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Re-blogged from A-List: Why Publisher 2.0 is M.I.A.

Feature: Why Publisher 2.0 is M.I.A.

Re-blogged from the A-List, great article by Steve Fowler on the current state of games publishing and where the future is headed. The original article can be found here: http://www.thealistdaily.com/news/feature-why-publisher-20-is-mia/

The video game business is changing rapidly thanks to growing access to and appetite for digital games. They’re everywhere, in your pocket, on your tablet, in your social network, even on your console. Look closely, however, and there is a disconnect in the digital game marketplace.

The audience for digital games, whether online, social or mobile, has continued to grow. Recent forecasts only point upward. There are quality products, and ever more sophisticated types of games. Yet there are an underwhelming number of bona fide hits, and evidently little marketing support for all but a handful of titles.

For nearly three decades the main source of revenue in the game industry has been packaged games sold at retail, and primarily for video game consoles. Early on these games were relatively inexpensive to make and could be completed in short periods of time. As technology advanced and the popularity of games grew, so did their complexity and sophistication. The perception that video games were toys shifted to seeing them as serious, and seriously lucrative, forms of mass entertainment. The business of games, from product development to sales and marketing processes, became scientific, formulaic, and with decision-making ever more reliant on predictability. It was increasingly beholden to major brick and mortar retailers as the predominant distribution channel, and with more and more real estate at stake inside these stores, distribution costs also began to soar.

As time went on, the industry became more risk averse. Once games settled into their role as mass market entertainment served through costly, controlled channels, they were like their Hollywood counterpart. The business evolved into primarily big risk and reward, with the chase for “mega” hits needed to offset investments. The side effect of this approach to creative enterprise is that it excludes many participants. It is more closed off to new ideas and anything seen falling short of having mass appeal. For games, these limitations meant fewer products coming to market serving segments of the core, or “mid-core” games, which have historically spawned game play innovations and new game IP.

Today, traditional games are more complex and expensive than ever. Console games can exceed $100 million in development costs and $50 million in marketing. For decades now the big publishers have scaled their operations to accommodate these “mega-games,” building massive infrastructure with huge overhead costs. Meanwhile, their interest in the “mid-core” market has shrunk drastically. They see successes in the category as contributing too little to their bottom line to be worth the effort. For the rare instances when they take on a mid-core game, their need to cover their risk introduces situations disadvantageous to the developer, usually with deal qualifiers such as complete IP ownership and exclusivity on future titles. These are risk mitigation tactics, essentially positioning the publisher so that it’s not left empty handed if the product or deal is doomed, even if it leaves the developer that way.

Without a channel to get their games to consumers, even if they had the means to turn their ideas into products, development talent was forced to fall in line. Then came digital distribution and things changed. Digital gave game developers direct access to players, hundreds of millions of them. It presented unprecedented diversity in gaming platforms, from hardware and interfaces to new types of games people were willing to try. The result has been a demand for innovative experiences unlike anything the industry has seen since the days of arcade cabinets.

Now that game makers of all stripes, from garage groups to crowd-funded industry legends, have made the jump to digital there should be a consistent string of hits. It hasn’t happened. The demand is there. The good games are there, and more by the day. Unfortunately some of the best experiences to ever target a gamer’s twitchy nerves are lurking out there with little to no following, or making a ripple when they should have made a splash.

It started with a bang. What happened?

Early on in the life cycle of these emergent digital platforms, if a developer had a great game it got noticed, and gamers likely told their friends about it. Remember when it was a novelty to see one of your friends had reached level 10 in Farmville. Suddenly people were asking, “Wait there are games on this Facebook thing”? Or when you got your first smartphone and immediately installed Angry Birds because it was the only must-have game. Now with over 700,000 apps on iOS and what seems like a new Facebook game every day, those days are over. Clutter is rearing its ugly head in every digital game marketplace, even in the free to play market where some mid-size developers are making big-time bets.

