Held during the 80th anniversary of the stock market crash —ironically, in the Toronto stock exchange building, one of the worldwide markets that weathered the crash — this year’s edition of the GameOn Finance conference concentrated heavily on the topic of funding game production in a similarly uncertain economic climate. Most commentators dwelt on the changes sweeping the industry, speculating that new business models fuelled by the success of Facebook games, iPhone and episodic content are likely to change the face of it entirely.

Jason Della Rocca, ex-director of the Independent Game Developer’s Association (and now a senior consultant at Perimeter Partners) opened the conference with the theme that would define it — innovation. Though Ubisoft Montreal and Toronto head Yannis Mallat would offer the most compelling demonstration of the importance of creative and business innovation working in tandem, Della Rocca argued that the mainstream industry, focused on simulation and narrative-based games, is generally the least interesting or innovative place to be in games.


_{^{Ubisoft's Yannis Mallat (photo from Interactive Ontario)}}

The problem, he speculated, is that developers rely on a model of spending until they launch a finished product and (hopefully) profit, giving them little leeway to move. He contrasted it with that used by many Asian developers, who launch as early as they can to profit through development. The evolution of that model is being used by the larger Facebook developers, who launch a wide variety of different titles and follow their metrics, allowing them to spend their development time on the projects when they need it the most, leaving the others ticking along – and still profiting. The problem, he admitted, was that in many cases, “you never quite get out of beta.”

Greg Short, executive director of game industry researcher EEDAR, agreed with Della Rocca that the current models are less than efficient.  “The games industry has only about a 33 per cent hit ratio, and unfortunately we’re a hit driven industry,” he lamented, noting that this year the news seemed especially bad, with retail results expected to be down or flat, consolidation, significant layoffs (according to EEDAR, 12 per cent of the total workforce) and cancelled titles likely to continue difficulties into 2010/2011.

However, he felt there was an upside for those taking a different tack, with a large talent pool looking for new jobs and middleware costs down, making it “far quicker, easier and cheaper” to make the small games new markets and models required.

Yet the majority of new markets discussed at the conference Short felt were unproven, arguing that along with the problems of re-educating an audience to accept microtransactions, the difficulty of marketing effectively online, the clutter of the “long tail”, and a distinct lack of transparency from those claiming success so far.  “Probably,” Short concluded, “because only a few of them are really making money.”

Despite that flaw, the new business models were strongly recommended by the speakers who were now using them. Telltale CEO Dan Connors talked of feeling “entrenched” in the traditional business model, and that going episodic allows him more creativity and the ability to “create a real connection with the audience.”

He admitted, however, that innovation tended to become a “flavour of the moment” that might not pay off, with a wait and see attitude sometimes more rewarding. “In 2004 when you wanted to raise money you were asked ‘can you put it on mobile?’ We now have a handheld strategy, after using the PC to flesh out our user experience and community, because iPhone is something we want to move to with our own technology. But we still have to explore ways to make the business end work on that platform.”

In turn though, as a pioneer of episodic, Connors felt Telltale had “taken a lot of arrows” but that more companies taking an interest will be rewarding. “It’s good to see companies like Microsoft feeling this out; it’s very beneficial to have someone like Peter Molyneux doing something like this with Fable II — it means on these channels we can now expect a robust platform for episodic content.”