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Innovation as an outcome of co-creation in digital games firms?

In his new blog post, Jedrzej discusses innovation in digital games industry and the role of players' creativity, skills and need-knowledge in it. Practical and theoretical considerations of how it could be of benefit to digital games firms ensue.

Embracing customers’ creativity

Co-creation of digital games, or the process of incorporating users’ creativity in digital games’ development and after their release, has been getting a lot of traction in business literature recently. This is due to its dormant (and slowly awakening) potential for improving the market performance of digital games and creating new business models in this industry. Its underlying rationale: customers have skills and expertise that digital games firms do not have, or which are very expensive and difficult (in terms of organizational effort) for those firms to obtain. Hence digital games firms seem to be starting to understand the ability of customers’ communities to generate surplus value. Those customers are beginning to be seen not only as consumers, but also as producers.

After all, digital games customers, like all customers, are better informed about their own needs and preferences compared to the firm (von Hippel, 2005). The knowledge about customers’ needs is difficult to obtain for digital games firms due to its ‘sticky’ nature – meaning that its transfer across firm-customers divide is expensive and much information is lost on the way (theoretically, customers know what they want, while the firm spends a fortune on market research, focus testing, opinion polls and the like – this is an example of such an attempted transfer). At the same time, it is critical for digital games firms to be aware of their customers’ preferences, because of their need to manage (and reduce) demand uncertainty to balance the risks of games’ production (which are getting increasingly expensive to develop; digital games firm must be sure that its investment will be recouped). This state of affairs suggests, that allowing customers to make their own products kills both of those problems with one stone – they will make products that will suit their needs and the firm will not have to worry about the future demand for their products. Unfortunately, digital games industry, as all creative industries, is not demand driven – instead, it is characterized by ‘supply before demand’ phenomenon, with new digital games made and delivered without their future customers even thinking that they ‘like’ (need) them. That is why co-creation is such a valuable and useful tool to digital games firms – it allows them to react to changing customers’ needs in real time after the game has been released, so after the customers have the knowledge of their own needs in this ‘supply before demand’ driven market, allowing the firm to capitalize on not having to transfer the sticky knowledge about customers’ needs.

Co-creation of not only content

With such platforms as Steam Workshop and games like Neverwinter leading the charge, it is becoming apparent that customers can create content for digital games. If a digital games firm plays its cards right and keeps tabs on this content development, it can reap significant rewards from co-creation, with players also getting to keep their cookie. With content co-creation, customers can enjoy a game with significantly more content, large portion of which has been generated by their own community. Firm, on the other hand, gets a more popular market offering, which is being purchased and played by more customers as it is more attractive to new entrants and better at retaining long-time users.

It is not only content that customers can help digital games firms with. For example, it has become a widespread industry’s practice to invite customers to beta test new games before their release. This also is a form of co-creation, one in which customers use their spare cycles to improve the game (without being paid for it) that later they will have to buy. Same goes for self-organizing groups of MMOGs players into guilds, corporations and other social structures, without which there would be no player cooperation and rivalry, and no multiplayer games whatsoever. Those phenomena are attributed to different dimensions of digital games, with some being technical in nature, some touching upon content, and the others dabbling even with the game design. We will discuss possible loci and typology of co-creation in one of the future (coming soon) posts.

With this increasing role of co-creation in digital games industry, a new question pertaining to the function of the customers within this process arises. Should digital games firms simply use their customers, and the process of co-creation, only to fulfil menial jobs and mundane duties that they did not have the time (or interest, or funds, or were of lower project management priority) to complete? Or does the potential of customers’ co-creation go beyond those simple jobs? What if it proves capable of generating innovations, “true improvements”, things that game developer can be impressed (and perhaps surprised) with, and which could potentially take the game into completely new directions?

In this article we will look into the innovation outcome of co-creation, and whether the customers are capable of incremental and radical innovation.

Incremental innovation and radical innovation

We should avoid thinking of co-creation as just production of mundane content, or performing of menial tasks, by the customers on the behalf of the firm. Certainly, so understood co-creation is fitted more easily with current functioning of a digital games firm, as it represents simple outsourcing of labour. Unfortunately, this mode of thinking will lead us to believe that customers are unable to create any innovations – either incremental (meaning improvements to current designs of the firm, but nothing that would be surprising or ground-breaking in terms of game design or production) or radical (true novelties, things that are unforeseen by the firm and open up new avenues for development and functioning of the game). Indeed, if we were a digital games firm, it would also cause us to miss out on the potentially game-changing benefits of the process of co-creation of computer and video games that our organization could embrace to improve its competitive position.

