Online rental games can be a huge success

What does Leveraging the long tail in web 2.0 means?

In the current world, internet is the driver to many innovative changes. With limitless choices around the web to search to niche markets that appeals to a specific group of customers. Leveraging the long tail is mainly determining how a business generates revenues by selling specific products that appeal to a specific group of customers.

Longtail1

In general, those specific products were not highly sought out as a necessary product therefore there is a much lower competition in the market. Therefore, by utilizing the best practices of leveraging the long tail pattern from Tim O’Reilly, these providers will be able to increase their sales rate of those lowly sought out products through reaching out to a niche market.

“Leverage customer-self service and algorithmic data management to reach out to the entire web, to the edges, and not just the center, to the long tail and not just the head.” – Tim O’Reilly 

With many examples such as Google and eBay that utilizes the search technology and brought it to a whole new level of automating a self service advertisement search bar where users searches are being matched with recommended results. All the high technology programming intelligence comes from collaborative and collective filtering from the user’s behaviour.

Gamefly

Gamefly specialises in the retail of games related to products such as PC, xbox360, PS3, PS Vita, Wii U, Wii and 3DS. Being the largest online video game rental subscription service in the United States(US)with more than 330,000 subscribers as of 2009, their growth has been proven from the source of a compelling proposition of their subscription model and high level customer service. Even with the huge amount of customers subscribed to Gamefly, it has constantly been able to reach customers in the US. With the benefit of great convenience and a wide variety of games to choose from the website, it is an affirmation that Gamefly is successful in leveraging the long tail.

Gamefly1

How does Gamefly contributes to the pattern: ‘Leveraging the long tail’?

Gamefly has reached out to its customers through the use of the internet and the website which customers can browse through categories at their convenience.  Without the physical retail shop, it can be certain that stocks are updated accurately online without the need to check the inventory in the retail shops.

Gamefly utilizes the wisdom of crowds’ technique to rate and provide feedbacks to certain games from the customers therefore being able to estimate the supply and demand chain. Gamefly leverages the ratings they gather on the recent releases to promote to other customers on the front page of their websites.

The website uses algorithmic data management to recommend other games to customers based on the price and the category of the game they are going to purchase through the cart.

The ranges of self service tools are high. E.g. Shopping cart, product search and online downloads. Users are able to have control over their registered accounts (Payment details/ personal details). Accounts can be linked through Facebook and Twitter.

The downsides of Gamefly

It is only available in the US, which is a waste as there are many potential niche markets outside of their comfort zone in US. By expanding the long tail even further, there would be bigger revenue entering to Gamefly’s pocket. With some of the reviews of Gamefly, here are some cons:

Other Links:

The Long Tail by Chris Anderson

Other Pros and Cons of Gamefly

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22 Responses to Online rental games can be a huge success

  1. atang28 says:

    Hi Jerfen,

    Gamefly does seem to only target one set of customers “gamers” to generate rate their revenue.

    Only available to the USA? Interesting, i think this is because that there are level restrictions on particular games in certain countries, in Australia the government may not allow games with say an R18 rating to be sold here. What do you think?

    However, even though gamefly doesn’t ship to other countries as you have stated they seem to be doing well in the market using the best practice of Leveraging the long tail to generate their revenue!

    Andy

    • ngjerfen says:

      Hi Andy,

      thanks for commenting first yet again 🙂 Well indeed Gamefly is a large online retailer on games. Apparently i tried registering for an account and they immediately rejected me due to the country I’m residing in, as I am trying to get an access in to know more. They detected my location wise base on the internet server i am using. It states that they only ship within the US.

      You might be right when other countries have different policies when bringing in games. Some games are to gruesome and are ban from certain parts of the world. Cheers!

  2. sukhshans says:

    Hi Jerfen,

    Many services likes GameFly are able to provide their service only to a certain region due to restrictions that relate to law. However, if GameFly could extend this niche market by customizing their services that would suit each region, I think they can extend the market. I agree with Andy that many countries like Australia has strong restriction and it would be much more difficult but GameFly has done well to tap into the long tail.

    -Sukshan

    • ngjerfen says:

      Hi Sukshan,

      Yes, i now know that there are diifferent game policies residing in different countries. However if gamelfy were to reach out to a higher number of resources, i believe that gamefly could be franchised to other countries. Each individual country such could have a gamefly website such “gameflyaustralia.com”. Cheers!

  3. PrapatW says:

    Hi Jerfen

    I think online store that have digital products such as game have high potential for long tail market. The cost of shipping and supplying is very minimal even with mail posting. People can play any game that they want and return them when they are done with it or keep the game with some price. I believe people can get games cheaper so that they are more willing to pay instead of download pirated game from somewhere. When people pay for the game that will also directly support the creators of the games and perhaps we will have many more good games from them. Also having variety of games especially hard to find games are important as people have different taste.

    Prapat W.

    • ngjerfen says:

      Hi Prapat,

      Many gamers tend to spend most of their time hogging their computers and usually do not have the time to head to a physical store to browse through games. In their own convenience, they can browse through the different catalogues on-line in their comfort of their own home. Cheers!

