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Holiday Guest Blog 2: Jon Shafer “The Middle Market”

December 20th, 2011 by Troy Goodfellow · 11 Comments · Guest Blog, Industry

Stardock’s Jon Shafer is one of those developers who thinks very hard about everything except joining our Out of the Park Baseball League, which he did as a “Why not?” more than anything else, it seems. Best known as the designer of AAA title Civilization 5, Jon wanted to use this space to again push forward his argument that the middle market for strategy gaming is alive and well.

Anyone that’s read any of my recent interviews or attended the strategy gaming panel at the most recent Game Developer’s Conference knows that I’m a big champion of “middle market” games – those that lack the AAA budget of tens of millions of dollars, but still aim to provide a “full” gaming experience. Although offerings of this sort have become rare in recent years, they appear to be primed for a resurgence. This is great news, as studios focused on the middle market put out amazing games unlike those offered by either the big publishers or the one-man indie shops.

Paradox and Stardock are two good examples of companies in the strategy genre that are built around this market. It’s no coincidence that games like Galactic Civilizations, Europa Universalis, Sins of a Solar Empire and Magicka all share two specific qualities: they have immense depth and replayability, but didn’t spend big piles of money on flashy graphics. These kinds of games are the bread and butter of the middle market, and anyone who’s enjoyed these titles or those like them has good reason to keep a close eye on this corner of the business.

Sales numbers on even the most successful middle market titles won’t ever reach levels that impress Wall Street, and as a result large companies that produce AAA games are nearly absent from this space, regardless of genre. At the other extreme end of the industry are the indie studios with only one or two developers that typically – but not always – produce fairly simple games. There are a few small indies that produce deep and engrossing games that keep people playing for months or years, but this is rare because of the massive amount of work required to make a complex game any good. There’s only so many Minecrafts and Solium Infernums in the world, and that’s a big part of what makes them so special. Without the middle market, very rare would be the strategy game which provides that deep experience so many players love.

Strangely enough, the middle market’s biggest enemy has historically been – of all things – its own past success. If you look back at where the industry was 15 years ago, you’ll find that nearly every game would fit today’s rough definition of a middle market title: solid gameplay as the #1 priority and small budgets (under a few million dollars). However, this place in the industry is inherently unstable. The survival of most independent studios is entirely based on the success of their next upcoming game – if the title underperforms it’s the end of the road.

Even when a studio has a breakout hit that sells gangbusters its situation changes dramatically. To escape the fate of eternally living paycheck-to-paycheck, companies naturally turn to sequels. By their very existence, these successors must bring something new to the table. With more features comes an increased budget and raised expectations from everyone involved, from the investors providing the capital all the way down to the artists painting icons. When this attitude becomes pervasive there are only two “natural” end-states for a game studio: extinction, or complete dependency on the blockbuster.

If looking at the games industry through the lens of business or growth, time spent producing middle market games might simply be considered an evolutionary step towards bigger and better things. Based on what today’s industry looks like, this certainly seems to have been the viewpoint held by those with the decision-making power. Very rare is the studio that has remained in the middle market for more than a game or two.

Despite the scarcity of companies which have built themselves around the middle market, the money there certainly hasn’t disappeared. Those willing to stick around will find not only the increasingly rare freedom to develop a variety of games, but also a nice profit along the way. Stardock and Paradox have found a great deal success with this model, and rather than “upgrading” to AAA development like most studios they instead diversified and began publishing other middle market titles – to even greater success. Both companies are now larger and more relevant than ever, and owe it to their willingness to embrace what they do best and not follow the path that has swallowed up so many others.

Today, the biggest challenge for the middle market is finding new studios willing and able to join the club. There’s no clear path for the big corporations to return to this space, so the most likely means for this community to grow and flourish is for solo indie developers to meet with success, then make that scary leap to hire a few more people. Fortunately, the emergence of a few new strategy publishers coupled with the amazing opportunity provided by digital distribution has resulted in a new generation of middle market companies.

The fairly slow but steady growth rate of this little corner of the industry isn’t going to turn many heads, but it’s clear that it will have an ever-increasing role to play in the future of the business. As has been true for PC gaming as a whole, the so-called “death” of the middle market is very much a myth, and that’s great news for everyone – it’s a huge part of today’s strategy game scene and the best is yet to come!


11 Comments so far ↓

  • Tom H.

    I can believe this of Paradox, but is Stardock really doing so well? I guess we may have to wait for the next encyclical to find out, but from the outside it looks like it’s in real trouble, with the sale of Impulse…

  • Wes

    I’m not sure Jon will be able/willing to answer that question, given he works at Stardock. However, I suspect you are incorrect in your assumption, Tom. IIRC, Stardock wanted to get out of the direct download business and found a willing partner in Gamestop who wanted to get into direct download (or more so than they were, let’s say). This was not a sale of desperation, from what I can see. I suspect, rather, that Stardock did very well for themselves with this sale.

    That said, I kind of wish Stardock had not sold Impulse as I don’t think Gamespot really knows what they’re doing with it. I used to buy a few Impulse games every month but have since stopped because the deals since the takeover have frankly kind of sucked. 10% off an already-inflated price for an AAA that came out five years ago? No, thanks, I’ll use Steam instead.

    The other shame with the sale of Impulse, I think, is that it really was the direct download platform of choice for a lot of the independent titles that Jon is talking about in this post, and I discovered many great ones via Impulse over the last few years. Now, all I seem to see in the weekly sales are ridiculously overpriced AAA titles of no interest to me. The indies may be on sale somewhere on their unnecessarily labyrinthine website, but I can’t be arsed to look that hard.

