Self-Publishing - A workshop at NeON by Gamesbrief

NEoN – a self-publishing masterclass
Nicholas Lovell
GAMESbrief
11th November, 2010

The afternoon
2.00: What is a self-publishing and who do you need to do it?
2.30: ARM yourself: funneling users into profits
3.00: Whales, power-laws and the future of media
3.30: How do we get our game out there?

Nicholas Lovell, GAMESbrief
Author, How to Publish a Game
Director, GAMESbrief
Clients include Atari, Channel 4, Channelflip, Firefly, nDreams and Rebellion
@nicholaslovell / @gamesbrief

Who does what?

Who does what at a developer?
Signs a deal with a major publisher
CEO
Spend two years making a game
Lots of developers

Who does what at a publisher?
Over to you

Who does what at a publisher?
CEO
Development director
Operations director
Marketing director
Finance director
Sales director
Databases
Financial controller
Business dev
Analytics
Partnership
Billing
Admin
CRM
Lots of developers
CRM
Customer service
Moderation
Brand marketing
Web design
PR
Security

Some team sizes
Jagex - 400 people
Adds one customer support per 10,000 paying users and 50,000 free users (currently 1 million paying; 6 million free)
Playfish – 300 people
10-15% of total staff are analytics people
20% of each game team is analytics
A fully-staffed online publisher like the one set out above will have 40 staff:
This will grow rapidly with customer support
BUT you don’t need to start with this. Just be aware of the growth path

Can we outsource?
Developers have always outsourced the publishing function – to PUBLISHERS
Most jobs *can* be outsourced
The questions is which ones *should* be

Sales
This is all about taking the user’s money
As much technology as “sales”
PSN/XBLA/WiiWare/iPhone:
Already outsourced to Sony/Microsoft/Nintendo/Apple
Web billing:
Yes, but plenty of integration issues
Advertising sales:
Yes, but plenty of integration issues

Distribution
This is all about getting games into the hands of users
PSN/XBLA/WiiWare/iPhone:
Already outsourced to Sony/Microsoft/Nintendo/Apple
On the web, this has two elements:
Technical: scaleable infrastructure
Marketing: generating traffic and plays
Although large elements can be “outsourced” to Facebook

Marketing
ARM yourself:
Acquisition: getting players to your game
Retention: keep them coming back
Monetisation: make money from them
Where marketing meets gameplay, keep it inhouse
“Traditional” marketing skills can be outsourced:
PR
Brand marketing
Graphic design

Finance
The hardest element to outsource
Only you can determine how best to finance your game
Heavily dependent on your business model
Regional location may matter
Use accountants/lawyers/financial advisors where necessary
Non-executives are extremely useful
But boot-strapping may be best

ARM yourselves:funnelling users into profits

1% convert = £1,000.00
1% convert = £10.00
Say each costs £0.10
Only if the average user stays for 100 months!
I’ll get some visitors
Some who visit will register
Some who register will subscribe
Subscribers will spend an average of £10 per month
I’ll put my Maserati on order
How most people start

ARM yourself
Hoping for the best is not good enough, you need to ARM yourself
ACQUISITION: How do I get people through the door cost-effectively?
RETENTION:How do I keep people coming back for more?
MONETISATION: How do I build money-making strategies into gameplay
Most developers focus on one of these
All three are really important

The funnel
Users
Profits

Feeding the funnel
Unique users
Marketing
PR
SEO
SEM/PPC
Harness users to create virality:
Referrals
Facebook Connect
Importing contacts
Twitter
Cross-promote from other titles

Converting the funnel
Unique users
Registered users
Active users
Paying users
Revenues & profits
For your business:
Draw the funnel
Reduce to as few steps as possible
Know the conversion rate for every step
Tweak, iterate, test until you know exactly how your funnel converts

Finding the levers
Users are not the only metric
The others depend on your business, but might include:
Page views
Video views
Game downloads
Purchase of a virtual item
A metric that you can’t influence is no good
Focus on LEVERS

Digression 1: Calls to Action
On every page, you should know what you want your users to do
Then SHOW THEM
e.g. Register/Log In/Buy/Subscribe
But also:
Tell a friend
Play a game
Connect with Facebook/Twitter

