Often when companies engage in a partnership there will be a power and/or resource difference between them.  New research from INSEAD explores this power dynamic in the context of the video game market.

The market for PlayStation2 games was chosen because the lack of self-publishing opportunities at the time meant that developers had to partner with publishers to get their games to market.  The analysis found that both the experience of developers and the likelihood that they would get devoted attention from the publisher played a big role in whether they tried to operate in a big or small pond.

Power play

Games generally make it to market after developers pitch concepts to publishers, who provide late-stage development that builds on the initial work and give the game access to the market.  The authors highlight that just 30 of the best-selling PS2 games were published directly and therefore bypassed this route.

Developers typically look for a couple of things when choosing a publishing partner.  Firstly, they want a close relationship so that the game is as good as possible in order to break through in a crowded market.  Secondly, they want their game to reach as wide a market as possible.

Meeting both goals is, however, incredibly difficult.  The biggest publishers with the best access to the market often have a crowded pool of developers they already work with and so may not be able to give the kind of personalized attention the developers crave.

Making the trade-off

As such, a trade-off is typically sought.  The researchers gathered data on nearly 400 developers and 170 publishers who were active between 2000 and 2009, which was the period in which the PS2 was most popular.  This data was then supplemented by additional interviews with developers.

They found that less experienced developers focused their efforts on securing the most development help rather than reaching the most customers.  The interviews revealed that this development support was particularly invaluable as there always seemed to be unforeseen snags to overcome.

What’s more, the more competitive the market was, the more keen developers were to ensure they got the right level of attention to ensure that their product was sufficiently differentiated to stand out.

Securing help

After all, entering into a partnership is but the first step, with the securing of the appropriate support arguably more important, yet far from guaranteed.  It’s not uncommon for larger firms to partner with more developers than they can realistically support.

As developers are largely unaware of either the quantity or the quality of the other developers working with a publisher there was a high degree of uncertainty involved, especially for less experienced developers, as they were found to be more likely to have their projects canceled.

For the more experienced developers, they were willing to cede around four times as much development support in order to ensure better market access for their game.  Often this dynamic seems to prompt publishers to prefer working with these more experienced partners.

The dynamics of these relationships are, the researchers believe, likely to be common in other similar partnerships, such as between a biotechnology firm and a pharmaceutical partner.  Most collaborative partnerships involve a trade-off between our own status, that of our partner, and of the others interested in partnering with them.