The San Francisco Games Revolution Is Over

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Editor’s note: Tadhg Kelly is a game designer with 20 years experience. He is the creator of leading game design blog What Games Are, and consults for many companies on game design and development. You can follow him on Twitter here.

To an outsider like myself, the Bay Area is the epicentre of a massive disruption which shook the games industry to its foundation. Call it the “San Francisco Revolution” – it was an unqualified success. It erupted through what we call social and mobile games on Facebook, iPhone and Android. It drew huge audiences, changed the fundamental economics of games and introduced a whole new language of play. It even went beyond games into what we now call gamification.

Many new companies sprang up all around the world based on the ideas of the revolution. Others who had been practising some of its principles already became global forces, and others changed their stance to become a part of it. The ideas that drove it came from various sources, such as Asian business models or massive multiplayer game distribution, but it was in San Francisco (and the surrounding area) that they coalesced into a coherent story.

At the heart of that story were five simple ideas:

  1. Social (meaning free) customer acquisition
  2. A price crash
  3. Digital distribution at scale
  4. Measured game behaviours
  5. Lower production costs than most video games

Games have always been considered expensive, risky investments – and with good reason. When a company whose founders are responsible for such legendary franchises as Grand Theft Auto blows $100 million on an online version of the same idea, it scares the living daylights out of prospective investors. However the appetite to invest has always been there, looking for the right model. The San Francisco Revolution proposed a model that could deliver games more cheaply and scientifically than before, and this is what drove its growth.

In the revolution all of the key sources of cost inflation could be reduced, or potentially be removed entirely. There were no physical production costs, no boundaries to distribution, no requirements to get the game into a highly polished state before release. There was less gameplay risk because you knew how players were playing (rather than guessing), and so the game could always be improved. Suddenly, everybody wanted a piece. Fortunes were made, companies sold and it seemed like games-industry nirvana had been reached.

But with all such stories the ideas which enable it rarely stay constant. The market matures, becomes more defined and expensive, and the sort of easy innocent opportunities that once worked no longer do. This happened to the San Francisco Revolution, too. It’s been incredibly successful, but the conditions which enabled it to happen have changed. Here’s how:

1. Social Stopped Working

The aspirational story of social as a game connector has probably been most well described by Jane McGonigal. In her book Reality is Broken, she talked about Lexulous (which started life as Scrabulous), a Scrabble clone which had 5 million players. Lexulous was one of the early examples of the revolution, commonly a source of anecdotal evidence about how games helped bring people together. The social story was that of a mom and her daughter living thousands of miles apart, brought together by games. Social game companies talked about connecting the world through play.

That kind of sociality turned out to be wildly over-estimated in importance, more a reflection of the novelty of playing free games with friends than an enduring change in the gaming landscape. Lexulous, for example, dropped down to 160,000 players pretty soon after McGonigal’s book was published (this is a reflection of the time delay between writing and publication, nothing more). So-called viral channels across Facebook were commonly abused by social game makers for what amounted to advertising, to the point that Facebook severely curtailed their use. And the most successful kinds of social network games generally tended to be parallel (rather than multi-player) games.

Today there’s Words With Friends instead of Lexulous. They are broadly similar types of games, but the difference between them is that Words With Friends has a backer who’s able to advertise on a constant basis. Words With Friends has strong retention, a loyal user base and brand recognition, but it’s less to do with social effects and more to do with straight-up-and-down promotion.

2. The Price Rush

The price of apps upended what the video game industry calls the handheld market. On handhelds, like the Nintendo 3DS and the Sony Playstation Vita, games commonly cost $15-$35 and are published according to an expensive process of approvals and manufacturing. On iPhone the games are often free. Or if not free then 99 cents. And the publishing process is pretty cheap, too. This is why the Nintendo 3DS proved a dud on launch and was only saved by a combination of brand-loyal Nintendo fans and a massive price cut. And the PS Vita has been a total failure.

Games like Rovio’s Angry Birds and Popcap’s Plants vs Zombies have become multi-million sellers as they twinned fun gameplay with revolutionary platforms. While that proved the perfect storm for those studios, for many others the problem has become about being faces in the crowd. Every developer has vastly more competition to deal with than they did in the relatively protected handheld market, and that’s proved to be a big problem. Discoverability is their biggest concern.

These days a Flight Control or a Doodle Jump from a new developer would have no chance. Those channels have been overwhelmed by the sheer volume of developers with exactly the same idea. Even when a game is distributed for free, or free to play, chances of success without backing are very small. There are simply too many me-too and me-three games, leading many developers to turn back to the same publishers that they once spurned.

