Dan Scherlis pr[Editor’s note: This is a guest article from Dan Scherlis. Dan is an advisor to MIT Business in Games conference. Dan is a consulting executive producer, currently fascinated by medical-behavioral applications for games. As CEO of Turbine, Dan produced the MMO “Asheron’s Call,” published by Microsoft. He has also produced mobile and retail-packaged games.]

The fifth MIT Business in Games conference was held in MIT’s Media Lab, on the eve of the PAX East gamer expo and crowd-control proving grounds.  The agenda of this student-led event included a keynote discussion with Insomniac Games CEO Ted Price, and panel discussions, including these two:

Funding your Game Company

It’s true, a “how to get funded” session is a predictable staple of entrepreneurial-business programs.  Then again, the problem is eternal, and thus the interest persists.  Moderated by Steve Charkoudian, a technology and IP specialist at Goodwin Proctor, this panel considered the growing diversity of funding sources, from publishers and venture capital to crowd funding and game-focused accelerators/incubators.

The developers on the panel, Dave Bisceglia of The Tab Lab and Seth Alter (who proudly identifies himself as the entire Subaltern Games team), were quick to agree that a choice of funding mechanism has implications that go beyond financing: the right angel investors give credibility, introduction, and mentoring.  And a successful crowd funding effort can build a strong game community, while demonstrating market interest that can support a future capital round.

Kickstarter Community Head Cindy Au observed the anniversary of the startling $3.3M funding for Tim Schafer’s Double Fine Adventure.  (Coincidental with last year’s Game Developers Conference, that success drew immediate and widespread attention from the game-development community.) Au reports that, with the maturing of the Kickstarter marketplace, game developers are now presenting more game assets, often including playable demos.

The traditional venture capital model was represented by Spark Capital Venture Partner Nabeel Hyatt, founder of social-game developer Conduit Labs.  Hyatt credits the rise of Zynga, who acquired Conduit Labs, with inspiring a growing VC and angel-investor interest in games. His remarks focused on the human side of fund-raising, noting that “I have never seen a deal fail to happen because of the terms.”

When Dave Bisceglia emphasized relationship-building with investors, citing advisors who a year or so later became his investors, Hyatt agreed. Noting that trust-building takes time, he endorsed an incremental sales process, with several meetings before an attempt to close a deal.  “Don’t ask the first time,” he cautioned.

The panel disagreed on whether start-up developers should embrace contract work, using work-for-hire income to support their primary goal of building a proprietary game. Hyatt cautions against it, suggesting that a better career-starting “day job” would be to work for “the best game company you can find.”  Also, contract work is a “tough drug to quit.”  (Personally, I agree, having seen companies spend up to ten years trying to jump from client-based work into building their own product.)

Big Data in Gaming

I moderated this panel on game analytics. Always suspicious of a popular buzzword, I asked for a definition of “big data”, noting that the top Google hits are dominated by technology vendors.  The Wikipedia article defines big data as “so large and complex that it becomes difficult to process.”  The challenge is real; as EA CTO Rajat Taneja recently noted, a game like Battlefield generates over one terabyte every day.

Thus, big data can be defined by its unobtainability, in the same way that I define virtual reality as “I can’t afford the peripherals.”

In that spirit, Turbine’s Mark Coleman positioned “big data” as an ambition: “more data than I have.”  Nick Lim, CEO of predictive-analytics provider Sonamine, noted the different types and sources of data that are increasingly assimilated into analyses.

Coleman and Lim share a background in analytics for financial services and other industries, and agreed that the game industry is relatively slow to adopt analytics. Coleman notes that other industries “use predictions at every stage” of the customer life-cycle, from acquisition to retention. Lim agrees, but offers the interactive nature of games as a complicating factor, so that “latent and stable behaviors” or demographic characteristics offer relatively less predictive power, compared to data captured from day-to-day play-patterns and in-game actions.

Coleman and Riot Games’ Renjie Li both addressed the challenge of delivering highly-quantitative analytics in the creative culture of a game development team, and in light of the intuitive nature of game design. (As one designer from another company has complained to me, “I don’t WANT to be driven by data.”) At Riot, analytics are used explicitly in support of the player experience, to the point that monetization is not a priority for Li’s team.  For example, the predictive targeting of conversion offers to very-few players, which some publishers embrace as a way to avoid “spamming your players”, might conflict with Riot’s commitment to offering every player the same experience.  At both companies, it became clear, there is an awareness that analytics can not support the full scope of a game designer’s decision-making.  (Whereas it is reportedly difficult at times, in some social-game companies, for a designer to take action that is not yet supported by A/B testing.)

Anders Drachen, of Northeastern University, spoke to the potential for game analytics to support the design process. He is co-author of Game Analytics: Maximizing the Value of Player Data, which will be published next week, with a back cover that puts primary emphasis on support for game development, including iterative development, user testing, and measurement of asset-utilization. (No, I’ve not read all 800 pages; only the back cover.)

Beyond game development, as one audience member suggested, a game’s big data could be delivered more-directly to its players. For example an individualized analysis could give a clear understanding of a player’s relative status and context.  Drachen agreed, citing the Player Stats Network as an example.

Dan’s report on the MIT Business in Games conference will continue, with coverage of the fireside chat with Insomniac Games CEO Ted Price, and panels on competitive gaming and on new distribution channels.