The business side of our industry used to be a fairly simple, if a little insular, affair. Developers made games for publishers who sold them in shops. Job done. However just as technology enabled our industry to exist, it also inevitably grows to complicate it. The business side of our industry has blossomed into a complex ecosystem of developers, publishers, platforms, stores and much more. This means that while overall the industry is growing in size, it also means it is growing in complexity too. The struggle for shelf space in shops like GAME or Virgin Megastore has been replaced by an infinite digital shelf of bewildering choice. Ironically it is the very success of these digital stores that powers our future which is also creating a new set of challenges. As a developer I feel it's key to understand the store wars that are raging around us and how we will either be players or pawns in its future.
First thing to note is that digital distribution is now very big business. You probably knew this, but just how big can be surprising. In a single quarter alone, Apple's App Store raked in $1.9 billion in sales, making Apple's 30per cent cut around $570 million. That means in total during 2012 Apple will probably take in around $8 billion from the App Store with its slice of this pie being around $2 billion. To put that figure in context EA is expected to earn around $4 or 5 billion in total this year over all platforms which means that Apple will be making half of what EA makes, just from its cut of the App Store alone.
"The struggle for shelf space in shops like GAME has been replaced by an infinite digital shelf of bewildering choice"
It is little surprise that others want to get into the act. In the boardrooms of technology companies across the land executives have been pouring over Apple's success and wondering how they too can grab a slice of the pie. We've seen a blooming of digital distribution sites; Intel's AppUp, Facebook's App Centre, Google's re-branded Google Play and Sony's rebranding of PSN into Sony Entertainment Network to name but a few. As well as the big players, there has also been lots of activity within more specialist gaming enterprises; Steam continues to grow with over 100 million registered users, of whom 40 million have spent hard cash on games. It's not just the established players either, with Blitz Game's IndieCity being one of the most recent entrants into the space. Then there is Microsoft and the growing unease over what it will (or won't) do with Windows 8; we buy and sell games in interesting times.
The money is only part of the power of such stores. A strong store also gives its owner lots of options for wider strategic distribution - when your platform has lots of great stuff that people want, it makes it attractive so users will install your client and/or buy your devices. A powerful store also gives you control of a space from where you can lever its audience to do other profitable things. For example, a store owner can choose to (or be paid to) promote certain apps, services or products that suit it. Go to Amazon's webpage and you'll see the Kindle promoted, the retailer using its store front to heavily promote its own hardware. From a biz-dev point of view this sort of horizontal integration makes total sense as once Amazon locks people in to the Kindle, the chances are they'll then use the Kindle's inbuilt store link to buy ebooks so cementing the relationship between the store and customer.
Its one thing to have a store, but store owners need to find ways to make their store stand out from the others. Each store seems to be trying to do this in different ways; platform specific stores such as Sony, Apple and Microsoft's have the home advantage. For others on more open platforms they need to find other ways; AppUp makes buying software on the PC less risky as Intel test apps first (plus they allow partners such as PC World to both create and curate their own version of the AppUp store). GOG.com limits the number of titles it releases per week and so can curate the games on the system carefully. IndieCity makes a virtue of the indie scene avoiding the big hitters for smaller studios. Gamersgate does not require the client to install its games and also offers the Blue Coins loyalty system. Steam has an active community and its client makes installs, saves, DLC etc a much more seamless gamer-centric experience.
This key strategic benefit from running a store is, I suspect, why there is the ongoing angst over Microsoft with Windows 8 and Surface. If Microsoft chooses to lock the system down into something akin to what Apple has done on iOS devices, it does give them much more control to shape the content as they see fit - but it also risks the backlash from exiting content providers. This is why it makes total sense to see the likes of Steam supporting Linux or any other open platform/console. If you are over-reliant on one system, it can all be good when things are going well - development is easier with fewer technical support needed and so on - but if the wind turns, it could be catastrophic for your business model. Remember what happened when Steve Jobs killed the cloned Mac business, a decision that made sense for Apple and killed the plans of companies like UMAX and Power Computing. (Are you listening, social gaming companies with all your eggs in a single Facebook basket?)
