Category: business

I don’t normally blog just to link to someone else’s writing, because that kind of bugs me, but allow me this rare indulgence. This is worth a read:

http://kotaku.com/5605532/how-an-army-of-junkies-and-kids-enriches-tech-titans

It’s a bit one-sided. I don’t like the moaning that virtual items ‘never existed’. Just because something is encoded digitally does not mean it has no value, even if the scarcity is artificial. (I own a ‘limited-edition’ print of a painting of a native american dancer, on the wall of my office. That’s artificial scarcity, and nobody minds that…).

But given my beef with that specific complaint, it’s still an interesting read. I’d hate to think people spent too much money, money they didn’t have, especially if they got into debt… on my games. I need to earn a living, but I don’t need money enough to risk getting people addicted to something just to line my pockets.

There is a fine line between clever marketing and design, and exploiting psychological tricks to wring every last penny from addicts. Modern companies of all types need to pay attention to that line, and not cross it.

There is a tradeoff every developer is making when it comes to spending money. You either spend it on the product, or marketing and promoting the product.

Now the romantically inclined might suggest that the best thing to do is just make the best possible game you can (100% product) and then the product will ‘sell itself’. Word of mouth news of your awesome game will do the work of the ad-men, and you will sell games by the bucketload.

The cynically inclined might suggest that the best thing to do is to market the hell out of your game. It doesn’t matter if the product istelf is a bit rough, because if 20,000,000 people get to hear about it, then you are bound to find enough of them who are bored enough to hand over the cash.

Obviously sanity lies somewhere in the middle. Finding out exactly where it lies, is not easy. To make a rational decision requires you to be able to measure the difference each dollar you spend actually makes. Clearly that is not easy.

With improvements to a games quality, you can sometimes tell that (for example) version 1.23 has a 22% higher conversion rate from the demo than version 1.22. This is assuming you have a clever enough order process to track that, are sure people aren’t trying an old, mirrored demo download and so on. Even then, this is completely useless, because it only works on the demo. Maybe version 1.23 full version is so awesome it encourages 18.34% more of your buyers to refer a friend to the game? Maybe screenshots from version 1.23 got featured on a website whereas 1.22 would not have, thus pulling in more eyeballs etc…

You might assume that it’s an easier thing to measure how effective marketing and promotion are. To a point this is true. I can tell you the CPC, CTR CPM and other boring acronyms for all my ads. I can plot very accurately the curve of CPC rising as total ad spend also climbs, and the  sales/ad spend is also very easily measured. Google Analytics even shows you the ROI for each individual site where your banner was shown. However, this leaves out an absolute ton of variables. Maybe someone saw an ad on their work PC, then bought it later on theirs (not tracked). Maybe someone saw an ad, told a friend, and the friend bought it (not tracked) and so on…

And that’s only for directly net-connected stuff like ad buys. I ran a competition where I gave away a hideously expensive plastic spaceship model. Did that get me any PR? any sales? any good word-of-mouth? VERY hard to tell. I spend quite a bit of time replying to emails from journalists, and seeking out websites to promote the game. Is the return on investment there better than coding? Who can tell…

For me, spending money on ads is quite an easy decision, because there is only one of me. Doubling my ad spend doesn’t require any more of my (overstretched) time at all. So I’m not having to do a weigh-up of time on marketing vs time on the game. it’s much harder to weigh up anything that takes actual time away from coding. There is still the decision as to weighing up money spent on contractors (art, web design, sound) vs money spent on ads. And then of course there is the tradeoff between employing an artist (product) vs employing a PR guy (marketing).

Personally, I’m wary of actually employing PR people. I’m a one man company. The ‘brand’ ‘story’ and ‘image’ of Positech games is just me. It would feel silly to have someone try and ‘re-brand’ me. That’s a level of corporateness which I don’t want to get into.

…of course, if I’m really good at PR, then I already employ a person to do all this, and he is the one typing this blog post. Cliff’s busy coding, as always

..or is he?

Disclaimer: I sell my games on all these portals, and am happy with them as a business.

So NPD think they have a list of the top 5 online games sales portals, but GamersGate and Impulse cry foul. Ok, fair enough.

With gamersgate, I can see why they are in the position they are in. They were late to the party, didn’t have a killer-app that people wanted to buy, had an abortive attempt with a client they abandoned… so maybe they have had a tough ride. They seem to be doing well though, no doubt tons better than lil old me.

Impulse is another story. I am surprised they haven’t been much more aggressive. I tend to assume they are the #2 seller, after steam. The interesting thing with Impulse is that stardock make money from Object Desktop, and presumably lots more  from games like GalCiv and SOASE, demigod etc. They literally do not need the profits from Impulse at all. So, assuming that, here is what I don’t get:

Why doesn’t stardock run impulse at a loss? Maybe only a small loss, but a loss nonetheless. Give developers 95% share of the royalties (totally crushing any other offer), or maybe 80% but 95% if its impulse-exclusive for 6 months.  Do not take a penny in profit for the next 2-3 years.  Maybe instead of cutting the royalty split, just discount the games big-time like steam are doing. Or maybe buy out the rights to some games entirely to make them 100% impulse-exclusive forever.

The prize at the end of this battle is market share. The web has 1 auction site, 1 book store, 1 video site and 1 social networking site. You know which ones I mean. It is close to having 1 PC games site, which is a license to print money. If I ran stardock, I’d sacrifice everything to fight for that slot. I’d probably run the whole business at a loss for those 2 years, taking every penny in profit from Object Desktop and throwing it at impulse to grab market share.

But….

The guy who runs stardock is a very clever guy. And no doubt rich. And no doubt he knows more about this than me, so I defer 100% to his greater knowledge of the issues.  Regardless of what happens, tragically they all do better than me. I’ll be under the table hoping for crumbs from whoever wins in the end :D

In unrelated news, if you like tower defence/defense games, then you might love revenge of the titans. I just added it to my site (it’s by a fellow indie). There is of course a free demo, and it’s 50% off right now. Give it a go, it’s excellent.