The Successful Paradox of Combining Business Strategy with Nonconforming Game Development

[Music] okay cool great to see that that you came here today was the toughest possible competition at Diablo 3 post-mortem in the other Hall and Friday afternoon so thank you for showing up my name is Fred and I have the privilege of being the CEO and president of Paradox Interactive which has been growing really rapidly in the past two or three years and you might know us from titles like Crusader Kings Europa Universalis City skylines Magica and today I'm going to talk about business models and I think that in our industry we don't talk about business enough so I used to work more with games ten years ago when the studio was small and I was kind of even if I was to sales a marketing guy all the time I still was a part of the games development team as well but the more I moved out of the games development team the better games we started creating and

even more so the better business we started making because I could focus on what what I do best so my goal of today is to actually make more game developers talk about business and business models and this is one of my favorite all-time quotes from Warren Buffett price is what you pay and value is what what you get because all markets are basically imperfect because we value things totally different so someone might value your opinion or solace at the price of $2,000 because they're putting four thousand hours into the game some other people might value this at one or two dollars because they like just to see what it is played for a little while and then let it be and have it in their Steam catalog now price discrimination doesn't let allow us to do that to charge exactly what people want to pay for something so all markets are in some ways imperfect but once you move into a

digital world like we're in most of us in here we moved away from retail boxes we can start experimenting much more both on the pricing side and on the business model side so I'm going to show you some models that we use a paradox how we start with a game how we integrate the business model and how we integrate people around the business model the value creators that we're working with so we are not the only ones making value for our own titles for our own games and starting just by like I I'm gonna use a few words that I come back to here and and maybe some of you are not familiar with these words but business model once you hear that what is a business model well it's basically how do you make money so even if you don't talk about business models you will have a business model in your company if you have revenue coming into the company the second one is value proposition and value proposition is the promised value that you're supposed to

deliver to a customer who's gonna use your product and that has also been approved by said customer and the value chain is everyone who creates value to put together the value proposition here with me cool this is all CEO art as well did I mention those I made this presentation myself so it might look a bit so-so so when you build value changes in business model you have to start somewhere you have to start like where do we start talking about this where do we start building our business models and the first thing you should talk about at your studio or whatever business you run is how do we want to make money not only what are we charging for the products but philosophically how do we want to make money how do we want to sell our products to our customers like a paradox we've said that we do not want to monetize frustration that's one of our key pillars in our business model meaning that if your character dies

Intercity kings - you cannot buy him back for a dollar that would be a bit salsa because people would be frustrated right and then you can pay your way out of that we don't think that's a good way to approach a brand so we want people to pay for our games when they're at like really stoked to play something also getting the team excited about the numbers start talking about the numbers saying like what are our goals with this not only on the money side it could be other key performance indicators as well but just get the team excited about the numbers because once we start to get our development team more excited about the numbers we started to make better games in fact you also need a customer approval so I'm gonna get back to this as well because the customers are part of everything you do all the time they will have opinions about it they will tell you when they think you make

mistakes and they will turn on you if you make enough mistakes in a short while also get the customer engagement so that they will drive the process further not only approval but asking like how can you help us evolve our business models and our value proposition I'm both so in pro we start with the games right because everyone here how many are game developers in here hands up most of you and you were the people who work in sales and marketing anyone few as well any media no media that's good then I can speak freely that's very very good we start with a game so when we look at a new game we look at something from the internal studio or we look to publish something we talk about three things and the first thing is do we have the passion to do this game do we think that we have the people who will walk 10 extra miles to make this game really

good the second one is market is there actually a market for a game like this if there's an established competitor for example you can always look at the competitor but if you're creating something new you have a kind of second guess if there's a market or not trying to quantify it but still and the third one obviously is skill did we have the skills to do this passion is not enough to actually complete the project that's going to be world class so you need the skills to do it do we have the resources to actually pull through the resources are not only on the development side it's also on the sales getting site we've had numerous discussions this is ten years ago but still weather a good game sells itself how many in here will say a good game sells itself anyone yeah a few really brave souls that's good so let's look at our funnel how tight is the paradox

