This session will briefly summarize the current state of digital distribution across major marketplaces (console, Facebook, mobile, etc), examine the major challenges associated with digital distribution, and provide concrete strategies for success in these marketplaces. It should be of interest to both developers and publishers large and small, as it will address strategic errors commonly made by multi-billion dollar publishers and tiny startups alike. If you're struggling to pick an ecosystem to focus on, or if you've picked an ecosystem but aren't sure how to maximize your chances of success within it, this lecture is for you.1) What's going on in the hottest digital ecosystems 2) Common misconceptions about digital ecosystems, in general 3) What truly does make digital distribution special, and how it can really help developers 4) Major challenges that large publishers and small developers alike have encountered in digital markets 5) Tips for succeeding in the digital world (including tips on marketing, pricing, biz dev, game design, and community management)
I was supposed to start the lecture off with a market overview. But I won’t, because market overviews feel increasingly pointless to me. Unless you live under a rock, you’ve heard that Facebook is huge, megahit XBLA games can now be expected to sell 1m units lifetime, iPhoneapp sales are rocking but price points are low and piracy is a problem, etcInstead, let me share some information that will always be useful about how platforms generally work…
This is the typical scenario for any successful digital games platform.For example, a platform such as XBLA, or the iPhone app store, or Facebook, comes into existence. Most people regard the platform suspiciously, for a variety of reasons. It’s an unproven market, for starters. The platform owner’s commitment to growing the platform may be unclear. The pros and cons of working with the platform owner in this context are unknown. There are lots of other platforms to choose from. Etc. Most developers take all this into account and decide to pass on the platform for the time being.
Then the platform begins to take off. The inevitable articles in respected publications such as Gamasutra and Edge appear; developer ABC claims to have made a million bucks; game XYZ has sold half a million units; average conversion rates are through the roof; etc. The platform’s owner is probably out there cheering more loudly than anyone. Supply/demand imbalance is the primary driver of success, here!Facebook is at the tail end of this phase. While most publishers are laying employees off by the hundreds, Facebook-centric publishers are hiring like mad. Conference organizers are rushing to capitalize on audience demand for business venues forsocial gaming. Growth stories have become common-place. Facebook’s platform managers have finally started embracing our industry. Many developers and large publishers have begun to re-orient themselves towards the development of social games.
Remember the early days of XBLA on the 360? Remember 20% average conversion rates? All that positivity was totally legitimate, but it reflected an ecosystem that was benefiting from an extreme mismatch between consumer demand (which was high) and content. And that’s where the first big wave of developers get themselves in trouble. They rush to develop games for this wonderful new platform. Consequently, the supply/demand imbalance quickly corrects itself or even over-corrects. Worst of all, many developers fail to realize that greater competition means a higher bar for success, and as a result they fail to increase the quality of their games and/or their marketing efforts and ultimately get lost in the crowd. Sierra Online + XBLA = good example.iPhone is in this phase. Whether it emerges will depend entirely on how well Apple manages the ecosystem and how successful the f2p biz model works out as more developers embrace it (no surprise that Ngmoco has repositioned themselves as a developer of f2p games.)Second Life is in this phase, and has been for years.It seems unlikely to reach the next phase, at this point.
But if (and here’s a big if) the platform’s economics are fundamentally sound and if the platform isn’t being too badly mismanaged, some developers ultimately will find a way to raise the bar and stand out from the crowd. They create remarkable games; they market themselves effectively; they adopt more profitable business models where possible; they establish a good relationship with a key publisher or the platform owner itself. These developers benefit from the fact that while the platform has become dramatically more competitive, it has also continued to grow and attract new consumers who still want to download games!The ecosystem has evolved into a hit-driven ecosystem.XBLA is currently enjoying this phase.
However, the budgets for XBLA games keep skyrocketing upwards, while it’s unclear that in the short term consumer demand will match the rate of those increases. So it’s possible that we’ll soon hear another round of painful moaning about XBLA…
I thought I’d make this more real by applying it to a debate that many developers are having: whether to develop games for the Kindle active content store or the iPad app store. Both platforms are technically in the “uncertain beginnings” phase – they are new, and many people are doubting their success. However, because of Apple’s great reputation and previous success, more than a few developers are ready to take a leap of faith on the iPad. And since the iPad will run content created for the iPhone, it is not a new platform in the truest sense of the word. It will launch with a crowded store, and whatever iPad-only merchandizing Apple implements will quickly cease to be a panacea to that crowding. In effect, the iPad already has many of the disadvantages of the “early glory” phase (glut of content; less accommodating management) but has not yet proven itself to have the advantages (i.e., large consumer base and/or reasonable returns for developers.) The Kindle, on the other hand, is a complete unknown – a true “uncertain beginning.” But we do know, at very least, that there are probably over a million Kindle 2 and Kindle DXs in the hands of consumers, and we can be relatively sure the store will be less crowded at launch. So, while the iPad may end up being the better platform long-term, in the very short term, the Kindle might be.
