Small but Incomplete

Small-studio developers are changing the world - but without the expertise of publishing, is this sector sustainable?

When we get around to writing the histories of the games business, the half-decade that we're in right now will probably be defined by three key events. One of them is the slowing of the graphics arms-race, as diminishing returns start to seriously bite the console platform holders. Another is the end of physical media - likely to be with us for another console generation, but already in its death bed, ravaged by the rise of digital distribution and the promise, or threat, of streaming services.

The final event in this hypothetical history is the extraordinary exodus which is taking place, slowly but surely, of talented development staff - who are abandoning traditional large-scale development in surprisingly large numbers to try their luck at the lower-risk, smaller-scale possibilities offered by Facebook, iOS and their ilk.

Can this utopian vision of an entire swathe of the industry made up of small-studio or self-employed developers working on highly creative, low-budget projects actually work on a commercial level?

There has always been a lifecycle in the games business not dissimilar to that of stars, whereby new companies would be formed by an accumulation of talent, burn brightly for a period of time - a short time if they failed to get a major hit, a longer time if they managed to produce a string of blockbusters - and ultimately collapse, shedding their talented staff in the process. Those staff would then form the raw material for new studios that would spring up from the ashes of the old company.

This process still exists, and works perfectly well - but in recent years, something has changed. When old companies go bust, as they continue to do with about the same regularity they always have, the new companies that appear from the ashes are different.

Developers who have watched one firm go under thanks to the extraordinary risks involved in high-budget game development aren't opting to dance the same dance once more. Instead, they're creating smaller, more independent studios, focusing their efforts on social and mobile gaming - hoping to have a product out the door in months rather than years, funded perhaps by their own small business loans rather than the wallet of a publisher who'll want the blood of your firstborn in return.

That this process is taking place is undeniable. What it'll do to the shape of the industry in the long term, however, is a tougher question. As console gaming stagnates but development budgets keep rising, it's easy to see why creatives are keen to parachute themselves out of that environment - and the success of games like Minecraft and Angry Birds, whose creators were honoured at this week's Develop Industry Excellence Awards in Brighton, provides plenty of impetus to chase the small-studio dream.

Obviously, not all of these studios are sustainable - indie development is lower risk because it involves less capital, not because it has a higher chance of success than a console game. Plenty of indie games, probably a majority, will completely fail to make a living for their creators, and plenty of new indie game studios will go bust - although given the low running costs they'll be operating with, the implosions are likely to be unspectacular and not particularly destructive.

However, looking away from the individual studios, the question must be - is the trend itself sustainable? Can this utopian vision of an entire swathe of the industry made up of small-studio or self-employed developers working on highly creative, low-budget projects actually work on a commercial level?

There are definitely huge barriers in the way. One of the most obvious is marketing, an aspect of launching a game which, in the sphere of AAA releases, has come to consume as much if not more of the overall budget than development itself. You can't sell a game to people who don't know about it, and while there are plenty of word-of-mouth viral successes out there, they're the exception, not the rule. They're going to become even more exceptional in future, too, because as the amount of content on services like Steam and the App Store booms, discovery becomes an increasingly tough process to streamline for your potential users.

Beyond marketing, there are plenty of competencies which can't be waved away simply by making grand proclamations about living in a post-publisher world. Budgets have to be controlled, accounts filed, license holders negotiated with and employment contracts drawn up - and on top of that, even on a relatively small project like an iOS game, there's an important place for good project management. It's boring stuff compared to the thrill of creation, sure, but you can't simply wave it away.

As un-sexy and not-fun as it may be, the pioneering, exciting small studios are going to have to be joined by services companies that replace all the boring stuff that publishers used to do

Many of the early gold rush of studios are likely to be brought low by some of those factors - in fact, some of them already have been. A small number started off with their heads screwed on over these issues from the outset, quite a few more have been forced to learn fast - and a few are still getting lucky. There are still occasions when I speak to relatively successful small studios and discover that their approach to something like accounting or employment law is to put it all in a drawer and hope it never becomes a problem. So far, they're lucky. Tomorrow, they might not be.

