To help inspire submissions for the GDC 2012 call for papers, the event's advisory board members for the Business & Marketing track spoke out on the rising business trends in the industry, outlining what they hope to see discussed at the upcoming San Francisco-based show.
Seasoned industry professionals such as Gaikai's David Perry, independent developer Adam Saltsman, Zynga's Louis Castle, Gazillion's Dan Fiden, and Ngmoco's Alan Yu all discussed the most pertinent business strategies of the last few years, as part of their drive to inspire submission ideas for the GDC 2012 Main Conference.
These GDC advisory board members oversee the show's Business, Marketing & Management track, and ensure that each of its sessions remain relevant and hold up the high bar of quality that GDC attendees have come to expect.
The call for papers for GDC 2012 will close on September 6, with a list of business and marketing-specific topics available on the official website. In the following interview, the advisory board members discuss key business issues they'd like to see addressed at next March's show.
How do you all think downloadable and free-to-play titles have affected the business strategies for traditional, boxed retail games?
David Perry: At the start, there was a lot of resistance to free-to-play. I put a lot of energy into trying to be the first free-to-play console game and was met with enormous resistance. I even remember comments saying not to interview me anymore, as this entire concept is horrible. In reality, times have moved on, Zynga is worth billions of dollars, free-to-play is no longer just an Asian phenomenon, and publishers are open to all business models.
Looking around, itís as if the video game industry, including mobile, is driven by three things in this order: Convenience, low price (Free to try), and high quality -- if you have all three you have a slam dunk. The X factor is how easy you make it to share. Boxed retail games fail on two out of three key drivers -- convenience and low price -- therefore they are ticking time bombs.
Adam Saltsman: Free-to-play is a kind of marketing coup. The name, I mean, not the actual concept. The main difference between "free for the first month" and "free for five minutes a day" is the latter is proven to make scads of money for social games.
Part of me is worried that box games are in the process of getting renamed and re-monetized the same way: "super deluxe special edition tin box with army helmet and real gun, only $250!" But the other part of me is really happy, because I know there will always be a free demo for the next big AAA game that I can download and check out, instead of having to take the big $60 (or $250!) gamble every time.
And there is a happy possible future where games are simply priced based on how you engage them. If you just want to play through the first chapter of a game and see what the controls and graphics are like, that will have one price (maybe free). If you want to pore over the whole game for 200 hours, then that can be a different price. This makes sense for people and for bandwidth I think, but there are a lot of opportunities for the system to be manipulated to work against the audience. This is going to be an interesting few years for any industry that used to sell chunks of data in a box.
Louis Castle: All digital entertainment is trending toward three things: sharable, free-to-sample, and pay for consumption. Boxed games are struggling with the same market forces that have been thrust upon the music industry and now film. There may be some long-term market for physical goods, but it is unlikely to be the primary market it is today.
How soon this industry will be forced to accept the change will depend on how long console makers will hold on to the current model. The market forces have little to no effect if you are one of the major franchises, but everyone else is already having to deal with the difficulties of getting players to pay when free options are readily available.
Dan Fiden: Agree with what's said above -- essentially, that free-to-play and social discovery are putting the traditional packaged video game world in a very unenviable position. I think what will be interesting to watch is how, and if, game retailers and traditionally oriented publishers can figure out how to leverage retail distribution and old-school broadcast marketing -- their strengths -- as a means for distributing free-to-play service games.
Will I be able to go in to GameStop and pick up the client for the next Blizzard MMO for free? Will that client be glued to the side of every carton of eggs I buy? Are endcaps full of a bazillion game cards the final evolution of what it means to sell games at retail? I suspect someone will figure out how to evolve retail in an interesting way.
Alan Yu: There's not much left to be said, considering everything that's already been highlighted by my colleagues, but as a consumer, the market is forcing me to really consider what I'm buying when I plop down three fresh Jacksons for a new title.
Looking at my own behavior, I won't buy any box product that isn't a surefire hit -- which often means a 90+ Metacritic. And perhaps a more interesting observation is that I only wind up playing these games over Thanksgiving or Christmas break, when I have large amounts of free time that I don't have over the course of the rest of the year. The experience of AAA box titles doesn't really fit my lifestyle and playing habits anymore. I'm sure this is true of many other gamers who have gotten older.
What are some of the greatest business or marketing challenges facing the industry today?
David Perry: We did a survey recently and over 20,000 people responded. We were looking to find out what helps them make the decision to buy video games. Number one was trying the product -- interestingly, all the expensive stuff like TV advertising and billboards were at the bottom of the list. Those systems are great at creating brand impressions, but lousy at getting a decision from someone who has hesitated.
Iíve personally found myself watching YouTube videos of people playing MMO games before I spend the next hour registering, downloading, and installing. Gamers also listed YouTube high as a way to make buy decisions, so the biggest change I anticipate is people will begin to insist on the chance to preview games, like they do with music, before they buy, you can make that easy for them or you can make that difficult. Iíve found I donít trust trailers & TV adverts anymore, as many are not even made by the development team.
Adam Saltsman: As a small developer, the rapid improvement and availability of middleware as well as the kind of uber-democracy of the internet have created a huge noise problem. The latest figure I heard was there are 350,000 apps on just the iTunes App Store. This is a veritable tsunami of noise and no one seems to know how to deal with it.
