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There Are Only Two Parts Of The Content Value Chain You Cannot Remove
by Kevin Gliner on 02/16/14 08:37:00 pm   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

This post originally appeared on Point Line Square on January 2, 2012.

There are only two parts of the content value chain you cannot remove:  the content creator and content consumer.  That’s a paraphrase of an unknown journalist from the June 5, 2008 issue of the Economist who said:

“Publishing has only two indispensable participants:  authors and readers.  As with music, any technology that brings these two groups closer makes the whole industry more efficient– but hurts those who benefit from the distance between them.”

So if you want to play in the space between, you need to provide some value in reducing one or more of the following four barriers:

  • Existence.  How difficult is it to actually create the product?  Am I coding in assembly or can I just use Flash?
  • Discovery.  How does a consumer find out about the product?  Banner ads, google keywords or the social graph?
  • Delivery.  How does the consumer get the product?  Do I have to drive down to the mall or can I just download it?
  • Commercialization.  How does the content creator monetize the product?  Do I have to pay $20 or can I try it for free and pay for stuff in smaller chunks later?

We use talent and money to overcome these barriers.  In recent years, there’s been a tremendous decline across the board in all of them.  Modern development tools and increased hardware power have put a huge dent in the existence barrier.  Delivery friction is virtually zero given modern bandwidth costs.   Commercialization is almost plug-n-play.  Even discovery has been dramatically improved with the advent of Facebook’s viral channels.

As these barriers drop, a number of interesting things happen:

  • Lower barriers mean lower capital requirements to bring a product to fruition.
  • Lower capital requirements mean the volume of product that makes it over these hurdles increases substantially.
  • More product means more competition, driving down prices.
  • More product also means more niche products that address previously underserved interests.  These products can charge a premium over mainstream content.
  • The closer these value chain barriers get to zero, the more they commoditize and become hyper-efficient.
  • The more they commoditize, the more the costs start to backload, further reducing capital requirements for the content creator.
  • As capital requirements drop, the sources of capital change and their influence over the content creation process falls.

There’s a bit of a feedback loop here.  If more products make it over the transom the discovery barrier goes up, for example.  And when a company has an effective monopoly over one solution (e.g. Facebook’s discovery advantage) they can intentionally raise barriers in other parts of the value chain, so long as the net gain is still positive for content creators.


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Comments


Maria Jayne
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About the only value I see a publisher truly having is that of detachment, for a long time the barriers between developer and customer have had a buffer. Customers ranting and bitching at publishers who controlled the money and could afford to be arrogant and ignore them.

Of course some of them needed ignoring, not everyone is polite, reasonable or constructive, there are casualties on both sides of that line as copy paste automated responses would trivialize issues and imply a lack of understanding from both groups.

However they did provide a value, when you can't personally be attacked by your customers, that has a value to your well being as a developer. We see evidence of the kind of horrible and offensive words people use on twitter or facebook all the time...that's in the public eye, can you imagine the kind of crap developers get personally?

We have seen evidence of death threats, horrible sexist gender slurs and no doubt racism, I see an opportunity there, for particularly savvy businessmen to step in and bring some order and protection back to development teams who see no value in traditional publishers.

It works more as marketing and after sales, but more importantly, it works for the developer instead of the alternative. For a while we as gamers began to get more and more power in being able to communicate with the developers, perhaps that power has gone too far and created an opportunity.

(Great article by the way!)

jeff grant
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Not sure I agree with you, especially if you're talking about online games.

So many game developers greatly underestimate the complexity of and resources required to develop the services required to support an online game.

User authentication/authorization (especially across the entire development process; beta, alpha, launch, etc), stress and load testing, telemetry, matchmaking, portal integration, live operations, customer support, etc, are all very complex entities that have to integrate closely with the game and are usually outside the skill set (or experience) of your typical developer.

A publisher that provides those elements as part of the partnership with the studio brings a lot of value add to the table.

Some may say that there are a ton of third party services that provide those functions, but going that route just adds unnecessary complexity to an already complex scenario.

Not all games are the same or have the same requirements, and not all Publishers are the same, or provide the same services. I find it hard to judge the relative worth of publishers to a developer in anything other than a case-by-case basis.

James Coote
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Edit: There are still plenty of middlemen in the value chain.

What's happening is companies are coming along and offering services / products that solve just one of those problems identified. Whereas before, publishers bundled solutions all together, and the only option was to pick a package that often came with unwanted extras. Now, there exist separate options for finance, technology, distribution, discovery, and analysis, often provided by smaller companies like Unity or Valve, or, almost by accident, large companies with only a peripheral interest in gaming, such as Apple and Google.

Discovery is the most interesting, because it was probably the simplest before digital distribution. The product was visible, in boxes in high street stores. Now it's the bottleneck, and probably where traditional publishers can add most value, (if only they didn't insist on foisting all the other parts on developers that actually, are better solved elsewhere).

Jonathan Murphy
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The middlemen of Legacy media are losing. Music, Television, Radio. Does it mean it'll disappear? No. But -most irrelevant- middlemen will paint a, "End of the world picture"; as history curbs stomps them for not adapting to a new era in distribution. They had their chance a decade ago.


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