3. Who’s Afraid of Scale?

Before the revolution the games industry was quite conflicted about digital distribution. In many ways it still is. The majority of its revenues still come from shiny retail discs and cartridges, and so the industry has tended to reserve digital exclusively for indie games or back-catalogue sales. Even to this day you cannot digitally buy the latest hit releases on day-one launch for consoles, which is every bit as ludicrous as it sounds.

One major exception to this rule was Steam. Steam has always been something of a sub-culture unto itself, but in many ways it has been the forerunner of much which came later in the revolution. Steam had many early-stage issues with delivery, pricing and content availability, but Valve persisted with it and eventually won through. It is now effectively a platform unto itself which works as a major route to market for many developers.

The revolution took all of this learning on board and over-delivered on results. On Facebook, for example, games are hosted remotely and served to the player as needed. On Kongregate and similar services likewise. Zynga maintains a vast network of servers that manage to serve game sessions to between 40 and 50 million players every day. Then there’s the App Store, which operates a download model, but one which has none of the perceived grief of installation that PC-based games have.

It has taken a long time, but there are signs that next year the rest of the games industry will finally have caught up in this area. Nintendo, for example, is including a gaming social network as part of the WiiU. Sony bought Gaikai, a cloud gaming technology provider. Both Microsoft and Sony are preparing their next-generation console technology, and everybody expects them to be always-connected boxes. And then there’s Windows 8, about which many of us have deep reservations, bringing an app store to consumer computing.

4. Behaviourism Gone Bad

Last year I wrote a well-received article called The Four Lenses of Game Making, which took issue with the classic games industry duality of gameplay and story. I argued that many simulation games did not fit, and neither did forms of game like gambling. So I defined a quadrant graph instead, based on the design intent to deliver emergent or experient outcomes crossed with the importance of fictional roles versus functional rules.

This gave four types:

  • Tetrism (emergence, rule): abstract games like Tetris and many sports
  • Narrativism (experience, role): big story-driven enchanting games
  • Simulationism (emergence, role): Games like The Sims, flight simulators and virtual worlds
  • Behaviourism (experience, rule): Guided and measured games based on psychological and metric-based methods — this includes social games, gamification and gambling

The San Francisco Revolution is most closely aligned with behaviourism. Its light side is TED talks on the subjects of rewards, learning, helping players experience positive emotional outcomes, improved health and so on. But its dark side is about manipulation of attention, playing the odds, monetisation funnels and so on. Both sides have featured in the revolution.

One of the side effects of behaviourism is the effect that it has on game makers. When every design decision has to be validated numerically, it leads to the kind of candle problem that Daniel Pink describes in Drive. Solutions tend to become linear, smart people get mentally straitjacketed and creativity goes out the window.

It means that studios inevitably settle on a few types of game that they can numerically prove to work, and innovation dies. This is why the gambling industry only has maybe a dozen games that it repeats endlessly and why arcade games became a niche industry. The exact same effect is playing out in the social game space.

The effect doesn’t just apply to game makers. Players notice it, too. They start to recognise when a game is just following a formula, particularly after they’ve played through that formula once or twice. They start to see the low value in the experience and then choose to drift away and do something else. This, as I have said before, is the heart of Zynga’s current woes. It’s also affecting many other areas. It turns out that perhaps the most recently famous gamification app, SuperBetter, only has 125,000 registered users.

5. Graphics Graphics Graphics!

CSR Racing is a dangerous game. It’s an iOS social-roleplaying game that mixes fast cars and upgrades with racing, but it has one thing that many equivalent games don’t: the drag racing component is beautiful. The cars look shiny and authentic, and this is important. It means graphics are becoming a factor in social game production.

In the video games industry the graphics rush is nothing new. All through the 90s until about 2006, games relentlessly pushed the graphics window on both PC and console. Polygon counts, particles, shaders, lighting effects, real-time cinematic rendering and so on all became a part of the mix, with the net effect that production costs exploded. In 1990 a game could cost perhaps $200,000 to develop. In 2012, budgets of $100 million are not unheard of.

If the San Francisco Revolution follows through on this pattern, it means that the social game space is about to go through a graphics revolution. New engine technology from people like Unity is paving the way for the limitations of Flash to be cast aside. Most games studios will immediately consider that as an opportunity to dive into realism and graphical fidelity, which dramatically increases both production and distribution costs.

Graphics will become a major factor of competition between studios, driving up costs even further. As social and mobile games find their own core of players and their own voices, it’s likely that we’ll see graphics becoming an important part of previews. Just as they are in regular video games today.

Conclusion

The effects of the San Francisco Revolution were not merely a blip or a bubble; they have permanently altered the landscape of games forever. They have taught many lessons to the rest of the industry, lessons which are now being adopted. They have also proved to have significant shortcomings in certain areas – especially the key area of gameplay value – but those will in time be folded into a second generation of social games.

Will that second generation arise in San Francisco? Who knows. But it’s on the way.