Portals Are Good
Anybody who explores the casual/indie development scene quickly runs into it’s dark secret: the industry is dominated by about ten major portals (i.e. RealArcade, MSN, Yahoo, Shockwave, etc…).
The portals restrict mass-market distribution to about 100-200 titles a year, and take a stunning 60-70% or so of the revenues for the games they sell, for a seemingly easy job – putting up a basic web site with a back-end order processing system. The other hard part is hauling all that money to the bank while laughing hysterically…
Many developers react to this by pouting that they refuse to sell their games through portals, or by kvetching endlessly about setting up an ‘indie portal’ run by developers, that will be fair in all ways.
Any many students in the 60s frustrated with modern society set up communes to grow beans and bake bread.
Burying your head in the sand doesn’t change the reality. Portals are here to stay. They aren’t perfect, but they exist and thrive for a reason – Portals Are Good.
Not necessarily good for you the developer. But your opinion isn’t the critical one. Portals are good for consumers.
When I want to buy a book, I don’t drive to the publisher’s warehouse in New Jersey to make my selection. I don’t even go to the publisher’s web site to order it there, even though in many cases you CAN order books directly from a publisher’s (or author’s) web site.
Depending on my mood, I either drive to my local Barnes and Noble, or log on to Amazon.com, and buy what I need. This works when I have a specific book in mind, a general subject, or no subject at all, and I’m just in the mood for a good read.
I do it this way because both the physical and virtual book stores are easy to find, well-organized, safe, and already known to me (and therefore, comfortable for me to use).
Looking only at the virtual bookstore (Amazon):
Easy-to-find: Well, I’ve known about Amazon for years. Even if I was a web neophite, I’d have heard of Amazon from my friends, or seen their manifold advertisements (lots of Google Ads), or just seen the site talked about by other book buyers and sellers.
Well-organized: Amazon runs one of the best websites out there. The ability to search is well implemented, as are their recommendation lists, their top 100 lists, and just about everything else about the site.
Safe: The Amazon site feels safe. It looks professional. I know Amazon is a big reputable company that won’t rip me off, and if I do have a problem, I have multiple channels to resolve the problem or return the book. My credit card info is not at risk.
Known to me: I don’t like to learn a brand new buying experience every time I buy something. I’ve already bought things at Amazon before, I feel comfortable buying things there again. Given two sites on the web to buy something, I will always prefer a site I’ve already had a favorable experience at. Why? Because I’ve had a few unfavorable experiences buying things on the web. So when I find something that DOES work, I stay with it.
The astute reader will no doubt notice that I have been setting up an elaborate parallel to the on-line game buying process. Frankly, none of the major game portals are quite so well run as Amazon… yet. But by and large, they fit my four criteria above MUCH better than individual game company’s sites do. So, even though I’m an independent game developer myself, I don’t go to other developer’s sites to buy games, rather, I buy them from the portals (where possible).
The portals provide a valuable service. Consumers obviously appreciate that service, as the portals control a VAST majority of the traffic of game buyers. And you’re fooling yourself if you think the portal experience can be replicated on the cheap, just by throwing up an ‘indie-community’ portal – a little Frontpage job or Wiki you cooked up in an afternoon.
I can understand that there are business models that don’t fit within the portal paradigm. But if you try to go it alone, you’re like that self-published author who can’t get his book in any bookstores and tries to sell it from the trunk of his car. A (very small) number of self-published authors do break through. But I’d rather be on the front display table at Barnes and Noble.
March 23rd, 2006 at 1:35 pm
Hey man,
Heh… why do you hang on on the indie gamer forums? They obviously bug you. =) (I don’t really go there either to be honest. Nothing personal.) Come over to the Garage Games Community site for some dignified discussion… it isn’t restricted to torque owners you know.
As for portals, I have a few concerns:
1) Without A Center Nothing Can Hold
The biggest problem I see for all of us is the distributed nature of the internet as a whole. You can’t get people to buy your products if they don’t even know about them. The portals help, but how do people find out about the portals in the first place?
If you don’t think this is an issue, go ask any of your friends who are in the hardcore gaming scene what they think about the latest big indie game hit. Ask non-hardcore gamers (outside of the indie scene) as well. No one will know what you are talking about… even for the biggest indie hits. =) Ok, maybe they have heard of Zuma and Darwinia but that’s about it.
