With the N64 all but over, the PC still struggling (Develop recently revealed that PC titles made up just 16 percent of the total sales of 1998's top 75 titles, behind even the Nintendo console's 19.3 percent), the Dreamcast underwhelming more with each passing day and the Playstation's days numbered by the official announcement of the sequel, practically no-one's developing games in 1999 unless they started at least a year ago. However, most people seem to think that we're simply looking at a bit of a "year-out" scenario, prior to another big boom-cycle surge in 2000. Most people, that is, except developers.

Or to be more specific, independent developers. Because from the conversations I've been having recently with the development community, it seems that the present and future prospects for game developers have never been worse. Over the last few years, the cost and length of development of an average game have spiralled so far out of control, fuelled by ever-accelerating leaps forward in technology, to the point where it will very shortly - if it isn't already - be totally economically unviable for new independent developers to exist. And as I'm sure no-one needs to be told, practically every major development in gaming in the last decade has come from an independent developer. If we kill the independent developer, we kill the pool of talent where the industry's future lifeblood grows, and with it our own future.

Needless alarmism? Not according to Bob Wade, industry veteran of 15 years standing, and owner of independent developer Binary Asylum. Asylum's first PC title, Star Trek New Worlds, will shortly be released through Interplay. The game, two years in the making, promises to be the first Command & Conquer-style realtime strategy game to feature a fully 3D environment, and looks set to meet with an extremely favourable reception judging by the coverage it's had so far. Asylum previously tasted success in the Amiga market with Zeewolf, and now have a proven track record of achievement and sensible management stretching back over five years. So you might imagine that their phone would be ringing off the hook with offers to keep them busy well into the new millenium. And yet, it's not.

"We're about to have what I think will be one of the biggest games of 1999 come out," says Wade, "and yet Binary Asylum - along with, I suspect, quite a few other independent developers - are finding great difficulty in placing any other projects. It's almost a mantra, I've heard it from so many other people - 'We love the game you're working on, what you're doing is fabulous, we love your team, we love the way you do stuff'. And then when you say 'Great, so what do you want to work on with us?', it all goes quiet."

Given that anything which gets started now is going to be aiming at release in 2001, this is a deeply disturbing state of affairs, surely?

"It certainly concerns me from a business point of view, but it's also extremely worrying in the sense of where games are going to come from next, because you can see that independent developers, particularly here in the UK, are getting squeezed from just about every angle imaginable. These are tough times - you NEED a licence or a franchise name. The only thing we're interested in establishing now is a franchise, but every franchise has to start somewhere."

Have we quietly, and without anyone noticing, crossed a threshold beyond which it's no longer actually economically possible for an independent developer to come up with a new game on it's own?

"The speed at which technological innovation is happening means that, with a rule-of-thumb figure of 18 months to two years average development time, once you get a year into the project the goalposts have moved so far from a developer's point of view that it's a big, big problem. If the goalposts are moving every few months, it's very hard to ever get a game finished that's reasonably near cutting-edge. I mean, even when it's done, chances are in the time it takes to go through beta-testing you're pretty much going to be another generation of hardware specs behind the pace. As development times get longer and longer it gets harder and harder to keep up with technology, and if you're an independent developer with limited resources and wages to pay, then it doesn't matter how capable your team are, you've immediately got a credibility problem with publishers. You can tell them 'Yeah, of course we can do all the latest stuff with the graphics and so on', but to them that's just so much bullshit unless they can actually see it."

Is it too late for new talent? Is there no way in without just selling your creative soul to a major?

"It's very hard to see a way in, because unless you can find someone who can stump up half-a-million quid on a total risk basis for you to start up a team - and these days, you really need a team in double figures - paying even vaguely competitive wages for anywhere up to three years (if you're starting your game engine from scratch), and then face the fact that you can't really even start to sell the game to a publisher until you're at least somewhere near alpha stage, there's just no chance. You MIGHT be able to sell something on the strength of a technology demo or whatever, but really publishers these days are looking for someone to walk through their door with something that's already at beta or even finished. And how many new development teams do you think can find that kind of money? It's also pretty hard to hold onto your team when they can just walk into a job at a publisher and earn £40K a year or more pretty much off the bat. Basically, unless you can find a rich sugar daddy, you're stuffed."

Wade's opinion was backed up by pretty much every other developer I spoke to. But there are voices of dissent, too. Jacqui Lyons of Marjacq is an agent for numerous development outfits, and claims to be placing products without any difficulty (though for obvious confidentiality reasons, she wouldn't name any actual names of any). She sees the climate rather differently.

