“But industry analysts say…”

Four little words that can make your investors squeamish, put you right in the middle of the hot spot in the market, or send the retail buyers to the phones to either double or cancel their big order of your game. But who are these analysts? Who anointed them the masters of the future and trends? Are they real people?

For most of us, the analysts are kept safely behind a curtain by overly-protective PR agencies. This primer is designed to rip that curtain aside and give a peek at who these people really are, what they care about, how they can influence our lives, and hopefully with all that knowledge in our pockets, how we can successfully influence them.

Why are they so damn important, anyway?

Analysts have two jobs: Write reports that a few people/companies pay serious money for, and to get quoted as experts in their fields, primarily so they can sell more of the aforementioned reports.

In the phylum of Analyst, there are actually a number of different classes. Each has a different focus and influences a different part of the game business, from communicating the overall health of the industry, to predicting how successful a particular company or even title will do in the market. At their core, they make statements with great authority about things that are essentially objectively unknowable.

These statements are consumed by the press who are looking for unbiased and credible sounding sources to counterbalance statements made by the companies that are obviously chock full of spin and company-centric bias. The dirty little secret in journalism is that even if a reporter knows to the tips of his toes that something is going to happen, or that an industry trend is going in a certain direction, he can’t make that statement directly unless it is objective and provable fact. But they can have quotes say almost anything. They need to have somebody else who sounds credible make the statement. In other words, a reporter can look outside, feel the crackle in the air, have his arthritic knee ache like hell and just know it is likely to rain. But he still needs to go and find Bob the Weather Expert to say so before he can put it in his piece. Notice, the label used was reporter, and not journalist. Columnists and Editorialists are free to pull anything they want out of their butts; it is just the reporters that have this restriction.

The other thing a reporter can’t/won’t do is use a company shill in place of an “objective” source. Your company President might get quoted, but it will be side by side with Mr. McExpert either supporting him or, more likely, giving a more cynical counter view. This need is why the vast majority of company press releases include quotes from either happy credible customers (theoretically a nice objective source) or some other analyst or expert. Smart PR people will have a couple of analysts that they have pre-briefed who they know like their company’s products, and are ready and waiting to feed to the reporters. As long as they come from a credible source, the reporters are usually happy to use them, because it means they can get their story done without the hassle of calling a ton of analysts to find out which ones are familiar with a particular product. The ethics are on the edge, but there are lots of stories to write, and most product stories don’t have enough controversy in them to justify the extra time for the majority of reporters. (…sounds off page of this writer being dragged off and beaten with AP style guides by his fellow journalists…)

The analysts also influence the lives of people in the gaming community when they do their primary function, that of writing reports about aspects of the industry. They are the grease that helps move business decisions forward. The interesting thing about business decisions is they always need to be made without most of the facts. It is impossible to really “know” what the sales will be like for a particular platform or type of game, or how much money will be spent on entertainment in 2003, or if people will flock to the latest video card. A successful CEO/President will have strong instincts and a sense of what is going to happen, that’s why you want them at the helm. But even the best can’t go in front of their boards or investors and just say “’Cause I said so…that’s why.” They look like crazy for analysts’ reports that confirm why the business will be good. This is particularly true when trying to raise money from investors who are traditionally skittish, or VC’s who want something to point at to cover them if their instincts don’t work out and the investment tanks, or even big companies filled with executives that need to be able to justify their decisions to their bosses. Nothing says safety net like being able to point to an IDG report and say “Hey, the analyst were sure that THIS was going to be the year of audio-only games.”