Louis Castle: One of the greatest business challenges is how to adapt development processes designed to spend large amounts and take great care and time to ensure low risk and high quality into a world where anything but fast is fatal. The need to monitor and adapt to customers' play patterns is perhaps the most underestimated skill set a company needs to compete when in direct contact with their customer base. Marketing is a massive challenge as well, since the traditional channels are far less effective in a market where sharing is the distribution channel.
Dan Fiden: The industry is in the middle of a shift from one oriented around product development into one oriented around service operations. In my opinion, the significance of this simply cannot be overstated. When the music industry changed so significantly, it was essentially a shift from retail to digital distribution.
Lots changed as a result of that shift -- pricing and form factors changed, power-shifted from certain distributors to others, the importance of labels and traditional marketing diminished. But the core product remained the same -- a person still plays an instrument into a recording device, decides when the song is done, and then someone else listens to it.
Games are in the middle of a similar shift from retail to digital, disrupting the publishing and retail side of the business. But we're simultaneously shifting from product to service, which disrupts the development side of the business much more significantly.
The way games are forecast and budgeted is fundamentally different. The job roles and skill sets required to be successful are different, the way organizations are structured is different. In my opinion the companies that will be most successful in the coming years will not be the ones who can figure out how to sell the same games they packaged up for Walmart in 2005 on Steam in 2011, they will be the ones who can learn how to integrate distribution and monetization deeply into the design of their games, meaning that they figure out how to get "business" and "creative" people to sit next to each other and collaborate from day one.
The successful companies will understand how to ship early, they know what data to collect and how to act on it, and they'll be able to move fast. Game studios and publishers traditionally work very similarly to movie or TV studios. Now they need work like web service companies. It's a tremendous shift.
Alan Yu: As a producer or game designer, it will be very hard for you to succeed if you can't think about your customer in an ongoing service environment. The marriage of game design, business and deep understanding of the consumer informed by analytics is the next frontier of innovation for our industry
Do you believe in the future of consoles, the future of cloud gaming, or none of the above?
David Perry: Iíve bet the farm on cloud gaming so Iím completely biased. Consoles were invented to make games convenient and lower cost with high quality, but I think the console companies are losing track of that core DNA. The idea was you didnít need to go to the arcade; for a low cost you could play stunning "new" experiences at home and getting a game up and running (with a cartridge) took just seconds. If I was a console company, Iíd be paying very close attention to what I just said and Iíd add instant discovery and social sharing everywhere. Iíd also make the entire experience completely transportable to all other devices.
Adam Saltsman: I think we have a tendency to greet new developments as conquerors, when really they are just a part of the puzzle. Social games haven't taken over video games any more than cloud gaming will destroy the home console. Right now, we drive to the store, buy a game on a disc, drive it home, copy it to the hard drive, and then, an hour or two after we started this process, we finally play it -- that is a scenario that never made sense. Cloud gaming can and should replace this.
But there is another scenario where we are shopping for a game online, buy it with a couple clicks, download it in five minutes and start playing it locally. With monthly bandwidth caps a likely part of the future of US internet infrastructure, this is a system that will stay relevant. I can easily imagine a future where consoles are tiny, low-power devices with a spacious SSD, which can play a certain class of game locally, and a different class of games via the cloud.
Louis Castle: Yes and yes. Console platforms are likely to survive but maybe not as stand alone boxes. I suspect the hardware will be built into more and more media devices or emulated on newer hardware. Of course for some part of the market, cloud gaming will make the most sense as it continues to improve in performance. Limits on latency and bandwidth will likely preclude pure cloud gaming as a single solution, but I believe it is a critical part of the total solution.
Dan Fiden: It's clear that the days of the dedicated game console are over. And I might be in the minority here, but if we see another hardware generation from the major console folks, I think it's going to be a mess for everyone -- the manufacturers, the developers, the publishers.
How far away is real, high-quality gaming in a web browser? One year? Two? When does Apple really attack the living room? Games are going to be played from the couch, but I wouldn't bet it's going to be on a device manufactured by the same folks owning that space now.
Alan Yu: If you think about what assets Apple has, I agree with Dan. You don't have to connect that many dots to imagine them being a significant player in the living room. That in and of itself is a game changer.
What subjects are you particularly excited to see covered in this year's Business, Marketing & Management track?
David Perry: I think the key ones are customer acquisition, running a live service, and diversifying your distribution channels. Iíve been in the industry nearly 30 years now and it just stuns me how fast it keeps evolving. GDC 2012 is going to be covering a lot of new innovative developments in business and marketing and Iím looking forward to it!
Louis Castle: Rethinking the very nature of how your business is organized to deal with the fast paced demands of a live marketplace, customer targeting, social recommendations or net promoter scores, or NPS, efficacy in content development, and the discipline of a minimum viable product production chain.
Dan Fiden: Agree with Lou on all counts. Who are all these free-to-play data analysts and product managers, and how do we incorporate them in to our process? Enough Agile doctrine, let's get real about minimum viable product!
Alan Yu: I'm mostly excited by the entrepreneurs that will be giving the presentations. Sure the topics will ensure the attendance, but there are few things more insightful than hearing risk takers share what they've learned, successes, failures, warts and all.