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 side of E3 you won’t read about

While hundreds of games press journos eagerly lined up for over the top press conferences that cost more than a humbler publishers annual operating budget there was another story unfolding at E3. The story of an industry in transition. As the Cliffy B’s and Molyneux let themselves be celebrated by adding another numeric value to the next version of their milked to death franchises behind the scenes there were actually some real exciting success stories. Sadly though, you probably won’t be reading about them. The majority of the press are busy writing about Duke Nukem, no that’s not a misprint from 1994, yes actually Duke Nukem is getting some attention. Along with another Tomb Raider (yawn), another Call of Duty, another Halo, another Gears of War, another Bioshock, another Battlefield, the list goes on… you get the idea. Read IGN’s E3 winners, it’s so dull you may cry but it’s a perfect reflection of what the mainstream games press is focused on.

So on the one side you have justifiably risk averse publishers banking on their big franchises to see them through another year and on the other side you have the little covered online, mobile and social games that are truly driving the industry forward. It’s a weird juxtaposition where the industry leaders are leading from the sidelines rather than taking the glory on-field. And the perceived leaders are scrambling to figure out what exactly they should do next. While still spending stupid money to show off, to mainly each other, as if somehow to reaffirm their relevance.

So here are the alternative highlights from E3 you won’t be reading about elsewhere:

1)      The traditional games publishing business is dying. Okay that’s not a very cheery highlight but it’s a fact. The model is broken, there are a myriad of reasons for this but in its most basic form: it’s just too damn expense to get a box on the shelf 2011. In the wake of E3 THQ just announced its closing down the studio that developed Homefront. A game which on its first day did 375,000 units in sales. Another sad footnote that shows a mediocre or okay game cannot survive in this day and age. Apparently you need a big block buster that sells close to 5m+ or you might as well save yourself the development costs.

World of Tanks representing outside the South Hall, E3 2011

2)      World of Tanks: How innovation can still make you money. You may have noticed the huge tanks outside the South Hall and wondered what that was all about, well if you work in games and didn’t know World of Tanks, shame on you. You should absolutely know about World of Tanks. Why? Because it’s one of the most innovative games to be created for a good couple of years and they’re doing quite nicely to. Since the launch of World of Tanks, the game has signed up over 2 million users from Russia and over 1 million in the North American regions. It’s just so odd that a game has that level of success with so little mainstream press attention. However with their climbing CCU I am sure they’re not losing sleep over it, but the big boys should be because these type of products are the future.

3)      League of Legends: Why great products don’t need to show off. I’ll forgive you not knowing who World of Tanks are but I won’t forgive you not knowing about League Of Legends from the LA based guys and girls at Riot. Riot was recently acquired by 10 Cent for 400m USD. Ring any bells? League of Legends is the biggest thing to hit online gaming since WoW in 2004. So far they’ve been keeping their cards very close to their chest but once they do reveal user numbers I think it’s going to blow quite a few people away. If they’re smart, which I know they are, they’ll probably wait till they surpass WoWs user base before revealing hard numbers. My gut tells me that’s not too far off. They haven’t even opened in Korea and China yet, but when they do it’s going to be big! At E3 LoL just had some behind closed door meetings, for a B2B conference it doesn’t really make a lot of sense for a consumer focused business to blow a lot of un-necessary money. Certainly a big winner in 2010 and one to watch for 2011 and beyond.

4)      APB Reloaded and why free to play  is more important than the majority of game industry folk care to admit. It’s time to stop turning our nose up at the free to play space and start understanding it. And here’s a perfect example of why. APB, you know the one that cost 100m to develop. Well what was written off as a total failure and shut down with its original traditional pay to play model but it has been extraordinarily successful with a free to play model. In it’s new incarnation as APB Reloaded in the first few weeks of beta it already achieved a peak concurrency of 24,000. That’s a pretty healthy start for beta before they’ve even started properly monetizing.

Hopefully over time the games press and the industry as a whole will start turning towards and focusing on the trends that really do matter and that really are changing the games industry. Rather than glorifying the same old tosh that’s moving backwards or at best standing still.  I’ve recently read another few interesting pieces about how E3 really isn’t a great reflection of what the industry is anymore. Highly recommend the piece by David Wong on Cracked.com .

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

Why There is no WoW Killer

Image from an article @ Massively.com

The term WoW Killer seems to rear its head with every new MMORPG release, most recently Rift had the honor partly fueled by their marketing approach and partly due to the similarities in the gameplay with WoW. Star Wars: The Old Republic is also getting similar treatment as the industry and fans alike have high hopes for such a large franchise and respected developer.

The term itself is obviously flawed as nothing will ‘kill’ WoW outright but I think the term is supposed to allude to a product that can compete or even get close to WoW. Not something that will kill it.

There will never be a WoW Killer, too much has changed in market since WoW was released.

When World of Warcraft launched in 2004 not even the Blizzard team knew how big they were going to be, it took everyone by surprise. The game changed the entire lanscape of the MMO industry almost overnight. If you look at a chart of MMO subs the usual trend is for a the game to peak post launch, trend downwards and then level off. With WoW it was a straight line up and it never stopped going.

The latest numbers for WoW have surpassed 12m. When WoW launched the market was ripe for an MMO and there were several factors why it exploded the way it did:

  • PCs technology was getting cheaper and more powerful
  • Broadband penetration was exploding across Europe and the US
  • Games like, Ultima, Planetside, Everquest and Dark Age of Camelot had paved the way and educated consumers and retail on MMOs
  • WoW had the strength of the Warcraft brand behind it
  • Blizzard built a kick ass, extremely well designed and polished persistant world
  • WoW was one of the only products that had appeal in Europe, North America and Asia in equal measure
  • They did an excellent job marketing this title, starting with the hardcore and as the product grew went more and more mainstream
  • It become a cultural phenomenon: not just any game gets an entire South Park episode dedicated to it

It was like a Dark Knight or Titanic at the box office, the timing was right, it was a great product and once is snowballed there was no stopping it.

Now the market has changed and evolved in such a way that to surpass this success is no longer viable with a client based box sale subscription MMO. It may be done in other forms with slightly different genres or business models but there is always going to a Pre and Post-WoW era. It’s become the benchmark by which all MMO are judged and defined. But it’s an anomaly, it’s the exception to the trend, not the rule.  And no, you can’t kill it.

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