Earlier this year, Palworld took the world by storm. It became the biggest third-party game launch ever on Xbox Game Pass, dominated the Steam charts, and spawned a craze for monster taming not seen since Pokémon Go.
What makes this story even more special is that Palworld’s developer Pocketpair is an independent studio without a big marketing budget.Pocketpair is not alone –we’ve seen aclear uptick in self-published hits lately. What is going on?
Palworld crushed it on revenue on PC alone, based on last reported estimates of 15M Steam sales at about $30 a pop. This massive number doesn’t even include Game Pass revenue, and has even led to claims from Pocketpair itself that it’s too much to handle. The game recouped roughly 2,300% of its $7M development budget in the weeks after its release.
In February, it became one of the best-performing Steam releases ever with over 2M concurrent players at one point. Pocketpair said it had attracted 25M players in one month.
Recently, it was confirmed that Palworld is coming to more platforms at some point, and Pocketpair is flirting with an acquisition, preferring it over a public offering. Unfortunately, with the amount of attention the developer has been getting, its popularity has also led to some unpleasant feedback.
If a game doesn’t revolutionize anything in terms of platform (like Pokémon Go did eight years ago), most hype cycles in the game industry are short-lived. Looking back now, the same could be said for Palworld. It’s been a few months since Palworld was the cat’s meow, after which many players moved on to the next big thing, Helldivers 2.
After the recent PSN debacle surrounding Helldivers 2, which did the exact opposite of revolutionizing things in terms of platform, it seems that around 9% of Helldivers 2’s player base has refunded the game and moved on. Other recent breakout hits include Balatro and Hades II, although as of yet, neither of these seem to have generated the type of attention that Palworld and Helldivers have.
Palworld’s hype was especially extreme. For a brief moment, it was even more talked about than Diablo IV or Baldur’s Gate 3 at their peaks. That being said, when compared with these other zeitgeist-making franchises released throughout last year, Palworld’s popularity graph has a steeper tail than the others, likely as the result of a lack of substance in its post-launch content roadmap.
While Palworld’s hype has long subsided, it is still the biggest self-published game launch in recent memory, and therefore a great case study of what makes a one-in-a-million marketing message.
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Introducing a New Era in PC Gaming
While some have been touting a new era for indie games, we’d caveat this by adding that defining “indie” is not always easy. Since this is a notoriously difficult to define market segment that proves to be quite polarizing, we’re talking about self-published games on PC today.
Early adopters like Giants Software took the leap in November 2021 with its first self-published game Farming Simulator 22, and made the choice to try to keep a bigger share of its revenue.
It seems that a surge of self-published games has taken the business by storm, but is this just perception, or is there actual, hard data to support this claim? And, if so, why is this happening?
It’s not just marketing and distribution that are behind the dawn of this new era. A marketable game starts at the product level. This means certain choices need to be made before the first piece of concept art is drawn up and the first line of code is written. For that matter, after revealing the findings of this piece’s research, we will also cover:
- Product and design takeaways taken from Palworld and other recent successes
- Marketing theories for self-publishing
- Looking ahead: what’s next?
Study: a New Era of Self-Publishing
One of the goals of this piece was to prove the hypothesis of a recent surge of hits by developers who have relatively little historical experience with publishing and did not use a dedicated external publisher. Colloquially, these companies are often called indie.
Using publicly available data from Gamalytic, we conducted a study to track the number of self-published hits over the last 5 years. As can be seen below, the year-over-year data proves the hypothesis of a stark increase in self-published hits in 2023, indicating an acceleration of a longer trend.
Methodology
As developers have wildly different budgets, the definition of a success can be wildly different. To generalize results, a cutoff point of more $3M of revenue in the first year qualifies a generally successful “hit” game in today’s study.
Additional methodological details are:
- Only Steam data was used for this study
- Games that were co-published by the developer and another party were not qualified as self-published
- Games that were mostly published by their developers but received help publishing in specific countries (which happens often in Asia-Pacific markets, for instance) still qualify as self-published.
- Licensed games were qualified as self-published
- As most revenue is made right after launch, first-year revenue was used to qualify games as hits. To determine this, a percentage (depending on the amount of months since its release) of the game’s lifetime revenue was used. For every month of a game’s life that was not part of its first year, a (slowly diminishing) percentage of its lifetime revenue was deducted. For games released less than a year ago, revenue was annualized.
This study resulted in other interesting findings, such as the projected number of self-published hit games for 2024, which is projected to end up around 70. At the time of this research, 20 such titles have been identified to reach this threshold. Moreover, what would a study like this be without a colorful top-10 of self-published games over the last five years?
And then, the necessary disclaimer: in a market where self-publishing seems to be gaining momentum, one shouldn’t forget publishers can bring scale and add value, especially in more specific scenarios or markets. This piece is in no way meant as justification to not use a publisher or romanticize the notion of “being indie”.
Self-Publishing Product Design
Several early choices that the most successful developers have made in terms of product design and game design have been crucial for them to have come this far. Recent successes like Lethal Company and Helldivers 2 (even though the latter isn’t self-published) show great examples of product design that help them gain traction in a crowded market. The first and most important choice in this context is genre.
Genre Mashing
We’ve shed light on this trend in a few of our previous pieces, and while Palworld is an example of this, there are substantial design caveats to this strategy, not to mention the possibilities of clashing themes. As Chris Zukowski stated on his excellent website howtomarketagame.com: “Pay attention to genre and theme very closely. Adding just one tiny element that conflicts with a genre can have HUGE impacts on the perception of your game.”
In the case of Palworld, a laudful Polygon review says, “while it could feel limiting if someone wanted to hone in on a specific element of the game, this progression system also gives a potentially unwieldy game an overall sense of structure, even as it includes so many varying forms of gameplay.”
Let’s look at another example, whose development studio, Zeekerss, is said to be made up of one person.
Lethal Company, the third-highest grossing game of last year, is a survival horror game that takes inspiration from SCP: Containment Breach for its diverse roster of creatures and 2020 self-published megahit Phasmophobia for its social dynamics. For example, Lethal Company players can stay back on their ship, a very similar choice to the one made by players who are too scared to leave would rather do meter readings in Phasmophobia’s van. Add a much faster-paced action to these social dynamics, mix in some rogue-lite elements and resource management, and you’ve got a game that’s somewhere in between Phasmophobia and Back 4 Blood. Because of its unique mix of highly popular subgenres and its take on social dynamics, Lethal Company is a clear example of a game that spawned from the utilization of a modern angle on product design that supports self-publishing because of its highly viral amalgamation of mechanics.
Even though it wasn’t self-published, another example that makes it possible to draw a pretty neat comparison to Palworld is the sudden success of Valheim in 2021, whose success took everyone — including its nascent developer Iron Gate Studio — by surprise. Set within the same, smartly-chosen survival crafting genre, Palworld players build bases and define their own goals, or get goals defined for them by friends in their server. This is especially the case on Steam, where Palworld’s players can play in parties of up to 32 on dedicated servers.
A big difference is the game world, which is procedurally generated in Valheim. Palworld is technically not an open world game at all, even though it’s marketed and designed in a way that this isn’t unnoticeable right away. After playing for a while, and moving away from the starter area of its predesigned world, it’s easily noticeable that Palworld sends players through a more-or-less fixed progression, with parts of the world that are clearly off-limits, as the enemies and Pals there can easily one-shot low-level players.
It’s a matter of focus. Nintendo’s Pokémon Legends: Arceus is arguably one of the games closest to Palworld and does have a similar open world layout as Nintendo’s ultimate champion, The Legend of Zelda: Breath of the Wild, but in turn lacks the crucial team-based multiplayer survival angle that Palworld offers.
The reason why team-based multiplayer is so crucial is it creates the ultimate food for streamers. Take Lethal Company’s proximity voice chat as an example. Stressful chaos is a gold mine for player expression and memorable highlights, which can clearly be seen from the countless of top gameplay moments that were recorded and uploaded to YouTube.
