VC Bing Gordon reflects on marketing games, hacking growth, and investing in social

Bing Gordon spent 26 years at Electronic Arts before he became a venture capitalist. He had just about every job at the company, and he closed his time there as chief creative officer. Then he became a general partner and chief product officer at Kleiner Perkins Caufield & Byers. He leads Kleiner’s ProductWorks program and heads its sFund, which focuses on investments in the social web.

That fund has made 16 investments. He serves on the boards of Amazon, Ouya, Zazzle, Mevio, N3twork, Zynga, and Ouya. Gordon has a zany personality, and he’ll be speaking about hacking monetization at the upcoming Game Marketing Summit in San Francisco on April 22. Gordon has talked about the “golden age of gaming” and received the highest honors from his peers in the game business.

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I interviewed him recently in a wandering conversation. That’s the best kind of talk to have with Gordon, as he has an interesting opinion or off-the-wall comment on just about everything. Here’s our edited transcript of our conversation.

GamesBeat: You’re talking at the Game Marketing Summit. I figure you have an interesting take on how to do game marketing right. Do you have a thesis you’ll be talking about?

Bing Gordon: I got asked to talk about hacking monetization, hacking pricing, how freemium works, the per-session economy and how to think about it.

GamesBeat: Why would you use the word “hacking?”

Gordon: In Silicon Valley, people talk a lot about growth hacking, which I think is obnoxious, but it’s become a meme. Growth hacking is really a fancy term for engineered spam. It’s a consumer anti-benefit, but it’s necessary to building critical mass. I like the idea of retention hacking because you’re basically trying to figure out how to keep people who like what you’re doing around longer.

GamesBeat: “Hey, Bing, we haven’t seen you in a few days, but here’s a new gold nugget to buy something in our game.” Is that what you’re talking about?

Gordon: The growth hacking is, “Hey, you should show up now and here’s why.” You reach them in a different channel. For monetization, I use the word “hacking” just because other people use it. It’s a new economy of games. I started talking about it in 2004. People in the packaged-goods business didn’t believe that games were going to get monetized differently, but then in 1981 and 1982 the way packaged goods got monetized was invented. I’m putting that in perspective on one slide, and then offering some tricks and benchmarks.

GamesBeat: When you think of modern marketing for 2015 that’s different from, say, 2012, what comes to mind?

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Gordon: Instagram. It’s basically channels. 2010, Facebook was the channel. 2012, I’m not sure there was a channel. We were transitioning from web to mobile. In 2015 Instagram is a channel. Email is always a channel. How do you build awareness in the first place, and then how do you connect people socially without the Facebook notification channel?

GamesBeat: Oddly enough, on mobile, the answer is still Facebook, right?

Gordon: Yeah, but there are very few games that connect people regularly. Game of War does it. Words with Friends does it. Clash of Clans does it somewhat. It’s hard to find other people in a mobile game.

GamesBeat: I guess the notion of clans seems to be great for retention, keeping people coming back and feeling like they have to be there every day.

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Gordon: The way a clan works, it’s a light version of MMO guilds, which are kind of an online version of fraternities and sororities. They’re competitive fraternities and sororities. And then that’s a Greek version of villages going back to prehistoric days.

GamesBeat: Are we wandering now, or is this actually part of your talk in some way?

Gordon: When I put together a talk, I wander, and then I end up putting each thought in a single slide. But no, the social structures are critical for retention. Retention is critical for lifetime value.

In the marketing of the packaged-goods era—In the first generation we made games that would show well in magazines. The second generation, we made games that would show well in a store. That was around the founding of Electronic Arts. The third generation was showing well on TV. In the ‘90s, when we understood TV commercials, the designers would co-develop the TV commercial with the game. In the 2000s we built games for the internet. Now people are wrestling with how you build games for mobile social sharing. Nobody’s quite figured that out.

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GamesBeat: For Twitch or YouTube?

Gordon: Those do not work for all games. Those work for games that are already hits. I guess in 2012 the theory was, you promoted a game by getting Apple to feature it and then getting to be top 10 in the App Store. That doesn’t work so well anymore.

GamesBeat: The interesting place we now find ourselves, we had three mobile games advertised during the Super Bowl.

Gordon: The reason they do that is because their predicted lifetime value in a new customer is higher than their expected cost per customer acquired of TV during the Super Bowl. I don’t have their exact numbers. I have guesses about how it works and why. What we found with The Sims when we put it on TV is that half of the economic benefit of TV advertising was getting existing customers to spend more.

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GamesBeat: The funny thing about the Supercell ad, this guy Jimmy Lee from Supercell was talking about it at F8. He said, “We sort of thought up the idea in a hot tub. We were thinking of something we could do for our fans. ‘Hey, how about a Super Bowl ad?’ came up.” It didn’t sound very analytical to me. It sounded like they just thought of something fun and did it.

Gordon: It’s nice and honest of him to admit that. If someone was an MBA, after the fact they’d try to prove how smart they are.

GamesBeat: When you think of what happens in console game marketing now versus what happens in mobile games, do you see anything they have in common, or any specific things that are very different?

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Gordon: What they have in common is, they all think the console game marketers are going to lose their jobs. In the 2000s, console games were marketed a lot like movies — paid television, a little bit of PR, a lot of retail marketing, and street marketing, trying to get word of mouth among opinion leaders. None of that has worked well for mobile games.

GamesBeat: The console guys seem to spend an awful lot of time on trailers — doing a new trailer every week now.

Gordon: It’s a transition. The people making console games learned the art of making games that were good TV. You tend to keep doing what you’re good at. Right now I think the key in console games is how you keep monetizing your happy customers over time. To the degree that the viral video can get to buy more stuff this month, it probably pays off.

The big difference right now between console games and mobile games is 3D graphics. TV is the only way to show that off. And then the sense of movie-like story quality. Console games keep playing that up. The TV for mobile games, rather than looking like a movie, it up-rezzes all the art. We don’t have the footprint on phones to have all that art as a non-interactive interstitial, so they just run it as a TV commercial instead. That’s very much like the kind of advertising Nintendo could have done for the Game Boy, the original B&W Game Boy. They could have put Kate Upton in Mario and it probably would have had the same impact.

GamesBeat: Some of the mobile advertising reminds me of — it’s playing up the social element of it, like Nintendo did with the original Wii. Instead of showing you the screen, they turned the camera around and showed you all the fun people were having in their living room.

Gordon: I think of the failed launch campaign for the Xbox — “It’s good to play together.” I haven’t seen any TV about social connectedness that I think is very effective. The TV still mostly gets across a great solo experience.

GamesBeat: I did like the Liam Neeson ad Supercell did. He’s trying to get revenge on someone. I guess that’s kind of social?

Gordon: I guess? But it wasn’t showing people playing together. I’ve tried over the years how to get across that social aspect. What the movie business does, they do endorsements where they show people coming out of the theater together. What they really want to show is people kissing in the back row, I think, or somebody screaming and jumping into someone else’s lap. It’s hard to get inventive about social endorsements, showing on video what social is. “Social” sort of becomes a buzzword we use and everyone nods. But that doesn’t work well for marketing. The best video for social marketing comes from the dating apps.

GamesBeat: There’s a good question. What can gaming learn now from other industries when it comes to marketing?

Gordon: We learned from the movie business back in the late ‘90s. Frank Gibeau and Jeff Karp were experts. They brought the movie business to games. Blizzard did not get across the social element of World of Warcraft, all the guilding. Clash of Clans doesn’t know how to get it across.

I think there’s a lot to learn from dating. I did a talk three-four years ago about how online customer management is like a dating app. I showed side-by-side comparisons of graphs from OKCupid and various game product management graphs. There’s not a lot of new paid media. Right now the games business hasn’t really learned about Google advertising yet. We’re still kind of stuck with the movie business.

I do think there’s stuff going on in short-form online video that’s pretty interesting. There’s stuff going on with YouTube and the various creators there. How they build an audience is interesting. But there doesn’t seem to be very many people who are thinking across games and new video simultaneously.

GamesBeat: Switching gears slightly, what’s your view of the investment environment around games? Does some of this affect what you decide is going to be a good investment in 2015?