"Independent development being dead is a load of garbage. The PC is sticky, there's no doubt about that. But everybody knows that there's still life in Playstation. Sony aren't going to let what happened to the SNES and NES happen to it, not with 50 million consoles out there. To me the problem right now is the Dreamcast - everyone had been looking at it as a contender, but now publishers are going off the platform. The real trouble with developers is that very few of them have original ideas. When you've got something different and good, you can sell it no bother at all."

So the problem, according to Lyons, is that publishers are demanding innovation and originality that developers aren't providing. It's an unusual angle, certainly.

"That's rubbish" says Jon Hare of Sensible Software. He argues that you only have to look at the charts to see that innovative, original, imaginative titles are the last thing publishers are looking for.

"Our first 10 games were all critically acclaimed, original, pretty off-the-wall ideas. But we didn't start to make any real money until we came up with a football game and created a franchise with it. Generally, the more original our stuff was, the less well it did. I still think Wizkid is one of the best games we ever did, it got fantastic reviews everywhere, but it was a flop."

"The problem," continues Hare, "is that you haven't got a chance as an independent developer unless you've got a proven track record of success already. However, if you HAVE got that record, the risks nowadays are so massive compared to the potential reward that you've got to be mad to take the chance. One single PC game swallowed up our company's profits for over 10 years. In the end, Chris Yates and I were putting over £40,000 of our own personal money into the company every month, just to cover the development costs of one game, which ended up not even coming out because it was TOO off-the-wall. If you've already been a success, why would you risk everything on developing a new game now? You'd be much better advised to just take your money and run. I mean, if it takes 10 games to get to a hit, a new development team's going to need anything up to £20 million invested in it before it starts to make a return. And that's fairly obviously not going to happen."

Jacqui Lyons is insistent, though.

"The fact is there's a shrinking industry out there, a conglomeratisation of publishers, but in a lot of cases the thinking of the developer is simply not in line with what the business requires. It's not quite as black as anybody paints it. It might even get better over the next 12 months - it will definitely get easier for certain developers. There might be a sudden resurgence in smaller games for a mass market. I still think there's an enormous support for third-party developers."

But the point of what everyone's saying is that it's simply not possible to BE a new third-party developer any more. Where are these new developers going to come from?

"The next generation of developers won't come from the bedrooms any more. They'll come out of university and join established teams. And then break away and form their own companies once they've shown what they can do."

So I spoke to someone who tried just that. Programmer X comes from a very well-known development outfit, and has coded several major hits over the last few years. With a couple of other time-served, proven-track-record colleagues, he recently broke away and attempted to set up a new outfit (going along also with another of Lyons' stipulations, that it's possible - despite what all the developers I spoke to suggested - to start up a viable operation with just two or three people). His story wasn't an encouraging one, though.

"It's easy to think you can knock out a game with half a million quid and four people, but when you add it up, even if you keep costs down as low as you can, it hardly takes any time at all before things have spiralled out of control. You know, six months just fly by and you've had to pay four people's wages, you've had to buy all your equipment and your 3D engine and so on, and that costs an absolute fortune. I made a lot of money out of stuff in the past, but that's all gone now with very little to show for it, and there's no way of funding ourselves any further. It's just impossible."

What about the argument that smaller developers could make a living from smaller, simpler games in order to make their name?

"I wish it would happen, but I can't see it. Why should things go backwards all of a sudden? People are still buying games, and once they've seen some fantastic-looking graphics on a title, they want fantastic-looking stuff all the time, regardless of how it plays. So the industry is only interested in giving them what they want, which is the big, fancy, expensive stuff. I can't see why people would suddenly go back, I can't see where this market for simple little original games is going to come from. It goes against everything that's happened in the development of the market until now."

It would seem, then, that there's simply no way of retreating from the "huge development costs" model that we've created. By constantly wowing punters with groundbreaking technical achievement, the industry has created a monster, like a heroin addict who needs bigger and bigger fixes to keep getting the thrill. We've made a giant rod for our own backs, and it's only now that the punters are really starting to hit us with it.

"Sure, if you don't deliver the visuals and the depth and everything else that's required for especially a PC game these days, you're not going to make it," admits Bob Wade. "You're right, there's basically no way of making the development process any cheaper now."

So given that there's no bottomless pit of development cash available from publishers, even if they wanted to indulge developers' creative impulses, haven't we painted ourselves into a corner where, despite Jacqui Lyons' claim that the industry is crying out for originality, it's simply not economically viable to do anything but sequels and clones of existing titles?

"There are ways round it," Wade maintains. "Look at what Lionhead are doing - that's a professional, well-run business that's making the effort to encourage new creative talent. You might say that they're a special case, but why aren't they a special case that can be repeated?"

