Wednesday, July 20, 2005

How to Design Online Crack

Today I decided to indulge in my evil side and delve into how the business aspects of a game such as Space Crack strongly influence the game design. First, we'll look at the impact of game design on the financial success of a game from the traditional packaged goods viewpoint. Next, we’ll take a look at the impact game design on financial success of onlines games. At its purest, online game design is quite Machiavellian in its devious desire to mold customers into grinning zombie-like addicts who spread their luscious wallets on command. (Ah, game design...such a noble profession.)

The traditional approach: Games as packaged goods
There’s a wonderful quote from someone who interviewed EA executives
Probably the most surprising thing I learned about EA is that its leaders, including its creative leaders, describe it as a packaged goods company like Proctor and Gamble or Nabisco.”
Dr. Randy Pausch, Professor of Computer Science, HCI and Design, Carnegie Mellon
In the current world, games are seen as shrink wrapped, packaged products that are created in a game development factory and then shipped out like pre-fabricated Willy Wonka’s chocolate bars to retail locations around the world. This perspective has a major impact on the role of game design in the sales process.

The sales funnel
Let us first frame this discussion in terms of sales activities and the impact of game design on each one of those activities. At the most basic level, the economic goal of commercial game development is to provide entertainment in exchange for money. You can think of the process of creating and marketing a game as a giant funnel that turns uninterested users into avid purchasers. People go in one end of the funnel, their needs are fulfilled, and money comes out the other end.

There are several stages involved in the typical sales process. I’m simplifying this a bit for brevity:
  • Market identification: Who is our target market
  • Lead Generation: How do we generate leads? Techniques, sources, etc.
  • Lead Conversion: How do we turn those leads into sales?
  • Repeat Sales: What is the process of repeat customers?
In the packaged goods world, there is a single major touch point during which our sales funnel and game design intersect. During the Market Identification stage markets are defined, licenses are purchased and concepts with ‘niche-only appeal’ are culled. The broad setting and game genre is heavily affected by both internal market strategy and external market factors. The most basic game design details are put under the microscope in order to understand if they will result in a salable title.

This collaboration does not last long. Immediately, the sales team and the development team are split into two distinct silos:
  • Product Development: The software engineering team that creates a high quality packaged product whose goal is to satisfy the implied needs of the identified market. The game must fit in a box and is seen as a ‘disposable experience’, one that can be played through, conquered and tossed into the trash heap of history.
  • Marketing and Sales: The marketing team that will take the finished product and push it through a series of lead generation, lead conversion and repeat sales activities.
    From here on out, game design has a very limited role in the selling process. The financial role of game design begins and ends with fulfilling the initial constraints set during the Market identification stage.
In the packaged goods model, a game exists solely to appeal to a target demographic and provide good entertainment value for a standard industry entry fee. The message to game designers is clear cut, “Your job is to make an entertaining game. It is the job of sales and marketing to sell it.” Anything associated with getting new customers or converting customers is a marketing activity and is completely outside the scope of the game design.

As a game designer, I find this division of labor rather frustrating. A game development team often builds an entertaining game and then watches it flop in the marketplace due to poor sales and marketing. As the entire painful process sales fiasco unfolds, the team's hands are tied.

A waste?
I believe that game should be the major customer touch point. Surely some inspired game design could help convince players to plunk down a bit more of their hard earned money? Players could purchase additional power ups or character levels. They could be given codes that result in discounts on upcoming sequels. Game mechanics designed with a strong economic agenda have the distinct potential to improve a company’s bottom line. A successful game that supports itself with a steady revenue stream can be an evergreen product that stays on shelf for years, not weeks.

In the retail model, it turns out that these extra activities are generally not desirable because they break the business habits of three main players in the distribution system:
  • Publishers
  • Retailers
  • Customers:
Let's look at each one in a bit more detail.

The publishers: a business of volume and timing.
A packaged goods industry is about volume and timing. Large amounts of disposable product must be correctly positioned on shelves at the appropriate holiday dates. Companies (such as EA) who see themselves as packaged goods companies create reproducible marketing processes that rely on a uniform product. An action title comes into the pipe, it is processed in a generic fashion and money comes out the other side. A unique treatment of each title is not desirable since it incurs substantial costs that cannot be amortized across multiple titles.

