Game Studios Are Struggling — Here’s Why We’re Optimistic
Is there hope for the games industry?
“So what are we doing here?”
I have a colleague who makes fun of me because I frequently say this in meetings. Yes yes, your weekend sounds great (“dope tomatoes,” I hear myself say about another man’s tomato plant) but the pleasantries are now over and I want to know what the heck we are trying to accomplish on this 25 minute video call.
That brings me to this very second. Why am I writing this? What is Spyre doing here (I’m sure you’ve heard of us)? What are we trying to accomplish? Why did I quit a lucrative job as an executive of a successful game studio and start building my own thing?
At the end of the day, all of us at Spyre just want to like, make games man. Maybe that should be our tagline.
Spyre: We just want to like, make games man.
The issue is that game-making in 2024 is a complicated affair. Not only is the making-a-fun-game part really hard, turns out it’s even harder to make a game that makes enough money to sustain its developers. Maybe you’ve heard of record breaking games industry layoffs? It’s not working. Not for big studios, not for small ones.
So how do we make money?
They used to sell games in cardboard boxes for like $20 at EB Games. Now they are just buttons on Steam or the Xbox store. These are called “premium games” where you just pay a price and get a game. If you’re anything like me, you likely have somewhere between 100 and 10,000 un-played premium games from Steam’s Summer Sales.
The problem with making premium games is that they are one heckuva risk. Game development is expensive and what if no one buys your game when you release it? What if it sucks so bad you need to bury 700,000 copies in the desert? Or what if it’s great but it doesn’t matter because no one can find it? Premium games require all the money up front and are hard to test before you release them. They are extremely risky.
We have another model for making games called “free to play” (F2P) and this model worked for awhile too. F2P games are generally nice and predictable. The can be tested well before launch, and they provide revenue over a long timeline rather than say, 90% on launch day. Some F2P games are legitimately good games — Royal Match enthusiast here. I also spent waaaay too much time on Kabam’s Edgeworld (that’s a throwback). However there is a wasteland of F2P games that started as cool games that developers then broke in annoying ways so that players need to pay to un-break them. I’m not going to name names because I’m a nice guy.
In addition to this scourge, when you look at the economics of F2P, what happens is that the burden of fiscal sustainability largely falls on a tiny fraction of the players. In practice, less than 1% of players have to pay for everyone else to play. Is this adding genuine value to the world? The answer is highly nuanced, but we at Spyre lean toward an emphatic “ehhhhh?”
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What models are left?
I have now demonstrated straw man versions of two well-used monetization models for building games. Of course, there are many more models: subscriptions, ad-supported, arcade, sweepstakes, location-based— and we have lots of options inside of premium and F2P (early access, DLC, battle pass, micro-transactions, cosmetics, etc) but for the purposes of a short but incredibly well written Medium article, let’s say they suffer from many of the same issues.
What we really need are monetization models that combine the nice unit economics of premium games, with the predictability of F2P games. We don’t want the high-risk of premium games, and we also don’t want to break the game and charge users to fix it, or heap our finances on a small cohort of users, like many F2P games are wont to do.
Skill-based gaming has entered the chat.
Skill based games are, like the name implies, games where players play each other and the winner is not chosen by chance but by who played the game better. Chess is a choice example here. People that are good at chess don’t generally lose to people bad at chess. They even came up with a nifty skill-based rating system: the Elo rating, some variation of which is used in practically any game with a ranked matchmaking system (Halo, Valorant, Clash Royale, etc). Of course, not all skill-based games need to be chess.
I’ve got a mean minigolf concept that might be dangerously fun.
Monetizing skill-based games is — well I’m not going to say it’s easy but at least it’s clear where to start. Like my kid’s soccer tournament, you pay an entry fee to play, but you can win a prize based on your performance. The organization that runs the tournament takes a percentage of the fees to pay for the tournament. This is distinct from gambling games where chance determines your prize.
With this scheme, we have unit economics. We have a predictable long-term revenue stream (number of matches times entry fees times cut). We have tied engagement directly to financial burden (i.e. the more tournaments a player enters, the more they pay for the platform to operate). And finally, unless I’m mistaken about literally the oldest types of games continuously played, skill-based gaming has the opportunity to add genuine value to the world.
This is the starting point for Spyre.
Our goal is to make skill-based games successful.
We are doing this by making it easier for developers to build them and more engaging for players to play them. Incentives aligned: achievement unlocked.
For developers, we aren’t reinventing wheels, we’re just putting a bunch of already-invented wheels on a nice chassis. We will chat more about our tech choices but our entire stack is open-source: Nakama, PixiJS, Thirdweb, Viem. We don’t need to build these things, they already exist. However, they don’t play together perfectly out of the box, so what we’re making is more like a “harness” than a “platform”.
Before releasing this harness, first we are laser focused on making our own games successful. It does no one any good to make a harness that’s never really been put through its paces. To that end, we’re iterating quickly on our first game: a competitive, head-to-head twist on the classic game of hangman, called Hangman Clash. Ever heard of hangman? Well hangman is old news: Hangman Clash is its hot European boyfriend.
Here’s a teaser. Pretty cool, right? Yah, nbd it’s just something we’ve been kickin’ around. Bet you want to play it, HUH?? Challenge a friend, destroy them, take their money.
Well hold on, it’s coming. We’re aiming to get some early users by the end of the month. Until then, give us a sec, we’re doing an art overhaul and it’s quite busy over here — what with being penniless game developers.
Look, we just want to like, make games man.
Like what you’re reading? Consider a highlight or clap.
Follow our adventure on X or play our newest game: Hangman Clash.
