I’ve been talking a lot lately about mistakes made in the game industry, but one that constantly amazes me is the failure to understand the competitive landscape. This issue is not new to the social gaming space; I have lamented this problem for nearly 20 years. I am always amazed at how many products come to market with no awareness of the competition. Developers and publishers end up losing millions of dollars that could have been mitigated—or even avoided—by basic competitive intelligence.
Your game should not be worse than your competitors
The most egregious example is when a developer/publisher releases a game that is clearly worse than the market leaders. This could be putting out a shooter that has a much lower frame rate than Halo or a hidden object game that does not look as good as the other titles on the market.
Developers will often create a game based on the current market leaders, with the intent of being competitive with the current best of breed. The problem develops because new games come to market between green light and launch but the developers often do not keep abreast of the changes in the market (and in their defense, it is often very crazy during the development cycle). When it’s time to launch, what would have been a great game a year ago is not as good as other options players have today. In the free-to-play world, this issue is exacerbated because your game cannot retain players or get them to monetize if they are not having a better experience than their alternatives (a console game can still sell a certain number of units with good advertising).
Missing features that become standards
Even if the overall quality of the game is consistent with the competitive environment, if you do not include features your competitors now have and your players now expect your game will fail. 
A great example from the traditional game space is when most first-person shooters became multi-player. Some companies did not adjust their development to incorporate a multi-player option, and even though they created a great single player experience some great games failed. In the social and mobile gaming space, a great example is Big Fish. Their first major foray into social gaming was a product called My Tribe (launched in 2010). It was a beautiful game and well executed. Unfortunately, other products at the time incorporated more of a sandbox mode with non-linear gameplay and players came to expect these mechanics. It took Big Fish three years to recover in the social gaming space (with Big Fish Casino).
This issue extends beyond games
The importance of understanding your competitors’ products extends well beyond the gaming space and is a key issue for all companies. Microsoft’s failure as a mobile operating system is a great example. About 18 months ago, I bought a Windows phone. Within days, its deficiencies compared to iOS and Android were clear, particularly the fact that it regularly froze and crashed. My guess is that Steve Ballmer and Microsoft management never used competing phones and just looked at the features of its phones versus the competitors, rather than understanding the experience. This failure to spend a lot of time understanding your competitors cost Microsoft shareholders billions of dollars and probably cost Ballmer his job (and possibly his legacy).
What you should do
I am not advocating creating long Powerpoints comparing your features with your competitors. What is crucial is that all members of your product team (and senior management) spend as much time on competitive products as they do on your product. You can see what innovation competitors are bringing to market, what frustrations there are with the products and how the market is evolving.
For the latter point, it is important not to have a certain product(s) that you are constantly assessing against but quickly incorporate new successful products or games into the mix. If you were creating a match-3 product that you started a year ago, you may have been playing a lot of Bubble Witch Saga and Bejeweled Blitz. (By the way, if you missed that Candy Crush Saga took the match-three world by storm and just created a game that kept up with those, you also would have failed.)
Although most would agree that it is important to play competitive games, it is much easier said than done. Most people in the game industry already do not have enough bandwidth to accomplish everything they need to do. One of the first things that gets cut in the search for time is playing competitive games even though most realize the importance of doing so. You need to re-prioritize your play of competitive titles, incorporate it into your schedule and also make sure your team is doing the same. That is the only way to avoid publishing a sub-standard game.
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