Manifesto Games is in part a wild-eyed, radical and utopian attempt to transform the game industry by recapturing the creative vigor, willingness to experiment, and exciting potential of its youth--and in part a sober, carefully planned ecommerce venture.

Building a Viable Path to Market for Independent Games

For years, we've been looking for ways to break free of the constraints of the conventional market and create for the game industry what independent music and independent film create for their own fields: a way for individual creative vision to reach a market, and for the field as a whole to be able to innovate and take risks at lower costs than conventional game development now demands.

In essence, we, like many developers, have become increasingly frustrated with the contraints forced on gaming by ever-spiralling budgets. Massive bureaucratic teams make it hard to sustain creative vision; risk averse publishers become less and less willing to risk experimentation; and independent developers find it harder and harder to get to the point of being self-sustaining, because at current budgets it takes a miracle for a game to sell well enough to generate actual royalties.

Over the years, we started on multiple business plans, trying different approaches to finding an alternative distribution channel for games, but could never quite convince ourselves that we had a viable answer.

Until two things happened: the spread of broadband, and the success of the casual downloable game market.

The Spread of Broadband

In 1993, 15 million copies of Doom were downloaded over the Internet. As JC Herz wrote a few years later:

"Down the line, you can see a point where videogames will be sold in electronic form and jettison their bodies entirely. Doom points the way. Doom is a fulcrum.

It didn't happen like that, for one simple reason; CD-ROMs. Instead of delivering games a few megabytes in size on floppies, we suddenly had games that were hundreds of megabytes in size. While modem speeds increased modestly, they just could not keep up. Within a few years, it was no longer practical to distribute games via download.

Today, the tables have turned. Fewer and fewer people are on dial-up, and gamers in particular have flocked to broadband. It's increasingly feasible to deliver games online, even ones that are multiple hundreds of megabytes in size. The stage has been set; it's possible again to imagine a success like Doom.

The Casual Downloadable Market

Back in the dot-com era, a whole series of operations including Yahoo! Games, the MSN Gaming Zone, and Uproar, built businesss that offered free online play of classic card and board games--advertising supported, of course. Other companies, like Shockwave.com and RealArcade, offered free play of arcade-y games, also ad-supported. And both sorts of operations got huge usage--tens of millions of unique visitors, in some cases.

After the dot-com bust, their ad revenues dropped precipitously. Searching for just about any other way to make money, they hit on a model that worked for them: offer original downloadable games that appealed to their demographic (middle aged women, typically) with a 'try before you buy' offer and a purchase required to unlock the game and permit unlimited play therearfter.

Thus was born the casual downloadable game market, which is expected to hit $300m in sales domestically in 2006.

Broadband gives us a distribution mechanism; the casual game market pioneered a business model that works.

The Long Tail

The third part of the equation is Chris Anderson's conception of "the Long Tail."

Chris points out that in every medium, there's far more content available than will fit into a retail store. As a result, every brick-and-mortar retailer sells "the short tail," the handful of products that sell best and fit on the shelves. But online retailers like Amazon and the music sites have learned that a substantial portion of their sales lie in the long tail, the many products they can offer because there are no shelf-space limits online. Individual titles may sell relatively few copies, but in aggregate, there are substantial revenues to be captured here.

Back in the early 90s, Talonsoft (a computer wargame publisher) made money producing games that sold as few as 15,000 copies.

These days, budgets are so high that publishers want to see a million or more unit sales.

In other words, spiralling budgets have forced publishers to concentrate on a narrower and narrower slice of the short tail. Not only are they forgoing the revenues inherent in the long tail for any medium--but the long tail has gotten LONGER in recent years.

In other words, publishers have abandoned the many genres that still have enthusiastic fans, but not enough of them to generate a million unit sales: graphic adventures, flight sims, wargames, turn-based strategy, even (increasingly) RPGs.

And because 1m unit sales is a LOT, they've focussed more and more on cross-platform games, released simultaneously on multiple consoles, with PCs as an afterthought--abandoning PC-specific development (except for MMOs, which so far work almost exclusively on PCs).

PC game sales at retail have declined from $2 billion annually in 1998 to $1 billion today, even as overall game sales have soared. The conventional explanation for this is that gamers have flocked to consoles.

The conventional explanation is wrong. Over the same period, household penetration for PCs has increased, and almost everyone who has a PC plays some kind of game on it from time to time. There's absolutely no reason to believe that, absent other market trends, PC game sales shouldn't have increased.

The real explanation is this: The decline in PC sales is a direct consequence of the abandonment of PC-only publication, and of many of the game styles that PC gamers love.

In other words, the short tail has narrowed so much that the publishers are abandoning a cool billion dollars of revenue on the PC side.