The Discoverability Menace
For Apple the ongoing app boom will only seem a good thing; with 300 apps per day being released, each one only adds to what the hardware can do. Given that hardware sales comprise over 50 per cent of Apple's income, this iBoom is good for them. The lowering of the barriers to self-publishing has been key to this process, breaking the monopoly of bricks and mortar. The expansion of choice at a merry rate is currently not a problem for Apple because while individual apps may be getting less attention, the overall size of the audience is still growing as is the total number of apps downloaded and hence, so does its revenue.
"If getting featured is key to your marketing strategy then you either need a hotline to Apple or to have a re-think as 99% of apps will never bask in Apple's reflective sheen"
The vast array of apps means that theoretically there is more choice for users but this is only to a point. Humans are notoriously bewildered by too much choice and can end up buying nothing for fear of getting the wrong thing. Stores are starting to tackle this, for example Gamersgate takes this issue very seriously as its CEO Theo Bergquist explains: "Discoverability is key to sell the right game to the right customer. Gamersgate has a history of extremely high conversion rates and this is something we've been working hard to solve. However, it's kind of a trade secret for us but in general it's a mix of the right content, good navigation on the site and recommendation functionality. "
Within the jungle of choice, one weapon the store has is curation, as gamers tend to trust others to help guide them through complex multiplicities. Friends are the most common guide, but a store that is aligned to our thinking (either by human moderation or via mechanic intelligence) can earn our trust. Most stores have one form of curated featuring. If your game is in this spotlight, sales will follow but by its nature, only a few can enjoy its illumination. This is a key issue and the decisions of store owners can become key to the success of a developer. For example, getting featured by Apple, meant one developer received an increase in sales of 10,000 per cent. Yet only a tiny handful of the 600,000+ apps on the system can ever be featured, in part due to the design of the store. If getting featured is key to your marketing strategy then you either need a hotline to Apple or to have a re-think as 99% of apps will never bask in Apple's reflective sheen.
By contrast, IndieCity takes a different approach, one that states that we're the best judge of what we like, as Chris Swann, IndieCity lead remarks, "Just as with music everyone's gaming tastes are unique, so in our view a single edited front page makes no sense. Instead we present each gamer with their own custom front page of the games in IndieCity, generated by their preferences compared to other people, combined with various other factors such as the ratings."
The choice to hand the power of curation to the user highlights the question about in whose interest is this power wielded? Theoretically it should be an optimum strategy between both the store owner and the user but this does not always work out. Where recommendations are weighted more towards the store's business interests, it can end up not offering the gamer the sort of games they are interested in and will ultimately damage their trust.
Over the next few years you will see the store owners grapple with this issue. The current leader in this area is Steam. Its store design and features are excellent and recently, when Apple were spotted visiting Valve's HQ, it sparked much buzz about a possible new console. However I wonder if it was not the design and operation of a store that was of much interest to Apple as anything else, after all Steam has been doing digital distribution for some time and is very good at it.
"Over the next few years we'll see a rapid evolution in store design as well as operation and for developers, these changes will mean both opportunities and challenges"
As they tackle discoverability, stores also need to look to future-proofing their offerings for the games and gaming trends of the future. Freemium is the next wave we'll see on PlayStation and Xbox and the trend won't end there. New platforms and models mean new opportunities, as Gamersgate's Theo Bergquist explains, "Next is to grow Void the "play, don't pay" service where gamers can play premium games for free as well as grow our indie [bundle] initiative Indiefort. We have some big plans for smart-TV but that's too early to talk about." I agree that the trends that will come to define gaming will be freemium (and variants), bundles and smart TVs, with the latter being another front in the store wars saga. Over the next few years we'll see a rapid evolution in store design as well as operation and for developers, these changes will mean both opportunities and challenges.
