A Game For Your Every (and Darkest) Desires: The Rise of Long Tale

This article is about niches. Why? It all started when I wrote this. Basically, all it said was that DLC should be all-pervasive, for although it is not the most inclusive distribution model there is, it certainly makes more sense than the dominant model. When we talk about inclusive distribution models, we are basically talking about including niches, or rather targetting specific segments of the market, with specific desires – the desire of riding a horse with shining armor, for instance – that weren’t being targetted before exactly because their tastes were so peculiar of their own.

But then I discovered I actually wrote about the coming of the Ragnarok.

Well, apart from destroying society as we know it, I actually spent time looking through the responses the article got. Many were concerned with the thought of publishers using the powers of DLC for evil (because evil they are, right?), littering the videogame market with unsellable crap or breaking up games to the point where buying a single DLC wouldn’t make any sense anymore as the DLC would be so fragmented it wouldn’t work on its own. Those all seemed like some of the very worst business decisions for any executive to make. I mean, where would your revenue come from if the stuff you sold was unsellable? Sure, they can be evil, but do they have to be dumb as well? Others cared more about which power sentence they could use. “Fragmentation singularity” was my favorite as it united an oxymoron with such coolness that the sentence could be also be used for superpowers.

The general feeling that I got, apart from people not fully understanding what a commodity is (Look it up people! Commoditization only occurs when you start buying a certain good based on price alone!), is a disturbing misconception that designing for niches is equivalent to breaking up and diluting a game. This couldn’t be farther from the truth. In fact, nichelization – or, to use its official name, the Long Tail Effect – implies the very opposite of “breaking up a game”. It implies a complete understanding between developer and audience.

Before the Long Tail could exist, the name of the game was different. Those were the days of the Pareto principle, the rule that states that 80% of the effect comes from 20% of the causes. In other words, you sold more of less. From all the games you released, you knew only the AAA titles were expected turn into a profit. Everything that sold less than one million copies was considered a failure. The only reason they invested in other games was to build them up so that, one day, they could become AAA titles as well. And what was the AAA game? It was that same game that was a hit last summer, only with a few extra trinkets. That sequel that plays as The Same Game Again, that tells that Same Story But With A Different McGuffin, about that same hero archetype with the same clichéd characters.

Those were not achieved by accident, by the way. As the years went by, publishers were able to refine exactly what kind of game made a profit and replicate those characteristics through their entire catalog. And it was not like the developer could interfere. In the game industry, the developer’s name does not sell games, which means less bargaining power for him. Besides, even if he could have a say-so in the matter, who would believe he actually knew his audience? Until the last decade, both developers and publishers didn’t deal with the consumer. They dealt with other companies. The developing company had to deal with the publishing company so they could get money and start making their game. Meanwhile, the publisher had to deal with the large retail companies for them to place enough orders, so that the games could start being produced and distributed. The marketing department didn’t speak to the consumer either, simply because they lacked the tools to do so. What they usually did was look at the past performance, never to the future, and adjust the market’s expectation by positioning the game where it could attract the biggest number of people – i.e. the Greatest Common Denominator.

And who spoke to the customer? Well, the cashier or perhaps the manager at the retail store and certainly the guy who read your letters from that famous game magazine.

Those AAA are still products of a niche market, by the way. The term niche does not imply a smaller group of people with perhaps obscure tastes. A niche is any subset of a market with enough characteristics of their own that they can be targeted for a given product. The AAA niche is just the biggest niche, the mainstream, composed by the majority of people willing to pay 60 bucks for a game with certain characteristics. The Long Tail Effect arises when the other niches start to gain importance – maybe because they have just become targetable, maybe because only now they believe there is a product meant for them, maybe because they have just formed.

The term “long tail” comes from a demand frequency distribution curve. The head of the curve is pure Pareto talking: the first 20% of the items with the highest frequency account for the majority of the curve.  As the distribution skews to the right – that is, as the smaller niches begin to matter more – the tail of the curve, the least-frequently-occurring 80%, will gain importance and the 20% most frequently-occurring items will represent less and less of the total population. Notice that, in the graph below, the areas of both regions match, meaning that the total revenue of the first 20% is the same as the total revenue of the remaining 80%.

It also helps that products for smaller niches usually can be developed with less resources (time, money).

Feel free to blame the internet for all that.
There were 3 things the internet did that changed business forever:

1. It annihilated distribution costs and any physical limit that could otherwise prevent your game from selling, like limited shelf space;
2. It created a direct bridge between the industry and the consumer, thus allowing not just the developer, but also the publisher, the analyst, the project coordinator, the marketing guy, the intern, the retailer and all their moms to ask the consumer directly what they want – as well as brand their own names through social media, thus breaking the vicious circle where only the name of the publisher and the console for which the game was made were known.
3. It utterly shattered that fickle concept of mainstream into a bazillion different cultural shards. Each one a niche. Each one a market of opportunities.

Right now, we look at ancient TV shows like Father Knows Best or The Ed Sullivan Show and wonder why don’t we all watch the same TV shows, like we used to? In the future, we will look at Call of Duty or GTV and say the very same thing. The end of this era, when stores would only bother with best sellers, is nigh. The revenues of games as boxed products peaked in 2008 and it doesn’t seem they will rise again anytime soon.

A game for the largest niche we have right now - the one craving for cinematic shooters with online matches

Other business, like Rhapsody, Netflix and Amazon.com have long caught wind of this, as reported by Wired.com; for them the revenues of the long tail already surpassing the revenue of the head of the curve. Allegedly, an Amazon employee once described the Long Tail as follows: “We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday.”

On the internet, you are only limited to your own marketing abilities and how well you know what your consumer wants. As the cost of reaching the consumers plummeted, the one-size-fits-all model of mass appeal was no longer necessary. Our tastes are so unique and varied; one could make a huge profit just by rethinking where their markets hide and how to get to them. This is the essence of the Long Tail Effect: the future of business is selling less of more, and not more of less. As developers get better at tracking their markets and searching/recommendation tools become smarter, otherwise obscure products will be less likely to have their development denied by publishers because, who knew?, those can also be profitable.

A game for a very restricted niche: people who own a guitar AND wants to learn how to play it

Sure, some bottlenecks will still persist, limiting our power of choice and causing fewer alternatives to compete for our attention: the consoles themselves being the biggest shackle of them all, but also including different languages and geographic region codes. Still, the changes are already accelerating. When you see a console being backwards compatible or selling copies of older games in their virtual store, that is the Long Tail. When you see peer, niche and independent production soaring, that is the Long Tail. When you see on-demand games, that is the Long Tail. As more and more games become customizable via DLC, that is also the Long Tail.

When I say everything should be DLC, that gamers should no longer need all to pay the same amount for a game, a common criticism I’ve received was that this would take the power away from developers and, between the gamer and the publisher, the publisher’s bargaining power would somehow force the gamer to only choose between shovelware, games which huge, relevant chunks missing and expensive, but useless, crap.

A game for an ever expanding niche - people who want "play whenever you want" doses of exciting gulp gameplay. Cost of production: one weekend.

However, this criticism is only valid under the mainstream market model, where gamers have fewer alternatives to choose from. Under the niche market model, a less commercial game, produced with smaller budgets, could achieve profitability and critical success as long as it finds an identifiable market.  That’s why the criticism above cannot happen in this scenario. After all, if you mistreat or miscomprehend your niche, offering things the niche doesn’t want, that product won’t be sold.

In the online world, every client is different. They are willing to pay different prices for different things. If publishers are willing to talk, but not to listen, they will be left talking alone.

Edit: Long tail chart now contains stuff written on it!