Weaker subscription deals have hit indie publishers, says analyst | GamesIndustry.biz
Weaker subscription deals have hit indie publishers, says analyst | GamesIndustry.biz
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cross-posted from: https://lemmy.sdf.org/post/2944272
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."
Part of this article just feels like the capitalistic notion that profits should only increase and anything but that is failing:
"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.
But I wouldn't be surprised if the subscription model WAS actually hurting smaller developers. I remember hearing people hypothesizing that would be the case for a long time.
If you have Gamepass or PlayStation Plus Ultra, you can play almost any small publisher game for free. With that set up, there's a very large incentive to only play the games on the subscription service, instead of buying a full priced game to try out.
The problem is that once a small game is on the service, a large number of potential sales are going to be cannibalized by people playing on the subscription service instead of buying the game.
This leads to a scenario where your game needs to be on the subscription service and you have less sales because of it. This means that Microsoft and Sony have a large amount of power over the small publishers' vitality, since a lot of money now needs to come from deals with them.
As Microsoft starts tightening its purse strings trying to make Gamepass profitable, I wouldn't be surprised to see more small publishers suffering as a result.
They're not going to suffer from weaker deals. They're going to turn down deals that don't make up for their lost sales.
Honestly, I would hope for that as well; but it seems very similar to the enshittification of Amazon (Wired link, archive link):
Marketplace sellers reached huge audiences and Amazon took low commissions from them.
This strategy meant that it became progressively harder for shoppers to find things anywhere except Amazon, which meant that they only searched on Amazon, which meant that sellers had to sell on Amazon. That's when Amazon started to harvest the surplus from its business customers and send it to Amazon's shareholders. Today, Marketplace sellers are handing more than 45 percent of the sale price to Amazon in junk fees.
Basically the notion is once a storefront has captured the bulk of potential customers, they are able to extort their suppliers however they want, since it's the only way the suppliers can reasonably reach the customers.
Hopefully in this case, the publishers can explore other sales avenues; but it all depends on the reach of the subscription service.
I hate investor brain