GamesBeat

Game companies are adapting to platform changes more quickly

To Jan Beckers, the chief executive of Berlin’s HitFox Group holding company for game startups, game platforms are a lot like countries. They evolve along certain patterns. And because veterans have watched a few platform changes happen in the digital era, game companies are adapting to this platform evolution more quickly. If you recognize these patterns, Beckers said, you can figure out the right strategy to pursue in a digital era where platform change is accelerating.

In an interview with GamesBeat, Beckers (pictured above), said that the transition from browser games to social games to mobile games is happening at an accelerated rate. Each time, the evolution is like the rise of a country, where you see the establishment of rules and regulations. You see rapid growth and then a slowdown. You see a lot of competition and then an evolution of government toward democracy or dictatorship. And finally, you pay a tax. The rise of Facebook followed such a pattern, Beckers said.

“The web was very democratic, where anybody could publish,” he said. “As a platform, it created a  huge ecosystem. With social and mobile, history is repeating itself.”

He added, “You get new applications programming interfaces [APIs], which are like the rules and regulations of a country. There are new ways of coding and distribution, new audiences and usage patterns. You need new organizations — startups — to deal with that complexity.”

Each platform has six important patterns. First, they go through a hype stage. Expectations run high, then the bubble bursts and the market recovers.

Second is the focus of the companies shifts from marketing to product. Companies that figured out how to grow fastest, like Zynga, prospered early on. But then they had to shift toward making high-quality games to continue that growth.

Third, the platform moves into the Wild Wild West. There is little regulation at the beginning, until aggressive marketing leads to scandals. We saw this on Facebook with aggressive “offers” that the social network had to shut down.

“Aggressive marketing strategies work in the beginning, but not later on,” he said.

Fourth, the platform owner increases its power. The platform owner starts with a friendly attitude toward developers, who can make or break a platform with their support. Then the platform owner enacts a tax, taking a higher revenue share, and it makes moves that aren’t perceived as developer friendly. It might even copy the most popular applications of developers.

Fifth, a period of accelerated change happens. Facebook made a lot of changes to its platform and fast-moving companies like Zynga adapted to those changes. Copycats entered the market and the cycle became shorter. The period from growth to consolidation happened faster on Facebook than it did on the web. Beckers believes each new platform will have a shorter cycle, in part because there are more competitors jumping in from existing platforms.

Sixth, a platform starts out with high-specificity. That means it is hard to create games for it and to distribute those games. Once a platform matures, the knowledge about how to operate on it becomes more of a commodity. In effect, everybody learns how to do it.

With the web, social, and mobile platforms, the game industry has three mature digital platforms. Game companies can now differentiate based on the types of audiences they want to reach, such as hardcore or casual audiences.

“At some point, there will be no Facebook game publishers,” Becker said. “The companies will become digital game publishers. This is where we see the industry heading.”

At some point, the TV will become a platform for mobile and digital games, beyond the consoles. Seasoned players such as Electronic Arts will be faster in adapting to the changes, Beckers said. And barriers to entry between platforms will fall, resulting in increased competition.

“It will be a new platform with its own startup opportunities,” Beckers said. “It will have a faster consolidation cycle, once it is proven.”


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