Venture Capitalists & video games - Thoughts on Reassessing a Business Plan.

        There comes a time when you start to think about the information you've gleaned from others. In particular, my last blog post on Venture Capital companies Lightspeed and Joystick got me thinking – what have I learned, and what can I put to use in my own business plans? Of course, plans aren't just about you – but those who might invest in you, which begs its own question – what might be important to them, as well.

         While there's a lot to be learned, certainly a few things spring to mind in the whole affair of the business plan – discovery and cross-promotion. An article from Lightspeed Venture Partners at Gamasutra, goes over some of these pertinent topics, with regard to investing in gaming companies. In this market climate, it's important to have a business model that involves user acquisition backed by cross promotion. Since the social and mobile gaming markets are stil

l in their relative infancy, but quickly maturing, kit's important to find methods to overcome saturation, and improve total market retention. After researching Lightspeed Venture Partners, Jeremy Liew and other experts, such as Andrea Cockerton, a pitch expert, the consensus is relatively similar between them – you've got to stand out, either by the ingenuity of your product/service, or by capitalizing on a portion of market that wants or needs what you have.

Venture Capital money helps build dreams

         For my own business plan, restructuring portions of it to have a focus on cross-promotion benefits, both with similar products of my own, and/or products/services of affiliates, feels pertinent. Additionally, Focusing on core elements that are likely to excite investors (i.e. Paid acquisition, user retention, life expectancy-per-game increase via premium content services) is something that is likely to improve the overall effectiveness of the gaming business plan for an investor reading it. If anything, Lloyd Melnick's article at Quora on the secrets of monetization is a major eye-opener. Regardless of the kind of games you might release, getting the most out of your products and services is something everyone can appreciate. 

 

Ouya Kickstarter - $8.6 million can't be wrong, can it?

         There's ultimately a clear need to focus more on the product/service than just the marketing and branding of the company, within my video game business plan. Using the aforementioned content to help redirect my focus will help bring together a far more useful video game business plan. If anything, it's got a good start, focusing on – as Grace Davis, CEO and Founder of Omega Environmental Technologies puts it – selling relationships, not products – as a core of the branding process of the company. Certainly not a bad place to begin filling in. There's, however, always crowdfuning – a fare less scrutinizing and controlling sector for venture funds. After all, if the Ouya, which obtained almost 8.6 million from its Kickstarter campaign - a mini console vying for space in a veritable landscape of console super powers, can do it, then well, there's no reason not to keep that as a viable option for funding.

  

Business Plan - Video Game Venture Capitalists: LightSpeed Venture Partners & Joystick Labs

         What is venture capital, you might ask? Why could it be important to video game companies? Neither needs a detailed answer. It's all rather straightforward – games cost money, lots of it. Video game venture capitalists have the ability to get a developer out the door, and with every higher layoffs and closing studios within the last year, an investor has the potential to be the solution.

This money ain't free - but it sure beats loans

         With companies like Lightspeed Venture Partners, or Joystick Labs developers have legitimate opportunities beyond selling the dream on places like Kickstarter – though that has indeed, become a powerful launching platform. In the case of Lightspeed, whom, over the past 20 years has backed a couple hundred start-ups, has managed to secure themselves an impressive foothold in the realm of technology industries – not just games.

         An article on Gamasutra, goes over the key elements that these venture capitalists are looking for, and it makes for rather pertinent reading material. Things like the quality of an assembled team, and the ability to leverage elements of a good game, into creating new games via 'unfair advantage' – a common term for using what it is that people like about your product/service into future products to give you, for all intents and purposes, a direct advantage over your competition. If you play a lot of MMO's of the Korean or Chinese flavor, you'll note this is a very direct and common strategy. Additionally, they expect to see companies use co-opting and cross-promotion techniques in order to promote products and increase monetization.

Friends to gaming companies and other shady business, everywhere

         Honestly, I can understand the reason behind Lightspeed Venture Partners' belief in these Key strategies. They let you know a company has more than their game itself, on the brain – that they're thinking of how to monetize their product not just at the shipping point, but for improved longevity beyond. As they're an investment company that prefers mobile/social space with respect to games investment, it's any wonder knowing how to leverage your market, and improve product longevity in the form of 'services' is of paramount importance.

         Joystick Labs, however, is a bit different. What started as a promising accelerator program for getting digitally distributed gaming companies off the ground, has already begun to close up shop. In a way, they remind me of people who like the “idea” of something, rather than the actual execution of it. Built to help the seed-stage of companies, and beyond, the Joystick labs aspired to use the Triangle – an area which has as many as 50 gaming companies as a community, across the Carolina's, in which their belief in quality teams (similar to Lightspeed) is of paramount importance. Rather than a focus of during-development, they work toward getting developers a chance to come together and get up-and-running. Their belief-spectrum in turn revolves around elements such as workforce supply – such as from universities and collegiate areas that are local. With the belief in mentorship, and a heavy presence in educating and networking those start-ups, they did something a little different that tried to give hope to would-be gaming companies – certainly, something we could see more of.

They came, they saw...they shut down?

         For whatever reason, however, they closed down in 2012, noting that they stopped applications but were still helping the few companies they invested in during 2010/2011. While I can certainly get behind what it is they were trying to do, it begs the question, was it the right method? What actually is necessary regarding mentorship, education, and network in the context of monetization, and after-release shelf-life of a product? What separates these two companies – one might suggest a more competent level of forethought. After all, Lightspeed is still here to stay, and thanks to them, I'm able to keep blowing hours on just about everything companies like Kongregate put out, so it's not all bad.

Virtual Reality worlds and their resurgence via The Oculus Rift.

        The Oculus Rift A technological marvel. Virtual reality, now at its finest apparently. Virtual reality glasses are certainly becoming popular, and with trending topics relating to 3D for the modern era (3D vision for your desktop, and the idea of Google Glass virtual HUD on the go) has created a notable resurgence. With the amazing things they can achieve, it's more of a wonder they aren't used for more pragmatic solutions. Which brings me to why a seemingly niche technology (for entertainment) which utterly failed in the 90's is somewhat current and relevant in today's world.

Lawnmower man - apparent pinnacle of VR awesomeness...Not.

         Throughout the 90's there was a mass surge in virtual reality, and virtual reality glasses. You practically couldn't get through a movie without running into someone regarding the technology. It would appear, I'm not the only one with that sentiment. The over-aching problems, I firmly believe, are rooted in a lack of a standardized platform, no professional applications or or actual OS support/Interface design – and certainly from an economic standpoint – lack of a major backer. None of the big players really took it on, the wide variance of platforms, no applications that were designed to interface with virtual reality – cert iWear VR920 can go for under $500.

ainly no legitimate interface to speak of – all of this combined to make a very hard sell. Of course, with the price points (Which I remember sets going for 5 to 10 thousand when i was a kid in the 90's), it just wasn't meant to be. However, the sad part is the average display today, which only shows 800x600 is around $1000-$1,500 USD, though cheaper end models, such as the

Back...to the Future..wait, what?

         Of course, with all those negatives, in a manner of speaking, its any wonder it's something that still excites people, particularly in this day and age. Amazing technology, thanks to Moore's Law, has grown the technology necessary for virtual reality worlds, to a level commensurate with a consumer-end product. With extraordinary platforms allowing us relatively, unfettered access to a wide range of applications, big players to take on various projects (Just look at Sony's VR sets, like the new Prototype-SR), and a developed open market for people to put in their own design aesthetic (and the hardware to back it up), easily paves the way. If anything, the Wii, for instance, has shown a clear desire for more interactivity in people's gaming, as it won this generations console wars, selling almost 100million units. It led Sony to develop the MOVE for Playstation, and Microsoft to develop the Kinect for the Xbox 360. Rather than Niche, people are more and more, wanting these interactive technologies to play with. All that really stands in their way is price-point. Depending on your budget, grabbing a Kinect could have been a bit more expensive than you'd like. Certainly if you're into 3D, the 3D vision could be a tough sell unless you've got some extra cash on the side – after all getting the kid isn't the beginning, as to efficiently use them, you need a monitor with some capability (and for best results something 3D ready and/or 120Hz capable at least, which combined can easily land you around $500 or so).

How immersive can a brick on your face, be? We'll see..see, get it?

         Certainly a bit of wonder, but if anything, it's certain the with over 10,000 units pre-ordered already, the Oculus Rift is making waves. In a world that now has access to the technological hardware to make VR something of a pragmatic gaming solution, it's evident, regardless of whether it's niche or not – there's a market for it, people are craving it – the Oculus Rift may be the technology that brings virtual reality worlds – virtual reality in general – to the masses.

    

Mass Market Appeal and the Lack of Creative & Innovative Gaming.

                                                                                  Courtesy Gamenesia.com

        Recently there's been clamour for building games as with mass market appeal. Every year gaming grows larger and larger, having since passed all other forms of entertainment in total revenues, yearly. Digital consumption has increased by incredible margins in just the last 3 years, with no sign of slowing. Yet, somehow there's a need to make games “mass-market” appealing – even though they're the biggest market that exists in entertainment.

