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Why Publisher 2.0 is M.I.A.

With digital distribution disrupting traditional publishing, who is filling the gap for digital games?

The following article is republished from the [a]list daily, which is produced by Ayzenberg Group and powered by GamesIndustry International

The video game business is changing rapidly thanks to growing access to and appetite for digital games. They're everywhere, in your pocket, on your tablet, in your social network, even on your console. Look closely, however, and there is a disconnect in the digital game marketplace.

The audience for digital games, whether online, social or mobile, has continued to grow. Recent forecasts only point upward. There are quality products, and ever more sophisticated types of games. Yet there are an underwhelming number of bona fide hits, and evidently little marketing support for all but a handful of titles.

For nearly three decades the main source of revenue in the game industry has been packaged games sold at retail, and primarily for video game consoles. Early on these games were relatively inexpensive to make and could be completed in short periods of time. As technology advanced and the popularity of games grew, so did their complexity and sophistication. The perception that video games were toys shifted to seeing them as serious, and seriously lucrative, forms of mass entertainment. The business of games, from product development to sales and marketing processes, became scientific, formulaic, and with decision-making ever more reliant on predictability. It was increasingly beholden to major brick and mortar retailers as the predominant distribution channel, and with more and more real estate at stake inside these stores, distribution costs also began to soar.

"Now that game makers of all stripes, from garage groups to crowd-funded industry legends, have made the jump to digital there should be a consistent string of hits. It hasn't happened."

Steve Fowler

As time went on, the industry became more risk averse. Once games settled into their role as mass market entertainment served through costly, controlled channels, they were like their Hollywood counterpart. The business evolved into primarily big risk and reward, with the chase for "mega" hits needed to offset investments. The side effect of this approach to creative enterprise is that it excludes many participants. It is more closed off to new ideas and anything seen falling short of having mass appeal. For games, these limitations meant fewer products coming to market serving segments of the core, or "mid-core" games, which have historically spawned game play innovations and new game IP.

Today, traditional games are more complex and expensive than ever. Console games can exceed $100 million in development costs and $50 million in marketing. For decades now the big publishers have scaled their operations to accommodate these "mega-games," building massive infrastructure with huge overhead costs. Meanwhile, their interest in the "mid-core" market has shrunk drastically. They see successes in the category as contributing too little to their bottom line to be worth the effort. For the rare instances when they take on a mid-core game, their need to cover their risk introduces situations disadvantageous to the developer, usually with deal qualifiers such as complete IP ownership and exclusivity on future titles. These are risk mitigation tactics, essentially positioning the publisher so that it's not left empty handed if the product or deal is doomed, even if it leaves the developer that way.

Without a channel to get their games to consumers, even if they had the means to turn their ideas into products, development talent was forced to fall in line. Then came digital distribution and things changed. Digital gave game developers direct access to players, hundreds of millions of them. It presented unprecedented diversity in gaming platforms, from hardware and interfaces to new types of games people were willing to try. The result has been a demand for innovative experiences unlike anything the industry has seen since the days of arcade cabinets.

"If this is the new formula of success in digital games, then why are so few people making any money?"

Steve Fowler

Now that game makers of all stripes, from garage groups to crowd-funded industry legends, have made the jump to digital there should be a consistent string of hits. It hasn't happened. The demand is there. The good games are there, and more by the day. Unfortunately some of the best experiences to ever target a gamer's twitchy nerves are lurking out there with little to no following, or making a ripple when they should have made a splash.

It started with a bang. What happened?

Early on in the life cycle of these emergent digital platforms, if a developer had a great game it got noticed, and gamers likely told their friends about it. Remember when it was a novelty to see one of your friends had reached level 10 in Farmville? Suddenly people were asking, "Wait there are games on this Facebook thing"? Or when you got your first smartphone and immediately installed Angry Birds because it was the only must-have game? Now with over 700,000 apps on iOS and what seems like a new Facebook game every day, those days are over. Clutter is rearing its ugly head in every digital game marketplace, even in the free-to-play market where some mid-size developers are making big-time bets.

