Category Archives: Business

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.

IGF Observation #2: Slow Initial Experiences

Observation #2: if at all possible, it’s best to entertain a judge from the very first minute — just like a potential customer.

Several of the games I evaluated simply weren’t very fun to start with. Some even came with explicit caveats which I will collectively paraphrase as follows: Dear judge, you must play this game for several hours before you understand why it is special.

Who wants to slog through an endless tutorial that isn’t inherently fun before actually getting to enjoy themselves? Who wants to trudge through hours of uninspired gameplay before the “magic” of the game’s design reveals itself? As a judge, I’m willing to do it because I feel obligated, but which game do you think I’ll probably give the higher score: the game that entertained me for three consecutive hours, or the game that entertained me for only the final hour out of three hours, total? With rare exception, it will be the former. And you can bet that most consumers will vote the same way with their wallets. In summary:

  • Long-winded, boring tutorials are bad (seems like this should be self-evident, right?)
  • Conversely, dumping people into a game without any explanation of how to play is also bad, unless the initial gameplay experience is very intuitive. For an example of a game that does a good job of introducing the player to the core mechanics of the game, see Braid.
  • Games that don’t become very interesting (or don’t reveal their “special sauce”) until the player has invested lots of time into them are not inherently “bad”, but unfortunately such games are often doomed to smaller audiences. Most people simply aren’t willing to give a game the benefit of the doubt if it doesn’t entertain them relatively immediately. Long story short, developers should think carefully about finding ways to expose their game’s “special sauce” right away.

PS. On a tangent, my old post on crafting a good game demo might be interesting to some of you.

IGF Observation #1: Compatibility Problems

I volunteered to be one of the many judges for the IGF this year. Here are some of the random observations that I jotted down while working my way through the batch of games I was assigned to evaluate. Hopefully these observations will be useful to people entering the competition next year.

Observation #1: you can’t win a competition if the judges can’t play your game.

Out of all the games I was asked to judge, approximately half did not run on either of the two different Windows PCs in my home. One is my laptop, which is much more powerful than a netbook but isn’t one of those “desktop replacement” models with a $400 video card. The other is my brand new gaming desktop, a machine probably more powerful than 99% of computers in US homes today. I could also have tried the games on my wife’s laptop, but if by some chance a game somehow corrupted her PC she would have killed me, so I opted not to risk that. ;-)

I’m not surprised half the games wouldn’t run; the compatibility-related frustrations of PC gaming were precisely why, after many years of shunning consoles, I eventually threw up my hands and made the Xbox 360 my personal gaming platform of choice. And this isn’t a knock against the organizers of the IGF; they screen every game to make sure it runs before they submit it to judges for evaluation. The IGF can’t be expected to try every submission on fifteen different PC configurations… that’s the individual game developer’s job. But this isn’t even a knock against developers, because I appreciate how challenging traditional PC game development can be.

And that’s really the point of all this (I know, it took me long enough to get there.) If you’re an independent game developer working on a downloadable PC game, you really need to ask yourself if the benefits you get from your engine actually outweigh the portability benefits of Flash, and to a lesser extent, solutions like Unity. I doubt that consumers are, in general, much more forgiving than IGF judges. Requiring a download probably drives away half your potential customers right off the bat — the actual percentage varies depending on the game and the audience, of course. You’d better be certain that the game concept and technology you’ve settled on is so compelling that it justifies not only losing customers to a download, but also losing another large percentage to compatibility problems!

On a final note, this seems like a good time to once again reference Danc’s flash love letter: a worthwhile read for all PC game developers.

Update: After much additional effort, I was eventually able to play 70% of the games in my batch. I had to give up on the other 30%.

On EA’s Acquisition of Playfish

I wrote the following brief, high-level news analysis for a multi-industry expert network that I joined earlier this year; figured some of you might like to read it.

EA has just acquired social-network games maker Playfish for $275 million, plus an additional $25 million in equity retention arrangements and up to $100 million in additional cash contingent upon future performance. Playfish is one of the top three game developers in this space, the others being Zynga and Playdom (both privately held.) Zynga is widely rumored to be targeting an IPO within a year, leaving only Playdom as a wild card.

Why would EA pay such a large sum for a company that was only founded in 2007? In fact, one could argue that Playfish doesn’t even possess particularly distinctive IP and that its games are easily cloned (as Zynga demonstrated when it created “Cafe World” — a close copy of Playfish’s hit game “Restaurant City.” Cafe World now has 28 million monthly active users on Facebook, as compared to 18 million for Restaurant City.)

The answer is complicated. On one hand, big video game publishers have a history of overpaying for top development studios. But on the other hand, while social-network games may seem like simple things, they are in fact dramatically different from the video games that publishers like EA have built their businesses around. EA is, in part, acquiring expertise.

The traditional big video game publishers rose to prominence in part because they were capable of funding the development of robust, complex, multi-million dollar video games and in part because of their retail marketing and distribution prowess. In short: they are very good at getting people below the age of 35 to pay $30 to $60 for a boxed game that can be enjoyed alone on the couch or at the desk or with friends online. But social-networking games, by contrast, require a completely different product development and product marketing skill set. These games are free to play and generate revenue via optional microtransactions — they must be designed explicitly for the purpose of driving such transactions, as opposed to traditional games which can simply “be fun to play.” Furthermore, the core gameplay mechanic of any good social-network game must encourage players to invite their friends into the game — again, it cannot simply be “fun.” And of course, there’s no retail shelf to position a social-network game on; instead, developers must rely on non-traditional advertising, on the viral mechanics of their games, and on cross-promotion between online games to drive traffic.

This latter point is critical. The top social-network game developers have become very effective at driving players from their existing games to their new games. This means that they are essentially capable of helping any new title reach a critical mass of players almost immediately, and for “free.” From that point forward, if the game is designed well enough (i.e. if it is highly viral and good at engaging and retaining players), it will succeed.

So why did EA purchase Playfish? Because EA’s game designers are not accustomed to building games that focus mainly on viral design or on monetization via microtransactions. Because EA’s marketing people are not intimately familiar with the techniques necessary to market these non-traditional games to these non-traditional audiences. And because Playfish offers an established network of players that future games can be cross-promoted to. Of course, it certainly doesn’t hurt that Playfish is rumored to already be generating $50 million a year in revenue. Lastly, Playfish was likely the “cheapest” of the three established game developers in this space.

One could certainly argue that it would have been cheaper for EA to spin up one, two, or even three independent studios and charter them with experimenting in the social-network game space (especially if they’d had the foresight to do so two years ago.) Eventually, one studio would have hit on a successful formula, just as Playfish did. And perhaps other major publishers, such as Activision, should be considering such a strategy. But EA’s acquisition of Playfish certainly makes sense… it simply remains to be seen whether they overpaid or not.

The Death of Lead Gen?

It’s been a while since any given news story caused five different people to spontaneously email me. The latest story to do so is the Techcrunch exposé of scam artists who are working through the popular lead generation services (such as Offerpal) that are used by most major social gaming companies.

The story has already inspired quite a few responses, such as these thoughtful articles by Andrew Chen and Justin Smith, and this entirely predictable response by Mark Pincus, the CEO of Zynga.

My quick two cents: have the lead generation services (and therefore the social gaming companies, and therefore Facebook itself) benefited from the behavior of scam artists? Yes, absolutely. Should the lead generation services immediately do something to address the problem (and if not them, then the social gaming companies or Facebook itself?) Yes, absolutely. Does Facebook “deserve to be sued”, as one of my good friends suggested to me? No, it does not. Does this whole thing prove that social games are a house of cards? I highly doubt it.

Facebook is a popular open ecosystem, and like any other popular open ecosystem, it will be exploited from time to time by unethical people. There is always the argument that Facebook “could be doing more” to police the ecosystem (and in fact, it had already announced a plan to do precisely that as part of larger changes to the platform) but at the end of the day you simply cannot compare Facebook to the Playstation, to Wal-mart, or to any other closed ecosystem. Facebook has an essentially unlimited number of “content partners,” and while it should keep a close eye on the biggest of those partners, it is inevitable that some shadiness will eventually slip past the Facebook Police.

Sony and Wal-mart, on the other hand, have the advantage (and the great burden!) of controlling everything that enters their virtual and/or physical shelves… and they have much smaller shelves. So while I hope that Facebook will indeed do a better job of catching scams in the future, I don’t blame it, and in fact I hope it chooses to emphasize crowdsourcing techniques (i.e. better enabling users to flag and stifle abusive 3rd parties) as much as expanded police squads.

The social gaming companies turned a blind eye to their part in this problem, and now they are catching flack as they deserve. But this will blow over, and lead generation will likely continue to represent a significant percentage of their ongoing revenue. Why? Because at the end of the day, there are legitimate advertisers, content providers, and 3rd party networks with a vested interest in the success of this model. These aren’t all late-night, 1-800-type con-men; these are advertisers like Netflix, FTD, and GAP and product/service providers like Apple, The Wall Street Journal, and The New York Times. The only “house of cards” here is the house that Tattoo Media built.

Pretentious

I had a long conversation today with a person responsible for biz dev at a major publisher. He regaled me with a remarkable story about a hot indie developer who he had reached out to with a simple email: “Hey there, I’d like to introduce myself and learn more about your company.” There was more to the publisher’s email, but that is how it started out.

The developer wrote back, “A little advice — you should insert my name and my company’s name in your email. It will make it more effective.”

Can you guess how the publisher responded? Predictably: “Thanks for the advice. I wish your company the best of luck in its future endeavors.” Still no name in there. ;-)

I don’t care how great you think you are. I don’t care how many companies are knocking down your door. This is a very small industry, and people talk. Never forget that. It simply doesn’t pay to be an asshole. What good does it get you, except a brief feeling of smug superiority?

Your next game or two might flop. It has happened to the best of developers, for reasons both within and not within their control. If you find yourself in that unfortunate position, all you’ll have left is your reputation — how people feel about you as a person, what you’re like to work with, etc. And even if you’re lucky enough to enjoy an endless string of successful titles, do you really want to be known as a jerk?

There’s a reason why guys like Will Wright, Ray Muzyka, Bob Bates and Chris Avellone are so widely respected in the game industry. It’s partly because they’re successful and talented… but it’s also because they’re genuinely nice guys. Aspire to be like them, not some douchebag celebrity.

DD Summit Video

Film Victoria was kind enough to publicly share the video of my keynote at the Digital Distribution Summit in Melbourne. You can find it here.

Quick summary: I focus mainly on what it takes to successfully pitch your XBLA/PSN/Wiiware/Steam game to a publisher or platform-holder. If you haven’t already endured too many talks on this subject, I think you’ll enjoy the video. I’ve gotten an unusually large amount of good feedback about it!

Oh, and in case you’re wondering, when I ask “are you all right?” in the first few minutes of the talk, it’s because some poor guy fell on his face at the back of the auditorium. I, ummm, probably should have let someone else — someone NOT delivering a keynote at the time — ask after him.  :-}

Aside

I’ve just returned from a lovely three week trip to Australia, thus the downtime for Game Tycoon. Melbourne has earned my vote for “nicest botanical garden” and Sydney for “best large-animal aquarium exhibit,” while Cairns nets “loveliest man-made pseudo-lagoon.” :-) … Continue reading

The Hits Get Bigger

I’ve been meaning to post a followup to my Develop keynote on digital distribution, and was reminded to do so by Raph, who lately has been speaking his mind about the realities of the Long Tail (good stuff — worth a read.) Raph also highlighted a report that Zynga is spending millions of dollars advertising its games and wisely predicted that new digital ecosystems will eventually be “much more hit-driven” as marketing and development budgets escalate. Raph’s right, as he frequently is, but I have one minor correction to make: the new digital ecosystems already are remarkably hit-driven! Put more bluntly: the people who thought the Long Tail would promise the end of hit-driven market dynamics were completely wrong (both about the nature of digital distribution and about the companies that digital distribution benefits.)

With rare exception (see my comments on niche markets at the end of this article) the Long Tail primarily benefits platform holders and the creators of hit content, not the broader creative community. Of course, I’m talking about financial benefit here; one could easily argue that the social benefits of digital distribution touch a far greater number of creators and consumers, and the social benefits are what make digital distribution truly wonderful. But that’s a story for another blog post.

It turns out that the hits get *bigger*

As many prominent journalists, analysts and scholars have recently argued, it turns out that hits are no less important in the new Long Tail world. Lee Gomes noted in the Wall Street Journal that in 2006, Amazon.com still derived 75% of its book sales from just 2.7% of its titles. True, 2.7% of 3.7 million books is nearly 100 thousand books — a great deal more than the total offered by any brick and mortar store — but that doesn’t change the financial situation for the authors of the other 3.6 million! Gomes also noted that, wherever he looked, hits remained vitally important to a given ecosystem (or in his words, “iTunes looks like Billboard, not some paradise of niches.”) And research by Anita Elberse, a professor at Harvard Business School, has shown that in some “Long Tail markets,” success has begun to concentrate in progressively fewer best-selling titles, and worse, that independent artists have actually lost share to major labels. And via Raph, another recent research study with similar findings: of the 13m songs for sale online last year, 10m never found a single buyer, and 80% of all revenue was generated by less than half of one percent (.004) of all songs.

Continue reading