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[channie]

Bill Roper on LinkedIn paints a very bleak picture of the state of investors funding where they all kinda force developers to hit irrealistic targets before seeing a single dollar from their pockets.

The consensus coming out of DICE is that things aren’t going to be getting any better in 2025. In fact, there’s more investment pulling back and more layoffs and studio closures to come. AAA is dead and Indies and AA studios are on the rise.

There’s a massive divide to this becoming a reality. It’s now being talked about more publicly, but it’s been the reality that some of us have been living for the past few years.

Three of us started Lunacy Games in the summer of 2022 after the indie studio we were working at together lost its funding. With Lunacy, we had a clear vision of the game we wanted to make that was born out of a deep design analysis of what we’d been playing during the pandemic coupled with a desire to do something different in building a company. It immediately reminded me of how we approached development back in my Blizzard days, so we started working on something to bring to publishers.

We pulled together a prospective team that was a mix of proven industry veterans and highly talented junior developers who had all worked with each other over the years. We solidified our game concept and put together a solid pitch deck complete with financials for the studio and project development. We started pitching to publishers, VCs, and angel investors. This was the “team, dream, and a deck” model that had proven successful for me in the past.

In late 2022 we had 3 publishers interested. Two of them interested in funding our game / studio (a mix of project funding and equity investment) and the third pitching us on becoming a fully funded, first-party studio. We were exchanging deal terms and talking numbers when the playing field shifted under our feet.

All of the interested parties pulled back, explaining that they were “re-evaluating their investment stance” or “shifting focus to existing projects and studios.” By the end of 2022 we had no deals on the table and it seemed we were back at square one.

Little did we know we were about to go into negative numbers in terms of opportunities for video game developers and studios.

The 2+ years since then have seen a recurrent theme in the games industry. No one signs games that don’t have fully playable demos (and that has now evolved into requiring a vertical slice) while, in the same breath, no one is funding demos.

And it doesn’t stop there. I’ve been told directly that to really have a chance to get my project funded I “need to have a trailer, an engaged and active Discord community, and a Steam page with at least 10k wish lists.”

And that’s before they'll spend dollar one.

All the risks have been put on those least able to bear it. And much of what developers now “need to do” isn’t about making their game. It’s about reducing publisher risk by proving they have a built-in audience.

The rise of indies is because their development cost model is a race to the bottom. The model is 1-4 developers (commonly younger) living at home or sharing a small apartment making a great, small game for under a million dollars. Publishers can fund these projects much more easily and when an oversized hit occurs, it just reinforces the model.

Of course, it’s also easier to ignore the tens of thousands of games of this size that get released every year and fail because the bets (and risks) are so small.

So where does this leave AA studios?

Out in the cold.

Based on the feedback we got on the survival game we pitched at the end of 2022 we spent the next several months scrimping our personal money and working whatever hours we could to put together a demo. We bootstrapped our way into having a 9-minute proof of concept for our game and the world in which we want to bring players in time for DICE and GDC of 2024. I pitched the game well over 100 times across both shows and heard the same basic refrain:

- This looks fantastic. You made it how fast for what surprisingly low amount of money?
- This is a great idea and a very clever approach to the genre.
- This game could be extremely successful, but instead of premium +DLC, we’d prefer (insert their business model of choice that ignores what players in that space want).
- Your budget makes sense - and in fact we think you might not be asking for enough – but it’s too much to ask for. No one is funding AA development.
- You built a demo, but we need to see more. Tt needs to have ALL the groundbreaking systems you’re proposing, and every core loop implemented, so our game evaluation team can play it and tell me if its “found the fun.”
- Also, we don’t fund that prototype development. Have you considered Kickstarter?

For the sake of transparency, the budget for our open world survival game that ships on Steam, Xbox, and PlayStation = $18.5 million. A modest budget for what we propose to deliver and one that no one argued about being too much for the scope of our game.

So, we pivoted. We brainstormed and came up with an idea to make something we felt was both special and missing in the extraction shooter genre. It’s a smaller project with a total development budget of $5.5 million. We have a tight, 14-week plan to deliver a fully playable demo (with a beautiful corner) for a fraction of that cost. We’ve been pitching our new game for a few months and… I’m sure know what the response has been.

