Why Pyrogon Failed

This post was originally posted on the old site on April 23, 2004.  It was one of the most linked and highest traffic posts on the old site.

Brian Hook, founder of the independent game company Pyrogon, has posted A Pyrogon Postmortem, an article of the reasons he believed his company failed.  Read the article, it is a very interesting read.

Based on the experiences of my nearly 10 years in the independent, downloadable games business, and a look at the companies web site and a careful reading of his postmortem, I come to completely different conclusions for why Pyrogon failed.

Here are the reasons I believe Pyrogon failed:
1. Pyrogon put the success or failure of the business into the hands of people other than themselves.
2. They paid no attention to marketing.
3. They pursued fads rather than focus.
4. They had no long term plan.

These reasons are often inter-related, let us start with the first and most important.

1. Pyrogon put the success or failure of the business into the hands of people other than themselves.

We also benefited tremendously by seeking out larger portals such as GameHouse, Real Networks, and PopCap to distribute our games, even though our take would be much smaller. Their audiences are so vast that the lower profit is more than compensated for by the volume.

Wrong. Wrong. Wrong.  Completely wrong.  They didn't benefit from this, they were killed by it.

The large game portals give the illusion of giving a large volume of sales, except they don't actually. The typical game sold in the large portals sells next to nothing. And the portals take the vast majority of the proceeds of this next to nothing. The large portals sell so many games that any individual game gets lost in the shuffle. A game only sells if they promote it, put it on their top page or in their newsletter for a week. Then when it is removed for some other game the game goes back to obscurity.

Unless you have a Bejeweled-like hit, there is no way you are going to make as much money from the portals as you could selling it on your own. The portals don't care about your game the way you care about your game. Real Networks/GameHouse is interested in making money for Real Networks/GameHouse. PopCap wants to make money for PopCap. Your game is just another listing. If it doesn't sell as well as something else, it will never get promoted. And unless you are Bejeweled, your game won't sell as well as Bejeweled. You won't be promoted, you won't make much.

And it gets worse. The most important part of an independent game business is acquiring customers. Getting them for your first game, then selling them your second game. When you sell your game to a customer of a portal, you get only that small part of the sale that the portal generously hands over. You don't get the customer, you don't know who the customer is. You can't sell that customer your second game because you can't contact them and they can't contact you. In short, you can't build a business.

There is no way I would do a deal today to sell my games in a portal without getting the names, addresses, and email addresses of the customer. Absolutely no way. It does not matter how many copies they think they can sell, or what percentage they give. It is not worth it, it is not a business.

By putting their entire destiny in the hands of the portals, Pyrogon put the success or failure of their business into the hands of people who simply did not care whether their business succeeded or not. The entire burden of selling their product was put into other people's hands. Which brings us to point 2.

2. They paid no attention to marketing.

Every month I had to sit down and pay bills; we had to find insurance; we had to find an office; we had to monitor the Web site for outages; we had to package up installers and upload them; we had to do marketing by hitting all the shareware sites; etc. etc. None of these issues in isolation were that big a deal, but all these little (but important) things were constantly assailing me while I was busy trying to get "real" work done.

This paragraph is the only occurence of the word "marketing" in the entire postmortem.  Yep, I checked.

They had to do marketing instead of getting real work done.  What a bother!

This attitude, coupled with the abdication of the business in point 1, pretty much says it all. I would say it guarantees failure.

It does not appear that Pyrogon did any marketing on their own. Their web site is not designed for marketing. There isn't even any place on their main page to sign up for an email newsletter, one of the very basics of internet marketing. Basic things like order links on the main page don't exist. According to the Alexa, the site's Alexa rank is over one million, which means it gets very little traffic. A quick Google search on MahJongg solitaire to find search results for NingPo MahJongg turned up nothing in the first 5 pages of results. Simple redesigns to the site and some basic internet marketing could probably increase the sales from their web site many times over.

But they turned over the burden of selling their products to someone else, so they didn't focus on it.

