Last week I promised to give some advice to the leadership teams of of major game publishers, who will never read this. I doubt this advice will strike most of you as profound or novel, but I’m doing this anyway in order to drive the point home that the people in charge are making expensive mistakes despite their financial gains.
First, the really obvious stuff: Microsoft needs to ease off the push for more intrusive platforms and invasion of privacyI guess they kinda repented with the new Xbox, but I suspect they’ll try again. They didn’t have a change in company values, they just needed to deal with a PR disaster. and fix the Windows 10 Store before it does some damage. EA needs to stop treating their creative teams like a rental car. I don’t know what Ubisoft is trying to accomplish with Uplay, but whatever it is isn’t working and they should probably just stop. But this is stuff we’ve all heard dozens of times before and all of these are just symptoms of a larger problem.
A Long-Term Problem
As some have pointed out, if you’re a shareholder then you might be pretty happy with how these companies are being run. If your only goal is to keep pumping up the stock price and focusing on the short term, then the current crop of guys are doing their jobs. When EA bought Playfish it was a pretty good example of this behavior in action. To an outsider it probably seemed “bold” and “proactive”. Hey, casual games are a thing and EA just made a massive investment in casual games. This must be a good thing! It’s a move made by people who don’t understand the industry, intended to impress people who don’t understand the industry. Sure, it was a terrible move in the long run, but if you’re the kind of jumpy investor who buys and sells based on fads, feelings, and the latest gossip out of the news ticker, then you’re not making long-term judgments.
Of course, you can't keep pumping up a stock forever. The hype cycle comes back to bite you in the ass when your big bloated, over-hyped AAA flagship title fails to deliverIronically, many small studios sold themselves to big publishers back in the aughts because they didn’t want to be in a position where one bad game could sink the company. But now they have to worry about their studio being closed if someone ELSE’S game bombs.. So the stock rolls up and down. Overall the trend might be upward because the industry itself is growing as more people join the hobby, but the whole thing is basically an exercise in chasing trends and engaging in a long series of destructive over-corrections.
My premise is that this is passing up on massive opportunities for long-term growth. Not just for the individual companies, but for the industry as a whole. The right leadership could turn one of these companies into something like the Disney of videogames. We could be getting better products for less hassle with less waste and with a less miserable environment for the developers. We could be welcoming more people into the hobby.
Instead of serving their customers, these leaders are actually serving the legions of skittish gamblers playing the market. That's probably pretty close to the rotten root of all of these problems, but getting into that is getting into politics. I have Many Opinions on the dysfunctions of the stock market, but rather than get on my soapbox and sanctimoniously explain why my policy ideas will save the world, let’s just set politics aside and continue under the premise that the leadership wants to run the best videogame company they can and are failing to do so. I encourage you to follow this example in the comments. If I’m not willing to post my own politics here, then imagine how much less interest I have in reading yours.
The fact that these big companies seem to sacrifice long-term growth for short-term hype is probably another reason Valve does so well in comparison. They're not a publicly traded company, which means there's no outside pressure to do something showy and headline-grabbing every quarter to keep people excited about the stock. They still make bad decisions, but they're not obliged to always focus on the short term.
In any case, there’s a lot to be said for focusing on the long-term, even if you’re more interested in selling stock than videogames. It’s surprisingly easy to get the stock to go up when you’re a beloved industry leader. Isn’t it strange how antagonistic the relationship is between these companies and their customers? I doubt the people at Disney are more virtuous than the people running EA, yet the two brands have vastly different reputations. Apple has a borderline abusive relationship with their customers and yet they still enjoy brand loyalty bordering on the fanatical. When was the last time anyone was actually glad to see the EA, Activision, or Ubisoft logo on their game? When was the last time anyone looked at one of those logos and thought, “Oh boy, this game is going to be good!” Even if all you care about is stock price, I still think these places could have better leadership than they’re getting now.
In any case, let’s get to the advice. If you’ve got a friend that runs a major videogames publisher, then now would be a good time to call them into the room, because I’m about to explain how they need to be running their company…
1. Hire Some Gamers!
Hire some gamers. No, I don’t mean do something with a focus group. I mean hire a person who has videogaming as their primary source of entertainment, and get them involved with strategic decisions. It can’t be that hard to find someone with both an MBA and a half-decent gamerscore. I’m sure there are lots of people who have successfully run a business and also successfully cleared Manus, Father of the Abyss on New Game+. I’ll bet somewhere in the resume pile is a person that can lead a sales team and also has what it takes to lead a raid on Icecrown Citadel.