panel when we look at new games and how critical are we about new concepts coming in the paradox or old concept for that matter I once was pitched a game called fish Tetris which was you should match fishes against each other to remove them that's one of the most terrible pictures I've ever seen and that's one probably only four hundred in here four hundred and one that was specifically something like fish Tetris those were the pictures received total in 2015 the Paradox Interactive 401 pitches in total which is more than one page today and all the 400 pictures 20 went to the greenlight Committee for further research and the games that we're actually signing for further like up until prototype is between one and three probably all three of them but at least one of those projects will be closed before it reaches prototype stage that's how tight the finalists and they

go over to like what are the reasons for declining so many games first of all they're on race issues we have decided what makes a paradox game and I'm gonna come back to that with even more CEO work we are we stand for something and if the game doesn't stand for the same thing as we do we can't sign the game no matter how good it is then you have pillar issues which is very very game specific and then you have of course development issues as well it's the developer not the right developer we don't think they can actually make this game happen just to give you a glance on how we work the first thing we do when we look at a new game or look at a new project overall is setting the vision and ambition is really important because when you look at the wall and you see the vision you can unite your team there are a couple of good wishes out there I mean we use for our upcoming space games to

Loras the galaxy is vast and full of Wonders so what does not say when you look at it it says that it's kind of different from our other games because Europa Universalis is there is no exploration in that game so the implicated thing in Solaris is that it starts with exploration for example they can interpret this in many different way of course but you can unite the team behind the vision my absolute favorite mission I think it's the mission at least that's what I heard is for Gears of War and very easy to understand Marcus Fenix is a badass that's good why is not a good mission because we look at Marcus Marcus Fenix you see his about us the artists who worked with Marcus Fenix knows that he should be painted as a badass he doesn't open doors he kicks doors in because he's about us so everything in the game design everything in the art everything in the level design implies that he's

about us Erica can get behind that so why do you actually set this vision and why is it so important you help the team find the direction of what they do it's really easy to communicate to your fans it's part of your marketing plan as well you can fight find angles in the marketing that actually explains the vision and even deepens it even more and you of course you identify the priorities as well you can talk about like what's the most badass of these two choices that where and how do you set the star like a vision is not easily completed the worst visions you can ever have is this is going to be the best strategy game ever no one has a clue what they're supposed to do right it doesn't set an angle it doesn't set a direction it just says it's gonna be really good once it's finished or the best World War two game ever made it's a terrible mission terrible could be a statement or it

could be a general feeling that makes up your missions and the people making it should be everyone involved in the team and I'll get back to that as well why it's so important to mix and match teams between not only development but also sales marketing and all other parts of the company dreaming big is the next step we feel that okay we're doing something new here something new cool that people should be excited about so we'll dream 18 to 24 months ahead the game is already out there it's a big success everyone wants to play it so who was playing this game if it was a book written on this game who would write the book and what type of book would that be who would be the author would it be Stephen King or would it be Ernest Hemingway where it like how do you cosplay this game how do you make the game have a soul so when someone goes to pax to show off to their friends what do we actually wear watch it is obviously a

TV series maybe is it Netflix or HBO is it our Raider R rated or T rated and who's the director for this TV series or a movie build it how do we actually get our fans to build things for us what do they build in the game how do they present it itself preach it is really important it's like what do people say about this game when they're trying to convince their friends to play it when we released the Rope universalist we are the whole tactic was empty marketing and why do you call it that our whole marketing angle was maybe this game is too hard for you to play and people were like really I'm gonna show you so we found out but the way most people learned about paradox games was they saw other people playing the paradox game and they asked what are you playing never mind I don't think you would get it and that provokes a lot of people

obviously some people would be like okay okay I get it I'm stupid I can probably not play this game other people will be intrigued and those were the people were looking for and of course this summarizes it into a lifestyle you you'll live the game and so this is the dreaming big scenario that we're using first abyssion then like how do you dream about this which takes us into my game pillars which is what actually makes up the game and how are the different departments of paradox involved in what the game actually is and if we start with what is the game pillar we have seven different game pillars the most important thing about every pillar of our games is the player value you always start with discussing what is the right for the players and the problem with our industry has been for a long time there are a lot of big egos with artistic ambitions they can also be a positive thing but when it

comes to player value first it's a really big challenge and I know I'm one of these egos as well so sometimes you have to just put it away and do what's right for the gamers the second most important thing here is the paradox value like for us as a company what value does this pillar have and how does it match with the game early if we're working with an external developer what's their value in this or if the internal studio paradox would snare value marketing value the marketing department why should this be exciting to them why is this core pillar a really good thing for marketing and of course the people working in sales working with our partners working with Steam Microsoft Sony etc why should they be excited when they are trying to sell them percent again does it make sense so we're trying here our most important feature of all is replayability for people to play pickup and play the game

again and have a different experience there is something new that it didn't experience before and the most obvious thing for that for the gamers is that they get a lot of bang for the buck it's a lot of value for the gamers and the big thing prepared ox is obviously that we get highly engaged customers people who play our games over and over again provide us with feedback and it creates a positive spin of developing the game further the development value here is that you can continue for a long time to continue to develop the game and make it even better if you have high engaged fans to play it over and over again people will continue to support your your development the marketing value is obviously it's easier to reach the customers because we know they're in game and we know they're following our social channels or email channels and everything it's very easy to communicate to all the gamers out there and the sales value for the people handling the partners is the attach rate so if you if

you release a new piece of DLC or an expansion you know that a certain amount of the people are actually playing the game every month or every day even are gonna buy this expansion or deals so business-wise it actually makes sense we also say that we are hardcore we're in the hardcore segment of the gaming markets we're not making any casual games we're targeting niches and the player value here is to feel smart right the the hole maybe you can't really play this game feeling but you can you feel smart it's like being a part of the Illuminati probably that you're a paired off gamer is that which is almost as good you don't really rule the world but you do it on your computer it's like an interactive version of Illuminati the value for paradox is obviously that there is limited competition so we don't face we're not going up against Zynga or King in this case to buy new customers

all the time so it's a limited competitive space so if we make really good games we know we can keep the gamers the depth value is that there is no in here they can pretty much do whatever they want as long as they get the gamer approval it's not only data driven but driven by what the gamers say as well in the marketing value it stands out so it's not just another copy of a copy of the copy of a game that is trying to churn out new things it's actually something that stands out and has a marketing angle and the sales values obviously that the lifetime value of this is going up because the hardcore gamers play more I'm gonna run through a little faster here but we do functional reform which means that the game doesn't have to be triple a quality on the on the side of graphics for example which means that for a player you don't need the latest

and greatest hardware to play the game for us it's a good return of investment because graphic costs a lot of money so we can keep the risks down and still keep the upside because if a lot of people play the game we'll still make a lot of money so the risks are lower and the ROI can be really great still the dev value here is small team so you can work in small teams where you have a lot of say so a lot of responsibility this doesn't fit all developers I know that but to the people who want to work in small teams where actually your opinion counts this is the perfect way to do it so game pillars and everything else with the vision is not just to attract people it's also to define who should not be a part of this right so if you like large teams where you only work on gun sounds for two years in a row isn't it not gonna fit you so it's really good to be upfront about that as well marketing value messaging their rights and market accessibility on sales we say that we want to make our games

