Falling indie prices undercut the market

When Hideki Kamiya took to Twitter earlier this week to praise and thank NieR: Automata director Taro Yoko for the positive effect the game's success has had on PlatinumGames as a company, he implicitly confirmed something many fans of the company had feared - that despite its string of much-loved, critically acclaimed titles, Platinum had been on the ropes and potentially facing disaster.

"It's a pathetic thing to say, but it's no exaggeration to say that Platinum has been saved by Yoko-san," Kamiya tweeted.

PlatinumGames is a pretty impressive development studio. Firmly establishing itself as a creator of beautifully polished cult classic games with the likes of Bayonetta, Metal Gear Rising and Vanquish, it's also done great, offbeat work with the likes of The Wonderful 101 and has done high-profile work for hire for some of the industry's biggest publishers. The quality bar hasn't always been held up - games like Anarchy Reigns and Star Fox Zero failed to hit the mark we'd come to expect from Platinum - but in the eight years since the company launched its first games, there have been far more hits than misses, and the hits have been spectacular.

"We can sometimes lose sight of the fact that this is still a living reality of the games business; that a big publisher or platform holder can roll over and crush a small developer, no matter how acclaimed that studio may be"

Yet here's Kamiya, one of the founders, talking about the studio needing to be "saved" by the success of NieR: Automata - which, although a brilliant and beautiful game, has really only been a moderate commercial success. Though far outperforming the original NieR, the well-regarded sequel has sold about 1.5 million units - great, but not "sports cars for the whole studio" great, by any stretch of the imagination.

Why PlatinumGames was in trouble, right at that moment in time, isn't hard to fathom; the studio had just seen Scalebound, an ambitious multiplayer RPG being developed as an Xbox One exclusive, being cancelled by publisher Microsoft. In this era of crowdfunding and early access and many other business models and ways of funding development, we can sometimes lose sight of the fact that this is still a living reality of the games business; that a big publisher or platform holder can roll over and crush a small developer, no matter how acclaimed or beloved that studio may be. The history of game development is littered with those dead studios; destroyed not by their own incompetence or lack of creativity, but by a publisher that changes focus, or loses interest, or makes some other decision at an executive level that ends up destroying a third-party developer halfway across the world.

Of course, we'll likely never know what the actual problem with Scalebound was; whether it was Platinum that was struggling to make its ambitious vision work, or that Microsoft simply decided the game didn't fit its focus and vision for Xbox One anymore. Most likely, some combination of both was in play. Yet the core point remains; were it not for an acclaimed and moderately successful project pulling it out of the hole, the cancellation of Scalebound would likely have seen PlatinumGames shut its doors for good.

That's the short-term reason why Platinum needed rescuing. The long-term reasons are more complex, and cut closer to the core of a problem that's being faced by a lot of creators in the games business right now - not just Platinum, by any means. The sad truth is that despite the acclaim for Platinum's titles, despite the many core fans who have played them obsessively and will recite their merits chapter and verse, despite the rapt reaction whenever the studio announces a new title, Platinum's games haven't sold very well.

They fall firmly into the status of "cult classics" - acclaimed, beloved, celebrated, and not very successful. Glowing reviews and countless hours of Twitch footage don't pay the bills, and it looks for all the world like the kind of games Platinum makes - polished and professional, but a little off the beaten track in terms of both style and gameplay - aren't great at keeping the lights on either.

"The core audience for creative indie games overlaps significantly with the core audience for games like those Platinum makes... And that, it seems, is a core audience that's started to get used to paying five bucks, rather than fifty, for a game"

That doesn't just impact Platinum; it's a problem for a whole sector of the industry, studios and creators who have done a great job over the years of building games that build cult status with a small but thriving audience of fans. If that's not something that a studio can build a business around any more, that's an enormous shame - and a huge creative loss to the industry as a whole. These are the kind of games that often drive the industry forward, innovating and pushing boundaries on a whole range of different fronts; they may not always hit their mark and they rarely sell millions, but when they get something right, you can be certain it'll start to appear in some form in the sorts of games that do sell millions. Moreover, the audience these games appeal to are important in their own right; it's the fans of creative, cult games who are the industry's most devoted "superfans", and its from their ranks that many of those motivated to work in the industry or in the media surrounding it are drawn.

