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What the videogame industry needs now is less but stronger platforms

This industry has to deal with a distribution issue and the marketplace needs to see the emergence of strong, stable platforms offering a quality service to end-users and able to manage a true publishing strategy. The issue may be that there are not enoug

Somehow, the video game industry finds itself back to the pre-Nintendo years when there were many incompatible and ever changing formats offering a plethora of games to the same undiscriminated audience. Among these games, one could find those which became classics but, as a matter of fact, many were of poor quality, many were copycats and… many were pirated. The entry point was the –high priced- device (Commodore, Atari, Amstrad etc) and the content was coming second. Gamers would always find games to play among the vast list available even though discovery was hazardous. The top 10 rule applied i.e.: when a market is flooded with a plethoric offer, consumers tend to select the less risky choices which often means either the most successful products (The larger the choice, the bigger the sales of the top 10) or the cheapest ones (free if there is free available). Any similarity with a current market situation ?

What did Nintendo and Sega bring to the market at that time? They came with a simple packaged offer including a stable and robust technology and a selection of pre-approved games. Technology became more stable and the focus was set on content: Mario, Sonic and plenty of IPs emerged. Roads to market for consumers became simple and easy and the eco-system for publishers more secure. Obviously, publishers had to adjust and many just did not make it. However those who succeeded went through a period of growth and success. In the process however, many of them have forgotten -or simply never experienced- these hectic early days of the videogame industry and considered this eco-system granted. Which obviously did not happen as digital challenges arose.

Free is surely the most disruptive factor of digital (internet & mobile) in a value chain. It happened with music, it happens with videogames with a strong positive difference though which is the free-to-play model allowing for some monetization –even though it has not been invented by traditional videogame companies. In return, one of the strongest benefits of the internet is the lowering of entry barriers, the massification of audiences.

The market situation is obviously much different now from what it was in the eighties at least for one reason: the number of players across the globe is now truly massive. As a consequence, the industry has to acknowledge two new facts: a- gaming  times are a segmentation parameter for the audience (there are games for consumers willing and able to play one hour per month and games for consumers playing one hour a day) and b- the final price for a game has become a variable dependent on the consumers’ usage (DLC, items, subscriptions etc make that each individual ends up paying a different price). However, for the rest, the current market situation is not that dissimilar.

How is it that many game publishers are struggling when there have never been as many players around the world? What is it the market lacks to provide wealth to its stakeholders? There may be a large variety of different answers to these questions but one way to look at them from a different angle consists in asking the question: What did Nintendo and Sega bring to a malfunctioning marketplace in the eighties?

-           Simple roads to market for the end-user that is less entry points for playing videogames and a better customer journey. Today, games are available through an infinity of platforms delivering a wide range of quality of service .There is always an entry barrier to any service; the height of this barrier should be directly related to the quality of the service provided to the end-user.

-           Stable platforms, in terms of technology, business models and distribution, that is a solution offering safer mid/long term investment for publishers, distributors and consumers. Publishers as well as end-users are risk adverse. Both need to make sure that the money –and time- invested will not end up in the sewer thanks to branded, recognizable, reliable platforms.

-           Focus on content; devices are meant for accessing valuable content. Promotion must be made on content and on specific IPs , not on the “tons of games “pitch. These platforms must manage a true publishing strategy, comprising possibly exclusive games.

-           Filtering; games are selected in order to allow for superior quality and avoid the proliferation of pointless copycats. Ultimately, platforms should include a solution for discovery allowing customers to find the games best suited for them.

This industry has to deal not only with a business model issue but also with a distribution issue. The marketplace needs to see the emergence of strong, stable platforms offering a quality service to end-users and able to manage a true publishing strategy. It may happen that IPTV and mobile carriers which are already streaming content to all of us become top platforms for videogames delivery, like  in the VOD market (where there are much less platforms accessible to an individual customer) even though there are only local players and no international providers. The Steam platform has done good to the marketplace. The issue is not that they have become a power place, it is that there are not enough platforms like Steam.

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