Category Archives: Business (in general)

Acquisition vs. Innovation

Fail Often.

This article was originally published in Game Developer Magazine. It was the first in a series of business columns that I am writing for GDM.

Ask anyone over the age of 30 how many times they’ve had to “learn something the hard way.” Most people can’t count that high. Businesses are just like people in this regard: they need to experiment in order to gather the data that will enable executives to make informed decisions. And experimenting often means failing.

Despite this, most game publishers and developers are profoundly averse to experimentation and risk. “Little” mistakes, like failed prototypes, are not embraced. “Big” mistakes, like failed attempts to capitalize on new markets, are assiduously avoided until those new markets “prove” themselves, by which point it is deemed necessary to spend a fortune acquiring a successful competitor.

Dan Ariely, the author of “Predictably Irrational”, has noted that there’s plenty of research to explain this behavior. In his own words: “Experiments require short-term losses for long-term gains. Companies (and people) are notoriously bad at making those trade-offs.” Put another way: short-term risk aversion is a major psychological handicap for businesses… one worth recognizing and confronting.

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Who is a bad customer?

For a long while now, the video game industry has had a very simplistic definition of a “good customer” and a “bad customer.” A good customer is someone who pays you $60 for your game (and better yet, pre-orders it.) A bad customer is someone who buys a used copy of your game or worse, pirates it. The problem is, this worldview ignores a variety of important factors and doesn’t translate very well to the digital markets that most indies are focused on.

Tell me which of these people is the best customer:

  • Customer A: pays 99 cents for a copy of your game immediately after launch, gives it a 1-star rating for some trivial reason and deletes it forever.
  • Customer B: pays 99 cents for a copy of your game, gives it a 5-star rating and even tweets regularly about it, but is such a toxic presence in the forums and/or in-game that she drives other customers away.
  • Customer C: pays 99 cents for a copy of your game and enjoys it, but never rates it and does nothing to promote it.
  • Customer D: pirates your game and regularly tweets about how awesome it is to her hundreds of followers. She also eagerly and politely answers the questions of newbies who visit your forums and happily beta tests your new games.

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The Business of “Steambirds: Survival”

Today we launched Steambirds: Survival (SB:S), the first true sequel to the original Steambirds. It’s essentially “Steambirds meets ‘Horde Mode’ from Gears of War” — your goal is to fight off ever-growing waves of enemies for as long as you can manage. Aside from this central conceit, the key differences between SB:S and the original SB are:

  • In SB:S, you can choose from 24 planes, all of which need to be unlocked, and nearly all of which have very distinct characteristics which heavily impact your play style.
  • In SB:S, when enemies are shot down, they leave a collectible powerup where they crash. Judiciously deciding when to collect these (and how to use them) is key to your survival.
  • In SB:S, there are microtransactions. Seven of the twenty-four planes in the game can only be unlocked with cash. One of the twenty-four planes is unlocked for free, if you create an account and sign up for our newsletter.

Monetization headaches

Adding microtransactions to SB:S proved to be non-trivial. To understand why, you need to understand our distribution strategy. We’re excited about Flash because it opens up such a huge audience to our games. Part of that huge audience comes from the hundreds of Flash gaming portals who will happily host and promote your game for free, without any negotiation or formal arrangement needed, in exchange for the opportunity to monetize the game via their own site’s advertising system. Normally, all you get in return (aside from exposure) is a prominent link (or links) in the game to other websites of your choosing. But we wanted more than that – we wanted to monetize content inside the game, no matter where it was hosted. That turned out to be a huge pain in the butt.

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Why we created Triple Town for Kindle

This week is a big milestone for Spry Fox; we released the first independently-developed game for the Kindle, which we called “Triple Town.” Our playtesters have described Triple Town as, among other things, “the Civilization of Match-3 games”, which is both flattering and terrifying. :-)

Danc has written a nice post about the design philosophy behind the game. If you own a Kindle 2, Kindle DX or Kindle 3 you can purchase Triple Town directly from Amazon.com.

As a supplement to Danc’s post, I thought you might like to know our business rationale for creating Triple Town. It shouldn’t surprise long-time readers of this blog that I’m always on the look-out for platforms in the “uncertain beginnings” phase that may soon enter “early glory”. The Kindle seemed like just such a platform. Let’s break that down:

1. Platform prospects

First and most important question: is there a reason to believe the platform has a good chance of becoming a viable ecosystem for its first wave of game developers? Looking at the Kindle, I saw a platform with a reasonable number of users (Amazon will not release ownership statistics, but I’ve been guessing that there are currently at least 2m+ active content-enabled devices out there, based on publicly available information. I could definitely be wrong about that, but hopefully not by too wide a margin on the downside.)

More importantly, I saw a platform with users who are inclined and encouraged to purchase large quantities of digital content at relatively healthy prices. And given Amazon’s merchandising expertise, I hoped that unlike on so many other platforms (Wiiware springs to mind as a sad example), Kindle games would get plenty of visibility and Kindle developers would have reasonable marketing tools made available to them.

2. Content supply

Secondly: what is the supply of high-quality content likely to look like when the platform first launches? Will it be an overwhelming flood or a small trickle? The latter is what creates a supply-demand imbalance during the “early glory” phase, and which ultimately leads to strong returns for early developers. The Kindle was an interesting case in this regard. While I’d imagine that software developer interest in the Kindle is quite high in general, when I personally asked a large number of my friends in the game industry, “are you planning to develop a game for the Kindle,” the answer was always either “no” or “you can make games for the Kindle?” Furthermore, I didn’t see much Kindle-related news in the game industry press or at game industry conferences. To me, that indicated a potentially-unappreciated market opportunity.

3. Investment threshold

Unfortunately, even when both the conditions above hold true, there is no guarantee that the emerging platform will ultimately prove viable. Any number of issues — ranging from mismanagement of the platform, to unanticipated technology problems, to rotten luck — could cause the ecosystem to be less viable than you might hope. Consequently, the third major condition of a good “uncertain beginnings” investment opportunity is simply: can I dip my toe in the water with a project of relatively small scope? If entering the market requires a huge expense, it probably doesn’t make sense for most independent game developers. But Daniel and I were confident that we could create a great game that we were proud of in a reasonable period of time, with a reasonably small team. And so we did.

Conclusion

Of course, it certainly didn’t hurt that both Spry Fox and Amazon are based in the greater Seattle area. Knowing that I could easily meet the platform managers in person if they were interested in our company or our game was a nice bonus. That said, I wouldn’t call location one of our key investment criteria.

Anyway, long story short, we decided to give the Kindle a shot. I am very grateful to the people at Amazon for their decision to release Triple Town as one of the first games on the Kindle, and look forward to seeing how this grand experiment turns out. :-)

Building and Maintaining the Right Studio Culture

The folks at Casual Connect were awesome enough to make all of this year’s Seattle conference lectures freely available online. My talk was called building and maintaining the right studio culture. Check it out!

Debating F2P Monetization

One of the things holding back the evolution of F2P gaming in the West is the understandable discomfort that many Western designers feel about the “aggressive” monetization strategies employed by Asian game developers. For the purposes of this post, I’m defining “aggressive” as the sale of items that impact gameplay and/or speed up a player’s progress, in addition to other, less controversial premium features like aesthetic items and account personalization.

To many developers, the idea of designing a game to be anything other than “fun” is heretical (they may also fear the possibility of offending sensitive players.) Consequently, they either ignore the F2P business model or attempt to create games with relatively tame revenue-generating systems; for example, focusing on the sale of items with aesthetic benefit only, or roping off a portion of the game and hoping enough players voluntarily pay for access.

The irony of these fears should not be lost on anyone who was designing games thirty years ago. Classic arcade titles were explicitly designed to eat quarters over brief, regular intervals, and people of all ages still put up with it. By comparison, modern F2P games are positively generous to players!

All this is why, up until the social game explosion, we heard of so few financially-successful F2P games in the West. The social gaming companies get a lot of credit for leveraging Facebook and for rediscovering the market potential of asynchronous gameplay, but they deserve equally as much credit for realizing that people in the West are not culturally predisposed to hating any game with an aggressive monetization model. As with everything in life, context matters.

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Lessons from Hollywood

For such a juicy situation, the online debate about Infinity Ward has been pretty dull. A summary, for those who haven’t been following along: 99.99% of people believe that Activision committed a grievous error and is clueless about the value of talent — the other 0.01% of people work for Activision. Either the wisdom of the crowds has revealed itself, or anyone who sympathizes with Activision has been unwilling to speak up for fear of being mocked.

It won’t surprise regular readers of this blog that I’m on the “pro talent” side of the debate. Making great games on a strict schedule is exceedingly hard, and anyone who can reliably manage a team to that end is probably worth their weight in gold. That said, there’s an interesting question to be asked here: if we take for granted that Jason & Vince were worth their weight in gold, is it possible that they were simply demanding “too much” compensation in their ongoing negotiations with Activision (i.e. all the gold, and more on top — leaving too little for Activision’s shareholders?) Or was Activision simply greedy and unappreciative?

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My GDC 2010 Slides Uploaded

For those who attended my lecture at GDC and would like to see the slides (which I have annotated for your convenience), please find them here.

If you missed the lecture but are a regular reader of this blog, fear not. Much of the content was based on articles that I have posted on this blog over the past year. The new content pertained primarily to iPad vs. Kindle and some neat new research/data on the Long Tail. Fun stuff!

My GDC 2010 Lecture

My favorite conference of the year, GDC San Francisco, is almost upon us! The date, time and subject of my lecture is noted below. If you’ll be attending and would like to meet up, drop me a note. :-)

Digital Distribution: How to Deal with the Parts that Suck and Capitalize on Everything Else
Date/Time: Thursday (March 11, 2010) 10:30am — 11:30am
Location (room): Room 303, South Hall
Format: 60-minute Lecture

Summary: 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.

IGF Observation #3: Polish Required

Observation #3: A polished game stands out from the crowd.

Some of the games that I played could really have used a few additional rounds of playtesting and design iteration before they were submitted to the IGF. The developers of those games would probably have been better off holding back their games until next year’s competition.

I know this can be tough to swallow. Perhaps you’ve worked long and hard on your game, and you really want some recognition for your effort. You might be counting on that recognition to help boost your marketing or business development efforts. I can imagine many an indie developer thinking, “My game isn’t perfect, but it shows a hint of something great, so I’m going for it!” And to be clear, that’s a fine attitude — if you wait until your game is “perfect,” you’ll probably never finish it! But unfortunately, some developers jump the gun and submit their games before they are truly fun, much less “perfect.”

If you’re creating a new gameplay mechanic (or an interesting twist on an old mechanic), make sure that you have implemented at least one very polished, very entertaining instance of that mechanic. A single, excellent level is better than five mediocre levels, in my opinion. Per observation #2, other developers are making me trudge through hours of tedious gameplay, so I’m going to be especially appreciative of a developer who wows me with ten short minutes of brilliance.

Of course, “very polished” doesn’t necessarily mean “short and sweet.” But many independent developers don’t have the time or resources to produce several hours of very polished gameplay, so all I’m saying is that if you can’t, you might as well err on the side of short and sweet. I’m fairly certain that you’ll be better off!

PS. Don’t forget to frequently playtest your game on other people. It doesn’t take long to lose your sense of perspective when immersed in a project; a pair of fresh eyes will significantly increase your odds of ultimately developing a polished gameplay experience. Also, for an example of a relatively simple indie game that is extremely polished, check out geoDefense (or its sequel, geoDefense Swarm) on the iPhone.