Wednesday, January 18, 2012

Establishing an Important Link between New Monetary and Personal Concepts of Value for the User

“I believe games will be the preeminent art and entertainment form of the 21st century [but] if we continue on our current path, we'll end up in the pop cultural ghetto.” – Chris Hecker (head of definition six, inc., formerly of MAXIS/Electronic Arts)

The quote above was delivered by Hecker at the IGDA Leadership Forum in San Francisco in 2009 during his keynote speech addressing the need to further pursue more new, original and experimental game development with regards to mass-market products, recognizing that such practices are a difficult proposition given the risk-averse nature associated with the development of high-budget, mass-market titles, yet vital for the continued growth of the industry and the long-term stability of the industry and the medium.  

Bearing this concept in mind, a connection begs to be drawn between this and another comment by Level-5 president and CEO, Akihiro Hino in a interview with Nikkei Trendy Net, noting his concern over the potential of moving games too far in the direction of the currently booming free-to-play model prevalent in many mobile, online and social networking games, noting that charging nothing for a product runs the risk to conveying a message to the user that the product that they are consuming, in this case a video game, carries no value.

Essentially what we are struggling with are concepts of value, with the goal of this article being to point out a clear link between the concepts outlined above by these two industry visionaries, by offering examples as to how the industry might find new opportunities for growth and expansion by addressing these issues together and establishing both new monetary and personal concepts of value within the consumer.  

What do we mean by the word value? For the sake of simplicity, let’s assume that we have two primary ways in which we assess a game’s value, and that there exists a direct link between the business side (development, publishing, marketing, etc.) and the end user, the person who decides to invest their free time and expendable income on the products that we create:

Value 1) Monetary:  This refers to how much money the user is willing to invest for a given experience that a game offers.  Examining past market trends, future prospects, and engaging in activities such as focus testing and play testing, representatives will determine how much money to invest in a particular game’s development and marketing resources based upon the perceived user interpretation of this same monetary value.

Value 2) Personal:  This value refers to how the user relates to the game on a personal level, difficult (if not impossible) to interpret with numerical data.  While the user-experience with a game may be unique to each individual player, it is to an extent influenced by the developer’s ability to successfully execute on delivering an intended kind of experience.

The Pricing Problem: Opening up New Pricing Models

The increased prevalence of online distribution outlets and the rush by both established and independent developers to capitalize on the currently booming casual and social game market surging alongside the dangerous trend toward Hollywood scale budgets for mass-market packaged retail products has, in only a few short years, created a chasm in price-point standards between the products offered by the game industry’s long established distribution model and the ever evolving digital distribution model.  And while year-end revenue reports and month-to-month sales figures continue to keep industry executives on edge, establishing a general air of pessimism permeating the industry, reality is likely brighter than it seems, as many of our lumped figures are unable to account for the rapid diversification of distribution outlets and revenue models, meaning that the now much larger sphere of the game industry is likely healthier than our current general perception.

This is a clear positive, as this would indicate that the industry as a whole is likely gradually managing to reach outside of the traditional market which has made up the majority of game sales over the past several decades, meaning that we are expanding the user-base.  It’s generally accepted that in order to grow as an industry, there are only so many ways in which we can increase revenue through a single user-base, in this case the core gamer, and that we need to, while continuing to support and grow that existing market, get more different kinds of people playing games.  Often defined as casual or social games, these burgeoning genres prevalent on platforms such as mobile phones and social networking sites appear to be playing a significant role in attaining that goal of a wider, more diverse gaming audience.

But this trend is also helping to create the pricing chasm.  On one side we have the social games that are ostensibly growing the gaming population, many of which are of the free-to-play nature, while the pricing structure for the iPhone market, for example, is described as the race to the 99 cent price-point, also often described as, the race to the bottom, with the bottom being the cheapest viable pricing option available without giving away the product for free.  

