The Middle Market

The original version of this article was written for Troy Goodfellow’s website, Flash of Steel. Many thanks to him for allowing me to repost it here. The article has been updated to reflect changes within the industry over the past four months.


Anyone that’s read any of my recent interviews or attended the Future of Strategy Games panel at the 2011 Game Developer’s Conference knows that I’m a big champion of ‘middle market’ games – those that lack the AAA budget of tens of millions of dollars, but still aim to provide a ‘full’ gaming experience. Although offerings of this sort have become rare in recent years, they appear to be primed for a resurgence. This is great news, as studios focused on the middle market put out amazing games unlike those offered by either the big publishers or the one-man indie shops.

Paradox and Stardock are two good examples of companies in the strategy genre that are built around this market. It’s no coincidence that games like Galactic Civilizations, Europa Universalis, Sins of a Solar Empire and Magicka all share two specific qualities: they have immense depth and replayability, but didn’t spend big piles of money on flashy graphics. These kinds of games are the bread and butter of the middle market, and anyone who’s enjoyed these titles or those like them has good reason to keep a close eye on this corner of the business.

Sales numbers on even the most successful middle market titles won’t ever reach levels that impress Wall Street, and as a result large companies that produce AAA games are nearly absent from this space, regardless of genre. At the other extreme end of the industry are the indie studios with only one or two developers that typically – but not always – produce fairly simple games. There are a few small indies that produce deep and engrossing games that keep people playing for months or years, but this is rare because of the massive amount of work required to make a complex game any good. There’s only so many Minecrafts and Solium Infernums in the world, and that’s a big part of what makes them so special. Without the middle market, very rare would be the strategy game which provides that deep experience so many players love.

Strangely enough, the middle market’s biggest enemy has historically been – of all things – its own past success. If you look back at where the industry was 15 years ago, you’ll find that nearly every game would fit today’s rough definition of a middle market title: solid gameplay as the #1 priority and small budgets (under a few million dollars). However, this place in the industry is inherently unstable. The survival of most independent studios is entirely based on the success of their next upcoming game – if the title underperforms it’s the end of the road.

Even when a studio has a breakout hit that sells gangbusters its situation changes dramatically. To escape the fate of eternally living paycheck-to-paycheck, companies naturally turn to sequels. By their very existence, these successors must bring something new to the table. With more features comes an increased budget and raised expectations from everyone involved, from the investors providing the capital all the way down to the artists painting icons. When this attitude becomes pervasive there are only two ‘natural’ end-states for a game studio: extinction, or complete dependency on the blockbuster.

If looking at the games industry through the lens of business or growth, time spent producing middle market games might simply be considered an evolutionary step towards bigger and better things. Based on what today’s industry looks like, this certainly seems to have been the viewpoint held by those with the decision-making power. Very rare is the studio that has remained in the middle market for more than a game or two.

Despite the scarcity of companies which have built themselves around the middle market, the money there certainly hasn’t disappeared. Those willing to stick around will find not only the increasingly rare freedom to develop a variety of games, but also a nice profit along the way. Stardock and Paradox have found a great deal success with this model, and rather than ‘upgrading’ to AAA development like most studios they instead diversified and began publishing other middle market titles – to even greater success. Both companies are now larger and more relevant than ever, and owe it to their willingness to embrace what they do best and not follow the path that has swallowed up so many others.

Today, the biggest challenge for the middle market is finding new studios willing and able to join the club. There’s no clear path for the big corporations to return to this space, so the most likely means for this community to grow and flourish is for solo indie developers to meet with success, then make that scary leap to hire a few more people. Fortunately, the emergence of a few new strategy publishers coupled with the amazing opportunity provided by digital distribution has resulted in a new generation of middle market companies.

Kickstarter now appears to be the middle market’s Great White Hope. In just the past few months it’s become a major factor in the games business, and two projects have been funded with a budget of over $2 million (Double Fine’s yet-unnamed adventure game, and Wasteland 2). Many more developers have started jumping into the pool, and indie middle market games are looking like those poised to reap the greatest reward. Expect to see a great many excellent strategy games appearing in the near future. The only real risk with the new Kickstarter funding model is that  a high-profile failure or two might completely sour the gaming community on the concept.

