It should go without saying that the digital industrial revolution (the one we’re all living through) disrupts everything. Technology reduces the marginal cost of distribution to zero (or as near enough as makes no odds), enabling one-to-many and many-to-many communications on a vast and cheap scale. Information, ideas, applications and transactions all become thinner and more easily transmitted, and that change affects just about everything.
While the first changes involved the dissemination of the formerly printed word through email and web, the revolution has gone on to affect all kinds of data. Media sharing, video, the delivery of new kinds of services and the formation of vast communities are part of the same wave, and it goes even further. It will affect manufacturing. It already affects economics, the movement and the idea of money itself (hey there Bitcoin) and therefore the way that businesses organize. It affects governance and relationships, and the sense of integrity within a distributed culture. Everything.
In simpler terms the revolution lets you can charge for things in ways you never could before, and conversely not charge for things that used to have value. It means that you can establish relationships with fans that previously could not have existed, while simultaneously destroying more traditional kinds of relationship.
Arguably we are nowhere near the final destination of all this change, however today certain aspects of it have become accepted. Those of us who consider ourselves digital natives get that Napster forced the music industry to change or that ride-sharing services are eventually going to do the same to taxis. It’s just a matter of time, we say. Free distribution and free market eventually beats managed, tied up and messy.
But that doesn’t mean we’re immune to the emotional consequences of change. While a few authors have attempted to argue that the genie should be put back in the bottle, the overwhelming consensus is that such efforts are doomed to fail. We all get that there’s a new world disorder and that it feels natural. Except of course when that disorder comes calling in our own industry. Then we tend to freak out.
There are few industries more enmeshed in the pain of this argument than video games.
How Life Is Supposed To Be
The counter-revolutionary argument always boils down to “this is not how things are supposed to be”. You are not supposed to charge for a product before people can see what it is. You are not supposed to charge variable amounts to players because that’s not fair. You are not supposed to think of economics as a part of your game design because that sullies its purity. You are not supposed to attack the problem of delivering “console-quality” in alternative ways because that threatens “console quality”. And so on.
I don’t mean to sound overly dismissive but these counter-arguments are identical to the reservations that Hollywood had over VCR, the music industry had over CD, the publishing industry is having over the ebook and so on. They speak to a fixed idea that folks involved in the industry have over what games are supposed to be, and “supposed to be” is a very powerful and irrational force. Games are supposed to be what they idealistically are, but enhanced by digital. They’re not supposed to be disrupted.
Yet of course they are disrupted. When we look at all those other industries whose disruptions we like we can accept that things have to change. Uber means that the old taxi model will fade. iTunes continues to kill the DVD and the CD. Twitter is slowly replacing the function of news channels. Industrial revolutions are rarely purely additive. Usually they replace or unseat the old too. The relationship as it was supposed to be is changed, and is now supposed to be something else.
Here’s some examples.
Lowly Old Retail
In ancient history games were imprinted onto objects known as disks or cartridges, packaged and sold in places called “stores”. If you wanted to buy a game you got in your car, travelled to a store, spoke with a human and then exchanged some printed paper and metal coins for the box with the disk or cartridge. Then you went home, unwrapped the box, inserted the disk and played your video game.
Then came the revolution. The idea that you might buy your game online was simple to understand, but it ran into problems of price point and digital rights management. The industry spent a long time fooling itself that just because a copy of a game was digital it should make no difference to the retail price (because customers are just that dumb) and that the real problem was making sure they couldn’t be copied.
This tension has resolved through services like Steam and the App Store, but it wasn’t a straight swap. Game makers realized that they could distribute a game to millions of players essentially for free (yay) but also that the digital market isn’t that interested in paying $60 a game (boo). Certain sectors of the industry, most especially consoles, resisted that change tooth and nail because of what it means for the class of product that they make.
You can still find plenty of people who’ll argue to their dying breath that the high priced console model is the only way to bring games to the living room. Or that Valve allowing developers to set their own sales won’t result in a price race to zero. In essence the attachment to that car-store-disk-plug-in cycle remains strong, to the precepts of what it was supposed to mean and what kind of game it was supposed to permit. Being as premium-price gamers are big fans of high-powered Titanfalls, they have a strong instinctive resistance to anything that looks to change that idea.
Another change facilitated by the revolution was the free-to-play (f2p) game. Whether on a vast scale like Zynga or a smaller one like Erepublik, the revolution enables game companies to find players and provide them with a game experience before converting some of them into customers. And then to do so repeatedly. Just as the music industry partially moved to essentially-free distribution of songs as a way to up-sell merchandise and concert tickets, f2p games sell virtual goods to the few in order to support the many.
This model works pretty well, incredibly well for a few. It’s particularly successful in Asia, but the West has its share of giant games that come from nowhere on the back of f2p. The success or failure of the model over the medium or long term has a lot to do with how a particular game is managed and the environment it operates within. Some f2p games have proved to be shady operations that fell apart over time. Others have shown long-term cultural and community development.
But the reaction to free-to-play in the games industry, especially in the West, remains very divided. There are those for whom it makes total sense and then those for whom it is nothing but a vast scam. Many independent game makers essentially consider f2p to be the same as Vegas economics, real-money gaming and gambling. But this betrays a cognitive dissonance.
