Discovery is the problem in gaming June 11, 2012

In 2009 I wrote a guest post at Industry Gamers about why social gaming is so attractive to investors, where I talked about the three key elements oin gaming: Development, Distribution and Discovery. Basically, I compared circa 2009 social games to AAA games and said that they were cheaper to develop (a few months and a few hundred thousand dollars), distribution was virtually ubiquitous (since they could be played in browser versus bought in a store and played on a console or high end PC) and discovery was free through viral growth instead of driven through heavy marketing campaigns. I concluded that this dynamic, which allowed a startup to take multiple “shots on goal” with a venture capital investment, was what had brought renewed investor interest to gaming, an industry that had largely been financed by publishing deals.

Much has changed since 2009, and browser (including social) and mobile games are the two hottest areas in gaming right now. But I think the framework of Development, Distribution and Discovery is still a useful lens to view the industry

Development costs have gone up since 2009, as has production quality and game quality. Many of the circa 2009 social games were more focused on growth than retention, and in many cases more focused on “satisfaction” than fun. This has changed dramatically. Game design has improved, as has design and art. This has caused development costs and timelines to increase, but generally but less than an order of magnitude. Good mobile and web games can still be built for a budget in the low single digit millions range and below, and in under a year.

Distribution continues to be easy, but it is no longer free. In 2009, there were no facebook credits and 360M people used Facebook. The iPhone app store had been around for a year or so, but there were less than 10m iphones in use. Today, there are 1bn smartphones (including Android), 900M people use Facebook every month, and in all cases you pay a toll to the platform. But gaming companies do not compete on distribution, it is a level playing field.

The outcome of easy development and distribution has been a massive explosion in the number of games available. For both mobile and Facebook, games are the most popular category of apps. In a world as crowded and noisy as this, Discovery has become the bottleneck.

In 2009, viral growth through invitations and notification were the way that Facebook games could get discovered. As these channels became better policed, discovery moved to the feed. Today, even the feed is no longer a reliable driver of discovery.

For mobile, charting is the primary mode of discovery, and this led to widespread app store manipulation.

Today, game quality is an ante, but discovery is the differentiator. We see a few strategies work repeatably for at scale discovery in the current environment:

1. Cross promotion to an existing base. Game publishers with a lot of Facebook or mobile install bases are able to make their user base aware of new releases in a free and scaleable way. Zynga has repeatedly made use of this approach to launch its new games at real scale.
2. Sequels. Publishers with a hugely successful hit game can often milk the IP with subsequent releases. Rovio has done this repeatedly with Angry Birds. With the game market being so noisy and confusing, most players will give a sequel a shot if they enjoyed the first game.
3. Borrowing IP from another media. Much like a sequel, gamers will respond to a brand they recognize. This can be IP from another gaming platform (Bejeweled Blitz, Zynga Poker, Sonic the Hedgehog, Sims Social) of another medium (Hollywood Squares)
4. Paid acquisition. Smartphone and Facebook both have relatively efficient markets for paid installs at this point. If a game monetizes better than others, it can pay more for a new player than others can, and it can find its audience through paid channels. This requires excellent monetization. Kixeye, a Lightspeed portfolio company, has followed this approach with great success.
5. Get featured by the platform. This is hard to do. Infinity Blade benefited from a lot of promotion from Apple, in large part because it changed peoples perceptions about what was possible for an iPhone game. This drove a lot of users for the game, despite its relatively high pricepoint. Getting featured by the platform is hard to plan for, and can take a combination distinctiveness, something in your game that also promotes the platform, business development expertise, and someone simply taking a shine to your game.

Many of these are not useful strategies to startups since they are only available to larger companies who have already seen success. But we still see new games break through, get discovered, and race up the charts. This can always happen to great games at any time. But it relies on luck, and luck is not a strategy.

What is your strategy for discovery?