When Klei began life in my basement, we had a prototype for our game, Eets, and looked to which platforms we could port it to. Eventually (you can read the full story here), it found a comfortable home on the PC, but we also ended up with a neat controller prototype to work with. Around the same time, we noticed the rise of the Xbox Live Arcade, and pitched it to then-XBLA-games-portfolio-manager Ross Erickson. It was a hit, and in April 2007 we released Eets: Chowdown on the XBLA.

We’ve also worked closely with Slick Entertainment to bring N+ to the fold, and through both of these products, we’ve certainly learnt a few things:

1. Exposure

We know who’s on XBLA. Better than that, we know they’re ready and willing to pay for games. In fact, $10 on a PC is $10 more expensive than what PC users are used to, where on the 360, $10 is an incredibly great deal. Add in the fact that the barrier to entry for XBLA is relatively high (at least compared to the PC), and you’ll find that it’s far easier to get noticed on the 360 than on a PC.

Note: I’m not going to go on and praise XBLA’s conversion rates — they’re very high, but they’re also irrelevant. It’s like comparing the conversion rate of Wal-Mart and bikes to a bike shop (the bike shop will certainly have a higher bike conversion rate, while Wal-Mart certainly sells more bikes).

Microsoft also has a decently large install base, and the Dashboard is built to show off your game whenever anything new pops up. Arcade Wednesdays has been very successful at drawing eyes to the latest products out, and Major Nelson and the like help drive even more people to your games.

At least in our experience, we have done far better volume both in terms of downloads and purchases on the Xbox than on the PC. I also suspect that, for the average game, the Xbox Live Arcade tail is longer and thicker than the casual space.

2. Good risk / reward structure

Compared to traditional console titles, games on XBLA (and any other console download service) are cheaper to make, require far less marketing, and the production cycle is cut to a third. In fact, I could probably write an entire article on AAA titles, and why it’s a tough life to make one as a third party developer.

Compared to casual games in the PC space, you immediately have more guaranteed exposure, as we talked about above. Your royalty rates are also higher (depending on your arrangements), and, not unimportantly, your profile as a studio raises significantly when you are known as an XBLA developer (few) rather than a casual PC games developer (many).

These two factors means that, as a small-medium sized studio, Xbox Live Arcade is a great place to gain some exposure with a good chance of some decent ROI.

3. Great support from Microsoft

I have to say, we were very impressed with the level of support we received from Microsoft during development. All three key points of contact (PM, Test Lead and Release Manager) had lightning fast response times — closing on the final stages of development, I would email our Test Lead at some time past midnight, and received a response 15 minutes later.

Microsoft also understands where the key barriers are to small developers and removes those barriers for you. They either handle it for you (ESRB submissions) or give you direct contact to the teams you need to know to get it done (testing and localization).

4. Easy to develop for

Developing an Arcade game on the 360 is a smooth ride: you have more power than you need, and the platform libraries are mature and easy to use. For the most part (see the note below), you can concentrate on building your game as efficiently as possible. That means both using their internal libraries (such as networking and match-making) and external third party libraries that you may have been prohibited from using because you couldn’t guarantee your target market would have good enough specs on the PC.

I’m also really looking forward to seeing how XNA turns out. I’ve seen Nick do some amazing things with it.

Note: Certification is that necessary evil that certainly no smooth ride at all. After the first time through it, though, it gets much easier.

5. Access to achievements, leaderboards, upsell features, etc

Microsoft puts a fair amount of focus on these features, and with good reason. My suggestion if you’re building an Arcade game is, think about these things early, and make the most of it. They’re great for extending your product shelf life, and obviously your upsell is incredibly important for your bottom-line.

I think many AAA developers could use a couple lessons in upselling, and building an Arcade game might not be a bad idea to do that. Too many of the demos on the Marketplace actually make me want to buy the game less than before I played it because of how badly it was put together.

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Obviously, it’s not all a bed of roses to develop for Xbox Live Arcade. There are certainly things that could be much improved in their systems, but it was definitely a positive experience for us. Next week: I’m on holiday, but I’ll think of something interesting to write about

Last week, my post was admittedly reeking of manifesto snobbishness. I felt like I needed some strong words to describe the changes that are happening to the industry.

This week I’m pulling back and writing about my own experiences with the Try & Buy, PC Download market. Eets: Hunger. It’s emotional (not the best game name ever), was released in 2005 as a try-before-you-buy download title. We sold it on our own site, and over time expanded to the major portals such as Yahoo! Games, Big Fish Games, and others. These are my top 3 reasons why I won’t be doing that again any time soon:

1. Developers take all the risk.

In this market, most developers create the game entirely on their own budget, and then ship it off to the distributors to sell. The distributors then put the game up on their site, and if it doesn’t hit certain metrics within a short time span, the game gets pulled off the front page, buried underneath hundreds of other games. You can bet the long tail is hard at work after this point, but selling a few copies here and there over a long period of time doesn’t benefit the developer — it benefits the distributor because of the volume of games. Hence, it’s in the distributors best interest to grab as many games as possible to build their library up and fatten the long tail.

In addition, because of the promise of “free” volume sales the distributors hold, they offer low royalty percentages. The result is that developers take all the risk in developing the product, while distributors get the largest profits if the game is successful. If the game isn’t successful, that’s still good news for the distributor as it builds the library.

