Video games take a lot of time and money to make. This isn’t news to anyone working in the gaming industry. And yet every year, multiple titles are released that make the collective gaming public sit back, scratch their heads, open up Reddit, and ask “how the bleep did this get made?”
There is no one answer for why mediocre games are made and released, but the answer usually involves a studio approaching the game development process with excessive confidence, relying more on domain expertise than on empirical data.
Smart studios have seen this movie before, and are determined to trend on Reddit for the right reasons. With that goal in mind, they often apply the concept of product-market fit to ensure the success of their game — to make sure that it finds an audience, and retains that audience.
While product-market fit, a classic tech concept and framework, has its place in game development, it may not be the best starting point. Instead, developers should first evaluate their game’s product-market potential, which can be determined much earlier in the development process using data-driven insights.
Previously, we walked through multiple ways to validate your game idea before starting development.
In this article, we’ll go a big step further. We’ll explain what product-market fit is, explain why it is a useful concept but often the wrong thing to focus on early in game development, explain why product-market potential is a much better place to start, and establish the Product-Market Potential Framework
Understanding Product-Market Fit
Product-market fit is a concept that was introduced by Marc Andreessen in 2007. It refers to the state of being in a good market with a product that can satisfy that market. As Andreessen explains:
“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account.”
To put it in simple terms, product-market fit is essential for a product to succeed. Products that don’t find it are almost guaranteed to fail — eventually.
The Challenges of Product-Market Fit in Gaming
Achieving product-market fit is essential for the success of any game, as it ensures that the game resonates with its target audience and can generate sufficient revenue. However, game developers face unique challenges in their pursuit of product-market fit, including:
- Predicting what resonates with players: Rapidly changing player tastes and trends make it difficult to predict what types of games and features will resonate with audiences. Considering how long it takes to create most most games, developers need to meet players where they’re going, not where they are.
- Standing out in a crowded market: The gaming industry is increasingly competitive, with countless new titles released each year across various platforms and genres.
- Balancing innovation with what’s known to work: Over-reliance on either innovation or convention can lead to games that fail to connect with audiences or achieve commercial success.
- Optimizing for engagement and retention: In an era of countless entertainment options and short attention spans, game developers are competing in a different arena than most other products.
These challenges make it increasingly difficult for game developers to create hits that achieve lasting success.
Where Game Product-Market Fit Falls Apart
Failing to achieve product-market fit can have severe consequences for game studios. These can be as mild as wasted resources and poor player retention, or as dramatic as an entire studio closing. As the gaming market becomes more complex and competitive, the pressure to create successful games has only intensified. Studios not only want to find product-market fit but also want to do so as quickly and confidently as possible.
However, it’s important to note that reaching the largest possible audience isn’t always the goal. Instead, the focus should be on right-sizing the audience to ensure the game resonates with the target players and can sustain long-term retention and profitability. Factors such as development budget and the core fantasy of the game should be considered when determining the appropriate audience size.
The solution to this problem would seemingly be a systematic approach to finding and validating product-market fit. This might include steps like:
- Conducting extensive playtesting and gathering player feedback
- Measuring key engagement metrics
- Analyzing monetization metrics
- Monitoring social media sentiment and community feedback
- Conducting market research to validate demand and assess competitor offerings
- Continuously iterating and optimizing the game based on data-driven insights
These all sound great, and are vital for sustaining success in the gaming industry. However, they come with a massive problem: these steps occur late in the game development process. While studios may find product-market fit with this approach, they can end up with a much smaller market share than they initially anticipated.
This is because these games achieve what is known as a local maximum — a point at which little can be done to grow the user base through an iterative, data-driven process.
The Product-Market Potential Framework
To avoid hitting the local maximum once a game is live and to find the right-sized market for a game, developers should focus on identifying their product-market potential. This approach helps developers discover the maximum potential audience for their game concept before development begins.
The Product-Market Potential Framework is a five-step process that occurs entirely in the concepting and ideation phase, before any development work has begun. By the end of this process, you’ll have a unique value proposition, positioning you to create a game with a well-defined target audience.
- Create Your Initial Game Concept
- Refine Your Concept Based on Research and Data
- Identify and Understand Your Target Audience
- Refine Your Concept Based on Audience Wants and Needs
- Define Your Game’s Unique Value Proposition
Step 1: Define Your Initial Game Concept
The first step in the Product-Market Potential Framework is to define your initial game concept. Begin by outlining your game’s core mechanics, gameplay loops, and unique selling points. Consider the genres, themes, and innovative features that will set your game apart from competitors. Ensure that your concept aligns with your studio’s brand, portfolio strategy, and available resources. At this stage, keep your concept flexible enough to allow for further refinement based on the research and data you’ll gather in the subsequent steps.
An initial concept can be as simple as something like this:
An X genre game with a unique X twist, similar to X and X.