Entries from December 2009 ↓

Have a good one. I am giving myself a bit of a rest from this till the new year.

Publisher consolidation is an ongoing story in any form of IP publishing. The competitive advantages of scale are so great and are becoming greater. It is something of an ongoing saga in the game industry too and we are going to see plenty more.

The internet has changed the rules in two ways. Firstly it has focussed all IP publishing (including books, TV, film etc) into a smaller number of big hits. This makes the risk/reward equation ever bigger. We are at the point where a single game can gross a billion dollars at retail, yet most non blockbuster games make a loss. Secondly it has reduced the entry barriers to publishing to nearly zero. Anyone can set up a business with instant global distribution, just put a game on Facebook, App Store, Steam, XLA or any of the other online distribution channels. So now we have around 100,000 active publishers in the world!

I see consolidation in the video games industry now taking four forms.

Firstly I don’t think that mid sized console publishers are a tenable business model any more. They have insufficient titles to spread the risk and if a single iteration of one of their blockbusters bombed they would be in very severe trouble. Take Two and Sega are perfect examples. So these sort of companies will be the subject of M&A activity. They will merge or be taken over so that their IP can flourish within a big enough organisation. Some publishers may well go bust as their accumulated debt becomes too much for anyone to take on. When this happens the IP will live on in the hands of others.

The second form of consolidation will be the big general media companies enhancing the gaming side of their portfolios. Companies like Warners and News Corporation know they have to be in gaming in a big way. Nobody is safe from being bought by these guys, for a long time I have thought that Electronic Arts is a prime target, but don’t be surprised by who ends up being owned by them.

The third form of consolidation will be the small self publishers like those that have sprung up on the Apple iPhone App Store in the last 18 months. 99% of these have no idea about marketing and no idea about finance, so they are currently not going anywhere. However they are a hotbed of creativity and innovation. So those few that do understand marketing and finance will end up owning those that don’t. This is exactly what happened 20ish years ago with home computer game publishing.

The fourth is the acquisition of publishers for their IP by platform holders to give themselves exclusives. This has dropped off in recent times but could become a lot more prevalent when Apple join the home console market.

But it is this third form that can be the most exciting, as we are seeing with Playfish and Zynga. Done just right a publishing startup company could easily go from zero to a billion dollars turnover  in just a few years. All you need to do this is the right people following the right business plan.

So today we are looking at the console platforms and their performance in the American market (the world’s biggest) from a software sales point of view. This is looking at game retail revenues for November 2009 compared with November 2008 as reported by Gamasutra.

The most striking thing is that Sony, which once owned the console market now only have a total 25% market share across their three platforms. Playstation PS2 game sales have collapsed from 8% of the market to just 2%. And 2% is exactly what the PSP did for both years. As you would expect after the price cut, and more importantly the marketing activity that went with it, PS3 game market share is up, by 4%, from 15% to 19%. Hardly stellar but a move in the right direction after all the PS3 disasters.

Nintendo is doing significantly less well than a year ago. The DS is blighted with piracy and the Wii is suffering from not being HD and from the fad nature of many owners’ buying decisions. Their total market share is down from 47% to 40%. 5% of this loss came from the Wii dropping from 34% to 29% the other 2% drop came from the DS going from 13% to 11% market share.

And the big winner, as anyone could have predicted, is Microsoft and its solitary platform in the market, the Xbox 360. In the year its market share of software sales went from 28% to 37%, a massive 9% rise. This makes it by far the most successful platform for game sales, overtaking the Wii.

In fact Microsoft is selling nearly twice as much dollars worth of games for the Xbox 360 as Sony is for the PS3, an enormous advantage. This is the true measure of the success of the Microsoft Xbox 360.

I am not going to apologise for writing about Android so much. Smartphones are set to become the most used computing devices on earth, easily outpacing personal computers and game consoles. Pretty soon they will be selling a billion handsets a year as Moore’s Law kicks in and they replace dumb handsets. And Android, despite Google’s traditional lacklustre marketing, looks well set to become the leading software standard, with handsets being made for it by many companies.

The Motorola DROID (Milestone in the UK market) is the first handset to use Android V2.0 and has been a sales phenomenon, with manufacturing being unable to keep up with consumer demand. One UK retailer says it is more successful than the iPhone and Time magazine has named it gadget of the year.

But now Google has issued its upcoming Nexus One handset to its staff. It is manufactured by HTC in Taiwan and Google intend to sell it direct to customers, which should make it very price competitive.

So the war against iPhone will be waged by Android on many fronts. It will be the gaming platform story of 2010.

There will be many development people reading this who know exactly what I look like. And I don’t mean in some carefully posed corporate photograph either. I mean in the shambolic, 3D, real world flesh. In fact they will be far more familiar with my ugly appearance than that of just about any other marketing person that worked in the same company as them. The reason for this is very simple and very complicated at the same time. For I am a practitioner of a dark management art call MBWA. An art so powerful that it was behind Bill Hewlett and Dave Packard building the biggest technology company in the world from an investment of just $538. An art that is often unknown by modern managers yet which yields almost mystical powers in those that have the vital knowledge. An art that has also been instrumental in the success of many other companies: Apple, GE, Wal-Mart, Pespsi, Disney, Dell, 3M, Lucas Film, McDonalds and a whole list of the most successful companies on earth.