As can be seen from recent viral successes, the initial mix of subgenres to include is very important, because games can attempt to look like they belong in the same category — Lethal Company, Palworld and Helldivers 2 are all shooters — but their subgenre mixes makes them entirely different games altogether.
Going in the Other Direction
Next to genre and subgenre, theme also plays a big role. Not so much as a direct way of generating buzz, but more indirectly in terms of player fantasy and what an audience really seems to have been missing. In Palworld, it results in a more hardcore and adult experience, compared to the casual and PG direction Pokémon has had in terms of audience. In the example of 2018 self-published hit Among Us, the audience was clearly in need of a game that looked accessible enough so they could play it with a big group of friends, regardless of their skill level. Theme also played a big role there, as a spaceship is the best environment to stress the importance of an easily-sabotaged environment.
Being able to give guns to Pals in Palworld is not as prevalent as the game’s trailers make it out to be; upgrades to use a handful of specific Pals with guns are unlocked in the tech tree and are not integral to the game experience. But making gunfire the main form of combat for the player is definitely one of the smarter and essential diversifications. Taking Fortnite and other shooter survival games like Rust as direct inspirations definitely paid off in making Palworld a more adult experience. Oh, and being able to butcher your Pals definitely helps too.
More than in Pokémon, catching Pals is the main way to level up, and the game incentivizes players to catch multitudes of the same Pal. Where Pokémon really take the role of a player’s fuzzy friends, Palworld’s mechanics steer player’s Pals in the direction of expendable assets. Pals can be eaten, enslaved, mounted, and thrown at elements in the player’s base to gather resources, build structures, or conduct other tasks.
A big part of Palworld’s success can be attributed to the void that was created because Pokémon games refused to grow up with its audience. Palworld, with all its violence, filled that void by picking a target audience far less easily overwhelmed than the relatively casual Pokémon player. This opens a lot of doors for the developers to create (and expose!) the deep, underlying RPG-like systems that come with monster taming gameplay. A good example of this is the player’s Capture Power, which can be improved by finding collectible effigies in the game environment.
From the theme, the target audience’s degree of expected game experience can easily be derived. Especially when a chosen theme seems unconventional, it has the potential to shake up the market and allows the developer to reassess the UX of its game and make it more or less casual than is currently fashionable.
Designing for Virality
With the rise of TikTok, which popularized entertainment in the shape of short videos, Instagram, YouTube, and Twitch followed suit. Furthemore, game designers around the world started developing products that are able to generate content that supports this trend. Designing games around their ability to generate the contagious fun streamers seem to have, by including boisterous mechanics, like being able to sacrifice friends for the greater good, is a big part of that strategy.
Palworld is extremely streamable (more details on that later). Countless videos of players experiencing unexpectedly funny (and sometimes outright glitchy) things started popping up all over the internet after its launch. The developers of Palworld have added plenty of mechanics that are expected to generate interest in its world. One of the most clippable phenomena being the chance of success is exposed before and during the catching sequence. This way, ultra-rare catches have the potential to become free, viral promotion material when experienced by streamers.
Playful settings bolster creativity, which brings us to another almost essential mechanic to generate this kind of interest in the game’s world: An accessible, physics-based construction system that enables players to build their base. Even though this has been done much better in other games, resulting in the beautiful constructions of Valheim and the incredibly inventive contraptions of The Legend of Zelda: Tears of the Kingdom, Palworld also dabbles with these mechanics effectively enough to spark curiosity among viewers.
Streamer’s Delight
A big part of the general enjoyment in Palworld’s gameplay comes from the wonder felt by exploring the game’s mix between crafting survival and monster hunting mechanics, but that is inherent to the genre. As mentioned above, the ability of its engine to generate unexpected results and creating a sense of wonder has sealed the deal.
Some streamers started playing Palworld days before its global launch on Jan. 19. One part of the audience tuning in was curious if the game was actually fulfilling the promises it made, and others were regular Twitch viewers who learned of the game there.
