With the emergence of online - and increasingly with the importance of social network games - understanding your game's users has become a hugely significant element of the business, with several companies now offering analytics services to developers and publishers.
One such company is GamesAnalytics, first announced last week, but today they bolster their team with the appointment of Activision co-founder Alan Miller to the role of strategic advisor and director of North American operations. Here he explains why he's getting involved, and precisely how analytics can help.
Q: The press release announcing GamesAnalytics last week talked of "turnkey real-time behavioural analytics" - let's start by unpacking what that is.
Alan Miller: Sure, I'd be happy to address that - perhaps we should break down the phrase. "Turnkey" means that we provide a solution that is extremely easy to integrate; "real-time" means that we're constantly analysing player data and providing individualised marketing to players through in-game mechanisms.
The objective of all of this is to better understand player behaviours, in order to help publishers maximise revenue; and from a game-player's perspective, to minimise frustration and increase the length of time they're interested in playing the games.
Q: And what kinds of things are you tracking? When you talk about behaviour, what are you looking at?
Alan Miller: Well, we use very sophisticated analysis to look at the entire player data-set, which could be hundreds of gigabytes or terrabytes in size. We look at it in an abstract way to identify desired behaviours.
For example, the common problem in the industry is that only 1-2 per cent of online players generally make payments - and a lot of publishers are resigned to that. But we look at that as a great opportunity to bring in additional paying players.
1 per cent of those 98-99 per cent of non-paying players substantially increases revenue, so if we assign our analytics to look for behaviours that address additional monetisation, we can identify several different patterns of behaviours that players have experienced in the past that lead to this monetisation.
Then, in real-time, we look at all the active players, see if they're close to this monetisation model - and if they're close to it then we give them very specific marketing messages, like hints, challenges, offers, free goods, instructions and so on, that are delivered in-game to the player to motivate them to move towards these behaviours.
The desired behaviours don't necessarily have to be monetisation-related - the objective might be to study the sending of messages to other players in order to increase virality, for example. We're working with some clients right now to help avoid players from leaving the game - cancelling their subscription and departing.
So there are several different kinds of these desired or avoided behaviours that we study - and maximise the results for the publisher and players.
Q: One of the complexities is the sheer amount of information that can come in from an online game - that's not a challenge that should be underestimated, is it?
Alan Miller: No, it's a huge challenge, and there are two phases to the analysis we perform. One is the initial analysis to identify all the desired behaviour patterns, and that has to be done over a period of a few weeks, studied offline. It's a combination of modelling and techniques, but it's significantly driven by human insight.
So we have a staff of very experienced analysts in the UK that perform that analysis, and once we've identified all of the desired behaviours, we get together with the game publisher and talk with them to define dozens to hundreds of very specific marketing messages that are designed to motivate the players to do specific things - and those things are to propel that player towards the desired behaviour.
Once we've aligned those marketing messages, then we enter the real-time phase and the our software will scan every active player - that can be thousands, hundreds of thousands or even millions of concurrent active players... and that's a big technical challenge.
We evaluate all of them to see if they're getting close to any of the desired behaviours, and when they start to get close, we signal the game to deliver one of the pre-defined marketing messages to that specific player. They're individually assessed and targeted marketing messages designed to accomplish specific things.
Q: It reminds me a little of the way that Zynga tracks the behaviour of its players in order to inform game design.
Alan Miller: Zynga's approach to analytics is a common route for the social games industry, and there's one provider called Contagion that provides packages to help publishers preform A-B testing. Now, that's actually very different to what GamesAnalytics does.
To use an analogy - I have family in dairy farming - that approach that Kontagent provides gives a very high altitude view on the cattle, and it can tell you that 80 per cent of them are in Field A, and 20 per cent in Field B. It can also give you other global information, and that's very useful to publishers.
GamesAnalytics, because we do behavioural analytics at the individual player level, instead of looking at the entire herd, we look at each individual cow and can tell you a lot about that individual cow - and predict its behaviour.
Then, instead of just providing analytical results, we take it another step further and deliver immediately actionable marketing. In this analogy it would be sending a message to the farmer to have one of his field hands go out and milk a certain cow in a certain place - and tell you how much milk to expect from it.
Q: It's a pretty ambitious statement to make when the company says it hopes to help companies make an additional $1 billion in revenue over the next four years.
Alan Miller: It's a good objective; I think it's a good target to reach for. But if you look at the online games industry, it's primarily composed of subscription models and virtual goods-based models, and those are already huge businesses.
This year we estimate the virtual goods business - so that's not even subscription business like World of Warcraft or Runscape - as over $10 billion this year. And it's consistently growing - it was $5.5 billion in 2009, $7.5 billion last year. It's the way that the industry is going - and over the next four years that amount of revenue generated by the segments we address is going to be $50-80 billion.
So when we say we want to add $1 billion to that over the next four years, that's 1-2 per cent of the total revenue for that part of the business.
Q: Oh, well, when you put it like that I'm less impressed... But seriously, in terms of business models, how does GamesAnalytics work? Is it a fixed fee, or a proportion of new revenues generated?
Alan Miller: Well we provide two different models. One is commission on revenues generated, and in that case we have to reserve a control group outside of our services to accurately measure the income generated by our services. That's pretty common, and that's where we're going to generate a lot of revenue.
But we also provide a model that's a more traditional consultant service, where we'll talk to companies about how they can set up their games to provide the data that's useful, and other kinds of fundamental analytics consultancy.
Q: What attracted you to GamesAnalytics? What is it in the challenge that thrills you?
Alan Miller: What thrills me is that it's novel. It's the first application that I'm aware of that uses analytics at this kind of level in the games industry. It shows tremendous promise for improving revenue, but also customer satisfaction - and that's the second part. It serves both players and publishers. I'd be much less interested if I thought we were only doing this to extract more money from publishers...
Q: Although that's still tempting...
Alan Miller: Well, you generate profits to stay in business, but our approach identifies successful pathways that players have taken through a game. We can also identify pathways that are leading to frustration - and we want minimise that frustration while maximising satisfaction.
Q: You're heading up North American operations - what's on your immediate priority list for the next six months?
Alan Miller: In the next few months we're going to establish offices in the San Francisco Bay area, and I'll be hiring a small team here - the North American office will be sales and marketing activities. All the analytics will be performed in the UK, in the Edinburgh area.
Alan Miller is strategic advisor and director of North American operations at GamesAnalytics. Interview by Phil Elliott.