And yes, I’m sure you’ll defensively claim that you “play games” in the sense that you sometimes sample your own products. I appreciate the gesture, but getting shoved into the pool doesn’t make you a member of the swim team.
Have you ever had an experience like this?
- See a videogame trailer that catches your interest.
- Drive to your favorite retail outlet for videogamesYes, retail is dying now. But if you’re a 50-something running a 30 billion dollar publisher then I really hope your relationship with the hobby is more than 5 years old..
- Purchase the game with your own money.
- Bring it home to your dedicated gaming space where you’ve got multiple platforms available.
- Go through the install process, agree to the EULA, agree to the Terms and Conditions, struggle to remember what password you use to sign in to your account with this particular publisher, and dismiss a bunch of popups shilling DLC.
- Stay up later than you should waiting for the day-one patch to download.
- Once the patch is ready, you try to launch the game but instead run into some oddball technical problem.
- Go online to look for help and promptly get sidetracked in a two hundred post flamewar on weapon balance.
If that little story arc sounds completely unfamiliar to you, then you are not equipped to make informed decisions regarding publishing videogames.
Note that I’m not claiming you’re not a “real gamer” if you don’t do these things. This is not an argument about who is or is not a “real gamer” (whatever that is) or if you know the secret handshake to be in the cool kid’s club. I’m saying you need to be immersed in the culture and understand the most common elements of the end-user experience before you’ll have any frame of reference for what the customer might like or dislike.
If you are not a regular, active consumer of games then you’re blind to opportunities and ignorant to your weaknesses. You shouldn’t be worried about Valve software. That ship has sailed. You should be worried about the next Valve. The next missed opportunity. The next small-fry company to pull the rug out from under you and grow into a dangerous billion-dollar rival.
Like the people in Moneyball, you’ve got to change the criteria you’re using to hire people. I realize this is hard because I’m suggesting you hire someone else to do your job, but think of this as rounding out your decision-making team. You are not running a regular consumer goods company. You’re not selling blue jeans, soft drinks, or body spray. You’re not making cars or snack cakes or selling insurance. You are running something altogether unique. Like Hollywood, this is a creative industry. But it’s also a technology company. There is no way you can make informed decisions on what projects to greenlight and how funds should be allocated if you can’t tell a good product from a bad one. And you can’t tell good from bad if you aren’t part of the hobby. The idea is ludicrous.
This industry is in a constant state of technological and cultural upheaval. This is a new creative medium that’s a blend of every medium that came before, along with a bunch of new challenges unique to the form. You can’t make smart decisions without having one hand on the pulse of gamer culture and the other hand on the pulse of technology. And just so we’re completely clear: I’m still not talking about hiring focus groups.
Alternatively, if you’ve already got some gamers involved with your decision-making process then you just need to start listening to them when their face curls into a sneer and they say, “Actually, this idea sounds like it would be really obnoxious.”
Project Ten Dollar, Games for Windows LIVE, the disastrous tone-deaf marketing campaigns for games like Dante’s Inferno and Dead Space 2, the Dungeon Keeper Mobile fiasco, the entire design of SimCity, and the consumer backlash against the original design of the Xbox One are all obvious technological, business, or marketing disasters that could have been avoided if the people making the decisions had even part of a clue of what their audience really wanted. These decisions betrayed a kind of casual contempt for your core audience and helped cultivate the often adversarial relationship you have with your customers.
This is an opportunity. Major mistakes are being made all over. If you can be the first company to stop making enormous and expensive mistakes, you’ll win.
EDIT: And to be clear, I’m not suggesting that hiring some gamers is a magic silver bullet and that any gamer will do a good job. Obviously you still need people with vision, leadership, and creativity. Hiring a gamer is the FIRST step, not the final one. Either way, you still need to innovate. But if you don’t know what your customers want then all your “innovations” will take the form of, “What if we make the customer buy the game one character at a time?”