accessible which you might laugh about if you look at the interface of Crusader Kings - it's kind of daunting but we're working we're working on this core pillar a lot we've identified it as important so player value is no frustration and for us value for the whole company is that we reach a wider audience the depth value is that the stickiness of the product is going to increase because if you learn the game quicker you're going to keep on playing we've seen that on data as well market values that you Kings can explain the game and the sales value is the promotion potential because of if you have all the other things to promote promotion potential and to sell at a lower price increases a lot of well as well over time creative is a little bit fuzzy but give the ability for people to create their own things like modding for example in the game make it easy for people to make youtube videos that's the creative part of this

so for the gamer it's a self-expression thing people love to do things so people make mods without being paid right the Crusader Kings to Game of Thrones smart is a super ambitious product and they can't charge for it because HBO will would shut them down which is reasonable because it's not their IP but still it drives a lot of traffic for us as well like it was touching here it's a lot of value creation for paradox if you just allow people to go crazy with your products they're gonna create a lot of value and taken together we have 5 million registered paradox customers right now it's increasing by 300,000 a month collectively there is they are obviously a lot smarter than we are we're only 200 people at two offices so we can combine the thinking of 5 million people instead of just being 200 creating things we're up for something good going forward for the devs it's a

good way to find talent we find sometimes people who made mods for us and made YouTube videos or whatever to help us out and to carry the company forward so you could call it a recruitment process as well obviously it's free marketing and the potential I mean the user-generated content is like a swearing word right now after the Skyrim debacle and all of that but still we've used a lot of things created by people to sell them to our other users and they get really well paid so it's a huge potential that is to a large extent untapped except for valve who does it really well for dota 2 for example and for Team Fortress we have high engagement subject matters like history is one of those that people are super engaged like World War 2 which means that they can nerd out so might it has a back side as well so once you start a thread on the hearts of iron form heart sabayon is a World War 2 game which is

which do you think was the best tank during world war two you have to close the thread after an hour due to flame wars widget but the nerding out thing I got her chiffon is a good example because we had a lot of technologies and Generals I don't remember how many about thousands of them in the game so I get an email this is 2006 from a player saying the following mistakes in the game makes your game totally unplayable and there's a list of things no bugs listed at all only things like German felt how bits cannon nine centimeters you say deployed February 43 true date March 2nd 43 stuff like that and it's great because they really helped us by doing that so I just sent an email back saying wow that's great here you get some download codes for helping us out and he replied oh that's

good thank you so the people by nerding out and by creating these highest high engagement subject-matters people will engage even more early we think at least these are ours the switching costs from the game is higher so it's harder for a player to switch to another game that is made by a competitor if they're not making the exact same game as a copy it's also rachel materials so it's really easy to find new material for the game that you're creating so you're not having to make up new things or new IP you already have an existing audience or a fan base in that space and obviously you can find a lot of tie ins as well so this is my proudest moment of this presentation of CEO art look at all the imperfections right there you can take this is the full full slide if you take I want to take a picture of that and I'll move on in three two one here we go so why we move over to the business stuff that was a game stuff how

we make games of paradox from a business angle still if you have I have some products developers in the audience and they would tell you totally different story than this one how we make a game this is my perspective under business so why do you want to make a business model why do you want to visualize to people how the business model looks and what you're trying to do with your business model first of all it's a naming convention if you use the same words for the same things you will work in the same direction so in our case is steam a partner or a channel it's really important because if we have the words just wrong we might just misunderstand what we're do the other thing is that is there actually a receiver on the other end for this product once you start analyzing the business model and dig deep which we're going to do in a moment you will see like it's there really someone who's interested in playing this game it helps you to focus a lot as well

if you visualize the whole business model on a big screen like this you will see quite clearly what are we trying what do we need to focus on to make this a big success and the fourth one is that it encourages use of data because once you start talking about business models you will figure out that some people only have opinions it's my opinion that I actually banned that word from our management meeting I said you can't have an opinion because it's worth right you can have a thesis my thesis is that the things are like this opinions no this is okay if you have data you can say the data backs up and I base my thesis on this data but maybe your thesis is wrong so the data is showing something else that's also how you put it the naming convention no opinions

