GamesBeat: Authenticity And User Engagement Go A Long Way

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The GamesBeat 2015 conference, where executives and investors from today’s hottest companies discuss video gaming trends, wraps up today in San Francisco. Here are some of our biggest takeaways from this year’s event:

User Engagement Goes a Long Way

John Koetsier, vice president of research for VentureBeat, spoke about how user acquisition has changed so much over the past few years, based on this report.

With it, he explains the importance of user engagement, as a customer is much more vital than trying to get a casual user involved with a game. “There’s no point in acquiring users if you’re not going to engage them,” he explained. With the increasing cost of acquiring users, it’s important to have the right players on board, especially with mobile advertising reaching $70 million for this year alone.

Social channels, like Facebook and Twitter, can also play a part in reaching out to such an audience, as promotions can be made outside of more than just the routine channels. User-acquisition partners can go a long way as well, and timing also plays a part. Koetsier believes that the beginning and end of the year, January and December, can be incredibly competitive for mobile offerings.

Authenticity Plays a Big Part

It helps to be original and unique in this industry if you want to stand out. Authenticity goes a long way.

Twitch’s Greg Vederman and Coca-Cola Company’s Matt Wolf spoke on the subject, both with video game marketing expertise and the knowledge required in regards to finding the right outreach to audiences. Wolf spoke about the previous “game-a-thon” event that Coke hosted last year, which can help improve gaming experiences as a whole.

Creating games today is akin to social media, Wolf said. The two are inextricably linked. Because of that, people are communicating nonstop. Because people are constantly communicating, they are a lot more aware and savvy of what they re being presented. If you build things that are meaningful and have value [consumers can be] incredibly rewarding and loyal.

For Twitch, brands come to us looking for help with authenticity we will tell them the best way to do that for [our] community, Vederman said. There is a challenge that comes with this, though, as some firms don’t know how to approach Twitch and game streaming, despite its imminent success. As a result, certain compromises need to be made to bring a program to life.

Authenticity plays a part when it comes to a product’s image, especially considering the specific demand that comes from a gaming audience. You have to keep it real, according to Vederman. They re going to see through BS real fast, he said. They ve also been marketed to for a long time badly, so they re sensitive nobody wins if the brand brings something to the platform that the audience sort of cringes at.

But to see an idea connect with the audience is really something. To see a brand deliver really cool content in a way that s resonating with [consumers] when you see it and it s working, it excites the hell out of me,” he added.

A passion from creative types is necessary to see these products succeed, both agreed. It s got to come from a real place, says Wolf. Things need to be meaningful, or why are you doing what you re doing

India Can Do Better With Monetizing

With over a billion citizens, the gaming market for India is ripe with potential. Dhruva Interactive and GameTantra CEO Rajesh Rao explains that, especially with the country’s young population, it’s also ripe for massive success.

Part of that success lies in the mobile phone market, with over 100 million phones activated. “These are the building blocks of a market,” said Rao. “The first thing people want to do is try Facebook and WhatsApp but eventually they want to try out (more) games and apps.” The audience is expected to download a whopping nine billion apps this year, making it the second largest mobile ad market in the world.

This makes gaming more accessible as a whole. “When we were growing up, there was a perception that games were a waste of time today, with moms playing Candy Crush and FarmVille, they’re realizing that games are quite alright.”

But monetization is one area that could use a huge amount of focus. The lack of credit card usage for small transactions in part of this obstacle. “There isn’t very much credit card penetration (just 20 million credit cards). But we have about 400 million debit cards, but the majority are just used to withdrawing money from ATMs,” explained Rao. He expects more methods to be introduced in terms of generating e-Commerce.

We re seeing that people are playing. If the pricing was right, and there was less friction, there would be more conversions, Rao said. That s the thing to crack. If we see that change, I think the market size would improve very dramatically over the next eighteen months or so.

Many of the large companies are looking at India and saying, We are having fantastic numbers from here! But they re not monetizing. We just have monetization challenges right now.

More information on Rao’s panel can be found here.

Programmatic Video Continues To Grow

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Programmatic video advertising has become increasingly accepted across both mobile and desktop formats, and based on numbers provided by eMarketer, it’s not likely to slow down anytime soon.

