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The devaluation of everything

The barriers to entry in gaming are falling left and right, causing some unfortunate side effects in the process

Last week, Epic Games announced that it was dropping its Unreal Engine 4 subscription fee for students and academic institutions, and heralded a new, "democratic" approach to pushing the technology. It's just the latest example of the democratization of game development, the lowering of barriers to entry in the industry across the board.

This is unquestionably a Good Thing. By reducing the financial hurdles needed to make a game, we are opening up the industry to a more diverse array of creators, which carries benefits for everyone: the developers, the audience, and the medium itself. But like virtually every Good Thing, it's not an exclusively positive force in the world.

Some of the biggest problems the industry faces today have their roots in this trend. Just look at the mobile market. Inexpensive and easy-to-use developer tools, phones that double as debug units, modest app developer fees, and digital distribution have inspired a flood of new talent to join the field. That's great to see, but there are more quality titles than there is virtual shelf space to effectively promote them, and the mechanisms in place don't exactly ensure that the most deserving games are the ones that get promoted. The result is a discoverability crisis that disproportionately impacts anyone not already successful or attached to a huge license.

The race to free is happening everywhere, impacting the creation, distribution, and consumption of virtually any kind of content that can be stored digitally

The lower barrier to entry also leads to a devaluation of games themselves. When developers spend less making games, they can charge less for them. Again, that's great on one level because games can be an expensive hobby and this allows some less affluent audiences to enjoy them as well. But when you combine the incredible amount of competition in the space with the ability to charge less per game, you really see just how cheap games can get.

And even though the mobile world is its own unique corner of the industry, it doesn't exist in a vacuum. Just look at the dedicated handheld market and consider how much of the family-friendly audience that drove DS sales has migrated to free-to-play iPad apps rather than spend up to $40 per 3DS game.

As Nintendo president Satoru Iwata said in January, "We must take a skeptical approach whether we can still simply make game players, offer them in the same way as in the past for 20,000 yen or 30,000 yen, and sell titles for a couple of thousand yen each."

The devaluation trend has even spread to the AAA console world, as evidenced by services like PlayStation Plus, Games With Gold, and EA Access. It's now surprisingly common for publishers to give away last year's big games for free, or for indies to include their games in such services on launch day. Even when the deals they strike make sense for each individual game or company, developers and publishers are still giving their premium-priced releases that much more competition--competition with a huge inherent advantage--and increasing the pressure to drop all their products' prices that much faster. For everything else, there's Steam sales and pay-what-you-want bundles, which have conditioned half the PC gaming audience to wait for the inevitable deep discount. A game just isn't worth what it used to be.

The race to free is happening everywhere, impacting the creation, distribution, and consumption of virtually any kind of content that can be stored digitally. Take the games media, for example. Once upon a time, there were barriers to entry. When the industry was young, magazines were the main discovery filter for games. The costs of writing content, layout and design, printing, and distribution were a significant hurdle for pretty much everyone except existing magazine publishers and giants like Nintendo.

The content that can keep independent gaming sites solvent in the short term is the same content that can make them irrelevant in the long run.

Then the internet democratized (and subsequently devalued) everything. Now creating a gaming press outlet is a trivial matter. There's no shortage of free blog sites to host content and provide templates to make it look acceptable. There are no printing costs, and there's no shortage of writers willing to work for cheap or free. You barely even need any prep time. Today's controversy can spawn tomorrow's new press outlet in a more literal sense than ever before.

You don't have to look very hard to see the impact this has had on the largely ad-supported media. When there were barriers to entry, there was less competition. When there was less competition, there were fewer innovators, and the ones that did exist were less audacious. It was a lot harder to throw the old way of doing things in the garbage when you had invested everything just to get a foothold in the market.

But in a medium where anyone can join and success is measured in eyeballs, it didn't take long to figure out that sensational headlines and list articles attract a lot more eyeballs (and are a lot cheaper to produce) than nuanced, in-depth coverage. It's a sad lesson that we don't want to be true, but supporting evidence of this fact emerges at roughly the same rate a well-funded outlet can talk themselves into believing otherwise. As with the devaluation of games, this devaluation of the media only seems likely to get worse. A staff of round-the-clock paid-by-the-post writers churning out new content every 20 minutes is still more expensive than one charismatic YouTuber cobbling a daily video together.

