[Casual games are vital to the future of the biz - but how does a developer navigate the middlemen-strewn digital distribution future? In this in-depth piece, Lost Garden blogger Daniel Cook presents a manifesto to help casual game devs get loyal customers with great social games.]

A few years ago, casual game development has heralded as a safe haven for the independent, creative forces in the game development community. All the past worries of shelf space limitations, ornery publishers and expensive development budgets no longer applied.

In the new world of high profit margins, limited middlemen and free green lighting for all, innovation would inevitably flourish. And for the most part, once you account for Sturgeon's inevitable law that 90% of everything is crap, this is exactly what happened. More game developers poured into the market and some truly wonderful games were born.

Middlemen, however, were not eliminated. They merely evolved. In the place of brick and mortar stores, portals emerged. Instead of limited shelf space, there was limited access to top ten lists. Instead having your company name sidelined in the spirit of publisher branding, your game is whitewashed with the portal's brand, advertisements and customer retention systems.

In return, the portals offered quick sales on your latest game. Game developers trade their future for a fast sale now and the portals attempt to pick up the long term customer loyalty. Much of this is uncomfortably familiar to the early publisher/developer relationships of years past.

In order to maintain the biggest piece of the pie possible, casual game developers need to evolve their business strategy. This essay covers the following:

• Strengths and weaknesses of the typical successful casual game developer
• How the addition of developer-run online services can help mitigate the weaknesses of the current downloadable business model
• How a developer's strengths as makers of great games can be turned into a competitive advantage when surviving in an ecosystem filled with larger service-oriented portals

There are two pillars to the typical casual game developer's strategy:

Best-in-class casual games

The golden geese at the center of most casual game developers' success are their high-quality casual games. The best groups create a powerful creative team that consistently builds polished, innovative titles that have strong appeal with a wide demographic of players. Historically, such teams have focused on creating complete, packaged games that can be easily ported to a wide variety of platforms.

Multi-platform/Multi-distributor

Once a game is built, it is distributed across hundreds of portals and multiple platforms. Due to their relatively simple interfaces and system requirements, casual games port well to a wide variety of platforms ranging from phones to consoles. Due to their electronic nature, they can be republished to a vast number of portals at little cost. The revenue potential of a single game is multiplied by the number of distribution channels that can be addressed.

Threats

Every developer faces some common strategic threats:

• The rising quality of competing games. The entry barriers for creating casual games are low and dropping every day. Tools such as Flash or XNA ensure that the masses of developers interested in making games have all the resources they need. A substantial number of casual titles, both original and clones, are reaching best-in-class. The secret ingredients of a great internal development environment (small teams, a passion for detail and freedom to experiment) are being replicated in a small but growing portion of the hundreds of developer petri dishes around the globe. As this process inevitably advances, even the most established casual game developers run the risk of losing their position at the top of the heap.
• Brand erosion due to portal business tactics. Portals desperately want to commoditize casual games. It is in their best interest to treat them as disposable, one-size-fits-all content like a movie or an MP3. This allows them to take a mass market strategy where they build efficient machinery that feeds their customers a stream of gaming snacks. Never satiated, the players keep coming back to the portal for more. In order to make themselves the center of gaming goodness in the eyes of their players, portals are incentivized to minimize development team branding and maximize the placement of their own branding and services.
• Portal integration cost. As part of their customer retention tactics, portals are building in more community features such as achievements, gamer scores, persistent IDs and chat. They are using disposable casual games to build a loyal community that they can continue to rely upon for years to come. This places an expensive integration burden on the casual game developers. It also increases the chance that customers will look to the portal for future purchases, not the developer of their favorite game.

All these issues reduce the developer's bargaining power and their profit margin. The slew of high-quality games means that portals can more easily walk away from any one company with extraordinary demands. Brand erosion means that developers are forced to scramble each time a new title comes out to sign deals that help them acquire a good stream of trial downloads.

The good news is that casual games are still a growing market and the inevitable consolidation is only just beginning to appear. Distribution channels are still quite fragmented. The bad news is that every game that a casual game developer releases ends up building up the publishing behemoths that will eventually put the squeeze on profitability. Many smaller developers are already feeling the pinch. The portals have some very sound business dynamics on their side. Where casual game developers are scrapping over each and every sale, the services strategy adopted by most portals takes a longer term approach and looks to capture the lifetime revenue of each customer.