The site’s latest report indicates that the format will continue to see growth, even if automation is playing a part in U.S. digital video ad spending. Both buyers and sellers see the advantages behind it, in an effort to reach out to general audiences.

The report, titled “Programmatic Video Advertising: Poised For Rapid Growth Despite ‘Premium’ Holdouts,” indicates that, based on a previous poll conducted by Digiday, over two-third of advertisers have already purchased some form of programmatic video.

Chart

The above chart ties in with those numbers, with Display channels getting the most attention by 85.6%. Following closely behind is Mobile (69.1%), Video (67.1%) and Social (49%). TV and Out-of-home also made the chart, albeit with considerably lower numbers.

Enthusiasm for the format remains at a critical level, but investment has a smaller interest compared to the general digital display market. The report indicates that 59% of the $26 billion being spent on U.S. digital display ads will be done through programmatic means for this year alone, while 39% of digital video ad dollars will go towards its spending.

This trend will grow. eMarketer estimates that by 2017, programmatic activity will reach about 65%, or $7.43 billion of the overall advertising market. The chart below shows a bigger breakdown of just where the growth will lie.

Chart 2

“When it comes to video, programmatic from an inventory perspective is very different,” said Rany Ng, product management director for display advertising at Google. “Just the sheer fact that there’s scarcity in the market creates different dynamics, so we’ve seen many of our broadcasters and programmers becoming much more comfortable with participating in private marketplaces and striking private deals than they are with the open option.”

Buyers still have issues with programmatic means, mainly due to the lack of premium inventory and ad quality issues, according to the report. They wish to see expansion of video ads across various formats, but wonder about issues like audience identification, measurement and targeting; all of which could get in the way.

Still, eMarketer believes that most of these will be alleviated over the next couple of years, with a triple-digit jump in programmatic video ad spending for this year alone, and an even bigger increase by 84.5% over 2016.

It’s still too early to tell where programmatic advertising will end up, but there’s definitely interest in it. More details on the report can be found here.

Facebook Doubles Down On Video, Tests New Video Experiences

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It’s no secret that Facebook’s video content has been doing incredibly well over the past few months, scoring higher ROI than YouTube and expanding with a greater mobile audience. Today, the social networking company explained how it will continue to increase its video services, particularly across mobile platforms.

VP of Product Management Will Cathcart wrote a detailed blog post that highlights the many new video features that will be coming to the service. The most prominent features include authentic and candid live videos, which have been supported by celebrities, in addition to picture-in-picture, which enables users to view smaller videos on their News Feed as they continue browsing posts.

Suggested Videos is currently being tested as an upcoming feature, which allows users to find multiple videos based on a subject found in the News Feed. Although it’s still in testing, results have been positive thus far, and could indicate that advertisers may be able to use it more extensively, as Star Wars and Discovery have done in the past.

As for the picture-in-picture feature, it ties in with the “floating video” option that Facebook introduced last July. “We all know that sometimes people want to watch a video, but they don’t have time or aren’t in a place where they can turn on sound,” states the Facebook blog post. “To make it easy to return to the videos you’re interested in, we’ve been testing a button that allows you to save a video to watch later, which can be accessed in your ‘Saved’ bookmark.”

There will also be a devoted section for videos on the mobile app, so that users can follow their friends and other video publishers with ease. This feature will also be rolled out to desktop users, since Facebook video is finding great exposure there.

Erik Schmitt, Social Strategist at Ayzenberg, states that  As Facebook becomes more and more video focused we re likely to see more and more brands shift to short-form video content to keep users engaged. Having a solid video strategy is becoming increasingly important. As a result, the impact on users will be evident.  This will change how people use Facebook and will likely keep them on the platform much longer.

The video above demonstrates some of these features in action, so be sure to check it out. It should definitely add a factor to Facebook’s continuing video success.

Machine Zone CEO Talks Brand Marketing, TV Ads

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At GamesBeat 2015, Dean Takahashi had a Mystery Guest scheduled for Monday, and it was a worthy guest indeed Gabe Leydon, CEO of Machine Zone, the creators of Game of War: Fire Age. That’s the mobile game that’s been consistently #2 or # in the top-grossing charts for both Android and iOS since soon after it appeared, and that’s generating enough revenue to put Machine Zone (according to rumor) nearing $1 billion in annual revenue. Not bad for a single game. Leydon spoke in a fireside chat with GamesBeat lead writer Dean Takahashi, providing a rare glimpse inside of Machine Zone.

