Make It Big In Games

Traditional game developers are scared to death of what is happening with “social games“, but that is fodder for another post. This post is about the big gasp that went up throughout the game industry when the site Second Shares posted a well through out article that that came up with the $5B valuation.

NOTE: As a corollary to this article about why I think Zynga is worth so much, you should check out why I won’t invest in traditional game publishers.

I posted the following thought on Twitter and Buzz yesterday, but could not get any traction. If you want to discuss this issue, let’s use my Buzz post (I have been getting so many comment spams, that I had to turn off comments on this blog).

Activision =$15B, Electronic Arts = $6B, Ubisoft = $1.3B. Zynga = $5B? Can this be true? Check out my thoughts. #twitter

As hard as it is for hard core gamers and developers to accept it, Zynga and other “social” game publishers are coming on strong. I believe there is good reason for this. EA, Activision, and Ubisoft do not have direct relationships with their customers, let alone have their email, demographic info, and credit card info, and precise analytic data about how players are using their games.

Also, at the end of the day, the old school, hard core gamer, console specific game publishers are addressing a niche market, i.e. 14-25 year old males. I admit it is a great market, and it has proven to be willing to buy a lot of games over the years, but when compared to all males and females in the world, it is a niche market.

All games will be social so that will not continue to be a unique selling point. However, getting off the console onto social nets, the net at large, and mobile markets with a willingness to address different demographics (older men and women) with different types of games and using a metrics drive development approach is a unique selling point. I think will be easier to address this type of change from a clean slate than it is to turn a hard core console game publisher.

It is already too late for the old school publishers to react. Zynga is worth too much to be bought by any of them. At some point, they will realize that it is easier for them to stick to their hard core knitting than it is to address this new demographic.

On the other hand, the guys at Venturebeat feel the valuation is way too high. At some point we will see, and this blog post will keep me honest.

Jeff Tunnell, Game Maker
Make It Big In Games

As announced today at PushButton Labs, we have acquired the full rights to The Incredible Machine! Although this happened several months ago, we waited on announcing it until the guys at Good Old Games could get it ready for sale, where they have a bundle Mega pack that includes four versions of TIM for $9.99.

Original Incredible Machine in Pixelated Glory

How we came about getting the rights to TIM is a story that we cannot even tell. It is a story filled with lots of NDA’s, Activision, Sierra, GarageGames, a racing game, on-line game portals, PushButton Labs, Grunts, spys, and intrigue. Well, maybe not spies, but all of the other stuff was there. Regardless of the path, I have sitting in front of me all of the copyrights signed over to PushButton Labs, and like I tweeted a while ago, it feels like having a long lost child finally come home.

The Incredible Machine Copyright Folders

While we are not announcing our future plans for the TIM franchise, you do know that I still work with Kevin Ryan (co-designer, programmer for original TIM) and PushButton Labs creates Flash technology and websites, so you can draw your own conclusions.

-Jeff Tunnell, Game Maker
Make It Big In Games
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Flashbang Studios, creators of the portal Blurst, which is filled with their own games such as Off Road Velociraptor, Blush, and Minotaur in a China Shop are really doing things right. They have now self funded five titles and try to come out with a new game every eight weeks (six per year total). All of their games use the Unity web plug in for a nice, high fidelity game experience in the browser on both Macs and Windows machines.

Flashbang's Blurst Game Portal

These guys have no idea that I am posting about them. While I met Mathew Wegner a few years back at a Casual Connect, we have not stayed in touch. At the time, I was extremely impressed with his creativity and the types of games they were creating. Since then, their company has really hit its stride. In this article, Gamasutra - News - Interview: Flashbang Studios, Blursting Through?, Gamasutra interviewed the founders.

Here are some of the things that I think they are doing right:

• They have a”day jobs” doing contract work.
• They are creating new Intellectual Property at the rate of six games per year.
• They abandoned their old plan of making casual games to make money to concentrate on games they really believed in.
• They chose a game engine and work within its bounds. They don’t complain about what it does not have, they just crank out great games.
• They are aggregating their efforts in a rapidly evolving portal, Blurst, that is gaining traffic at a nice rate.

In summary, Flashbang is following all of the steps that I advocate in my Foundational Five article about surviving as a game developer. They have a small team of creative, like minded people, they have day jobs, they are creating innovative games, they are building a portfolio of company owned IP. In my mind, these guys, along with companies like Thatgamecompany, Behemoth, and 2D Boy are a new generation of rising stars that will be making the hits of the future. A couple of years from now, I think Blurst will have huge traffic, and these guys will be extremely successful.

-Jeff Tunnell, Game Maker
Make It Big In Games
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The success of the iPhone App Store is bringing out a lot of pontification about what is wrong with the market and how to fix it, but I think many of the ideas are dead wrong. Develop Magazine’s interview with developer Nnooo finally pushed me to write this article to debunk some of these ideas before they become dogma.

If you think there are too many games in the iPhone App store now, just wait. There will be many more.

All of this elitist non-informed bullshit needs to be debunked. Crap like this, along with developers complaining that they cannot make $80,000 per year just by making iPhone games is so far from the truth that it is laughable. The bottom line is that markets owe you nothing. If you can’t survive in the market, there will be a hundred other guys that want it more and will take your place.

First of all, get used to the crowding. If there are over 25,000 apps today, there will someday be 100,000, then 200,000, etc. It won’t end. If you can’t take the heat, get out of the kitchen. This is a marketplace, and you either break through or you don’t, but don’t blame other people that want to make games on your problems. Another marketplace, the Internet, has millions of products and games available. It is an open marketplace, and you should be glad for this.

