If you have been sentenced to a career in technology for at least two decades, you might observe that there are repeatable patterns when The Next Big Thing arrives. I will not give you links to those stupid graphs for each investment wave. Google “VC Hype Cycle” if you have no idea what I am talking about. If you will not click my affiliate links to participate in The Great Amazonian Nickel Heist, I will not give you other free-er links to click on. You have only yourselves to blame.
Now that I have churned some number of shocked and appalled people from my readership, let’s get back to the nitty and the gritty.
I have been telling people that industrial memory is seven years. That is the length of time for the average boom-bust cycle in tech. I am still here because the overall trend line for this is still positive. The busts drop us down slightly less each time, and we continue to do slightly better every time. I guess that makes me a boomer? Probably in more ways than one.
In games, the boom-bust cycle also has some very interesting side effects. The first is the role of portfolio management. Every publisher has a set number of titles they like to manage. As we enter the boom cycle, these people tend to get super excited about publishing, and they start to act irrationally—somehow believing that this will help increase their job security. I will give you a spoiler here: This part of the pattern of behavior does not increase anyone’s job security.
I have seen publishers comfortable with ten nice titles in their portfolio start taking moonshots as the market heats up. It is not uncommon for publishers to increase their portfolio of titles under management by fifty percent or even one hundred percent. Some internally focused game companies will suddenly jumpstart third-party publishing programs, and everyone has a new roster of “Bizdev” types on payroll, SDKs, and parties to host at various conferences.
Let’s blink and jump forward three years. We are halfway into the boom-bust cycle now, and some kind of Black Swan event is about to happen to poop on everyone’s parade. Around the time that this sadness is about to emerge, game publishers are starting to get real serious about their portfolio math. In this window of time, it is clear that adding as many titles as they did was a bad idea—and by a bad idea, I mean an expensive idea. Angry bean counters start running around the building armed with pink slip cannons, whooping and hollering like crazy people as they “right-size” the company.
The person who decided to add so many games to the portfolio has been pink-slipped, and his boss, in a desperate attempt to keep his job, has decided that the company will focus on the core franchises that make money.
I wish this were as funny in reality as I make it sound. These binge and purge cycles are unhealthy and cost people their jobs and affect their families.
I can respect that when we are headed for good times, you want to leap up and pull a Napoleon, screaming, “Audacity! Always Audacity!” I just think that is not a very wise idea. When things start to heat up, it is probably worth making some amount of cautious investment into adjacent areas and “off-the-roadmap” experiments. It is also very important to ensure that these are well-measured, and that there is consideration for the incoming bust cycle that invariably follows. I can imagine someone doubling the number of games they publish smugly, declaring, “This time, it will be different!”
Sadly, it never is. I have seen publishers declare they want to go from ten games under management to fifty games under management. By the time they have nearly thirty games ready to go, the marketplace shift is underway, and suddenly they are focusing on their best three games.
You can almost tell the time by the regularity of this sick game portfolio management pendulum swing.
I keep telling people that each of these articles is valuable if there is one single moment in time that someone is about to make a bad decision and they remember that I talked about why it is a bad decision. I don’t even care if they still go ahead and make the bad decision one more time. If they remember that I predicted this would happen and then decide differently the next time around, then all of this me-not-making-money-as-amazon-associate will have been worth it.
Having ridden this seven-year wave at least four times, you have no idea how sad this cycle makes me. I am emotionally spent writing this article from the Ozymandias-level destruction these waves cause. I am on the verge of tears, like when Spock dies in the only good Star Trek movie.
I am so saddened that I need to go to Amazon and buy one of these comforting huggable teddy bears to feel better. Does contemplating the binge-and-purge culture of game publishing make you sad too? You should buy this teddy bear to feel better. In fact, buy two. One for you and one for the person you care the most about. They will thank you for it.
I will see you next week, where I hope to be a little less “Look ye mighty on my works and despair!”
