December 1, 2010
I wasn’t able to attend last night’s Transmedia meetup in New York City, but I was able to catch most of it via a video stream very kindly provided by hosts Aina Abiodun and Mike Knowlton.
The main event featured was a presentation from Transmedia writer Andrea Phillips, which has been stored online at livestream.com. I recommend you tune in, because her talk is extremely insightful and presents a lot of information that will soon be essential knowledge for online content creators. Here are some brief thoughts:
Perplex City
As Andrea states, Perplex City can be considered a creative triumph. A hugely ambitious project, it fostered a passionate online community as well as live-action engagement with the story. Andrea’s story about the helicopter is incredible and really demonstrates the scope and theatrical quality of the project. It gathered a lot of press, and its legacy is still available to dig into via a dedicated wiki and other sites.
Andrea mentioned that there were five writers on board for most of Perplex City’s run, including Dan and Adrian Hon of Sixtostart. When you consider that the core creatives behind Perplex City met while playing the A.I. ARG, the Beast, in 2001, it is astounding to think about how far ahead of the curve they are when it comes to this sort of complex, game-based storytelling. It’s possible to argue that Perplex City was simply ahead of its time.
The Business Model – A Physical “Hook”
Perplex City is noteworthy from a business perspective for attempting to solve the essential question with ARGS: how to profit from them. The Perplex City experience was attached to the sale of physical goods – playing cards that were sold in packs of six for five pounds a pack. Each card featured a puzzle that could be solved online – often through a collaborative effort. In Andrea’s words, Perplex City was the first ARG that existed independently, not as a marketing effort for another entertainment product (although you could make an argument that the ARG elements were an elaborate marketing campaign for the quiz cards).
Across the duration of the Perplex City game, 1.5 million cards were sold. That’s 250,000 packs at 5 pounds each – suggesting a total revenue of 1.25 million pounds. That may seem to compare unfavorably with an initial venture capital investment of $3m, but that is not to say that there isn’t potential in what Perplex City attempted.
The Old View – A Flawed Model
If you approach Perplex City from a traditional standpoint, it appears to be an immensely inefficient business. The principal source of revenue is the playing cards, but a great deal of time and effort went into the ARG elements. An entire world was created, along with a lot of online stories – none of which obviously contributed to Perplex City’s core businesss – selling game cards. In fact, it would be reasonable to suggest that the Perplex City ARG actually discouraged sales of the playing cards by presenting an online community that was far too complex for the merely curious audience member. In essence, the complexity of the game and fervent engagement by the core audience actually contracted the potential of the core revenue stream. Half a million words may have been written, but it is difficult to gauge how many (if any) of them led to more cards being sold.
Under the traditional model, one could suggest that Perplex City should have charged a subscription fee for access to the ARG part of the game – or tied the game to the purchase of playing cards in a much closer way.
An Engagement Perspective – And Business Potential
The approach above is arguably antiquated thinking. Facebook has demonstrated that it is unnecessary to charge a fee for an online experience provided that a large enough number of people are sufficiently engaged with it. At that point, other revenue streams begin to present themselves.
With an experience as comprehensive as that provided by Perplex City, the owners are able to collect an enormous amount of information on users. I’m not just talking about the usual demographics – age, gender, race, location, and so on. I’m talking about very specific behavioral traits – when the user goes online, how long he spends, where the user spends time within the game, how likely the person is to seek help on a particular problem, how social the user is.
This level of data collection would permit extremely finely targeted advertising, in a way that potentially eclipses even Facebook – for advertisers would be able to target products to users based not only on what they claim to like, but how they actually behave. Users may display certain behavioral preferences and biases that permit certain products and experiences to be advertised directly to them as they are immersed in the game, and hence more receptive to making purchases (especially if a one-click purchase system is set up). For those harboring ethical concerns, I believe that we’re headed in this direction already (see today’s WSJ article on “fingerprinting” computers).
Thus, it is possible to conceive of a profitable ARG that operates under a hybrid business model based upon (a) the purchase of some physical object that is a “buy-in” to the world; and (b) nuanced targeting market that plays upon user behavior and a tendency to make impulse purchases within the game experience. Yet in order for this model to work, the audience must be expanded.
