The Winner-Take-All Game Economy

Last week Sony announced the PS4–the first real salvo in the belated next generation console wars. It all seems so familiar; a new box, mind-blowing new graphics, and an array of launch titles we’ve kind of seen before (Killzone, again?). Also, much like every console transition from the NES to the PlayStation 3, we’ve seen the wholesale destruction of development studios not able to make the transition.

This is evidenced by thousands of layoffs in the traditional game sector, including the implosion of at least one long-running publisher. The standard reasons of not being able to compete with increasing production values as well as the inescapable trap of publisher work-for-hire certainly are partially responsible. Not to mention the mobile disruption that has been detailed on this blog for a few years. However, is something else at play here?

There are two precious resources in the ecosystem of games: money and attention. In previous generations games cost a fixed amount of both–You give me $60 and I give you 10 hours of fun in a box. If a gamer had $500 a year to spend on games, 8-10 games would get that person’s cash–spreading the wealth. In this era, there was a healthy market for mid-range titles in addition to blockbuster hits.

Now, many games are “free” and monetize users by charging for consumable in-game items. Games built on this model are designed to string the player along forever, allowing him to spend a theoretically endless amount of money and time in a single title. One game can consume all of the player’s cash and attention at the expense of most others on the market. The winner takes all.

The finite resources of gamers’ time and money are under increasing pressure from a deluge of free content. How do developers survive in this economy? One way is to build shorter, more intense experiences. Games such as FTL deliver hours of fun in 15 minute chunks. This is bite-sized entertainment gamers can snack on while primarily strung out on an infinite f2p hamster wheel. For many developers it may be futile to compete head on with vastly over-funded startups producing endless time sinks for an increasingly fickle audience. Instead, fit in between the cracks and lure players into your wider ecosystem once you get them hooked.

5 thoughts on “The Winner-Take-All Game Economy

  1. “my mum just discovered ipad games. she has been playing same game for 4 1/2 hours. its 2:20 AM” -Angus


  2. Good post. Also, cable TV and websites have taught us that when clutter increases, the underdogs will need to be weird and extreme to break through the noise. While that looks interesting on paper (and works for something like FTL), the eventual conclusion for cable TV became Ancient Aliens and Jersey Shore, so I am kind of nervous about how games will handle it.

  3. Pingback: Game Developers: Don’t Compete, Disrupt. | Ralph Barbagallo's Self Indulgent Blog

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