Some Insight Into Package Art

There's an interesting pair of posts on Kotaku about box art, where they interviewed some designers about the creation process for package art. I'm certainly impressed with artistic quality, and with how much effort (and money) it can take to achieve a beautiful cover that adequately captures the essence of the product. The craa product marketing side of me wonders if that's really money well spent... I recall many SF and fantasy novels where the cover art had little or nothing to do with the contents, but was probably chosen for its low cost. Was there any noticeable effect on sales? For that matter, many fiction novels have little or no art on the covers; sometimes it's just a treatment of the text for the author and the title, perhaps embossed or foil-stamped. Other novels may have a small photo of a gun or a rose or some other item emblematic (perhaps) of the story inside.

Nowadays many games have such excellent artwork that the cover art is taken directly from screen renderings. Given this, it's probably better to spend more effort on a distinctive logo (usually a type treatment) than on unique cover art. Cover art's importance dates back to a time when retail shelf presence was a significant factor in game sales. These days, even when your product is sold in a retail store, it's rarely face out (and if it isn't, your cover art doesn't help sell it). Most of the time customers go into the store to ask about something they've heard of online... I think the ability of cover art to help sales has diminished. I love beautiful cover art, but if you're looking for a way to use your money to increase sales, spending a lot extra on cover art probably isn't it.

Why $60 Isn't Really $60 For Video Game Publishers

This article in the LA Times breaks down the cost of a $60 video game. While the publisher takes in around $27, you might be surprised to learn that $7 goes to cover the cost of returns... that is, games that didn't sell. This shows just how much slack there is in game pricing. If publishers could sell their games directly, they could price them at $30 and still make just as much per unit... and I'd venture that sales would increase if the cost were halved. It might even be that sales would increase even more at $20, enough to cover the lesser amount of revenue per title. When you don't have to worry about retail margins and cost of goods, those are the experiments you can try. This is the logic of digital distribution, and it's inexorable. The only question is how long it will be before it takes over the lion's share of game sales, not whether or not it will.

It's not going to be an easy transition for Gamestop; I see no clear strategy for them to thrive in a world ruled by digital distribution. What happens to the used game market when there are fewer and fewer used games for sale, because people were buying them digitally? What does Gamestop sell if people aren't interested so much in buying a physical copy, and there aren't any used games? Do they just become a retailer for action figures and card games?

Secondary Sales

Once you've developed an audience for a product, you really would like to turn them into a fan base. Fans become engaged with your products and your company; they want to get more information and be more connected to your products. Engaging with your fan base through social networking and blogging and community forums helps to increase the sense of engagement, but it takes time. The payoff is in increased attention for future products, and at some point you'll realize that there's a certain number of sales you can pretty much count on when you release a new product. That's always a good feeling.

Nowadays, once you have a fan base there are many more ways to monetize those fans than just shipping a new product. Here you can find a list of some web sites that allow you to create customized products with no upfront cost to you. Some are well known, like CafePress, others not so much. If you've got some cool artwork, an iconic character, or a spiffy product logo, you can set up a store in these sites and begin selling T-shirts, mousepads, mugs, or all sorts of paraphernalia. This is not only good supplemental income, each one of those items is an ad for your product.

The High Cost of Game Development

If you are wondering why major video game companies seem to be having trouble making a profit these days, this article should clear things up for you. It should be noted that these are just development costs, not marketing or production costs. Those costs can be double or triple the development cost, running the total budget for some of these games north of $200 million dollars. When you figure out that a publisher may make a profit of $20 per unit (if they're doing well), then you realize even selling 10 million units isn't enough to turn a healthy profit on the most expensive titles. And budgets don't seem to be decreasing.

I think the Hollywood model of megabudget "tentpole" titles doesn't necessarily translate all that well to videogames. Especially if you don't have a steady flow of low-budget, generally profitable titles to make up for the huge losses when a large budget title flops. The path to sane development budgets begins with reconceiving the design of the games into smaller, more manageable projects that can be completed in under a year, with the plan of generating Downloadable Content (DLC) in the form of levels, characters, weapons, scenarios, etc. that can be rolled out on a regular basis. If the game is a hit, you can do more... if it doesn't go well and you don't want to wait around to see if the market grows, then you can kill it with much less investment than the traditional model.

Some publishers are looking at an even more radical model: Free To Play, where the game is free and the publisher makes its money off of the 3% tp 5% of users that pay for digital content upgrades. Seems to work for social games...

