Preparing for Launch

Some games catch the public eye years before release—sometimes on purpose, sometimes because of schedule slips. However, in most cases, publishers begin to work on a launch campaign approximately six months before release. In the United States, much of this activity happens at the Electronic Entertainment Expo (E³), which takes place almost six months to the day before the most important shopping weekend of the year, Thanksgiving.

Selling to Retailers

At E³, publishers meet buyers from all of the retail chains and show them the games of the Christmas season in almost-finished form. (Demos of the next year's releases are also shown, often behind closed doors.) The publishers' goal is to guarantee that their games will be available in as many outlets as possible, in sufficient quantities, and on the best shelf space. Therefore, they spare no expense; the high-tech booths and hundreds of thousands of square feet of floor space that publishing giants buy at E³ cost them millions of dollars for the three-day event.

[Laram e03] discusses the retail market in more detail.

Selling to the Press

At the same time, game magazine reporters receive previews and interview the games' developers.

Most print magazines have lead times (e.g., delays between writing and publishing of articles) of about two to three months. Therefore, E³ previews appear in print in August or September—just in time to condition consumers for Christmas shopping. Full reviews follow a few months later, to coordinate their appearance in print with the game's release.

Marketing Campaigns

It is no secret that magazines tend to give better and more favorable coverage to publishers who fund their business through advertising purchases. Retailers also want to know how much advertising a publisher will buy to support a game, when it will appear, and in which publications.

A print advertising campaign for a typical game will cost about $150,000 to $350,000. That amount will buy full-page and two-page ads in several major magazines for three to six months. Television ad support is usually reserved to flagship titles and brands (e.g., Tomb Raider or EA Sports) and can easily cost 10 to 20 times as much.

Other major marketing expenses include:

• Store promotions. These include preferential pricing and rebates granted to a specific retail chain, in-store displays, and advertising in a store's fliers.

• Online marketing. Publisher staff members discuss upcoming games with consumers in chat rooms, on Web sites, and so forth. Once marginal, this labor-intensive practice now sometimes accounts for half of a game's marketing budget.

The Final Countdown

Once the game is complete, the publisher runs final testing, manufactures copies of the game and packaging (sometimes in-house, usually through subcontractors), stores the boxes in its warehouse, and ships orders to retailers.

For a PC game, this sequence takes approximately one month. For console games, it often takes three times as long, for two reasons:

• Since it is impossible (for now) to release a patch for a console game, the platform owner must certify that the game is bug-free. This makes the final testing and approval period much longer.

• Platform owners usually retain the exclusive right to print copies of game media, using special formats and processes to minimize the risk of piracy. If the platform owner has limited manufacturing capacity, which is typical during a console's first year on the market, it might take a while for them to fulfill orders.

Case Study 1.4.3: Self-Publishing (Continued)

Kutoka Interactive, the publisher of children's games profiled in Case Study 1.3.1, relies on effective press relations to offset their competitors' larger advertising budgets. "When a magazine like MacHome writes that our animation is as good as Pixar's and better than Disney's, consumers notice," says Kutoka vice president Tanya Claessens.

Aggressive brand promotion also helps ensure market penetration. "We have bundled the games with plush dolls, created a complete line of ancillary products such as backpacks, puzzles, and action figures, and we are going to expand the license into children's books and television as well."

But ultimately, it all comes down to sales. "Stores only stock best-sellers, so we have to move more units than the competing product that could replace us on the shelves."

Case Study 1.4.4: A Publisher Profile

One of the world's leading publishers of strategy games for the PC, Strategy First has marketed such titles as the Disciples and Europa Universalis series. When evaluating a game proposal, the company adopts an iterative approach.

"Anyone in the company can submit a design treatment," says Chuck Kroegel, Strategy First's vice president for product development. "If it is approved by our executives, the project advances to the proof of concept phase, during which a brief design document and a playable demo are created. After another review, a promising project is assigned to a team of six or seven people who develop a prototype, a technical design, and better gameplay specifications. Only if there is a strong hook in the prototype will the game progress to full-scale development."

As a result of this iterative review, about 50% of the projects that pass the proof of concept stage eventually reach store shelves. "I have seen hundreds of games in my career," says Kroegel, "and many get waylaid because they lose their core vision. We work hard in the early stages of our projects to avoid the mistakes that lead to cancellations."

Third-party developers seeking a publishing agreement with Strategy First go through the same process, but they have to create the proof of concept on their own. "We usually act as a publishing partner, paying more in royalties than in advances, although we plan on funding more development in the future."

As an affiliate of Infogrames in North America, Strategy First handles advertising and online marketing for its games, while Infogrames takes care of sales, distribution, manufacturing, and store promotions. The company begins a game's pre-launch campaign three to six months before the planned release date. "War games are one of our specialties, and they don't require much advance warning. We know who and where the consumers are, so reaching them is straightforward." For this type of niche product, online promotion is key, and accounts for 50% of the marketing budget and 70% of the labor.

Thanks to its low overhead, Strategy First can turn a profit on games that bigger publishers must decline. Kroegel concludes: "We can often break even on sales of 50,000 units and earn significant profits if we reach 100,000. That makes us an attractive outlet for developers whose games target smaller but well-established niches."