Friday, March 31, 2006

Why better price won't make GameTap better

GameTap, the 'all you can eat' PC gaming service, has dropped it's price from $15/month to $10/month. They've also added Video-on-Demand to their line up.

It'll be interesting to see the consumer reaction to it. It's also interesting to guess as to the change in strategy. Since one can surmise they didn't just kick back and thing "Hmm... we're making too much money here. How can we reduce it by 33%?", there are two possible reasons for the change:

1. The service has been so successful that they've decided that the audience is larger than anticipated, they've tapped the 'hard-core market', and so are doing this to grow the user base.
2. The number of subscribers has been below expectations, and are blaming price.

Since they haven't been touting their growth (a quick look at their press site shows NOTHING on number of customers, which they'd brag about if they had a lot of them). I'm going to assume it's the latter. And while there's certainly a standard price elasticity arguement that says "lower price - more people", I really doubt that's their problem.

Their problem is, IMHO, two-fold.

First, the service doesn't work as promised. I've tried it out (though it was some time ago) and run into crashes and artifacts. However, this is a very minor problem, and would be fixable if they addressed they next- bigger - problem:

I think they have too many games.

But that's not really the problem either. That's a symptom.

In Inside The Tornado (if you were to be stranded on a deserted island and could only take one business book with you...), Geoffrey Moore talks about new products and services needing 'bowling pin' strategies. Pick one very specific niche, deliver a product that serves that niche PERFECTLY, and let that niche be a bowling pin that (a) provides revenue and learnings to go tackle the next niche, and (b) let the pin fall and help you tackle the next niche.

To pick an overused example: iPod. Initially, didn't view photos, didn't play video, just music. Vertically integrated with a single service - which in theory meant a more limited set of content than a horizontal model with multiple vendors services. However, it did that one thing *super well*. And that's what consumers want. That 'bowling pin' let them tackle photos. And now video. Textbook case.

In the world of digital distribution services for games, you've got a number of different entrants. Steam (Bowling pin? HL2 customers. perfect); MMOs (Bowling pin? The audience for that one game, which in some cases is defined narrowly enough); Xbox Live Arcade? Well, that's a longer discussion - but you could argue that hardcore console gamers were the first pin, and you aim at it by doing a console well. Digital distribution in that case could be part of a larger game, but I digress...

GameTap does just games, right? Sure, but that's painting with pretty wide brush. It's the retro-arcade platform (but doesn't have them all), the retro-console platform (but doesn't have them all), the retro-PC platform (but doesn't have them all, and they don't all work), and the current-and-recent-PC-hits platform (but only has a few of them and there's no clear group they 'own').

So what does that mean to the consumer? What's the message to them that gets them to say "I sure am itching to take my money out of my pocket and put it in Mr. Turner's!"?

The official message right now is (snip) "For the first time ever, gamers of all ages will be able to play the greatest games in their original format, regardless of platform, right on their personal computers." (/snip) - and I'd contend its at best misleading (note the future tense of 'will be able to play') and at worst just false advertising.

To anyone that looks past the press release at the service itself, the message they'll come away with is "we offer a bunch of games". Will it have what they want? Maybe. Will it have the games on teh computer/console they had as a kid? Maybe. Will it have the PC games they loved playing over the last decade? Maybe.

So it does a bunch of different things *kind of well*, but nothing *really* well.

And that's GameTap's real problem. They don't have a particular customer they are trying to serve perfectly. They have a huge number of customers they are going after at once, and serving them all inadequately.

Now, I get why they can't have EVERYTHING there. They aren't going to land agreements with all the IP holders, and there are limits to the emulation tech they are running for some of the titles. I'm not saying they should have everything.

What I am saying is that as long as they offer a bunch of stuff that is maybe what you want, and maybe works, they are going to find consumers are *maybe* interested, but most likely not.

They'd have been better off focusing on getting one group of content for a particular niche *really* nailed, and then grown it over time. (Of course, that idea would ahve been hard to pitch at Turner, due to big-company-therefore-it-must-be-a-billion-dollar-business syndrome, but that's another post for another time).

Consumers are willing to part with their money for quality products and services. I'm not sure what the going rate is for "It might work and you might find what you want", but I'm pretty sure it's not just 1/3 off from what they'd pay for 'great'.


adam lake said...

i have to nod in agreement at the analysis here. excellent work :)

Patrick said...

Another factor you left out is the fact that the real hardcore can illegally play most of GameTaps titles via platform-specific emulators, and find a far richer selection in ROMS.

Personally, I wouldn've subscribed for a month if they had some of the Kings Quest games on there.

KimPallister said...

Adam: Thanks.

PatricK: Yeah, I thought about mentioning this, but I'm undecided on it. Most people make a time/money trade-off, and the time spent hunting around for and installing emulators, front-ends, ROM images, etc, adds up to a pain in the rear.

I did my own arcade cab conversion about 8 years ago, long before people were selling pre-fab kits (you can see a pic here: ) and while it was fun, it certainly was a pain to cobble the rom image library together.

So, while some of GameTap's potential audience is being lost to this, many others would gladly pay to have all those titles at their fingertips in a trouble free way. Problem is, as I stated, that GT doesn't have nearly the selection that you can pirate, and doesn't necesarily offer a significantly better experience.

You do make a good point though. What would someone pay for JUST a Sega emulator with a big lib of games? And is subscription the right model? $20 a year? $120 is a far bigger commitment. Maybe $50 for a lifetime subscription (i.e. it's like buying a game one time, only you are buying a library of them). Hmm...

Anonymous said...

Well regarding the arcade games it wouldn't surprise me if the emulators provided the better experience with the save anywhere abilities. Old arcade games were often painfully difficult.

Another issue I see with the site is that finding the good games out of all those would be a pain. Perhaps some user ratings would be helpful. It probably wouldn't be possible for them to rate the games themselves as it would cause difficulties with publishers.

Of course the service might provide both ratings and save-anywhere. I can't tell from just scanning the pages.

13TonGimp said...

I have a theory about Gametap. I think it was part of a strategy by Turner and Warner Bros to "tap" into the marketing power that they have with [adult swim] and the key demographic that the channel holds.

I think they wanted to synergize the gaming market and their "hip" little marketing giant....this was what they figured would carry Gametap to success. WB also runs those Gametap ads on other networks, but it was super hot and heavy on [as] when it first launched, and they still promote it a great deal on their home turf.

That is the problem with companies that don't normally do games. They think they can snatch up a mess of licenses and it will translate into big bucks, but that isn't the way things happen in the real world.

What I've been saying about retro gaming like this, is that the really hardcore geeks who relish this type of retro experience are already playing any old stuff they want by way of ROMs gotten throught the web. Torrents of complete ROM collections for consoles are easily found as has been discussed already. Getting ROMs is extremely easy, and getting them to run is not hard at all by any stretch of the imagination. The emulators that exist are numerous and they are usually solid chunks of programming.

The casual gamers who like retro stuff aren't going to want to subscribe to this kind of deal. Instead they want to make a single purchase...they end up getting something like a greatest hits package of classic titles for their console or PC.

I think the bottom line is that their are waaaaay too many subscription based services fighting for peoples attention right now. Digital cable, cell phones, satellite radio, Netflix, Gamefly, etc, etc, etc, etc. There are only so many of these types of montly billing services that people can afford, and $15 for a bunch of old games isn't something that will be a huge draw for most people.