Given how many other sectors of the industry are booming, what's gone wrong for PlatinumGames and studios of its ilk? Why is a studio so popular and so acclaimed left in a situation where it lives from project to project, and a single cancellation can threaten its existence? Here, I'd like to draw attention to something else that happened this week; the comments from Steam Spy's Sergey Galyonkin, who used in-depth data about Steam pricing to argue for indie developers to value their games more highly and stop undercutting their own businesses.

Galyonkin pointed out that even though average sales for indie titles are only at around 21,000 titles, the average selling price has fallen to $8.72 - which drops by almost half, to $4.63, during Steam's periodic sales, which have become famous for consumers stuffing their catalogues with cheap games that they may or may not ever get around to playing.

The pricing of indie games is a tricky subject, because it plays around the whole issue of consumer expectations - which have become complex and controversy-laden, thanks to a whole host of influences, from F2P games on mobile to angry responses to DLC content, from the race to the bottom in Steam pricing to the steadily rising costs of season passes for AAA titles. There's definitely a disconnect between what consumers expect to pay for content, and what developers can afford to charge for content without pushing themselves or their studios close to bankruptcy - and in this tug-of-war, it's currently developers who are losing out, with the pricing of most indie titles cratering.

This relates back to the experience of niche, celebrated games from bigger studios precisely because very often, what those games are competing with for attention is exactly indie titles. The core audience for creative indie games overlaps significantly with the core audience for games like those Platinum makes... And that, it seems, is a core audience that's started to get used to paying five bucks, rather than fifty, for a game. Of course, what Platinum offers is more polished, more complete and more professional, in most cases, than what you'll get from a plucky indie creator; but it's on the same spectrum in terms of experience. At one end of the market, you have AAA games getting more and more expensive; at the other, indie games getting cheaper and cheaper; and it's increasingly hard to see how a studio like Platinum fits into that world.

"Failing a push-back in indie, it's not hard to imagine F2P becoming the only workable business model on Steam within a relatively short span of years"

Galyonkin is right that one way out of this is for indies to start taking a tougher line on pricing; there's no one-size-fits-all, and there are undoubtedly lots of small, short experiences that suit a $5 price tag, but equally there are lots of games that would be far more reasonably priced (and far more likely to break even) at $15 or $20, or perhaps even a little higher than that.

In doing so, they'd face a backlash, of course; but ultimately this can and would change consumer behaviours and expectations, and probably serve as a glass of ice water in hell for the likes of PlatinumGames, struggling manfully to convince consumers that its original titles are worth $60 in a world teeming with good-looking indie titles for less than a sixth of that price. (It would help to persuade publishers, too; they've seen the writing on the wall for this kind of game for some time, which is why PlatinumGames has spent much of the past few years stuck in a work-for-hire limbo on tightly budgeted projects over which it had limited creative control.)

The unspoken aspect of the indie game pricing argument, of course, is that we've all seen a race to the bottom in pricing before, and we know where it leads. The bottom is zero; it's arguably a hard economic law that the price of items with no manufacture and distribution cost, like digital games, will tend towards zero eventually. That's what happened on mobile, where pretty much every game now has a price point of zero, supplemented by F2P systems.

Failing a push-back in indie, it's not hard to imagine F2P becoming the only workable business model on Steam within a relatively short span of years; pretty much nobody can make a living from selling games for $5 in a highly competitive environment, and if you're going to go bust at $5, you might as well drop the price to $0 and try something else instead. Whether you think a fightback against low indie pricing is worthwhile is really down to how much you think a future where F2P is the default business model for indie games, and studios like Platinum are gone forever, is good for videogames; I have no problem with F2P in the right game, but this isn't the future I'd prefer for the medium as a whole.