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Developers and publishers need each other now more than ever before

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The recent Casual Connect casual-gaming conference posed an interesting question: What is Publshing 2.0, and how do you make it happen? I heard this provocative during Applifier CEO Jussi Laakkonen’s panel on digital publishing.

As the former publisher of Saturday Night Magazine, a traditional print magazine, and currently head of publishing, licensing & distribution at SGN (Social Gaming Network), I have experienced the shift in the publisher-to-content-developer relationship across the board. As such, I can tell you that what we’re seeing in the mobile/social games business today is something that we’ve seen before in other content mediums.

Historically, the publishing model for games, and most industries for that matter, was quite simple: One party makes the content, and another party markets and distributes the content. It’s the common theory taught in business school, the principle of specialization: that groups are better off specializing and “trading” based on one’s comparative advantage.

We have seen shifts in this publisher/content developer relationship in the music, film, book, and magazine industries as digital distribution models opened channels for content holders to reach their respective markets directly. The video game business is no different.

The major change? Distribution, distribution, distribution.

The case for content

The key difference in today’s environment is that the publisher no longer entirely controls digital distribution channels and, even worse, distribution is readily available to content holders. Just look at the music business: Napster and MP3s took distribution out of the hands of the record labels and made music readily available to consumers. Not long after, websites and services such as MySpace, iTunes, and Amazon enabled musicians to speak and market themselves directly to customers, essentially eliminating the traditional record labels and giving rise to popular indie artists.

The same took place in the magazine business, where the publisher historically controlled or owned the distribution channel. Content producers, aka writers, were at the mercy of the publishers who controlled the media and medium. But now, with that crazy thing called the World Wide Web, writers can distribute their content directly to consumers, instantly and for free. The speed at which information is processed makes the morning newspaper old news before the presses even fire up.

Now we’re seeing this affect the games industry. In the past, the major game publishers controlled the consoles or were large enough to fund the manufacturing and distribution of game cartridges, and thus the content maker/publisher relationship made for one happy family. But now Facebook, Apple, Google, and Amazon, among other daily entrants such as the Desura, the digital download service for independent games, have flipped this model upside-down. Any yahoo can develop and distribute their own game, reaching millions of potential customers practically instantly and for free (minus the app store royalties, but there is no real upfront cost). Just as the music and magazine industry experienced, distribution has been ripped from the game publishers’ hands, and content developers now have a direct line to customers. Essentially, the barrier to entry has been removed.

Thus, content is king, and death to the publisher, right? Not so fast.

The case for publishing

Just because it’s now “easier” for developers to release their own titles, both the mobile and social gaming space is incredibly crowded and competitive. Yahoos launch games every day, hundreds daily on Apple’s app store alone. Yet nearly two-thirds of apps on the app store are so-called “Zombie Apps” that generate no downloads, a good number of which are smaller developers who poured their heart and soul into developing the content. I wouldn’t be surprised if there were some diamonds in the rough, but we’ll never find them because of the lack of monetary and/or marketing support.

You can roll the dice and do everything on your own: develop, distribute, market, and promote your own game. Or you can stick with the principle of specialization and focus on what you do best while relying on others to handle the rest. As a game developer, your time is better spent developing games than optimizing marketing plans, leveraging CPIs, and analyzing LTVs. Publishers continue to play a major role in the ecosystem, providing support, best practices, brand value, funding, access to the store operators (for promotional opportunities, tech support, and new feature sets), an existing user base, marketing dollars, and marketing expertise. As this business matures, the publisher’s role will only become more valuable. So how do we all get along?

The answer is that Publishing 2.0 is a greater collaboration between parties of specialization.

No longer does the relationship end when a developer hands their game to the publisher. If anything, this is when the relationship begins. It takes communication and a true partnership. With this new form of distribution, speed-to-market and live information has created new opportunities in the ecosystem. As publishers pivot to fill this void by providing real-time data and analysis, developers need to recognize this shift and thus adapt their development cycles. Publishers should work more closely with developers to provide support with user data, analytics, monetization strategies, game feedback, and coordinated promotional plans, while developers need to create flexible schedules in order to adjust to live consumer feedback and operate as a more service-oriented business.

Neither have a strong case?

The biggest issue here is economics. With distribution platforms taking 30 percent off the top and publishers taking anywhere between 30 percent to 50 percent, that leaves the developer with a remaining 20 percent to 40 percent — if they’re lucky. It doesn’t take a mathematician to understand the share of a $0.99 game for developers and publishers, before any marketing dollars are spent. Simply put, with developers working hard on developing a game and publishers making heavy investments (commonly north of $1 per user), it becomes very clear that even in a Publisher 2.0 world, it’s incredibly hard to turn a profit.

Therefore, goals and expectations need to be more accurately aligned prior to entering into a partnership, and both parties must be prepared for the outcome to change. Will the developer support the game on an ongoing basis? If so, for how long? What does that road map look like? Is the studio prepared to make adjustments based on user and publisher feedback? What does the publisher’s marketing plan look like, and how does it align with the type of game and its target audience? What baseline commitment is the publisher willing to guarantee on all levels of the marketing plan, including existing user engagement, acquisitions, advertising, PR, and so on? Can the publisher scale to take advantage of the market opportunity if the game is a hit? These are just a few of the questions every developer and publisher should consider in a Publisher 2.0 engagement. Ultimately, relationships and specialization still matter, and those that “tie the knot” the best will continue to succeed and rise above the fray.

Michael Ritter is the vice president of licensing and distribution at Social Gaming Network, the developer of popular social and mobile games such as Fluff Friends Rescue, Rescue Reef, Bingo Blingo, Jewels of the Amazon, and Skies of Glory. Follow him on Twitter at @Ritter83 or @SGNGames.


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