Implications of the Amazon-IGDA spat

In case you missed it, there's been some interesting goings-on in digital distribution land, in particular with Amazon's Android Appstore, and the dev community (via their proxy, the IGDA) taking issue with some of the terms in their distribution agreement.

The IGDA, in service of it's members, posted an advisory calling Amazon out on several of the points they viewed as egregious and called attention to the risks they believed developers were taking on in accepting such terms. You can read the IGDA's letter here.

On their developer blog, Amazon responded the following day, stating simply that the policy in question was from a dated text file, and that a PDF elsewhere on the site contained the correct terms.

The response seems fishy. The IGDA's letter states that they reached out to Amazon several times and that Amazon were unwilling to change terms. If it were simply a matter of referencing the wrong terms, surely they would have pointed that out. Secondly, Amazon's response doesn't actually address the concerns stated in the IGDA letter. Even taking Amazon's 'correction' into account, many of the IGDA's concerns still seem valid.

It will be interesting to watch how this plays out.

However, I wanted to call attention to a couple things I think are worth noting about this chain of events.

1) As Dan Cook pointed out in his excellent GDC presentation, platform owners and/or retailers may act in a way that is detrimental to developers, depending on their motivations, business interests and the stage of their life-cycle.

Amazon here is a retailer with far less interest in the success of the platform than they have success in capturing revenue/market share away from other android store fronts. This is a formula for a Tragedy of the Commons where it will be the developers upon whom the livestock graze.

So, this current Amazon/IGDA tete-a-tete serves to draw attention to the issue from that perspective. In a case like this, Amazon may be very different from Apple. For that matter, Amazon's Android Appstore may be very different than their Kindle Appstore.

2) Another way to think about this, is as a form of collective action. Not formal collective action such as a union might undertake; but rather collective in the sense that as the hive-mind of the developer community becomes educated about the implications of terms, they can jointly act.

3) As Dan also pointed out in his presentation, large companies generally don't like bad PR, especially when it presents them as Goliath to a game developer David. I think this is a great example of the kind of collective developer action we are going to see to try to shame platform owners into curbing one-sided practices. I'm surprised their weak response isn't developing more outrage.

We've seen previous efforts in this vein. e.g. When MS was proposing changes to the XBLA royalty structure, or when MS did a dashboard update that buried the indie games channel. In both cases, developer outcry caused at minimum a public response, if not a back-pedal on policy.

So what is the real implication?

Developers, and the indie community in particular, have always had a 'sneaker net' with which they supported each other with information about platform and distribution portal learnings. However, today with social media tools and groups like the IGDA, developers better armed than ever to take action when terms aren't in their favor

The question portals, distributors, and retailers should ask themselves is how they would feel about their terms coming under public scrutiny. Today this is about Amazon, but in reality it's about 'little guys' vs 'big guys'. The little guys are realizing they wield more power than they thought, and are starting to learn how to use it. One need only look to the past months' developments in the middle east to see examples of it in other contexts.

[Update - April 19: IGDA responds to Amazon's response]

Several good reads this week around the web

A few good finds this week to read over your morning coffee, or over turkey hangover:

• Tim Berners-Lee (inventer of The Web) in Scientific American: Long Live the Web: A Call for Continued Open Standards and Neutrality. A lengthy dissertation on open standards vs walled gardens, Net Neutrality, and Electronic Human Rights. Much of it covers known problem, but it's good to see them called out so eloquently.
• iReaderReview has a piece examining What Impact are Kindle Exclusives Having. There are some parallels with games here. In a crowded market like books (or, say, small downloadable games), does having an exclusive on even a significant number of titles make any difference for the platform's appeal.
• Gamasutra has a good piece up on Console Hardware Trends in the Bundle Era. I find the title a bit misleading, and would rather label it "Hey Guys, how goes the mid-life booster rocket?". Title aside, though it's interesting. The table of 360 HW sales by month is interesting, showing 2010 to be a banner year thus far, and that was BEFORE the Kinect and its bundles launched.
• Good CNET piece on Netflix's Secret Sauce for Acquiring Content. Good lessons here on being a good partner.

