Two Art Movies

In 16 1/2 minutes a Canadian left an indelible mark on one of the greatest filmmakers and one of the most financially successful. His first film was nominated for an Academy Award when he was 25 and Stanley Kubrick called it “one of the most imaginative and brilliant uses of the movie screen and soundtrack that I have ever seen.” The Canadian was Arthur Lipsett, and he took his life in 1986 after a struggle with mental illness.

Arthur’s obscurity relative to his influence is reflected by the fact that there are two feature length documentaries about him but only one written biography (by one of the documentarians) and a handful of articles that note the scarcity of critical or biographical writing. His is a story that should be told, but I have nothing to offer biographically that hasn’t been covered by others. Instead I’d like to show you his work and talk about its influence on movies and also on me.

Before the first film I’d like to ask a favour. Arthur Lipsett was an avant-garde filmmaker whose works weren’t for everybody even in the 1960s. It is common for someone in my role to stress the importance of a given work or to give a list of excuses masquerading as context for why this very boring movie is actually a very good movie. I think the films in this article are worth experiencing on their own. I watched them all before putting them in, and for most of them I watched again right after. The deal I’d like to make with you is is this: I will present the film first and I’d love it if you watch it and form your own opinion (ideally without distractions. They’re less than 10 minutes each). I’ll explain why after this first one. Also, I’ve embedded the YouTube videos in the article, but if you’d click the NFB links in the text I’d much rather you get swept up in their recommendation algorithm than YouTube’s.

Very Nice, Very Nice

Here is the second movie of Arthur’s I ever watched (7 minutes):

What did you think? Did you feel a particular way or get an overall impression about what it might be about? I am an unforgivable film snob, but I can’t shake the feeling that so far as experimental films go, this one is pretty accessible. I can’t know for sure how you reacted to it but I’d like to think that we found similar bits funny. This was most likely a strange movie to watch, but I also think deep down in your heart of hearts while you’d never tell anyone for fear of being wrong or seeming like one of those people in coffee shops, you have an opinion about what this is ‘about.’ At the very least I hope that if you didn’t enjoy it, it wasn’t a massive waste of your time.

This was the one that was nominated for the Academy Award and that Kubrick spoke so highly of. If you don’t agree, that’s fine, but that’s why I wanted people to watch before the exposition so that they can make up their own minds and give themselves a chance before deciding if it was an accessible experimental film. But I’m getting ahead of myself. How did this thing get made at all, let alone with taxpayer dollars?

The National Film Board (NFB) was founded in 1939 to create propaganda in support of the Second World War. In 1950 the National Film Act removed direct government intervention from the NFB and shifted its mandate to produce and distribute, and to promote the production and distribution of films designed to interpret Canada to Canadians and other nations. In 1956 the NFB headquarters was relocated from Ottawa to Montreal to improve its dismal reputation among French Canadians and to be more attractive to French-speaking filmmakers. At this time Arthur was an exceptional student at Ecole des beaux-arts de Montréal (Montreal school of fine arts). Two years later, when the NFB was looking for talent, Arthur’s mentor Arthur Lismer (a member of a famed group of Canadian artists The Group of Seven) recommended him.

Arthur assisted on different productions and did service work, short cartoons for sponsors or spots, illustrations, and similar jobs. In contrast to the service work, Arthur had a great love of sound and would stitch together small clips from different sources to create certain effects and moods. At the NFB he began liberating bits and pieces from other films from editing bins and garbage cans and started assembling them late at night. He got a still camera and took photographs that would be attached to the sounds, and for about $500 (around $3,600 today) Arthur created “Very Nice, Very Nice.”

It is common to say something to the effect of “the film was released to critical acclaim” but at least some people NFB didn’t really knew what to do with it until it was nominated for the Academy Award, even if others thought it was clearly very important. The NFB distributors thought it was nonsense, schools were asking what it meant, and independent film as we know it today didn’t exist in Canada. Even if you liked “Very Nice, Very Nice” it’s easy to have sympathy for skeptics the NFB. Films like this didn’t exist (even if now this kind of visual collage is almost an art film cliché), there weren’t music videos, flashy advertising, or even a stack of channels you could flip through quickly on TV. Arthur was the first. The film’s importance became clearer with recognition from other filmmakers and the Academy Award nomination, and the film sold a fair number of prints.

There are a lot of cinematic firsts (even in Canada), so why insist on this one? Mostly because I think “Very Nice, Very Nice” still holds up and I suspect it is even more relevant today than when I watched it before. I like the little jokes that are in the film like the audio saying “keep moving right ahead please” with the still of the street sign indicating left or right, the particular photo shown over the words “reproductive system” or the “in this marches an army whose motto is” and “we believe warmth and brightness will  return and renewal of the hopes of men” both receiving the immediate response of “NO.” I also really like the overall structure and the climax at the end where it really just cuts loose. I’m useless at film criticism, but when I first watched the movie I had a really distinct feeling that I sort of understood what it was like to be around in the 1960s. There certainly seems to be plenty of anxiety and it does seem to be dealing with social change and the bomb, but I’m not sure if this film qualifies for entry in the “the world is going to hell” genre of art film. First, unlike other entries in the genre (which wouldn’t have existed anyway), it is not relentlessly depressing and I think this is part of the attraction to me since there are enough nice things cut between the distressing bits. It’s also why I’m reluctant to even try to pull out any kind of a ‘message’ and why I think it’s a relevant movie today. The world in “Very Nice, Very Nice” seems to be changing a lot, and there seems to be a lot of cause for concern, but we are not destined for oblivion. It may not be hopeful, but it’s honest, and as an experience there maybe isn’t some big message to be taken away from it so much as an opportunity to share a particular point of view, or maybe have a moment of “hey, I think that too!”

I like to think I’m not totally off base in my impressions on “Very Nice, Very Nice” and take some comfort in the fact that Kubrick’s praise of the film and subsequent offer to Arthur to edit the trailer for Dr. Strangelove or, How I Learned to Stop Worrying and Love the Bomb line up well enough at least so far as anxiety and humour are concerned. Arthur did not take the job, but his influence is plain as day on the trailer:

And while we’re at it, the logical conclusion of this influence is probably the trailer for A Clockwork Orange:

21-87

I mentioned two filmmakers and also that “Very Nice, Very Nice” was the second film of Arthur’s that I ever saw. Here was the first (9 minutes):

This movie went off like a bomb in me. I saw it completely devoid of context and I suppose the most basic reaction I could describe is that is scared the hell out of me. I have no idea if this is anyone else’s reaction, but I found myself anticipating what would be coming next, (for example the woman says she found something else I had this unshakeable belief that she would say specifically “The book of Revelation” and not just the Bible), and the themes of dehumanization were something I was concerned with and thought “yeah, whoever made this totally gets it!” There doesn’t seem to be any of the humour in “Very Nice, Very Nice” but I picked up on the irony all the same. I love this movie, even if it’s not the first of Arthur’s movies I would recommend. Unlike “Very Nice, Very Nice” this one seems to be relentless in its pessimism, and so it may even be that my love of it is as much a reflection of what I felt at the time as it is its own merits (though I really do think this is his best film). I’m still struck by how a movie that’s less than 10 minutes long can give me such a clear impression even if I struggle to put what it’s ‘about’ in to words.

I am understating the influence of “21-87” by focusing on one filmmaker, but George Lucas has been very open about the influence of Arthur Lipsett on him and specifically his love of “21-87”. You can look at his student film “Electronic Labyrinth: THX 1138 4EB” and see it clearly. When the NFB visited his class at USC Lucas asked “How is Arthur Lipsett?” and he participated in the documentary film on Arthur’s life. It seems fairly well known that Lucas was more interested in being an artistic or experimental filmmaker than the author of spectacles like Star Wars and Indiana Jones. What has been lost in this story is that he didn’t just want to be any experimental filmmaker, but he wanted to be one like Arthur, and Lucas himself plainly says as much. But Arthur’s presence is still felt in the original trilogy, either through Lucas’ (slightly dubious) claim that ‘the Force’ was inspired by the dialogue around the 3:45 mark, and through Princess’ Leia’s cell number in Star Wars.

The Future

What’s striking about rewatching these movies is how they influence or anticipate what we might think of as modern. The short Rejected is hilarious and spawned its fair share of memes, though it seems about 40 years late to the party after watching the NFB’s “Hors D’Oeuvre” (you’ll almost certainly know Arthur’s segment when you see it). Baraka has a lot in common with “Free Fall” (I picked one really obvious one. There’s lots to choose from). I’ve not been able to see any direct mention of Arthur from Terry Gilliam, but I do keep hearing “it reminds me of Monty Python” (the animations) whenever I show poor unsuspecting acquaintances an Arthur Lipsett movie, and I certainly believe he was an influence, if only an indirect one. Arthur almost certainly would have done well in music videos (Chris Cunningham comes to mind. You might want to skip ahead 4 1/2 minutes on that first one if you’re in a rush) and a Canadian music video prize bears his name. Unexpectedly even the ‘react video’ genre might claim its genesis in response to Arthur’s work as this is exactly what the NFB released with ‘the youth of today’ reacting to “Free Fall” and “A Trip Down Memory Lane“.

The react video (“Two Films by Lipsett“) is the most interesting when writing about Arthur because it forces me to avoid an easy summary of his creative work. We know the story ends unhappily. The quality of his later films suffered, and he ultimately left the NFB. His mental health deteriorated and after multiple suicide attempts, he took his own life just shy of his 50th birthday. Very few would question a narrative of a disturbed genius shackled by the confines of a government bureaucracy, and that the cost to his mental health was the price of seeing further than everyone else. But this isn’t supported by the facts. In truth Arthur had at the very least supportive voices within the NFB that let him do his work. That support extended to the creation of a film like “Two Films by Lipsett”. He was given advice on at least his early work and seems to have taken it (“Very Nice, Very Nice” was apparently much bleaker). He would later re-apply to the NFB and they enthusiastically took him back later in his life. Unfortunately he could not complete the film. His behaviour was so erratic he would hide the splicer when he was using someone else’s editing room and he chained up his own equipment. He eventually quit with the job unfinished, stating he was incapable of continuing on. Arthur’s best work was when he was lucid, and his deteriorating mental health ultimately prevented him from making films. He personally may not have operated well within the NFB bureaucracy, but he did have supportive producers who let him produce the work we enjoy today. The effectiveness of this collaboration is why we watch and discuss “Very Nice, Very Nice” and not “Strange Codes” (his work outside the NFB).

