There are a lot of doom and gloom headlines around at the moment. Lots of development staff being laid off, games selling far less than expected, major publishers making massive losses and release schedules that look a little thin. What is happening here?:
The industry have become even more lemming like than normal. We get a successful game like Guitar Hero and suddenly everyone thinks it is the second coming. Other people do “me too” imitations whilst the owner of the original title flogs it to death with countless variations. Then we have the inevitable, a Beatles game that flops. Publishers are just not thinking from the customer’s perspective, people really don’t want all these similar titles.
Annual iterations of popular titles. Another way of flogging a successful IP to death, try and get the customer to fork out every year for a slightly updated version. This is incredibly inefficient as you end up with lots of customers just buying alternate iterations. Or being turned off by the cynicism of the whole exercise. Leave 2 years between releases on popular franchises.
The customers are moving to online faster than the publishers are. Lots of publishers have misread just how quickly the market would change. Apple’s App Store getting one and a half billion downloads in a year and Evony getting 10 million registered users in just a few months whilst boxed cardboard and plastic retail games gather dust on the shelves is the new reality.
Unwillingness to experiment with new IP. This is just pathetic. So many publishers now are just sitting there flogging their old IPs to death because they think it is safe. It isn’t safe at all, those IPs will not deliver for ever. Publishers need to build value in their business and the only way is with new IP. Sure it is risky, but publishing is about risk. And these days you can experiment on a cheap to develop platform and then if it works move the IP to the expensive to develop platforms. And the Apple App Store has loads of brilliant new ideas for IP.
Awful marketing. By and large the industry markets incredibly inefficiently with advertising that preaches to the converted. Instead they should be trying to engage with the public so as to switch their spend from other pursuits. Nintendo have done this incredibly successfully but the rest of the industry have failed to take this on board.
Mid generation lethargy. Most publishers have now released all their franchises for this generation of platforms. So they are waiting for the next generation platforms to release them all again. In the meantime they can’t think of anything for their developers to do.
Piracy. The 360 is being hit quite hard with this now. Microsoft really to need to put a whole pile more IP protection into the Xbox 3/720/phoenix, especially if it is a mainly, or all, online machine.
Recession. A convenient excuse. Most of the world is out of recession now (except for the UK, which has the worst run major economy). And even in recession people give up paying for their entertainment last.
So it is the management’s fault. And the few well managed companies are making hay.
The App Store is an accident of history. (But one that was predicted on here). Apple had been making MP3 tracks available for a few years on the iStore. When they added a bit more memory and processing power to the iPod they realised that it could run third party applications, so they made an iStore for applications. And amazingly they were only doing it as a service to users, they didn’t see the business potential.
Now after a little over a year there are over 100,000 Apps and there have been over 2 billion downloads. 125,000 developers have signed up with Apple and 19.6% of Apps are games. All this has brought up some very pertinent points.
This is the biggest success and the fastest growth, by a huge margin, of any new gaming platform in history. It has changed everything.
Apple put up very little in the way of barriers of entry to publishing on App Store. This means that there are vast quantities of total rubbish on there.
The other side of Apple’s policy is that there has been a vast flowering of creativity on App Store. The biggest ever in the history of the video game industry.
The App Store gives you instant global distribution. 77 countries can download your app the instant it is available. This has shocked the whole digital IP distribution industry. There are now lots of App Store clones for other platforms.
Apple realise that they have a business model that is a license to print money. So it is pretty obvious that they will use it as a template. Firstly for their imminent tablet device which will be like a cross between a netbook and an iPhone. Then with their home console which will evolve from Apple TV just as the iPhone evolved from the iPod.
Someone is running an online hate campaign against me. Obviously he has never met me and has too much time on his hands.
But he has found an interesting way to market his campaign. He has set up a bogus Twitter account called bruceongames2 and made tweets to it pointing to websites that support his hate campaign. Then comes the clever bit. From this account he then followed the followers of my legitimate account. Each one then gets the follow notice, and then if they click through to find out why I’ve apparently started another account they get to see all his hate tweets.
I opened one of the first computer stores, Microdigital in Liverpool, in 1978. So I was in a good position to see the rise of Apple to dominate the personal computer (PC) market. I even visited Apple in Cupertino in California and was offered the UK distributorship. So this put me in the front row as they built up to own the market, then threw it all away.
