You likely haven’t heard of Slitherine or Matrix Games (they’re the the same company), unless you’re an aficionado of serious strategy games. If being a armchair general appeals to you, however, it is very likely that you’ve played a title like Battle Academy, or one of the Commander titles.
What’s fascinating about Slitherine is that is is one of the few companies that absolutely insists on the value of its content. Sales are few and far between, and in fact its Battle Academy release is one of the most expensive games you can pick up on the iPad. And yet, even as the rest of the corporations in the industry look to batter one another into submission with slash-price cutthroating, Slitherine has succeed, making a strong argument that it’s more sustainable to find a niche and supply it with quality products than try to appeal to a mass market without really engaging with the players.
We sat down to have a chat with the Director of Slitherine, J.D McNeil, about his frustrations with this flight to the bottom, the retail system, and the challenges that niche publishers face with console manufacturers and audiences.
What I found really interesting is that for all the rhetoric around being supportive of indie developers and publishers, Slitherine’s experience with Sony’s approvals system is still something of a business risk. After going through the energy of developing a game for the platform, to have it denied release, despite being deemed of standard enough for other markets, is a very real risk of a failed investment. Luckily it worked out well for Slitherine in the end, but it’s a sign that the console platforms are still not a guaranteed avenue to success.
As the digital market continues to grow and strip production costs out of game development, it is going to be interesting to see if more independent and niche publishers are able to find similarly sustainable business models. If McNeil is right, they should be able to succeed, as long as they don’t treat their content as a throwaway commodity.
Digitally Downloaded (DD): As a specialist publisher of serious and complex strategy games, has the market become tougher with the current market dynamics, or have you found better opportunities? Why do you think this is?
JD McNeil (JM): Well for sure the market has changed dramatically in a number of ways. Firstly the collapse of retail has had a profound effect on the entire industry. So far as our particular sector of the industry is concerned, retail had become a diminishing factor in our business model for some time. This was not an instant effect, but had become increasingly obvious over a considerable period of time.
The retail focus had become increasingly fixated on triple-AAA releases and big brand hype. In my view there were several problems with their approach; firstly it divorced them from a significant sectors of the market, in our case the TBS strategy game sector that we focus on had increasingly become a no go area. Their strategy to remove, almost entirely, smaller specialist publishers to focus on triple-AAA titles left little selection on their shelves and put them in head to head competition with mass market outlets.
For example in the UK and I believe other territories they completely failed to deal with the deep discounting introduced by supermarket chains, who often used video games and for example petrol as lost leaders to lure consumers to their stores. For mid size and even some larger publishers the writing was on the wall. It was change or die. It is fairly obvious when one scans the market today that many great names have passed into history. The knock on effect on developers has been just as dramatic with an almost frenzied rush to the bottom as far as pricing is concerned. Free-to-play and 0.69 cents are very difficult business models for developers, especially those who release a single game a year. Firstly they have to fund development and then they have to wait for their revenue to arrive by drip feed. Sure we see a Candy Crush, great game by the way, or Angry Birds every now and then, but these are like lightning bolts and not even close to reality for the great majority of developers. This is a totally flawed business model.
For developers the void on how to sell their games has to some degree been filled by the plethora of distribution platforms and in truth, its frying pan to fire for most developers, as again these distribution platforms depend almost entirely upon deep discounting to drive sales. If you are a distributor/ publisher only one thing counts, driving your revenue stream and the way they seem to do that is to compete amongst themselves on the same products with alternating deep discount promotions. Now assuming they can get enough developers and a selection of larger titles on board they can make their money and it matters little that developers cannot survive with this model. It works for the distributor and the more product they can cram onto their site the better, as even with the deepest discounting the still make a profit share as they have done nothing, other than place the game into their store.. Compare and contrast this with the developer who has to make enough from this one title to survive a year and fund the next one. It simply does not work and time will tell that this is a flawed model. If distribution/ publishing does not get its act together my forecast is that many will follow in the footsteps of retail.
Our business model is totally different and we are thriving, and consequently so are our developer partners. Why? Because we focus entirely on a sector of the industry that is savvy, knows what it wants, values historical accuracy and realistic gameplay and is prepared to pay a fair price to get this.
DD: You’re one of the few publishers that have insisted on a “premium” price for your iOS games. Why has that been important to you, and how can a publisher compete with the likes of $0.99 EA/ Gameloft titles?
JM: I think I touched on this at least in part on my earlier answer. Firstly we don’t compete with EA or Gameloft; our products are entirely different in type and audience. Another important factor is that we do not impose prices on our developer partners and our relationship with them is nothing like that of a distributor. Our developers have as much to say about the prices we charge as we do. We hold an enormous amount of data relating to trends, audience and other factors that influence our thinking and our market. The fact is that there is no other source for the information relating to our sector of the market and although we get all sorts of advice from both pundits and journalists on pricing, their information it is based entirely on guess work and hyperbole.
Consequently the advice we are able to deliver to our developers is in fact the only credible source of this data. It is also very important to realise that whilst we could easily cope with doing the same kind of deep discounting in a similar way to the various distributors this would not benefit our developers. Their games often take years to develop. They do not have a huge back catalogue of titles to bring in revenue and even allowing for the spike in sales when their new release goes out this seldom instantly earns enough to cover their full development costs. In some cases it may be years before they have enough monthly revenue from current and back catalogue to match their costs.
