Saturday, January 18, 2014

Why focus development on Social Games is really dangerous for business

NOTE; This is in response to Capcom 's policy to focus on Social Games, and why I think it is dangerous.

In this writing, [Social Games] specifically refer to Games which were designed to get Player play with large amount of other Players.
Stand Alone Games which simply have share progress features do not count.


For quite a while now, I've tried playing several Japan's [Social Games].
Some Good, Some Bad, Many are downright boring.
And here are their common features.

1. Replayability over Narrative.
Some are Narrative-focused, but Replayability is still a major factor.

2. Preferences on Freemium model to get as many Users as possible.

3. To get the Player stay for as long as possible, thus increasing the urge to pay,
they gave Players reasons to return everyday.


Dangerous reason No.1 - 
Many Games are Cheap Imitations of established Model.

For example, Let say that there is a Game1 made by CompanyA, which was a hit,
and the player for this is 100%

Then, Company B-E decided to imitate it, thus we have game A1,B1,C1,D1,E1

Although they are made by different companies, they are pretty much the same Game.
Due to this, the target audiences for each of them, were drawn from the same pool as A1
As such, Players got distributed and each of them only get 20%.

Even worse, CompanyA could also make sequels or variation of pretty much the same Game,
resulting in A1a, A1b, A1c, A1d, A1e, A1f, B1, C1, D1, E1
Resulting in 10% income for each Game.
As a result, Company A will receive 50% of original income while spending 6times the original cost of production.


Following reason No.1, some people might think that making Game2,3,4,5 would solve this.

HOWEVER! Due to the nature of Social Game, this in itself is a great risk.

Dangerous reason No.2 - 
Time needed to be spend on playing them

As said in feature3, To ensure profit on Social Games, they have to be designed to get the Player to return on a daily basis.

The problem with this is, Each Player has a threshold level of how many Games they can play concurrently.
As such, many Games will be ignored even when the Player wanted to play them.

For Example,
Let say that there are Games
A1, A2, A3, A4,
B1,B2, B5,
C1, C6, C7

There are 10 Players, Each can play up to 3 games concurrently, spending 10$ per game.
For a total of 300$ pool.
Game1 and 2 are major hits, and each Player must play a variation

A1,B1,C1,D1 got played by each Players, thus received 100$ in total, 25$ each
A2,B2,D2 got played by each Players, thus received 100$ in total, 33$ each

The result is 100$ left for A3, A4, B5, C6, C7
Thus, 20$ each

Company A received 98$ with 4 Games, 24.5$ income per Game
Company B received 78$ with 3 Games, 26$ income per Game
Company C received 65$ with 3 Games, 21.66$ income per Game
Company D received 58$ with 2 Games, 29$ income per Game

From the result, Although A make one more Game than B and receive more money, income per Game was less.
C, which focused more on Originals, will receive even less total income and per game.
When D, which made no original at all received most per Game.

HOWEVER!!! If every companies were to keep making imitation hit games,
then we will return to Reasons No.1, further reducing profit for each Game.

THUS, we came back to this continuous loop between reason 1 and 2


Dangerous reason No.3 - 
Market Saturation and Treatment

Calculation in No.2 is in assumption that each Game will be treated equally.
In the Case of Imitated Game1,
The Company that made it 1st will likely to receive more income from the same share,
thus CompanyD which imitated last could receive no money at all.


Dangerous reason No.4 - 
Relying on Hit IP

Many well known Companies, such as Capcom, rely on well known IP as their basis for Social Games.
Because these IP have customer base to them, a certain amount of income can be guaranteed.

HOWEVER! this also means that Originals will have higher risk, and the company will have to solely rely on IP Contents.
As such, how long the business model will last in dependent upon the amount of existing IP.

In another word, unless the Companies also made new IPs, to feed the Social,
this Business model will eventually collapsed upon itself.


If we put this into retro perspective,
This is also what happened during Atari era,
which caused the American Game Market Crashed due to overflow of Cheap Imitations.

Pretty much the same thing is happening to Social Focus Platform like Gree at the moment.

The Company that made a business models that fixed this was Nintendo.
Who made a regulation that control the overflow of low quality Games.
Thus, the Game Industry was recovered all together and resulted in the rise of Nintendo in Global Game Market.

Friday, January 17, 2014

任天堂 スマートフォン


以下は 2013年7月に 私が任天堂に送ったメールだが.....