Game Investor Consulting's Rick Gibson on why constant click-reading won't breed innovation
When we first started writing about what’s come to be called social gaming, it was clear that any company looking to enter the space would a need new skill set to successfully navigate the social graph.
Principal amongst them was learning how to deal with the fire hydrant of data on user behaviour. The resulting discipline of analytics has rapidly become central to the success of all social games companies, but its use without moderation could hamper future market growth.
Customer profiling used to mean – and still does for some traditional publishers – focus groups and the odd consumer survey; fairly blunt marketing instruments that rely on consumers being transparent and accurate (a rare occurrence).
Early web businesses bought off-the-shelf client-based solutions that analysed log files and counted click-throughs and page impressions to convert them into advertising dollars.
Processing and bandwidth constraints drove providers to sample a tiny proportion – perhaps 10 per cent – of total usage and then extrapolate, charging clients for every byte processed.
Many analytics companies still use the sampling model, which often results in serious inaccuracy, is often not real-time and can be unaffordable for those games services with bulky user data. Many, particularly those selling virtual goods, find sample-based solutions unfit for purpose, and so turn to new, cloud-based solutions to provide detailed, real-time analysis of the data flow.
These new analytics tools allow unprecedented insight into your players – who they are, where they came from, what they play, what and how they buy, who they recruit on your behalf and, ultimately, how valuable they are to you.
Once you’ve asked whether that cherished new gameplay mechanism actually works or if those expensively acquired new customers are worth it, it becomes apparent that analytics can inform all parts of your online business. These hard-to-find practitioners of the dark arts can have dramatic impact on businesses large or small.
However, analytics are useful only to studios prepared to turn the data into meaningful actions, which in practice means continual experimentation and continuous production, all of which can be a cultural challenge for staff schooled in fire-and-forget console development.
In the early days of social gaming, before microtransactions became a real revenue source on Facebook, many failed to realise how critical analytics would become to their businesses.
What differentiated Zynga was that, since its inception, management placed data mining at the heart of its operation. Today scores of analysts continuously sift Zynga’s vast customer data flow in real time, segmenting their audience, optimising customer acquisition and passing intelligence to designers and programmers to improve the customer experience, and, ultimately, drive up sales.
This more detailed understanding of customers means practitioners understand what, how, why and when customers purchase and can therefore make more of what they like best. They can react to customers faster, which keeps players engaged and buying for longer.
Above all they smooth out any friction to deepen engagement, raise conversion rates and minimise customer drop off. This can add up to businesses that are more efficient and responsive to consumer demand and ultimately more profitable because there are fewer unknowns about their existing users.
But here’s the serious flaw: analytics, however real-time, are fundamentally retrospective. They can only make you aware of what today’s users do with your existing app.
They can’t tell you what new app to build tomorrow for new audiences. This retrospection is patently visible today in many social game designs, some of which are repetitive and self-referential.
The sheer numbers of saccharine, flavourless, me-too titles aping 1990s games designs show the perils of allowing your existing players to lead you by the nose. Without checks and balances, analytics will predetermine what you design, resulting in constant evolution but few – if any – revolutions. Have any brave new frontiers yet been discovered in social gaming?
What innovations do arise are swiftly copied because barriers to entry are so low. Zynga, a fast follower par excellence, will snap up nice little ideas as well as a dozen or so companies, doing a decent impression of its silverbacked forebear, Microsoft.
One reason for Zynga’s acquisitiveness, as repeatedly demonstrated by Microsoft and Google, is that when innovation is hard to create internally, management compensate by trying to buy it.
Historically, few succeed, and analytics can exacerbate this tendency.
There’s undoubtedly huge mileage in watching your customers closely, and sensible use of analytics combined with inspirational games design will result in more sustainable, profitable companies.