All of this constitutes a major barrier to the sustainability of the small-studio sector - but it need not be an insurmountable barrier, because within these problems lie the seeds of their own solutions. Indeed, within that solution may lie an answer to another question that's been asked often of late - what happens now to the mid-level publishers who are trapped between AAA budgets escalating beyond affordability, and low-cost games whose developers seemingly no longer require a publisher?

The answer, I believe, is that we're about to see the rise of a new type of games company - not entirely novel, but certainly about to come into its own. Rather than a publisher, what is required by the small-studio sector is something more like an agency - a body that sells a service to them, providing marketing, PR, financial, HR and project management expertise, along with great networking possibilities. The upfront can't be high, if it exists at all; the money in the deal would flow as a percentage of a game's turnover, as it does with literary agents, for example.

For small developers, it's easy to see how this would be attractive - and those stubborn enough to believe that they can do all of those things by themselves will come around to the idea quickly enough, after a couple of game launches threaten their bank accounts and their sanity. For publishing staff, though, wouldn't this be a step down from their previous position of power? Certainly, that's true - but since distribution channels have been blown wide open and the barriers to entry have collapsed, publishers can no longer act as gatekeepers. What choice have they but to find a new way to package up and make available the expertise they house?

In short, then - yes, I believe that the small-studio market is absolutely a sustainable, long-term part of the games industry. Indeed, I believe that in time we will come to look upon the years between the decline of the bedroom coders and the rise of the iOS studios as being something of a wilderness for gaming - a peculiar time in which only large corporations could afford to create anything. But for this to happen, we're missing a piece of the puzzle. As un-sexy and not-fun as it may be, the pioneering, exciting small studios are going to have to be joined by services companies that replace all the boring stuff that publishers used to do - before together they can really set out to change the shape of the industry as a whole.

Latest comments (16)

Ian Baverstock Co-founder, Tenshi Ventures6 years ago
I said on Wednesday that I think this is the second great age of the Indie and in that context I completely agree with you Rob.

I also agree there will be more, better agency type support companies for developers to work with in areas away from those that the traditional core of game development; coding, art, etc. But I really think developers will need to see marketing, community management and PR as new core areas of competency that are integral to successfully making a game even if they also get outside help in those areas too.

Developers can't stick to the mantra "I just want to make the game" ... to make a (digitally delivered) game is to engage with the consumer is marketing.

Also completely agree it's sustainable. Not only that, I think it will be more fun!
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Martyn Brown Managing Director, Insight For Hire6 years ago
I agree with Ian. It's simply replicating how things were in the 80's and early 90's in 8 and 16bit days when it was largely a cottage industry. It's also true that there are publishing/marketing needs, but there are opportunities for developers to work with the right people to make that happen.

I think the same kind of polarity of success will happen also, you'll get amazing hits and you'll get failures and disappointment, nothing new there - in many cases its still pretty much a lottery, but fortunately the cost of a ticket just came down :-)
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Nicholas Peterson Founder, CFO, VisionaryX GmbH6 years ago
As a founder of one of these Indie startups, I think that there are a few fundamental differences to the days of 8 bit / 16 bit which i grew up in. First, more creatives are involved in startups, with hard core coders becoming less involved. Second, lots of people are moving into the gaming business that knew little or nothing of it or of the publishing business of old. Third the business model is changing the field too with Freemium and other business models providing budget possibilities (and needs) that we didn't have in the 80's as indies. You hit the point about marketing, it is also an area that is being changed by this non-publisher centric, small shop high income dream that has become the new "Golden Goal" that many startups are reaching for. Eventually there will be some sobering, and consolidations as companies realize they need more than what they have as small teams to succeed long term - specially as it becomes more of a customer centric service business with "casual" and "mobile" games getting and needing AAA level budgets.
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I think multiple tiers of large medium and small (pyramid) can co exist happily. For those starting up now, small and sweet means agile and profitable. Its just until they decide to jump to the next level is the challenging growing pains to enjoy
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John Cook Senior Partner, Bad Management6 years ago
What Ian and Martyn said basically - with the caveat that (apart from the odd lottery win) thinking about marketing *before* coding really is incredibly important in a crowded, open access platform. (As is, knowing what you don't know - and either becoming an expert, or getting someone involved in the project who does).

