Managing and Navigating Risk in the Video Game Industry

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Ever wondered how leaders in the video game industry navigate the rough seas of risk? Tune in this week to the Press Start Leadership Podcast as we discuss these unique challenges and offer proven strategies to manage and overcome them. We start by identifying the different types of risks – from technological to reputational – and provide insights on how to cultivate a risk-resilient mindset. We also share valuable strategies on risk management, including comprehensive risk assessment, contingency planning, and the importance of staying agile.

In the second part of the episode, we focus on the importance of learning from mistakes, and how constructive feedback from the gaming community can be utilized for continuous improvement. We also delve into the role of technology in risk management, shedding light on the importance of data analytics, real-time monitoring tools, and collaboration platforms. On a financial note, we discuss the significance of prudent budgeting, securing sufficient funding, and diversifying revenue streams. Wrapping things up, we reflect on the ethical responsibilities of leaders in the video game industry. So, buckle up for a deep dive into risk management in the gaming world and let’s turn potential challenges into opportunities for growth and innovation together!

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Episode Transcript

Speaker 1 (00:20):
Hey there, press starters and welcome to the
press start leadership podcast,the podcast about game changing
leadership, teaching you how toget the most out of your product
and development team and becomethe leader you were meant to be
leadership coaching andtraining for the international
game industry professional.

(00:40):
Now let me introduce you toyour host, the man, the myth,
the legend, christopher Mifsud.

Speaker 2 (00:50):
Hey there, press starters and welcome back to
another awesome edition of thepress start leadership podcast.
Today we have a fascinatingtopic on our hands navigating
the risky waters of the videogame industry.
This industry is a hotbed ofcreativity, innovation and
passion, but it's also riddledwith uncertainty and risk.
Today, we're delving deep tounderstand these unique

(01:11):
challenges and explore howleaders could strategically
tackle them to come out on top.
To start, let's lay thegroundwork by understanding the
risk landscape in the video gameindustry.
This sector, due to itstechnological roots and
entertainment driven nature,presents a variety of risks.
Technological risks are at theforefront constant advancements
in AR, vr and cloud gaming,opening new possibilities, but

(01:34):
also introducing potentialpitfalls.
Timing is everything, andadopting a new technology too
early or too late can haveserious consequences.
Market risks are another majorfactor.
Player preferences arenotoriously fickle, and what's
popular today might be forgottentomorrow.
Leaders need to be cautiouswhen betting heavily on trends,
as it could be a double-edgedsword.

(01:55):
Financial risks also play asignificant role.
Game development comes with ahefty price tag, and misjudging
budgets, revenue projections orfunding rounds can put a company
in a precarious position.
Then there are the operationalrisks, encompassing
developmental delays, talentmanagement and the ever-present
threat of cybersecurity issues.
And we can't forget aboutreputational risks.

(02:18):
In today's world, where newstravels fast, pr mishap, a
poorly received game orallegations against a company or
an employee can swiftly andsignificantly tarnish a brand's
reputation.
Facing these risks head-on iswhat separates the trailblazers
from the rest.
Building a risk-resilientleadership mindset is crucial.
It starts with embracinguncertainty, except that risk is

(02:40):
part of the game.
This proactive approach is farmore effective than a reactive
one.
Staying informed is another keycomponent.
Leaders must have their fingerson the pulse of the industry,
continuously consuming news,attending conferences and
engaging with peer networks.
This not only provides earlywarnings about emerging risks,
but also keeps leaders in tunewith market trends and

(03:01):
technological advancements.
Encouraging open communicationwithin teams is also vital.
Those on the front lines,closest to the work, often spot
risks before they becomeapparent.
At higher levels, creating anenvironment where everyone feels
comfortable voicing theseconcerns and opinions can be a
game-changer.
With a resilient mindset inplace, leaders can now focus on

(03:23):
effective risk managementstrategies.
Start with a comprehensive riskassessment, identify potential
risks, assess their probabilityand evaluate their potential
impact.
This needs to be an ongoingprocess, not a one-time effort.
Prioritizing risk is the nextstep.
Leaders need to discern whichrisks demand immediate attention
and which can be monitored overtime.