“Your success comes from one game. How do you explain it ” Takahashi asked Leydon. “The game we wanted to make is incredibly complex,” Leydon said. “When we started building Game of War back in 2011, we wanted to build something that a whole global ecosystem could play together at the same time. We built it to be a very engaging, very complex experience, with tremendous amounts of concurrency and translation systems we built to support this global community. It’s an ultra-hardcore experience that was the exact opposite of what everybody else was doing, which was Apple-esque UI, simple, easy-to-understand experience. No one was thinking about games with thousands of options. If you look at the PC or console market they’re pretty much all like that. It’s close to something like EVE Online, it’s the largest single-shard game in the world ever it’s bigger than Second Life or EVE Online. It’s very, very hard to manage.”

“The back end is built on something we call real-time messaging,” continued Leydon.. “It’s not a typical game server. We’re able to process all the actions incredibly quickly. We can handle over a million players playing together at once, there’s no other game in the world that can do that. It’s very complicated experience and it’s very hard to run.”

Once you understand how complicated Game of War: Fire Age is behind the scenes, it’s easier to understand why Machine Zone just has one game right now. As Leydon put it when Takahashi asked him about this, “Why doesn’t someone just do four World of Warcrafts ” Leydon noted that Machine Zone is currently staffed at about 550 people, “and frankly we are understaffed, we could use more,” he said. Leydon noted that they are opening a facility in Las Vegas and plan on adding a couple of hundred people in customer support.

“In 2011 you predicted user acquisition costs were going to soar,” Takahashi said. “How do you look back on that prediction ” “It’s kind of obvious, Leydon replied. “There’s $40 billion or so spent on brand marketing digitally on desktop. Currently only about 15-20% of that has moved over to mobile. You’re going from these very large screens that can show maybe eight to ten ads at a time ads down to these very small screens that can show maybe two. So there’s a ton of congestion when that $40 billion moves from a very large screen size down to a small screen size. There’s all this money coming from brands going to the mobile space and it’s going to cause tremendous inflation on the CPM cost. It’s been ramping up more and more, and you’ll see a lot this Christmas. I think by 2017 the majority of the digital spend will be on mobile, and mobile phones can’t support that many impressions. There’s going to be a tremendous amount of money fighting over a much smaller impression pool.”

Leydon noted the top mobile games on the list haven’t changed much in the past few years. “If you look at top-grossing let’s say the top 25 most of the apps are from 2012, there’s a few from 2014. I don’t think there’s any from 2015, at least in the US. There are in Japan and China. Game of War was from 2013, but I think the majority of them were developed in 2011,” Leydon said. “What keeps it there is the rapidly increasing cost of distribution. The early guys probably aren’t get as much traffic as they used to, but they have enough traffic to maintain where they are.”

Takahashi asked how important TV ads have been to Game of War: Fire Age‘s success. “I’m a big fan of Asian free-to-play, and if you look at them there’s a lot of celebrities involved in the marketing of these games,” Leydon said. He went on to explain why they picked Kate Upton as their initial spokesperson. “We were focusing on American football, and so we picked someone who was a five-time Sports Illustrated cover model. If you watch football you probably know who she is. We went out thinking we were just going to market on American football, and that was it.” Leydon admitted that they did the TV advertising “mainly just to see what would happen we weren’t sure how any of it would go.”

“TV is very interesting, it’s really hard to get right but if you get it right it can work,” Leydon continued. “But it takes an orchestrated effort across TV and digital. You can’t just do TV, you have to be really good on the digital side to make it work.”

Leydon reflected on how much impact TV has culturally, even though digital reaches more people. “Machine Zone has been big in the digital ad space for a while. Even though we were blasting out ads, I don’t think the general public knew what Game of War was,” Leydon said. “But as soon as you go on TV, people think it’s a brand, it’s really weird. Even though digital is way, way bigger than television, there’s just something that happens as soon as you go on TV it becomes a very big deal.”

Skype Discusses Their Approach To The Twitch Audience

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Skype has been working to create turnkey ways for those who use Twitch to engage their fans more easily and professionally. We caught up with Skype at TwitchCon to discuss how they have been approaching the platform in this community-centric sense.

