Grading my 2011 predictions

It's always a good idea to go back and look at calls I made and see whether I was out to lunch or not. I'll keep these in brief and elaborate where necessary, so it may help to first read the original post if you are interested.

Grading: 0 if wrong, 1 if right, 0.5 if partly right, with explanation

1. 0.5 "Bespoke design and devices of emotional attachement" - I predicted we'd see more Apple-like design and this would extend down to personalized design even to the individual level. I'm taking a half point on it because we did see some from the top down with all the laptop and camera manufacturers embracing design as a higher priority, and at the same time the bottom-up end of things like Kickstarter projects (e.g. pay a little more to get a custom color or your name engraved on it)
2. 1.0 "Appstore fatigue" - I think I was correct on this one. I participate in a few 'behind the scenes' mail lists with developers, and many of them are comparing notes on whether an appstore for a given platform or device has proven itself before they leap in. I also get the sense that consumers are ho-hum about hearing that yet another device is including an app store with the same apps they've already bought elsewhere.
3. 0.5 "Stereo3D will reach a point of undeniable lack of success" - Taking a half point here because there have been numerous pieces calling attention to the lack of success, but there's still an air of 'wait and see', plus some claims that they are doing well in some regions outside the US. US press seems to be acknowledging that the tech isn't moving people as expected (1, 2)
4. 1.0 "3D Printing will take off" Though admittedly I was vague here by the "as measured by..." piece. Still shapeways, Tinkercad, MyRobotNation, 3D printable remote control cars, and numerous entries in the low-cost printer market... it's clearly a growing area of interest. Supposedly Makerbot has some big announcement coming next week at CES.
5. 1.0 "Gamings Physical & Virtual Worlds meet" - This was already underway but has been making further progress. The examples I listed last year are still there, and new ones have been introduced, as well as existing toys getting a virtual element to them (e.g. American Girl has added an online component). Probably the best example I've seen to date is Skylanders, which my kids are currently obsessed with.
6. 0.5 "Apple has a game platform" Apple more openly acknowledges games as a leading category in their app store, and is catering to developers with feature requests and the like. They still haven't directly taken on the consoles or handhelds with their core customers yet. 
7. 1.0 "The Post-PC era will officially arrive". I think this is true - not in the sense that PCs are dead (they are doing great) - but in the sense that there are computing and media-consumption devices that are designed to function without PC tethering. tablets, phones, etc, seem to have made this transition.
8. 0.5 "Brands-as-memes": There are cases of this happening, but Angry Birds is still so exceptional I can't point to it as a trend when the others are so much smaller.
9. 0.0 "e-reader apps and services will see an explosion of innovation": I still think this could happen, but so far the leaders in e-reading have been pulling ahead based on vertical integration and digital distribution leadership (Amazon, Apple), not by building a more innovative reader. Shame.
10. 1.0 "Cracks in gaming's walled garden": It's still early, but HTML5 games on iOS are a leading example here.
11. 1.0. "HTML5 begets real apps": LucidChart, Tinkercad, many other examples.
12. 0.0. "Android Consolidation": There hasn't been consolidation, and like I pointed out the app landscape while perhaps not bleak is at least very messy. Rather than consolidation though, we're seeing a few guys break out as leaders from the rest of the me-toos. e.g. Kindle Fire.
13. 0.5. "Games market analysts will struggle to segment an amorphous landscape": I think I was right here, but in retrospect it's hard to see how to grade it.
14. 1.0. "No official Kinect for PC": Development kits yes, but no consumer product.
15. 1.0. "Tablets as a Producer Platform": We are seeing tablet-targeted text editors, photo apps, visualization apps, etc.

So, 10.5 out of 15. Not bad but could do better.

Riffing on the Popcap acquisition rumor

Yesterday Techcrunch broke this story:

Popcap to be acquired for $1+B, which started a rumor mill going. Who could it be? Story points to potential buyers as: Zynga (discounts them as not having stomach for the price & multiple, EA, DeNA, Tencent.

I tweeted about it saying I thought EA just as a gut call. Later though, I started wondering why no one had asked if it could be Google, or even more credibly, Microsoft.

Techcrunch added a story about rumors that it was likely EA.