(03:44):
Developing contingency plansfor high priority risks is
essential, laying out detailedaction plans that encompass
mitigation strategies andresponses if the risk
materializes.
The first vacation is anothereffective strategy.
In the investment world,putting all your eggs in one
basket is risky, and the sameapplies to the video game
industry.
Exploring multiple genres,platforms and revenue models can

(04:07):
provide a buffer against marketfluctuations and player
preference shifts.
Insurance is another avenue toconsider.
While it's impossible to insureagainst every risk, some, like
operational disruptions orcyber-searchority breaches, can
be mitigated through insurance.
Engaging with insuranceprofessionals to understand your
coverage options is a smartmove.

(04:27):
And finally, staying agile isparamount.
The video game industry isincredibly fast-paced and
rigidity can be detrimental.
Adapting agile methodologiesthat allow for swift adaptations
in the face of unforeseen risksis essential.
Now, even with all thesestrategies in place, mistakes
will happen.
The true mark of a strongleader is in avoiding mistakes,

(04:49):
but in learning from them.
Encouraging a no-blame cultureensures that when things go awry
, the focus is on understandingwhat went wrong and preventing
it from happening again, ratherthan assigning blame.
Documenting failures is alwayscrucial, maintaining a record of
projects that didn't go asplanned, and periodically
reviewing these records canprovide invaluable lessons Post

(05:11):
a setback.
It's also vital to revisit riskassessments, asking whether the
risk was overlooked,underestimated or misunderstood,
and adjusting futureassessments accordingly.
However, risk management is notsolely a leadership task.
Every team member plays acrucial role, providing regular
training and risk identificationand management.
Incentivizing risk reportingand decentralizing

(05:33):
decision-making can allcontribute to a more risk-aware
and proactive organization.
No-transcript.
Dominated by rapidtechnological advancements, it's
fitting that we leveragetechnology in our risk
management efforts.
Data analytics can provideinvaluable insights and covering
patterns, anomalies andpotential issues before they
escalate.
Real-time monitoring toolsoffer immediate insights into

(05:56):
various facets of gamedevelopment, from player
engagement metrics to serverloads, allowing teams to respond
instantaneously to issues asthey arise.
Collaboration platforms canalso play a crucial role,
especially for teams that aregeographically dispersed.
Using tools like Slack Teams orTrello ensures seamless
communication, keeping everyoneon the same page and mitigating

(06:19):
operational risks associatedwith miscommunication or lack of
coordination.
The game industry is unique inits communities, passion and
engagement levels.
Leveraging this can beincredibly beneficial for risk
mitigation.
Implementing beta testingbefore a full-scale launch can
provide invaluable feedback,helping to identify bugs,
gameplay issues or potentialcontroversies before they become

(06:40):
major problems.
Open-source collaborations andactive engagement on forums like
Reddit, discord or Twitter canalso offer real-time feedback
from the gaming community.
Leaders should ensure theirteams are active and engaged on
these platforms, gaugingsentiments and addressing
concerns promptly.
Financial risks are among themost pressing concerns in the

(07:03):
video game industry, andbuilding financial resilience is
key.
Prudent budgeting based onrealistic projections and
accounting for potential costoverruns in market fluctuations
is essential.
Securing funding well inadvance, whether through venture
capital, crowdfunding or othermeans, provides a financial
cushion against risks.
Diversifying revenue streams isalso a smart strategy.

(07:23):
Explore various monetizationoptions, from in-game purchases
and ads to premium versions andsubscription models, ensures
consistent cash flows, providingadditional stability.
As we navigate through theserisky waters, it's important not
to lose sight of ethicalconsiderations.
Player welfare should always beat the forefront, ensuring
features are in place toencourage healthy gameplay and

(07:45):
protect our users.
Fair monetization practices andstrong commitment to data
privacy and cybersecurity arealso non-negotiable.
Looking ahead, the nature andscale of risks in the video game
industry will undoubtedlyevolve, and leaders need to be
forward-thinking in their riskmanagement approach.
Encouraging continuous learning, collaborating with academia

(08:05):
and being active members ofindustry associations or forums
can provide early insights intopotential risks and
opportunities, helping leadersstay one step ahead.
Final thoughts To wrap up riskis an intrinsic part of the
dynamic and ever-evolving worldof video games.
However, with proactivestrategies and open mindset, and
the collective efforts of thededicated team leaders can not

(08:29):
only navigate theseuncertainties, but also harness
them as opportunities for growthand innovation.
Effective risk management isless about avoiding pitfalls and
more about charting a course tonew horizons, turning
challenges into chances forprogress.
All right, that's this week'sepisode of Press Start
Leadership Podcast.
Thanks for listening and, asalways, thanks for being awesome

(08:50):
.
The faculty and leaders arevery welcome.