Now if we were simply a distributor that would not matter a jot, but we work with developers over the long term and we can predict and forecast where their breakeven point is. The other factor to bear in mind is that none of this is an exact science and sales can be unpredictable, both up and down. The app store and several other distribution sites have now created a belief that consumers have a right to get games at heavily discounted prices or even 0.69 cents. This belief is reinforced by the plethora of download portal sites scrambling in the race to the bottom to attract custom and creating price wars to sell the same titles. In fact apart from Steam with their enormous critical mass I see no real long term future for these sites and I believe they are heading they way of retail. The simple truth is that these sites can only get exclusive deals from Steams leftovers.
DD: In the past you have published games on consoles (I really loved Commander Europe at War on the DS). Are consoles a future market for Slitherine/ Matrix?
JM: The demise of retail has been a significant factor for us on this particular point. As already noted, these days it is almost impossible to get shelf space at retail unless you are dealing in triple-A product. This is demonstrated by the demise of almost all midsized publishing firms and many larger ones. This has also been a major factor in the struggle for survival amongst many development studios.
As you have gathered from my responses here, we have to some degree been sheltered because of the very specialist nature of our business. However we recently released Legends of War on PS3, Xbox 360, Vita and PC. Our sales guys had to work their butts off to secure sales. The other issue is the length of time in development and the sheer cost of developing on these platforms. The cost value equation, when comparing against tablets is a major and deciding factor here. However one ray of sunshine here is that when we consider our sales on PS Network together with the relaxation by Microsoft in allowing a wider spread of titles onto the Xbox Live digital platform our revenue stream has leaped and we are revaluing these platforms. Our problem is the time to pursue these various opportunities and of course we need to concentrate firmly on our core business and not become too distracted.
DD: Why do you think that games of the kind of depth that Slitherine publishes struggle to find a stable console audience? I know there are a lot of gamers out there that think the likes of Advance Wars are deep strategy games…
JM: My answer above to some degree deal with this. If the games were out there the audience would find them, but sadly there are many barriers to a successful release on these platforms. The most frustrating in recent years for us was that Commander Europe at War, Great Battles Rome and Great Battles Medieval were refused release by Sony in the USA. Commander was also refused by Microsoft. Their review panels were simply unable to fathom the attraction of these types of games. We in fact wrote a thesis on the TBS sector of the business to show to these bodies, but to no avail. This was despite Sony Europe’s approval of both Great Battles titles in Europe. This could of course have been a disaster in terms of sales, but fortunately despite this they all sold extremely well. It tells you something about their approvals system and to be candid they just did not understand this sector of the business.. Oddly we have now just been granted permission to release Great Battles Medieval digitally in the USA. Go figure.
DD: Kickstarter has been a boon for small and independent publishers. Do you see much opportunity there yourself? Why/ why not?
JM: Kickstarter has evolved and changed. It was originally a crowdfunding opportunity to help developers with little or no funding and who no longer had support from publishers to raise the cash to develop their games. Many of those games are now coming to market and from the reports we are now seeing several cannot sell their games to anyone other than the initial backers. Without a credible sales platform or route to market it’s difficult to see how this will change. So to a large extent Kickstarter is changing and is now being used as a marketing aid to raise awareness for games, in many occasions funding is no longer the primary goal, although the money is of course still handy in spreading risk.
Without wishing to be a harbinger of doom I think it is only a matter of time before we see titles that were successfully Kickstarted never even getting started. We have looked at Kickstarter from a marketing and PR perspective and whilst it does look quite attractive from that point of view we are reluctant to become involved for the reasons I mention, at least until we see how it pans out.
DD: Do you see much opportunity to expand your scope beyond strategy games? What other kinds of games would you consider publishing?
JM: We receive invitations on an almost daily basis to evaluate titles from various categories including MMO, RTS, casual games etc but we are quite clear about our direction and strategy. Our mission now is to raise the bar for our developers and give our audience the sort of games they love.
DD: With self publishing being a genuine opportunity for small development teams, what value can a publisher offer them?
JM: Our relationship as a publisher for our developer partners is quite different from anything that has been done in the past. This relationship is unique. We provide support in multiple ways and the relationship is a true partnership. Arguably the biggest single factor in play here is that we put their games in front of a dedicated fan base of millions of strategy games players, who visit our sites on a continuing basis. We also provide a tailored support service individually designed to meet the needs of individual developers providing, contractual, legal, banking and asset provision in multiple areas to improve their games, including movie making, voice overs, localisation, porting to other platforms and funding where necessary. We provide an annual conference where our developers meet with the press and more recently we have been inviting developers to spend a week or so at our offices for really structured and focused sessions with our production, marketing and sales staff.
DD: Where do you think the strategy genre is going to evolve in the future?
JM: Watch this space!!
DD: What are the chances of getting a new Harpoon game? Those were the days…
DD: Harpoon was a great product and in fact still sells very well on the site. However our new title Command is following in the footsteps of Harpoon has taken the genre to a new level. From our perspective we release multiple games on subjects like WW2, so two modern Naval titles can quite easily survive and complement each other without any problem. In fact Larry Bond (the creator of Harpoon) was a guest at our Developer conference in Fredericksburg earlier this year and as you might guess Harpoon was discussed.
DD: Finally, what games are you playing at the moment?
JD: I can’t tell you, that would be an exclusive, but it works great on my tablet and my office machine.
– Matt S.
Find me on Twitter: @digitallydownld