Off-topic - but sad to see EA and MS come out with some "coders should stick to coding" stuff yesterday. Don't know about Crunch being 20th Century, but that kind of thinking certainly is..........
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Nicholas Lovell Founder, Gamesbrief6 years ago
The service angle does make sense, but marketing is a tough piece to put in there.

Too many developers think marketing = "launch marketing". That's the skill of building buzz for a launch event (PR, TV spots, etc).

Marketing is much broader than that. It includes, for example:
- analytics and metrics
- design input to match the game to the business model and target market
- customer acquisition and customer retention

It is possible to outsource launch marketing. The other types of marketing need to be integral to your indie studio for it to succeed.

(Many of the successful indie studios I know have an innate feel for marketing. So much so that they don't really consider it to be marketing at all. It's just "what you do to make a successful game"
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John O'Neill President, Spark Plug Games6 years ago
Very good points Nicholas L. (many of which we follow as a smaller team of experienced developers, you're absolutely right.)

And to continue Nicholas Peterson's point, there is also another key element to consider with regards to comparing the market of the 80s and 90s to the market of today. Back then in the "good 'ol days" we were building games for gamers, and a smaller consumer market at that. If we look at casual/social/mobile gaming of today, we are building games for general consumers, a mass-market of people who don't define themselves as gamers and thus in many ways the core fundamentals of solid PR and marketing is even more important.

Great times and fantastic opportunities out there for entrepreneurs, but we should learn from what other industries have done to market their creative products to a world-wide consumer audience.
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Must agree with Rob and all commentators. I founded my small and agile mobile games company in may, after having making the preparations for 3-4 months (worked on PC/Console developer previously).

I got on board an investor who knows about accounting and other boring but very important stuff. It has worked really well: investor takes care of financial/legal bureaucracy and I can concentrate on the development and project management. Good example of the fact that you should concentrate on your strengths.

Marketing really is one of the possible bottle necks. Especially as successful viral/social marketing is not something your average advertising agency or even games industry PR agency is able to do.
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Diane Lagrange Founder and Consultant, ICO Partners6 years ago
It's basically what we're doing with ICO Partners - we are an agency providing consulting and services for game-related business matters, such as strategy, market intelligence, PR, branding, operations etc.

There are some restrictions though : As Nicholas points, marketing is not something you can simply outsource (and I'm really wary of community management outsourcing too). It is so much intertwined with the development and operations of an online game that it has to be piloted internally. Marketing is not a magic wand or some icing you put on the cake after baking it. It needs to be at the core of everything you do. It's possible to hire support for high-level and low-level tasks though.

Regarding accounting or employment law issues where specific game business expertise is not necessarily needed, I'm not sure the specialized agency one-stop shop is the right model either, the studio is better off working with lawyers and accountants IMO. I would think the studios will work with a diversity of various specialised partners in the future, rather than one big agency who can do everything.

Edited 1 times. Last edit by Diane Lagrange on 22nd July 2011 3:27pm

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Taylan Kay Designer / Lead Programmer at Black Gate Studios, Nerd Corps Entertainment6 years ago
Very good points. I also want to add that small studio games do not necessarily mean simplistic games. Games like Dwarf Fortress or Mount & Blade are examples that indie games can also offer very deep and complex entertainment experiences, with minimal (if any) marketing budgets. I have been trying to explain the difference between launch marketing and design-marketing integration for a while now, and how the AAA industry have excelled at spending money without necessarily creating proportionate value as a result. The exodus, I think, is happening due to the simple realization that sometimes more can be achieved with less. A lot less.

