How to make the jump from developing a game to running a game platform

The advent of cloud computing has enabled several companies to reinvent themselves, either by increasing the value they offer to customers or by creating new businesses. This digital transformation wave affected several industries, from retail to healthcare, from hospitality to financial services. Gaming companies, both developers and publishers, have also aimed to capitalize on the vast amount of data and intellectual capital they have, in order to reinvent themselves and branch out into different ventures. This is not new, but in the past focused on capitalizing on intellectual property through licensing rights for TV and movies. Today it has expanded to other media such as Riot’s League of Legends Netflix animation and Music business, or through different TV and online formats such as the LoL Esports tournaments.

The appeal to branch out comes from different directions, such as the need to create long-term engagement with players via subscription models rather than stand-alone sales, or direct sell to customers via their own online game store. Companies also want to capitalize on data acquired from player behavior in order to improve their experience or create additional revenue from ads or in-game purchases, as well as expanding their internal tools as platforms to be used by external customers.

One example is Epic Game’s Unreal Engine platform. Unreal Engine can be used by other game developers, as well as by film and television and other industries. It also includes a marketplace for buying and selling of digital assets, and can run in the cloud through AWS. Other companies also moved their development platforms beyond the video games world, such as Cocos HMI Smart Cockpits for smart vehicles, or Tencent Games’ WeGame, which aims to be an open ecosystem for gaming. On the other hand, some companies, such as Revolgy and Accelbyte, were born with a mission to support other game developers through their platforms.

The pursuit of these new revenue streams can introduce new challenges for engineering teams, even those who are comfortable using the cloud. Besides a sound architecture that’s scalable, resilient, and extracts all the benefits that the cloud can provide, additional consideration has to be taken to make sure the cloud platform itself is well managed and allows the company to innovate and expand it businesses. A consequence of offering different products and services is having to adapt your operating model and address topics that until then might have been faced only by their internal IT teams such as SLAs, disaster recovery, data governance, compliance and availability. For a game developer, a short outage in a game service might be mitigated by giving affected players in-game credits, but if your online 3D engine is being used by a hospital to plan surgeries, even small outages can have serious consequences.

Any change by itself is a challenge, and jumping head-first without much thought can come at a price. Research shows that 70% to 95% of digital transformation projects fail. Here are four competencies to better managed your cloud platform, and two to allow your company to make the jump from selling games to providing new services:

Cloud as an Innovation Enabler

It’s very common for companies to first approach cloud from a cost reduction perspective, and even when they understand the additional value that it can bring, such as business agility and improved efficiency, there’s a lack of vision on how the cloud can enable the creation of new businesses and new revenue streams.

Long gone are the days when any new initiative had to be planned out at length in order to avoid unnecessary expenses in IT infrastructure and software. The pay-as-you-go model of the cloud reduces that risk and should empower teams to experiment: start small and grow based on customer feedback, and stop all at once when it doesn’t make sense. Besides that, the cloud brought to developers the ability to use several different technologies such as ML, IoT and Blockchain, in a way that doesn’t require them to build and manage a whole stack of new products. Business leaders should understand that this capability is now available for their teams with much less effort than was needed a few years ago, and should look for opportunities to take advantage of that.

With new services being released all the time, there are constant opportunities to innovate by leveraging cloud services. As an example, AWS made 100 announcements during re:Invent 2022 alone, including several around big data and analytics.

Data Monetization and Value

A consequence of a closer relationship with customers is the growth in the availability of data about those customers behaviors or preferences. Companies that are successful in creating new businesses use that to their advantage. According to research from management consulting firm Mckinsey, those companies can see an increase in EBITA between 7% and 15%. There a few ways the cloud can help companies create value from data:

Scalability: cloud computing allows companies to scale their infrastructure up or down as needed, without having to invest in additional hardware. This means that companies can store and process larger amounts of data, and run more complex analytics without having to worry about capacity constraints;
Real-time processing: with the cloud, companies can process data in real-time, allowing them to make faster, more informed decisions. This is particularly useful for applications that detect fraud, either in financial transactions, or just someone trying to cheat in an online game, where timely responses are critical;
Collaboration: cloud-based platforms can enable greater collaboration between teams and departments. This means that data can be shared more easily, leading to better insights and faster decision-making. Tools such as Amazon DataZone can help companies share, search, and discover data at scale across organizational boundaries.
Machine Learning: the cloud can be used to train machine learning models on large datasets. This can help companies gain insights that could be difficult or impossible to obtain through traditional methods, and are only available through the scale of the cloud. Amazon SageMaker, for instance, is used to make more than 1 trillion predictions per month.

This explosion in data storage and consumption does require companies to adopt a more rigid data governance program, especially when dealing with personal identifiable information (PII), or when processing financial transactions. Here are some steps companies can take to establish effective data governance:

Establish clear ownership: identify who owns the data and establish clear lines of responsibility for data management. This includes defining roles and responsibilities for data stewards and data owners.
Establish data standards, including definitions, business rules, and data quality standards. This helps ensure that data is accurate, consistent, and reliable.
Develop policies and procedures: develop policies and procedures that guide data management practices, including data privacy, security, and retention policies. These policies should be communicated clearly to all stakeholders.
Implement data management tools and technologies: invest in tools and technologies that support effective data management, including data cataloging, data lineage, and data quality tools. AWS has diverse tools that can be used to implement and automate compliance and auditing. For example, Amazon Macie uses ML and pattern matching to discover and help protect sensitive data.
Monitor and enforce compliance: evaluate data management practices to ensure that they are compliant with internal policies and external regulations. This includes conducting regular audits and implementing corrective actions when necessary.
Foster a culture of data governance: foster a culture of data governance by educating employees on the importance of data management and providing ongoing training and support.

Governance & Compliance

Governance is an important topic for any gaming company, even those that don’t venture outside the traditional model of selling game copies. When venturing into new areas, especially when you begin to run a platform that will store and process customer data, it requires a conscious effort to strengthen some capabilities and processes. It’s important to begin early and evolve incrementally as your business evolves, because exponential growth is possible when dealing with digital services, and it’s easy for things to get out of control. Some companies might not have an established governance team, or the responsibility might be split among IT, legal, and security. It’s important to clearly define a place for the creation and enforcing of policies to live on early, either by having dedicated roles in the areas mentioned before, or by incubating it inside a cloud team, potentially a Cloud Center of Excellence (CCoE).

As the company explores new ways of working, strong IT and cloud governance can help establish clear lines of responsibility and promote greater collaboration between the cloud team and business stakeholders, which is essential to extract the maximum benefits from the cloud and truly innovate.

Cloud Operations

While successful game companies have mastered the skill of developing and distributing stand-alone games, hosting and managing an online platform can bring additional challenges. First of all, the set of skills needed for the cloud might be different from the ones they currently have, especially when it comes to cloud infrastructure and operations. In fact, it’s very likely that a closer partnership will have to be established with HR to define the new roles and responsibilities that will be required. If the company has a strong maturity in their internal IT team when it comes to governance, and standard frameworks such as ITIL and COBIT are well established, the IT team can be a starting point to help adapt those controls and processes for the cloud.

It’s important to also treat the cloud platform as a product, with designated owners, managed backlog, and a roadmap, and allowing for constant evolution. Ideally, a Product Operating Model should be implemented, where teams and functions are centered around product teams delivering value for customers, either internal or external.

Conclusion

There’s a lot that can be achieved by leveraging the power of the cloud, and game companies are well positioned to expand into several different business initiatives. There are steps that need to be taken to prepare themselves for the change in how they operate and view technology, but those can be tackled with a proper strategy and planning.

It’s very tempting to embrace the same operating models when transitioning to the cloud from your own data center, as well as from a license-based to a subscription-based business model. It’s important that companies understand that what worked well in the past will probably not be the best model for the future. Adapting is the only way to maintain a competitive advantage that will last, and companies should be willing to embrace change as part of their new reality.

You can start your data journey by leveraging the AWS Data-Drive Everything Program, and improve your governance maturity by leveraging the AWS Cloud Adoption Framework, including a free Cloud Readiness Assessment.

Additional Reading

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