The last article, I gave a macro view of the gaming ecosystem. Now, I wanted to spend time on each game category to define what they are, how they innovate by function, feature or use case, and finally what are the top startups startups in each category. This article will solely focus on game developers. This category dominates the gaming industry. They make up almost 60% of the entire gaming ecosystems funding ($7.1B) and number of startups built (447).
The game developer category focuses on studios and publishers that are looking to create, acquire and distribute new games. This is one of the most unique categories of the entire startup ecosystem because of its success and failure rate. Over the 447 game developers I’ve reviewed, ~23% have exited and ~10% have closed.
It is truly an art to build a game with the right level of strategy, skill and style - which only the best game developers know how to do. For this article, I won’t touch on game play but I do want to highlight the patterns I see in tools used to create games, features added to drive engagement and target demographics of game developers.
Basics Trends Game Most Developers Follow
- Mobile is becoming the most important platform to publish games.
- Majority of game developers are creating free-to-play games.
- Monetization of each game comes from advertisements or in-game purchases such as skins, boosters or premium products.
- It also seems standard to build games across all platforms (consoles, mobile, TV and VR).
- Creating a competitive multiplayer ecosystem or offering prizes are a must to drive engagement.
- It seems more and more developers are trying to build communities around their game through any means possible, chat, in-person meetups, leagues and more.
- All developers must cater to influencers to attract viewers and gamers.
- Building your own unique IP or using an existing valuable IP is key to building a successful game.
How game developers differentiate by the tools they use to build games or the platforms the games are built for.
New Platforms Used To Play Games
Game developers are finding new platforms for game play. This looks like an opportunity for game developers to grow where others have not yet. Examples include:
- Audio: Developers like Drivetime or Sensible Object are allowing users to play audio trivia games from Alexa or while driving a car.
- Smart Watches: Everywear Games and Pocket Gems are creating games for both android and apple smart watches.
- Chat Applications: Knock Knock has been building games in Facebook messenger. Neptune has been working with Kakao. Tencent’s Mini Program has sparked a number of games over WeChat. Mojiworks is building games for both Messenger and WeChat. This looks like an an exciting category for short casual game play, an area telecoms or CPaaS solutions should pay attention to.
- Internet of Things: It seems more often traditional board games or toys are merging with video games. Workinman Interactive is making interactive toys for brands like Disney, Nickelodeon, Atari and Fisher-Price. Mighty Bear Games created a heart rate monitor that controls game difficulty. Sensible Object created a unique hardware game where Jenga meets pokemon.
- Television: Nazara has also forged an alliance with Amazon to provide localized Indian gaming experience on Fire TV. It seems TV’s are becoming an important platform for more publishers outside mobile and PC. Will this hinder console growth?
- VR/AR: Niantic, Leaftail Labs, Snatch, Next Games, Placeholder and Shifu are all primarily using mobile phones to create AR experiences that are social, interactive and collaborative. VR is also a platform of choice for developers to expand their existing IP. Resolution Games, as an example, brought Angry Birds to VR. Others are taking a step further to enhance the gaming experiences within AR/VR. Subdream is building their own hardware that can be used in VR games. Meleap has gone as far as creating their own arena for AR gameplay.
- Theme Parks: Immersive Game Labs and Survios built an indoor video game theme park where people can play their games. VR/AR indoor theme parks have been a trend for awhile, but the economics of managing them are a bit shaky.
Why is this important?
New platforms are able to reach new or existing gamers in a different way. Publishing games on these new platforms first can define a new category of gaming. As an example, Mech Mocha claims 96% of mobile first gamers have no history of PC/Console games. New platforms can also hurt existing platforms. Tencent mentioned in their annual report that their PC gaming revenue is impacted and will continually decline because of the mobile gaming shift.
Developers Creating Their Own Game Engine
The engine used to build games are becoming equally important as the game itself for many developers. This seems to be developers growth strategy to evolve into a publisher.
- Game Engines To Publisher: Companies like Epic Games Unreal Engine or Niantic Real World Platform are examples of developers building successful games and sharing their platform with other developers. Developers like The Ready Games will publish games built using their developer platform, the key benefit is users don’t have to know any code to build games. Workinman Interactive offers a IoT hardware simulators.
- Internal Game Engine: Developers like Super Evil Megacorp and Mojiworks created their own game engine to power their mobile and chat games with no intention to license it. This route seems to give studios more freedom over their games performance and how quickly games can be developed. Dapper Labs takes a slightly different approach by allowing developers to use their code to create games within their gaming ecosystem. The purpose is to create more mini-games around Dapper Labs branded games. FRVR’s technology stack helps them serve quality games in less than a second on almost any mobile phone.
- Gaming Tools: Many developers are also licensing tools they use to improve the performance, distribution or engagement of their own games. Teatime Games offers broadcasting and video chat within games. Reload Games offers in-game music studio and tools to accelerate game downloads. Midas Touch creates 2D animation software.
Why this is important?
The future of gaming infrastructure and tools will most likely come from game developers. The future of game development is focused on how fast, cheap and immersive a developer can build a new game. This is a stepping stone to becoming a major publisher for developers.
Quantity of Games Built
A handful of studios and publishers seem to be aggressively setting production or acquisition targets for new games. Maybe this stems from the search for the right IP that will that will create a big payoff for the studio. Some publishers like Games2win encourage zero dependency on a single title. Hypixel, Mighty Bear or Flowplay try to build multiple mini-games within an existing successful game. MZ Studios sets a goal to release a game every 6 months. The Ready Games tries to release a game every 48 hours. Examples of approximate quantities of games under developers or publishers:
- Flowplay 200+
- Pogo 176+
- NoodleCake Studios 140+
- Playstudios 100+
- Team17 100+
- TabTale 100+
- Gamee 75+
- Zgames 40+
- Hypixel 22+
- FRVR 26+
Why this is important?
It’s tough to build quality games quickly, Phoenix Labs mentioned that it takes almost 200 people to produce their new PC free-to-play cooperative hunting game. If done right, games can bring in hundreds of thousands, if not millions per day. Developers and publishers seem to be constantly looking for their next big win. As gaming engines evolve to make it easier to produce games, you should see this ecosystem flooded with more and more content.
Redemption Games mentioned, “The mobile games business has become one of the most competitive industries the world has ever seen. There are hundreds of thousands of games in the app store and to be able to rise to the top requires a unique combination of skill and effort, from how the game is designed to how its marketed and operated as a live service. There are no silver bullets and no shortcuts.”
Developing a game is an art, and artists constantly collaborate. There are a handful of developers collaborating for skill, IP or regional distribution. Obviously many collaborate with publishers to receive help for production and distribution. Other developers like Hutch prefer to self-publish. Nonetheless, merger of media, content and game IP will constantly generate exciting new gameplay. Examples of collaboration:
- Halfbrick Studios worked with Mech Mocha to localize and relaunch their games in India.
- Workinman collaborated with Addicting Games to create an intense combat game to reflect the spirit of the series, Man at Arms.
- Digit Game Studio collaborated with Scopely to build Hollywood IP, Star Trek Fleet Command.
This section focuses on how developers differentiate through their IP or the features they to their games to increase fan engagement.
Merger of Media, Brands, Icons with Games
Many developers are building games around existing popular brands to drive instant attraction. Other developers try to build games around movie or tv show content to further build upon their game’s IP. Some developers are producing rich media content within their games to create a better gaming experience. Here are examples of how games are merging with media:
- Media Icons To Games: Almost any popular media icon from television, movies or actors, has been or will be built into a game. Examples include Niantic using Harry Potter; Jam City using Family Guy and Marvel; Second Dinner also using Marvel; Scopely using Walking Dead and Wheel of Fortune; nWay with Power Rangers; MZ Games using Final Fantasy; Moonfrog Labs using India’s highest grossing film and most famous actors; Funtactix creates games based on blockbuster films. Neptune is partnering with messaging platform Kakao and using their characters to build games. HQ Trivia takes a different approach by inviting celebrities like The Rock, Robert De Niro, Gordon Ramsay, Neil Patrick Harris, and Alicia Silverstone to drop into their game. A really unique example of building games off of popular media is Hypixel. They started by producing their own funny youtube videos. This Youtube channel garnered enough attention and following to help them build their own Minecraft mini-games based off their youtube videos.
- Games To Media: To further build off of the existing IP of a game, developers are creating media around their game. It can be as simple, like Kixeye creating videos and blogs on how to beat their games. Or it can go as far as Niantic, who is creating a tv show around their game Ingress. Telltale releases interactive episodic content on a monthly schedule about their games. Youxigu participated in the investment in the production of two cinema films and action type movies. Moshi Monster went as for a creating books, magazines, toys, trading cards, music albums, a movie and a dog mat.