At least the retail market has a full working model that includes marketing, distribution, and sales. You watch TV, pick up a game mag, read blues and gamespy and you find out about cool new games. Indie games have no central marketing and distribution machines.
Portals work for those who actively seek out indie games. But how do we market to the people that have no frigging clue what a casual or indie title is? How do we reach those who are totally bought into retail distribution so we can get a piece of that market share? How do we reach people who might like to play casual games that don’t even know about casual games? There is no model. It is a total crapshoot hoping that they will wonder across an ad that captures their attention on some knitting website or something.
Instead what we have are a bunch of portals all fighting for dominance over a small market that most people don’t even know or care exists.
Solutions like Steam and XBox Live may change all that… but will things change for the better?
2) More of the same…
Portals are not that much better for indie developers than the retail game publishers. In fact, I expect to see retail publishers buying out or crushing the major online distributors within 10 years… then there really won’t be a difference.
Our percentages are just a little better via online distribution because there are lower marketing and distribution costs. We are still potentially getting shafted depending on the publisher deal.
I have just never understood in any medium why developers, musicians, filmmakers, and artists only see a small percentage of the returns on their own products. The only reason publishers get away with that crap is because we let them. The internet is supposed to be this freeing thing that allows us to bring our products to our end users directly. Yet we are falling into the same trap we always have…
I don’t think portals or publishers are bad… they serve a vital function. But I don’t think that developers are doing enough to maintain ownership over their own products nor to shape the future of this industry. We all just sort of bend over and take it because “that is the way the world worksâ€.
3) Publisher Conflict Of Interest
Like I have mentioned before, many portals and publishers have a conflict of interest that needs to be resolved. Portals are like gatekeepers who traffic the world to your storefront. The problem is that they also have set up shop and are trafficking people to their own storefronts as well. Take two competing games on the same portal, one that you own and one that they own. Which one do you think they are going to market the best? Are they going to put a concerted effort to make sure you get equal coverage so they get a 65% cut or are they going to focus on the product that is going to bring them 100% profit? Until publishers focus on publishing vs. development this will always be an issue.
What I would like to see is more review sites… websites that push people to actual developer websites vs. going through publishing. I think though that portals and publishers are here to stay… I just advise caution when building your distribution plan to look seriously at the royalties you get from each portal to make sure you are maximizing your profits every step of the way.
-Unk
March 23rd, 2006 at 1:35 pm
Crap… sorry for the uber long reply. =( Guess I have lots to say on this subject. Heh.
March 23rd, 2006 at 2:14 pm
The big problem with portals today is they don’t know how to sell to anyone but the causal gamer. There are a lot of people that want games deeper and more complex then Bejeweled, but if you give one of those to the portals you hear “our customers don’t like…”
They need to do a better job of getting more customers. Amazon.com understands that everyone doesn’t want to read the same kind of book, the portals don’t get this yet.
What the portals don’t understand is marketing. They assume that the 1 hour try to buy is the marketing. They don’t understand how to convince people that they want to buy something, or try something new, or get new people to their site.
The portals are on cruise control.
March 23rd, 2006 at 4:41 pm
I think using Amazon as an illustration of your points is not a terribly good choice. Amazon doesn’t act like a publisher. They don’t try to pretend that the products they are selling were made by them. They don’t handle support for the products – beyond taking returns of defective products. They’re a retailer. Their shelves are large (infinite almost), so they offer every product under the sun.
The portals, on the other hand, are acting somewhat like publishers and somewhat like retailers. It’s not good for the consumer because they only see the products that get sifted through the “publisher” side of the portal, and it’s not good for the developer because the portal eats all the money. Do you think Amazon get’s 70-80% of the money?
No.
March 23rd, 2006 at 5:05 pm
I won’t dispute that the game portals are good for casual customers but I wouldn’t put them in the same level of relevance as Amazon. The biggest difference is that Amazon is mainstream (appealing to a huge demographic) and the portals are niche (despite their best efforts). As a general rule the games that do well on portals are those that best appeal to women ages 18-35, anything else fails to sell. Where as Amazon has something for everyone at virtually any age, any background, and any generation.
Ironically Amazon is good for and treats fairly it’s suppliers but portals are bad for and exploit third party developers. I’ll let others elaborate on why…
March 23rd, 2006 at 5:18 pm
Yes, the analogy isn’t perfect. The portals carry a smaller catalog and take a much higher cut than Amazon. But I think it’s reasonably accurate, insofar as the type of customer who plays casual games.
