Developers – your role in the coming war, and the ways you can benefit from new modes of game production.

Welcome back, commander! In today’s article, your very survival is at stake… We are here to discuss new modes of production in digital games brought about by the increasing role of customers, and how they can restructure the currently existing industrial regimes.

Changing macro-economic environment

There is no doubt that customers’ relentless march is changing something about how the games are produced, published and distributed (not mentioning the business models of game development studios making them). More importantly still, by the very public manifestations of it, such as crowdfunding, the relationship that exists between game makers and game players is becoming reframed. The latter are empowered, and for the former numerous market niches become available for business – niches where devoted customers’ following exists in the form of communities. These changes by many are hailed as the much-desired breakoff from some of the bad things that are associated with the big publisher mode of game production and marketing. They are seen as reinvigorating  creativity in the industry (recently eroding due to big publishers’ risk aversion and reliance on established IP franchises), opening new markets and customer groups for gameplay, giving game developers more power in negotiations with investors, allowing more artistic (and indie) projects to see the light of day, and many more…

It seems that the macro-economic environment itself of the digital games industry is gradually changing. Not only the rise of online distribution is causing this – but most of all, the increasing reliance of game industry on the creativity and involvement of players in games production. This involvement can take many forms – let us look at them briefly in the Table 1. Those trends are coupled with wider phenomena becoming dominant in the media industries overall (for example broadcasting industry) – which are becoming increasingly focused on co-terminous and co-located preproduction, production and postproduction. The classical milestone mode of games development has long been shown as inefficient when it comes to game production (and has been, to various extent in different game development studios, replaced by Agile or Scrum approaches), but with those recent changes we should see complete abandonment of those still lingering takes on game making.

Table 1. Some of the forms of customers' involvement in digital games production and postproduction, which can be grouped under the term of 'co-creation'. Notice the prevalence of mid-budget games and MMO games as loci of those phenomena.

Those phenomena can be collectively classified as ‘co-creation’ of digital games. They take many forms and have many dimensions across game development firm (or game publisher firm – but that is a topic for another article, as there will be some significant differences which we have no room to discuss here). They can occur not only in the three classical aspects of game production – namely design, technology (i.e. code and programming, game engine etc.) and content (i.e. art assets, animations, models, sounds, music etc.). The point here is, that customer co-creation does not have to pertain only to the game itself anymore (understood here as the playable cultural artefact and object of fan-like following). Customers, due to changes in back/front-stage processes can get involved in the firm (organizational, business model, marketing, value chain, distribution etc.) aspects of the game development and production. The best example of that is the opening of game investment to customers by crowdfunding; in the ‘old’ model it used to be the domain of game development completely hidden from the customers, while today it is out there in the customer relationship and community management spheres. In this new ‘open’ paradigm, firms are beginning to be in the position of benefiting from having their customers engaged with their product, service, as well as operations (games are both products and services; main manifestation of service-like nature of games is in the post-launch phase, where studios will patch games, release new content, engage with the community, organize contests etc.).

After all, ‘two heads is smarter than one, and three is even better’. It is true for any industry that customers also have product or service-related competencies, meaning that among customers there will be experts in many domains, including the domain of the production itself. Game developers are already experiencing this – having their players help them with bugs, making new art assets, and even significantly helping with community development and game marketing – and they readily tap into those activities which after all require high skills (in some cases comparable to those of actual game development firm employees). There are theories in the academic literature on open innovation paradigm, that any kind of competence will be always hosted in the community of customers if that community is large enough; and games, even the ‘not-AAA’ titles, have very big fan followings. On top of that, those fan followings are well organized in communities and are characterized by transparent to the firm and traceable communication channels. From this statement further conclusions are obvious – the community of game players is a powerful resource which potentially has the capacity to help game developer with any possible problem, as the community will have members who are already expert in those domains.

Ni Dieu, Ni Maitre?

