The Current Challenges and Unexpected Successes in the Video Game Industry

“Everything is on fire at the moment,” states independent developer Adam Riches, a sentiment he expresses with a casual tone, reflecting its common acceptance. The widespread layoffs and studio closures that impacted the industry last year have persisted into 2024, accompanied by a deceleration in investment following the gaming boom during the Covid pandemic. Furthermore, there are indications that consumers are spending less on new games, opting instead for established online titles such as Fortnite or annual franchises like Call of Duty and EA Sports FC. Despite these trends, the volume of new game releases continues to increase. The UK’s Digital Entertainment and Retail Association reported in July a significant decline in game sales compared to the same period last year. This downturn has not only affected premium releases but has also made it difficult for smaller studios, which typically offer more affordable games, to attract an audience. While the precise reasons are often elusive, high quality does not guarantee commercial success. “You can have the best marketing, you can have the best game, you can get rave reviews, but you’re still flipping a coin as to whether it’s going to blow up,” Adam Riches remarks. Adam identifies “discoverability”—the process of players finding a game—as a primary obstacle for independent developers. Steam, the leading digital storefront for PC gamers operated by Valve, features a vast array of games, from independently developed projects to major blockbusters created by large teams, leading to intense competition. According to the tracking service SteamDB, over 14,000 games have been published on the platform this year, already surpassing the total for 2023. Adam himself recently contributed to this number with the release of Loco Motive, a murder mystery adventure he developed with his brother over three years. He lightheartedly suggests that 2013, when Steam was less saturated, would have been an ideal release time. Despite the crowded market, methods exist for games to gain visibility; Steam recommends titles based on user playing habits and frequently runs promotions that highlight a curated selection on its homepages. However, Adam acknowledges the difficulty. “We’re all competing for those same slots, and now we’re competing with triple-A and other indies,” he explains. Beyond vying for players’ attention, new games are increasingly competing for their time. Analytics firm Newzoo indicates that annual series like Call of Duty and online games such as Fortnite account for 92% of gaming time, leaving only 8% for new releases. Attracting players away from these well-established titles proves exceptionally challenging. For instance, the rapid discontinuation of Sony’s online shooter Concord by the PlayStation maker just two weeks after its launch was attributed to its resemblance to popular existing games. Rhys Elliott, an analyst at Midia Research, suggests that the major success stories of 2024—Balatro, the multiplayer shooter Helldivers II, and “Pokémon with guns” Palworld—distinguished themselves through novelty and innovation. Yet, he concedes that this is not the sole determinant. “Factors like a strong IP, strong marketing campaign, community fostering, and timing can help, but the fact is that there is luck involved,” he states. “Right place, right time is a big part of gaming’s surprise successes. But gameplay matters, and innovation, so great games often stand out and find their market.” Securing funding represents another significant challenge for developers this year. Investment in new projects has declined, prompting some studios known for previous indie successes to provide support. For example, Innersloth, publisher of Among Us, recently established Outersloth, a fund designed to assist developers in completing their projects. Husban Siddiqi, whose upcoming game is Rogue Eclipse, was among the first recipients of this program. He notes that Innersloth “understand the struggles” developers face, and their assistance has been invaluable. Nevertheless, even with the backing of an established studio, Husban does not take success for granted. “It’s unforgiving, the speed at which things change, the technology changes, the platforms change,” he comments. “I always feel like we’re trying to study as quickly as possible before some paradigm shift happens that kind of upends whatever that conventional thinking was.” Manor Lords, a strategy game where players construct a Medieval settlement, has sold 2.5 million copies since its early access release in April. Snow Rui, co-founder of publisher Hooded Horse, attributes the game’s success to its unique approach within the genre, allowing players to physically inhabit and explore the settlements they build. While Manor Lords garnered substantial pre-release interest from early trailers, Snow admits that Hooded Horse was still surprised by its reception. “It would almost be arrogant not to be taken aback by how successful it turned out to be,” she says. Snow shares that one of the most valuable pieces of advice she received was “don’t roll too fast” after achieving success. Some of the broader industry’s difficulties have been linked to companies expanding too rapidly when gaming profits surged during the pandemic. Snow emphasizes the importance of long-term sustainability and realistic expectations for her company. “A breakout hit like this, you cannot count on it to repeat itself year after year,” she asserts. “There will be people pushing you to have a different expectation or treating the next year as a failure if the breakout hit doesn’t repeat itself but that’s simply not the case. So that’s a matter of setting your expectations and centering who you are.” While many aspire to publish the next Manor Lords or Balatro, Adam Riches clarifies that for an indie game, “success” does not necessarily equate to blockbuster sales. “Our game doesn’t cost that much to make, and because it’s mostly been me and my brother and a few freelancers, the cost is not that high,” he explains. Adam also states that it involves maximizing a game’s potential; Loco Motive’s significant marketing campaign was launched close to its release to maintain momentum. This strategy may have proven effective, as the game debuted in Steam’s top-seller charts. The likelihood of creating a breakout hit, or even simply breaking even, remains low. However, Snow Rui points to a positive aspect: development tools are becoming more accessible, creating opportunities for smaller teams with “ingenious” ideas. “As a fan of games, this is something I’d love to see,” she expresses. “Even in the current environment, there’s still plenty of room for fresh and innovative ideas. And that’s something I look forward to for many years to come.”