App Stores, Steam, and Indie poverty: the Web as an alternative.

This article is going to try to prove with data how difficult it is to make a living as an Indie video game developer in some areas. We’ll be showing data from app stores and Steam to point out how complicated it is to enter into those markets with scarce resources. Finally, we’ll look at Web-based games as a possible alternative for Indie developers who want to get started in the world of video games with a minimal resources to build a sustainable business.

App Stores: a highly unequal ecosystem.

At a pace of more than 1,000 new apps per day just in the Apple App Store, everybody knows that the main game stores for mobiles are saturated; the Apple App Store and Google Play mostly, but also, in smaller measure, the Windows Phone, Amazon, or Tizen stores, for example.

This led, in 2014, to the use of a new term, the “App Poverty line”, based on reports like those from Vision Mobile. These analyses showed that up to 24% of developers didn’t earn anything, 23% made less than $100 a month, and 22% less than $1,000 a month.

They even came up with a number for the “App Poverty line”: revenue below $500 a month, which means up to 64% of Android developers are poor, and 50% of iOS developers. After that, a middle class that makes between $500 and $25,000 a month, with 30% for Android and 39% for iOS. Finally, an upper class of developers who make more than $25,000 a month, with 6% for Android and 11% for iOS. Finally, there’s a super elite of developers who make up just 1.6% of developers who earn more than $500,000 a month, and several (unspecified) times more than the other 98.4%.

With these data, we must keep in mind that all types of apps are being analyzed, not just games, which is usually the category with the best earnings. In their 2014 third-quarter report, Developer Economics showed data specific to video game developers.

In this case, the poverty line is different, and varies quite a bit depending on the number of games published per developer. So we can see that of the companies that have only published between 1 and 3 games, the percentage under the poverty line (less than $500 a month per game) reaches 64% while the upper class is 3%. On the opposite side, among companies that have published more than 50 games, we can see that only 21% are poor, while 27% are rich.

These data have been widely shared among the developer community, and have helped create several myths around app stores and indie developers. For example: only a few make millions of dollars, and they are the ones taking almost all the revenue, and anyone outside that privileged class is in poverty.

According to the data we’ve just seen, these myths have weighty arguments behind them. Even so, some try to show the opposite, arguing that there are, for example, 1,260 iOS publishers who make more than $1 million. In any case, these 1,260 lucky ones represent only 0.26% of the 477,000 iOS publishers in the US store. Another myth that’s making the rounds is the one about sustaining oneself thanks to the long tail. This refers to the idea of being able to make your games profitable without having to be among the bestsellers thanks to the wide user base and niche markets that digital distribution platforms provide. I think the following image from  Gaping Void illustrates the reality of this model in a rather funny way.

Visibility problems on Steam

Steam is another big open market for independent videogame developers. Already in 2014 we began to hear comments about the growing rate of publication of new games. Just in the first 20 weeks of 2014, as many games were published as in all of 2013. In the end, 1,814 games were published in 2014.

In July of 2015, more comments were made about the fact that Valve by then had already published 1,592 new games to Steam, and finished the year with 3,109. By February 8, 2016, 318 new games had already been published (according to Steam Spy). For the following graphs, I’ve used data provided by Steam Spy. It’d be a good idea to look at their page to see the margins of error for these data.

In any case, in this table, we can see the average sales per game and the sales median per game as well as the number of games published.

At first, especially between 2009 and 2013, there was a time when the titles published to Steam enjoyed less competition and good sales per game, both in the average sales per game and the median. But after 2013, there is a sharp decline in each game’s sales. In 2015, developers began commenting that the main barrier to Steam is the visibility of your games in such a competitive and saturated market.

If we look at Google Trends’ data on people’s interest in the term “Steam”, we can see that it parallels the rise in games published on Steam. Undoubtedly, Steam’s success among the wider public is at its best moment; in December 2015 it hit a new record, and everything points to it beating that by June 2016.

Steam’s success, just like app stores, is undeniable. But, who gets a piece of Steam’s success?  Let’s analyze the revenue from Premium games on Steam.

Revenue from Premium games on Steam.

To get the data on revenue from Steam, we’ll again use Steam Spy. We have to keep in mind that these sales data are the result of multiplying the number of copies owned (Owners) by the price of each game. This method is not 100% reliable for several reasons discussed on Steam Spy, but I believe they serve to reflect the proportional relationships between different games. The data obtained by this method are the following: