Earlier this month, I spoke at Casual Connect about lessons from Real Money gaming that could be applied to the social space. These lessons range from product to CRM to VIP. See the full talk here:
Advertisements
General Social Games Business
How to build a Leaderboard that actually works and drives KPIs
Leaderboards are a common feature in games but developers are often surprised because they are ineffectual or quickly lose impact. The problem is not in the underlying value of leaderboards but in how they are often designed. A recent blog post by Omar Ganai and Steven Ledbetter, How to Motivate with Leaderboards, does a great job of presenting the underlying psychology driving leaderboards and best practices.
What makes leaderboards work
The key principle behind leaderboards is that people want to win and winning improves status. What is often neglected, however, is that some players do not want to win, they want to avoid losing. The latter is important as players who want to avoid losing perform worse when competing. Competition is good for motivation and achievement only when it helps users feel competent. You need to design your leaderboards so it does not make your players feel incompetent.
Ganai and Ledbetter point out that self-determination theory shows people seek and engage in undertakings that fulfill three basic needs. Thus, a well designed leaderboard is consistent with these three needs:
- Competence. The emotion a player feels when they successfully complete a challenging goal. The opposite feeling is ineffective or helpless.
- Relatedness. The feeling a player has when they are understood and liked by other players. The opposite feeling is rejection and disconnection.
- Autonomy. The satisfaction a player gets resulting from a personal commitment and choice. The opposite here is coercion and manipulation.
An effective leaderboard will combine competence, relatedness and autonomy while not making the player feel helpless, disconnected or manipulated.
Best practices in designing leaderboards
To design a leaderboard that drives behavior and incorporates the three needs above, the authors point to four “ingredients”:
- Goal-setting.Goal-setting involves giving or guiding a user toward a goal, and has become recommended as an effective building block for behavior change. The goal of most leaderboards implicitly is to be number one. You need to go beyond this implicit goal and guide your player toward a goal. Effective goals include having fun, learning and showing autonomy. They also recommend nesting intrinsic goals with the extrinsic goals, like making yourself a better poker player by competing on the leaderboard. Finally, an effective technique nests individual goals inside team goals, so the leaderboard is more about playing with others than being number one.
There are also some goals you should avoid as they will prove demotivating. These goals include meaningless rewards (get more worthless points by finishing number one), emphasizing outcomes players cannot control and focusing on pride (i.e. you should win because only the smartest win).
- Feedback. A strong feedback mechanic can promote feelings of mastery and competence. You should provide feedback for players on how they are progressing tied to the above goals they have set. The authors also suggest proving juicy feedback, “juicy feedback is varied, unexpectedly excessive sensual positive feedback on small user actions and achievements.”
- Social comparison. Social comparison helps players understand how they are doing compared to others. Rankings are inherently a form of social comparison. The trick is doing it right because social comparison can make people feel ineffective and unrelated. People tend to compare themselves with people above them so it is easy for them to then feel incompetent.
There are some techniques to mitigate the risks in social comparison. First, you can tell players they have achieved a standard, even if they did not finish first. Second, explain why players got the score they did and explain how they can do better. Third, give players a choice of playing more or stopping (putting them in control). Finally, acknowledge losing is not fun. If you keep players focused on improving and playing well, they are likely to stay engaged. Also, if they lose as part of a team, the impact of the loss will not be as great, thus it is critical to emphasize connections and relationships.
- Social rewards. Just as Facebook uses the Like button, let other players reward a player for their activity. You can achieve this impact by letting them follow the player or just sending a virtual high-five. It also helps to make the rewards surprising, as predictable rewards undermine intrinsic motivation.
What to do
Rather than avoiding leaderboards, build them but build them correctly. If you employ a lazy approach and just rank players 1 to one million, the leaderboard will not work well and impact will diminish over time. If you take the time, however, to set up effective goal setting, provide good feedback, employ social comparison and have strong social rewards, you will have a winning feature and move up the AppStore leaderboard.
Key takeaways
- While leaderboards are a central feature in many games, for them to be effective you must build them properly or else they will be ineffective.
- A key to good design is keeping players from feeling incompetent or inferior.
- The other critical components of powerful leaderboards are clear goals, a strong feedback loop, social comparison and rewards that are social.
Key takeaways for game companies from Mary Meeker’s 2018 Internet Trends
Mary Meeker recently released her 2018 Internet Trends (entire presentation below) and several of these trends are particularly important for gaming companies (both real money and social). For those of you not familiar with Meeker, she was formerly one of the top tech analysts on Wall Street and is now a leading VC (Venture Capitalist) with Kleiner Perkins. Her annual Internet Trends report has become required reading and although I hate predictions (they are about as accurate as your local weather man) she does a good job of identifying underlying developments that change the way business operates.
The trends that are most important to companies are:
- Smartphone shipments are flat, the base is not growing, while growth in the number of Internet users has fallen to less than 5%. This fact means for game companies growth will come from increasing the amount of time existing people spend in games and, in particular, your games. It also means you need to monetize these existing users better.
- Easy to use products are becoming pervasive, and Meeker points to Messaging (Telegram), Commerce (Square Cash) and Media (Spotify). This development is consistent with the growth of hypercasual in the game space.
- Messaging (WhatsApp, WeChat, FB Messenger, etc.) is growing at an incredible rate. This trend suggests CRM, acquisition, support and games on messaging platforms will become incredibly important.
- Voice technology is lifting off, suggesting voice will be an increasingly important element of games.
- Personalization plus collective data is creating better consumer experiences. Game companies need to continue making experiences more personal for players without crossing over concerns about privacy. This can be done by keeping data cumulative, rather than personal.
- Social media discovery is driving purchases. Discovery of products is expanding from Google and Amazon to Facebook and Instagram, which should reinforce their importance for game marketing.
- In performance based marketing channels, competition for top placement has reduced ROIs and increased the importance of improving LTV.
- Shopping and entertainment is converging, with one example people using YouTube before making a purchase. Game companies need to leverage this by making their games purchase ready on entertainment shopping destinations.
- New retail, a phrase pioneered by Jack Ma, puts the right product in front of the right customers at the right time. This translates to how we should present in-app purchases in games, right package to the right player at the right time.
- Data is an increasingly important driver of customer satisfaction. You should look to leverage this data so the player experience is tied to their interests.
All of these trends should be considered as your green light and grow your games. Rather than building for today, you should build for when you launch the product and years in the future when players will still be playing. I am sure there are other trends you may find useful and recommend you review the full presentation.
The Complete Mary Meeker Internet Trends 2018 presentation:
Is Hypercasual worth the $450 million that Zynga and Goldman Sachs just spent
In February, I wrote that the next big casual gaming phenomenon would be hypercasual, but even I did not expect the genre to take off as quickly as it did. Last week, Goldman Sachs invested about $200 million in French hypercasual game company Voodoo. The next day, Zynga announced it acquired hypercasual game company Gram Games for $250+ million. These deals follow Zynga’s acquisitions of Harpin and Peak Games’ card business for $142 million. With about $600 million in deal, money talks, and money is saying hypercasual is for real.
What are hypercasual games?
Hypercasual games have a single mechanic and a single goal, so they are very easy to learn. Mastering them, however, is almost impossible, as the games get more challenging as you try to reach a high score. Effectively the core game loop is very straightforward, do one thing, get rewarded (so you can try again) and keep repeating to get a higher score.
Are hypercasual games here to stay?
As I said in February, unlike fads, hypercasual taps into the key to product success, simplicity. Most successful products are not crammed with features that generate a lot of checkmarks on a competitive analysis. Instead, products with very few options generate tremendous value. Uber is valued at tens of billions and when you open the app you are asked where you want to go, and then you are given 3 or 4 options to get there. You are not picking the color of the car that collects you, the height of the driver, what route they will take, etc., which is all handled by Uber. Apple is another great example. The iPhone and iPad have virtually no extraneous features or options.
The science behind simplicity is neuroscience, particularly related to cognitive load. Cognitive load is how much info people are processing at any one time. A simple user experience minimizes cognitive load, thus not creating too much strain and making enjoyment more likely.
Many people often do not realize it is much harder to make a simple product, just as it is harder to create a five slide presentation than a 50 slide one. Keeping a product simple means you must decide what features to exclude, so you need to understand your customer and what you are trying to achieve. Given the market’s feedback to Gram and Voodoo last week, the effort is worthwhile.
Do opportunities remain in hypercasual?
Often when there is a spate of deals it means the end of bubble, or at least the end for small developers, but that is not the case with hypercasual. First, hypercasual is not really a genre, but more of a game making philosophy. It is about creating games with a straightforward and simple mechanic. There is no reason to believe this philosophy cannot be extended to every genre, from simple car racing games to hypercasual social casino titles. The opportunities for hypercasual are as bright now as the opportunities for free to play were after Farmville and Who Has the Biggest Brain.
What should you do
<pThe key is to learn from hypercasual rather than try to imitate what is already in the market. If you have a successful game, see how you can simplify it. What can you do to reduce players’ cognitive load. If you are looking for new product opportunities, identify what player segments currently do not have good hypercasual options and build products for these players. This can be an extension of your current customers or can create games for customers where the competition is irrelevant. By focusing on simple yet repeatable fun, there is a great opportunity in the game industry.
Key takeaways
- Hypercasual it the hottest sector in the gaming space, with two deals valued at $450+ million announced last week.
- Hypercasual games have a single mechanic and a single goal, making them easy to learn and play but hard to master
- The key is simplicity, and the opportunity is to make your own games simpler or create products for an existing or new market that leverages simple mechanics.
How to add features that your customers actually want
One of the challenges successful game developers face is what features to add to the product. With a successful game, you are not in panic mode but you also must deal with the reality that in a free-to-play product you need to keep players engaged or you will become the next Trivia Crack. The fundamental issue is adding features that are useful and fun for your existing players, that enhances their enjoyment of your game.
Keys to adding successful features
There is an excellent post by Casey Winters that highlights three keys to building features that enhance a successful product:
- The new feature must retain players. The feature itself retains the player and you do not have to drive players artificially to it from other parts of the game. For example, if you add Blackjack to your social slots application, it works if players engage with Blackjack and then come back to play it regularly. You can use the same retention metrics (D1, D7, D30 and CURR) to assess if a feature is working as you do to look at an app.
- The feature can drive its own use at scale, you do not need to create a plan to build adaption. To use the Blackjack example, if you integrate it in your lobby players will try it without forcing you to run specific campaigns.
- The feature must improve KPIs of your core product. To use the blackjack example, it needs to improve either your overall retention or monetization.
The last point is critical to success. I used to be at a game company where product managers regularly presented analysis of their features and bragged about the great performance of the feature. Overall, though, the company’s games continued to lose players (DAU) and monetization per player (ARPDAU) was also decreasing. While the features appeared to perform great in a Powerpoint, they actually were costing the company money because they drove lower overall performance.
How to add features that improve LTV
While you may infer from the previous sections that you should only integrate features that appeal to everyone, the opportunity is to segment your players and build features to appeal to target segments. If you limit yourself to only adding features that are accretive to everyone, you have a small pool to pull from.
Given you already have a successful game, by definition your players are already enjoying your product. While there may be opportunities to add features everyone enjoys, you have a bigger set to choose from if you also identify features that may appeal to a subset of your players. This is particularly powerful because this feature can appeal to a segment that is likely to churn and keep them engaged or a segment that does not monetize and prompts them to spend. Conversely, it could only appeal to the ½ of 1 percent that are VIPs but given how much they spend could have a great impact on revenue
If you are building a feature that appeals to a specific segment, then you must be careful not to violate the third key to creating a successful feature, you do not want it to impact negatively overall KPIs. The way to achieve this balance is by positioning or displaying the feature only to the target audience. This can be done as an AB test, where you only surface the feature to specific players. It can be achieved through targeted CRM (in-game banners, push notifications, email, etc.) that is only sent to players in the target group. Surfacing a different UIUX to players who you want to engage with the feature can also accomplish the same goal. The key is maximizing how much the target audience uses the feature and minimizes how much other players see it.
Using the blackjack example yet again, we can illustrate how it could help a social casino game. Overall, slots monetizes much better than blackjack. It is a faster game and many blackjack players will play in a way so they lose very few chips. If you added blackjack to a successful slots game and promoted it across your player base, you probably would get great engagement as a lot of people love blackjack. It would, however, drive some players from your slots to blackjack where they are likely to monetize at a lower rate. If you were looking at how it would impact overall performance, then, you would say blackjack is a failure.
If, however, the blackjack game was not in the main lobby but embedded deeper in the game and you then drove players who were likely to churn (maybe you have a nice machine learning algorithm that can identify these players) to blackjack, it would engage some of these players. They would then come back regularly to play and rather than churn some would monetize. Thus, you would have a successful feature that helps the overall product.
Add features that help your game
Although it sounds obvious, when building your product roadmap you need to dive deeply into each potential feature and identify how it will improve KPIs of a target segment. Effectively, how will it solve a problem for you or your player (user churning, user not spending, etc.). The bigger the problem, the higher the priority.
Key takeaways
- The key to adding new features to a successful product is ensure the feature itself retains players, can generate its own use and helps the overall KPIs of your game.
- You must avoid features that seem to perform well when reviewed in a vacuum but actually hurt the KPIs of the game.
- You can achieve launching a successful feature by targeting your players and then only showing or promoting the feature to players who will benefit from it.
How to use nano-marketing to grow your game or app
One of the constant challenges developers face is user acquisition, as costs seem to increase much faster than revenue per user. This issue is not limited to game developers as more companies see digital and performance marketing as their premium-marketing channel, the competition for eyeballs drives up costs. It is a constant challenge for everyone in growth or marketing to understand the newest techniques for finding the best and most effective channels. No longer can any executive run television ads and then hide behind ambiguous results. The issue is magnified when trying to reach millennials, who spend most of their time (free time or not) in the digital world.
A recent article in the MIT Sloan Management Review, The Right Way to Market to Millennials by Jay Sinha and Thomas Fung, does a great job of presenting the idea of nano-marketing, one of the most promising new growth mechanics. Nano-marketing is using micro-influencers to market your product or build your brand. This approach is evolving into one of the most effective forms of advertising.
Who and what are micro-influencers
While we are all familiar with the personalities who have huge social media followings, the Kim Kardashians or Gwyneth Paltrows, the people with smaller followings are proving most effective. Micro-influencers have between 1,000 and 100,000 followers. Although their following is relatively small (Kim Kardashian has over 100 million followers), they have a category specific following and much more engaged audience. Micro-influencers also build more personal relationships with their fans, as they can engage with them one-on-one. They are also frequently considered experts in their fields (something you may not say about a Kardashian).
People also often consider micro-influencers more credible. When LeBron James tweets his support of a shoe, most people assume he is getting paid for that tweet. Conversely, a micro-influencer who promotes your game will believe he is a fan and give him the benefit of the doubt. Even if people assume the micro-influencer was paid, they also assume that the personality has a true affinity for the product.
Not only can micro-influencers drive sales, but they can contribute to your brand building. Sinha and Fung discuss how Coca-Cola leverages micro-influencers to develop compelling brand narratives. They also discuss how start-ups, such as sock retailer Stance Inc., have used micro-influencers to grow into major brands.
How to leverage micro-influencers
Working with micro-influencers is different than working with celebrities or other marketing channels, it also requires a personal approach. There are several keys to building a successful micro-influencer program, with may of them highlighted by Sinha and Fung as well as a VentureBeat post on how micro-influencers are essential. The elements of a successful program include:
- Use micro-influencers to target highly segmented audiences. This channel is not the right option to reach millions at once. Instead, micro-influencers are a great way to amplify a feature that largely appeals to a niche or helps you recruit a specialized segment.
- Understand who you want to reach. There are millions of micro-influencers, you need to understand exactly who you want to target and the goal(s) of your campaign. Once you have a clear understanding of your target, you can then find the micro-influencers who reach that audience.
- Look at micro-influencer work as a long-term investment. Build a long-term relationship with the most appropriate micro-influencers, so they can continuously weave your brand into their stories.
- Effective micro-influencers integrate their personal narratives with the brands they endorse. Rather than trying to foist a message on the micro-influencers, use their story-telling ability to create a compelling message.
- Avoid heavy-handed or aggressive push-marketing and instead have the micro-influencer give their audience a gentle nudge.
- Before approaching micro-influencers, follow and engage with them. As VentureBeat writes, “this helps you better understand their personality and interests so you can determine their fit with your brand. It also helps you approach them with a more personal request, which is more likely to get a positive response.”