In truth, I have very little to say about his life. I can’t tell you a story of clashes with the NFB or the failures that lead to his death, and there is no big “and we now call them ‘Art Movies’ in honour of Arthur Lipsett” conclusion. Ultimately this article was meant to share Arthur’s work and the unacknowledged debt so much of our media owes to it. I don’t know why things turned out so badly for him, but I regret that they did. The biographical details I know are that was well dressed, had a wonderful sense of humour, apparently liked peanut M&M’s (although the photos I’ve seen only ever show smarties at his workspace), and was overall pleasant to be around and an impressive individual. I only know him through his movies, and like to think that this is all true. If you’d like to know more about him, the NFB produced a documentary Remembering Arthur (his girlfriend is impossibly likeable and his colleagues at the NFB do not suggest a particularly troubled relationship with the organization). And if the films happened to speak to you, maybe pass one or two to a friend and see what they think.

Lower game prices

In a previous article I pointed out that the inflation adjusted price of the Doom shareware demo is about the same as what you’d pay for a copy of Deus Ex (a complete game that is technologically more sophisticated) today. There is a longer range comparison in the loot box article (the good one) and the conclusion is the same: Games have never been better and we have never paid less for them. I see this as good, but someone pointed out how alarming the fall in prices is, and I can understand why. If your livelihood depends on selling a product, price decreases are not met with enthusiasm. This article will unpack what I mean by falling game prices, and what this model of thinking can tell us about what’s happening right now.

I made an effort to make the article shorter and couldn’t manage it, so there is something of a summary at the end, and I’ve tried to make the sections reasonably self-contained.

Comparing prices

There is a game jam where participants are invited to create a game in 0 hours, starting at 2AM daylight saving time and finishing at 2AM standard time. The joke is clear: the difference in measurement is being reported as the duration, but it’s easy to let this kind of mismeasurement creep into discussions on price.

Comparing products like games is difficult because they’re so varied. A cigar is never just a cigar. Visit a forum for enthusiasts of any given product and you will quickly find all the differentiating characteristics of their chosen brand and how dare you even think of comparing it to the garbage that other guy makes. Even within the same product quality changes over time. The car today may cost more than it did last year, but last year’s model didn’t have seat warmers, built in GPS, an automatic parking assistant, directions voiced by Mark Hamill, and perfumed airbags. We need to be clear about what we are trying to measure and then make sure what we’re using is appropriate.

In the case of games we are looking to measure the welfare of the consumers and producers of games. Consumer welfare improves when the same game costs less or the game is improved and costs the same. Producer welfare improves when they can make the same game for less or charge more for it. The price is easy to measure, but the concept of same game is not.

The ideal world for this kind of measurement is one in which I go to a nondescript building with the words GAME STORE written on the front, put down some money, say “One video games please!” and am handed a grey box with the word GAME written on it taken at random from a drawer. All changes in price directly translate into welfare changes, since all the products are identical. We don’t live in this world, but we can approximate it in order to analyze changes in the price of video games.

Imagine we had some objective measure of quality that accounted for all characteristics and differences in games. We could then pick one game as our benchmark and adjust the prices of all the other games by the quality according to the list. If Pillars of Eternity (PoE) was our benchmark then maybe Tyranny is worth one and a half PoEs, and Nantucket is worth half a PoE. Since Tyranny gives you ‘more game’ per dollar the quality adjusted price of Tyranny should be lower than PoE, while Nantucket would be higher by comparison. The underlying product would be the grey box with GAME written on it since we’ve transformed all quality characteristics directly into the price.

We won’t attempt to develop an authoritative list of quality adjustments since our objective is to measure welfare, but it is useful to keep this framework in mind as we work through its implications in the following sections.

Consumer welfare

Personal circumstances aside, video game consumers are unambiguously better off today than in the past and there are multiple ways of showing this. First we can directly compare the back catalogue available on game publisher’s websites. We don’t need a quality adjustment here since we’re comparing the same product. Purchasing Half-Life  costs you less than it did when it came out in 1998 (happy 20th). This would also be true if Half-Life cost $10 (US) in 1998, since prices, including the price of labour (wages), have gone up over 20 years and so Half-Life will claim less of your income today than 20 years ago.

Alternatively, we could try to infer a change in welfare based on game quality by comparing a $60 (US) game from the past to today. The Elder Scrolls IV: Oblivion (2009) cost the same as Fallout 4 (2015) on release in nominal (not inflation adjusted) dollars. If we allow that the gameplay experience is roughly comparable then Fallout 4 is  better as it clearly has a substantial improvement in graphical fidelity and, as measured by howlongtobeat.com, gives you more things to do. Pure playtime is a poor measure of quality on its own, but since I’ve assumed near-equality in the gameplay experience, Fallout 4 is quite literally ‘more game’ than Oblivion. Our $60 has gotten us more and we’ve not yet adjusted for inflation which makes Fallout 4 even more attractive in real terms.

The quality adjusted price described in the previous section needs to fight against nostalgia. While classic games are wonderful, I would argue the examples above suggest that an honest accounting would show that games today are of a higher quality than games in the past. Producers have been able to learn from the great games of the past and build on them. If the classics really were so much better than what we have now, we would not need such a substantial discount before we buy them. Over a 20 year time horizon, we don’t really need the abstraction of a quality adjusted price to see the difference, but provided we have a convincing indicator of quality improvement, it does allow us to say that game consumers are better off year over year.

The consumer side is only part of the story. Why were games so expensive on a quality adjusted basis in the past and why have prices gone down now? For that, we need to look at video game production.

Supply side gaming

The current model is ambiguous as to whether or not game developers should be panicking. Producers are paid with actual money, not quality adjusted or inflation adjusted dollars. The fact that prices have not kept up with inflation implies a welfare loss, since producers need to pay those higher wages (including to themselves) and grocers don’t offer discounts to the people polluting their children’s minds with Grand Theft Satanism: Ignore Your Homework Edition. But there are also more people playing games now than in the past, and the amount of money the games industry is bringing in has grown substantially.

At least part of the increase in revenue is attributable to the fact that gaming is more affordable. But if the only thing keeping the industry from experiencing this growth was a pricing decision, why didn’t companies start charging less earlier and reap the benefits? Any company attempting to do so in the past would have gone bankrupt. Playing games became more affordable over time, and so did making games. Did you like Mass Effect? You can access a better version of the engine they used to make it and only have to pay 5% of revenues (past $3,000) once you start selling your game. In 2007 you could only get Photoshop in a big expensive box and it did a lot less than the one you can rent for $10 a month today. Same with 3ds Max (at a higher price), although I’ll bet Blender ($0) has at least the capabilities of 3D software from over a decade ago.

The one price that has gone up is labour, but the reason for this is that labour today is so much more productive with the improvements in the tools. One hour of labour spent on games today has more knowledge about games, produces higher quality content, and does so faster than it did in the past. Labour costs should also include the payments to the developers themselves, unless they’re the ‘ideas guy’ kicking back and watching everyone else work.

I started by saying producer welfare goes up if they can pay less to make the same game, or if they can charge more for that game. This ties producer welfare to profits, though we need to use quality adjusted prices since no developer would make the exact same game again. Competition should prevent producers from arbitrarily increasing the price of their games and so producer welfare is tied to the efficiency through which they can make their quality adjusted games. If you took one year to make the box with GAME on it and then it takes you six months to make the box with GAME on it, you have six months to make another one or to have a holiday (‘consume leisure’).

Developers are producers of games but they are consumers of game making software, and the same rules apply for 3ds Max as they do for your favourite game. Most of us play games while few of us use these tools and so it’s harder to give examples of quality improvements that don’t come straight from marketing material. Depending on your time horizon the US price index for commercial software publishing is down of at least flat (local indices could be approximated by applying the exchange rate if most of the software used was US produced, or obtained from your national statistical agency), and largely ignores the proliferation of free alternatives for tools. In addition, commercial products tend to contain app stores with inexpensive solutions to things that used to require developer time.

A producer working today can make a game for less on a quality adjusted basis. In practical terms this means that something like the last game can be made for less (including time), or a better game can be made with the same resources to command a higher price. Lower costs also mean people who could not make a game before are able to and so the ability to create a game in the first place is a welfare improvement itself. Our analysis should not limit itself only to incumbents.

These are the positive reasons for quality adjusted prices to go down, even for producers, and they broadly match what is happening to nominal prices. Games cost less now because they cost less to make and competition prevents the producers from simply pocketing the surplus (though there may still be some  if enough additional players buy at the lower price). The gains realized by developers are through the higher wages that increase with the productivity improvements from better software and more knowledge about game development.

A rising tide or Noah’s flood?

Lower prices brought about by technological improvements sound like a wonderful win-win that everyone should be happy with, and it is. But producers who are talking about lower prices are not speaking about it in positive terms, and the existing model presents a puzzle. If price declines are due to decreases in the cost of making games, then why are the prices of smaller games falling so much more than large games?

The lower costs to production inputs are not specific to one segment of the market, but smaller producers are seeing a substantial drop in nominal prices in a way that we don’t see for their larger contemporaries. There may be other factors outside of our current model at play, but there is another side to the entry of new producers into the marketplace that produces negative price effects.

