In fact, people say that's essential.
BR: Yeah. Knowing when to stop. And it's interesting. The casual game market, in that way, on the business side, is the antithesis of core gaming, because everything is metrics-driven, and as soon as it falls below those numbers, they're like, "Okay, stop. Just cut it off because now it's not making the ROI that is required."
And you can sometimes keep the game running longer if you're like, "We're three days from an update, and we think it's going to get the numbers back up." You can kind of play that game, but the cycles are so short.
Where it's harder to get away from the big games. You're like, "Oh, God, if we shut down all the servers..." And the thing that's funny is if you think about it, the numbers of players that are impacted are so much greater on the casual side.
You know, you're worried about like, "Man, we still have 20,000 subscribers. If we shut the game off, they're all going to be really mad." And it's really interesting because on the casual side, they're like, "Yeah, we shut this game off. Yeah, we still have 800,000 users. Yeah, we're not making enough money off it. [snaps his fingers] Kill it." And they do.
I think somewhere in the middle, maybe, on the core game side, there's a balance. I don't think they can be quite so metrics-driven, but we have to be willing to say "This isn't working. How do we get out of that?"
I think the way that it tends to happen now is the slow bleed, right. "Oh, how were the revenues for this month? Oh, you didn't quite make enough. We need to trim two more people from your team." But you're still trying to keep the game alive, and you've already put years of your life into it.
And that's the other thing, too. The developers, I think become so much more attached. You work on a project for three months, yes, you're proud of it and you want to make it good, but it's three months -- as opposed to "I put four years into this game." You're like, "I'll be damned if that thing is going to die!"
So, it's harder to just burn the game, at some point, than it is on the casual side. But we have to find some ways to do that, whether that's having cheaper sustenance of the game, or just being able to say, "You know, let's just stop the game. Let's just stop the service on it."
And I think that if you're designing games that you know are going to be free-to-play with microtransactions, you're building a different game. You're building a smaller client. You're building a game that has much less stress on the backend, server-wise. It takes less resources. Its cost per user has to be so much lower, and it's easier for you to sustain that game longer.
That's the real thing that starts killing MMOs that are designed with that subscription model, with massive download and all these huge databases. It takes all this horsepower to run it. You start saying, "Oh, well it costs X amount per user to run the game." And you say, "Well, if we don't have this many subscribers, the game can't support itself," and it's a high-ish number. It's substantial.
There's a floor you hit where you're like, "Yeah, it doesn't matter if I've got 500 guys or 15,000." There's some number that's like, "Once I get below that, I'm paying in that cost." It just gets worse and worse because that's how the games are designed, technologically.
Do you think that like new business models can also alleviate some of the problems with funding for developers? Like if money is rolling off microtransactions consistently, will that be something that can keep people afloat?
BR: I hope so. I think it has to be a combination of business models, and then the way that whoever -- VC, publishers, whatever it is -- the way those funding deals for the developer are structured. Advances against royalties is just... It's almost not sustainable anymore.
If you have a company and you're like, "Look, we want to have a small, focused company that does one thing it does great -- and just do that", it is almost impossible unless you have a mega hit, and you know it's going to be huge, and you've already signed the sequel deal or something, just because of the lag in time. If you're taking advances against royalties, and I've got to pay you back in my royalty rate, it's like the publisher could make good money off a game, and I could close my studio. I mean, not great money, but good money off a game, and I close my studio.
And then they contract someone else to make the sequel if they own the IP, which they may well do.
BR: Sure. Right. And that depends, too. I have been talking with people that are going out and are like, "Yeah, I'm doing a start-up right now. So, I signed a deal, and I've got a royalty rate at 18 percent, and I got this much money up front, and I've got to pay back on my royalty, and the studio owns the IP." I'm like, "How does that ever work for you?"
It's like, "Hey, man, I'm working on it. I've got a job, and I've boot-strapped the studio up. I'm looking for the next deal." It's just like, "I was trying to get spun up, so I can do that. I found someone who's going to help me do that."
But it's so not sustainable, especially if they're asking you to make a product that they intend for you to support. It's like we're stuck in these boxed product business models and funding structures, but they want you to build something that you never leave. It just doesn't work.
I mean, there's got to be something where it's like, "Look, here's the funding. Here's how much we spend on development. Here's how much we have to spend on the marketing or whatever." Like, get all the components together. "Yup, that's the number. Okay, the first X whatever the game makes pays all that off. Then we go to the royalty rate." So, you start making money the same time the publisher makes money. Publishers are going to hate that because their whole thing is, "Look, we're funding many, many games," and they're hedging all their bets on these numbers.