Is it Time for Game Developers to Move Away from Steam and Kickstarter?

game developers

Life is a lot like a game. Every game starts somewhere, takes the player through a path, and if played correctly – leads them to a successful conclusion. Unfortunately for game developers, the path is often far more difficult and filled with many chances to fail, and those who fail are often left out of money, out of a job, and out of luck.

Indie games are growing in popularity, and although some developers are destined to fail, that doesn’t mean that everyone should have to suffer high fees and inconveniences when trying to fund their endeavor. If indie developers are given a new and improved way to fund, build, and sell their games, will the industry see greater success?

We would like to thank the team at Hyperbridge for their contributions to the design and implementation of the research and to the analysis of the result.

The Current Market for Creating and Selling Games

We won’t be discussing the giant game studios in this article, instead we’ll be focusing on smaller game development studios and indie developers still trying to carve out a place for themselves in the market. Big companies with nearly endless budgets and expansive resources don’t have to succumb to the will and whim of the creation market, unlike indie game developers. When it comes to making a game there is always one important step that has to come first – funding. According to a survey conducted by TIGA, about 38% of game companies list a lack of funding as the main thing holding their business back.

producing a game

For game developers there are a few platforms/methods they can turn to, each with its own caveat of pros and cons:

Steam

Valve has been helping game developers get their products to customers since 2003, so it should come as no surprise that they have become a household name in the gaming industry. Because of this brand recognition many developers want to get their games onto the platform, but doing so comes with its own set of obstacles. Although Valve is a huge market for games, they are shifting away from funding indie developers through their former Steam Greenlight program. Ben Kuchera on Polygon explains this shift perfectly, “The Steam Greenlight system, where players vote on which games make it onto Steam, is going away. The replacement involves a more straightforward method of paying for inclusion. The new system — Steam Direct — is simple: You pay Valve money — around $100 per game— and you get to release your game on Steam.”

With this new program, Steam Direct, it seems that game developers can no longer turn to Valve for help in funding and creation. Steam Greenlight was a beneficial program that helped many games get their feet off the ground, and although Steam was taking a cut (30% on average), it was still the best choice for many developers after considering the alternatives. But as Jake Birkett, founder of Grey Alien Games, states in his blog, even a “good” game can expect to only make $25,000 in a year – hardly enough for even a single developer to live off of.

PRO: Well-known marketplace/company with a huge player base.
CON: After phasing out Steam Greenlight, developers no longer have a way to seek curation, instead they have to pay to enter a saturated marketplace (800+ new games every month).

Kickstarter

When it comes to crowdfunding, Kickstarter is the first thing that pops into many people’s minds, and game developers are no different. Ranking as the third most funded category, indie game development has certainly seen its share of success on the platform, but at what cost? Kickstarter has its own set of problems that extend across all categories, such as as high fees (8-11%) and long payout times (3+ weeks after a project ends). Game developers who do manage to raise the funds through Kickstarter will still find themselves without a platform to distribute their game.

Some developers, like Chris Hecker (creator of SpyParty), opt to release the game through their own website. “I’ve been selling [my] game to the public through its own website since 2013, though I’m planning to send it into Steam Early Access soon. Valve will take a 30% cut of any sales I makes on the platform, compared to the 2.9% and change that PayPal takes when I sell the game myself.”

It would be ideal if developers were given an option where they could not only raise funds, but directly convert those fund contributors into community members without bridging the gap between different platforms.

PRO: Fundraising exposure through well-known platform.
CON: Lack of integrated options, high fees, long payout times, 37% success rate for game funding.

Self Funding/Private Funding/ETC

Just as some developers opt to release games through their own websites instead of using an established platform, there are some developers who want to keep total control to themselves instead of seeking funding through outside parties. Paying for a game with your own money is expensive. “If you’re going to be serious about producing a game, be prepared to sink $50k to $500k of your own personal savings into producing a game. […] Most likely, it’s going to have to come from your personal savings because investors and publisher won’t fund you — why would they? You’re an unknown indie with no proven track record in an industry/environment with a 99% failure rate,” explains Eric Nevala, the founder of Wobbly Duck Studios, on Medium.

PRO: Developers don’t have to answer to anyone, they are in control of their own funding.
CON: Distribution, community development, and more issues have to be sorted out.

