Hello Games' Sean Murray learned a lot when looking for a third-party publisher for his company's recent PSN critical and sales success Joe Danger. But the final takeaway from all those lessons seems to boil down to the same thing: most of the big publishers do not know what they're doing in the downloadable games market.

Speaking at the Develop Conference in Brighton today, Murray presented much of the personal research and anecdotes that convinced him and the three friends that make up his tiny company to self-publish on PSN rather than attach themselves to an established third-party publisher. Chief among those reasons was the fact that digital downloads from big publishers don't tend to sell very well on the download services.

Excepting established franchise re-releases like Galaga and Street Fighter 2, which skew the data, Murray's research found that an overwhelming majority (77 percent) of original IP from third-party publishers sold a paltry 25,000 copies or less on Xbox Live Arcade and the PlayStation Network. These weren't underappreciated critical gems either -- 68 percent of original IP third-party downloadable games earned a 65 percent or lower average on Metacritic, Murray said.

What's causing this sorry state of affairs? Murray thinks most established publishers still consider digital downloads on consoles the ginger stepchild of the business. They want to be in the space because they know it will be big eventually, but the person in charge of the digital download services at most publishers "is not necessarily the biggest deal for the overall structure of the publisher," Murray argued.

"We're focusing on games that are less about fun right now."- Anonymous gaming publisher

Many XBLA and PSN publishers also seem blinded by what Murray called "The Uno Effect," named after the first XBLA title to sell over one million units. Never mind that many of those copies were bundled with purchases of an Xbox 360 Arcade unit. For years publishers seemed obsessed with pushing casual card, puzzle and word games onto the console download services. By Murray's estimation, these titles are making up a full 31 percent of the offerings on console download services but less than 5 percent of the sales. Murray said these numbers show that it's the long-time, hardcore gamers that are driving downloadable game sales, not the casual players.

But what really convinced Murray that pubishers just didn't understand downloadable games were the reactions he got when he tried to pitch Joe Danger to them. From one publisher that said, "we're focusing on games that are less about fun right now" to another that pointed out "collecting giant coins feels unrealistic to me," to a third that asked "can Joe be a monkey? We like monkeys," Murray said he didn't feel publishers understood what his company was trying to do with the game.

By self-publishing, however, Murray said Hello Games could get its vision for Joe Danger through to the consumer unmolested. While a publisher can be useful for marketing and promotion, Murray said Hello Games worked hard to spread the game through word of mouth and personal connections at conferences like PAX (where Murray said he thought the line-free experience at his company's booth was much preferable to the half-hour queues for Mafia 2 right next door). The result is a game that recouped its meager development budget on the first day and has since earned ten times that much for the tiny company, whose principal expense, Murray said, is two years of beans on toast.

Other developers can do the same thing, Murray argued, as long as they're passionate about their vision and they don't try to take down Halo. "A small house isn't interesting when competing with a skyscraper," he said by way of analogy.

This article was originally published on Joystiq.

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