Go read! Discuss!

Spry Fox releases game on Kindle!

Dave Edery's finally able to talk about one of his hush-hush projects: Games for the Kindle.

Their studio, Spry Fox, has released their first game for the Kindle, Triple Town, as part of what appears to be a very quiet soft launch of their game catalog for the device.

Dave's got a post up on the subject and how it fits his blue-ocean strategy that he's been talking about for a while.

Amazon certainly has a lot of catch up to do in getting an app store up, and they are heading into crowded territory as many devices are also getting app stores into play. Additionally, the Kindle seems somewhat hobbled as an interactive application platform (e-ink, UI, etc)

On the other hand, as David points out, Amazon has a large installed base of users with a propensity to spend money, and a trusted commercial relationship with those users. Those things alone certainly make those blue ocean waters look inviting.

If you are a Kindle owner, check out Triple Town.

A couple digital distribution points of interest

Sighted today, two different - but related - items on digital distribution:

1. Amazon noted today that Kindle sales of books have surpassed hardcover.

"While our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. Amazon.com customers now purchase more Kindle books than hardcover books--astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months "Bezos says

Different than games you say? High price premium at launch - check, hit driven - check, most titles consumed once - check, atoms resellable buts bits are not - check, etc.

Still think people won't give up their shiny DVD?

2. Gamasutra had this story on Gamestop looks to Netflix for Online Business Cues.

Of course the last retailer with a boat-anchor of retail outlets that looked to Netflix for cues was Blockbuster, and it didn't work out for them so well. So good luck to you, Gamestop!

And the money quote:

"...The world won't be all digital tomorrow, even though that's what people are claiming. In this business, users still want physical content." said CEO Paul Raines.

Hey Paul. See item #1 above. KTHXBAI!

What Amazon/Macmillan brawl means for games

Late last week, Amazon and book publisher Macmillan got in a scrap. Macmillan demanded higher prices for it's ebooks on Kindle, and Amazon responded by pulling all books (digital and posthumous tree varieties) from it's store.

BoingBoing has a post going with updates [in which the discuss the fact that Amazon caved eventually].

A more detailed post describing one view of the battle that is really at play, can be found on (awesome) author Charles Stross's blog, here.

In it, he describes what is going on is really a more significant chess game in which Amazon and Apple (and the publishers for that matter) are trying to re-define the supply chain as it shifts to digital, and hoping to capture a bigger share of the pie as that happens:

The agency model Apple proposed -- and that publishers like Macmillan enthusiastically endorse -- collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled 'fixed-price distributor' and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits.

Amazon are going to fight this one ruthlessly because if the publishers win, it destroys the profitability of their business and pushes prices down.

The way I see it, as I commented on Stross's blog, is that Amazon is trying to use their strengths to squeeze suppliers out of a greater share of margin, while Apple is instead going to give suppliers a decent margin to get them favorable terms which they can use to deliver better end user offerings. This in turn they can use to try and win market segment share.

It will be very interesting to see how this plays out over time now that there is (real) competition in the ebook space.

What's interesting for anyone in the games business is that the same issues and tactics come into play in games, and you can see how people's positions shift over time. [e.g. MS offered 70 points to developers when they were trying to build a platform (XBLA) and win MSS (vs other consoles) but over time as the business stabilized and it was clear they had a winning platform, we saw the temptation to put the squeeze to that 70 point handover.]

It'll be worth watching what happens in the ebook space (as well that of music, movies, etc), as the same sorts of battles are being fought across all of them. Developers and publishers will do well to watch whether there are mistakes in other spaces they can perhaps avoid. For example should they make move to ensure competition, even at the expense of a more lucrative deal in exchange for exclusivity?

