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Weaker subscription deals have hit indie publishers, says analyst

gokurho

Member

Smaller subscription deals and the underperformance of certain titles have had a severe impact on Devolver and TinyBuild, says stockbroking firm Goodbody.

Both companies floated at the peak of the games business in 2021 and have seen their share prices plummet over the past two years. Devolver has seen its share price drop 92% since its peak in January 2022, while TinyBuild's has fallen 95%

"We have seen from Devolver and TinyBuild that subscription is under pressure at the moment," says Patrick O'Donnell, technology and video gaming analyst at Goodbody.

"The cheques coming from Sony and Microsoft are just not as big as they were. And that creates problems if you're concentrated on that side of the market.
"TinyBuild, of all of them, was most exposed. Devolver was exposed, but not quite as much."

The recent drop for Devolver followed the firm's decision to delay a number of big titles out of its current year. It has also suffered from poor year-on-year comparisons, as the publisher delivered a hit title last summer in Cult of the Lamb.

"Expectations for Devolver this financial year were $115 million to $120 million, and they've had to go back to $90 million. The majority of that is the delay of big releases into 2024. I think those are decision for the right reasons, although investors won't like it in the short term.

"Also, although their back catalogue is resilient, pricing is down 5%, and that’s hurt their EBITA. And they don't have the big games they need to offset that anymore."
 

Punished Miku

Human Rights Subscription Service
Devolver didn't really put much on Gamepass this year besides Disc Room, which sells for like $7. McPixel 3 also, which sells for like $5. It was always going to be a decrease this year.

Sounds like they had multiple delays; Plucky Squire, Anger Foot, Skate Story. And none of those are even announced for subs.
 
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RoboFu

One of the green rats
The major problem with Indies is the lack of curation.

Every indie title gets treated the same which devalues indies over all. You want every dev to have a chance to sell their games but there are companies out there who dont care about games and just flood the market with cheap shit. those games get the same exposure.
 

Magic Carpet

Gold Member
Too many low quality Indies. They need to start having more for the basic experience. Music, Voice Acting. No more 8 bit pixel visuals. You’re not standing out. Use the memory of your PS5. Stop creating your levels as if they are playing on 1999 machines With loading screens every time a character walks off screen.
 

Tsaki

Member
Sub growth has flatlined so the money put on it by the platform holders has to be shared between 1st and 3rd party. The higher number of 1st party games (as well as bigger budget) get into a service, the lower the share for the 3rd parties and especially the indies. Add to that the costumers being accustomed to waiting for a game to "inevitably" come to a sub service and the indies will see lower direct sales from that as well. I've seen too many comments: "Looks cool! Will play when it comes to Game Pass"
 
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Dane

Member
I dunno what they were after with the stock market, indie games are more about doing what they like than YoY increase at force.
 

diffusionx

Gold Member
subscription gold rush is over. look at what it looks like on the tv/movie side, the entire business model is in freefall. A business model where you spend billions on content acquisition and give it to people in exchange for $10 a month is just a disaster. Like Starfield is a $200-$300 million game, Activision spends at least that on COD every year, and MS wants to release four+ of these shits a year, it just doesn't add up in a subscription world.

is Epic still handing out endless fortnite bux for exclusives upfront or have they switched gears to that 100% revenue thing?
 

Three

Gold Member
Subs aren't a charity. You guys look over their 2023 list and tell me what should have been aggressively bid on.

They didn't have shit this year. Several of these are also only PC / Switch.
That's kind of horseshit isn't it. The Talos Principle 2 and Plucky Squire would be high value releases to bid on and they can get their deal that affects their stock. Most of the hype built for a game are usually from these deals anyway so the fact that they don't have it makes their games more obscure. The problem is that they are not putting in high enough bids anymore (and not just at DD) because who would have thought they'd rely less on indies once they had their own big first party games. Not some indie developers it seems:

The idea is that MS are relying on indies to fill out their portfolio, but once this portfolio gets a steady stream of first party content that's more popular and more profitable they're less likely to give indies coverage/exposure or moneyhats.
 
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jm89

Member
Writing is on the wall and not just for indies.

With more first party games in the pipeline for MS, third party deals on gamepass probably won't be as lucrative.

Third parties who signed deals with MS congratulations, you've helped MS train the xbox user base not to buy games.

So you've helped crater your sales on xbox and now won't get a massive handout by MS.

