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
Danc.

Reference
Here is a great article that talks about what the attitudes are like inside a packaged goods focused company like EA:
http://www.etc.cmu.edu/about/press_articles/EAFieldGuide.pdf