They don’t want to deal with a fragmented marketplace with many vendors, and products of widely varying quality. The portals serve as winnowers – they set a minimum bar for quality, and as aggregators. That’s a valuable combo to the typical consumer, and one all too often overlooked by those who rant against the portals.
Yes, I’d like to see either a single Amazon-like uber-portal that branches beyond ‘casual games’, or a series of portals with different specialties (like, say a mystery book store). Perhaps Manifesto will be one or both of those things.
March 24th, 2006 at 2:11 pm
I think it’s a mistake to go too far either way — either being too forgiving or spewing too much vitriol at the portals. Yes the portals fill are useful for consumers. However, they also take most of the revenue, market to a narrow subset of the potential audience and aren’t great for developers. I think it’s in our best interests as developers to push as much as possible for alternatives and make the portals work for us instead of the other way around.
March 24th, 2006 at 6:29 pm
Portals aren’t the antichrist, it’s true. but they have as many downsides as upsides.
They maintain price control, and often slash the price (and perceived worth) of peoples games down in vicious price wars.
They go out of their way to appear as if they made the titles themselves, denying any recognition for the real developer.
They almost always provide inferior customer support and tech support relative to the developer.
Portal business models rely on developers saying in their place and not getting brand recognition. When people know the name ‘introversion’ they can quickly find Darwinia direct, ditto with Positech. By definition, the portals have it in their interest to prevent developers getting recognition or any real tangible success.
At the end of the day, a portals top 10 can be based on what games it wishes to see selling, based on what royalty cut it arranged, who developed it, and what target market the portal wants. Amazon is a different state of affairs, where practically all products are listed regardless of subject matter, and its trivial to find even obscure niche products.
Over the years I’ve seen portal royalty rates drop lower and lower until they are probably now at the level (or worse) than retail publishers provide.
On the whole, I’d suggest the balance sheet is negative.
March 24th, 2006 at 10:56 pm
So Phil, why NJ to get books? You from around here somewhere? I have a small wireless game development company in NJ (and Samara Russia actually) and have been on the lookout for any game related folks in the area to hook up with.
Really getting alot of the the blog, thanks!
March 24th, 2006 at 11:02 pm
No, I’m from St. Louis (hence the silhouette of the arch at the top). I just know that all the publishers are in New York, and figured their printing/warehousing is in Jersey.
March 27th, 2006 at 12:46 am
The Carnival of Marketing…
Welcome to the Carnival of Marketing! This is a selection of seven of the best blog posts on marketing from the past week. Here are this week’s selections: China’s New Statue for Brotherhood and World Peace. Jack Yeost posts about…
April 5th, 2006 at 3:33 am
[…] In his blog, Phil Steinmeyer’s talks about the fact that portals are good. Those discussion are fun to read as always, but I want to talk more to another aspect of the “problem”. How can you define yourself indie when you’re using a portal? Everyone who worked with them, knows that they often require changes to your product (not all portals do that, but many yes). Isn’t this falling back to the old “boss that tells you what to do” idea? […]
April 6th, 2006 at 10:52 pm
I know I’m stepping into the firepit here (dons flame retardant suit) but someone’s got to stick up for the portals here 🙂
While it’s true that the developer sees 25-35 points of the sale, that’s not to say that the portal takes the remainder, nor that what they take is all profit.
– There is often an aggregator in the middle. Many portals (even MSN) don’t have bandwidth to do contracts/QA/etc with 200 developers. This is no different from your local grocer who has a distributor come in and stock his magazine rack. He doesn’t have a PO with someone from GQ, newsweek, pc gamer…
– Credit card transactions seem simple, but they still cost. Visa takes their cut.
– there’s usually a DRM provider taking a cut.
– Support is an issue. An significant number of transactions end up not only not working, but requiring someone to get on a phone or on email.
– Bandwidth is an issue. If a title has a 1% conversion rate, that means that there there was 100*20Mb or 2Gb of downloads for that 1 sale.
There are other issues too, but you get the idea. Anotehr way to look at it is that if it really were all just massive profit margin, one of the big portals would cut the oxygen off to the other one by offering vastly higher royalties to the devs/pubs in exchange for exclusivity. Truth is, it’s not a trivial (nor cheap) business to run.
Hope that helps add to the discussion…