3. They pursued fads rather than focus.

Pyrogon started out making one kind of game, then looked where the wind was blowing and made a different kind of game. This game was successful. Then they turned out other games, but the games don't seem to have anything in common. Did they do a survey of the customers of their first game, asking them what kind of games they would like to determine what to do next? It doesn't appear so, and because they sell mostly through portals they probably couldn't contact their customers to ask them anyway. Did they try to link the games, so that someone who liked one would immediately see that the other one was by the same company and that they would probably like it? It doesn't appear so. There doesn't seem to be much link between the games at all, nor any strategy to attract the customers for one of their games to another.

It looks like they developed their products on a pinball basis - where ever the ball bounced to, they developed a game. 

They even bounced around within their individual products, developing Windows versions, Mac versions, Linux, and so on for each game. Now it takes a lot of time and effort, regardless of how well you do cross platform development, to put out versions for different operation systems. This was a two person company, after all. Diluting the focus by covering all platforms meant they were spending an awful lot of time on developing for OSes with marginal markets instead of devoting their time to selling their existing products.

4. They had no long term plan.

By switching their focus and bouncing around so much, they had no long term plan. They had no plan, it appears, to build a business over a 5 or 10 year period. The postmortem gives no indication that they thought about how to build from one product to another, not just on a development (code) basis, but on a marketing basis. How does this next product fit into the existing lineup, how does it fill in something that our customers would want, and so forth. But if you don't know your customers, it is hard to figure out what they want. Which takes us back to the fundamental flaw of point 1.

The portals are a recent development and still a fad. It is not certain that they are around to stay. They may decide that they want to focus on some other kind of games than the games they currently do. They might decide at any time to change and drop your game. Putting your entire business into their hands is just playing the lottery, not a long term plan.

A game development company around for the long term will develop products that have a common theme, and they will build a customer list and market to their customers. They will try to find out what their customers like and make more of it. A long term business won't depend on whatever the current bestselling game type is, but will find a niche where it can prosper. It's not easy to do, but quite a few companies (including mine) have managed to do it. The key is to realize that you are in business to provide for your customers and to make the kind of games they enjoy (and it really helps if you enjoy those same kind of games). You have to try to get every customer you can and to sell them as many of your games as you can. Selling to the portals is fine as long as you consider it as a bonus and don't base your business on it. In the long term, you have to base the success of your business on yourself (or yourselves if it is multiple people), and make it so that the success or failure of the business will be up to you, not others.

Comments

[Cliff Harris]

I'd read this before, but after recent discussions at indie gamer (and a few recent pitches to me from retail publishers) it's still a fascinating read. The bit about portals keeping the customer away from you is right on the money. I suspect the portals ARE here to stay now, it's just a pity to have witnessed how quickly everyone rushed forward to help them takeover the market, and mold it into a retail model for the new millenium.

[Hamumu]

I want to comment on the illusion of sales from portals. I have my best selling game on a portal. The first month, it sold a bunch (due to a newsletter, of course). After that, virtually none. I'm literally selling 10x as many copies from my own site. So it's not that my game is bad. There's obviously a failure on their end. And my site has AWFUL traffic. I don't doubt for a second that their traffic is more than 1000x higher than my own. It would be interesting to see a 'conversion' number comparing unique hits per month to sales.

Obviously, I pump my game up right on the front page, while they have relegated it to somewhere in their back catalog. But I think it all makes an interesting point. Portals really are a myth, unless you are that smash hit they're focusing on. I had totally envisioned it as a little bonus income, but I figured they'd sell a few more copies than I do, and it would just be the royalty split that makes the income (much) lower. Not so. I had this image of portals as just a churn of thousands of sales like crazy. No, you gotta do this stuff for yourself. Only you will put in the effort behind your titles, keep them prominent, push the right kind of people at them.

Portals are one gigantic conflict of interest. Bully for them, sucks to be us!

(By the way, I predicted the whole thing a couple years ago in an interview at Indiegamer... too bad it's defunct so I can't be proven omniscient!)