Tag: value creation

How Emergence Changes The Business Model

December 24th, 2013 — 10:23pm

In this final post on emergence in games, I want to talk about how emergence impacts the business model.


Emergent games are inherently social.  The more emergent a title is, the higher the volume of novel content generated by the players:  there are more surprises, more varied progress, and more opportunities for self expression.  As a result, there’s not only more to share, but more that players want to share.

Just look at The Sims:  that product has more shared content than almost any other on the planet despite being single player and lacking built in viral hooks.  Or Minecraft, a game with no marketing budget and a ridiculous amount of commerce and distribution friction.  Giving players interesting things to share — and by interesting I mean things that appeal to non-players — dramatically increases the native viral coefficient for the product and reduces the cost of discovery.

Player Life Expectancy

In previous posts I’ve noted that emergence increases the possibility space for players, which in turn increases their engagement (by reducing the pattern matching problem and increasing the likelihood of finding something interesting to play).  Greater engagement increases player life expectancy, and players who play longer are more likely to monetize.  The data Kongregate has data been sharing the last few years is particularly compelling on this point.

Development Expense

Launching a live service-based product puts you on the content creation treadmill:  you’re in a race with your players to author content faster than they can consume it.  That’s a very expensive proposition for most games if they want to maintain player engagement (it’s not enough to re-skin content or re-purpose mechanics since players will have already pattern matched the play dynamics).

In an emergent game every tiny bit of new content combines with all the old content, refreshing it and exploding the possibility space all over again.  Balance issues aside, both initial and ongoing content creation costs are small and manageable.

The Business of Play

So emergence lets us use the underlying mechanics of the game itself to drive discovery, increase player life expectancy, and reduce development expense.  That’s a much better approach to long term sustainability than optimizing LTV > CPA and trying to re-capture players in another game when they churn out.  In fact, emergence allows us to re-think core assumptions about how we make games.

Our industry is in the business of selling experiences through play.  Traditional game companies make products with a finite life, and they offer players more play by creating new products.  This approach comes with some inherent problems:

  • A short product life cycle means the threshold for success is high.  You need a large audience to return enough revenue to cover expenses, which in turn drives up customer acquisition costs.
  • It’s very difficult to find this level of repeat success, so companies use portfolio strategies to offset risk.  This raises the success mark even higher, since now a few hits have to cover a bunch of duds.
  • Milking the hits you do find can help, but sequels only take you so far (see Eidos and Tomb Raider as one of many examples).  These product lines get tired over time, due in part to the small possibility space that offers little in the way of new play.

This is what we call a hit-driven business, because if you fail to keep making hits, you die.

With emergence, you offer players more play in the same product.  There is more play in one emergent game than in 100 traditional games.  I’m being arbitrary with that ratio, but my point is that the possibility space is so large players never run out of interesting things to do.   As a result:

  • These games last forever.  A long product life cycle requires a smaller audience to generate the same return, thereby reducing customer acquisition costs and making less competitive niche genres viable.
  • With a long product life and a large possibility space, you have a lot of flexibility to adapt your product.  You take multiple shots on goal with one game, not many.  That’s less expensive than building new products until one hits.
  • Games of this type stay fresh for a very long time — there’s less risk of player attrition due to product exhaustion, and there’s no need for sequels.

You have to re-prioritize many of the metrics we use for evaluating success if you’re going to build products this way, but if you’re willing to take the long view emergence can get you out of the high risk hits business and into a safer, more sustainable model for making games.


The entire series on emergence can be found here:

Games Have An Attention Problem
Attention and Emergence
Emergence and the Build-Try-Fail Loop
Key Challenges Creating Emergent Games
How Emergence Changes The Business Model

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The Value Of Content Is Falling, The Value Of Content Is Rising

March 5th, 2012 — 6:46pm

I’ve written before about how value chain barriers are dropping, enabling a more product to reach consumers than ever before.  While a boon for consumers (setting aside for the moment the noise/discovery problem), this is a challenge for content creators:  more product means more competition, driving down prices and unit sales.  So the value of content is falling.

