If you think the gaming industry is represented by the somewhat pathetic image of a 35-year-old male playing Age of Empires in his mother’s basement, you are sorely mistaken, because gaming is so much more than that.
In fact, this $78.61 billion industry is a poster child for modern engineering, typically adopting new technologies before other sectors do and showing itself to be one of today's most successful industries when it comes to understanding its customers (who, yes, are typically 35-year-old men).
Indeed, gaming is a technology powerhouse constantly investing in more and more powerful machines and infrastructure. That investment has created a global ecosystem of gamers and communities responsible for generating for this sector more earnings than either movies or music.
So, what does the future hold for gaming? “Strong growth will continue as more online casinos open in China and other Asian countries," predicts NewZoo, an online games market research group. "Established markets have reached maturity and have less room for revenue growth, [meaning that] new markets will open up and increase access to gaming activities.”
Today's gaming industry, in short, is still managing to grow those margins by getting smart with data. And while big data in gaming has been around for years, only recently have AI-powered SaaS platforms been able to achieve user-focused behavioral analysis.
The next phase of gaming software advancements, then, will likely rely heavily on integrating behavioral analytics to understand gamers’ tendencies and preferences. Games empowered with that kind of information can be calibrated in real time to hold user attention, increase purchases and grow the bottom line, all of which are tactics I've covered on my podcast.
The goal of behavioral analytics is to identify what behaviors cause what actions. What steps did the user take before he or she made an in-app purchase? Was there a point in the game that turned the user off or caused a loss in interest? How long will a user play without winning before he or she quits?
This type of path analysis, attached to a time frame, is allowing game marketers to create better user experiences.
“Today’s current measure of KPIs in gaming are only the headlines about your players," Dan Schoenbaum, CEO of Cooladata, a behavioral analytics platform for online gaming, said on my podcast. "The people who manage games today already need to leverage behavioral analytics. They experience a large number of players who play on free, so the ability to convert them to a paying player is huge. If you understand user behavior, you can drive up retention, which is absolutely crucial.”
Optimization for retention
Game-developers don’t just want someone to download or play their game once; they want the game played again, and again, and again. Long-term engagement creates loyalty, and that is the best way to gain a competitive edge.
To achieve long-term engagement, analytics and tools must be in place to measure player engagement over a period of days, weeks or other time period; they must also be accessible and easy to understand.
Schoenbaum recommends looking at user behavior through the lens of product optimization: “Following user paths, combined with specific time frames, allows game managers to glean new insights for different players, optimize their path and increase conversion rates,” Schoenbaum told me.
Predicting, to be proactive
At this point, gaming companies' data warehouses and customer databases contain a wealth of data. Not only is that data valuable for analyzing past user behavior, but it's valuable for game marketers, to shine a light on consumer patterns. Insights like these indicate who will purchase again, how much they'll spend and the churn rate for those customers overall.
A recent illustration of the future of predictive analytics comes from the partnership between Zodiac, a cloud-based software platform provider, and Tophouse Media, a digital media company. A match-up like theirs aims to bring predictive analytics to game marketers so they can better understand their customers and fine-tune their planning and forecasting.
Moves like this across the industry also allow gaming operators to be more accurate and precise in their marketing strategies, while reducing spend and maximizing return.
Another intriguing aspect of predictive analytics is its capability to predict abuse or addiction -- related to gaming in terms of the problem of gambling addiction. Understanding customers with this problem, in fact, is one of the top uses for today’s analytics activity.
A leading money-gaming company in Europe, Pentaho, is an example: It's using big data and predictive analytics to create a “360-view of customers, which, among other things, helps to identify those customers who show signs of gambling addiction.”
As our world becomes increasingly more digital, identifying technology will play a significant role in moderating game mechanics.
Leveraging data to stay ahead
Online games must have a unique user experience, but they also need back-end support to iterate quickly and cater to individual users.
“Gaming is a hyper-competitive industry, and those who succeed are implementing unique identification capabilities, people-based approaches, and proactive behavioral campaigns,” Schoenbaum said.
Related: Infographic: The Gaming Industry
In sum, deploying analytics has transformed most brands and entire industries into tech companies. This billion dollar industry is expected to generate 2,857 petabytes of data per month in 2018. So, game marketers that take the time to understand that 35-year-old man in his mom's basement will actually cross the threshold into a lucrative online gaming platform.