Early news coverage shows big names like Ninja, CohhCarnage, PirateSoftware, Zackrawrr (Asmongold’s second channel), Forsen, and former Apex Legends pro Aceu onboard. In Asia, agencies like Hololive were utilized.
Expect the Unexpected
The best way to engage and entertain players is to surprise them with (to them) unexpected and literally awesome scenarios. These can be handcrafted PvE sequences like boss fights, narrative plot twists, or beautiful environments, but one of the most effective ways to do this without even having to come up with them is having mechanics and an engine that supports emergent gameplay and then drop several players into a world where they can share this experience.
As shown by the incredible success of Helldivers 2, players are hungry for cooperative experiences that allow them to explore a world with their friends and engage in all kinds of hilarious shenanigans. Especially when mixed with more advanced physics engines, this fun is highly contagious.
One of the main reasons why an increasing number of self-published multiplayer games have been popping up over the past few years is the higher availability of dedicated multiplayer technology, among other improved technology that has steadily been lowering barriers to game development. Both Unity and Unreal Engine have increasingly become able to support a multitude of solutions catered to bring the development of synchronous multiplayer experiences that allow advanced physics within reach of an increasing number of game developers.
In conclusion, good product design for self-publishing requires:
- A smart subgenre mix
- A fitting, yet ideally unconventional theme that is able to unlock a new audience
- Viral, highly streamable game mechanics
- Multiplayer that enables emergent gameplay
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Hype-Focused Marketing
Game marketing insider Belinda Ercan has written a great post about Palworld’s marketing framework that is definitely worth the read. In summary, it says marketing these days can be described as a vicious circle (a flywheel), while traditionally it was more like a waterfall. The big difference between the two images is the added feedback that consumers are now able to generate with great ease, as opposed to the solely one-way communication that has been present in more traditional marketing. The main reason for this shift is the rise of interconnectivity, in which people’s ability to let their voices be heard has drastically increased over the past two decades.
Pocketpair has been going through the stages of this framework meticulously and with striking efficiency, leading to a clean marketing home run.
Doubling down on this baseball analogy, Pocketpair easily reached first base with their approach of making product design decisions based on choosing the right genre, theme, and platform that allowed an underserved audience to be discovered and reached. Pokémon on PC and Xbox proved to generate a strong selling point and awareness.
Second base was taken by exposing the genre mashing aspect (with the use of gameplay trailers) to make sure people were able to describe their game easily using a clear and instantly relatable marketing message. For Palworld, this was the gun violence that led to the Pokémon with guns and ARK/Fornite with Pokèmon angle.
Then, some trendy and key open world-mechanics like Zelda’s glider and rideable mounts were thrown on top for recognizability. Third base.
Lastly, bringing it all home was the shock factor: Enslaved Pokémon on an assembly line clearly did the trick.
Next to the enticing trailers Pocketpair released in the leadup to Palworld’s launch, the company’s PR team has also helped maintain and feed the hype with interesting stories from the trenches. The days that gamers don’t know anything about game development are long gone. Especially with indie titles like Palworld, facts about budget, team size, and quotes from developers can accelerate the flywheel when it’s running through dedicated players that go online and search sources like Reddit. Finding information that “Palworld’s main 3D modeler is a high-schooler who the team met because he worked part-time at a convenience store they frequented” adds to the indie charm.
And with success came the necessary scandals and controversy, so while Pocketpair’s employee safety took an unfortunate hit, Palworld’s coverage grew even more. A quick summary:
- Some hardcore Nintendo fans were very upset that some of the characters look like Pokémon and threatened Pocketpair employees.
- PETA put its game design hat on and got involved, as the game contains “animal cruelty.”
- The game’s founder previously tweeted about generative AI, prompting critics to claim Palworld’s game assets were made by AI (Pocketpair denies this and there has been no evidence to support this claim).
The above points are just some of the most notable controversies surrounding Palworld. For a more complete breakdown, visit YouTube, where content creators rose to the occasion by releasing dedicated videos covering the various issues the game has faced. The truth is these seemingly unfortunate events have all contributed to the game’s appeal. It’s a small price to pay for being bold and taking risks that bigger corporations can’t afford to take.
