[In this opinion piece, reprinted with permission from his blog, 2D Boy's Ron Carmel examines the health of Microsoft's Xbox Live Arcade marketplace, and what can be done to make it more useful for developers and players.]
I recently read a Gamasutra article
in which XBLA Portfolio Director Chris Charla explains that "With XBLA, we've consciously developed a curated portfolio" and that "The net result is that our customers know that every XBLA game is measured to the same bar – that the quality of games that indies like Signal Studios [Toy Soldiers
] or Haunted Temple Studios [Skulls of the Shogun
] bring us continues to get better and better, so the bar is always getting higher to get on the platform. I think that's ultimately beneficial to our customers. We want the best, most innovative, coolest games on XBLA."
I think striving to have the best games is very important for the long term health of a platform.
The data I've collected, however, suggests that XBLA's health is actually flagging. The elements to which Chris attributes XBLA's ongoing improvement (a curated portfolio and a rising quality bar) are some of the elements that I believe are the biggest obstacles for XBLA's continued prosperity.
To be clear, I'm not finding fault with Chris. XBLA's take on content selection has been this way long before Chris joined as Portfolio Manager. I don't even know if it's within the Portfolio Manager's jurisdiction to change how content selection is handled, much less push for the changes that I will discuss later in this article.
I'm not finding fault with anyone else at Microsoft, either. Their content selection approach made a lot of sense when XBLA was launched 7 years ago. In the early days of digital distribution, there wasn't the abundance of high quality downloadable games that we have now, so weeding out the chaff was critical to creating a positive image for digital distribution in general, and XBLA in particular.
But things have changed quite a bit in the last few years and it might be a good time to reexamine some of the assumptions and reasoning behind how XBLA is managed. Newer, more successful business models have emerged, the number of talented game creators leaving their jobs to do their own thing is on the rise, and both the quality and quantity of games produced by small teams has increased dramatically.
I'm writing this article because I believe XBLA's popularity among independent developers peaked last year (2010) and Microsoft is not yet aware of this. I'd like to discuss why this is happening, what effect I think it will have, and what changes Microsoft can make in order to ensure that XBLA keeps getting the best possible games
. As a developer I'd like to see as many healthy and prosperous digital distribution channels as possible, and I believe XBLA has not yet come close to fulfilling its potential.
Are Independent Developers Really Moving Away From XBLA?
Yes. In August of 2010, as part of my research for a talk I was preparing, I sent out a kind of "indie census" to about 200 independent developers. One of the questions I asked was which platforms they were developing for at the time (2010), and which platforms they had developed for in the previous two years (2008-2009). For this article, I sent out another survey to the same group, asking again which platforms they are currently (2011) developing for and which platforms they intend to develop for in 2012. It's important to note that only about half of the developers I sent the survey to responded, so while the results do have meaning and suggest certain trends, they are not definitive. I'm open (and wouldn't be shocked) to seeing data that suggests a different trend.
First, let's take a look at the number of these developers making games for PS3 vs the 360 over the last few years:
As you can see, in 2008-2009 Microsoft had more developers making games for XBLA than Sony had for PSN. The gap narrowed in 2010, and this year more of these developers are making PSN games than XBLA games. Next year, the number of games this group makes for XBLA will drop again, and PSN's lead will widen as the number of developers making PSN games rise to double what it was in 2008-2009.
Should Microsoft care about this relatively small group of developers? I think so. It includes the developers of many high profile, critically acclaimed, and commercially successful games.
To better understand what kind of games this group of developers represent, I took the list of XBLA games
from Wikipedia and looked up each game's Metascore
. I then split the games into two categories: games made by the group of developers I sent the survey to, and all the rest. Of the 400 or so XBLA games listed on Wikipedia, 33 were made by this group of developers. Here are some interesting facts:
- Average Metascore for an XBLA game made by this group: 78
- Average Metascore for all other XBLA games: 66
- 3 of the top 5 rated XBLA games were made by developers from this group
- 76% of XBLA games made by these developers scored 75 or higher
- 31% of all other XBLA games scored 75 or higher
It becomes apparent that this group of developers makes much higher quality games than the average XBLA game, and represents a significant part of XBLA's star talent. It's unlikely, therefore, that the decline in the number of XBLA developers among this group is due to Microsoft turning them down because of a rising quality bar. It's much more likely that they simply choose, for whatever reason, to no longer develop games for XBLA
You might say that quality is important but bottom line is what really counts. Microsoft, after all, is a public company and has a responsibility to its shareholders to maximize profits. So I reached out to Ryan Langley who periodically compiles sales estimates for XBLA games based on leaderboard data. Ryan was kind enough to share his estimates with me for 2010. It's okay that they're just estimates because we are only interested in a relative measure of one group of games against another, we don't care about absolute numbers. We are comparing how well games made by this group of developers sold relative to how well all the other games sold. With a reasonably sized data set, and assuming the results are dramatic enough, the fact that the estimates are imperfect shouldn't really matter. Well, the results are pretty dramatic:
So on average, a game from these developers sells 3 times the number copies than the average game made by all other developers
- Average # of copies a game developed by this group sold in 2010: 137,010
- Average # of copies all other games sold in 2010: 46,281
The median number of copies sold by a game from these developers is 4.6 times greater than games from other developers.