Book Review: Free

Free: The Future of a Radical Price

Man, I really wanted to not like this book. I'm not sure any other book has been cited, oft out of context, to me over the past year. The fact it was cited to me to make points I disagreed was what made me want to read it. I realized it was often being cited incorrectly or out of context, but did have other issues with the book.

After reading it, while I *do* have issues with it, I have to highly recommend it nonetheless.

The basic thesis is as follows: As the marginal cost of creating & delivering a product drops towards zero, its price will do the same. It then goes on to discuss how when the price goes to zero, interesting things happen.

The thesis is sound. And the important part relevant to many cases cited (e.g. print, music) is that when the cost of *creation* of the product is near zero, then you have a market where the cost of delivery is the biggest factor, and when that falls to zero, things go non-linear. (Divide by zero = undefined :-)

I agree with this 100%, and it's clearly had huge impact in many areas, some of which are cited in the book. Craigslist decimates Newspaper classifieds. Online distribution completely tips the music industry on it's side, Amateur journalism gives pro a run for its money, etc.

There are a couple issues I have with the book:

1. Inconsistent definition of "Free". The author cites many different versions of 'free', some of which have been around a long time. Take for example "free prize inside". Early in the book, he points out that this isn't really what he means by free, because it's just bundled into the price of the product. Yet later in the book, he cites this as an example model of free. I think this a case of the author falling into the very common trap of trying to stretch the thesis too far. This happens a lot in business books, and it's a shame, because it dulls and confuses the fundamental point, which is a really good one.
2. The author doesn't adequately take the cost of creating the product into account. He mentions it, but often only looks at the cost of distributing the product. He gets around this by saying that when the product is made of bits, the distribution cost goes to zero, the development cost is sunk, and therefore can be viewed as negligible. However, there are two cases where the cost of development cannot be ignored. One is when the market for a product is limited. At the end of the day, the development cost has to be distributed across the total customer base, and if that is finite, then lowering your distribution costs may let you get more efficient, but once you saturate the market, that's it. The second issue (and it's kind of the same) is when the cost of developing the product is really high. If you made a film that takes $100M to produce, and you beleive it has a market of 100M people, then the per user cost doesn't go to zero, it goes to $1 (given perfect efficiency, etc). Anyhow, I would have liked this more thoroughly taken into account.
3. Free doesn't exist in a vaccuum. While the simple thesis looks at cost of developing a product and cost of distributing the product, these are only a couple factors. Lip service is paid to things like cost of supporting a product, shelf life of a product, value of scarcity (real or perceived), value of exclusivity (real or perceived), etc. While these are mentioned, it is only in passing. Depending on the product or business being looked at, the value of these things may be a signficant factor that needs to be taken into account.

These issues aside, the book is highly recommended. At the very least it'll give you some food for thought about your business. As a bonus, there are many examples included from the games space, including demos/trials, freemimum models, etc.

I'll post another set of thoughts about some implications for the games industry when I get a few moments.

Is Amazon fanning the Kindle(ing) flames?

I've been following the Kindle with some interest for a while. I *really* want one, but not as long as it's as closed a model as they are currently pursuing. I want to get e-books from other places, and I'd like an RSS reader please... which really means an open development platform so that RSS readers can compete... which quickly leads to other ebook retailers, and you see why they aren't that interested in it.

Anyhow, Amazon got themselves in a pickle when they had a licensing issue with a number of books from a publisher, which in turn led to them reaching out an disabling them on users Kindles out in the wild - something the users didn't know Amazon could do.

Kind of like coming down to your kitchen in the morning, seeing the toaster missing, and finding a note from Sears saying "Sorry, we decided we shouldn't have sold this to you, so we took it back. Here's your $20. Hope you weren't expecting toast this morning. Might we suggest oatmeal?"

A kerfuffle took place on the intertubes, and Amazon went on to issue an apology:

This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our "solution" to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.