If you can fund the game yourself, wonderful, but you’ve still got a long road ahead of you: finding a community to buy the game, a platform to host sales/updates/downloads, and more. Sometimes using a platform to fund the initial operations is a great choice, but even more so if that platform is intertwined with a community and ways to sell the game as well.

game revolution

The Importance of Community and the Drive for Better Alternatives

Games cannot survive without community support, period. Even when the entire community is raging against the developers ( such as the case with the game developer EA), the bottom line is that the community purchased the game to begin with. Sure, some developers ignore their community and continually put out mediocre games, but community engagement and interaction can lead to far greater success.

The main benefits of community in the gaming industry can be broken down into two categories: trust and improvement, both of which lead to greater profits. If your community trusts you they are more likely to spread the good word about your games, and having more reviews/buzz about your games will lead to more sales.

“Community is not just important,” Wright Bagwell, CEO of Outpost Games, said. “It’s everything these days. Almost every big game out there is a service. And if you’re monetizing your community, then you have to have a direct relationship with the people who are playing.”

In conjunction with that, if your community enjoys interacting with the developer then they are far more likely to want to help improve the game, both through bug reporting and alpha/beta testing. This type of direct feedback from players is invaluable for game improvement, and a better game often leads to greater sales.

The current game development platforms (Steam for hosting, Kickstarter for fundraising, etc.) fall short when it comes to community engagement. Steam, for instance, has a huge player base and community, but no way for game developers and players to productively interact with one another in a mutually beneficial way. Kickstarter succumbs to these same community related issues, but they also struggle with enforcing crowdfunding deadlines and requirements.

Enter Better Alternatives

The game industry has seemingly tried it all, but a new technology has arrived to turn the industry on its head – the blockchain. Is it possible that a decentralized, blockchain-based approach to game development and platform hosting could solve the major problems that the industry experiences?

BlockHub

Developed by Hyperbridge, BlockHub is a decentralized platform that takes the best from Steam and Kickstarter and blends them into a blockchain-powered gaming solution. Built to allow the user (both developers and players) to stay on one platform no matter what they are looking for, BlockHub is built with gamers as the key focus. When it comes to community trust and engagement, there is no better way to encourage feedback and testers than monetary incentives. On Steam there is no way for users to be rewarded for their contributions (reviews, videos, bug reporting, etc), but on BlockHub users can be rewarded with Hyberbridge tokens (HBX) for anything the developer decides, such as:

  • Bug reporting
  • Game promotion
  • Product Testing
  • Poll/Questionnaire completion

Those rewards can be created and locked into a blockchain through a smart contract, thus removing bias and ensuring that everyone is treated fairly for the work they contribute. But before rewards can be handed out, the game has to be funded – something that is systematic and heavily regulated through BlockHub. Unlike Kickstarter, where there is little to no enforcement for missed deadlines or delayed projects, BlockHub’s crowdfunding aspect is regulated through smart contracts to ensure everything runs smoothly. If a project meets its funding goal, the money isn’t released to developers until they meet predetermined milestones that are declared ahead of raising funds. If the backing community has a consensus on the milestone goals being accomplished by developers then funding is released, this ensures that the community doesn’t have another Star Citizen on its hands.

PRO: Crowdfunding based on smart contracts to protect backers, and is community orientated to help ensure the success of quality games and blockchain-secured micro economies.
CON: Needs time to grow game/player database, isn’t a household name like Steam/Kickstarter (has to fight for credibility).

We’ve created an infographic to better explain this idea to you:

video game industry

Is Decentralization Necessary?

It would be wonderful if the types of systems needed to help developers could be implemented into the already existing platforms, but unfortunately they need a decentralized blockchain, dApps, and smart contracts to function correctly. Looking at the crucial things that sets a blockchain approach like BlockHub apart from traditional platforms (automatically regulated and systematic crowdfunding systems, micro economy fraud protection through tokenized game assets [such as in-game gold, items, and characters], and the ability to keep platform fees to a minimum through blockchain and artificial intelligence automatization), it is no surprise that this type of solution needed the blockchain before it could even launch.

The indie game revolution is charging forward in full force, and maybe your new favorite game is waiting somewhere in the background to be discovered – don’t you want to give it every chance it deserves to be found?

All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice.

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