But it’s also rising.  Lower barriers make it feasible to bring niche products to market that couldn’t be justified in the past.  And consumers will pay extraordinary amounts for products that address a niche they find compelling.  The evidence for this is all around us, from low budget CCGs (e.g. the now defunct Warstorm) to high budget strategy games (e.g. League of Legends), and it’s been happening for years.

We’re talking about products that generate $50 – $100 per paying user.  Per month.  Do the math and ask yourself how small a niche you can serve and what it will cost to build the product.  You don’t need to spend millions like League of Legends, or even hundreds of thousands like Warstorm.  There are countless underserved niches out there just begging for a product.

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Friction Innovation Vs. Engagement Innovation

February 7th, 2012 — 8:06pm

I’ve been posting a lot of recently about value creation in games.  Most of my attention has been on the engagement side of this equation, but for today’s post I’d like to talk about the relationship between friction reduction and engagement.

First, friction reduction (a.k.a. accessibility) is not in an inverse relationship with engagement.  In fact, they’re highly complementary, since advances in friction reduction reduce the barrier to entry, increasing the viability of more experimental products.

Second, I’d argue there’s been an amazing amount of innovation on the friction side the past 20 years.  So much that there’s been little incentive to innovate on the engagement side.  I’m not saying engagement innovation has slowed – it has probably increased as well, just not at the same pace as advancements in friction reduction.  But when reducing friction is improving product value so dramatically, why bother taking any risks in engagement?

Looking for evidence?  I give you the last decade’s increase in cloning as exhibit A.  The friction reduction benefits are so strong that companies won’t even risk changing the numerical values in the game (see the Yeti Town clone of Triple Town).

I expect this is cyclical.  Friction reduction will eventually run out of steam in our current ecosystem and likely commoditize to the point where it’s simply not a differentiating factor, at which point more attention will shift back to engagement innovation.  But in the meantime I think the engagement piece is underserved, and there’s an opportunity there.

I do have some concern that over the long haul we, as an industry, will lose some of our expertise in engagement innovation if an entire generation of game designers grows up in a world based largely on friction innovation.  We’re not there yet, but I find it striking how many folks don’t know there difference between the two.

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The Game Engagement Landscape

February 1st, 2012 — 8:43pm

If you buy into my notion that engagement is primarily driven by two forces, content volume and personalization, then it’s worth taking a look at the game engagement landscape today:



I don’t want to quibble over the details of where each game really falls – there’s a lot of subjectivity built into this assessment, and it’s ultimately going to be different for each individual.  Here’s how I approached it:

  • Since content volume is mostly about the amount and variety of content one can consume (the possibility space), games like Heavy Rain and Half Life that appear to be content rich at first glance are actually very limited in the choices one can make.  On the other end of the spectrum, you can see how games with more distinct moving parts (including other people) absolutely explode the possibility space.
  • I took a fairly crude approach in assessing personalization.  I simply moved the games one third to the right for how strong they were in each of three domains:  persistence, playing with friends, and differentiation (such as how you can make a character match your own play preferences in an RPG).  I then knocked them back half that distance if it was necessary to spend a lot of time on mundane things in order to make any of these personalization attributes possible.  So products like Second Life and Little Big Planet, which are very strong in all three areas, have huge signal/noise problems that require the player to consume a lot of uninteresting content.

Whether or not each game is in the right spot, I do believe the overall pattern is correct.

