The second day of GamesBeat 2024 brought together panelists from every corner of the gaming industry to talk about what it takes for developers to succeed — and thrive — in an ever-evolving gaming market. It’s been particularly tough last year and at the start of 2024, said David Stelzer, president of Xsolla, pointing to the roughly 80% drop in investment and the number of jobs left. But building and sustaining a viable games business is still possible, with creative funding strategies, streamlining resources and launching strong.
“When I look at this thing, especially with the perspective of 25 or 30 years in the business, I see this as the games industry taking a breath,” said Ron Scott, GM of Xsolla Backend and SVP business development at Xsolla. “Once the first person gets to the point of wanting to cut back a bit, trim some of the excess, see some things on their balance sheet they want taken care of, you get that reorganization. Other people follow suit and cut back. But what it’s really doing is giving these companies a little breathing room to make it through what might be a tough market condition for a year or so, but also to establish a solid base so when the growth does come back and the economy opens up and that new avenue for growth hits the industry, you’re ready to start hiring right away.”
But a downturn in the market is also an opportunity for innovation, said Jessica Tams, venture partner at Griffin Gaming Partners.
“It’s a good time to come in and start up something new, try new things. Maybe they’ll be awesome and maybe not. But it’s a good time to set up something right now,” she said. “Money will be tight. But as it opens up, then they’ll be able to take what they’ve created and actually get funding.”
What we’ll see is continued consolidation, said Doug Morin, ex-CEO at Devolver Digital, which will garner the attention it takes to get noticed.
“The focus has to be on ROI and discoverability — you have to solve for those two things. If you can solve for those two things and demonstrate it, there is a wave of institutional capital that will back you,” he said. “The capital is there. This will be an exciting next few months, but I think as we get to the next year, you’ll see some very strong players, some very good games, some very good companies, and the cream will rise to the top.”
Finding a niche and getting noticed
On the venture side, things are starting to pick up — though the checks they write will obviously be downstream of the money raised, said David Kaye, general partner at F4 Fund.
“We’re seeing things get a bit more active, which is good for everyone, because it will flow through to developers eventually,” he said. “One tip I’d have — just trying to be very audience and distribution driven.” He pointed to the success of Power Wash Simulator, which was pitched as a game for folks who love power washing, or first-person shooters, or both.
“It’s important to be different and unique in some way, and use that as a wedge into an audience,” he added. “We see a lot of stuff that’s a little undifferentiated. That’s a hard place to be. There are so many great games for people to choose from, and so many demands on people’s attention.”
Stelzer pointed out that the industry works on cycles, both capital market and hardware cycles, and as belts tighten and technology evolves, there are going to be a lot of holes in publisher portfolios.
“They’re not going to have enough content in a year or two years to fill their pipeline,” he said. “The things that are being made now, if you can weather the storm, are going to be able to find a home. Quality is always one of those things that rises to the top. If you’re making good-quality games, if you have a solid management team, if you’re playing with your fundamentals, if you’re able to talk clearly about your product and demonstrate where your audience is and how you’re going to reach them and how much money you can make to return that investment, the opportunities will be there.”
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