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Some Top Reasons Why (Game) Businesses Fail

by Richard Atlas on 12/03/15 01:05:00 pm   Expert Blogs   Featured Blogs

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The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

The goal of this article is to sum up the many, many articles about “why businesses fail” and try to see if the most common causes are applicable to the games industry or if there are other, less common causes which are more relevant in this field.

Before starting, I’d like to preface this article by saying that all of the opinions held here are those of me, Richard Atlas, and not of my company, Clever Endeavour Games. I’d also like to preface this by saying that while I think there are good points here, I haven’t started and failed a business (not yet, at least!) so I look to you, readers, to comment and let me know what you agree and disagree with.

So, there are a bunch of articles (see: a gazillion) that talk about why startups fail. I decided to have a look at around 20 of those, and compiled the things that came up most often.

Let’s look at the top 5 overall, before exploring what I think are the most relevant ones for our industry, and providing hypothetic solutions for those. Top 5 overall:

 

1. Bad Marketing, Bad Internet Presence or Bad Location

Relevance to games industry: ★★★★

This is an obvious, though not always simple one. Get the word out! Get in the right space (physical location or positioning online), and attract attention to yourself.

2. Expanding Too Fast

Relevance to games industry: ★★

Quick expansion kills companies mostly because of a lack of organized growth or a lack of long-term cash-flow preparation. In the first case companies operate like a 4-person startup with a staff of 30… this usually is a recipe for disaster. In the second case there is fast expansion to meet demand, but when demand falls the company can’t support itself.

 

3. Poor Management

Relevance to games industry: ★★★

This can relate to staff management, inventory management, general high-level decisions about the company, inflated egos fighting each other, lack of direction, etc.

 

4. Too Little Financing3_EmptyPockets

Relevance to games industry: ★★★★★

Lack of capital, plain and simple.

 

5. Lack of Planning

Relevance to games industry: ★★★★★

This could probably be paired with “poor management”, but I think they can be distinct. Planning can involve looking into new markets, staff planning, cashflow planning, production planning, etc.

 


 

 

So what do I think are the 5 most relevant ones from this list, specifically for the game development industry? (By the way, here’s where you should disagree with me and yell at me in the comments!)

 

1. No Real Differentiation in the Market

Image taken from a GREAT article here.

One of the things I see time and time again from game development studios is, well, the same thing. Games come out, sometime with unique mechanics, but they get buried amidst the thousand of other games with exactly the same theme, exactly the same characters, exactly the same story, and exactly the same progression. While this is more of a product argument than a company argument, I really think you have to ask yourself: what makes thisdifferent? Not like, “my character has blue hair” kind of different… more like “this is a game where you train lemurs to perform at a circus and get rated for choreography and performance”. While that might be a crappy idea, it’s a good example of something that’s fundamentally different from most other games out there. (That’s not what our game is about by the way).

 

2. Burnout4_Burnout

(image of burnout game cover)

Over-working, under-sleeping. Crunch is a terrible thing, and we do it all too often in the games industry (link http://kotaku.com/crunch-time-why-game-developers-work-such-insane-hours-1704744577 ). People get burnt out from over-working, but also from working only on one project for years at a time. What we do at Clever Endeavour is that we take work breaks: every Friday we take a few hours to talk about new ideas and prototype things for our next projects. That helps to get our minds off the project (while still in work-mode) and also generates ideas for the future.

 

3. Not Investigating the Market

5_InvestigatingMarket

This kind of fits with “No Differentiation in the Market”, because the way to know if you’re differentiating is to know what the market is offering. In my opinion, once the idea is prototyped and fun to play (SUPER EARLY, we’re talking grey blocks and Times New Roman on the screen), take a look at the market. Identify the games that are similar to what you’re going to make, and try to think about how you stand out and how much market there even is to capture. I’ve seen some games that have come a long way and are quite developed as far as art, code, story, etc. is concerned. But if you take a step back, it wouldn’t be hard to look at the overall idea and realize that it should never have been made in the first place; the problem is that often people are very attached to their “dream games” and they ignore what the market tells them.

 

4. Too Little Financing

This is an obvious problem in our industry. This is a problem in any art form; people aren’t willing to take chances on something so subjective. It’s easy to finance the next portable water filtration system that filters rainwater into drinking water because it’s tangible, the market is easily identifiable, and everyone can see the value in it. Not everyone sees the value in a piece of art that might be seen by some as earth-shattering while others may think it has no value.

 

8_Internet5. Bad Marketing and Internet Presence

Certainly one of the more difficult hurdles to overcome is the visibility issue for games nowadays. In general, something that came up in many of these business articles was the idea of location and having an online presence; while this applies more to retail shops, restaurants, etc., I’ve noticed that many games don’t have the presence they need. Every game company needs a solid website, a good Twitter presence, a Facebook presence, and a regular channel through which they communicate with their fans / followers / future fans.

 

6. BONUS! Failure to Communicate Value Proposition in a Clear Manner

Adding this in as a bonus! I think it’s extremely important to be able to explain your game in a couple of short sentences. I’ve played some games that are fantastic, but when I heard the developer talk about it I was feeling less inclined to be interested in the game. I took the chance because I’m a developer myself and it looked cool, but consumers might not be willing to do that.

 


 

So there you have it, some common pitfalls of startup businesses, and some common pitfalls of game development startups. I certainly think all of the business ones (on the first list) can apply to games, but I think the order of importance can be rearranged. So, now to you! What do you think are the most common problems? What do you think of these lists?


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