All the sessions from Transform 2021 are available on-demand now. Watch now.
Editor’s note: Tim goes Business 101 on us to illustrate the interdependencies between big budget and niche games. I’m still not entirely sure what a BCG matrix is, but I can definitely get behind his final conclusion. -Brett
“Damn all you Call-of-Duty-buying, Madden-loving, know-nothing gamers! What about all those great games you’re totally missing out on? What the hell, man? Why not open your mind for a change and try a new intellectual property?!?!”
I once read these comments indiscriminately; I even agreed sometimes. But now I read them with a more discerning eye. After years of skulking in the shadows of all the major gaming sites, I consider myself to be a sommelier of gamer complaining. A former complainer myself, I now inhale the tearful bouquet of gamers lamenting the injustice of games being canceled in the same way a wine connoisseur enjoys a vintage cabernet.
However, unlike a nice red, a gamer’s whine doesn’t get any better with age.
Three top investment pros open up about what it takes to get your video game funded.
So, as a self-proclaimed expert on the subject of complaining, I’d like to touch on one of the most frequently made complaints I’ve read recently: Big franchise titles are inhibiting the production of new franchises.
I beseech you all making such accusations! Stop! You’re only hurting yourselves! We need to embrace the mainstream purchaser who is perhaps not as informed as you or me and give them safe harbor in the storm of angry comments out there on the Internet.
In fact, if you’re a lover of new franchise games, I implore you to take this opportunity to thank and embrace each and every one of the mainstream buyers you come across. Why? Let’s just say that all will become clear by the end of this article.
“Wait wha…?” I can hear the collective gasp of building nerd-rage. But before you rage-quit on my article, hear me out, my digital countrymen!
“Why should I thank mainstream gamers?” you ask. “The games made for those football-loving, rare-steak-eating, contemporary cavemen wipe out wonderful games like Beyond Good and Evil because they grab the majority of sales!”
To some extent, they do. But before you pass your judgment, I think it is important for you to reflect on this simple statement: Without the big franchise titles that sell millions of copies and bring in tons of money, there would be no new IPs or indie games. Just like one cannot speak of light without darkness, salt without pepper, or Mario without Luigi, so too are intertwined the fate of major and minor gaming titles.
How can this be? To explain, I’ll use one of the most basic marketing concepts, the BCG matrix.
(I should preface this portion by saying that I don’t work in the gaming industry in any capacity. This is only an idea I had as it relates to the limited number of concepts that I’ve studied, so I could totally be wrong. But I imagine that the intellectual property development mix must follow this,or some similar principle. If anyone knows for certain, I’d love to know.)
All great Harvard business ideas, this one included, seem to take the form of a four quadrant framework. On the bottom left of your matrix, you have the cash cows. These are your market leaders, the ones that give you a high rate of return on your assets compared to the growth of the market. They generate more cash than they consume and are appropriately milked for every penny. These are your Maddens, your Rock Bands, your World of Warcrafts: games with little room for growth in their genre that still pull in lots of cash.
On the top left you have your stars, which require lots of money but in turn generate lots of money themselves. In this quadrant are all-star franchises like Call of Duty, which have high market share in a high growth market.
On the top right are the question marks: new IPs. They tend to be a bit more experimental and require more money for development and marketing than the cash cows because consumers are unsure of what they are getting. The hope is that eventually these question marks will become cash cows.
Lastly, on the bottom right are your dogs, and well, sadly, you usually have to kill your dogs because they haven’t performed well relative to the other quadrants. These are low-growth genres and games that don’t capture much market share. Frequently, innovative titles will unfortunately find themselves here.
Now, the goal of this matrix is to develop a balanced mix of each, and this is why we need the mainstream gamers. The profits from the cash cows improve dogs and question marks. It’s because of them that new games are possible at all.
Unfortunately, these same cash cows and stars set the financial return bar so unattainably high that most games can’t clear it, despite their quality.
Your response? You beat your bosom while screaming “Foul play!” towards the heavens. But can you really fault mainstream consumers for their purchasing habits? They’re just following the trends. And surely we can’t blame companies for producing popular titles, because that’s what businesses need to do to stay afloat.
Who do we direct our collective rage at, then?
I think we should blame ourselves, the hardcore gamers. We’re the ones who help turn niche titles into cash cows. Like Dr. Frankenstein, we allow our obsession to transform them into the monstrous titles that they become.
So the next time you have the urge to whine about Call of Duty preorder records, remember: This is your monster. Do you really want to destroy it?
GamesBeatGamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. How will you do that? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational, and fun speakers at our events
- Networking opportunities
- Special members-only interviews, chats, and "open office" events with GamesBeat staff
- Chatting with community members, GamesBeat staff, and other guests in our Discord
- And maybe even a fun prize or two
- Introductions to like-minded parties