2. Experiment More
I’m not asking you to randomly green-light every crazy idea some yahoo game designer brings in your office. I’m not asking you to dump fifty million bucks into untested ideas. I’m suggesting you take your proven project leads and give them a small budget for passion projects. The movies do this all the time. “I’ll direct the next ROBO WARS sequel if you’ll let me do this side-project about a quirky hipster Rhode Island couple who dream of winning the National Line Dancing Championship.” You do something big and safe to make money, and then you do something cheap and experimental to see if it pays off. Most popular modern games were a radical new idea at some point.
You’ve already realized that your safe, dependable income is the result of exploiting established IP. Well, where do you think IP comes from? I’m sure you’ve noticed that IP sort of burns out over time, particularly if you’re doing annual or biennial releases. Don’t be like the leadership of EA and buy the IP after it’s become a hit and shot up in price. Make it yourself. If it takes off, you’ll already have full control and you’ll have the original creative team working for you. This is better than doing the EA thing where you end up in a bidding war for a company with an incompatible corporate culture and a staff of people who don’t want to work for you. That’s a really expensive and destructive way to acquire IP.
For a non-videogame example of this sort of acquisition misfire, there’s the time AOL overpaid for WinAmp, let it stagnate, and then ran it into the ground. And then there was the time Yahoo! bought Flickr for a fortune, let it stagnate, and ran it into the ground. Within the videogame industry, there was the time Electronic Arts overpaid for Playfish, let it stagnate, and ran it into the ground. And let’s not forget the time Activision bought the Guitar Hero developers, let the series stagnate, and you get the idea.
You’d be better off growing your own IP. Even if a lot of them fail (and many of them will indeed fail) you’ll still be better off than overpaying for something that blows up in your face. You won’t run the risk that the original team bails after an acquisition because now they’re rich, their names are on a hit game, and they don’t want to work for a huge company because they were indies at heart. If you develop the new IP in-house then the team has a much better chance of sticking with you and maintaining the IP they created.
The PC is a great place to run some kind of skunkworks programAssuming you’re EA and you can avoid paying the Steam tax. Activision and Ubisoft have to hand over 1/3 of their take to Valve, which probably makes the PC less attractive to them.. Let a team make something on a small budget. If it works out, then polish it and port it to the “real” platformsXbox and Playstation, and maybe whatever contraption Nintendo happens to be selling at the time. where you can get bigger sales numbers. If that works out, then you can (if needed) ramp up the budget and make this IP another tentpole franchise. And if it doesn’t work out? No big deal, because you didn’t spend a lot of money on it. If the property itself is a dud, there still might be some new mechanics the team can take with them when they’re sent back to working on the next AAA blockbuster.
This is a good way to reward and retain successful leaders. Note how many big names leave the AAA scene to work on passion projects. They might stick around to pass on their insight and knowledge if you give them an occasional outlet for those passion projects. Doing so will also improve the odds that the next Amnesia, Portal, Minecraft, Bastion, Braid, Terraria, or Hotline Miami happens within your company. Sure, those games didn’t make Call of Duty money, but they provided a really good return on investment, they got lots of good pressWhy SPEND millions on remedial marketing to improve your image when you could accomplish the same thing while MAKING millions on small-scale critical darlings?, and they built up IP that could be leveraged in the future for larger projects.
That’s all for this week. I’ll finish this list up next time.
 I guess they kinda repented with the new Xbox, but I suspect they’ll try again. They didn’t have a change in company values, they just needed to deal with a PR disaster.
 Ironically, many small studios sold themselves to big publishers back in the aughts because they didn’t want to be in a position where one bad game could sink the company. But now they have to worry about their studio being closed if someone ELSE’S game bombs.
 Yes, retail is dying now. But if you’re a 50-something running a 30 billion dollar publisher then I really hope your relationship with the hobby is more than 5 years old.
 Assuming you’re EA and you can avoid paying the Steam tax. Activision and Ubisoft have to hand over 1/3 of their take to Valve, which probably makes the PC less attractive to them.
 Xbox and Playstation, and maybe whatever contraption Nintendo happens to be selling at the time.
 Why SPEND millions on remedial marketing to improve your image when you could accomplish the same thing while MAKING millions on small-scale critical darlings?
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