Gordon: In games I’ve seen a lot of things. The question is, with any consumer-facing product, can you afford to invest ahead of proven traction? It’s pretty awkward to invest before traction, especially in venture, because if you do — If you stick with that company for five or six years, even if you like them, and they don’t get traction, you’re kind of boxed out from competitive investing. The only reason to invest ahead of proven traction is if you really believe in the founding team. It’s hard, in games, to show a prototype or a Powerpoint and make it worth investing.

We’ve seen stuff like QuizUp that got invested in at a really high valuation after a meteoric 30-day rise. It still seems like premature investment.

GamesBeat: A lot of the money seemed like it was all going to go for user acquisition. In that case, if you know you’re putting $10 million into a company, and they’re going to use it for user acquisition, does that make you feel good?

Gordon: It depends how valuable the consumers are. You’re always betting that a company will figure out how to be long-lasting, get increasing returns, and keep customers for a long time.

GamesBeat: There are these new categories that always pop up. Virtual reality and augmented reality are the darlings right now. There’s also some interesting server infrastructure companies, like Improbable and Shinra. What do you think of those categories?

Gordon: I hope that VR happens. It’s another potential step in high resolution. Since I’ve been in the games business, every six years there’s a new generation. The first year or two it seems like a miracle, like you’re immersed in some all-new thing. Then, by year three, you see around the edges and you get used to it. By year four or five you’re bored and hoping for the new thing.

I think virtual reality shows great promise — a lot more immersion. The difference here is that in addition to the sense of immersion through ears and eyes, it seems to also get your inner ear involved. Your body’s affected more than in anything I’ve ever seen. That might make this feel simultaneously like two generational steps, if Carmack can make the graphics look good enough.

GamesBeat: You could combine it with your Apple watch, right?

Gordon: Ha! VR in general has earmarks of really high consumer demand. It looks like it’s coming to market more slowly than originally anticipated. It’s very difficult for a successful game company to spend a lot of time on it now, because it’s happening slowly. But it’s wildly interesting.

As far as live services, we’ve seen it with AI, we’ve seen it with 3D, and we’ve seen it in analytics. People could build a layer, the tech stack, and become valuable. In the early days of AI, of Havok, and of 3D, these were frameworks that over time became more battle-hardened. We’ll see the same with live services. 3D, engineers liked doing it, but it was hard to get performance. AI, engineers didn’t like doing it, but Havok could get performance. With live services, nobody likes to do it, but it’s important. The stuff nobody likes to do, or that people can’t do, is often a good thing to create as an independent service layer. It’s a hard way to make a living, but if things go right you can build a dominant position.

GamesBeat: What do you think of some of the categories that seem like they might be past their prime as far as investment opportunities? With social casino games, in 2015 the successful ones seem to be run by the big companies now.

Gordon: The category is here to stay. The question is, is there more innovation ahead? There’s always more innovation ahead, I think, but it has to happen through people. It doesn’t happen on its own. In these creative businesses, the market grows when people make good stuff. When people get bored of their own success or stop having imagination, then things stall. I think it’s very likely that online casino games are going to have a potential to be 10 times more people than ever go to a real casino in a given year. Whether it’ll reach that or not remains to be seen.

I liken it to NHL hockey. When I started doing the NHL hockey game on the Sega Genesis, people would buy the game who never watched hockey on TV. People would wear hockey merchandise who never went to a game. The NHL stumbled in their marketing to a point where the only people who watched it on TV and bought merchandise were people who went to at least one live game a year. As soon as you lose the imagination of a broader audience, your business gets a lot less interesting. With online casino, the question is, can you keep people involved who don’t go to Vegas or Atlantic City?

GamesBeat: What platform is more interesting — the Nintendo NX, the Nvidia Shield, or something else?

Gordon: I’m not paying attention to either of them.

GamesBeat: The Nvidia one seems to be tied pretty closely to cloud gaming. I don’t know what you think of cloud gaming in general.

Gordon: I’ve seen a couple of them. The world’s going in a different direction, I think. The problems with ping rate and prediction of what other users are going to do are just exacerbated on touch screens and mobile. In general, asynchronous is fine. It’s bandwidth or memory. I just don’t think that games work with the client’s memory constraints, and all the problems of doing processing and rendering in the cloud don’t give much advantage to mobile devices.