To understand just a small part of the powers of MBWA in publishing a game that is a commercial success, something we all strive for, there is an essential fact that everyone in the games industry needs to know. And that fact is that if a game has zero marketing it will have zero sales. Given that just telling your mum about it constitutes marketing. You see, development and marketing are two sides of the same coin. Like a rifle and bullet they are pretty useless in isolation yet used properly together they make a lethal combination. But in the real world of the modern game industry this rarely happens. And it is the fault of the marketing people. It is their job to communicate. And in order to communicate they need the knowledge. In fact they need more than the knowledge, they need the passion and commitment as well. Which can only come from visiting the team who make the game they are marketing. Frequently.

MBWA is a acronym for Management By Walking (or Wandering) About. Seriously. If you look it up using Google you will find that it is a well regarded professional management technique. Books have been written about it. And it is well proven to be mightily effective, as the many number one games I have worked on help to illustrate. Yet too many managers in the video game industry do not know that it exists. They hide behind the keyboards in their offices and go to endless time wasting meetings with other marketing people instead. In fact too many managers in the games industry don’t know about lots of well proven management techniques. Which is a pity because MBWA is especially effective when you are bringing together disparate groups with widely differing skills in order to hit the bullseye with that metaphorical rifle. Precisely what we would like to do in game publishing.

And, for the record, it isn’t just the development teams that have had the frequent and dubious pleasure of seeing my ugly face. Nope, there was also QA, central tech, sound, compatibility, licensing, IT, legal and every other department in the company. Why send an email when you can walk over and have a chat with someone and maybe bump into a few others along the way? Do this every day and pretty soon you have the real pulse of the whole company. You know what is going to happen before it does, because this is the sort of knowledge that gives you second sight. And number one games.

So now you can already see that it is possible to do your marketing better by being different and using your brain. Which is why seeing all the television game advertisements before Christmas makes me want to cry. The companies involved would get far better results if they cancelled this waste and put half the money in my pension fund then spent the other half with a bit of intelligence and application. Television is a fragmented and dying medium with dodgy audience targeting and advertising that is easily avoided, yet they still ask you to pay the price of when they were king. So how come our industry wastes all this money? Basically publishing a boxed game has very high fixed costs in development and very low variable costs in the cardboard and plastic that make up the distribution medium. So you can throw money at the marketing like crazy and you are still ahead so long as you are getting incremental sales. This means that marketing managers are given massive budgets to burn through and the only way they can think of doing so is on television. Whereas the reality is that they could create far more sales on a smaller budget without television if they were really forced to.

For instance let’s look at radio. Radio advertising is cheap. And because people listen to the radio whilst they are doing something else they don’t skip the adverts. Plus radio stations tend to be targeted more towards specific demographics. And radio adverts are a lot cheaper, quicker and easier to make than TV adverts. So say you are releasing a game on a Friday. On the Tuesday and Wednesday you can hype it up with “This Friday…….” advertisements. On the Thursday they become “In the shops tomorrow…….” advertisements and on Friday you can do the big “Released today……..” thing, followed on Saturday by “This weekend…….” . So you can engage massive audiences in an event. You can get your messages over lots of times. And you have spent a lot less. It makes a lot more sense to me than some of the TV campaigns I see. And it is just one of a whole myriad of tools that sit in a good marketeers toolbox, just waiting to be brought out at precisely the right moment to do precisely the right job.

Then there is PR. Some people think that this means sending out press releases about what is happening. Poor misguided fools. PR is about managing the newsflow in order to get your key messages over to your target audience as many times and in as big a way as possible. For a boxed AAA console game I like to start a year before street date. Just tell the world the project exists. This is big news so you don’t have to tell them much more. So it is a good opportunity for some juicy quotes to raise the profile of key people. Then you need a release every month, each of which contains genuine news, that gradually reveal what an amazing game you are going to unleash on the world. Each release is planned weeks or even months ahead and each is supported with loads of assets such as videos, screenshots, box art, renders etc etc. And you don’t just send the release to journalists. It forms an article on the game website and on the game blog, it is an exciting new thread on the game forum. It is in an online newsletter and your community marketing team can use it as ammunition to run amok all over the web. You need to use every avenue to spread the knowledge as widely as possible.

Which brings me very nicely to fan sites. You want as many of these as possible for a game as they are each a free marketing department evangelising your game like crazy. But they can also do naughty things that you don’t like. The answer is an accreditation scheme. To borrow an old saying; you want these people inside the tent pissing out, not outside the tent pissing in. You give them a set of simple, clear rules that stop the worst excesses. Then you look after them with a fansite toolkit of resources, with the press releases and with special favours and access. Then about three months before street date you ask, say, the top 5 or so fansite owners to visit the company for the day (choose a school holiday!), chill out with the development team etc. Can you even begin to imagine just how much coverage this is going to get you all over the web? I have been there and seen it and it is pretty impressive. It was to engage online like this (and in many other ways) that I first came up with the idea of having a community marketing department at Codemasters, something that has now been widely imitated throughout the industry.

So now you are getting an idea that marketing can be fun, devious, challenging and immensely powerful. So it is time for me to tell you the biggest marketing secret that there is. Quite simply everyone is far more interested in people than they are about things. That’s it. It is programmed genetically into every one of us when we are conceived and we cannot escape it. Just look at the news. How much is real news and how much just following personalities? Once you understand this you can use it as a very long lever to get your key messages to your target audience with far more power and far greater ease. Once again I know this because I have done it, repeatedly. Make someone famous and you really do change the rules of the game. Everything they say is far more widely believed and the press are pursuing you for content instead of vice versa. People I have made famous have even ended up seeing the Queen and the Prime Minister because of their fame. This is an amazing power. Yet game industry marketing is totally rubbish at it. Which is puzzling to me because we have the examples of the film and music industries that both do it so well.

Another thing that has always worked extremely well for me in marketing is being different, for the sake of being different. If you look at the advertising for certain genres of games it has become extremely formulaic. To the point where, quite frankly, you have put special effort into working out which particular game it is for. And if you have to put that special effort in then so does everyone else, which most often they really won’t bother doing. More marketing spend being thrown away. The basic problem you have as a marketeer is that everyone you want to reach is already being hit by thousands of marketing messages every day. And everyone has developed powerful filters to stop 99.9% of these marketing messages from getting through. Which is why lots of clever people are paid lots of money to come up with ideas that will get past your filters. So just ask yourself which marketing messages you have actually been conscious of recently (it is no good asking which ones have reached your subconscious mind!). Ask which advertisements make up the 0.1% that got past your filters. Most times it will be the ones that are different. It helps if they are zany. And it helps if they include a good looking person (see above). But it is being different that is the key.

So you can see what I am coming round to here. Creativity. A good marketeer needs a huge amount of knowledge. The toolbox that makes his marketing mix is very complex and ever changing and its real world use can be fiendishly complex. But this is as nothing compared to creativity. To be a good marketeer requires creativity in the same way that good game designer needs creativity. Whilst the job that we do is so widely different the fact is that at the very core of what we do it is creativity that makes the difference between those who can do the job and those who excel at it.

Originally published in Gamesauce.

Way back in 2007 I wrote here: “One of the biggest issues and trends in gaming is the way that gaming is drifting towards social networking and vice versa. So eventually they will meet in the middle and make up one big industry.” And so it has happened, the two have moved relentlessly together.

Rupert Murdoch is turning MySpace into a gaming platform. Alex St. John has joined hi5 as president in order to transform it  into a social entertainment hub. Electronic Arts has bought social networking games firm Playfish, which makes games for Facebook and MySpace, for possibly $400m. Microsoft Xbox Live has not only steadily added social networking features, it now even hosts Facebook. Take Two CEO Ben Feder has said: “Social network games is an area that promises to deliver a true mass audience to the videogame world”. It goes on and on.

And it is inevitable, firstly because human nature has us as playful, social animals. Secondly because of the connectivity and interactivity of gaming. And thirdly because of the fundamental game mechanism of being rewarded for using skills or assets to solve a problem.

From a game industry perspective the obvious course of action is to maximise the social networking potential of every game and to ensure that your IP is earning its keep on the big social networking sites. Also you need to stay on the ball, this is an area where changes and progress are rapid.

Games For Soldiers is a brilliant American charity, it: is a non-profit organization dedicated to sending entertainment items to deployed US troops the world over. Primarily we send new and used videogames and videogame consoles.

Obviously it is brilliant if you can help them by sending them any games stuff you may have for them to distribute. But they also need a bit of more specialist help:

Hello,

Games For Soldiers is looking to gain it’s 501(c)(3) status early in
2010. The approximate cost for this is $1,500 (includes incorporation,
IRS documentation and agent fees). I am reaching out to the community
first to see if anyone is willing or able to provide this service
pro-bono, to include filing fees.

Currently, nearly all donations are in the form of games. Any monetary
donations supplement out-of-pocket costs to myself for the shipping of
boxes overseas (each costs roughly $13). As a college student, one can
see how these continued expenses get out of hand quickly.

Fear not, GFS is not going away regardless. Even if we need to put off
the NPO filing, I will continue to operate GFS as I have for the last
year and a half. However, the benefit of gaining this status is that
some companies who currently donate games would also be willing and
able, by internal policy requirements, to offer monetary donations to
offset the shipping costs and allow GFS to donate greater amounts of
entertainment items.

Please forward this message along to anyone you know that may be
willing and able to assist us in this new adventure.

Thank you,

Jesse Williams
Games For Soldiers (.org)

Now giving a helping hand here should be easily within the compass of readers of this blog. So if you are in a position to help Jesse, then please do. If you need an email address, just ask me.

The politics and the rights and wrongs of deployments don’t come into this. These young men are a long way from home doing a dangerous job and they deserve our support.