1. Nicholas Lovell GAMESbrief 11th November, 2010

2. The afternoon 2.00: What is a self-publishing and who do you need to do it? 2.30: ARM yourself: funneling users into profits 3.00: Whales, power-laws and the future of media 3.30: How do we get our game out there? 3. Nicholas Lovell, GAMESbrief Author, How to Publish a Game Director, GAMESbrief Clients include Atari, Channel 4, Channelflip, Firefly, nDreams and Rebellion @nicholaslovell / @gamesbrief 4. Who does what? 5. Who does what at a developer? CEO Lots of developers Signs a deal with a major publisher Spend two years making a game 6. Who does what at a publisher? Over to you 7. Who does what at a publisher? CEO Development director Operations director Marketing director Finance director Sales director Lots of developers Databases Billing CRM Moderation Web design Security Analytics CRM Customer service Brand marketing PR Financial controller Admin Business dev Partnership 8. Some team sizes Jagex - 400 people Adds one customer support per 10,000 paying users and 50,000 free users (currently 1 million paying; 6 million free) Playfish 300 people 10-15% of total staff are analytics people 20% of each game team is analytics A fully-staffed online publisher like the one set out above will have 40 staff: This will grow rapidly with customer support BUT you dont need to start with this. Just be aware of the growth path 9. Can we outsource? Developers have always outsourced the publishing function to PUBLISHERS Most jobs *can* be outsourced The questions is which ones *should* be 10. Sales This is all about taking the users money As much technology as sales PSN/XBLA/WiiWare/iPhone: Already outsourced to Sony/Microsoft/Nintendo/Apple Web billing: Yes, but plenty of integration issues Advertising sales: Yes, but plenty of integration issues 11. Distribution This is all about getting games into the hands of users PSN/XBLA/WiiWare/iPhone: Already outsourced to Sony/Microsoft/Nintendo/Apple On the web, this has two elements: Technical: scaleable infrastructure Marketing: generating traffic and plays Although large elements can be outsourced to Facebook 12. Marketing ARM yourself: Acquisition: getting players to your game Retention: keep them coming back Monetisation: make money from them Where marketing meets gameplay, keep it inhouse Traditional marketing skills can be outsourced: PR Brand marketing Graphic design 13. Finance The hardest element to outsource Only you can determine how best to finance your game Heavily dependent on your business model Regional location may matter Use accountants/lawyers/financial advisors where necessary Non-executives are extremely useful But boot-strapping may be best 14. ARM yourselves: funnelling users into profits 15. Ill get some visitors Some who visit will register Some who register will subscribe Subscribers will spend an average of 10 per month Ill put my Maserati on order 1% convert = 1,000.00 1% convert = 10.00 Say each costs 0.10 Only if the average user stays for 100 months! How most people start 16. ARM yourself Hoping for the best is not good enough, you need to ARM yourself ACQUISITION: How do I get people through the door cost-effectively? RETENTION: How do I keep people coming back for more? MONETISATION: How do I build money-making strategies into gameplay Most developers focus on one of these All three are really important 17. The funnel Users Profits 18. Feeding the funnel Unique users Harness users to create virality: Referrals Facebook Connect Importing contacts Twitter MarketingPRSEOSEM/PPC Cross-promote from other titles 19. Converting the funnel Unique users Registered users Active users Paying users Revenues & profits For your business: Draw the funnel Reduce to as few steps as possible Know the conversion rate for every step Tweak, iterate, test until you know exactly how your funnel converts 20. Finding the levers Users are not the only metric The others depend on your business, but might include: Page views Video views Game downloads Purchase of a virtual item A metric that you cant influence is no good Focus on LEVERS 21. Digression 1: Calls to Action On every page, you should know what you want your users to do Then SHOW THEM e.g. Register/Log In/Buy/Subscribe But also: Tell a