- Allow the micro-influencer to create compelling content rather than directing them. As Sinha and Fung write, “young, creative micro-influencers are good at producing innovative content that features the brands in an interesting way. They know their audience would want to be educated about new offerings, while being entertained at the same time.”
By following these steps, you can build an effective micro-influencer program that will support your marketing initiatives.
Key takeaways
- Marketing continues to evolve quickly, with it increasingly difficult and important to find effective advertising channels. Nano marketing is one of the most promising of these channels.
- Nano marketing entails working with micro-influencers, people with between 1,000 and 100,000 followers, to promote your brand or products.
- Micro-influencers are particularly effective because consumers consider them more genuine and they have much greater focus than celebrities who have huge followings.
Finally, a new approach to monetization in free-to-play games
I am excited that the latest gaming phenomenon, Fortnite, is not only a hit game because of its content but also because it has brought a unique monetization mechanic to the mass market. For over ten years, people have been optimizing the free-to-play model, improving monetization primarily through in-app purchases. We have all talked about finding new or additional revenue mechanics but there have been no dramatic changes. Many companies have gotten better at getting players to pay more (or more players to pay) but nobody had changed the paradigm. Yet, as I have written many times, the real opportunity for growth is to find a blue ocean, do something your competitors are not.
Why Epic
Epic Games has overcome this challenge with Fortnite, creating a monetization mechanic previously seen only in niche titles. Initially, I have to admit I was particularly surprised this innovation came from Epic, as I frequently wrote that traditional game companies ( most recently Nintendo) could not succeed in the mobile space because they were too wedded to the old monetization model of discrete purchases. Epic is definitely a company that has benefitted mightily from the old model, from Unreal to Gears of War to their other hits, they have made billions of dollars from selling great games in pretty boxes. Now, though, they have disrupted the free-to-play space.
In retrospect, it is not that surprising that innovation did not come from a mobile game company. Just as traditional game companies could not embrace the free-to-play model fully, the “what are now” traditional free-to-play company cannot discard their in-app purchase (IAP) optimization strategy fully. Thus, Epic, which did not have the IAP optimization baggage, could look holistically at the opportunity and come up with a new approach.
What Epic did
Fortnite’s Battle Pass system is a unique approach to drive monetization that is showing great results. According to a recent article by Adam Telfer and Joseph Kim, Fortnite has generated $126 million in revenue, including $5.3 million mobile revenue in its first 10 days.
The Battle Pass is a mechanic that avoids pay to win (spending to get a competitive advantage over other players) but finds a way to get players to pay significantly for cosmetic benefits. Traditional thinking in free-to-play is that cosmetic accessories (avatars, skins, emotes, etc.) can only generate limited incremental revenue. With Fortnite, however, they have made the cosmetics the only way to show success and progression, so players are motivated to acquire (and show off) more and better items, and subsequently monetize to get the great cosmetics.
Battle Passes are largely a challenges mechanic, and even in traditional IAP games challenges are a proven monetization mechanic. They are a great way to drive player activity, guide them to specific activities and provide a sense of completion. It’s not surprising that the evolution from challenge systems to Battle Passes yields a new monetization mechanic.
The first key element is that there is not a leveling or stats system. Thus, you cannot show others how skilled you are by pointing out you are level 5,274. Instead, status is conveyed by how great your cosmetics are. The more, and better, cosmetics, implicitly the better Fortnite player you are.
The second key element is the Battle Pass, a series of challenges to earn cosmetics. The Battle Pass is a series of challenges with each one providing cosmetic rewards.
The third key to the Battle Pass is offering multiple paths. In addition to the free path is a premium path that provides significantly more rewards. Epic is also very loose in providing rewards for the premium path, players feel they are getting an incredible value.
Fourth, each Battle Pass only lasts a season. Each of these seasons has its own cosmetics, so if you miss a season you never get them. This creates an incentive for the player to play each Battle Pass so they do not miss any content forever.
Fifth, and a key difference with traditional IAP models, players can pay to skip ahead in tiers. Since tiers are not levels, players are not actually paying to win anything, just to get to higher value cosmetics.
Sixth, if you fail at a challenge, you need to start the entire path again unless you monetize. Critically, if you die during a challenge (which happens to most players of Fortnite), you have to start at the beginning of the challenge. Thus, there is a strong incentive not to lose your progress (and plays to people’s loss aversion). People do not want to start from zero repeatedly.