Love you.
Love the team.
Love the idea.
Bring us a vertical slice.

And no, we won’t fund it.

This is the Catch-22 that start-ups are in. Great developers, comprised of people that have a proven track record of shipping games, bringing great ideas to the table, fighting for scraps up in a broken publishing model.

There’s a real opportunity for someone to put relatively small amounts of money into the ideation of games without being predatory. We’d gladly give up equity in our studio to the right partner that is invested in building a profitable studio with a long-term vision.

And we’re not the only ones. I read this a few days ago and it really resonated.

"Typical game investors would hate us. A game dev studio focused on sustainability over growth, careful profit over risk, and maintaining studio culture over expansion and moonshots."

There’s a moment in time, right now, where a new powerhouse group of AA studios could be built. Ones using all their knowledge of what we’ve done right and where things went wrong to create better places to work and build amazing experiences for players. But we can’t do it alone.

We have responsibilities and families and lives. And that means we can’t simply “tough it out” and “work for free” to “prove we’re 100% committed.” The expectations and focus of VCs don’t align with video games. We’re a special mix of art and technology and the formulas for launching that next “killer app that’s going to disrupt the space” doesn’t apply.

AA studios aren’t asking for a free ride for a moonshot. What we need is a stable launch pad to help us ignite our ideas and soar.

Project Skinwalkers 2024 Demo =

Innsmouth Mysteries Teaser =

Unless there's a definitive pivot from investors to fully support AA, we can sure as hell forget about these properly replacing broken AAA model.

 

[ReBurn]

Investors expect a commitment to timeline and a return on investment. That's reasonable and they're not the problem. Are they just supposed to fund indefinitely with no expectations?

The problem is the development companies not being able to stick to the commitments they make when they ask for and take the money. Why should the investors care about the developers' responsibilities, families and lives? That's management's responsibility.

 

[MayauMiao]

We have responsibilities and families and lives

So do investors.

 

[SirKicksalot]

the survival game we pitched at the end of 2022

Then

came up with an idea to make something we felt was both special and missing in the extraction shooter genre

K

 

[Facism]

Optimus Prime would have read the OP

 

[LazyParrot]

Investors expect a commitment to timeline and a return on investment. That's reasonable and they're not the problem. Are they just supposed to fund indefinitely with no expectations?

The problem is the development companies not being able to stick to the commitments they make when they ask for and take the money. Why should the investors care about the developers' responsibilities, families and lives? That's management's responsibility.

Developers not following up on their commitments doesn't seem to be the problem here, since that would require a financing agreement to already be in place. Investors have gotten so risk-averse that they're asking for games to be at increasingly advanced states of development before they'll invest. But to get to that point, the developers would require... an investor. It's basically a catch-22 type of situation for a lot of studios.

 

[ChorizoPicozo]

The gaming industry fucked itself by thinking that 3 billion players is a realistic addressable market. Also, there was a triple penetration due to the fake growth during COVID and the push for DEI/WOKE around 2020 and the snake-oil panacea of GaaS.

The fact of the matter is that gaming ain't that big. The real meaningful number is between 3–30 million (at any given time). Yeah, I'm pulling that number out of my ass. But let me explain:

If someone says: "On this street, 1M people walk by every day. You wouldn't expect to make 1M sales every day. 10% of that number could be your potential customers (just because there are people who don't care what you have to sell). Then, you take another 10% of that number to get people who are potentially interested in what you have to sell. Finally, you take another 10%, and you'll get people who will buy what you have to sell somewhat regularly. So, we went from 1M to 100,000 to 10,000 to 1,000

People think that the 40M players of Marvel Rivals is impressive, but when you realize that only between 400,000 to 2M are the ones actually paying somewhat regularly, that number isn’t that impressive. Even with Fortnite, we’re talking around 1M to 5M.

So I think the industry is waking the fuck up to the realization that they need to adjust their budgets to a realistic expectation of 5-7 million copies for AAA single-player games (to be an unmitigated success), 3 million to live another day, and a similar audience each year (who pay for MTXs) in a GaaS

 

[Magic Carpet]

4 people living together in an apartment working on small things.
This is better than sleeping under your desk working on a AAA game during crunch time I guess.
Remember when developers used to give time and home life over to focus on a game?

 

[Shits_McGiggles]

The studio was trying to make a survival game and then an extraction shooter, which are flash in the pan genres in a highly saturated market. That is not a gamble worth making right now. That might be a pretty big reason why interested parties are withdrawing.

 

[ReBurn]

Developers not following up on their commitments doesn't seem to be the problem here, since that would require a financing agreement to already be in place. Investors have gotten so risk-averse that they're asking for games to be at increasingly advanced states of development before they'll invest. But to get to that point, the developers would require... an investor. It's basically a catch-22 type of situation for a lot of studios.

It's not really a catch-22. Investors have always been risk averse. That's nothing new.

Investors become more risk averse when development shops aren't meeting their commitments, causing the investments to lose value. I've been around enough to have seen first hand how often dev shops underestimate time and cost just to get the money knowing full well they'll have to go back and ask for more or crunch their asses off to hit dates. Then investors are into sunk cost territory and have to choose whether to spend a bit more and lose some margin to keep from losing everything, or they just pull the plug and try to write off the loss.

Dev shops rarely admit that their woes are self inflicted but, many times they are. Whether it's because of inadequate design, new vision that causes restarts, or just plain inability to deliver. Sometimes developers just can't do the things they commit to because they don't know how. When they succeed it's because of their genius and ability. When they fail it's management and investors. Tale as old as time.

 

[StreetsofBeige]

If devs can’t work out making games based on budgets or whatever investment pots of money they can get then too bad.

No different than someone buying a home or car. You get approved a certain amount and you got to live with what you qualify for and buy something you can afford.

 

[P:axMagellanic]

He's over the hill and hasn't made a game in donkeys years. 'Proven' track records mean fuck all when games are bombing left, right and centre.

The era of cheap money is over.

 

[Loomy]

We're all blaming developers when the problem, really, is us.

If we were buying/playing those AA games, they'd fund and make more of them. But every time there's a showcase, SoP, Direct, etc, we shit on anything that's different than the last 10 games we played. Everyone wants AAA sequels, but then complain about having to wait 7 years for those AAA sequels.

Meanwhile, lot's of AA games just came out and die because no one wants to play anything unless its popular, or we dismiss it without even giving it a chance.

 

[bender]

- This game could be extremely successful, but instead of premium +DLC, we’d prefer (insert their business model of choice that ignores what players in that space want).

I'm assuming that means a F2P model. It's all well and good that you think you know what players in the space want, but if the investors want to invest but only with a different market strategy it would be foolish to ignore that capital.

- Also, we don’t fund that prototype development. Have you considered Kickstarter?

Maybe I'm out of the loop, but it feels like the days of getting your project off the ground via crowdfunding are way behind us (kind of like the GamePass gold rush). I know he mentioned the difficulty of creating a vertical slice, but something compelling via Early Access would probably be the "easiest" way to crowdfund your game.

 

[Felessan]

The problem here is that devs got too used to use others money to provide games with no clear track record to support success chances.
And as market became fragmented where AAA and live service games (=expensive games) take disproportionally large share and runaway indies are more popular and known, investors don't really "believe" in AA to justify risks of invesment.

It's not really a catch-22. Investors have always been risk averse. That's nothing new.

Those investors that they go to (vc and angel one) not really risk averse. They just careful.

 

[MrRibeye]

I interviewed with a startup studio working on a 3rd-person battle royale with Dr Disrespect and I said we need a Plan B in case player numbers aren't high, but the CEO said even if they make 10% of Call of Duty money that's millions and millions of dollars so they are not worried.

My jaw was on the floor and I kept arguing ...

 

[Sakura]

Why not start by making a smaller indie game with low dev time and costs? It sounds like their entire plan is to just make small demos until someone gives them a few million, which doesn't seem like a solid business strategy to me (but what do I know).

The rise of indies is because their development cost model is a race to the bottom. The model is 1-4 developers (commonly younger) living at home or sharing a small apartment making a great, small game for under a million dollars. Publishers can fund these projects much more easily and when an oversized hit occurs, it just reinforces the model.