then we make what we call a business model assessment we ask ourselves seven simple questions about the game that we're about to look at the first is the product switching cost how much does it cost for a customer to switch from your product to a competitive product how much emotional investment financial investment forum time investment and other relationship has a person actually invested in this game and how easily would they switch to another game how do we have the screw up for the people to actually leave us and never come back as a person the second one is what's the potential for recurring revenue in this game it has a lot to do with the core pillars that I just presented like the replayability if the replayability is high the recurring revenue potential is much higher for example earning versus

spending do you make money early in the process for example if we were kickstarter or do we make money after the game is released how does that look it's a risk assessment do we as a company have a game-changing cost structure if we compared to our competitors how large teams do they have what's their marketing budget how do we spend our money are we smarter with our money than our competitors are but we can still keep the same quality to what extent do other people or are other people allowed to add value to our games modders for example youtubers so how do you make other people do the work for you it's also a cost issue to some part because if you have a thousand youtubers creating videos for you you don't need a marketing department or maybe you need a marketing department because you can get up to 2,000 youtubers next week so to

what what extent to others do the work and the final one is how scalable is the product and by scalable it's a buzzword in here in San Francisco specifically but all over the world scalable basically means can I sell one more product without adding any extra staff how scalable is the business model and a final one how protected are we against our competition is it easy to like how do we see that the protection against competition these seven we rate them from one to ten and then we try to see how can we actually make this even better and how do we integrate that in the game design we make the assessment sheet and we apply it on the game design sheet and see wait can we do something here is there potential to do any of these seven a lot better which brings us

to the whole visualization of what a business model looks like how many people recognize this model yeah quite a few are working with it that's good what I want to say like if you start in the middle there those who you know it you know maybe know it as good as I do but the value proposition is the number of this is available online it's called a business model canvas by a company called strategize er I've been to a few workshops on that and I'm still a novice but we're trying to get there right so the value proposition is the sum of products and services that your company provides for a customer they are being sold through channels as you see there to the customer segments and the customer relationships is how you approach your customer in terms of communication email social channels direct phone calls hopefully not but still and down there to the left to the

right is the revenue how do we actually make money here on the other side is key resources what do we actually need to make this product or a value proposition a reality programmers artists in our business for example game designers and the key activities we need to engage in to make this value proposition happen and what partners do we need to actually carry this through on that side it sums up the cost structure and if the revenue are higher than the costs is a profitable project very simple way to put it so we work a lot with this model just playing placing post-its on this business model cameras moving them around and you will have to all the time to invent your business model because there is something called the Icarus paradox and it means that your victim of your own success so once you've succeeded big-time with

something and you don't change it over time the customers will feel that they own this game more than you do so will get your core audience to turn of you once you start changing things in the business model the company is only in one of two stages one is development and the other is stagnation so once you reach your peak on your business model you'll start stagnate if you don't innovate there are a lot of companies out there in our business who does not innovate I'm not going to name any of those because I'll probably be sued but I'll name a few companies who are really good I think don't think this look at Blizzard for example they released World of Warcraft with a $15 recurring revenue every month and they kind of realized this business model is growing old so what do they do invented hearthstone which has a better scalability high switching cost everything it's even better as a if you

take the business model assessment that I just showed hearthstone is even better than World of Warcraft and where the Warcraft is really strong so Blizzard is one of those companies are always inventing their business models as well so by making hearthstone which is totally different from World of Warcraft they don't really need the customer approval in the same way see if you're only working on one game and you work on the same business model all the time the customers will have their say old it and if you do something too strange or too weird they will turn on you and tell you you can't do that I will have to back up like 50 steps again I start out but it's likely damage damaged reputation as well so when you design business models it's interesting that you don't need to talk about business models or like you can talk product you can model and you can mix and match the teens when you talk about the business model at the abstract level that this is the former screen you can have people