There are three interesting holes in this chart:

  • The upper left corner is empty.  In theory it doesn’t have to be, but it’s hard to generate a lot of content without relying on user generated content or adding other players, both of which will push products more to the right.  One could speculate on a game that made heavy use of non-player emergent systems to generate a Second Life level of content variety, always played with/against anonymous opponents, and started fresh each play session.  There’s not much incentive to make such a game though, since it’s likely even more difficult to produce than the same product with more personalization.
  • Likewise, the lower right corner is empty.  A game here would have few choices but be hand authored for the individual player or group of players.  Perhaps a homemade version of a board game like Life, but never ending.  Or a perpetual slot machine that increased one of several progress bars based on the result.  The real problem with potential games here is that the unique content is exhausted so rapidly it’s not worth the time investment necessary to build them.
  • Lastly, while not a hole, things are certainly a bit sparse in the upper right, where content volume and personalization are at their peak.  The only game that really nails it is the well run paper RPG.  Electronic games have been trying to move in this direction for decades, but the technical hurdles are huge and we’re not even close to narrowing the gap.  I suspect true interactive storytelling lies in this direction as well.

Remember that this is just the engagement piece of creating value.  The popularity of some of these products is additionally dependent on their accessibility (e.g. Solitaire is highly accessible, whereas Second Life is not).  That’s not shown in this chart, although some of the factors that make games inaccessible pull them to the left.

That wraps up my series on value creation in games.  Here’s the entire list of posts on the subject:

Value Creation in Games

Engagement and Content Volume

Engagement and Personalization

The Game Engagement Landscape


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Engagement and Personalization

January 24th, 2012 — 8:49pm

This is part three of the four part series on value creation in games. Part 1: Value Creation in Games; Part 2:Engagement and Content Volume; Part 3:Engagement and Personalization; Part 4: The Game Engagement Landscape.


So increasing the amount of content we can consume increases the possibility some of that content will be interesting to the player.  But that’s not much good if we can’t sort out the meaningful bits (in the Hitchcock sense), or make a higher portion of the content more interesting.

How do we do that?  Once again, three possible ways:

  • Tailor the content to individual interests
  • Share the experience with friends
  • Increase personal investment

At its extreme, hand-tailoring content to each individual would be far too expensive to be practical.  Some games do get close, like extremely well run pen-and-paper RPGs (i.e. where the GM is able to adapt the game on the fly to the group’s interest).  But even little things can bring a game closer to an individual’s personal interests:  specific themes (e.g. sci fi, fantasy, western) mechanics (e.g. strategy, action, puzzle), play style (e.g. exploration, competition, achievement), audiovisual style, and so forth.

You lose audience the deeper you go down this path since you’re adding something that will have no interest to (or possibly a negative impact on) a portion of your potential players, but you’ll likely increase the length of play from those you do capture.

Some games have attempted to introduce more asymmetric play to capture a broader range of interests, where the same game is being played differently by different players.  The best successful example of this lies with MMOs, where one can focus more on, say, exploration, or combat, or crafting, or trading.

Speaking of MMOs, simply sharing the experience with friends is another way to make it more personally meaningful.  Note that I’m not talking about telling others what you’re doing (in the Facebook viral sense), but sharing the play experience itself with others who are also playing.  Friends might be those you knew before you started playing or those you met through the course of play;  the important part is that they appreciate and validate your experience.

Lastly, increasing a user’s personal investment goes a long way toward making it more important to them.  Yes, that sounds a bit circular, but it’s more of a positive feedback loop:  the more I invest, the more meaning it has;  the more meaning it has, the more I’ll invest.

Persistence is the easiest form of this.  It captures the unique changes and additions the player has made, and reflects the unique history – the story – of the player’s personal involvement in the game so far.  That includes player relationships, assuming the game is structured to remember them over time.

Anything the player authors falls under the personal investment heading too:  I made it, so it has value to me (indeed, it likely has far more value to me than anyone else).  Not everyone wants to create, however, and the act of creation itself has numerous friction barriers to overcome.

It’s worth noting that what’s personally interesting to a player one day may not be what’s interesting the next.  Part of that’s the pattern matching problem, but it’s also a function of many external forces outside our control:  how distracted are they, how much time do they have today, are they in a good mood or bad mood, and so on.  Having the flexibility to adapt to a player’s personal situation over time would go a long way toward increasing their engagement.

Next time, a quick conclusion to this series.

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