The first nail in the coffin of financially motivated game design is the fact that the marketing machine demands simple, predictable boxes. Any additional game elements intended to help sell more tends to muck up the smoothly running sales machine.

The retailers: In packaged goods, the customer pays before they play
Game creators, be they publishers or marketing people, do not control the retail channel. The true drivers of game delivery standardization are the retailers who demand a uniform high quality boxed product from the publishers.

Retailers reduce the customer relationship to a simple transaction. Customer pay up front, sight unseen for a boxed game. This simplification process puts game developers in a bind. They may be able to rely on secondary touch points such as reviews and advertisements, but they never get to put the game directly in the hands of the consumer. Despite the dozens of man years of hard work that goes into create a game, the most important factors in the final purchase are the box, the brand it expresses and its placement on the shelf.

The result is a game like Grim Fandango. Surely, everyone who played it thought it was wonderful. But, it came across as a bit different and risk averse genre addicts avoided it like the plague. If only consumers could have played the title, perhaps its fate would have been different. But they couldn’t play it, because in the critical moment of purchase, all that ingenious game design had been reduced to a simple box with an unappealing graphic on the cover.

In essence, there is little opportunity for the game design to affect lead generation, conversion and repeat sales in a direct fashion because the retailers control and limit many of these elements at the point of sale. Retailers demand uniform packaged boxes, so that is what we produce.

The customers: “Um, can you get it at Walmart?”
None of this would matter except for the fact that customers insist on doing the majority of their financial transactions through the retailers. Customers have purchased games at retail locations for decades and will continue to purchase games at retails for many decades more. This is a culturally-driven purchasing behavior ingrained by long habit and historically poor distribution alternatives. In order to reach mass market customers, game designers must play by the restrictive rules of the popular retail channel.

A New Approach: Online distribution
However, change is in the air. Companies like Valve and Direct 2 Drive are forging new online distribution channels. Console manufacturers such as Microsoft and Nintendo are building in direct download systems into their consoles. A vast (albeit anemic) casual games movement is picking up steam. None of these distribution systems possess the same fundamental economic constraints of the packaged goods business.

Online distribution changes the financial role of game design
Online distribution changes the impact of game design on the business model quite substantially.
  • Customer plays before they pay: First, in almost all cases, the majority of the money a customer spends on a title is exchanged after the player has had a chance to trial the game. This happens with MMOGs, advertisement funded casual games, and shareware titles. In this situation, the game design (not a box) has a crucial role in convincing the customer to purchase.
  • The purchasing experience can be controlled by the game developer, not the retailer: If the developer controls the online store, they control the packaging of the title, the opportunities for purchasing and the mechanism for incenting the customer to purchase.

For online titles, the game, not the retailer, becomes the primary financial touch point with the customer. This situation offers increased opportunities for the game designer to push financially motivated game play.

A game as a boutique store
If a retail game is a packaged good like a can of Campbell’s soup, the idea online game is a high end ‘boutique’ grocery store like Whole Foods. Here are some characteristics of Whole Foods that are similar to that of a successful online game
  • Entrance is free (or very low cost)
  • Free samples are plentiful
  • You are met with a friendly, welcoming culture
  • The environment provides an enjoyable experience
  • You always walk out having spent more than you expected
Starbucks does the same thing. So do many high end clothing boutiques. They provide a highly designed experience that drives good will, repeat visits and substantial consumption of goods and services. Game designers, with their control over the entire game experience, should strive towards the same potent financial mixture.

Return to the sales funnel
Let’s look at the sales funnel again and call out the areas that online game designers impact.
  • Market identification: The game designer and marketing collaborate on determining the ideal market segment and what types of games will appeal to this group.
  • Lead Generation: The game designer can build in viral marketing campaigns into the game. They can offer in-game incentives that encourage players to encourage their friends to play.
  • Lead Conversion: The game designer can offer a variety of micro-purchase opportunities for players to upgrade their characters. They can build the game with persistent characters that ‘die’ if you do no pay. They can promote addictive behaviors that result in the spending of real money for virtual tokens. The opportunities here are nearly boundless.
  • Repeat Sales: The game designer can collect detailed information on each player and tailor incentives that encourage them to keep playing and keep purchasing. Unlike the packaged goods market where short games are an economic necessity, the ideal online game is one that is played for as long as the customer is still willing to provide incremental revenue.
The game designer in an online game influences every major sales touch point. The result is a title that, much like the high end boutique shopping experience, both entertains and generates revenue.