I also don't think this is bad for the AAA sector. If anything, it is a boon that there are those smaller studios trying out ideas, testing new concepts, and maturing up in terms of business-responsibility and project management, on their own dime. The whole industry will reap the benefits of that. Not all of them will strike gold of course, but a balance will be found between small and big eventually, and here is hoping that the AAA industry will finally turn a keen eye on improving risk management capabilities while retaining creative freedoms.
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Steve Fowler VP Strategy, Ayzenberg Group6 years ago
Great article and I agree with most all of your positions. This was a key factor we saw about a year and a half ago and the reason we formed [a] list games. [link url=

For the last 17 years we have been doing marketing for most all the major publishers in the business with our parent company Ayzenberg Group. When we started to see the advantages that digital distribution offered independent developers we quickly realized that these guys are going to run into major discoverability issues once the digital channels mature and competition gets stiffer.

In this new digital world indies with games as a service need to change the mind set from fire and forget launch marketing to marketing over time and building relationships with consumers. This is something very few developers are prepared, staffed or budgeted for. An agency mentality (which was our core business for the last 15 years) has all the resources needed to support these efforts. We partner direct with indies, fund the marketing budget and execute the marketing and PR at a much more efficient cost than big publishers can.

Welcome to the new era of the games business
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Marcelo Martins President, Clefbits6 years ago
One more tip about marketing:

Build expectation. People will only buy your product if they have heard about it. So, talk about it! The more you talk about it with relevant content and in a non-invasive fashion, the more people would be inclined to buy your product.
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Tony Johns6 years ago
It would be sad for the console and game retailers to end.

I still want to make games but I would feel more better if I did it with physical copies because we all know what happened to the PlayStation Network earlier this year as well as other companies that got hacked.

The only way that these new smaller companies would go bust with only producing smaller download only games is when there is a massive internet hacking breach that crashes the entire system and no developer would be able to gain any profit from sales because gamers can't buy what they can't download if the entire networks are offline.

Thus creating the next game market crash.

I don't want that to happen but that is what I foresee when the games industry and gamers in general turn their backs on the retailer and physical copy markets.

I only import the games I have to import if they can't come to my local retailer, but I still want to support them.

I also believe that even digital download games have a important place too, but not at the expense of the traditional physical copy games.

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Rick Cody PBnGames-Board Member 6 years ago
I see indie devs as a mainstay in the mobile and social world of gaming. There's no reason for astronomical budgets unless you're making an astronomical game.
In response to everyone saying marketing services won't work because they need to be a part of the process from the beginning, I think it'll take developers a game cycle or two to realize that. But I can see the service being contacted at the beginning of a game's development process. Why not?
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Jeff Spock Writer/Narrative Designer 6 years ago
It's a mildly silly argument, IMNSHO. Any small business, be it game development or home renovation, needs to be run by a good manager. You can be a great game designer or a great carpenter and still be a lousy CEO; inattention to accounting and marketing can kill any start-up in any industry.

So yes, it's true, but no more so than anywhere else. I have the good fortune to be part of a small start-up studio, and from day 1 the business plan included a detailed budget with financing plans as well as a marketing plan and the resources to execute them. Note: I wish I could say it was all my doing, but it wasn't :) It was just good planning by a couple of guys with a lot of experience in the industry.
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Nick Alexander Consultant 6 years ago
One of my mantras is that the mainstream games busness,alone amongst all entertainment media, has seen technolgy increase, rather than reduce, the cost of production.
Magazine and other print media, tv, video, radio, music, have all seen massive reductions. I have been involved in them all and its true.
Something had to change.
If we are finally seeing the start of that change we should all embrace it.
This is my 30th year in the games business and, generalising, creativity has been increasingly stiffled by ever increasing dev costs.
Developers may well become the new publishers, though focussing on key skills and out sourcing the rest, again generalsing, has repeatedly been demonstarted as the best model.
Current changes give me hope for the future and that where we, at last, lead again, the rest of the entertainment industry may follow!
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