Importance of Market Analysis for Video Game Publishers
A long time ago, video game publishers used to manufacture physical discs with copies of their products and advertised them in specialized magazines. In the current age of digital distribution, games are delivered via direct downloads and a publisher’s work shifted towards more complicated tasks, such as:
- Gaming market analysis;
- Community management;
- Technical support;
- Ad campaign management;
- Ad monetization.
Nowadays, video games comprise the largest segment of the global digital content market, generating multibillion-dollar revenues annually and attracting an ever-growing audience. Having collected the most common requests from our clients in the early stages of game valuation, we invite you to take a look at why it is important for publishers to keep constant tabs on the current state of the video game market.
1. You need to keep track of the release schedule for all titles of similar genre when planning marketing activities to be able to pinpoint peak months for your product’s eventual release.
For example, choosing when to launch a project does not have to follow the same pattern every year. Christmas, of course, is a high time for video game releases. The holiday sales window is very lucrative and can account for upward of 60% when it comes to some companies’ annual revenue.
However, it is also an extremely competitive and expensive time to release your title. In 2018, it was a bloodbath, and for every successful product there were at least two that did not produce the expected results.
Some publishers avoid the holiday season and prefer to launch their games in Q1, but this could also lead to a month as competitive as February 2019 when Anthem, Crackdown 3, Far Cry: New Dawn, and Metro Exodus all released just seven days apart from each other.
Of course, there are times when such situations simply cannot be avoided. The decision on when to release a game may be dictated by financial pressures, development schedules, distribution channels, or the need to get ahead of the competition. Regardless of whether you are an independent developer or a publisher, there are certain factors you should consider when pinpointing a final release date, and this can only be done by analyzing the market. Note that if your game is more focused on steady sales over a prolonged period of time, the launch window may not be as important.
2. Analyze your competitors’ marketing potential, understand their sources, and continually expand your own distribution network;
Take your time and approach the analysis with due diligence, level of expertise, and consideration. On average, it takes a few hours to conduct such research, and that is if the current trend is already widely understood. However, if a trend has not been detected yet, the process can take one person days or even weeks, and will require you to:
- Study the current state of PvP crosswords in the App Store and Google Play;
- Analyze the genre situation with the help of specialized services;
- Determine the feasibility of selling a new game and draw conclusions.
At this stage, it may be enough to go with an accurate search query in Google Play or App Store. To make sure that the games found fit the required criteria, you will need to play each of them or at least look through their description and media. This is the most time-consuming part of the job, but it should not be underestimated. There is a risk of including games in your sample that do not really fit the idea you are researching the market for. We have used App Annie, Similarweb, Sensor Tower, and AppMagic in our experiments. Remember that most analytical services are severely limited without paying for premium access.
In order to get an idea of the current state of the market, one should pay attention to certain circumstantial signs:
- Number of competitors and their growth rates;
- Top game references and their dynamics;
- Game review volume for different periods of time.
Next, you will need to make a graph. To make sure that this graph at least partially reflects the current market situation, you will need to acquire the data on your competitors’ income for the current year. You can do this on your own, but there is no telling how long it will take. Alternatively, you can order this service from a specialized company that will do it faster and more accurately, potentially saving you both time and money.
3. To correctly evaluate your project’s audience and investment potential, you will also need to understand your competitors’ sale volumes;
Online services that offer competitor analysis are common, so you can quickly find one via any search engine. This will arm you with such data as user engagement rates, audience makeup, paid traffic, social media activity, traffic sources, as well as a comprehensive list of founders and investors. You can also calculate a competitor’s monthly profits. To do this, you will need to learn the following:
- Monthly attendance;
- Sale numbers;
- Average revenue per sale;
- Average conversion rates for the selected market niche.
Even if you are launching a kind of game that no one else in the market has previously released, it is worth taking a pause to find out for sure. It is safer to refer to that which has already proved itself on the market and has shown that it can improve key metrics. Otherwise, there is a good chance that you could be wasting your time, energy, and money.
4. Understand your project’s sales potential early on, so that you can price contracts more effectively when signing new games.
The main reason why your price should be high as reasonably possible is that sales are of key importance for increasing revenue after launch, and if your game’s price is set too low, you will make less money even after applying a discount.
Before you launch, think about the promotional bursts, that are part of any title’s natural sales cycle, as well as what your players will pay during key discount periods.
While price protection is important, the truth is that small post-launch discounts usually do not make much of an impact, so, in order to convert some of your post-release wishlists into sales, you will usually need to sell copies at least 33% off, where 50% proves to be a true game changer. With that in mind, your full recommended retail price will have to take those discounts into account. We always encourage our customers to think about these things from the very beginning.
Market research constitutes a huge layer of work that needs to be done in order to minimize risks and put out a product that is potentially interesting to the right audience.