I’ve heard about this book twice now – just now on Slate and previously All Things Considered – and have been wondering about its application to the games industry. I think while the premise bodes well for us, it also indicates we have some work to do.

The Long Tail

The Long Tail: Why the Future of Business Is Selling Less of More

Beginnings of the Long Tail According to NPR the original concept of the long tail was first conceived when the author, Chris Anderson editor of Wired, was talking with the company “ECast jupebox” that, like ITunes offers a large number of songs over the internet. He had originally expected that their sales would follow the same sort of 80/20 rule that cds, books, films, and other traditional media follow. The 80/20 rule posits that 20% of your products make about 80% of your profit. Chris Anderson assumed, based on this rule, only some small percentage of the songs offered would ever sell. In fact, what the company revealed was that something like 98% of their songs had sold at least once. In fact, the more songs ECsat added the more songs they sold – and always in that high 98% range. Traditional outlets don’t normally offer a wide range of product because they only have limited shelf space – they both create, and are beholden to, the 80/20 rule. If a retailer wants to maximize profits they have to devote their shelf space to those products they know will sell well: that limited top tier of product. Go to most any game store and you can see the problem. There just aren’t that many games on the shelves. Try to find good older games, and you can only hope someone has sold their beloved copy back to the store. Wonder why game boxes shrunk in recent years? Its wasn’t the cost of the box; it was the cost of the space.

Game sales are worse than 80/20

For games, an incredibly tiny of number of products – the top 10 games – get truly the vast majority of sales. I wish I knew the exact breakdown but I believe its some thing like 90%. This doesn’t make it a 90/10 rule per se – but its well beyond the range of healthy.

A worse than 80/20 industry sales ratio coupled with the extraordinary cost of making breakout video games has been cited in the death of many a company – my own included. Yet industry pundits seem to feel it will only get worse before it gets better.

Does every game needs to be a blockbuster to be successful? No, especially not if we can get production costs down.

The niche market

In his book, Chris Anderson, differentiates traditional retailers from electronic retailers. The curve depicted by Slate shows sales dropping as a power curve. Yes, there are blockbusters in online sales, but there is also a long tail of sales behind those top sellers. No product sells zero; there’s a consumer available for every product that gets created. Anderson suggests that this indicates the presence of niche markets. Groups of consumers will buy specialty titles, the sales of which, when taken as a whole, represent the buying power equivalent to that of the blockbuster titles.

I, for one, am a strong believer in the power of the niche market. What are indy games shooting for if not the niche markets? What are games like Psychonauts and Grim Fandango, Planescape:Torment and Fallout, aimed at if not the adventure and RPG markets respectively? None of them were ever top sellers, but as long as they sold enough to cover their respective investments and enough to pay their employees, does it matter? The developers made, consumers played – that should be enough.

Decent niche games in recent years have, however, seemed few and far between. Psychonauts barely made it to market, and RPGs of the old BioWare ilk don’t seem to be made by anyone anymore. This is precisely because of our skewed 80/20 market – what publisher wants to take the risk on something that might cost them a lot but get sell only in small numbers?

On the retail front there are several trends that might make niche markets available.

First, more people are buying games. Traditionally games themselves were a niche entertainment market. Now that they are coming into the main stream there is the possibility for viable sub-markets with then the industry as a whole.

Then there’s the Nintendo DS and other similar games-as-toys markets (eg. cell phones). I, for one, love the DS. Honestly: I haven’t bought games in this frequency since about 15 years ago – back in the Atari and Nintendo days of youth. I’d like to think that’s because the DS games are fun, imaginative, bite-sized chunks of entertainment with a good price point – and while I’m sure that’s true I suspect it only normalizes game sales to bring them in line with other media. While its true I’m buying from lower in the sales charts than with I do with PC and standard console games there’s actually no particular reason why DS games should break the mold of traditional retail sales of music, books, and movies. The DS simply makes the game market slightly more sane.

What about online services such as Steam, XBox Live, and the Wii Virtual Console? Will these sell games to the coming niche markets? Time will tell, but I think we should expect the answer to be: yes. Perhaps the average consumer won’t buy Halo 5 online, but we don’t need them to Let blockbusters be sold over the counter, and all the smaller and slower sellers sell online – that would match the current music business nicely, and would let niche markets flourish.

Game production

Yes, more people are buying games; yes, the DS should bring sanity; yes, online sales should break open the market – but that won’t make games immediately more profitable. Developers have to make games profitable in order to survive. For the market to normalize and for niche markets to really take off we need to find ways to make game production cheaper and more predictable.

There are some signs that’s happening now.

At long last we have decent off the shelf components for audio, ui, physics, and animation – some of them are even open-source and therefore lie within the grasp of smaller developers. There are now some decent off the shelf engines available for making genre games – they are expensive right now but lets hope their price drops with time. Even Microsoft is doing its part by pushing XNA – its in everyone’s best interest to make the game industry more stable.

That said while these developments are good we still need to take proper advantage of them.

On the vendor front: We need more off the shelf components for basic tasks. The makers of commercial engines need to take advantages of these components to avoid monopoly style lock-ins. Microsoft needs to stay true to its word to make XNA available to all developers not just those developing for Microsoft platforms.

From our side: Teams need to get better at scheduling. Developers need to get better at prototyping. Programmers need to publish successful software engineering techniques. Artists need to publish more texture, mesh, and animations libraries. We all need to search for off the shelf components and use them whenever appropriate.

These are just a things we can do to improve the industry – there are undeniably many more.

Whether these, and similar, improvements are done freely, through open source, or commercially, through licensing and support, ultimately wont matter as much as whether these things are done at all. Game developers can take advantage of the coming long tail but we need to help each other in order to help ourselves. I, for one, plan to go pick up the copy of the book – if nothing else it seems like interesting reading. I am also, however, preparing myself that we – yes, myself included – have a lot of work to do before it applies to games.