The problem starts with discoverability or awareness, which has become significantly more difficult for digital games. That's the first step, followed by a series of successive ones critical in generating and sustaining an audience for any piece of entertainment. Taking people on a journey to drive consideration, investigation, fondness, and purchase intent. Strengthening customer relationships through brand building, customer engagement and community relations. Establishing lasting affinity that translates to fandom and evangelism. These are about making people care, evoking an emotional connection to the product if possible. More than anything, the marketing presentation itself has to be compelling, even entertaining.

There are digital publishing and marketing entities who say they understand the landscape, that they're the industry's publisher 2.0. But they're forgetting these fundamentals. They simply stop at solving the discoverability issue and call it marketing. They'll partner with a developer and check off boxes, helping submit their game and guiding it through certification, if necessary. Then they might put out a press release and chase it with some PR, at most spend a little money with a media referral partner. If this is the new formula of success in digital games, then why are so few people making any money?

"It's technically true that even a single individual who releases a game into a digital platform has now published that product. What they haven't done is the most important aspect of entertainment publishing: building an audience."

Steve Fowler

What about the very innovators hoping to establish digital and get a foothold, could they be hindering its growth? It's true for some of them. "Self-publisher" has become a favorite categorization for indie developers. It's a powerful label for what's going on in the industry, emblematic of the haste with which many of them are shunning and running from the old publishing model. Ultimately, it's a bit of a misnomer. It's technically true that even a single individual who releases a game into a digital platform has now published that product. What they haven't done is the most important aspect of entertainment publishing: building an audience.

Is there a fundamental shift in marketing digital games versus traditional boxed games? Yes. Is digital a new marketplace environment that traditional publishers and even the savviest marketers are struggling to adjust to? Yes. Does this mean developers should walk away from all of it and expect to succeed? No way.

There's a way to blaze this trail into digital games and escape stagnant old models without running off of a cliff. The nature of digital distribution, including its reintroduction of a viable market for mid-core games and building an appetite for free-to-play, presents new fundamentals that allow for close, symbiotic relationships between game makers and marketers. There's no more appeasing that self-interested entity known as retail. What's more, there are unprecedented levers for efficiency, accountability and agility when it comes to marketing these games. These lead to a lot more transparency and relationships structured around mutual benefit for developers and marketing.

That's what I'll explore in the coming weeks in a series of articles for [a]list daily. I'll look at not only tactics and strategies for this new approach to publishing, but give concrete examples for analytics driven, highly cost-effective and efficient ways to market games. Included in my analysis will be how the fundamentals of brand building still apply, with approaches that create an emotional response from and connection with the consumer. Let's discover what publisher 2.0 is supposed to be.

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Latest comments (8)

Morville O'Driscoll Blogger & Critic 9 years ago
Interesting. Looking forward to the future articles. :) Also hoping they don't focus entirely on Console, Facebook and Mobile (that is, PC will actually be talked about in more than a passing sentence here-or-there :) ).
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Peter Bess Software developer 9 years ago
Very well written article.
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Joel Benton Vice President Business Development, Fuse Games9 years ago
Interesting, timely, well written but missing a big point. The biggest challenge is to not view games as a product but as a service. The way you approach the market and marketing each is very different.
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Show all comments (8)
Brian Lewis Operations Manager, PlayNext9 years ago
This is an interesting article... and very close to home. The company that I work for basically falls in this gap, but doesn't get the notice/appreciation from the media/masses that the more traditional publishers do.

P.S. We have official partnership/investment deals with other publishers, such as Sony (So-Net), NHN and EA. So, it is not like THEY don't see our value.