- Median # of copies a game developed by this group sold in 2010: 63,480
- Median # of copies all other games sold in 2010: 13,899
As a side note, if we calculated the averages and medians based on cumulative sales figures from the games' launch through the end of 2010 (instead of sales just from 2010) the multiplier for average sales is 2.4 and the multiplier for median sales is 4.2, suggesting that these developers are even more important to XBLA's bottom line now than they have been in the past.
So these developers not only make much higher quality games, but they are also generate a lot more revenue for Microsoft relative to the average XBLA developer.
But departure of star talent is not the only obstacle XBLA is facing right now. This survey data makes it clear that both 360 and PS3 are, at the moment, second tier platforms in terms of popularity among these developers. Windows, Mac, and iOS are getting far more attention, a very positive indicator for their longer term health. The chart below shows what percentage of developers have been making games for each platform over the last few years. It also includes reported plans for 2012:
Why Is This Happening?
I asked these developers to rate the importance of certain factors in choosing which platforms they will develop games for. The most influential factor was ease of working with the platform owner
, with 69% of developers rating it Very Important. In 2nd and 3rd place were the platform's install base (63%) and how well the platform's controls match the game (58%).
Since ease of working with the platform owner was voted the most important factor in choosing a platform, I sent out a followup survey to ask how easy each platform owner has been to work with. Here are the results:
Almost half of those who worked with Microsoft described the experience as "excruciating".
Given that ease of working with the platform owner was voted the most important factor in choice of platforms, it becomes perfectly clear why XBLA, despite being a very strong channel with a large audience and huge earning potential, is dropping in popularity among these developers.
What Does This Mean For The Future of XBLA?
At the moment, people are still lining up for XBLA slots. I've heard of developers giving publishers 15% of their revenue for the privilege of using their XBLA slots (publishers who make a certain number of 360 retail games per year are allotted a number of XBLA slots to do with as they please). So XBLA is not going to be hurting for content in the immediate future.
But if things keep going the way they are, and XBLA keeps losing talented developers, I believe the diversity of games available on XBLA will diminish, quality will suffer, and revenue numbers will drop as players start to move away from an unremarkable portfolio of games.
We will see a lot more "genrefication" and big publisher franchises.
After a few years, XBLA might start to look like Big Fish Games, which is in an advanced state of genrefication. With XBLA, the genres would be different, but the overall effect would be similar.
Once players start to leave in large numbers it will be too late to late to turn things around. Given that it takes at least a year or two to make an XBLA game, no developer would want to start working on one knowing that XBLA is declining in popularity and could be significantly weaker by the time the game is ready. There's data suggesting this player migration is already happening
, but my gut says this is a local adjustment forced by the arrival of social games, not a trend. I suspect a larger scale migration is still a few years away and that there's more than enough time for XBLA to change course.
The more open platforms, like Windows, Mac, iOS, and Android, are very attractive to developers. Take iOS, for example. Top hits on XBLA/PSN earn their developers millions of dollars. iOS hits earn tens
of millions. When World of Goo
was briefly the #1 top grossing iPad app it was earning upwards of $50k a day. Angry Birds HD
has been hovering in the top 10 for about a year and a half. But that's not all, there's Angry Birds Seasons HD, Angry Birds Rio HD
, and all three of these games have non-HD iPhone versions as well. That's six Angry Bird
games in a top ten position. For a long time. Then, there's the Mighty Eagle you can buy with an in-app purchase. You do the math.
These hits are beyond rare though, and not a good reason to develop games for a platform. For that reason it's important to ignore the sales numbers of the top games on any channel and instead look at the sales/revenue of top 100, or 200, or even 400, a position that a good game is much more likely to hold than #1 or #5.
A couple of months after the release of World of Goo
on the iPad, I wrote an analysis of the game's iPad launch
, and among other things, created a scatter plot of the relationship between rank on the iPad top grossing chart and the amount of money the developer earns in a given day.