         At what point do we ask, how long till anyone cares about the quality of games – their narrative, character development, design aesthetics and staying power – in lieu of what can only be described as desire for more money? And, while everyone likes more money, is there really a need to sacrifice the very qualities that made gaming such a lucrative business in the first place?

That is a crap-ton (pun intended) of Brown.       Joystiq.com

         As the years go by, I begin to wonder what happened to the creative minds that brought us products like Heart of Darkness, or the surprisingly fun Medievil – even games like Fear Effect. I understand the need to increase quarterly revenue and profit margins, though the continued increase of lower-quality games isn't necessary. After all, how much of the color Brown can a mass market find appealing? Years later and it's still one of the most common colors of mainstream games. The level of engagement, immersion, and narrative have become scant, but they do appear occasionally, throughout the years. Offerings such as the original Assassin's Creed, Mass Effect, Batman Arkham Asylum, Psychonauts, The Walking Dead,by TellTale games and some others in the last 5-7 years, keep the heart hopeful. They're fairly far-and-few-between, however. With the ever-growing casual/social and mobile markets making a steady increase, year over year, the sheer number of easily cashable products have become the norm.

         As far as more detailed console and PC offerings, the sheer amount of IP milking, and banking on only the most likely-to-succeed titles means a steady decline in overall rich games. Lets be serious for a moment, for the nay-sayers – What games compromise the top spots for most sales, marketing, and/or overall exposure in the last 5 years, that weren't representative of a bundle? If you said the Call of Duty, Medal of Honor, Assassin's Creed, Mass Effect, Black Ops, HALO, or Gears of War, for instance, then you'd be in the same conundrum. Yes, they all have great games in their respective series, but for better or worse, they've all become rehashed, over-milked IP's. Ironically, for instance, most FPS games have not only virtually the same marketing art – they often all look and play exactly the same - the most common appeal to mass market.

Apparently, mass-market appeal            Terabass -Wikipedia

         EA's CCO, Richard Hilleman thinks video games should be mass market appealing – though he doesn't think they've reached that pinnacle, yet. What does any of that have to do with the big chunk of yada-yada I gave in the aforementioned paragraphs? It's the core of the issue at hand – to much focus on monetization to court creativity, narrative, and quality user-experience. We have a market that produces over 67 billion a year, yet they want more, even during rounds of layoffs, and poor quarterly performance by some major companies. It's time to improve on the quality of the user experience in every faucet of gameplay. We can always come back to “mass market appeal” later, when there's a reason for people to actually feel the appeal.

  

Cross Platform Personalization & the Spread of Gamification.

        As 2013 makes its way toward summer, we've already seen some major highlights for the year. With the advent of Tegra 4, Project Shield, the Ouya, Unreal 4, and a host of other amazing product and services, it's a year year full of wonder and possibility. There are, however, trends that have continued and shaped into tangible forms over these past few years, as the force of casual and mobile games begin to take a forefront seat. People want content on the go, cross-platform, and all the work in between, they're looking for anything to improve the quality of an experience, that feels less like a chore.

         The two things that stand our in this arena are Gamification, and of course, cross-platform content personalization. While there's certainly a lot more, most trends can be summarized directly in these two arenas. If there's one thing we can all certainly agree on, it's that everyone pretty much loves games. People love achievements, as well as getting something for taking the time to do most anything. How impacting this is on our daily media consumption is surprisingly profound. It's pervasive even – you know it's gone somewhere when it has its own summit revolving around it – especially when there's a dedicated Penny Arcade episode to it. 

        A lot of what we see is focused on turning typical consumer engagement into a meaningful game-like experience, but the application is spreading. For instance, social networking has some of these elements, along with places like Foursquare, Dashlane, and many others, which offer badges for doing menial tasks. After all, lets face, it, we're all more likely to make the effort for things like filling out profiles and whatnot if we start getting leveling bonuses on a site for doing it. A lot of forums have done this kind of thing for years, though the range and detail is something that's increasing, across the board. The researchis staggering for this, according to DriVE by Daniel Pink, insisting autonomy, purpose, and personal improvement are the defining characteristics motivating people – core tenants we see consistently presented in Gamification.