The entry of new producers into the market is generally good as it means more variety in terms of games. New entrants does not always mean harder times for incumbents — Rockstar has little to fear from the hobbyist putting their project up on Steam Direct — but there is likely going to be some competition at the lower level. Competition can manifest itself in healthy ways, but one unhealthy way competition may manifest itself is through higher budget/quality games feeling the need to compete with hobbyist/niche projects on price, and the likely resentment felt towards these new entrants. This is not just unhealthy for producers. In the long run consumers will suffer as well as the lower profitability of games will make it less attractive to the people who make them, and the games that are left will reflect the lower valuation, leading everyone to complain about how games used to be better.

This invites the question as to why higher quality small projects feel like they are in competition with the bottom end of the market. When there isn’t a seasonal sale going on the top sellers on the storefront are not normally low cost games and so consumers are clearly willing to pay up for games, even after the influx of new producers. The titles that appear on the  top seller lists have been able to get across their value proposition to their target market in a way that other titles have not. The question seems to boil down to marketing.

The importance of reaching out to the intended audience and showing why the game is worth its proper value has become more important than it used to be. Large producers are already experienced in at marketing with specialized departments and so have people who are able to identify and respond to shifts faster. Smaller producers are more resource constrained and it’s easy to see how the importance of marketing can be overlooked when a team without marketing experience is trying to optimize the finished product.

The previous article imagined game developers as processes through which labour, computers, and software were transformed into video games. The market is constantly shifting, and technology is always getting better, and so there is always something new to learn and a new way to get better. In the current environment under resourcing marketing (or following ineffective strategies) is an inefficient allocation of resources that has larger implications for the project than it used to. Failing to reach the target audience and making the value proposition means the producer is no longer choosing their audience. Competition for the default audience is well represented by niche and hobbyist projects that didn’t or couldn’t dedicate resources to outreach. In the absence of other information consumers in this segment can only compare by price. This means that the demographic of people who read dinner menus right to left is one of the most competitive spaces in gaming right now since it is the default audience without intervention from the producer.

In trying to think about this problem, I am struck by how much this resembles crunch. Nobody should want to opt into crunch since labour that is overworked is less productive and costs more. It is most succinctly described as a failure of planning, as it is the result of not enough contingency time budgeted. If problems are not identified early enough, there may not be enough time to bring new hires up to speed to deal with the problems and the choice becomes crunch or miss a milestone and possibly kill the project. Likewise, nobody makes a $20 game with the intention to sell it for $5. The consequence of under resourcing outreach is only apparent at the end of the project and so the choice becomes accept some sales at a lower value, or potentially sell nothing at fair value. The competing games at the low seem like the most direct cause, but the problem was a few steps back in misjudging the audience or the price the audience would bear.

The work that people put into their games should be fairly valued both directly in the price of the final good as well as working conditions that do not ask them to sacrifice their personal life. Undervaluation is also undesirable for producers trying to establish themselves at the low end, since higher quality products are being dumped into their segment at cut rates, and gamers who would have otherwise loved a game that failed to reach out to them have to work harder to find it or deal with the second or third best option.

I don’t have a firm solution for this problem, since simply saying “spend more on marketing” assumes resources that may not exist. If a $20 game is being sold for $5 then in theory resources can be reallocated to find a better balance, but coming from a non-specialist this sounds about as comforting as informing someone they may choose which limb gets hacked off. Despite my inability to offer concrete solutions, I have a strong feeling that this is something most if not all developers can overcome.

Because I am boring I talk a lot about organizing factors of production to make some grey box with GAME on it, but what I’m really talking about is creativity. Anyone who has shipped a game has had a unique way they have organized the resources they had to make a finished product. Some producers may have made something of average quality, while some particularly successful producers found a way to take the same or similar resources and make something really great (or, in the model’s terms, something with a lower quality adjusted price). Creativity isn’t limited to making new levels, mechanics, or genres, it’s also something that can be applied to questions like “How do I get people’s attention?” and “What’s something they don’t even know they want yet?”

Lottie Bevan of Weather Factory has written a wonderful blog post (which is much shorter and better than mine which is why I’ve waited until you’re near the end to bring it to your attention) on the creation of the Church of Merch. She says Cultist Simulator lends itself merchandise, but I certainly didn’t know how much I needed a fancy cultist leather journal until I got a shiny package one day (thank you you-know-who!). All the ups and down of the process are recorded, and it’s a fantastic example of how a member of a two person team was able to do something that was obviously a honking great idea in retrospect, but is not an obvious next step for a company with one game and a bunch of DLC on the roadmap (to me at least. But then, this is one of the many reasons why I’m not a producer/co-founder/wearer of many metaphorical hats). Read into the archives and you will also find a post specifically talking about a partnership with a publisher in order to get help with marketing.

Creative solutions is part of the job description for any producer of games. In trying to minimize the possibility of a game being undervalued the solutions don’t need to be perfect, but they need to be attempted. Some producers may hire a specialist, some may try streaming or various social media platforms. Maybe a producer will license an IP they love and use it as a springboard to find dedicated fans. And, of course the market will shift again in some way in the future and there will be rewards for identifying and solving the new problems we haven’t seen yet. It isn’t easy, but this is how progress gets made.

What have we learned?

We put all games on a level playing field by transforming all quality differences into a theoretical concept of quality adjusted prices. Games higher quality games have a lower quality adjusted price and so are more attractive to consumers. This is an uncommon way of thinking about games but it is equivalent to saying that if two games are $20 and one is higher quality than the other, then more people will buy the higher quality game, just as if the two games were the same and one of them cost $15.

Using this perspective we identified two reasons for lower prices for games, both on a quality adjusted basis as well as a nominal basis. The first is positive: games cost less to make because the tools cost less and the labour is more productive than it was before. Here a game is sold at a fair value that reflects its lower cost. The second is negative: Smaller games in particular have not adapted to a market in which identifying a target market and communicating a value proposition is more important than ever. Here a game is sold at a value lower than it should that reflects an inefficient allocation of resources.

Prescribing the problem of undervaluation is only the beginning, but producers have and will continue to overcome this problem in traditional as well as novel ways. The best selling games on storefronts are no there because they cost the least. As smaller producers recognize their games as products and connect with their audiences, they will not only receive fair value for their product, but they will also reap additional quality benefits from engaging with their community.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. As always, I encourage you to do your own price comparison or buy on your preferred platform.

Studio Closure

News of Telltale Games’ closure highlighted the fact that quite a few game studios have closed this year. There has been a lot of reflection on everything from the precarious nature of work in games, to the viability of certain types of games, as well as an outpouring of support for at least some of the developers affected. I count at least two personal acquaintances among people affected by studio closure this year, and so have wavered in even approaching this topic. The closing of a business is unremarkable, but the disruption it creates to owners and workers can be life changing. My problem is that I am only equipped to talk about the closing of a business, and so can only offer an impersonal take on a personal issue. My hope is that despite this limitation, I can offer a possible explanation for what is going on, what it means, and how we might respond to it.

Why do studios close?

A studio closes because it has more money going out the door than coming in and it is unable to bridge the gap. This is a boring reason which accounts for the majority of closures of any business, not just game studios. It has nothing to do with hot takes on there being ‘no audience for that kind of game’, the developers being bad at their job, or an asserted (and counterfactual) correlation between wokeness and brokeness. These explanations are great examples of reasons that seem obvious until you think about them and then they make absolutely no sense. So we’re going to think about them.

A studio’s revenues are going to be tied to their ability to sell games, and so surely if there is no audience for its games it won’t be able to stay open. This is certainly possible, but it ignores the fact that the studios that have closed have fairly established track records and it assumes that a studio’s costs are fixed, which they are not. I had never heard of a game called ANATOMY until just now, but it’s the top selling game on itch.io. There’s an audience for that. Tastes change, and audiences can grow and shrink, but if there’s an audience for a $3 indie I’ve never heard of, there’s an audience for an established developer and their back catalogue. Now, reaching that audience, setting an appropriate price, making sure the lights stay on before the games are released, and scaling operations to match circumstances are all factors that will affect a studio’s ability to stay open, but this is a much narrower scope than what is implied by pontificating on ‘the state of the market.’ Business management often isn’t sexy, but it’s what’s at play here. Spiderweb Software and Grey Alien Games have been around a long time, despite armchair market analysts declaring there being no market for those types of games.

For the same reason, the skill of the developers has very little explanatory power. The majority of studios being discussed had established track records, and only two of the 10 major closures had an average metascore of less than 70 (and most were in ‘green’ territory). Anyone who has worked in a poorly run office knows that the first people to detect problems are the rank and file staff, and they are often able to do a good job despite the situation they find themselves in. The number of people who directly control the kinds of decisions that ultimately determine if the studio has enough cash to keep going is very small and management quality is not a characteristic you can directly observe in a game. You cannot point to games you don’t like and say which one was the product of poor management without some external source of information.

There is, however, a perfectly plausible and boring reason for a profitable development studio to be shuttered. We’ll start by considering a subsidiary of a larger company. If the parent company sees opportunities to earn a greater return than what it can earn from continuing operations at a given studio then, from a purely economic standpoint, it makes sense to allocate those resources towards their most effective use. This is the same logic that applies when someone decides to take an office or teaching job instead of being a cashier at McDonald’s. This is not intended to be a normative claim (at least without a number of qualifiers and clarifications) so much as it is an intuitive illustration of how a studio that is successful by one criteria (profitability) may be untenable to another criteria that may be more relevant to the final decision maker.

Companies that are not subsidiaries face a similar risk. Telltale’s closure was surprising because it had seemed to be successfully turning around from its earlier troubles, with critical success for the latest Batman game and sequels to its most noteworthy releases (The Walking Dead, and The Wolf Among Us) in development. The culprit seems to have been withdrawal from financers, Lionsgate, AMC, Smilegate, or all three. As with a parent company, the inability to find financing is as much a product of the opportunities available to the financiers as it is their assessment of the studio’s future prospects (it is also worth noting that gaming is outside the core business of Lionsgate and AMC). Anecdotally, it also seems that Telltale was attempting to reduce the cost of producing its games and so it makes the failure of the financing round all the more frustrating, since it seems to reinforce the idea that Telltale could very well have successfully continued save for the fact they could not be financed long enough for the turnaround to finish.

