www.Tobold.com
Tobold@GMail.com
A blog with my thoughts regarding games I am playing and other stuff in life. Please read my Terms of Service
Sunday, March 03, 2024
Is there an advantage to be large in the video game business?
In October 2023 a small board game company released a card game called Forest Shuffle (or "Mischwald" in German). This turned out to be a rather good game, and thus became rather popular. As a consequence, I can't buy an English language copy anywhere, and the original German language version is likewise sold out. Small company means small production runs, and even if the game is a hit, it takes quite a while to produce another batch. Even if an initial print run sells out fast, it doesn't make the small company directly rich, and so probably even a second print run will be limited in size and might sell out equally fast. There is little economy of scale here.
The video game business is very, very different. Video games aren't sold on disks anymore, and there is no limit to how many copies can be sold of a game online. Thus if a game like Palworld is unexpectedly popular, it can sell 19 million copies without running into print run or production problems. The only possible limitation is when a game like Helldivers 2 needs servers to run, and the game is so popular that the servers are full. But even that is a lot faster to solve than the production of a physical game.
A person walking into a board game store with the intention of buying Forest Shuffle is going to be told that the game won't be available for a while. So they might well end up buying a game that has the advantage of being available. And bigger companies can afford bigger print runs and have an advantage in the physical availability of their games in stores. Bigger video game companies don't have that advantage. 2024 is shaping up with games like Palworld and Helldivers 2 from small companies selling extremely well, while games that were much more expensive to produce like Suicide Squad or Skull and Bones sell rather badly and fail to break even.
Of course big companies have other advantages, but these advantages seem to be less prominent in the video game business. There seems to be some sort of inverse correlation between the size of a video game company and the quality of the games it produces. Smaller companies making passion projects appear to often do well. Large corporate entities under pressure from shareholders can make stupid mistakes under that pressure. That also affects longevity of game studios. Making a good and successful game can make a studio larger, and then end up producing much worse games: Just look at CD Projekt Red going from Witcher 3 to Cyberpunk 2077, or the perceived downfall of Blizzard. Embracer Group buying up 129 video game studios and trying to become a giant in the video game industry didn't exactly work out well.
In the movie industry the $100+ million movie has arguably taken over the market to the detriment of smaller companies and smaller budget movies, even if that model is also showing its problems. In the games industry it seems to be a lot harder for the $100+ million games to dominate the market.
- posted by Tobold @ 9:43 AM Permanent Link
Comments:
<< Home
Newer› ‹Older
"Smaller companies making passion projects appear to often do well."
Correct, they appear to. It's survivorship bias: smaller companies that do well, do well.
The million other smaller companies with a good game that don't go viral with their passion project are just not known and thus not successful.
Then there are more passion projects that are bad games for various reasons and they simply don't have the spotlight on them when they fail and vanish unlike the big players.
You can't disappoint if there are no expectations. The advantage of being known is that people will rather buy from you where they have a certain expectation than from an unknown developer.
That's why CoD is still selling dozens of copies and people will flock to the latest rehash of whatever Marvel/DC/The Fast and the Furious/Transformers movie is currently on.
Sure, some will flop but people will be back next time.
Correct, they appear to. It's survivorship bias: smaller companies that do well, do well.
The million other smaller companies with a good game that don't go viral with their passion project are just not known and thus not successful.
Then there are more passion projects that are bad games for various reasons and they simply don't have the spotlight on them when they fail and vanish unlike the big players.
You can't disappoint if there are no expectations. The advantage of being known is that people will rather buy from you where they have a certain expectation than from an unknown developer.
That's why CoD is still selling dozens of copies and people will flock to the latest rehash of whatever Marvel/DC/The Fast and the Furious/Transformers movie is currently on.
Sure, some will flop but people will be back next time.
The bigger is the company, the higher marketing budget they can afford, which means they can reach out to bigger player base. I'm sure you can easily name lots of smaller indie games that you love, yet nobody knows about them. By the same logic, there might be lots of indie games in your favorite genre, yet you might be not aware of their existence. This isn't the case for bigger companies.
Also, bigger companies are generally more resistant to economic problems. At times when bigger companies fire some percentage of employees, smaller companies close down for good.
As for game quality, bigger companies almost never produce games that are worse than mediocre, and their ratings (excluding the cases of review bombings) stay at least average. There's no AAA shovelware. Smaller studios both have capacity and sometimes incentive to release low quality games, although I don't have stats on which ones have more low-rated games.
On the other hand, bigger companies are usually less inclined to take risks, so if you check all the games you personally like, I bet most of them will be made by smaller studios, as they often target smaller niches. But as Camo said, those will be survivors, rather than average indie studios.
Also, bigger companies are generally more resistant to economic problems. At times when bigger companies fire some percentage of employees, smaller companies close down for good.
As for game quality, bigger companies almost never produce games that are worse than mediocre, and their ratings (excluding the cases of review bombings) stay at least average. There's no AAA shovelware. Smaller studios both have capacity and sometimes incentive to release low quality games, although I don't have stats on which ones have more low-rated games.
On the other hand, bigger companies are usually less inclined to take risks, so if you check all the games you personally like, I bet most of them will be made by smaller studios, as they often target smaller niches. But as Camo said, those will be survivors, rather than average indie studios.
Camo pretty much hit the nail in the head with what they said.
For every Palworld and Helldivers there are a hundred indie games that will never leave obscurity.
Even a good indie game might never sell a ton of copies as discoverability on platforms for indie games isn't great. Look at cases like Among Us or Fear & Hunger where they were out for years with minimal success until they exploded due to going viral on YouTube and twitch.
For every Palworld and Helldivers there are a hundred indie games that will never leave obscurity.
Even a good indie game might never sell a ton of copies as discoverability on platforms for indie games isn't great. Look at cases like Among Us or Fear & Hunger where they were out for years with minimal success until they exploded due to going viral on YouTube and twitch.
My point was that large companies can’t dominate the video game market, because small companies can always steal significant market share with a relatively low barrier to entry. That point is still valid if there are simply a lot of small studios and only a few of them produce a very popular game once in a while.
Post a Comment
<< Home