        Of course, there's other things going on – cross-platform personalization – that are the foundation of the digital revolution. At the end of the day, people want content somewhere other than their TV, or just their computer. They tend to want it on any screen, be it phone, tablets, laptops, or their TV – all at their convenience. Anyone who uses Netflix can attest to its ability to keep pace with whatever you're watching or doing, even if you change your platform. It knows – it recognizes the network and produces you have on your account, and can adapt and keep up, accordingly. It even does so with its advertisements. TV show Vegas is an excellent example to use: Tuesday time slot it drew in almost 11 million viewers fairly consistently. The problem of course, is that the average age was 60.7 years – well above the 18-35/49 demographic the marketing slots are directed toward. In the face of the digital wave, however, that's not nearly the problem it may be on TV, where with algorithm's based on what you watch, when, your profiling, etc, such as with Netflix, you can measure the kind of advertisement that would be more relevantly suited to a consumer, rathe

r than at a broad category. It's a lot closer to “shooting fish in a barrel” rather than “aiming in the dark” so-to-speak.

        The data, posted at Digital Trends, is fairly clear – there's a change in the weather concerning net usage. In just 4 years mobile traffic went from 1% to over 13%. It's certain this is a steadily growing trend. With that growth comes certainty that more people are going to expect more synergy between their devices, and the need to market and advertise specifically with detail to a consumer, will grow with it. With micro screens, the amount of marketing you can do in a given space decreases – so the need to be more user-specific will increase, accordingly. Certainly a good thing, as it's market is a growing one up to9%. Consider also, the rising cost of digital marketing, just look at conversion costs for companies like GREE, who pay up to $15 per user acquisition – clearly driving up the market - it become pertinent to be specific, more now than ever.

         At the end of the day, marketing directives have a fairly obvious path. As we continue into a world that's entirely wired, having us transition from device to device, advertising and marketing initiatives need to be just as pliable. With focus on cross-platform personalization of content and advertisements, in addition to Gamification to improve the percentage of invested consumers, ads and commercials probably wont lessen, but at least they'll be more specific and interesting to you, and certainly less bombastic across every page.

Thoughts on Game Design Documents

        There comes a time when you're producing a game, you look for a feature, only to find that there's a lot of ambiguous information regarding its function and overall use/implementation. Often an issue in any design document, its a concern , after all having all the answers so your team can do what they need to do, maintaining the core of your product, is the most essential element of any game design document. However, when is to much, simply to much? Executive summaries, financial plans, marketing directives, prose for the first parts of your game, etc. Is all of this necessary? Who's going to actually read it? 

 

        The basic building blocks of any document should involve 3 major things, the way I see it: Core Statement, written for your team who read it, and lastly, no ambiguity (though that doesn't mean there is no elasticity in what can/cannot transpire with regard to mechanics and what not, there shouldn't be any direct questions regarding whats suppose to happen, or how things are suppose to work with any given feature or scenario). Clearly, I'm not alone in that sentiment, as others like Brenda Brathwaite with her take on ambiguity and core statements, or Tom Sloper with his belief indetail and even Black isle studiosleaked Van Buren documents present a clear standard.

        Over time, however, it's become apparent that game design documents have become biblical – only in the sense of their immense size. It's not uncommon for publishers and other departments to have a say in the overall GDD, and often end up including a wide array of things that simply aren't necessary or beneficial to development – clearly I'm of similar opinion with Mr. Tadhg Kelly. There comes a point where everything that your document is about becomes veiled by clutter – elements that no one but executive would ever look at, if they weren't already busy listening to you and watching your presentations instead. No one in the design team is going to care, and they're the very people these documents are really meant for.

         Of course, there are other developers who have their own opinion even on that – these documents are worthless in their eyes, something they feel is a waste of time to write, according to Joe Danger's Sean Murray. I admit, there's a certain appeal to game design as a form of purely elastic, reiterative prototyping, rather than design documents backed with concept artwork galore. Raph Koster has a great article regarding less design documents, art, and more prototyping, like in the image to the right – as well as learning to make products cheaper. It's certainly insightful, and definitely relevant in a world where games can cost as much as fifty million and higher – in the hundreds of millions, as it did with Star Wars: The Old Republic. 

        Ultimately, there's always going to be room for design documents. They're truly beneficial, though only if they continue to focus on the design, remain elastic, and revolve around prototyping (even if that prototyping is some flash cards and paper cut-outs). There's a point where we seem to get focused on the 'idea' of what we like, rather than on the implementation and functionality of 'fun' with those ideas. While it's clearly not everyone's cup of tea, a good foundation, and a good place to finalize information that you're actually using as you prototype and iterate your designs.

Video Game Agents & Consultants...Yes? Maybe?...

        With the increase in the range and penetration of the gaming industry, it was inevitable that eventually, agencies and consultants would make their way into the field. Business, and the dynamics of corporate work not only set the stage for these players, but create a space where they have the ability to thrive. Curiously then, one wonders, is it a viable investment in the age of gaming corporatism, to yolk yourself with an agency, or to hire in a consultant? As time moves forward, it's become more of a rhetoric than a direct question, though I think it has its own answer imprinted in it: “No.”

         If you're wondering why “no,” - for the simple reason that we live in an age of information. Everything you need or want, is by and all accounts, at your fingertips. Whether it's related to branding, marketing, or potentially, publishing & distributing your work – the world wide web and associated internet-technologies allow us – the consumer – to also be the producer. We simply have no real need of them. While an agency can provide a great stepping stone between your company and publishers/distributors – while also taking a great deal of the time and effort to both go through the motions of it all, as well as acquiring the skills and mindset needed to go about such hefty business – today it's often easy enough to manage it yourself. The reality is, most consultants and agencies simply don't have the background. It's common for them to rationalize games as just another venue for media consumption. In part, this trend has helped develop the casual market in recent years. Certainly there's a place for that – yet that market in and of itself is a different beast to the gaming industry that makes over $67 billion a year. Statistics show even now, the core gamer – those who make up almost all of that number – are still, “...reluctant to embrace social games.” Mobile gaming certainly has a place, but as long as it, and other venues of social gaming remain a casual affair, they're likely to not be taken seriously. Consultants and agencies need to take that into account, to focus on elements that are viable in the gaming industry direction, or focus specifically on casual/social and mobile gaming elements.

         Of particular note, securing publishing deals for companies can be a burden, and a costly one at that. Certainly a benefit of agencies and consultants. However, with the rise of cloud-based distribution, and elements like Steam – with their indie-friendly appeal and “Greenlight” community, make these options far more lucrative. For those who prefer to go it solo, take Mojang founder, Markus Persson who managed to create one of the most authentic, and impressive games of the last generation – and likely, ever made. After all, since Minecraft's official release, it has sold over 20 million copies. Primarily, all of it with a focus on their own method of distribution, and marketing – without the use of agencies and consultants, or all those fees.

         Of course, there are those points with which many make claim of their benefit to the industry. For those not in the know – a quick search can show you just how many developers actually jumped on the agency & consultant train(s) – in 2010, one of the leading Video Game Agencies, Digital Development Management, had over 700 signed, across 15 studios, in addition to working with 20 different publishers. Not only that, the infamous “fired” Infinity Ward duo, Vince Zampella and Jason West, shacked up with Creative Artist Agency in 2010 as well. They're certainly not the only ones.

         While the model itself may be pretty similar in the industry today – with a focus that's very focused on franchising and “studio renting” to publishers – the role of Agencies and consultants today, has the ability to make the divide much smaller. It's fair to say they are in a position now, to even embolden developers against the constraints of this ancient model. Two major ways to go about this is to either A: focus on marketing/branding factors of a studio and its developers – or its products if they prefer, and B: focus creating an atmosphere that allows a dynamic change in financing models for game developers and publisher relations. That is exactly what many agencies are doing in the game industry. Seamus Blackley created a new dynamic by way of “B” - focusing on bringing the artists and creatives to the forefront of negotiations, while changing the core of how financing could be done for games by working around the ideal of bond/debt financing – something of a norm in film/TV – to games that rely on iteration.There's a lot less guessing and fishing with these kinds of methods, and you certainly don't need a crystal ball.

     

     Other companies, who may follow the “B” and also certainly the aforementioned “A” model, such as Video Game Agency, the Game Agency, Intergi, or Embassy MultiMedia, happen to provide services that you don't generally associate with games, but you certainly enjoy seeing them all the time. What do you do, if you're studio is new, and lacks a firm hand, a financial lead, or a producer with business sense? If anyone still remembers the ill-fated Ion Storm company and it's epic failure, Daikatana, you'll know that by and large, had they'd secured a consultant and/or agency to help in the realm of branding/marketing and especially finance with a producer, things may have turned out a lot different. By right of branding and marketing, think of the extraordinary commercial for Halo 3, which you can view, here – brought to you by the famous McCann Erickson. EyeBallNYC created the well-known Bioshock commercial for Xbox.

         If anything, it's fair to say that there's certainly some contention, but agencies penetration into the industry is only going to become stronger. It's for the best – as they continue to improve the quality of marketing and branding directives, that actually listen to developers, while opening up the dynamic from a franchise model and studio renting, to one that showcases the developers and the artistic merit of its products, the quality of their worth becomes apparent. As more and more sign on, in order to improve their ability for their products to get funding, development resources, or expanding their distribution and marketing, they're creating more options. Any option that allows an artist to be an artist and do what they do, while helping to alleviate constraint and stringency is certainly an option worth considering, if not outright investing in.