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Mar 22, 2004

PROFILE: Newly Merged IGN/GameSpy's Aggressive Content Sales Plans

SUMMARY: On March 5th, the two largest companies in online game content merged; and now they have big plans to dominate broadband content sales (including music and movies) to millions of men aged 18-34. Not to mention a possible IPO....

In our exclusive interview, Exec VP Jon Epstein reveals what's working for online sub sales so far (205,000 paids and counting) as well as quick info on IGN/GameSpy's upcoming launches
This month IGN Entertainment and GameSpy merged to form the world's largest gaming and entertainment company with total traffic at 25,000,000 unique visitors per month. (Yes, that's unduplicated uniques.) And, now they've got big aggressive plans, that go well beyond the niche world of computer games.

"Our board members are talking about a potential public offering," says Executive Vice President Jon Epstein.

"The market is happening again, gaming's one of the most successful content segments, and we're in it for real. Both GameSpy and IGN launched in 1996. We've been through the good times and the bubble, and we went through the rough patches. It's really fun now. The Internet has grown, gaming has grown, and we are the survivors. We're pretty well positioned. Obviously we have to deliver, but that's our job."

Launching a new premium subscription service

Although both sites targeted male game enthusiasts, and cross-promoted each other's services in the past (the gaming business is fairly incestuous), they'd carved out very separate and distinct niches. In fact there was only about 10% duplication of visitors and paid premium service subscribers between the two.

So, the minute the merger was finalized March 5th, the marketing team sprang into action launching a new subscription offering "Founder's Club" which combined all the sites' mainly unduplicated content into one extra premium offering for $9.95 month/$79.95 year.

Founder's Club has so many features that it's a bit overwhelming for shoppers. Marketers simplified this by posting a handy comparison chart on the promo pages with oversized check boxes showing what features each subscription choice includes. It's easy to skim, and you don't have to read every word to know the Founder's Club is the much better deal for just a few bucks more per month. (Link to promo creative below.)

Results? In the first two weeks of the March Madness Merger promotion, more than 5,000 consumers took the Founder's Club option.

5 key IGN/GameSpy subscription marketing tactics

#1. Offer month-to-month plus annual options

Epstein notes the sites have tested offering other terms such as three months and six-months in the past, but users didn't go for them. So the team now stick to monthly and annual subscriptions, both on auto-renew.

Despite being up to 50% discounted, the annual subscriptions are more profitable than month-to-month because the average lifetime is higher.
Credit card numbers going bad are by far the top reason why most month-to-month subscriptions don't make it to 12 months.

#2. Appeal to online ad haters

Although the sites' entertaining ads enhance the average visitor's experience, the fact is, a slice of the Internet population just hates online ads. And they are willing to pay to get rid of them.

So, in addition to a "Subscribe Now" link, each site's navigation bar also features a "Disable Ads" link prominently. The Disable Ads link leads to a subscription sales landing page that's identical to other landing pages, except of course the headline includes sales copy about getting rid of ads. (Link to promo sample below.)

#3. Premiums (gift with purchase) really work

You'll almost never see a plain vanilla "subscribe now and get our premium content" offer on any IGN/GameSpy sites. "Premium offers do work," says Epstein who admits to being inspired by the football phone Sports Illustrated once offered on TV.

The offers that work best are games -- either advance beta tests of a famous name-brand game's next version, or downloadable free copies of a new game. Subscribers don't mind if the file is huge, even 2-3 gigabytes, because file size equals value and 86% of users are on broadband connections. (Link below to a sample game offer.)

The offers that work second best are men's magazines such as Maxim. This is not the trial offer that Classmates does via Synapse, but a full year's subscription. Fulfillment is handled through ValueMags' parent company.

"When I started doing those deals a couple of years back, we had to pay for magazines. Now in some cases they pay us to give them subscribers. We're an important source for them; their whole hope is that we introduce people to their property. There's no transfer of any account information beyond mailing address."

The least effective offers? Gaming magazines.

"Print readership is declining because of the strength of the Web sites. The reality is between our two sites, we publish 4,400 articles per month, and we have it about two months before it becomes available in print. Online offers better timeliness to the gamers market, which has excessively short product cycles. If you don't sell large in your first week, you could be marking down your price in three-four weeks, and off the shelves before the printed review comes out."

#4. Test, test, test

The team has been testing offering Paypal as a payment option for about a year now. Epstein says, "We didn't see the lift we had expected, but continue to try it." The percent of subscribers choosing Paypal is "in the low single digits."

IGN/GameSpy is also working with PRE Solutions to test a brick and mortar retail offering of prepaid subscription cards (a tactic tested several years ago.) Initial tests appear to be "quite successful." Of course this is a tactic that would only work for a household name site.

#5. Track the reasons why people unsubscribe

Every unsubscriber is sent an exit poll so the team can learn what happened. Plus, the online customer information pages include a link to live chat with a service rep. "It's great to understand the reasons why and reduce churn. It gives us opportunities to reengage them."

IGN/GameSpy's plans for the broadband future

The management team has "a very aggressive growth plan"; and, because the two companies knew each other so well prior the merger (did we mention how incestuous this business is?), we don't expect them to be slowed by the traditional six-month post-M&A adjustment period.

Aside from the potential IPO, the team are launching shortly:

-- a metrics service that advertisers and PR firms can subscribe to for results and behavioral data far beyond the clickthrough;

-- a "next generation laddering tournament system for console and PC gamers";

-- a much-expanded eretail offering selling digital downloads which will compete directly with brick and mortar retailers;

-- and, "any number of new sites."

Plus, they don't intend to stick to the gaming niche. "We have a corner on the 18-34 year-old male demographic. We plan to be the online leader in digital entertainment, not just games. We'll extend the model in other ways such as music and movies."

Epstein says, "We're evaluating all possible growth strategies including acquisitions and partnerships and continued internal development." Watch for the press releases to come flying out soon.

Useful links related to this article:

Samples of subscription marketing promos on IGN/GameSpy sites


PRE Solutions

IGN/GameSpy info

See Also:

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