KGC 2005: “Blue Ocean Strategy in Games,” Kim Hak Gyu

Kim Hak Gyu did Ragnarok, and now Granado Espada. Here’s my very rough notes on his talk:

Blue Ocean Strategy is about new markets… why talk management at a game conference? There is an overflow of games in the market. Some of the games I make are not always welcomed, and this is worrying. Too many games out there competing. This is a red ocean where the sharks are eating each other. You work and make your baby and then it’s not welcomed by the market.

Blue Ocean is the opposite, it’s a market with no competition. Korean authors have not been doing well in writing business books like this. But this book was instantly popular.

How do we relate this to the game industry? At a company workshop we discussed these ideas with the employees. It was welcomed, so now I want to share it with you.

[[Slide: a quote from Joel on Software! (In Korean)]]

We’ve increased the amount of pixels in digital camera shots, but then we usually reduce the resolution of the pictures afterwards–so why chase the megapixels? Same happened with cars–we chase horsepower, but who gets to actually use this horsepower?

How do you differentiate? People are choosing to increase numbers. If they don’t they lag behind the market.

In the game industry costs will rise, you’ll have to hire more employees, in order to win in the market. At this point, I look back at the past… it used to be pay-as-you-go, small audience. It was a blue ocean back then. Now it’s a red ocean.

If you do not create a blue ocean for yourself, you will not succeed. Consumer innovations and tech innovations are not always the same thing. The megapixel increase is a tech innovation but not a consumer innovation. Why should the consumer care even though you have spent all this tech R&D money?

You need concepts that the user will care about. Last year I talked about this difference as the essence of marketing. If you just go for the safer route, then you will actualy take on higher risk. Differentiated market AND differentiated product is what you need. How do you do this? Many books talk about differentiation.

ERRC — E- eradicate, which is removing. R is reduce. R is ?, c is creating. [[this is in the book]] You don’t have to be good in everything, or the best in everything.

What is strategy? Extended Starcraft metaphor [[how very Korean]] Concentrate, fire on one point. Otherwise you’ll be roadkill. You will have a limited budget, and if you spread it too thin… that won’t work. If instanced dungeons is the trend, or whatever is the trend, if you include everything that is a trend, you think it will be successful. But you’re wrong.

In Grenado Espada I was pressured a lot, just like being a good student. “Last time you came in second place, this time you should be 1st”. So I thought I’ll have the best graphics, 3 times more stuff to see, more dungeons, more quests. I wanted to do that, but I started to go crazy trying, because I couldn’t do it all. So I had to give up on things — the graphics. Instead, we do 2 or 3 villages that look really good. Instead, the players have to go into the same dungeons over and over because they are deep.

This is value innovation. People are not paying attention to how it looks and how big it is, but instead to their experience. But you’ll need to get creative. If you try to do everything nicely, you can’t actually do everything nicely.

How do you match all the years of investment into Lineage? If you just try to copy the best, you are trying to achieve failure from the get-go. You need to concentrate your resources in open areas. You may end up with a lesser user value otherwise.

You may have noticed that the website for GE looks strange — we applied ERRC to it too — the typical website has a ton of buttons and small fonts. we developed it internally in a few days. No Flash, though we’ll add it. Instead of having to take pains to hit tiny buttons, we have big letters on the screen. We wanted a spacious website. We introduced a real name system on the forums so that users got really polite. Sometimes the competitors come to the website to start flame wars. But on the GE website, they have real names and pictures, and the users are polite.

This website was cheap to make. We spent the money on areas that we wanted to focus on instead. We have community members who have been waiting for 2 years. I feel grateful to them and hope they spread the word about the website…

There’s an old saying that something is perfect when there’s nothing left to take out. You see that students who focus on specialties have higher performance in their work. Frost — the road less traveled made all the difference. This is the challenge even though people may call you crazy. I want to emphasize that you have to push risky choices.

Now, to speak on market differentiation. We have to segment the market and focus on non-consumers. The current market distribution is divided into teens, 20s, 30s, 40s, women… but we should not segment by demographics, it’s not helpful. Regardless of age, the main purpose of the game may be the same. A 50 year old might be a hardcore gamer. Why do we segment the market? To provide a product that consumers really need. It’s about targeting product. Look at how books are segmented on Amazon–by topic, genre… customers like customized service–we need to segment the market to do that, but not by age since that makes no sense. We need to get out of this box and overthrow this stereotype. We need to understand the behaviors of the consumers, so that we can make non-consumers into consumers.

We know many office workers do MMORPG. But office workers don’t have much time, and the games demand it. So we see bots and macros… we have to focus on the consumer’s needs. Now there are services to level up characters. We need to understand that this is a different consumer. We need to provide easier experiences, we need to appeal to women. [[this talk could have been at GDC in the US!]]

Look at recent fighting games–they’ve gotten too hard for non-gamers to get into.

[[Tom Peters and Re-Imagine! cited.]]

There is a large potential market for women. They should be our next target audience. What is blocking them?

We see many foreigners coming to Korea to marry Korean men. Korea is no longer a homogeneous society. They will be naturalized. Korea is becoming internationalized. Think 20 years forward. Chinese kids can’t register on my website because they don’t have a Korean ID number right now! We have to think about foreigners, and fix the ID number barriers. There’s a real blue ocean there.

Another important point: companies and consumers and direct contact–most of the time the channels in between are a stumbling block–game rooms, etc.

I am running out of time… my presentation will be on the website, and I do recommend these books.

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