Category Archives: The Business of Games

MARKETING TIP 1: Winning distribution partnerships for your game

Posted on by

Build it so they will comeTakeaway: One of the fastest and cheapest ways to win a big audience for your new game is through a well-connected partner. It’s a lot easier to win partners when your product fits their interests and business model – and that needs to be built into your plans from the outset.

A lot of startups and smaller organizations assume that they have to build their own audience organically. This leaves a lot of great games (and other products) out of the market, unused and un-useful. Getting other organizations to push your games through their existing networks is the fastest way to pull in a sizeable audience for your product – even if you already have a respectable audience of your own.

Enduring distribution partnerships can happen by happy accident, but it’s possible to plan ahead – as early as your product strategy and design phase – to make them more likely. After all, it’s one thing to convince someone to Tweet about your awesome new game – it’s another for them to invest their own resources into a meaningful distribution effort. You can design your product to make it easier to secure these partnerships:

What’s in it for them?

Giving your partner tangible incentives for spreading the word is the best way to win real and enduring help:

  • Profit. Can your partners resell your product and make profits? This is the clearest way to incentivize a distribution partnership, but it’s not always easy to achieve – read my story below for some caveats.
    The various app stores, from iTunes to Edmodo to Steam, all offer access in exchange for profit-sharing – but don’t expect them to elevate your product above the clutter unless you have something extraordinary to offer. You’ll still need to push meaningful sales through sharp marketing, including more substantive partnerships.
  • Enhancement. Does your product meaningfully complement and enhance your partners’ products, e.g. fill a critical gap or provide a competitive edge? This can ultimately translate into higher profit for your partner, but you may have a harder time claiming a share if you can’t demonstrate direct causation.
  • PR. Can your product generate a meaningful boost in awareness, e.g. help win news stories in relevant publications? Note that this is the weakest and most ephemeral of incentives; after the initial flush of excitement, there’s little further incentive to continue promotion.

Does your product match your partners’ business model?

A few years ago I helped an indie game developer market its game for change. Among the most promising assets it had was a revenue-sharing deal with a major international nonprofit. That organization would help promote the game in exchange for a cut of the profits – a win-win for both parties.

Unfortunately, when the time came to promote, this relationship didn’t generate meaningful sales. Why not?

  • Audience alignment. While the game was compelling, it was also “hardcore” (e.g. not Candy Crush) and available only on PC. There just weren’t that many hardcore gamers among the nonprofit’s membership.
  • Channel mismatch. The nonprofit mostly promoted the game through Twitter. It’s pretty tough generating sales of a PC game through Twitter (a mobile game, maybe). The nonprofit refused to promote through its email list, where there’d be a somewhat higher chance of success. And this was because of:
  • Limited incentive. Sure, a cut of the profits is some incentive – but how does that stack against the organization’s other income sources? We’re not talking about GTA5 here; even in the best-case sales scenario, the game would only have generated vanishingly small revenues.

This same analysis applies to educational games and major publishers. Even if your game were a perfect match for a publisher’s content, does it match their marketing and sales strategy? Would the publisher be able to charge more for their existing products if they bundled yours in? Does it merely provide another “talking point” for a sales rep, or can it justify a meaningfully higher sales price? And remember the moral of this story: if the revenue is minimal, a sales team will have little incentive to push a new product.

Does 1 + 1 = 3?

Does your product have qualities that make it synergistic for potential partners?

  • Does it transform the partner’s product? For example, does it add new capabilities, especially those with high revenue potential such as assessment, or allow it to sell into a new market segment?
  • Is it broad as well as deep? A one-day intervention, no matter how profound, just doesn’t add the same value as something that enhances an entire semester. And make sure it feels coherent: one publisher I recently spoke with scorned mixing-and-matching games from different developers because it would result in a patchwork user experience.
  • Is it easy to integrate? For educational games, do your game’s data outputs match existing standards? Are all your games in Flash when your partner has standardized around HTML5?

Don’t just plan. Ask.

Despite everything I’ve written above, the surest way to build meaningful partnerships is to build real relationships with the intended partner. The best way to build a product that your partners will promote is to ask them directly what they’d like to see.

Funding: Small Business Innovation Research Grants

Posted on by
GoCivics Concept Art

Concept Art for Filament Games’ and iCivics’ GoCivics project

While at iCivics, I contributed to three winning proposals (and one declined proposal) to the U.S. Department of Education’s Small Business Innovation Research Program – two phase I proofs-of-concept and one Phase II buildout:

Dan White, then-CEO of grant recipient and iCivics partner Filament Games, has written up 11 tips on winning SBIR funding. Here’s the lede:

Compared to VC money, SBIR (Small Business Innovation Research) funding comes with relatively few strings attached. Most importantly: you don’t have to give up any equity. So what’s the catch? I’m glad you asked! One, the funding rate is low (typically ~15%), and two, the application process will make you cry and beg for mercy. Before applying for an SBIR, steel yourself to write dozens of pages of argumentative text in answer to an extensive list of intimidating questions, buried within a dense application that’s riddled with esoteric rules.

SBIR Funding: Dreadfully Wonderful (Gamasutra)

With memories of this process still somewhat fresh (I recall our team staying up to 3am to “finish” the Phase I proposals, then barely making the deadline due to a Presidential motorcade between us and the office), I can certainly underline the following points by Dan:

  1. Get to know the program officers. They want to see good projects succeed and will help you navigate the grant’s quirks.
  2. Line up your partners early, and make sure to get their letters of support as far in advance as possible! Nothing is more frustrating — for you or your partners — then to get a letter after the proposal deadline.
  3. Every line of revenue is an investment. If you’re already familiar with government funding, the SBIR process will be old hat (and you’ll already be aware that each grant program has its own quirks). If not, consider whether you can sustain another type of funding, which includes not only applying for but also following through and reporting on your results.

