It’s a fascinating time to observe the games industry, particularly in terms of innovation. The console cycle nears its peak. Traditional publishers, staring down the barrel of a long transition to the next generation, are refocusing budgets towards smaller portfolios of established franchises and proven IP and away from high risk new IP. Contrastingly, many online games companies are thriving, rapidly growing their user base, maintaining continuous production pipelines and experimenting with healthy levels of new IP.
Where their offline colleagues are becoming increasingly risk averse, the online companies are riding a wave of commercial and technical innovation. Developments in technology and online distribution have combined with revolutions in commercial models to allow a new generation of games developers to create games and get them to market for costs that have not been seen since the 1980s. That time was a golden age of unprecedented innovation in terms of genre, gameplay and technology. I believe we are in a new golden era for games today, and we see most of the dramatic innovations in the online world; but just how innovative are today’s online games companies and why?
First, online companies’ risk profile is fundamentally different. AAA in the console world means teams of several scores, 8 figure budgets raised from publishers’ working capital, unprecedented complexity in production, massive and protracted investment in technology, long crunches, a value chain that leaves little for most independents, and mounting risk for everyone involved. AAA in the online world is much harder to tie down, because it’s so fluid, changing with the platforms, the genre and the consumer. Million-player games teams in Europe rarely exceed 30 developers, and the rare 7 figure budget games are often supported by private financing. Technology is focused on customer management over engines and tool sets. Production is continuous, not project-by-project. Online games involve constant maintenance and support but the value chain is shorter and more generous, giving rise to developers that are often publishers.
Online games, which grossed $10bn in 2008, are experiencing a pace and breadth of innovation that outstrip their offline colleagues. Companies are finding myriad, unique and unprecedentedly profitable ways to drive revenues online and we have written frequently about online gaming’s high levels of commercial innovation. We see significant technical innovation in companies finding new ways to create and deliver compelling content, and to understand and enable consumers to play with others. But there is still massive potential for creative innovation.
Revolutions in gameplay are relatively rare in the overall industry, but most successful online games are not breaking new ground in core gameplay, instead mostly falling back on tried and tested mechanisms. Runaway success Travian is fundamentally a heartstoppingly-slow real-time strategy game. Gameforge’s Ogame or Bigpoint’s Seafight have their origins (and graphics to boot) in games more than a decade old. Most casual games’ gameplay arguably dates back 15-20 years. Zynga or Playfish’s pet games on social networks rely on Tamagotchi’s gameplay. Most hard-core MMOGs (including World of Warcraft) feature core RPG gameplay that’s little changed since Ultima and Wizardry.
Perhaps, it’s a question of evolution, not revolution, particularly in the behaviour online games induce in players. Travian’s gameplay mechanisms and timed services encourage truly novel collaboration between players. Gifting, item auctions and limited edition collectible items are introducing some strange and interesting behaviour amongst social network gamers. The complex political alliances between clans in casual MMOGs can result in unforeseen and changing in-game outcomes. To keep pace with their users’ changing behaviour, these games must evolve as rapidly, never really hard-launching anything, running live betas for months, constantly experimenting and refreshing their games with new content. Eventually, this incremental improvement will generate new games species, but the radical steps involved in the creation of truly new genres are harder to uncover.
So where are the new genres? You have to look to the boundaries of the industry to find games that are challenging the definition of what a game is. iPhone and Facebook’s burgeoning app developers have conjured successful, revenue-generative games out of thin air from subjects as bizarre and diverse as parking to friendship. Some look across the range of games based on user-customisable physics engines, from the beautiful polish of Little Big Planet to the charming, home-baked Crayon Physics and argue that they have evolved a new genre. Perhaps the keys may be in the hands of non-professionals given the chance to innovate with the simple game building tools of YoYo’s Game Maker or Flash. Whatever your opinion, it’s been a long time since new game formats could be made and distributed to a mass market so cheaply or democratically.
Surely we should look to our veterans for such fundamental innovation? The 1980s and 1990s saw new genres arise, frequently from the UK’s independent sector. That era’s studios still form the backbone of today’s studio sector, but traditional UK independents, the economics of whose business are becoming harder to sustain, are moving online slowly and in surprisingly low numbers. Many are ignoring the opportunity to return to their game-changing roots, while the costs are still bearable and routes to market are manifold. These lower barriers to entry mean that the online world has higher innovation potential and is crying out for the outstanding creative, technical and design skills found in abundance amongst independents. The question, perhaps the challenge, for them is this: will you follow the likes of Real Time Worlds, Sports Interactive, Monumental, and Eutechnyx into this brave, if often over-hyped, new world and create the next wave of new games genres?