Apple computers were well made, came with excellent documentation and were easy to use. All of which was not necessarily true of the competition. Apples were also expensive but were worth the extra. They became a bit of a cult, a fashion item, as well.
The big strength of Apple computers was that the software and the hardware came from the same company, so they worked. The resultant dominance in the early 80s was such that other PCs might as well not have existed. Apple had a virtual monopoly. Then along came Microsoft’s MSDOS and changed the rules. Here was a standardised operating system (and consequential applications) that would run on machines from many hardware manufacturers. So the hardware manufacturers had to compete against each other on price and features. And it was war.
The result of this war was the survival of the fittest, rapid evolution that improved the breed. And Apple was left well behind looking underpowered and overpriced, they could not even vaguely get near competing with the MSDOS machines. So Apple’s market share collapsed and they fell back to serving niche markets such as pre publishing. In just a couple of years they went from near monopoly to sideshow.
And history could very well be repeating itself. Substitute Personal Computer with Smartphone. And substitute MSDOS with Android. Otherwise it is the same. Apple dominate the consumer smartphone market with the iPhone. The hardware and the software come from the same company and it works. It is a fashion item, a bit of a cult. Android, however, is available to all hardware manufacturers. Most of them are developing models that use it. So they will have to compete against each other on price and features. It will be war with rapid evolution improving the breed. Already the Samsung i7500 looks better featured than an iPhone.
Some may think that the tens of thousands of applications on the App Store make the iPhone entrenched. But remember that these were put together in a little over a year, so Android can do the same in a year. Just as Apple’s dominance of PC application software was quickly overcome when the MSDOS computers arrived on the scene in big numbers.
Of course Steve Jobs and Apple, having been there before, may have the answer this time. They need to entrench their position, which they are doing by going to multiple air time providers in each territory and by going to new territories. But Android will be doing all this too. They need to very rapidly advance their hardware technology. There is plenty of room to do this, the iPhone has a rubbish camera and no OLED screen, for instance. And the iPhone operating system has lots of room for improvement. But Android will be doing all this too.
Apple are moving on from the iPhone with a tablet device and probably a home console. Maybe this is their strategy. Don’t compete, move on.
The one saving grace that Apple have here is their brilliant marketing. In fact, to me, Apple are a marketing company first and a technology company second. Compare and contrast that with Google who have a trail of great products that have failed due to poor, almost non existent, marketing. But Android is different because it doesn’t need Google marketing, it will be marketed by all the handset manufacturers and air time providers. Companies like Vodafone, Sony Ericsson, Sprint Nextel, Samsung, Motorola, LG, Toshiba and Garmin. Formidable, isn’t it?
Now for the gaming perspective. The iPhone and App Store have produced the biggest flowering of gaming creativity in history. In terms of range of products they have left every other platform behind. However the business model employed here is easily copied. So we are moving into a new age where the iPhone game publishers will maximise their profitability by going multi format. Develop for Android, iPhone, PSP, DS and possibly PC simultaneously and reap the marketing benefits. It makes sense.
Inevitably, and for reasons explained many times on here, the Wii bubble has finally burst. In the half year to the end of September sales were down by 40% compared with the year before. Nintendo president Satoru Iwata has no option but to admit: “Wii has stalled” he even admitted that the price drop has failed to arrest the decline: “With the price drop, sales returned to a certain level, but they just did not reach the level of last year around this time”. Which was all as inevitable as night follows day.
A lot of the success of the Wii was fad. People becoming lemmings under the onslaught of peer pressure. Just like the Hula Hoop and Rubik’s Cube for previous generations. And fads have very sudden endings as the zeitgeist moves on to something new.
The Wii is a very strange and paradoxical device, its hardware capability is mainly last generation yet it boasts an innovative and compelling gesture interface. Most Wiis are bought as family toys and are little used yet it has some amazing games including possibly the stand out title of this generation, Super Mario Galaxy.
The Wii has had its popularity and life massively extended by the Balance Board and Wii Fit, but there are only so many overweight middle aged women willing to pay so much in a feeble attempt to assuage their vanity. So it looks like this market is exhausted, much to the dismay of the many publishers who thought that this was a bandwagon they could jump on. The reality is that the Balance Board is panning out as being the Reebok Step mark 2.
It doesn’t help that you can buy a vastly better machine, the Xbox 360, for less money. Even Sony have tried to be more price competitive and have improved their act in many other ways. Both these machines are introducing gesture interfaces that will finally remove the Wii’s main trump card.
We have known for a long time that the Super Wii is in the way with HD graphics and a rumoured Bluray disk drive. But this is thought to be coming some time after the middle of next year and the market needs it now. Nintendo have got their timing very wrong this time.
It has to be said that the Wii has done video gaming a massive amount of good. It has taken the medium to new markets and new demographics, vastly expanding it for everyone’s benefit. They have introduced new genres of games and extended old genres in a prodigous burst of creativity. And they have continued in their fine tradition of production values that put most of the rest of game publishing to shame.
Yesterday I was at the Best of British conference in London rubbing shoulders with the good and the great of the video game industry. And once again the stark message came over that there are some people who get it when it comes to marketing. And there are big swathes of the industry who don’t get it at all.
In the 1960s and 1970s consumer marketing was perfected by huge multinational companies that manufactured detergents for washing clothes. This is a commodity product, one detergent is much the same as another detergent. So the wise housewife will buy the one that does the job for the least money. But most housewives don’t, this is because they are victims of the marketing of the detergent manufacturers.
This form of marketing involves creating and building a brand by shouting at your potential customer. And shouting can take many forms. TV commercials, billboards and print advertising were especially popular. All that mattered was getting the brand message across. This was unbelievably inefficient and cost an absolute fortune. But the detergent companies didn’t mind because they were rolling in money. Every household needs to wash their clothes and housewives were willing to pay a hefty price premium just to buy into the brand. The other reason the detergent companies didn’t mind is because there was no alternative. It was shout at your customers or nothing. So it was a war of brand against brand (often owned by the same company) in a shouting war where the winner was the person who spent the most money.
Of course the methods, practices and techniques of the detergent wars were adopted by a wide range of other manufacturers selling an immense range of other products, even when it was patently inappropriate. And it is what a lot of the game industry, unbelievably, still does today. They needlessly throw very many millions away shouting at customers.
When it comes to consumer marketing (there are many other sorts) it is important to step back and look at what you are trying to do. Firstly you have to clearly identify who you are trying to reach, you are wasting your time trying to tell the Women’s Institute about a first person shooter. Then you have to work out the message that you want to get over to these people. Finally you need to investigate what is the most cost effective way of getting this message over to them. Now this may sound very simple and very obvious, but, unbelievably, most people spending money on marketing don’t do it.
Video games are not detergent. Video games are interesting and rouse emotions in people. This actually makes them very, very easy to market, because your customer wants to listen to what you have to say. There is no need whatsoever to shout.
Which brings us to the internet. The internet is any true marketeers dream. The ability to interact in real time with your entire global customer base is something that previous generations of marketeers could only dream about. It is as good as it can get. And the tools are free and easy to use. Wordpress, Facebook, Twitter, Reddit, YouTube.
So let’s look at what a game marketeer should be doing, rather than shouting at people like the dinosaurs do. The first thing to remember is that the most powerful marketing tool, by an immense margin, is word of mouth. So you want people talking about you. Then you need to actively engage with your customers and potential customers. And by engage I mean listen just as much as talk. You need to generate genuinely interesting marketing content. Blogs and videos are essential. And you need to keep on top of it, keep it fresh and continuously analyse what is happening. Easy, if you have a brain.
In this world the press release is more powerful than the advertisement, because the press release is telling people stuff that they want to know. Whereas advertisements are things that people want to ignore. Press releases tell a genuine story, they feed people’s appetite for news and they can be leveraged to reach vast audiences with key marketing messages.
So we have two distinct marketing philosophies. One the one hand the outdated, expensive detergent methodology still amazingly used by some. And the massively superior methodology of engaging with your customers which, refreshingly, more and more of the industry is gradually coming round to. The amazing thing isn’t just that engagement is better in every possible way to get the messages that you want over to the right people, it is also a whole lot cheaper.
I would like to point out to Patrick and to Train2Game and to Metropolitan International Schools Ltd that there is an automatic right of reply built into an internet blog like this. At the bottom of every post there is a comment section where they can put their side of the argument, without the need for any recourse to law. This is what most people do and it gives the reader a balanced view of the issues. I suggest that they do this.