Despite all these caveats, the federal government’s SBIR programs can be a great funding source if your project fits their profile. As you can see from the evolving names of our successful projects, they get that innovation requires iteration.

By the way, here’s the video supporting one of the Phase II proposals. If you follow Dan’s advice and develop a Minimum Viable Product, be sure to provide something — like a video — explaining it to the reviewers: Filament Games GoCivics.

TIP: Educational games must meet curriculum standards

Posted on by

Takeaway: When developing an educational game for the K12 market, start by matching what you want to teach with what educators need to cover. State and local standards provide a handy shortcut, though nothing beats actual research (talking to real teachers).

Peter Stidwell, an Executive Producer at the Learning Games Network, has written up an excellent guide to developing games that can succeed in the K12 market. One of the most important points isn’t about marketing but rather ensuring the game itself fits the needs of American teachers:

Tie your game to standards. Stateside, the Common Core State Standards (CCSS) is the equivalent of the National Curriculum. Sort of. CCSS only covers some subjects, it’s very new, and not all States have signed-up to it. There are also individual state standards in various subjects.

— How to market your game to US schools (Edugameshub)

Common Core, gamed?

Ensuring that people actually want the product always precedes marketing — in fact, it precedes development. Too often I’ve seen organizations create materials that push an internal agenda, then scratch their heads about how to get teachers to use them. “Vanity projects” have little chance of gaining significant usage because they aren’t meeting an urgent need.

Educational games are no different than any other product: they must meet customer needs. Designing your game to explicitly meet Common Core or state standards is a pretty good bet – though your best option is to first conduct user research, to make sure. How you interpret the standards may not be how schools or teachers do it — or maybe teachers are only spending 20 minutes on what you think is a one-week topic.

Example: Key to iCivics’ widespread adoption was to develop our games and other materials to meet specific middle school civics / social studies standards. We started with in-house standards alignment and eventually outsourced it to Academic Benchmarks both because of the time involved (there’s no Common Core for civics, so we had to match to 50+ states — including DC, military, and territories — different standards) and the credibility of third-party certification. Check out iCivics’ standards-matching.

Sustaining R&D in learning games

Posted on by

What business models support great learning games? Not just any edutainment video game, but the kinds of immersive, fully-realized experiences coming out of places like the ASU Center for Games and Impact or MIT’s Learning Games Network. These aren’t shovelware with shoehorned content. They are games in which the fun is the learning. It’s an art as much as a science, and that means they require significant investment – more than seems sustainable from where many of us stand.

This question about business models arises whenever game-based learning organizations talk, and it surfaced again at a recent gathering of the Gates Foundation’s Games for Learning and Assessment portfolio. A seminal study we drew from is the Games and Learning Publishing Council‘s (also Gates-funded) deep market analysis of the learning games space, with particular focus on barriers to marketing and selling games into the K12 space. This analysis of the market prospects for learning games also touched on barriers to investments in this space, particularly the reluctance of venture capital to enter.

In a breakout group focused on the topic of sustainability, we honed in on a subset of the overall issue: how to fund new product lines. This isn’t the same question as how to create sustainable businesses, but R&D operations are key to our business models. And typically, this is what the existing process looks like:

Big Investment ... Release Product ... Now what?

How learning games are funded today

At the “Now What?” phase, we usually see a few options:

  1. The product is incomplete, and we scramble for more funding to finish or fix it. During this time, the product isn’t evolving.
  2. The product is great, but the revenues it generates is inadequate to underwrite marketing, sales, support, patches, upgrades, data analysis, etc. Even if it’s educationally successful, it’s a commercial failure, at least not without further investment.
  3. The product is great, and it’s commercially viable.

Anyone who’s familiar with the Lean Startup model would recognize the above model as broken. Too much is risked on that first investment, and not enough is there to support iteration, nevermind total pivots. Worst of all, while user testing may be happening, market testing is not.

So what’s the alternative? This is what we sketched:

MVP ... ASAP release ... Iterate iterate iterate

How learning games might be funded to support longer-term sustainability

In this model, we put out a smaller product faster and, importantly, begin commercialization efforts sooner. In the perfect case, we find commercial partners early to invest in the product. The benefits: we fail faster, and commercial viability is a factor in that earlier success/failure evaluation.

The upshot would be many more pilots, many more failures, and a bit fewer fully-developed games – but those that do survive are already tested for market viability.

Now the reality for a lot of nonprofits is that we’re rarely in a situation where our investors (typically, philanthropic grantmakers) are in a position to support a pure form of this model. Often, grants have rigid requirements and timelines, and the high cost of securing and reporting on grants incentivizes grabbing the biggest grant possible as quickly as possible.
After this gathering, I realized that a few changes would make the MVP model a lot more viable for many of us:

  1. Grantmakers could deliberately underwrite MVPs, ideally with a commitment to support winners. This is exactly what the Gates Foundation did with its recent literacy courseware challenge. More of this kind of investing needs to happen.
  2. Large grants could have longer execution periods to allow us to structure product development in stages and go through multiple iterations.
  3. Both grantmakers and grantseekers should realistically budget for market testing and iteration.
  4. Commercialization should begin sooner in a product’s lifecycle.

Of course, suggestion 4 begs an overarching question. We could individually or as a consortium retain more business development talent and create more commercial alliances. But as we continue to forge ahead on the supply side of the learning games market, the question that remains is whether the demand is there to sustain us.