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Video Game Marketing: The New Bible Part 1

Scott Steinberg's guide to promoting and selling product in the new games economy

That said, rather than fear this shift in thinking, it's time we as an industry holistically embraced it, and wrapped our heads around the fundamental change in strategic approach this necessitates. In hopes of opening lines of communications between development and marketing, and giving game industry newcomers and vets suddenly faced with the terrifying prospect of operating as full-service publishers a leg to stand on, I've put together the following ultimate guide to promoting, packaging and selling product in the new gaming economy. (Including new business models that can save your company's skin, give any studio more leverage in contract negotiations, and effectively act as ongoing marketing methodologies unto themselves.) No matter the size of your development team and budget, from zero-cost options to grand-scale strategies, you'll find a wealth of hints, tips and advice contained within.

In the first installment of this multi-part series, we recap the biggest challenges currently facing video game developers, publishers and businesspeople today:

Rising Development Costs: With average review scores in key genres in 2011 growing (FPS – 81%, RPG – 80%, Sports – 82%, Strategy – 85%), it's becoming more expensive to compete on an international level, let alone keep up with blockbuster brands. Launch dates are no longer the end of a developer's work either, but rather the beginning as well: It's vital to increasingly treat games as products, not services nowadays, and account for ongoing spend on servers, DLC, regular updates, etc. Although expected to grow 5X to a $5 billion market by 2015, according to Parks and Associates, the switch to social games won't save you either. From deeper, more traditional gaming experiences on Facebook (see: strategy outing Kingdoms of Camelot's 7.3 million monthly active users) to titles with broader multiplayer connectivity and user-generated content/location-based integration (e.g. Heaven's Diner, which involves quests at actual real-world locales and casual photo sharing), these games are becoming more complex and detailed as well.

Greater Competition for Share of Shoppers' Time/Budget: – An endless flood of games (30,000+ presently available for iPhone/iPad alone, as compared to just 30 retail releases across set-top consoles in May), platforms and devices from Web browsers to tablet PCs are suddenly competing for consumers' attention and disposable income, as are a growing range of work demands and leisure activities. Lest you discount the danger, consider mobile gaming, expected to be a $10 billion market by 2014 according to Futuresource. Not only are smartphone apps killing portable consoles' share of the market, causing it to drop by 15 per cent to just 66 per cent between 2009 and 2010 in the wake of growing iPhone and Android alternatives, per Flurry Analytics. EA Mobile says that 47% of players play at home, and NPD tells us that home is likewise the most popular place kids enjoy apps as well, taking a chunk out of the time that would otherwise be spent with traditional set-top games (Frighteningly, in the latter case, eight out of every 10 gaming apps downloaded for kids are free too). To wit, a product doesn't just have to immediately stand out from the crowd and grab buyers' attention today – it also has to deliver compelling reasons to stay top of mind, and at a rapidly shrinking cost to the end user.

Developers struggle to continue to "rightsize" titles, delivering just enough features to justify the price and please consumers.

Less Shelf Space at Retail: Even the globe's biggest retail chains are devoting less room to boxed product, especially in the PC space, and increasingly focusing their efforts on digital initiatives. GameStop alone plans to spend $100 million on growing its online presence through downloadable, cloud and free-to-play efforts in 2011 – $30 million more than it will spend this year on new store openings or renovations. But along with a drop in space at retail, and in retailers' overall market impact, come ancillary concerns with advertising. Not only is there less chance to promote your game via end-caps or point-of-purchase in physical shops. These opportunities aren't being replaced readily or fast enough on digital storefronts. Yes, you can buy space on the Xbox 360 dashboard at a high premium. But what about platforms like the iPhone, or less sophisticated cellular handsets, where oftentimes promotional ops are limited to the name of the game, a single icon and possibly 140 characters of text alone?

Game Prices Dropping: Over half of all Xbox 360 games in May 2011 will retail for $49.99 or under, and retailers (e.g. those who can track inventory in real-time) can implement price drops in a matter of days, not weeks. Contrast the scenario with that of the average smartphone app, which is either free, or sells as a $0.99 - $1.99 impulse buy – and there's tens of thousands sitting in your pocket ready at any time to choose from. The twin pressures of the rising costs needed to keep up with modern quality standards, coupled with growing fan expectation surrounding getting more for the money, are quickly presenting a vise between which many game makers are being mercilessly crushed. As was illustrated with the sudden freefall in plastic instrument-based music video game titles over the past two years as well, downloadable content (DLC) is now cutting into new product sales too, providing value-priced ways to keep even older titles feeling fresh and new. That's good for businesses prescient enough to adapt to online business models (ironically, even Harmonix, often cited as a casualty of music gaming's collapse, says it's still doing one million in digital song sales a month). But it's also a serious wake-up call for anyone who's still hoping to hock boxed product, let alone on an annualised release schedule. Can't gauge the impact? Allow us to put it in perspective: Prior to recent issues with hacked accounts, the PlayStation Network boasted 75 million players, 70% of whom connected to it each week, and had downloaded 1.4 billion combined pieces of content, with free-to-play MMOs like Free Realms also arriving on the service. In other words, even the traditional console landscape is rapidly changing.

Consumers Spending More Time with Digital, Mobile: Nielsen studies show that household budgets are up, but people are spending less money on gaming. Why? They're going outdoors and socializing more, and shifting interest to cheaper, more convenient outings for mobile devices. With nearly half of all full video game downloads occurring on these platforms, according to the NPD Group, it's obvious that smartphone, free to play, web and online outings present a growing threat. Not just in terms of pricing, but in terms of how much time they're eating up that would traditionally be spent with the involving $50-$60 blockbusters needed to keep large-scale firms afloat. On a happy note, digital distribution is also opening new frontiers: Expected to nearly double to a $4.2 billion market on PC in Europe by 2015, per DFC Intelligence, spot markets such as Romania and South America are suddenly becoming viable concerns for selling digital downloads and virtual goods. Because of this, even niche genres – e.g. war games – once seen as dead can live again, as illustrated by hardest of hardcore themed title World of Tanks' 1.7 million players in Russia alone. The new challenge, though: How to reach players via these territories and new operations strategies, where you may not be accustomed to doing business, and adapt to marketing and business models that may be based on making more from a smaller user base than is typical? Interestingly, gaming is also the top activity on tablet PCs – 84% of owners use them for play, says Google AdMob, more than employ the devices for searching online, checking email or reading news. This would appear to be a positive for the games industry, with nearly a third now using the devices as their primary computer. The Catch 22, however: These devices primarily play apps delivered through dedicated app stores, Flash web browsers and online titles – not the traditional AAA products that have, historically, fuelled grand-scale concerns. Worse, 77% of owners say they now use their desktop and laptop less, driving them even further away from traditional retail product

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Scott Steinberg


Scott Steinberg is the CEO of video game consulting firm TechSavvy Global and a frequent keynote speaker and media analyst for ABC, CBS and CNN who’s covered the field for 400+ outlets from NPR to Rolling Stone.