200w.gif
 

Punished Miku

Human Rights Subscription Service
The Talos Principle 2 and Plucky Squire would be high value releases to bid on and they can get their deal that affects their stock.
I doubt they want to put either of these on subs. They will likely be breakout hits.

The article literally says they turned down large sub deals.

"You have to look at the calibre of Devolver. The track record and quality of their products are almost always good. They have that hit-driven potential, which they've shown multiple times. That will be one of the key factors that will keep institutional investors in Devolver. Ultimately, they're protecting their IP. They did mention they had turned down some big subscription deals."

Obviously they were offered money for those two games. I mean, McPixel 3 is on GP.
 
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Montauk

Member
Sub growth has flatlined so the money put on it by the platform holders has to be shared between 1st and 3rd party. The higher number of 1st party games (as well as bigger budget) get into a service, the lower the share for the 3rd parties and especially the indies. Add to that the costumers being accustomed to waiting for a game to "inevitably" come to a sub service and the indies will see lower direct sales from that as well. I've seen too many comments: "Looks cool! Will play when it comes to Game Pass"
Writing is on the wall and not just for indies.

With more first party games in the pipeline for MS, third party deals on gamepass probably won't be as lucrative.

Third parties who signed deals with MS congratulations, you've helped MS train the xbox user base not to buy games.

So you've helped crater your sales on xbox and now won't get a massive handout by MS.

200w.gif

And none of this was hard to foresee as a potential problem.

I’ve been worried about the potential implications of GP for the games industry and for the sustainability of GP itself since it was announced.

In a relatively short time it has transformed the way many normie gamers talk about games.

It is blatantly obvious that it is causing too many people to devalue games in their minds.

Training gamers to see games as worthless “content” that has almost no value and that they don’t need to engage with properly because they haven’t directly paid for it, seems unwise.
 
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Three

Gold Member
I doubt they want to put either of these on subs. They will likely be breakout hits.
What you're saying doesn't make sense though. You're saying they don't have anything worth aggressively bidding on and then when presented with games that could be aggressively bidded on you say they're worth too much. They would put anything on a sub if the price is right those are two releases that could have very agressive bids. Massive deals worth a lot.
 

Punished Miku

Human Rights Subscription Service
What you're saying doesn't make sense though. You're saying they don't have anything worth aggressively bidding on and then when presented with games that could be aggressively bidded on you say they're worth too much. They would put anything on a sub if the price is right those are two releases that could have very agressive bids. Massive deals worth a lot.
The topic is not all black and white. The headline also mentions they aren't getting good offers, but then text I just quoted shows they did get big offers and turned them down. It requires a tiny shred of nuance to understand. Pretty simple stuff. They want to gamble on high sales for those two games since those are their two biggest games.
 
Writing is on the wall and not just for indies.

With more first party games in the pipeline for MS, third party deals on gamepass probably won't be as lucrative.

Third parties who signed deals with MS congratulations, you've helped MS train the xbox user base not to buy games.

So you've helped crater your sales on xbox and now won't get a massive handout by MS.

200w.gif
It's also killing their perception for when they do go to playstation.
No one is buying games like High on Life on Playstation cause gamers don't want to pay $60 for what was given "free" on gamepass.
 

GHG

Member
So you've helped crater your sales on xbox and now won't get a massive handout by MS.

200w.gif

This is actually all part of the plan from Microsoft (and any other company that aggressively pushes similar media subscription services - this has also happened in TV and music).

What do you think Microsoft will do the moment the valuation of some of these really talented indie studios plummet and they are struggling to keep the lights on?

Every single part of this equation is by design.

The topic is not all black and white.

Actually, when mathematics are involved it is.
 
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Skifi28

Member
Third parties who signed deals with MS congratulations, you've helped MS train the xbox user base not to buy games.
All subscriptions kinda do that, but MS certainly had the bigger hand in starting the trend and "forcing" others to adopt it to some extend to compete. Loss leading is just a great strategy, like organizing a mass suicide but planning to pull out at the last minute.
 
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Montauk

Member
I’ve always been sceptical and worried about whether GP could supply all the revenue needed to keep publishers happy and Microsoft Gaming making profit. And beyond that the negative effects it could have on perceptions of games.

That doesn’t mean I was sure it would end badly and I’m still not but i could foresee these possible quite big problems with the model.