from marketing discussing a game product because it's so abstract and then they can take it back to the team like what are the overarching goals rather than what is the actual game design and they could take out the different parts of the business model give it to the people in different departments and let they do the interpretation work but you've agreed on the overarching goals of it you can work a lot with constrain creativity that you box in things and say we will start only in this part of the business model canvas and work from there if you take for example six pieces of H Double A go like this one six pieces of that and combine them for example you can only combine these six pieces how many ways can you combine them it turns out it's 915 million different combinations that's pretty cool like you would say oh I can only work with these six dots that's impossible no you can do a lot so if you

go back if I go back to the formula here you can start in any of these squares right here and start working on a business model or on a game say that you start in revenue streams and say let's let's make a game where we have to charge $10 a month for people to play it how would that look how do we fill the other parts of this and how do we write the game design based on this business model canvas or you could start in the customer segments you can start in the channels it doesn't matter as long as you do new things and innovate and the most important thing is not to make new projects based on this it's more of a thought process it's more getting people to think this way and the way they approach problems right move on which moves us to when you take out the value proposition and the customer segments out of this equation you get the value proposition canvas this is also

available online and that the model with a little head there it says customer jobs so when a customer picks up your product what are their expectations that the job to be done for them is fulfilled if you take a drill for example if you buy a drill that's a very good hardware tool what are you actually paying for if you're a Marxist it would say you're paying for the plastic you're paying for the iron and you're paying for the transportation of the product to the hardware store but what are you actually paying for you're paying because you want the hole in the wall in your house Airport nothing else it's a customer job that needs to be fulfilled there are two other things here on the customer side one is pains what is the potential pain that people will feel when they buy this product what are their worst fears when they

look at your product and they're about to buy it and the gains what are they hoping to achieve that is even like more good like good side effects by having your product and on the left side here is how do you actually make a product that matches two jobs how do you relieve the pain from the customers and how do you enhance the gains so now I'm going to show you the value proposition we did for Europa Universalis for you ready so on the right hand side there let's start with the customer jobs one of them is feel smart right people want to feel smart they want to also be challenged strategy gaming wise you could make a mod for example it's good typically you could take this down to three to five different in each in each square it makes it easier to look at if you take the pains for example one of the

apparent pains we've seen with our games is I'm not sure I'm gonna be smart enough to play this game I'm not sure that I will actually understand how to play this game and a few of the games are like I can engage in a right forum for example I'm a part of a big community that has a lot of fun together and if you match that on the other side one of the pain relievers we have to do with how do we make a good tutorial how do we make it easy for people to come into the game YouTube videos for example interactive tutorials part of that the game enhancers like how do we make it even easier to contribute to our forums and just sign in and to be a part of it on the game enhancer side and the product is obviously your open verse Allah sport so this is a way of toying with your own ideas in getting quantitative and feedback from the community as well you can read what people are actually writing about your game media for example stealing reviews and put them here we see that 50 percent

of everyone is saying that the character creation is not deep enough do we agree with that and how do we sort it out if that's so important to our clients great I'm gonna have one more one more management models I'm not a big fan of these management literature books there's gonna change everything forever right it's a blue ocean strategy how many are familiar with that right blue ocean basically means that you should move out of the competitive space and move into space where there is no competition and you do it by for simplified steps and we did this for City skylines straight off and I'm gonna tell you exactly how we did it so it goes saves up for building blocks I'm gonna check the time sorry for building blocks which is first of all what features do our competitors have in this case SimCity 5 that we can eliminate

completely from our product and that is costly for them to create as well so we save money and take away a feature in our case it was that a game was always online they put a lot of money into making it always online and we said what would be the reasoning if you're making a customer job out of this what's the reasoning of always being online we don't think there is one we think what they looked at was the value for EA to be always online they probably wanted to track the customers and see what they did so what we said okay we also want to track what our customers are doing in the game can we do that without being always online the answer was yes so good out the door right simple as that reduce what features do we think we can reduce to such a limit that we save a lot of money without ruining the game experience there are a lot of example of this in city skylines SimCity example but in this case was we had 200 buildings in our game when we released