With deep apology to our customers,

Jeff Bezos, Founder & CEO, Amazon.com

Sounds really good. I beleive he think's doing the right thing. He is.

Except he's doing the right thing about the wrong problem.

One problem is that some people had their books taken from them post-purchase, and yes, it's good to apologize for that.

However, this problem is only symptomatic of the REAL problem, which is that people bought a device which comes with hidden restrictions, unclear terms of service, and the capability to change behavior and functionality at any point in the future. (Cory at BoingBoing has been on a bit of a crusade to get answers on exactly this)

So, kids, what have we learned?

1) There's a lesson here in the growing awareness of, and intolerance for, DRM in all it's forms. Every story about a consumer being burned by DRM adds to that awareness and intolerance.

2) While it was good for Bezos to publicly apologize, he's created another problem: He's shown that he's aware of the situation and therefore what was a puzzling silence on questions around the Kindle's functionality and DRM now seems like a deliberate silence.

In the meantime, I'll stick to dead trees. They tend to not disappear from the nightstand while I sleep.

Braid finally ships on PC

Braid has finally shipped on PC. Jon's shipping on a number of distribution services, so you get your pick. It's up on Steam (Valve), Impulse (Stardock), GreenHouse (Penny Arcade dudes), and GamersGate.

Amazon launches casual games site

Amazon announced the launch of their casual games download site. They bought Reflexive a while back, and so this wasn't unexpected, but it certainly is going to shake things up a bit in the casual games space, if not in the games digital distribution space in general. Some things to note:

• The downloads are priced at $9.95 for most downloads and $6.99 for back catalog. This vs the $19.95 that is common in much of the casual games space. (e.g. Jewel Quest III on Amazon, vs MSN). Lots of sites have played with lower pricing but usually as a promotion, on select titles, etc. This is an outright assault on the $19.95 price point that's going to have impact, if not kill it entirely.
• They are offering downloads, but no free play on the web (ad-supported), no subscription offering, no other business models for monetizing games.
• There are a couple notable absences from the catalog (perhaps related to the pricing?). No Popcap content. No Playfirst content (Flo is a no-show!). No EA Casual Hasbro licenses. Hold the line guys! (uh, ya, good luck with that)
•  While these are all casual game downloads, note that it doesn't say "casual" anywhere. Just 'game downloads'. There's no reason they can't get into digital distribution of large download game titles if they feel the money is there.

Ok, so to quote my fave line from Burn After Reading, so what have we learned?

Amazon's entry marks the entry by a very large etailer into the games download market. If you distribute content this way, or plan to, take note. If you are an etailer or distributor (Steam, MSN Games, Oberon, etc) take note if you haven't already.

It's a really good time to think hard about who you are and what your core strengths are. e.g.

• Amazon is an etailer that offers games for purchase. It's a store. They have great transactional tools, and are great at removing hurdles between the customer and the cash register. However, I'd guess they are weaker on understanding their customer's playing habits, preferences, etc, and don't offer other business models for customers to get games. They've also got things like their associates program for referrals and such.
  
• MSN, to contrast, is a destination. Once there, users can choose to access games via a number of different models, and the catalog is curated for them based on the MSN communities tastes, etc.
• Oberon is a distributor. They have unparalleled reach, and can use that to optimize the suggested merchandising their network uses to maximize revenue, they can also offer distribution to game devs and pubs that other people can't.
• Steam (just to pick a different example), is a service first. One of the elements of that service is that they offer their customers games for sale, but it's worth noting that this isn't the whole offering, just a piece of it. They've also got great 1st party content that customers WILL come in the door for, regardless of what else Amazon or another competitor offers. So long as Steam is the place to come get Gordan Freeman goodness, that's where his fans will come.

Anyhow, I highlight these examples only to make the point that when there's a shakeup of this nature, it's a good time to think about what your core competencies are, and then focus on making those delight your customers.

iPhone Games Market: Promised Land or Cesspit?

