While the first day offered a variety of sessions on venture capital, project-funding, value of analytics, lean start-up models, and exit strategies, there was a single and consistant message to game studios:
Regardless of whether you are trying to attract investors, pitch to funders, entice buyouts, or build a market share, success is driven by one thing: Know your audience and serve their needs, not your wants.
Albert Lai, serial entrepreneur, currently of Big Viking Games, kicked off the event by explaining how “you’d be an idiot to not start a games company in Canada” with the technological changes to the games industry, coupled with access to talent and financial opportunities. Lai notes that with the advances in gaming mechanisms, particularly with mobile and social platforms, a studio now “doesn’t need to be about distribution if you can get the consumer to do it for you virally.”
This theme was echoed by Jason Della Rocca from Perimeter Partners in his talk about how to strive for success in an uncertain environment. In Della Rocca’s experience, “developers spend too much time on awesome ninjas over validated learning.” Through the use of validated learning, a studio can be more reactive to market opportunities. Citing the example of a fictional knitting game for grannies, he recommends testing out the concept before jumping into production. While many gaming professionals are familiar with the concept of MVP (minimally viable product), Della Rocca recommends implementing validated learning processes even prior to a prototype as validation of concept and simply gauging interest in a knitting game for grannies. Proof of concept can be as simple as purchasing relevant Google AdWords directing to a landing page where users can enter their email address for further information. If there is an interest in the concept, you can then track how many people see the ads to clicking the ad to signing up for the newsletter.
The presenting representatives of various funders and venture capitalists further expanded on the ideas of knowing what your B2B audience wants.
Bram Sugarman from OMERS Ventures left the door open to pitches from content companies, but they won’t take pitches from any game studio, supporting only “selective cases”. Said “selective cases” are groups with team members who have a “rounded skill set of what a user wants”, who “have done it (achieving past success) before…even if not as an entrepreneur,” looking for groups who understand the importance of testing and validating ideas. Also of importance to venture capitalists are teams who, in addition to strong technical skills, additionally have the involvement of people with business skills who know how to manage process, and marketing skills who understand how to implement SEO and SEM strategies for self-published titles.
Reaffirming Sugarman’s points, Anne Marie Aduri from Maduri Laird Partners Inc. presented a list of factors that investors look at when considering a company to invest in or buy out. Beyond your company’s product and process, investors are also looking at the team, the company’s strategic plans, growth opportunities, business models and revenue drivers, a clean balance sheet, clear cash flow, and how it has been financed to date. Pitching an investor solely on an idea is not enough to woo them – it is about a well-rounded plan and vision with the right tools to execute.
Aduri also emphasized to the audience that a studio’s value is based on “how attractive you are to the buyer.” You might be most proud of product X, but if the buyer only wants component Y, focus your efforts not on upselling X, but on the elements of Y that are meaningful to the buyer.
Francesca Accinelli from Telefilm Canada (CMF Program Administrator) and Howard Rosen from the Bell Broadcast and New Media Fund both highlighted the importance of responding to what investors need when applying for project-related funding. Every moment that an analyst has to stop and ask questions about a file, the applicant loses points in the assessment. The more clearly an applicant responds to the questions/deliverables asked for by the Fund, the easier it is on the analyst and more confident the Fund feels about contributing to the project. Rosen suggests that studios spend more time on proposal writing to ensure clarity and consistency in the communication of the proposed concept.
A companion to the thread of ‘know your audience and serve their needs’ was the value of data. To investors, data is not only is competitive intelligence to the studio (thus, giving it value), but also the key to responding to users’ needs.
Further to Lai’s earlier statement about encouraging distribution via consumers, he additionally notes that “engineering virality” is about using metrics. “The best companies have built technology into content” to track metrics. Content is fast becoming engineered: data-driven with the ability to track and test multiple paths.
Chris Wright from GamesAnalytics took the attendees through the steps of assessing metrics and their value in shaping game design – noting that “games that adapt to the player is the future”, and that the first step in this process is to know your players. By focusing your efforts on the player and player-centric analysis over content use analysis, you can deliver a product that engages users and resonates with them. Examples of player-centric analytics include player progresses, items bought/sold/gifted by users, their preferred browser/device of access, etc. He also noted the importance of not treating all players the same – that segmenting them by behaviour can help in the adaptation of their experience to their needs/wants.
A final thought echoed by many of the day’s speakers was to get help where you need it. Greg McElheran from Export Development Canada recommends looking to people in the industry for coaching. Accinelli emphasized the importance in engaging someone who knows the business side to lead proposals and manage business development to meet the needs of funders.
Many studios are afraid of involving too many people in the early stages of R&D and concepting, concerned that their ideas might be stolen. Della Rocca feels that the worst thing a developer can do is not ask for help in the early stages. Without searching for validity a studio may be overlooking opportunities. “People won’t steal your ideas,” he said flatly.
GameON: Finance concludes after Day Two.
About Interactive Ontario
Interactive Ontario (IO) is a not-for-profit industry trade organization committed to the growth of the Ontario interactive digital content industry. To this end IO is an industry advocate within Ontario and nationally as a founding member of the Canadian Interactive Alliance /Alliance interactive canadienne (CIAIC).
IO represents over 290 interactive digital media companies covering a range of sectors including: e-Learning, video/online games, mobile, television, and social media. IO also works with many interactive digital media stakeholders including those working in marketing, law, accounting services, research and academia.
Sasha Boersma is an independent business analyst & consulting producer for the Canadian interactive, convergent, and games industries. She is active on twitter (@sashaboersma) sharing general insights and news about and relevant to Canadian IDM, and blogs on the business of the Canadian interactive digital media sector at www.bewareoftheleopard.ca.