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The future of media, in 45 minutes

By on September 6, 2010
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I gave a talk entitled Whales, Power Laws and the Future of Media at the Edinburgh Interactive Festival last month.

In essence, the old media model is that all consumers were treated equally: one price, one experience. They had to be, because physical distribution meant it was impossible to offer personalised experiences in a cost-effective way.

Spreadsheet first page

The Internet has changed all that. I can enjoy dabbling in a free-to-play game gratis, while another gamer can spend money on progression, or pimping his ride, and gain whatever emotional satisfaction that the game provided. A record label can generate the same revenue from a combination of free and high-quality, high-status products for it’s true fans as it used to be able to do by offering the same product at the same price to everyone.

It’s the future of the media, and with evangelistic zeal, I want to spread the word. Please, please help me. I want this video to be watched by game executives and designers, by record labels and television producers, by analysts and journalists.

If you like the video, and think the message is important, please spread it. Tweet it, post it to Facebook, tell your friends in the pub.

Thank you in advance.

Part 1: Why publishers can no longer charge 80% for their services

 

Part 2: Why our analysis of free-to-play success has always been wrong

 

Part 3: How the record industry will be saved by the whales, if only they work it out in time

 

Part 4: Questions

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
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  • R2

    Nicholas – seen you speak several times and always impressed… however…

    Your Morph experiment – I’d go a little further and toss in Rovio who stumbled across something entertainment companies have done since the dark ages – which is – “exploit their IP”….
    So to use your model – Give the games away free – Drive up the charts with Apperang – Financially counterbalanced with Admob ad’s – But making sure you promote your own IP = licensed merchandise…
    (Hasbro were involved in the development of the Transformers movie script from Day1)

    Once your in the charts in the top 10 or top 25 … – then charge 99cents…(and also have an advert in the game for the merchandise…)

    label on the merchandise has a code…. for the follow up game… launched on a specific date…

    You then have an audience – that clearly loves your games and will become “brand spokespeople for you” – Increasing the chances of the second game (and sequel) being more successful…

    The model = Angry Birds…

    Zynga are now also using their reach to consumers in the physical world – as they can “speak” to millions of consumers – and using in game placement in a new novel way…

    There’s various examples –
    Codes on 7UP cups and codes on Jolly Green Giant vegetables stocked in Walmart or my favourite Mother Day Flowers (US$ 40 x 365,000 people to get a virtual item and also make gamers feel good about buying “mum” flowers and good about buying the virtual item

    Oddly enough – Tapjoy and others just havent harnessed this – it cant be overused but can be used tactically and strategically to send consumers from digital to physical…

    it’ll be interesting to see if developers and their commercial partners realise this….and where it leads us…

  • That’s a wonderful example, thank you very much.

  • I only just watched your talk, (which was great btw) and I thought of an example of how TV shows might hook their ‘whales’ in.

    Recently, Mad Men did an auction on eBay of a lot of the furniture in the office. I think it was for charity, but you get the idea – the show is ridiculously well researched and the furniture and styling a big part of its appeal so the stuff they were selling had a fair bit of value anyway.

    Really, its not too disimilar from standard merchandise, but if you make the objects within the show have an inflated value (fictionally precious or important), then whales who are sufficiently immersed in the experience of the show will be willing to pay top money for things which connect them further.

  • I’ve got a couple of things to say to this:
    – There has long been an argument that people won’t accept others buying advantage in game. That’s been comprehensively disproved by new business models in Asia and Germany, which are spreading here.
    – But then why should an unemployed person with more time than sense be able to get a real advantage over me in the game. Surely the ability to trade time for money makes sense?

    In reality, the games need to change. There need to be some items that are “time-only” or “skill-only”, some that are “money-only” and some that are both.

    I also think that you are looking at a very narrow definition of multiplayer: competitive FPS. It’s about the smallest segment of the market.

  • IPete2

    I agree that this is a powerful arguement, and your recent Pocket Frogs assessment kind of proves it.

    There is absolutely no reason not to offer items at huge prices, however, on the multiplayer gaming front, if that means people with more money can always beat me because they can afford the £100 game pre-order and get the ‘free’ upgraded gun and the ‘free’ best transport in available the game, then I am not so sure! In fact I’m really sure that’s not the way to use this – it will alienate the audience.

    It will surely, slowly dawn on people that a balance has to be struck in multiplayer/co-op/versus games which would prevent me from enjoying anything other than ‘level one’, because I can’t get passed the guy who paid extra for the biggest gun in the game and who sits by my respawn point gleening extra game score by massacreing everyone who enters the game.

    I guess this will mean game makers will have to adapt their strategies and deployment tatics to prevent such bad side effects happening.

    P.

  • Indeed. I think that the music industry is rapidly cottoning onto this, although it is mainly driven by bands and their managers, not the labels.

  • MEE

    I’m looking forward to checking it out and definitely think you’re more than on to something with, at least, major aspects of the new digital economy.

    Cee Lo or, at least, someone at the new Elektra seems to agree:

    http://www.ceelogreen.com