According to NPD marketing research, consumers will spend equal to or even more money on entertainment this year than last year.  This is great news for the gaming industry in general – though I’d like to think that indies have even more chances now than ever to make a mark because people will still be searching for the greatest value for their money.

“Even in the face of a down economy, entertainment remains a popular spending category,” says NPD analyst Russ Crupnick.

“Most consumers say they’ll continue to purchase at least the same amount of many entertainment categories in the coming year.”

This makes me wonder if the bursting economy was just an excuse for the big-AAA gaming industry companies to “right-size” its projects because all signs show that the entertainment industry would not be affected by the economy. Well… Except for the massive “adjustment” the stock market made in the last few months. But even then, the creators of Grand Theft Auto IV who sold over 13 million copies, still took major losses, so why wouldn’t their stock fall in the open market?

I believe that the current models of business for the entertainment industry are unsustainable – not without a substantial increase in technology for the creation of game content or a completely different business model, such as fostering more downloadable content “episodes” of an established product.

The amount of effort it takes to create high-quality game content versus the payoff it makes is getting more and more marginal as technology increases and there is a significant shift to DLC and multiplayer experiences to create a “long tail” effect on keeping a game alive in the market and making money.

The other factor to consider is that the  NPD study seemed only to focus on the US market.  The world economy in general is in deeper trouble, and more than likely there will be a dramatic spike in piracy in the coming year.

Jeff Vogel of Spiderweb Software has been one of the longest and successful independent game developers that I know of.  I don’t believe that Jeff would say that he is successful, but I judge it by the longevity and sustainability of his business – over 15 years of striking it on his own developing his own games.

In one of his latest blog posts, Jeff laments the constant downward push of prices in the game industry, specifically citing the price points barriers created by Apple, Amazon, and Xbox Live and how this affects the market expectations for niche development.

In a series of exchanges, Jeff and I traded points where I pointed out that in that many casual games regularly sell at the $20 price point despite being heavily derivative and oversaturated in the market.  But the reason they can demand such prices is because of the amount of traffic they generate on those portal sites.  So despite the fact that there is a market drive to push down indie games at or below $10, that with sufficient Internet market and traffic share, you can bring the price up pretty high and be comfortable.

Derek Yu, the Editor-In-Chief to TIGSource.com, used the traffic generated by his site to sell copies of Aquaria at a $20-$25 price point.  And many top notch indie titles such as Braid and World of Goo sell well above the $10 cap because of all the traffic and interest they generated.

To be fair to Jeff, I think that he might just be talking to cause a stir in the air.  Also being 15 years an indie for a niche market must take its toll.  15 years in the IT industry is several lifetimes.

But I honestly believe that the right price point is $10 and under for an indie.  And with the news that Amazon.com can do digital distribution, it makes it even easier for an indie to get into the action.  Creating a viable storefront that is safe, secure and reliable to a prospective buyer is a difficult task and having a game on Amazon.com to download gives a lot of people a sense of trust in the quality of your product.

Some quotes from the comments I made I think bears repeating:

The Internet is the biggest street corner in the world, and we are the street musicians and performers who hopes that the passersby will toss us pennies along the way. But if we’re good enough, they may stop long enough to pick up the CD we are selling next to the hat we set down on the street. And even though the big man who owns a storefront says that they are paying too much for the CD, if we are good enough, responsive enough and entertaining enough, we will still make a sale – and hopefully a good living.

That’s the charm of being an indie and entrepreneur – great risk, great reward and making the things you are most passionate about the very things you do everyday.

Two weeks after the release of Strike Eagle, I’m seriously raking in the dough:

Now granted, I have no network.  I am a virtual unknown coming into the Flash Game Development field, and until the contest results come in and I place, I’m virtually no one.  My rank at NewGrounds was a little above average and same with Kongregate.  So with approximately 30,000 ad impressions, I’ve made close to $20.  If I somehow break 3,000,000 impressions, I make $2000.  But only the best games with the highest replay value ever get that high.  So this is not a viable way to make a living or start a gaming revolution.

Several people have taken me aside and said that if I put the game up on Flash Game License, I would have easily gotten $1500 for the game.  Which again means that I still have a long way to go to get effective games done.  I put in over 120 hours into “Strike Eagle”, and if you divide it up into an hourly rate, is not very high.  I actually make more money doing freelance web programming than I do making Flash games at that rate.

Urbansquall recently posted about his business model with how he makes money for his Flash Game Development company.  And oddly enough, he also states the same thing.  He makes the majority of his money in Licensing and in Contracting – not in advertising.

I think that for my next game, I will try licensing the game I create rather than going for a contest.  As much as I think this contest experience on MochiAds was great and a giant motivator to get me moving and especially to finish a game, waiting for the contest result and the uncertainty of knowing if all the hours you put in are going to be worth your time is very frustrating.  Worse still, since your game is already out there, you can’t go back and license it.

So I may have to reneg on the Jennifer Ann contest.  It is a noble venture, but I currently have a small freelancing job I have to complete, which I will document here on my blog to show the agile software development process for an overseas client.  By the time I complete this job, I will have no time to finish for Jennifer Ann.  But I will seriously consider it for next year.

For now, I will let a possible sequel to Strike Eagle sizzle on my mind and I will document and finish my small freelancing project using Windows Presentation Foundation (WPF).