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Plan for Dan MacDonald

by Dan MacDonald · 10/12/2004 (12:08 pm) · 18 comments

IGC'04 was my third time attending an IGC and let me say it keeps getting better and better each year. The amount of games at IGC this year was truly impressive. Torque is looking less and less like itself each year, people are pushing the accepted norms and doing new things with the engine and it's really exciting to see. BraveTree's dRacer and 21-6's GravRalley are both looking pretty impressive. Not to mention there was a great showing of 2D games at IGC this year. ZAP being the one getting the most attention, but I would say that close to half of the games being shown were 2D.

This year I showed off my 2D game, Little Soldiers on both Mac and Windows platforms, people seemed to like it and it took 2nd place in the "Most Innovative" category. Needless to say I was very proud.

The biggest change this year was the difference in how the guys from the portals and distribution channels acted. Before I continue I have to say that the opinions expressed here are entirely my own and not the opinions of GarageGames or anyone else on this site. A number of the people I am going to talk about are actually GarageGames partners and I understand why that is. That doesn't mean I have to like it.

First a little background, last year there were a number of producers from the various channels, Shockwave, Real, etc. They were really nice guys, they were more then happy to take a look at your game give you advice on how to improve it so that it would sell better to their audiences etc. They seemed like normal human beings. This year, the mass market / casual games space is big business. PlayFirst was there, having just come off a first round of funding totaling 4 million. Of course PopCap was there with their millions, the dude from popcap was wearing clothes that had to have cost more then my car. (my '89 firebird cost about $1700 and this guy was close). Basically there is this major shift in how things work for the mass market space. Distribution channels like Real, Shockwave, yahoo games, MSN etc. are tired of the overhead of dealing with hundreds of indie developers to get games. Not only that they are giving away less and less in terms of royalties, where it was once 40-50% for developers it's now down around 20% and will continue to drop as the players get bigger and the developers loose leverage.

Enter Oberon Media and PlayFirst, the first straight up retail style publishers in the online space. They see their position as an intermediary between developers and the distribution channels. They want to leverage developers IP (by owning it) and use it to keep the distribution channels honest and demand higher royalties. Of course for this "added value" they want a piece of the pie. Phil Carlisle was there and he asked the panel "So you point fingers at the retail industry and say how broken it is, but they you want to bring the same problems to the online space, how are you making things better for indies?", the response from Dave Nixon (formerly of Real Arcade, now for Oberon media) "Hey at least you still get royalties."

Now Dave is a nice guy, if you hang out with him in a bar or something he's a lot of fun. But I personally detest the business he's in. It's like the retail industry all over again, except the only difference is THIS time THEY are the players instead of the guys being screwed. The general feeling I was getting from members of the panel was "hey guys, we are the gatekeepers now, time to bend over and take it." Gate keepers to what you might ask? well the mass market as they would describe it. Games like Zuma, feeding frenzy, or bejeweled that appeal to the majority of "casual gamers" out there. I remember 3-4 years ago before these guys were really big players with all the market share, indie developers used to try and make games for this market. They tried hard to make their games accessible so more people could enjoy them and they sold their games directly to their customers and took care of them.

Now a days it's just a big commercial machine. To these guys it's just pushing product that has a large market that's willing to pay for it, the larger the market the better. It costs popcap 100 thousand dollars to make a game, the prototype tons of games and throw them away before they find the one they think will be a hit. Guys like Oberon and PlayFirst sign traditional publishing deals with development teams and give them money up front to develop games, of course they want to own the IP and if your lucky they'll remember to pay you royalties. Of course there's nothing you as an indie developer can do about it, because you've given all your leverage away, you don't have access to your customers you don't own your own IP you have absolutely no leverage.

There is hope however, this panel still seems to think that the 250 million people going online and buying games are 35 year old women, grandparents and grandkids. So that's why all the game they promote look like they do. They are right to some extent that's a huge section of the market, most likely the majority and hence the most profitable, but there are other segments that they don't seem to see. The ex-gamer, guys like me who were hardcore players but then got married, had kids, and started game development. I don't have the time to get into the complexly designed retail titles, but games like Think Tanks that are easy to get into and have short time commitments can suck me in. There's also the logic game crowd that has made dexterity.com successful. There's a distinct crowd, call them the hard core casual gamer, who like games that look like casual games but have hard core logic problems. Thinking games. There's also strategy games, there are number of strategy web and downloadable games that have come out recently and all seem to be doing pretty well. This is one of those places where they aren't getting what they want from retail and are finding it elsewhere. Simulation games are another.

There are plenty of sub sections of that 250 million consumers that don't fall into the 35 year old women category, but plenty big enough to support an indie with low overhead and keep them financially very comfortable. Think 60-100k a year, I know indies who are doing this, and some who far exceed this.

I guess the whole point of this rather long rant is that you have to ask yourself what are you in this business for? Is it purely for the money? or do you love what you are creating as well? The popcap guy said since their costs are primarily salary there's still a possibility for a 3 man team in a basement to create a superhit. But honestly if your a 3 man team without popcaps record and no customers how much of a royalty do you think PlayFirst or Oberon is going to give you? You'll have this wildly successful title and all the middle men will laugh all the way to the bank.

And honestly, the games that do well in this MASS market do really well, like millions of dollars in sales, but give me a break they are some of the most boring and uninspired games I've ever seen. A result of a game that was designed with one goal in mind, make money. I like to think that indie developers started hacking away in their garage's because of something more then money. Because they were insprired, because they loved games, because they couldn't be happy doing anything else. I'm not saying you should ignore markets altogether, hone your ideas so that their something people actually want to play, but for crying out loud. You have to be passionate about your projects, build something that interests you, that excites you. Even if you do grow, get an office and hire a few employees never forget the compulsion that drove you to into the garage in the first place.

I think with a few more games GarageGames has great staying power, while the big business goes increasingly toward bubble poppers and color matchers GarageGames will differentiate itself by being the place with something different. I honestly think that it might actually be better in the long term for garage games to pull it's titles from the distribution channels, get more of their own customer base by forcing them to come and get it from the source. The more users you have the more visible you are and the more those other segments of the market will be able to find you.

Anyway, here's some of Jeff Tunnells ideas on the process of designing a good game, I'll be cleaning this up and submitting it as a resource, but I wanted to get it out there for the inquireing minds that didn't make it to IGC.

www.planetthinktanks.com/dan/jefftunnell/

#1
10/12/2004 (1:16 pm)
Great write-up there on Jeff's speech. I look forward to seeing the version submitted for a resource, thanks Dan!
#2
10/12/2004 (1:39 pm)
I see the market you are going for - I'm going for the same thing. A lot of the 'serious' developers in the GG community are going after that market. I don't know what to call it... the "Semi-Hardcore" market, the "Semi-Casual" market, the "Intermediate" market?

But what's worse than trying to name it is trying to FIND it. How do you find these people - game players like us? I wish I knew. Right now I think we're still in the same place we were when we were hardcore gamers... in the isles of Best Buy, MediaPlay, CompUSA, Babbages, Wal*Mart, or wherever.... buying the hardcore games like we used to. Now we have money but no time, so we buy one game (possibly an older title) and keep playing it for months instead of finishing it or getting bored with it in 3 weeks and getting something else.

I don't know the answer. I have a FEELING that the answer lies somewhere in developers retaining their IP, building their own brands, and thus retaining some level of negotiating strength in the face of a portal-dominated online sales. Working with those portals that don't demand that they own you. If the guys who demand that you deed them your soul find that they can't get the "hot properties," they'll back down.

Or they'll do what the retail publishers do, and bring development in-house. But their attempt to establish a stranglehold on the market is going to be hindered in that online sales don't have a huge financial barrier to entry that retail sales have. So there will ALWAYS be an alternative for developers. Maybe not a very attractive one --- getting yourself noticed right now is INCREDIBLY difficult without a lot of money AND the credability that comes with being 'chosen' by an established publisher / portal.

I'd love to hear some magic trick to escape this, if anybody knows of one.
#3
10/12/2004 (2:22 pm)
Dan, those were some of my impressions as well. I thought online distribution was supposed to eliminate the middlemen, yet here they are appearing all over again. Let's go "Kick the Bear"! (or at least the bear cub) :D
#4
10/12/2004 (2:51 pm)
Greetings!

Talking with developers at the IGC after this panel, it seems that many feel the same way. Phil asked the right question. Their answer was truly unfortunate.

- LightWave Dave
#5
10/12/2004 (2:53 pm)
In talking to some of my peers on messenger I realized that I was pretty heavy on the "sky is falling", "Their destroying our way of life" beat. While this may be partially true it doesn't represent the full picture. Basically what bothers me is that some new indie who came to IGC and didn't know anyone else in the community would sit at that publishers round table and think "How on earth can I compete with that" and go back to their dayjob dejected because they didn't know any other options existed. As the portals and pub's get bigger and bigger and they get more VC funding and rise to the top of the headlines, they will continue to assume that they are the be-all and end all of online distribution, and their message of "go through us or you wont make a red cent" will be the one that's in the headlines and the one that is commonly accepted.

The fact is there are plenty of indie's out there who don't cater to the portal business model, they make the games they want to make and they have customers who are delighted to buy their games. I think this is the ultimate indie model, the one where developers fuled by their own passions and ambitions create games that excite them for a customer base that isn't exactly mass market but still big enough to support that developer comfortably. I know a number of indies who make enough to pay their mortgage, run a small office and keep medical for their wives and kids. This model isn't going anywhere, if we are smart and "right size" our lives, keep our overheads low we can continue for ever and no amount of VC funding or marketing dollars can take that from us.

So my greatest concern is this, that while the publishers and channels grow in visibility, prestige, and power that people don't assume that their vision of "we are the only way to make money online" is not bought hook line and sinker by indies who just want to make some money and make some games.

I guess one of the things I felt from other indie developers out there, was that the channels had good potential to generate some extra money for indies. Amongst some of the people I spoke to afterworld the general concensus was "I need to ask myself why I'm doing this" , I guess we kind of all bought the idea they were selling to some extent that "the only way to be successful, is to go through us". So it made us think, are we willing to become what they want to be successful? The general consensus was no, I'd rather go back to working and doing it on the side. But I don't think that's the case, in thinking about it I really believe there's still great opportunity to be successful even with big publishers with deep pockets and it's up to us to get the word out.
#6
10/12/2004 (6:57 pm)
[quote]Basically what bothers me is that some new indie who came to IGC and didn
#7
10/12/2004 (11:10 pm)
Jeff Tunnell's presentation was a high point of IGC for me, and he saved his best point for last:
[quote]
#8
10/12/2004 (11:30 pm)
Well put Joshua.
#9
10/13/2004 (4:13 am)
Preach it brother Dan!
#10
10/13/2004 (4:51 am)
Speaking of portals, it'd be really nice to see a community-based one, that simply shows indie games off, and provides buy links (regardless of who sells them). The only thing that allows the current portals to have this attitude, is because they have become popular enough that casual users know them. If a free alternative was available and able to reach the same status, they'd have less leverage.
#11
10/13/2004 (7:56 am)
You know - I have to apologize to you guys. I didn't say much on that panel (except to bitch at Phil when he hit my hot button - if I add no value to this process then why the heck am I working so hard?) - and I think I could have done a better job explaining how I personally work as a Publisher and how I think the Publisher/Developer relationship should work. I think it's inevitable as a business grows that organizations operating in that industry become increasingly specialized. You specialize in making games, Yahoo specializes in selling them to thier customers, and Oberon specializes in managing all the overhead associated with managing (and improving) the "funnel" of available and potential games.

I don't think you can avoid this specialization - even within Oberon's organization, the studio, the distiribution business, and the publishing business operate nearly independantly.

None of those key functions are inhearantly "Evil" - but publishers are often treated as such because very successful publishers, like any very successful organization, amass alot of power and can become bloated and greedy over time.

There is only one way developers can combat this - KEEP YOUR IP. This usually (but not always) means funding your game at least to the point where you can effectively pitch it to someone. The only time I own IP that we didn't build internally is in the case where 1) I've contracted with the developer to build a game that I designed and 2) The developer offers to sell it to me. In many cases where I have funded games, I've left ownership with the developer and taken only an exclusive license to distribute the game for a limited period of time.

