We are All Gamers Now

When we think of Computer Gamers we tend to have a vision of sleep deprived pallid teenagers locked in their bedroom for days at a time engrossed in some sort of world domination adventure game or else shooting up the neighbourhood in GTA.

For many years the term ‘hardcore gamers’ has tended to focus on this type of market and from a business perspective the games tended to be complex, with detailed and often ground breaking graphics, extended themes and storylines and expensive production and marketing costs. Mainly console or PC based, those games typically have a high margin but a limited market; and with the extremely high development, production and marketing costs involved, a relatively small percentage of recent games have actually have made a significant profit. Indeed, in the last few months we have witnessed some high profile game companies going bust.

However, the computer games industry is now at a tipping point as a perfect storm of technologies come together to revolutionise the market. The step change means that we are now in a world where the computer gaming is no longer a niche activity played out in the darkened bedrooms of the few – but is now very much a mass market activity being played out anywhere anytime by the many – with readily accessible and easily played games being available to a wide range of people.

The facilitators of this gaming explosion are firstly the growth of mobile smartphones such as the iPhone and Android phones and secondly the growth of ‘social’ games which tend to reside on social networks such as Facebook and can be shared in a ‘viral’ manner with friends. App stores such as Apples iStore and the Android store allow games to be simply downloaded and paid for almost immediately – providing an extremely effective distribution and payment mechanism. Similarly, Facebook’s open API ‘Facebook connect’ allows third parties such as gaming companies to provide a very attractive and seamless user experience. Those ‘Casual’ or mass market games are either free or very cheap and in general they can be played straight away – with no need to learn complex rules. The market size for those games is simply staggering. With the World Smartphone Market forecast by Gartner to be almost 2 Billion USD by 2013 and a similar amount of people forecast to be on Facebook alone at end 2010. Statistics vary, but roughly 50% of all iPhone users have downloaded at least one game from the iPhone store and 35% or UK based Facebook users have used Facebook to play games – so the potential market for casual games within the mobile and social web market is enormous.

The revenue potential of those Casual games is significant, with many games using a ‘freemium’ model and others gaining revenue through advertising or via ‘micropayments’ for items within the games. The common theme of those various revenue models is that the cost to the customer of initially playing the game is either zero or else very small. However, with the freemium, micropayments or ad revenue models, the revenue can accumulate very rapidly if a game achieves critical success.

From a games developers point of view, this provides the opportunity to ‘trial’ a game concept in a relatively ‘light’ manner i.e. The game can be offered via Facebook or the iStore initially with limited ‘levels’, production quality or detail in order to verify that the concept works. In the case that the game is successful and sales begin to take off, then it can be enhanced through additional development work on levels, features, and production values in order to maximise the game experience and hence revenue. At the same time opportunities for micropayments and advertising can be extended and a ‘premium’ option may be introduced.

This game development model does pose some issues for design studios. Typically, the development ramp-up required to take full advantage of a winning game concept can be significant. More importantly, there is a limited time window in which to do this in order to take advantage of the market demand generated when the game is still ‘fresh’, and clearly no studio can afford to have developers waiting ‘on standby’ to cater for this type of eventuality.

One option is to utilise contractors to provide additional resources in times of need, but this can be expensive and it can be difficult to ensure that a consistent standard of design and ‘company ethos’ is injected into the game development. Another option which has traditionally been used is that of outsourcing development work, often to an offshore outsourcing operation. However, the offshoring development model clearly poses quite a risk as it requires very tightly detailed specifications and therefore does not tend to match the requirements for game companies to be flexible, with prototyping and Agile development methodology being the normal development approach. It has also proved difficult to ensure that offshore staff are ‘bought in’ to the gaming industry ethos, excitement and way of working as a team – perhaps not surprising given that most of the developers have probably been working on banking or defence applications prior to their game assignment. In fact, recent experience of offshoring has been such that there is a current trend to ‘Backshore’ – or move development back to the home environment from locations such as India.

However, an innovative new model which has been pioneered by Danish IT Outsourcing Company Ciklum may provide an elegant solution to game studio’s development requirements. Ciklum’s ‘Own Team’ model effectively provides a low cost nearshore extension to a studio’s in-house development team, with the team ‘owned’ and part of the studio just like the developers back at base. Unlike traditional outsourcing where developers would typically be selected from a set of available consultants sitting on ‘the bench’, in Ciklum’s ‘Own Team’ case the team members are specifically recruited for the Client company. They will have run through an extensive evaluation process in order to be matched to the client’s requirements and – possibly more importantly – the developers themselves will have elected to leave another employer in order to work at the client team within the Ciklum environment. This means that there is a level of commitment both from the client AND from the developer – and this goes a long way to ensure a successful relationship. It also means that game studios can employ staff with not only the correct technical skills but also with the type of personality, work ethic and attitude that matches the in-house staff. In Ciklum’s case the development resources are primarily located in Ukraine, a rich source of high quality low cost development skills, and Ciklum provide a range of supporting services in order to ensure that the client experience is as slick and pain free as possible. In fact Ukraine also has a well-developed game development community and hosts one of the largest casual gaming conferences, Casual Connect.

Ciklum have been working with Game Studios for some time, but it has really been over the last 2 years that they have seen a major upturn in demand for their services, particularly from Casual game providers. Christian Aaen, Consulting Director at Ciklum states:

“We have been working with game companies since we started back in 2002, and our major focus has always been in the digital media space in general. However, it has only been relatively recently, with the explosion in mobile and web based games, that we have seen demand take off. I believe that our model is an excellent fit to game studios needs – with the ability to rapidly ramp up operations at short notice and with little commitment. We have a thriving game development community here in Ukraine, and it is important for any client to hire staff who closely match both their technical and social requirements.”