The equations

Why the funnel matters
The funnel matters because it is your entire business
To emphasise that, we need Equation I
CPA < LTV = good business
CPA > LTV = trouble
Where:
CPA is cost to acquire a user
LTV is the Life Time Value of a user

Harnessing virality
A viral business can be an insanely profitable business
CPA is close to zero, so even if LTV is low, your business is great
Time for Equation II:
Viral coefficient = A% x B x C%
Where
A% = Percentage of your users who invite a friend
B = Number of friends they invite
C% = Percentage of friends who accept the invitation
If viral coefficient > 1.3, time to order the Maserati

But what if I’m not viral?
For most Web businesses, the choice exists between:
Viral: low CPA, low LTV
Monetized: High CPA, high LTV
Either is fine, or even a blend, but keep focusing on the conversion rate

It’s all about the levers
Find the metrics that have the biggest impact on the bottom line
Try to reduce the metrics to one!
Three is more usual
Make sure they are LEVERS
Laser-like focus on pulling and improving these LEVERS
The result will be a better business and a happier team

Whales, power-laws and the future of media

Mythbuster 1: Publishing is about content
10%
90%
Books
15%
85%
Newspapers
$200m
$50m
Games
Publishers add value through DISTRIBUTION

The Internet has made distribution easy

Great news for content creators
Content distributors, not so much
Ballpark, I estimate 50% of people in content distribution will be out of work over the next decade
BUT many more content creators will be able to make a living from producing and distributing their own content

Mythbuster 2: All users are not created equal
Circulation
Units sold
Audience
Platinum disc

Users come in all shapes and sizes
Grazers
Buyers
Sneezers
Spenders
Browsers
Socialisers
Gawkers
Influencers
Recommenders
Passers-by

The price/demand curve
In an era of physical distribution, you need to set a single price
For games, around $40
PRICE
“It’s great
value, I’d have paid much more”
“That’s too expensive for me”
Demand

Now we let users set the price
Hypothesis: Allow users to choose how much they spend on your product, and your revenues will go up
PRICE
DDO revenues up 500%
LOTRO and Everquest II going soon
$3
$5
$5
$1
$5
$3
$10 MMO subscription
$3
$3
$3
$1
$5
Demand

WRONG!

Allowing users to choose how little to pay is not the secret
We all knew that 95% of users played for free
We now know that 80-90% of revenues come from 0.5% of users
PRICE
Spending $50 - $10,000 or more
Demand
Free: 95%
Paying: 5%
80-90% of revenue from 0.5% of users

Find the whales

Let’s look outside the games industry

What happened to music?
Say 90% of users want to pay nothing
10% would happily pay $100
So 90% pirated and 10% paid $10 = revenues falling 90%
PRICE
There was no mechanism for the whales/high/rollers/true fans/kings
It didn’t have to be that way
$10 album price
Demand

Bands and managers are waking up
Nine Inch Nails
$300
First 2,500 only
OK Go
$25
Live recording of gig you’ve just been to!
U2 by U2
$30
Coffee table autobiography
Mos Def
$40
T-shirt with code to download The Ecstatic

One-size-fits-all pricing is dead
Revenue opportunity
PRICE
Marketing opportunity
Demand

Mythbuster3: Free players are freeloaders
Free users are insanely important
They are:
Potential converts
Eyeballs for advertising
Leads for lead gen deals
Influencers through virality and word of mouth
Gawkers
Every single player has value

Morph – a thought experiment
Business model 1
Make an iPhone App
Offer a Lite version and a 99¢ game
Business model 2
Make a free iPhone App
Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999
Conversion rate of 0.1% = same revenue (oh, no 30% to Apple)

My advice
If you don’t have a way for whales to spend unlimited amounts of cash, you’re in trouble
Look after the whales
Treat your freeloaders with love and respect; they never stop being valuable
All users are not equal. Tailor your products accordingly
Sales, marketing, revenue generation. These are all part of the creative process now. Have fun.

How do we get our game out there?

nicholas@gamesbrief.com@nicholaslovell / @gamesbrief

Self-Publishing - A workshop at NeON by Gamesbrief

by Nicholas Lovell

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