What drives commercial success in our industry? What does it take to make great games that sell?
Those were the main questions posed by Robin Kaminsky, Activision's executive VP of publishing, as she addressed the D.I.C.E. Summit 2008.
She noted that as the costs of development rise, the sales threshold to make a profit and recoup expenses is necessarily rising. But at the same time, competition is also rising — with over 600 titles launched last year in the US alone.
"At one time, Activision thought it was sufficient just to make great games," she said. "But a great game doesn't guarantee sales success."
Kaminsky does agree that quality matters, pointing to statistical analysis that found a 0.62 correlation between sales and aggregate review scores.
However, even with a rating of 80 per cent or higher, a game does not always sell well.
Of the 18 titles to receive a ranking of more than 90 per cent in the last year, 7 of those titles sold less than a million units and two-thirds of that group will not sell more than 2 million units.
Activision's first goal is to find the appropriate development talent needed to make games.
"Each Activision studio has its own culture and identity," she said. "We feel this autonomy fosters innovation and creativity.
"It provides freedom to deliver games 'in the wheelhouse' of that particular studio."
To the developer's hard work of creating a great game, Kaminsky says that a publisher must add a real partnership between its production, marketing, and sales teams.
For its part, Activision performs qualitative and quantitative research — not just for balance, but to help foster more innovation and creativity in game development.
Next, the company figures out how to ensure great demand.
"Given the size of the industry, developing, marketing and selling games is no longer about reaching the center, hardcore gamer," she said.
She referred to Activision's Call of Duty 4: Modern Warfare as an example of how the company worked to influence demand.
"Creating the game is the start. Driving the awareness, driving the desire to buy is the next step."
Activision launched the first COD 4 trailer during the NFL draft. It started a beta trial game with hardcore gamers and then expanded more broadly through the Xbox 360 demo. High profile media continued to spread awareness, followed by post-launch commitments such as tournaments and downloadable content.
The result? COD 4 sold 7 million units worldwide in two months, and its advertising was seen as the #1 most-liked new television spot of November 2007 and the #16 most-liked new spot of the year according to Advertising Age.
Even more impressive was research showing a final purchase intent of 83 per cent - meaning that, after viewing the advertising, 8 out of 10 people said that it had encouraged them to buy the game.
CRMs, or customer relationship management programs, were also used by Activision to help drive sales. This type of marketing becomes increasingly important as traditional mass one-way communication loses effectiveness.
"It is more important than ever to reach consumers in a way that they want, particularly among young consumers," Kaminsky said.
Through it all, the goal is to get those people who are the most interested in your game to become "missionaries" — bringing the message to the masses in a way that is more powerful than any ad that can be run.
Exclusive content, access to developers, contests and behind-the-scenes videos are examples of CRMs that Activision used successfully.
"You have to get these most interested gamers a reason to market your game for you."
Finally, Kaminsky noted the importance of retail partnerships to target the mass market consumers who may have gone into the store with no knowledge of or intent to purchase the game.
With the company's revenues increasing from 500 million in 2000 to 1 billion in 2004 — and to a projected 2.45 billion in 2008 — the sales seem to bear Kaminsky out.
"There are many strategies in this business, but this one has clearly worked for Activision."