Why better price won't make GameTap better

GameTap, the 'all you can eat' PC gaming service, has dropped it's price from $15/month to $10/month. They've also added Video-on-Demand to their line up.

It'll be interesting to see the consumer reaction to it. It's also interesting to guess as to the change in strategy. Since one can surmise they didn't just kick back and thing "Hmm... we're making too much money here. How can we reduce it by 33%?", there are two possible reasons for the change:

1. The service has been so successful that they've decided that the audience is larger than anticipated, they've tapped the 'hard-core market', and so are doing this to grow the user base.
2. The number of subscribers has been below expectations, and are blaming price.

Since they haven't been touting their growth (a quick look at their press site shows NOTHING on number of customers, which they'd brag about if they had a lot of them). I'm going to assume it's the latter. And while there's certainly a standard price elasticity arguement that says "lower price - more people", I really doubt that's their problem.

Their problem is, IMHO, two-fold.

First, the service doesn't work as promised. I've tried it out (though it was some time ago) and run into crashes and artifacts. However, this is a very minor problem, and would be fixable if they addressed they next- bigger - problem:

I think they have too many games.

But that's not really the problem either. That's a symptom.

In Inside The Tornado (if you were to be stranded on a deserted island and could only take one business book with you...), Geoffrey Moore talks about new products and services needing 'bowling pin' strategies. Pick one very specific niche, deliver a product that serves that niche PERFECTLY, and let that niche be a bowling pin that (a) provides revenue and learnings to go tackle the next niche, and (b) let the pin fall and help you tackle the next niche.

To pick an overused example: iPod. Initially, didn't view photos, didn't play video, just music. Vertically integrated with a single service - which in theory meant a more limited set of content than a horizontal model with multiple vendors services. However, it did that one thing *super well*. And that's what consumers want. That 'bowling pin' let them tackle photos. And now video. Textbook case.

In the world of digital distribution services for games, you've got a number of different entrants. Steam (Bowling pin? HL2 customers. perfect); MMOs (Bowling pin? The audience for that one game, which in some cases is defined narrowly enough); Xbox Live Arcade? Well, that's a longer discussion - but you could argue that hardcore console gamers were the first pin, and you aim at it by doing a console well. Digital distribution in that case could be part of a larger game, but I digress...

GameTap does just games, right? Sure, but that's painting with pretty wide brush. It's the retro-arcade platform (but doesn't have them all), the retro-console platform (but doesn't have them all), the retro-PC platform (but doesn't have them all, and they don't all work), and the current-and-recent-PC-hits platform (but only has a few of them and there's no clear group they 'own').

So what does that mean to the consumer? What's the message to them that gets them to say "I sure am itching to take my money out of my pocket and put it in Mr. Turner's!"?

The official message right now is (snip) "For the first time ever, gamers of all ages will be able to play the greatest games in their original format, regardless of platform, right on their personal computers." (/snip) - and I'd contend its at best misleading (note the future tense of 'will be able to play') and at worst just false advertising.

To anyone that looks past the press release at the service itself, the message they'll come away with is "we offer a bunch of games". Will it have what they want? Maybe. Will it have the games on teh computer/console they had as a kid? Maybe. Will it have the PC games they loved playing over the last decade? Maybe.

So it does a bunch of different things *kind of well*, but nothing *really* well.

And that's GameTap's real problem. They don't have a particular customer they are trying to serve perfectly. They have a huge number of customers they are going after at once, and serving them all inadequately.

Now, I get why they can't have EVERYTHING there. They aren't going to land agreements with all the IP holders, and there are limits to the emulation tech they are running for some of the titles. I'm not saying they should have everything.

What I am saying is that as long as they offer a bunch of stuff that is maybe what you want, and maybe works, they are going to find consumers are *maybe* interested, but most likely not.

They'd have been better off focusing on getting one group of content for a particular niche *really* nailed, and then grown it over time. (Of course, that idea would ahve been hard to pitch at Turner, due to big-company-therefore-it-must-be-a-billion-dollar-business syndrome, but that's another post for another time).

Consumers are willing to part with their money for quality products and services. I'm not sure what the going rate is for "It might work and you might find what you want", but I'm pretty sure it's not just 1/3 off from what they'd pay for 'great'.