The impact of digital and connectivity in gaming

In an interview with McKinsey, Bryan Neider, the COO of Electronic Arts (EA), discussed how the increase in bandwidth availability and the widespread adoption of connected devices had changed the electronic gaming business.

Here are some of the highlights (but do head over to the original article, here, for further insights, such as the type of metrics used by the company).

Product and new product development

The games can be delivered digitally – e.g., downloaded – in addition to the traditional format based on a physical support (e.g., a CD-Rom).

Games are no longer a stand-alone product, but a ‘digital universe of content’. They need to be accessible anytime, anywhere and on any device.

Games are always live and evolving. Once released, games may be continually improved and new features added, in response to analysis of data such as:

• Where in the game are consumers dropping out?
• Did we make it too difficult or too long?
• What is the network effect of getting new players into the game?
• How many people finish a game? Did people finish too fast?

Distribution

The fact that so many customers choose to download the game rather than buying it in physical support means that EA can sell directly to its customers, bypassing retailers.

Pricing

The company is exploring new business models like micro transactions within free-to-play games. In this model, users play the game for free but have the option to purchase items that accelerate progress within the game, or that improve the playing experience.

Another stream of revenue is advertising within the game.

Customer Insight

Direct access to customers means that EA does not need to rely on its retail partners’ weekly reports. Moreover, as users are often playing on devices with access to the Internet, the company can collect data through ‘telemetry’. Bryan Neider explains:

‘When players log in, they are asked whether they permit us to use the telemetrics of, for example, their handheld device, to communicate information from their game back to us. Many do. This is a critical tool because it permits us to watch real game playing so that we can understand quite objectively when something is working and when it isn’t.’

Telemetry, the use of multiple platforms, etc means that EA is now able to obtain deep customer insight and develop extensive profiles of users. Based on gaming behaviour and purchasing patterns, EA can calculate the gamer’s lifetime value. EA also understands how users interact with the products, the pain points, and can respond very quickly, fine-tuning the game and improving the experience for the different type of gamers. In addition, the company solicits feedback from users at different points in the game.

EA also surveys blogs and social media, and actively engages with the player community for feedback on early versions of new games. Comments are continuously reported back to the development team, with the caveat that such feedback tends to be polarized and not necessarily reflect the views of the majority.

Customer Relationship Management

The company is focused on the lifetime value of each customer. The direct relationship with the customers, the added insight and the ability to continually develop the game to reflect players’ preferences have enabled EA to build a close relationship with its customers. It also enabled the company to overturn the situation it was facing a few years earlier, with game-quality scores going down and costs going up.

Electronic Arts is a great case study of how digital and the always on society has transformed the business environment, don’t you think?