That competitive pressure has plenty of upside, ensuring new voices have an opportunity to be heard, particularly ones that might be free of the burden that comes from acting as one small part of a massive operation and the various conflicts that produces. However, that pressure also makes it harder and harder for the independent press to function properly. Producing quality content takes time and money, thus it is a luxury. When competition gets fiercer, sites focus on the content that provides the best return on investment.

Sooner or later, the cut corners and emphasis on things other than quality content show up in the final product, leaving the door wide open for publishers to set up official blogs or hire their own "brand journalists" to market directly to the audience. And that audience will welcome this, because they didn't see much difference between marketing and what the independent press was doing in the first place. The content that can keep independent gaming sites solvent in the short term is the same content that can make them irrelevant in the long run.

"When there is a seemingly endless array of people able to make, cover, and consume content, it can't help but minimize the value of any one developer, any one writer, or any one customer in the chain."

But in an industry where the product and the press are devalued, it would be odd if the audience wasn't subject to the same forces. Puppy Games' Caspian Prince pointed out recently that the average customer is virtually worthless to him because the average customer paid virtually nothing for his game. As Prince perhaps bluntly underscored, the relationship between game creators and game consumers has changed in recent years.

When games sold for more money and the ratio of revenue to customers was more skewed to the former, creators were better able to offer customer support on a one-on-one basis, or reflect on individual feedback in a meaningful way. With the value of games eroding, developers have had to make up for the reduced income from the average customer by dramatically expanding the number of customers in total. But when you increase the number of players that much faster than the corresponding revenues, it's functionally impossible to continue treating customers as individuals rather than price tags or data points.

Naturally, the audience doesn't really care about all this. Gamers value "free" considerably more than they value the benefits of theoretical customer support if they have a problem, or not having their existence in the developers' eyes boiled down to heat maps and ARPU. And just as with the media's response to its own devaluation crisis, Prince's answer to this predicament, embracing a free-to-play model for the upcoming Battledroid, can only accelerate the trend he was bemoaning in the first place.

Again, in most aspects, this ongoing democratization of the industry is a Good Thing. But when there is a seemingly endless array of people able to make, cover, and consume content, it can't help but minimize the value of any one developer, any one writer, or any one customer in the chain. It threatens to make all of us that much more disposable, even as the industry becomes increasingly essential.

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Latest comments (24)

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.7 years ago
*claps*

Brendan, that was one of the best pieces I've read in a long while.

I've seen first hand how the change in media has taken place. Back in the 90's, I wanted to start my own magazine but learned quickly it was cost prohibitive (among other problems). Not long after, the impact of the Internet made it possible to have a virtual magazine. It still cost a lot of money; hosting, programming, etc... And a lot of time; content management system creation, site layout, other custom coding. But it was a new enterprise and few were doing it. Made it easy to become known.

Then blogs and free templates, free hosting, Youtube and other platforms showed up and it became easy to fall into irrelevance. Devalued.
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Adam Acuo Investment Banking 7 years ago
I've seen this view before and there's no doubt some truth in it. I'm not convinced however that lower prices mean fewer dollars flowing into the industry - in fact the anecdotal evidence is quite to the contrary... lower game prices mean that the industry is grabbing some market share back from the pirates while deep discounting of older games seems to generate sales to impulse buyers that would likely not buy the game at all. There was in fact a recent analysis of Steam libraries that showed that many users don't spend ANY time playing many of the games that they have purchased via some of these sales - this isn't a devaluation of the industry - this is found money. It seems to me that the industry is evolving and it is evolving in a good way to a model with a longer tail of revenues albeit at lower prices that I believe likely more than makes up for any reduction in initial full price sales.
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Mihai Cozma Indie Games Developer 7 years ago
Very good article, I feel the same. When I started this indie game dev thing about 4 or 5 years ago I had a very romanticized vision of what being an indie means, and I thought it will be more than a hobby for me, maybe a small business. Now it becomes more and more clear that it will remain a hobby. Eventually things will settle down as they always do, big players will remain while a large part of the others will look for other opportunities.
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Show all comments (24)
Neil Young Programmer, Rebellion Developments7 years ago
For everything else, there's Steam sales and pay-what-you-want bundles, which have conditioned half the PC gaming audience to wait for the inevitable deep discount.
As I noted under the linked article, that statistic doesn't necessary lead to that conclusion though.

