Talking marketing in the video games industry
With Eric Folliot, European Marketing Director for Square Enix
My partner, Jennifer Clinehens, and I have a podcast called ‘Everybody hates your brand’. We discuss everything from CRM to Customer experience to Brand to Behavioural Science. We also interview some great guests and we wanted to turn them into articles to increase their accessibility.
In our most downloaded podcast (which you can listen to here), we chat with Eric Folliot, European Marketing Director for video game publisher Square Enix. They publish some of the biggest game franchises in the world: Final Fantasy, Tomb Raider and most recently, the new Avengers game.
Video games as an industry is fascinating because it is massive in cultural and revenue terms is constantly evolving but is weirdly under-looked for its scale. It’s almost like it’s an enormous underground industry.
We covered four topics:
- video games as a service rather than a product and the impact on marketing
- the advent of video game streamers and their use as a marketing channel
- the growth of eSports and its use as a marketing channel
- changes in payment and distribution models like Microsoft Game Pass
Rob: The idea used to be you bought a complete game on a disk or a tape or a cartridge, popped it into your device that was not connected to the internet and you played single-player or local co-op with a mate.
Obviously, times are changing. We’ve had Massively Multiplayer online games like World of Warcraft for a while but recently there’s been an increase in this idea of games as a service. Games like Destiny, your own Avengers title, Fortnite, Call of Duty: Warzone. They’re extending into an ongoing service where they’re trying to maintain player bases, using microtransactions and new content to generate revenue. Given that shift, how does that impact how you market a game? Is it now more about acquiring a customer rather than just buying a box like it used to be?
Eric: I think it’s changed things to a certain extent. There is still the reality that you need that big week one, blockbuster launch. You still need that because that fundamentally drives a huge amount of revenue. And very much like movies and the opening box office weekends, it’s the thing that sort of sets you out into the world and it makes you either noticed by consumers or talked about. You are the thing of the moment.
So you do need that, but I think obviously the lifecycle of the product has changed. So it used to be launch, you have a moment of glory for four to six weeks depending on the competitive landscape, and then other titles come in and obviously start the dominate the charts.
Whereas now I think you get this longer product cycle, and it obviously impacts how you look at things, how you plan campaigns. You might not front-load it quite as much in terms of spend, for example. We get an influx of consumers straight away week one, but how do you then sustain that engagement, and how do you keep bringing in new players? Because unfortunately, it’s a bit like a leaky bucket, people get distracted and drop out and so you have to bring them back and keep bringing new players in to keep filling that bucket. So yeah, I think from our perspective it's changed the game
Rob: Nice pun. Do you find that you’ve had to invest more in certain areas like CRM to engage that player base going forward?
Eric: Definitely, I think there’s just an increased willingness to do more with your own channels and recruit payers to sign up and give their emails. So you can have newsletters, you can keep that connection to them, keep them up to date with the game and also try and form as much as you can a long-term relationship with that player.
So you understand how they interact with the game, what they spend their money on, what they spend time doing, how many friends they’ve got, how they can actually influence those friends, and you incentivize that.
You want to grow all your social channels to make sure that you have an impact when you’ve got an announcement or new assets to share. That reduces the pressure on media.
There’s a huge evolution in terms of back-end systems in games which allow you to segment your audiences and understand a lot more detail about their behaviours.
Rob: I remember going over to the Activision Santa Monica office and seeing some of the data that was coming from the Call of Duty servers. It’s absolutely phenomenal.
I imagine that’s led to an investment in data science and analytics to make sense of that?
Eric: Yeah, and actually the more you can analyze it, the better the quality of it right? It’s all well and good having lots of data it’s then what do you do with it that really matters?
That’s the biggest challenge because it’s resource-heavy. It would be interesting to see what happens with AI and whether AI can help in that sense of seeing those patterns earlier and more accurately say. I don’t think we’re there yet, but the next evolution is how we use AI to do that.
Rob: Has this evolution changed how you measure success? Historically I imagine it would be based on units sold — are you now looking at KPIs like active customer base size and revenue per user and those things?
Eric: Yeah, we do talk about retention rate, and we talk about churn, and we talk about the stickiness of the game fundamentally, and what’s working, what’s not. Identifying game modes that are more popular than others, trying to understand why and therefore can we do more with that information and create more stickiness and more monetization.
