Where's the squeeze, if more games 'succeed' on PC?

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[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Welcome back to our newsletter for yet another week, as we all LaaS (life as a service) our way inexorably towards the grave. You too can look forward to patches like ‘new baby’, ‘we’re grandparents!’, and ‘uhoh, movement nerfed’ as you approach EOL.

Oops, too much death-y humor for Monday? So rather than ask if it’s your first time, let’s get on with some proper analysis. We’re starting today’s missive out with a look at what Valve said about Steam sales in 2023, and an attempt to fill in the blanks…

[PSA: yes, you can support GameDiscoverCo by subscribing to GDCo Plus now. You get full access to a super-detailed Steam data site for unreleased & released games, weekly PC/console sales research, Discord access, seven detailed game discovery eBooks - & lots more.]

Where’s the squeeze, if more games win on PC?

Late last week, Steam put out its annual platform summary for 2023, and it proved a couple of things. Firstly: for a compact team, they sure do ship a lot of things - SteamOS updates, dev-centric tweaks, and features galore. (Seriously, read it.)

But obviously, we’re interested in the bits that talk about game performance. And here - specifically - was what Valve said about games on Steam in 2023:

• 2023 was the first year in Steam’s history where more than 500 games earned more than $3 million in gross revenue - in that calendar year alone:“For comparison, that’s more than double the number of games hitting the same threshold five years earlier in 2018.”

• Steam's 2023 Autumn Sale "saw healthy growth" in both total revenue and the # of games doing well: Taking this Black Friday-adjacent sale as a snapshot, specifically between 2022-23, games that made >$1k revenue in the sale increased by 19%, >$10k by +17%, >$100k by +17%, >$500k by +19%, and >$1m by +21%.

• From December 20th to December 31st, 2023, players redeemed more than $80 million in physical Steam wallet cards: we forget about the physical Steam cards sometimes. But - if not as much as platforms like Roblox - a lot of people will still use physical gifts with their kids and friends.

There a few other notable stats in there. (For example, 11.8 million players taking part in a Playtest on Steam during 2023, a 41% increase compared to 2022.) But what the above stats largely show is that some games are performing very well on Steam.

The next question you’re likely to ask us is: well, what games? Old ones, new ones, borrowed ones, blue ones? (Actually, blue ones do quite well, but that’s a whole other can of suspiciously undulating worms.)

And what this snapshot shows is twofold: firstly, more games are doing better in discount sales, YoY. And secondly, more games are making >$3m on Steam than ever before. This is great! But what it doesn’t really talk to is new launches - or overall competition.

Look, if you Google for the phrase ‘robust back catalogue’ + games, you’ll see a host of companies - from Tinybuild through Devolver, and even Ubisoft - using it in recent years. Not sure we’ve ever seen a ‘disappointing back catalog’ statement, uh, ever.

And ‘already successful’ games can keep monetizing and discounting for some kind of semi-guaranteed long tail. But how about brand new games? We’ve teamed up with key partner Gamalytic again, and tried to answer that question for Steam.

Below is our attempt to calculate ‘first 3 months gross revenue’ for Steam games that launched from 2017 to 2023, at various levels of success. The largest cohort is ‘games that grossed between $10k and $50k’, and the bottom is ‘games grossing >$10 million.’":

What does this tell us? Well, a couple of things:

• The total # of new games on Steam ‘succeeding’ has been stable or increasing: none of these lines fall off the pace, though a couple bobble up and down. And every single one of them is bigger in 2023 than in 2017.

• The $100k-$500k bucket is one of the largest ‘gainers’ over time: of the 300 extra games doing >$10k in their first 3 months in 2023 compared to 2017, half of those are concentrated in the $100k-$500k space. (This may speak to the niche-ification of the space or the solo-dev ‘breakouts’ that keep happening.)

• The amount of games succeeding has not kept pace with the # of new games: you might know that the number of new games released on Steam has more than doubled since 2017. As you can see, the number of games making >$10k has not doubled. (It’s gone up by 27%, and we think long tail is now a bit worse on most smaller titles.)

To make this clearer, we split out a single graph which is ‘total new games on Steam’ vs. ‘all games that we believe grossed >$10k in the first 3 months’. This is what you see:

OK, then! When we print data like this, you probably have more questions than answers. An obvious one is: ‘#1 - aren’t most of these new titles actually inexpensive hobbyist games?’ And another is: ‘#2 - how much money went into making the new games released in 2017, vs. 2023?’

We’re going to try to come back in a subsequent newsletter and have a hack at this answer, since it’s quite important. Our off-the-cuff responses are:

• #1 - “Hobbyist games are the majority of the increase, but there are more non-hobby games too. And also some of the 'hobbyist' games are becoming hits, and displacing revenue from the bigger new games.”

• #2 - “We suspect that at least 3-5x the external costs went into trying to make new hits in 2023 vs. 2017. But the only way to estimate that more exactly is individually estimating dev costs for games.” We might be bold enough to try this soon…

So yes, we think there is a squeeze here for new games for the trad PC (& console) game industry. And it’s coming from multiple directions:

• select new hobbyist/semi-pro games breaking out ‘bigger’ on PC.

• ‘investor/publisher money’ crowding the market for new mid-sized & large games. (Along with inability to always well-differentiate these with hobbyist games!)

• high-quality older games - both games as a service-y ones or just premium ones - monetizing the long tail via discounts and IAP.