Edited 1 times. Last edit by Brian Lewis on 18th April 2012 4:58pm

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Steve Fowler VP Strategy, Ayzenberg Group9 years ago
Joel, I absolutely agree! I will be writing about this monumental shift over the next few weeks. You nailed it. Service based marketing (and development for that matter) is drastically different than product. This is a critical shift our industry is undergoing and few are aware of it let alone prepared for it.
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Steve, great article, I'm really looking forward to the following pieces.
I think that even though every disruptive shift in the game industry is different in details still on the overall you see the similar pattern over and over again with new companies entry the market and making great success before anyone understood what was going on and then finally the bigger players in best case adapt and manage to make it for another run.
However, I think that what makes it so interesting this time around is the fact that the barriers to entry is so extremely low and market size is bigger than ever making it a 9.0 rather than 3.0 on whatever scale is the games industries equivalent to the Richter scale. And it is not necessarily a bad thing that a you individual or start up company so easily can get a product out on the market and dip their toes in the water so to say even though they really don't have a chance to make any success of it as they will in best case learn a lot from the process and it will overall create much more space for new great ideas and accrued competence.
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Klaus Preisinger Freelance Writing 9 years ago
Digital gave game developers direct access to players, hundreds of millions of them. It presented unprecedented diversity in gaming platforms, from hardware and interfaces to new types of games people were willing to try
I am not willing to sign that.

Digital meaning access:
No. Mobile internet means access, broadband everywhere means access. One can take away digital distribution and make a "digital" platform a success. One could never take away internet access and hope to achieve the same. Ultimately, no publisher started talking to more people because of the internet. But people started talking to other people about the publisher because of the internet, that is when we saw games developing reward schemes based on "bring a friend". If it were any other way, we would see reward schemes based on "read our publisher news" on Facebook. Compared to the increase in reach the customers gained, publishers have stagnated.

The footnote of payment schemes:
even if you could digitally stream content to people's homes (which was done as far back as software being transmitted in the vertical blanking interval of a TV signal), there is no market without money. People have to pay some way. The digital distribution revolution was not unleashed by people copying files on the internet since the days of BBS, it was set in motion by companies combining file transfers with money transfers. Apple being the poster child here. In contrast, who still remembers R@dio.mp3?

We used to have multiple home computer platforms, now there is only Windows and the tiniest bit of MacOS. The number of console platforms (which matter) has been a constant; two, at best three. The mobile platforms have evolved the most, it is not LCD game watches anymore, it is now smartphones playing games which can also tell you the time.

New Types of games:
There is hardly a game that could not have existed 20 years ago. It might have had insane requirements, such as constant internet connection, and the visuals would be worse, but the game could have existed just as well. Any of those digital distribution mega sellers and "casual" games

I believe there is a trend of overselling digital distribution in a similar way home shopping television channels were oversold for a while.
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Murray Lorden Game Designer & Developer, MUZBOZ9 years ago
I keep thinking about these issues.

The time seems SO ripe for a new Golden Age of games. A chance for small teams, or even individuals to make games - visions from their own head - and get them out there to the people.

I love it! I'm excited by it!

But there is the challenge of being seen. With so many hundreds of thousands of apps out there on App Store and Android Market, for example, it's hard to get noticed.

I'm yet to release my first game, and I feel like I'm getting prepared to promote it, and I'm excited. But I also worry that my marketing is going to completely fail! Hopefully not!

I look through the Top 200 games on the App Store, and can't help but feel that, despite some nice games on there, that it's a very casual, superficial, cutesy market place. That's great, there's some good casual games out there, and I definitely want to make some fun, lighthearted casual games myself. But I also want to evolve and create some deeper, richer games with strategy, story, flavour, and I worry that these games may find it hard to find purchase on these cute rounded cliffs of the App Store charts.

I find it hard to find the sorts of games I'm interested in on the App Store. I'm not even sure if there's really any games on there that I want to play! I flick through 200 or 300 of the top Free and Paid cutesy apps, and pay-to-progress "strategy", or tap-tap-tap "rpg" games, I even install a handful, but I never really feel like playing them...

It's all about evolution, I suppose! Just gotta enjoy the journey!

Indie Game Developer
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