The Era of the Indie Game

Indie Games Will Take 2024 By Storm

Indie games have re-emerged as a significant point of interest within the gaming community with games like Palworld ($6.75m budget) surpassing 25 million units sold. However, the presence of indie developers in the gaming scene is certainly not new; the success of past titles like Minecraft, Stardew Valley, Among Us, Fall Guys, and Valheim have launched these creators into the spotlight over the years, capturing the attention of gamers and industry experts worldwide.

For those unfamiliar with the term “indie game”, it refers to a game that is made by an “independent game developer”, typically referring to a solo or small team of creators who are not backed by the largest gaming corporates in the world. They operate without the development and marketing budgets of major game publishers. These games have been praised for their innovative gameplay, creative storytelling, and the unique experiences they offer.

In 2024, indie games are making an unprecedented impact, with five of the top ten highest-grossing games on Steam so far this year (Palword, Granblue, Last Epoch, Lethal Company, and Enshrouded) having been created by publishers classified as indie by VG Insights.

The dominance of indie games in 2024 is not an accidental occurrence of release timing but rather the culmination of a decade-long trend where indie games have steadily increased their market share. In 2023, indie games accounted for 31% of all Steam revenue, up from 25% in 2018 (VG Insights). This gain in market share is impressive by any standards, but especially when considering that these numbers are occurring alongside a high volume of blockbuster AAA releases in 2023 (Baldur’s Gate 3, Spider-Man 2, Hogwarts Legacy, Call Of Duty: Modern Warfare III) that all pulled attention away from indie games.

To put this into context, the number of indie games on Steam generating over $10m in revenue as a percentage of all games on Steam dipped significantly in 2023 as players spent more time on the AAA releases (VG Insights). Despite this, indie game revenue on Steam as a % of total Steam revenue merely flatlined.

Given the expected drought in AAA releases in 2024, it is no surprise that indie games are already dominating Steam charts and accounting for the largest portion of Steam revenue in recent years (Note: the revenue includes only full game sales revenue on Steam and excludes in-app purchases, and that the Steam cut of 30% has not been taken off). We expect that indie games will continue to find market share success throughout 2024.

We believe that this shift towards indie games reflects a broader dissatisfaction that some gamers feel towards the lack of innovation in the AAA sector. In his latest blog post on gaming, Mathew Ball highlights the prevalence of sequels, remakes, and updates in the AAA space, which contrasts with fresh and inventive experiences offered by indie titles. He claims that “nearly all of the hits of 2023 are sequels, remasters, updates, or remakes.”

The reason for this sense of repetition in AAA games is multifaceted but largely revolves around risk appetite. It takes significant amounts of time and money to create games at scale and the ability to de-risk the investment by doing “what has already worked” helps to reassure management and shareholders that this is likely to work again (makes sense, yet has to be balanced with the gaming audience’s expectations for something “new” and “innovative”). This is a tough balance to strike for gaming companies that are servicing >3.3b gamers globally.

Indie vs AAA - ratings converging

Despite often lacking the graphical fidelity and complexity of AAA games, indie titles have successfully competed in terms of player experience. The average Steam rating for indie and AAA games has nearly converged, at 72% and 74% respectively (VG Insights).

This parity in ratings, alongside their innovative approaches, raises the question of how some indie developers manage to stand toe-to-toe with industry giants. We believe the answer lies in the democratization of developer tools. Unreal Engine and Unity democratized core tools that help developers avoid building an engine from scratch each time they want to make a game. Steam completely changed the way that developers were able to distribute their games online.

This trend of democratized developer tools and platforms has extended to various aspects of game development, from multiplayer server management to user analytics, enabling developers to outsource and automate many processes and instead focus on creativity, fun mechanics, and storytelling.

Less focus on the peripherals of game development also means that the breadth of technical knowledge required to start building games is significantly lower. With a lower barrier to entry, more games are created, and while not all of them will be a success, this lends itself to more unique mechanics, storylines, and  art styles, which will lead to more indie games at the top of the charts.

The importance of these tools is only set to increase in the coming years, especially as AI begins to play a more significant role in further and incrementally streamlining game development. Developer tools have consistently decreased costs and reduced the time and resources required to make a game, which has allowed for more focus on quality. At a time when funding is hard to come by, these advancements are vital for indie developers looking to innovate and bring unique gaming experiences to the market.

Takeaway: Indie games have carved out a significant niche within the gaming industry and challenged the dominance of AAA titles through their innovative and creative approaches. The success of indie games in 2024, coupled with their growing market share over time, underscores a shifting preference toward unique gameplay experiences over traditional sequel-driven AAA games. Indie developers have competed on equal footing with AAA studios thanks to advancements in development tools (Unity, Unreal) and platforms (Steam), allowing them to focus less on the minutiae of game development and more on the core competencies of their craft. Given the lack of blockbuster releases expected in 2024, we believe this could be the biggest year for indie game developers ever.