“The quality of Twitch streams these days is so high that people are doing anything they can to try and get their edge,” says Skype’s Adnan Jamil Mir. “We feel that allowing people to come into your show in a professional manner where a producer can actually control what happens to those callers is so important.”

GamesBeat 2015 For Marketers

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GamesBeat 2015 is bringing together many of the top executives in the game industry for two days of an expert look inside the hottest topics of the game industry. The theme this year is Game of Thrones, where the conference explores the shifting powers within the game industry. While there are plenty of sessions to attend, some will be of special interest to marketers. For those of you unable to attend in person, GamesBeat will have a Twitch livestream going throughout (see GamesBeat’s Twitch channel for the livestream). More than that, there will be a special GamesBeat Online, hosted by Gordon Bellamy, during the break times of the physical conference, featuring special guests.

There’s no one better than Wedbush Securities analyst Michael Pachter to open up the conference with a short overview of The State of the Game Business at 9:30. He’s not always right, but he’s never dull and he’ll have some interesting insights on where the game industry stands right now, which is something every game marketer should be tracking.

It’s obvious that eSports is a hot segment of the game industry, with rapid growth, multi-billion dollar prospects, and the involvement of major brands like Coca-Cola and American Express. So it shouldn’t be a surprise to see that GamesBeat has multiple sessions eSports, eSports: The Rise of the Giant (9:40 to 10:10 a.m.), a panel of VC experts explores the challenges and opportunities in this fast-growing industry. Later that morning (11:30 to 12:20) another panel of experts looks at what successful eSports companies have learned about hot to do it right, and how the business will grow in the future. Tuesday continues the eSports insights with a panel from 11:20 to 12:10 on The Emerging eSports Community, talking about Twitch streamers, pro gamers and YouTubers and how eSports is expanding around the world.

If you’re looking to find out some of the key strategies being used by the industry’s most successful companies, there are several talks with CEOs that will give you a rare glimpse inside the minds leading the way into the industry’s future. One such session is The Celebrity Strategy at 10:10 a.m. Monday, featuring CEO Niccolo De Masi of Glu Mobile. He’ll talk about the company’s partnerships with Kim Kardashian, Katy Perry, Kendall and Kylie Jenner, Nicki Minaj, Britney Spears, and Jason Statham a total of 650 million followers between them. What’s the future hold for this type of game, and where do celebrities fit into games and game marketing

For a different perspective, check out what Nexon CEO Owen Mahoney has to say at 2:00 p.m. on Monday about how Nexon has pioneered free-to-play games and how it continues to succeed, and how its strategy will tackle the future.

The consumer market for virtual reality (VR) is almost upon us, as major platforms begin shipping early next year. What lies ahead” GamesBeat has that covered. An expert panel led by Digi-Capital’s Tim Merel looks at this potential multi-billion dollar segment to see how soon it will get that big, beginning at 11:30 am Monday morning. Later on Monday (1:40 to 2:00 pm), Jason Rubin from Oculus will talk about how to create the best VR experiences. Bringing a very different perspective will be Magic Leap’s chief creative officer Graeme Devine, talking about creating games for mixed reality and perhaps shedding som light on just how Magic Leap is planning to revolutionize augmented reality (AR) and several different industries in the process. Peter Levin of Lionsgate Interactive will also address VR at 4:20 pm on Tuesday, disucssing how VR may well deepen the ties between Hollywood and gaming.

The session at 3:10 pm on Monday should be of special interest to marketers that’s where ex-Zynga SVP Mark Skaggs (who was instrumental in hit games like Command and Conquer and FarmVille) will discuss with this author just how to reach the widest possible audience, and the importance of how game design, marketing, and data science work together to make that happen.

For marketers looking to gain better understanding of international markets, there’s a session about Unlocking the Potential of the Next Billion Players at 10:20 on Tuesday, where Amit Khanduja of Reliance Entertainment discusses the fast-growing market for games in India. Then at 11:20 Tuesday on you’ll find International Expansion Cracking the Asian Markets, where expert panelists discuss China, Japan and South Korea.

Finally, there’s a look at The Supergeek Gaming Future at 1:50 pm on Tuesday, moderated by Chris Kohler of Wired. This will be a glimpse of what the future might hold with new technologies for gaming, and it promises to have some wild visions of what might be.