it they had 800 and that's a huge budget difference create what features can we add that is a high value to the customers but it's not present in the current product for us and was it for example modding we knew that the SimCity modding group were desperate to have a game with modding in it and modern city builder not also to care of the problem that we had fewer buildings in 24 hours we had more than 2000 mobs for cities Congress so Tara Wright took care of a problem and what factors should be raised above industry standard we don't need to like outdo them totally but so we put a lot of effort into the management layer of it we said people want to play they don't want every individual simulated because it's really costly so we'll put a management layer on it and more abstract how you actually run the

city which can have really interesting side effects once you start following individuals in city skylines and make a lot of funny stories which is also a side thing with emergent gameplay and all that I urge you all to see a really PC gamer article which is called the city skylines city with only one house where they try to simulate the sims in city skylines it turns out very weird I can tell you a lot much but it's it's almost an extra value because it creates new weird emergent gameplay stores as well so it didn't matter to people how much and if you divide this into two groups on the cost-saving side the red ones and on the cost increasing on the other side and you have to balance this in a very good way so basically if you walk through the process how we work just we recap everything I said so far the product mission comes first the value proposition comes second and if the

value proposition is not good enough we will have to start over with a product mission because maybe they're not matching together you look then at the project scope can we actually pull off the value proposition with this mission up to the prototype phase and after prototype you're fairly sure that the whole team understand exactly what they're supposed to do the marketing angle the sales benefits everything so everyone in the organization will be on the same page if it's done right I'm not saying we do this right all the time because I have paradox employees in the audience but we strive to do the drive and if the prototype is not good enough you just go back to the value proposition and say can we redo the value proposition and see if it fits better for the next prototype is it even worth doing anyway and if you take game design versus business strategy because it's basically the same thing typically when you run into a problem with the product it has a business side and it has a development

side it's not opposite it's actually the same so we take the Crusader Kings to example we have developer problems and we have business problems the problem with previous versions of Crusader Kings was that every time we released something for it it was different versions for different gamers which on the other hand on the business side cost lower attachment rates for DLCs because it needed all the time to upgrade and upgrade your game the developer problem is well this is actually Europe Europe another solid is 3 it was a game released before Crusader Kings 2 so all the problems come from Europa 3 the multiplayer support because we have different versions you couldn't have multiplayer support in a good way which made the business problem that customers weren't satisfied because it was not a full complete product in the eyes of people the developer problem also which stemmed from different version was that it was

problems to adapt the mods to all the different versions which made the business problem that you had lower engagement rates on the people there because they knew that maybe I can't download these mothers have the wrong version and whatever I don't really care so our solution that was actually every time we release a DLC you download the whole game and you get 50% of it for free and the rest your unlock but all the content is in there so everyone is basically playing the same version so what seems like a really simple solution actually took a lot of thinking because both these things had to match in together if this was only something that would have been solved from a development standpoint I'm not sure that we would actually sort out the business problems we could have found something completely different that took care of the developer problem or what didn't make sense business which takes me to the final part which is the value

creation part and we have coined an expression that we call games as a platform on the valuation side and value creation wise is a gaming ecosystem created by you that could continue to grow without your own involvement so basically it's a self serving system of gamers Team Fortress 2 is the best example in the world of this so when you talk about value creation like who is actually creating value in this process and what are the two key rules for how you make it possible for people to create value for your game first one is if you make it easy for people to create value for example mods you're on the winning side of the games industry if you make it hard it will lock people out you're on the losing side if watching a YouTube video of your game adds

to the gamer robbed and spoils the whole game you're on the winning side of game those are the two golden rules of value creation and how your game is created and how it affects your game design so it's not only about creating the value and how do you actually attract the people who create the value simple first lots of replayability a lot of good mod support dedicated people who take care of that as YouTube friendliness we talk a lot about what's the YouTube moment of this game like why do someone finally or just all of a sudden on YouTube cry out and like laughter or something like that what happens in the game when that happens on YouTube because that is what people are actually watching YouTube also a game the create stories so you will tell your friends what happened in the game and you will be intrigued to

