Posted by: Samwise @ 11:02:26 on 9/7/06
AGC Rivebrog: The Age of the DinosaursSummary: Raph says embrace the niche, bitches. (Or get out your Wile E. Coyote umbrella.)
The slides can be found on Raph's website here. Read on for the unedited and somewhat disjointed notes I took during the talk itself.
Dinosaurs didn't evolve into extinction -- they evolved into a very successful niche that made them ripe for extinction. Evolution is not about progress; it is about adapting to a situation. "Progress" is a value judgement, not an absolute.
All sorts of game worlds used to exist; out of those, a relatively limited subset has remained popular, as many other "species" went extinct. What we see here is adaptation to an evolutionary niche.
The major players in the life cycle of content: funder, creator, editor, publisher, distributor, and re-user. With books, these roles are split between the publisher (funder, editor, publisher, distributor) and the writer (funder, creator, re-user). With music produced under a major label, the musician is the creator, but all other roles (including re-use) are taken by the publisher. Movies have a sweet deal -- investors or lenders do the funding, and the studio does the rest, including reaping the benefits from re-use (DVD sales, etc).
Games are special in that there's very little re-use; books and movies based on games don't tend to do very well.
Hit-driven media consumption: a minority of the games (the big hits) actually get shelf space and make money. (Insert chart of game profits here, with a big spike at the top where the big hits are.)
Games have gotten bigger and bigger. (Insert exponential curve of game data vs time here.) If you want a big hit game, you have to dump a lot of resources into it -- lots of art, lots of developers, etc. So budgets have gone right up along with game size. If the trend continues, the next point on the graph is going to be bigger than the entire industry. This is a losing race.
Specialized adaptations of the video game industry: dedicated 3D graphics cards, surround sound, hi-res graphics, single-player experiences, narratives. Video games have evolved into their own ecological niche.
Gamers have adapted along with the games. The directions for Pong were three lines, but look at manuals and strategy guides for, say, GTA. Those big-hit games demand a different type of consumer than the early arcade games did.
Not long ago, "only gamers play games" was a criticism. Now it's a marketing strategy.
The "gamer market" is a minority of the overall population. In Myers-Briggs terminology, this market is dominated by INTJ and ISTJ, the same types that are predominant among game developers -- so not surprisingly, most games are designed to appeal to that type of personality. In other word, our core audience is a bunch of introverted geeks like us.
Genres ultimately end up dominated by a single hit game -- the number of people playing Counter-Strike dwarfs the number of people playing every other multiplayer FPS put together.
So where's the meteor going to come from?
In all media, hits are getting rarer. We still have them, but the percentage of the population that a hit reaches is shrinking. "Infinite shelf" means that significant revenue is derived from the aggregation of many niche titles -- see GameTap, casual game sites, NetFlix, Amazon, etc. 98% of the Netflix library gets rented only once a month; aggregators get lots of revenue by selling stuff that's too niche to be given shelf space in stores.
Digital distribution is rising (Live Arcade, Steam, GameTap, etc). Many of the most popular games aren't even rated by the ESRB because they are online and not at retail.
The cost to produce a minute of content has risen, but the price to buy it has dropped. Since consumers are less willing to pay for content, publishers are turning to advertising. Meanwhile, game characteristics are liberally co-opted by other media: interactivity, voting, ratings, competitions, easter eggs, puzzles. (Star Trek 2.0, American Idol...)
Finally, we learn that the audience isn't who we thought -- there are more casuals than hardcores, but there are even more types we're ignoring that are bigger than both put together.
What are the "mammals" in this scenario?
Distribution: digital, leaner on assets, episodic content, bypass publishers.
Content: aim at different markets. Lots of niche-driven targets instead of big hits. Designed to be consumable and disposable.
Connectivity: design for online from the get-go, with social features (chat, etc).
Celebrity: active community management, fan-driven followings, "lifestyle" marketing. Form relationships between the consumer and producer. Almost nobody gets to be the Beatles -- aim for being the Grateful Dead instead.
Revenue: not driven by sales to consumers. Merch, sell shares in future content, use advertising as a major driver.
Runescape, Habbo Hotel, Gaia Online have huger audiences than WoW. We don't tend to pay attention to them because they aren't sold on shelves. Not to mention the many smaller multiplayer games (Dofus, Travian, etc) that have numbers similar to the "big" pre-WoW MMOGs.
Who are mammals to watch?
- Web-based MMOs (Neopets).
- Indie MMOs running without name publishers (especially social worlds, user content worlds, worlds not aimed at core hack 'n slash markets).
- Aggregation of all sorts (disk space is cheap, and everything has SOME audience).
- Media companies merging online world elements into their content.
- Online distribution.
Climate shift: we are hitting a wall on finances, and we are not seeing alternative revenue streams. Movie-style alternative financing (other ways to monetize like DVD sales) isn't materializing for us. Distribution is in upheaval. This will be a shakeout for any developer that can't adapt.
Consoles are starting to adapt: Live Arcade, Wii's plans to make the old Nintendo library available online.
Aftermath: digital distribution will become the only logical choice. Game ecology will grow more varied, and the noise level in the market will rise. PC gaming will grow back because there are fewer "gatekeepers" for PC game developers. Consoles will specialize or become more like PCs.
WoW is the last gasp of the dinosaurs - not because WoW is going to die off any time soon, or because nothing can follow WoW, but because nothing can do to WoW what WoW did to Everquest.
Imagine a world where there are no game retailers and no publishers, but lots of aggregators and portals. Fewer artist jobs, but more procedural content jobs. Games are services rather than products. Celebrity (reputation) will matter more than eyeballs.
End.
[discuss]
All sorts of game worlds used to exist; out of those, a relatively limited subset has remained popular, as many other "species" went extinct. What we see here is adaptation to an evolutionary niche.
The major players in the life cycle of content: funder, creator, editor, publisher, distributor, and re-user. With books, these roles are split between the publisher (funder, editor, publisher, distributor) and the writer (funder, creator, re-user). With music produced under a major label, the musician is the creator, but all other roles (including re-use) are taken by the publisher. Movies have a sweet deal -- investors or lenders do the funding, and the studio does the rest, including reaping the benefits from re-use (DVD sales, etc).
Games are special in that there's very little re-use; books and movies based on games don't tend to do very well.
Hit-driven media consumption: a minority of the games (the big hits) actually get shelf space and make money. (Insert chart of game profits here, with a big spike at the top where the big hits are.)
Games have gotten bigger and bigger. (Insert exponential curve of game data vs time here.) If you want a big hit game, you have to dump a lot of resources into it -- lots of art, lots of developers, etc. So budgets have gone right up along with game size. If the trend continues, the next point on the graph is going to be bigger than the entire industry. This is a losing race.
Specialized adaptations of the video game industry: dedicated 3D graphics cards, surround sound, hi-res graphics, single-player experiences, narratives. Video games have evolved into their own ecological niche.
Gamers have adapted along with the games. The directions for Pong were three lines, but look at manuals and strategy guides for, say, GTA. Those big-hit games demand a different type of consumer than the early arcade games did.
Not long ago, "only gamers play games" was a criticism. Now it's a marketing strategy.
The "gamer market" is a minority of the overall population. In Myers-Briggs terminology, this market is dominated by INTJ and ISTJ, the same types that are predominant among game developers -- so not surprisingly, most games are designed to appeal to that type of personality. In other word, our core audience is a bunch of introverted geeks like us.
Genres ultimately end up dominated by a single hit game -- the number of people playing Counter-Strike dwarfs the number of people playing every other multiplayer FPS put together.
So where's the meteor going to come from?
In all media, hits are getting rarer. We still have them, but the percentage of the population that a hit reaches is shrinking. "Infinite shelf" means that significant revenue is derived from the aggregation of many niche titles -- see GameTap, casual game sites, NetFlix, Amazon, etc. 98% of the Netflix library gets rented only once a month; aggregators get lots of revenue by selling stuff that's too niche to be given shelf space in stores.
Digital distribution is rising (Live Arcade, Steam, GameTap, etc). Many of the most popular games aren't even rated by the ESRB because they are online and not at retail.
The cost to produce a minute of content has risen, but the price to buy it has dropped. Since consumers are less willing to pay for content, publishers are turning to advertising. Meanwhile, game characteristics are liberally co-opted by other media: interactivity, voting, ratings, competitions, easter eggs, puzzles. (Star Trek 2.0, American Idol...)
Finally, we learn that the audience isn't who we thought -- there are more casuals than hardcores, but there are even more types we're ignoring that are bigger than both put together.
What are the "mammals" in this scenario?
Distribution: digital, leaner on assets, episodic content, bypass publishers.
Content: aim at different markets. Lots of niche-driven targets instead of big hits. Designed to be consumable and disposable.
Connectivity: design for online from the get-go, with social features (chat, etc).
Celebrity: active community management, fan-driven followings, "lifestyle" marketing. Form relationships between the consumer and producer. Almost nobody gets to be the Beatles -- aim for being the Grateful Dead instead.
Revenue: not driven by sales to consumers. Merch, sell shares in future content, use advertising as a major driver.
Runescape, Habbo Hotel, Gaia Online have huger audiences than WoW. We don't tend to pay attention to them because they aren't sold on shelves. Not to mention the many smaller multiplayer games (Dofus, Travian, etc) that have numbers similar to the "big" pre-WoW MMOGs.
Who are mammals to watch?
- Web-based MMOs (Neopets).
- Indie MMOs running without name publishers (especially social worlds, user content worlds, worlds not aimed at core hack 'n slash markets).
- Aggregation of all sorts (disk space is cheap, and everything has SOME audience).
- Media companies merging online world elements into their content.
- Online distribution.
Climate shift: we are hitting a wall on finances, and we are not seeing alternative revenue streams. Movie-style alternative financing (other ways to monetize like DVD sales) isn't materializing for us. Distribution is in upheaval. This will be a shakeout for any developer that can't adapt.
Consoles are starting to adapt: Live Arcade, Wii's plans to make the old Nintendo library available online.
Aftermath: digital distribution will become the only logical choice. Game ecology will grow more varied, and the noise level in the market will rise. PC gaming will grow back because there are fewer "gatekeepers" for PC game developers. Consoles will specialize or become more like PCs.
WoW is the last gasp of the dinosaurs - not because WoW is going to die off any time soon, or because nothing can follow WoW, but because nothing can do to WoW what WoW did to Everquest.
Imagine a world where there are no game retailers and no publishers, but lots of aggregators and portals. Fewer artist jobs, but more procedural content jobs. Games are services rather than products. Celebrity (reputation) will matter more than eyeballs.
End.
[discuss]