How Video Games revived Customer Engagement

The idea of this article came after reading a good article about the PC video game industry there from Chris Dixon. It gives plenty of information on how big the video game industry became, and on the freemium 2.0 that keeps the integrity of games. In this article I would like to focus on another aspect of those freemium 2.0: 
The incredible Customer relationship they have.

The growing video game industry

Global gaming revenues will grow by 9.4 percent year-over-year to reach $91.5 billion for 2015.

In comparison, the filmed entertainment revenue for 2015 was $88,3 billion, and surprisingly still got the public approval. It is totally acceptable today to follow the celebrities whereabouts but still kind of weird to watch an e-sport live stream on Twitch (or at least to publicly admit it).

I don’t want to be too extreme as the mainstream view of gaming is way better today than it was 15 years ago. But we are still far from the level of acceptance of Reality shows or TV shows.

“ The mainstream view of gaming has become less curmudgeonly in recent years–we no longer think of games as a horrible evil demon trying to corrupt our children” Jordan Shapiro

So, what do we got?

A bigger and faster growing industry whose only issue is social resistance. 
I do think it is only a matter of time before video games get the public blessing it deserves.

A good measure of the public interest generated by video games is the Tournaments price pools, and we cannot talk about pro gaming without talking about Starcraft.

Starcraft 1 set up the basics of professional gaming in South Korea since 2002. Then Starcraft 2 Wings of Liberty came out. The price pools quickly grow up and even if viewers did not scaled enough, professional gaming was a reality.

Data from Broodwar for 2005–2009 and Starcraft 2 from 2010

At the time Starcraft 2 came out, MOBAs were already on their way to take over the PC gaming industry.

In the case of DOTA 2, first price pools were already more than $1,5Mio in 2011 and are growing at an exponential rate as per the below, with a total of more than $18Mio for the 2015 edition of The International .

Below shows how this money was divided in 2015:

To put it in perspective, the total cash prize of the 2015 edition of The International is bigger than the total price pool of Men’s Event at Rolang-Garros tournament by $5Mio.

This exponential growth in price pools comes from the way they raise those sums; through their customers.

A new customer relationship

In DOTA 2 the price pools are mainly contributed by players and viewers, not rich advertising company, but by real people, taking their pocket money for the younger and salaries for the older to sponsor their favorite player, and ultimately, to improve the show. Please note I used the word “sponsor” because, even if they get « in game » items in exchange, the viewers do not actually need to pay to see the live stream or to play the game, but they contribute anyway, they want to support the game.

It’s like soccer game where players get paid by the fans… An unlikely event,or even a “Black Swan”.

The concept is simple, the game is free, and all technical features are free too, the MOBA model is a free to play but not a pay to win. Meaning that even without paying you can still master the game. The only things to buy are in game esthetic items to customize your characters, not make them better.

What happened in term of customer relationship:

  1. The company gives you an incredible game for free;
  2. You can win without paying;
  3. People love it, the company treat customers as thoughtful beings and not childish cash cows;
  4. As customers both trust and love the company, they pay to support the game:
     When DOTA 2 asked them to contribute to tournaments price pools, the reaction is not anymore:
     « Why should I pay, these guys already make a bunch of money » 
     « Yeah I’ll sponsor it because as price pools will increase, better players will be attracted by the game and the show will be better »

This is an incredible demonstration of how trust and transparency allowed gaming companies like Valve Corporation (editor of DOTA 2) and Riot Games (editor of League of Legends) to revive a customer relationship too often based on illusion and deception.

The most surprising is how this model scaled. Because sponsorship was already working for small non for profit organisation, but making this work for huge profit making corporation is groundbreaking.

The question is now how to learn from this and how to apply it to other industries?

Video game industry just taught us a valuable lesson about respecting customers and transparency; and what’s amazing is that people are still skeptical because for half of the population this is video games.

Skepticism of others is the opportunity.