Home > Activision, Blizzard, Digital Distribution, EA, Game Industry, Game Sales, Games, MMO, MMORPG, MMOs, Press, THQ, Ubisoft, World of Warcraft > Traditional Publishers and the MMO Challenge

Traditional Publishers and the MMO Challenge

Eddie Vedder once said ‘Wake up or die in your sleep’. He was referring to the general state of the world back in ’91, but it’s solid advice for traditional game publishers in 2011. By traditional I mean the ones that still put a CD in a plastic case and send it to a retail store; EA, Ubisoft, Namco, THQ, etc. The only real exception is Activision because they made the extremely smart call to do a power rangers style move and join forces with Blizzard several years ago. Putting them in a strong position in both the online and console space. In Q1 this year alone their net revenue was $503m, in large part due to the on-going success of their World of Warcraft franchise.

Most other traditional publishers have online strategies that vary between non-existent to clueless, naive and embarrassing. However you can’t really blame them and expect a overnight change to the entire of foundation of what made them successful in the first place. Much like the music and film industries they are struggling to grasp the wide reaching implications of digital distribution quickly enough and clinging on to what they know works. Their biggest failure lies not in the un-willingness to change but in the un-willingness to truly understand the online space and MMO games and adapt their infrastructures to suit a new focus. We may think the MMO industry is huge but in the grand scheme of things we are still a niche within a niche industry and there’s a massive knowledge gap.

Here are some of the fundamental challenges traditional publishers face:

1) Retail focused Infrastructure – Traditional publisher are built around retail. They have manufacturing teams, operations teams, sales teams. They schmooze Buyers from Walmart, Best Buy, Gamesstop, etc., they print manuals, manufacture CDs, design, proof, copy, get ESRB ratings, and work on submissions with the console owners. All this takes manpower and money, even though retail sales are decreasing you still need all those resources to produce less units. So you the overhead remains but the profit diminishes.

2) Community – Historically big publishers are not used to in-depth community interaction, with the rise of social media this is slowly changing and even the most backward publisher will have a community or at least a social media team.  But by the nature of the box distribution model the process is one-sided and not as organic as with a MMO. With the lack of a beta phase there is limited consumer feedback pre-release. There is little involvement from the community in shaping the final product, often this beta phase can be a critical part of a MMO launch on where you build your grassroots community that drives your positive word mouth. Get this wrong and any product will struggle to recover.

3) Marketing – Most large publishers have over-inflated marketing budgets that use a scatter-shot effect to reach out across multiple mediums: outdoor, TV, events, radio, online, viral and social media. Large scale campaigns like this make a lot of noise but are not necessarily ROI friendly or effective for a more specific demographic. If you’re trying to reach a niche audience such as subscription based MMORPG gamers you need to consider: they need the right PC spec to play your game, must have a credit card, probably be male between the ages of 16-35, etc. The point being you’re not going to best reach that person with an outdoor billboard on Sunset Blvd or the London Underground. You need more focused marketing efforts with a close eye on your conversion rate and cost per acquisition (CPA). Big publishers need to tone down their marketing efforts and make them much more focused on conversions vs brand awareness and noise.

4) External dependencies – Creative Agencies, Media Agencies, PR agencies, manufacturing suppliers are all part and parcel of modern games publishing. The issue is much like the traditional publishers infrastructure  these suppliers are setup to work on big launch campaigns and one off projects. Not necessarily on long term ongoing acquisition and retention marketing campaigns that a MMO with a life of 4 to 5 years requires. Retaining these companies of long periods is extremely expensive and cost prohibitive. Once you have contracts in place and have established relationships it’s not easy to close the doors on those overnight. And this is exactly why most online publishers will fulfill a lot of these function in-house themselves.

5) Timing – dictated by all of the above. The usual cycle of pre-release reviews, teasers, tightly embargoed exclusives all work differently for an online product. For example with an open-beta it’s much harder to embargo things, you can’t send press a review copy because the servers aren’t actually live yet. Not all the marketing should be front loaded, you need to think about the first 30 days when the subscription kicks in, you need to think about patches updates and what activity you need in-place post launch. You need to structure deals for pre-orders, head-start events, all things that usually do not need to be considered for a boxed product.

So what can these publishers do to better prepare themselves for continuing shifts in the industry?  Well, step 1 is acknowledging you have a problem. You need to accept you need to change to survive, once you’ve managed that the rest is down to practicalities. Build a knowledge base quickly, bring new talent into the management/executive ranks that understand the online space and have experience in it. Make the hard decisions sooner rather than later, focus on result oriented implementation, build effective data tracking tools for things like marketing and monitor those closely. Focus on digital distribution strategies either by relying internal systems or partnering with online distributors like Steam. Figure out future revenue models based on something other than pure box sales. And finally be brave enough to step away from retail.

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: