GamesBeat Engage kicked off during SXSW in Austin on March 11 — the first in a series of invite-only, salon-style gatherings. Designed and brought to industry leaders by GamesBeat and global video game commerce solution provider Xsolla, every event features an evening of keynotes, fireside chats from top industry voices, dinner, networking and connections.
Session one: Solving the funding drought
In the first session, GamesBeat’s senior writer, Dean Takahashi, welcomed Adam Boyes, founder and CEO of Vivrato and Elizabeth Howard, chief advisor – services, for Midwest Games to the stage to ask the real question: How can developers navigate ongoing uncertainty and find ways to grow?
“When we go on our LinkedIn or we talk to people at these industry events, a lot of people are complaining about the state of the industry,” Boyes said. “And so it’s time for us to turn to action.”
Boyes recently launched Vivrato Consulting with co-CEO Chelsea Blasco as a resource for developers, publishers and broader industry stakeholders as they navigate through complexities for the game industry. In interviews with over 200 executives, they determined that the funding draught remains one of the biggest challenges facing the industry right now. It’s not just a matter of finding and pitching funding sources, which many developers struggle with, Howard said. They’re often struggling with seeing the larger picture, funneling much of their budget into development and coming up empty everywhere else.
“There’s a go-to-market part of the equation that not just costs money, but time and effort and should ideally be part of the entire production schedule, meaning you’re engaging early and often,” she said. “You’re building an audience, you’re investing in understanding who that customer is, and that helps you both save money on development ideally by right-sizing your investment for the market that you’re targeting, and making sure that you’re not overinvesting in something that doesn’t have players yet.”
Too many developers are going into pitch meetings not knowing how to pitch, how to work with a studio in terms of game parameters, and even miscalculate just how much to ask for. Or they don’t understand what kind of deal a venture capital company wants to make. For an investor, It’s often not just about money; it’s about that investor expecting a 10x return over a 10-year period, for example. And this profit at any cost model is expensive for the industry, Boyes says.
“Executives and investors push for short-term gains, ignoring game quality, and capital extraction overshadows creative ambition,” he said. “The cost is layoffs, studio closures. Risk mitigation means less spending. Less spending means less capital, which means less creative. They’re cutting innovation, they’re cutting R&D And so how do we reverse that trend?”
Studios are increasingly only willing to make safe bets — only produce the GTAs and other home-run triple A games that cost $125 million plus and make bank.
“I think my controversial question is, does it make sense for games to be part of a publicly traded entity that requires a certain amount of return, requires certain margins to be successful,” Howard said. “That frankly, requires a long-term financial planning on an outcome you can’t predict for the most part, which becomes like an insane game to try to play.”
And the question from there is, what does it take to build sustainability? Modularity might be the key, she said — rather than one company owning the end-to-end delivery and risk.
“So finding the right team, the right publishing group, the right financing model for where you are in development and really proving out at the different phases,” she explained. “It means a more mitigated, stepped approach, but something that doesn’t involve the rapid growth and then response that we’ve seen in recent years that frankly a lot of humans have paid the price for.”
Session 2: Taking back control in mobile gaming
In the second session of the evening, Berkley Egenes, chief marketing and growth officer at Xsolla and Mitchell Gray, global strategic account executive at AppsFlyer spoke to Takahashi about the latest challenges facing mobile game developers when it comes to launching, monetizing and distributing games globally. Among the biggest today: ownership of player data, especially in light of new privacy laws coming into effect both in the U.S. and abroad. The number of data sources has multiplied, and keeping track of the player journey has become profoundly complex. One of the most critical strategies to take back ownership, Egenes says, is adding direct to consumer pieces, like a webshop and community channels, along with in-app ads, to the monetization strategy.
“By owning the experience on the web shop, we’re seeing tremendous growth,” he added. “We’ve launched over 550 web shops for game developers over the last two and a half years and generated $1.5 billion in incremental revenue for mobile game developers.”
It’s a true direct-to-consumer strategy that allows you to test content and new offers and engage with your players, and craft an experience that keeps them returning for more.
“You can truly own the user experience throughout,” Egenes explained. “You can create your digital ecosystem, your social media channels, your Discords, and really own that experience and bring it into a branded platform. We look at web shops as an extension of your game.”
Some of AppFlyer’s clients are seeing up to 50% of their revenue coming from webshops, Gray added.
“We’re helping marketers to understand which creative, which keyword is driving the most lifetime value,” he said. “We’re not only just showing you all of your data, all of your performance metrics, we’re also part of this flywheel, sending that data back to ad networks for optimization so they can then optimize and find users that are more likely to buy on web shops and, and tailor campaigns towards those type of users. Similarly, you can tailor campaigns towards your ad whales or your in-app purchase type of users.”
Don’t miss the next stop on the GamesBeat Engage tour in L.A. on June 5th! Request your invitation here.
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