Games people tend to be just the sort of otaku types who become lifelong fans of movies, games, comics and whatnot. They are the kind of people who’ll happily throw a thousand dollars down for a trip to hang out at the parties surrounding GDC. It seems perfectly normal for them to spend lots of money on gaming hardware as a part of daily life.
Yet they struggle to accept that that same instinct applies to most people. There are people who are fans of cars, people who are fans of horse racing, people who are fans of music festivals or opera or wine. They all exhibit the same behavior of passionate spending on the things that attract them, and free-to-play games simply tap into that passion. There are people who are big fans of Clash of Clans.
Again for some reason some of us consider that with games it’s supposed to be different, and that economic change within games can only presage disaster. We cry ”not in my back yard” and plead for a better model that is more honest. But even when that comes along, or is trying to, there is still resistance.
A more recent economic innovation has been the rise of crowdfunding through Kickstarter and Indiegogo. Kickstarter has recently crossed the billion-dollar mark. Much of that has come from games and related projects, such as Double Fine Adventure, Oculus Rift, Star Citizen and OUYA. Some of those projects have proved very successful (Cards Against Humanity) while others have had issues. The model seems to weigh in favor of pre-established figures in the industry trying to raise their next round of funding, but that’s by no means a rule.
The model encourages true fans to contribute to pet projects in the hope that they will be successful. Yet while it is a more honest model for connecting game makers to fans, even Kickstarter et al struggle with acceptance. A big question hangs over whether certain creators should go that route, such as whether Peter Molyneux should have funded Godus through crowdfunding or gone the more traditional route.
In other words crowdfunding has been accepted as a way for alt or fringe projects to get funded, but when it touches on more mainstream projects there are sections of the industry who find it uncomfortable. A common argument against it is the fear of delivery. Granted there is precedent: Double Fine managed to raise $3.4m or so but it wasn’t enough to make the game they wanted to make.
Some studios have solved that fixed-budget problem by turning their crowdfunding into an open-ended activity. Star Citizen, for example, has raised $35m at last count by continuing to pre-sell pledge spots and stuff in the game even though it isn’t yet released. Elite Dangerous from storied British studio Frontier, is doing something similar. You can buy access to the alpha for £200 and that gets you insider stuff. Through Steam several other games are doing the same thing, often charging more for the privilege of early access than the eventual retail price.
And yet the questions remain, making crowdfunding’s next steps hard to ascertain. Could a large publisher like Activision decide to take the next Call of Duty onto a crowdfunding basis as a way to fund its production? Likely not because of the backlash in perception. There’s something about crowdfunding that causes the industry media to freak out if it goes over a certain level, as though industrializing it compromises the spirit of what crowdfunding is “supposed to be”. That phrase again.
What Next? Patreonomics
But if all this talk of disruption has any merit then it’s clear that not only are these new models of revenue and connection here, they are here to stay. And in that vein I think there’s something very interesting going on with Patreon.
Patreon is a patronage service inspired by crowdfunding, but different. Unlike the traditional Paypal Donate button that used to infest websites and never worked for most creatives, Patreon lets artists create campaign pages with rewards (a la Kickstarter) and encourage users to become patrons. The service is currently pretty small, but there’s something very interesting about what it’s doing.
While some creators opt to set up their campaigns via a monthly payment (in effect a subscription model), the more interesting version of this model is the per-deliverable model. Unlike Kickstarter where essentially you pay per product, Patreon users pay per-part. A few independent games journalists, for example, have created campaigns that charge on a per-post basis. Some small-scale game designers use the service to charge on a per-game basis. If you’re into the text adventure games of Porpentine you can support her per game, which translates to giving her a couple of bucks every month or two.
It may seem incidental but there’s something significant about that kind of repeating structure. It’s a model which mixes aspects of crowdfunding, free-to-play and retail all at once and arguably is more aligned with the marginal cost of distribution than all of the above. It encourages the building of a relationship with players (or readers, listeners, whatever your thing is) that is both fiscal and honest and focused around community building. It’s intriguing.
It also raises many questions about ethics, about whether being in a direct commercial relationship with an audience somehow constitutes a compromise of integrity. If you’re making stuff just to satisfy an audience of payers, are you essentially becoming a populist? That’s yet another “supposed to be”.
The Final Disruption
The bald truth of the revolution and its economics is that it kills all notions of the official stamp, of “supposed to be”. When the relationship between the artist and the audience loses its intermediaries then external ideas of integrity become irrelevant. Whether you’re crafting the most noble of interactive artworks or the most naked of real money bingo games, there is no standard by which to judge. Everything becomes equivalent, relative and justifiable. That inevitably means that there is opportunity for scam and graft, but also that there’s an opportunity for a new kind of direct connection to an audience with no barriers to success.
Will Patreon be the next big hub of the games industry economy? I have no idea. But the patreonomic model of direct relationships with customers over the long term? Of people paying studios per-build, per new-release, per-update, per-prototype? There is no physical reason preventing that from happening.
History shows that any change empowered by the digital industrial revolution will inevitably come to pass and the question is only when. Patreonomics may well be the last great disruption, a combination of all the steps we’ve learned along the way. We may end up in a very weird world when millions of fans have become patrons of a Blizzard or a Nintendo and are supporting what they do on a continuous basis.
It may seem ridiculous and wrong that the world might work that way. It may violate all that we think is supposed to be. But what’s really stopping it from happening other than our own ability to imagine it?
Article source: http://techcrunch.com/2014/03/09/patreonomics/?ncid=rss