And then today, VentureBeat had this story pointing to EA (nothing new, just citing the techcrunch article), but being skeptical about it and pointing at other potential buyers: Zynga, DeNA, Media companies like Fox, Activision/Blizzard, and throwing water on any "stingy" chinese companies.

(WTF, why is VentureBeat also not mentioning Microsoft? Does everyone assume they are broke after buying Skype?)

The interesting thing about these pieces is that they are looking at the market rather naively. Techcrunch refers to Popcap as a startup while at the same time mentioning that they've been in business since 2000. VentureBeat mentions their social games but barely mentions mobile let alone all the other platforms they are on.

Anyhow, I believe the EA rumor is most likely accurate (though I still have a side bet on a surprise that it's Microsoft, but I'm crazy like that).

Just for grins and giggles though, here's some alternate takes on the headlines made possible by this acquisition, which I think make it more apparent that this isn't such a bad buy. Allow me my editorial liberties:

If it's EA:

• #1 iPhone games publisher buys #2(3?) iPhone games publisher to further cement leadership
• #2 Facebook games publisher buys #3 facebook game publisher in bid to take lead position away from #1 FB games publisher
• Leading western games publisher buys another entry ticket in race for China gaming market (Popcap has social games/portal play in China, a shanghai studio doing original IP, etc)
• EA buys leading casual games dev, "Popcap is the Valve of casual games" says Someone.

If it were to be Microsoft

• MS buys publisher of popular iPhone, iPad games in bid to secure exclusive content/features for MS phones/tablets
• MS buys publisher of social games in bid to catch up in that race
• See same two above points about traction in Asia and Popcap's production abilities, quality

In any case, my point is that there's a lot more value to Popcap than just "Plants vs Zombies on Facebook or iPad". They are a force in the mainstream games market with recognizable IP, real revenue, good distribution, top notch development talent, international portfolio of games and distribution, etc. You can play their games on almost every platform under the sun - even play bejewelled on airplane headrests!)

$1B is a lot of money, but Popcap is an awesome crew, and likely worth it. I sure hope whoever it is doesn't screw the magic formula.

Extra Credit: An open letter to EA marketing

A bit old, but right on the money. EA really should fire whoever greenlights all this shit.

DICE 2011 in short

I'm back from DICE 2011 and recovering from intense brain-filling and long nights of inebriated schmoozing. As always, it's a high-caliber attendee list, so the quality of sessions and conversations is generally pretty good, and this year was no exception.

I'll post some longer thoughts when I get the time, but some quick notes to start:

Favorite Sessions:

• Mark Cerny's talk: Summarized here, but that summary leaves out many of the astute observations Mark made. I had a converstation that evening with him about his comment on genre diversity ("genre diversity is the canary in the coalmine as to a segments health"), as I thought he was going to point to the heavy focus on shooters today, but instead he feels we are very healthy. Myself, I'm still not sure. Anyhow, when/if they post this session, it's a must view.
• Bing Gordon's talk: I twittered that it was "a big bumbling disjointed spew of savvy insights." In other words, classic Bing, and well worth watching. Summary here.
• Richard Garriott's talk: Little to do with games, but very compelling story about his trip into space. That guy is hardcore!
• Jane McGonigal's talk: Same ideas as in her book, which I'm partway through reading, but still compelling. her talk is also on slideshare.

Other highlights:

• Fave Jay Moore comment fron the IAAwards: "Activision, every title you guys put out makes more money than anything from anyone else and STILL no one wants to work with you!"
• Fave moment from a talk: Garriott's showing of a video of Carmack's latest rocket, taking off, going up 2 miles, hovering, descending, and landing less than 10 cm from where it took off. Clip:

• Bing Gordon's lifetime achievement award acceptance speech, delivered as a poem. It formed an excellent 20+year follow on to the "Can a Computer Make You Cry?" ad copy (<-- read that ad copy first if you've never seen it). I hope the video is posted somewhere, but in the meantime, here's the poem in it's entirety:

The Golden Age of Gaming
Can a computer make you cry?
How many cool things can you ship before you die?
How many best friends have been made on your development teams?
Is anything better than creating a new “language of dreams”.

If it’s in the game, it’s in the game;
So what’s in your personal hall of fame?
Are you like Daisycutter, a fire-balling wizard?
Will Disneyworld ever again be as much fun as Blizzard?

