Filling the need for Immediacy

The latest NPD numbers are out, and aside from Guitar Hero 3 selling best on the Wii out of the next-gen consoles, the response to Nintendo's lack of units has been the most interesting piece of information. From Gamasutra:

Nintendo has upped worldwide production of the Wii to 1.8 million systems per month, twice as much as at the console's launch. "We’ll keep production at that level for quite a while," said Fils-Aime

The first part of the statement is something we already knew. The second part is fascinating.

Nintendo is getting a black eye in the media for not having enough consoles available. This is a problem of immediacy. People want the consoles now. Now it's Christmas. Now I will buy.

There aren't any consoles right now, but based on the statement from Fils-Aime, there will be...oh boy will there be!

Let's think about that 1.8 million number a moment. It's huge. That essentially means 800,000+ Wiis will be brought to the US every month until they lower production. It takes time and money to take factories off line, so it seems unlikely that Nintendo would stop the number any early than March.

If that is the case, there will be a minimum 2.4 million Wiis delivered to US stores during the first Quarter of 2008. (Another 3 million would be split between Japan and Europe!) I only have numbers back to 2001, but can you guess what the highest US sell through of any console ever was for Jan-March?

1.3 million PS2s in 2002. So the Wii is expecting, essentially to nearly double the best sales ever. Stop and think about that for a minute. The PS2 is the all-time best-selling console and the Wii expects to nearly double the best Q1 sales the PS2 had...ever...

At some point, a Nintendo executive saw those numbers and freaked out, leading to the raincheck program with Gamestop. As well as the Wii is selling, these numbers, if they happen are beyond anything the industry could ever dream of.

Of course what got the Wii in this predicament was selling so many consoles all year that no substantial Christmas stock could be built up. It's a great predicament to be in, but it's got to make Nintendo nervous to have so many consoles coming through the pipeline. They keep trying to get it through everyone's head how many they are making, but the message isn't getting through because people don't have Wiis in front of them. However, in the very near future, the understanding of what 1.8 million Wiis per month means is going to become abudantly clear.

While there are no Wiis right now, and Christmas shoppers are going nuts in frustration, Nintendo has to be eyeing the future with a lot of careful consideration. They don't want a million extra units sitting on store shelves come April. If you run these figures forward just 3 months (imagine 6 months!?) Wii sales will have to be beyond the wildest dream of every video game company ever just to keep up with supply.

And the scary thing is (or the wonderful thing if you are making software for the thing) the Wii might just do it.

Who are casual gamers?

Great article from the Seattle Post-Intelligencer today: http://seattlepi.nwsource.com/videogames/342095_casualgames.html.

The first part of the article talks about how Seattle is where much of the casual games industry is found, which is interesting, but doesn't lead to any additional insight. The second half of the article is out-standing, with some insights into what casual gamers are looking for out of a casual game, which is quite interesting and should lead to a lot of additional thought.

I play games to relax. I don't crave the adrenaline rush of fighting my way across the universe. Getting chased or shot at makes me nervous and I just don't find it very fun. With casual games I can just relax at the end of a long day

What a great quote. It encapsulates what a lot of the casual games industry already knows about casual gamers in a very easy to understand way. Many casual gamers play because the like to relax and they find games that put them in danger as not relaxing.

This is one of the reasons that shooters from Space Invaders to Halo don't do well with casual gamers. Many casual gamers simply don't enjoy the emotions created from the games that historically has been the key to growth in the console market. (and it's probably why some core gamers seem to struggle to comprehend casual gamers)

Another quote, this one directly related to Hidden Object games:

It still makes you think a little. You follow a theme or an idea to its conclusion. It makes you wonder. It's like reading a mystery novel. A third of the way in, you want to read the last chapter, but you can't until you work your way through it. You never know when it's going to end

Another great encapsulation. Players looking for 'wonder' and wanting to take a theme to its conclusion. Notice there was not mention of finding objects, but there was mention of having to think. What the player is noticing is the story and the progression and the way they feel in response. Hidden Object games are quite interesting as they may be some of the best pure story-telling opportunities in gaming today. (this is especially true if your story is a mystery)

I see often remarks belittling casual gamers as they play multiple Hidden Object, Match 3 or other common casual game types. Many people seem to think that it is bad for the industry and negative for the people to be playing games that are so similar. They may be right.

However as an alternative, perhaps we should consider casual games are the first successful episodic games. (Sam & Max coming in close behind)

Perhaps casual gamers are simply looking at the different games as different episodes where the key framework, the game mechanic, stays unchanged. Each different game may feel more like another episode of the same TV series than a different series. The close similarity between the games may be helping this belief along.

In any event I find the many arguments towards either gamers in the casual space being somehow mentally behind or casual game companies forcing cloned games on gamers to lack much of an intellectual punch (though they create some wonderful emotional arguments). Clearly as a group, casual gamers are driven by a different set of gaming desires than the typical console gamer, and that isn't a bad thing. Learning what is driving the choices, I think, is a fascinating bit of understanding that has yet to be fully grasped.

Paying the Messenger...er distributor

Thought this post from Seth Godin was particularly interesting and have wanted to share it for a week or so.

http://sethgodin.typepad.com/seths_blog/2007/11/who-pays-the-me.html

It talks about retail, where the last mile, getting your good or service to the consumer:

accounts for the bulk of the cost of the service or good being sold.
Retailers get half. Insurance people get commissions. Distributors make their share.

In the downloadable distribution model of games, we run into the same issue. After making the game, how do you get it to consumers? Though it seems like the Internet should solve this issue and make it easy to find people to buy, the sheer amount of information on the Internet makes finding customers as difficult as it was in retail. (which, btw, is why casual game portals can give developers a 25-40% of the revenue and keep 60-75% for themselves)

Seth addressed this point and should get you thinking about a solution:

If you're not going to plan on paying the messenger, your offering better be so remarkable and have such a viral story that your investment in product eliminates the need for media and sales.

