Gaming's new superstars are independent developers

Chris Morris
Key Points

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Independent games don't rule the sales charts. Their fan base is dwarfed by that of even a mid-level game put out by a major publisher. And the money they make is just a drop in the bucket in an industry whose global revenues last year totaled $93 billion.

But lately, those indie developers have been the belle of the video game ball.

Sony, Microsoft and Nintendo are all courting independent developers as they look to expand the offerings of their system, differentiate themselves from the competition, and ensure that they've got a steady flow of games to players.

"We need to be able to bring new blood into this business," says Shawn Layden, president of Sony Computer Entertainment America. "There comes a time when certain teams make the same game over and over over time. To get a new idea, it has to come from another direction. … We want to see more of that."

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Increasingly, that seems less likely to be existing publishers.

"Look at Activision, Take-Two and all of the other big publishers," says Eric Handler, senior equity analyst with MKM Partners. "The number of releases from them each year has shrunk considerably. So to keep a well-stocked pipeline of titles, you need these games."

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Indie developers used to live on the fringe of the gaming world, making experimental titles that generally went unnoticed by the larger gaming audience. But as the cost of AAA releases by major publishers has escalated, those companies have become much more conservative with their releases, relying on established franchises and formulas, which some players complain has brought a staleness to the industry.

Independent games, though, are generally created on shoestring budgets. Yet, they still manage to showcase captivating new gameplay styles.

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"Some of the most dynamic and interesting games coming out right now are from smaller independent developers," says Simon Carless, chairman emeritus of the Independent Games Festival. "If you make a game across multiple locations with hundreds of developers, as some of the big franchises like 'Assassin's Creed' do, it's difficult to turn on a dime and completely switch up the gameplay. The animators and modelers need to know exactly what they're doing weeks or months in advance to make the production schedule work."

The risk averse nature of big companies has spurred several well known developerssuch as "Gears of War" creator Cliff Bleszinskito strike out on their own. A 2013 survey of developers, in fact, found that 53 percent identify themselves as "independent."

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And it's getting easier for those developers to create games that rival what bigger publishers put out. Although indie games have generally not compared well graphically to major releases, the companies licensing game development software have recently changed their terms to include smaller developers.

For instance, Epic Games, whose "Unreal Engine 3" powered some of the biggest titles of the previous console generation, unveiled a new pricing strategy for its "Unreal Engine 4" in March, abandoning the traditional licensing model for a flat monthly fee and a small percentage of any retail sales. In the past, developers paid hundreds of thousands of dollarsand a per-game royalty to use Epic's software.

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"The Unreal Engine remains an awesome venue for building high-quality games, but we've realized we haven't covered the depth of what the engine is capable of," said Epic founder and CEO Tim Sweeney at the time. "The future of the engine is really inspired by a lot of the changes in the game industry."

Even with the new affordability of top-level design tools, not every indie game will resonate with players. That's just the nature of a field that can be so experimental. But regardless of the hit/miss ratio, console makers are likely to escalate their pursuit of independent developersbecause it only takes one big hit to cover the costs of the failures.

"For every 100 garage bands, how many get a chance at record label?" notes Layden. "This is pretty similar to that."

In the indie world, there's no bigger hit than "Minecraft." First released in 2009 in an incomplete state, the game hit the Xbox 360 in May 2012 and has continued to grow. Last year, its sales topped Disney's highly publicized (and multiplatform) "Disney Infinity." Life-to-date, "Minecraft" has sold over 35 million copies across various platforms.

While replicating "Minecraft's" achievements is the dream, industry insiders note it's the indie equivalent of creating the next "Grand Theft Auto."

"Minecraft is Minecraft. It's a phenomenon, and I'm not sure anyone should be thinking that a phenomenon is reproducible," says Carless.

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That may be. But as this generation of consoles matures—and game budgets continue to expand, analysts say the real reward of courting these independent developers could begin to shine through.

"You know the big games from third-party publishers are going to be available on both [the Xbox One and PlayStation 4]," says John Taylor, managing director of Arcadia Investment Corp. "That's not a differentiator. Console companies need to come up with something else. If Sony or Microsoft or Nintendo can come up with a game property that is rapidly iterated on, is always fresh and forces people to come back because they're so engaged, then that's going to be a defining characteristic of the back half of this generation."