      • PrapatW says:

        It is very true what you said Jerfen. Many gamers also have to work and they can be very busy with both their work and their family which are often more important their game. They might have once a week that are free to play some games and it would be very frustrating for them when they forgot to buy new game and have nothing to play for the weekend. Gamefly offer digital download which help these gamers to play almost instantly after they paid for the game and downloaded the game. The game will also cost a lot less since you don’t have to pay for transportation and sometime your own lunch when you going out to buy games.

        Prapat W.

        • evecrithary says:

          I’m not really a gamer so if anyone can answer this question for me that would be great. Although gamers traditionally had to pay for transportation costs etc to get to a physical store, will they miss the experience of going to the store and browsing games?

          • ngjerfen says:

            Eve, I wouldnt know myself, but i would assume that there is a wide variety of online choice from the catalogue to browse through, therefore I think the experience of heading down to the store physically doesnt count.

          • PrapatW says:

            This is entirely up to people. Many people listen to new game from feeds and they read review online before buying games. There are also people who like to go to shop to browse and perhaps ask for more information from people at the shop. There is also type that are willing to wait in line overnight to buy the new release game.

            Prapat W.

  4. Hi Jerfen,

    Very nice post! I’m not a gamer myself but I like how Gamefly doesn’t target a specific console/product, but includes a variety of them including 3DS. I used to have a DS which I hardly use anymore and its nice to see that you can still get games for them. I do feel like they’re getting less popular though, especially since there is xbox, wii etc.

    Gamefly seems like a great online service, especially for those gamers who are not close to a game shop. It’s a shame it’s only restricted to the US.

    Kind regards, Laura 🙂

    • ngjerfen says:

      Hi Laura,

      Yes its a shame that its restricted to buyers in the US. Gamefly still continuously gets games for unpopular devices because there are still a minority of gamers that utilises such devices. If it only focuses on popular devices such as xbox, Gamely would not have leverage the long tail. Cheers!

  5. robakom says:

    Hi Jerfen,

    A very good informative post! I don’t rent games, but It seems really convenient to have an online system where you can select games within in an instant and get it sent to you. What I like about it, is that they give you the opportunity to keep the rental copy of the game at a cheaper price. I’m surprised that they have not yet expanded outside of the US because I’m sure that it would be great for them business wise.

    Thanks, Rob

    • ngjerfen says:

      Hi Rob,

      Renting of games is such a norm these days as once a gamer completed the game’s quest, he/she might not be as active in playing the same game. Therefore renting games can provide the gamer a wider range of games to experience playing without spending a whole lot of cost in purchasing the game. I am sure they would expand their growth to outside of the US sooner or later. Cheers!

  6. Hussain Adel says:

    Hi Jerfen,

    Gamefly seems poised to change the landscape of online gaming. It brings the sourcing of games from the traditional way of going to the store and physically browsing into a more online experience by providing rental services or the actual download of the games. The strategy definitely cuts across the wide expanse of customers – from kids to busy moms and dads – allowing them to purchase the games anytime and anywhere. Online gaming at your fingertips.

    Regards,

    • ngjerfen says:

      Hi Hussain,

      Definitely, a great web application to begin with. Usually in other platforms, they sell different ranges of games, but may not acquire the “renting” system. The market of renting games online is gradually increasing significantly within countries.

  7. azizalkaldi says:

    Hi Jerfen!

    Gamefly not only offer a cheap way to play games through renting, but also a nostalgic glimpse into a time when people used to rent movies, music and games from brick and mortar stores. I believe that the nostalgia the service offers is what puts it in the niche segment. I have to add that they do have a decent collection for all gaming platforms.

  8. bronwynsc says:

    Thanks for another great post, Jerfen. I think the online games market is an interesting example of ‘leveraging the long tail’ since it has the niche of online gamers. I was intrigued by your last link and the cons they identified: “Cons: Lots of people=Low quantity of new games. Abandonment of older games. ” It resonated for me that since the internet lets you reach so many people, then you better have the products to satisfy them or they just get frustrated. What do you think?

    • ngjerfen says:

      Hi Bronwynsc,

      Thanks for reading! It may seem that new games popularity only arises after the amount of reviews that they get from the gamers. The initial stock of the games might be not meet the demand, incase the new game is not well sought out. It is only after the popular game is being rated by the first come first serve basis gamers, is when you will see an increase in the number of people wanting that particular game and Gamefly is not being able to supply to those demands in a quick response. Cheers!

  9. Yiting Zhang says:

    Hi Jerfen,
    Nice post. Leveraging the long tail requires strategy and wisdom. Gamely is a good example. Is it like the electronic business such as ebay? The only difference is that it is selling games?

    • ngjerfen says:

      Hi Yiting,

      It is somewhat similar to what you are referring to. Ebay doesnt have a phyiscal store for people to pop by and get their stuffs. Everything is done online. But the difference is Gamefly is not a third party platform. Ebay can compromise sellers that utilising ebay as business platform or customers (that comes by to buy things from ebay). Gamefly do not compromise sellers. It only have one main stream of users. That is customers.

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