Many Indie game developers start out with the idea that they can simply make their game and that people will naturally pass it on. Viral marketing is really hard. There are very few products that are viral. Expecting your product to be viral is probably not the best approach.

What is the best approach?

That depends on you and your product. At the Game Developer's Conference in March of this year I did a session on marketing Indie games. I suggested that developers should use the portals, and abuse the portals by placing things in their games such as level editors and obvious, but obscured secrets, that would cause players to go out looking for the developer's own website. Over time, you can build an audience that comes directly to you.

NPD - Spin it good

A goal of marketing is to control the message. I found the messages near the NPD October results particularly interesting.

• Microsoft's Message - You may have sold more, but our stuff sold for more money. Therefore we are king. (Just overlook the fact that all 360 stuff costs more, hence the higher gross...)
• Sony's Message - October was bad, but it's also in the past. Forget the past, live in the present. Right now, we are king. (which of course we can't confirm, and that is kind of the point)
• Nintendo's Message - We're selling as many consoles as ship to retail. (...but note, they aren't shipping all the consoles to retail! They state they're making 1.8 million consoles per month. NA 520k + Europe 500k + Japan 150k = 1170k. Where are the other 630k? Not in Australia! Guaranteed they are in a warehouse, being held until the holidays to ensure that Nintendo is the top selling console for December in NA, instead of coming in second b/c it didn't have enough units to sell. There is no spin like a spin you are preparing for two months in advance.)

So coming out of the NPD spin did you get spun?

Sales data and Top 10 Lists

Recently the NPD had stated that they would no longer be providing their estimates of hardware and software sales to the media, which meant that the public wouldn't be seeing them. The public was outraged and NPD was surprised by the widespread backlash.

This phenomenon is really quite interesting. After all, if you've already bought a Wii or X360, why should you care how many are selling each month? What difference does it make when you've already made your purchase?

In July of this year I did a compilation of 3 years worth of GameTunnel's monthly round-up, creating a Top 100 games list based on the round-ups. In addition to learning that most people don't actually read an article before responding to it, doing the top 100 compilation reinforced something I'd already learned through my Game of the Year articles, people need context.

Each year GameTunnel has done a game of the year article highlighting the Top 10 Indie games. It's an impossible task that cannot possibly please everyone and will even leave some people indignant. Doing the Game of the Year awards takes around 160 hours of my time every December. So why am I doing it again?

If you go to the listing of Action games on GameTunnel, you are quick to become overloaded. There are so many games! Which ones are good?

This is the problem of context.

There has been some decrying of review scores lately and I agree with the complaints. In fact GT did away with review scores 3 years ago. However, I'm not sure that not having review scores helps the general public.

The general public needs some sort of context to make decisions or the decision will be to do something else with their time and money. Looking at the list of Action games on GameTunnel, you should be able to find a game you will absolutely love. However, due to the fact that you have no context to compare the games one to another, you are more likely to become overwhelmed by the sheer number of games and quickly move onto somewhere else where there is context.

The GOTY awards for GT provide context. Though impossible to make the perfect list of top games, it provides a list of games that are considered to be the best. It's a starting point. It gives the reader a context to work within. It keeps people from feeling overwhelmed by the available choices and gives them direction.

NPD data also provides direction. Though the blog commenters who complained about not having the data have already purchased hardware and software, most of them are trying to put their purchases into context. Are they a part of the majority? Are they missing out on something? There is a secondary issue of the comfort of the majority, but the primary issue is context.

If you make games, what is the context that will get people to notice them? Nintendo used alpha moms to make the Wii more relevant and a brilliant pack-in game. Mystery Case Files launched a new game this week that is more of the same, but more polished. However, the brand gives context and makes the game have tremendous value that it wouldn't have had if it had been released as a MCF game. Jay Barnson runs a blog about RPGs and development and sells games he recommends alongside the blog.

Indie and casual games both face a low awareness and struggle in having the right context for the customer. How to help customers find quickly find something so they don't leave, and so that they also add the vendor's website to the small list of sites they visit frequently.

How are you providing context to what you are doing? How are you helping your customers find things for them? If you aren't doing it, be assured someone else is.

A Wii bit of fun

After reading an interview from Eidos' CTO Julien Merceron I couldn't help but blog about it. The thought put forward is that if 3rd party games don't sell on the Wii this Christmas, 3rd parties will decrease their support, and that will hurt the Wii sales. (read it here)

The Wii is really leaving people scratching their heads as it seems that most 3rd parties aren't sure what to do. However, I think the clear thing to do is to make good games. No 3rd party has yet tried something as ambitious as Zelda, Mario Galaxy, Super Paper Mario or Metroid on the platform. That's understandable as a year ago the 3rd parties were caught totally surprised when the Wii sold and the PS3 floundered. Immediately effort went into making Wii games, but they've mostly been low-effort games such as the library of Ubisoft ports and rushed EA efforts like EA Playground (no depth) and Boogie (no fun).

But let's think about the logic put forward by Eidos.
1 - 3rd party games aren't selling
2 - if they don't sell this Christmas 3rd parties will decrease support
3 - if 3rd parties decrease support the Wii won't sell well.

Do you see the problem? #3 isn't supported by numbers 1 & 2.
If currently condition 1 exists and the Wii is selling well, than condition 1 does not have any impact on the Wii selling well. Removing games that are already not selling well won't impact the Wii.

The second issue is the one that I alluded to earlier. 3rd party games aren't selling well because, 3rd parties aren't making good games for the Wii.

What is the highest profile 3rd party release so far on the Wii? I think it is Red Steel, an early effort that was a decent try, but beyond that, what high profile games have been made? Mario & Sonic at the Olympics isn't exactly 3rd party. Guitar Hero 3 is, and it's probably the highest profile, however its not exclusive by any means, and most would state that it was the number 3 sku for the Activision in terms of importance.

If 3rd party developers don't make good games they aren't going to sell on the Wii. Blaming Nintendo for the problem is disingenuous. Unless of course the blaming is something along the lines of "we can't compete with Nintendo on the Wii, their games are so much better than ours that we don't stand a chance." No CTO in their right mind will state that, but its a lot closer to the truth of the matter, but it has probably more to do with publisher's not understanding what a good game for the Wii is.

As soon as I see any 3rd party game near the quality of the top teir 1st party releases on the Wii (or even the DS for that matter) and receiving a lot of love from its developer (sorry Zach and Wiki, that's where you get off), and it doesn't sell well, then we can talk about the problem being Nintendo. Until then, 3rd party developers should focus more on making solid products and less on blaming Nintendo for their shovelware not selling.

Interestingly, the top 10 Wii games for September are as follows:
Wii Play W/ Remote (Nintendo)
Metroid Prime 3: Corruption (Nintendo)
Mario Party 8 (Nintendo)
Carnival Games (Take-Two Interactive)
My Sims (Electronic Arts)
Mario Strikers: Charged (Nintendo)
Tiger Woods PGA Tour 08 (Electronic Arts)
Madden NFL 08 (Electronic Arts)
Legend Of Zelda: Twilight Princess (Nintendo)
Resident Evil 4 (Capcom)

5/10 games are by Nintendo, 3/10 by EA and the other 3 are split. RE4 was initially an exclusive for the GCN (and was the top selling GCN game the year it was released).

The more interesting point is one that Bill Harris made in regards to Carnival Games being the best selling 3rd party game despite getting horrible reviews. I wanted to echo his point.

Reviews on mulitiplayer games are scoring the games badly because they are looking at the single player experience. I've rented a lot of multiplayer games and my biggest surprise has been that games that received horrible reviews like Donkey Kong Barrel Blast and NBA Live 08 are actually good games. However, if you play them alone they are horrible. Since most of my play is with my kids, and we play A LOT, I have a very different perspective on what a fun game is. EA Playground - not fun, because it isn't fun playing it together. NBA Live 08, great fun because we can really enjoy playing together. However, in playing single player on both those games my opinion is reversed. EA Playground is a great single-player game with decent depth. NBA Live 08 is a horrible single-player basketball (as usual). The problem began with low scores on Wii Sports, and as a single player it isn't great, but as a multiplayer it is without question one of the best games every made.

However, review scores are clearly focused on the single player experience or the multiplayer experience where each person is located in different locations and connected by the internet. There is a new type of gamer, those who play together in groups. Reviewers are starting to note the trend, but they aren't sure how to review for it. Most interesting was the recent Mario and Sonic at the Olympics review by GamePro that suggested casual gamers would like it (though the reviewer wasn't a casual gamer). I think a lot of reviewers are starting to feel like they are having to guess a game might score better for a different crowd...and they are starting to realize, the Wii has succeeded in bringing in players who the reviewers have very little in common with.

End result?
Developers for the Wii need to focus on making great games first. RE4 is selling (over 1 million copies so far), Metroid is selling. Good games sell. Carnival Games is a good game, but I think most publishers, like most reviewers don't understand why, and THAT is why publishers are having a hard time selling games on the Wii.

Those publishers who understand why are going to find themselves selling plenty of games on the Wii. Publishers who try the more traditional approach of putting their third string developers on a port of some key title from another platform, so that they can say they have games on the Wii, are going to find themselves at a loss as to why not only Mario Party and Metroid, but also Carnival Games and Cooking Mama sell and their games don't. In either case, learning who the market is and making good games for that market is the key. The only thing that has changed on the Wii is who that market is. Some developers are still trying to figure that out.

NPD Re-Cap

Well the NPD numbers have been out for a bit now, so I thought it was worth re-visiting some of the numbers.

The big story is just how many consoles were sold. Over a million between the X360 and the Wii. September is typically a pick-up month as sales start to move slightly upwards before the big holiday spike. The last time a console sold 500k+ in September was 2002 and the PS2. That was the 24th month of the PS2 and came 12 months after the release of the Xbox and GCN. At that point, the launch luster of the other consoles had worn off, and the PS2 was running away with the best-selling console crown. If it wasn't for the launch of Halo3, you could make an argument that the X360 was starting to move into the leadership position for this generation of hardware. Still, it's a key month for the X360, especially if it is able to sustain the momentum through the holidays. Many have pointed out that this could be the first generation in a while where there are two clear winners dealing with different audiences. That certainly seems more plausible with each passing month. Also of note is the Wii. At this point in its life, the Wii is unparalleled in the number of consoles sold in the US. It's been outselling even what the PS2 sold. No console has ever sold this many units per month this early in its life before, which sort of explains whey Nintendo is struggling to keep up with demand.

Metroid Prime 3 sales fell, but not horribly. Clearly, despite the fact that it is a more hard core product, the majority of Wii owners are not buying the game. Possible causes: 1) The majority of Wii owners aren't hard core gamers. 2) The majority of Wii owners are hard core gamers, but they aren't buying Metroid. I think the second item is worth considering. It seems strange, but it seems likely that many hard core gamers simply aren't buying the hard core Wii games. Why? Probably because they have other hardcore systems and are too busy buying games for those systems. So BioShock and The Orange Box will sell well at the expense of Metroid in the Wii60 gamer's house. If that were the case it would be interesting as it would mean those same gamers who are complaining about the lack of hard core games on the Wii are likely causing them to not be made on the Wii by not purchasing the games when they are available. Of course a couple of hit core games should change that...but Metroid is exactly what you'd expect to be a difference maker...and it doesn't seem to have impacted perception much.

EA Sales
Quick question, who is the number 2 game seller on the Wii and what percentage of the games sold are by this publisher? Answer: EA at over 20%.
That is significant!
Why? Well because no publisher is selling over 10% on the DS other than Nintendo. The gap on the the DS is huge, but the Wii has been a different story. Though EA has struggled to create a great game so far on the Wii, they are selling games. In the UK, the top version of Tiger Woods was the Wii version. The US has been a totally different story, but EA has to be encouraged by the percentage of the market they've grabbed so far.

Handheld gaming
Still is struggling. Zelda opened big, not huge, but big. Despite fairly strong hardware sales the PSP software sales have been lagging in both the US and in Japan. Certainly hardware sales will be strong through Christmas, but it will be more interesting to see how the software does. Zelda should sell quite well, but will it? With Nintendo focused on making the Wii a success it seems the DS is feeling a little neglected. Meanwhile, the PSP to PS3 integration I think will continue to be a boon to the PSP.

Heavenly Sword didn't move PS3s. The game was #10 in the charts, but the PS3 numbers don't reflect any real bump. I don't believe any one game moves hardware, so I'm not surprised, but nonetheless, it's good to have some high profile games on the PS3. I expect the price cut and new 40GB system will drive the PS3 sales to close the gap on the X360 in November and December.

Interesting stuff. September could be a big transition month. It might have been the beginning of the X360 dominating hardware sales for this generation. I don't think that is the case, but if it happens, this will be seen as the month as when it all began.

You know, for kids

With the announcement of the Xbox 360 Arcade version of the console this week, there has been some noise about how Microsoft is going after Nintendo's 'family' market. While I do think the family market is worth going after, I find it amazing how many people seem to have no understanding as to what the family market is.

Quotes from recent press releases:

...the Xbox 360 Arcade system features the industry leading family settings that allow parents to control what their kids are watching and playing

Nickelodeon delivers three top shows to Xbox LIVE, also available today, including programming for the Nick Jr. hit series "The Backyardigans."

...kids of all ages can download the entire first season of the educational and imaginative, play-to-learn, top-rated preschool series "Blue's Clues."

Also being introduced today are new kid-friendly game titles, "SHREK-N-ROLL" and "SpongeBob SquarePants: Underpants Slam," based on two of the most popular family icons in animation.

The Xbox 360 Arcade or 'family' system may succeed in spite of its message, but I think that is quite unlikely because the message is missing a fundamental understanding of what a 'family' is.

The definition of family is: parents and their children, considered as a group [ref: Dictionary.com].

However, the press releases are using the word 'kids' and 'family' as interchangeable. The message is that Sponge Bob is 'family content' and that a 'family' console is one where parents play one thing and kids play something else (and that separation is enforced by 'family settings').

Kids are a part of family and parents are a part of family, but for it to be a family you have to consider them together. Adding kid content to a console does not make it a family console. For it to be a family console, you need to have both kids and parents playing together. (and I'll be real honest with you, I'm not playing Shrek or Sponge Bob)

Consider Wii Sports. It is succeeding not because it is content for only kids or only adults, but because it is content that both kids and adults can play together. It is a family game.

When you think of a 'family' board game, you don't picture kids playing Candyland in the same room where adults are playing 'D&D.' Family is playing together, not having controls to keep the kids from playing what the adults are playing. The fact that you need controls to keep the two separate isn't family friendly, it is an affront to every mother who is involved in purchasing a game system, and if you are looking for a true family system, mom has to be involved in buying it.

Family Controls are something that the core male gamer looks for to keep his kids from playing the 'M' rated games that he is playing. The mother doesn't want the 'M' rated games in the house irregardless of who is playing them. The gamers who are proponents of the idea that blood, violence and sexual content is mature [definition: fully developed in body or mind, as a person], are only further pushing video games into the realm of the juvenile.

Focusing on parental controls and Shrek places the console squarely in the 'OK for my kids' mindset, not in the 'family' mindset.

The misconception that family content is kid content I believe will sink the current Microsoft 'family' campaign. One of the reasons that Pixar movies do well is because they aren't for kids, they really are family content. Adults want to go see them.

In order to create a family platform you need to create something that is enjoyed by both kids and adults together. It is a far from trivial task that Nintendo accomplished with the Wii by focusing on the family and what keeps family members from playing together. The console and controller were designed to make it feel familiar and simple. Nintendo passed on more hard-core designs along the way and have been called crazy by more than a few. Though many will try to take a swipe to get at some of the audience being created by the Wii, any thoughts of it being easy to steal the audience by simply calling something 'family' need to take a better look at the families buying the Wii and the reasons they are buying it.

Kids are a great part of family, and indeed, to meet the definition of family, you need kids. However, forgetting to include the adults while going after the kids doesn't give you any more of a family than you had when you were just going after the adults.

September NPD Predictions

With US (and it's just US let's not forget that) console sales numbers (estimations) about ready to come in, I thought it might be fun to take a look at what the numbers might be this month. Will the Xbox 360 outsell the PS2 for the second time this year? (that would be the 3rd time ever!) How will Halo change things? Did the PSP slim release affect sales?

Here are Michael Patcher's numbers: (who is quite a sport)
Xbox 360 - 450,000
DS - 430,000
Wii - 425,000
PSP - 252,000
PS2 - 220,000
PS3 - 150,000
GBA - 65,000

And a couple of guiding principles:
1 - Sales are usually higher in September than August as Holiday releases begin to occur
2 - Pre-Halo 3 I predicted Xbox 360 numbers at 360k (so despite now knowing the Halo 3 sales numbers I should probably stick with the old prediction, though if I were to change it, 420k sounds about right)

My guesses (Red means my number is lower, green is higher, Black is =)
Xbox 360 - 360,000
DS - 441,000
Wii - 394,000
PSP - 225,000
PS2 - 232,000
PS3 - 150,000
GBA - 70,000

Stories to watch for:
1 - Does the 360 outsell the Wii. With Halo 3, the flagship 360 title out in September, if the 360 doesn't outsell the Wii it would paint an interesting picture.

2 - Does Metroid Prime 3 sell? It was released late in August to rave reviews and pretty 'meh' sales. Perhaps it was just poorly marketed, but it is a good enough title that the mainstream gamers should be picking it up. If it isn't selling, what does it mean to the lifetime of the Wii?

3 - How many of the top 10 games are PS2 games? In August 3 of the top 10 were PS2, 1 was PS2, 2 were Xbox 360 and 4 were Wii.

4 - Will EA solve the Wii 3rd party riddle? Boogie sales were tepid, Madden were disappointing and though the Wii version of Tiger Woods outsold all other versions in the UK, it was a mere afterthought in the US. Will MySims fare better? Will the long term sales of any of the other titles make up for their poor launches?

5 - What happened to handheld gaming? Though the hardware is outselling the consoles, the games, outside of Pokemon, aren't doing much in the charts. Will Zelda's October 1 release put handheld games back on the charts?

6 - Will Guitar Hero just keep on dominating?

7 - Will Heavenly Sword drive console sales?

The Casual Threat!

With the continued success of the Casual market on the PC and the Wii thoroughly dominating console sales, the casual movement, once thought to be a nice side business, is starting to feel like a Threat to many gamers. (with a capital 'T')

What is a threat? It is the expectation of future trouble.

When gamers first started playing casual games, their numbers were few. However, as the money and audience has increased, the number of developers has also increased, often inplace of core games. The core audience has carefully eyed the casual audience's growth and the Wii becoming popular with a bit more contempt of late.

As the success of the Wii has turned the core audience from a majority into a minority, it has become the new whipping boy of the old core gamer. You can see it often in the media with even developers like Dave Perry jumping on with somewhat illogical arguments to try and fight back against what they see as taking away from their favorite pass-time.

The mainstream attack on the Wii parallels a longer attack that has happened in the PC space. Especially among the Indie crowd, which was formerly the shareware crowd, which formerly was the main money driving source in the PC gaming space.

As casual has become the key downloadable games market, Indie developers have gone to great lengths to decry the market as simplistic and pointless. A general sense of 'dumbing' down consumers and making games that don't challenge and perhaps aren't even games has become the outlook on the casual games sector.

It's kind of like an avid outdoorsman, who hikes deep into the mountains to more fully appreciate nature's beauty. In his mind, those who stop at the side of a road and take in a vista from their car are really missing out. The highway and national park system are dumbing down the experience, keeping people from what's good, and bringing in people he can't relate with to nature areas once only enjoyed by the like-minded few.

What's important to remember is that there are lots of different consumers who want different things. ...and that's a good thing.

When you go to sell your product the goal is the most sales, which means you need more people looking at it. To that end, if you are both a gamer and a businessman there is a lot of good that can from letting go of your personal aprehensions and embracing the casual group to ensure that your product is seen by the largest number of people possible. After all, you never know when someone staring out of their car window at a beautiful vista will decide to get out and walk to the other side. However, if you let your personal game tastes keep you from places, like the casual portals, when a casual gamer starting looking for something more, it will be much more difficult for them to find you.

The Casual Division

There is a strange division currently in casual games, that continually mystifies me. Answer the following questions for yourself. [I added my 'answers' in ()]

What is EA's most valuable casual property?
(You could make an argument for Pogo, though it's probably the Sims)

Who are Pogo and the Sims targeted at?
(I'd say they have the same audience, casual gamers)

Can you buy the Sims on Pogo.com?
(no)

An ever lingering question in my head is 'Why Not?'

One of the most interesting things about the new casual games industry is the disconnect it has with the mainstream game industry. There are many games that were previously released at retail that I'm convinced would sell really well to the audience that the casual game portals have assembled. Games like the Sims and Roller Coaster Tycoon.

However, when you go to Pogo.com, there is no mention of the Sims. In fact EA has the Sims in its own separate division. The original Sims is not available even from EA as a downloadable product. Roller Coaster Tycoon fairs a little better. It is available through one portal: Real Arcade. However that is the only portal through which it is availble.

The division between two kinds of casual, those that are popular on the PC at retail and those that are popular on the game portals is one of the most curious things in the gaming business. A good rule of thumb is to always distribute your games everywhere you can. That will help you to maximize your revenue.

The division probably has something to do with the roots of casual games, which was a counter movement to retail. Still, with so many hot properties, from the old Humongous Entertainment games like Freddi Fish, to current popular TV shows like Dora, and even to those silly Big Game Hunter games, the time will come that the 'casual' games that have sold well in retail stores will join those that have sold well online. When that happens, I think you'll see another big expansion in the audience that the portals take in.

Why isn't it happening? Especially when some of the companies involved, like EA, simply need to get their right hand to talk to their left?
There is a large list of guesses why that is so. Some of it is the amount of difficulty that arises in getting something done in a HUGE company and some of it is the mainstream industry's perception of casual games. (mainstream still sees casual games as the place where formerly good execs are sent after they've outlived their usefulness)

As casual games continue to increase their profit, they are becoming less and less the red-headed step-child of the games industry, which should lead to some very interesting changes in the online portals (and big increases in their audience). It's going to happen as soon as publishers realize how much money they can make off of their old back catalogue. It's going to happen as they discover a new market for old games like SimCity 2000 and Theme Hospital. The only question is: when?

How to achieve Casual Games Revenue Growth?

Gamasutra published an opinion piece today that talked around the same topic as the article yesterday, but with a different approach to making more money per user. This article focused on making more money per game with a nice slant to helping spread around more money to more developers.

The suggestions on possible areas for attack are:
1 - In-Game Ads
2 - Using social networks to directly connect with gamers
3 - Increasing the price of games
4 - Combining Approaches

I think 4 is always the winner, but am also a strong believer in doing something all the way or not at all. Combining approaches by partially doing each of the other options isn't likely to return the wanted results.

Some thoughts on each:
In-Game Ads
- This is certainly something that is becoming more popular as the early results reported back by Real and other companies shows that it can be quite a solid money maker. Reflexive is currently getting ready to launch one of our games on another portal in the ad-supported approach. We are excited to see the results.

A possible concern with in-game ads is changing the industry format. Instead of trying to convince the customer to purchase the game, games with in-game ads need to maximize advertiser dollars and please the advertiser. That shift to a different customer and approach is a little worrisome. Certainly there are some games, like Bejeweled that work well with breaks in the play in-between levels. For other games, like Virtual Villagers, the breaks may not be as natural and may feel forced. The focus on trying to get a customer to use an ad is also a a bit worrisome. To quote the article:

It wouldn’t be surprising if in-game ads soon become integral to the content of a game, offering clues, extra levels or other hidden rewards for the player who clicks through.

I worry that focusing on the advertiser as the customer, instead of the gamer as the customer could lead to a less enjoyable experience for the gamer. Certainly it is something that will need to be carefully watched and balanced as advertising becomes more prevalent in games. The current approach of making older games ad-based while keeping newer games ad-free I think is a good approach that maximizes revenue from both sides of the chain.

Social Networking/Helping Viral marketing along
In this article the social networking was tied back to a platform being sold by the author that helped to connect gamers and developers. The end-goal is to remove the middleman while maximizing sales. I think using communities to help sell games is definitely a good thing to do. Whenever you have someone who enjoys your game or business you should encourage them to be an evangelist. Your biggest fans can speak about you in persuasive ways that few others can and should be rewarded for their efforts to keep them going. It's certainly one of many methods that should be employed to increase the market-size for any business you do. It's worth stopping what you are doing right now and considering how you can easily help your fans talk about you. Can you give them a copy and paste signature for the forums they visit? Is there a widget they can plug into their CMS? Can they easily email friends about your product? (do they get something for having done so?)

Increasing the Price of Games
This is an interesting suggestion. From all the studies done, increasing prices does not seem to improve revenue. However, from your economics class you probably remember that there are different points on the sales and demand curve that produce different amounts of profit. Many of the subscription programs offered are set to maximize the access to markets who will pay varying amounts for a game. I don't know that raising the price is a good idea. However, I think offering a game at different prices is a great idea. Subscription programs are one way to do this, but it would also be interesting to offer Platinum versions of a game that have additional content. Unfortunately none of the portals are currently set-up to offer multiple versions of the same game, but with the practice succeeding on retail games it seems only a matter of time before something along the same lines is attempted in the casual sector.

Certainly some interesting thoughts and it is clear that many people are wrapping their head around the same problem, which is how to get more money out of their product. With an increasing number of casual games coming out, it is very possible (I'd say likely) that the games are increasing faster than the market is growing. That leaves us in a situation where newer games make less money than games 'used to make' even in a rapidly expanding marketplace. In such a situation, there are many approaches to try and maximize the money from any one title, and I am in total agreement with the author that a variety of methods should be tried.

Is 1% Conversion Rate a problem?

GameDaily Biz had an interesting (and unfortunately difficult to read) article today on the Conversion Rate within the casual games industry being too low.

I've written before at length on Gamasutra on going beyond Conversion Rate to increase sales, and I don't want to repeat that discussion here, but I do want to consider the numbers from the GameDaily article, which if representative of the casual games market are interesting, and not in the way that the writer expected.

The article puts forth the common thought that free demo downloads, when connected to a low conversion rate are a threat to the industry.

Consumers are willing to play the free trials and very occasionally buy a game. But for this industry to be really big, gamers will need to more regularly purchase new downloads...

Here is the data that is used to support the point quoted above.
1 - 20% of Internet users between 12-64 downloaded a game last year
2 - 8% of Internet users between 12-64 downloaded a try before you buy game
3 - 64% of that 8% bought a minimum of one game last year
4 - 32 % said they were likely or very likely to buy one game in the coming year
5 - Conversion ratio is estimated to be 1-2%
(unfortunately a games sold / person breakdown isn't given)

I'm a big fan of "Try before you buy" game downloads. I believe it opens up the games to more people, which increases sales. I believe increasing sales is more important than increasing conversion. I think of it like a Lemonade stand. If I have a stand on my street the number of lemonades I will sell per passerby will be much higher than the number that I would have per passerby if my lemonade was on a shelf in Walmart (my neighborhood knows me and are predisposed towards me, most Walmart shoppers don't go there for lemonade). However, being in Walmart stores across the country will sell more of my lemonade than I could ever do on my street! As your audience becomes wider and less targeted, CR goes down. However, that pales in the face of how many more sales you can achieve with an expanded audience.

So a couple of points/questions to consider.
- 64% of an audience purchasing games is a fantastic number!
- If they hadn't had Try Before You Buy downloads, would 64% of the audience have bought a game?
- Considering all the numbers reported above, what number would you try to increase first in order to increase sales?

For me, I expect conversion ratio (CR) to continue to decrease. I expect CR to continue to go down as casual games gain audience. CR is definitely something to try and work on increasing, but it isn't the number that intrigues me most out of the report.

64% is a number that intrigues me. When people use the 1% CR, they often state that 99% of the customers aren't paying. According to the article, only 36% of the customers aren't buying games. Most of the customers are buying at least one game. By trying to increase CR, you're really trying to increase the number of games sold per customer, which is a great goal, but with 64% of the audience already buying games, it's not likely to increase the number of paying customers very much.

8% is the number I would focus on increasing. If 20% download games, but only 8% download try before you buy games, there is a lot of potential market available. 8% is a low number with a lot of room for growth. It may be easier to get that number to 9% than it would be to get your already paying audience to buy more games per download.

What would have been really interesting would have been the number of game purchases per customer and the frequency of purchases. I do agree there may be room for growth there. However, the numbers in the article don't give us any information in that regards, which can only leave us guessing as to the potential for multiple game sales in increasing the market size.

For the casual games market to get really big I believe it needs what every other market needs. More customers! Increasing that 8% to 9% will definitely increase customers, and more customers would definitely make the casual games market bigger :).

What does the selling of GarageGames mean to Indie?

I was going to finally post my thoughts on last week's NPD numbers today, but the IAC acquisition of GarageGames being made public pushes me to another topic as Independent Games have been so near to my heart for so long.

There is no question that GarageGames was near the heart of the most recent Indie revolution. The release of Torque seemed to put game-making within the grasp of anyone who desired to do so, while the release of Think Tanks and Marble Blast showed that great games could be made using it.

However, since that initial push, there has been a lot of silence. Of course Torque has been made to help people create XBLA games and was more recently ported to Wii, but GarageGames has only partially succeeded in helping change the way games are made and played.

XBLA is not the future of Torque. The developer experience and game quality requirement puts XBLA beyond the reach of 99.9% of Torque users and would-be users.

So what is next for Torque?

What is not next is the PC downloadable sector. Honestly, I believe GarageGames misstepped in that regard. While they did a great job at helping people make games, they did a horrible job in helping people sell those games. Without a market on the PC, the more savvy developers moved on. Without a market on the PC, current mainstream developers weren't as enticed to quite their day jobs and follow their dream. GarageGames made it easier to make a game, but game developers knew they had to eat, and no market had been created to sell Indie downloadable games.

Consider this question, "where do you buy indie games?"

The 'umm' that probably starts your answer is really the biggest problem that has faced indie games, and it has only grown worse over time. (with apologies to Manifesto)

GarageGames did have a game store, but it was clearly not the key point of the GG site. It was an afterthought, and that made it irrelevant.

I remember at IndieGamesCon in 2005 eating dinner with Jeff Tunnell and Jay Moore and making an impassioned argument for creating a game store. Something like 'Out of the Garage.' My reasoning? There wasn't anywhere to get Indie games on the internet. Casual games were harnessing their market, but indies were still for sale from many spread out sites without any cohesion. That lack of cohesion meant no market, no market meant no money, no money meant the best indie developers moving onto greener pastures.

And move they did. Most of the biggest indie developers moved either to casual games or to console games. The quality of Indie games available on PC decreased, and today, I think we have a situation where, for the 99.9% of indies, there is little possibility of making a go of it.

Josh Williams, in the blog about the IAC purchase stated: "we've never had the resources at hand to fundamentally change the game and carve out new space that'd really help developers be successful."

I agree with the general idea, but disagree with one point. They did have the resources, and in-fact were one of the few companies that could have done something to create an indie games market. I think the GreatGamesExperiment is proof of the resources and ability when the desire is behind it. What GarageGames didn't do was fully appreciate the importance of selling games to their future. They wanted to create the technology and let the developers create the market. That didn't work. 5 Years later there is no Indie marketplace, in fact there is less of a downloadable Indie market than there was when they started.

I think in retrospect the approach would have been something like:
1 - create great technology
2 - create games on that technology
3 - create a great community driven website store to sell the games
4 - release the games on casual portals, and then later steam and gametap to maximize awareness and drive customers back to the game store
5 - publish other people's games on the game store and create great add-ons for the great games that you'd already made
6 - improve the technology
7 - make new games on that technology
8 - repeat 4-7 multiple times

(my assessment is that GG got off to a great start doing 1 and 2, skipped 3, started to do 4 and then changed directions , dabbled with 5, worked on 6, didn't deliver on 7 and was ready to try a different approach by 8)

The move with IAC is all about creating a market for Independent developers. In creating a web-based games console, GG is attacking the heart of the matter. Will it work? That's hard to say. Certainly every indie who is hoping to make a financial go of things should be paying close attention. Potentially GarageGames is doing just what it needs to in order to create a market for Indie developers to sell their wares and make a living on the dream.

Currently for indies wanting to live their dream of making the games they want to and being paid to do it there are few options.

1 - Consoles - (XBLA requires more funding than most indies have, WiiWare is untested waters, PSN requires a personal invitation)
2 - Casual Portals - (This may require changing the game to better fit a market that you aren't familiar with, plus, many indies don't consider themselves indie when they have to take direction [which is a bad approach, but it is a common sentiment])
3 - Create a market for your game from scratch

Those options are pretty bleak. I know of very few businessmen who would dare take on option 3 (and very few indies have succeeded at it). Option 1 requires some experience and typically a lot of financing, but it is certainly a good option for indies, it may be the best one currently available. Option 2 is a low-cost, low-experience option, but it may not allow for development on your own terms.

Getting back to the first question, what does the IAC acquisition of GG mean?
It means they will still help with option 1, and they are going to work on creating a here-to-fore non-existent option 4...

...which sounds just like what was said 5 years ago when GG was formed!
However, the big difference now is that GG may have the finances and experience to make it happen.

As I've watched the indie revolution of 5 years ago slip away into dreams of what might have been, I'm hopeful that this new approach will create the indie market that the last one missed.

Marketing Indie Games > 2007 IGS/GDC session

A video of my marketing session from this year's Independent Games Summit (as part of the GDC) has just been posted up at GameSetWatch. It's also embedded below for easy viewing.

I was really excited for the chance to speak at the IGS and right around minute 10 you'll see me jump on a subject that I really wanted people to think about.

Most developers shun the portals as bad for them, but few take advantage of the portals. When a game goes on a game portal (ie - Real Arcade, MSN Games, etc.) the percentage that the developer receives is typically below 40%. Developers are notably frustrated as they don't think they are getting fair value for their work. However, no place offers the opportunity for selling like a portal. Sure you can sell a game from your own website, but it's the difference between selling lemonade at a stand on your street and selling it at Walmart. Even if you pocket 1% of the money at Walmart the volume means you make 1000% more.

However, there is another side to this. Whenever a game is on a portal, the player sees the developer name. Portals work hard to keep from losing their customers and won't allow developers to put links to their own websites in the games, but that shouldn't stop developers from stealing customers from the portals.

It starts by trying to do so. Developers should put something in the game that makes customers go look for them. I use the example in my session of Ricochet Lost Worlds. It tells players that they can download more levels from the Internet.

When the player goes and looks on the Internet for these levels, he ends up at the Ricochet home page.

That's just one of many approaches of abusing the portals. So many developers get angry at the portals, but very few get smart. When your game is going before thousands of eyeballs, you can turn those eyeballs back towards your own website.

Enjoy the session! (again for many!)

And I again recommend acting on the ideas. My brother did, and I hope to report his numbers from doing so. (maybe next IGS?) Traffic to his own website has gone through the roof, and because he had planned on that traffic, he selling to them and keeping them around for his next project. Steal traffic anywhere you can! Don't roll over, take your 30% and decide it's a hopeless situation out of your hands. It's only out of your hands if you don't act.

Will Halo 3 sell more Xbox 360s?

Halo 3 is a big deal.

It is the franchise that people identify (for better and worse) with Microsoft's game console. It is increasingly recognizable and creates tremendous buzz for Microsoft.

But, does it sell hardware?

Everyone is quick to answer 'yes.' Games sell hardware.

While that is true in a broad sense, I'd suggest that the answer of whether or not Halo 3 will sell consoles isn't quite so easy.

Let's consider Halo 2 as something of a case study. How many more Xbox consoles sold in the US the month Halo 2 was launched (November 2004) compared to the previous November? (2003)

Remember the US lifetime sales of the Xbox were 14.5 million units.

Do you have your number?

Was the number around 218,000 units?
If you think that is a big number, it isn't. It's about 1.5% of the total sales of the Xbox.

So let's extend out to October and December. Certainly it drove sales in other months. Right?
So what are your numbers for those months (the plus or minus).

October +41,000
December -78000

In fact, if you consider the year following the release of Halo 2 (Nov 04 - Oct 05) 8 of the 12 months sold less Xbox units than the same period a year earlier. When you put all those months together you come up with this startling fact:

The Xbox sold half a million less consoles the 12 months after Halo 2 was released than it did the 12 months before Halo 2 was released.

Stop and think about that for just a couple of minutes.

Did Halo 2 sell more Xbox units?

I still believe the answer is 'yes.' However, I think most of those sales happened before the released of Halo 2, and the total number was less than a million additional consoles sold.

Why didn't Halo 2 sell more consoles? After all, 7 million copies of Halo 2 were sold in the first year after its release (notably 3.4 million Xbox units were sold in that same time period).

Halo 2 served an audience that already owned the Xbox. The Xbox was known for having games like Halo. The audience that wanted Halo, for the most part, already owned the Xbox. The Xbox catered very well to the FPS and TPS audiences. The size of that niche certainly could be questioned.

So, let's end the case study. How does it apply to Halo 3? Will history repeat itself?
Every analyst and gamer thinks Halo 3 is likely to be a game changer that gives the 360 a boost to the top of the hardware sales charts.

I don't think so. With the high profile shooter Gears of Wars on the system and many buyers having already bought with the expectation of Halo 3, I think Microsoft already has a good hand on the shooter audience.

My expectation?

September +100k (was 260k in '06, around 360k in '07 sounds probably high, but reasonable)
October +100k (was 220k in '06, so I've got it at 320k in '07)

Notably, if the 360 sells 400k a month it would quickly be seen as the top Next-Gen console in the US. 300k isn't 400k, but it is much better than the sub-200k that the 360 has sold from March-July of '07.

However, I don't expect the sales numbers to stay at +100k for more than a couple of months, and selling an additional 200k of units is insignificant in the long-run. So my end result? Halo 3 makes little difference to 360 console sales due to it catering to an audience that I believe the 360 already owns.

So for a fun aside, what do I think is required to sell consoles?
Variety!
That doesn't mean having a lot of different games. You can have a variety of trash and it is still trash.

The next-gen consoles need variety in good games.

Guitar Hero is more important to the Xbox than Halo 3. The Xbox 360 already has plenty of good shooters, and there are plenty more coming. Another great shooter, I believe, has very little impact on the overall sales numbers.

Guitar Hero expands the audience by having another great game type on the 360. Unfortunately, since Guitar Hero isn't an exclusive, it doesn't help the 360 any more than it helps any other console, but it is a powerful sales helper on every console.

I'm always interested to see the NPD numbers and to make corrections to my own understanding of the gaming industry. The September numbers should be particularly interesting. I'll come back with some estimates for that month in a few weeks.