Thanks to the wonders of bargain books, I’ve recently picked up a copy of The Long Tail, a book by Chris Anderson. It’s thesis is that the future of selling is going to be based on what he calls the long tail, a pattern of sales where only a few blockbusters sell a lot of copies, but an incredible amount of niche products exist and become profitable due to aggregators: services like Amazon.com that become giant clearing-houses for hundreds of thousands of them. It’s a prescient book, however he glosses over one problem which also affects niche MMOs.
Aggregators profit from a long tail of a lot of niche products, especially digital ones. That’s because they manage to get rid of the high cost-low volume method of display that is retail selling. A good retail store can sell only so many goods, and since shelf space is at a premium, they constantly need to focus on the blockbuster titles to the exclusion of all else. If a MMO-only store existed, you’d see a majority of shelf space given to WoW, with the rest focusing on the current hot titles. It makes more sense to stock a WoW action figure or mousepad than a game like Darkfall to a point, because WoW’s base will generate more sales.
Chris promotes the alternative, especially for items that can exist only digitally. If you stock a tremendous amount of niche goods, and avoid a lot of the costs of retail, even if you sell only a few copies you’ll make money. That’s because the sheer number of sales on the long tail-the low end of selling- is great. If you carried 10,000 ebooks, even if you sold only a few hundred of each a year, that leads to a lot of money. However he misses out on a huge point, and one that we are seeing particularly in MMOs.
While this long tail mode of business is great for the aggregator, and great for Steam, it sucks for content creators. It makes it impossible or very hard for professional content creators to create works, because unless it is a blockbuster, it’s niche and will languish in a sea of other professional and amateur work. Kongregate, for example. So many games are chasing long tail sales that they act as a depressant in terms of revenue for everyone except the site owners and a lucky few. While the barrier of entry is fairly low, it is also in MMOs. A game like Fallen Earth isn’t competing against WoW, and that isn’t it’s difficulty. It’s competing against the long tail of 20-30 or more F2P Korean games, and other niche MMOs.
The creators cannot benefit from the long tail unless they too can diversify and increase content to fill a lot of niches. By increasing volume they can take advantage, but MMOs are notoriously impossible to do so and maintain quality. Hence, the nerd rage at Cryptic.
So we have a tough situation. The business model of the future is in the long tail: in aggregators that make money off of a lot of small sales. Netflix, Amazon, Ebay, Steam, Alibris, Itunes, and others. But that same model is unprofitable for many of the creators who are required to keep producing for the long tail to work. The difference is made up in amateurs and low-value work: Itunes makes money from a bad band or podcast as well as a good one.
So unfortunately what I think we will see is not a flood of niche or indy works. We will see a lot of games designed to be cheap and sell copies over time. This is why we have a flood of Wii minigame collections. They are cheap, and can be released over time to trickle in sales through bargain pricing. This is also why back in the day video stores had 70% of their new releases low-budget horror films.
MMOs though I don’t think can work. The Free to Play Portal concept is their attempt at the long tail. Have enough MMOs no matter how crappy and as long as they are inexpensive to make you draw in cash. The problem is that they for the most part are junk, and the market is moving towards a net game model: monetizing non-mmo genres like racing or FPS. I can’t see any portals actually encouraging indy growth: Ryzom, a Tale in the Desert, and Global Agenda are passed up in favor of cheap imports.
So to summarize, while the business models of the future are going to rely on big online services making money off of a lot of things, it’s soon going to get flooded by cheaply made and crappy product. As long as some few people buy them over time, the aggregators make money. But it will become increasingly hard for true indie projects to survive, because the long tail market rewards cheap cost and sheer volume over quality, and they don’t pay enough to make a living off of it. For MMOs that take a lot of effort to design, this could be fatal.