Of course, it’s also easier to ignore the tens of thousands of games of this size that get released every year and fail because the bets (and risks) are so small.

While it is true the vast majority of indie games are just generic metroidvania's or whatever that sell 100 copies if they are lucky, that's because most indie devs are just novice developers that don't have the skill set or knowledge to make something bigger. Many are also just doing it as a hobby or to get experience.
This guy says "We pulled together a prospective team that was a mix of proven industry veterans and highly talented junior developers who had all worked with each other over the years." so I'm not sure why they would be on the same level as the average indie game. If they've had time to put together demos to pitch to investors, then I don't see why they couldn't have instead used that time to make a nice indie game that would pay the bills, build the company profile, and give them more time to come up with and pitch bigger products.

Also their ideas kinda suck. An open world survival game? Extraction shooter? Why would they fund you over the countless other studios that make the same kind of games, especially when you don't already have a vertical slice ready to show?

If you want to make your own dev studio, you gotta put in the work, and sometimes that means working for free for a while. If you don't have enough capital to cover the first couple years or so without an investment then maybe you shouldn't have started the studio.

 

[Clear]

If you want to make your own dev studio, you gotta put in the work, and sometimes that means working for free for a while. If you don't have enough capital to cover the first couple years or so without an investment then maybe you shouldn't have started the studio.

There's no part of this that doesn't require "putting in the work"!

The issue is that for most people working for free isn't an option. Especially once they realize that there's no security at the end of it.

 

[Griffon]

So instead of making a smaller game and shipping it on Steam, they spent 2+ years making shitty Survival/BR/Tarkov pitches to publishers.
... I think I see where the problem is.

Kudos to investors for asking for gameplay demos and concrete track record first, means they are actually smarter now and won't finance just any big budget slop based on vague promises.

 

[Unknown Soldier]

Insofar as Bill Roper is concerned, a lot of these prospective publishers probably remember Hellgate London and are justifiably wary. Once burned, twice shy

 

[Sakura]

There's no part of this that doesn't require "putting in the work"!

The issue is that for most people working for free isn't an option. Especially once they realize that there's no security at the end of it.

I'm sorry but then you probably shouldn't be starting a studio. A gameplan that is basically just demoing your generic open world survival game etc, without even having a vertical slice, and expecting to get millions in investing doesn't make any sense to me.

 

[Astray]

I'm sorry but then you probably shouldn't be starting a studio. A gameplan that is basically just demoing your generic open world survival game etc, without even having a vertical slice, and expecting to get millions in investing doesn't make any sense to me.

That's the problem tho, when you factor in a plan for a demo, you get asked for a vertical slice instead, and when you get a vertical slice you get asked to make a full game.

At some point someone is going to have to take a financial risk somewhere.

 

[Toots]

A bleak depiction indeed...
Could be coming from bitterness stemming from having been someone once, but not anymore, or pragmatic knowledge of the industry...
Before hurling anathemas left and right, we must bear in mind one thing : Bill's name "Roper" has nothing to do with the density of his ejaculation... Or does it ?

 

[RJMacready73]

Someone has to take the risk and i'm all for putting it on the cunts that have 3 houses in the Hollywood Hills and 2 yachts in Monaco than the small groups of guys and gals who are willing to put the work in and make something decent outside of the studio system

 

[Angry_Megalodon]

What they don't say, nor the media (of course) is the wild amount of scams going on.

Devs of The Unknown 9, one of the worst games this gen, scammed Bandai into believing they had a sci-fi transmedia universe to exploit. The same goes for Concord and other projects built just to fool investors.

The bubble has burst and they are calling industry crisis to malpractices.

 

[Roman Empire]

Optimus Prime would have read the OP

 

[Felessan]

At some point someone is going to have to take a financial risk somewhere.

It might be dev all the way to the end.
Even publishing fully made game is not guaranteed.

Getting funding money from someone else is a privilege of a good product, not some obligations for those who have money.

 

[Punished Miku]

We're all blaming developers when the problem, really, is us.

If we were buying/playing those AA games, they'd fund and make more of them. But every time there's a showcase, SoP, Direct, etc, we shit on anything that's different than the last 10 games we played. Everyone wants AAA sequels, but then complain about having to wait 7 years for those AAA sequels.

