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Posted 05/10/12 04:42:00 pm "We do not write a marketing plan, marketing doesn"t work." – Indie developer in recent email conversation Independent game studios have the tendency to revert frompublishing partners when it comes to commercializing their games ondigital distribution channels. Doing it yourself is implicitlyassumed by adopting the label ‘independent" and hascertain obvious advantages such as (creative) freedom and greaterrevenue per unit sold. Further, with the advent of Kickstarter funded development projects , the need to work with other companies within the value chain isshrinking every day. The routes to market small firms should taketo commercialize their innovations is a hotly debated issue instrategic management research. Bypassing publishers and offeringyour game directly to the gamer seems like a no-brainer in thisdigital era. However, there are some significant benefits topartnering that I will try to shed light over here. While nottrying to turn my back towards the indie community, in this articleI will put forward some reasons why the publishers aren"t‘ dead " yet. Adding value through certification and complementarities "We have 300+ email addresses from press contacts that we can contact.Obviously, only 2% of those people react on your message, so thisis not valuable." – Indie developer in recent email conversation Great games are being released every day, whether it"s oniOS, Android, or Facebook. What makes games successful however isthe effective deployment of certain complementarities such asmarketing capabilities and a solid reputation that signal to gamersthe quality of the game without having to play it. With over 4,000 games submitted to the App store every month commercial success unfortunately doesn"t rely solely onwhose game is the best. Consumers are confronted with hugeinformation asymmetries in selecting the right games to download.You as a developer perfectly know the quality of your game, yetyour players-to-be, or relevant gatekeepers such as reviewing mediaand platform owners for that matter, do not. Partnering with areputable and/or capable publisher can be a valid way to reducethis uncertainty with the people that eventually determine thesuccess of your game. Perceptions of quality with prospect consumers or gatekeepers arepositively influenced by the reputation of the developer/publisher.When your reputation is low, i.e. you did not have any Top 3 gamesbefore, you do wise by teaming up with a reputable partner. Thepositive spill-overs from your partner"s reputation work twoways. Firstly, the aforementioned consumers and gatekeepers alikesee the act of partnering as an endorsement from the partner andsince his/her reputation is at stake, the game must be of highquality. When your game is picked up by Chillingo, the publisherbehind Angry Birds, this is a relevant pre-selection in the eyes ofgamers and reviewing media. Secondly, a successful game"sreputation is transferred back to the developer since people nowassociate that success with the companies behind it. Positivereputational spill-over effects from a successful game can be usedfor subsequently (independently) commercialized games. OMGPOP isnow using their reputation from the massively popular DrawSomething to attract attention to some of their other, lesswell-known games such as Boom Friends and Puppy World. Routes to market based on reputation and complementarities Reputation alone won"t do the trick though. Many independent developers seem to live by the perception that, now that barriers topublishing have been eroded, established publishers don"t addvalue anymore. Publishers add value through their exploitativecapabilities. These complementarities are embedded in strategicdirection, relationships with gatekeepers and knowing how to usethem effectively, a large portfolio of content through whichcross-selling of content can occur, and marketing communicationskills for presenting games in the best possible light. Having 300+press contacts is a good start, however knowing how to approach andmaintain relationships with these persons is what gets you goodcoverage. Practically, publishers enhance the chances for higherreview scores; in-depth coverage by media; features by platformowners; and, a better capitalization per unit sold. With the eye onthe latter it is important to involve a potential partner wellbefore your game is finished as strategic development issuesregarding business models can have a critical impact on yourincome. Capturing value from sharing revenue "We don"t work with publishers because they cannot guarantee success at all. Wecan consider it, but then they have to come with a very gooddeal!" – Indie developer in recent email conversation Unfortunately, publishers don"t work for free. In most casesthey capitalize on their reputation and complementary capabilitiesby demanding a revenue share anywhere between 10 and 50% andpossibly want to include a cost recoupment clause in the contract.Developers often operate independently because they neglect theadded value of the publisher and merely focus on the revenue theyhave to give up instead. Rather than being envious of the seeminglydisproportionately high revenue share, developers have to take intoaccount the additional value created by partnering: a greaterchance of selling more units in addition to higher monetization perunit sold. These are valuable additions in an environment where 85% of the games don"t manage to move more than 1,500 units . What is left is a simple, albeit difficult to accurately performprior to commercialization, calculation where the added value frompartnering is offset by the loss in value appropriation per unitsold. Value creation and value appropriation from partnering Consider the following hypothetical example. Developer X decides toindependently commercialize her game. The game sells for£0.69 GBP throughout its lifecycle, grossing approximately£0.50 GBP per unit sold after platform fee deduction. Thedeveloper sells 20.000 copies, appropriating £10,000 GBPsince 100% of the value created is captured by the developer. Now,in a hypothetical scenario, the developer reverses the wheel oftime and decides to commercialize the game through a partnershipwith a publisher. The publisher is confident and promises todedicate time and money to the project, and in returns asks for 30%of all value created. The developer now only receives £0.35per unit sold after platform and publisher fee deductions. However,by pooling capabilities more value is created through effectivepublishing and reputational signalling (on top of that great game).As a result the game sells 40.000 copies grossing £20.000 GBPcumulatively. The developer appropriates £14,000 GBP, 40%more compared with the independent strategy despite a lower valuecaptured per unit sold. Final thoughts These are top-level indications of how and when a publishingpartner can add value to the commercialization of your game.Needless to say, there are complexities in finding the‘right" partner and dealing with the practical issues of revenue sharing. Notwithstanding these complexities, I believe there are solidreasons not to bypass the publishers independent developers areincreasingly declaring ‘dead", or more mildly, oflittle added value. We occasionally see and read about independentsuccess stories on digital distribution channels such as Tiny Toweror Triple Town. These are fantastic games commercialized byindependent development studios. However, let"s not forgetthat these games represent only a fraction of the total populationof games available on the digital channels and that they have beenmarketed by teams that invested heavily in getting theircommercialization complementarities on point. May 31 st I am speaking at the London Digital Shoreditch festival. My talk ‘ The Publishers are Dead?! Lessons from Digital Game Distribution " is part of the Play Summit and will extend on the thoughts displayed above. I am an expert from replacement-lcdpanels.com, while we provides the quality product, such as Kyocera Lcd Panel Manufacturer , TFT Lcd Panels, CMO Lcd Panel,and more.
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