The problem starts with discoverability or awareness, which has become significantly more difficult for digital games. That’s the first step, followed by a series of successive ones critical in generating and sustaining an audience for any piece of entertainment. Taking people on a journey to drive consideration, investigation, fondness, and purchase intent. Strengthening customer relationships through brand building, customer engagement and community relations. Establishing lasting affinity that translates to fandom and evangelism. These are about making people care, evoking an emotional connection to the product if possible. More than anything, the marketing presentation itself has to be compelling, even entertaining.

There are digital publishing and marketing entities who say they understand the landscape, that they’re the industry’s publisher 2.0. But they’re forgetting these fundamentals. They simply stop at solving the discoverability issue and call it marketing. They’ll partner with a developer and check off boxes, helping submit their game and guiding it through certification, if necessary. Then they might put out a press release and chase it with some PR, at most spend a little money with a media referral partner. If this is the new formula of success in digital games, then why are so few people making any money?

What about the very innovators hoping to establish digital and get a foothold, could they be hindering its growth? It’s true for some of them. “Self-publisher” has become a favorite categorization for indie developers. It’s a powerful label for what’s going on in the industry, emblematic of the haste with which many of them are shunning and running from the old publishing model. Ultimately, it’s a bit of a misnomer. It’s technically true that even a single individual who releases a game into a digital platform has now published that product. What they haven’t done is the most important aspect of entertainment publishing, building an audience.

Is there a fundamental shift in marketing digital games versus traditional boxed games? Yes. Is digital a new marketplace environment that traditional publishers and even the savviest marketers are struggling to adjust to? Yes. Does this mean developers should walk away from all of it and expect to succeed? No way.

There’s a way to blaze this trail into digital games and escape stagnant old models without running off of a cliff. The nature of digital distribution, including its reintroduction of a viable market for mid-core games and building an appetite for free-to-play, presents new fundamentals that allow for close, symbiotic relationships between game makers and marketers. There’s no more appeasing that self-interested entity known as retail. What’s more, there are unprecedented levers for efficiency, accountability and agility when it comes to marketing these games. These lead to a lot more transparency and relationships structured around mutual benefit for developers and marketing.

That’s what I’ll explore in the coming weeks in a series of articles for [a]list daily. I’ll look at not only tactics and strategies for this new approach to publishing, but give concrete examples for analytics driven, highly cost-effective and efficient ways to market games. Included in my analysis will be how the fundamentals of brand building still apply, with approaches that create an emotional response from and connection with the consumer. Let’s discover what publisher 2.0 is supposed to be.

Steve Fowler is a thirteen year veteran of the interactive entertainment industry. He is responsible for the brand identity and launch of the Halo franchise at Microsoft Corporation, Inc., and has held marketing and business development roles at Interplay, Sega Sammy Holdings, Inc., Square Enix, Inc., and Take-Two Interactive Software, Inc. He is the chief architect of the one of its kind annual industry conference the [a]list summit, and has been incubating new digital game publisher [a] list games internally at Ayzenberg Group for the past year. For more information on [a]list games, visitwww.alistgames.com.

7 Basics for Games Business Development

Image Courtesy of Fireflyseo.com

This months contribution comes from a biz dev professional who has worked both on the agency, developer and publishing side of the industry:

1) The most critical thing for me is that you need to understand who you are talking to. I can’t tell you how many times I’ve had people wasting my time trying to sell me something that’s totally irrelevant to my business and being really pushy about it at the same time. For example I was at a MMORPG company and someone was trying to sell me advertising in baseball stadiums for 175,000 USD spouting off how many million eyeballs they have. My point to him being, only 0.1% of those millions (if I am lucky) may be relevant to me. So do research on the company you’re approaching, understand what they do and be sure that what you offer is a really good fit for them. Demonstrate your understanding when you email them or when you speak to them on the phone. Get a good grip on their product line-up and understand what markets they operate in and how they monetize.

