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The Long Tail of Digital Games

David Edery
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In the raging debate over the legitimacy and consequences of the “Long Tail” theory (Anderson 2006), few markets have received more attention than those dedicated to digitally distributed video games. Proponents of the Long Tail have argued that digital distribution will finally turn the historically hit-driven game industry on its head—that future revenues will be driven by consumer activity distributed across a huge catalog of video games developed, in large part, by independent game developers as opposed to titanic publishers; that it will prove consistently more profitable to focus on niche audiences in this new world of digital game distribution, rather than to focus on the development of broadly appealing hits; and (for those of us interested in the spreadability model) that a new generation of empowered consumers will actively seek and promote the highest-quality content, driving revenues to the most deserving game developers and leading to a healthier and more vibrant video game ecosystem overall.

There can be no doubt that encouraging signs of this development have begun to crop up everywhere. Many now-prominent independent game developers, such as The Behemoth and 2D Boy, have leveraged console-based digital distribution platforms such as Xbox LIVE, Wiiware, and the Playstation Network (PSN) to reach markets that were previously only accessible via the long arm of a traditional publisher. These developers have not only created award-winning games that have generated significant amounts of profit. They have, in many cases, retained the rights to their intellectual property (IP) and operated with near-total independence, an unthinkable situation for small console game developers only a few years ago. And, while digital distribution on the console typically generates the most buzz, independent developers have made equally great strides on mobile devices, the web, and the PC thanks to a wide variety of channels (stores such as iTunes, Android Market, and Steam; portals such as Kongregate.com; and more generalized distribution through social network sites such as Facebook, to name just a few). Savvy observers have noted that in mobile ecosystems in particular, independent developers have consistently had greater success than traditional publishers in cracking into the “top 10.”

These happenings, while extremely encouraging, mask some current realities and challenges faced by digital game distribution systems. Many prominent journalists, analysts, and scholars have recently argued that it turns out hits are no less important in the new Long ail” world. As Lee Gomes (2006) argued in the Wall Street Journal, Amazon.com still derived 75 percent of its book sales from just 2.7 percent of its titles at the time of that writing. True, 2.7 percent of 3.7 million books is nearly 100,000 books—a great deal more than the total offered by any brick-and-mortar store. However, that doesn’t change the financial situation for the authors of the other 3.6 million! Gomes also noted that, wherever he looked, hits remained vitally important to a given ecosystem (or, in his words, “iTunes looks like Billboard, not some paradise of niches”). And research by Anita Elberse (2008) has shown that, in some Long Tail markets, “success” has begun to concentrate in progressively fewer best-selling titles. Elberse also found that, in some digital markets, independent artists have actually lost share to major labels. This is not the indie paradise that Chris Anderson promised us.

The phenomena studied by Gomes and Elberse appear to be repeating themselves in digital game ecosystems. While, unfortunately, no verifiable public sources of information exist for the sales of iPhone, Steam, Wiiware, PSN, or Xbox LIVE Arcade games, it is widely believed that all these ecosystems have become more hit driven over time. Whereas, once, any game had a reasonably good chance of reaching a sizable audience, thousands of games (most especially on the iPhone) now go entirely unnoticed. This was the inevitable and unsurprising result of the initial supply-demand imbalance that characterized each of these digital ecosystems upon their births. Millions of consumers, eager to download content on their exciting new game consoles or phones, pored through initially limited game catalogs and purchased everything in sight. Dramatic sales were trumpeted by indies, by the press, and by the platform holders themselves, spurring huge increases in content supply, which pulled each ecosystem back toward the more familiar hit-driven model.

To a limited extent, the platform holders who drive these digital game ecosystems can be held responsible for the speed with which they have evolved into hit-driven businesses. For example, as of the time of this writing, most of the major games ecosystems do not possess an automatic recommendation engine of the sort that has proven so useful and wildly successful on Amazon.com. Many of those platforms also do a curiously poor job of quickly surfacing new games that are receiving positive customer reviews. The consequence, unsurprisingly, is an increasing tendency for consumers to steer toward titles they recognize, which means games based on well-known IP and/or games that have received substantial promotion by the press and user communities. For example, most of the heralded hits on Xbox LIVE Arcade, such as Braid, Castle Crashers, Battlefield 1943, and Trials HD, are games that were promoted years in advance of their public release or were (like Battlefield and Trials) based on existing franchises with established fan communities.

However, it would be terribly unfair to blame the platform holders for the ultimate evolution of their digital ecosystems into hit-driven businesses. As noted earlier, even Amazon.com, with all its supremely refined tools and merchandizing mechanisms, has not managed to avoid the realities of a hit-driven business. More importantly, research has indicated that—given fundamental characteristics of human decision-making and interaction—it simply may not be possible to avoid hit-driven market dynamics in a digital ecosystem. Matthew J. Salganik, Peter Sheridan Dodds, and Duncan J. Watts (2006) recently demonstrated that, in a digital music ecosystem devoid of traditional marketing signals and recognizable IP (but possessing a public rating system), not only did “the hits get bigger,” but popularity might be understood as essentially random. A song’s popularity depended entirely on the first few users who happened to notice, rate, and download it; a song that was number one within one test ecosystem was bottom of the barrel in another.

Of course, one could view this not as randomness but as the ultimate validation of the spreadability model. That is, if a tiny group of initial consumers in a (admittedly rarified) digital ecosystem can have total control over the fate of a product, perhaps media companies have underestimated the importance of every consumer’s voice. Perhaps active user communities—even very small ones—hold the key to success in this new Long Tail age. It’s an age in which hits still matter (perhaps more than ever) but also in which indies have a better chance to make an impact on consumers and society at large. It may not be the Long Tail age that Chris Anderson promised, but it is an exciting one nevertheless.

 

References

Anderson, Chris. 2006. The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion.

Elberse, Anita. 2008. “Should You Invest in the Long Tail?” Harvard Business Review, July–August, 1–9.

Gomes, Lee. 2006. “‘Long Tail’ May Not Wag the Web Just Yet.” Wall Street Journal, July 26. http://online.wsj.com/public/article/SB115387606762117314-WwmoACNV7rjYDAvcwtpe8vMpMYs_20070725.html.

Salganik, Matthew J., Peter Sheridan Dodds, and Duncan J. Watts. 2006. “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market.” Science 311 (Feb. 10): 854–856.

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