Now that virtually every game company, and every tech company, understands and uses analytics in its operations, simply having strong analytics is no longer a competitive advantage. If everyone is doing the same thing, it becomes the cost of doing business. In the early days of social gaming, Zynga, Playdom and the other leaders built a huge advantage because they had great (at the time) analytics system and used the information to adjust their games based on player demands. Now, even the most traditional game companies (yes, I mean EA) are using analytics to optimize live games and third party providers allow even start-ups access to advanced analytics.
Sustaining competitive advantage
A recent article in the MIT Sloan Management Review, “Sustaining an Analytics Advantage” by Peter Bell, shows ways companies can still use analytics to build competitive advantage even when analytics are prevalent. While some of the suggestions are not relevant to game or tech companies, there are some that are invaluable:
- Apply your analytics to the right problem. Most companies use analytics where they can create quick savings or gains. The downside of this strategy is that the analytics for these small problems are easily replicated. Also, competitors will quickly copy what analytics help you do (did you ever wonder why most game economies are very similar). Companies that have sustained an advantage from analytics have often taken a different approach, focusing on a large, critical problem rather than a low-hanging one. Rather than tweaking your game economy or leveling system, use analytics to understand how your users consume all social media and then build a CRM strategy around those insights.
- Become truly data-driven. It is ironic how many companies that rely on data from their product are actually not data-driven. Many times their strategic decisions or marketing or customer service are not based on analytics but on intuition, often of the leadership team. As with product development and management, analytics can improve all elements of the business. As Bell says in the MIT article, “a truly data-driven corporation, maintaining an advantage for years.”
- Leverage control of the data. You can define analytics as data and the algorithms that extract useful information from that data. The article shows that some companies have sustained an advantage from their analytics by keeping tight control of their data while allowing access to their algorithms. In the game space, there may be a model on building email campaigns for players. The model (algorithm) is potentially less valuable than the data you get from your players, particularly when the number of users starts reaching the millions, that allows you to optimize your email delivery.
In addition to the suggestions above, the article mentions two other ways to sustain competitive advantage, though they probably are not that valuable to most game and tech companies. First, they suggest keeping your analytics secret. Although there is questionable value in sharing how you are using analytics and your findings, everyone in our space already knows the value of analytics and how they can be used. Unless you come up with a truly novel (and valuable) application of analytics, the value of secrecy is minimal. Second, Bell writes you can gain sustainable advantage by moving quickly. Given that every game company is already using analytics and even the ones who moved first have lost their edge, this tactic probably is not an option for most people in the game or tech space.
Remember that analytics are not in themselves the advantage
The critical issue is that in an industry where everyone is using analytics, using analytics is no longer a competitive advantage. To maintain an advantage, you need to use them better and more comprehensively than other companies in your space.
Key Takeaways
- When everyone is using analytics in an industry, it no longer creates competitive advantage. It is just the cost of doing business.
- By ensuring you are using analytics to solve key problems, you can maintain a competitive advantage.
- Using analytics throughout the organization, rather than for limited activities, provides another way to sustain competitive advantage.
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