2) It’s better to reach out to 5 companies with the above approach vs spamming 50 with a generic cut and pasted letter that doesn’t speak directly to their needs.

3) Understand who the decision maker is, before you go to deep into any discussions try and understand the hierarchy of the business and who the relevant person is to pitch to, as well as the ultimate decision maker. Sometimes the person you’re talking to is the right contact but doesn’t have the authority to sign off. However you could create a internal win for them, making his or her life easier if they bring a great new technology to the table that helps the business. Understand from them what they need from you to get things pushed through internally. Enable them to become an internal advocate for your business.

4) If you can create mock-ups or examples of the companies logo or games integrated with your system, sometimes visualizing something goes a long way to explain what it is you can offer. It can be as simple as including a screenshot of their product within your UI when you’re presenting to them.

5) LinkedIN is great tool for reaching out to potential partners, if you don’t already be sure to use it to build your contact base and research companies you might want to work with. Keep your links on your profile up to date and join groups that deal with your business genre.

6) In your first contact be direct but not pushy. Time is valuable to everyone these days and not everyone wants to commit to lunch or dinner, or even an hour phone call over something they know nothing about. Ask for a 10mins or 15mins window to give a brief intro on what you’re all about. If you’re less demanding in what you’re pushing for you’re more likely to get a response. Provide documentation or emails that can shared easily internally, don’t send 10mb 55 slide powerpoint decks. The easier you make it to share, the more likely it will get shared.

7) Check out conferences that may be relevant for your business, go through the attendee list, most conference websites list this publicly. Find out who’s going and work on setting up meetings in advance. Failing that you can try go around to the booths and see if you can grab 5mins with the relevant person. Although it does really help if you know who you should be talking to in advance. Some companies are more receptive to walk-ups than others.

The Myth of the Poor Developer

Image from kavistechnology.com/blog

Almost every other week you read sad stories of studios closing down and talented people losing their jobs. This is a great tragedy within the modern games industry that is evolving faster than you can say, “What’s your business model?”.  With retail sales, subscriptions, 99 cent downloads and free to play the market has a plethora of choices on how to monetize a product and more often than not companies will fail in trying to figure it out. There will be a lot more failures before there are successes unless there’s a shift in thinking, especially in the development side of the business.

Much like in the music industry where the record company is always the bad guy and the bands are the cool creative ones, the same applies in games. Publishers are the money hungry corporate vultures that don’t understand gamers while the developers are the downtrodden and beaten stepchild that’s lucky to get a pay check. Mmhhh, not quite… there are in fact quite a few developers that are extremely well funded either through private investment or publisher backed money. Development studios aren’t poor, they’re just really expensive to run and in certain cases not run effectively.

I know developers that have signed up publishers with no intention of ever delivering a real milestone and strung them along for a almost a year taking 160,000 a month for ‘concepting’. I’ve witnessed games being developed for 5+ years with development teams of over 250 people that are released and tank, I know of studios that haven’t shipped a successful product for 7 years that get bought for 50 million dollars, I worked with a studio that bought their team of 300 an ipad for Christmas – which would be cool if they weren’t 2 years behind schedule. The list goes on but I don’t want to sound like I am ranting. Or actually I do! Not just to rant though – my point is this: There are some accepted losses that come with developing a product but these losses have crept up exponentially over the last four or five years. Look at the Star Wars: The Old Republic, it’s rumored to have cost over 80m USD already, and that’s just pure development before any marketing or server infrastructure. These type of development costs set the ROI bar very high and put a lot of pressure on a publishing org. to turn a profit. If you’re starting 80m down that’s quite a large forecast you need to make up.

