The 5 trends that defined the game industry in 2016

2016 was a year marked with fear, disappointment, uncertainty, and dreams of what survival might be like in a post-apocalyptic world…and that’s just talking about the video game industry.

Gamasutra editor-in-chief Kris Graft (@krisgraft) takes a look at the trends that shaped the video game business in 2016.

2016 was a year marked with fear, disappointment, uncertainty, and dreams of what survival might be like in a post-apocalyptic world…and that’s just talking about the video game industry.

Here are the top 5 trends that defined the year:

Nintendo takes its first real steps into mobile

It’s something that was a long time coming, but was still difficult to fathom: Nintendo, a company that on a fundamental basis is about creating hardware and software that complement one another seamlessly, was going to start making games for mass market, non-dedicated hardware.

First there was Miitomo – a slightly gamified (sorry) social app developed in a partnership with mobile game giant DeNA. It’s a fascinating, appropriately Nintendo-like approach to social interactions on phones. Although it was a flash in the pan when it launched this spring, it was a bright flash that hinted at the kind of audience Nintendo could draw on mobile devices. (Remember when we were all totally into Miitomo for those two days?)

Then came Pokemon Go's explosive success. While it was developed by Niantic (and remember, Nintendo only owns about a third of the Pokemon franchise), the Pokemon brand and Nintendo are inextricably linked. By mid-year, Nintendo was just starting to hint at the impact it may have once it put more significant resources into mobile.

Actually not gameplay.

And this week, we’ll be seeing what can be considered the first “real Nintendo game” on smartphones with the iPhone release of Super Mario Run. Directed by Nintendo stalwart Takashi Tezuka, the game is getting special attention from Apple, which seems determined to make it a success.

It’s a smart tack by Nintendo as it finally acknowledges that mobile games have wooed-away the mainstream audience once owned by the Wii and DS/3DS. Supplemented by the upcoming launch of the Switch console, Nintendo’s slow but sure move to mobile this year is laying the foundation for a potentially robust 2017.

Coming to grips with the commercial VR market

It’s true – last year we noted virtual reality in our top trends list, but the way the VR market has developed over the course of 2016 makes VR once again impossible to ignore, albeit in a different light.

Whereas 2015 was a year in which a select few had access to VR, 2016 was when VR became commercially available. Valve and HTC’s Vive is out, Oculus Rift hit shelves and recently added Touch controller support, and PlayStation VR had a strong launch with a more mainstream console crowd.

Maybe we'll leave this guy in 2016.

With these commercial launches, actual reality is beginning to sink in for VR developers. So far, what we’re seeing is that it’s difficult to make money on a VR game, which shouldn't be a surprise to people familiar with new markets with small addressable audiences. We’re also seeing developers try to mitigate the risk of getting into VR here in the early days, often by shoehorning existing games into VR (a practice that often doesn’t yield the best results). VR devs are also experiencing first-hand the difficulty in marketing and selling a game meant to be played while actually inside a digital realm. Those are just a few of VR's now very real challenges.

All of last year’s handwavey theories about the practicality, usability, and overall viability of VR games have been put to the test by the live consumer market over the last several months. Through all of the challenges, however, the VR dev community, along with platform holders, still seem extremely committed to the medium. That could be enough to make 2017 the year VR truly solidifies its position in game dev, if not a wider addressable market.

Game consoles have a mid-life crisis

Game consoles have, once again, found themselves in an awkward position. They need to keep up with the times, but also simultaneously avoid wrecking the entire console game dev ecosystem by launching new proprietary hardware.

In 2016, Sony and Microsoft revealed exactly how they would attempt to navigate these tricky times, by announcing the PlayStation 4 Pro and the Scorpio, a souped-up version of the Xbox One. These new, more powerful iterations of their launch counterparts are meant to tackle higher-resolution 4K televisions, enable fancy HDR effects, improve framerates, and be ready for processor-intensive VR games.

More like late-life coolness.

Dedicated hardware continues to be the console market’s greatest strength, and also its Achilles’ heel. The fundamental question associated with the incremental-update trend is whether or not people will buy enough of these updated consoles to warrant console makers to continue such upgrades. The answer lies somewhere in the value proposition.

