Hello friends,

Greetings from Utrecht!

Pocket Gamer Connects was the first event for many people in the games industry, and from what I hear it was a great edition.

One of the soundbites that was apparently making the rounds was "survive to '25".

Sure, there is some optimism about funding opening up again in the second half of 2024, but by and large it looks like this will be a year we all have to survive.

Read the essay for my take on what your studio or company can do to make it through (mostly) unscathed.

Additionally, all three Bits today are also concerned with the state of the industry, the causes, and possible approaches.

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Today at a glance:

• Essay - How To "Survive To '25"
• The state of gaming in 2024
• Brace up for two years of pain
• Surviving the game

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How to "Survive To '25"

2024 is going to be a tough year for the games industry.

Thanks in large part to a cocktail of macroeconomic forces and underperforming investments made during the COVID boom, the games industry is undergoing an unprecedented, if necessary, correction.

Combine this with the fact that there are simply too many games for the available player base, and the fact that development costs have increased at a much steeper pace than their retail value, and you end up where we are now: dried up investments, record layoffs and seemingly successful companies shutting down.

While some dare to be cautiously optimistic about things opening up towards the second half of the year, it's telling that one of the most-heard phrases at Pocket Gamer Connects London was "survive to '25".

Catchy. Clear. Prudent.

But how do you do it?

Here's my advice for companies that want to increase their odds of making it through the rough seas of 2024, and hopefully into calmer waters at the end of it.

What can you do?

For the best chances of getting through this, you will have to go all the way back to basics.

In essence, any company is a black box with money coming in, and money flowing out.

A company is successful simply when there is more money coming in than flowing out.

It follows that any company should aim to increase the amount of money coming in, and decrease the amount of money flowing out. Especially and emphatically so during an economic downturn like the one we are in now.

Here are a number of ways you can make this happen:

Focus on profitability

You will likely have to pull through this without outside money, so profitability is key. Focus on those parts of your business that generate cash rather than spend it.

One thing that can help in this regard is to go back to your core, and focus on what you do best.

Your core, or your Hedgehog Concept as Jim Collins calls it, is the intersection of 1) what drives your economic engine, 2) what you are passionate about, and 3) what you can be the best in the world at.

Define or redefine your core, and focus your resources there.

If the situation gets really dire, forget about passion and even skills, and focus on what you can make money with.

This is about survival.

Focus on distribution

Do this for me: take everything your studio is currently doing, and divide them between two categories, product and distribution.

In the average studio, the bulk of the items will be in product. Make sure you are spending enough time and resources on the distribution of your product.

You can't survive on a game that no-one plays.

Manage costs

To make the most of your budget, you will have to cut back on any luxuries and focus on the necessities that will see you through this period.

Since you don't know exactly how far you will have to stretch your budget before we get into calmer waters, err on the side of caution.

Reinforce your company foundations

Efficient teams are focused, aligned and take accountability, and survive longer than teams that operate in chaos.

Help your team by putting the right people in the right seats, providing clear goals, driving efficient meetings, and measuring the things that give you grip on your business.

Do this right, and you might even come out of this as a more efficient and effective company than you started.

Grow sustainably (if at all)

Insofar as you do any growing, only grow what your own free cash flow can support. Be sure to re-read point 1 before making serious cash allocations here though.

Build smart partnerships

Smart partnerships can help you mitigate and spread risk, or even open up opportunities that are harder to grab on your own.

For example, the Win Win Collective is a group of independent studios that joined forces to be able to accept more ambitious projects than they would be able to handle individually.

Only lay people off if you really, really have to

Listen to me, because this is important: A company is only as good as its people.

This isn't a fun movie with George Clooney. We're talking about peoples' lives and livelihoods, as well as your company's institutional knowledge, culture and morale.

So if the time comes to cut costs in this area, it is in your own best interest to look critically at your own compensation first. And if it is possible to increase survivability by sharing this burden as a team, that can still be preferable to laying people off outright.

But if it comes down to it, I advise you to do the same as with your business model: go back to the core.

Think carefully about your team, and identify areas that are not crucial to your survival.

This does not mean cutting people out willy-nilly.

I'm simply urging you to make a distinction between the parts of your company that are crucial to your profitability and survivability, and those parts that are perhaps longer-term bets, or that are nice-to-have in times where you don't have to worry about cash.

Right now you do have to worry about cash, and the only thing you should be betting on is your survival.

Focus on retaining your core team to establish your survival and consistency, and consider working with freelancers for the parts of your business that aren't core.

And please, for the love of god, remember that you are laying off living, breathing people here, so be a f*cking human about it. It's literally the least you can do.

So yeah.

It's going to be hard, and not every company will make it, but I hope you'll give it your best shot.

And if you want to seize this moment to tighten up and reinforce your company foundations, I'm here to help.

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The Best Bits

​The state of gaming in 2024: This is the most comprehensive analysis of how and why the industry got to where we are now, courtesy of industry VC Matthew Ball. Grab a drink and settle in, this is a long one, but you'll come out with a much better understanding of what's going on.

​Brace up for two years of pain: Gamesindustry.biz interviewed a number of games industry leaders for their opinion on where things are headed.

​Surviving the game: Streamline CEO Alexander Fernandez shares his take on the current climate, and gives pointers for not just studios, but also investors and employees for making it through.

See you in two weeks!

Martijn

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