Competing with these trends we have a standard suggested retail price-point for packaged retail products ranging from $50-60 dollars in the US and often 6,000 to 8,000 yen (approximately $66-88 US dollars) in Japan.  Current development and marketing costs associated with bringing a game to market which is considered to be up to standard in all areas from gameplay to visual and audio fidelity easily reaches into the range of tens of millions of dollars (approximately upwards of  10, necessitating these price-points and keeping what are intended to be mass-market games monetarily out of reach of the mass-market, creating a difficult entry point for those who don’t already have an interest in the medium and greatly limiting the amount of products that even the highly interested and willing more user is able to consume due to financial barriers.

We have, albeit unintentionally, essentially polarized our largest markets, offering a deluge of easily accessible products which, while of high quality and successful in providing a well-crafted and intended name experience, are inherently limited in what they can offer based solely on their low pricing structure and budgets, running the risk of creating a mass culture of game consumers instilled with the concept that the potential for video games as a medium doesn’t  stretch too far beyond that of being a brief and relaxing diversion.  Packaged retail products on the other hand, while the developers and publishers working on them have the tools available in order to experiment and the marketing dollars to help bring technically impressive and compelling products to a wider audience, are unable to do so at the risk of not reaching an already established user-base, as not reaching projected sales numbers in the current generation for only one title often results in layoffs and even studio closures, making the development of new kinds of mass-market products attempting to expand the medium a risky proposition, thus forcing these games outside of a mass market price point as well.  

So, what are we doing with those potential price-points that lie between 99 cents (or free and $60 dollars? How can experimentation couple with those in-between price points in order to broaden the user base?  In the following sections we’ll look at some examples of games that have made steps toward solidifying this connection to interesting results, allowing us to examine ways to further grow this largely untapped and important segment of the market.  

Notable Examples

Wipeout HD:  Developed by Sony Computer Entertainment Liverpool Studio and released at a $20 price-point as a download-only title for the PlayStation Network back in September of 2008, Wipeout HD slips into an artistic niche by offering an entry into the racing genre that departs from more standard depictions of racing in video games, with a unique and catching art style that penetrates all areas of the game experience from the audio all the way down to the menu design, while still managing to be conceptually easy to grasp for players who typically don’t consider themselves to be fans of racing games.  The game is often considered steal at only $20, yet is a bit of an anomaly within the pricing structure of PSN.  Sony has managed to create long legs for this title by continuing to update it with downloadable content, with the game scheduled to receive 3D enhanced visual upgrades in the near future in order to have the game serve as one of the PS3 initial poster titles showing off the technology. 

Braid:  Originally released back in August of 2008 for Xbox Live Arcade as part of Microsoft summer of Arcade promotional series, this independently developed game led by creator Jonathan Blow has gone on to sell nearly 365,000 units on Microsoft’s service alone (as of April 2010, according to Gamasutra), and has since been released for the PC, Mac, PlayStation Network, and even received a full box-product release for the PC in January of 2010 where the game appeared on the shelves of major U.S. retailers such as Wal-Mart and Target.  At a $15 price-point, the game didn’t stretch too far from the platform‘s pricing standards, however it was considered to be at the high-end of the pricing structure upon its initial release.  While a game appearing on multiple platforms is hardly out of the ordinary, this game is significant because, despite its appearance as a simple side-scrolling 2D platformer, it was independently developed and lauded for its unique storytelling and art style, often also being considered an art game. Stellar reviews and word of mouth resulted not only in the game selling impressive numbers, but more importantly, blazed a trail for independent game developers, helping to open up independent game development as a viable market and raising awareness throughout the established mass-market of users as to the presence of such games.  

Deadly Premonition:  Originally developed and published by Marvelous Entertainment in Japan for the PS3 and Xbox 360 under the title, Red Seeds Profile, the game was released by Ignition Entertainment in the U.S. for only the Xbox 360 as a packaged product for the budget price of $20 dollars.  The game initially received a fair bit of criticism from the gaming press for not being up to standard from a technical standpoint; however the game’s storytelling, originality and unique presentation soon became a hot topic of conversation throughout the gaming community, with the game managing to achieve a number of perfect or near-perfect scores from several notable media outlets.  The game has gone on to be a major discussion topic throughout the Western gaming press for months, holding the attention of the media and users throughout a spring season full of high-profile game releases.  The game even managed to spend a short bit of time at the top of the Amazon.com video game sales charts.