Zynga’s SponsoredPLAY Ushers In Gamified Ads

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Seeing ads in mobile games — particularly free-to-play ones— is pretty commonplace these days. But Zynga is about to take advertising one step further with the introduction of gamified ads. The popular mobile and social game company has introduced SponsoredPLAY, an advertising product for social games. With it, in-game brand integrations will be included in certain titles, without getting in the way of the game experiences themselves. The photo below shows some involvement of this, with a salad dressing being advertised in one of the company’s match-three titles.

Progressive Insurance SponsoredPLAY

With this program, Zynga hopes to offer players value in the game they are playing, in exchange for engaging with brand advertisers. But, again, it’s in a non-obtrusive way — and some of the advertising could be rather ingenious when it comes to in-game content.

“At Zynga we believe the next wave in mobile advertising will be SponsoredPLAY. Social games are one of the top entertainment activities consumers participate in on their mobile devices, and SponsoredPLAY offers a new way for brands to reward and engage users in game,” said Julie Shumaker, Vice President of Global Brand Sales, Zynga. “Our new SponsoredPLAY engagement ad products deliver advertisers significant brand lift by offering players content that is rewarding, additive to gameplay and improves the overall gaming experience.”

Some brands are already on board with the program, including Progressive Insurance. With it, gamified ad engagements will take place in a number of FarmVille games, including FarmVille: Harvest Swap, FarmVille 2: Country Escape and FarmVille 2, among others. Social aspects will play a big part with this project, with Twitter integration included so that the games can help “spread organic buzz and increase engagement,” according to the press release.

According to Zynga,SponsoredPLAY beta saw a double digit increase in player opt-in interactions compared to interstitial video ads, five to seven times the engagement of static ads and two to four times the average key brand health metrics like recall, purchase intent and more. In addition to this, Zynga has emphasized the social integration aspect and spoke with [a]listdaily about how brands are utilizing it.

“In some instances, like a recent Naked Juice campaign, players tweeted an image of fruits and vegetables from their FarmVille: Harvest Swap game board with the hashtag #100kcrops. This engagement was designed to raise awareness for Naked Juice and Wholesome Wave’s #100kcrops campaign. In other instances, we may leverage other social platforms such as Instagram or Facebook to drive meaningful social interactions between our players and brand partners,” said Shumaker.

When asked how Zynga approaches these SponsoredPLAY executions to retain the players’ experience of the game and authenticity, Shumaker went on to say that SponsoredPLAY engagements are developed in close partnership to Zynga’s game teams.

“The engagements are true extensions of our games, and leverage the game’s mechanics, design and overall look and feel to deliver an authentic player experience. For our players, SponsoredPLAY engagements feel like a new level in the game versus an interruptive ad — and in turn for engaging with these ads our players are rewarded with new content and sometimes in-game currency.”

“Zynga has had a long commitment to leveraging data and analytics to deliver the most personalized gaming experiences,” said Dr. Amy Gershkoff, Chief Data Officer, Zynga. “We’re seeing that use of data and analytics come to life with the launch of SponsoredPLAY, which enables us to deliver the most consumer-centric ad experience to players while helping brands meet the right consumers, in the right games at the right time.”

As gaming continues to shift toward a more mainstream market with mobile, non-gaming brands are beginning to see the value of of gamification.

“Mobile gaming is fast becoming the new TV. According to ComScore, in August the average consumer in the US spent more than 630 minutes a month playing mobile games. For brand partners, it’s clear that mobile gaming is now a favorite activity for consumers around the world,” said Shumaker. “For brands, it’s about having a meaningful presence in games where millions of people are playing, connecting and competing every day.”

ESL CEO Ralf Reichert On ESports’ Hot Button Issues

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Turtle Entertainment s ESL is the largest eSports league in the world today. Following its second successful event at Madison Square Garden, the company is expanding its focus on global stadium events through ESL One and increasing its U.S. footprint as it tries to keep up with the demands.

Flush with an $87 million investment for a 74 percent majority stake from Swedish media company Modern Times Group, Turtle Entertainment is focusing on its own growth as fans clamor for more eSports titles. Ralf Reichert Managing Director and CEO of Turtle Entertainment and ESL, addresses hot button issues that eSports faces as it evolves into a real sport in this exclusive interview.