Indie’s Imperative
While the industry might currently seem particularly gloomy in terms of career opportunities, the future of gaming promises to be rich and full of innovation. With the increasing technical capabilities (e.g. AI and more accessible solutions for synchronous multiplayer) of less established companies, which are willing and able to take more risks, come a new wave of games that fill previously unseen voids.
Regardless of the longevity of Palworld as a product, its purpose has already been fulfilled. It has exposed the industry to the market opportunities that seem to exist with this combination of parameters: genre, theme, gameplay, and experience. Within the vast ocean of games, a small, blue patch was discovered from which multiple evolutions can be derived. Any company, especially the ones without the burden to please a publisher or a huge existing player base, is able to discover new patches like these. All it takes is being able to formulate the correct status quo and find the things it’s lacking. To do so, the following framework might prove useful.
A Successful Synthesis
In one of Belinda Ercan's other videos, she mentioned the long-tail effect, which explains why a few major intellectual properties dominate player attention while a long-tail of original indie games tends to drive most innovation.
While this video covers innovation in newly released games in a broad, industry-wide sense, the interesting thing is that the Hegelian Dialectic can also be applied to the release of Palworld itself, and to every other hit that we have seen disrupt the industry in the past. This more than 200-year-old philosophical framework describes how ideas and concepts evolve over time. In this model, things originate from a starting point, let's call it the "status quo," or the way things currently are (thesis). Then, there's a challenge or contradiction to this status quo that we'll call the "antithesis." This antithesis could be a new idea, a different perspective, or a problem that arises.
Now, instead of simply sticking with the original thesis or going somewhere entirely different as an antithesis, Hegel suggests that these opposing forces interact and clash. This clash creates tension and leads to a process of change and development. Through this clash and interaction, a new idea or concept emerges, which Hegel called the synthesis. This synthesis incorporates elements of both the original thesis and the antithesis, and it goes beyond them to create something new and innovative.
In short, Hegel's dialectic is like a creative process where existing ideas collide with new challenges, leading to the emergence of fresh and innovative solutions or perspectives. All historic hit games like The Sims, World of Warcraft, and Minecraft fit the bill here. When taking the latter as a concrete example, the following dialectic can be identified:
Thesis: Traditional video games typically offered structured, goal-oriented gameplay, with predefined objectives and limited creative freedom for players.
Antithesis: Minecraft provided an open-ended sandbox environment where players could create, explore, and survive in a procedurally generated world with minimal predefined goals, emphasizing creativity and player agency.
Synthesis: Minecraft merged the concept of goal-oriented gameplay with sandbox creativity, resulting in a hybrid model where players could pursue their objectives or engage in freeform creativity. This synthesis influenced many other games to incorporate sandbox elements, encouraging player-driven content and community-generated modifications across the board.
We can see the exact same thing has happened with Palworld. As Gene Park at The Washington Post wrote, “Palworld hopes to realize the dream of every longtime and frustrated Pokémon fan by offering a persistent online multiplayer world full of cute critters.”
Of course, the diagram above is oversimplified; Fortnite, Valheim, and The Legend of Zelda: Breath of the Wild are part of the thesis as well, but not as much as Pokémon and ARK: Survival Evolved. Moreover, let’s also not forget that there have been many other attempts like TemTem and Kindred Fates to revolutionize Pokémon; technically, all unsuccessful Pokémon-likes are part of Palworld’s antithesis.
Mainly, Palworld is a product of the lack of ambition from The Pokémon Company to make a multiplayer game and really innovate on the age-old Pokémon RPG formula. In its defense, it must be challenging to commit to a new and innovative long-term Pokémon game project, as it’s such a gigantic franchise with an extensive amount of stakeholders and dependencies. For example, Pokémon video games have to release at the same time as the tradable cards and merchandise, making it more difficult to plan long-term projects, but this doesn’t take away from the fact that players were looking for something more.