While at TGS, I had a lot of hallway & dinner conversations about iPhone games, with people weighing in on whether the iPhone Appstore was the promised land (a la XBLA circa 2005) or whether it was going to rapidly turn into something less than that.

Some thougts on the subject:

• The fact that the Appstore was not part of the initial design of iTunes is apparent. There are some fundamental features you would want to enable here that are lacking. Most significant of these is a "Try'n'Buy" mode which right now developers are implementing by shipping two versions of their games, which is a broken experience. Other examples include couponing, gifting, friend invites, discounting, retail point-of-sale cards, on-deck pre-installs, etc. (some of these, like gifting and friend invites, are going to become especially important when you look at the marketing challenges which I discuss below)
• Two different people involved in the business of iPhone games told me that "Try'n'Buy models actually often result in people NOT buying the games". This may be true, but the opposite means that the customer has made a purchase he/she will regret, and will be more reluctant next time. If it's good product, let them see it and try it. Fooling them into buying it is a loser strategy.
• The "open" policy of letting developers put anything up on the store (vs, say, XBLA's approval process) is good for a number of reasons, but it has implications:

The store is CROWDED. Even more than XBLA, the responsibility of getting your app noticed falls on the developer. Crossing your fingers and hoping to make the "featured" page or the "top 25"page is not a strategy.

The quality level is highly variable, and the long-term effects this is going to have on the customer impression of the store is TBD. My guess is that over time, there's going to be negative perception for this reason, and Apple's going to start reeling it in (either by pushing low-quality titles to the 'back shelf', or pulling them off altogether).

• We are going to start hearing questions about transparency. For example, if the Featured page is a big driver, then how does something get featured? Can people buy their way onto that page? Maybe not today, but the pressure will be there to do so going forward.
• An additional driver for transparency will be that some developers will choose to 'spend their way out of the clouds' in terms of development budgets, quality, etc. If they do so, they are going to want to know BEFORE they develop their titles, if they are going to be allowed to ship. This is especially true for apps that might be viewed as conflicting with Apple's business model or on-deck apps, but also true for games.

All in all, I think some of the shine is going to come off the apple, but that it's definitely a compelling platform and has reached critical mass as a platform that it's here to stay for developers. 

I don't think developers should delude themselves though. This is rapidly going to become an even more crowded space in which quality titles are going to be expected, and in which the challenge will be in overcoming obscurity - which you can read as "developers need to do their own marketing and they need to be good at it". Alternatively, they an rely on a publisher to do that marketing for them, which is one of the reasons that a publisher business makes sense in this space (Ngmoco, for example, was an early entrant into this space).

[Speaking of Ngmoco, they've announced their first couple titles, and while I'll reserve judgement on Maze Finger and Topple, I will say that Rolando, an innovative platformer using both accelerometer and touchscreen, looks awesome. Trailer here]

Last thought: On the subject of marketing, several folks I spoke with were in agreement that devs/pubs need to do their own marketing outside of the Appstore e-tail placement. However, there was some varied opinion on what that marketing should entail. Several folks I spoke to were of the "viral" mindset. (i.e. you do it on facebook and myspace and via mechanisms incouraging friends to join mail lists and such). There wasn't much excitement around traditional mechanisms like, say, print ads. On the other hand, if you think about it, this is a very interesting marketing problem. The iPhone customer, I'd guess, has a widely varied demographic, is affluent (they aren't cheap), and there may not be one answer to he question of how to reach them. Maybe print ads make sense, but if so, where? Wired? Forbes? Tiger Beat?. Maybe do something at retail, but where? Target? AT&T stores? Starbucks? Maybe coupons/invites in your cell phone bill? Will be interesting to see what turns out to be successful here.

More on marketing of indie console titles

Gamasutra has a postmortem up of the XBLA beat-match-3 title Go Go Break Steady.

Of note is the last point they make on their 'what went wrong' list.