Because Lionhead's strength (ie Peter Molyneux and the very substantial resources he's accumulated through years of success) was founded in an age where you could develop games quickly and cheaply with a small team. It's now too late for anyone else to become Peter Molyneux. One person who CAN still be Peter Molyneux, though, is Peter Molyneux. How does he feel about being the only viable independent developer in town?

"Well, firstly, I agree with what everyone else is saying about the difficulties of being a developer at this point in time," Molyneux concurred when I asked him. "Where they're wrong is in assuming that it's even very viable for Lionhead - times are tough even for us. But the people I feel really sorry for are the new developers who've just recently been signed up. Because if you signed a contract 6 months ago to develop Y number of games for Z thousand pounds, you're in real trouble now - the publisher is obviously going to expect those games to be of a competitive standard when they come out, yet the cost of developing a game to that standard has just gone through the roof. The PC market is scary enough, but the huge leap forward Sony are making with the PS2 is going to force the PC market to come with it to keep up, rather than move at the comparatively steady - but still frightening - pace it's been going at until now."

You mean things are going to get even worse still?

"To make a game a success now," Molyneux continues, "you're competing with stuff like Shen Mue and Final Fantasy 8, with development teams of hundreds of people and budgets well into eight figures. As the games business is dragged by the Japanese, kicking and screaming - and despite the West's best efforts - towards the mass market, consumers want those levels of production values and they simply won't put up with anything less. An indie developer hasn't got a chance of competing with that."

Interestingly, this is an almost exactly opposite interpretation of "mass market" to Jacqui Lyons' version. Someone must be wrong, surely?

"The best analogy I can give," says Molyneux, "is the film industry of the 40s, 50s, and 60s, where the UK was producing all these wonderfully creative films that didn't sell terribly well, but did okay. Then Hollywood came along with the idea of the blockbuster and the entire industry collapsed practically overnight. Once people have seen the big flashy epics, that's what they want from then on."

We're looking at the death of new independent development houses, then?

"The industry's got to look fairly hard at its practices in terms of encouraging creative talent like that to come through," says Bob Wade. "There's no inherent reason that kind of creative talent can't exist within the conservative, corporate business that it now is. But we need corporate structures to take risks, in order to have the chance to create the next big wave. Those of us that do care need to do something about it. The money is there in the industry to fund riskier development as well as play-safe stuff, but you also have to remember that play-safe stuff is a bit of a false economy in the long term. All the breakthrough titles, the games that create genres, come from external development teams. Trying to cut costs by bringing all development in-house just won't bring the same results, because independent teams are always going to be hungrier, for both creative and financial reasons. I don't see any evidence that in-house teams are any more cost-effective."

But if they're so indispensible, how come the independent developers are having such a hard time?

"If I could put my finger on the answer to that, I'd have done it by now. But as an industry, I think we need to find those answers fairly quickly. The consequences otherwise are pretty awful."

1. Jon Hare sees a semi-independent studio model as the only way forward, with designers being drafted in to work with in-house development on a project-by-project basis. This is plausible, but only for designers with existing records. The problem of introducing unproven new blood remains troublesome.

2. With the resurgence of Game Boy since the introduction of the colour model, the comparatively tiny scale of games there (easily possible to do with a team of two or three in a few weeks) could provide an affordable way to develop a track record. Whether the skills used would be of any value in developing "full-size" games is dubious (the Game Boy is a Z80 system, for one thing), but it might be possible to create a Pokemon-style brand name which could be exploited.

3. Guess what? Lower game prices. If games came down to a sensible level, it'd be possible to support niche markets (like the music and film businesses do), and it would hence be possible to develop the smaller, less ambitious games that Jacqui Lyons sees, but without the sales-destroying stigma currently attached to lower-priced titles. Economically sensible? Yes. Likely to happen? No.

This isn't just a scare story - it's already happening. The casualty list of proven, successful, time-served independent developers is growing by the day.

Sensible Software - now exists as a name (and some brand franchises) only. Closed as a going operation late last year because, according to boss Jon Hare, "We make a lot more money closed than we can actually developing games."

Trilobyte - the team behind The Seventh Guest recently shut up shop, with the cancellation of their upcoming Extreme Warfare.

Alien, responsible for hit PC RPG Neophyte, gave up the ghost this month. FGN Online quoted the company as saying "We simply never got the investments we needed and the money has run out."

System 3 - the veteran developer also closed this month, also citing investment difficulties.

DMA Design - still going strong, of course, but even this proudest of names is no longer independent since the company's absorption into Gremlin last year.