The fairly slow but steady growth rate of this little corner of the industry isn’t going to turn many heads, but it’s clear that it will have an ever-increasing role to play in the future of the business. As has been true for PC gaming as a whole, the so-called ‘death’ of the middle market is very much a myth, and that’s great news for everyone – it’s a huge part of today’s strategy game scene and the best is yet to come!

– Jon

Categories The Industry

8 thoughts on “The Middle Market

  1. Aside from the risk of a high-profile failure, the other problem I see with Kickstarter is that you need to bring some fame and credibility before anyone would risk money on you (no different than traditional publishing, really!). It’s no accident that the $2 million examples you cite are from well-established celebrities. I expect that newcomers will need to have some self-financed successes under their belt before they can expect to raise any serious money on Kickstarter. Still, it’s good to have that possibility of moving from basically no budget to middle-market budget.

    1. To be honest, I’m not sure that’s a terrible thing. Games, more so than any other entertainment medium, require top-notch execution – as anyone in the business knows, there’s almost no value in simply having a “good idea.” I’d actually be MORE concerned about Kickstarter if gamers were willing to throw millions of dollars at an individual or team that was completely unproven (though Takedown, aka ‘Realistic Squad-Based Tactical Shooter’ does kind of worry me).

      I think it’s still possible as a new guy to carve out a small niche, raise enough money to make some small but still interesting projects, and then work your way up. I think Banner Saga is an excellent example. It’s a brand new development group and there’s no huge name attached to the project, but they do have veteran talent that seems to know what they’re doing (and they have a really cool idea!). All of that has added up to half a million dollars, which was much more than they were hoping to raise.

      There will definitely be some really talented developers with great ideas that try the Kickstarter route and don’t raise the money they’re hoping for, but there’s little double the success rate for indies trying to make it using Kickstarter will be MUCH higher than what you see in other corners of the games business (e.g. XBLA).

      – Jon

  2. Excellent post! I for one am working on a title that would fit nicely into your definition of ‘middle market’. Hopefully there’s a few retail dollars floating around to head in my direction. :p

    Kickstarter has been fantastic for Indies. There’s a major problem I see with crowd sourcing though, and that’s quite simply that Kickstarter, the crowd source leader, is too big and too limited. It’s too big because other crowd source sites don’t really get the traffic they need (since everyone goes to Kickstarter) and too limited because you have to have an Amazon account which limits you to the US only.

    Thus for non-US Indies hoping to join the crowd source gravy train, there’s not really any choices for us. That is unless you aim for $10K instead of $100K. But $10K isn’t going to get your game polished though, where $100K would.

    But hopefully Kickstarter can sort something out and allow Paypal, which would open up Kickstarter to non-US Indies.


    1. Unfortunately, retail has really been drying up for PC games the past couple years, at least in the US. Best of luck there sir!

      You bring up a very interesting point about Kickstarter essentially muscling everyone out of that space. The fact that they only cater to the US is indeed a MAJOR drawback (and a really surprising one – that’s the first I heard of it). However, I think we’re still in the infancy of internet crowdsourcing, and things will continue to improve. It’s hard to imagine them not adding PayPal support eventually, and there’s little doubt in my mind that international support WILL happen at some point. Hopefully soon!

      – Jon

    2. I’ve been told that non-US residents can still fund a project through Amazon as long as they have a credit card. Was that something you were aware of Dale, or did you still have other concerns?

      – Jon

      1. Yes you can fund someone else’s game (I recently joined the DF kickstarter) but the team putting the project up must have an Amazon account.

        “To be eligible to start a Kickstarter project, you need to satisfy the requirements of Amazon Payments:
        Be a US resident and at least 18 years of age with a social security number (or EIN), a US bank account, US address, US state-issued ID (driver’s license), and major US credit or debit card.
        Please note that anyone, anywhere (with a major credit card) can pledge to Kickstarter projects.”

      2. (I can’t seem to reply directly to thesdale so I will do so here.)

        The only project I have funded is D-Day Dice, and both myself and the people making it are based in Canada. I have no idea if they signed up for an American Amazon account or whatever, but it would seem that it is at least possible to get around this restriction (which, on the face of it, I agree is quite stupid and needs to go away).

  3. It’s great to see the rise of middle market games in recent times.
    I think there is a natural and vast audience for these types of games. Just like non-mainstream music genres, like Jazz, attract a lot of faithful fans.

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