Tuesday, March 4, 2008

Can Seth Godin predict the Game Business' Future?

Seth Godin (who I link to a little too frequently, I think) has posted an awesome transcript of his talk given to music business executives. You can get to it here.

Go read it before continuing. It's short and entertaining. Time well spent over a coffee. Really. Go on! Kthxbai!

You're back? Good.

Now a while ago I had a post picked up and re-posted on Gamasutra about how those of us in the games business might re-think customer relationships and how customized content (as an expression or artifact of that relationship) might be a better solution to piracy than customer-punishing DRM. Over on GamesIndustry.biz, Rob Fahey echoes the sentiment, though looking more at the negative side ("if you treat your customers like criminals, they become criminals").

When reading the transcript of Seth's music biz talk, I was struck by the parallels. Let's recap:

Music (games) business was a good business, why?
- Entire medium devoted to promoting your product. He's talking about radio here, but one could argue that a good chunk of the internet is the parallel for games.
- Oligopoly He's talking about labels, but let's list how many publishers can fund $30M game titles en masse.
- Key part of our lives. For gamers, they can be as nostalgic about their first experience with Ultima Underworld or Doom as they can about their first album or the song playing at their wedding.
- Entire chain of retailers devoted to selling your product for you. Check
- 'God' on your side He's talking about the regard for Clapton, Madonna, etc. I give you Carmack, Wright, Molyneux, Miyamoto.
- Printing LPs was cheap .CD's and cardboard - check.
- Magazines devoted to promoting your product Check. He even mentions a bunch on page 7.
- Used to cost a lot of money to make a record. Check.
- Top 40 really mattered because people bought stuff just because their friends did. Check (another ranting post on this subject coming soon)

So, what happened?
- Key customers got old and buying patterns changed - new customers may want different things. Check.
- Piracy became easy because everything was digital. Check.
- Top 40 doesn't matter as much because of long tail. Here we have a difference, because games cost a lot to make compared to records, and so you only go so far down the tail as your starting point before it doesn't make sense - at least for big budget titles. Once you get to small titles, indies, etc, this applies here too.
- Digital distribution enables long tail and disrupts retail. Check.
- Suing customers is a bad idea. Oh man, I really hope we don't go down this road!

So, what's next?
- Good news, more people listening to music than ever before. Check for us too.
- Bad news, every one of the above bits of good news is no longer true. Now, here a number of them still apply to games - but there's writing on the wall. Games still cost a lot, but some types of games are getting way cheaper (XNA, Raph's company, etc), and while the Oligopoly is still intact, it's fraying around the edges a little.

OK, I'm going to stop drawing parallels here, but I think the analogy is pretty clear. Seth's advice to the music business is that timid transition won't work, you need to leap whole heartedly to a new model, and that this model is in selling & servicing relationships. The relationship is between customer and artist, and the label is now in the relationship services business. And THAT is what I was trying to say in my Gamasutra piece. The fact that Seth talks about 'tribe management business' gives us a clue that the MMO folk get it, as do a few of the studios, but that bulk of this business clearly doesn't.

I think it would behoove us to make the leap before we enter the catastrophic phase that the music business is in, but its hard to beleive that'll happen. Often it takes pain to inspire change.

1 comment:

Anonymous said...

A service industry vs a packaged goods industry. Hurray!