Written by Duane Bedard, CEO/President of eSage Group
While EA has been focusing on high end content, quality graphics, and celebrity actors/voices to make games, they have been consistently losing money and market share for several years. Even Microsoft’s venerable Xbox franchise, although in much better shape, recently missed revenue targets and put out guidance that growth would be less going forward.
Meanwhile, social gaming companies like Zynga continue to see rapid growth and much higher profit margins with their much less content rich, but socially enabled games. While there are lots of differences in the business models of both, one factor looms large to differentiate the two companies. Zynga use predictive analytics, machine learning and other sophisticated business intelligence techniques to drive new users and improve existing user’s experiences in order to quickly evolve. The rapid improvement in usability of “Big Data” tools in the last few years has allowed front runners in the space to make better business decisions, both strategic and tactical, based on real information, leading to market dominance. This is particularly true in the gaming space where Big Data tools have enabled the analysis of the large streams of data that are available from each gaming experience, and the social networks of players.
Established players in the gaming space have been slow to adopt these practices and they are paying the price as newcomers gobble up market share. EA is working hard to catch up with a big investment in big data analytics capability and acquisitions like their recent purchase of Popcap Games with its popular portfolio of socially enabled, more simple games. Is it too late for EA? That all depends on how quickly they can shift their ingrained culture to embrace data driven decision making. If they can pull it off, a combination of sophisticated analytics capability and high end content development might just give them the edge. Making content king and data queen might just be winning strategy. History shows that kind of culture shift is very difficult to do, stay tuned!
Meanwhile the lesson for other content rich, entrenched players such as movie and music producers is clear. Protect your market share now with serious investments in data analytics capability, particularly in the rapidly evolving big data space that allowed sophisticated analysis of huge data sets that are the norm in online and social offerings. If they don’t, it is only a matter of time before a scrappy startup with that strategic advantage steals your market.