The Devaluing of Game Design and the Market Impact

The game market is always in a state of flux as we are seeing massive changes from the Indie sector and the AAA market. However one thing that is remaining consistent is a steady devaluing of video games. While this is great for consumers, it is forcing game makers to do more work and evaluate what games to work on.

Understanding what is going on with the greater market is critical for any game designer regardless of where they work as it is a major market trend.

The Current State of the Industry:

Over the last three decades, we have seen video games come down in value. From the days where SNES titles were $80 to 99 cent mobile games. A few years ago, AAA developers and publishers talked about raising the current MSRP of AAA titles due to the increasing cost of game development. However, that didn't happen but games as a whole have dropped in price.

To understand why, we can point to several major trends that have shaped things for better and worse.

Sales:

Games sales have really come into their own and have changed the way games are being sold. It all started with the Steam Summer Sale and since then we've had seasonal, weekly and even daily sales on a number of store fronts. This has conditioned a lot of people to wait for sales instead of buying a game at full price and we are seeing more frequent sales of games these days.

Outside of the major developers like EA, Nintendo and Blizzard, most games don't retain their value for more than a few months. And we are either seeing full on price drops or the game being a part of some sale.

Sales have become major business opportunities for store and developer alike

Sales are a byproduct of the move to digital distribution as it allows both developers and store fronts to quickly and effortlessly change prices and create marketing buzz easily.

Ease of Development:

The ability to create and distribute video games has never been easier than it is right now. In the past, you needed an entire team and the technical knowhow to work on very specific platforms to create a game and even then that wasn't enough. Due to limited store shelves, retailers controlled what games were being seen by the public and both developer and publisher had to conform to the store's wishes.

Today things are far different. Game engines like Unity provide a lot of power and in the right hands can be used to make any number of games. With both digital distribution in the form of store fronts and developer sites, you don't need to worry about Wal-Mart or GameStop anymore for your game to be a hit.

This means that the barrier of entry to game development has decreased dramatically and we now have dozens of games being released weekly instead of only having a handful a month. With all these games out there vying for consumer attention, means that there is more competition without an increase in the money coming in which we'll talk about next.

Mobile and Social:

The mobile and social markets have created an entirely new market of casual gamers who wouldn't think about buying a console or playing PC games. This lucrative market has turned companies like King and Zynga into giants and created the social game boom from a few years back.

mobile games have created a new market of consumers who aren't necessary savvy with the game market

However we are seeing things bust as social gamers aren't buying and playing multiple games like the core and hardcore markets do. And as more games came out, many social developers found themselves without a dedicated fan base to sustain them. Now for the AAA and Indie developers reading this, you may be thinking "who cares?" but the devaluing of games is a big deal that affects all corners of the Industry.

Why it Matters:

Consumers these days are being conditioned not only to wait for sales but to spend less money on individual games and this is not good. The AAA market is already risk adverse as it is, but with consumers waiting on sales and not spending full price on games, this makes lengthy development cycles very risky.

Even if you release an amazing game with dozens of hours of content and think that it's worth a $50 price tag, the market may not agree with you. Many developers don't have the savings to wait for profit over a course of years due to sales.

Indie developers are also feeling the burn as they also have to compete with 99 cent titles and the influx of games. There are people out there who feel that even spending $20 on one game is considered pricey and it's becoming harder to convince people of the value of a game.

The problem in a nutshell is that every game is being compared to each other: Whether you are making an 80 hour RPG, five hour experimental game or a 99 cent app, the general market views all games with the same lens. And as store fronts continue to cash in with sales, developers may find themselves without knowing it, pricing themselves out of their market.

What can be done?

There really isn't an easy answer to this as consumers continue to throw their money at sales and support the model. Developers will need to find a way to convince people of the value that their games have. And with more F2P games coming out and the increase focus on mobile and social games, this is not going to be easy.

There needs to be standards of pricing: What different types of games can and should cost. Something to say that X game has Y value due to its content, so that someone can't compare it to another game that is priced cheaper. It's important to mention that this isn't a call to end game sales as sales have been critical for helping a lot of developers and to explain why would take another post.

The market has been in a downturn for the last few years which has been great for the consumers who get to play more games for less. But if things don't stabilize soon, it will become increasingly difficult to justify working on lengthy development cycles as one critical failure could mean the end for a studio, AAA or otherwise.

( For more posts, check out the Xsolla blog)