Starting a Game Company the Way for Developers to Survive?

I write a lot about the video game industry and how game development is in upheaval. It's being shaken by the seismic forces of online and mobile gaming rising up from the bottom while the imminent deep impact of crushing AAA mega-title development costs comes streaking out of the sky. The products that are relevant to the market are changing with the mid-range titles eking out an existence in a precarious niche.

Nobody really knows how many game developers there are worldwide. Partly because it's hard to pin down exactly what you mean when you say "game". Modern Warfare to Farmville, PocketGod to World of Warcraft, there's a vast range of console, PC, online, handheld, web and mobile products. The IGDA has about 14,000 paying members. Electronic Arts, Activision-Blizzard and Ubisoft have over 20,000 employees at last count.

In July 2009, there were about 16,000 games on the iPhone. In June of 2010, 9 of the top 10 iPhone apps are games. Who knows how many Facebook and other social media games are out there? We do know they're attracting millions of users, millions in revenue and billions in company valuations.

And traditional game company studios are getting savaged by spiraling development costs, a changing marketplace and the forces of online. It's harder and harder for a mid-sized studio to survive. Sure, you might end up working for the giants, but even the big guys are focusing more on fewer but bigger hits. A game needs to either be a big vicious T-Rex or a nimble little critter that can thrive in the bustling ecosystem of web, mobile, handheld and social games.

Full-time, stable employment as previous generations understood it is becoming rarer in the American workforce. But this might not be such bad news for game developers who have an entrepreneurial spirit. I've had interns who published games to the iPhone. While the Zyngas are rare, there is definitely room for micro-studios to become self-sufficient and profitable.

There may be a time in the not-too-distant future when "game developer" is all too commonly synonymous with being an entrepreneur, even if on a small scale. The idea of being an employee in the cozy environs of a game studio where "those business guys" worry about the niggling details like revenue and costs may become, if not a thing of the past, the exception rather than the rule.

The game business might end up looking more like the model of the film world, where  some work in large studios but a vast workforce labors as independent contributors or in tiny shops. In other words, responsible for their own fate.

And if game developers become entrepreneurs by default, they'll be selling products (as opposed to contracting services). That means suddenly they're going to face issues like costs of production, cashflow, company structures, taxes, marketing strategies, etc.

So is your typical game dev ready for that business savvy?

Well, it's really a question of the dinosaur mandate.

You either evolve - or get crushed by a giant rock.