The Developers Dilemma
So after all that store-centric talk, the question remains; which store(s) should you go with? Game theory might suggest that all of them would be your best bet, but in the real world where development and marketing resources are limited, this option is not going to necessarily pan out for you. From my own experience as an indie developer and my research these are my personal pros and cons of the different stores.
Amazon App Store - Amazon has been doing customer end work for a long time now and as you might expect, is pretty good at it. The Kindle has done and continues to do well for them and the Android-running Kindle Fire is also doing well. Until recently both the Amazon App Store and Kindle Fire had not been available in Europe, but now the former is and the latter I am sure will follow soon. Some developers have had problems with it and the IGDA has been public about it's issues such as allowing developers to limit the devices a purchase will run on. However, we've found it relatively easy to get content onto and the returns have been reasonable given the limited scope it currently has. However it is still US-centric, paying you in dollars, so you lose money in the cheque conversion fees. However is it not currently as cluttered as the Google Play store, which gives you a degree of visibility.
"Once you are in the top charts, you tend to stay in the top. Which is great for the few and bad for the masses"
Apple's App Store - Currently the most valuable mobile market in terms of what users spend. Apple's approval process can be a little unpredictable and takes around seven days to pass which can feel like an age for patches to fix issues. The store is a classic feed-forward loop in that once you are in the top charts, you tend to stay in the top. Which is great for the few and bad for the masses. Ultimately without luck, serious marketing muscle or getting featured, this is going to mean you're in the 90%-ish of apps that do very little in the way of downloads and/or sales. They also only allow 50 review codes per version on the store, though this re-sets with each new version.
Blitz Game's IndieCity - An open PC store in that all games submitted are in it, however you start in the 'underground' section and need to wait for the community to play and rate the game before it goes into the main store. Currently free of much curation or featuring it only has charts for new entries and the highest rated but at the moment it takes much less than the 30 per cent cut most other stores take. At present the user base is very small so sales will not be that great, but its openness and gamer-centric approach means there is lots of potential here, indeed the 'gamer approved' method of populating the main store was up and running at IndieCity long before Steam's Greenlight. The store is expected to add more features this month.
Desura - An indie and mod community focused store, as well as a distribution means for some indie bundles too. Desura prides itself on its community and indie focused means it is very open to content from smaller developers. The site has a healthy number of users and developers have reported good sales on the platform. Though it is not as big as Steam, Desura offers games and mods for PC, Mac and Linux.
Facebook's App Center - It was only a matter of time before Facebook realised that there was no central store of the vast array of apps it offered, meaning users tended to rely on social means or ads to find apps. So this year Facebook unveiled the App Center, where developers can place Facebook apps for people to find and install. Unlike other stores, its for Facebook apps, so has that key feature but is also interesting in the larger array of metrics they will offer developers so you can see who is using your games. It also plans to allow the sale of games for a one-off fee, opening an option that is not currently on Facebook.
Gamersgate - A PC store that does not require a distribution system to be installed as many others do. Has a wide mixture of both indie and mainstream titles and has a curated features page, conducts sales and the like. One of the things that sets it apart is the Blue Coins loyalty system so that users earn rewards for community minded behaviour, which is a great idea. You do need to apply to be on the system but can choose whether or not to have DRM with your game. The developer store interface is also very good allowing you to easily create free keys for competitions, reviewers etc. We've found it a reasonably sized market and been pleased with the level of sales.
GOG.com - Another gamer-centric store. However as a closed curated space with only a limited number of release slots, it is not going to be there for all developers, though it has strong gamer support so if you do get in then expect your game to do well. GOG prides itself on the gamer-focused non-DRM content and system of distribution.
