Hi!

I am having a break from writing about video game events and news as I am currently in China and rather disconnected from the world of games. The reason for visiting China is teaching a course in marketing at an international business school; a research seminar on my work on video games at the Nottingham University in Ningbo; and, seeing some of the country. Upon return half March I will turn my attention to the blog again.

Take care.

An event like this is a good indicator of where the industry is at, and more importantly, where it is heading. Last year’s focal topics were whether or not to go freemium, what to do with location based services, and which platforms to embrace. This year’s event showed deeper signs of maturing as speakers were presented more forward-looking plans and showed concern with external adoption from both consumers and businesses alike. Of special interest were discussions around design convergence that have greater console-like experiences; the role of games in mobile transmedia; and the introduction of key performance indicators for stimulating transparency.

Design convergence

An unscheduled but welcomed panel discussion explored what makes a quality social mobile game. Henrique Olifers, former studio director at Playfish and founder of the social games studio Bossa Studios, offered interesting insights. Across the board, a psychological and emotional drive to play a game is what defines quality, regardless of platform or genre. This intrinsic motivation leads to “thinking about the game while not playing it”. It is exactly this drive that makes players coming back to their favourite games.

The methods used in social games are rather simple. A game like Farmville offers little narrative background and its retention techniques, such as harvesting crop, are not particularly fine-grained. The sophistication found in console games is not required since social mobile games cater to an audience of non-game players who are looking for low entry barriers to play. This audience however, is becoming increasingly acquainted with games and with this increased knowledge comes higher thresholds. As a consequence, the panel foresees an “arms race” in technical, narrative and game-play design advancements. With marketing expenditures already rapidly increasing, the social games ecosystem will not be unlike its console counterparts in the near future.

Mobile transmedia

The advent of linkages between mobile games and non-game properties or real-life brands was a recurring subject during the conference and seen as good business practice. Interesting insights came from Ray Sharma from XMG Studios, Canada’s second largest development studio. While cross (mobile) platform endeavours were the topic of last year’s discussion, Sharma was looking ahead by exploring cross-media, or transmedia, strategies. XMG’s mobile game for the somewhat forgotten animated TV series ‘Inspector Gadget’ spun-off a range of side products including best-selling ringtones, up to the point where the game “reinvigorated the TV series”. Indeed, a new season of the series is currently in the making.

Sharma took this transmedia perspective one step further by drawing the analogy of the mobile phone being a remote control, or hub, for various interrelated mobile media. XMG’s pinnacle of this approach is the recently released Totally Amp’d, the first interactive sitcom for smartphones and tablets. Spread over ten episodes, the player follows a group of teens on their road to stardom and while doing so the player decides on the content of the teens’ video clips, records tracks in a karaoke studio, and decides what the stars-to-be should wear.

Transmedia efforts are pretentious to say the least, and require a lot of coordination between companies with various specialities. Furthermore, like any pioneering or innovative service, profits are far from given. Having said that, if these efforts do work out, the return on investment is likely to be very high

Increasing transparency

The first two topics, convergence with console experiences and cross pollination with other media industries, point towards increasing maturity for the mobile games industry. The console games industry is dealing with signs of decline, whereas signs of growth in mobile abound. For example, 15% of last December’s retail shopping activity in the UK came from mobile. In spite of these staggering figures for the mobile games industry to enjoy greater recognition from consumers and businesses the industry needs more established metrics on effectiveness and quality.

Michael Schade CEO of successful advergaming studio Fishlabs highlighted the importance of generally recognized measures of effectiveness. Brands and other media might still be reluctant to partner with mobile games studios since there is little knowledge on what constitutes success and how to measure it. The same applies to measures of quality. While there are many analytics to be used, there still is “not a lot of knowledge on analytics”. According to the previously mentioned panel on quality, mobile games are in need for a unified key performance indicator of quality (like Metacritic for console games). Whether this is done through retention, featured by the platform owner, or daily active users, institutionalizing such metrics will help amplifying the success stories and leads to an ever bigger market opportunity.