Still in the early days
We are still in the early days of online game design. Many game designers hold tightly onto the design habits of their packaged goods past. Indie titles insist on modeling themselves after packaged titles by using the same system of pre-packaged game play that is purchased, exhausted and then thrown away. Hybrid titles such as MMOs rely on an initial retail purchase and then morph into an online subscription model.

True online games like Second Life, Gunbound and Kart Racer are still young. They’ve yet to discover a unified distribution channel such as console-based only market place and must survive solely on word of mouth and traditional advertisting channels. We are still waiting for the maestro game design that plays it’s customers like a fiddle so that they weep with joy and empty their pockets for the right to play more.

The MMO players know that their needs can be better served as they willfully circumvent the virtual laws of their land to purchase gold and weapons. Shareware users know that their needs can be better served as they beg game developers for extensions, additions and modifications to their favorite titles years after the initial release. The online game customers of the world are clamoring for game designs that offer them more than pre-packaged retail-style experiences. When will the game designers realize that there are better ways to fulfill their customer’s needs?

Needed: A few good renaissance men (and women)
The reality is that game designers are mostly rigidly trained craftsmen who adapt poorly to changes in both genre mechanics and business models. To successfully navigate the next generation of online game design, the world needs game designers that are trained in sales, marketing and business. These skills are historically the antithesis of game development culture. We’ve all heard the rants:
  • “Game developers are artists.”
  • “Game developers make games for the love of the game, not for money.”
  • “Pure and Good engineers make cool shit and Evil marketing people do the biz thing in order to sell it”

In the packaged goods era, where the game developers were the sharecropping slaves of the powerful retail distribution machine, this proud display of business ignorance was understandable. In the online era, the cultural divide between development and sales will be shattered by wily game designers who understand that game design is merely another tool for making money. We need a new set of rants:

  • “Game developers are business men (and women)”
  • “The best game developer has an MBA and knows how to use it.”
  • “Both Engineers and Marketing people are part of the game development team and together we make cool shit.”
The Space Crack Financial Manifesto
Space Crack is an online game that will experiment with many of the ideas I’ve described in this essay. It will not be the first to do so, nor will it be the most successful. But at least its twisted little heart is in the right place.

The purpose of Space Crack is clear. It is exists to make money in the most efficient, customer friendly manner possible. All my skills as a designer are bent towards that singular task.

The design of Space Crack is built to capture a massive number of players and then immerse them in a psychologically addictive environment. I’ll liberally use in-game rewards and other tricks of the game design trade to drive real world results. This means making customers give me money for virtual bits stored on a server someplace. This also means coercing customers to willfully sign up their best friends so that they too can be addicted to my money making drug.

Ultimately, customers of Space Crack will pay the development team hundreds of dollars each for the pleasure of playing our delightful game. Naturally, the first hit will be free.

take care

Here is a great article that talks about what the attitudes are like inside a packaged goods focused company like EA:


  1. Wow, this article was really informative. But I feel I have to let you know something about this bit at the end.

    I've read all your updates about Space Crack and it sounds like a game I really will like, a lot. There aren't many games like it and I will likely have a strong desire to play. That first free hit will be snatched up and devoured.

    However, I'm sorry to say that I will never ever pay a dime for a game like Space Crack no matter how much it exceeds my expectations. Here is why.

    It kind of has to do with what you said about the customer above. About selling it at Wal-mart. I personally refuse to shop at Wal-Mart. But I am an incredibly discriminating game purchaser. I wont play a game with a monthly fee. I wont pay for an item or an upgrade in a game. In my eyes a game is either worth paying for or not. If it is worth paying for, like say Half-Life 2, I pay for it once and play forever and ever. If it's not worth paying for, say Tetris, then that's that.

    I learned some valuable lessons from CCGs back in the day. When you start messing with a pricing scheme other than pay once ever you ruin the game itself. It no longer becomes a game of who is best, but a game of who pays the most. Or in the case of MMOs who plays and pays the most, not plays the best. And in a multiplayer game the only factor in victory shoudl be who plays the best.

    Your business model modifications will work, I know this to be true. I know it. However, incredibly serious and stingy gamers like myself wont buy it.