bit Generations series:  A series of 7 games originally released only in Japan for the Game Boy Advance back in July of 2006, the games were all entirely new titles, each with an artistically retro aesthetic, a design choice cohesive throughout the series and atypical of many retail products which were not rereleases of already well-known titles from the 1980’s.  Selling a new  old-looking game of this nature could have likely been considered a risky proposition, however releasing the games with a cohesive image as a series in sleek and classy original packaging that matched the games retro style and also stood out on store shelves made the games a tantalizing proposition for many users.  The fresh design and the idea of Nintendo releasing retro art games even caught the eye of gamers overseas, making the games a target for import-savvy consumers as well.  Several games in the series have since been released in the U.S. and Europe for both Nintendo’s WiiWare and DSiWare downloadable services, hence serving as accessible titles with long legs thanks to their ability to be repackaged and redistributed to a wider gaming audience.    

Trine:  Trine was developed by Frozenbyte and released for the PC in July of 2009 and on the PlayStation Network in October of the same year.  The game is a physics-based, side-scrolling action platformer integrating puzzle elements utilizing the game’s impressive physics and forcing the player to regularly switch between the game’s three playable characters, each sporting their own unique abilities.  The game was originally a one-man project within the then relatively large studio which was primarily focusing its energy on the development of another AAA title.  The rather unique ecosystem which developed within the studio following financial difficulties resulted in the studio refocusing its energy on Trine, a technically impressive and creative title created by a team of about 20 people with contributions from many others, eventually releasing for $40 on the PC (retail and digital download) and $20 on PSN, with $20 now being the standard price-point across all platforms.  Though sporting rather uncommon price-points on both platforms, the game has been profitable for the studio which is currently hard at work on new projects as a result.      

Connecting Price and People Future Potential

While each of the games outlined above differs from one-another in many clear and observable ways, there are 3 common threads between them worth noting:

Each of the games stepped outside of the standard pricing structure for its respective platform. The games all competed and succeeded within their own given market, not based solely on technological prowess, but by tapping into an artistic quality, whether it be gameplay design, aesthetic, story, or a combination of the three, each offering a presentation easily communicated to the core audience while also managing to appeal to users who may not have chosen to explore that particular game or genre otherwise. The games have all demonstrated long legs. Each of these titles has managed to hold the attention of both the press and the user-base far past their original release into the market. Many of them have also been supported by the developer and/or publisher over the long-term, sometimes even years after the product’s original release, repackaged and rereleased in different capacities, allowing them to reach different audiences.   

The reality is that experimentation is a financially threatening proposition for titles with high development costs.  In an interview with Gamasutra, the Trine developers refer to a time when seeking a publisher for a new AAA project when they came to realize that, the publishers who had enough money did not believe in our ability to deliver the AAA game we were pitching to them, and the publishers who had enough faith did not have nearly enough money, a statement that clearly exemplifies the industry’s current struggles. But we need to continue developing titles that flaunt our technical and creative resources in order to expand. This combination of creativity in design and technical implementation to produce well-crafted games of an in-between scale could very well be the key to offering products at price-points which are more accessible on various platforms while still managing to evoke a sense of personal value within the end-user and generate necessary income.

It is vital that we pay close attention to the figures that we use when we determine how successfully we are growing and expanding video games as a medium.  With a tendency to focus merely on the total amount of money that we are generating, often comparing ourselves to other industries, such as film, flaunting that we save surpassed the long established culturally respected art form, we also tend to overlook the fact that we are selling products at comparatively premium prices.  As Hecker noted in his IGDA keynote, we have yet to produce our ‘Gone with the Wind’, a film which sold 202 million tickets in the U.S. alone back when it was released in 1940, a time when the population of the country was only about 130 million people. It’s this kind of cultural relevance that we need to establish as a goal for the medium in order to solidify our long-term safety as an industry, and finding ways to offer more financially accessible and personalized products could serve us well in our attempts toward reaching that goal.