As I said above I think it’s very important to look how GP has affected the way that many normie gamers speak and act. How it has changed the culture around games in a few years.

Is it a good idea to makes games (some of which could be brilliant) have their sort of nominal value (and people invest mentally when they spend money) reduced to almost nothing by having them be part of a “pile it high” content catalogue?

I get shivers when I see people casually - in huge numbers - saying “meh, maybe on Game Pass” to some decent looking game.

There’s lots you could say about that, but doesn’t it encourage more games to regard only the super duper expensive AAA games that can break studios as the only ones they might put money down for unless it’s on sale?

If lots of people already see some AA and indie titles and think “well…I might play it for free” isn’t that harmful to the industry?

I’m not writing this very well I know, and my thoughts are scattershot but I’m aware that everything I’m talking about and much more has been discussed at length and in depth by very eloquent writers.

Part of my thought process in worrying about GP from the start was thinking about what turning games into piles of content that you have little attachment to, a la Netflix, would do to people’s attitudes to games and gaming.
 
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Thick Thighs Save Lives

NeoGAF's Physical Games Advocate Extraordinaire
It's also killing their perception for when they do go to playstation.
No one is buying games like High on Life on Playstation cause gamers don't want to pay $60 for what was given "free" on gamepass.
Well, that also depends on the game and the consumer's preference. For example, I bought the medium once it came to PS5 (got the physical version at around $30), a title which was given to both Xbox and PC gamers for free through Game Pass day 1. And this is just one example, I've purchased probably over two dozens GP games, because I like to support the devs and also own these titles instead of renting them, and preferably in physical format.
 

Montauk

Member
BEST DEAL IN GAMING TM

I feel bad for the devs and publishers.

It *is* the best deal in gaming, for gamers.

Whether it’s good in the long term for them, for Xbox, for the industry or even the medium of games itself is another matter.

It remains to be seen and I don’t think people should take this as proof. But it’s concerning.
 
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Well, that also depends on the game and the consumer's preference. For example, I bought the medium once it came to PS5 (got the physical version at around $30), a title which was given to both Xbox and PC gamers for free through Game Pass day 1. And this is just one example, I've purchased probably over two dozens GP games, because I like to support the devs and also own these titles instead of renting them, and preferably in physical format.
Well I think a lot more playstation gamers would buy the games if they were closer to the price of a month of gamepass when they come to playstation.
If High on Life came to Playstation at $20-30 it would have moved some units. But $60 for a now older game, that was free elsewhere, is a tough sale.
I look for games on sale on Xbox that get as low as around a month of gamepass. I got MCC for $10. I'd rather own than rent for a month for instance.
 

Clear

CliffyB's Cock Holster
Absolutely noone should be surprised by this.

I've been posting about how this was inevitable from the start of the streaming/subscription model push; because this is exactly what happened with the music business.
 

Thick Thighs Save Lives

NeoGAF's Physical Games Advocate Extraordinaire
Well I think a lot more playstation gamers would buy the games if they were closer to the price of a month of gamepass when they come to playstation.
If High on Life came to Playstation at $20-30 it would have moved some units. But $60 for a now older game, that was free elsewhere, is a tough sale.
I look for games on sale on Xbox that get as low as around a month of gamepass. I got MCC for $10. I'd rather own than rent for a month for instance.
Yeah, I guess that's true. An almost one year old game which was also on GP being ported to a different platform and then the publisher offers it at launch price.. that's a tough sell indeed, even for me. But if it's something I'm interested in I'll add it to wishlist and grab it later down the road when it receives a decent discount (30-40%).
 
This is just the beginning. Anyone that expected videogame subscription models to be the second coming of jesus is about to have a rude awakening, specially as ALL subscription platforms are either flatlining or decreasing. There's just a lot of them between music, movies, tv shows, animes, videogames, etc... as life costs increase as much as it has been lately, it's going to keep getting worse.

There's a reason the article mentions both Sony and MS aren't paying as much as they did.

The market itself isn't as enthusiastic for this model as it was in 2018.
 

Punished Miku

Human Rights Subscription Service
It is the best deal in gaming, for gamers.

Whether it’s good in the long term for them, for Xbox, for the industry or even the medium of games itself is another matter.

It remains to be seen and I don’t think people should take this as proof. But it’s concerning.
It's really not that concerning. Devolver is just having a slow period due to delays and multiple uninteresting titles.