How you can use Battle Passes
Battle passes effectively change monetization from the core game loop to the challenge mechanic. By eliminating levels and points, you can move monetization from interrupting gameplay to super-charging it. Challenges work in many genres but the Battle Pass takes it to the next level. Zynga credits much of its current success with Zynga Poker to challenges. Virtually any PvP game, and even some single player games, can integrate a challenge system. The key to success though will be recentering monetization on this system rather than the traditional IAP model, making it the source of showing progression and providing a VIP path.
Key takeaways
- Fortnite is one of the biggest gaming successes ever, and it is being driven by a monetization system previously not seen in mass market free-to-play games, Battle Passes.
- Battle Passes allow players to earn cosmetic rewards, which have a high value because they are the only way players can show progress in Fortnite.
- By centering your monetization on a challenge system, you can develop a similar mechanic as Battle Passes.
How to avoid misleading data, aka Fake Analytics
Someone I respect recently posted an article from a news source that I also respect, but the article actually highlighted how data can mislead, either intentionally or not. An article on the Guardian.com, Amazon Prime Video’s growth outpaces Netflix in UK, tells the story of how Prime Video is growing at a faster rate than Netflix. The sub-title stresses that, “cross-promotion to Amazon shoppers and new on-demand series rank it top in 2017.”
The article goes on to point out several reasons why Amazon is top in 2017:
- New series of the Grand Tour and Transparent are fueling growth
- Hefty cross promotion of Prime Video to regular Amazon shoppers is also contributing
- Prime Video increased its subscribers to 4.3 million in 2017, representing 41% year-on-year growth
- Netflix only grew 25% in the same period.
If you stopped reading the article there, and who reads an article until the end these days, you would think Amazon is doing a great job in the video market and Netflix should be very worried. If you worked at Amazon and get a similar report from your analytics team, you might high-five the head of Amazon Prime in the UK. If you were at Netflix and got a similar report from your analytics team, you might panic a little and divert resources to the UK.
The problem is that although the data is accurate it is misleading. The key figure is that Netflix added 1.6 million new subscribers in 2017, while Amazon added 1.3 million new subscribers for Prime Video in the UK. Thus Netflix actually extended its lead over Amazon by 300,000 customers in 2017. Netflix is in 8.2 million UK households (at the end of 2017), versus 3 million for Amazon.
How different would the story have been if the headline was Netflix extends lead by another 300,000. How different would the reception be at Amazon and Netflix respective headquarters if their analytics team presented data in this way.
The mistake
The mistake in this case (and I will be generous and assume the Guardian was not click-baiting) is comparing growth rates (or any other rates) while neglecting the size of the relative base. It would be the same in football if you looked at Messi’s goal scoring versus a second year player. The latter may be scoring twice as many goals as he did as a rookie while Messi may have been flat or added a few. Thus the young player is growing his goal scoring 100% while Messi is adding only a few percent to his lifetime numbers. That does not mean that the second year player is either having as good a season as Messi or closing the gap.
The same happens in the mobile game world. Your slot game may be growing 100% month on month while Slotomania is growing 10% (not real numbers), but because their base is so high they are adding millions in revenue while you are still not profitable.
The key is only comparing trends when you are comparing apples to apples. Trends mean something if you are looking at two products or companies of comparable size in the same stage of their lifecycle. Looking at two auto companies who launched an SUV the same year in the same market makes sense, comparing growth rates of two automakers, one who is new and has no dealer network with one that has been around 100 years is worthless.
The answer
You need to look deeper into the numbers. Look at the absolute numbers. Look at the pricing. Look at the target market. Look at percent usage (in the Amazon case, how engaged are Prime users who may have bought it just to get free shipping versus Netflix users). The key to using data effectively is look deeply at the data and understand what is driving the results. You also need to make sure your analytics team does the same. It is very easy to make conclusions based on obvious trends. Avoid superficial analysis and, more importantly, superficial conclusions.
Key takeaways
- A recent article implied Amazon Prime Video was doing better than Netflix in the UK as it grew 41% versus 25% by Netflix.
- The article is misleading as Netflix actually added 300,000 more customers than Amazon. This obfuscation shows how data can mislead if you focus on trends but are not comparing comparable companies or products.
