Correct target market size process?

[Promaginy]

I am posting my method that I am using to arrive at our target market size to see if this makes sense.

Using ESA (formerly the ISDA) information at ISDA State of the Industry (http://www.idsa.com/releases/SOTI2001.pdf) and ESA Sales Facts (http://www.theesa.com/facts/sales_genre_data.php) I have determined that there are 6,640,204 computer game players in 2004. Of those, 43% play online (which would shrink the target market to 2,855,287), and of these people 21.1% play action-strategy-rpg games online which is the genre our game will be based in.

This means that our core target market consists of 602,465 players who like to play action-strategy-rpg games online using their PCs. Quite a big market, though no where as big as others.

Now if I make the unrealistic assumption that I could get each of these players to download our game and attain a conversion ratio of 1%, I could sell 6,024 copies. That is a huge assumption! So it is probably is better to scale down the number of downloads to something like a quarter. This would mean that I could expect 150,616 downloads and with a standard conversion ratio of 1% would mean I would be able to sell 1,506 games. Not bad and I would be happy with this.

Of course, there are huge assumptions being made here : that our game will be appealing, that our marketing efforts will be successful, etc. But, I am not looking for comments on what could go wrong, I am just want to know if this makes sense? Is the process correct? Am I being too conservative or ambitious?

[svero]

Those seem like really ambitious assumptions you're making there. I'm not even sure how reliable your stats are. That is.. there's probably a percentage of players who play certain kinds of games online who also never ever download demos of anything, but rather only get magazine cd's or only buy retail. Even if we assume you're right 1/4 of all potential players seeing your game seems like a huge percent to me. I dont think I ever reach even 1/1000th of my potential market for any game.

[Promaginy]

Those seem like really ambitious assumptions you're making there. I'm not even sure how reliable your stats are. That is.. there's probably a percentage of players who play certain kinds of games online who also never ever download demos of anything, but rather only get magazine cd's or only buy retail. Even if we assume you're right 1/4 of all potential players seeing your game seems like a huge percent to me. I dont think I ever reach even 1/1000th of my potential market for any game.

Steve, if I can only reach 1/1000th of my potential market, this means I will only find 6,640 players who would be interested in downloading our game and with a conversion ratio of 1%, I could expect to sell 66 games. Does that not seem a bit harsh? The sales figures posted in these forums indicate that developers can sell that many games in one month.

[Cuculain]

I might be missing something with the 6 million figure, but at least 50% of americans play computer games and then there is the rest of the world with a few hundred million players more? :confused:

[svero]

Well who can say really how many I reach. Its hard to know. I'm just under the impression that its a very small number when I compare my reach to that of all the major game portals. 1/1000th doesnt seem out of the question if you add them all together. But maybe 66 copies isnt unrealistic. Some people sell more than that in a month but those are other genres. Some people sell only 1-2 games a month. Your initial figures could be wrong as well. Are those stats mostly concerned with retail sales of online playable games or do they include more casual players etc...?

[svero]

Also your conversion ratio is probably low. Because your saying 1% of the most highly targeted possible audience. low conversion ratios generally assume a general non highly targeted download audience.

[arcadetown]

I might be missing something with the 6 million figure, but at least 50% of americans play computer games and then there is the rest of the world with a few hundred million players more?
Same here. Not commenting about other matters but that one stat must be way low or we're drawing a hefty % of those US users per month which is highly doubtful (but maybe in not to far future). Plus we know other gaming sites that draw well in excess of 6 million uniques per month.

[Spaceman Spiff]

I seem to recall reading that 92.6% of all statistics are made up (including that one). Seriously, those numbers are whack.

Reading the State Industry report (which is 5 years out of date, BTW) I noticed this quote in bold:

Overall, the study revealed that 60 percents of all Americans, or about 145 million people, play interactive game on a regular basis.

From that, I'm not sure how you got the number down to 6.6 million. And that's just America. Most PC games released released by US developers sell over 50% of their total outside of the USA. We could argue that the potential audience is greater than 300 Million people. And as for conversion rates.. Those tend to quesses at best.

