Video Games by the Numbers

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How are companies in the video game industry using data about player preferences to inform their strategies? At an interesting panel at the third annual MIT Sloan Business in Gaming conference earlier this month, representatives of game companies discussed the way their companies are using analytics to inform their business decision making. 

What are some of the statistics these game companies look at? Here are a few highlights of some panelists’ comments on that subject:

  • “Probably the most important metric for us is months of engagement,” with a game, said Dan Kim, CEO of Nexon North America, publisher of games such as MapleStory and Dungeon Fighter Online.  Other key metrics for Nexon, he said, are average revenue per user, the number of millions of players playing a game and the conversion rate from nonpaying to paying users.
  • From the perspective of start-ups creating social games, a key metric is K-factor — a measure of growth through viral contagion, explained Doug Levin, founder and CEO of Ayeah Games, a start-up that has created a Facebook game called FanSwarm. Venture capitalists fixate on K-factor, and in some parts of the country, especially California, there’s a “maniacal focus” on it, according to Levin.The reason for the interest in K-factor, he added, is that viral growth decreases the cost of acquisition of customers.
  • At Harmonix Music Systems, whose games include Rock Band and Dance Central, the company monitors attach rates at various points, explained Chris Rigopolus, Harmonix VP of strategy and business development.The chain of attach rates, Rigopulos explained, starts with sales of game consoles and of Harmonix software — but also extends to how many of the people who have Harmonix disks download free online content from the company — and how many then will pay for content online.”You can look at every single one of those attach rates and figure out if there’s something tactical you can do to increase those attach rates,” Rigopulos observed.
  • Interestingly, there can be seasonal variations to the video game industry.  With many students playing its games, Nexon sees peaks in usage during their vacation times, Kim explained.

However, while the numbers are important, there’s more to the game industry than analytics.  As much as analytics has helped the gaming industry figure out what works, ultimately, it’s the game content the drives the traffic, Kim observed.

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Comment (1)
fernando manzano
Even if he is right and “It is ultimately about the content” I wonder how much performance (profit by default) could video games industry gets using strategies based on mathematical modelling . I mean Dynamic Decision Systems and no just average statistic. Dynamic modelling of operations and markets is what is making a different between intuitive decisions (changeable results) and strategic decisions (constant results).