Where’d that truck come from? We transformed John Madden
Into football fanatics’ equivalent of Tinkerbell plus Aladdin.
Now that Mario and Cityville have proven to be bigger than Titanic,
Which is your game of the year, what’s your golden mechanic?

We remember the 80’s, when games were geeky, uncool.
We were the high potential kids bored with teachers, and lectures and school.
We turned Dr J into a software artist, ended “Dinkety Dink Dink,”
And when the going got tough, we took the Bard out for a drink.

25 years later, we’re an overnight success;
Boys tout their COD scores to girls, and impress.
Guild management skills get you promoted to VP,
And Phorthor pays you to play his account, if you’re at UBC.
Virtual goods and freemium have become investable, magic words
We remember when Bill Budge was the only game-making non-nerd.
Pogo-type badges are imitated these days in enterprise,
Xbox Live achievements are used in online universities, Best Buys.

FIFA camera angles are adopted in televised sports,
And Gameface avatars are showing up in all sorts
Of websites. Sims relationship ratings are the new arithmetic teachers,
Gamification is on the Fortune 500’s must-have features.

We have innovated with more ethics than those damn Wall Street banks:
With Diablo skill trees, Ocarinas of Time, C&C stealth tanks,
Battlefield commanders, Kart bananas, and Hedgehog’s gold rings.
These are a few of my favorite things.

Hey, maybe Night Trap was just a little too smarmy,
And some people were offended by America’s Army.
But we are teaching productivity, how to commit to a mission,
And the high art of Tolkien has been surpassed by Cataclysm.

You have created the new literature, a Moveable Feast,
As rich as Moby Dick, more relevant than War and Peace.
You’ve made plastic cool again, with Nerf guns and guitars;
And taught a generation of speed freaks how to outrun cop cars.

We were all once young prodigies, in need of feedback and interaction,
Now we are self-taught pre-ship marketing and revenue traction.
We’ve grown up with the business, become our own mothers and fathers,
But we still share the initial dream that “We See Farther.”

Today, our mutual industry is undergoing a bit of re-framing,
But recognize this: we’re in the golden age of gaming.
It’s because of Sid Meier, Will Wright, Brian Reynolds, Mark Skaggs, Neil Young, Miyamoto, too,
That our nieces and nephews no longer have to get a “Clue.”

We have more power than Mubarak, so we shouldn’t abuse it.
Our goal is to “make software worthy of the minds that use it.”
Keep inventing cool! There are so many creative challenges still unmet.
And, as this Lifetime Achievement dude protests, “We’re not dead yet.”

Ps Thanks for the honor, now I’d better get off,
Because there’s an after-party with Dean Takahashi dressed as Lara Croft.

5 Things I'm Thinking Right Now

I've been very busy at work. Other than taking some time to write a few notes up about E3, the blog's taken a back seat right now.

However, Alice did a post on her current thoughts that I thought might make a nifty meme, so here are 5 Things I'm Thinking Right Now. (What are 5 things YOU are thinking?)

