Close
Are you sure? Are you sure you want to report this comment? I understand, report it. Cancel

What the evolution of Dead Space says about EA's strategy

What the evolution of Dead Space says about EA's strategy

Wed 06 Mar 2013 9:09am GMT / 4:09am EST / 1:09am PST
BusinessPublishing

Why EA has to continue experimenting with the business models behind blockbuster games

Yesterday, rumours were flying around the internet saying that Dead Space 4 has been cancelled after disappointing sales of Dead Space 3.

I haven't played any of the Dead Space games, so I can't comment on the criticisms that Dead Space 3 sold poorly because of game content or the way in which it dumbed down the gameplay experience to appeal to a broader audience. I can talk about how I see the microtransaction and other changes that vocal fans derided fit in with Electronic Arts' broader strategy.

The games market is polarising. The big are getting bigger (see Grand Theft Auto and Call of Duty beating first week sales records year after year) while the niche is becoming more viable (see every indie game on Steam) while the middle is getting squeezed (see THQ, Eurocom and dozens of other midsize developers). The emergence of digital distribution has brought along a bigger change than many people realised, driven by two different properties:

  • It is cheaper than ever before to distribute content
  • It is possible to have unique, personal, one-to-one relationships with every customer

The strategies that EA are putting in place reflect this reality.

The variable demand curve

The past 30 years were about putting games in boxes, shoving them in shops and trying to sell as many as possible. The price was basically fixed at around £30-40, so the only way you could make more money was to do more volume, i.e. sell more copies. You could also try to maintain the price for as long as possible by restricting price reductions and limiting trade-ins. What you couldn't do was to connect with your fans in any meaningful way.

We no longer live in that world, except perhaps for the very biggest blockbusters. We live in the world where there is a bewildering choice and variety of games available to us. At the same time, development costs for AAA games are enormous and rising, while the market is not getting bigger. In fact, that subset of the market is shrinking as players are distracted by the many different ways, times and devices they can play games on.

There is only one solution. It is to find a way to use the initial launch of AAA game as a starting point in your relationship with fans. It is to start the long process of turning games from one-off purchases to long-term relationships. It is about using games to engage with and retain players, to convert some of those players into fans and to convert some of those fans into superfans. In the process, niche AAA games that are not viable using the blockbuster, fixed-price-massive-volume model can become successful long-term businesses.

EA's strategy

Viewed through that lens, everything that EA is doing makes sense. It is trying to use its games as the starting point of the relationship. Sometimes those games are free (as in most of its mobile, tablet and online strategy). Sometimes they are paid (as in its console strategy). What they are trying to achieve is a revenue model which means that those people who love their games, who keep playing, who are vocal and demanding, are given an opportunity to spend lots of money on the products that they love. It is the only way for niche AAA games to survive.

I don't know why Dead Space 3 didn't do well. I don't know if it was about poor design decisions, a change of focus or gamers voting with their wallets and not supporting a game with microtransactions on principle (EA will have data on how many users engaged with microtransactions. Answering the other questions will be harder).

But I don't think gamers should view any rumoured cancellations of blockbuster projects as a victory against microtransactions. Finding a way for the biggest fans to pay lots of money to get things they truly value is the only way to support niche AAA games (and by niche, I mean anything outside the top 4 or 5 games released every year). EA may not have got the exact model right yet, but they are experimenting. The failure of the experiment does not mean that EA will abandon microtransactions: it means that it will abandon anything other than blockbuster games and tablet games.

Is that what you really want?

Nicholas Lovell is director at GAMESbrief, a blog about the business of games. He provides business advice on free-to-play and paymium design. He will be giving a masterclass on how to make money from free-to-play games in San Francisco on Sunday March 24, just before GDC. You can also book one-to-one surgeries

26 Comments

Popular Comment
There is only one solution. It is to find a way to use the initial launch of AAA game as a starting point in your relationship with fans. It is to start the long process of turning games from one-off purchases to long-term relationships.
I think the stumbling block comes when publishers try to do this, but can't quite bring themselves to let go of the old "putting games in boxes" model. The customer arguably ends up getting it from both ends - a £30-40 purchase that then demands more money to stay relevant and playable. It's no wonder fans are disgruntled.

As soon as publishers bring down the upfront cost of buying a game to reflect the long-term relationship, and stop designing micropayment systems in a way that feels like the player is being led by the nose to the store icon to progress, a lot of the industry's disruption will begin to settle down.