It’s also possible that more powerful consoles are a stop-gap as Sony and Microsoft continue to make moves toward video game and media strategies that no longer rely on dedicated hardware. We see Sony continuing to develop PlayStation Network, and making PlayStation play nice with PCs, and there’s Microsoft that’s increasingly integrating Xbox One and Windows 10. This isn’t to mention developments in cloud-based games, the logical goal of which is to use a network as the backbone for streaming and distribution on non-dedicated platforms like TVs and PCs.

I'm getting ahead of myself. In any case, for now we’ll humor PS4 and Xbox One, who’re snapping up that new Corvette convertible to let their graying temples blow in the breeze.

A new kind of crowdfunding takes shape

Part of making video games is getting money to make them. It’s not as sexy as the more creative aspects of game development, but typically essential for commercial endeavors.

This year a new kind of funding that’s been in the works for years finally went into wider practice in the U.S.: equity crowdfunding. Companies like Fig, Gambitious, and Indiegogo ramped up or introduced crowdfunding initiatives this year, with studios including ArtCraft (Crowfall), Double Fine (Psychonauts 2), Flying Wild Hog (Hard Reset Redux) turning to equity crowdfunding as a solution.

There're no good images of equity crowdfunding, so here is a watermarked stock photo of money bags.

In case you’ve missed it, here’s what it is: In traditional, Kickstarter-style crowdfunding, backers pledge a certain amount of money, and project owners offer up rewards – like a copy of a game or a spot in the game’s credits – depending on how much money a backer contributes. Once a campaign hits its funding goal, pledgers’ cash is released to the team behind the project to go towards work.

Equity crowdfunding operates in a similar fashion, except instead of “backing” a project, backers become legally-bound investors in the project, potentially receiving an actual monetary return on investment. This style of crowdfunding is fraught with legal complications (equity crowdfunding rules in the U.S. were just finalized late last year), but the real investment aspect is appealing to people who might like to fund video game development and who wouldn’t mind making a bit of extra money.

While not as explosive as when Double Fine blew open Kickstarter’s doors for game devs in 2012, equity crowdfunding is a measured yet notable trend that more game developers may turn to as other funding options (like Kickstarter) dry up.

The post-indiepocalyptic game industry

Last year, we noted the “indiepocalypse,” which was less of a real extinction event and more about fear and uncertainty as game markets matured and became increasingly crowded, competitive, and unforgiving.

2016 was the year that these fears and gut feelings began to creep into observable reality: As the quality bar rises on indie games, so do development costs; discoverability continues to be an issue as games flood the market; hits become bigger and fewer, squeezing out more indies; game devs have more and more in common with struggling artists and musicians; and so on.

Indies at the beginning of 2016 vs. indies at the end of 2016

While that sounds a bit depressing, at least there’s no mushroom cloud hanging in the sky just yet. The good news is that this year, there is less “omg the sky is falling on indie games,” and more “these are the problems – now that I can see them, I can try to solve them, or at least work around them.” Indie games might be headed for winter, but think about what your spring will look like.

Indies will need all the support they can get from platform holders as the new reality unfolds. Some have been more proactive than others – where Valve has continued to implement and address issues with its storefront (namely discoverability on Steam), others like Apple have done little to address the hurdles in front of small developers. Newer distribution platforms like also offer fertile ground for developers looking to avoid the worst degrees of noise.

While crowding markets are still a major concern, this year we see making a living as an indie is more complicated than just "fixing" discoverability. The road ahead is still difficult, full of potential pitfalls. But at least in 2016, the challenges became more apparent, and hopefully with that, so has a way forward.

Hungry for more 2016 best-of? Gamasutra published its Top 10 Games of 2016Top 10 Game Developers of 2016 and Top 5 Events that shaped the year. Gamasutra contributors also each wrote up a personal top-five list -- and you can read them here: Kris GraftAlex WawroBryant FrancisKatherine CrossChris BakerAlissa McAloonChris KerrPhill Cameron, and Brandon Sheffield.

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