None of this is to say that no game studio has failed because the underlying product was bad, or that they released an overpriced game into a crowded market. Gamasutra is filled with those kinds of post-mortems. But these kinds of explanations don’t credibly explain why 10 studios with experienced teams have closed, while the boring accounting explanation lines up with the known facts. The question is, what do we do with this information?

Human resources

It’s upsetting that something so boring from a business standpoint creates so much turmoil for individuals. Nobody who has lost their job as a result of the processes above is likely to take much comfort in knowing that the parent company perceived them as a lesser opportunity, or that the bosses failed a funding around, nor should they. But is there anything more I can say beyond pointing out that it’s foolish to blame the people who are now looking for a new job for their circumstances?

The closures have added a sense of urgency to a broader conversation about working conditions and the possibility of unionizing. There isn’t a lot to add to that discussion when focusing on closures. It would be better if large numbers of workers did not need to lose their job without severance after working countless hours of unpaid overtime for this conversation to resonate, but we play the hand we’re dealt. Beyond the possibility of it being a catalyst for change, I do have a slight sense of optimism that stems from a longer term view and a particular perspective of what a game studio is.

In simplest terms I think a company that makes video games is a machine that turns person hours, computers, and software into games. If that machine can produce the same game with fewer hours, computers, or software then it has become better at making games (this is equvalient to saying they make a better game with the same resources as well). Computers and software are not able to organize all of these factors in more effective ways, but people are. The real thing that differentiates one video game making machine from another are the processes it has in place to make sure it makes video games better than all the other game making machines. People learn over time and also compete which means that we are getting better games at lower prices than ever before. To put this in perspective, you can buy the full game Deus Ex today for the inflation adjusted price of the Doom shareware demo in 1994.

We are left with two facts: a company/video game machine failed for one reason or another, and that the people, the most important part if you want to build a company of your own, are now available to be put to better use. This is where my optimism comes from.

The closing of a studio means the destruction of that process that organized the factors that make a game unless someone steps in to preserve it. Most of the time it’s not worth saving since it was one that resulted in a closure, but since the closing of the previous company had little to do with the people who are now unemployed, there is a wealth of experience and talent just waiting to be put to good use and comes with the added bonus of being able to tell you “Don’t do that, that’s a really dumb idea” if you repeat the same mistakes. My personal hope is that some of the developers who are affected by the layoffs don’t wait to be picked up for a new venture, but are the ones who develop the better way of doing things. If this happens, then we can continue to expect more, better, and less expensive games in the future.

This optimism is not simply a product of wishful thinking. Poor treatment of the talent, and so poor management, certainly was a factor in the closing of some of these studios. You simply cannot expect talent to flourish in an environment where it is overworked and viewed as expendable without severance. Talent may persevere in such an environment, but how much productivity was lost through the failure to attract/retain talent and the inefficiencies created through overwork? A future Telltale should retain the features that allowed it to be a unique voice in gaming, while making sure those working there are taken care of and that management has their interests in mind when times get tough. This does not even need to be altruistically motivated (though it would be nice), since an experienced worker familiar with the process will simply do more and better work than an equally talented but unfamiliar worker.

Some of these dynamics in terms of unrealized value being unlocked with the closing of studios are on display through the willingness of other studios to hire some of the people affected by the layoffs. Better run studios don’t just gain the value the former employee was bringing to the studio that was closed, but the value that wasn’t being realized by an inferior process.

In the short run the layoffs are tragic and I wish people didn’t have to go through this sort of thing. In the longer term, this can be a more positive thing. Because life is short, and while it may be comfortable in the short term to remain in the status quo, I am not convinced that anyone is well served by staying in a position that is not using their talent to the fullest. Is it really better to carry on through a succession of mediocre years at a firm that values you less? Or is the short term shock in employment worth moving to something that better uses your talent? I suppose to some extent this is a matter of preference or risk tolerance, but this is how we seem to sort out the best allocation of our time and resources as a society.

Of course, different countries handle this allocation better than others. Canada may enable the creation of some of these new studios through government funding. Some forms of social assistance can help ease the transition. Unions and employers can help in this regard too, as industries with substantial booms and busts often do need to encourage the workforce to save for low points in the cycle. With all this in mind, I do believe it is better that unproductive uses of people’s time go away and that they be freed to do something they are better at, and this is partly due to my own experience.

Dismal science fiction

After high school I worked in the film industry. Specifically I worked in the camera department and worked on quite a few science fiction shows that are a bit old now but are still the sort of thing I’ll hear “I loved that!” about. This is the kind of job I know lots of people are desperate to get into, and I made decent money doing it. I never took a holiday or a break until a strike came and there simply was no option to work. After a few weeks I realized how much I had come to define myself through this work and how unhappy I was without being occupied with the 12-16 hour days of setting up or rolling.

I had a few false starts but I ultimately went to a college, originally with the intention of studying philosophy. When I took an economics class I was fascinated by ideas like comparative advantage and wanted to learn as much as I could. I needed to overcome some truly atrocious math grades from high school and a lack of sophistication with that subject, but the interest in econ got me through it. College turned into university, which turned into admission to the honours economics program, which turned into graduate studies.

That’s at least one way of looking at it. The truth is, my friends who knew me during the film years and after (before I enrolled) said I would be very well suited for university and that I would love it. I’ve always loved reading, and what time wasn’t spent on set was spent at the library. I was focused on the short term certainty of a profession that I was competent at, but, on reflection, did not truly align with my deeper passions.

Would it have been better if I didn’t do film? Probably not. I did get a better work ethic when working in it, and I was an undisciplined student as soon as I knew I was going into film. Would I want to repeat the transition period? I would probably want to hit the person writing this post if I read it during that time, because things got very dark indeed. But with the benefit of hindsight I can say that whatever my limitations as an economist (and there are many), I am better suited to it than moving camera stuff for the rest of my life.

I  also recognize that my optimism is also a reflection of the fact I was fortunate enough to land on my feet. This is why I do not take it for granted that existing social programs are sufficient, or that nothing should be done to make these transitions easier. The fact is we all do better if people have the least friction possible in being able to find that better use of their talent. I am no longer taking up the job for someone who was born to lug camera gear and movies got a little bit better than they otherwise would have, while I’m now at one of the few places that uses a fairly arcane subject I studied at university.

Even if I didn’t count friends among people affected by this year’s layoffs, I’ve read enough about the difficulty of working in games that the closures sound like insult to injury. But I’ve also gotten a peek at how the story ends. These workers are smart people with a unique set of skills. Some may find they’re happier or better suited to another line of work, while others will find themselves at studios that better appreciate their contribution. Some may finally have had enough and found their own studio and realize the projects that went ignored. And so my disappointment at hearing the misfortune of others must always be mixed with a hint of excitement at the possibilities of what they may now accomplish.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. As always, I encourage you to do your own price comparison or buy on your preferred platform.

Finding your next (not so) hidden gem

Every once in a while I get the question “Where do you find all these cool games?” so I thought it would be good write about it. It just so happens that a Kickstarter for such a game is happening right now, so if you do nothing else, please check out Nighthawks.

I should admit that I don’t know of any special technique that ejects cool but relatively undiscovered games. Answering the question means describing a fun way I’ve been engaging with games that has also resulted in me finding some interesting stuff. The question about finding “those games” is an acknowledgement that there are more and better games to play than ever before, with the side effect that it is harder to find an individual title by browsing. We’re not so much looking for new information as we are looking to effectively sort through what we already have.

One obvious place to look is where you’ve found good games in the past. If you played Transistor or Pyre, there’s a good chance it’s because you enjoyed Bastion. But follow ups to popular products take time, and sometimes you’re looking for something brand new. When I reflect on how I’ve found some of my uncommon choices, it’s not very different from following developers who have made things I’ve liked. The only difference is a greater emphasis on people over products. Studios are active on social media, but so are the people behind those studios. Taking an interest in those people, and following the ones you find interesting lets you peek backstage.

There are reasons why following developers who are active on social media is an effective way to find new games in the early stages, but we should focus on why this is worth doing on its own. Following these kinds of accounts is fun. Beyond the sneak peeks, you get to see the personalities behind the games. This can enhance your enjoyment of games as every once in a while that personality slips through and you recognize it. Social media does not always produce positive encounters, so being a source of positive interactions (even just a simple ‘like’) is mutually beneficial and so worthwhile in its own right. It will also expose you to different perspectives.

The inclusion of different perspectives is what gives you access to new games. This makes sense because we are looking for information about a game that someone else has. We don’t know when it will happen, which is why this isn’t a fast track to ‘scoops’, but this should be good news since we enhance our enjoyment of our existing games, as well as find out about new ones.

Following individuals gives you a direct view of what people are playing. Better still, sites like Twitter also display interactions such as likes and retweets of other developers, allowing you to find other people with interesting perspectives. Individuals talk about what they’re working on, keeping you informed up front. As a bonus, they talk about what friends are working on, which means there will be links to demos and crowdfunding. These mechanisms complement each other, since it is remarkably easy to overlook Yet another Early Access/Kickstarter/Itch Demo. Repetition from multiple sources does a nice job of finally getting you to act.

I am always looking for new and interesting games because I like games and there is a benefit to me as a small streamer to find cool and underplayed games. I have every incentive to be on the lookout and yet I fail much more than I succeed. I love the Shadowrun games but needed HBS to e-mail the slacker backer campaign for Battletech before I was aware of it. A friend let me know about a voice audition for Unavowed (which I  chickened out on, partially because I thought it looked really neat and so no place for amateurs), and yet it took everyone Tweeting about it for me to finally check out the Steam page. It required three people tweeting about In Other Waters before I finally Kickstarted it and that one turned out to be a project mentored by Weather Factory (which is a heavy recommendation for me since I enjoyed Cultist Simulator so much). I had a chance to get a Shadowhand key which I didn’t take because I didn’t think I could make time for it, though I have since bought, played, and enjoyed it. All these games clearly have value to me through either my backing decision or my enjoyment on release, and yet I’ve come to them kicking and screaming, not Kickstarting and streaming.