Sorry to be negative, but actually its a positive. If you sold a total of 1,506 games and realized 20 dollars a game, you would gross a total of $30,120. Good for just a few man-months worth of work, not so for a few man-years. If you think your game is going to be good and noteworthy, aim higher than that.

One thing that is probably in the ballpark is the percentage breakdown by game type -- but remember that's for Retail/Commercial sales. I don't think everyone in the indie developer scene submits sales numbers to PC data.

[ggambett]

Now if I make the unrealistic assumption that I could get each of these players to download our game and attain a conversion ratio of 1%, I could sell 6,024 copies. That is a huge assumption! So it is probably is better to scale down the number of downloads to something like a quarter.
if I can only reach 1/1000th of my potential market [...] I could expect to sell 66 games. Does that not seem a bit harsh?
Is the process correct? Am I being too conservative or ambitious?
Your process is not correct at all. You already know the figure you want to reach, and now you're trying to justify it. If it's too big, divide by 4; if it's too low, multiply by 10. This process will give you a warm fuzzy feeling but nothing more useful, I'm afraid...

[Promaginy]

Overall, the study revealed that 60 percents of all Americans, or about 145 million people, play interactive game on a regular basis.

From that, I'm not sure how you got the number down to 6.6 million. And that's just America. Most PC games released released by US developers sell over 50% of their total outside of the USA. We could argue that the potential audience is greater than 300 Million people. And as for conversion rates. Those tend to quesses at best.

I did not post the correct information. :o The 6.6 million people was a bungled number, so back to the drawing board. You are right, that number is far too low, so in reality that is a good thing.

My intention for attempting this was that I had read it was important to know the size of your market that you are attempting to service. This way, you have an idea whether your best & worst case scenarios could be.

Your process is not correct at all. You already know the figure you want to reach, and now you're trying to justify it. If it's too big, divide by 4; if it's too low, multiply by 10. This process will give you a warm fuzzy feeling but nothing more useful, I'm afraid...

You obviously subscribe to the build it and they will come school of business. I cannot deny the appeal or possible success that this method can have, but I enjoy thinking these kinds of issues through. Will correctly determining the number of potential customers ensure success in game development? No, but it can help determine whether a targeted audience is worth pursuing or not. It can reduce risk.

[ggambett]

You obviously subscribe to the build it and they will come school of business. I cannot deny the appeal or possible success that this method can have, but I enjoy thinking these kinds of issues through. Will correctly determining the number of potential customers ensure success in game development? No, but it can help determine whether a targeted audience is worth pursuing or not. It can reduce risk.
No, no, I think making a game which has no market is suicide. I agree completely with what you say here, I was just saying your calculations are too unscientific to give meaningful results, IMO.

[Itsme]

I am posting my method that I am using to arrive at our target market size to see if this makes sense.

It does not make sense for two reasons. First, the number of game players are in the hundreds of millions. Second, downloadable game market is a lot different from general game market. Third, your calculations of your total share are fundamentally flawed. The market for commercial airplanes in somewhere around 2000 aircrafts a year. If I can get only 1% of the market - wait, Boeing and Airbus aren't going let me on the market.
You see, since 1996 the Internet audience probably quadrupled (too lazy to check the numbers). The number of buyers of downloadable games may have inceased ten fold (the actual numbers are not important). But, average sales for average indie developer and average per game sales have actually dropped.
A lot of indies excersize "common sense" marketing approach (as in "my game is good, so people will buy it" - makes sense, doesn't it?). What you want to learn is reality marketing. You'll have to deal with reality anyway - either in the form of poor sales or moderate success. If you want to learn reality marketing quit assuming things. Base your calculations on real fact and real numbers.

[Promaginy]

If you want to learn reality marketing quit assuming things. Base your calculations on real fact and real numbers.

I had miscalculated the numbers of PC players, but those numbers came from the ESA. If they are not based on real numbers, then where do I get those numbers?

