as competitive and unprofitable: revenue remained huge, but net profit was eaten up by the cost of advertising.
As a result, we now have a market where the range of ideas, mechanics and variety of genres is severely limited. Anything that is not capable of generating super profits does not survive. And there is no indie segment here. Yes, cool indie teams can make a good mobile game. But they have no money for marketing. And without this, it is impossible to publish a game in the mobile sphere. There are no crowds of bloggers, reviewers, magazines and press, catalog sites and everything that is on the PC. All mobile marketing is buying traffic.
If, despite all the problems, I see relatively positive development prospects for the PC, then mobile is not yet ready to overcome the crisis. The market is consolidated by super-large players and the situation will not change in the coming years, since there are no technological or geographical prerequisites for this. In the future, mobile will create a new market due to India, Pakistan and African countries, but so far this is far away.
However, mobile will not lose its leading position, occupying up to 51% of the entire market.
Console market
The most closed and complex, and yet accounting for up to 28% of all game development, is the console market.
Its main features completely dictate the situation on the market:
Consoles are expensive and, unlike a phone, not everyone has one, although in many countries they are more common than a home PC.
The market is monopolized by three large corporations: Sony, Microsoft and Nintendo
Publishing games on consoles is expensive and difficult
No purchase of advertising traffic
And there are no indies here. Practically none. This is a consequence of the high cost of entering the platforms and expensive marketing. Uploading a game to the Xbox store is as easy as in Steam and relying on search algorithms will not work.
In part, the console market is similar to the PC, where there are only AAA and AA projects. Others are rare on consoles. Here you can object, but what about such hits as Binding of Isaac? It is already a successful game ported to the console. It made a lot of money. And garage indie with instant noodles is almost impossible to find on consoles.
The Nintendo Switch stands out in this realm of Spider-Mans with its Zelda, Mario, and other hits. Nintendo is doing quite well without the stiff competition that Xbox and PlayStation have.
Another problem is the new generation consoles. It is difficult to develop hardware further, and most importantly, it is difficult to explain to the player why he needs to buy a new console instead of the 5th PlayStation.
As a result, we can conclude that the console market is in a difficult situation. Some experts even say that the next generation of consoles may be the last if nothing new is invented. I think these are still overly pessimistic forecasts. Nevertheless, we do not expect rapid growth in the coming years.
Russian gamedev
I would like to say separately about gamedev in Russia and neighboring countries. The sanctions of 2022 have led to a mass relocation of Russian companies to other jurisdictions. This is due to the fact that their main revenue is the global market, not the Russian one. Those who collect the main money in the Russian Federation (Astrum, Lesta, etc.) feel quite good.
Many companies have relocated to Kazakhstan, Georgia, Armenia, Uzbekistan, which has significantly enriched their domestic development market. Belarus and Russia are now building a new game development.
The game consumption market in the Russian Federation has returned to normal quite quickly: workarounds for imports have been found, and players have not abandoned their favorite games. However, the mobile segment has turned out to be more dependent on foreign solutions, and there are still many problems with payments, and as a result, with the availability of some games.
Now our development market has begun a gradual recovery. And its most important part is you: game developers and players. Our problem is the lack of large companies that would take the place of those who left. Due to both the local crisis and the global one, attracting investment has also become more difficult. But what we are doing well is training personnel who will make games. We have a lot of self-taught people from the indie segment who have created amazing products. And we have high-quality educational programs that train in-demand specialists.
Taking this opportunity, I invite those who are in Moscow to a series of free lectures that we will hold at the ZIL Cultural Center: https://www.hse.ru/lectorian/game2024
And for those who read us not only from Moscow, on July 18th there will be an open day for our Game Project Management program: https://games.hse.ru/openday/ Here you can ask any questions to our teachers, experts with 15-20 years of experience in developing and publishing games.
Finally, I sincerely ask you to carefully study the feedback from graduates when deciding on the choice of one or another educational program. Now there are many low-quality pop courses on the market, training on which will only waste your time and money.
And, of course, let's discuss your opinion about modern game development in the comments!