At the moment we're getting weird Frankenstein hybrids of bloated blockbuster and begging-bowl F2P, neither of which are designed to benefit the customer.

Posted:A year ago

#1

Jamie Read
Junior 3D Artist

125 64 0.5
I agree with what Dan said above.
I would also add that from my view, (having only played bits of Dead Space 1 and 2) that this third installment has shifted direction away from the isolated scare-fest of the original, to a gun-hoe, action-filled game (from bits I have seen people playing of it). This clearly isn't what most Dead Space fans wanted.
Add to that the game was £40+ on release, with 11 (yes, 11!!) day one DLC. I agree with releasing paid-for DLC after release to extend the players' time with the game, but when developers are intentionally leaving out content from the base game (on day one) to try and weasel more money out of the consumers, it's clear that a lot more gamers are being turned off that idea.

Edited 1 times. Last edit by Jamie Read on 6th March 2013 10:44am

Posted:A year ago

#2

Nicholas Lovell
Founder

183 166 0.9
I half agree with Dan.
The psychological contract is different when you pay £30 for a game versus when you get it for free. Therefore the monetisation strategy needs to be different: more generous, more respectful, more engaging.

That is hard to do, so I agree with you that we are getting the worst of both worlds, with freemium approaches plastered over paid products.

Your comment suggests the solution is to eliminate the upfront cost, which would work. I also think that there is a route that involves keeping the upfront cost but getting better at the -mium bit of the business. That will take some trial and error and as Rob Fahey said in his excellent column last week, there will be some substantial missteps along the way.

Posted:A year ago

#3

Dave Herod
Senior Programmer

517 734 1.4
The psychological contract is different when you pay £30 for a game versus when you get it for free.
It isn't for me. When I play Android F2P games and it pops up with "aha! you're going to have to pay for that!", the first thing that always springs to mind is "money grabbing little bastards, get lost". It's only when I think about it later "oh yeah, I haven't paid the makers of this game *anything* yet". Once I'm in the game I just want money decisions to go away and leave me alone, regardless of what came before it. If I had the option right at the start, for a game I was fairly confident was going to be good, to pay up front to make all game content unlock, I'd go for that. But F2P games don't give you that option.

Posted:A year ago

#4

Nicholas Lovell
Founder

183 166 0.9
That still sounds like a different psychological contract.

And some people just plain don't like free-to-play. Which is fair enough (although it will substantially limit their choice of games in the future)

Posted:A year ago

#5

Kingman Cheng
Illustrator and Animator

945 161 0.2
Personally I just wasn't interested in the game, I enjoyed the first title despite some bits being repetitive. But with the 2nd title I kept trying to replay it but getting bored after a certain point so I wasn't really keen on buying the 3rd title.

Posted:A year ago

#6

Sandy Lobban
Founder and Creative Director

310 195 0.6
High quality games with minimal overheads. Thatís the answer for the survival and bottom line of any business. Itís also the key to a fairly priced product funnily enough.

I would guess someone like EA budget something like £6000 per developer per month on a project, including wages an all operating costs. With a team of even something like 30 you can see how the development costs can get out of hand, and ultimately push the break even numbers of the product up pretty quickly. Compare that with an indie made up of a few experienced and skilled developers who know how to make games, have minimal overheads in a cheap office space, free development tools, many routes to market and the motivation to get paid. Its almost a no brainer from a business point of view.

The operating costs are the numbers anyone in the business of making games should be looking at, and not the pricing strategies to simply cover the current costs. This is why indie acquisitions are so attractive, and the same reason you see studio closures. Both make financial sense.

Pricing doesn't have to be that complicated when you can bank roll "good ideas" for longer with low operating costs.

Posted:A year ago

#7

Craig Burkey
Software Engineer

151 142 0.9
Dead Space 3 is a great game, I played it on Impossible from the start, with rare resource drops and never felt the need for the microtransactions, you just go back to earlier levels if you feel too weak mop up a few easier kills collect a few more health packs for later on, gives you time to look for those missed collectables too.
Personally I thought the resource system made the game more of a challenge as previous games started Impossible with no items, this time it kinda expect you to of leveled slighty in the early dificulties so playing through unleveled is more difficult. Doing it this way certainly brought back memories of the original game for me at least.
These things are lost with the general hysteria arround the microtransactions, now their is the wider question that I'm the type of player that has played it to completion and will probally do it multple times without paying a penny more than RRP and regular story DLC yet people buying these thing are paying more for essentially less game

Posted:A year ago

#8

Eric Pallavicini
Game Master

259 165 0.6
Dead Space 3 is a great game
It is probably on it's own. But in terms of franchise (or IP) it is also probably disappointing.
Add to that the game was £40+ on release, with 11 (yes, 11!!) day one DLC. I agree with releasing paid-for DLC after release to extend the players' time with the game, but when developers are intentionally leaving out content from the base game (on day one) to try and weasel more money out of the consumers, it's clear that a lot more gamers are being turned off that idea.
Although this is difficult to evaluate, if it is really the case and become identified as such by EA (or whom is concerned in EA) then it is very likely this particular experiment will turn out to be done as a different experiment for another project.

Posted:A year ago

#9

Tameem Antoniades
Creative Director & Co-founder

196 164 0.8
Popular Comment
@Jamie

For many AAA games, content is locked up to 9 months before release. This can break down to:
3-5 months of optimisation, fixes, balancing & polish
2-3 month of submission to platform
2-3 months to manufacture and distribute it to the shops.

During that lengthy period of time, new content can only be produced for new games or for DLC which has it's own budget and timeline. DLC is on a shorter and smaller timeframe and doesn't have to be manufactured and distributed like the retail copy. Therefore it is often ready in time for day one release. That DLC content would have never been part of the retail copy if digital distribution did not exist.

I can understand why the consumer wouldn't see it that way as all they see is a retail copy and DLC being "made at the same time" and it is too difficult to educate consumers on the actual process behind this nor should they care about it. So the concept of DLC being held back is not going to be ever shaken and will be one of those things that will just have to disappear in future as we transition to fully digital releases for games.

Edited 1 times. Last edit by Tameem Antoniades on 6th March 2013 1:05pm

Posted:A year ago

#10

Andreas Gschwari
Senior Games Designer

555 607 1.1
Tameem is spot on. Day one DLC does not mean the customer is tricked into buying content that should have been in the launch product. Sometimes it was meant to be part, but had to be cut or moved out due to time constraints. Other times it's an add on which could be done during submission and manufacture (using existing assets). That time frame most consumers don't know about.

Posted:A year ago

#11
Your comment suggests the solution is to eliminate the upfront cost, which would work. I also think that there is a route that involves keeping the upfront cost but getting better at the -mium bit of the business.
Absolutely. I certainly wasn't implying that the only way forward is to go completely F2P as that model clearly doesn't suit every game. Digital distribution opens up so many more business models, it's a shame to see the industry going hell for leather after just one solution. I'm surprised we've not seen a return to the old shareware model from the mid 90s, where you get a hefty chunk of the game for free - as with Doom - and if you like it, you pay to access the rest of the game. If you don't, you're free to keep playing the first bit for as long as it entertains you. Variations on that theme would be both generous and fair, I think, and would definitely result in less combative relationship between industry and consumers.

I think the problem is that micropayments are simply too alluring to the big AAA publishers because they represent a potentially limitless source of income, rather than a simple one-off transaction. It's natural that the larger companies gravitate towards that without letting go of the security blanket that is a full price RRP. Trouble is, it can lead to game design with a casino mentality where psychologically the goal is to extract as much from the customer as possible, by whatever means are available.

Their response to the shift in the industry has been to go all in on the big blockbuster titles, cramming them full of stuff in an attempt to add more marketable bulletpoints to the back of the box. Upgrade your hub! Sail a ship! Run a farm! Choose from 200 different hats! And each new thing they squeeze in there adds incrementally to the development costs, making it even harder to break even. It's a vicious cycle. When you've got 600 people working in dozens of studios on one title, the sales required to cover that are insane.

But all the signs point to people wanting smaller, more focused games - and everything needed is right there to create them. That's where the missing middle tier needs to be - turning out smaller, cheaper downloadable games with a long tail based around content that gamers want to keep paying for.

Edited 1 times. Last edit by Dan Whitehead on 6th March 2013 1:57pm

Posted:A year ago

#12

Craig Burkey
Software Engineer

151 142 0.9
To me it makes perfect sense to release DLC day 1 as you know everyone will get the opportunity to buy it, rather then release it months after when a large proportion of people have moved on.