There needs to be more control and accountability on the part of developers, at all levels: financial, studio management and individual contributors. Not to be mean and controlling but to stop developers working on something for years only to go bust three months post-launch ala APB (All Points Bulletin). Imagine a marketing director is over budget 2 months in a row he’d be looking for a new job, right? Let alone going over budget for 2 years. So why is it okay for this to happen in a development setting and not anywhere else? It seems that development has become an accepted black hole, and the longer it remains that way the more damage it will cause and more good studios will close. So what are the solutions? This is something that’s not going to change overnight, but here are a few basic suggestions:

1) Stop throwing good money after bad. If the game is bad 3 years in, it’s going to be bad 5 years in. Cut your losses earlier and walk away.

2) Don’t be afraid to not launch. Sure you just spent an arm and leg to get this title to gold master and the main investor put his island in the Caribbean down as collateral but launching is going to cost you even more, and a negative critical reception of a below par product could jeopardize future launches.

3) Make milestones mean something. If a project is a year behind schedule then why have milestones in the first place? Stick to the schedule and if that’s not possible seriously evaluate if it’s financially viable to continue rather than pour more money in blindly.

4) Take individual responsibility at every level. So if you’re on a team that is several years behind and you’re watching Family Guy on your ipad while munching your free lunch in the pool room maybe think about where all that money is coming from and what you can contribute to making this work. Every individual at every level can contribute to changing the mind set of what’s okay and what isn’t.

5) Work with the publishing teams and not against them. Believe it or not all either of you want is to make your product a success. I’ve seen a lot of products stumble due to petty politics. Cut it out and get it done.

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.

The Rise of Cut and Paste ‘Journalism’

Commentators have often lamented how the rise of the internet has turned every amateur into a professional overnight. Often these pieces are written by bitter traditionalists clinging onto the false pretense that print journalism somehow has a higher standard by default. But you really don’t need to look far to see that print journalists are not more or less fallible than us online ‘amateurs’. Just look at the recent Sun piece on the 3DS as a perfect example of reporting that’s closer to fiction than anything else. There are some extremely talented and knowledgeable online games journalists out there. So please don’t take this as a rant against online journalism in general, this is squarely aimed at those that don’t get the concept that being a news source carries some responsibility.

There are countless game ‘news’ websites out there that contribute about 5% of their own content and simple cut and paste the rest from what they pick up off other sites. Where the issue arises is if the news they are picking up is false, unsubstantiated, and worse still, damaging to the company it’s referring to. I’ve seen examples of press releases that still had text that said “insert date”, or “partner quote here”. Which is also pretty poor showing by a publisher to let something like that leave the building but it gives you an idea about how much time goes into reviewing the ‘news’ content that’s posted by some sites. With this level of attention to detail it’s not surprising that some stories have spread like wildfire that have zero foundation in truth. The amazing thing is that up to 20 or 30 sites can run one such story as news and not one of them will bother picking up the phone or dropping an email to the publisher to even ask if it’s true, or try substantiate the source in any way. And the irony is that when you ask for a correction sites will often refuse to edit or even remove the wrong story mumbling about something about how that’s not their policy.

In an ideal world sites that run game news should either quote the original source of the news, thereby putting the responsibility on the source. And if they run any piece as their own, they should at least try and verify it with the publishers or developers being talked about. As is always the way with news, bad press tends to spread much quicker than positive press so the negative stories are propagated much quicker and travel further than a positive and probably accurate story would. I doubt this trend isn’t going to change anytime soon but my hope is that the younger news sites look to the good examples that are out there (VG247, Gamasutra) rather than compete with the hacks in a who can cut and paste quicker contest.

Have your say

Ever seen an online article about your area of expertise that was closer to science fiction that what you actually do day to day? Always wanted to run your own blog but never really got round to it, feel like you have a few things to share about what you’ve learned in the games industry? Well this is your chance to have a say of your own.

We are aware the above is written like some terrible headache tablet commercial so we’ll stop with the questions. Tumbling Dice is hoping to provide a platform for game industry professionals to voice their opinions and share expertise. We hope to run articles from a wide cross section of game industry professionals. Please take a look at our contribute page on how you can submit a piece to TDM.

Categories: Game Industry
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