Repetition from multiple accounts is a powerful way to get you to pay attention, which is why the benefits from following developers extends beyond their own products and out to the accounts they follow and engage with. And if you follow interesting people, you get to learn things. Yes, I see things that annoy me or that I consider unfair, but I do my best not to treat Twitter as a complaint box. Since the exercise is about finding information I don’t have, listening is better than talking.

Social media is a convenient tool, but it’s not the only one. I have flogged Cultist Simulator and Nowhere Prophet at a local gaming bar to anyone who will pay attention. In return I found out about Slay the Spire. I also visit a local gaming collective to see what what is being made in my own backyard. I also did this before I moved to where I am now.

None of what I’ve written here is new. It’s an exposition on a perspective and why it has been effective at refining a search for new games. Even if we were indifferent to the people making the games (and shame on you if you are), they talk to and support each other when they have something new coming up. Tapping into that network doesn’t just inform us of what is going on, but gives us a beacon to guide us out of our suspicion of untried products.

Of course, no article like this would be complete if I didn’t talk about some of the things I’m interested  in right now. I’ve seen Richard Cobbett as a punny commenter on a lot of Alexis Kennedy’s tweets, along with hints from the latter that something cool was coming up. There’s a Kickstarter for his game Nighthawks going on right now which very much fits the “You’ll probably like this when it comes out, so why not make it a reality” mold, and came to my attention exactly through the channels outlined in this article. Eric Billingsly let me try out a game he was working on called Hexagon Falls which was really enjoyable and had a funny tweet. Sean LeBlanc always seems to have something to show at each meetup, and I will never forget how he had the entire room in the palm of his hand with his MMO. Sophia Niergarth showed off a prototype of her game Full Feather, which looked really interesting, and she was remarkably thoughtful and articulate when we spoke on Twitter. Jesse Ringrose has been showing off these interesting little clips of a game that I now know is called Spek.

All of these games are in various stages of development, and if I even know anything about the people behind them at all, there are no common threads in terms of personalities or interests. Each of these games and their creators had something that caught my attention. It is too easy to walk by cool stuff like this and never think of it again, which is why I like following as soon as I can. Even if these projects don’t turn out, or become the thing that originally interested me, these are people who have made something I found interesting at some point. I am much more likely to find something interesting from them, than I am a Steam or Kickstarter sorting algorithm.

 


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.

Your EA Takes Suck

EA is an awesome company that makes good games and you sound like a moron when you bash it. EA bashing is the gaming version of clapter. If you’ve ever watched Real Time With Bill Maher, you’ll immediately know what I’m talking about. Clapter sounds a little something like this: “Hey, how about [politician] right? What a moron!” waits for applause. There’s no real joke there, but that doesn’t stop people from clapping. Here’s some EA clapter:

img_1856

There’s no point. It’s just taken for granted that EA is so terrible and out of touch that a premium subscription service that costs less than Netflix or a WoW subscription is beneath comment. My new favourite hobby when I’m in a gamer bar is to mention EA and watch total strangers come up and unload on the company. And this is the mild stuff. YouTube is full of shouty men whose only purpose in life is to heap scorn on the publisher. This week we hit a new low in blaming EA for the recent shooting in Jacksonville.

None of this makes any sense. You may not blame EA for the shooting, but there are still way too many people using that company as a shorthand for the worst in gaming. If I play the odds, most readers will have liked some EA clapter in their social media feeds, or have issued one of their own. I am here to tell you your takes on EA suck. I will bring evidence for this fact. I’ve brought enough evidence to deal with as many goalpost shifts as I can stand and I still know the response is going to be “Yeah but…” So let’s get this over with.

If you hate EA so much, why do you keep buying their games?

We can now add the response to Cowen’s report on Battlefield V’s pre-sales to the long list of times idiots have crowed about EA’s imminent demise. This genre is pretty old now and has its origins in finding out that watching YouTube and dumping on the hobby is easier than having an original thought. But you want finances? I’ve got finances.

There are five game publishers traded on US markets: Activision Blizzard (ATVI), Electronic Arts (EA), Microsoft (MSFT), Take Two Interactive (TTWO), and Zynga (ZGNA). I’ve removed Zynga since it’s a mobile focused publisher, and had to do the same with Microsoft since the information will be tangled up with a majority of non-gaming activity. Since these companies trade on US markets, they must file with the SEC and these filings are available in the EDGAR database. If you would like to follow along while finding out why your EA takes suck, I will be using form 10-K, the annual report.

This is also the point where I expect a bunch of whining “Biased analysis” objections since publishers like Ubisoft, Paradox, Capcom, or SquareEnix aren’t included. These companies don’t file with the SEC since they are not on US exchanges. If you think an analysis of the publishers of Battlefield, Call of Duty, Grand Theft Auto, Civilization, XCOM, Need For Speed, Diablo, Bioshock, World of Warcraft, and Dragon Age is not representative, give me a good explanation why and then I’ll consider addressing the inevitable objections based on obscure European accounting differences that will follow when I add the other publishers.

Since everybody’s talking about how EA’s going to fail because of their business decisions, let’s talk about profitability. Here are five years of financial returns (note: the year is the period ending, so 2018 = 2017’s games etc.).

profits

EA wins three out of five years, usually with a healthy margin. Overall EA brought in $191 million more than its closest competitor, Activision Blizzard. Case closed.

But this isn’t convincing and it’s not because EA won. When EA stumbles there will be no shortage of commentary about why financial success is the only true measure, but since I am not a half-wit I must hold myself to a higher standard. If EA spent $1 trillion to achieve the results in that chart, while Activision Blizzard only spent $20 (coffee and muffins for the design team), then Activision Blizzard would be the better publisher. To normalize these results let’s see how many dollars in revenue (not profit, but total goods and services sold) each dollar spent generates:

efficiency

Here EA beats the competition in all years but 2014 and is the only publisher with a clear upward trend. For every $1 EA spent last year, it generated $4.03, while Activision Blizzard generated $2.76. Why do gamers care about this number? Unless EA is robbing banks or putting a gun to your head, it makes its money like its competitors: making and selling games. This measure says EA has a really good idea of where to spend its money, because when they spend a $1 making a game, the result is something we are willing to spend $4 to play.

“Aha! This proves that EA is screwing us!” I hear you, a moron, say. For this to be true it would have to mean that despite a ‘guaranteed fun’ refund policy, streaming, and Metacritic, EA (and EA only) has been fooling gamers for five years and not only has nobody caught on, but they have only become more credulous. Or we can say that EA’s pretty good at finding out what the value of their games is and making you pay up for it. But let’s leave aside your obvious appetite for EA games and look at what goes into the costs we are talking about.

Everyone knows that EA is a greedy corporation that doesn’t care about games and is only concerned about making fat, cigar chomping businessmen money. Hell, we just need to look at Kotaku’s piece on Mass Effect: Andromeda to see this inefficient bureaucracy in action. I bet they only sell so much because they spend so much money marketing their games. For our next chart, we will assume that all administrative and marketing costs are the same as putting the money in a big pile on the floor and setting it on fire. This chart shows how much of each dollar has been burnt upon the alter as an offering made by fire for a sweet savour (lower is better):

markAdmin

While not the lowest, EA consistently spends less on marketing and administration for each dollar of expenses than Activision Blizzard, and by a wider margin than the difference between itself and Take Two. The worst you can say about EA is that it does no worse than its peers in this regard, which is a quite the concession given how pathological the hatred of the company is.

(As an aside, I would like to take a minute and say how unfair and totally detached from reality this measure is. To see why the premise of “Marketing and admin doesn’t count as gaming” is nonsense, you only need to spend 10 seconds reading marketers like Haley Uryus of Failbetter. Watching a trailer for a game like Stellaris will also help you appreciate how marketing can play a role in helping to create the fantasy that is played out in the finished product. Anyway, back to your terrible EA takes.)

If you invert this measure and ask what proportion of expenses go towards the elements of the game you see on screen (higher is better), EA is at the top in all periods but 2014.

inverted

This is because the assumption that all expenses other than marketing and administration go into the games is not a good one for Take Two Interactive. That’s right, EA isn’t even the worst company when I bias the measures against them. The SEC filings show us that EA is a company that makes a product people want to buy, and puts more of its costs directly into that product than its peers. People buy EA games because they’re great games made by talented people.

But what about the quality!?

Let me guess, now financial reports don’t capture the true essence of gaming. How do I know that talented people are making games there? This is EA we’re talking about, the publisher that kills anticipated games and eviscerates beloved studios. I know because the people who work at these companies told me. Here are the Glassdoor rankings for the three publishers:

  Rating # Reviews Recommend to a Friend Recommend CEO
ATVI 3.8 130 82% 87%
EA 3.8 1900 79% 89%
TTWO 4 56 84% 98%

Identical between EA and Activision Blizzard, with Take Two pulling ahead by 0.2. EA’s finding comes from 1900 results, over 10 times more than the other two publishers. EA only lags in recommendations for a friend to work there. But this is just the corporate side of these companies right? I’m sure if we started looking at ‘real game development’ we’d see how bad EA is. Once again I’m sandbagging EA on this one, because if I drilled down to individual divisions I would be presenting EA Montreal’s 4.8 to Blizzard’s 4.5 and you’d accuse me of biased measures.

What about the games themselves? Everyone knows EA makes terrible games that everyone hates! Here’s Metacritic:

2018 2017 2016 2015 2014
ATVI 75.7 71.0 72.0 67.1 62.5
EA 73.2 79.7 71.9 74.5 74.7
TTWO 72.8 77.2 77.7 75.7 78.0

EA achieved the highest score over the five year period and is in the middle of the pack for the five year average (74.8). EA is last in only one period by 0.1 point. Activision Blizzard’s five year average doesn’t even break 70. Which of these publishers has the most franchises that have sold at least 100 million copies? EA. Too high of a bar? What would you prefer? 50 million copies? 20 million? 10 million? 5 million? EA, EA, EA, EA. And that’s after I included Barbie for Activision Blizzard.