The most powerful piece of leverage in this industry is the game nobody can live without. Unfortunately, for Retail CD-ROM products, developers chose at some point to abdicate control over that tremendous power to the publishers. You are fortunate today that you may decide whether, for our games, control over that power rests in the hands of the developers or someone else (Publishers, distributors, agents, etc).

You mentioned Brian Fiete's clothes - yep, the guy is wealthy. He's also one of the humblest, hardest working, most modest and underspoken people I have ever met -- AND he is rich. He got rich not by selling out to some Publisher, but by busting his ass day after day to build (and keep control over) games that nobody can do without.

Good luck! The choice rests with you, not with me. If any of you would like to chat about stategies for negotiating effectively with Publishers to maintain control over your IP, call or write me anytime.

--David

PS - thanks for the compliment Dan, I like hanging out with you too. :)
#12
10/13/2004 (7:58 am)
Oh yeah - and I'd like everybody to keep thinking I'm only making bubble poppers and targeting 35 year old women...it makes world domination all the easier. Ever played "Pacific Heroes"?
#13
10/13/2004 (9:04 am)
Thanks for posting Dave, it always helps to have perspectives from both sides of the issue. I certainly agree that the growth of the mass market space leads to an inevitable consolidation of distribution channels and the access to those channels must become well defined. This process has been exemplified by the movie and music industries. I have to say Dave, when I met with you at Real and you told me that Real "had to be more then mass market to be mainstream", that put the fear in me. I think you are one of the few who really get it, and I don't think Real is nearly as threatening without you there. I think Oberon getting indies on the xbox is an excellent opportunity for all involved. I've had a few people ask me what I thought about that opportunity and I definitely support it. It's one of those situations where it's a market small / one man indie studios just wouldn't be able to reach otherwise.

But for an indie just starting out, with a small support network, limited funds for production values, trying to take on Feeding Frenzy can seem like a daunting task. Better for them to do something they love and sell to a smaller less crouded market. I also know existing indies who have made good livings selling to the casual space and are watching it slowly fall away from them. Their games aren't up to the standards of popcap and sprout so they really can't compete. There's so much marketing in the distribution channels that it's hard to get new customers to find their little sites with 10-15 games on them. If they do get their games up on a channel they fall into the catalog and soon disappear. These are games that provided the developers with good livings a few years ago and now they are going broke. It is inevitable and not inherently evil, that's what competition in a capitalistic system does. That doesn't make it any easier to watch it happen, I really care about all the guys in their garages trying to make a go of this. I think it's in their best interest to not target the casual/mass market space in it's entirely, but rather go after smaller niches in it.
#14
10/13/2004 (9:46 am)
I'm with you...I care about those guys in the garage too. Any thoughts on what Oberon can do to support them - other than continue to support Garage Games?
#15
10/13/2004 (10:39 am)
David
Do you mean this Pacific Heroes ?
http://www.city-interactive.com/pacific.html

Really dont looks like a bubbleshooter 8:)
#16
10/13/2004 (10:57 am)
Though I would argue that it's best for indie developers to keep both their customers and their IP. I realize that in some cases it is beneficial to leverage distribution channels to get more exposure. As long as the developers aren't entirely dependent on the distribution channels then I think some nice opportunities arise for mutual benifet. I think GarageGames has a great deal here, 60% going to the developer. Wow you can't beat that, it's obvious that the guys at GG care as much about helping indie developers as they do making money. This is partly why they have such a cult following amungst developers. In fact, I would even go against my stated convictions about retaining customers and publish a title exclusively with GarageGames because I believe in what they are trying to build and want to support them. To me it would be more of a partnership then anything else, I don't mind being dependant on an organization that has simmilar goals to my own. (To see indie developers succeed)

If Oberon wants to support indie developers, it should become a champion for indie developers. Encourage developers to keep their IP, continue to offer access to new markets like the XBox. Some publishers will offer a developer a bum contract just to see if they are dumb enough to accept it. Don't do that (I'm not saying you do), that's a sure fire way to get a bad reputation. Find ways that both the distributor and the developer can win without one party exploiting the other. Lastly, be vocal, increase the transparency of your business so Indie's know what you are doing and what you are trying to build. There is a business case for places like Oberon, be the one that does it right and treats developers right.

