EUR 2 billion. This is the price paid by Microsoft to take over the independent studio Mojang, creator of the game Minecraft, representing more than two-thirds of the total turnover of the video game industry in France and Belgium. Madness?
At the risk of offending some, let us reply in the negative. Microsoft is one of those large technology companies that fully appreciate the potential of the gaming market.
Intrinsically international, the video game market generated more than € 75 billion in revenue in 2013, an increase of 17% compared to the previous year. In France, for the tenth consecutive year, it is the cultural industry that is most resistant to the crisis, to the point of making Cannes pale with its 2.7 billion euro figure. Anatomy of this industry at the heart of the use of digital media.
On the software side, the market fell by 7% in value in 2013 in France; in Belgium, it fell by 11.8%. But from 2014 onwards, it is the beginning of a new cycle: following the launch of the new generation of consoles (Xbox One, PS 4, Nintendo Wii u), the market is revitalizing itself around the publishers ‘ offer. To generate real added value, publishers must redouble their inventiveness, which is facilitated by the progressive detachment of developers from platforms such as Sony, Nintendo, and Microsoft, in favor of direct sales via the internet or smartphones.
New business models are emerging, such as cloud-gaming (the equivalent of video on demand) or the minute-gaming, from social networks and mobile technologies. With use that believes proudly, the business models of the sector are not yet stabilized. After experiencing an explosion of independent developers, the sector, although consolidated, remains composed of a few large groups (Ubisoft notably) and a multitude of independent studios.
At the origin of free successes on the networks, these studios make use of their adaptability by selling the licenses of their games. This allows them to keep a flexible structure to focus on creating innovative gameplay. However, it remains particularly difficult for studios to achieve a stable break-even point.
The time it takes to develop a game is important (30 weeks on average) and generates very variable production costs: from€ 3k for a single game, to€ 200k – € 800k for a more sophisticated game and several million for classic games. These high costs result in a high need for working capital:” studios must have a strong foundation to be able to wait until a game is commercially successful, ” explains Julien Villedieu, delegate of the Syndicat National du Jeu Vidéo (France). This need is reinforced when the studio sells its games on the App Store or Google Play, where the price per game can go down to € 0.79.
To resist these cycles inherent to the industry, many studios are diversifying, notably through the “serious game” which has become in a short time a tool for playful training in business, communities and public services.
Of the hundreds of startups created each year, many do not last two months. They often do not have access to funding systems to support their activity during the creation process or the natural development cycles of subsequent games.
However, the consolidation of the media gives rise to new opportunities, like Ubisoft, which creates its cinema studio.
The cultural industries are converging, and in an industry that is becoming more and more structured, new financial mechanisms (public aid, venture capital, etc.) are appearing to support the sector’S small and medium-sized enterprises (SMEs), even if they are still insufficient to compensate for the banks ‘ reluctance.
French-language studios are fortunate to have a high international profile thanks to their independent game specialists: mocked before, they now account for 90% of their turnover in Europe, Brazil, and even Russia. In addition to funds such as Capital Games (a French video game cluster), independents such as Fishing Cactus, Tale of Tales and Larian Studios will be able to find support from the Walloon Region and the European Social Fund.
The cultural industry can still use crowdfunding or rely on manufacturers such as telecoms: in Belgium, Belgacom is launching a cloud gaming offer for its subscribers. Thus, Microsoft is not alone in grasping the potential of Independent Video Game studios. Pedagogical engineering is becoming a real issue, as IS media convergence, and it is vital for our francophone SMEs to stabilize their cash flow to promote their creativity as best they can.