Your complaints are stale

Hate loot boxes? What publisher removed lootboxes due to player complaints rather than regulatory change? EA. What company completely removed them and expansion DLC from the latest iteration of a major franchise? EA. And then you complained about women being on the cover. Because it’s never really been about the games has it?

The only reason you hate EA is because some guy on YouTube said EA was bad and he was angry enough, or British enough, or maybe angry and British enough. Either way, you were definitely stupid enough to believe him. The funny thing is, there was even a time you could rightly criticize the direction that EA was going, and it changed right around the time people developed these unshakeable priors that the company could do nothing right. Commentators who had no idea what they were talking about unloaded on EA for every last perceived slight in gaming as a whole. Remember when day one DLC was beyond the pale? How dedicated servers were non-negotiable? Commentators changed their minds on the individual business practices, but EA retained its Goldstein status. Influencers’ private gripes with a publisher were uploaded into an internet hive mind that will believe anything it is told. There will be people who die hating EA who have never once experienced any of the things the internet complains about.

This is why your EA takes suck. The EA you’re attacking doesn’t exist and never did. All that this baying signals is that you’re someone who believes any nonsense they hear on the internet and will repeat it ad nauseam. Think $100 a year is too much to pay to access EA’s premium titles? Don’t buy it. I only got the Basic level myself because I’m scared if I go for Access Premier I’ll never stream anything else. But reducing it to a response of “HAHAHAHA” only tells me you’re going to pay that much to play one game instead of an entire library of them, and that you don’t really know that much about gaming other than what people on the internet tell you. This is true of all EA clapter. It’s unfair, it’s old, and it makes all of us dumber.

Fortunately, it’s never been cheaper to tune you out. For $5 a month, I can try out some EA financed indies like Unravel or Fe and not think about people being angry on the internet. You know, like a real gamer does.

Subscription Conniption

A new generation of consoles is released and PC gaming dies again. Google makes us stupid. YouTube serves up algorithmically chosen banality over quality shows. Television replaced the golden age of cinema with tawdry soap operas. Radio distracted children from their studies and turned their brains to mush. The printing press made our thoughts sloppy and cheapened scholarly work. Writing itself made us forgetful and replaced instruction with the illusion of wisdom. In short, everything you love is being replaced with the worst kind of nonsense.

I have a quiet admiration for people who warn of the dangers of technological progress, because they know their track record and will always be terminally uncool. Most of these takes weren’t even wrong, just incomplete. We can point out the problems, but the long term benefits are hard to spot. So what do we make of the present interest in streamed and subscription gaming? Is it a threat to developers as gamesindustry.biz (GI.biz) would have it?

History

To answer this question we need only look to the recent past. US movie production in 2000 produced 2,000 titles and approached 7,000 by the year 2012. This is despite the introduction of subscription streaming services by Netflix, Amazon, and Hulu. The share of box office revenue from non-MPAA member studios increased from 20% to 50% over the same period. These movies also take the largest share of ‘top movies’ for their year measured by Metacritic, Rotten Tomatoes, and user scores. TV production more than doubled from 100 new series to about 250 over the same period. Digitization drove this growth and a significant part of that change was in distribution. The worst we can say is that subscription streaming did not hinder the growth in movies from 2000 to 2012. The same can be said for music and book publishing.

Netflix began to produce its own shows in 2012 and it is instructive to know why they did this. Licensing costs were increasing as rights holders realized the value of their content. Netflix’s choice to create content was as much a bargaining chip in these negotiations as it was an effort to gain and retain users. Disney is expected to make its own streaming service, and HBO is already streaming.

This anticipated landscape resembles a likely future for gaming. Humble, the last non-publishing subscription service, started in 2017. Netflix established itself because studios did not realize the value of their libraries. This experiment can only be run once, and so incumbents are the ones driving this model for gaming.

The Threat

At its core the GI.biz article is more concerned with subscriptions. Streaming may be a catalyst for subscriptions, but the threats come from subscriptions. The distinction matters since subscription services exist now and do not require the same kind of investment streaming does. If a subscription model is a threat to developers, then that threat is here now and does not go away if streaming fails.

This means I am less interested in concerns based on streaming such as the availability of mods. This is a problem consoles have been living with for a while (and for which there is a solution). It is better to focus on how developers get paid and how they navigate the marketplace in the future.

The article identifies discoverability as a threat to developers. Specifically, it worries that a platform’s games will have priority over third party ones. It also fears a drop in financing, though I think this begs the question. A concern about access to sales information stems from a real problem with Netflix.

In essence, the article is worried that developers will receive less money for their work. The most convincing objections present specific mechanisms that make this happen. The subscription model is consumer friendly, but at a cost to developers. We should not be indifferent about developers or view the relationship as adversarial. Intellectual property protection is not consumer friendly, but we value new works enough to make it law. Adverse effects on the supply side will find their way back to the consumer.

Are these threats serious?

One comparison we can make with GI.biz’s list of threats is to the status quo. Here discoverability and market information are less convincing. How many copies did Cultist Simulator sell on Steam in two weeks? Only Steam and Weather Factory know. Weather Factory practices open production and is transparent about their sales. However, Steam  does not permit developers to publish sales information for their platform. Valve has a notoriously testy relationship with SteamSpy, mirroring the Neilsen/Netflix spat. Title specific information will likely depend on whether the rights are bought outright or on a per-play basis. Not having access to sales data is still a loss, but we are already reliant on 3rd parties for market information.

Discoverability is another problem we already deal with, but could it become worse? A platform prioritizing its own games over third parties sounds like it would. Would a platform have any reason to do this? A glance at Origin Access shows EA titles in the top 10. But then, a purchase of Origin Access implies an intention to play EA games. Extending the list to games I can see on my screen, I find Orwell: Ignorance is Strength, Mad Max, and Cities: Skylines above Titanfall and Battlefield 1. Scrolling down there are a number of excellent indie games listed above cherished titles in the EA back catalogue like Mass Effect or Dragon Age. The costs of making these games are sunk, and so the goal of any platform is to maximize the number of subscriptions. Mediocre games boosted by tweaks to the algorithm carry the risk of the platform being percieved as low value. The only case where such a tweak might make sense is a per-play license that exceeds the cost of maintaining an internal title. But we need to ask: Just what kinds of independent developers are we talking about there? Have I missed an entire genre of independent games that are lower cost and direct competitors to Madden, Need for Speed, Assassin’s Creed, and Battlefield? Platforms should be trying to buy these developers if they exist, not license from them.

Financing is the final concern, but I’d like to reframe it into more than an assumption that revenues drop. If an individual title’s influence on a subscription choice is low, licensing terms will be unfavourable to developers. Reduced revenues mean future projects of similar scope are less profitable, making investment less attractive. Alternatively, since projects are largely self-financed budgets necessarily shrink. But project scope is not fixed. Profit margins can be restored by making smaller games or reusing existing tools and assets. If the resulting games are too small, platforms will need to pay up. This is a different environment for developers, but not necessarily a hostile one.

These concerns aren’t baseless, but are they a threat to developers beyond normal shifts in the industry? Does the fear that developers will face lower revenues outweigh the concern that Fortnite is successful at the expense of other games? Is the potential for algorithmic tweaks a greater threat to discoverability than the shift to Steam Direct? Perhaps we are better served in viewing subscription services as a shift in gaming that carries opportunities along with threats.

Differences under subscriptions

Here is a good article on Eurogamer about game endings. It charts the progress of, well, progress (like the title says), guided by commercial context and technological constraints. Every one of these changes could have a “threat to developers” article written about them, and in a sense they would be right. Arcade machines are not what they once were. Saving permits players to ruin the experience for themselves. MMO’s really do require investments unavailable to independent developers. Steam Direct has meant it is harder to get your game noticed than before. And yet gaming has never been better and more people are making them.

The printing press did not usher in an age of peace and quiet contemplation, but we do not consider that a vindication of its critics. Recognizing the difficulty at appreciating the benefits of a given innovation, how might we think about changes that might come from a broad adoption of a subscription model?

If games are bought outright or licensed for a term (as opposed to a per-play like on music services), this seems to bring a degree of certainty to developers. Developing around expected revenues from a license is a less uncertain prospect than trying to triangulate tastes, price, and attention into a successful release. Furthermore, just as streaming has not replaced Blu-Rays (or even DVDs), we’re more likely to see a hybrid future. Licenses can provide a cushion for a less successful release, or even give a game a new lease on life as is already happening with Humble and Twitch Prime.

The consumption behaviour of players in a subscription service will change. Marginal costs for new games on a subscription service are zero. Players will no longer need to ask “Is this game worth X?” before playing. Not too long ago we were talking about the death of the single player game. Removing the implied price/time ratio puts single player back on a level playing field. What matters is if the game is attractive enough to play and if the time spent is worth it.

Even the GI.biz threats carry their silver linings. Tyranny, Orwell, The Witness, and This War of Mine, are nowhere to be found on the Steam Top 100 but are on Origin Access (Top 70 no less). Even if platforms were to prioritize their own games, third party games can be compared across platforms. This doesn’t just provide an estimate of how well a given game is doing, it identifies niches for particular platforms. Instead of betting everything on ‘charting’ on Steam, a game can leverage success on one platform into launches on others.

There are also clear negatives. Subscription services will likely reintroduce gatekeepers. This benefits incumbent developers, but means we miss out on unexpected successes. These games are good candidates for an ownership model or a niche platform. Signing with a subscription service may just as easily become an aspiration for developers instead of a necessary evil.

One way to gain perspective is to ask if we were to invent the games industry again, would we choose the status quo we seem so attached to? We’ve switched to digital distribution, but in some ways we’ve just replaced walking with clicking. We still buy the product, and the expansion packs are now smaller and cheaper. MMOs and Free to Play are notable and successful exceptions, but the majority of games still follow the old model. Is there any reason to see this as any more natural than an arcade?

One major shift in perspective a subscription model will inspire is a view of games as complements instead of substitutes. It’s hard to see the purchase of a game that’s not yours as beneficial on a storefront. Games in a subscription model will benefit from players being able to switch between games without cost. This is an environment that rewards faster, innovative work.

The benefits and detriments of a subscription model are far from certain, but we should resist the temptation to see it as a threat over a technological shift. Developers who can work on a budget and produce unique experiences are well positioned for a future where players can experiment without cost.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.

L’Affaire le Laissez-Faire

A little over a month ago Valve issued warnings to the makers of adult visual novels and others which became publicized resulting in controversy and uncertainty regarding the status of games with sexual content on Steam. A few weeks later Valve reversed this implied decision and announced that they would open the store to anything that they “…decide [is] illegal, or straight up trolling.” A lot of commentary seemed to react to, or at least occupy the same space as, Leaf Corcoran’s (of Itch.io) response that the new hands off approach was “ridiculous” and to keep “malicious, derogatory, discriminatory, bullying, harassing, demeaning content” off of Itch. Gamasutra summarized a number of reasonably high profile comments here.

Given that this news is already a month old, the best I can offer here is a room temperature take, but I’m struck by how the focus has been on free expression when I don’t think this is really what is at stake here. For all the effort to form two poles between the Itch and Steam approaches, the main differences are technological. Before weighing in on any of the commentary, I’d like to begin by examining possible reasons for Valve’s actions.

The economics of keeping games on Steam

Valve’s announced laissez-faire approach to Steam should be viewed in light of the original news that there was a coming crackdown on sexual content in games, which invites us to ask why Valve might want to take a game off of its platform. Valve has a pretty good deal going with the Steam where games pay $100 to be listed (recoupable after $1,000 in revenues), and they take 30% of revenues, meaning their variable costs are matched by increases in revenues and their slotting fee ensures the developer is on the hook for at least some of the on boarding/vetting costs of a game that does not sell.

Since the on boarding costs are sunk, why would Valve ever want to stop selling a game? There are likely two sets of explanations: Costs directly relating to the title itself, and knock on effects from a certain class of product. Direct costs are fairly intuitive to understand. For instance, Grand Theft Auto (GTA) seems to be a perennial favourite when it comes to identifying entertainment products bringing about the decline of civilization and so carrying that title also means assuming the liability of angry people complaining that you are carrying a product that brings about the decline of civilization. In physical stores these encounters are diffused among different locations and staff. For a digital storefront they are taking on the sum of complaints which will be directed to their staff who could be tending to other requests from other games, and are doing so on the internet which tends to alter the character of the interaction. Nobody would seriously consider removing GTA from Steam, but dealing with the associated complaints do represent a real cost for carrying that particular game over a less controversial title.

Indirect costs are a bit easier to understand when considering a class of games. A common complaint about Steam now is the discoverability problem: Getting a game in front of its audience when more and more titles are being released. Some genres take less time to create games for and so it is to be expected that there will be a proliferation of low-cost titles entering the market on a daily basis. The indirect costs can be summarized as follows: Valve may take 30% of sales, but if the problem is severe enough that customers are shown games that do not result in sales over games that would have, everyone loses. These costs can be compounded by discouraging developers to release on steam or even create the game in the first place, though it’s doubtful we’ve reached this point (this will be covered later). Forgone sales are one of the more quantifiable indirect costs, but the main point in considering both costs is to show that some titles will be more costly for Valve to carry than others and that it is likely there is a class of product that can be identified as such.

In light of these added costs we can now consider Visual Novels. Visual Novels are relatively low-cost products with a straightforward production model. So long as the game can sell more than the costs of obtaining art, words, and someone to glue it altogether, it makes lots of sense to put it on Steam, and the tools built to create the first game (say a script that links certain phrases with displayed character emotions or a set of templates to produce characters faster) can be reused, lowering the costs of future games. None of this is to make a quality judgement, as there are clearly people who  enjoy these games, and some of them (Dream Daddy, Hatoful Boyfriend, Doki Doki Literature Club) seem to have appealed to players who do not normally engage with this genre, but this is a recipe for overproduction and the potential crowding out of other titles.

A noticeable number of Visual Novels also follow in the fine tradition of independent and European films trying to sell into the US market. Hollywood has an edge on production value and spectacle, and so rival offerings need to offer something to entice audiences away. While I’m sure there are defensible aesthetic reasons for doing so, it is not a coincidence that these films have a fairly high incidence of the leading lady, sometimes the leading man, and sometimes everyone else taking their clothes off. Sex doesn’t just sell, it’s high margin. As with film there are plenty of Visual Novels that do not fit this description, but there are many that do and by their very nature are the most attention getting. Whether this is because the Visual Novel field is crowded or it is just one of the conventions of the genre, a product in this space is more likely to contain sexual content than a product in another genre.

Returning to our evaluation of costs, it’s pretty clear to see how both the direct and indirect costs can be higher in the case of Visual Novels, specifically adult ones. If discoverability is a problem, the economics of Visual Novels are such that we’d expect them to be a larger contributor. More importantly, the higher incidence of sexual content means that Valve will need to spend more time vetting entries to ensure compliance, and likely committing to additional costs as patches will likely command greater scrutiny than a game like Opus Magnum. Finally, it is likely there will be a higher incidence of reporting/complaints with this kind of game, either due to hostility at the lack of quality or with regards to content. Whether any of this seems fair or not, it is understandable for a company like Valve to turn around and say that these games are more trouble than they are worth and to reevaluate their place on Steam. The focus on games with sexual content suggests that Valve was aiming to curtail simple games whose primary draw was titillation, regardless of their profitability. The subsequent focus on the content of these games (as opposed to their volume) is unavoidable, as it seems to have been the only condition for reevaluation, but the motivation here is not personal dislike on the part of decision makers at Valve but the fact that this content was associated with other costs that Valve no longer wanted to bear. This distinction is important as it explains why The Witcher 3 or GTA V did not face the same scrutiny.

The economics of opening up Steam

Just as games have indirect costs, so do policy decisions. A vocal subset of gamers were upset, but this doesn’t carry very much information nowadays. Likely more concerning to Valve were the expressions of uncertainty on the part of game developers. As Amazon, Netflix, and Google will tell you, content is king, and so Valve has a vested interest in being the first place developers think of when it comes to distributing their game. There are strong network effects at play with Steam, and while they can be difficult to unravel, they can do so swiftly. If the speculation in the preceding section was at least somewhat correct, then the uncertainty of the developers who have already been chosen for removal is no big loss, and it’s debatable if this can be read as “First they came for the adult Visual Novels and I said nothing…”, but the publicity resulting from the reevaluations serve as a reminder for something that has always been true: A ban (de facto or de jure) from Valve can destroy your company. A large number of developers are not just big unhedged bets on the PC gaming market, they are bets on Steam itself. If your business model is built around releasing lots of small, low-cost DLC, Valve is one submission pricing decision away from making it unaffordable, and the announcement can come right in the middle of production. If you made small games that can be completed in under two hours, guess what the refund policy did to your revenues. I’m not sure if Valve has ever done anything quite so heavy handed as what was implied by the reevaluations for sexual content, but introducing this level of uncertainty will leave firms wondering if their next title should maybe be a mobile game instead.

The uncertainty created by Valve’s decisions is something of their own making given that they are so tight lipped, but it also made the announcement of the new plans all the more noteworthy. A statement from Valve is also a useful point for a summary since everything above has only been speculation on news about Valve. We know firms were contacted regarding the reevaluation of their games for content and that this became a fairly prominent news story. From Valve we know they were responding to that public discussion, that they are changing course, they now prefer the laissez-faire approach and will collect their 30% while only intervening in the case of illegality and trolling. We’re left asking if this is a good decision and what the consequences will be. Following our reasoning above, this essentially means that the uncertainty felt by developers after the news about reevaluation was more costly than the decision to leave things on the platform. This seems plausible seeing as developer uncertainty can be an existential threat to Steam in a way discoverability is not, as well as the fact that Valve privately contacted the developers for reevaluation but publically posted when responding to the media coverage of that decision. Valve’s post does also spend a lot of time talking about discoverability which inclines me to think that this has always been the focus.

Had the story not been public then eliminating the biggest problem spots (cheap titillating content) was seemingly the lowest cost way of clearing the channels and helping discoverability. The uncertainty created through the subsequent publicity was more costly than the gains from improved discoverability and so the decision was reversed. However, reversing the decision doesn’t solve the original problem and so the second best option is to invest in technology to help mitigate the discoverability problem. The opening of the platform adds another dimension to the problem, but I suspect in part it lessens the burden on the people handing reports and curation as the only real decision rule will be the Valve defined category of “Trolling” which may not reduce the volume of content complaints but can reduce responses to boilerplate “Valve does not curate…” messages.  The case for Valve’s reversal being caused by developer uncertainty is also strengthened by the fact that Valve merely announced the new policy with later implementation, while their usual pattern has been to implement then announce (even if it’s meant letting a negative story fester for longer than we’re accustomed to from other companies).

What does it mean to have an open Steam? The economist Joel Waldfogel has a good and readable summary on the effects of digitization on music, movies, books and television. At the risk of oversimplifying, Waldfogel’s conclusion is that digitization has created a golden age for these media and this is due to projects that otherwise would not have been realized but for the fact that digitization has lowered costs. Conclusions like this normally inspire a dismissive “Well that’s obvious” (if it helps, you’re very smart and I’ll be sure to ask you next time), but analysis like this is valuable because it helps us understand the mechanisms that brought about the outcome. I’ll take a point from Waldfogel and present it as a puzzle: Should the effect of lowered costs of production translate into marginal gains in niche areas, or will it produce unexpected hits that produce substantial gains? Most readers are likely going to know of some indie successes and so say that it will produce hits, but this does not harmonize with the ‘obvious’ conclusion that digitization produces a golden age. To see why consider that under the old model there would be gatekeepers who evaluate a given project and if the returns exceed the cost of production then they would approve it. Lowering costs allows more projects to get made, but these are projects with returns lower than the previous threshold, meaning we should see a proliferation of niche projects, not hits (which would have been produced under the old system). Where do the hits come from? The hits come from the fact that gatekeepers aren’t that good at predicting future outcomes for present day production and so lowered costs are allowing more hits to be realized outside of traditional channels. This is observed in the data through the growing share of self-published/independent/non-traditional projects in revenues or best seller lists. Since the quality or success of a given product is something of a random draw, the gains from allowing more products on Steam have an outsized return even when some of the ex-ante losers turn out to be ex-post losers.