Posted:A year ago

#13

Tameem Antoniades
Creative Director & Co-founder

196 164 0.8
Hi Dan & Rob @ Gamesindustry,

I'd love to see an article on these alternatives, games that have found success with other purely digital models. At least it will open up the debate more widely than f2p on one end and retail on the other (and paymium in the ugly middle)

Posted:A year ago

#14

Georges Paz
Programmer, technical director and CEO

13 1 0.1
I agree but partially. I've seen (and worked) on DLCs while the game wasn't even finished (two teams one finishing final game products and the other working on a DLC). Clearly, some games where designed to have DLCs from start.

Posted:A year ago

#15

Samuel Verner
Game Designer

131 243 1.9
For many AAA games, content is locked up to 9 months before release. This can break down to:
3-5 months of optimisation, fixes, balancing & polish
2-3 month of submission to platform
2-3 months to manufacture and distribute it to the shops.

During that lengthy period of time, new content can only be produced for new games or for DLC which has it's own budget and timeline. DLC is on a shorter and smaller timeframe and doesn't have to be manufactured and distributed like the retail copy. Therefore it is often ready in time for day one release. That DLC content would have never been part of the retail copy if digital distribution did not exist.

I can understand why the consumer wouldn't see it that way as all they see is a retail copy and DLC being "made at the same time" and it is too difficult to educate consumers on the actual process behind this nor should they care about it. So the concept of DLC being held back is not going to be ever shaken and will be one of those things that will just have to disappear in future as we transition to fully digital releases for games.
the real question for the customers is: "why not give it out for free, if it is made with the budget which im paying for when i buy the game?"

Posted:A year ago

#16

Yavar
Operations Manager

1 2 2.0
the real question for the customers is: "why not give it out for free, if it is made with the budget which im paying for when i buy the game?"
because it is not made with the budget for the stand-alone game.

Posted:A year ago

#17

Andrew Goodchild
Studying development

1,227 388 0.3
Maybe it's not, but imagine the PR difference. On the one hand you have customers percieving that they are being fleeced paying for things that perhaps were cut from the game to extract money. On the other, by giving it free, they feel they are being treated. It clearly wasn't cut from the package for cynical reasons, because why would someone cut it only to give it for free? (Apart from as a PR stunt, of course).

It's easy to say that it makes sense for EA to get people who enjoy their games to keep playing, but if their implementation means that less people enjoy the game, maybe they need to step back and assess whether it is such good business sense antagonising your fanbase.

Most gamers accept that to give a game for free, there has to be a revenue stream, and if this happens to be millions of microtransactions, fine. Those who don't like this may well stick to buying games for £40/$60, and perhaps with the odd bit of hopefully substantial add on content. As soon as it is full of F2P revenue generators, why pay for the game. Especially when League of Legends seems to handle it a lot less clumsily than EA's full price titles.

Posted:A year ago

#18

Robert Ilott
Build & CM Engineer

20 31 1.6
Doh. Pressed the wrong button :P
This is what I meant to say:
Maybe it's not, but imagine the PR difference. On the one hand you have customers percieving that they are being fleeced paying for things that perhaps were cut from the game to extract money.
In which case it probably just wont get made. Companies don't generally release DLC for AAA games just for fun - they cost huge amounts of money and time for artists/engineers to produce and then QA has to have a good run at it too...

Posted:A year ago

#19

Kingman Cheng
Illustrator and Animator

945 161 0.2
Tameem is spot on. Day one DLC does not mean the customer is tricked into buying content that should have been in the launch product. Sometimes it was meant to be part, but had to be cut or moved out due to time constraints. Other times it's an add on which could be done during submission and manufacture (using existing assets). That time frame most consumers don't know about.
Indeed.

I heard the new Tomb Raider already has new DLC coming out this month? :P

Posted:A year ago

#20

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
They tried to "call of duty" the dead space franchise. Make it a huge hollywood style "blockbuster" game. Something that you can expect from director Micheal Bay. Instead of a well made game they aimed more towards marketing flash instead and prioritized the business end of things. I think when an IP is developed it has a certain integrity to it. Certain elements that make it what it is and if tampered with will change it to something else. And game publishers are so determined to make money they would rather put a game out even when its not ready or try to expand it beyond its current audience that simply are not interested. There mistake was turning Dead Space into a franchise they can milk the cow with. The franchise lost its "way" the first game had an isolated feel, like in an Aliens movie. The third one is on its way to turn the franchise into an all out generic action game, with huge explosions and set pieces. And at times thats not what a game needs. This happened to Resident Evil. I never even bothered with 6 and the demo didnt really help me want to buy it. Assasins Creed deserves a break, but now they announced Assasins Creed IV. Lets see how far they can go, how they can keep the series fresh and how long it will be before they drive the series to the ground. Im particularly not a fan of yearly releases because almost always it drives a good IP to the ground. This is why a game like Grand Theft Auto stays strong in sales everytime its released. Because the waiting period between games, allows for a sequel that seems fresh and not more of the same.