5. Marketing XBLA games as an indie.

What is hype? We completely underestimated the marketing effort required for a successful XBLA title. One of the most attractive reasons for us to develop for XBLA was that we wouldn't need a publisher or major marketing, as the game would always be available online and would be able to garner enough sales for us to make up our investment.

This might have been true when we first started developing for XBLA, as there were then fewer than 10 titles available. We, on the other hand, were the 150th title on XBLA, and we were released alongside a very popular remake of a classic arcade game. Going into our release, we had next to no hype and much to our chagrin very little post-release hype.

Researching this more, we realized that this seems to be the bane of all indie developers. Although we found someone to help us with the PR work close to the release date, in retrospect it would have been prudent to show more of the game earlier so consumers would at least recognize the name when they see it on XBLA.

As I've been saying for some time, this is the real challenge for downloadable titles. Both Braid and Castle Crashers are great examples of devs creating their own buzz.

Indie devs can't count on XBLA, PSN, Steam, or any other digital distribution service to do the full marketing effort for their titles. Doing so would be the equivalent of EA counting on EB Games doing the marketing for Madden. The storefront plays a role, but there has to be anticipation built for the title over time, etc. Viewed differently, if you do well, the storefront will bolster your effort. If you don't do well, they'll forget about you quick.

Gamers steamed over Steam? Distilling some learnings

There's an interesting thread over on the Escapist Magazine forums in which someone is raising a bit of a fuss about game prices on Steam. Specifically, their complaint is that many of the games listed, including some of Valve's, can be found cheaper at physical retail locations.

Having higher prices for comparable product isn't normally perceived well, but it's additionally aggravating in this case because (a) so much has been said about the efficiency of digital distribution, and (b) there's a perception that the customer is 'buying direct', and therefore should be given a better deal.

Now, I'm not faulting Valve. I think they have a great service. The issue here, is in the difficulty of keeping up with the aggressive discounting and/or promotion that retailers will do as they manage their inventory and shelfspace.

To some extent, Valve is between a rock and a hard place. Just keeping up with the pricing and promotions that all the retailers have going on would be daunting (I'd argue impossible). Even if they did that, then matching one retailer's price drop would be seen by another retailer as undercutting their channel partners. Damned if you do, damned if you don't.

So what can we learn from this?

1) Be careful about message you send about the value of your service. I'm not sure that Valve has ever said that digital distribution would result in lower prices (I'm fairly certain they didn't). Still if the value was in the dynamic updates, or in the feel-good value of a larger share getting back to developers, or whatever, they should have made that the top talking points in all marketing efforts.

2) If people are comparing apples to oranges, make sure to point out that you are a pineapple. If customers ignore the above, and insist on making comparisions like the above, bring the discussions back to your product/service's value and to why the comparison is moot. In this case, it's not buying a product, it's entering into a service relationship with Valve, and that does more than get you the one game.

3) Prevent the upset from happening to begin with. This might seem a little schizophrenic at first, but I think that Valve should point people away from Steam. By this I mean they should clearly point out that some retailers might offer the game for cheaper, and that if all a customer wants is to buy the game, they are welcome to check prices at places A,B,C. They should then point out what the advantages are of buying through Steam. Customer doesn't feel they were duped, and you've reinforced your messages.

Long story short, I think this is a good lesson in how the customer doesn't always get your marketing pitch. Sometimes they write it for you. You have to plan for that and know how to address it.

Reading into Radiohead's Results

There has been what looks like some rigorous analysis of the Radiohead move (which I blogged about here, here, and here) to make their album available online at a pick-your-price, no-DRM format. This comes to us from paidcontent.co.uk.

The results are astonishing. An estimated 1.2M copies of the album were downloaded, with 38% of downloaders chosing to pay, and of those, the average was $6 per copy paid (Americans paid a more generous average of $8).