  • Anders

    Anyone know why Stardock are suddenly selling their games on Steam? Makes me worry that my Impulse will suddenly be shut down and I lose all my games….something that has made me stop buying games on Impulse.

  • Josh

    Stardock started selling games on Steam because they no longer own the impulse service, therefore, there is no longer a conflict of interest between Stardock as a publisher and Steam as a distributor from the moment that Stardock no longer controlled its own distribution operation.

    Steam is now a way for Stardock to spread the popularity of their games as opposed to previously being a competitor in online PC game retail.

    Although I cannot imagine that Gamestop will go bankrupt, I think if Gamestop were to go bust or be unable to manage distribution then they would probably sell the distribution side of business to another company, ala Stardock.

    Asset repossession can sometimes be a positive element of a commercial society as it hopefully means that those who control important services are those most capable of doing so.

    ‘Free distribution’, known also as Software Piracy, on the other hand, is always a liberal insurance policy against such failures, if our online games suddenly became worthless entities and not viewed as worth maintaining by a company. I am not advocating Software Piracy but it may one-day be a ‘get-out-card’ in the issues of Post-Scarcity resource management.

  • Evrett

    The middle market bloom is a product of the PC gaming economy, which is affected by outside entertainment forces more than anything. PC games do well when entertainment isnt drawing the consumer elsewhere. Indie games are always around for the PC loyalists. When a middle market studio is successful for long enough that studio can draw investment and go AAA but this is more about ambition than profit. In order to appeal to enough people a AAA title often loses what made it attractive to the middle market.

  • CraigM

    While it’s nice Jon acknowledges the great Internet backup repository (a.k.a. The jolly Roger) I’d like to tie back to the main point of the article, the middle market.

    You mentioned Stardock and Paradox, and I agree that they have filled the middle market. There are numerous other examples in strategy, Matrix, 1C , Kalypso and others I haven’t tried. That said you see this more in the strategy genre than elsewhere. Perhaps it’s the fact that outside Civ and Total War there are no real AAA strategy games.

    Perhaps that’s what leads companies to stay in the AA realm like Paradox. The market for strategy is by it’s nature smaller, but more involved. Without a flood of big loud releases the middle ground is given it’s place to breathe and grow successful. Maybe the middle market is impossible for, FPS’s for example.

    I guess the question is, are middle market games successful because the genre permits it? Are they successful because outside strategy few have tried? Is middle market really a viable place to be? I’d like it to be the case for more genres, RPG for example. I just don’t know my ideal world where AAA, AA (middle market refined ambitions), and A (indie small scale wild experimentation) are all equally served can happen.

  • ShadowTiger

    I wrote up a blog post about the potential death middle games last month. I focused on the games I was looking forward too, Elemental: War of Magic, Might and Magic: Heroes 6, and Stronghold 3. I think Sword of the Stars II is in a similar situation. These are all prominent games in a niche genre and each has a devoted following of fans. Each of these games disappointed many people with a turbulent launch. All of these companies are comitted to fixing bugs and adding content with patches, but fans were generally disappointed at how incomplete the game felt. Hopefully this practice wont cripple sales of future games.

    I agree that there is generally a lack of small studios who want to make middle games. However, my 3-man group is doing its best to create a high quality strategy game but we can’t get any help or support from the industry. So maybe its not for lack of trying?

  • Arrgh

    Thanks for destroying the franchise with Civ V.

  • Troy Goodfellow

    Please do not troll my guests. If you have something to say about Civilization V, there are lots of places to say that, and I will be revisiting the game in future posts. But Jon took the time to write about something else. Staying on topic would be appreciated.

  • Josh

    Yes, after looking into game development and the stories of people who seem to put a lot of effort in creating a product, It doesn’t seem a fair assessment to suggest that any game is either a ‘franchise-destroyer’ or a ‘failure’.

    While we would all relish the opportunity for constructive criticism and feedback, personal criticism is not a welcoming gesture.

    To tie this into the topic, It appears to me at least that some of the negative feedback surrounding Civilization V stems from a very difficult challenge to meet the expectations of long-time fans when trying to market what, arguably, is the first real AAA mass-market Civilization title when using a more middle-market approach to development that Firaxis appears to implement (small teams, long development times).

    From a PR perspective, the relatively low level of information and exceedingly high hype generated from the initial reveal of the new game was a likely factor in contributing to the colouring of people’s imaginative presumptions.

    I think that for newcomers to the series, Civ V will be seen as a success. Long term fans of the series most likely appreciate the evolution, given that their expectations would be grounded in reality due to at least a small insight into difficulties of the design process.

    For a lot of people, Civ 4 would have likely been the first of the series that they played and Civ 5 would be seen as a ‘next-gen’ sequel rather than a 5th implementation and, as such, the pure hype generated from ‘next-gen’ products makes it almost impossible for designers to meet unrealistic expectational demands.

    I, for one, would like to see an expansion that fills in a few holes and rounds off a few square-pegs – will there be a fully-fledged expansion?

  • Tom

    I’m not sure how you could say that long-term fans of the series appreciate the “evolution” that is Civ 5, when the only active online Civ forum remaining is Civfanatics. Apolyton, WePlayCiv, Realms Beyond, and even the official 2K forums for Civ are virtually dead as far as Civ 5 is concerned – and the head of 2k himself has described Civ as no longer being “relevant.”

    I can’t see anyone in his position saying that if Civ V hadn’t in fact performed well below expectations.

    For newcomers to the series Civ V is undoubtedly a success. Unfortunately, these newcomers will not display the level of dedication and love attributed to past iterations of Civ. To them, Civ V is just another game – and that’s because it’s now a pale shadow of it’s former greatness.

    CivWorld anyone?