Will endless low cost content do to gaming what it did to TV and film?
UGC gaming platforms that incentivize user-generated content are expected to make big payouts to creators in 2024. As this practice grows, however, it could put pressure on top-tier games and services.
Two popular video games have enabled hundreds of millions of players to be 3D creators. Now, a third heavyweight has launched new tools and incentives to stoke the fires of 3D user-generated content (3D UGC) on their own platform.1 More people have been creating 3D content, and top 3D UGC platforms have been paying out more money to them. Deloitte predicts that these platforms will pay out almost US$1.5 billion to their content developers in 2024. Deloitte further predicts that the number of paid independent developers on 3D UGC gaming platforms will exceed 10 million.
This prediction is buoyed by the success and inertia of 3D UGC platforms for players, creators, and brands; the arrival of new tools and incentives to make 3D content easier to create and monetize; and the strength of the UGC gaming model for video and social media.
Expanding the creator economy for games could drive greater innovation in game experiences and digital goods, stronger engagement for 3D UGC platforms, and more favorable economics for both platforms and creators. These platforms likely see an opportunity to democratize gaming and interactive experiences. But by unleashing endless cheap 3D content, will they disrupt the industry?
What is 3D UGC?
Like user-generated video platforms and social media, 3D UGC democratizes content creation for games. On 3D UGC platforms, users can create, share, and monetize digital goods, like skins and cosmetics (things an avatar might wear), and equipment (gear that might offer some utility to the player). Platforms have developed robust marketplaces for creators to trade in such digital goods.2 Users can also create entire games and immersive 3D experiences, then leverage discovery tools provided by the platform. Like social media, these user-generated games and their creators can become very popular, drawing millions of players and fans each, and generating valuable brand relationships.3
Although it’s gotten much easier and more popular, there have always been some players—and some game-makers—that have seen the appeal of creating in games. Modders, as they’re called, have brought fan fiction into games, enabled personalization with digital goods and cosmetics, and added features that players were clamoring for, but game companies were unable to prioritize.4 Some mods have evolved into hit games of their own,5 while others have directly influenced how game companies have grown their franchises.6
Leveraging a distinct blockiness that may have made content creation easier by presenting a LEGO-like building experience, Roblox launched in 2005 as a platform for users to develop and share their own games and digital goods. In 2009, Minecraft offered its version of 3D in-game construction adding resource management and survival mechanics. Both have worked to lower the barriers to 3D modeling and game creation, spawning creators, companies, marketplaces, and other games offering 3D creator capabilities. In 2023, Epic Games announced new creator capabilities for its popular multiplayer franchise, Fortnite, on its Unreal Engine development platform, diverging from the blockiness of its competitors with more realism. To incentivize game creators on their platform, they also announced revenue sharing opportunities based on engagement.7
User generated content could shift the economics of gaming
Developing blockbuster story-driven games has become very expensive and complex, and such games compete for engagement with top live game services. An explosion of cheap or free 3D user-generated content could draw more people away from top-tier games and game services and into simpler, more commoditized and niche games. For the leading games studios and publishers that tend to dominate engagement and revenues, 3D UGC gaming platforms could become an alternative destination for immersive and interactive experiences.8
For game studios, building and delivering great games has become an increasingly challenging and expensive endeavor. Making a hit game that might sell for US$65 can take years to develop and cost upwards of US$300 million to produce and market. Games that run as live services shifted the economics of gaming from making money on the launch of a new game to recurring in-game revenues from personalization with digital goods, new content experiences within the game service, and access to special events. Such games often thrive on the social nature of their services but also should continue to deliver new experiences to keep players engaged.
Platforms for 3D UGC lean into this by deputizing and incentivizing players to keep adding new content to their services. The platform itself can radically lower the cost of game development and marketing for creators while enabling them to monetize their passions and build fandoms. Like user-generated video services and social media, this can lead to highly diverse content catering to the most popular and the smallest niches.
How platforms are making 3D UGC easier to create
One challenge for 3D UGC is that it is typically more difficult to produce than video content. This difficulty of building in 3D modeling tools has historically kept it a narrow pursuit, but some game companies have steadily been making it easier.9 Power users can attain greater capabilities while nontechnical creators can develop compelling games. Platform marketplaces enable creators to trade in texture packs and shaders, 3D objects to populate the game, and game mechanics that package interactions like opening a door or driving a vehicle.10
With the rise of generative AI, providers are actively working to make 3D content creation easier.11 These tools are emerging to automate some parts of coding and testing for more involved game elements; they enable faster development of dialog and localization into different languages, as well as visual generation of character and set design; they support early experiments in non-player characters that can engage in conversations rather than reciting a few canned lines; and at the edges of innovation, they are working to enable natural language prompts that can generate games on the fly.12
Making UGC easy to create and share, and enabling creators to monetize their work, has driven a near-infinite tide of content for social media. This has put more pressure on premium content, drawn audiences away from TV and film, and changed the advertising landscape. If 3D UGC platforms are successful, they could bring about a similar sea change for gaming.
The bottom line
For the games industry, 3D UGC could be a double-edged sword. Enabling and incentivizing much greater 3D UGC could amplify innovation in games, digital goods, and monetization while fostering more interest in and engagement with a rich diversity of interactive experiences. Such innovation might not only drive the expansion of an independent 3D creator economy, but some of those creators may also move on to establish successful game studios of their own, bringing yet more diversity and competition to the industry. Additionally, some of those games and gaming innovations could matriculate into stronger game studios, further stoking their own competitive capabilities.
At the same time, however, history has not been kind to incumbents when their control over content gets disintermediated and democratized. Some of the challenges confronting film and TV—high costs of content development, disruption of distribution channels and lucrative theatrical windows, and the shifting behaviors of audiences—have arguably been exacerbated by the rise of endless free content, lofted on the winds of social networks and the preferences of younger generations.
Leading platforms for 3D UGC have been around for a while without disrupting the games industry, but as their games and experiences become richer, more innovative, and easier to develop and monetize, they could attract more attention and engagement. Greatly amplifying 3D UGC could create more fragmentation of gaming content and creators while consolidating them onto a handful of platforms. This could shift the economics towards gaming and interactive experiences that are often cheaper to develop.
At nearly US$250 billion annually, game studios may be in a stronger position than TV and film studios have been. Younger generations are flocking to gaming in its many forms, and more game IP is producing hit movies and streaming TV.13 Still, video game companies may face a similar shifting landscape between premium and commodity content. Developing premium games has become costly, and top game companies could face greater competition and cost pressures from 3D UGC, drawing more players to a seemingly infinite abundance of cheap or free interactive experiences. At the same time, 3D UGC platforms could enjoy an abundance of 3D content that could cost them far less, but they may wrestle with managing, moderating, and monetizing so much commodity content, as well as with the challenges of copyright infringement, harmful content, and looming regulations. In the middle, companies that are neither commodity 3D UGC nor premium studio-led may need to pick a side to survive.
On the way to their metaverse visions, platforms for 3D UGC may succeed in democratizing game development for the masses. This could lead to an explosion of creativity and innovation for gameplay, and also new forms of immersive and interactive content and experiences. But in doing so, 3D UGC platforms could disrupt their own industry.