Back of the envelope math says 1.2M * 38% *$6 = a little under $3M. I have no idea of the distribution arrangement, but lets say they give up 10 points for billing, bandwidth, etc, andanother 10 points to someone to manage all this for them. That still leaves $2.5M.

Now the article linked to above comments about the number of copies circulating via bit torrent, etc, but that's beside the point, isn't it? That'd be happening if they were on iTunes. The real question is how many copies they'd have to sell on $10 - $15 plastic where they are making, say, 10 points. (I have no idea what rev shares are in the music biz, so I'm really blowing smoke here). At that point, they'd have to move 2M copies in order to reach the same level.

That's totally doable, but not *certain*. Their first four albums went platinum in both UK and US, so at least 2M units per album, but their last couple albums were between 500k and 1.5M-ish each.

So in this case, they (a) hit at least the minimum threshold they'd have done via the traditional channels, (b) now have a direct relationship with their customers, and (c) created a marketing vehicle for the album and the band that money couldn't have bought.

Sounds like a win to me!

Obligatory (sparse) WiiWare commentary

If you heard something un-applish within this past week's din of prelaunch iPhone religious euphoria (seriously folks, it's not like burning tablets are scheduled to fly out of shrubs this week or something), that noise might have been Nintendo's beloved son, Reggie Fils Aime, announcing WiiWare, Nintendo's XBLA-like program for 3rd party downloadable games on the Wii.


Plenty of commentary so far (Dave and Ian both have good posts on the subject). Like both of them, I have a lot of questions and would go a step further to say that I think they either havent' thought things through entirely, or are being disingenuous in their promises.

I frankly do not beleive they can approach it in a way that titles are not vetted by Nintendo. They have stated that titles will need to be rated, and AO ratings would not fly, but I don't think that's enough.

Echoing and adding to the list of unanswered questions that David and Ian raised:

• What of content that might get an M or T rating, but that some groups would find offensive (e.g. Nazis), or for that matter, that some corporate groups would find offensive (would The McDonald Game fly?)
• If they aren't vetting concepts, then how are they prioritizing dev kits? From what I understand, there's a pent up demand for them, so how is this allocated if they have no idea what a dev is working on (or is this the real gating factor)
• If they aren't vetting concepts, but have the right to refuse games based on the above factors or other reasons, then might developers sink a couple hundred thousand into a game only to be turned away when showing up to Wiiware wanting to hang out their shingle?

I guess details will become clearer as we near the first release of titles, but I am skeptical to say the least.

Gametap: Jack of ever-more trades...

This announcement today that Gametap is adding more types of content (current release PC titles), and more business models (ad-supported/free, paid download) to it's already wide mix of offerings.

I don't beleive it's going to help.

As I've said before, I think their problem is that they don't offer a clear best-of-breed, 100% complete solution to any one customer need. Just many things, none of them well.

Good take on the Guitar Hero Song Pricing Kerfuffle

In case you missed it last week, the internets were abuzz with the griping of many a gamer.

This is of course true of every week, but the target of last week's ire seemed to largely be directed at the pricing/packaging of downloadable song content. (3 songs priced at ~$6.50). The griping being directed (a) at the price of >$2 a song, more expensive that iTunes and they are covers at that, and (b) at the packaging, necesitating the purchase of 3 songs at once.

While I have *no idea* on what the real story is (not involved in that part of Microsoft at all), and while I'm not saying whether the pricing strategy is a good or bad one, I did think that this post by DonkeyXote was a good take on the subject. He's a lawyer who works with our games group (but did not work on GH2 in any way), and his post goes over some of the complexities involved in digital distribution of music, performers rights societies, etc.

I'd label this 'what you have when the round peg of new technology, new mediums, and new business models is smashed into the square hole of antiquated organizations and business models; and what happens when people try to get it to work.

...but we make it up in volume!

Robin points us to the "Develop 100", an interesting attempt by Evolving Media to build a list of "The World's Most Successful Game Studios" by (according to their site):

Develop 100 ranks the world's games development studios based on the revenues their products made at UK retail in 2006.