Note: I’m not a big fan of “fairness”. Distributors shouldn’t be giving better percentages out of the goodness of their hearts — they worked hard to get into the position they’re in, and it’s an enviable position (for now). I simply feel there are other opportunities out there for developers that have a better risk/reward structure.

2. It’s not very exciting.

Last week I argued vehemently that fewer people can acheive better results than a huge group of people. I could write an entire article just on this (people have written books on it), but the most important ingredient in all of this is passion. The fact is, Klei is not staffed with people who are passionate about building games for this target market — that is, players who buy games off of Yahoo!, MSN, and Big Fish Games.

We believe we can and do make games for mass market audiences, but from our experience, the players on these sites are a very small subset of this pie, and the games that do well on these sites are not the type we wake up hoping to make.

Note: A few months ago, I went to a conference where a prominent casual game developer stated along the lines of “The console titles are working with such a niche, whereas the try-before-you-buy market is HUGE! Just look at how many people have computers connected to the internet!” To that, I say: Nike doesn’t sell to everyone with feet.

3. We don’t believe in the model.

Even disregarding everything above, I believe the market goes against the greatest strength of the internet. It can be encompassed with one word: Service. The future of games, especially ones delivered over the internet, is providing not just a finished product, but a continued service. But everything about this market stops you from doing that:

• You only have on point of contact to the user — the sale of the game. You will never earn another dollar off that customer for that game.
• Each portal has a different DRM, and you have no control over their priorities in updating your game (very low), so even if you wanted to, you can’t improve your game over time.
• Each portal’s largest asset are their visitors, so they will do everything to stop visitors from leaving their site, hence most players will never arrive at your site to participate in your community.

So there you have it. My top 3 reasons we’re no longer in this market. My prediction is that over time, these large portals will have no choice but to provide games as a service (some already do) (Okay, two of those three aren’t portals) (Actually, GoPets IS a portal, but it’s hidden behind a game). I realize I’ve opened a big can of worms right here, but I think I’ll leave that topic for another day.

Edit: Warren posts a very valid point, and after thinking about it, I realized that my title and post are somewhat mismatched. I’ve changed my title from “Top 3 reasons Klei isn’t into PC Try & Buy”, to “Top 3 reasons Klei doesn’t do Casual Portals”. In addition, here are my thoughts on Steam:

Portals such as Steam are a great step in the right direction. They give more visibility to the games they launch, are more selective with their choice in games, and they understand and promote games that are continually updated and modded upon. They also promote episodic content. That is, they get it.

I still feel it’s an more an incremental improvement than a revolutionary one, but I think Steam has great potential to be so much more. It’ll be interesting to see where portals take us in the next couple years.

Next week: Where Xbox Live Arcade excels

For about a year now I’ve considered starting a business blog. I had a few obstacles that I needed answers to before starting: what am I offering that isn’t already out there? Who is my audience?

My answer: There are few companies out there like Klei Entertainment. We developed an indie game that went casual, and totally missed the sweet spot. We’ve developed for the Xbox Live Arcade. We helped jump start another studio, now making N+. We’ve worked with publishers. We’ve self-published. Certainly, someone can benefit from my experience, and I believe in giving back to the community.

So, starting today, every Thursday I will post a new bit of rambling. Some of it will be technical (I’m a programmer by trade, and much of that geekiness lives), much of it will be my own opinions about the wonderful business we’re in, and most of it I hope you’ll angrily disagree with me so we can have an interesting conversation.

What’s the quote of the day? “Make sure your board is sufficiently weird”.

I love that.

I grabbed that line from a book I’m currently reading: Re-imagine by Tom Peters, and I can’t agree with it more. Klei (that’s pronounced “clay”, by the way) is staffed by a serious hodge podge of people. Sure, we have a couple industry veterans, but several key staff are also weird people who have no preconceptions of what the “right way” to develop a game is. This can bring some amazing results when mixed with people from the industry who are fed up with the “right way” to spend millions of dollars to create a game you’re not sure people will enjoy. Most of the people I trust the most for advice are weird people who don’t deal with inconsequential things like video games (but would love to get a Wii if they could find one).

I believe that there’s a huge opportunity to rethink how we develop games. By developing smarter, and destroying old preconceptions, extremely high quality games can be created with amazingly small budgets. For starters:

- Choose games that won’t break your back developing them. If you’re a small developer tight on cash, WHY are you developing a content intense game? Surely there’s another game you can be excited about that doesn’t kill your staff.

- Destroy old processes that aren’t doing anything. If your employees roll their eyes when you ask them to do something in the process, either get them to buy in or figure out why it’s stupid. For example: the only time I’ve ever seen a smoke test break is when someone forgot to fix the smoke test.

- Challenge notions of what is needed to build a game. Lots of time, lots of people, lots of money? As Gordon Bell says “I’ve never seen a project being worked on by 500 engineers that couldn’t be done better by 50″. Try cutting from 50 to 5, and I think you’ll be amazed at the result.

This blog is all about rethinking how game developers look at games. From the design of games, to the code that makes them, to how different teams interact, to how we look at and treat users — lets create new notions, new systems, new processes, and then destroy them again

Okay, now… disagree!

Edit: I changed the title and wording to better reflect my thoughts. Destroy your preconceptions, dammit!