Of course, this optimistic vision could cause some of the readers to ask “Why do we need the game developers anymore then?”, and “Surely, if we have all the competencies in our community to make a game already, then let’s make it without the firm!” Actually, the risk of having skilled customers  competing with and displacing professionals in their domains is a valid scenario in academic literature (Wexler, 2010). Theoretically, all kinds of firms could become nexi of social outsourcing networks, with all work done by external contractors recruited from among customers and fans. Nevertheless, realization and successful execution of such a business model in games development would pose numerous challenges, and would not work today for any mid-size to large game production enterprise. The only thing we can say, though, is that such a scenario is not an impossible one to appear in the future.

For the current state of the industry, both of the sentences above are completely false. Game developers have functions other than just loose amoebas of skilled people who know how to do things to make new games. The role of game development studios is still indispensable: they provide structure, organization, business acumen, are capable of navigating the treacherous and aggressive environment of free-market economy… Organizations such as game development studios have their ‘added value’ and are more than just a sum of its parts (as represented by competencies of individual employees). They are also judges of market feasibility, and thanks to their hierarchical and centralized power structure are capable of successfully responding to the market (in terms of, for example, realizing customer needs). Understanding what kind of game to produce and launch is not an easy thing – customers’ needs are difficult for firms to gauge, demand uncertainty in the creative industries is high, and many of the customers’ most heartfelt wishes are completely commercially and production-wise infeasible.

New opportunities: arise!

Exactly here is where game development studios’ new functions, and the new opportunities for them in the slowly reforming digital games industry, are. Game developers, if they want to be poised for maximum extraction of surplus value from the market (and especially from the still vastly dormant market of customers’ co-creation), they should become filters of ideas. They should learn (apart from retaining their game development competencies) how to induce, harness and then select for the creativity of their customers, so that their game production process is enhanced and empowered (and not disrupted!) by their players’ creativity. Furthermore, if customers can co-create not only games but can also become involved in other aspects of game development firm, perhaps digital games studios could start recruiting people to co-create who are not players of their games at all, but who for example just want to get engaged in marketing instead? We have already seen it in the case of crowdfunding – not all ‘big dollar’ backers are interested in the product/service being crowdfunded – some of them are seeking to build their professional networks, get access to certain communities, or do it as part of their investment portfolio. Game developers should think large and beyond just simple ‘players of our games fixing our bugs and making new art’ model of co-creation. The future will belong to those studios, which will innovate in the new modes of game production using their customers.

One thing to remember here, though, is the fact that co-creating customers are not an infinite resource in the digital games industry (or any other industry for that matter). They are essentially normal people with normal jobs, who only use their spare cycles to co-create. Their time and attention will become one of the scarce resources that industry actors will soon start competing for.

Crowdfunding: vanguard of destruction?

Figure 1. Colossi of the world... Behold the agent of your demise!

That is also why we are seeing so much crowdfunding in the PC sector of the industry. PC games have always had more devoted following of players than mass market console games or more casual-natured handheld and mobile games. Niches exist within PC gaming market for the game developers to occupy – the best examples of which are the classical isometric RPGs or JRPGs. Those niches can also be occupied by games with more innovative or experimental gameplay models (Godus, Planetary Annihilation) or bridging across various genres (to readers interested in this topic, as well as those pursuing more examples of games like that, I recommend a visit to Steam and Steam Greenlight, where more and more games which are still in development feature prominently on the front page). The presence of those niches is the reason why PC gaming firms are poised particularly well to benefit most from the process of co-creation in their game development, as well as in other aspects of their operations. They already have close relationship with well-defined and fairly taste-uniform community of customers. Moreover, due to the size of investment required to develop such games, those studios and their productions are placed in the mid-budget game market. That and their occupation of niches suggest that those game developers are in the best position for seeking innovative competitive advantages over the established (incumbent) firms, such as big publisher studios. This advantage is reflected by the fact, that those mid-sized studios have agility and manoeuvre space in terms of how they engage with the community and how they spread the risk across the process of game production as well as value chain location. This, on the other hand, is a luxury that extremely risk-averse, high-demand-uncertainty operating triple AAA studios simply do not have (as the financial risks associated with failed, or even under-selling products are too large). This is a textbook position for the ground-breaking market and industry change, one in which new conditions and rules of the ‘business game’ will allow the studios currently occupying niches to successfully displace (increasingly vulnerable to change) AAA publisher firms.