Thursday, April 20, 2006

Mark Cuban Meets Bethesda

Mark Cuban owns the Dallas Mavericks. He made his fortune by selling for six billion dollars to Yahoo about five minutes before the Internet bubble exploded. And when he first bought the Mavericks, he was one of the worst franchise owners in professional sports, making stupid decision after stupid decision.

This is why Mark Cuban is so successful, though: he got smart real quick.

The Mavericks are now one of the best-run, most prestigious franchises in professional sports. Everything about the team is first-class. And Mark Cuban, who bought the Mavericks in 2000 for $280 million , now owns a franchise worth over $400 million, the fifth most valuable franchise in the NBA (according to Forbes).

He also keeps a blog and personally answers e-mail.

So last night, on Maverick's Fan Appreciation Night, he gave all 19,000 fans in attendance (and 1,000 watching on television) free ticket vouchers on American Airlines. It works out to about $3 million if everyone cashes them in.

How many jerseys do you think that will sell?

The reason I bring up Mark Cuban today is because Bethesda needs to learn from him. They've put out a brilliant, wonderful game, and I'm not exaggerating--truly, Oblivion is a brilliant and wonderful game. And based on Take 2's glowing sales announcement last week, the game's generated roughly $100 million in sales. I know, that's not profit, but any way you slice that pie, it's a lot of damn money.

Here's the thing, though: they know they can make even more money by releasing more content. The Xbox Live Marketplace is perfect for that, and PC gamers are now familiar enough with digital downloads that they're a willing market as well.

Literally, the number of add-ons they could release number in the hundreds, and all they have to do is make us want them.

And that's easy. Man, that is sixth grader stuff.

So what do they do? They release horse armor for $2.50, which pisses everyone off. Then they release The Orrery, which is apparently a 30-45 minute quest that is as mundane as quests come. At least, that seems to be the general feeling on multiple gaming forums I visited yesterday.

Come on, Bethesda. Think. You're not trying to get people to buy one or two add-ons. You're trying to create an environment where people will buy all of them. And you're blowing it. Because it doesn't matter if 100,000 people bought the horse armor. What matters is how many people buy the fiftieth download, and the hundredth, and you're headed in the wrong direction. Fast.

Here's what they should have done. First off, give away that damn horse armor. Just give it away. I don't care how much it cost on the Excel spreadsheet that tracks development costs, because that's the wrong way to think about it. Giving away a download is a marketing expense, and it's no different than advertising.

And the Orrery? Give it away. Again, I don't give a shit what it cost to develop. It's inconsequential, because you're looking at it as a marketing expense. Here's what you do when you give away a few downloads up front: everyone who bought the game, essentially, will download them. That means everyone can find where those downloads come from. And when you start charging for them, you've ensured that everyone knows where to get them.

It's the drug dealer thing--the first hit (or first few) is free.

And you want to keep giving them away, at least things like horse armor. Get people to the download page as often as you can with free downloads, because they will then get constant exposure to the add-ons that aren't free.

If I've gotten free downloads of minor things like armor and mini-quests, I am ten times more likely to actually buy the more substantial items that you're charging for. The key words there are "more substantial." You could charge $3.95 for an interesting storyline that involved a few quests and took 2-3 hours to complete, and we would all buy it. Maybe even $4.95.

The mix of free and paid items is what makes it all work. That's going to generate far more revenue over time than a strictly pay model.

Here's something even better: to celebrate sales milestones, you could adjust the price of future downloads. So after you hit two million in sales, say that all future "category x" downloads will be $3.49 instead of $3.99. And when you hit two and a half million, say they'll be $2.99. It's terrific marketing, because you get publicity for the fantastic sales numbers and those numbers actually wind up benefitting gamers. Everyone wants you to sell more copies of the game because downloads will be cheaper. Get that? Everyone is on your side.

Now if you sit down with your spreadsheets and your data wonks and try to mathematically figure all of this out, I'm sure there will be a hundred reasons not to do it. And all those reasons are wrong. They're wrong because spreadsheets never calculate the true value of goodwill.

So how do you fix the current mini-mess? You announce that the next five downloads are free. Throw out a couple of new models, a mini-quest, a building or something, and give the damn things away. Then mix free downloads and paid downloads, but the paid downloads have to have some meat to them. Money for meat.

And if the numbers guy starts to complain, here's what you do: you take the pointy pencil from his shirt pocket and threaten to jam it in his ear.

Or buy him a DS and a copy of Brain Games, and you'll never hear from him again.

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