Media & Entertainment

What Games Are: Patreonomics And “Supposed To Be”

Comment

Tadhg Kelly

Contributor

Tadhg is a video game designer, producer, creative director, columnist and consultant. He has held roles at various video game development, technology and publishing companies. Since the early 90s, Tadhg has worked on all sorts of game projects, from boardgames and live action roleplaying games through to multi-million dollar PC projects. He has served as lead designer, senior producer and a number of other roles at several companies including BSkyB, Lionhead and Climax.

He was a cofounder of the social gaming startup Simple Lifeforms before moving on to becoming a consultant in the game design space through founding noted industry blog What Games Are (www.whatgamesare.com). A recent immigrant to the United States, Tadhg has most recently worked at Jawfish Games, OUYA and for some other studios on a consulting basis.

Tadhg is currently consulting out of Seattle for a variety of companies under the banner of Tadhg Kelly Game Design, as well as writing a book named Raw Game Design to be published next year by Focal Press and a weekly gaming column for TechCrunch. You can reach him at tadhgk@gmail.com.

More posts from Tadhg Kelly

Editor’s note: Tadhg Kelly is a veteran game designer and creator of leading game design blog What Games Are. He manages developer relations at OUYA. You can follow him on Twitter here.

It should go without saying that the digital industrial revolution (the one we’re all living through) disrupts everything. Technology reduces the marginal cost of distribution to zero (or as near enough as makes no odds), enabling one-to-many and many-to-many communications on a vast and cheap scale. Information, ideas, applications and transactions all become thinner and more easily transmitted, and that change affects just about everything.

While the first changes involved the dissemination of the formerly printed word through email and web, the revolution has gone on to affect all kinds of data. Media sharing, video, the delivery of new kinds of services and the formation of vast communities are part of the same wave, and it goes even further. It will affect manufacturing. It already affects economics, the movement and the idea of money itself (hey there Bitcoin) and therefore the way that businesses organize. It affects governance and relationships, and the sense of integrity within a distributed culture. Everything.

In simpler terms the revolution lets you can charge for things in ways you never could before, and conversely not charge for things that used to have value. It means that you can establish relationships with fans that previously could not have existed, while simultaneously destroying more traditional kinds of relationship. 

Arguably we are nowhere near the final destination of all this change, however today certain aspects of it have become accepted. Those of us who consider ourselves digital natives get that Napster forced the music industry to change or that ride-sharing services are eventually going to do the same to taxis. It’s just a matter of time, we say. Free distribution and free market eventually beats managed, tied up and messy.

But that doesn’t mean we’re immune to the emotional consequences of change. While a few authors have attempted to argue that the genie should be put back in the bottle, the overwhelming consensus is that such efforts are doomed to fail. We all get that there’s a new world disorder and that it feels natural. Except of course when that disorder comes calling in our own industry. Then we tend to freak out.

There are few industries more enmeshed in the pain of this argument than video games.

How Life Is Supposed To Be

The counter-revolutionary argument always boils down to “this is not how things are supposed to be”. You are not supposed to charge for a product before people can see what it is. You are not supposed to charge variable amounts to players because that’s not fair. You are not supposed to think of economics as a part of your game design because that sullies its purity. You are not supposed to attack the problem of delivering “console-quality” in alternative ways because that threatens “console quality”. And so on.

I don’t mean to sound overly dismissive but these counter-arguments are identical to the reservations that Hollywood had over VCR, the music industry had over CD, the publishing industry is having over the ebook and so on. They speak to a fixed idea that folks involved in the industry have over what games are supposed to be, and “supposed to be” is a very powerful and irrational force. Games are supposed to be what they idealistically are, but enhanced by digital. They’re not supposed to be disrupted.

Yet of course they are disrupted. When we look at all those other industries whose disruptions we like we can accept that things have to change. Uber means that the old taxi model will fade. iTunes continues to kill the DVD and the CD. Twitter is slowly replacing the function of news channels. Industrial revolutions are rarely purely additive. Usually they replace or unseat the old too. The relationship as it was supposed to be is changed, and is now supposed to be something else.