We're not talking about a few sales here and there for an obscure band, as in music, or a few purchases of a book that will never sell more than a thousand copies.

In games, we believe, there's an obvious billion dollar gap to fill--a huge opportunity for us to explore.

Duty Now for the Future

So. Broadband gives us a distribution channel. Casual games give us a business model. The Long Tail gives us a market.

How do we take advantage of this?

Very simply.

Do What's Proven to Work in Long-Tail Environments

That comes down to: connecting users with "the game for me," not "the current best-seller." Providing the kinds of tools that Amazon provides to let people uncover what they want--tools as simple as "purchasers of X also bought Y" and "recommended for you." (We don't have this yet, note, but it's where we're going.)

Have a depth of inventory. (We're over 100 titles today, and expect to be over 1000 within a year.)

Don't just provide a link--provide a depth of information about each title, so people can make informed judgments.

Do What's Proven to Work in the Casual Space

Try before you buy. Application sale. This is not rocket science.

Target People Proven to Buy Games

In our materials, I used to say "the core gamer demographic (males 25-40)", but Johnny (quite rightly) took me to task on that. "Core gamer" is a psychographic, not a demographic--and we're seeing a surprising number of female users.

The point is this: Back in the 90s, CGW's surveys used to show that their typical subscriber purchased 12-18 PC game titles annually. That's our target. We want gamers who consider themselves gamers, who like to keep abreast of what's cool and new, and (unlike the casual game demographic) have a long and proven history of purchasing games, and lots of them.

Where Do We Find the Product?

In the short term, we've done the obvious thing: Go after indie games, and games from smaller publishers that haven't had a lot of retail exposure, and games from Europe that haven't seen a lot of exposure in the US.

Ultimately, however, we need to be in a position to provide development funding, for two reasons. First, because (as Warren Spector says), today there is nothing between the gaming equivalent of a student film, and the gaming equivalent of a Hollywood blockbuster. That's not entirely true, as our catalog shows: excellent independent developers, on scant funding, are doing good work, and managing to survive, and we love that and want to support them. But we think there are all kinds of games and audiences that can be profitably exploited at development budgets in the $250k to $500k range. And too, our existing catalog can be cloned--for a sustainable competitive advantage, we will ultimately need "Manifesto exclusives," and it's not reasonable or right to ask for any kind of exclusivity if we aren't putting up money.

This is, of course, one reason we're going out for capital.

So our strategy is: Short-term win by aggregating as much cool indie product as possible. Next, develop new games to demonstrate that there are large market segments the current system isn't addressing. And ultimately, prove to developers that they can break free of the rigid constraints of the conventional market, and make decent livings following their bliss and developing the games they want to develop--just as many developers have found that they can make reasonable livings in the casual market--thus spurring an increasing and self-sustaining independent games market.

How Do We Persuade Gamers?

The basic pitch is simple: If you are bored with the repetitive franchise titles and Hollywood licenses that the conventional market is offering you, come see what else is out there. It's here.

And then reinforce that with: You are so cool and hip, because you value individual creative vision over glitz. Indie games are our field's equivalent to indie music and indie film. If you are truly hardcore, this is where you need to be.

And compound that with a feeling of being a part of a vital community, and movement.

And believe in that movement, and participate in that community, because people can smell bullshit a mile away.

Which is, in fact, one of our competitive advantages. We do.

Where Are We Now?

In less than a year, and with less than $100k in funding, and with a technical team consisting largely of too-busy veterans who believe in our mission and hard-working students who've learned on the way, we've built a functioning ecommerce site with still too many ragged edges, but that fundamentally works.

And with a staff of people going without salary and working for equity and air, we've signed over 100 titles, and created a perceptible buzz in the field.

Where Are We Going?

Here's what we need to do, in approximate order of importance:

1. File off the rough edges from the site, and make our formal launch.
2. Make as much noise as possible, and start generating noticeable revenues.
3. Keep on finding the coolest and most interesting titles we can, and signing them up for distribution.
4. Build the reputation we need to establish: as the single place to find the stuff the conventional market can't carry.
5. Land substantial venture capital, to build out the 'long tail' technical infrastructure we know we need for ultimate success, and embark on a larger marketing program to attract the critical base of users we need.
6. Start selling enough units of individual titles that developers sit up and take notice, and think about developing for the indie market instead of others.
7. See real competition arise, so that we know that "independent games" as a market rather than a movement has actually arrived.
8. Achieve our financial objects.
9. Make our investors happy, sell out, and watch our successors destroy the company through sheer incompetence and failure to comprehend the nature of this delicate market.
10. And not give a rat's ass, because "independent games" is now a vital and successful market in its own right, and our ultimate objectives are obtained.
posted by Greg at 5:59 PM 10 comments