We’re not sure any of this is news to you. And it explains Steam’s performance stats from 2023 highlighting improved performance from discounts, and robustness in overall catalog.

But at least you have some extra data to back up what looks in data - unfortunately - like a major market overinvestment in new games vs. legacy titles? (And may explain some of the current layoffs plaguing the biz.)

Holding onto your launch players - how to do it?

We’ve been ‘holding on’ to this one for a few weeks (*sad trombone noise*), but Paul Kilduff-Taylor has followed up his great blog about how to ‘catch’ players with another impossibly long - v.good - one about holding PC game player attention.

The piece starts with a good point: “Does holding attention really matter? There is widespread agreement that a good commercial video game should be attention-grabbing but ongoing engagement (or "retention") is a more contentious topic.”

Paul suggests that if you believe that “it is reasonably well demonstrated that a high number of hours played correlates with units sold, especially on PC”, you probably do want to hold player attention - even if it’s only to finish your ‘X hour long’ game.

Here’s the four stages of ‘holding’ players that Kilduff-Taylor believes take place - you need to pass one to get to the next:

• Evaluation: players “checking to see if [the game] fundamentally works” - so not having obvious bugs, and having great ‘game feel’ and ease of entry/tutorials seems to be key.

• Exploration: this involves “figuring out and testing the limits of the experience”, and gets into game depth: “It's one thing to create a set of base mechanics which most players will accept for 30 minutes, and quite another to turn that into a substantial game.”

• Integration: this is when players “agree fundamentally with your design choices and want to either push themselves to complete the game, or otherwise develop a long-term relationship with it.” You’ve sold them, in other words!

• Perpetuity: here, Kilduff-Taylor does reference ‘infinite grind’, but also highlights alternatives: “Hyper-systemic games like Dwarf Fortress, Caves of Qud or Kenshi [function as a story generator]: "players can tell an infinite array of stories" is an intriguing design pillar that can be approached in different ways.”

Having DM-ed with Paul about this blog series, we told him he was ‘accidentally writing a book’ through these ever-expanding posts, lol. That’s why our summary covers a fraction of the material. Go poke at it if you have a chance.

The game discovery news round-up…

Finishing things out for this fine Monday, we have a whole bunch of game platform and discovery news to impart. Which we will do, in the following order:

• According to a Nikkei report (via VGC), the Switch 2’s ‘delay’ - possibly until around March 2025 - was “partly so that Nintendo could avoid potential hardware supply issues” - and perfect launch titles. And it expects “the next Nintendo console to again be a hybrid portable-home device similar to Switch.”

• We kept meaning to look at Data.ai’s free with reg. ‘state of mobile gaming’ report, but failed to do so until Joseph Kim summarized the Top 5 takeaways. And there’s some real ‘fun’ graphs - like the demographics of mobile genres by age (above!)

• This update on PlayStation VR 2’s upcoming games from Sony also slips in there: “We are currently testing the ability for PS VR2 players to access additional games on PC to offer even more game variety in addition to the PS VR2 titles available through PS5. We hope to make this support available in 2024, so stay tuned for more updates.” Huh!

• We’re still finding some people don’t know about SteamDB’s Chrome plug-in, so repeating and amplifying: it injects real-time & all-time high CCU, Steam followers, lowest-recorded discount and more when you go to Steam’s website. (Which is very, very helpful.)

• In the continued ‘what % of Helldivers 2 sales are on PC vs. PS5?’ area of interest, GI.biz’s Chris Dring confirms that across Europe, “well over a third” of Helldivers 2 sales were on PS5 in the first two weeks. (GameDiscoverCo estimated 65-75% of worldwide sales on PC a week ago - which basically fits in, right?)

• One tidbit we missed from this Game File interview with Xbox’s Phil Spencer? He said “gaming via the cloud now accounts for a double-digit percentage of total hours of Xbox games played.” But Phil punted on if it’s still majority on-console use: “Any conversation we have on cloud is very time-dependent because it's growing so fast”, lol.

• As part of the EU’s Digital Markets Act changes, Apple opted to discontinue web apps for iOS (sometimes used for games!), and now the EU itself is investigating that decision, telling The Verge: “We are indeed looking at the compliance packages of all gatekeepers, including Apple… in that context, we’re in particular looking into the issue of progressive web apps.”

• Here’s another one of those‘I went to DICE and maybe the biz isn’t doing too well’ posts. And we’d particularly highlight this comment on current PC & console game funding availability: “I spoke with a dozen VCs and indie/mid sized publishers and they were (for once?) aligned on their “sweet spot” amount - $500K.”

• Just a small clean-up - the ‘final’ transcript of the recent Sony financial results had Sony president and PlayStation chairman Hiroki Totoki saying that “the use of business expenses and assuming accountability for development timelines” needs to be improved at Bungie, and not PlayStation as a whole. (Not sure if mis-translation, mis-speaking, or mis-direction at play here!)

• Interesting to see that Dead Island 2 stealth dropped for Game Pass on Friday, not announced in any of the ‘upcoming Xbox Game Pass’ blog posts that we spotted. (Was this due to it being a late addition, or a ‘keep it on the down-low’ publisher request, we wonder?)

Finally, look like the GDC 2023 lecture by Humble Games (using Interpret data and survey!) on ‘Who plays indie games?’ is now up for free on YouTube. Lots of granular data in this one, even if the definition of indie can be maddeningly ethereal:

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]