(4) PROMOTING, BUYING, AND SELLING PARTS

WHAT IS A GAME MADE OF? >

PROMOTING, BUYING, AND SELLING PARTS

Sales? Is that not the job of the teenage clerk at the local Electronics Boutique?
Well, yes of course, but well before a gamer walks into a computer game store, a sales force has made the larger sale of the game to the buyer agent of the retailer. The decision on the retail buyer’s part of how many units of the game title to order on release depends on how hot the title appears to be, the wholesale price, and the influence of any number of incentive programs that have been negotiated between the publisher’s sales force and the retailer’s buying force well before the game’s release.

SALES EXECUTIVE

Each publisher has a top executive in charge of sales. This person has a lot of influence on the ultimate sales of a game. The executive in charge of sales has a budget that goes by several different euphemistic phrases such as “marketing development funds”; this budget is spent to buy shelf space at retail. This is a pretty strange concept to people who are unfamiliar with the industry—that the publisher not only needs to absorb the risk of funding the development of the game and its packaging and marketing, but also must completely absolve the retailer from any risk. Selling games is a consignment business.

The retailer will put the product up on the shelves, and if it does not sell quickly enough, the retailer simply sends the product back and gets its money back. Retailers take maximum advantage of this relationship when a highly anticipated game is released by ordering as many units as the publisher will deliver. It sounds great when you have an order of 200,000 units from CompUSA for your game, but if your game fails to meet expectations, CompUSA will not hesitate a moment to send 160,000 units back to you—all marked up with their price tags—and simply order more later. Those 40,000 units you sold at CompUSA effectively had the packaging and shipping costs of 200,000 units, which wipes out much of the margin from those 40,000 units that did sell.

A careful study of some publishers’ financial reports to the SEC will show periodic “write-offs” and “one-time charges.” There can be a whole variety of reasons why a business is forced to report a loss on their books, but in the case of game publishers it is often massive quantities of returned games that they have accumulated for as many quarters as they could get away with. It is not unheard of to see six to ten quarters of accumulated returned product discharged as a write-off. Keep in mind that during those six to ten quarters this product was accounted for as revenue. This practice is not sustainable, and the stronger publishers do not do this. A strong sales executive should work closely with the publisher’s chief financial officer to manage what is called “sell-in” to the retailers with the goal of having the highest “sellthrough” to “sell-in” ratio.

(* Sell-in is the number of units the retailers order or buy. Sell-through is the good stuff; this is the measure of how many units of your game were sold through to consumers
— a true sale.)

SALES FORCE AND RETAIL PURCHASING AGENTS

Under the direction of the sales executive, the publisher’s sales staff meets periodically with the retail purchasing agents, each of whom represents a different retail chain. Prior to calling on the buying agents, a publisher will often host an internal sales meeting to communicate their product’s selling points to the sales force. These meetings can sometimes be fairly lavish with, for example, large ice sculptures and Klingon impersonators to get the sales staff pumped up and primed to handle the buying agents.

PRESS RELATIONS MANAGER

The press relations manager will oversee how the game is communicated to the press. For large titles, this is a nearly full-time job, and a quality PR manager should be split across as few titles as possible—one to three titles at most. The PR manager will field all press inquiries, as well as inquiries by those claiming to be press. The PR manager will strategize and plan how the details of your game will be released to the press.

If PR has a solid date on when the game will ship, then PR can create a solid plan for ramping up the buzz in a steady, ever-increasing volume to peak just as the title is released. Releasing too many of your game’s goodies too early will provide you with little to say later in the project, and interest in your title will sputter and fade before it is released. On the other hand, if you do not release enough information on your game to grab press and fan attention, it may be difficult to maintain the support of the executives at the publisher and other project stakeholders.

TRADE SHOWS

The Electronic Entertainment Expo, or E3, is the largest show in North America for publishers to get their products implanted in the agents’ minds. E3 is a vast show with tens of thousands of attendees strolling through hundreds of displays ranging from mini amusement parks from the likes of Nintendo to a folding desk and some business cards from discount CD duplicators. Thousands of products will be on display and scores of tricks are used to try to get your attention, from the obligatory booth babes to breath mints that are rolled out like cellophane. E3 is a cacophony of sound effects, lights, noise, and people. For all of this energy E3 is the largest news reporting event in the game industry and next to the retail buyers, the game press is the second most important contingent of VIPs to grace the floor. These folks have conspicuous press ribbons dangling from their badge so you know when not to speak candidly (handy)

Like anything competitive, the press at E3 is out to get more viewers and readers. The larger the market share, the more their business will grow. Years ago the press were trying to figure out how to arrange their time more efficiently for those precious three days of E3; they wanted to be sure they looked at every hot game. It would be a minor tragedy if a competing magazine or site were to report on a major title that you failed to see at the show. So the publishers and the press put together a schedule of viewings and demonstrations for all of the large press. That might sound innocent enough, but if you think about it for a moment, you will realize that all of the major press walks into the show with a schedule of titles filling all of the required genres and platforms prioritized in order of importance. Of course this journalist will still walk the floor, but it will be between appointments or at the end of the show. This makes it really tough for the little games trying to break out, as they are not even on the list to be seen.