There’s the obvious stuff, like no physical media distribution costs, but what’s really interesting is…
Ability to respond to consumer behavior and feedback in real-time! (moon launch analogy for retail sales today vs. steering a car) Develop closer relationship with your customersWoW: shipped with 2600 quests, added 5300 with burning crusade and 7650 with lich king
AB Testing – don’t need to guess which features are most effective/popular anymore.
Cross promote your games to reduce advertising costs and help retain players who get bored of any given game.
Today, Nintendo might be favoring MotionPlus submissions. XBLA might be favoring Natal submissions. Hopefully you’ve been working on those for the past six months instead of something else.
Image: The Anointing of Louis XV as King of France.Platform managers often kingmake games. Odds are, unless you’ve developed a very tight relationship, they’ll be kingmaking your competitors.http://www.nytimes.com/2009/06/14/weekinreview/14cohen.html?partner=rss&emc=rss Before it was changed, Twitterers on the “suggested user” list would gain 500k+ followers Same story with iTunes, Amazon, and game portals
Why was Kingdom for Keflings such a big success? Because the developer was wise enough to fully support LIVE avatars when nobody else was doing so, and Microsoft responded by kingmaking the title, which to this day receives prominent merchandizing in the xbox dashboard.
Image taken: 7.11.2009. http://www.roughtype.com/archives/2006/07/lee_gomes_respo.phpLee Gomes, Wall Street Journal: wherever he looked, hits remained vitally important to a given ecosystem (or in his words, “iTunes looks like Billboard, not some paradise of niches.”)
See http://www.economist.com/displaystory.cfm?story_id=14959982A disproportionate part of the audience for a hit is comprised of people who consumed few products of that type. * Many people who read a bestselling novel, for example, do not read much other fiction. * By contrast, the audience for an obscure novel is largely composed of people who read a lot. * That means the least popular books are judged by people who have the highest standards.On a tangent: Professors Duncan Watts, Matthew Salganikand and Peter Dodds demonstrated that, in a digital music ecosystem devoid of traditional marketing signals and recognizable IP (but possessing a public rating system), not only did “the hits get bigger,” but popularity was essentially random. A song’s popularity depended entirely on the first few users who happened to notice, rate and download it; a song that was #1 within one test ecosystem was bottom of the barrel in another.
If an ecosystem enables you to extract a large amount of money from a small number of people (i.e., a niche), that’s something!Some random numbers:50k daily players * 2% pay * $3 per day * 365 days= $1.1m per year50k daily players * 2% pay * $0.33 per day * 365 days = $120k per year*A song that sells 50k copies at 99 cents is a failure. So is an XBLA game at $10 or $15. But an engaging F2P game that keeps people coming back and does even a half-decent job of monetizing them is *not* a failure at 50k daily users, at least not for a small indie team. Daily active user statsvia:http://www.appdata.com/leaderboard/apps/?cat_id=400&fanbase=0&list_select=apps&metric_select=dau&p=1
Many games, unlike most physical goods, have a real disadvantage when it comes to the “perfect” Long Tail environment. If only 1,000 people buy an obscure product for $1,000 each, the maker of that product may still be very happy. But a multiplayer-centric game that appeals to 1,000 (or for that matter, 100) people… A) isn’t likely to be sold for $1,000 and B) isn’t going to make its few customers very happy when they can’t find anyone to play with online. Check top games on the iPhone today, and you’ll find the majority to be primarily single player experiences. And the popular multiplayer titles are overwhelmingly those that are either free or based on a strong IP like Monopoly.
For platforms?- First, allow viral invites and guest passes - if you own a game, you can invite and play with anyone, even if they don’t have the game installed or have a gold subscription. Once the game is over, they’re left with a trial version which they can later choose to purchase.
for Platforms?- Second, fix matchmaking so that it presents a clear indication of the expected wait time. With a good interface, I might be willing to wait ten minutes to find a match if I know it will be ten minutes. (Especially if there’s an audible chime when the match kicks in.) AI opponents to fill the extra seats is a plus.
