PTD Original

IN|10 Feature: Speaking with EEDAR’s Jesse Divnich about Business, Culture and Canada

If you’ve read the about page for Play Till Doomsday, you know that the approach we’ve taken to address the culture of digital games is all-encompassing.  This project aims to bring together the different perspectives of all the individuals, communities, institutions and companies that weave together the fabric of digital games culture.

Obviously, some of the different parts that make up that culture don’t always see eye to eye.  This is no more apparent than in the relationship between the businesses who aim to make profit from selling games and those who aim to approach games as something more than just consumer goods, as creative expressions or objects of cultural significance.  One of the mandates of the PTD project is to reach out to all sides and get them to share perspectives with each other and foster understanding about how the economic and creative aims of any cultural industry are often intertwined, even if at odds.

At the recent Interactive Exchange 2010 (IN|10) conference in Toronto, I spoke with Jesse Divnich about how the financial side of the digital games industry conceives of games as cultural artifacts, how its analysts may fit into a wider culture of gaming and what impact Canadian consumers have in the games marketplace.

Divnich is the vice president of analyst services for Electronic Entertainment Design and Research (EEDAR), a games industry research and market analysis company based in San Diego, California.  Before joining EEDAR, Divnich worked as an independent consultant and analyst for various clients with financial stakes in the interactive media industry.  By most accounts (if his multiple appearances on and references in Bloomberg, CNN Money, Wall Street Journal, Industry Gamers and Gamasutra are to be indicators of clout) he’s good at what he does.

Talking with Divnich was an enlightening experience.  Our differences in perspective were immediate, the product of differing angles used to approach the same thing: Jesse’s background training is in business and financial management, while mine is based in understanding the social and cultural qualities of digital media forms.  This diversity of approach produces a rich reflection of the many ways digital games produce value, financially and socially.

When asked to describe what EEDAR does, Divnich says they collect massive amounts of data to track how the industry moves, and use it to “improve the quality, profitability, and value of video games.”  This is matched by EEDAR’s proclaimed mission statement: to increase the profitability and creativity of the video game industry by allowing retailers, publishers, developers and investors to make more informed decisions based on objective, accessible and meaningful data.

Noting the attention given to game creativity and quality in this mission, I asked him if he or EEDAR ever conceives of video games as cultural objects, as things meaningful to people’s lives that might go beyond things just bought and sold in a marketplace.

In response, he suggests that the initial capacities of early video games, to facilitate play and interaction, or allow for the escape into a game’s narrative or find fulfilment in fantasy, have been joined by newer social functions in recent years:

Video games now generate social conversation; they bring together families and friends in interesting ways not possible a decade ago.  Microsoft’s Kinect, for example, is going to allow video chat through televisions.  Game systems such as the Xbox 360 are incorporating more and more social media components into their feature sets, allowing them to become communication tools.  And the Wii is bringing in audiences that might otherwise not be interested in games.

I was curious about whether or not he felt these new social elements being built into game platforms impact how video games themselves are perceived as commodities, if publishers or game makers are recognizing that they can create financial value by making connections to the cultural value games bring with them.

That question produced a brief moment of disconnect – Divnich asked me to clarify what I meant by “commodity” – revealing that my use of the term, as an object of exchange whose function lies in that exchange, may differ from that of business-focused thinkers.

My “go to” explanation, overused as it is, involved Bobby Kotick and his much loathed approach to games, financially successful as it might be.  Kotick, CEO of Activision Blizzard, has been vocal in saying he brought business people from the “packaged goods” industry into his company, presumably because they were very good at making and marketing various products for regular and repeatable mass market consumption.

For many, the mental images that the phrase “packaged goods” stimulates includes things like toothpaste, batteries, canned soup and shampoo.  This can be unsettling because the things that Activision produces are received very differently from the things that companies like Unilever or Proctor & Gamble produce.  What gets complicated if we treat video games as cultural products is that they are more than just packaged goods – like films, books, music and games in general – they can hold deep meaning for their consumers and users, form social attachments and foster derivative creativity and reflect and speak to cultural realities and ideologies, even through abstracted presentation.  They can also stimulate emotions – indeed, shortly after my interview with Divnich, I attended an IN|10 panel that aimed to explore how people might experience emotional engagement with the games they play.  Video games, as cultural products, can mean something beyond their utility, making them different for consumers than a tube of toothpaste.

After playing the Kotick card, Divnich knew the angle I was taking, and spoke to the connection players have to the games they engage with:

Some video games have grown to become cultural objects – people relate to icons like Halo’s Master Chief or Nathan Drake from Uncharted.  People who have grown up with video games might have strong connections to Pac-Man and Super Mario Bros – those things might have helped define their childhoods.  Of course, Mario has transcended games to become this huge cultural icon.

Intrigued, I pushed further to get Divnich’s perspective on what the industry thinks about games being culturally significant:

I think it is easier to accept in movies, books and music all the time – that these things are culture.  The games industry is slower in turning its products into something much bigger than the games themselves, into larger cultural phenomena.

The perspective that it is the industry that turns things into cultural phenomena produces another moment of disconnect between our approaches to video games.  Creative industries certainly market their goods to be as successful and meaningful to people as possible, but cultural analysis would suggest it is the audiences and users of such things that produce long-lasting cultural significance. 

From this perspective, Nintendo didn’t make Mario into a cultural icon.  Instead, it was the millions of consumers and players that have meaningfully engaged with the character for the past three decades that grant the portly plumber his social worth. 

Of course, this begs the question of whether industry marketing and cultural acceptance can exist without one another.  I’m not sure that question can be easily answered, but much money has been spent by creative industries in recent decades trying to replicate the cultural positions of Mickey Mouse, Superman and Mario, but none have been successful without the will and passion of the public who must engage with such figures at levels that transcend their commodity value.

Perhaps even more reflective of the consumers role in fostering cultural significance comes out in our next topic of discussion.  I asked Divnich if he felt that games industry financial analysts were part of the culture of video games, noting that the figurehead for such analysis, Wedbush’s Michael Pachter, has taken on a persona of his own.  Pachter frequently incites the passions of gamers, who’ve help foster his icon status, with his appearances on, particularly the Bonus Round panel discussions and his Pach Attack Q&A show.

Divnich responded that he loves the idea of the financial guys being part of the culture, as well as the media attention that comes along with it.  In particular, the Pachter persona is something he appreciates:

I’m good friends with Michael.  I admire what he does, and – he is going to love it when I say this – I would like to become like a Michael Pachter one day.  I do love the media attention, reading about what you do in the papers, stuff like that.  But that does bring EEDAR a lot of attention.  I’m always trying to bring in positive attention.  Michael doesn’t care.  Michael will flat out say “you are full of shit, your game is going to suck, you’re going to miss your financial targets and you’re going to go bankrupt.”  He is an icon in this industry because he takes those freedoms.   He doesn’t have the same restrictions that people like myself have, or the big executives at game companies that have to interact with other clients.  People have to be called out on their BS and I’m glad there are people like Michael that can do it.

I asked him about being “restricted” in what he could say, and he replied that “restriction” was not the concept he means to invoke.  Instead, he says his actions and opinions reflect on EEDAR and he has to represent the values and mission of the company, whereas Michael Pachter works directly with a set of investors and is accountable only to himself.  However, despite Divnich’s position as part of a research firm that relies on satisfying paying clients, he still prioritizes being genuine and honest in his approach.

One thing I will never do is lie – I would never lie to benefit a client.  People come to us with a lot of money and say “I want to make the perfect video game, just tell me what to include.”  This is the truth: doing that is going to be very expensive and demand lot of investment in development, marketing and time – and there will still be risk.  This is an industry in its infancy and one that is incredibly fast-moving.  Who knows what will succeed and what won’t five years from now?  We like to think we’re one of the better companies at predicting fluctuations, but for now, everything this always put in context of your skill and your budget.

This is the reason EEDAR creates and compiles massive amounts of data for clients, to paint a picture of where the industry is headed and what it needs to produce successful content.  But Divnich, as an avid gamer, actively wonders if such data can be used in a negative way by producers.  He would like to see meaningful and quality content be what fosters financial success for core gaming titles.  During the panel Divnich participated in at the IN|10 conference, where he presented the findings of a recent EEDAR study that suggested review scores and other positive affirmations of a game’s quality do indeed have significant influence on consumers perceptions about the game’s worth and willingness to buy it, he suggested some publishers might take the data to mean they don’t have to make quality games, only games that get promoted as such.

This of course runs counter to the relationship between profitability and creativity championed by EEDAR in its mission statement, a perspective shared by others featured alongside Divnich on the IN|10 panel.  During the Q&A session that followed, Shaun Hatton of Electric Playground asked those on stage which was more important, making good games or making money.  The answer from panel members, unsurprisingly, was “making money,” with the added stipulation that producers can’t be financially successful without prioritizing game quality. 

That quality of content is on the radar is encouraging for those who feel games can be more than packaged goods, but perhaps not immediately acceptable to gamers who see franchises regularly run into the ground.  There is no denying that some business decisions exploit the popularly and cultural appreciation of certain properties to the point where those properties are negatively affected, or no denying the general lack of attention and care given to licensed games that prioritize brand recognition more than quality.

This is a major point of contention between games as culturally significant objects and their purpose as tools for generating profit.  But the core gamer, says Divnich, does not accept mediocrity for long:

There’s a lot of debate regarding the priorities of publishers.  If you are making a Barbie game, who cares if it’s good or not, relative to the core gamers?  This is not to say the game doesn’t have to be good for its target audience, or doesn’t have to appeal to the target audience, but the brand is going to sell it.  Publishers know that and want to have low development costs – it doesn’t have to be a Halo, it just has to serve its purpose.  But when you are speaking to the core gamer, these models don’t work the same way, brand is very important, but must be considered alongside the development costs and marketing budget, overall game quality and review scores – our research tells us all of those factors are important.

Wrapping up my time with Divnich, I changed gears to discuss the Canadian games market.  Although he lives and works in sunny SoCal, Jesse is a Canadian, born and raised in Southern Ontario.  Knowing this, I took the opportunity to exploit our shared nationality to gain some insight into the state of the Canadian marketplace for games, something not as readily addressed here when compared to other jurisdictions.

Public data about the Canadian games market does not come out that frequently, certainly not as frequently as the monthly NPD numbers released about the American market.  So understanding how big of an impact Canadian gamers are having, at least financially, within the culture of gaming is difficult.  I asked Divnich if EEDAR has access to Canadian sales data, and whether or not it conforms to the “divide by ten” rule of thumb that separates much of America’s economic reality from Canada’s.

We do get data from around the world and we do find that Canada and the United States are closely related.  There are some differences of course: For EA Sports, Madden football is not as big in Canada, while NHL hockey is huge here.  The spending trends during seasons can also be different – it is colder in Canada, people who spend more time indoors in the winter tend to buy more video games. 

However, for overall sales of shooters and core action games, it does pretty much follow the 10% rule: Take 10% of the USA sales and you have a reasonable approximation of Canada’s sales.  The problem is that the Canadian market is so small, even if we were to identify a trend where a certain kind of game sold way more to Canadians, that’s still only 10% of the market.  In most cases, a business man, an executive who has to generate return on investment, would just say “who cares, it’s just 10% of the market and we are here to please the other 90%.”  People don’t pay too much attention to Canada because of its small marketshare.

I inquired about whether or not the attention paid to Canada has been affected by this country being the third biggest producer of games.  That, suggests Divnich, is a whole other topic:

Let me put it this way, 80% of the products in the United States are made in China, but that doesn’t mean what happens in China will be an influence on American culture.

No example makes the point better.  This is no doubt the reason why Canadian content in video games is sparse, or representations of Canadian culture are virtually non-existent outside of sports titles.

Divnich, however, is quick to defend Canada’s position as a producer of quality and financially successful games:

In terms of a development community, Canada is fantastic.  East coast to West coast, Canada has some of the best schools and best developers.  I would say Canada is the best producer of video games in the world.

In fact, he would like to back that up by doing a study that measures the review scores of games developed in Canada against those developed in other jurisdictions.  While noting the need for caveats when working with the scientific objectivity of review scores, he says he would still “put some money down saying Canada does make better games.”

My time speaking with Jesse Divnich informed, more than once, the breadth of diversity that exists in perspectives targeting video games, but on this last point, our views align perfectly.



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