  2. Customers are creatures of habit and like most creatures of habit, they dislike change. It is upsetting, alien and generally results in one of two behaviors
    - Apathy
    - Defense

    Apreche, (and I don't mean to pick on you...this is just too good of an example to pass up) you have choosen a behavioral response that reinforces the validity of your past game buying decisions. "In my eyes a game is either worth paying for or not". Avid players set up a black and white situation with the good and moral people on one side and the people promoting change on the other. The root fear is that game companies will stop making boxed games.

    People pursuing new business models for online games should welcome these comments. Such passionate consumers will ultimately go where the great games are. Often, they've simply had a negative experience (For example "I learned some valuable lessons from CCGs back in the day.") and can be brought back with appropriate game designs that address the complaints. Every complaint is an opportunity to win back a customer on the edge.

    I will bet you, Apreche, that in the next 10 years you will find an online game that you enjoy and will pay for in an incremental fashion. Someone will listen to your concerns and address them. Game design is flexible. Not every game needs to have the exact characteristics of Magic.

    The real problem are the apathetic customers. These are the ones that never experiment or complain. They happily buy from retail venues and will for the rest of their lives. The only solution seems to be generational changes (people die off) or massive educational outreach efforts.

    take care

  3. It's great, I guess, that you have chosen a business-plan-oriented approach to designing a game. This will certainly get you a game that will make money, if people are willing to play it. It may not get you a game that people are willing to play.

    (Contrast with a game-oriented approach, which will certainly get you a game that people want to play, but may not get you a game that makes money.)

    Please understand, if you don't yet, that plenty of gamers value *fairness* as a major attribute in a game. Thus, if they get their ass kicked by a player who spends an extra $5 to buy a Vorpal Sword, they are pissed and will quit, never to be seen again.

    Payments which give a player an in-game advantage fundamentally screw with the game's fairness. Imagine if chess tournament players could buy an extra Queen during the game and plop it down... the world chess champion would be Bill Gates. People who are serious about games hate this, universally.

    This is a different issue than incremental payments which don't affect gameplay. Please don't confuse them, and be very cautious (IMHO) when considering allowing players to pay to give themselves an in-game advantage.

  4. Well, I was all into this game up until this post. Now I'm not so sure. As far as marketing strategies go, I think this is not what you'd call a winner.

    Hey, gamers! Check out the hottest new online game: Space Crack!

    Why 'Space Crack', you ask? Because this is the game that's been engineered from the start to induce an addictive state and require ever-increasing amounts of cash to sustain your initial levels of enjoyment! Just like Real Crack!

    It looks like a simple, cheap game you might play for free! But make no mistake, this game is engineered to suck you dry! If you think simple online board games aren't worth going broke over, this isn't the game for you. But if you have an easily manipulated personality, and a poor grasp of personal finance, get in line!

    "Ultimately, customers of Space Crack will pay the development team hundreds of dollars each for the pleasure of playing our delightful game!" --The Developer

  5. *grin*

    The game will be fun to play. The players will feel they get good amounts of value for their money or else they will not pay. All this is fundamental to the creation of any commercial game.

    I'm not using the most politically correct language in this essay and I apologize if the concept of addictive gameplay or the exchange of money for entertainment is seen as offensive. A MMO would likely use terminology like 'renewal rates' or other metrics.

    Surely folks realize that these are topics that game designers must be intimately involved with? I believe that it is better to be open and honest with customers about your intention than it is do one thing and claim another.

    As for the concept of 'fairness', I agree that this needs to be included in the design. Game designers much like authors and movie makers manipulate their is their job. However, we manipulate the audience at their whim. If Space Crack adds a play mechanic that causes 90% of the population to leave and it only generates 15% more revenue per player, then I'm being a bad designer. Don't do that. Simple enough.

    take care

  6. I think the reason why people are starting to backlash against this approach is simply because it is a business minded approach. The focus is on making a game that will make money. The enjoyment factor is just a facet that you need to make money. It’s just another hook to keep the consumers coming back for more.

    It’s like the manufactured pop bands. You’re not making music because you like making music or because you enjoy music. You’re making music because you want money. To many people this is the epitome of evil and soullessness. As odd as it is, people don’t like to be reminded that we’re in a capitalistic system. People don’t like the idea that companies aren’t doing things for the best interest of the people; they’re doing it for the best interest for the company.