Meanwhile, lot's of AA games just came out and die because no one wants to play anything unless its popular, or we dismiss it without even giving it a chance.

That's the truth. I think there's maybe 3 people on here that have played Eternal Strands. About the same for Slitterhead. About the same for Dungeons of Hinterberg. About the same for Flintlock.

 

[ByWatterson]

Investors expect a commitment to timeline and a return on investment. That's reasonable and they're not the problem. Are they just supposed to fund indefinitely with no expectations?

The problem is the development companies not being able to stick to the commitments they make when they ask for and take the money. Why should the investors care about the developers' responsibilities, families and lives? That's management's responsibility.

Bring back crunch.

Seriously.

 

[Astray]

It might be dev all the way to the end.
Even publishing fully made game is not guaranteed.

Getting funding money from someone else is a privilege of a good product, not some obligations for those who have money.

It's not an obligation to invest yes, but the entire idea of investment is to take on *some risk* and meet people in the middle.

Otherwise if the dev can just fund their game completely then why do they need the investor exactly?

 

[DeepEnigma]

We're all blaming developers when the problem, really, is us.

If we were buying/playing those AA games, they'd fund and make more of them. But every time there's a showcase, SoP, Direct, etc, we shit on anything that's different than the last 10 games we played. Everyone wants AAA sequels, but then complain about having to wait 7 years for those AAA sequels.

Meanwhile, lot's of AA games just came out and die because no one wants to play anything unless its popular, or we dismiss it without even giving it a chance.

Or they're all on a rental service where they go to die and condition people not to buy those smaller games.

 

[Punished Miku]

Or they're all on a rental service where they go to die and condition people not to buy those smaller games.

The rental service is probably the only thing helping them at the moment.

 

[DeepEnigma]

The rental service is probably the only thing helping them at the moment.

Double-edged sword. Monkey paw and all that gravy.

 

[Loomy]

Or they're all on a rental service where they go to die and condition people not to buy those smaller games.

The rental service is probably the only thing helping them at the moment.

This also brings up another problem. Perceived value. As great as renting or bundles are for making game affordable, and helping developers get some revenue early on, it devalues the product itself. There are a lot of $20 games that people will look at and agree it seems like a good game, but won't touch until it's on sale for $5 or part of a bundle.

So you're right, DeepEnigma . It is a double-edged sword.

The "middle" is just dropping from everything.

 

[Felessan]

It's not an obligation to invest yes, but the entire idea of investment is to take on *some risk* and meet people in the middle.

Risk one wants to take
Not for all risks there are people to invest

Otherwise if the dev can just fund their game completely then why do they need the investor exactly?

Devs obviously want funding as per Roper cry. They just should be ready that there might be no one to give them money and they will be on themselves.
Basically as per any independent business an ability to attract funding solely depends on business itself. And there are times when "idea" behind business is not attractive to investors so this business have to be self-funded or go bankrupt. It's an risk on business side, no one promised stable funding and line of investors

 

[Punished Miku]

This also brings up another problem. Perceived value. As great as renting or bundles are for making game affordable, and helping developers get some revenue early on, it devalues the product itself. There are a lot of $20 games that people will look at and agree it seems like a good game, but won't touch until it's on sale for $5 or part of a bundle.

So you're right, DeepEnigma . It is a double-edged sword.

The "middle" is just dropping from everything.

I'm sure that's true in some cases. But I do think that people are also just a lot more culturally conservative at the moment. I don't mean that in a political sense. I mean they are literally more risk-averse when buying entertainment and playing it safe. They're gravitating towards only sequels and known IP, or only the biggest of the best teams. A lot of great new IP can launch, and people will hear its worth checking out potentially, but will wait until it's dirt cheap to buy it and then would maybe be interested in a sequel after they know the IP and know it's good and have literally no risk left. Less and less people are willing to just jump in and try a new thing. I think this is the case across music, movies, and gaming at the moment.