As you can see, the top 10 games earn tens of thousands of dollars every day. Better yet, the dropoff from #10 (around $15k a day) to #60 (around $6k a day) is slow and gradual. Recently World of Goo HD
's rank on the iPad's top grossing chart has been floating between #225 and #250 and it still nets us around $2,000 a day. That's what a healthy channel looks like. It can support an incredibly large number of developers and games, including some niche / strange / avant garde games like #sworcery, Game Dev Story, Enviro-bear 3000
, and Eliss
That the App Store can sustain such a large and diverse set of developers means there's something for everyone on iOS and developers feel more comfortable trying to innovate and take risks. This creates a positive feedback cycle, drawing more players, and in turn more developers.
Having unlimited shelf space is, after all, one of the great benefits of digital distribution
, and consoles have failed to take full advantage of this.
10 Things Microsoft Can Do To Improve XBLA
It's extremely difficult to make big changes in large organizations. It takes a strong leader with a lot of organizational clout, and time. That's probably the biggest obstacle Microsoft would have to face if they're going to try to make XBLA as popular with developers as Windows and iOS.
For this reason, I'd like to divide these ten suggestions into two categories, a more easily achievable set I believe is required in order for XBLA to survive, and a more challenging set that I believe would make XBLA thrive, by drawing in large number of talented developers, a lot of great games, and new audiences.
- Create a fair contract that doesn't require negotiation. Everyone I know who's been handed Microsoft's boilerplate distribution contract for XBLA was angered and offended. It's the most exploitative, one-sided distribution contract I've seen. I suspect it's a holdover from the days where Microsoft only dealt with large publishers/developers and contracts were handled by teams of lawyers on both sides. Lawyers are probably used to conducting this kind of adversarial negotiation that begins with an unreasonably one-sided version. Smaller developers that don't have a legal department are not used to this sort of thing. We each waste months of our time and Microsoft's time negotiating the same stuff out of the contract, over, and over again. All that time, and in some cases money, would be much better spent making the game better. Efficiency aside, it's a terrible way to begin a business relationship.
- Solve the content discovery problem. This issue has three components. First, is bringing as many 360s online as possible. Microsoft is already doing a good job here. Last I heard the 360 has the highest online connectivity rate among consoles. Second, making it obvious to players that they can buy and download games. Too many people still don't know what XBLA is, or that you can download games directly onto your 360. The dashboard should be designed in a way that makes it obvious that this is a possibility, and make it super easy to get into. Third, It's important to put the best content in front of the player so that they have a positive experience purchasing games and would want to do it again. There are many approaches to this: Steam's discounted promotions, the App Store's Featured section, Kongregate's top rated games list (top rated new games, all time top rated games, etc). The platform owner needs to make it SUPER easy for their users to buy software. This is how Apple, intentionally or not, solved the so called "piracy issue" (don't get me started on how wrongheaded it is to think of those that download a game for free as "pirates"). The purchase process is so simple, smooth and painless that it's easier to pay for an app than to "pirate" it.
- Stop requiring independent developers to publish through MGS. All you're doing is adding overhead to the process by assigning a producer to the game and making developers unhappy by giving them a lower rev share (to cover MGS' added overhead costs). For the most part, everyone I know who has worked with Microsoft said it was not only unhelpful to have a producer, it actually became yet another thing that needed to be managed and took focus away from developing the game. I'd like to note that Kevin Hathaway seems to be an exception. I keep hearing developers say positive things about him. Every other distribution channel allows independent developers to self publish, without a producer, and I see no evidence that having a producer on a game makes it better.
- Drop the TCRs, make updating easy. TCRs add months to a game's development time that could be better used polishing the game. Many of these requirements hardly ever come up or could be dealt with behind the scenes by Microsoft instead of requiring every developer to write their own solution. I don't see any evidence that enforcing these TCRs results in better games. PC games are of comparable quality despite the much wider range of hardware they run on and there's not TCR list. Instead of enforcing time consuming and expensive compliance testing, Microsoft could make it trivial for developers to release updates so that whatever issues come up after launch can be easily and quickly addressed by the developer. This model is working wonderfully on both Steam and the App Store.
- Get rid of the exclusivity requirement for independent developers. This is really an aspect of creating a fair contract, but it's important enough that I thought it should be mentioned separately. XBLA is no longer the king it use to be. Microsoft is no longer in a position to demand exclusivity now that PSN has more developers and is growing, while XBLA is losing developers. Exclusivity was very popular among casual game portals in the mid 2000's. If you put your game on Yahoo Games, Big Fish Games wouldn't touch you. For whatever reason, this practice has since disappeared in the casual space. Those who believe requiring exclusivity is a good business strategy might want to ask the casual portals why they no longer do it. I'm sure there's a good reason, and I'm sure it's somehow connected to the fact that exclusivity requirements are not good for developers or players.
