I do want to ask you about 3DO and Doom, but before we get into that: What would a market crash today look like?
A crash today would be -- which is already in many ways happening right now.
The first stage is the race to the bottom. And that is because everybody is so desperate for market share, they're trying to either sell or give away the games. We're already in this free-to-play trap in which, well, nobody wants to buy a mobile game -- nobody wants to give you money for it. I mean, if I coulda made a really great mobile game and I think it's worth $19.95 and I put it up there, I might sell 10 copies. Because the market's so full of very high-quality, free games. And a majority of people playing these free games will never pay a penny.
There's a phenomenon called "the whales" in which you put a free-to-play game out there and then there's this tiny percentage of the population -- it's something like .2 percent -- who are the people who will start buying the crap that's in the game. And they will buy it to the point of several hundred if not thousands of dollars. It's those people that are funding the development of the game and the studio.
I remember there was a talk about that at GDC a few years ago. But those aren't really the talks at GDC, I feel, people pay attention to.
Yup.
Unfortunately, it makes it hard for anybody else to say, at least on mobile, "How in the world are you just gonna do the old business model where I make a fun game and you pay me for the game and then you play the game and have fun?"
And look at on Steam. Right now, the Steam summer sale is actually hurting indies because, like, I would put a game up there and I would ask $39.95 for it because it's a really nice, big, long game or a medium indie game should be, like, $19.95. But people would say, "Hey! That's a nice game, I really like it. I'll put it on my wishlist. And when the Steam summer sale comes around where I can get it for $5 or $10, then maybe I might pick it up, but then again I've got all these 5 kajillion games to choose from."
And at the same time, it's like, even games that the AAA titles are last year, I could pick them up for, like, $9.95 or heck -- even, I picked up some Tomb Raider games, like, a trilogy for $3.99 on the Steam summer sale.
I did that, too.
So, how can I compete with a brand new game that may not have the production values of a modern Tomb Raider where they're charging $3.99 for it?
That is the crash of what's going to happen, is you're going to start seeing -- from the consumer's point of view, it's awesome because it's going to be all these games and they're all really cheap and you can stock up on titles like crazy.
Yeah.
So, the consumers are loving it.
But the developers -- you're going to start seeing developers drop like flies. Indie developers are just going to be leaving the industry because they can't make any money. You're going to see the real tragedy when major developers and major indie developers are not making any money and they're dropping out or forcing themselves to be sold. Examples are like Gas Powered Games. They were trying to do a caveman game on Kickstarter because he couldn't get anybody to give him a contract and he ended up having to sell his company to wargaming.net.
But, you know, all you do is look at Gamasutra and you'll see pretty much every week another studio is closing. And in many cases, especially if it was an indie studio, it's usually because they made a game, they put it out there, they just weren't generating enough revenue to sustain their operations and so they closed.
Once it gets to a critical mass in which the consumer is now going to expect games to be $9.95, the crash is really gonna happen when a blockbuster game, which announces for $59.95 -- people just don't buy it. And their answer when you ask them is, "Oh, it looks like a great game, but you know what? I'll wait for the Steam summer sale or I'll wait for it to be discounted because I'm so busy playing all these other games I just bought that you know what? I don't have time to play GTAVII or whatever it is because I'm still busying playing GTAV with all the expansions and all the DLC for $10."
And that's when the companies are gonna start realizing, "Hey, we can't spend $125 million to develop a game because we only sold a million copies at $9.95."