No, no, I think making a game which has no market is suicide. I agree completely with what you say here, I was just saying your calculations are too unscientific to give meaningful results, IMO.

How do I do scientific calculations? Obviously, my original numbers were wrong, so the result would be wrong, but what was wrong about the method? I can see that I made an incorrect assumption that 43% of PC Game players enjoying playing on-line - that is not the same thing as the number of PC Game players who would be willing to buy a game online. Anything else?

[Itsme]

I had miscalculated the numbers of PC players, but those numbers came from the ESA. If they are not based on real numbers, then where do I get those numbers?

The point is - you don't need any numbers of total downloadable game audience - they are worthless to you and meaningless. A while ago, there were a few websites that could drive TONS of traffic to you (for free, too) - AVault, Download.com, Tucows, etc. Not so any more. So what you need now is real no bull-shit knowledge of all distribution channels you can get into and how much traffic you can expect (not much any more). So what I am telling you is it's better to find 5 power affiliates rather than read some generalistic reports on the game industry. And it's better to know a real person working for a portal, whom you can call or e-mail, than read all the fluff people write about portals (how good or bad they are).
Frankly, selling games is too tough and unrewarding (moneywise) for any sane person to do it "full-time" so to speak

[Promaginy]

So what you need now is real no bull-shit knowledge of all distribution channels you can get into and how much traffic you can expect (not much any more). So what I am telling you is it's better to find 5 power affiliates rather than read some generalistic reports on the game industry.

Makes sense, but besides the largest portals, how do I know which portals will be the best one for our kind of game? Which portals and affiliates cater to action-rpg gamers? Do we just contract with everyone and see which ones turn out best?

[Itsme]

Makes sense, but besides the largest portals, how do I know which portals will be the best one for our kind of game? Which portals and affiliates cater to action-rpg gamers? Do we just contract with everyone and see which ones turn out best?

I can tell you from my own experience and of other people that most game marketing efforts will fail miserably, no matter how smart you are or what you do. That's just a reality. You can make A LOT more money if you devote the same time to marketing something else.
Still, there are some exceptions. But they can't be generalized. For instance, one can easily generate 30-60 sales a month from www.searchamateur.com or www.astatix.com or a few other "power" affiliates. Discounters can drive a lot of sales, too. But if you don't know whom to contact or how to craft an offer - this information is worthless to you. Your e-mail probably won't even get answered. You can try to contact everybody, but that's a very laborius path that you want to take only if you have no other way. It's not a seller market, games are a dime a dozen, so you practically have no leverage. There is no other way, especially nowadays, rather then forget game dev and how much you love it, and start building your own website to attract visitors there.

[Promaginy]

You can make A LOT more money if you devote the same time to marketing something else. There is no other way, especially nowadays, rather then forget game dev and how much you love it, and start building your own website to attract visitors there.

Itsme, for all of your talk about marketing experience, I would have thought that you would take a lesson from the most basic marketing principle: Understand your target market.

You obviously don't understand why people like to do game dev and want to make a go at it. So why do you continue to rant about how bad game dev is to a bunch of game devs? Why post these rants to the people who would be most likely to not appreciate the message? What do you hope to gain from such a losing battle? :confused:

[Itsme]

Itsme, for all of your talk about marketing experience, I would have thought that you would take a lesson from the most basic marketing principle: Understand your target market.
Well, Prmaginy, I refuse to believe in herd mentality. A lot of people "understand target markets" and ignore current market conditions. For instance, you may know exactly what people looking for, when they by a hammer or nails or a brick.
You may be an expert in the field. But guess what - this ain't a profitable business and these jobs are mostly migrating south of the border and accross the pacific ocean. If I was an expert in VHS manufacturing, I would want get get stuck with my head in my ass, telling everybody I am an expert and that I love video tapes - I'd learn a new trade.


