Monday, March 12, 2012

What Happened to Gaming's "Middle Class?"

The divide at this year's GDC between independent developers and AAA game makers seemed wider than ever. Panelists referred to working with teams of a few dozen, or over 200, and almost never something in-between. We observed this dichotomy in nearly every aspect of the show, even the recruiting pavilion where major publishers and social game startups competed for space and talent.

Mid-sized companies still exist in the industry, just not in the public eye. HD-development and the economic crisis destroyed the old middle class of developers and publishers (remember Midway?) and the companies that have taken their place don't produce content directly for consumers. If you recognize their names at all, it's probably only from five-second splash screens that run before a game's main menu. You've no doubt played games that take advantage of the Unreal Engine, Havok Physics, or SpeedTree. Called middleware, these services provide a short-cut for developers who don't want to undertake the laborious process of creating their own game making tools. Why spend months creating things from scratch when there are cheaper and less time consuming options available.

Developers can now choose two routes to viability when making games, finding a publisher or going indie. Those that choose the former tend to make large AAA titles, while indie developers generally tackle much smaller projects -- or, if they do have a large game, like Minecraft, they still maintain surprisingly small headcounts at their studio. Developers that want to create something in the middle don't have the money to fulfill their vision, and publishers won't invest because a mid-sized game's profit potential can't justify it. At GDC, Saints Row: The Third Design Director Scott Phillips explained how his team took a middle class (if uncharacteristically successful) series, and turned it into something that could go head-to-head with Modern Warfare 3 and Skyrim. Phillips pointed out some serious flaws in the first two SR games, and explained how the team improved upon them.

THQ, the publisher of Saints Row, spent the last fifteen years capitalizing on licensed titles while releasing tiles like Company of Heroes or Dawn of War -- well received games with relatively small, but dedicated communities. The two halves of the publisher's portfolio let them enjoy a fair level of success. However, 2011 marked a major shift in the publisher's strategy as it tried to emulate Call of Duty with Homefront, and largely abandoned licensed titles (a genre that's proven unprofitable in the current market). Turning Saints Row from an enjoyable-despite-its-flaws breakout hit, and turning it into a major event was the natural extension of this strategy.

If a mid-sized company wants to turn a profit they must downsize, turn to outsourcing, or, like THQ, invest the capital into development necessary to compete with EA and Activision. The market now resembles that of the '80s and early '90s, where garage development produced major hits alongside the big players like Sierra or EA. Of course, teams were so small then that the distinction between indie and studio-development was a matter of a dozen individuals, not hundreds. CEO of Loot Drop, a social game developer, John Romero and pointed this out while on a panel about the state of independent games, "The platform is different, and the monetization is different. You just don't sell games on Facebook...but the games are very similar to the way they were back in the early '80s."

On that same panel, Epic Games founder Tim Sweeney drew attention to the efficiency of small development teams saying, "Infinity Blade was more profitable per man hour than Gears of War 3." In a world where an iPhone game presents a better investment opportunity than a AAA-retail game like GoW3, who would volunteer their money to fund a milquetoast project aimed squarely at the middle?

With the market in its current state, it's no wonder middleware vendors filled the show floor. They seemed to have a solution for every game design issue imaginable -- from the ones you'd expect, like graphics and physics engines, to off-the-shelf solutions for AI, particles, and even narrative. All the financial chaos we've seen play out in the past six or seven years is merely a high-profile side show created by shifting economic incentives. For every developer we've seen shutter their doors in the past ten years, it seems an indie studio or middleware developer started up -- though not necessarily in the same locations, the industry's shift game development in the UK devastated, while new studios start in China every day. Kept away from the public eye, middle-class developers don't make games anymore, they create tools other game makers use every day.

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