Good article, though!
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Brian Lewis Operations Manager, PlayNext7 years ago
Hmm.. Perhaps I am in the minority here. I felt that that the author was a bit off note. I think that they missed the elephant in the room.

Things have not been devalued... they have been adjusted to thier relative worth. Yesterdays gaming blockbusters that were less than satisfactory, are now competing with games that cost 1/1000th as much to make/produce, but that provide just as much/more entertainment value.

In a market with sparse competition, the seller is able to charge a premium for thier product, regarless of quality, or actual value. Scarcity alone drives the price up. However, once the market is flooded, then the actual value is much more relevant to the price.

In gaming, this has happened because of the lower cost/greater availablity of tools to create content. Much of the new content lacks in production value, but often, it provides much more enjoyment to the user (its the game stupid). The key to the new market is not price point, but matching the customer experience to the cost. If a game is going to cost $40-60, it should provide sufficient enjoyability to the customer to justify this. If this means lowering the production values, to generate a better ROI, then it needs to be done. If the game doesnt generate that much customer value, the price needs to drop.

This is what we are seeing now. Games have prices dropping to (almost) nothing... because people were not really interested in playing them. It doesnt matter to them how much it cost to make them, only what they get in return. However, we are still seeing them paying a premium price for games that they WANT to play. Heck, I still see some old games sell for more than games that are almost new... because they still have great gameplay value.

So, overall it is not a process of devaluation... but rather a simple matter of supply and demand...
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Johnny Hsu Employee, EA7 years ago
We've seen explosive growth of worldwide revenues in the interactive entertainment industry... fueled by games that the writer asserts are "devaluing everything." Today's games reach a larger audience and provide a wide variety of gameplay diversity. Customers are rewarding our industry innovators with their dollars.

The growth in our industry has resulted in higher valuations for both established gaming companies and new gaming upstarts. In some cases, the companies that successfully embraced games that allegedly "devalue everything" are generating more cash flow than the established firms who have been around for decades.

Does reality support the claim that the interactive entertainment industry is losing value?
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Lewis Pulsipher Game Designer, Author, Teacher 7 years ago
Tabletop gaming has seen much the same progress, with one vital exception: prices have not fallen, because making additional copies of the product costs a lot of money. Electronic games can be copied infinitely at no cost, and that leads to a rush to zero cost as producers decrease prices to sell a few more that cost them nothing to produce.

What HAS happened in tabletop games is the same that's happened in books: more titles published, fewer copies sold per title. A really good hobby game that might have sold 90K copies some years ago might sell 20K now. More and more titles are printed in quantities of a thousand.
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Jason A Bentley Owner, Hemlock Games7 years ago
The games industry is a declining market.

This doesn't mean that the market is making less money, in fact the market is huge. What it does mean is that the barrier to entry is low and PROFITS for any individual producer are very low. The only producers of content who make serious money any more are the ones who can afford the massive advertising budges or who stand out completely on the quality of the product. What percentages of each do you expect to see?

You may say that this is all a Good Thing, but I see a future where even the largest publishers are making nothing but F2P and squeezing out even the littlest competitor in their chase of the few dollars consumers are willing to spend when everything around them is offering free.
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colin merrick Engineer/Artist 7 years ago
All forms of entertainment that have a digital form games, movies books have all lost their value recently. It is a sign of a new almost disposable art form. Customers now have very short attention spans and want everything faster and want to move on to the next thing even faster. As the entertainment industry churns out more and more content at an increased rate quality will fall and people no longer have the luxury of development time to 'get it right' sometimes its just get it out the door.
I do believe sometimes less is more and I think we are starting to see an oversaturation of content and customers can not or are not allowed to focus on what they have just bought or aquired.
The engine is constantly turning faster and faster and it needs more and more fuel no matter what the quality.

Edited 1 times. Last edit by colin merrick on 10th September 2014 8:25pm

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Jason A Bentley Owner, Hemlock Games7 years ago
"Does reality support the claim that the interactive entertainment industry is losing value?"

