We have seen it go from blue ocean to bloody red.
In the early days the market has not yet been overrun by the hordes of game developers. It was heaven for all who managed grow along with the market.
8 Years later around 1000 apps are submitted to the app store every day. It's almost impossible to break through now unless you are the "dominating one". The one with the 200 million marketing budget.
Is there still a way for indie game developers to fight the domination?
This gamasutra blog explains more about the companies but also their situation at the moment.
For the past years these companies stayed on top because they spend a huge budget on marketing a few games. They also generated the necessary revenues to maintain such marketing budgets.
The mobile game market has become bloody red now.
Many developers attempted to copie these games and their business model but none has managed to come even close in matching their succes.
Machine zone and supercell are able to maintain their audience and revenue but king.com's audience is shrinking.
They say that the game is maturing. They say that the audience is maturing. I say that the players are getting bored from always playing the same type of game.
My gues is that game types have an expiration date.
So it seems that the red ocean is beginning to way on even a titan like king.com.
Supercell has found calmer water with clash royal. Will king find calmer waters aswell?
Historically companies have created market dominance by following traditional monopoly practices that are based on limiting access, setting a high price and engaging in price skimming. This works well when you possess exclusive assets or critical patents.
Just think of the pharmaceutical industry. It can boast hefty profits and benefit from long-term patents that protect them from being challenged by other players. But is that the case for most companies today? The answer is no.
Let's take candy crush for example. You start with 5 lives. You will lose a life if you fail to complete a level. Your lives will replenish over time so this means that you have limited access to the game.
Candy crush is free. Eventually you don't need to pay anything to reach the last level. But if you want to progress at your own pace, you will have to pay big time. So in the end they set the price as high as a player can pay. (which can be insanely much) Andrew Hayward seems to confirm this in his blog.
And they also engage in price skimming with all their prices and special offers.
In today’s knowledge economy, based on ideas rather than resources, traditional monopoly practices are hardly effective. Almost everything can be replicated or imitated, often better and cheaper.
Traditional monopoly practices are hardly effective. Every succesfull game has been copied by other developers. Maybe they are cheaper but not always better.
So in order to stay on top of the app store chart companies are buying installs through advertising. In order to buy installs, you need players that spend money on your game.
And these are 2 major problems. 1 Advertising is getting more expensive and 2 only 2 to 5% of the gamers are spending money on a game.
So there you have it. You need millions to dominate the market. Only roughly 20% of the mobile games break even or make profit. (My gues is that only .1% is managing to make millions with mobile video games)
Developers are searching for different marketing strategies to break through. Glu mobile has done this by working with Kim Kardashian.
It worked for bigger companies and bigger brands but so far it hasn't worked for smaller companies and smaller brands.
The characteristics of dominant firms
1. They shift the demand curve out by offering a leap in value;
2. They set a strategic price so that people not only want to buy the product or service but can also afford it.
3. They lower the long-run average cost curve so the company can expand its ability to profit and discourage free riding imitation while offering buyers a leap in value at a strategic price.
- Shifting the demand curve out by offering a leap in value.
This one seems the most difficult to do. Making a game with the help of the BOS tools isn't easy that is if they already know it.
I don't know if my methode of working with the BOS tool isn't any good. (Check my previus posts for more information.) The open BETA tests of 4 in a blow will start soon. (I'll inform you so you can join the tests)
- Set a strategic price.
How do you beat a game that is free?
You don't. You will have to strategicly price your in-game content.
According to this unity survey players are more willing to watch a video add then to pay for in-game content. Maybe you can ask players to do share/invite their friends to join or watch an add?
- How do you lower the long-run average cost?
Having a strong community around your game can help. You communicate with your gamers and fans will be glad to help you with some community managment or translation. Fishing Cactus got some help with the translation of their newest game epistory.
Some games give their players a "level builder" so they can make their own levels. What would minecraft, little big planet or mario maker be without the help of all the fans?
Just giving your players a level builder and hoping that the magic will happen is not enough. You still need a strong connection with your fans. You need to reward them for sharing their creations.
My examples my not be the best ones. Feel free to comment or give us your solutions.
But if you keep searching for blue ocean and keep searching for ways to innovate I think you will be ok.