Oscar bait

Hollywood just got done with its annual parade of self-congratulation. And I don’t mean that in a bad way — the Oscars may have originated as a marketing gimmick, but they are more than that. They serve as a way for creatives to honor creatives. And every year, movies are made which get called “Oscar bait” — films clearly made without much expectation of huge profits.

At a time when big game companies frequently speak in terms of “it it doesn’t make a million a day, or have a million players a day, it’s not worth making,” why do Hollywood studios keep making films that are small, play to small audiences, and aren’t anywhere near as profitable as a summer blockbuster? Wouldn’t it make sense to focus all your resources on the titles that have the highest ROI? While many small films have great profit margins, the absolute numbers are small, and thus there’s a large opportunity cost to doing the small movies.

Don’t worry, there’s a business reason. The logic goes something like this:

• proven creatives increase the odds of financial success for a film (the evidence for this, particularly for actors, is actually somewhat dubious — there is much debate about the degree to which a given star can “open” a film; the evidence is much stronger for directors and producers).
• creatives like working on things they are passionate about. Yes, some creatives are passionate about making blockbusters. But many, particularly the top ones, are interested in doing things for the sake of the art, not the money.
• creatives are free agents and can go where they are offered jobs. And it matters that the projects are often of relatively limited duration. Movies take forever to get made, but activity is highly “bursty” — actual shooting schedules are measured in single-digit months.
• to keep creatives happy, studios find ways for them to do passion projects, so that they can then count on them for their blockbusters.
• awards tend to go to the passion projects, but these then serve as a marketing bump for re-uses of the creatives in other titles (“see Oscar winner Halle Berry in this schlocky thriller!”)

via http://fxrant.blogspot.com/2013/02/with-and-without-rhythm-hues.html

It is worth pointing out that this all sounds lovely for the key creatives, and it is. They get tons of money and fame. But for folks down the chain, things are not so rosy. The recent bankruptcy of visual effects house Rhythm & Hues has triggered a wave of solidarity from game developers, who can see the immense contribution that VFX houses provide. But the fact is that what Rhythm & Hues (and all VFX houses, really) offers is both incredibly important — and a commodity. It can be outsourced, it subsists on tiny profit margins, and frankly, no matter how awesome and indispensable their work is — getting to “good enough” is really the bar most of the time. The other commodity roles in the movie industry avoid this trap through heavy unionization, but VFX houses aren’t unionized.

So what’s different between the movie world and games? Lots.

• Proven creatives do affect a game’s success. But marketability is largely by team and by brand, not by creative. We have Sony and Microsoft and Nintendo fans, which is like being a fan of Columbia Pictures. There are times in film where a studio develops a strong artistic identity (Pixar, Studio Ghibli),  but frankly it’s generally around a creative leader (Lasseter, Miyazaki).
• Games work on a studio system still, whereas film long ago ended up with key creatives as free agents. Key creatives are salaried employees. There’s a thriving market for contractors (usually two sorts: high-end hired guns brought in to solve a thorny issue, and “warm bodies” brought in to be a force multiplier against a commodified problem, like generating loads of art) but these are never in the role of key creatives for the game.
• This is because big games have development times measured in years, not months. Locking up a key creative as a free agent for a three year project is just plain unlikely, not to mention liable to be way more expensive than having them on board as an employee.
• This means that key creatives quit their jobs to do passion projects instead of companies greenlighting passion projects. Oh, sometimes we hear of a key creative who has managed to get enough power to get a passion project made. But it’s the exception rather than the rule.
• Only recently have awards started to go to the passion projects, and because gamers do not tend to follow key creatives but brands instead, there’s a lot less marketing value there anyway. Few gamers know how much their favorite brands have been handed off across multiple teams over the years. It’s like being a fan of a band whose line-up changes completely between albums.

There have been a few moves towards “Oscar bait” equivalent approaches from big game companies. The most obvious ones have come from Sony, which has a history now of supporting “artsy” projects with serious investment and marketing attention. (And if you think the support is negligible, check out the length of the credits on Journey… that’s a looong list for an “indie”). But by and large, it just isn’t a model followed by most of the industry. All in all, it’s a recipe for a very different industry from the movie business.

Today Gamasutra published a survey that reveals cracks starting to show in this model. If I had to summarize what’s happening, I would describe it as

• new markets have opened up where it is possible to make and distribute a game in a lot less time and for a lot less cash. One of the biggest barriers that is lowered is the gatekeepers of portfolio management. It’s no accident that developers are looking at PS4 and asking for open submission policies, and that Gabe Newell is making noises about changing Steam’s Greenlight program.
• this is resulting in a boom of indies — no small number of whom are veteran developers who are taking the chance to work on passion projects — we’re seeing lots of them doing Kickstarters, for example
• because the games are small, and funding and marketing is often grassroots, there is much more of a culture of celebrity around key creatives
• we’re also finally starting to see the rise of secondary revenue streams as indies manage to create products, characters, and brands that have value via original soundtracks, plushies, and the like
• finally, the rise of free to play has enabled games-as-a-service to provide ongoing revenue to smaller shops in a way that mimics what online games have been doing for decades. Even though not everything has quite become multiplayer yet, it’s well on its way as every game ties into achievement systems, asynch play modes, and ongoing service models. This both helps customer loyalty and provides stabler revenue than a “retail” model.

via Gamasutra, from http://www.gamesetwatch.com/devplatforms.jpg

All of that is basically the recipe I outlined back in “Age of the Dinosaurs” in 2006. But…let’s not kid ourselves. Moore’s Wall is still in full effect. The marketing budgets and development budgets for a top-tier iOS title are still enough to make a bedroom coder blanch, and the arms race is only going to accelerate as mobile technology improves. Open markets do allow the occasional indie to strike it rich, but a glance at the top charts will show that the real winners still tend to be deep-pocketed studios who can afford higher levels of polish and tens to hundreds of thousands of dollars in marketing spend. The window for small indies to get in while everything was cheap has largely already passed.

On top of that, open platforms lend themselves to a race to the bottom: since there is no portfolio management on the part of the publisher (and here, you may as well consider an app store to be a publisher), rampant clones tend to show up. They are cheaper to develop, lower market risk, and a “fast follower” strategy is typically more successful than an innovator’s strategy (a sad reality! The market rewards a well-executed clone better than it does an unpolished innovator). Given commodified product, vendors compete on price. So margins fall, making it even harder for indies to make a living.

All of those things are why I doomcast indies several years ago in my talk “It’s All Games Now.” The trend itself has within itself the seeds of its own destruction: more indies means less revenue per indie means less indies in the long run, because, well, indies gotta eat. The ones who are successful and bucking the trend end up as Rovios and Temple Runs: the new big boys, with more of the characteristics of a big shop than an indie.

The blessing for those of us who enjoy game innovation, though, is that it also means more passion projects. You see, once it’s unlikely that you are going to make money anyway, odds are much better that you will choose to do the risky, the creative, the unproven thing. You get outsider art movements, and punk ethics, and yeah, no small amount of hipsterism too… but way more innovative work.

In a world like that, “Oscar bait” is suddenly an incredibly valuable marketing tool. It helps you rise above the noise and increase the odds of eating. It connects you to the cognoscenti among game players, and they are far more likely to be “whales” — or put another way, “true fans.”

So really, the new world is likely to be much like the old world. App stores will have the same overwhelming power that platform holders always have. Even if consoles open up the submission process, marketing budgets will likely still win. Customers, overall, will still likely prefer the polished but retread experience over the unfamiliar. But it might be that this new landscape means that the new form of publisher start courting our equivalent of Oscar bait a bit more.