- Brands To Games: Developers are also partnering with iconic brands to build games. As an example, Playstudios partnered with casinos in Vegas to offer rewards. The Ready Games works with top brands to build custom game experiences. Animoca Brands built games for Mattel. 704Games created six games all about NASCAR.
- Games To Games: It’s common to see developers revamping existing popular board/arcade games. Mech Mocha built a game about a popular local Indian board game called Ludo. Subdream built a VR game based on the popular 1980’s arcade game Galaga. Jackpocket helps you play state lottery games on your phone. Scopely built games for Yahtzee. SuperSolid is building off of Sims. The list goes on.
Why this is important?
Building a successful game IP is very difficult. To keep a previously successful brand alive is even more challenging. Any popular content will inevitably be eaten up quickly by developers. Those who have found successful gaming IP will create media around it to keep players around. I think we’ll see more media and games colliding in the future, especially as it gets easier to make and distribute games and media.
Giving players ownership of the game seems to be a building trend among developers. Selling in-game items have been the standard for monetization for most free to play games. However, developers are opening up their game to allow the players to create, sell and trade items, maps and more. Examples of this trend:
- Dapper Labs opened up their code to allow developers to build games off their game IP.
- Epic Games and Funcom gives out mods so gamers can create their own worlds within popular games.
- Mythical Games will focus its next game on user generated content where players and influencers can trade the digital assets they created.
- Klang Games allows players to create and manage multiple characters. The characters live on even when the player is logged off.
- Pocket Gems allows users to create their own storyline within the game to share with other players.
- IMVU created their own fashion blog for in-game styles created by players. Their avatars can be named top model and recognized on the game banner.
Why this is important?
Digital assets are becoming extremely valuable for engagement but also the new means of monetizing games. The future of gaming will allow players to build their own games, profiles, skins, storyline and more. The future of game development will probably come from players.
Events, Tournaments & Competition
Another rising trend of developers and publishers to increase engagement is by hosting competitions for their games. This can be done in-game or by hosting an event. This helps developers drive engagement and new monetization strategies. Some examples include:
- Niantic creates events and local meetups for their AR gamers. Some of these meetups are a core part of gameplay. In addition, they hold contests for developers.
- In Tencent’s annual report, they mentioned they are able to increase user engagement through esports tournaments and live streaming events.
- Nazara Technologies secured multi-year exclusive licensing rights for the ESL to organise and operate ESL competitions in India.
- Funplus and Millennial Esports host esports tournament and leagues. Millennial Esports actually has their own gaming arena in Las Vegas.
- Games like The Ready Games and HQ Trivia host competitions for prizes in-game daily.
Why this is important?
Esports is a movement that has been growing fast. Developing collaborative and competitive games seems to becoming a requirement. Participating in the esports industry is a must for developers.
Big or small, all games have added a social component to them. This can be anything from chat, live video or VR worlds. Adding live social components to games are becoming a must for all developers. Examples include:
- Mech Mocha is focused on building social components to their games. Their DAU spend on average 25 minutes per day on their in-game voice chat.
- Teatime Games provides live video for their face to face racing battle games.
- Funplus mobile app enables users to stream their game play and interact with their audience.
- Flowplay created a virtual world that allows players to interact and play games together.
Why this is important?
Social interactions seem to drive engagement. It’s is must for the future development of any games.
This section focuses on the type of audiences game developers are focused on and how their company evolves.
There are a handful of game developers catering to specific demographics that are worth noting. Examples of common demographics below:
- Geographic: Mech Mocha feels there is a gap in location specific games. They are focused on winning small regions within India. Games2Win also claims to focus on creating localized content.
- Gender: Singularity 6’s upcoming game hopes women will be a major portion of their audience. Nix Hydra is focused on creating women oriented games. Gram Games actually created a movement called Project 22% that caters to women.
- Competitive: Gamelynx is creating team-based competitive games on mobile, so esports can become more accessible and global.
- Professional: Level Ex creates video games for doctors that capture the challenges of practicing medicine. Radd3 virtual reality training system helps football players mentally prepare for upcoming games by visualizing plays. It also allows football players to practice without the risk of injury.
Why this is important?
