BETA | A NEW ERA
Welcome to the
Golden Age for games development
There has never been a better time to be a game developer, says Nicholas Lovell, who in the first in a series of articles for Develop looks at how fortunes have reversed from corporate publishers to small development teams…
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elcome to the second Golden Age of games development. And, wow, is it better than the first one. The first Golden Age of video games started with the first home video game systems and ended in 1983 in a wave of overexpansion, hubris and the rumoured burial of millions of copies of E.T. for the Atari 2600. Why was it a Golden Age? It depends on whom you ask. For game creators, it was an era of extraordinary opportunity. New devices allowed new types or artistic expression. A generation of designers were just making art; they were making up the rules of the form itself, because no-one had been there to do it before them. It was a heady, febrile time for games developers. For people who think business innovation is as exciting as content innovation – and I’m one of them – the Golden Age was even more exciting. Disruptive technologies bring vast opportunities to create brand new companies, business and revenues. Most of the companies that we revere today have their roots in the Golden Age. THE DAWN OF THE PUBLISHER AGE The Golden Age eventually came to an end. It was destroyed not by the publisher but by a fundamental truth of twentieth century media: it was expensive to distribute content. It’s not actually expensive to create content. No, really, it isn’t. How much does it cost to create a best-selling album? What about a novel? Even a great game (World of Goo cost $120,000; Braid cost $180,000)? Across all of the media industries, the content creators are not the key cost. Distribution is where things get expensive. 60 | AUGUST 2010
At an average newspaper, the editorial cost is less than 15 per cent of total costs. An author will generally get a royalty of less than 10 per cent of the price of her novel. Modern Warfare 2, cost $50 million to develop but $200 million to manufacture, market and distribute. And that’s not including Activision’s corporate overhead.
Publisher-bashing is an easy option. It’s also a deeply unfair one. In the era of physical distribution, publishers deserved to make most of the money. Publishing in a physical world is a very challenging activity. The moment that you press the button on the release of a triple-A game (or a book, or a movie or anything else), you are totally committed. That entire development budget is spent. It’s sunk. You now have to spend a huge sum on manufacturing and distribution to get that game into stores all across the planet. Having invested all of that money into a game, it would be terrible if consumers didn’t buy it simply because they didn’t know about it. So sensible publishers double down by investing a multiple of the dev budget into marketing. And as budgets go up for development and marketing, few companies can afford to participate in this game.
The Publisher Age saw the end of the small independent game creator overseeing everything from the idea to the box in a consumer’s hand. The economics didn’t stack up. And so, as the twenty-first century dawned, it looked as if the Publisher Age would be upon us for ever. Luckily, the world changed. BLOOD-SUCKING LEECHES Publisher-bashing is an easy option. It’s also deeply unfair. In the era of physical distribution, publishers deserved to make most of the money. It is hard to arrange for all of yesterday’s news to be written, subbed, laid-out, printed and distributed to every newsagent in an island of over 60 million people by six in the morning. It’s so hard, in fact, that only a limited number of companies could make any profits at all trying to do it. It’s not so hard to deliver that news online, and to do it instantly. It’s hard to manage a transmission network of broadcast towers and repeaters to deliver television county to an entire nation. It’s also not so difficult to upload content to sites like YouTube. It used to be hard to get a game into a consumer’s hand. You had to manufacture it. You had to distribute it. You had to persuade GAME and their equivalents in every country in the world to stock it and promote it. Distribution used to be both very hard and very expensive to do right. It was so difficult, and so risky, that publishers could, and frequently did, take around 80 per cent of the revenue from titles – and even more of the profits – on the games that they financed, marketed and distributed.