The Exporter’s Dilemma

Many companies, particularly in the game space, have failed to match their local success in international markets. Ones that believe they are particularly data-driven have often had the worst results. The biggest single contributor is that these companies experience false negatives, negative results that they then extrapolate to the opportunities outside their home market. I refer to this phenomenon as “The Exporter’s Dilemma,” as a homage to Clay Christensen’s seminal work, The Innovator’s Dilemma.

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Parallels with The Innovator’s Dilemma

In The Innovator’s Dilemma, Christensen shows that successful companies have trouble innovating because they know their customers too well. Innovating is about creating products that initially appeal to a new customer, which then evolves to penetrate the existing market. Existing customers do not find the new offering compelling, thus the company believes it is not an opportunity.

Successful companies also have trouble innovating because they are successful and they have built a structure that does not support small opportunities. Thus, an innovative opportunity may only contribute one percent or less to the bottom line, and thus the company does not put any resources into growing the disruptive innovation. Instead, a small competitor takes the opportunity and grows it into a business that then undercuts the established companies existing business.

There are parallels to both these issues when building an international social games business. Great games have already optimized for the core market. A top social game team is going to be a top team because they look at the metrics for their existing players and evolve the game to generate the best metrics from those players. That could include features that will perform well or licensing IP that resonates with the players.

When the company expands internationally, features that a Frenchman might like may be unattractive to an Australian. The Frenchman might like a feature where players work together to create beautiful art, while the Australian might prefer that by cooperating you create a race course. With IP (intellectual property), some of the strongest IP in one market may not have value in other markets. While a science fiction game in the US around the Star Trek IP would have a strong fan base, the same IP would not generate any traffic or appeal in Italy. Continue reading