  • Cult of the Lamb - not on subs. They knew this had hit potential.
  • Return to Monkey Island - Gamepass
  • Phantom Abyss - Gamepass, never once heard anyone talk about it
  • McPixel 3 - Gamepass, never once heard anyone talk about it
  • Devolver Tumble Time - never heard of it, mobile game
  • Terra Nil - never heard of it, PC only
  • Bleak Sword DX - never heard of it. PC, Switch only
  • Sludge Life 2 - never heard of it, PC only
  • Karmazoo - never heard of it
  • Cosmic Wheel Sisterhood - PC, Switch only
  • Gunbrella - never heard of it, PC, Switch only
  • Wizard with a Gun - never heard of it
  • Talos Principle II - not on subs. They know this has hit potential.
  • Plucky Squire - not on subs. They know this has hit potential.
  • Skate Story - not on subs. They know this has hit potential.
  • Anger Foot - not on subs. They know this has hit potential.
That leaves literally 2 games that could potentially be on Xbox / Gamepass that no one has ever heard of. Karmazoo, Wizard with a Gun. Look up these 2 games. They're not going to get big offers for these. Devolver is just having a very slow year. Really has very little to do with either Gamepass or PS+. Just look at the list. You have to have appealing games first.

They have 4 games coming up in late 2023/2024 with hit potential, and likely turned down solid offers for all 4.
 
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Gambit2483

Member
Subscription is just not the way to go. It undervalues games, causes game budgets to shrink, and while your game might get more exposure, the average consumer might spend no more than 10 mins with it and never even give it a 2nd thought...and then, as we see now, the checks dry up.

Also it's unrealistic for MS to keep throwing Millions at ATLUS and SE just to have a few hundred more people play a persona game they aren't going to beat much less play past the tutorial level
 
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DenchDeckard

Moderated wildly
Not that surprising that they’re down, but MS need GP to be strongly trending up for a while yet, don’t they?

After a freak worldwide phenomenon where people lived in doors for 2 years.

Sure, I'm sure they would love to see that but a lot of markets are like 30 percent down. Vs 2021
 

Montauk

Member
After a freak worldwide phenomenon where people lived in doors for 2 years.

Sure, I'm sure they would love to see that but a lot of markets are like 30 percent down. Vs 2021

You’ve just repeated yourself. I know the pandemic happened - it aged me a decade.

It’s not about what they’d like to see, isn’t that what they *need* to see? Doesn’t GP need to be still growing strongly?
 
Well, that also depends on the game and the consumer's preference. For example, I bought the medium once it came to PS5 (got the physical version at around $30), a title which was given to both Xbox and PC gamers for free through Game Pass day 1. And this is just one example, I've purchased probably over two dozens GP games, because I like to support the devs and also own these titles instead of renting them, and preferably in physical format.
Now I’m not sure if you do have these other platforms to play these same games and if you do, do you play those games on gamepass and just purchase on PlayStation? Is that what’s going on?

Or you strictly just a PlayStation owner?
 

diffusionx

Gold Member
It *is* the best deal in gaming, for gamers.

Whether it’s good in the long term for them, for Xbox, for the industry or even the medium of games itself is another matter.

It remains to be seen and I don’t think people should take this as proof. But it’s concerning.
it's a good deal in the interim period where stuff is being figured out. like that brief time when Netflix had EVERYTHING and was charging a pittance. Now they rely mostly on their own homegrown garbage only and raise prices constantly, and you need to sub to 3 other shitty services to get access to everything and it comes out to basically the same price as cable except it's all disorganized and crappy.

When MS was handing out fat deals to devs for great games that were in development, and charging a small price to gamers because they were trying to get subs, it was awesome. Like I paid $1 on top of my XBL to get UGP for THREE YEARS. That is insane. But then everything adjusts and it's not so great. And when I say adjust I don't mean the price (which is going up), I don't mean the amount of the deals with devs (which are going down), but also how the games are made, what they incentivize, etc.
 
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mckmas8808

Mckmaster uses MasterCard to buy Slave drives
So subscriptions are not even good for indies? Maybe to teach people to expect day one releases was the mistake.

We tried to tell them. But they still won't listen. Idiots video game podcasters are still saying the GamePass model will take over and be the primary way people play games and that selling a console will be a thing of the past. They are still saying that TODAY!
 
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