It’s about understanding patterns in behaviour that suggests that this player has spent a number of hours playing, are they now about to monetize or are they not? That’s probably the biggest thing — to try and get somebody who isn’t monetizing to monetize from the first time.
Rob: Moving on, there are a couple of new marketing opportunities out there that weren’t 10 years ago. One of those is video game streamers.
For people who aren’t necessarily in the video game industry, streaming involves watching somebody play a video game with a community there. So there’s a live chat, the streamers talking to the chat. Usually, they run on platforms like YouTube and Twitch.
What do you see as the role of streamers? Are they awareness drivers? Do you see them as affiliates? And is it something that from a budget perspective, you have diverted spend into from something else? Or is it something that you have added on top of your budget?
Eric: I think it’s all of the things you’ve said. It’s definitely eyeballs on the product which is fantastic from an awareness perspective. I think it is a key part of your initial launch campaign, but also post-launch, in terms of new content.
What you hope is that the streamers become fans of your game and do so organically. Not every game has that luxury of being a Fortnite or a Call of duty where streamers do it because they get an audience.
Streamers derive revenue from their streams, and not every game can bring that audience, so in some instances, you are required to pay for streamers. The interesting debate in the industry is, do you pay for one person who has a million viewers, or pay a thousand people who have a thousand viewers and do you get the same results?
And I think you get a little bit of both, right? You do the big streamers because you get the stature and they bring other streamers with them.
Rob: There’s a copy cat effect.
Eric: Yeah, totally. A game has that moment in time when the spotlight of the whole industry and community is on it. So you invest knowing that it will have ripple effects within the streaming community. So that’s kind of the first part of it — an awareness thing.
Then there is that kind of the idea that they are also taste-makers and influencers. People see the streamers as the friend in the playground that knows everything about video games. So if they are streaming it, if they are talking about it, if they are commenting on it on Twitter, Instagram, whatever, then you can tap into that and you almost get credibility from that influencer or streamer talking about your game.
So I would say they’re the two things we use them for — both as influencers and awareness drivers.
The second part of your question is about the financial impact of that and yes, if you’ve got to pay for it, you do have to reduce budgets elsewhere. I would say what you might call traditional channels have probably be reduced — the likes of television, out-of-home, cinema, certainly press and radio maybe to more of an extent.
If that’s where our consumer eyeballs are, what they’re paying attention to, then we would definitely invest more with streaming. Whether that’s pre-roll advertising or encouraging streamers to stream your game through various rewards.
Rob: It’s an interesting question from a branding perspective because if you’re a brand you don’t know necessarily what they’re gonna say…
Eric: Yeah. And there is always that risk. And I think you have to be very careful, and I think we are quite sensible and pick streamers that we know and trust. They kind of understand the commercial aspect of the relationship, I would say.
I’ve been to several meetings with brands that are not necessarily to do with video games because of various partnerships we had, and I was surprised by the number of people who don’t know what Twitch is. For a lot of those brands that are youth-orientated they’re just not aware of this huge world and how they can interact with it.
Rob: I find it extraordinary that you’re hearing that people don’t know what Twitch is or even what streaming is. And when you explain it you get a quizzical look and the question: “What people and watch people play video games?”
Eric: I have to say I was a bit like that - Why on earth would you watch somebody play a video game when you can be playing yourself? It just didn’t make any sense to me and then I found myself watching people play Call of Duty Warzone. So when I couldn’t play, I was watching other people play.
Rob: It’s a community thing and a personality thing. There’s also an element of expertise. I think it’s an under-used channel outside of video games.
Another new channel or a new potential opportunity is the growth of eSports. eSports has been around for a while now. I remember back in the day thousands of people in South Korea sitting and watching Starcraft tournaments. But even more now, whether it’s games like Overwatch, League of Legends, COD, Fortnite. During lockdown, you had actual F1 drivers competing with streamers and I think BBC is gonna show the Rocket League championship, which is extraordinary.
It’s not quite as relevant to your current company just in terms of the brands, the franchises that you sell, but going back more to your Call of Duty days, what is the role of e-sports as a marketing opportunity?
Eric: It’s an interesting one. I think it remains relatively niche. It really is the most hardcore players, the very top end of the Call of Duty community. I’ll caveat that this was a while ago in terms of when I worked on it.
