Lots of people think that surviving as an indie developer is now harder than ever before and there's been a lot of talk about what caused this 'indiepocalypse', as I've seen it being referred to, and what can be done about it. Jeff Vogel has been a successful indie developer for many years, making old-school small-budget RPGs and he had some thoughts on the matter back in 2014 in his personal blog, maybe predicting the current situation in indie development. I'll quote the most important parts but you should really read the whole thing, it's very interesting. First, the link:
http://jeff-vogel.blogspot.com/2014/05/the-indie-bubble-is-popping.html
A brief history of the indie boom according to Jeff:
His initial thesis:
The crux of the issue according to Jeff:
The marketing and budget issue:
On Steam's decision to open the floodgates:
On bundles:
This post is already super long so I'll stop the quotes here. As I said, I highly recommend that you read the whole thing.
Edit: A couple more articles from Jeff:
http://jeff-vogel.blogspot.com/2014/05/the-indie-bubble-is-popping.html
A brief history of the indie boom according to Jeff:
First, a brief history of the Indie bubble. In 2008, big budget developers were doing fine, but they had mostly abandoned a lot of genres many gamers loved (puzzle games, adventure games, 2-D platformers, classic-style RPGs, Roguelikes, etc.)
A few young, hungry developers stepped in and showed that classics can be written on low budgets by young, plucky people with unruly facial hair. (Braid. World of Goo. Castle Crashers. Minecraft. And so on.) They were rewarded with huge accolades and many millions of dollars.
Shortly after, other developers stepped in with their own games. They weren't quite as classic, but they were decent, and these people made fewer millions of dollars. Some old super-niche developers (Hello!) were able to rerelease old games and get caught in the rising tide.
Then even more developers, sincere and hard-working, looked at this frenzy and said, "I'm sick of working for [insert huge corporation name here]. I would prefer to do what I want and also get rich." And they quit their jobs and joined the gold rush. Many of them. Many, many. Too many.
And now we are where we are today.
His initial thesis:
So what this grumpy old fart is saying is that there are Issues. They should be discussed. There are new obstacles that should be planned for and forces you may blame for your problems that, in fact, you shouldn't. If you are a green developer, face these facts, or I believe destruction awaits.
The easy money is off the street. If you want to make it in this business now, you have to earn it. It's a total bummer.
The crux of the issue according to Jeff:
It's simple math.
All gamers together have a huge pool of X dollars a year to spend on their hobby. It gets distributed among Y developers. X stays roughly constant (up a little, down a little), but Y is shooting up. A fixed pool of money, distributed among more and more hungry mouths.
Those mouths are your competitors. All your heroes? Notch, The Behemoth, J. Blow, etc? They're your foes now. Are you ready to fight them?
You can talk all you want about how mean Steam was to you, or how much "discoverability" is a problem, or about how important it is for developers to go to GDC or the PAX Indie Warren or to cool game jams or whatever. It's all a distraction.
X dollars, Y developers. That's all that matters.
And if X stays constant, the only way to solve the problem is for Y to go down. I'll give you a second to work out the consequences of that for yourself.
The marketing and budget issue:
But suppose you're a mid-tier (sometimes called AAA Indie) developer, with $500K-$2 million budgets. You have a problem. You need advertising to get sales, as word-of-mouth won't cover it. But you can't afford a big campaign. The only way you will turn a profit is if you get huge free marketing from Steam/iTunes placement and press articles. (Which is why going to big trade shows and cozying up to the press is so important.)
But when there are so many games competing for free marketing, you have a serious problem. According to their site, the Indie Megabooth at the last PAX had 104 games. 104! At one PAX! Just indies! The games industry doesn't need that many games this year, period. #mildexaggeration
If you are an established developer journalists love, like Supergiant with Transistor, you have a chance to stand out from this horde. If you don't already have a hit, I don't know what to tell you. If I were you, I strongly suggest you write an utterly flawless, ground-breaking title and utterly blow everyone's minds.
On Steam's decision to open the floodgates:
I have a private theory, that's really only in my own brain. It's this. Valve is full of really cool people, who truly love games. But, at some point, with Steam, these basically nice people suddenly found themselves in the position of deciding who lives and who dies. It's a stressful, miserable place, and they didn't like it. It just made it harder to get out of bed in the morning.
In the last few years, Steam workers were the ones who handed out the golden tickets. They gave one to me. (Everyone on Steam made a lot of money. Even niche-developer dingleberries like me. You could put Pong on the front page at $20 a copy and still make a fortune.) The guy next to me who didn't get the ticket? He was angry. At Steam, at me, at the world. But mostly Steam.
Steam found themselves in a position of being hated for something it could do nothing about. Not to mention the fact that the sort of curation they were doing was impossible in the long term. You shouldn't want the games you can buy to be controlled by some guy at a stand-up desk in Bellevue, WA. They aren't wizards. They can't tell what's going to be a hit any more than anyone else. The free market has to do that job.
So they stood aside and opened the floodgates. Supply shot up and demand stayed even, which means, by a certain law of economics (the first one, in fact), prices have to drop.
On bundles:
It just can't last. Bundles used to earn a ton, but they don't anymore. If making pennies a copy selling your games in 12 packs is the main source of a developer's income, that developer is going to disappear. Also, all of the bundles and sales encourage users to expect to pay a price too low to keep us in business. It's just the same race to the bottom as in the iTunes store, except this time we were warned, and we did it anyway.
And hey, I'm not blameless in this. My games have been in a million sales and bundles. It's what you have to do now, and I'm just as fault as everyone else.
If someone tells you this is the slightest bit sustainable, they are misleading you. There are lots of different reasons to do this. Maybe they need to fool you. Maybe they need to fool themselves. Just don't believe them. X dollars, Y developers. That's all that matters.
This post is already super long so I'll stop the quotes here. As I said, I highly recommend that you read the whole thing.
Edit: A couple more articles from Jeff:
Jeff also wrote a follow-up article a year after the one that was posted by the OP that's also worth reading: https://jeff-vogel.blogspot.com/2015/09/the-indie-bubble-revisited-or-are-we.html
(Tangentially related is this article which deals mostly with pricing / sales promotion that he wrote between the two 'pocalyspe articles: https://jeff-vogel.blogspot.com/2014/12/how-youre-going-to-price-your-computer.html)
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