For better or for worse, in today’s autocatalytic technology-driven world, where every change accelerates the speed and frequency of the changes to follow, gamers (of all ages) are the virtual canaries in the coal mine. The disruptive innovations and the market transformations which the gamers’ behaviors consistently predict are felt and rapidly found across every industry sector and, in general, across the board. As gamers go, eventually (and increasingly quickly), so goes the rest of the world.
It was the gamers’ rapid abandonment of expensive, bulky and static gaming consoles (Playstation and Xbox) in favor of light, portable, and mobile devices which not only built companies like Zynga into almost overnight market leaders, but, much more significantly, presaged the world’s online migration from the desktop to the mobile world. Mobile today is everything and everywhere and our smartphones are the direct descendants of yesterday’s handheld gaming devices.
And there’s still much more to be learned from the actions and choices being made by gamers every day which will change the ways in which more and more businesses price their products and services and the manner in which they interact with their prospects and customers. We’re looking at the end of fixed pricing for anything and entering an ala carte/all the time world. Bulk packaging, bundled products, and even bargain pricing are all breaking down in favor of a single consumer demand driven by a desire for freedom of choice and flexibility – I want “everything by the bite” – whatever I want, whenever I want it, and wherever I am. And it’s the gamers who have shown us exactly how these demands will soon find their way into every business.
It’s helpful to start by looking at which approaches didn’t work over time in the gaming space and why they didn’t.
First and foremost, subscriptions and long-term commitments haven’t achieved anywhere near the scale and player penetrations that were anticipated. The fundamental reasons are fairly clear – commitments of any kind and continuing obligations are out. Any online game company will tell you that the most active participants won’t commit to spend a dollar in advance, but will spend ten dollars – a dime at a time – all day long.
Second, fixed pricing, downloadable paid games and pay-per-play models have also failed. The only companies making real money today (over a million dollars a day in virtual sales) are the companies deploying freemium games where players are charged for upgrades, increased weaponry, powers or skills, or other virtual goods.
So what are the lessons for the rest of us? Three basic propositions underlie the gamers’ decision-making process and these ideas are already on their way to your market and your products and services if they’re not already there.
First is Investment
The best and smartest games let the users set the effective price of each session or game each time they play. Some days it’s a little bit and some days it’s a bundle. The point is that the customer is in control. Your pricing strategy needs to incorporate and evidence the same kind of flexibility.
Second is Commitment
The best and smartest games let the users decide how much or little they want to spend each time they play. Some days it’s a lot of time or money (each being a material kind of a commitment) and some days it’s just a lark to kill some time. If you do things right, you can be all things to all people all of the time. But your products and services need to be accessible across a broad spectrum of pricing and consumer choices and not a simple set of fixed offerings.
Third is Valuation
The best and smartest games let the users decide on exactly how much the experience is worth to them each time they choose to play or continue to play. All the market research and pricing guidance in the world doesn’t compare to just letting the customer determine the value of the experience. If your products or services provide real benefit and value to the users, you will discover over time (and over the lifetime of a continued customer relationship) that your best customers will actually pay up for the right experiences rather than try to be bargain basement buyers.
And focusing on the value of the experience is doubly significant because today no one under the age of 30 really cares about possession or frankly about owning anything. Everything is about utility and experience. Social and sharing. Ownership (buying “stuff”) is a burden today – not simply because so much of the readily-disposable technology we see and use every day is outmoded and obsolete in roughly the time it takes us to master the things in the first place – but because, in addition, we would just as soon not assume the obligations and the commitments that come as part of the package.
Bottom line – I know that one size, one model, one strategy will never work for everyone – but one thing is true beyond question and that is that your best buyers will tell you that everything is better by the bite.
PP: “You Get What You Work for, Not What You Wish for"
