What will all-digital gaming mean for developers, especially indies?

Atari's upcoming Tempest 4000 was developed by Llamasoft, a two-person game studio, and features crowdsourced music.The great thing about editorials is that they inspire people — you and me alike — to think about how we feel about the way things “should” be going forward. Over the past two weekends, I’ve published discussions of the future of digital downloads on consoles, generating a great dialogue with readers in the process. This weekend, I’m responding to reader A.M., who posed a series of interesting questions on the all-digital future of games. He writes:

I read your piece on VentureBeat titled “going all digital” and totally agree with your points but I have a question to ask you. (Hard one which I am asking myself)
Once all platforms have gone digital and games become platform agnostic, what happens to all these developers who switch platforms in order to gain attention because of overpopulated platforms? (If mobile is overpopulated, imagine all platforms coming together)
We see that devs switched from PC to Smartphones and back last year. What happens to them once all platforms merge?
Will we see a huge loss of jobs in the gaming industry? Will big publishers become even stronger than presently because of direct access to the aggregate number of game consumers in one click?(platform agnostic games coupled with cloud streaming technology)
Will the market be split by marketplaces or publishers? Will the publishers owning digital stores (example Valve) become untouchable or will it be the companies such as Sony, Microsoft and Razer who will redirect their energy and capabilities from their hardware operations to focus on cloud technology (started) and digital distribution (started) who will take the prize? (Who wins this race in your opinion)
All revolutions pass by three stages: ridiculous, dangerous and evident. I am afraid that I am in the “dangerous” state of mind when thinking of the future of gaming related to indie devs. I am sure something will come up which will actually make it better for indies to compete. I would be interested to hear of your view.
I hope you find this subject of interest and I will be looking forward to your answer if an answer ever comes my way.
My initial take on A.M.’s email — beyond a great respect for how thoughtful the questions are — is that the future he anticipates won’t be a direct consequence of games going all-digital, but rather part of a development democratizing trend that has occurred simultaneously with the growth of digital game stores. This trend obviously began with PC game development, which unlike console development required no specialized or proprietary hardware, but continued with iOS development, where a $99 annual fee provided unlimited access to Apple’s latest development tools and publishing rights in the App Store.

Above: Apple lowered developers’ bar for entry: a full suite of development tools and access to over a billion customers is only $99 per year.

Image Credit: Apple
By eliminating the console market’s high manufacturing, shipping, and distributing costs, digital stores removed major financial and size barriers to entry for indie developers. But the key difference we’re now seeing is that basically anyone can develop a game and start offering it globally within days.
Particularly across the PC (Steam), Android (Google Play), and iOS (App Store) marketplaces, but moving to console shops such as the PlayStation Store and Nintendo eShop as well, there’s now an unprecedented glut of me-too software. As just one example, SteamSpy reported that Steam added over 7,600 games in 2017 alone — that’s over 20 games every day. Steam has openly adopted a “let the market decide” attitude toward flooding its shop, and even Nintendo has loosened its once-strict quality and quantity limitations to let all sorts of games in — 643 games are “available now” for the year-old Switch console.

Above: Steam now sees over 20 new games a day.

I don’t pretend to have all the solutions, but these are definitely problems from my standpoint. As you suggest, there are indeed overpopulated platforms. There are hundreds of developers bouncing around the platforms trying to get attention. And there probably will be some job losses in one respect — some independent developers will close — while bigger companies expand their teams to build bigger and more impressive titles. Yesterday’s endless runner game artist may wind up smoothing hand animation frames for VR avatars.
My perspective on this is that we’re in the middle of one of the best times for developers in gaming history. Thirty years ago, relatively few people knew how to make video games, and only a small percentage of the population played them. Today’s grandparents, parents, and kids have either grown up with video games or been exposed to them for a long time. The customer base has grown, as have the numbers of developers and games.

Above: The Google Play store had just under 650,000 available games as of the end of 2017, according to Statista.

But as is always the case, unfettered growth will lead to a period of contraction. There is no way for the market to sustain Steam’s 7,600 annual games. Statista says that the iOS App Store had over 783,000 games as of last year, while only the top 25 percent of iOS developers make over $5,000 per month — a number that’s not enough to support two full-time employees. At some point, a 75 percent chance of not actually making enough money to live is going to thin the herd of developers.

So, my direct answers to A.M.’s questions are these:
  • What happens to developers who switch platforms to gain attention? More likely than not, this isn’t going to be a viable long-term strategy, but people will keep trying it. If there’s a new platform (say, Switch) that has some unusually high sales, developers will test the waters — and perhaps get marketing support from the platform’s needier owners.
  • Will we see a huge loss of jobs in the gaming industry? Will big publishers become even stronger? I think big publishers will become “safer” employers for developers who have talent but neither the money nor the spark to hit it big on their own. As the insane size of modern triple-A game development teams illustrates, there will be plenty of big studio opportunities for good people. They will also be hiring people to keep working on games they launch as services. And big publishers will have superior marketing resources to actually sell games.
  • Will the market be split by marketplaces or publishers? If I had to choose one, I’d bet on marketplaces versus publishers, only because the marketplace can offer a wider variety of software and doesn’t have to front any money itself for development. But both can succeed — if the publisher makes good investments.
  • Will the publishers owning digital stores become untouchable or will it be hardware companies that redirect their attention to digital sales and cloud streaming? Owning any form of digital store that earns commissions from selling third-party software is nearly a license to print money. Selling self-developed software depends on the publisher’s internal quality. Cloud streaming is going to be an expensive, challenging business, but we’re going to see a bunch of new companies try to get into it over the next few years. Because of real-world latency and bandwidth issues, I’d bet on digital downloads to win this battle for the foreseeable future.
A.M.’s email suggested that he’s concerned with the survival of indie developers, and I can understand that concern: Indies have really thrived over the past decade, bringing an incredible array of new perspectives and experiences into the marketplace. Looking at how GamesBeat’s editorial team covers the game market, I feel better about the chance of a small developer with a truly great game to succeed today than 10 years ago.

Above: Fireproof Games’ “The Room” series of puzzlers has led the all-digital indie game studio to great success, growing from a team of two full-time developers to nearly 20 people today.

Image Credit: Jeremy Horwitz/VentureBeat
That said, the low costs of development and distribution have really oversaturated the marketplace. There will be natural market corrections, and some small developers will likely exit the business due to lack of success. But in the end, I’m confident that an all-digital game marketplace will give deserving indie developers greater shots at freedom and success than the all-physical game marketplace ever did. It’s just up to you and me to support them.