Imagining Future Studios

On Game Monetization and Community

I guess I’ve been living in Denmark long enough to have lost the ability to sleep when it is hot. And it was hot last week. After a few nights lying awake and playing connect-the-dots with the sort of random thoughts that drift into a developers’ head at 4am, I decided to write some of it down to share. Many of my points don’t seem quite so black-and-white to a well-rested mind. That said, I’ve tried to annotate rather than edit in order to keep this document as close to my original thinking as possible. In any case, I appreciate and encourage any feedback and comments—from the insightful (“you are wrong because of X!”) to the pedantic (“it’s not its”). Thanks! — c

Controversy surrounding loot boxes briefly dominated industry news and lunch conversations late last year. Most of the critical takes focused on the ethics of pay-to-win gambling¹ and called EA out for their greed. But there was another theme that occasionally surfaced: desperation.

This has traditionally been a zero-sum industry² and developers have always been desperate for a hit. These dynamics have often been masked by incumbent players securing a sustained advantage through building franchises and establishing lock-in, and by the creation of new markets which provide opportunities for upstarts. In both cases, the desperation for short-term gain has come with a willingness to destroy long-term value³. Nothing about this is sustainable, and it has left us in a situation where, despite skyrocketing development costs, traditionally priced games sell for only 45% of what they once did⁴.

It is against this backdrop that we have seen one of the most signifcant macro-trends to reshape the industry in decades: the rise of free-to-play⁵. For years, advocates have been telling us that it is the future. Back in 2012, EA COO Peter Moore put it bluntly:

He went on to say that he believed that the real growth for the industry is bringing billions of people in and calling them gamers. And looking at the performance of F2P games today, you would be hard pressed to say that he was wrong. Sure, the practice has occasionally drawn criticism for testing the boundaries of acceptability (like pay-to-win and the aforementioned loot boxes), but F2P has grown the market enough that it almost looks like those like zero-sum dynamics are gone. Almost.

Reading headlines about Fortnite generating infinite money in 2018, it is easy to forget that F2P is a bandage, not a cure. But the success hides an overall 6% decline in industry revenue⁶. Despite breathless praise for Fortnite’s halo effect, it is even likely that the game is actively cannibalizing market share from existing titles. This is an unavoidable eventuality—regardless of how we microtransact or slice things, we are still just selling games and the fundamental equations remain unchanged. The market grows, direct network effects kick in, and massive profits are generated… but then it does exactly what we should expect it to do: correct back towards its usual zero-sum dynamic.

Many in this industry imagined that F2P would carry us into a bright and shiny future. But perhaps it is our failure of imagination that better indicates where we, as an industry, are headed. Maybe it is time for us to stop presupposing that a sustainable studio must be built around the idea of selling games in the first place⁷. Maybe we need to imagine a less desperate future governed by a fundamentally different set of equations.

In the early ‘70s, Kristen Nygaard and Olav-Terje Bergo worked with the Norwegian Iron and Metalworkers Union to create techniques for workers to influence the design of computer applications at the workplace. This project, which emphasized active cooperation between researchers and workers, is considered to be the origin of “participatory design”.

In the ensuing 45 years, participatory design has been embraced across disciplines ranging from product design to corporate innovation. The belief that the users’ presence is integral to the creative process has helped to reshape modern design practices: Involving users with different perspectives early in the design process (and keeping them involved throughout) has proven to provide insight into what is valuable to them and increase empathy among stakeholders and designers. The results have been transformative.

As game developers, our job is to create good games. Anyone who has ever seen the difference that playtesting can make will emphatically tell you that we can only do that with player feedback. But playtesting is still falls short of participatory design — we can do much more. And the opportunity is certainly there to find players who want to engage: our industry has an abundance of passionate players who care deeply about the games that they play.

The biggest barrier may be that players are, generally, woefully uninformed⁸ about game development. Unfortunately, the opportunity for them to become informed is limited due to the secrecy commonly surrounding development. If we want to more deeply engage players, can’t we just drop some of that secrecy and inform them about development? Designer and programmer Charles Randall spoke to this in a Twitter thread last year:

Monetization and community are two facets of the singular commercial relationship that underpins our industry, and both of them being broken isn’t a coincidence — it is a sign that the underlying relationship has become increasingly untenable. To look for holistic fixes that address that base relationship, we need to start by asking questions about an imaginary game studio that doesn’t view selling games as its primary business: How does that studio make salary? What sort of hierarchy does it have? How large can it grow? What is it like to work there on a typical day? What does it mean to be a customer? How are these changes reflected in the games and what does that mean for the players?

One version of this that I can imagine is a studio that is designed to shift both the studio’s primary source of revenue⁹ and its fan support away from emphasizing games as a playable artifact and towards game development as a creative and commercial process. It would operate as a membership business for a community of fans who subscribe to get exclusive access to development and earn returns from specific studio revenue streams like game sales—sort of a hybrid between Patreon and Fig.

The studio would provide gated access to everything from prototypes and alpha builds to development live streams¹⁰. Subscribers would also earn a voice in the decisions¹¹ that the studio makes by acting as a potential swing-vote in internal decision making. Additionally, each month of subscription would represent the purchasing of a security tied to the eventual revenue stream of the game that is in development (in the form of a non-voting share where dividends are tied to that specific revenue). The idea being that turning players into “owners” will increase their loyalty¹² to the studio and lead to improved engagement with the creative process— similar to the effect of stock ownership on employees.

The ramifications of going from selling games to selling exclusivity and access would be massive. It would require re-thinking everything from employment contracts and harassment policies to how to act on new opportunities in diverse areas like marketing and talent acquisition.

Could we take the holistic approach and build a studio around this philosophy from the ground-up today? Could it survive? Could it scale? I think so¹³. It would definitely require proper capitalization¹⁴ to get the studio off the ground and it would still be exceptionally risky. Or maybe not… maybe being from the future is the best way to thrive in these desperate times.

Doing this in an existing studio came up in conversation after I initially hit publish. This article is sleep-deprived rambling, not an attempt to lay out any sort of strategic plan, but I think it might be possible. Experimenting with a lot of these ideas would be challenging because they so fundamentally transform the business. Maybe the best solution would be to create a subsidiary as a “business model lab” and (beyond ensuring that it is properly capitalized) try to keep it as operationally independent as possible. That is appealing to me because, just like in our R&D efforts we might compartmentalize aspects of our technical or creative processes, doing so with business processes becomes a relatively low-cost insurance policy against future uncertainties.

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