Psychochild's Blog

A developer's musings on game development and writing.

22 April, 2008

The Long Tail and Indie Game Devs
Filed under: — Psychochild @ 10:33 PM
(This post has been viewed 6575 times.)

Every once in a while I read an article from someone who gets all excited about "the Long Tail" as it applies to people who I call "indies". The theory is that there are a lot of unserved people out there, so the indie should find customers on the long tail and serve a niche.

It was refreshing, therefore, to read an article taking a serious look at the Long Tail. Unfortunately, the article then goes on to discuss an equally unlikely scenario.

The truth is: Business is hard for the indie, no matter how you slice it.

One thing that people talking about the Long Tail seem to forget is that the Long Tail works in the favor of aggregators. The classic example of a company taking advantage of this is Amazon: there are hundreds of books out there that sell only a few copies every year. No book store is going to stock these titles, but a book company that only has a warehouse and takes orders online can capitalize on all those orders.

Note that this doesn't mean that the author selling one of those "three per year" books is going to be making any more money. Rather, Amazon is going to profit from that, and the thousands of other people in that author's situation. You can argue that there might be a few more book sales because of this, but it takes more than a single-digit bump in book sales before the author sees any return. Trust me on this one. :P

The author of the article then goes on to explain that if you can just get 1000 "True Fans" to pay you $100/year, that's a good living! Well, not so much.

Let's look at this in terms of Casual games. To make $100/year, you have to sell 5 games priced at $20 to those 1000 true fans. Cranking out a game every 2.5 months isn't exactly a reasonable pace. Now consider that many of the smaller casual games are going for only $9-10, so you're talking about cranking out a game about once a month. To get to the point where you can do that, you have to develop a lot of infrastructure. Now consider that one person can rarely do stable programming, eye-catching art, and interesting sounds and music by him/herself, so you're going to have some significant expenses.

In the realm of online games, it gets even more depressing. With the subscription model, at $10/month you're going to get about $120/year out of people, but again a single person isn't going to be able to do everything. Customer Service takes a significant amount of time on top of development and maintenance. So, again, you're going to have to split the costs with someone else.

The other major problem is business. I edited a book on business not because I like writing about business, but because I see so many game developers do a terrible job at running businesses. This is one of the benefits of the l larger publishers: they know how to do things like distribute and promote a product. Most of the recent "indie successes" for music, Radiohead and Nine Inch Nails, have had a better start than most because they landed a deal in the "traditional" record industry back when that was still possible; they have benefited from the large industry side of things in a way that a new musician just starting out today couldn't.

Now, one possible solution for these larger projects is to build a team and multiply your expectations. Can five people developing an online game attract 5000 people to their game and keep expenses low enough so that most people can earn almost $100k per year? I'd hesitate to base my livelihood on that assumption, seeing as I have trouble finding 3 people willing to commit to a project.

Most of these problems were visited in a follow-up article that looked at the income of an indie musician. Robert Rich explained that he had about those 1000 "True Fans", but he has a hard time extracting even that $100/year out of them. One of the major problems is that people just don't value music as much these days, so even if people enjoy the music, they often don't actually buy something that gives income to the musician. This is most prominent in Russia, where he has 4 or 5 "True Fans" who explain that the 500 or so serious fans in Russia feel no need to pay for his music.

Another problem brought up by the follow-up article is one game developers are familiar with, even on a larger scale: overspecialization. The problem with focusing on your 1000 "True Fans" is that you tend to lose sight of people beyond that. The game industry has done the same thing; the last generation of consoles tried to focus on the same audiences as before, the hard-core that upgrade for pretty graphics, but the Wii came along and scored a massive success by looking beyond the (admittedly greater than 1000) "True Fans". A creative person could focus too much on the small group and never bring his or her unique work to others. The larger companies that have the reach usually shun "risky" ventures that could bring a new style to a wider audience, despite the fact that these newer styles tend to be the biggest successes.

The big questions on most peoples' minds are, "Why does this matter? Why does anyone have to make money instead of doing it for the pleasure of doing it?" This works great for a garage band that wants to do a couple covers at the bars on the weekend, but it falls apart for anything more complicated. Why should a kid learn a classical musical instrument when they're expected to play for free? On a personal level, why should I work to make a casual game every month when I can do consulting that takes less time and pays more than $100k/year?

Plus, I don't think attracting even 1000 "True Fans" is as easy as it might first seem. I doubt that I personally have that many. There are a few thousand people aware of my work; a fair number of them hate me just like they hate everything in the industry. The number of "True Fans" I have is probably limited to a few dozen despite the fact that this blog has been running for years and I'm a regular speaker at conferences, etc. At any rate, I'm not going to survive on $100/year from that limited number of people.

