Connected by Design: Seven Principles for Business Transformation Through Functional Integration by Barry Wacksman & Chris Stutzman

Author:Barry Wacksman & Chris Stutzman [Wacksman, Barry]
Language: eng
Format: azw3
ISBN: 9781118907214
Publisher: Wiley
Published: 2014-04-28T04:00:00+00:00

Figure 4.1 The Skylanders Ecosystem of Value

Reimagining Skylanders as something more than a traditional video game is one of those great ideas that seems obvious only after their rollout. But there was nothing obvious about the Skylanders course of development. In fact, there were plenty of excuses for never making such a game.

For one thing, combining computer chips and play figures was not entirely new. Webkinz, another game for small children, had been doing something similar for years. Second, there was no preexisting bond between children and the Skylanders characters, so it would have been reasonable to assume that Skylanders would have a tough time competing with games starring familiar movie characters from the Star Wars and Transformers franchises. The third problem was that the children's game market was already in decline; U.S. consumer spending on video games fell 9 percent in 2012, shortly after Spyro's Adventure was released.6 And the fourth strike against Skylanders was that the parent company, Activision, was making its very first foray into the toy business at a time when that industry also was suffering through a down cycle. In summary, Skylanders was based on a not-that-novel concept, using untested storylines and characters and joining a gaming category in decline, while its unfamiliar action figures would also be trying to break into a flagging toy market. The Skylanders launch had disaster written all over it.

“I don't know anyone that's taken a bigger bet on a less-proven franchise based on their gut-instinct than we did with Skylanders,” Activision CEO Eric Hirshberg stated in 2013.7 In an earlier interview that same year, he'd said, “I do remember, a very short time ago, encountering a lot of people scratching their heads when we announced we were getting into the toys market…. People perceived that market to be strained; other publishers were getting out of kids' games.”8 So why did Activision move ahead anyway? Hirshberg chalks it up to magic. Activision designers regard the instant when the physical toy pops up on screen as “the magic moment.”9 Our own analysis is that the magic moment is the kind of user experience that characterizes Functional Integration. Multiple contexts, in particular, are always more interesting than single ones.

Skylanders action figures also create magic for Activision's top-line growth in the form of tremendous market synergies. An exclusive Kindle tablet version of Skylanders Cloud Patrol became the first-ever app to allow users to click through and buy Skylanders toys while playing the game. Because the action figures are sold separately in stores, Skylanders enjoys a much larger footprint than its video game competitors in Toys R Us and other toy retailers. Whereas most video games are set aside in small boxes in the gaming aisles, Skylanders is represented both in the gaming aisles and in big, lavish displays in the action figure aisles.

The addition of action figures also grants Activision coveted price inelasticity in marketing the Skylanders game. A Skylanders starter pack, which includes three toys and the portal, retails for about $70, which is $10 to $20 higher than the prices of competing games that don't have action figures.

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