A Final Thought…
- Drop the greenlight process and open up development to everyone. Is the quality of the average game on XBLA higher than the average game on the App Store? Probably. There's a ton of crap on the App Store, but the App Store has hundreds of thousands of games, compared to mere hundreds on XBLA. There are many, many more great games on the App Store than there are on XBLA. If done right, the curated approach may result in higher average quality, but it definitely results in fewer good games because of the overhead involved with bringing in each game. Players judge the quality of a platform by the quality and quantity of the BEST games available on it, not by the AVERAGE quality of all games. Even if you disagree with this assertion, Microsoft's current approach to a curated portfolio is broken in two ways: First, it's very difficult to know which games will be good based on what the people at Microsoft see when they greenlight the game. Second, 360 retail publishers are allowed to put whatever games they want on XBLA. That's how you end up with XBLA games like Yaris, NBA Unrivaled, Crazy Mouse, and Beat'n Groovy, which have Metacritic scores of 17, 25, 28, and 29 respectively.
You might ask, then, why Steam has done so well despite its curated portfolio? Other than being the easiest distribution channel to work with (see above), Steam is just one distribution channel on an open platform (Windows / Mac). Developers can make PC games without permission from Valve, they can distribute them directly to an audience they build up or via other distribution channels. World of Goo generated as much revenue via direct sales as it did via Steam. Minecraft generated pretty much all its revenue via direct sales. Open platforms also create room for innovative distribution models like the Humble Bundle.
- Make every console a dev kit. Windows and Mac, by their nature, have always been that way. Apple and Google have done a good job of it with iPhone and Android. It may require a lot of work, but there is nothing stopping Microsoft from doing this as well. This is actually one of the reasons Microsoft is the console maker best-poised to undergo this transformation. XNA Creators Club already allows people to make games and run them on their 360 at home. There are a few things that need to change though. First, signing up for the Creators Club has an awful user experience. It took me a while to figure out where to sign up and how. Second, the followup identity verification process was so complex and invasive that I actually couldn't bring myself to get all the way through it. Third, developers are restricted to using XNA for developing 360 games as part of the Creators Club. With iOS, Objective C presents a similar obstacle, but it's easy to compile C++ code along with some minimal Objective C to create iOS apps. This makes porting games to iOS a lot easier. Rewriting a game in a different language is a much more daunting task.
- Automate everything. Automation has to be utilized in order to handle the high volume of games being added to an open distribution channel. With the App Store, everything is automated and a developer can release a game without ever talking to a human. The registration process, distribution agreement, game submission, financial reporting, releasing updates, setting prices (as well as temporary promotional prices), and setting release dates and regional availability are all done via a simple web interface.
- Drop the ESRB in favor of a self administered rating system. This is another advantage the App Store has over consoles. It takes weeks, and thousands of dollars, to get a game rated by all the domestic and international ratings agencies needed to launch a game globally. The ESRB in particular is a nightmare to deal with (If you Google around, it's easy to find people speaking out about the ESRB behaving like a bully — and I've had personal experience with that). If consoles switch to a self administered rating system similar to Apple's system it will save developers a significant amount of time and money.
- Make avatar related requirements optional. I don't know a single developer who wants to make toys for avatars. It's not fun and it inflates the game's budget. If Microsoft wants to keep adding new toys to avatars, they might want to hire people to do it in-house, or offer incentives for developers to do it. Kongregate, for example, gives developers a larger share of ad revenue if they integrate with their APIs. They'd have a lot fewer games if they required developers to do this instead of providing incentives for them to do so.
XBLA played a pivotal role in the popularization of independent games. Most of the early indie hits were XBLA games, starting with N+
, then Castle Crashers
, and continuing with Limbo, Super Meat Boy
Microsoft proved that indie games can be million sellers on consoles, and then sat on its laurels for half a decade as more nimble and innovative companies like Valve and Apple took the lead.
I would love to see Microsoft rise to the challenge of adapting to new digital distribution landscapes. More healthy platforms means more interesting, creative games that push the limits of our medium.
For players and developers this is an end in itself. For the industry as whole, it means growth through the discovery of new audiences.
Many thanks to Nathan Vella, Matthew Wegner, Kellee Santiago, Kyle Gabler, Andy Schatz, and Ryan Langley for their feedback and assistance with this article.
If you believe I've made any errors in the collection of data or its interpretation, I would love to hear about it, send me an email, my address is ron at 2dboy.
[Gamasutra has reached out to Microsoft for a response to the issues raised in this piece, and will post that response in full if and when we receive it.]