friend Play a game Connect with Facebook/Twitter 22. The equations 23. Why the funnel matters The funnel matters because it is your entire business To emphasise that, we need Equation I CPA < LTV = good business CPA > LTV = trouble Where: CPA is cost to acquire a user LTV is the Life Time Value of a user 24. Harnessing virality A viral business can be an insanely profitable business CPA is close to zero, so even if LTV is low, your business is great Time for Equation II: Viral coefficient = A% x B x C% Where A% = Percentage of your users who invite a friend B = Number of friends they invite C% = Percentage of friends who accept the invitation If viral coefficient > 1.3, time to order the Maserati 25. But what if Im not viral? For most Web businesses, the choice exists between: Viral: low CPA, low LTV Monetized: High CPA, high LTV Either is fine, or even a blend, but keep focusing on the conversion rate 26. Its all about the levers Find the metrics that have the biggest impact on the bottom line Try to reduce the metrics to one! Three is more usual Make sure they are LEVERS Laser-like focus on pulling and improving these LEVERS The result will be a better business and a happier team 27. Whales, power-laws and the future of media 28. Mythbuster 1: Publishing is about content Publishers add value through DISTRIBUTION Books 10% 90% Newspapers 15% 85% Games $200m$50m 29. The Internet has made distribution easy 30. Great news for content creators Content distributors, not so much Ballpark, I estimate 50% of people in content distribution will be out of work over the next decade BUT many more content creators will be able to make a living from producing and distributing their own content 31. Mythbuster 2: All users are not created equal Circulation Audience Platinum disc Units sold 32. Users come in all shapes and sizes Buyers Sneezers Influencers Browsers Spenders Socialisers Gawkers Grazers Recommenders Passers-by 33. The price/demand curve In an era of physical distribution, you need to set a single price For games, around $40 PRICE Demand Thats too expensive for me Its great value, Id have paid much more 34. DDO revenues up 500% LOTRO and Everquest II going soon Now we let users set the price Hypothesis: Allow users to choose how much they spend on your product, and your revenues will go up PRICE Demand $10 MMO subscription $1 $1 $5 $5 $5 $5 $3 $3 $3 $3 $3 35. WRONG! 36. Allowing users to choose how little to pay is not the secret We all knew that 95% of users played for free We now know that 80-90% of revenues come from 0.5% of users PRICE Demand Free: 95%Paying: 5% 80-90% of revenue from 0.5% of users Spending $50 - $10,000 or more 37. Find the whales 38. Lets look outside the games industry 39. What happened to music? Say 90% of users want to pay nothing 10% would happily pay $100 So 90% pirated and 10% paid $10 = revenues falling 90% PRICE Demand There was no mechanism for the whales/high/rollers/true fans/kings $10 album price It didnt have to be that way 40. Bands and managers are waking up Nine Inch Nails $300 First 2,500 only OK Go $25 Live recording of gig youve just been to! U2 by U2 $30 Coffee table autobiography Mos Def $40 T-shirt with code to download The Ecstatic 41. One-size-fits-all pricing is dead PRICE Demand Revenue opportunity Marketing opportunity 42. Mythbuster 3: Free players are freeloaders Free users are insanely important They are: Potential converts Eyeballs for advertising Leads for lead gen deals Influencers through virality and word of mouth Gawkers Every single player has value 43. Morph a thought experiment Business model 2 Make a free iPhone App Incorporate ads for a limited edition, 1,000-only print of the original Morph, framed for your wall for $999 Conversion rate of 0.1% = same revenue (oh, no 30% to Apple) Business model 1 Make an iPhone App Offer a Lite version and a 99 game 44. My advice If you dont have a way for whales to spend unlimited amounts of cash, youre in trouble Look after the whales Treat your freeloaders with love and respect; they never stop being valuable All users are not equal. Tailor your products accordingly Sales, marketing, revenue generation. These are all part of the creative process now. Have fun. 45. How do we get our game out there?