In 2012, a team of 100 staffers had been tracking millions of people since 2008 in an effort to influence their behavior on one specific day. The team quickly realized that there were three levers to achieve victory: the number of registrants, the number of people they had to persuade to act, and the turnout on that special day. Yet one factor that wasn't available before was even more significant to the success of this campaign than all three levers combined: The campaign's focus on mobile analytics.
When Obama campaign staffers described their victory to me it was clear mobile and data analytics were going to have a significant impact on the political and business world. They had taken all of the data from their email campaigns, social media channels, online websites, organizing field volunteers, and communications staff and unified the data into one analytics environment. This then gave the campaign the opportunity to mobilize its volunteers with the appropriate messages, in a door to door effort to sway voters. The campaign also targeted prospective voters with mobile ads and social media messaging with pinpoint accuracy. Finally, analyzing the results of these experiments helped the campaign learn how to influence people to change behavior.
The campaign offers a number of lessons for businesses and for gaming companies like Electronic Arts (NASDAQ:EA). And it appears EA has secured its curriculum. After talking to a number of industry insiders, analyzing current mobile and data trends, and analyzing EA's current hiring needs, positions like Sr. Monetization Product Manager, Research Data Scientist, Mobile User Acquisition Specialist and Mobile Ad Operations Specialist it's clear they are positioning themselves to profit from the enormous increase in mobile devices worldwide.
The UN's International Telecommunication Union published a "facts and figures" report, revealing that nearly everyone on the planet has a mobile phone including an 89% penetration rate in developing countries. In the US, over the past four years, the percentage of households using mobile devices for gaming jumped nearly 40 percentage points, far outpacing console games.
This isn't news, but when you combine those figures with the amount of data that's now available to game developers like EA, the opportunity to profit from that information is boundless. Take the game Candy Crush. Because King, its developer, conducted myriad experimentations and received feedback from user data, it was able to create a game that makes an estimated $850,000 a day and has almost 7.5 active players (that's far more than EA's entire mobile user base).
Another company called P4RC, proves that user acquisition can be far more viral on mobile devices than gaming consoles. P4RC allows players to accumulate points in every game their network, users then spend the points on real world rewards like those from Best Buy (NYSE:BBY), Target (NYSE:TGT) and Amazon (NASDAQ:AMZN). The company's software also encourages users to try other games in the network, thus increasing downloads across the board. This type of mobile based loyalty and reward systems can have a dramatic impact on player retention, frequency and duration of mobile gaming sessions.
Jason Seldon, P4RC's CEO told me, "By giving reward points to players (on top of existing achievement measures in a game), you provide the same type of feedback to players as seen in real-world redemption games - like Skeeball - where players are awarded tickets that can be redeemed for prizes. The result is far more time and money spent on the games."
While Zynga's (NASDAQ:ZNGA) stock price has been hammered recently because it continues to lose users faster than it acquires them, EA will learn from their mistakes and focus on the good and not the bad. At Zynga, product managers were the ultimate authority on what went in their games and what didn't. Data mattered, but revenue mattered even more, and Zynga product managers were compensated revenue conversion not user experience.
What Electronic Arts Will Do to Increase its Stock Price
Electronic Arts founder Trip Hawkins believes that the console market is dwindling and that console games will become a hobby market for the hard core gamer. That may be true, but the 5th installment of Grand Theft Auto (GTA) proves that a very large console market still exists (the game sold a record $1 billion and 15 million units worldwide in just three days).
But the future of Electronic Arts lies in mobile, social and data. Like the Obama campaign, EA will need to aggressively aggregate then target users across all of its platforms (console, online, mobile, social) then introduce them like P4RC does to their other titles and gaming platforms.
EA seems to be getting it, just last month they released Plants vs. Zombies 2 on iOS and like GTA (but on the mobile) it recorded 16 million downloads in just five days. The company has reported that they will release another 15 titles during the next 12 months. If they aggregate and use its data wisely, it can record another increase in its stock price even after gaining 90%+ in the last 12 months.
Best of all, by leveraging all of the user and game data all of its games are producing across all platforms, EA can further monetize by doing some or all of the following:
1. Hyper local and hyper targeted advertising. If EA understands where the user is located and can understand patterns of gaming behavior, it can sell that data to hungry advertisers.
2. User behavior pattern recognition. We've all taken job screening tests that introduce psychological questions and situations in an effort to understand what type of employee we might be, but imagine the information that can be derived by situational factors in-game. For example, if we know that in a controlled test environment that top salespeople play games very aggressively, trade and negotiate with other players effectively, and take a lot of calculated risks, EA could easily look for similar patterns of behavior and introduce job hiring companies to those people.
3. EA will do a better job of understanding its most loyal players and introduce or partner with companies like P4RC to introduce new gaming mechanics that keep players playing longer and helping to cross sell EA's other games.
4. EA will become an expert in building virality into its games. They won't overdue it like Zynga and cause players to flee, they will seek to understand user data and behavior to create mobile games that generate more money without sacrificing the user experience. The only way to do this is to rapidly test and adapt with small subgroups of gamers. When they find monetization options that work, EA will then scale it out to the rest of the gamers. Let's call this revenue hacking - because they'll have to keep
Because of this and because I believe in EA's new leadership, the stock is a buy and hold for the long term. But if the company is unable to aggregate and properly understand its user data because of bureaucracy and infighting, then the company may go the way of Zynga. Hopefully EA has learned that lesson.
(Note: Mark Fidelman is a former advisor to P4RC and Electronic Arts is a former customer)
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.