Way back in the mid '60s, Marshall McLuhan wrote about an idea -- and coined a catchy phrase -- that's proved startlingly insightful and prophetic ever since. "The medium is the message" is a term you've likely heard before; the point McLuhan was making was that the nature of a medium itself, not just the content it carried, had a powerful impact on society.
Whether it was a novel or a newspaper, a movie or a TV show, a billboard or a shop sign or -- had he only had a decent crystal ball to hand -- a website or a tweet, the functioning of the medium changed people's perceptions and thoughts in ways more subtle but yet far more fundamental than the content that actually flowed over that medium. McLuhan thought of media in a broad sense, but focused often on movies; no doubt, though, he would have felt fairly vindicated by the 21st century experience of how little time it's taken for social media to warp entire national discourses into new and alarming shapes.
"Telling studios to charge more is probably a case of King Canute trying to politely persuade the tide not to come in"
We can, a little clumsily, take McLuhan's insight and think about it in business or economic terms as well. The medium -- the platform, the channel, the storefront, or whatever you choose to call it -- plays a central role in forming and shaping the expectations and desires of consumers. We focus on the content carried by the medium; games themselves are discussed and reviewed at great length, dissected in media studies courses and laid bare in dissertation theses.
The medium underneath, however, largely escapes notice except in the broadest of strokes. We talk about technological shift in terms of the new content it enabled, from graphics chips allowing games to move into 3D to disc-based consoles introducing FMV-led extravaganzas, to the online gaming revolution of the late '90s creating entire new genres. Yet underneath all this, as McLuhan would have expected, the changing medium -- the consoles, the platforms, the storefronts -- have wrought even deeper changes on how consumers think about and interact with games (and indeed with many aspects of society far beyond games themselves).
The most impactful of those changes, economically, lies in value perception; the private calculation people make, generally without even being aware of it, before deciding whether something is worth paying money for. It often feels like a gut reaction, but it's really a calculation based on experience and expectation, a constantly updated Bayesian model of your own notion of what constitutes "value for money," or indeed the value of money, running away unconsciously over some mesh of neurons in your brain.
The medium has a powerful impact on those perceptions; how much you've paid in the past, how many other products are competing for your attention, how they're presented, whether there's a physical item involved, or a physical transfer of cash, how and when you pay... It all sums up to a ton of information that consumers process without even thinking about it.
"The indie space is now clearly circling the same drain that mobile games did many years ago"
Marshall McLuhan came to mind this week on two separate occasions. The first time was reading Mike Rose's insightful report into conditions for indie or mid-range titles on Steam, which appear to be deteriorating very rapidly. The most striking thing, to me at least, wasn't that the average revenue for a game in his sample is now well below providing an income for a solo creator, though that's a pretty important benchmark in itself. Rather, it was the evidence suggesting a race to the bottom; not the overall drop in revenue so much as the inexorable decline in price tags.
Rose suggests that studios should be charging more, and while I think his diagnosis is spot on, I also think this prescription is probably a case of King Canute trying to politely persuade the tide not to come in. Not least because we've seen all this play out before, albeit in fast forward, over the course of the first few years of smartphone gaming.
Digital storefronts on PCs have been slower to follow this curve than smartphones' meteoric plunge towards the zero price point, but the curve is still describing largely the same arc. The PC market benefited from greater starting velocity; there was a history of high-priced AAA titles meaning that lots of consumers had a pretty healthy starting point for cost/value calculations, so even as the medium changed there was a strong degree of inertia in people's cost perceptions. That created a bit of breathing room, and a false sense of security; a somewhat naïve belief that you could replace physical products sold in bricks and mortar stores with downloads from a digital storefront without fundamentally rewiring the perceptions and evaluations of consumers in the process.
The indie space, however, is now clearly circling the same drain that mobile games did many years ago. There's a growing mass of consumers who basically feel like games should be free up front; not in an entitled, piratical sort of way, but in a "this is how my other favourite games work, why should other games expect me to pay before I play" sort of way. On mobile, which like Steam and its ilk was a hugely competitive and open platform environment, this drove us in a matter of a few years to a point where zero was the only price point consumers were willing to consider.
There is little evidence to suggest that the process will play out significantly differently on other digital storefronts. The medium is the message; the platform defines perception. Developers aren't skidding along a downward pricing spiral, racing to an inevitable bottom because they're greedy and trying to make a fast buck; they're doing it because it's the only way to actually compete, and soon the options will close up even more tightly and any price at all will be far too much for a critical mass of consumers.
"This is a hard spiral to break out of, as evidenced by the fact that nobody has really managed to do it yet on mobile"
McLuhan came back to mind as Apple unveiled its Arcade service -- properly this time -- and announced pricing and a pretty solid looking game line up. The timing of this alongside Rose's report is striking, since Apple Arcade represents a point much further along the evolutionary cycle from the rough spot in which indie games find themselves; an attempt to pull back an industry where the free price point reigns supreme into some kind of balance where other business models can function.
A lot of what Arcade is offering is clearly pitched at the kind of users who actually do play games but really don't get along with free-to-play mechanisms, but I think it's also clear that there's a family-oriented pitch here too. Once the service gets its feet underneath it I really wouldn't be surprised if turning off free-to-play transactions for your account entirely becomes an up-front option for Arcade subscribers, essentially making this a safe option for parents. More than anything else, though, it's an attempt to offer something outside the dominant paradigm of mobile gaming, the same paradigm that a big chunk of the PC gaming market is now starting to approach.
Ultimately, if the cost of distribution is zero, there are no walls of any consequence around the garden, and major market players are starting to push a $0 price tag, consumers' value perceptions will naturally undergo a major shift -- making it an economic inevitability that up-front pricing will drop to zero and new revenue streams will have to be found.
I don't think a lot of the players who currently fork out for indie games will like that, and I suspect many creators will look for alternative ways to make money rather than embracing free-to-play as quickly as mobile did, but that doesn't change the slowly tolling funeral bells for the mid-range price-point indie games have enjoyed thus far. Free games supported by Patreon, or ads, or sponsorships, or merchandise sales, are far more likely to be the shape of this sector in the future than a continuation of any kind of decent sized market for $10 games, let alone $15 or $20 games.
This is a hard spiral to break out of, as evidenced by the fact that nobody has really managed to do it yet on mobile -- and it's not for want of trying. Even Apple's effort with Arcade is likely doomed to a niche existence through the simple reality of how games work, which lends itself far less readily to the subscription library approach than music or movies do.
On PC, where companies that can actually build a walled garden all of their own don't really exist, this task will be harder still. We should never have expected that the move from physical to digital would allow old business models and long-standing consumer habits to continue unmolested. Inertia has given us a few good years, but we're rapidly approaching the point where developers will need to adapt to the new reality or face commercial extinction.