I can tell you with conviction that you don’t want a closed market. If Apple were to close off the market by putting up slotting fees, a big sign off process, etc., only the largest of companies would be able to afford to put games in, effectively cutting off the small guy, probably even the company that gave the interview. This kind of closed distribution system is very similar to the box market, and was what caused the big publishers to evolve to what they are today, i.e. he with the most money wins.

Huge publishers used to kiss Nintendo’s ass to be allowed the honor of paying for development, marketing, cost of goods, plus a big royalty to the NIntendo just to bring their products to market. Today, if you want your game to go on XBLA, you first need to spend the money to make most of the game, then beg Microsoft for a slot, which is worth a lot less than last year due to MS arbitrarily dropping the royalties. Do you want to take your game to the box channel? Then get ready to play the extortion game of paying slotting fees, co-op marketing and selling fees (essentially kick backs), etc. if you can even get an audience with the channel. Again, he with the most money wins.

Making a great game is only part of the process. Marketing is the other part, and developers never really want to acknowledge this fact. We are in a unique period of time right now where new markets are opening up, and some lucky developers have hit the jackpot without giving any thought to how to sell their games. This will not continue. If you only know how to make games, it might be in your best interests to hook up with somebody that understands marketing and sales. That can be in the form of finding a partner that can work on those aspects or even considering finding a publisher that will handle those efforts for you.

I say that open markets are best. Sure a lot of bad games will be made, but they will quickly fall off the new release charts, and they will never be heard from again. If you are counting on the featured lists or the best sellers lists to market your game for you, you might as well pack it up now. That is a naive business model and, while lightning may strike a lucky developer once in a while, you need to have a better plan than relying on pure luck.

-Jeff Tunnell, Game Maker
Make It Big In Games
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I have always thought game prices have been too high, and I have put my money where my mouth is. At Dynamix, I pushed to have an entire line of casual products come out at the then unheard of price point of $19.95 instead of the industry standard of $40-50. When we first started the GarageGames Game download store, I advocated for, and won, a $14.95 price point. For the next six years I constantly advocated that we should blow away pricing friction and come out with some games at $1-3, as it was my belief that these rock bottom prices were inevitable.

Game prices are falling, and they won't go back up.

One of the first successes in lower priced games came from XBLA, where Microsoft went out and did huge surveys of gamers, and found they would be much more receptive to downloading games at lower price points, so they came up with the $5, $10, and $15 price points (further disguised by using Gamer Points) seen today. Our Marble Blast Ultra was one of the first games in the store at a $10 price point, and it made us hundreds of thousands of dollars in revenue, so I finally felt vindicated for my years of lower price point pontification.

Now the flood gates have been opened, and I am telling you to look out below. Today Reflexive, recently acquired by Amazon, opened their new download store, with lowered front tier pricing of $9.99 and second tier pricing of $6.99 for Indie casual games. All of the other casual portals like Big Fish Games and Yahoo games have pricing of of $6.95 by joining their “clubs”. It is my belief that even these prices will not hold up over time.

As an example of the future, look at the game section of the iPhone App Store. In this market, the right price for a game is $0, and I believe that is where all game prices are heading. For a while, there will be successes at $3.99 to $1, but eventually, I think you will see capitulation to the $0 price point.

Why are games going to what many see as absurdly low price points? It is a simple answer. Supply and demand. It used to be difficult and expensive to make games, so few people had the knowledge to create a game, and even if you could figure out how to make a game, there were only a few distribution outlets. There was no Internet, so only a few games could be brought to the few shelves open to selling them. With relatively few games being made, and fewer being distributed via hard media, games were scarce, resulting in high price points.

Contrast that to today, with an uncountable number of inexpensive or free game engines and tools, game development schools and thousands of web sites that teach people how to make games resulting in tens of thousands of game developers and games competing in the market. I always compare game development to music, and I will again. People want to be in bands even though there is no exact way to make money, let alone make enough money to make a living. As proof, there are over four million bands on MySpace alone. In the future, I am sure there will be millions of games developers, and all of them will be putting downward pressure on price points.

This is already happening in the Flash game market, with even a cursory look showing Kongregate, a single Flash games portal, with over 11,000 free games on their site. These games are already fun, but watch for them to get more polished with more features as more sophisticated Flash development gets easier with tools like our upcoming Push Button Engine as well as the foundation of Flash itself getting better. As there are more and more games on the market, developers will have little chance if they do not keep up with bigger and better productions. These great, creative, free games will put tremendous downward price pressure on all other categories and distribution channels.

What about consoles, and big game publishers, and the $60 price points of AAA titles? In depth analysis of this market is another article, but suffice it to say that prices will come down on all of them. Of course, all of this will take time, but it will be an excruciating fall. All you have to do is watch what is going on in the music industry to get a feel for how it will play out. There will be fights, finger pointing, lawsuits, and tons of press while the incumbents attempt to hold onto old business models while thousands of new competitors ravage the old way of doing things.

How will you survive in a market with a $0 price point and millions of competitors? I have ideas, and I can’t say for sure, but I do know there will be no one way of succeeding. I’ll explore different strategies such as ad supported games, micro-transactions, etc. in future articles. Don’t get me wrong, if you are already an Indie with nothing to lose, and you are following my Foundational Five ways of running your company, you should be excited about the changes.

-Jeff Tunnell, Game Maker
Make It Big In Games
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