Entry Points and Audience Handholding
I think it is a reasonable criticism of ARGs to suggest that the biggest problem with them is that they are written by hardcore players, for hardcore players. Almost every ARG that I have read about, or seen a talk on, has reported that the “games masters” were unable to come up with new problems and stories quickly enough – the users solved problems far more quickly than expected. But the further you go in that direction, the more potential players you are alienating. If you begin catering exclusively to a small niche audience, you are cutting your chances to create alternative ad-based revenue streams. With Perplex City, the most telling statistic would be how many of those 1.5m cards were purchased by a small core group of enthusiasts. Having only 10,000 extremely passionate fans renders you irrelevant – unless you are catering to the “wealthy and exclusive” market.
As Andrea astutely suggested, the key is to provide entry points. There needs to be an easy way for casual players to get involved in the story. As she pointed out, Star Wars has become horrendously complicated as a story universe but everyone still knows where to start – watch one of the movies. The person who gets very rich from ARGs will be the one who works out what that “hook” is going to be so that somebody who is casually browsing the aisles in Target or Gamestop can get involved simply and easily. Perhaps mobile devices hold the key, or Facebook, or Twitter.
I believe that one day we are going to see something that walks the tightrope between engaging a huge number of casual eyeballs and satiating the hardcore ARG player, and when that happens, there’s going to be quite a windfall. The thing to note is that everything else that I speak about on this blog – licensing, story threads, platforms – will still hold true. You’ll launch a movie or TV series based upon this game world and there will already be a captive audience in place. In essence, it is possible that a true Transmedia franchise will spawn from an ARG. That may seem a wild claim now, but one need only look at the profits generated by World of Warcraft in the MMO space for inspiration.
If you’re at an agency, studios, or tech company and think you may be interested in picking up where Perplex City left off, check out Andrea’s blog. She’s an extremely smart writer and I can see from her presentation that she’s chomping at the bit to give it another shot. Personally, I think the time of the popular ARG is still some time away but, as I suggested, I do believe that it will eventually come.
Thanks for the interesting perspective, Simon. It’s funny — in PXC days, the way we built everything was so disjointed that we didn’t even do any meaningful data collection. But even so, we could have done so much with licensing and additional platforms… the day will come, mark my words. ^_^
Audience data is definitely the most valuable part of a game like this, and there’s no way that I would set out on a similar endeavor without (a) a means to collect user data; (b) a way of making sense of that data; and (c) a way to sell products built straight into the experience.
The big issue is over the ethics of using that data – you’d have to provide an opt-out probably, ensure full disclosure, and be very careful how you store and share the information. Ideally, you’re only partnering with products and services that are directly germane to the audience – no spamming. As you know, the minute you lose the audience’s trust in you, it’s goodnight Vienna.
Mmm. I respectfully disagree. Player data wasn’t the most valuable part of PXC any more than it’s the most valuable part of Star Wars, or SpongeBob, or any other piece of IP. I guess you could spin up a platform to collect player data for PXC… but you could for any other IP, too. PXC wasn’t a social platform, it was a piece of entertainment, and its value should be judged accordingly.
Right, but the value of Star Wars and Spongebob lies predominately with licensing and consumer products in addition to syndication, DVD etc. You can’t sell Perplex City branded cereal or action figures, nor do I see an easy way to resell the story in Wal-Marts around the world. The value of Perplex City as I understand it stems from the cards that were sold, not the ongoing game. So you’d either have to find a redirect ARG players back to the cards so they buy a lot more, or directly monetize the “experience.” Selling products – branded entertainment, in essence – seems to be the most logical way to do so.
See, you’re using “value” to mean “where the money comes from.” I’m using “value” to mean “why people care about it.” The cards were the revenue stream, sure, but if it were just the cards, we wouldn’t be talking about it today. The value was in the story and world we built, and we could’ve turned that into comics, books, films, etc.
This is perhaps a symptom of an underlying divide between the artist and the merchant.
I understand that, and in the long term you’re absolutely right. It’d be a cold heart indeed that put the bottom line before creating something that is meaningful to people and is remembered fondly. I’m playing devil’s advocate because the next time a potential investor considers doing something like this, these are the questions that will be asked. The sense I get is that you’d love to be working on Perplex City – or something even grander – right now, but it’s really hard to sustain a project unless you can demonstrate the realistic potential for meaningful profits.
If I were an investor looking into putting money into Perplex City today, I’d look at the business model and say “well, if we make our money from the cards, why are we paying five people to write a load of stuff on the internet that people aren’t paying us for? Why not just release a card game?” And if I’m asking that, I can only imagine what a real investor would think.
There was so much more potential there beyond the cards, and today, with social gaming and virtual currency firmly established, a similar initiative would have a number of potential revenue streams that didn’t go anywhere near data mining and ad plays.
This is getting interesting.
Thanks for all the good info.