If we think Waldfogel’s analysis has applications to gaming as well, then distribution platforms need to be better at predicting final quality, or the platform should be open as possible to projects that previously would not have passed gatekeepers such as Greenlight or a large publisher. But Steam already seems to have achieved this through the Steam Direct program. Morgan Jaffit’s (Defiant Studios head, makers of Hand of Fate 2) analysis indicating more winners and more losers seems to be exactly in line with the experience of other creative industries as reported in the Waldfogel article (though the an increased share of ex-ante losers in revenues is something of a matter of speculation given the notorious difficulty of estimating sales on Steam). This is why it is important to recognize the mechanisms through which the gains in other media were made, since these gains rest on the unpredictability of outcomes and the failure of traditional gatekeepers to manage it. The most relevant question stemming from the new lassiez-faire approach is whether or not quality guidelines are analogous to gatekeepers in terms of evaluating the value of products. If you feel that they are an impediment to high value products being realized, then Valve’s decision is a good one, will likely be profitable, and we’ll all benefit. If you feel they are largely irrelevant (possibly even orthogonal) to a project’s value, then the best case scenario from this decision would only be the incremental gains that will come from incorporating niche products.

Another way of examining this question is whether or not there is such a thing as a pornographic masterpiece. That is, is there a work of pornography (realized or unrealized) of genuine artistic merit that we have suppressed through these guidelines that would achieve a level of appeal beyond its traditional audience? Most definitions of pornography deny any aesthetic value, but if this is the only argument then we are simply begging the question. The same might be asked of hate speech (is there a work of bigotry of such sublime beauty that failing to publish it would impoverish our culture?), though this would certainly be illegal in some jurisdictions and so still banned. While there have been independent successes outside of Steam (Minecraft or Dwarf Fortress for instance), none of them seem to be products that would have failed to pass the Steam Direct system. These exceptional cases are always dangerous ground to tread on, and so it is possible that the unavailability of traditional commercial channels really has prevented a pornographic masterpiece from being realized in gaming, but it doesn’t seem like a product has emerged that has achieved universal acclaim within its own niche, let alone as a contender for mainstream success.

The reason we care about whether or not the gains from removing content barriers are incremental (i.e. niches) or the realization of mainstream hits is that it is what we should measure against the cost of lowering these barriers. For this we return to the discoverability problem and see just how far apart Itch and Steam really are.

The costs of discoverability problem

If we believe Waldfogel’s analysis applies to Steam then Steam Direct has produced gains above and beyond the incremental benefits stemming from lower costs for games. However, we started with the speculating that the impetus for reevaluating adult visual novels and similar games was the discoverability problem brought about by implementing the more open system. Waldfogel briefly addresses this in the “more research is needed” section at the end, though the idea of information cascades (the Bikhchandani, Hirshleifer, and Welch 1998 reference) does seem to be in line with the “big open” strategy employed by recent successful releases. Waldfogel’s summary does suggest that the cost of search (which we’ve termed the discoverability problem) may not increase, but I am operating on the assumption that this is not the case for games given that developers (who are better informed than I am) describe it and Valve has dedicated resources into mitigating it (and they see almost the entire market).

All of this may seem a bit abstract, so here’s an illustration of what this means. Suppose everyone had an app like Tinder which contained true information about potential romantic matches, but was optional to use and had some search preferences. Let’s say the search preferences start with the default setting of people who are very similar demographically to you and if the love of your life is present in this group, you will find them within two or three swipes. The next setting will put you in a pool of likely matches which, if it contains the love of your life, will find them in 7 to 12 swipes. Finally you can include literally everyone but you will not find the love of your life until 400 to 328,922 swipes. The growing number of swipes represents the increasing search cost as we grow the pool in search of that special m’lady or m’sir. Our choice of search setting is going to depend a lot on our expectations of how likely it is we’ll find our match in each of the groups. The cost difference between the default and second option is more than double, but is broad enough to be pretty appealing to risk averse people who want to maximize their chances. The literally everyone option is so costly that even if we turn the chance into a certainty, we may prefer to reserve it as a last ditch option (or abandon the app entirely).

Switching to Steam Direct seems a bit like switching to the second option in the example above. It does increase the cost of search, but the reward is worth it, especially if we’re looking to expand beyond what’s familiar. But we are unlikely to want the pool to increase indefinitely since the search costs don’t merit the increased chances of finding the love of our lives (game or person). If the benefits of removing content restrictions are analogous to the ones obtained through the reduced costs of games, then we should be willing to entertain higher search costs, but if the benefits are limited to the incremental gains of niche products then we may not willing to accept any additional inconvenience.

A key difference for Steam is that at the moment we are collectively setting one search preference for everyone, and so we’re deciding if we want to go from the expanded category to the literally everything one. It’s true that some people are not able to find the love of their life from the current choice (maybe this explains the desire for pornography), but the inconvenience to this group is considered the lesser evil compared to the universal inconvenience faced by the entire platform and its attendant frustration and likely abandonment by some users. To return to games specifically we can characterize search costs on Steam as the time it takes a customer to find a game they like, the forgone opportunity of Steam to make a sale by serving up the wrong recommendation, and the equivalent lost sale to the developer.

Valve’s new approach involves investing in technology to help lower search costs, including allowing them to restrict the pool of potential games they are exposed to. I don’t think anyone really knows how successful they will be at it. If Valve succeeds, then we will all benefit through faster matches to games we enjoy the most. If the system doesn’t work as well as they plan, then I suspect we’ll see a few more applications of the “trolling” criterion to keep users from encountering offensive content they wouldn’t buy in the first place. When looking at the Steam Direct guidelines, it becomes apparent that Valve hasn’t really given up a lot since half of the rules are already legal matters, and the remaining can credibly fall under a the trolling criterion. In fact, Valve offered some clarity on the condition and used a banned school shooting game as an example of what would not be permitted.

This brings us to Itch. Itch’s submission guidelines are extremely permissive, a fact that tends to be lost when you see people who have never used the site complaining about censorship in response to its founder’s Tweet. Itch also does not have the resources that Valve does in terms of being able to automate the curation of a given user’s pages and so they are less likely to propose a technological solution to the problem. Itch faces the same issues of discoverability and desire to maximize revenues as Valve but needs to employ solutions that reflect its capabilities. It is difficult to find a more direct solution than saying ‘don’t put this kind of stuff on our site and if you do we’ll ban you.’ If anything this is likely more a timely reminder of Itch’s existing policy rather than any kind of policy shift (so far as I can tell, the rules have not changed substantially since Corcoran issued his tweet or, indeed, years before he did). In fact, based on the clarification Valve offered to the definition of trolling, there seems to be very little difference between Itch and Valve in terms of what they consider (or will consider) unacceptable on their platform.

If it turns out there are substantive differences between Itch and the future Steam, it will be an interesting experiment in terms of whether or not these content guidelines actually do prevent the realization of good games. At the moment Steam is not my go-to source for interesting and unknown games but Itch is. The free speech warriors reacting to Corcoran’s tweet seem not to have been interested in the relative freedom of Itch’s platform to Steam Direct and Greenlight, and Itch has done fine without them. Gaming as we know it has also not collapsed under Valve’s relatively more restrictive policies, and Itch’s ban buttons are not likely to steer the industry into some kind of Hays Code. In truth, most if not all of the percieved difference is likely explained by Corcoran’s directness and Valve’s vagueness.

It’s fun to wrap oneself up in the illusion of a principled stand on free speech or against intolerance, but there really isn’t a lot for either side beyond rhetorical posturing. People who want to see the Valve decision an unmitigated win for free speech need to reconcile that with Valve’s follow up comments which seem to be banning exactly the kind of titles we’d expect a reasonable set of content guidelines to ban. Likewise, Itch’s permissive submission policies do not seem to have reduced the storefront into the dumpster fire predicted for Steam, nor has it seemed to produce the controversial hit that has demonstrated the outsized welfare gains from removing content restrictions. This is why I think the difference is merely technological and if anything Steam is shifting closer to Itch. The small scale experiment of Itch also suggests that the gains from loosening content guidelines are incremental for their respective niches rather than an opportunity for previously censored hits to finally be realized.

Seeing the realization of Valve’s promises will make all the difference, but my own expectation is that this decision will result in much needed curation tools being made available to users and developers, pornographic content will be made available (though the most egregious examples will likely still be banned) but will need to be opted in, and there may be some improvements made to the recommendation engine. Because the new policy will likely mean the entry of niche products, a ‘first do no harm’ approach would mean that most of the changes should be imperceptible to users, since these are products they have no interest in buying in the first place. So long as Valve is able to ensure these niche entries aren’t a nuisance to the rest of us, it’s hard to see this move as a bad one, but it hinges on both the new entries not being as bad as the worst that people assume (the hate speech case) and Valve being able to segment the user base in a way that doesn’t cause games we would have otherwise enjoyed becoming invisible to us. Of course, if Valve finds this problem is much more difficult than they anticipated, they have left the details open enough to make the changes modest and we may find the store isn’t all that different from the way it is now.


Note on affiliate links: I have an affiliate status with GOG.com for which I am given a portion of sales for traffic I drive to the site. The inclusion of a given title is for illustrative purposes first, but when it is available on GOG I will provide such a link. Naturally I encourage you to do your own price comparison or buy on your preferred platform. I include, on occasion, affiliate links from other broadcasters to support people who helped me in a given post or the cast in general. For this article, Humble Links support the streamer JessyQuil.