Some interesting issues to consider. How can a small-scale indie creative type survive? Is there a magic number of "True Fans" that it would take to allow one to survive? Is it even possible to get up to 1000?

--







8 Comments »

  1. Great job on getting the real story out there! I've gone through the same type of thing a couple of times as well...I had a subscription based service that had around 1,000 paying members, and still it was all I could do to break even as a one person company...eventually I had to switch to the free model just so I could stop spending so much time and effort on breaking even...at which point you of course lose even those 1000 or so fans...

    I think it takes more than a magic number...I think it takes a magic true fan number at a magic price point producing at a magic frequency for a given industry...for something like music or games you've got to hit a much higher 'true fan' threshold because you have to work with a lower price point and at a much more rapid frequency...I suspect this is the case in more verticals than not...

    With my latest single-effort game I'm trying an approach that goes a bit in the opposite direction...rather than try to get to a magic number as quick as possible and then figure out ways to keep profiting from these fans...I'm focusing on building a handful of games slowly and 'just for fun' and 'for the experience of doing it'...without the vision/dream of surviving (or even profiting) from it.

    If you do come up with an idea for the 'little' guy to make it though I'm willing to give it a shot...so keep us posted! :)

    Comment by Kevin Marshall — 23 April, 2008 @ 2:31 AM

  2. Personally, I'd be real scared to rely on "1000 true fans" to make a living. The day you make the wrong decision (from the point of view of these fans) is the day you'll have to get another day job.

    I feel fans should only be considered to get the word out about your work, not to put money in your pocket. These days, there's different ways to do business other than selling subscriptions or box so why not use them.

    For example, web ads. Say you have an indie mini-mmorpg expecting to release near the end of spring (ok, shameless plug here, must admit). You're no one, have no experience, make mistakes, ... you can't expect to get 1000, 500 regular players in the first few months (or maybe ever).

    However, for web ads to work, you don't have to get people play your game. You need to get them on your website, which is probably easier to achieve and easier to renew the visitors based each month. That doesn't mean you should do any crap just to get traffic (in the end that won't work anyway), it just means you're realistic about what can be achieved and about the best ways possible to turn this into your job.

    Web ads are just one way but I'm sure people with more imagination than me can come up with something else.

    So that's my take on how indies can probably put chances on their side. Of course, I have yet to prove my theory but some people around seems doing fine this way.

    Comment by Over00 — 23 April, 2008 @ 4:17 AM

  3. Developing enough new casual games to get $100 from each customer each year is doomed to fail for all the reasons you mention. The 1000 true fans article was aimed mostly at other mediums where the development costs are much lower or there are multiple revenue streams. Indie musicians make money from concerts and t-shirts too, not just from selling copies of their music.

    For "1000 true fans" to really work on a game you have to get the revenue per fan up to a point where it's sustainable at that level with just one person's efforts. Subscriptions are a possibility here... at $8 per month you're getting about $100 per year. Another option would be downloadable content like the songs in Rock Band. Merchandise could work if your game art is unique enough (like Alien Homonid). Selling in-game items would be another possibility, and seems to work for many games.

    Of course another approach is to have 100,000 true fans and get them to pay you $20 each. ;)

    Comment by Joe Ludwig — 23 April, 2008 @ 7:15 AM

  4. 1000 reactions to 1000 True Fans Follow-up

    [...] lot of blogs have picked up the story, including mogul Boing Boing, and different perspectives are widening the debate more and more, but what’s really interesting for me is searching [...]

    Pingback by juanzelada — 23 April, 2008 @ 11:29 PM

  5. First, I agree with your reaction to the 1000 true-fans comment. However, I think your analysis is still missing the core of the true-fan proposal.

    1000 true fans is really just another way to say "price discrimination". Some people are willing to pay more for your product than others. The $100,000 a year question is how to get those who are willing to pay more to pay more without pissing them off that other people get the same product for less.

    This is where your $5 per game theory breaks down. When mass-marketing a casual game, $5 might be a good price point. However, among those who paid $5 are some who would have paid $20. Now, you don't want to charge $20 as you'll lose more money in $5 sales than you make up in $20 sales. So, the solution, is to somehow get $20 from the $20 people and $5 from the $5 people and $0 from the free people (as their word of mouth is itself valuable in attracting the first two groups)

    One solution some artists have tried is "Pay what you think it is worth", possibly with a minimum (dangerous! See price anchoring!). Another solution is tiered content. Some message boards do this with their "free, bronze, silver, gold, ultra-leet" memberships. Another, obvious one, is in-game item/currency purchase. Iron Realms success, I think, is because they can exploit the wide disparity that people are willing to pay - accommodate both the person wanting to throw $5 in as the $5,000.