But it remains for me, just an incredible spectacle. Being at a live e-sports event is an incredible buzz. I think that there’s a lot to be said for it to broaden, and they have definitely made huge inroads.
For me, it’s a bit like watching football. You watch a professional footballer and you’re like, “Oh my God, that first touch is incredible. How do they do that?” And you watch Call of Duty eSports, and honestly, you’re not quite sure how they can see what they see, even with all the broadcasting tools that they have!
From a marketing perspective, I think it’s about creating a broadcast event. There’s something to be said for drawing eyeballs to eSports and seeing the pinnacle of your game being played by the very best players. It is pretty powerful for normal consumers to try and emulate those styles and the way they played.
For me, it just hasn’t quite broken through. Yes, the numbers are extraordinary. Millions of millions of dollars, from acquiring a team to paying the players to prize pools. I just don’t quite think it’s broken into the mainstream. I think it still has to do some things better in order to do that.
Rob: What do you think is missing?
Eric: A combination of things. I think establishing the stars hasn’t really happened. I always think, and again, this is my experience on Call of Duty, there is a level of immaturity from players in terms of social media. I don’t think they’re getting the chaperoning they could be getting from teams to create personalities that are aware of brands that they represent.
The other aspect is you’re not necessarily getting the non-endemic brands getting involved. So, Coca-Cola has spent some money around League of Legends. I think Red Bull is obviously trying to play a part as well.
But I feel like there’s a lot of brands out there that haven’t really grasped the opportunity that eSports brings and therefore the financial influx, and therefore the eyeballs and the broadcasting haven’t quite broken out into the mainstream.
Rob: I think you’re absolutely right. I think there are a few other things that stand out in my mind.
There’s fragmentation essentially. So whether you’re going to the EVO tournament to watch StreetFighter or fighting games, or you’re watching League legends or Call of Duty or Overwatch, people lump them together into one thing. But in a sense, they’re individual sports.
In addition, in other sports like football, you have the pyramid system — teams move up and down the League system. What is grassroots eSports? You have Belong arenas in the UK and Spain, which are basically places where you can go and play video games on top-spec kit. The idea is that each arena has its own team and they compete. I think there’s an element of building up almost that pyramid pathway.
How can I get from being a grassroots playing here up to those big events that you’re talking about, and I think there’s a function the professionalism that ties into that. Like professional scouts.
Eric: Yeah, I don’t know how that happens apart from if they are streaming on YouTube or Twitch.
You also talked about fragmentation. You watch the games you play yourself right? I don’t watch Fortnite, I don’t play Fortnite, I have zero interest in it. And that fragments the audience across a lot more things than say a traditional sport does where football dominates, but really you’re talking about five or six sports per country, that are probably big enough for an audience.
Rob: You mentioned Fortnite and I think it’s a fascinating case study. We’ve talked about streaming, we’ve talked about games as a service, and we talked about esports, and Fortnite has kind of been at the forefront of all those things.
I was reading something from a chap called Bob Hoffman. He’s an old creative director called @AdContrarian on Twitter. He was saying that he struggles to believe that personalised digital advertising, programmatic, that kind of stuff can build a brand.
His argument is that to build a brand, you need collective experiences that you talk to each other about — the classic being a Superbowl ad spot. Everyone’s looking at the same ad, everyone’s seeing the same thing, everyone is talking about the same creative execution, and as TV starts to… Its not dead but as it starts to become less viable, you lose that collective consciousness.
But I look at someone like Travis Scott, who did a concert on Fortnite. That’s really interesting to brands, because you have millions of like-minded people, tuning in to that event. A single collective consciousness watching one thing and that’s a really interesting opportunity.
Eric: I’ll go back to something we talked about when I worked on Destiny. About Destiny as being this third place. The first place is your home, the second place being where you work and your third place being where you socialize, whether that’s a coffee shop, a bar, a pub or whatever.
And Fortnite and Destiny as well, they become a social space. So the game is almost immaterial to the interaction. You’re actually online with your headset on, chatting to your friends in the background. You’re playing a video game that happens to be Fortnite or Destiny or whatever that might be.
So I think that’s where games as a service, going back to your first question, that’s what they’re transitioning into. I would argue Fortnite is becoming a marketing platform for personalities and brands because it’s one of the biggest games in the world and millions and millions of people play it.