The Internet game sites have another pressure—real-time reporting. To keep up, all of the major game sites need to have nearly live coverage of the show in an effort to bring the show to the fans and of course to gain more viewers. Real-time reporting is hard for several reasons, not the least of which is that you need to have something to say. Here again, publishers and the press will work together to give the press an E3 package a couple of weeks before the show. This package always contains the best screen shots, plenty of quotable material, and occasionally a playable preview build of the game. The better journalists look at this material as just more information; the less rigorous journalists (or those with very little time) have been known to lift the majority of the quotable material and publish that in lieu of an original opinion on the game.

OTHER TRADE SHOWS AND EVENTS

E3 is important and dominant no doubt; however, it is hard to get your message across to the buyers, press, and fans when there are 3,000 other titles. Publishers have been creative about how to handle this problem; they hold their own shows in one form or another. For example, Activision hosts its own show in Europe between E3 and ECTS (the major show in Europe) to be sure awareness is implanted before and more effectively than the ECTS show. Interplay hosted a very cool event for three of the Star Trek games (one of which was Starfleet Command) on the Paramount Studios lot. Press from around the world came to view three games hosted by George Takei. The trailers for all three games were shown in the posh Paramount screening theater, and a fine lunch was served where the press mingled with the developers for an extended Q&A period after the press had a couple of hours to play the games. It was a relaxed but focused event that gave those three games ample time with the press.

THE MARKETING OF A GAME

As you can see there is a lot of sales and promoting of a game behind the curtains, but what about the ads—the traditional form of selling a product? Of course games have ads; take a look at your favorite game magazine and it seems like half of the pages are fullpage ads. And the online sites have banners, navigational bar headings, and a myriad of advertising terms for the various bits of electronic click-mes.

Like the press relations manager, the marketing director for a game should not be spread too thin across many different games. The marketing manager will work with the producer and development team to craft the game’s image in all of its various forms: print ads, banner ads, and the all-important box.

Just like press coverage, it is important not to create too much hype for the game and then fail to deliver on time. Publishers are getting much more savvy and are scheduling their marketing campaigns to kick off only when the ship date is known with confidence.

The marketing manager will also be responsible for getting your game shown at smaller venues such as the GenCon game convention held in Milwaukee. The marketing manager will coordinate strongly with the press manager and sometimes supervises the press activities. Sometimes it is considered a peer position, and in some places the same person is overloaded with both jobs. In particular, the marketing and press managers will be working closely with any playable demos that are to be released, making sure they are cover-mounted on the game magazine CDs and that the retail stores carry a supply of demos in a display.

HARDCORE FANS

It is commonly known that hardcore fans and the word-of-mouth sales they generate is the largest factor in the number of games you will sell. Hardcore fans are eager to check up on the progress of their favorite game at the developer’s web site, interact in the forums, and beta test. If they like the game, they can be responsible for not just the sale of the box they buy for themselves, but for the six or eight boxes that they have convinced their LAN party to play with. Or in the case of console games, the hardcore early adopters get the game first and invite people over to play. I have met fans who have sold ten, twenty, and more titles just for their passion of the game. Hardcore fans are always looking for the best in games; they also have a bunch of friends the industry calls casual gamers and mass-market gamers. These casual and mass-market gamers ask for recommendations from the hardcore gamers. The hardcore gamers will in turn ecommend the titles they feel comfortable with. This is just common sense, but what it means is that Blizzard’s Diablo was perfectly poised to capitalize on the streamlined interpretation of the computerrole-playing game genre where just light taps on the left mouse button looted catacombs and vanquished elemental evil. Valve’s Half-Life laid a heavy story on top of the first-person shooter genre dominated by id (in fact they licensed id’s Quake engine) to produce a mega-hit. And depending on how you measure it, Half-Life and its free, fan-created mods Counter-Strike and Day of Defeat are the most popular online games. These games are simply the most approachable, solid, and just plain fun games you can buy. If you want your game to sell, study how narrow the feature sets of Mario64, Half-Life, and Diablo really are, and how well and deep these few features are executed.

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