Big Risk, Big Reward – how video games are no different from Glengarry Glen Ross

The video game industry is an amazing microcosm of capitalism.  Businesses rise and fall.  They invest, research, innovate and create, all with a view to make a few extra dollars and more importantly compete in the marketplace.  Publishers and investors are speculators in the industry merely looking to put their chips on a winning number.  It’s business, pure and simple.  But at the fringe of that you’ve got the guys doing it for the love of the art, the socialists, commies, hippies.  These are the indies that we all know and love, putting their creativity on show for us all to enjoy.  It’s ‘You’ve got mail’ or the original film on which it is based ‘The Shop around the corner’ playing out right in front of our eyes.  People love a good David vs Goliath story and that’s exactly what the industry is giving us at the moment.  We simply can’t take our eyes off of it.

But it would be remiss to think that all parties aren’t doing it for the money.

Video games like any form of entertainment built on trying to capture expendable income and is a highly competitive business with platform holders, publishers and developers all jostling for position on the podium.  And you don’t have to look far to see symptoms of the industry’s fantastic health.   Platforms, in most cases, are loss leaders.  That is they sell the main console hardware itself for a loss, underpinned by an assumption that profits from complementary goods and services will fill the red in the books with black.  And there is plenty of room for recovering any losses incurred in one business unit or area through cross-subsidisation given that in 2012 the video game industry was worth around $78 billion globally according to Reuters.  By way of comparison the International Federation of the Phonographic Industry (IFDA) estimates that the recorded music industry was worth just shy of $40 billion in the same year.

Games are undoubtedly a growing industry and big companies and their shareholders, including platform holders, intend to keep it that way.    Development costs have soared, with one of the latest big releases, Disney Infinity, reportedly costing upwards of $100 million to develop.  It’s a big risk, but a big reward if it hits the mark.  Software is never a guaranteed to be success, and so substantial costs are incurred with selling these products -marketing, messaging, community, public relations.  It’s like a well oiled political machine trying to spread the message that its game is the next big thing.  Sometimes it does, but other times it doesn’t.  Either way it’s business and business is ruthless – celebrating the successes and punishing the failures by studio closures of consolidation.  An agreeable altruistic pastime video games is most certainly not.

And so we see the rise of the Indies, the saviour of creativity, the last bastion of hope for the free developers’ world, the guys sticking it to the man.  These are the people the community hail as the real artists who care about games as a creative outlet and endeavour and are not in it for the money.  The rise of indie developers has defined the tale end of this generation and will define the start of the next, depending on your definition of what an indie developer is, of course.  We’re seeing names of boutique development houses, celebrity indie developers and indie-super groups thrown around at the virtual water coolers that are forums and websites.  Praise and adoration is heaped enmasse to the minimalism, pixel art, environmental storytelling and unique situations and concepts often contained within these low-fi video games.  The indie game has become more than just about ‘indie’ or ‘DIY’, but more about the feel and mentality behind it all.  But the community itself clings on to the commerciality argument as to some way paint these people as the struggling, starving artists – the Vincent van Gogh’s developing pieces of art.  It is in this way that these indie-game fanatics that hold them up as the messiahs of creativity and innovation in pursuit of nothing but the love of the craft. and in doing so present an either/or situation where its the good  versus the bad.

IndieGTM

But are the indie-tragics setting themselves up for a generation of sellouts as the sustainability of these studios and individuals bites their bottom lines and they’re forced to sell themselves or their ideas to the highest bidder in order to put food on the table?  Maybe not.  But the push for self-publishing on both of the major consoles is a clear signal that these guys want to be on more platforms, for more people with the end goal of selling their products to more consumers.  If it were simply about games as a creative outlet their would be no dogged pursuit of removing barriers to entry in certain markets.  Far from a dramatic artistic statement, they just want equality when it comes to the ability to appear on as many storefronts as possible.  And that’s okay.

But is it really US versus THEM?  Well no, not really.  The approach may be different but the end goal is the same for both groups, to differing degrees.  It definitely can be argued that publishers have moved to a more profit maximising, and often-times risk averse, business model.  This can in some cases lead to less innovation and creativity and more reliance on what the market tells it in wants through sales figures and focus groups.   But with every truth in all of that there is a falsehood. There is no doubt that the independent nature of these indie guys and girls gives them full creative freedom. It is true that they are not held back by profit and lost statements of publishers or shareholders’ needs, but in most cases they are constrianed by the same commercial realities as Electronic Arts, Activision, 2K or SEGA, just orders of magnitudes lower.  Where indies need to only cover the costs of their development plus their costs of living, big commercial businesses have far more riding on what their games bring in.  Shareholders expect dividends and decent prospect for future earnings, as do private investors and equity partners.  Large publishers just don’t have the flexibility to run their operations on the certainty of short term losses, but only the prospect of a long term gain.  And so this pressure trickles down to developers.  It isn’t a loss of creativity it is an economic reality, and one that most certainly isn’t confined to big business in the long-run.  If revenue isn’t covering costs of living or recouping costs of devlopment, one day creativity will make way for smart-business decisions.  And that may mean increasing prices – even in the indie space.

We all love video games because they provide us with escapes from our daily lives, the grind of work and relationships, or an opportunity to experience the fantastical.  An artist will say that they are thrilled at the prospect of the smile on someone’s face, but really like all of us, they are likely looking forward to the big pay cheque when the man and woman all dressed in fur come in and decide that the canvas will look nice above their mantelpiece.  It is nice to think that this is all one big happy family who are doing it for the love of the craft, and that may be the case in some instances.  But the video games industry and its players are driven by the same desires and needs of any other within a capitalist system – and for the most part they’re all just chasing the Glengarry leads toward the next big paycheque.

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3 Comments

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3 responses to “Big Risk, Big Reward – how video games are no different from Glengarry Glen Ross

  1. Really good read! Especially since we are in the creation of our first indie game. Thank you 🙂

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    • Thanks – it’s important to keep things in perspective. As soon as some of these guys become real successes and start making money it’ll be amazing how quick the internet turns on them and labels them as ‘sell-outs’. Good luck with the game, too!

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  2. Pingback: Indie Developers are just another cog in the machine of the games industry. And that’s OKAY | A Most Agreeable Pastime

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