If you were to look around the industry these days, you might think whales had gone extinct. But they haven't, really. They've just re-branded.
These days, free-to-play publishers generally don't refer to the heaviest spenders in their games with the exceedingly cynical comparison to the largest animals on the planet. Much like the actual practice of commercial whaling, the term is so loaded with negative connotations that publishers typically don't use it, at least not in public. Instead, it's much more common they refer to their highest-spending customers by the more respectful euphemism "VIPs," which I will assume is short for "Very Important Placental-marine-mammals."
And while free-to-play publishers have found a nicer way to refer to their best customers, the tactics they use to separate these whales from their money are as cynical as ever, if not more so.
That was made abundantly clear to me last month as I sat through a Game Developers Conference presentation by Zynga vice president Gemma Doyle titled "Learn How VIP Management Can Change Your Company's Revenue Footprint."
"It can be anywhere between 70% and 90% of all revenue coming from your VIP base"Gemma Doyle
Doyle runs the VIP Management operation at Zynga, a program where high-spending players are given a personal account manager they can call whenever they have an issue, access to special promotions and weekly sweepstakes for free vacations and luxury cars, early access to new game features, studio visits to provide feedback, and other perks.
If giving away a free Mercedes-Benz in a contest for a fraction of a fraction of your game's user base seems overly extravagant, it makes a little more sense in light of the free-to-play business model.
QUOTE | "When you look at your VIP base and how much they're spending right now today, it's a huge amount of money. Depending on your game, it can be anywhere between 70% and 90% of all revenue coming from your VIP base." – Doyle underscores how utterly dependent most free-to-play companies are on whales.
Like a lot of what works in free-to-play gaming, Doyle came to video games from the gambling industry. Naturally, she brought the gambling industry playbook with her.
QUOTE | "In 2012, when I moved over to social/mobile gaming, there was no VIP in existence within social gaming, and what I was trying to do was take my learnings from real-money gaming and translate them into the world of social/mobile gaming." – Doyle recounts the origins of the Zynga VIP program.
The first place she started the program was in the Zynga casino games that most closely resemble the gambling industry where her VIP programs had been proven. The results were positive, but the real test was going to be the rest of Zynga's catalog.
QUOTE | "It was very important for the business to understand if VIP just works in social casino and poker, or does it actually work across other genres? So that was quite a test for us to do. I moved into a central function within Zynga and we launched VIP on all of our genres." – Doyle explains how Zynga has embraced VIP across everything from Words With Friends to CSR Racing 2.
A key aspect of the VIP program is that it's not just lavishing attention and gifts in a show of gratitude to loyal customers for long-term retention. It is also trying to maximize their spending in the here and now.
Whatever outreach account managers make to whales is calibrated to specific ends and informed by data science modelling. Doyle says she has a team of analysts that she'll run hypotheses by, and they'll crunch the numbers to find "pockets of potential liquidity" within the VIP base.
QUOTE | "We've done so much experimenting at Zynga with VIP. We know what's the frequency of contact. We know what call types work. We know what times to call. We know exactly who to call and when. We know who has a higher propensity to be more susceptible to our call." – Doyle brags about how thoroughly the Zynga apparatus boils its biggest customers down to little more than numbers on a spreadsheet.
Doyle said Zynga has models that identify people who are on a trajectory to being a high-level VIP but slow down their spending. At that point they "need to reach out and call them to find out what's wrong."
They also identify players who have slowed down their play. For example, a poker player who normally plays 50 hands a day but has slowed down to 20 hands lately. They'll get a call from an account manager following a script to "get them back on track."
They even have a "propensity to pay" model that identifies how likely people are to spend money on the game at a given time. They don't use that model to go after the people most likely to pay – Doyle says having account managers call them would be inefficient since it's like "shooting fish in a barrel" – but instead they focus on people with a medium propensity to pay, but a tendency to pay a lot when they do.
The actual account managers are largely going to be people with a background in sales, because they kind of have to be.
STAT | 110 – The average number of contacts (primarily outbound phone calls to the VIP base) each account manager makes in a day, according to Doyle.
And just like sales people, they're going to be trying to build relationships with their customers, something Doyle stressed a number of times during her presentation.
In fact, the account manager relationship changes how they go after lapsed players.