For that matter, Palworld has opened Pandora's box and started a new thesis. The next task is not copying Palworld’s design, but finding the next synthesis.
Looking Ahead
When it comes to Palworld, there has been lots of speculation in all four corners of the internet about where Pocketpair will be taking its miracle baby. A port to PlayStation seems only a matter of time, although a Switch port is probably not going to fly, as Nintendo wasn’t super amused with Palworld’s launch. By now, it’s not likely that any legal action will be taken by Nintendo or The Pokémon Company, as the damage has been done.
Pocketpair’s roadmap for Palworld shows new Pals, bosses, and technologies, as well as a focus on PvP, including a Pal arena. Logically, as the game is still in early access, a big part of the future plans still aren’t gameplay related, but after these technicalities are out of the way, other topics like Pal evolutions and improved enemy AI will likely be part of the game’s patch notes.
In the long run, as the game features a premade world, a modular approach for new islands and instanced dungeons reachable through loading screens would be the most obvious approach. MMOs like World of Warcraft and Destiny will serve as the main sources of inspiration for end-game features like raid bosses and PvP arenas.
Palworld’s developer won’t be worried about additional revenue streams for a while after its massive influx of revenue in the weeks after the game’s release, but in the long term, the magical AA price point of $30-40 can be supplemented with some live-ops. To stay clear of any controversy, something akin to the extremely friendly implementation of a fully grindable, seasonal battle pass like the one in Helldivers 2 comes to mind.
The latest Pokémon iterations, Scarlet and Violet, have sold approximately 25M units combined. Palworld has almost reached this count by now, but meanwhile, most players seem to have moved on already. As is customary with early access games, its most dedicated players will check in occasionally or start a new character with different (groups of) friends, but the biggest splash has passed. Articles about “what happened with Palworld” will start popping up a few months from now, with reflections ranging from objective takes on patch notes to pessimistic and disappointed journalists who are disappointed with Pocketpair’s progress. Something that could have alleviated this feeling of disappointment for early adopters is something that would reduce the content treadmill burden for Pocketpair at least a little is to adopt the strategy that’s being executed by Studio Wildcard, the developer of Ark: Survival Ascended. The developer supports mods to a large extent and is now even incentivizing other studios to build premium DLCs as mods for their game. While no silver bullet, it’s surely better than nothing.
As the developers of Palworld won’t ever be able to compete with the marketing machine that is behind the Pokémon IP, Nintendo and The Pokémon Company have little to fear. Sure, Palworld has disrupted the industry and made it painfully obvious that there is a much bigger (and more adult) audience for Pokémon games than Nintendo expected, but it’s still “just” a one-time success. The most impactful thing about Palworld is its inception, which has led to a new synthesis: A world in which adult-themed Pokémon-like games exist. In the best case scenario, this will lead to Nintendo pulling another Breath of the Wild in a few years and taking the world by storm with its AAA version of a Pokémon game catered to a more mature audience. Arguably, a “thank you” card would be appropriate.
What Can Recent Self-Published Successes Teach Us?
It’s never been clearer that players are like dogs with two tails for collaborative experiences these days. There is a clear tendency toward multiplayer survival games for turbo-charged streamability, as well as the experience one can share with friends. Breakout successes like Among Us, Valheim, Palworld, and Lethal Company have repeatedly shown that it doesn’t matter if a game is early access, or if it is indie, AA, or AAA. If it allows players to collaborate, build, and survive together with their friends in an interesting game world, they will watch it, play it, and maybe even stream it. When even joke games like Content Warning are able to capture giant audiences with some creative marketing and an original concept, a new age of viral marketing has visibly taken off.
If there was any doubt on the viability of genre mashing before Palworld’s release, the ridiculous amount of hype it created has shown that all bets are off. Emergence of games like Palworld will encourage countless developers to be bold, and mix and match the most exotic flavors of gameplay in the candy shop that is today’s games industry. While this will definitely not result in success for everyone involved, it does foreshadow an exciting new era in which rock solid game design is going to be more important than ever, to account for the challenges posed by the mixing of genres.
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