Are We Headed Towards a Casual Games Crash?
It depends on how you define "crash." As a total bottom-falling-out type deal, maybe not. But the casual gaming boom can't go on forever, and there are signs that its coming to an end.

Casual gaming has been the big subject in the video game industry for the last three years or so. That was the point where a few whitepapers came out and revealed that one of the largest areas of growth in the market was in the "casual games" area, neglected by the big publishers, and populated by a neglected audience --- principally women over age 40.

The growth has been nothing short of explosive over the last few years. The major players have emerged (though there's still plenty of jockeying for position to be had). The big publishers have started paying attention, and have created casual games divisions. The market is being saturated with product, with portals like Big Fish Games advertising "A new game every day." And the mainstream media has picked up on things, "suddenly" discovering that the gaming landscape has expanded.

Portals have started slashing prices to compete with each other, offering "memberships" which result in steeply discounted prices. And they have become more and more dependent upon ad-based revenue - which may or may not trickle down to the developer. And sites like Kongregate which are entirely ad-revenue based, offering free games to consumers which, like it or not, do compete with the pay-to-purchase games. Many of the established portals now have internal development teams - and they naturally promote their own stuff ahead of that of third-party developers. All of this spells weaker returns to the developers - though what else is new? Add to this the fact that the cost of development of "competitive" games has been increasing substantially in this space, and there's clear signs of danger ahead.

While these could all just be growing pains of this exciting new segment of the market, they may also warning signs that the music is about to stop in the not-too-distant future, and everybody involved had better make sure they've got a seat. The "explosive growth" phase may be at an end, and we may be entering the "maturity" phase of casual games. At this point, things will level off. That's not quite the same as a crash, though if you have built a business plan around the belief that growth is going to continue as it has over the last three years, it'll probably feel like one to you.

It's inevitable, really. The casual games market grew by 20% last year. Even if it grows at the same rate this year (and there's plenty of growth opportunity left, don't get me wrong), it seems to me - from my admittedly mouse-eye-view - that the supply side of casual games, casual game sites, and casual game developers have increased quite a bit more than 20% over the last three years or so. When supply gets to the point that it exceeds demand, the market corrects itself, and its not too pretty if you are on the provider side of things.

We indie developers who don't specialize in casual games ought not feel secure, either. We're probably going to catch our share of the "leveling out" fallout, too.

So - am I just paranoid and talking gloom-n-doom? Or are we going to look back on 2008 or 2009 and say, "Ouch, that one kinda hurt?"


(Vaguely) related paranoia:
* Downloadable, Casual Games Gain Momentum
* The Casual Game Industry Sucks, Two?
* Will 2007 Be the Year of the Downloadable Game?
* The Casual Game Industry Sucks, Too!
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Labels: Biz, casual games

- posted by The Rampant Coyote @ 6:00 AM (Permalink)