    That isn’t to say that their interests can’t lie together, they overlap in a large number of important ways. A company can make something that helps people and that the people enjoy. However, you have to keep in mind that from a pure business point of view a company makes something for people to enjoy because if they enjoy it, they’ll buy it. An average person might look at an item and say, “Wow, I enjoy this. The company is really looking out for my interests.” Advertising and promotional campaigns build this illusion that the company is there for you. It is pretty obvious when you step back and look at it that the company has no real interest in the consumer, only that the consumer keeps coming back with his (or her) money. And that offends people.

    But then, that’s just how I see it and I’ve got a pretty good track record of being in the wrong.

  7. I'm just wondering how to these designed business models fit in with SpaceCrack being a turn-based strategy game to be played "casually" by people with lives?

    I quite like the idea of a game that I could spend a couple of hours a week at. Either in regular bursts of a few minutes during the week or three/four hours on a Friday. But if SpaceCrack is turns out to too adictive and becomes a time hog then you'll lose me.

    Certainly it has to make money. Since it's turn-based and each single match should take decently long to play out, you could actually charge by the match. In that Player Alex buys a "six-pack" of matchs and his friends pay nothing. Effectively you'd only be charging for the hosting. I can see groups of friends running a rounds system. Though it does suggest some jokes about how depressing it is to drink your spacecrack alone.

    Sorry thinking out loud

  8. froggie: part of the problem with Danc's approach is not the sound business ideals he's presenting, but the attitude he takes towards capitalism in general. You'll note that when an exchange of money is discussed in his essay he has an almost cynical attitude, as if he's implying something nefarious is going on. This is because Danc, who has been corrupted by many a Boulderian socialist bent, has a rather negative opinion of the exchange of goods for services.


    PS> :)

  9. Ray is correct. I am primarily a designer who is required to deal with the distasteful subject of finance in game design.

    It is better to grimace and deal with the subject succesfully than it is ignore the topic through a sense of misplaced idealism.

    Colm Mac: Great ideas. I suspect the final economic systems in Space Crack will revolve heavily around the 'core friends' group. I'm fascinated by the 'us' and 'them' mentality that occurs when groups of humans interact. For example, in the powerup situation, it is completely fair for 'my team' to get powerups but unfair for the other team to get 'powerups'. The first is a case of great strategic thinking on the part of the protagonist and the later is a case of the environment (world, fate, system, luck, etc) having made it impossible for the protagonist to succeed.

    It is a very well studied perceptual bias in psychology and one I'd like to take into account when designing the methods of charging players for the team experience.

    One idea is 'socialism on the small scale, capitalism on the large scale.' In this model, players within a friends network share in each other's powerups, games, purchases. However, the group as a whole is ranked relative to other players using a relative ranking scheme.

    Thus battles are always 'fair', but the cream still rises to the top and creates a competitive current.

    take care

  10. Personally, I evaluate entertainment choices (as most people do, consciously or not) based on the metric of how much entertainment I get for a given price, as compared to other things I could be doing. I'd have no problem paying $100 or more to be entertained, provided that I was entertained for a long time or at a high level of enjoyment, and especially if that $100 was spread out over a long period of time. Compared to 2 or so hours at a movie theater, $100 over a year or so for a game that I play an average of an hour a day works out to a better deal.

    I'd be wary of a game in which players could pay for competitive advantage, but I'm sure there are ways, as you point out, of using such a model without creating a huge imbalance of power between casual and hardcore players. As long as that is taken into account, I'd be interested to see what kind of business model results.

    On a side note, I think it's great that you can be honest about the more "unpleasant" aspects of game design. Artistic integrity shouldn't have to mean a complete disregard for the financial side of art. Artists need to make a living too, and especially in such a highly-commercialized area, making a game with brilliant mechanics but no business plan may get your name out there as a designer, but won't do much for your wallet.

    I'm hugely enjoying the Space Crack articles, keep them coming!

  11. I enjoyed this article immensely. I've never before tried to absorb information as fast as I can while also going slowly to savour every minute of it!

    Although I subscribe to LG I came to read this article today because of research on the financial issues of online distribution. Like everything else I've found it still doesn't answer my burning question however: once the funnels have been funnelled through, what proportion of each shelf sale does a developer typically see? If you could fill me in, I'd love to be able to end my search.