His assertion isn't that the entertainment industry is losing value. His assertion is that any individual producer's value is dropping to zero.

Company X goes out of business because their game didn't sell? Oh well. Company Y will be created tomorrow to pick up where they left off
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Tim Carter Designer - Writer - Producer 7 years ago
The Star System can save the game industry.

Look at writing. For decades and decades now, anybody could be a writer. The technical barrier to entry was miniscule.

But not everybody was. Why?

Because it isn't the technical barrier to entry that matters. It's whether you have talent or not. It's whether you have a voice of not.

And, I'm sorry, just because you have an idea... just because you can physically make a game... doesn't mean anything that you make will be worth anything.

Edited 2 times. Last edit by Tim Carter on 10th September 2014 8:30pm

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Jason A Bentley Owner, Hemlock Games7 years ago
"The Star System can save the game industry...."

I agree.

The nature of the App stores make this issue far bigger than it should be. An app with 1-2 stars should never be apparent to users. I should never be shown the newest sports game; i've never played or reviewed a sports game.

The reality needs to be more like Amazon's marketplace. If you review specific games highly then other games that are similar become part of your suggestions and can be ranked by review scores. At that point I'm only shown games I'm likely to enjoy (because reasons) and are of higher quality. Unless I'm searching for 'flappy sh*t copy' I should never see one of those products.

Edited 2 times. Last edit by Jason A Bentley on 10th September 2014 8:52pm

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Johnny Hsu Employee, EA7 years ago
"Company X goes out of business because their game didn't sell? Oh well. Company Y will be created tomorrow to pick up where they left off"

The general rule of thumb for venture backed startups is that 8 out of 10 will fail or provide a break-even return. A Harvard study found that ~75% of venture backed firms in the USA don't return investors' capital.

There's nothing wrong with the cycle of Company Xs and Company Ys. The turnover is not an warning of a declining or dying industry. The notion that we have so many creatives and entrepreneurs trying to create Company X and Company Y means that the industry is growing with many investors viewing the space as a profit opportunity.

The interactive entertainment industry has roughly doubled over the last 5 years. Gaming is definitely not on a decline. Is there anyone employed by King, GungHo, Supercell, NetEase, Riot, Kabam, Machine Zone, King Digital Entertainment, or Nexon that believes the interactive entertainment industry is declining or being devalued?

Edited 1 times. Last edit by Johnny Hsu on 10th September 2014 10:04pm

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Christopher Bowen Editor in Chief, Gaming Bus7 years ago
There's only one problem: the people driving the round-the-clock, 20 blog post type sites? The Zergnets?

They don't give a shit about the damage they cause. They live by a phrase I heard in relation to the Wall Street Crash: IWBH, YWBH. I won't be here, you won't be here.

Translation: who cares about the splash damage? These people are counting their money.
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Dave Herod Senior Programmer, Codemasters7 years ago
@Adam Acuo
while deep discounting of older games seems to generate sales to impulse buyers that would likely not buy the game at all.
Yes, but gamers don't have infinite time to play those games. I will impulse buy games in Steam sales but that means I won't then buy another game full price because I barely have the time to play the games I already own, never mind wasting money on new ones I won't get round to playing for months anyway. So I am spending less on games due to having a massive backlog of stuff I haven't got around to yet, that I didn't spend much money on anyway.
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Eyal Teler Programmer 7 years ago
@Tim Carter, I don't think that writing is any different than gaming when it comes to digital. Writers could never easily publish their novels, let alone sell them. It wasn't until digital distribution that writers could easily publish their books and distribute them, and that led to a similar explosion to what indie games are experiencing. There are millions of books, and many writers who fail not because they write something that's bad but because nobody knows about their books.

Plus most writers have always made very little money, even before digital, which is why they always have a "day job". The difference with games is that they are harder to create, so doing them as a hobby is harder.

Back to the original topic, this problem is why there are so many articles and talks about monetisation. It's all about getting people to pay in a world where they don't care to do that up front.
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Very good article and it makes a good summary of all the trends currently happening to the games industry.

However let's take a look at the book industry for example, since Internet anyone can write, print (design) an e-book easily right? It still requires some talent and obviously time. However we haven't seen the same trends happening to books as it happens to games? Is the book medium less attractive? Is the game industry perceived as an easy money industry? Is it because the book industry is more controlled (editorial approval)?
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Ruben Monteiro Engineer 7 years ago
The Star System can save the game industry.
No, it can't. What it can do is turn the whole thing into a popularity contest. Between two 5 star games, the one with more votes will be on top, and that's a measure of how successful the developer was in getting eyeballs into it, not how good the game is.

Any rating system based on gamer's feedback is bound to be skewed by fanboyism, disproportionate emotional reactions and herd mentality. Just browse Metacritic's user score for Mass Effect 3, and you'll see folks rating it a 0 (!!!) because they didn't like the ending, or some even more obscure reasons like not liking the sex scenes.
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Dave Herod Senior Programmer, Codemasters7 years ago
@Eyal - Book writers have always struggled though. Previously there were lots of authors who wrote books that got rejected by publishers and never went on sale. Nowadays they're writing books that go on sale but no one ever finds, unless they have help. So the situation hasn't really changed for them. There's still many failures for each success, like there always has been.
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Jeff Kleist Writer, Marketing, Licensing 7 years ago
@Ruben

Exactly. All the star system does is generate another category for the leeches that eill sell you 1000 Facebook or twitter followers to sell you. Any metric that doesn't require the voting member tomproduce something, be it dollars, writing, a picture etc is entirely worthless

It always chaos my butt that Amazon allows reviews of things that aren't even out

Yesterday, to try to channel people's desires for Deep Space Nine on Blu-ray to an actual metric of paying, and likely to pay customers, I came up with #ds9onbluraypkease, prompting people to prove that they put their money where their mouth is by photographing themselves with their existing discs. We've already gotten some great shots, but more importantly, instead of an empty petition that's easily fired and forgotten, each person "signing" is demonstrating that they have purchased, and will purchase more Star Trek.

By limiting Star ratings to verified purchasers only, it keeps the bits and people with agendas at bay. They're welcome to drop $15 to downvote me any day ;)
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Greg Wilcox Creator, Destroy All Fanboys! 7 years ago
@Chaos Butt (Jeff): You said pretty much what I wanted to, so I don't need to type anything. But I must! Ha!

Star ratings are awful in this day and age unless there's a way to assure the person rating has actually paid for and played the product.

Amazon is FULL of the worst (and yes, most amusing) reviews from people who want to flex their comedic skills, Metacritic gets to use "user" reviews from people with agendas against certain devs or pubs (and stupid agendas such as "You won't publish import game X, so I'm-a gonna crap on any other game you release until you do!") and so forth and so on. It's at the point where by the time you find an honest user review, it's usually buried under so many fakes that it's not worth the effort to look at some sites.

And, I'm not even much of a Deep Space Nine fan, but I'd actually buy that just to get in on the money where your mouth thing.
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Rafa Ferrer Localisation Manager, Red Comet Media7 years ago
@Jeff and Greg - Let's not forget all the 1-star ratings in Google Play because "WTF your kidding me this don't work on my NexPerion 5X, this game sucks" (typos appallingly intended) and the king of educated opinions: "Great game, I give it 1 star because it should be free".

I know game writing is not the most popular thing right now, but God it's so much more needed than these crap user ratings systems.
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Ruben Monteiro Engineer 7 years ago
@Rafa

And equally amusing is folks that think a game is really 3 stars, but they give it 5 just to compensate for those who gave it 1 star!
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Adam Acuo Investment Banking 7 years ago
The evidence appears to show that this is not happening - gamers are spending more total $$ on games than before... they're just buying more games, and more games on impulse than they were before and people that would previously pirate the games are now probably still pirating the newer expensive games but they're also spending real money to buy older games that are on sale. Money from pirates is a clear win for the industry - it's the iTunes effect in play. I know that from my own experience that I'm spending more total dollars on games now than before - even though I'm waiting for the sales to pop in for certain games. I'm also gifting out games to people on my Steam list and buying multiple copies of games if they're included in a Humble Bundle or as part of a digital bonus package. Granted - all of my statements are anecdotal - I'll take a look at the industry stats later to see how they fit.
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