Friday, December 31, 2010

Book Review: Secrets of the Moneylab

This book surprised me and is probably one of my favorites of the year, at least as it is really timely for our industry, as I'll soon explain.

Technology companies generally have laboratories in which they do research & experimentation. Game developers often do so as well. Perhaps not formally in R&D labs (though some of the larger publishers have them), but certainly doing experiments for new rendering techniques, AI models, physics experiments, etc.

For all this though, it's surprising how little science is put into the business side of the business. Things like pricing, to pick one example, are often done using some gut-feel starting point and by following competition.

Kay-Yut Chen, author of Secrets of the Moneylab, runs a lab at Hewlett Packard. He is also an economist. The lab he runs does research on behavioral economics and it's application in the tech industry. The book runs through experiments they did on consumer pricing, marketing, supply chain management, and much more. Also, they look at a number of different experiments from different industries.

Why is this so timely?

Consider the point made by Neal Young of NGMoco at his GDC2010 keynote, where he said that for the first time in the games industry, the business model is in the hands of the game designers. Add to that the fact that digital distribution channels and competing appstores will mean that developers have the opportunity to try many different experiments as they bring their games to market on different platforms (Something Dave Edery at Spry Fox has been doing).

Success on these emerging platforms is going to come from people's ability to put some science into the business side of their business, and this book provides an excellent start to getting your head around that kind of thinking.
[note: I'm post-dating a couple of these posts as I didn't have a chance to sync them while I was travelling, and I like to track by when I read the book]