At KTH Executive School we have several times seen the strength when companies from different sectors, but with similar problems, meet and learn from each other. Inspiration on new ways to define and work with a problem can lead to wonderful results – and you don’t have to be afraid to discuss openly about your challenges since you don’t compete with each other.
A growing (and very successful) industri in Sweden is the gaming industry. This text is the first in a series about success factors and learnings from that industry. The insights are based on a report produced by researchers from KTH.
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Reaching through the noise
No matter how great a game is, it can’t have commercial success unless customers become aware of it. This is an increasingly difficult problem as more and more games are released every day, the amount of market noise is higher than ever before. According to respondents, the release rate is now so high that the average revenue per game is decreasing despite a steady growth of demand. So what options do developers have to get market’s attention? A number of different approaches was observed:
- Marketing spending: Big publishers like Ubisoft and Electronic Arts promote their premium titles with massive release campaigns similar to those for a major movie premiere. This includes elaborate trailers placed in purchased spots online and on TV, big billboard campaign, in-store promotion at retailers, pre-ordering campaigns, and much more. An illustrative example is Mirror’s Edge, developed by DICE and published by Electronic Arts in 2008. Mirror’s Edge is an open world game in which the main character, Faith, uses parkour–style movement to carry important messages while evading government surveillance in a beautiful and brightly colored future utopian city. The launch campaign was rather massive including all elements mentioned above. When preordering or buying the game online customers could get a special bag, similar to the one used to carry messages in the game. Still EA’s COO, John Schappert, admitted that Mirror’s Edge wasn’t given enough of a marketing effort, stating that “good marketing can’t make a bad game any better, but good games deserve better support” (Nunneley, 2010).
- Niche and focus: A way to bypass the noise is to form channels for direct communication with the customers. Once a studio has launched an appreciated game, they can start accumulating a fan base and engage in interaction with it. As these fans already like the game in question, it is probable that many of them will be willing to buy a similar game in the future. This way of farming a community of users and then sell them a succession of games over time is perhaps the most common strategy for established developers including King, Starbreeze and Paradox Interactive and many others. If sales are good enough, there might be a margin allowing for diversification projects, but often developers stay rather focused and instead try to improve the size of the core audience and use cross-selling features in the games to maximize the yield. While it is necessary to already have an audience from previous games to pursue this strategy, it is rather inexpensive and minimizes risks when launching sequels. Creating platforms for user interaction also facilitate collection of suggestions and testing of new ideas.
- Featureing: Digital distribution, rather than physical, is the dominating way to sell games today. All the digital channels (Steam, GamersGate), mobile marketplaces (Google Play and Apple AppStore) and console platforms (PS4, Xbox One etc) have download solutions for selling games and supplementary content. However, because there are thousands of games available at any given time, the chance that buyers will pick a particular game at random is very small. Prospects are much improved if channel owners “feature” the game, which means that they get a premium highly visible placement. It can be in on the channel’s first page or at the top in some theme or category. Some time after launch it is also common that games have temporary price reductions, which can give them attractive spots on in sales or bargain categories. Games may also be picked for the distributors’ own campaigns, like Steam’s Christmas Sale. To seize, and hold for as long as possible, favorable placements is extremely valuable and the difference in sales volume compared to a regular placement is enormous. In fact, for many projects, not getting featured nearly guarantees that the game will be a financial failure. Figuring out how to get the game featured appears to be a major strategic issue for game design and launch planning.
- Expert approval: Another way to draw attention to a title is to have it praised by established experts. Favorable reviews are always valuable and many good reviews can lead to a high ranking at important sites like metacritic. So when designing games, several respondents admit to being concerned about what the critics would like in order to give good review scores. (Publishers may even connect the payment of certain bonuses to the level of result at, for instance, metacritic.) Many gamers check reviews before buying games, so it can lead to increased sales. When good reviews appear in mainstream media, it may also lead to spontaneous downloads by customers outside the games normal fan base. Developers, especially start-ups, also often submit their games to competitions and awards, like the Swedish Game Awards. Winning awards gives the developer attention and credibility. However, in contrast to the digital advertising business where awards are crucial for getting credibility to capture large B2B contracts, game developers benefit from awards primarily by building a case for publishers or venture capitalists, rather than to increase sales.
- Online trend setters: When trying to penetrate the noise without large marketing budgets, developers often try to exploit social media. Pre-launch trailers can be used to create awareness around the game and evaluate customers’ interest in it. For instance, after spending a few weeks on doing a trailer for the Goat Simulator idea, Coffee Stain released it on Youtube where it quickly got several million views. The overwhelming response made the studio feel that they more or less “had” to do the game. Once a game is released it is desirable to get users engaged in seeing, discussing, trying and promoting it. Many creative tricks have been used. When launching Mirror’s Edge, Electronc Arts put up wanted posters for Faith at university campuses in an attempt to create attention and engage the public, as a part of the viral marketing strategy.
Given the scalable nature of social media reach, however, some trend setters have a disproportional influence and reach enormous audiences. If someone like Stefan “Notch” Persson, founder of Minecraft, tweet about a game to his over 2 million followers, or PewDiePie plays it in a fun Youtube clip, chances for success are very good.
The different strategies have different strength and weaknesses. Investing in campaigns require money and investing in supportive communities takes a long time, but both allow for some extent of developer control over the faith of the game. While being low-cost options, relying on reviews and trendsetters puts a lot of the control in the hands of external parties. Moreover, there are rumors that some online personalities and critics receive money to promote certain games. The extent of truth behind this is hard to assess, but it is another source of risk to consider. Featuring is of little cost for the developer. Sometimes featuring can be a part of a publishing agreement, for instance when working with Sony or Microsoft. Other distributors, like Apple, are very secretive about how they choose who to feature and don’t want to invite developers into discussion about their preferences. Only a very small percentage of games get featured, so relying heavily on it may be a bit of a gamble.
Malmö based Mediocre is an refreshing example going against the obvious choices when it comes to market penetration strategies. After being featured by Apple at the launch of Sprinkle in 2011, leading to 100 000 downloads in the first four days, and continued good sales after that. Only one sequel and a children’s version were made. In total these three games had 11,5 million downloads, but instead of exploiting and growing a fan base by continue making similar games Mediocre did exactly the opposite. In 2012 they released Granny Smith, a platform racer with an old lady, it was featured as one of the top games of the year and has been downloaded 3 million times. Then, in 2014 the released another, completely different game, a surrealistic 3D travel through a long path where you shoot steel balls at objects. Smash Hit was featured by apple and pushed Flappy Birds from the top position, with 102 million downloads to date. In April, 2015, yet another game was released, with nothing in common with the previous. It is called Does not Commute, and involves strategic driving of cars in repeated traffic scenarios. Again, it got featured by Apple on release, and 13 million copies has been downloaded. Such track record for featuring, while doing so different products, is probably extremely unusual!
Nunneley, S. (2010). EA: Mirror’s Edge and Dead Space failed due to lack of support. VG247.
The article is original published at playinginthegameindustry.com.