QUOTE | "If we take the slots genre for example, there's a lot of proven [methodology] that says in order to bring a slots player back to a slots game, an email sent to them should include the bells and the whistles and the feeling they get when they've just won and it ignites in them, 'I want to get back in the game'…
"We actually built out a VIP marketing program that would speak to the player about the relationship they had with the account manager and not necessarily the bells and whistles of what they were going to feel when they got back to the game, which is what central marketing were doing." – Doyle explains how Zynga monetizes the relationships account managers build with whales.
Even as she talked up the "beautiful connection" account managers form with VIPs, Doyle detailed for the audience how to put an exact dollar figure on each one of those relationships.
STAT | 89.36% - The profit margin on Zynga's VIP program expenditures, according to Doyle.
So how do they figure that out and determine exactly what the return on investment for the program is? They identify the whales in the game and run an experiment, giving the full VIP program treatment to 80% of those big spenders, while the remaining 20% get whatever the pre-existing perks for big spenders might have been. That way they have a control group so they know how much of the gain or loss is due to the VIP program compared to whatever else may be going on with the game, from promotions and updates to external factors (increased competition in the genre, global pandemic, etc.).
As Doyle pointed out, adding 20 engineers to a game team is "an uncertain investment," but a VIP management program with a defined profit margin may be more compelling.
QUOTE | "The results of our VIP journey have been that year-over-year when we produce the business case and said, 'Here's the results we've gotten with X number of headcount. If you give me an additional number of headcount, this is the linear increase I expect to get. We've done that for three years and every year we've hit exactly what we said we were going to hit, so we've had continued expansion. We're going into our fourth experiment now, and the dream is to find the exponential headcount." – Doyle believes the VIP approach can scale even larger, commanding further investment.
The relationships companies cultivate with whales are exceedingly manipulative and ultimately dehumanizing
From a business perspective, it makes sense to do it this way. Are you going to invest limited resources in something when the return is theoretical if there's another part of the business over here where you can invest money and reasonably expect a specific return on that money?
From a human perspective, it's considerably dodgier to create scripts and formulas to cultivate relationships with people that you fundamentally see first and foremost as pockets of liquidity.
After all, if they were any more than that, you'd probably want to give the VIP treatment to 100% of the people who met your VIP criteria rather than denying 20% of them the program's largesse because you're running an experiment to make sure you're getting back more than you're spending on these people.
Then again, Doyle says complaints on that subject are easy to deal with. If a VIP in that 20% group complains, they get moved over to the 80% group.
And generally speaking, the VIPs are happy, even as they're getting squeezed for a few extra bucks. While it's obviously not a complete secret, the VIP program generally keeps a low profile, and they've never had a problem with VIPs spilling the beans to the rest of the userbase about upcoming features or perks they're receiving.
QUOTE | "It's never been an issue for us. These are VIPs who are super connected with their account manager. They know they're VIPs. They're not voices in a community or a forum… They expect to get that level of service, they expect to be able to pick up that phone and speak to [their account manager]. They're entitled to that. So spreading word that, 'There's a VIP team and everybody should try and call this number' and flood their account manager with non-VIPs? They don't do that because they're thinking, 'I deserve this. I've become a VIP because of my loyalty so therefore I'm just happy for my space here.'" – Doyle provides some insight into the VIP mindset.
It's sometimes difficult to articulate the many concerning aspects of such nakedly transactional relationships, but one of Doyle's closing lines captured it for me.
QUOTE | "You will absolutely see that upside if you follow this strategy. There's no doubt in my mind whatsoever. We've done it across all of our genres. We've never had a failure on it." – Doyle, in the conclusion of her talk.
Actual relationships are fuzzy, imprecise, sometimes messy, and so much richer for all of it. They are built on leaps of faith and uncertainty until the point where such things disappear.
The relationships companies like Zynga cultivate with whales are built around providing the right stimuli at the right time to ellicit the desired response. They are exceedingly manipulative and ultimately dehumanizing, treating people less like individuals with agency that matters and more like rats in a Skinner box.
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The rest of the week in review
QUOTE | "But I think [generative AI] as a tool, for an artist, if anything it helps inspire people to be even more creative. What can machines not produce? What new level of artistry or art form, or type of storytelling, is going to be possible?" – Epic Games CTO Kim Libreri puts a positive spin on AI eliminating jobs in creative fields by saying it will force those artists to try new things.
QUOTE | "If we really put the screws to untold thousands of people, their desperation to put food on the table might result in a handful of them creating something wonderful, which totally justifies whatever other harm this technology causes." – What I hear when I read that quote from Libreri.