We used to have a larger contingent of "hardcore" gamer tastemakers. They'd take the plunge on the rare and weird stuff and report back to everyone what was good, and that seemed to work at least a little bit. I think that's largely disappeared and even the majority of the "hardcore" crowd are trending towards more risk aversion. But who knows, just my idea. That's why I particularly like subs since it eliminates all risk and you just get to try new stuff frequently.

 

[Hari Seldon]

We just have a MASSIVE amount of supply relative to demand in the entire gaming space right now. The industry definitely needs to contract. And I would literally light my money on fire to make smores before I invested in an unknown studio making a survival game or an extraction shooter. Maybe shoot for an under-served niche and not try to compete against AAA?

 

[BigBeauford]

The consequences of high interest rates.

 

[ungalo]

I don't understand why he's saying AA is on the rise then saying he can't find foundings.

 

[Felessan]

We used to have a larger contingent of "hardcore" gamer tastemakers. They'd take the plunge on the rare and weird stuff and report back to everyone what was good, and that seemed to work at least a little bit. I think that's largely disappeared and even the majority of the "hardcore" crowd are trending towards more risk aversion. But who knows, just my idea. That's why I particularly like subs since it eliminates all risk and you just get to try new stuff frequently.

This haven't disappeared. They moved.
Most of those hardcore play anything crowd was younger people that now "test" completely different games

 

[Zacfoldor]

Please let me say something that some of you need to hear. Please hear it and understand that it is 100% true and always will be.

In this world there are all different kinds of jobs.

Some of them are bad. Like when you have to go work on an oil rig. They have to pay tons of money to find employees and they are always short staffed.

Some of them are great, like male straight adult film star. You get to screw fine women all day and get paid for it.

However, in modern society no job is better in the minds of our children than game developer. You get to play videogames all day, and get paid for it. Even better than male straight adult film star, because let me tell you boys that butt has paid its dues before they made it to straight stuff.

Unfortunately, there are only so many of those jobs to go around.

Jobs are not fungible. Supply and demand also applies to different kinds of jobs.

The job Game Developer is very highly sought after and not necessarily very skilled labor either. For example a Cisco certified systems engineer is probably 1 million times rarer than a "game developer" who basically took a few computer classes and was taught the engine at the game development job when they started...or they didn't take any computer classes and just got in the business back when everything was still redneck enough for that not to matter. These are not highly skilled people. These are in most cases artist. They may be highly skilled artists, but art is subjective. The highly skilled technical tentpole WILL work in the same building as you and is also a game developer but the difference between you and he is massive.

So when you have a massive supply of something(unskilled game devs) or let's just call them (artists) and a fairly static or only slightly gowning demand, then not everyone can be a game developer. That is what is happening in the OP.

Saying "it wasn't always like this" was always allowed, but also meaningless.

 

[iQuasarLV]

Please let me say something that some of you need to hear. Please hear it and understand that it is 100% true and always will be.

In this world there are all different kinds of jobs.

Some of them are bad. Like when you have to go work on an oil rig. They have to pay tons of money to find employees and they are always short staffed.

Some of them are great, like male straight adult film star. You get to screw fine women all day and get paid for it.

However, in modern society no job is better in the minds of our children than game developer. You get to play videogames all day, and get paid for it. Even better than male straight adult film star, because let me tell you boys that butt has paid its dues before they made it to straight stuff.

Unfortunately, there are only so many of those jobs to go around.

Jobs are not fungible. Supply and demand also applies to different kinds of jobs.

The job Game Developer is very highly sought after and not necessarily very skilled labor either. For example a Cisco certified systems engineer is probably 1 million times rarer than a "game developer" who basically took a few computer classes and was taught the engine at the game development job when they started...or they didn't take any computer classes and just got in the business back when everything was still redneck enough for that not to matter. These are not highly skilled people. These are in most cases artist. They may be highly skilled artists, but art is subjective. The highly skilled technical tentpole WILL work in the same building as you and is also a game developer but the difference between you and he is massive.

So when you have a massive supply of something(unskilled game devs) or let's just call them (artists) and a fairly static or only slightly gowning demand, then not everyone can be a game developer. That is what is happening in the OP.

Saying "it wasn't always like this" was always allowed, but also meaningless.

The childhood world view.
vs.
The reality of the world.

Sounds like 'ole Bill is still thinking like a child.