Rob: So we’ll kind of move on to the last thing that I want to talk about, which is payment and distribution models. Back in the day, it used to be: “I’d like, this game, please game retailer.” and that would be 40 quid. Thank you very much.
Now there are different mechanics, things like Microsoft Game Pass, where you pay a monthly fee and you can download games from an extensive library including new Xbox first-party titles that appear on their launch date. PlayStation has its own version — PlayStation Now.
Square Enix have games on Game Pass. So where does that fit into your pricing mechanics, distribution mechanics? What’s it a good tool for?
Eric: Unless you are a first-party title, I would say it’s almost an end of lifecycle thing for us. It could be twelve months post-release, you might think “Okay, well, let’s put it into Game Pass. Let’s introduce it to a whole new audience that maybe hasn’t bought into it.”
When you go on to Game Pass, Xbox will throw a lot of marketing dollars at it, and obviously, help to raise the awareness of the game. So again, it’s about bringing new eyeballs to it, and effectively it becomes a sampling exercise of “Hey, I didn’t wanna spend the 40 pounds upfront fee. Now, I’d like to try it” It’s almost a sampling or trial mechanic for us, and then people who really enjoy a game might then convert and buy it for themselves so they can keep it.
There are other models where the game is in and out, and it’s not always accessible, so people then can decide “Well I’m gonna buy it before it goes off and I’m gonna invest in it.”
Rob: There’s a Behavioural Science principle called the anchoring effect — essentially if you put a number in somebody’s mind it’ll affect then everything else from that point. So let me give an example.
I’ve been on Game Pass for a long time and I haven’t bought a full-price game in a very long time because my brain is now anchored around the price point of £10 a month. It’s anchored around a lower number in my head than £70 for a new release.
All of a sudden a £70 game looks not just expensive relative to the previous generation, but it looks expensive versus something like Game Pass, which is a monthly fee. Is that something that you see in research or is that something that you guys worry about?
Eric: Errrr, now I do. Now, you’ve mentioned it.
Obviously, Xbox first-party titles, go on Game Pass — absolutely makes sense for them. That’s how they sell the service, they can drive their IP, and obviously, that helps. They want to monetize, they want people to commit to a service similar to Netflix or whatever.
But I think it’ll be interesting to see what happens when more and more games go that way, and more and more publishers go that way. And we saw Microsoft purchasing Bethesda that some of those titles will become exclusive to Xbox.
For Xbox, it's also about selling hardware and getting loyalty by saying: “Look at the IP, we have this exclusive to us. Come and join in.” And I think you’re right, if you have an Xbox, the Game Pass represents incredible value.
Rob: If you look at Mulan on Disney+ which was like 15- 20 quid additional cost, the problem there is people aren’t anchoring it against the cost of going to the cinema, they are anchoring it against their monthly Disney+ price.
Eric: For me, I anchored it against going to the cinema, and I actually have found it incredibly good value.
Rob: I wonder though if that’s because you’re in the entertainment industry to some degree? Because you’re missing out on that whole cinema experience, you’ve not got this surround sound and the sticky seats and the food, the popcorn and all that sort of stuff. It’s just something that kind of was playing in my brain when you look at monthly fees versus here’s £70 to shell out.
Eric: Yeah but I like to think there’s still the event side of it though. If it’s not available on that subscription service then I do think people will go: “Actually, I want that title and I want it now because I don’t wanna miss out on the first month, two months, however many months before it comes on to the service”. Netflix hasn’t killed off the cinema industry, right? People still want that big first weekend. See it first.
Rob: That event thing though, is what I’m missing when I’m looking at that price point from a Mulan perspective.
Anyway, thank you very much for coming on the podcast. It’s just a fun industry, and I think it’s changing so much, and I think there’s so much opportunity in it as an industry within itself, but also for other brands to get involved, and I think that’s kind of why I miss it. There’s a dynamism to it.
Eric: Yeah, I think it’s relatively young. I think the fans are passionate and want to engage in the conversation. You very rarely get that level of feedback on your brand, and I think that makes it unique.
I am a Senior Marketing Consultant with nearly 20 years of experience across both the client and agency side. I have applied my knowledge across brands as diverse as Vodafone, McDonald’s, Volkswagen, Westpac, and GAME.
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