You obviously don't understand why people like to do game dev and want to make a go at it. So why do you continue to rant about how bad game dev is to a bunch of game devs? Why post these rants to the people who would be most likely to not appreciate the message? What do you hope to gain from such a losing battle? :confused:

Nothing. I am going to get nothing out of it. My point is clear - put marketing above game dev - but this is not what people want to hear. You don't have to give up game dev. You will, if game dev is the only thing you do, but you don't have to if you put marketing and distribution first.
Svero made a comment about spending a thousand bucks to learn NLP (I say, buy a book for twenty and start practicing, you don't need to spend a grand) and how wasteful that would be. I got education from UC Davis and I had a few friends to went to Standford. Here is what I learned - people will spend up to $100000 for a degree in Art History or Gender Studies, and will end up with no job and no prospects after four years. They could have gotten the same education from a state school for $1500 a semester. But most people are simply stupid. Most people won't ever get rich (if that's important to you), will always be working for a Man, and, quite frankly most people will live as miserable f*cks, daydreaming about a better life. I am just trying to help a bit by saying - look, it's not working. Do something different. Don't keep doing something that haven't worked all that time. Miracles don't happen.
See what successful developers do - most of their time is not in development but running businesses.

[Yossarian]

Itsme,

You've made a few interesting points, but I think you're getting a bit repetitive and pointless now. This thread wasn't about whether he should quit game dev, but you've gone and hijacked it completely and gone so far off track that the original point of the thread is lost in your ranting.

If you are such a great marketing and business guru, why don't you try to answer his question? Put some of that knowledge to use and HELP by giving him (and us) pointers on how he needs to do his market research correctly.

We all gain absolutley nothing by you jumping in here and ranting about how he is wrong.

[Itsme]

Itsme,

You've made a few interesting points, but I think you're getting a bit repetitive and pointless now. This thread wasn't about whether he should quit game dev, but you've gone and hijacked it completely and gone so far off track that the original point of the thread is lost in your ranting.
We all gain absolutley nothing by you jumping in here and ranting about how he is wrong.

Chill out, dude. Here is my point. You don't have to quit game dev if you don't want to. But if you want to be able to develop games (not as an EA slave) as an independent developer - you will be force to learn some marketing. Or you'll go back to your 9-5 job.
So let's get back to the original thread which is "correct target market size process".
1. the number one thing you have to worry about is HOW THE HELL YOU GONNA GET PEOPLE TO SEE YOUR GAME, not some fancy calculation about how big the market is. It's been proven by hundreds of sorry-ass game developers who went out of business since 1996 that even though the market size has grown substantially, profits have diminished (well, they've been redistributed between a few big players).
2. Point two - you need facts and real know-how. This forum is a lot like self-help group. Occasionally a few successful developers will say something that's really worth doing, but most of the stuff is fluff. This is not unique to this particular forum - most stuff you read on marketing, relationship and even microbiology (I got a degree in microbiology) is fluff. Here is an example. There are couple of folks here from portals. Even though I don't know them personally, these guys know what's up. They will confirm that most games submitted to them will NEVER be featured. That's NEVER. Not today, not tomorrow, not next year or in ten years. The same is true for game publishers. Most games get rejected and will never be published
However, if you look at developers who already have a game deal with a portal or a publisher, it's almost guaranteed that their next game will make it. Occasionally, I hear about rejects, but thats a minority of developers who just too stupid to learn that you next project is supposed to be better than the previous one, not worse.
The difference between those who make it to portals and get games published and those who don't is that the first group of people know what they should be doing and the second group assumes that they can just "develop a game" and the rest will take care of itself.
3. Final point. You don't want to listen to what most people say. Most people don't know shit. Most people don't know a thing about Indian food, but they'll have an opinion about it. Most people here work for others and never made any money with games. But they'll keep telling you about this and that, about logos and whether you should change "Buy Now" to "Play Now" or "Order Now" just because they heard something or read something. There are only MAYBE 5-10 people in this very conference who make over 50K in games. These are the only ones you want to listen to, because they actually know what they are talking about.

P.S. It may be a VERY good idea to become independent financially first, and do all game dev you want later, rather than keep telling yourself - I will keep creating games until I can live off them. That time may NEVER come.

[terin]

Itsme is right.

Well, at least in terms of the marketing advice side of things.