Thanks to the kind people of Osney Media and Gaming Business Review for making my attendance possible. Onto next year’s event!

This article is co-published on Gaming Business Review, you can find it here.

Chris Deering: Sony (Computer Entertainment) EU's former CEO

Last week I had the pleasure of attending a talk by long-time Sony (Computer Entertainment) Europe CEO Chris Deering. At the London Business School Marketing Club, the industry veteran elaborated on how Sony gained foothold in the video game console industry and ultimately became the market leader. Deering, at Sony EU from 1995 – 2005, explained how organization design, a strategy of ‘platform play’, and beer are key to becoming a dominant player in today’s disrupted and expanded market.

What drove Sony’s success for PlayStation?

From an organizational design point of view, Deering deployed a mentality of putting the consumer first. Additionally, ‘politics’ was not accepted within the organization; employees at all levels were empowered to make a difference. This meant that overhead was kept to a minimum resulting in a $250 million cost reduction and a flat organization chart where people knew each other. While Deering rigidly kept an eye on the costs by personally signing off all requests for new hires (or not), he invested in employee morale by regularly organizing company-sponsored drinks under the mantra “beer is the answer”. Business gets done as people from different departments talk more easily to each other over a drink in an informal setting.

Deering noted the following advancements over competitors Nintendo and Sega. At the time of the PSone, processing power was still an obstacle for translating creativity into game design. Increasing the count of polygons and introducing CD quality sound meant a significant increase in technical abilities. By switching from cartridges to CDs for storing data, Sony reduced inventory risks for third party publishers. CDs could be produced in smaller batches and brought to market quicker compared to cartridges. This advancement tied in with a philosophy of aggressive cultivation of third party titles. Not having game development capabilities in-house, Sony was keen on establishing favourable relationships with third party publishers. This resulted in a rather different mentality towards third parties compared to Nintendo’s inbound looking mentality.

Sony was also particularly keen on its marketing endeavours. For the PSone Deering used a strategy of audience expansion and distribution ubiquity. In other words, people that had never bought a console before, young adults aged 18-34, were targeted to buy the device available in as many points of sale as possible. Sony backed its targeting strategy with edgy marketing campaigns such as the Society Against PlayStation (S.A.P.S.) commercials that portrayed the console’s recalcitrant image. Lastly, Sony paced a number of platform exclusive games that catered to the new target audience providing further incentive to choose Sony’s console.

Deering giving his presentation at LBS

A new environment.

15 years later the video games industry is faced with “massive disruption as well as expansion”. The advent of Facebook for social games and smart phones for mobile games has created a new environment. Indeed, some of the advantages with which Sony made its victorious entrance in the industry have been rendered obsolete. In digital distribution there is no inventory to be managed and thus no risk to be reduced. Technology is still a driving factor for innovation in games design, but not as much of a deal breaker as it was before. Rather than platform exclusivity, gamers now benefit if they can access and play content across devices. Additionally, free trial from demos or freemium business models in games explodes early uptake but also accelerates defection. In short, the risk factors for platforms have intensified over the last years.

Having said that, Deering states that a strategy of ‘platform play’ can still very well work today. Platform owners remain having opportunities to be the value chain leaders, but they should look for new directions to deploy ‘platform plays’. Platforms based on a single controller but multiple screens; platforms around currencies; platforms for decision point optimization (mentions Tapjoy); streaming platforms advocating trial (mentions Gaikai); and, recommendation platforms all have potential to become dominant players in their value chains. Deering mentions the Kindle Fire as a candidate dominant platform owner for the near future.

However, Deering concludes his analysis that at the end of the day, company DNA still very much is a key performance indicator for success. In other words, “beer still is the answer”!

>>An interesting read on Deering’s impressive CV and personal background was published at MCV in the ‘MCV legends’ series<<