Here’s some examples.

Lowly Old Retail

In ancient history games were imprinted onto objects known as disks or cartridges, packaged and sold in places called “stores”. If you wanted to buy a game you got in your car, travelled to a store, spoke with a human and then exchanged some printed paper and metal coins for the box with the disk or cartridge. Then you went home, unwrapped the box, inserted the disk and played your video game.

Then came the revolution. The idea that you might buy your game online was simple to understand, but it ran into problems of price point and digital rights management. The industry spent a long time fooling itself that just because a copy of a game was digital it should make no difference to the retail price (because customers are just that dumb) and that the real problem was making sure they couldn’t be copied.

This tension has resolved through services like Steam and the App Store, but it wasn’t a straight swap. Game makers realized that they could distribute a game to millions of players essentially for free (yay) but also that the digital market isn’t that interested in paying $60 a game (boo). Certain sectors of the industry, most especially consoles, resisted that change tooth and nail because of what it means for the class of product that they make.

You can still find plenty of people who’ll argue to their dying breath that the high priced console model is the only way to bring games to the living room. Or that Valve allowing developers to set their own sales won’t result in a price race to zero. In essence the attachment to that car-store-disk-plug-in cycle remains strong, to the precepts of what it was supposed to mean and what kind of game it was supposed to permit. Being as premium-price gamers are big fans of high-powered Titanfalls, they have a strong instinctive resistance to anything that looks to change that idea.

Whaling

Another change facilitated by the revolution was the free-to-play (f2p) game. Whether on a vast scale like Zynga or a smaller one like Erepublik, the revolution enables game companies to find players and provide them with a game experience before converting some of them into customers. And then to do so repeatedly. Just as the music industry partially moved to essentially-free distribution of songs as a way to up-sell merchandise and concert tickets, f2p games sell virtual goods to the few in order to support the many.

This model works pretty well, incredibly well for a few. It’s particularly successful in Asia, but the West has its share of giant games that come from nowhere on the back of f2p. The success or failure of the model over the medium or long term has a lot to do with how a particular game is managed and the environment it operates within. Some f2p games have proved to be shady operations that fell apart over time. Others have shown long-term cultural and community development.

But the reaction to free-to-play in the games industry, especially in the West, remains very divided. There are those for whom it makes total sense and then those for whom it is nothing but a vast scam. Many independent game makers essentially consider f2p to be the same as Vegas economics, real-money gaming and gambling. But this betrays a cognitive dissonance.

Games people tend to be just the sort of otaku types who become lifelong fans of movies, games, comics and whatnot. They are the kind of people who’ll happily throw a thousand dollars down for a trip to hang out at the parties surrounding GDC. It seems perfectly normal for them to spend lots of money on gaming hardware as a part of daily life.

Yet they struggle to accept that that same instinct applies to most people. There are people who are fans of cars, people who are fans of horse racing, people who are fans of music festivals or opera or wine. They all exhibit the same behavior of passionate spending on the things that attract them, and free-to-play games simply tap into that passion. There are people who are big fans of Clash of Clans.

Again for some reason some of us consider that with games it’s supposed to be different, and that economic change within games can only presage disaster. We cry “not in my back yard” and plead for a better model that is more honest. But even when that comes along, or is trying to, there is still resistance.

Crowd Things

A more recent economic innovation has been the rise of crowdfunding through Kickstarter and Indiegogo. Kickstarter has recently crossed the billion-dollar mark. Much of that has come from games and related projects, such as Double Fine Adventure, Oculus Rift, Star Citizen and OUYA. Some of those projects have proved very successful (Cards Against Humanity) while others have had issues. The model seems to weigh in favor of pre-established figures in the industry trying to raise their next round of funding, but that’s by no means a rule.

The model encourages true fans to contribute to pet projects in the hope that they will be successful. Yet while it is a more honest model for connecting game makers to fans, even Kickstarter et al struggle with acceptance. A big question hangs over whether certain creators should go that route, such as whether Peter Molyneux should have funded Godus through crowdfunding or gone the more traditional route.

