Wednesday, November 05, 2014

Inside the Whale

The ethics of "pay-to-play" are being explored in the video games market. Some "free" games are funded by optional in-game purchases, such as extra weapons. There are several problems with this. Firstly, the availability of ever-more-powerful weapons might distort the game. Obviously a wealthy player could beat any chess grandmaster in the world, if the game of chess allowed you to buy an extra queen from time to time. In which case, what is the point of playing at all?

Secondly, a small minority of players are funding everyone else. In the video game world, these are known as whales. Video games often come out in multiple (overlapping) editions, and some whales can be persuaded to buy every edition. So the game developers and the majority of the players are exploiting the whales. That's fine if they can afford it, but some of the whales may be tempted to spend more than they can afford.


Some software vendors have accused industry analysts of operating a "pay-to-play" system, which allegedly favours those vendors who are willing to buy into the latest jargon (hype). And some analyst firms have a tendency to fragment any given technological marketplace into subdivisions in order to sell more "editions" of expensive reports, and to provide more differentiated opportunities for vendors to earn (or allegedly purchase) a good rating.

So if one were to produce a 2x2 matrix based on Commercial Ambition and Willingness to Invest, then the top right quadrant could be called Whales.



"If you're not familiar with how the analyst industry works, here's a very short summary. Companies brief analysts on their plans, the state of their businesses and the products they are bringing to market. Some companies pay the analyst firms to have a two-way conversation and get advice from the analysts. Then the analysts write up information-rich reports about some important business trend or another, based on all the briefings they've done. They sell those reports for hundreds or thousands of dollars to consumers wanting to benefit from all the research performed by the analysts." (Source ReadWrite Web August 2009)

Is there a pay to play problem in the analyst industry?, You told us which analyst firms were most, and least, independent (Influencer Relations, February 2014)

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