    So, yes, 1000 true fans who pay $5 per game implies a ridiculous creation rate. The trick isn't how to make more games faster, it is how to get more money per game.

    Now, having said all that, I agree as much as you that it is an very difficult task to acquire such a magic 1000 fans. You are talking 10 times dunbar's number with "true fan" being people you've built a strong connection to. However, I think creative indie games could do well by not thinking of their games as a commodity product sold at fixed prices, but instead find ways to ensure those that *really* like their game can spend as much as they are willing on it.

    Comment by Brask Mumei — 26 April, 2008 @ 8:57 PM

  6. Agreed, that seems to be the fatal flaw with the 1000 fan approach. It implies someone is both excellent creatively (to develop the product) and also excellent in business (to build the balanced model).

    Penny Arcade, by their own accounts, turned around completely because they managed to hire/acquire a gifted business guy who could figure out new business models for them.

    I am somewhat skeptical that there is any magical business model that would work for all indie games equally. "microtransactions", as you say, hides a whole horde of problems about ensuring you give sufficient benefit to the buyers without harming the non-buyers.

    "Pay what you want" methods have an interesting twist of racing to the bottom. If you take it as a given that your space has already descended to the $5 per game range, it becomes a much safer proposition to just leave the price field blank on the form. Put a bit of anchoring text to swing people's estimates up, and you will at least provide an easy way for true fans to show support. (Please note I am not claiming this will actually work - I've not seen enough numbers on either side of the equation. I'm just pointing out that it is one of those interesting business models the 1000 fan seeker might follow) Personally, if I'm willing to pay for your game, I'm willing to pay more than $5 for your game. Offering it to me at $5 is not going to gain any sales over $10 - the "cost" of actually pulling out my wallet exceeds that. Of course, each person has a different threshold, which is what makes this such an interesting problem.

    Comment by Brask Mumei — 27 April, 2008 @ 1:42 AM

  7. "microtransactions", as you say, hides a whole horde of problems about ensuring you give sufficient benefit to the buyers without harming the non-buyers.

    For me, this is just another variable, along with the hundreds of others, to consider when doing multiplayer game design. If a designer can't figure out the issue you point out, he/she might want to seriously re-think the desire to create an MMO. Balancing raid loot vs. casual loot is just as challenging as this issue, IMNSHO. I'll accept that since we're talking about money here, some people may get weird about it. But, let's face it, fans of MMO games are already weird. :P

    That said, I don't think people should just stick with the tried-and-true if they have other ideas. If someone has another business model they think might work, they shouldn't pitch it just to do microtransactions to make me happy! I'd be happy to hear about other business models that might work; working examples get extra bonus combo points.

    As far as "pay what you want", I don't think that will ever work very well based on personal experience. When we resurrected Meridian 59, we took donations from people to help defray some of the startup costs. Our lawyer was very explicit that we couldn't offer people anything for these donations, so we didn't. While we got some donations from dedicated fans, it was a pretty small drop in the bucket compared to how much we made when we actually sold something. As pointed out in the original article I linked above, most people are quite happy to use what you offer without paying you even a single penny. Donations is not a business model I would stake my livelihood on.

    Comment by Psychochild — 27 April, 2008 @ 2:27 AM

  8. The Long Tail and Indie Game Marketing

    [...] 2012 the year of the gamer. As a counter Brian Green over at Psycho Child’s Blog  writes a great post (its from 2008 – but still spot on) about why the long tail is not the end all and be all for [...]

    Pingback by Yaseen Dadabhay's Blog — 23 May, 2012 @ 6:16 AM

Leave a comment

I value your comment and think the discussions are the best part of this blog. However, there's this scourge called comment spam, so I choose to moderate comments rather than giving filthy spammers any advantage.

If this is your first comment, it will be held for moderation and therefore will not show up immediately. I will approve your comment when I can, usually within a day. Comments should eventually be approved if not spam. If your comment doesn't show up and it wasn't spam, send me an email as the spam catchers might have caught it by accident.

Line and paragraph breaks automatic, HTML allowed: <a href="" title="" rel=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <div align=""> <em> <font color="" size="" face=""> <i> <li> <ol> <strike> <strong> <sub> <sup> <ul>

Email Subscription

Get posts by email:


Recent Comments

Categories

Search the Blog

Calendar

September 2014
S M T W T F S
« May    
 123456
78910111213
14151617181920
21222324252627
282930  

Meta

Archives

Standard Disclaimer

I speak only for myself, not for any company.

My Book





Information

Around the Internet

Game and Online Developers

Game News Sites

Game Ranters and Discussion

Help for Businesses

Other Fun Stuff

Quiet (aka Dead) Sites

Posts Copyright Brian Green, aka Psychochild. Comments belong to their authors.

Google