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?
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.
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.
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?
4 thoughts on “The impact of digital and connectivity in gaming”
Wow, not being a gamer myself, I never thought about the impact of the digital world. Bet it took a lot of thinking for all players in this market. And some didn’t make it, for sure!
Some companies implemented superficial changes, only – e.g., download vs. CD-Rom. Others, like EA, embraced the challenge and rethought the business model (e.g., pricing, innovation schedule…).
I find gaming very interesting because it has been turned on its head.
The model was for multiple ecosystems – closed shops around different closed forms but the move to mobile has democratised the industry and now it’s swimming in the world of Apple and Android – sorry MS you are not in the game.
The mobile guys are in a world where the model is a micro purchase (for IOS) – a couple of bucks- and in Google Play its free because distribution can be circumvented and it has to be free.
There is a lot being learnt in the UK now on monetizing games and the smarter use of in game ads and the use of in game purchases. This is a creative experimental industry and watching them will offer lessons for the rest of the digital world.
There is a WOM factor in games and buzz matters – NESTA-aligned AppyNation are helping UK indie game houses understand that hype-cycle and guys like Will Luton are curating the learning of Free to Play and connecting and sharing wisdom via webinnars and twitter.
I am not a gamer – never have been and unlikely to be – but reframing their learning and applying it to wider digital is valuable – I watch them like a digital anthropologist – game-makers are fascinating specimens 🙂
I agree with you – other industries can learn a lot from how gaming is adjusting to digital (starting with revenue models). Talking of creativity, I attended a presentation some time ago where the speaker was describing how virtual money and micro-payments were being used for money laundering…