"The continued growth rate of Android coupled with the rapid update time means Google Play is a key platform"
Google Play (was Android Market) - The wide variety of Android devices means that this has features like the users ability to get a refund after purchase. The developer interface is pretty good allowing you to see sales almost in realtime (but including seeing a lot of data from each customer, such as address, which I still can't believe Google allows). Currently there is no way of giving reviewers free copies of a paid for game, which is annoying. Like the App Store, there is a strong lottery element here with the feed forward loops that mean the winners tend to take it all. Google is taking steps to improve the store and it has come a long way, but it still has work to do. Despite the problems and difficulties of supporting the vast array of devices, the continued growth rate of Android coupled with the rapid update time (normally only a couple of hours) mean it is a key platform.
Indievania - An indie-run, indie focused store that sells DRM free content developed by indie developers Alien Trap. Unlike most other stores, the site gives 100 per cent of the income to the developer, making its money via donations from gamers. It has a clean and cool storefront that showcases titles and champions its indie games via this design, offering games on PC, Mac and Linux.
Intel's AppUp - A PC store that is pretty easy to develop for and with good support for integration. This is fairly easy to get onto and so a good route to get into the PC space. While currently the installed userbase is small, Intel says it remains committed to the platform and with its reach into the PC market and recent entry into the mobile space, this could really go places. It is also an app store as opposed to a games store, so does more than just games and does claim support for both free to play and DLC for titles. Our sales have been better than expected, but then we've got into the 'top apps' feedforward part of the system and also had a deal with Intel which saw the initial release of Call of Cthulhu: The Wasted Land on the system along with marketing support from Intel.
Microsoft's XBLA - This is the Xbox 360's digital store that has a huge range of games you can buy with Microsoft Points and a massive captive audience who can only come to you or a physical shop for new games. The store has featured both mainstream games as well as indie favourites such as Super Meat Boy, Limbo and Fez (though the latter got into a well publicised row over the cost/benefit of updating a game on the system to remove a few lesser bugs. The scene in Indie Game: The Movie where Team Meat stress about the newly launched game's store visibility, clearly shows the value of placement to a small developer.
Sony Entertainment Network (was PSN) - As with Xbox, being the only PS3 digital distribution option means it too has a captive audience. The higher barrier to entry means it is harder to get in, but once in there is less competition. Given that games need to be ported at least, but also pass Sony's own process in relation to what it is willing to allow, this is a much longer process then many other stores. As with XBLA this is also reflected in the update process which is subject to the same level of scrutiny and (potentially) cost. The store design itself has come on a long way since the first version, where you could only read sales text about a game and had no user reviews, so buying games was a bit of a stab in the dark, however is has now added the ubiquitous 5 star rating system. The store itself is ordered by A-Z and genre and a couple of other methods so no charts but it does have Sony's own featuring system. As well as PS3, there is also the PS Vita and Sony has been making noises about getting more indie developers on its systems, which would be essential to getting the level of kooky and experimental content such a device would benefit from.
"Sony has been making noises about getting more indies on its systems which would be essential to getting the level of kooky and experimental content the Vita would benefit from"
Valve's Steam - Currently the largest PC games store by a long way that has done well for many indie and mainstream developers and is setting the bar in store design and features. Steam has been a huge success for both developers and players with its gamer-centric approach. The system is excellent and makes a virtue of the need to install a distribution client with an array of services such as updating version, incorporating users generated content and mods, DLC and extensive fan support. Until recently the only drawback was the backbox-like application process that was the only method for getting on to the system; you could apply and if you got a no, you'd never find out why. However Steam seems to have responded cleverly to this issue by removing one of the bottlenecks to its growing power by crowd-sourcing part of the selection process with their recently launched Greenlight. We were one of the developers on the Greenlight beta (you can see our game page here) and found it very easy to get a game page up (it only needs text, images and a video) but it is early days yet regarding how a game will be judged and appear on the main site.
Tomas Rawlings is a designer at Red Wasp Design and a games consultant at Auroch Digital. Red Wasp Design was supported by AppUp to release Call of Cthulhu: The Wasted Land as the first PC platform the game was available on. The game is now also on Gamersgate and Indiecity.