One of the most compelling online business stories in the past few years has been that of Telltale Games - the team which pioneered, and made work, the episodic model with Sam & Max and Monkey Island, as well as others.
Now, as the digital distribution space evolves, company CEO Dan Connors updates us on Telltale's performance, and explains where the company's thinking is at.
Q: How's business for Telltale at the moment?
Dan Connors: Since we last spoke Monkey Island was released, and that was a great success for us - a really good team-up with LucasArts to market it together. We thought it was going to go great anyway, but the amount of love for the franchise and the size of the launch really shocked us. It was exciting to have that much buzz around the company.
Every time we do something with a new franchise, it introduces a whole new group of people to what we're doing. Our audience has grown greatly since Wallace & Gromit and Monkey have launched and a big part of the episodic model is that you're getting people to continue to come back. With Monkey, we've seen that play out.
I'd also say that with Monkey Island we've got the most serial of our seasons yet - the cliffhangers were there, and the execution from a gaming soap opera point of view was the best yet. That really paid off in users' minds from an experience standpoint.
Q: Most people seem to feel that the economy is recovering a bit - did you suffer at all, or has it been solid growth?
Dan Connors: It's been great growth for us - ours goes along with that of the digital distribution channel and our ability to support that. We're opening up the PlayStation channel with the Sam & Max launch, and with XBLA, WiiWare, Steam and TelltaleGames.com we're probably speaking to 25-30 million people now.
Previously we were pretty much a PC-only or one other channel - since that time we've been in an emerging market. The shift from retail to digital has happened in the last year - so our company has grown because we're servicing a growing market.
But our retail business has struggled - with everybody else. The retailers are taking less product... but we set out to be a digital company anyway, so we're trying to put more focus on that. I do think that the price points being a little less expensive, as a lower barrier to entry, work in the new economy as well.
Q: Price points is an interesting discussion point - that's not something we're necessarily seeing online from traditional publishers, but there is a clear expectation from consumers that games should be cheaper for non-physical products.
Dan Connors: Well, I think the savings from the download price points are more about the amount of content you need to produce before you bring it to market. If you're going to put something in a box and sell it for $59.99, and go through all the effort to have a retail launch, you want to maximise everything.
With digital distribution you can put any-sized products out to release, and do it monthly like we do. You can better calibrate the amount of content for the price point - if you look at XBLA the average price is probably about $10 for a chunk of content, and I think WiiWare and Sony are probably similar.
So I think that full blown games at retail - that price point is what it is - but digital that supports it, or is separate from it, can be based on the cost of production more. You can have a different ecosystem to stay profitable, play with price points more, and that's what you're going to continue to see.
Q: Consumers prefer to be given a choice these days.
Dan Connors: Particularly as you see people come into the market - I think a $59.99 price point was really prohibitive for engaging someone that's not a hardcore fan. As the price point becomes more flexible, more people are happy to try things - so we can hopefully introduce more people to games.
Q: What proportion of your business is now coming from consoles, as opposed to the PC space - and how has it grown?
Dan Connors: We generally launch with one console partner during the run of the season, and usually does about 40 per cent of the revenue.
Q: That's a higher number than I might have expected.
Dan Connors: They have big audiences there - they're all gamers, and they're all used to spending money on games. Compare that to online, where it gets noisy - Steam for us is an incredibly effective channel, and so is TelltaleGames.com, but the console channels are probably equal to those.
Q: Do you get any sense that the console users are new to Telltale stuff, or are they people that know what you do, but prefer to get your content via console?
Dan Connors: That's a good question. I believe the console gamers are generally not familiar with our stuff - there's a lot more education to do there. Because we haven't had the same flexibility in pricing models and things like that, on WiiWare we've been selling single episodes. That exercise of getting users to come back every month and repurchase, without having them buy into the full-price subscription, has been a challenge for us.
But I think the great thing for us is that we are talking to new customers, we are exposing them to Telltale Games, and our own internal engine - the way we do things - is getting calibrated to a console experience. That's very positive for us as we continue to go out and reach new audiences.
I think the type of games that we make have always been very PC-centric - so we're not only introducing a business model proposition to people - the way they play the game in episodic - but also a genre that is basically old-but-new on those platforms as well.
But it's good - it's pushing us, we're evolving in the genre, and we've always wanted to get to a storytelling engine that was console-friendly and engaging, and would pull people through. It's exciting, especially seeing Uncharted 2 and Heavy Rain have so much success.
Q: We've talked about story in games before, but those two games you mention there - plus Alan Wake, Monkey Island, Sam & Max... it's almost a watershed point for games, isn't it?
Dan Connors: Oh it's definitely a trend - I think it'll keep growing and we'll get better at it, because there's so much headroom there. There's been so much investment in first-person technology, and third-person action technology, that any investment is just an incremental increase in what's been done before - so everything's really starting to feel the same.
They need to put new stories around the mechanics anyway, so that's where there's so much headroom, because nobody's focused on it. There's not a tonne of AI work anywhere that's talking about how a character should respond to a situation based on a certain user experience.
The sky's the limit in terms of where it can go from a story-telling standpoint, and as far as the industry started to nichify there, with 18-34 males making games for 18-34 males, even the people that make games are getting older than 34 - so it is going to reach out to the wider audience.
To me there's no reason why an interactive experience shouldn't be as popular as a non-interactive experience for entertainment right now. Why are so many people watching Lost, but not playing the Lost game? They should be able to deliver on the same things, and games aren't there yet - but they should be able to get there.
Q: How do you view your website in terms of the digital download space - is there a possibility you'll host other company's games there in time, and open it up as a platform?
Dan Connors: From a community standpoint, it's a community we're talking to on a regular basis, and it's a place where we control the messaging and presentation - so in order to do something like episodic games, you can't jump in with a partner that's going to own the communication, because they're not going to do what you need them to do.
In the formative years of the company, and what episodic is, building out a channel to support our decisions on messaging and presentation was critical - and now it's robust. We have a community, we know what they want, we know what works, we know what language they like to speak and we know what interests them.
There's a great back-and-forth there - and that's one of the beauties of being a digital company. There's a whole feedback aspect that you don't get from retail - when you jump in and start swimming, you start to realise that's where it's at, and maybe the website continues to grow and get bigger, and we'll certainly support other products that make sense (like Monkey Island, because our audience enjoys it).
We have a strong channel for that type of audience, but we also want to evolve the way that people continue to get our products - we want to have our messaging tailored for multiple touch points, and own as much of it as we can, so that the minute a customer is introduced to Telltale, they're walking a path to a purchase. The website right now serves that function, and that will likely evolve.
Dan Connors is CEO of Telltale Games. Interview by Phil Elliott begin_of_the_skype_highlighting end_of_the_skype_highlighting.