The U.S. economy hasn't exactly been operating at peak efficiency lately, and even the traditionally recession-proof video game industry has felt the repercussions. Yet for the largest developers, business – and more importantly, business models – remain largely unchanged: Toss a $60 title at the walls of retail, and announce a trilogy if it sticks.
But elsewhere, models are changing. In a chat with the folks responsible for Sins of a Solar Empire, we discussed microtransactions. Instead of spending tens of millions over the course of a few years on developing an expansion pack, developer Ironclad plans to spend just under a year adding the features that fans clamor for, and then sell the product at a palatable cost. Fans get the content they want at a faster pace, and a smaller developer gets the funding it needs to crank out their next big thing – and keep the lights on.
For yet another perspective, I spoke with Kristian Segerstråle, CEO of Playfish. The company develops and publishes social games – flash-based titles specifically targeted at social networks like Facebook. These games are created with a focus on friendly competition – buddies comparing scores to see who's the smartest, or who's the best desk-bound bowler.
With a focus on word-of-mouth distribution, Playfish has championed a business model that embraces the agility of being a smaller developer, turning social communities into a volunteer public relations department – and turning a profit along the way.
If you have a Facebook account, chances are you've at least seen a Playfish game – they've developed 4 of the top 10 titles with the most active users at the social networking juggernaut. With Facebook being home to approximately 110 million active users (according to the Facebook Fact Sheet), the potential audience is tremendous. To turn that potential into revenue for the corporate coffers, Playfish adopted an approach with roots in viral distribution.
According to Kristian, "[Playfish] started off by inviting 100 friends, in December. We've now reached more than 22 million registered players, and we literally haven't done anything else." The idea, in essence, is to let the hordes do the work for you. Facebook has already gone through all the trouble of assembling a massive catalog of listless, socially-oriented eyes and minds. Why not give them a venue to direct their work-dodging attention spans?
Facebook also allows users to share their favorite applications with their friends, a sort of "trusted" advertising – I'm more likely to play a game if fifteen people I like think it's cool.
And if it's free to play, why not? As a big fan of free browser games, I'm always glad to try an entertaining new diversion.
Flash is intrinsic to Playfish's free-to-play business model, because it effectively eliminates any barrier to entry: "If you force players to go through any kind of hoops, like downloading a plugin or anything like that, you're just going to lose all of those people."
I own every console and build my own PCs – I'm obviously invested in this whole video game thing. But as Nintendo has shown the entire industry – and the world – there's a largely untapped market that enjoys having fun, but can't be bothered with system requirements or even plugging something into their TV.
When your platform is as ubiquitous as the lowliest browser however, reaping the monetary benefits is as simple (or as complicated) as properly managing your advertising.
Kristian: "I myself don't like if you are playing a game and you get interrupted by advertising ... there are opportunities to do cool sponsored add-ons to games without compromising creativity." Consider the Super Bowl: advertisements are as much a part of the event as the actual game, with companies competing to see who can create the most entertaining piece with the 30 to 60 seconds of your attention that they've purchased. Web-based marketing isn't exactly there yet, but Playfish tries to make their in-game advertising a bit more entertaining – a brief “word from our sponsors” between a level that features a character eating popcorn and watching along with you, for example.
Our conversation eventually drifted towards the Internet, as a distribution platform. Playfish, after all, is a developer of games for social networks, and Kristian stands largely in favor of leveraging the power of the increasingly connected-world: "Games probably will become more of a service than a product," he believes. Instead of heading over to your local GameStop and picking up a game, more titles will adopt an approach that takes advantage of the Internet, whether that means offering a portal to communicate (like Bungie's Halo Community, or Cities XL's proposed interactivity), establishing free-to-play, micro-transaction based models like Battlefield Heroes, or developing new models altogether.
But what about the publishing juggernauts?
While I wonder how small business will fare when the gaming behemoths begin to take the casual market a bit more seriously, Playfish remains unperturbed: “The whole approach to this kind of a business is quite different from what EA and Activision and these kinds of companies have done in the past ... In many ways, they don't have so many inherent advantages over the newer entrants.” While the larger publishing houses may have massive capital backing their efforts, the traditional marketing blitzes and distribution-chain might doesn't account for much in an industry as fluid as the browser-game market.
All things considered, the strength of a particular publishing company lies within the brand it carries. We begin to apply certain adjectives to games based solely on their publishers, long before we know anything about a title – a fanboy's raison d'être is to praise or chastise Nintendo or EA or Microsoft based on past prejudices.
Dependence on notoriety or fame isn't necessarily as potent for web developers, because brand recognition is replaced by the community that emerges around it. Kristian remarks: “You know that if you pick up Madden, it's going to be a proper game. Whereas if you pick up Super American Football 2009, you might not know what it's about. That source of trust that the brand brings is brought by friends in social networks ... I know you, and you wouldn't recommend a crap game to me.” Herein lies the fundamental difference between the traditional retail market, and the Internet: “You can bring a game to a social network, people can discover it, and forward it to their friends, and you can build distribution that way.”
Playfish appears to have lofty goals as a company, and for gaming as a whole: “The company mission, if you'd like, is to go out there and change how the world plays games, and thinks about video games... to something which returns more to the roots of games, which has to do with having fun together.” In their game Pet Society – think Tamogotchi, in your browser – you can team up and earn coins by visiting a friend, taking care of their pet and hanging out with that pet, whether or not your friend is actually around. It's a hands-off sort of co-op which appeals to a wider swath of non-gamers, who don't necessarily need to organize a particular meeting time to work together with a friend, playing something they enjoy.
Most importantly, it's an approach that works: Pet Society isn't exactly my cup of tea, but 2.4 million active users (after only a few months) seem to think otherwise. With revenue derived from advertising and user transactions, it's the sort of title that attracts wide population of non-gamers and gamers alike, an unobtrusive experience that you can share with your friends, without any initial investment on anyone's part.
When all you need to play is a browser and a few spare minutes, becoming a fan – which means pageviews for advertisers and potentially becoming a paying customer – is merely a matter of discovering an engrossing experience. It'll be up to developers like Playfish to craft those experiences, and reap the benefits.
Images Courtesy Playfish