Edited 1 times. Last edit by Rick Lopez on 7th March 2013 8:28pm

Posted:A year ago

#21

Jason Avent
VP, Studio Head

139 140 1.0
What astounded me about DS3 is that it went to number one and it's still regarded as a failure. That speaks volumes about the current health of the console industry. By contrast in the same month, Real Racing comes out from EA and gets into the top ten top grossing and is probably regarded as a hit. So much so that NFS is going freemium. It'll probably make more money too! Certainly a higher margin because of the lower dev cost. None of this particularly makes me happy or sad. It just is what it is I guess.

For the record, I think it's cheeky to charge £30-40 up front and then ask for more money straight away. Even as an ostensibly evil freemium developer! : )

Posted:A year ago

#22

Cameron Lourenco
Studying Business Managemant

21 16 0.8
This is all written by someone who has never actually played any of the games, so he's just drawing at straws trying to figure out why Dead Space 3 didn't sell. (it was number 1 for the first bit, as the loyal fans rushed to go buy the game, but everyone else who waited to see how the game would actually turn out, reading reviews, they decided against it evidently, so long term sales suffered immensely, same exact thing happened with Resident Evil 6)

As someone who has played the first two games, and highly schooled on the reception of Dead Space 3, the reason Dead Space 3 didn't sell well is due to the fact that EA tried to dilute the franchise and make it less survival horror and more of an action game in the vein of Gears of War. By including human enemies that shoot back at you, cover shooting, absolutely no horror elements, no tension, no scary moments, no enemies coming out of the walls, ceilings and floors, you have a watered down game targeting the tard Call of Duty crowd.

Co-Op was included for no other reason than the fact that EA did a poorly designed study that showed some people were too scared... of Dead Space of all things. So EA decided to try and market to a larger audience by making an already barely-scary game even less scary by including Co-Op so you would never be alone. This also added to the game being more action and less survival.

The problem came with the fact that the already established market of horror game fans was abandoned with this new watered down action game. The marketing problem came with fact that the game was marketed as a HORROR game, the new face of HORROR. Action fans weren't interested in a horror game, so they didn't buy it as that is how it was marketed. Once horror fans bought the game they cried foul as the game was nothing more than a lame action game. If EA had just been honest and said "Come buy our game absent of any horror, suspense or survival elements, just point and shoot and waves of enemies that do nothing but rush you in plain sight", you would've had the Call of Duty tards at least interested in the game. Instead EA pretended DS3 was something it was not, and it was that betrayal that destroyed people's interest in the game. If you asked a single person who might've been interested in an action game whether they knew DS3 was an action or horror game, they would have no clue, or would think it was a horror game, something they aren't necessarily interested in.

EA=marketing fail.

Edited 1 times. Last edit by Cameron Lourenco on 8th March 2013 2:48am

Posted:A year ago

#23

Andrew Goodchild
Studying development

1,227 388 0.3
In which case it probably just wont get made. Companies don't generally release DLC for AAA games just for fun - they cost huge amounts of money and time for artists/engineers to produce and then QA has to have a good run at it too...
Probably, but perhaps good PR is worth some of the marketing budget.
The question is, is the extra money from this sort of thing, when handled in a way some of the existing fanbase (whether rightly or wrongly) may consider cynical, outweighing the money lost if it results in less people buying it. I say if, because we don't know for sure that this is the major reason behind lower sales. The point about genre confusion was also viable.

Posted:A year ago

#24

Ken McFarlane
Artist

9 33 3.7
One of the problems I found with the current market and distribution method isn't that it's particularly bad (nor is the day 1 DLC hoo-ha), as it does cost more to produce to make and move a physical product

It's more that companies expect consumers buying the digital version to pay the same for the physical (most likely to help recoup costs more so). Xbox's most recent sale saw me buying three titles for £20 over the total course of the sale as the prices were fantastic but only cause they'd been reduced for the sale. If Publishers adopted something similar to Steam's method of selling/promoting digital products I'm sure it would see an influx in purchases, it definetly worked on me.

Posted:A year ago

#25

Login or register to post

Take part in the GamesIndustry community

Register now