Never has the games industry felt more on the precipice. The entire medium is on the brink of enormous change, and there’s no clear understanding of exactly what sort. Speaking to various industry figures at this year’s Games Developers Conference, the feeling is that the current state of affairs is unsustainable.

“Everything is coming to a head right now,” said Rami Ismail, organiser of international gaming conference GameDev.World. A combination of a “race to the bottom” with game prices, ever-increasing budgets and the difficulty of getting discovered for newcomers is causing many to push for change.

Steam’s dominance may be over

Central to the week’s chatter was volatility: the recent layoffs at Activision despite record profits; the disruptive potential of Google’s games streaming service Stadia; and most of all, whether new digital stores might be able to end Valve’s de facto monopoly with Steam.

Much discussion orbited around the current arms race between Steam and its recently founded rival, the Epic Games Store. “This is an interesting time in the PC space,” said Emily Greer, founder and CEO of online and mobile publisher Kongregate. “For a long time there’s been an effective monopoly, and that’s not a healthy ecosystem for anybody.”

Valve’s market dominance is being threatened in large part by Epic’s offering of an 88% revenue split for developers. Steam – and most other distributors – have been taking 30% of a game’s sale price for many years, but speculation that this might change is rife. As Ismail put it: “What the industry needed, what Valve needed, was to know that Steam can be hurt.”

This was a view expressed by a large number of developers, most of whom did not wish to be named. Many had concerns about Valve’s position in the market, which it has taken for granted for too long. So Epic’s aggressive invasion of Valve’s space is broadly welcomed by developers, not least by those receiving the big payouts that Epic is offering for PC exclusives.

And for it to get even better? “Honestly, I would love a third competitor,” said Ismail. “The healthiest way to break a monopoly is always three players.” Now Epic is taking only 12%, with smaller players Discord taking 10%, and Itch.io defaulting to 10%, there’s mounting pressure on Valve to change. “It’s like their own race to the bottom, and we’d like a race to the bottom!” adds Ismail. “We’ll take it.”

Getting noticed is increasingly hard for indie developers

Plenty of developers spoke about the struggle to get their games noticed in overcrowded, undercurated digital storefronts. “You’re fighting so many other games for players’ time,” says Ben Myres, one half, along with Cukia Kimani, of the South African development team Nyamakop. In 2018 the pair released the excellent platform game Semblance, but despite positive reviews and plenty of media attention, they haven’t yet made any profit. “I can pay to play Semblance for a few hours, or I can play more Fortnite for free,” explained Myres. “To get past that, you have to make something quite brilliant.”

One company that has claimed its own space is German developer Innogames. CEO Hendrik Klindworth explained that part of their success is down to continual investment into games after release – some of their free-to-play browser games are well over a decade old and still successful. But the developer has also avoided giving up a share of profits to storefronts. “We are not dependent upon a platform holder like Steam, and we don’t have to give money away to Steam. With Steam you’re just a content provider for their platform.”

Indie game Semblance has been a hit with critics, but has failed to find a big enough audience on Steam. Photograph: Good Shepherd Entertainment

“The games industry appears to change radically every two and a half years,” said Emily Greer, whose business has been built around the free-to-play games model. Founded in 2006, Kongregate has survived many of these changes, from its beginnings in browser-based Flash games to its most recent success as a mobile publisher. “If you lock yourself in to any one thing,” said Greer, “the games industry will change around you. But if you remain open and interested and care about the game, the developer and the player, then you can adjust and adapt whatever happens.”

She recognises this isn’t always the case. “I do worry about the health of the industry and the degree to which a lot of game developers are at the mercy of algorithms,” she said. “And whichever platform you look at, there are difficulties for developers getting started.” Kongregate itself has just launched a niche platform, Kartridge, to help smaller developers get noticed. With other newcomers such as Discord and Epic, and smaller Steam rivals GOG, Humble and Itch.io, Greer hopes all this competition will lead to “better discovery of different kinds of games”.

The ‘games as a service’ idea is creating problems as well as success

It has been adopted by plenty of successful games from Fortnite to Warframe, but the “games as a service” model isn’t always a positive. “Free” games such as Fortnite and Apex Legends, which make money from players’ optional purchases, are having a big impact on a market where it’s already hard to get noticed. Ismail argues that streaming culture, where people play games for an audience on Twitch or YouTube, is largely responsible for this: “Twitch has created a market in which it is beneficial to make games that people play for longer, and that means there are fewer people playing different games.”

The situation is hard to keep up with. Even publishers creating huge games with eight-figure budgets – games that bring in billions of dollars – are seeing mass layoffs. In February, Activision announced record annual profits, shortly before telling 800 employees that they were losing their jobs. “I think that’s the final piece of the puzzle,” said Ismail. “The stock market. The end result is everybody looks at Fortnite and goes, ‘Those are the numbers we want.’ If you fall short, even if you’re posting the highest numbers in the history of your company, it’s disappointing. The pressure on our industry is obscene. This is a very adaptable industry, we’re flexible, we can jump on trends relatively quickly – but everything is just not right.

Free-to-play titles like Fortnite are dominating play time and drawing attention away from other games Photograph: Fortnite

“It’s easier than ever to get started in games,” said Ismail. “[But] being successful in games is harder than ever. We’re looking a lot more like the music industry now, where everybody can grab an instrument and learn how to play but doing that in a professional capacity is just almost impossible.”

Greer drew the same comparison. “Fundamentally the problem is, people love games, people love to make games. When so many people do it for love, it makes it harder to do it as a business. The most successful people are very successful, but then there’s a lot of struggling musicians out there. I worry about that with games.”

The consensus appears to be that 2019 might be a year to hold back, to see where things head next. If Google can finally crack remotely streamed gaming, it could loosen the stranglehold that Microsoft and Sony have on distribution on their own consoles, as Epic’s disruption of Valve’s space might on PC. And with more ways to reach players, there’s more potential for new developers. “The global industry is growing to be a much more diverse platform,” says Nyamakop’s Cukia Kimani. From his perspective, as a developer in a continent that’s only properly entered the industry in the last decade, all these changes could be very positive. “There’s consoles, there’s mobile, there’s now streaming – Africa is like, ‘Oh, now we can join in the game.’ While before, it was hard for indies to even exist.”