QUOTE | "There's no forced online component because in my opinion, many businesses actually just use that as a [form] of DRM. 'Oh, it's online only, so you need to pay us the fee or whatever it is.' That's not who we are." – Rod Humble explains why his new life simulator Life By You is not an "always online" experience.
QUOTE | "You might have some really interesting ideas about how AI could impact gameplay, but if you have some huge number of DAU and they're all hitting this AI service as part of the moment-to-moment gameplay, you couldn't afford it. It's really expensive to run these models in the cloud. But being able to imagine running those things on a local device, including a phone, I think changes the game on how you might even think about [AI] as a part of the game." - In an interview about the state of Unity and its strategy going forward, GM of Unity Create Marc Whitten reminds us that there are reasons for game companies to avoid "always-online" models as well.
QUOTE | "In truth, it's not the number one thing we should worry about. They're going to publish information somewhere; [games] just happens to be a good place for them to get the information into circulation, and then ultimately journalists find it." - Microsoft president Brad Smith downplays concerns about Russian intelligence using gaming communities to spread leaks.
Putting aside the specifics here, I really dislike the general position of "People will do [bad thing] somewhere, so why should be worried about preventing them from doing [bad thing] in the communities we control and profit from?"
QUOTE | "For Sony to launch something like this wouldn't be swinging at the fences – it would be tilting at windmills, embarking on a truly quixotic quest that has more to do with wounded pride over the tough market conditions it faces in its home territory than with any realistic anticipation of recapturing handheld glory." – Our own Rob Fahey does not love the idea of a streaming-only handheld reportedly in the works at Sony. And as long as we're talking about tilting at windmills...
STAT | $16.99 - The monthly subscription price for Microsoft's Ultimate Game Pass plan to play games on PC, streaming, or Xbox. Microsoft lists 456 console games and 438 PC games being included (with loads of overlap between the two lists, but still).
This is like Mad Catz charging more for the third-party controller you make your kid brother play with than Sony or Microsoft charge for the real thing.
STAT | 1 – The number of companies that received an F from the ADL in its 2023 Holocaust Denial Report Card. That would be Epic Games, which has a "trusted partner" relationship with the ADL that allows it to flag offending content for escalated priority by the company's moderation team, but did not take action on Holocaust-denying user content the ADL flagged.
While none of the ten companies included in the report card did great (Twitch and YouTube led the field with overall grades of C+), Epic was the only company to not take action on reports it knew were coming through a trusted partnership with the ADL.
STAT | $377 million – The worldwide opening weekend box office total for The Super Mario Bros Movie, the largest theatrical debut of the year to date, and the biggest opening ever for a video game-based movie. (The previous record-holder was Warcraft, which brought in $210 million on its release in 2016.)
QUOTE | "For my part, I have also reached an endpoint with Alice and game production in general. I have no other ideas or energy left to apply toward getting a new Alice game made. Nor do I have any interest in pursuing new game ideas within the context of the current environment for game development." – American McGee apparently announces his retirement from game development.
I feel like games has a lot more of this kind of "Screw this, I'm outta here" retirement than the "going away party with cake and speeches in the break room" kind of retirement. We should probably do something about that.
QUOTE | "Step one is to show our intent – so that from the very beginning we are doing this commercial concept, which means that everything you do in Dreams is yours. You can use it." – At the View Conference in 2019, Media Molecule co-founder Kareem Ettouney says the company's goal is to let players bring their Dreams creations to other platforms and beyond the Sony ecosystem.
QUOTE | "No, there is no way to export creations from Dreams. Music and video using the PlayStation share button can be exported however." – Media Molecule, in an FAQ announcing an end to ongoing support for Dreams this week. Hope none of you creators who made amazing things were expecting to take it outside Sony's ecosystem!
QUOTE | "We are aware of the situation with the ESO Fan Artist. It was never our intention to include any community fan art without proper credit. We are in contact with the artist and will work with them to make sure that there is a proper resolution." – The Elder Scrolls Online Twitter account explains that used work by artist Relan Daevath in skins it was selling without permission or credit by accident, which seems like the kind of accident that needs a little more explanation, particularly given Zenimax's established stance on the misappropriation of someone else's work.
QUOTE | "The reality is the overall number of video game consumers is fairly meaningless and mainly used for grabbing headlines." – DFC Intelligence, in our story headlined, "DFC: Global game audience reaches 3.7 billion."
At the very least, you have to respect the honesty of it.
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