Calculating a target market makes sense if you are the marketing analyst for Budweiser and their launch of B^E energy drink because they have the resources available, in theory, to actually reach a market their target.

You don't have that reach. You'll never have that reach. Don't worry about if there is potential for 6,000 sales; 1,000 sales, or 100,000 sales. Identifying a target market's size is NOT the same as identifying a target market. Similarly identifying a target market's size is NOT the same as identifying how much it costs to reach that target market. Getting 1,000 sales in target market A may cost more than 6,000 in target market B, but that is only theory. You need to worry about how to get 150,000 downloads more than you need to worry about how large the market is.

Here's one way to guarentee 150,000 downloads: Gigex. Gigex will sell you downloads... 150,000 will cost you roughly 20-30,000 dollars and probably won't be that targetted.

Does that make you feel better? Probably not :-) There are ways to get downloads and there are ways to do it cheaper than Gigex. You will have to figure them out or hire someone who knows... The more capital you have to invest the easier it is to reach that magical number... but who knows if you have designed you business model to capitalize.

Itsme may be really mean but he is right when he says you need to concentrate more on the journey than on the preparation and arrival.

-Joe

[Promaginy]

You need to worry about how to get 150,000 downloads more than you need to worry about how large the market is.

Itsme may be really mean but he is right when he says you need to concentrate more on the journey than on the preparation and arrival.


Fair enough. I will take your and Itsme's advice to heart and forget about tweaking market size numbers. I will read through the forums posts about how to get downloads and website traffic instead.

Thanks to everyone. :)

[Nexic]

I think you can have a good reach, but not without portals, or a hell of a lot of patience (at least 3 years to make a site that has *real* traffic). But even if you were number one for a month on all the major portals I doubt you'd get 25% reach. But as others have pointed out, your base numbers are all wrong.

What you have been doing, is dreaming, and guessing of what you might get. This isn't even estimation as unless you've got actual sales data from a downloadable game, you cant know. I did this with my first few games, and they failed miserably. I was thinking "I can get 2% conversion, and then I should get at least 100,000 downloads per month."

It took me 3 attempts until I could get over 0.1% CR on big sites. Too be honest even getting 1% is incredibly hard. Im afraid you won't know until you've done it.

[Emmanuel]

Promaginy: don't just get traffic for the sake of it.

I get traffic from all sorts of places and from doing all sorts of things, but actual sales close from very few sources. What you need is qualified traffic. For instance, I sell a mini golf game for Windows and Mac. I could maybe get Slashdot to mention it, and get massive traffic. Will I close any sales from linux/OSS users and developers, ie. are they interested in a golf game for these platforms? Most probably not.

For instance since yesterday I'm getting massive traffic and healthy sales from features in Mac magazines and a top of category (sports simulation) listing on apple.com. People that visit those are interested in the newest mac games, and cute, well done graphics (I can brag about them, I didn't do them :)), which meets their interest. That's a qualified audience. That's what I learned that I need, the hard way :)

Best regards,
Emmanuel

[berserker]

P.S. It may be a VERY good idea to become independent financially first, and do all game dev you want later, rather than keep telling yourself - I will keep creating games until I can live off them. That time may NEVER come.

Straight in bull's eye!

But my point is that most important thing in casual game development is *production*. Produce game that will suit portal needs and you portals will handle marketing and sales for you. Produce the game that portals turn off and you will be damned to sell your game through your very own site.

[Promaginy]

But my point is that most important thing in casual game development is *production*. Produce game that will suit portal needs and you portals will handle marketing and sales for you. Produce the game that portals turn off and you will be damned to sell your game through your very own site.

It is all about goals. My goal is to have game development as one of my ventures. I love computer games, but will not base my entire business interests in this one area. That's my take on things. I intend to find success, but if the games that I want toi make are not financially successful, it will not sink me.

I guess that is why I started this thread. My intention was to come up with a system to gauge whether to pursue a market, but after this thread worked itself through, I am not so interested in this. I will focus on how to appeal to our target market instead.