create more things that are happening and engaging in the game and the most important factor of all let the people who create value in your game also make money from it you can split it up in between you because after all is your game so you should have some of the money but there are companies who are blocking people from putting up YouTube videos don't do them suicide that was my walkthrough for two days I just want to summarize everything I said I wanted three hours here because I wanted to go deeper in on everything like this but I'll summarize everything we have here in a few bullet points and I'm happy to answer any questions if you have any so the first thing is choose a set the vision for your game and don't set a bad vision like we're going to create the best RTS ever because it's a crappy vision it's really bad and a bad vision is actually worse than no mission at all so if you don't feel that you should you

should read an article saying that's named how to write a mission statement that doesn't suck it's a great article and it says everything you need to know how to write the mission a mission statements and it's really hard to do this and it really frustrating but it needs to be done start thinking about how do we at our company integrate the business design with the game design how do they affect each other what are the synergies and what are the Eli points where we don't really agree and we have to choose in between which thing is the right way to go start including if you don't already do that include the value creators because they are your best friends make your game live forever if you take those three above it will live for at least 10 years and the most important thing in our business my closing words is to have a lot of fun

because if you don't it will show in the game and no one will want to play it thanks any questions really it's probably afternoon at all you're longing for the beer hey how's it going thanks very much for the talk so on the subject of value creation I don't know if you deal with this a lot but I have a sort of you're sort of a concern about the idea of physical merchandise creation and how you handle that side of things on the fan side so with the rise of things like red bubble and other fan sites and community sites where people can submit their own artwork or variations on your games artwork how do you kind of handle that stuff you mean people who monetize on your game without tell you or exactly like someone who's gonna make a Crusader Kings to shirt and sell it on a RedBubble site without your explicit permission and stuff like that no I think it's really important to to put

like to own your brand as well so you need to be very clear that of course you can sell this but we need a part of the revenue to continue develop the game and everything so there's nothing strange about that you should just tell people that we're really a problem with that okay so as long as people do it just for fun is okay if they start monetizing it we want it not it because still we made all the hard work so I don't think that should be a problem cool thank you very much always when you communicate with rally creators it's very important not to start with a lawyer right because a lawyer is a very aggressive way to approach someone so if you get a seasoned desist letter people might just post it online I think look at these I'm just trying to do a lot of fun stuff here so sent out an email and saying you know what this is our take on the situation what do you say just be reasonable and nice and most people will actually yeah they will understand the situation cool thank you again how you talk about high switching cost is something they you want to have in your

game I'm wondering if we can talk a little bit about basically the things that give a game a high switching cost and games the things in your game that might take away from that a game that has high switching costs yeah yeah just basically like what practice is you think tend to promote that and and just to clarify by the way it seems like mainly what you're talking about is basically like sunk time and sunk cost this psychological barrier people have to kind of pull away are there other elements to it than that as well absolutely there are several different ways you there are several different switching costs one is for example financial if you put a lot of money into something you will continue like supporting that typically so psychologically once you put one dollar into something you'll continue to support that and that's why consultants like to send an invoice as quickly as possible so they can continue just invoice you because you'll probably be immune to invoices after a while I've seen that happen all the time but if you take a game with high switching costs

the to MOBAs that are the biggest one have really high switching costs the reason for that is I play league of legends myself a lot I could never switch to dota both because the mechanics are too complex and I'm not smart enough but to all your dota 2 players out there feel that you're better than League of Legends player but I've learned all the characters in the games I know exactly all the moves I know exactly how to attack and how to protect myself from everything so that's a perfect way of saying that gameplay design and I'm character design actually adds a lot of switching costs to again okay cool thankful thank you Oh okay cool I'll let you go Friday beers for everyone okay you