What Went Wrong with Knockout City?

Knockout City is one of the many online games that will be shutting down this year, with its servers scheduled to close on June 6, roughly two years after its debut. In an interview with GamesIndustry.biz, Guha Bala, co-founder of Velan Studios and Vicarious Visions, shared his insights on the reasons behind the game's demise. According to Bala, Knockout City had a strong start when it was released as a mid-priced premium title by Electronic Arts, with a boost from its inclusion on Xbox Game Pass. However, the game's pricing model became less competitive as most multiplayer-only titles had transitioned to free-to-play, making it challenging for Knockout City to continue supporting new content. As a result, the game transitioned to a free-to-play model a year after its launch, with Velan Studios taking over as the publisher. Despite this change, the developer remained committed to avoiding divisive strategies like loot boxes and pay-to-win mechanics, instead opting for cosmetics-only microtransactions. However, the free-to-play version of Knockout City faced significant challenges, including a dramatic drop-off in retention and monetization around the end of August. Bala attributes this to macroeconomic factors, including inflation and currency devaluation, which affected discretionary spending and, in turn, the game's revenue. The studio eventually decided to sunset Knockout City, with the goal of gaining more experience with free-to-play and live service games before shutting down. Bala expressed his hope that the game could be revived in the future, potentially as a sequel, and emphasized the importance of taking stock of the lessons learned from Knockout City's short lifespan. One of the key takeaways, according to Bala, is that a cosmetics-based, free-to-play game requires massive scale to be economically sustainable. He suggests that indie studios looking to innovate in this space should aim for a smaller scale, targeting hundreds or thousands of users, rather than trying to compete with larger titles. Bala also noted that the live service market has its limitations, with players only able to commit to a few titles at a time. He believes that games need to either be among the top two or three in terms of scale or cater to a specific niche audience to survive. In terms of the market at large, Bala expects to see more online and live service games close in the near future, citing the current wave of closures as a result of timing and macroeconomic factors. However, he emphasizes that this is not the end of games-as-a-service, but rather a cycle that requires adjustment and a reevaluation of the current business models.