Is the digital CCG boom a bubble? Analysts weigh in

There’s something powerfully appealing to the human animal about collecting. As with their physical counterparts, it’s not hard to see how that compulsive desire to collect (and the variable ratio reward schedule of finding rares/uniques) feeds into the burgeoning popularity of digital collectible card games (CCGs).

Digital CCGs have existed for years now, but it’s only recently that their popularity has exploded. Blizzard has acted as pathfinder with their slick, accessible entrée Hearthstone, a simplified take on the Magic: The Gathering formula where two players summon and battle monsters and cast spells against each other until one is defeated.

A critical and commercial success, with an aggregate score of 88 on Metacritic and drawing a reported $20M a month at the peak of its popularity thus far, Hearthstone uncovered an underserved market and immediately began dominating it.

Much like Blizzard’s previous success with World of Warcraft, Hearthstone mined some of the best features of established games in the CCG genre and refined them, adding the level of attention to detail and polish that the studio is known for and finding a similar level of success. Since Hearthstone exposed this market, a flurry of CCGs have been revealed by publishers and inundated crowdfunding platforms across a broad spectrum of sizes and scale. 

From triple-A headliners backed by major studios, like CD Projekt Red’s standalone Gwent game and Bethesda’s The Elder Scrolls: Legends, to smaller but still ambitious projects like Adventure Time: Card Wars and the IP mashup Animation Throwdown: The Quest for Cards (featuring characters from Family Guy, Bob's Burgers, Futurama, American Dad, and King of the Hill), the CCG genre is suddenly incredibly crowded. Whether that’s the result of actual consumer desire, however, or a California gold rush towards what looks like easy money, remains to be seen.

Gwent

To uncover some of the driving factors behind this recent spike in popularity, I reached out to a number of consultants with slightly different angles of approach to analyzing video game trends. While they didn’t provide any real consensus as to why CCG production has reached its current fever pitch, they did offer up some valuable insight.

“I think a better question is why not before,” says Michael Pachter, a research analyst for Wedbush Securities. “Hearthstone took the Magic formula and it worked, but it didn’t work for Magic years before. Clearly, the Blizzard fan base drove Hearthstone to success, but the Magic fan base should have allowed Magic to thrive several years ago.”

Pachter suggests that Magic might not have been able to satisfy the widening demand for a digital trading card game in part because of the finite economy of cards, a repercussion of your game being intrinsically linked with a physical product.

One of the main reasons digital CCGs are such a potentially profitable enterprise is the relative ease of generating new assets and features and the comparatively low complexity of their systems, which makes altering them, adding cards/content, or pivoting to meet consumer response a lower-cost endeavor than many triple-A propositions.

While Magic: The Gathering has had some success translating their massively successful physical game to the digital arena, it’s never had an impact approaching Blizzard’s success with Hearthstone. Their clumsy early attempts and failure to establish a consistent, flexible platform for digital Magic have dampened a lot of the property’s potential as a video game, and it’s precisely that failure that paved the way for Hearthstone and the current crop of CCGs.

On the other hand, Pachter believes the genre may be reaching a saturation point, an issue on which Thomas Bidaux, game consultant with Ico Partners, agrees. “That's the risk I see in the current CCG craze - like when World of Warcraft released and brought MMOs to the forefront, I’m afraid that the actual demand for this type of game is mostly fulfilled by Hearthstone.” An even more germane example he points to is the explosion and almost immediate contraction of physical CCGs following Magic’s meteoric success in the early 90s.

Bidaux believes that the current rush to the genre by developers may be overestimating players’ appetites. “I think there’s room for multiple games that will garner more diversity than in the MMO genre, but we’re not in a space where there will be a lot of titles either. Like in the MOBA space, you’ll have 3 to 4 strong titles doing very well and half a dozen being profitable and having a sustainable presence, but I have a hard time seeing a slew of new titles cycling every year.”

Hearthstone

As an analyst focusing primarily on crowdfunding, he suggests companies entering the CCG space could learn some valuable lessons by examining results on Kickstarter and similar platforms.

He points to how early CCGs had tremendous success and little difficulty getting funded, like 2012’s SolForge which raised over $429,000 during its campaign, or Hex which managed to raise more than $2.2 million less than a year later. But more recent projects are having difficulty, even around established IP and seeking more modest revenue, like the canceled Fable Fortune. 

“Before it got canceled, the campaign had raised £58,000 ($76,000) in 20 days. That's a lot less than SolForge did, and I don't believe this is due to crowdfunding being past its prime. There are still many projects funded every month. Fable Fortune was unfortunate to be in a segment where there doesn't seem to be an unfulfilled promise. The fact that the Fable brand is not particularly associated with this type of gameplay didn't help, but I am certain than had it been released prior to Hearthstone, it would have found an audience.”

On the other hand, Serkan Toto, CEO of Kantan Games, a company which specializes in analysis of the Japanese game market, suggests that there’s a robust appetite for CCGs in the mobile space in Japan. 

“Actually, CCG elements are the backbone of the vast majority of mobile hits from Japan. The first mobile game here in Japan that used CCG elements to perfection was Dragon Collection from Konami, which put CCG mechanics front and center and actually established the so-called card battle genre in Japan.”

The success of Dragon Collection triggered a landslide of similar games, and even inspired physical counterparts. “Many developers actually licensed out the rights to their characters to makers of printed trading card games,” Toto says.

Now, CCG mechanics appear in a huge number of games on the Japanese mobile market, including two of the most popular, Puzzle & Dragons and Monster Strike. But focused CCGs are still wildly popular in their own right, according to Toto.

“In 2013, mobile game powerhouse GREE even started a subsidiary that focuses exclusively on trading card games. Today, the biggest mobile CCG in Japan is Shadowverse from local company Cygames. It's essentially the Japanese answer to Hearthstone and is highly successful (in the top 10 grossing rankings right after launch a few weeks ago).”

Shadowverse

Whether the market will ultimately bear this fresh glut of CCGs is a question time will answer, but one thing is clear - with the level of competition constantly on the rise, only high quality, carefully crafted games are likely to survive.

Developers looking to jump in would be well cautioned to take a step back from the apparently lure of easy money, and consider how history has usually treated imitators in cases like this.