Business Opportunities for Independents

by Chris Swain, CEO Credible Research Corp.

Developers are finding opportunities for both creative freedom and financial return by publishing their games online versus with traditional retail-oriented publishers.

There are lots of ways to publish independent games, each with its own set of pros and cons. Here are the five main categories:

1) Your own Web site

2) User generated game sites

3) Indie game aggregators

4) Casual game publishers and portals

5) Downloadable console games

Here is a bit about each ranked in order of how hard they are for developers to gain entry.

Your Own Web Site

This simply means you produce a game and sell it via your own Web site. An example of this kind of game is Desktop Tower Defense. This game was self-produced by a young designer with no professional experience, Paul Preece. Preece makes Desktop Tower Defense available for free and reaps ad revenue off the Web site. The game is addictive and receives over 20 million page views per month. This translates into nearly $100,000 per year. A second example is the game Peacemaker, which is about solving the Israeli–Palestinian conflict. The game was developed by some college friends and is sold via their Web site for $20.00. Peacemaker is a success because it’s a good game and because they’ve generated tremendous press. The press can be thought of as marketing for the game because it drives traffic and sales.

Pros: You have complete control over the creative and the marketing.

Cons: No production budget, no marketing budget, no help whatsoever. Very hard to get traffic to your site for one game.

User Generated Game Sites

Think YouTube for games. Established sites in this category are Newgrounds.com and Kongregate.com. Essentially, developers upload their games in Flash or Shockwave format to these sites for free. Players rate the games, and top rated games appear prominently on the site. Kongregate.com awards cash prizes for multiple top rated games each week and each month.

Other interesting examples are The Great Games Experiment from GarageGames.com, which is a full Web 2.0-style gamer community, Armorgames.com, Crazymonkeygames.com, and Addictinggames.com. These sites are a great way for developers to promote their work and network with potential business partners.

Pros: Low barrier to entry. Complete creative freedom. Potentially lots of traffic. Anyone can build a game and upload. Go do it!

Cons: No development budgets. Lots of competition so only a tiny fraction of games will/do make a financial return. Go do it anyway!

Indie Game Aggregators

The best known company in this category is Manifesto Games. The company founder, maverick game designer Greg Costikyan, says the “[game] industry was once the most innovative and exciting artistic field on the planet [but] has become a morass of drudgery and imitation. We plan to change that.” He wants to “build a viable path to market for independently developed games.” Manifesto seeks quirky, innovative, and offbeat titles that are not likely to be sold at GameStop. Manifesto takes care of distributing, marketing, and selling the games (all online). Developers keep 60% of revenues and retain all intellectual property rights. Manifesto does not publish casual games.

A second example of an aggregator is Moondance Games. Moondance publishes anthologies of indie games on CD-ROM via retailers like Amazon.com. Moondance accepts submissions from developers through their Web site.

Pros: Strong emphasis on independent thinking and gameplay innovation. Out of the box thinking is rewarded. The aggregator provides the marketing for your game. You retain control of your intellectual property.

Cons: No funds for production budgets.

Casual Game Publishers and Portals

Casual games are big business. Casual game publishers work similarly to traditional console game publishers but focus on lighter games and distribute them online. Established publishers in this space are PopCap Games and PlayFirst. Here’s how PlayFirst’s business works in a nutshell:

  • A developer pitches a concept to PlayFirst via their Web site. Pitches generally must include a playable demo to be taken seriously. And, like any creative business, your ability to get a deal going is greatly enhanced if you first build a relationship with people at the company.
  • PlayFirst provides a production budget to games they believe will make money. The size of the budgets vary depending on many factors. Expect budgets to be in the $50,000 to $200,000 range.
  • PlayFirst manages the production through completion and makes sure the quality level is to their high standards.
  • When the game is complete, PlayFirst markets and sells it to casual game portals. PlayFirst sells to over 500 game sites worldwide.
  • Publishers typically give a royalty rate of 10 to 15% of net sales to developers after they’ve received revenues from the portal. This rate is negotiable depending on the track record of the developer and how much of the project is funded by the publisher. This rate increases dramatically if you bring the product to the publisher completed and they provide distribution services only.

Casual game portals aggregate lots of games and sell them to players. Typically casual games are downloaded and allow players to play for free for one hour. If the player wishes to continue playing after an hour she can buy the game with a credit card for $20. Examples of casual game distributors are Games.yahoo.com, Games.msn.com, Realarcade.com, Pogo.com, Bigfishgames.com, Shockwave.com, and Iwin.com. Distributors typically share 25 to 50% of revenues with publishers depending on the deal. Thus, in a typical arrangement, a game sells for $20 via the portal, about half (e.g., $10) goes to the portal and half goes to the publisher. The publisher gives about 15% of that $10 (e.g., $1.50) to the developer as a royalty. Publishers provide royalties to developers after they have recouped their investments.

Pros: Production budgets are provided! Also games are marketed and sold aggressively by the publisher.

Cons: There is less or no creative control. The developer typically does not own intellectual property.

For a more comprehensive look at the business of casual games—including an extended list of publishers—check out the Casual Games SIG on IGDA.org.

Downloadable Console Games

There are two venues here: (1) Xbox Live Arcade and (2) PlayStation 3 Downloadable. These are games that download directly to player’s game consoles via their console’s connection to the Internet. Games typically cost $5 to $15 to buy.

This category is listed last here because it is generally the hardest for developers to access. Xbox Live Arcade has been a big success for Microsoft partly because they keep tight control of the content on the site. For example, Microsoft prefers to not allow games that are very similar in gameplay to their popular offerings on the service. If you can get on Xbox Live Arcade or PlayStation 3 Downloadable, then chances are lots of people will play and buy your game. Getting accepted by these companies, however, is very difficult. It is akin to getting accepted by a traditional console game publisher.