What I notice about it is, civilians think it’s cool and gamers don’t. That’s usually a bad formula. It means that civilians invest and then gamers don’t buy. So far, cloud gaming is the Coleco Adam of online. It’s a fake demo that doesn’t actually work when it’s out of the showroom.

GamesBeat: Have you been very active in investing with any particular gaming efforts lately?

Gordon: Neil Young, Zynga. I invested in thatgamecompany pretty quietly about a year and a half ago. I’m doing more gamification stuff. Jason Oberfest started a company called Mango Health, which has gamified prescription drugs. The guy who did Badgeville, Kris Duggan, we invested in Betterworks, aSAS goal-setting company. But no, it’s always awkward, when you’re on the board of a company, to invest in a competitor.

I see many game startups. What’s interesting about this whole generation of mobile winners is that many of them were losers for a long time. That was never the case in console games. In console you never saw somebody fail a long time and then suddenly get successful.

GamesBeat: Yeah, these mobile guys failed for 17 years until they hit.

Gordon: Even Jamdat. There are lessons to learn that are so different from console games, and if you’re already successful you don’t bother to learn those new lessons. I don’t have any broader explanation than that, but the data says Supercell was a failure. Machine Zone did some weird stuff for a while. King was a failure for a long time. Maybe it’s just that everyone failed and so there are few successes, but the failures also failed for a long time.

GamesBeat: Now people are starting to say that you can’t dislodge those guys, that they’re locked in.

Gordon: Yeah, we’ve heard that before. We heard it about FIFA. We heard it about Madden. We heard it about Microsoft Flight Simulator. We heard it about Microsoft’s golf game. We kind of heard it about Ultima. We heard it about the early days of Activision. The new generation of technology always obsoletes stuff.

For some period of time maybe they’ll be hard to dislodge. Online, when there’s a social network effect, it tends to last longer than predicted. I think World of Warcraft has sustained itself for longer than Bobby Kotick probably expected when he first invested in it. Rock Band didn’t last as long.

GamesBeat: Kim Kardashian’s on top now. She brought the old brands back again, brands on top of mobile.

Gordon: We’ve seen that before too. The dislodge thing, having been involved in EA Sports forever — you just know that if you screw up a little bit — watch Sega, which owned the world once. You can do a string of stupid things and next thing you know, you’re wondering where your first-class ticket went to. The stay-thirsty attitude is important. You have to keep inventing. You rest on your laurels, you can get away with it for three months, but not three years.

GamesBeat: What’s your feeling now about the golden age of gaming?

Gordon: We’re still in it. When I said that, I imagined there would be some billion-dollar-a-year online games. We blew right through that. Who would have predicted, 10 years ago, that games would create billionaires? It did it in music and in movies, though. I hadn’t thought about that as a filter before.

In terms of game quality, I don’t have a sense that the Metacritic of popular games now is higher than ever. There’s been a divergence of taste. But boy, you look at some of the console games—Their resolution and storytelling is what we imagined 20 years ago. The size of mobile games is beyond what we imagined 20 years ago. Call of Duty is selling more units per iteration than we imagined 20 years ago.

The audience is broader and more engaged than we thought possible. The hits are bigger than we imagined. But going to market is harder. Maybe it seemed easier to me than many because at Electronic Arts we had so much focus on the retail channel. But at EA we could figure out a formula for going to market that lasted five years at a time. Mobile is still being invented.

By any measure, there are more people making games. You look at something like Minecraft. That was unimaginable even 10 years ago, the scope of success and engagement. Minecraft is like Counter-Strike times 20. So the golden age of gaming is being tinged with platinum.

GamesBeat: What do you think of the opportunities for indie game developers?

Gordon: When I learned about indie movies, it was mostly from reading books. When Miramax took off, all the indie moviemakers wanted to do was get paid as if they were doing features. They wanted to be proudly independent, but make real money. Miramax delivered some of that, or at least got you a little more money and a better shot at Academy Awards.

We don’t really have a Miramax for indie games. None of the channels for indie games have turned out to work very well. The only place where indie games continue to have a clear home is on PC. Google Play and Apple are both pretty hard for stand-alone companies to deal with.