If you hire a developer to make a game, encourage them not to be dependent on you for cash. Nothing endears people to a business then being encouraged to do something that may not be in the best interests of the individual business but is in the best interest of all parties involved. Consider this, if indies become dependant on middlemen for their revenue they will be much more risk averse then if they were truly independant. Indie developers take risks because they can as long as they have that they will be able to create new and innovative titles. Business is important, but so is the community of game developers and their independent spirit. Find ways to grow both and you will do very well.
#17
10/13/2004 (1:05 pm)
I doubt developers get less royalties due to "the overhead of dealing with hundreds of indie developers". I believe they get less royalties simply due to the increased competition. Games are easier to create than ever, and everyone is creating them. Consequently, they simply aren't worth much. Hence, if I owned a game portal, I doubt I would pay much for a game (especially breakout/tetris/pac-man clones, board game classics, word game variations, and classic card games) simply because there are so many available (good and bad). The supply currently outweighs the demand...

... which is why I'm hoping the new portals INCREASE the demand. With their focus on marketting (as opposed to development), the portals are the best hope yet of expanding the audience (similar to RealArcade and Shockwave 'discovering' the untapped 35+ market). Do you think Oberon Media is only interested in the current RealArcade/Shockwave/Yahoo/Microsoft audience? Does PlayFirst get $5 million of venture capital to steal the same fish from a small pond? I doubt it.

Additionally, the portals will eventually have to distinguish themselves with the games they offer simply because there are so many portals. The audience will also grow more discerning, even my Dad eventually bought a DVD player. This should increase the demand for good UNIQUE indie games and increase the amount paid for them. If I owned a games portal, I wouldn't want the competition to have better games, especially considering that's all I do. As the competition increases, Game portals will eventually have to start paying more royalties to keep/attract AAA games. At the end of the day, even a large game portal (i.e. RealArcade) needs to keep quality content.

The future's so bright, I gotta wear shades.
(Of course, since I've never published an indie game in my life, I'm all talk)

On a different note, I submitted my small indie game to a contest at RealArcade last year when Dave Nixon was still working there. Not only did he provide invaluable feedback and encouragement, but he managed to get the IGF entry fee waived for anyone also interested in submitting to the IGF contest. In fact, I think that Dave is one of the main reasons IGF introduced the Web/Downloadable category last year. Given my experience, I highly doubt that Dave (and by extension Oberon Media) would not treat indie developers right.
#18
10/13/2004 (11:53 pm)
Well, I think that such "conspiracy" against developers was inevitable in the long run. For indie, there`s always the Hamlet-ian question - to market yourself or not to. Market landscape is changing very rapidly and everyone suddenly has found out that its kind of crowded.
Aside from making fun game, there`s that damned problem of exposure. Conventional channels of online exposure are getting jammed, which allows owners of portals dictate their own rules, which more often than not means that they simply want bigger slice of the pie.
Alternative is creating such channel yourself, but its a risky and costly affair which excludes most indies right away.

IMHO - there`s one possible solution of avoiding that, though, and quite technical:

Why not use the spoils of "illegal technology"? P2P has a bad name, but so had Internet itself not so long time ago.
What if there was a P2P *freeware* app geared towards the games, which allowed searching for new game releases, both freeware and shareware, with in-built purchase mechanism (or even without - demoes would just need the option to buy built in them), rating mechanism which would eliminate the need to monitor the system and it could organise itself?
Plus "suggestions option" similar to Amazon and Netflix: if you liked this release, you might look at this; people who rated this above 70% also liked releases listed below.

It would ensure that everyone had the ability to get exposure, but the quality of exposure and popularity of it would depend directly on the quality of the game itself. And it would bypass numerous gatekeepers who all want just that - piece of your pie.

Well, just my two cents, of course, but personally, I dont see another way of bypassing jackals, all you can hope, that there are more publishers like GarageGames, who think about devs in terms of business partners, not prey.