    Apreche, if you are still reading, you say that you pay once for Half-Life 2 then play it forever. Where do new episodes like Aftermath come into that? Surely expansion packs are the packaged goods edition of, for want of a better term, micropayments.

  12. Not that I can speak for Apreche but I think I could answer for someone who could have a similar view. There is a big difference between a continued required payment, even if additional content is provided on a regular basis, and expansion packs. I can pay once for the normal game and play it all I want in a normal packaged environment. If I don’t want to, I don’t have to buy the new content. However, in a subscription type service, you do have to pay whether you want it or not. In a way, you loose your economic ‘vote’ on future development for products when you sign up for a subscription service, or at least that’s what most companies seem to want you to think. There is almost this basin attitude of “if you don’t like what we’re doing, then quit. We’re not making the game to cater to the way you want things, the developers make the game according to what they believe is the right direction.” If you’ve played SWG, you’d be fairly familiar with that attitude.

    But then, I’ve gone completely off topic now and there is probably a fair chance that I missed the point entirely.

    To go back to a previous topic, there seems to be a difference between openly discussing the “unpleasant” aspects of game design and embracing them. Granted, I’m rather na├»ve and idealistic (I’m not quite done with college, the harsh reality of the corporate world hasn’t completely crushed my spirit yet) but ideas like paying for powerups or customization don’t seem to be following the ‘way of the artist’ as it were. They seem to be more thoughts on how one can get money out of the customers. This follows more of the ‘way of the capitalist.’ Getting as much out of the customer as possible while providing the least resources. Capitalizing profits, minimizing costs and that sort of thing.

    Don’t get me wrong. I don’t intend to say that these are bad ideas, that they wouldn’t work, or even that it’s wrong to even consider such things. I just like to point out that these don’t seem to be in the best interest of the customer all the time, but then one could easily say that merely charging for the product isn’t “in the best interests of the customer.”

    Perhaps it just comes down to the fact that I’m not really a good capitalist.

  13. I find your lack of shirt, disturbing.

  14. I thought somebody might say that, FrogPlague. The thing is subscriptions are only one model (you'll notice I used the term micropayment). You don't have to put a stream of money into Gunbound: you could get that extra tank you fancy then never open your wallet again. Similarly you could buy the HL2 episode all your friends are telling you about just as a one off...or so you will tell yourself!

  15. Indeed, there seems to be a lot more speculation in this thread than the original article. Danc said nothing about exactly what the Space Crack cost structure would be, only what some other models are and their pros and cons. And already he's taking flak for letting players purchase powerups, which may not even be part of the plan.

    Heh. "Managing the player community and their expectations" might be a good subject for another article, since the expectations here seem to be spinning wildly out of control before the game is even designed :)

  16. I would consider myself a frugal gamer. If I am interested in a game that is sold as a "packaged good," then I rent it and blow through it in a week. If I intend to buy a game, It'll be one that I'm certain will have high replay value. I buy more used games than new ones. I borrow and I play homebrew. If I'm through with a game, I sell it. Only after five years of waiting for the right MMOG have I found one that I might be willing to actually subscribe to. I do as well as I can to be certain that I'm paying as little as possible for my games.

    This SpaceCrack idea looks excellent to me. A casual turn-based strategy game with multiplayer is something that appeals to me. I fully approve of the concept of incrementally selling in-game content - expansions, skins, whatever. This is only because I usually don't buy these.

    Ideally, you would charge once for the core client and be done with it, but retain a steady source of income through a steady supply of expansions and/or content which does not alter gameplay. Why? The other alternatives, even if they might cost players less, sound worse.

    Subscriptions carry an unattractive stigma. Pay-per-game micropayments have an even worse one, or at least over the Internet they do, where you have to use a credit card and everything - it's unlike an arcade in that people are more willing to part with change and singles than they are to make those same payments with (for example) a cheque.

    Of course, this may just be me, 'cause I'm a stingy little bastard.

  17. Argh I got dial up and I just bought Half Life 2 with my last bit of money. I can’t play it at all because my AOL is junk and wont connect to steam. So I cant even update it at all or play. I want to return it but the store I bought it from only allows store credit. Now I cant eat because I have no money for food or play this game to take my mind off the hunger.