Planning for the end of the one-hit wonder
The mobile gaming landscape is filled with giant companies living off the back of a single, enormous hit title - but how many are planning effectively for when that title starts to decline?
The faded glamour of the former popstar living off residuals from their venerable one-hit-wonder is something of a staple of Hollywood storytelling. It makes for a great tragi-comic character, living a life with the trappings of superstardom yet haunted by the irrelevance and anonymity into which they have slipped over the years.
One-hit wonders aren't solely the realm of pop music, of course; authors, filmmakers, actors and creatives of all kinds routinely fall into the trap of becoming little more than a nostalgia-fuelled "gosh, I wonder what happened to..." and a cursory Wikipedia search.
Video games, too, have had their fair share of one-hit wonders - but as a deeply collaborative creative effort, "one-hit wonder" in this context has generally simply meant that the studio folded, with individual creatives going on to work on plenty of other projects elsewhere. The notion of a game being so successful and having such a long tail that it could sustain a studio in spite of the failure of everything they subsequently released simply couldn't work in video games; at least, not until very recently.
"A studio sustained solely off the back of a single huge game is now the central paradigm for some of the industry's most wealthy firms"
Mobile gaming has changed that. Suddenly, the landscape is full of one-hit wonders - companies sustained for years off the back of revenues from a single, gigantic hit title that pulls in enormous amounts of ongoing revenue through aa free-to-play business model. The notion of a studio sustained solely off the back of a single huge game, which applied only to fringe cases in the past (MMOs are the main example), is now the central paradigm for some of the industry's most wealthy and successful firms.
The impact of that can be seen most clearly in the mobile game charts; every year for the past few years, the most eye-opening thing about looking at the annual mobile game charts has been just how little movement there is in the ranking, with increasingly long in the tooth games holding on to top revenue spots for years on end.
If you're the company behind one of those unstoppable juggernaut titles, this is pretty fantastic in many regards; the sheer amount of revenue that comes out of a Top 10 or even Top 50 mobile game is pretty dramatic, keeping a company well in the black even if everything else they do falls flat. Yet therein lies the downside; all too often, everything else that these companies attempt really does fall flat.
Few companies with mobile hits ever learn how to bottle the lightning; only a tiny handful have ever released a follow-up game that performs in anything like the same league as their initial success.
This leaves mobile game companies with a tricky calculation to make. Do you knuckle down and really focus on developing the best possible follow-up games you can, trying to broaden your portfolio and build a solid, sustainable business that'll stay afloat when your soaring hero title finally, inevitably, starts to falter? Or do you throw as much of the company's resources and effort as you can at that hero title, doing everything in your power to sustain its trajectory at all costs?
Most companies do a bit of both, of course; few companies focus entirely on their hero product and abandon new development, and equally few throw the lion's share of resources into development of new titles. Most established mobile firms, it's fair to say, are putting the larger part of their investment into marketing and customer acquisition for their existing successful titles - which has created a feedback loop at the top of the mobile games industry in which the costs of customer acquisition are soaring alongside budgets for marketing, making fully supporting the launch of a major new title exceptionally daunting.
A PC or console publisher with a major title that's untested but promising has many options - primarily, they can dodge around the big beasts in the release schedule and earn attention by launching at a relatively quiet time. Mobile gaming doesn't have quiet times; no matter when you launch, you need a budget that can match the big boys, and the big boys' budgets have become eye-watering.
"Few companies with mobile hits ever learn how to bottle the lightning; only a tiny handful have ever released a follow-up game that performs in anything like the same league as their initial success"
Even so; those major games don't stick around forever. Look at Puzzle & Dragons, a title which absolutely ruled the roost in Japan's enormously lucrative mobile market for several years. Publisher GungHo is a great example of the one-hit wonder studio; absolutely nothing in its portfolio, before or since, comes close to the success of Puzzle & Dragons, and now that the game is in slow decline, GungHo is throwing enormous resources at propping it up.
The company is trying to push it as an esports title, making new lines of toys, comics and animation shows, and essentially doing everything short of going door-to-door in major Japanese cities to beg people to install the game on their smartphones. GungHo does have other games and other business units, but they're incredibly minor compared to Puzzle & Dragons; having failed to create anything that matches or even approaches the scale of that success in the intervening years, the company's fate now feels inextricably tied to that of its fading mobile title.
I raise GungHo as an example simply because they made a big deal of their plans to resuscitate the P&D brand this week; they are, however, just a good example of a problem that afflicts many companies in the mobile space and will afflict many more as the crop of world-beating mobile titles from a few years ago start to lose the attention of players.
There's still a degree of denial and delusion in the mobile space about the inevitability of that transition; some have convinced themselves that their games aren't bound by the rules of diminishing returns, that instead their single game - managed properly - can be a franchise in its own right, enjoying the (more or less) evergreen sales of a FIFA or a Mario. Yet the differences between a well-maintained and regularly refreshed franchise and an individual mobile game are far greater than the similarities, and there are rather more prosaic answers out there - that high investment in in-game items creates a fear of loss which discourages players from abandoning the game, for example - which explain the current longevity of mobile titles but merely suggest slow decline, not eternal life.
Being clear-eyed about what's going to happen to these titles over the coming years is important, because it allows a company to plan ahead for the decline of its tentpole game. Of course, there's a degree of investment in supporting that game and slowing its decline which just makes good business sense; but looking at the longer term, companies which want to survive the end of their one-hit wonder need to be using its revenues to diversify and grow in other areas.
This isn't a fast process; it takes time, effort and commitment. This week also brought a reminder of just how long the turnaround for a firm whose big hit titles collapsed can take, as Zynga posted its first full-year profit since 2010 - the firm remains a long way from the dizzying financial heights it once looked down on the competition from, but at least it's no longer losing money hand over fist. That took seven years.
Even firms whose big titles are still firing on all cylinders would be well advised to start thinking ahead seven years or more as they decide what to do with all the money flowing in from their mega-hit; finding a golden egg-laying goose is enough luck for one lifetime - it would take massive hubris to imagine that it would also be immortal.