Instead, innovation is the nature of co-creation. Even inviting customers to co-create games by doing such un-creative jobs like beta testing new productions could potentially yield an innovation (for instance, a beta tester could identify a malfunctioning line of code and instead of fixing it, propose a better, more elegant solution – but this requires tester to be granted access to this code). The degree to which the process of co-creation can be innovative depends on the approach of the firm and whether it opens some of its game to customers’ creativity. In other words, co-creation cannot be innovative if the digital games firm does not open itself in any degree to this process. This opening can include simple social interfaces for communication with customers’ community such as establishing platforms for exchange of creativity on a dedicated forum, or more advanced means such as making available some of its development tools, to bold moves of releasing some of the game code.

The currently prevalent approach towards harnessing of the phenomenon of co-creation - deployment of toolkits for creativity – is particularly well adapted to directing the tide of customers’ contributions towards game elements where they are deemed desirable by the firm (for instance, customers are welcome to make and sell new outfits for their avatars via dedicated marketplace). It is an approach which insulates the digital games firms from disruptions caused by customers’ tinkering with the game too deeply (i.e. damaging the product’s image and thus reducing its market performance, or causing problems for the firm’s functioning or operations), and at the same time allows for neat regulation and control of the process of co-creation. In this scenario, we observe a trade-off: customers’ creativity is limited (they can only create within the bounds erected by the firm) but it is also less likely to damage the firm or its market offering, thus causing problems or disruptions. Radical innovation in such conditions is very difficult to achieve. Incremental innovation, on the other hand, is easier – for example, focused customers can devote their time to create quests, which can rival or even surpass those prepared by the game developer himself (for instance popular quests in Neverwinter developed using Forge tool).

Despite that, the use of toolkits is not the only mode of co-creation there is, just as content is not the only dimension of a digital game that is co-created (reminder: technology and design as well). For example, we have seen members of users’ community innovating radically new game designs (i.e. IceFrog’s DOTA total conversion of Warcraft 3; a radical innovation) via modding (a form of co-creation in digital games which was the first to be noticed by academic discourse). Players can find emergent ways to play games, thus innovating modes of gameplay, changing how the game is used and why it is attractive to players (for example the appearance of both Blizzard-sanctioned and Blizzard-banned economy in World of Warcraft). Moreover, literature reports players developing not only peripheral, but also central art assets in game development (Banks, 2009), beta testing customers improving the game code (Burger-Helmchen and Cohendet, 2011) and communities of customers inflicting heavy pressure on digital games firm regarding the direction of game development and changes (famous Monoclegate in EVE Online). We could multiply the examples here – if you have interesting ones, please share them in comments!

Open or closed firm, and increasing the difficulty level

We see therefore that digital games firms only started making forays into this new and uncharted territory of co-creating games together with their customers. Two conclusions come to mind here: first, the possibility of incremental or radical innovation resulting from co-creation depends on the decision of the digital games firm to open its proprietary assets for customers to have access to. Firms can also establishing channels for game production-related communications, or modes for customers’ contribution to the game development and production (to name a few). This is reflected by the work of Arakji and Lang (2007), who in their work observe that the way co-creation is encouraged, promoted and enabled by digital games firms, in a directly proportional function influences its outcomes (their prominence and quality).

Secondly, in embracing co-creation as a valuable tool for games development and production, digital games firms started with the easier and less risky thing to do – co-creation of those elements of the game, which are improvements to the developer’s original design. Embracing innovation (and radical innovation in particular) as the output of co-creative process is difficult though. Increasing radicalism of innovation is associated with more significant departures of co-created game from the developer’s vision, and thus introduction of numerous challenges to the firm. Let us now take a brief look at those challenges, before we wrap up, as a teaser for future posts.

CODA: new challenges to the firm

Co-creation is not an easy process to embrace. There are many difficulties to aligning firm’s interests with the ebbs and flows of community’s preferences, desires and delusions. It has been demonstrated in the literature that customers do not know what kind of market offerings they themselves want – community of customers is a horizontally networked collective without top-down structure. Moreover, creative industries are supply-before-demand driven (customers do not want a particular game before it is released, they like or love it only after they have played it). Customers have also been found to be unable to radically innovate in digital games industry (for instance, if Nintendo listened to its fans, Wii would have never be made – Aoyama and Izushi, 2008) and can lock the firm on the existing market trajectory. Therefore, the firm’s guiding hand in digital games development is indispensable, and some form of control over the process of co-creation will always be necessary. Finally, there are numerous difficulties that digital games firms face before they can incorporate the customers’ creativity in their own operations – involving customers in digital game production can produce many managerial and organizational challenges which, if not identified and resolved, can lead to complete disaster (and I really mean complete disaster, see Banks 2009 paper on Auran). There are also wider, firm strategy-level risks and challenges of using co-creation in digital games, pertaining to concerns about confidentiality, competition and relationship with customer base (Hoyer et al., 2010). For all of those reasons, it is important to understand the co-creative interface between digital games firm and its community of customers, and for the digital games firm to remain aware of their aims and benefits to be obtained from this difficult and at times risky process. Not making a critical mistake while engaging with your community to co-create is of utmost importance. 

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