- The key to using data effectively is look deeply at the data and understand what is driving the results.
How to balance your publishing or development portfolio
Most investors know that to optimize the expected value and risk of their financial portfolio they need the right mix of domestic and international stocks, bonds and cash. Many game companies, however, fail to heed the core principals of diversification when building their portfolios and deciding what projects to green light. Ironically, very successful companies often amplify this mistake by replicating (i.e. cloning) their hit.
Mistake 1: Copying your hit
The most common mistake successful game companies make is re-skinning or cloning their biggest game. The logic behind this decision is that it is quite difficult to create a hit game so copy what you know. Most frequently, however, the clone fails to reach expectations and the company is left relying on the original hit.
The flaw in this strategy, leading to a negative result, is that the new product appeals to users who are already highly engaged with your company. Since the existing product is a success, players are not looking for an alternative. They already love what they have, why give them the same thing in a different wrapper. I recently wrote about how challenging it is to steal VIP customers from a competitor because they already love the product, it is just as difficult to steal them from yourself.
In the social casino space, you often see this mistake by companies that have a hit slots product, just change the feel of the casino, keep the same slots, and then the new product does not perform as well as the original.
Mistake 2: Appealing to the exact same market
If you base your new product on one of your existing products, you will appeal to the same customers. By appealing to the same users, you are not expanding your potential market but can only increase your share of wallet.
Again, using the social casino space as an example, there are different types of slots players. If your existing game is appealing to players who enjoy land based casinos, rather than creating another product for this target market you can build off of your success by creating a product that appeals to recreational online-only players. Thus, you can still monetize the land-based players with your core product, and increase monetization by improving that game, but you open up a new market.
Mistake 3: You are not creating a blue ocean opportunity
The core of the issue in creating a copy of an existing product is you are not creating a blue ocean opportunity, that is moving to a market space where the competition is not relevant. I have written frequently about Blue Ocean strategy, and rather than repeat it the key is that you have a higher ROI by pursuing a blue ocean strategy than competing in a red (bloody competitive) market.
Blue Ocean strategy is incompatible with cloning your existing product because a new product needs to fulfill four criteria to create a blue ocean:
- Raise. You need to raise some of the elements of value you are currently competing on.
- Eliminate. You need to eliminate some features or aspects that you compete on.
- Add. You must add new features or attributes that other products do not have.
- Reduce. You have to reduce some of the features that the industry relies on.
By definition, if you are copying an existing product you are not doing any, let alone all, of these changes needed to move into a space where the competition is non-existent.
Mistake 4: No new VIPs
VIPs are the lifeblood of a successful mobile game. Less than one percent of players normally drive over 80 percent of revenue, thus it is critical to have a strong VIP base for a game to be successful. When you re-skin or clone an existing game, it becomes virtually impossible to build a strong new VIP base. Your existing VIPs already love the old product, hence why they are VIPs, so they have no reason to move (and you probably have no benefit in moving them). New customers were already exposed to the same mechanics in the existing product and chose not to become VIPs, thus it is very unlikely the new product will generate a different reaction.
What you should do
The easy part of the game industry is recommending what not to do, the challenge is how do you grow your product base. There are many different ways to run a good green light process, assess market conditions, etc., and that is not the purpose of this post (please see my post on how to create a mobile gaming hit). Instead, I recommend you build out a strong green light process that looks at the market, the competition, your strengths and gaps in the market and build your product strategy from there. If you already have a hit product, rather than start from scratch, see how you can leverage key elements of that product to expand into a different segment of the market or create an entirely new space.
Key takeaways
- While it is tempting to try to replicate your successful product by re-skinning or cloning it, such a strategy is likely to fail as it will not expand your market.
- Cloning a product is the inverse of pursuing a Blue Ocean strategy (which requires focusing on four core elements: Eliminate, Raise, Add, Reduce), and Blue Ocean generates a higher long-term ROI that traditional strategy.
- If you have a hit, rather than start from scratch see how you can leverage key elements of that product to expand into a different segment of the market or create an entirely new space.
Casual Connect Europe session on Lessons from Real Money Casino
I will be speaking next month at Casual Connect Europe on lessons from real money that give your free to play game a competitive advantage. If you are attending the show, please come by my session.