Catering to a specific demographic could open up new growth opportunities for developers. As an example, Nazara Technologies mentioned, “In either case, with a 500 Mn players’ market, India has the potential to build its own League Of Legends.”
Influencers are a major component of game developers marketing strategy. Phoenix Labs pointed out, “the reality is most of the folks who play Dauntless come in from somebody on Twitch who happens to play, or a YouTuber, or the vast majority of folks are coming in because their friends play and they want to play with their other friends.” How game developers interact with influencers are crucial to driving traffic to their new developments. Examples of innovative methods publishers use to cater to influencers:
- Funcom pre-made bundles exclusive for influencers to help them create better content for their audience.
- Epic Games Support-A-Creator program enables creators to earn money from Fortnite and other games in the Epic games store.
- Seriously found success by developing a series of campaigns with YouTube influencers around charity initiatives and timed them to coincide with game updates.
- Proletariat builds full live stream integrations and tools that allow viewers to interact with their favorite broadcasters within their games.
Why this is important?
Influencers will, if not already, become the dominate outlet for the launch of new games. To keep influencers happy, game developers need to help them offer better content to their viewers. We should see more collaborations and unique ways game developers will collaborate with influencers.
Evolution Of Game Startups
Game developers are constantly searching for ways to expand on their existing IP. Many shift from building games catered to players to offering their platform and expertise to new game developers.
- Acquiring Portfolio Growth: Many successful game developers start acquiring or investing other studios for growth, namely Jam City, Scopely and Tencent.
- Developer To Publisher: Many developers use their game engines they’ve created or reach to build their publishing portfolio. As an example, Epic Games leverages their gaming engine as a means to grow as a publisher. Paradox Interactive is also creating a digital distribution platform. Rumble Games offers tools for developers to publish and operate in game service.
- Developer To Service Provider: Workinman Interactive creates design, IoT toys, art, exhibits and more services for brands looking to develop games. ZGames offers game design document development, art creation, prototyping and audience research to app store release and post-release analytics-powered tuning and server support. Virtuos also offers extended gaming services and training for gaming artists.
- Developer To Products: Mind Candy build a successful IP that expanded into books, pet products, apps for pets, feeding mats, trading cards, magazines, toys, music albums and a movie.
Why this is important?
Creating legendary games are nearly impossible. Therefore, developers always have to be looking for new ways to evolve, grow and monetize or they will inevitably fail. Ideally, developers should continue to launch new games, but they should also have a plan B.
Top Game Developers To Watch For
Hypixel Studio, Immersive Games, Niantic, Jam City, Second Dinners Studios, Mech Mocha, Mythical Games, Everywear Games, BigBox VR, Embark Studios, Drivetime, Dapper Labs, Subdream Studio, Jackpocket, Epic Games, Phoenix Labs, Leaftail Labs, GAMEE, Singularity 6, 1939 Games, 704Games, Neptune, Knock Knock, Scopely, Jumpship, FRVR, Klang Games, Mighty Bear Games, Mightier, Sensible Object, Redemption Games, Gamelynx, Teatime Games, KIXEYE, Digit Game Studio, Level Ex, Volley, HQTrivia, Trailmix, Caret Games, nWay, Manitcore Games, Mind Candy, Snatch, Mojiworks, 3rd Eye Studios, Supersolid, The Ready Games, PLAYSTUDIOS, Super Evil Mega Corp, Portalarium, Pocket Gems, Seasun, Next Games, Armada Interactive, Hutch, PlaySimple Games, Bonfire Studios, Mino Games, Seriously, Ministry of Games, Machine Zone, Supreme Games, Beyond Games, Moonfrog Labs, Telltale Games, Proletariat, Derby Games, Kingnet, Playdots, cloudcade, Flaregames, Octro, Nix Hydra, Thatgamecompany, Funplus, Cocone, Tabtale, Chukong Technologies, Youxigu, Grand Cru, FlowPlay, Games2Win, Arkadium, Peak Games, Reloaded Games, MindSnacks, Red Robot Labs, Dang Le, SNSplus and a few more.
Game development is an extremely difficult industry. Creating a popular game is only half the challenge. Staying relevant by building out your IP, creating communities and expanding your game platform will help developers last longer. The future of gaming engines will be built by developers. The next best publisher will be a new successful game developer. It will be exciting to see how developers create new immersive games on a variety of platforms; how they will connect with the esports industry; and how they merge with traditional media. Next article I will break down the rest of the industry.