While and interesting idea, it falls short of the mark for a couple reasons:

- UK only. Meh.
- Retail only. ('We rated the most powerful transportation vehicles by the amount of hay they consume in a day!'). 'nuff said.

And of course the biggest issue (and granted, hard to put THIS list together) is that I'd much rather see the list ranked by contribution margin rather than just revenue. To borrow Raph's metaphor, (which is also his business plan, I guess) I think you'd see a lot of small mammals ranked higher among the dinosaurs.

And as Robin points out, it'd be interesting to see this ranked by a number of factors. QoL, GameRankings average, etc, etc.

Crowdsourcing: New name, same old story

Robin posted a link to this Wired story on "Crowdsourcing". While the word is a clever portmanteau and play on 'outsourcing', after reading the article, I don't really feel there's anything all that new here.

This is yet another story of disruptive technology (in this case, the internet & online community technologies) allowing new business models to rapidly displace incumbents.

The first example they discuss is iStockphoto. In this case, it's Internet + online community + cheap professional grade digital photography combining to disrupt the stock photography business. (More on this in a minute)

The second example include user-created video content. America's Funniest Home videos was perhaps the advent of this; with the proliferation of cheap camcorders. The current 'wave' of sites and soon network shows taking advantage of this have just added Internet + community to the disruptive technology brew.

The also look at examples of 'crowdsourced' R&D and menial problem solving. But in all cases, it's the same thing: The internet solves the distribution of labor problem, and the community tech solves the 'how to connect to the right person on the internet' problem.

New name, but its the same old thing. No different than when the word processor displaced the typewriter, or (to use my favorite Guy Kawasaki example) when the advent of refrigeration displaced the ice harvesting business.

Now, back to the iStockPhoto example, there's another interesting lesson here. From the article:

"In 2000, Harmel made roughly $69,000 from a portfolio of 100 stock photographs, a tidy addition to what he earned from commissioned work. year his stock business generated less money – $59,000"

And they are implying that the stock-photo side of his business will eventually go to zero. Note though, that his commissioned work business, at least as far as we know, is unaffected.

There's still value in the service side of his business. It's the product side that's been commoditized.

Carmack's Back

Having not heard anything from the guys at Id in a while (then again, I don't follow the hardcore space so closely anymore), a long interview with him popped up on Game Informer.

I've always been a fan of Id's games, and of Carmack as a developer. While they seem to have fallen behind guys like Valve and Epic in terms of their development model (old skool small team vs large team w modular development, etc), I secretly (not so secretly, I guess) root for Carmack to come out and ship something that kicks everybody's ass.

Of note, this quote about Gfx HW, and when and what users should upgrade to:

I don’t think that there’s any huge need for people to jump right now. All the high-end video cards right now—video cards across the board—are great nowadays. This is not like it was years ago, where they’d say, “This one’s poison, stay away from this. You really need to go for this.” Both ATI and Nvidia are going a great job on the high end.

Wow. It's not just me then. If HE doesn't care about the latest and greatest graphics, then who does?

Also, a game-biz-101 bit from Todd Hollenshead for those that think that digital distribution will make their publisher-dependence woes go away (Steam is the topic of discussion, but to be fair, they are just a proxy here for all digital distribution services):

there were serious flaws in the economic analysis that [Valve] laid out for developers. The problem for most developers is not one of not getting paid enough once the game is out, it’s that they don’t have the seed funding necessary to internally fund development of their titles. That’s why they work for publishers on milestone schedules and advances against future royalties, and Steam offers no solution for that. It also doesn’t offer any solution for the marketing spend question, where if developers don’t even have enough money to fund themselves internally to develop their product, then they’re not going to be able to pay for a multimillion dollar marketing campaign, which is a huge amount of risk that as an industry standpoint is offloaded from developers to publishers.