One of the greatest challenges game companies face is the green light process, even for the most successful companies. Game developers continuously struggle with the question of how to create a hit and where should they allocate their development resources. the most successful game companies struggle with this challenge, even if they have told investors they have a magic formula. When I first started in social gaming, Playdom, Playfish, Crowdstar and Zynga were the dominant companies. Now, if you know any of those companies outside of Zynga you get a gold star, none of them were able to replicate their hits of 6 or 7 years ago (and Zynga has also found it a challenge). Hits define success in the mobile game space, so finding the right formula is a critical issue.

I recently read an article, Space Ape: Chasing a genre-defining hit that describes an approach worth attempting. In the article, Space Ape, a mobile developer generating over $50 million in annual revenue, discusses its strategy to move from publishing solid titles to creating hit games. Space Ape has realized that simply replicating existing successful games and adding some minor improvements can generating solid performance but is not enough to create a hit.

Do not rely on market analytics

The first key is that you cannot use market data to predict the next hit. By its nature, market data is backward looking and can only tell you what has already been successful. It can help you create a good copy of a successful genre but will not tell you what will be the next genre defining product.

User testing and focus groups suffer the same fate. They can tell you what customers already like and dislike, maybe even what they think they will like, but customers will not think of new genres or understand what will appeal to them until they actually experience it. Apple’s success is a great example of this concept, as people never knew they would want an iPad until they actually had an iPad.

From pipeline to funnel

The key for Space Ape, and what I think should be replicated, has been moving from a production pipeline to a production funnel. In the production pipeline, a company will agonize over what product to make, and then spend considerable time refining the concept and developing the game. Effectively taking one product from concept to launch.

What Space Ape is now doing is creating hundreds of ideas for games, pouring them to the top of the funnel, with only a few making it out of the funnel. They allow their teams to move freely between designing, prototyping and developing a proof of concept.

Avoid sunk costs influencing decisions

Most importantly to Space Ape, the team can kill an idea easily, despite how many resources have been invested into the idea. This point is critical; as I have seen many game companies (including projects I have led) continue to invest in games primarily because of the investment already made. Sunk cost, a cost that has already been incurred and cannot be covered, should never be considered when deciding whether to proceed. Instead you should focus on the future investment needed and the expected return on that investment. The sunk cost is gone and no longer should matter.

Structure appropriately

To support the production funnel, Space Ape has restructured its team. Previously, 25 percent of the company focused on the production pipeline, developing new games, while 75 percent focused on maintaining its live games. Now 75 percent of the work force is focused on developing a genre defining hit, while 25 percent support existing products.

By putting sufficient resources behind the production funnel, they can generate hundreds of ideas, prototype a good percentage, pushing the promising ones to proof of concept and then developing the top ones that survive. This process ensures that many different concepts get fleshed out and they not need guess what will be a hit.

The ratio of resources focused on live games versus new development depends on your company’s situation. If you already have one or more of these genre-defining hits (i.e. King or Supercell), you should continue to put sufficient resources behind your hits to generate billions of dollars in value. Conversely, if none of your games are doing much, why keep any resources focused on them (remember sunk costs). What is critical is that you have enough people dedicated to the production funnel so you can have a plethora of ideas, prototype a high percentage of them and take the promising ones to proof of concept.

What success looks like

Moving from a production pipeline to a production funnel is a big decision, it requires significantly more resources, and you may consider it a risk. Given the carnage you see almost weekly in the mobile game industry, however, it is more of a risk to manage new product development the traditional way.

Key takeaways

• Creating a hit game is critical to success, even for company’s already with a hit, but it is one of the most difficult challenges you face.
• The key is moving from a production pipeline, deciding what game to create and then building it, to a production funnel, generating hundreds of ideas, prototyping some and taking the best to concept and then market.
• To support a product pipeline, you need to structure your company to support it and ensure you allocate sufficient resources to drive many ideas through the funnel.