How do you see the number of eSports titles expanding?

We have six or seven pro leagues for games like Halo, CS:GO, Dota 2, and Mortal Kombat and we re working with publisher partners to expand dramatically with new games like Guild Wars 2, which has had early success. We ve had success with PAX Prime and other game fairs. The demand in the U.S. is extremely high and we have trouble keeping up with that.

What are your thoughts on the large prize pools we’re seeing grab headlines like The International’s $18 million?

First and foremost, prize pools are one of the key pillars in eSports. People come to the stadium because we do a great show and great marketing around it, but it s because of the players. For them to make a living out of eSports and see this as a lucrative and engaging job is important. The big discussion is whether an $18 million prize pool is ten times more valuable than an $8 million prize pool. We re trying to build prize pools as fast as we can in the economy that we can afford it. We have the largest prize pools for Dota 2 outside of The International with $250,000, and with CS:GO we have a league with $500,000 and events with $250,000 prize pools. We want to be at the top of the league prize pools. While publishers like Valve can use in-game micro-transactions, we don t have that luxury. More generally, prize pools are a motivation for the players.

Can you talk about the revenue players earn outside of actual ESL One prize money?

Not only is there a prize pool for ESL One, every player gets a revenue share based on team logos sold as in-game autographs. At Katowice $1.5 million went to players, teams and organizers, and at Cologne over $2 million was paid out around that event.

How do you feel this type of revenue sharing will offset players forming a union?

There s always vying for shares in every major sport. That s part of eSports as well. But the way revenue is distributed is different, like the prize money and the sale of stickers. It s still something that we always need to keep an eye on, as organizers, to make sure is done fairly. A union will happen in eSports to some extent as well, but that s okay, it s part of every sport.

How do you see the drug testing policy evolving?

It will certainly become the standard in ESL One and Intel Extreme Masters events, but we haven’t thought about the national championships yet. It s undeniable that eventually it will come down to all events, it s just how quickly we will do it.

What have you learned from traditional sports drug testing?

We have a couple of advantages. Drug testing is a science/process that has been developed over the last 20 or 30 years. In eSports you have to be very adaptable. We really embrace this flexibility. Other more traditional sports organizations are usually run by older people. We have younger people who can adapt fast. We ve seen other organizations really go down with this. We know the risk it has if doping is perceived as being okay by an organization, or even worse if the organization, itself, somehow tries to cover it up. We want to have a very transparent fast and aggressive approach so it never becomes a problem before it spreads.

What s the reaction been like from game publishers and other leagues?

From the publisher side, there s been a lot of support for doing this. From other organizations, I’d assume they re working on their own programs.

We just work with the official agencies. We look at it as a general sport-wide approach to drug testing.

Are you surprised by the amount of mainstream testing the Counter-Strike: Global Offensive Adderall story received?

We re surprised by the amount of feedback. For us, doping is a negative story because it s something that shouldn t happen. But when we started going to stadiums, we had a lot of press around finally saying, Oh, this seems to be a sport. The doping stuff had a negative effect, but as we dealt with it in a transparent way, those same people are saying, Now it s really a sport. It s been extremely well received across the board, and it s good for the sport that we attempted to address the issue before it became a problem.

What are your thoughts on Unikrn and betting in eSports?

Globally, there are very different legislations around betting. In the UK it s socially accepted, but in the U.S. and Germany it s the opposite — it s close to being criminalized. Other sports work with large betting data companies for fraud detection and finding out if match fixing is happening. From a beta approach, we re looking into that. As far as partnering, if we did a UK event locally, that would be a natural piece of companies we work with on a sponsorship and business to business perspective. But in Germany or the U.S., that s not something that would happen. When it comes to a fraud detection system, we have a global approach we need to take care of.

How has ESL approached Fantasy ESports?

For the non-paid fantasy scene, ESL has a product (Fantasy.eslgaming.com) there which is fairly successful. It engages more users and creates an additional story line to a tournament. In the U.S. paid fantasy is huge around the NBA and NFL and we re working with all of the providers to offer a good product to our consumers. In other markets like Germany, paid fantasy is not an accepted sport. We don t have an interest in paid fantasy; we partner with others there.