Third, create a way that users can easily see which variants are being played when. A natural schedule will evolve where, for example, Tuesday nights are Kill Doctor Lucky Speedmatch night and Thursday lunchtime is the 7-handed poker peak. Maybe use prizes to attact more users during that time period- You don’t need fancy platforms
Asynchronous multiplayer!Competitive and cooperativeChess by mail; ghost competition mode in Topple 2Non-interactive (i.e., your avatar appears in your friend’s game)Leaderboard centricVirtual gift-centric
Long Lead PRThe consequence, unsurprisingly, is an increasing tendency for consumers to steer towards titles they recognize, which means games based on well-known IP and/or games that have received substantial promotion by the press and user communities. For example, most of the recent, publicly-heralded hits on Xbox LIVE Arcade, such as Braid, Castle Crashers, and Street Fighter 2 HD Remix, are all games that were promoted years in advance of their public release or were (like Street Fighter) based on venerable IP.
When negotiating with a platform or publisher, if there are other potential parties you can negotiate with concurrently, you (generally) should!
If you’re going to compete in an open marketplace, you might as well use a technology that makes hundreds of millions of customers easily available to you.- Graphics, animation, sound, video, physics and networking technology is freely available and works surprisingly well. You can have a working game up and running in hours. - No shortage of artists familiar with flash. - Thousands of useful platforms to piggyback off of: send emails, suck in friend lists from Facebook, access payment system, or let people buy underpants emblazoned with your logo? It is all there waiting for you to piggyback atop.
http://sloanreview.mit.edu/business-insight/articles/2009/2/5124/loyal-customers/Wall Street Journal / MIT Sloan
Transcript of "David Edery GDC 2010 Lecture"
Digital Distribution<br />How to Deal with the Parts that Suck and Capitalize on Everything Else<br />By: David Edery<br />Manager & Principal, Fuzbi<br />
Gatekeepers and their Agendas<br />Early PSN: must “look next-gen”<br />Early XBLA: bite-sized, especially casual/retro<br />Early Wiiware: make novel use of the Wiimote<br />Problem: these agendas change frequently!<br />
Downsides of Digital Distribution:A brief rant about the “Long Tail”…<br />
Lee Gomes, WSJ<br />Image taken: July 11.2009<br />
Amazon.com (2006)<br />Derived 75% of its book sales from just 2.7% of titles<br />Kongregate(July 2009)<br />Top 1% of games account for 50% of playtime<br />Music in general (2008)<br />0.4% of songs generated 80% of revenue<br />Anita Elberse, HBS (“Should You Invest in the Long Tail”)<br />Indies are actually losing share to major labels<br />
Blockbusters tend to score better user ratings than critically-acclaimed but obscure films.<br /> Why is that?<br />See http://www.economist.com/displaystory.cfm?story_id=14959982<br />
The answer has everything to do with the number of reference points each user has…<br />
The Bright Side,Aka “where can you extract real revenue from a small population?<br />1. FarmVille 30,409,073<br />2. Café World 9,264,914<br />3. FishVille 6,476,107<br />4. Mafia Wars 6,411,723<br />5. Happy Aquarium 5,992,187<br />6. Texas HoldEm Poker 5,816,752<br />7. PetVille 4,767,982<br />8. Pet Society 4,226,436<br />9. Restaurant City 3,539,602<br />10. Bejeweled Blitz 3,099,381<br />11. Birthday Cards 2,951,061<br />24. Animal Paradise 1,157,444<br />41. "Game by Boyaa.com“ 515,850<br />105. MiniPlanet 100,950<br />163. FV bonus checker 50,173<br />2228. Backgammon Live! 4 <br />Facebook, daily active user stats for games, Feb 7, 2010<br />
Microtransaction-based Games<br />“A very large percentage of loyal customers—often more than 50%—are not profitable for most companies, because their loyalty is driven largely by expectations of great deals. …Profitable customers tend to make up only around 20% of a company’s customers.”<br />-- Wall Street Journal & MIT Sloan Management Review<br />Sound familiar? <br />F2P turns a weakness into a strength!<br />
Thank You!PS. If you liked this, check out my blog:http://www.edery.org<br />
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