In other words crowdfunding has been accepted as a way for alt or fringe projects to get funded, but when it touches on more mainstream projects there are sections of the industry who find it uncomfortable. A common argument against it is the fear of delivery. Granted there is precedent: Double Fine managed to raise $3.4m or so but it wasn’t enough to make the game they wanted to make.

Some studios have solved that fixed-budget problem by turning their crowdfunding into an open-ended activity. Star Citizen, for example, has raised $35m at last count by continuing to pre-sell pledge spots and stuff in the game even though it isn’t yet released. Elite Dangerous from storied British studio Frontier, is doing something similar. You can buy access to the alpha for £200 and that gets you insider stuff. Through Steam several other games are doing the same thing, often charging more for the privilege of early access than the eventual retail price.

And yet the questions remain, making crowdfunding’s next steps hard to ascertain. Could a large publisher like Activision decide to take the next Call of Duty onto a crowdfunding basis as a way to fund its production? Likely not because of the backlash in perception. There’s something about crowdfunding that causes the industry media to freak out if it goes over a certain level, as though industrializing it compromises the spirit of what crowdfunding is “supposed to be”. That phrase again.

What Next? Patreonomics

But if all this talk of disruption has any merit then it’s clear that not only are these new models of revenue and connection here, they are here to stay. And in that vein I think there’s something very interesting going on with Patreon.

Patreon is a patronage service inspired by crowdfunding, but different. Unlike the traditional Paypal Donate button that used to infest websites and never worked for most creatives, Patreon lets artists create campaign pages with rewards (a la Kickstarter) and encourage users to become patrons. The service is currently pretty small, but there’s something very interesting about what it’s doing.

While some creators opt to set up their campaigns via a monthly payment (in effect a subscription model), the more interesting version of this model is the per-deliverable model. Unlike Kickstarter where essentially you pay per product, Patreon users pay per-part. A few independent games journalists, for example, have created campaigns that charge on a per-post basis. Some small-scale game designers use the service to charge on a per-game basis. If you’re into the text adventure games of Porpentine you can support her per game, which translates to giving her a couple of bucks every month or two.

It may seem incidental but there’s something significant about that kind of repeating structure. It’s a model which mixes aspects of crowdfunding, free-to-play and retail all at once and arguably is more aligned with the marginal cost of distribution than all of the above. It encourages the building of a relationship with players (or readers, listeners, whatever your thing is)  that is both fiscal and honest and focused around community building. It’s intriguing.

It also raises many questions about ethics, about whether being in a direct commercial relationship with an audience somehow constitutes a compromise of integrity. If you’re making stuff just to satisfy an audience of payers, are you essentially becoming a populist? That’s yet another “supposed to be”. 

The Final Disruption

The bald truth of the revolution and its economics is that it kills all notions of the official stamp, of “supposed to be”. When the relationship between the artist and the audience loses its intermediaries then external ideas of integrity become irrelevant. Whether you’re crafting the most noble of interactive artworks or the most naked of real money bingo games, there is no standard by which to judge. Everything becomes equivalent, relative and justifiable. That inevitably means that there is opportunity for scam and graft, but also that there’s an opportunity for a new kind of direct connection to an audience with no barriers to success.

Will Patreon be the next big hub of the games industry economy? I have no idea. But the patreonomic model of direct relationships with customers over the long term? Of people paying studios per-build, per new-release, per-update, per-prototype? There is no physical reason preventing that from happening.

History shows that any change empowered by the digital industrial revolution will inevitably come to pass and the question is only when. Patreonomics may well be the last great disruption, a combination of all the steps we’ve learned along the way. We may end up in a very weird world when millions of fans have become patrons of a Blizzard or a Nintendo and are supporting what they do on a continuous basis.

It may seem ridiculous and wrong that the world might work that way. It may violate all that we think is supposed to be. But what’s really stopping it from happening other than our own ability to imagine it?

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

1 day ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo