Sunday, October 19, 2008

An integrated game design and marketing model for commercial success

Since the very beginning, my goal in writing this blog has been understanding the disconnection between commercial success of a video game and its genuine quality, as one does not always imply the other. After about a month's worth of contemplation, focused observation and interviews with industry professionals, I am finally able to develop a semblance of understanding as to what is possibly happening in the industry.

The first part of this post will illustrate the current design and marketing interrelationship. The second part will be proposing an ideal relationship model that can offer much higher rates of commercial success.

1. Design First, Sell Later

I will try to explain this approach with a purposefully simplified example; assume that you have decided to develop a strategy game, based on your experience/gut sense/preliminary market research/etc about what will sell in the market at that time. From that point on and to the end result, you will have to make many decisions about the game along the design process.

Let's say you want to decide what sort of strategy game it will be: real time or turn based. Based on the results of your decision, you can end up with two completely different games. It is also highly probable that the consumer reaction to (and subsequently the commercial fortunes of) these two outcomes are not quite equal. Green circle in this example represents the better outcome, with yellow being the second best.

Most game designers pride themselves in understanding the gamers and what they want to play, for they are gamers themselves. I will not argue this point one way or another, at least not in depth, right now. Let us assume instead that in this case the designer has chosen the right option and has decided to go with a realtime strategy title. Everything is perfect for a little while, until you come to the next decision point.

This time you are perhaps trying to decide whether to go with a futuristic setting like Starcraft, or with a medieval theme like Age of Empires. Again one of the two will resonate better with the gamers than the other. Perhaps one of them (shown as a red circle) will be a total flop.

Right after that decision comes another: should you include two factions or three? Maybe four? Maybe add customizable factions? As you can see, each decision point adds new combinations and new possible outcomes to the overall picture.

Imagine how many of such decisions you have to make along the design process, big or small, visible or in the background, visual or technical, story-wise or mechanics-wise, and so on. Many decisions later what you end up with is a quantum cloud of possibilities:

Of this huge set of 'alternate universes,' only a small fraction will lead you to a hit title. A greater portion will probably fall under the acceptable or average category, while even greater is the possibility of a complete commercial failure. The aim of the design team is, then, to go through this whole decision tree with the most number of green circles, in order to maximize the chances of ending up in the green zone.

Remember: a green circle represents an outcome that will have the highest positive reaction from the consumers. It is not about chasing an absolute truth in game design. It is about giving people what they will like to play. So the chase for green becomes chasing an insight into the gamers' minds, to find the choices that will resonate with them most.

Guess whose job that is.

If you consult with the marketing people of the big game companies, they will likely tell you about the focus group studies, the open betas, the online forum posts from fans, etc. These things are sure to give you insights about gamers, right?

Let me tell you how well this works: imagine you want to drive your car from Vancouver (BC) to Lima in Peru. If you exclusively relied on the sketchy directions given to you by ten random people in downtown Vancouver, then maybe a hundred more along the way a year later, and not to forget your team of enthusiastic road-trippers, your chances of finding Lima on your own would be about just as high as coming up with a great game that also sells great.

As a consumer myself, I have observed the above scenario many times, with the end result of them ending up somewhere in Quebec instead and spending lots and lots of advertising dollars to convince everyone in town that they are in fact living in Peru. This is known as push marketing.

This is also why they are very unwilling to take chances with new directions. This is why they are more than happy to manage a ballpark with a title (because it is an amazing feat), and then reiterate it countless times with incremental changes, hoping to find the street address one day in the distant future. The problem is, though, the address keeps changing. Thus there is a never-closing gap between where we -as consumers- want them to end up, and what they can manage with their current pathfinding techniques.

2. Concurrent Design and Marketing

The solution: integrate the end user into the design process as much as possible. The best example of this approach is my favorite indie game Mount&Blade, but it is possible to see other examples in many other industries. What amazes me is the fact that the designers of that game got it right in their first try, while most industry people are not even aware of this unbelievable feat yet.

What they did right was releasing the game as soon as it was playable, and continuing the design process along with the end users. Every update got immediate feedback. The reactions to every little change, tweak, fine-tuning was immediately observable. Forty thousand people paid them to do their beta testing, and to co-develop the game with them. At every stage of the decision tree, thousands of fingers pointed out the green circles to them.

Leave aside the puny sample sizes of focus group studies/surveys, and try forty thousand people on for size. That many people did, not only their product development marketing, but also their advertising as well. I urge you to check out the Gamespot review for the game, and see the glaring disparity between the reviewer's rating and that of the gamers'.

Why do they love a game with graphics nowhere near AAA titles? Why a game that did not get marketed aggressively? Why a game that scores a shameful 6 on Gamespot's review? Simply because Mount&Blade did what the others could only dream of doing: it found the street address. And all that with a team of two people and a shoestring budget for absolutely everything.

Compared to the traditional video game marketing trip to Quebec, this approach is no different than having an onboard GPS system. The success of this humble indie title was no coincidence. It was, in fact, almost impossible for it to fail.

You may argue that the same design method cannot be applied to every situation for this reason or that. Just remember that while you are arguing that point, someone else out there may be just about to make it work for them.

And once that happens, imagine what a company that never misses can do.
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Sunday, October 12, 2008

Pictures from eMarketronics

It's been almost a week now and I finally have the time to post some pictures from Monday. Once again, thanks to everyone who graced our booth. We were most pleased with the level of attention we were getting.

It is yours truly in this one, posing right before our booth.

Miguel and Sandy presenting our research. A pretty animated and intense presentation too from the looks of it.

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Saturday, October 4, 2008

In-game advertising compilation

As promised, here is the complete filing of our in-game advertising coverage for Sauder eMarketronics event. This includes links to the blogs of Sandy Coupier and Miguel Maza, who worked with me in preparing this coverage.


  1. Why advertisers should be interested in in-game advertising
  2. Gamers as an advertisement audience
  3. In-game advertising 101: the basics
  4. In-game advertising agencies
  5. Efficiency of in-game ads
  6. What makes an effective in-game ad
  7. What it all means for the game industry insider

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Friday, October 3, 2008

In-game advertising and video games industry: trends, challenges and implications

This article - along with the other two that I will soon link to - will be the gist of our in-game advertising coverage in next Monday's Sauder eMarketronics event. In this post you will find the trends, challenges and future implications for the video game industry in regards to in-game advertising. So without further ado, here it is...

Game development costs are climbing with the ever-increasing complexity of the production process. “There are more lines of code and more development hours invested in creating really engaging video games. If I’m a publisher or developer, I’m saying,‘Where’s my new offset?’ Advertising is becoming a bigger part of that offset,” says Jay Sampson of Massive Inc, the in-game ad agency owned by Microsoft.

Justin Towsend, CEO of IGA Worldwide, puts a range on this advertised offset in an interview with Gamasutra: “We hope in-game ads will go on to support up to 15-20 percent of production costs – but nowhere near 100 percent.”

The industry-wide offset is expected to be $1 billion dollars by 2012, the total number that in-game advertising spending is going to reach. Nearly half of that spending is expected to go into web based games.

Meanwhile the in-game ad space is evolving rapidly to attract the advertisers, with development of new technologies and accumulation of experience in this field. The future of this new advertising front seems to be pretty promising, as evidenced by the big players taking positions already. One such move was Microsoft's acquisition of the in-game ad pioneer Massive Inc. With a similar move last year, Google acquired AdScape and the rumour is that an in-game version of Google AdSense is coming soon. This possibility is further reinforced by the Google Lively project, a virtual 3D world that will be providing an open platform for independent game developers.

This promising market is not without its challenges. The attractiveness of the medium largely depends on the amount of tactical flexibility it can offer to advertisers, such as fast deployment capability, real time control and reliable performance measurement. As such, creating versatile ad space within games is important for the future of this medium as an advertising platform. On the other hand this adds yet another layer of complexity to the coordination of game development efforts.

Independent sources claim that the biggest challenge so far is coming up with a reliable unit of measurement for ad effectiveness. In internet advertising market, this unit would be 'clicks.' Thus, the in-game advertising industry needs to invent its own click, a consumer response measure that is universally accepted.

Unquestionably another key component of the future is winning the consumer's acceptance for ad presence in games. Any campaign to ruin the entertainment experience would have a big chance of backfiring on both the advertiser and the publisher.

If video games imitate movies, then they should also follow the trend with in-movie advertising. Product placement in movies is evolving into a different model: incorporating brand directly into the storyline. Of all the examples, Audi and US Robotics presence in the Will Smith movie I-Robot would be the best one. An in-game application of this model would require close collaboration between the brand owners and game developers.

A traditional coping mechanism against increasing development complexity has been acquisition of game development studios by publishers. Games developed by such in-house studios are called first party titles. Considering the challenges that lay ahead for in-game advertising, it is not hard to imagine publishers increasing their preference for first party titles in order to have better control over addressing such difficulties.

For static ad placement, it is reasonable to assume that long standing franchises (such as NBA, FIFA, Sims, NHL... see a pattern here?) would offer more reliability for their high degree of predictability in terms of sales and gamer demographics. On a similar line, video game genres or franchises can develop portfolios of brand categories that can be supported in their games. A portfolio loyalty, in turn, could limit the availability of creative directions.

In-house game development, coupled with choices in favour of predictability, may turn the industry into a closed loop system where fresh and innovative ideas would have a hard time penetrating in. This means a risk of value decay and loss of entrepreneurial responsiveness.

As a result of increasing demand towards dynamic ad control, online gameplay technologies will probably see an emphasis greater than ever before. General marketing efforts can also be expected to intensify in driving the consumers towards online gameplay.

The question of where the in-game ad revenues will end up is another important one. If they are used as an offset for reducing the prices of games, the result could be increased sales and extended reach for advertisements (which could create a positive feedback loop), not to mention a boost to the consumer acceptance of ads. Revenues going straight to the bottomline, however, could upset the balance between what consumer wants to see and what the publishers are willing to invest in. The end result of such an imbalance could be stagnation in sales, which in turn could reduce the attractiveness of the medium for advertisers.

Although the exact direction can be argued, it is almost certain that advertising will have a profound effect on the future of gaming. Whether this will be good or bad depends on the industry's ability to understand the dynamics between ad and entertainment content, and to create a mutually supportive business model out of them.
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