The E-Book Future

I'd like to link to an excellent essay about the future of digital publishing here. Jason Epstein makes a number of excellent points, of which perhaps the most salient is that this process is inevitable. No amount of wishing will make digital books disappear, so publishers had better figure out how they're going to deal with it. It's a scary prospect to see your entire business turned upside down, but if you don't ride the wave of change it will drown you. Traditional publishers have to figure out what value they add to the author; they have to have a good answer when the author asks "Why don't I publish it myself and keep all the money?"

I see two main answers to that question. One is editorial; many (perhaps most) authors need some amount of editing in order to be their best. Sometimes the editor has little to do, other times they're almost writing the whole book. Mostly, that's invisible to those outside of the process. I'm sure there are many authors who feel that they don't need any editing, when in reality they do... and once they go without editing, the difference will be apparent to readers and they'll vote with their dollars. (Personally, I think Steven King writes great 400 page novels... but once he got famous, he could have his novels be any length he wanted, so now they're mostly far longer. And compare the first Star Wars trilogy to the second... the difference being that with the first three movies, someone was editing what George Lucas was doing, and it didn't look like anyone was doing that in the second trilogy.)

Of course, the second answer is marketing. Which is already where a lot of authors have a grievance with traditional publishers, since the marketing support seems capricious or whimsical unless you're at the very top of their charts. Authors that can handle their own marketing and editing (perhaps with the assistance of others hired for that purpose) will have no need of publishers... so publishers had better get busy proving their value in the new era that's arriving swiftly.

Digital Pricing

Seems like there's some data to suggest that, shockingly, raising prices results in lower sales. Who would have ever thought?

It's amazing to me that music and book publishers are apparently making pricing decisions based on gut feelings rather than experimenting, generating sales data for different price points, and using math. I guess they haven't realized that (unlike hard goods) they don't have to worry about the cost of inventory, which means they have more freedom in pricing. Look, if a book cost you $10 to print, and you made thousands of them and they're sitting in boxes in your warehouse, you have to price the book at well more than $10 apiece (perhaps $20 or $30) to make any money. (After all, you did spend some money on editorial, and perhaps even plan on paying the author something.) The converse is, if you don't pay anything for inventory, you could price the book at $30 just like the physical book... and maybe sell 10 digital copies. Perhaps you'd find if you priced the digital book at $10 you'd sell 100 copies... with no change in your upfront costs (transaction costs would be a little different, and the author's royalty would be different, I hope). And what if you found that at $5 you sold 1000 copies? Any sane person would want to make the most money, which would mean pricing the book at $5. (Unless they really hated to see an author make more money, even if it meant they were also making money.)

So watching music publishers trying to raise download prices on iTunes, and book publishers scrambling to strongarm Amazon so they can charge higher prices for e-books, strikes me as insane. I agree Amazon's restrictions are draconian... but I'd like to see a bigger cut for authors and publishers, real freedom in file formats, and publishers competing to sell their books for lower prices (especially older titles who have long since stopped generating significant revenue).

Reaching Customers

Paradoxically, reaching customers is both harder and easier than ever before. Back in the Late Stone Age (as my sons would refer to it), prior to the Internet's rise as premier marketing channel, there weren't a whole lot of options for reaching your customers (or potential customers). For games, the action was in magazine advertising. You found the right magazines, put together an ad campaign, bought some space and hoped you'd get some results. Usually, unless you had some sort of direct mail ordering in your ad, you'd never really know how successful the ad was at reaching customers and (more importantly) getting them to buy your products. Aside from magazines, you might have some success with mailings, retail store advertising, or convention appearances, but they all paled next to the power and reach of a good magazine advertising campaign.

Here in the future, while we still wait for our flying cars, magazine advertising is now merely one way to reach customers... and it looks like a pale shadow of its former self. Now we have social network marketing, Twitter, web pages, email campaigns and newsletters, banner advertising, search engine optimization (SEO), paid search ads, SMS codes for mobile phones, in-game advertising... it's a vast array of choices. Unfortunately, it's not easy to sort through them, learn the technology, and determine the best route for your particular title.

A really small publisher (which, in my admittedly biased view, I will define here as one who does not have a full-time marketing employee) has a few choices about how to approach this. One would be picking some marketing tool and throwing some money or effort into it and see if you get results. Another would be learning more about at least one of those marketing tools, and then trying it out (or deciding it isn't for you). Another would be hiring some expertise; get a marketing consultant to advise you on the best course.

Here's the bottom line: If you don't want to spend your time learning about marketing to some extent, you will either be spending money on marketing randomly (or not spending at all), or you need to spend some money on a marketing person to help you make some choices. Some careful experimenting with your marketing dollars might show you a big return; it's certainly worth seeing if the spending you already budget for can be made more productive. Once you find something that works, do more of it.