Implementing a services strategy

How would a casual game publisher to begin tapping into the services business model? There are two main steps:

• Build a gaming service around existing brands and products
• Co-opt existing distribution channels to promote the game developer's service

Step 1: Build a gaming service around existing brands and products

To make a service sticky, you need a persistent multiplayer meta-game. Existing casual games provide the core activity of the community, but the meta-game gives users reasons to socialize, reasons to replay old games and reasons to play new games.

There are obvious parallels to MMOs, but such designs should not be copied verbatim. It is also worth looking at more casual social spaces such as Habbo Hotel, Club Penguin or Facebook. There are four main steps that are important in the process of building a sticky community:

1. Persistent material goods. The first step is to move beyond ephemeral gameplay and give the player an immediate reason to stick around. The cheapest method is persistent meta-game goods. These can be through a decorated user page, achievements on display, placement on the scoreboards, or outfits that they flaunt.
   
   In order for players to stick with a game, they need to have a sunk investment in time or energy that is readily recognizable as material goods in the game. Persistent material goods provide a common focal point that ties together the time they spend across all the various divergent games. Why are you playing that 5000th game of Match-3 online? Because you want to earn those popular Ruby Earrings.
2. Persistent Identity. Once users are hooked on their material investment, the service should allow the user to make an investment in their reputation. Persistent avatars and screen names that can be viewed by others lets users become known in the community.
3. Communication systems. You need tools for individual users to find and converse with likeminded people. Lone wolves tend to leave community sites no matter how great the games. However, if you can bind them to a social group, they'll stick around for the conversation. Private messages, chat rooms, forums and blogs are all valid options.
4. Social structures. Now that small groups of users are talking, you want to bake the fledgling social network into the structure of service. By adding official groups, teams or "gaming circles" to your service, you ensure that the most efficient manner for users to talk with one another is through your site.

Step 2: Use existing distribution channels to promote the game developer's service

Other people's portals (OPP) are a great resource that should be leveraged for the good of the game developer's service. They aren't competitors. They are resources to be tapped. Once your service is in place, you can use your traditional packaged casual games, marketed through pure portals, as a customer acquisition tool.

Currently, you can visualize the casual games economy as consisting of game developers, platform owners and customers. Imagine that the two main currencies we are trading in are cash and customer loyalty.

1. Game developers make packaged games.
2. Portals in various platforms market and sell the packaged games.
3. Customers give the portals money and their loyalty.
4. A moderate portion of the money is passed on to the developer. Only the biggest brands get any portion of the customer's loyalty.

We want to switch this up a bit.

1. The first few steps are the same. Game developers make games and portals market them.
2. Users give portals money to purchase the games. However, the games are constructed to hook up to a larger developer-run online service upon purchase. This siphons much of the user loyalty away from the portals and back towards the developers.
3. The developer gets a small cut of the initial sales. They receive the vast majority of the customer's loyalty and future sales due to the user's participation in the service.

Each game sold through a channel acts as a gateway into the developer-run service. Channels become marketing and new customer acquisition partners, not merely sales partners. Channels still win, because they make money off selling games -- just like they do now. The developer wins by building up a stable population of lifetime customers.

This isn't a new strategy. We've been seeing mainstream developers selling core games such as World of Warcraft with solid success through retail channels. Eve Online recently started using Steam to replicate the same distribution tactic online. Each sale makes the channel owners happy, but ultimately puts the majority of the revenue in the hands of the service owner. The same strategy can be successfully applied to casual games as well.

Philosophically, portals are best-suited to selling packaged games to new customers for a profit. It is a good business, but their piece of the pie should end here. They should not own the lifetime revenue of the customer. This is the developer's to keep, if they so choose.