1. The time is right for a explosion of funding models. Over the past few years, we've seen things like funding disaggregated from the other facets of publishing, we've seen government grants, Indiefund, Kickstarter, and others. But when on one hand projects can raise $10-20k on Kickstarter based only on a good pitch - and large projects can do retail pre-orders for millions, months in advance (GoW3 went on pre-sale *10* months before release!!), it seems there's a lot of play in the middle. If gamers are willing to part with $60 6+ months in advance just to ensure they get a copy on release day, are they willing to part with $100 a year in advance if it gets them an advanced copy and possible repayment from the developer? Seems there's a lot of room for play (and opportunity) in between these two extremes. (Right now pre-orders are rewarded, if at all, with a piece of DLC. Couldn't they come with a royalty or dividend check?)
2. There's a new wave of growth coming. While down at E3, I ran into a number of industry veteran friends who've quit posts at large companies to pursue their indie interests. Then in the few weeks since E3, I've had four different friends (from very different areas of the tech industry) call me for feedback on their startup pitches. Maybe this is just symptomatic of post-recession exuberance? I don't know, but I put it to a friend that I felt like I was seeing a bunch of surfers waiting on the right wave. I'm suddenly seeing a bunch of people paddling hard to catch a wave I don't yet see, but there must be one coming.
3. An explosion of graphics capabilities is good and bad for game devs. This deserves a much longer post, but the short version goes like this: People are becoming accustomed to sexy UI (iphone, ipad, win7, consoles - all doing UI leveraging GPU transistors to do visuals). As this trend continues, graphics vendors are going to be putting more graphics power into devices across the board (good for devs) but the 'top customer' dictating the requirements for these things is not always going to be the game developer (bad for devs?) and there will be wide variance in solutions (not just performance, sometimes DIFFERENT - like the stereo3D gap I mentioned in my E3 post).
4. We are vastly underestimating the 'next wave of social'. Alice touched on this in her post, talking about how current social network games are only touching the basic 'slot machine/food pellet' buttons in folks. However, here are a couple things to think about: (a) There's a lot of money being poured into chasing Zynga's tail lights. Some companies will pour that into game design, production quality, and technical innovation - all of which will explode genres and offerings. (b) The console vendors have all learned a lot from MS's effort with Live. Last round we got a very basic stab at social with friends list, acheivements, messages, multiplayer, etc. Remember, this was a console shipped in 2005 and shipped before that. Pre-facebook-hysteria. The set of capabilities to trump that next time around has to be a pretty high bar. OnLive had some early glimpses of this at E3, but you could riff on this one all day. Forget Gamerscore and MS Points. Give me GamerWhuffie.
5. This time the phone is for real. By that I mean that we've been hearing for years that "The phone will be the leading device connecting people to the Internet". To which many have replied, "well sure, if you count texting, or very basic services, or voip". The reality is that Apple reset everyone on what high-end phones are expected to do, and low-end phones will follow in short order. First-world, money-spending consumers are going to use phones more than PCs in many cases, and so there's a real market there. The Apple vs Android will look like a blip when we look at the bigger picture years from now.

OK, back to work now!

A belated E3 2010 post

E3's been over a little while, but work's been *crazy* lately so I'm only now getting around to posting some thoughts.

The show got big again this year. Not much sign of recession other than on the faces of some friends who's studios either were casualties or are still standing after a grueling year. Signs seem to point to things being up though, and that's a good thing.

Short version of E3 was absolutely nailed by Penny Arcade and by Zero Punctuation:

So, E3 in short form:

Motion Control: MS and Sony *finally* show up with their Wiimote-killers. Sony's is a Wiimote with better accuracy (camera input to add some multiplayer capabilities) and MS's is the more ambitious Kinect. Why did it take so long? Because both companies went through the Five stages of competitor acceptance: "It'll never work", "It's a fad", "It's a novelty that appeals to a niche", "well, they'll never beat our installed base numbers", and finally "holy crap, we need to build us a wiimote!". Add product development on top of that, and you get five years of Nintendo first-mover advantage.

Ironically, there was a bit of ho-hum as maybe people are tiring of Wii style motion control and were hoping for dramatically better but didn't see it? At the very least, the hype has subsided from "In the future all games will be played this way!" to "It's good for some types of games"

Stereo3D: Sony's doing stereo on TVs with glasses, tapping their performance headroom to engage with developers and to the full cinematic immersive thing. Nintendo on the other hand impressed folks with the 3DS, which is using a lenticular filter/display to do no-glasses, single-player viewing.

One interesting point that I haven't heard anyone talk about (which I should do a longer post on at some point) is that the type of content that will lend itself to the handheld Stereo3D (DS, plus people are talking about doing this on phones, etc) will likely be different content. Rather than think stereo3D movies like Avatar, think macro-lens style close-ups of small objects.

I'll have to think about what that means for developers. Also, it makes me wonder where on the spectrum PCs will end up. Are they single viewer devices?

Onlive: There stuff looked good. Lots of interesting features that are one-up over consoles (e.g. jump in/out of spectator mode). Of course, the real question is how it runs in the field.

Favorite game of the show: A toss up between Pacman: Battle Royale (Warlords meets Pacman for a 4-player competitive arcade deathmatch), and Miegakure, a brain-twisting FOUR-dimensional puzzle-platformer. There’s a video here, but you won’t get it until you play it (and even then, it’s doubtful!)

Best graphics of the show: Many people claimed PS3’s Killzone 3, but I thought that was mainly cinematics and presentation. Personally, I thought Mafia 2 on PC was outstanding. I heard that Id’s Rage was awesome as well, but didn’t get to see it.

Best Game that wasn’t on the showfloor: I went to the Indiecade BBQ on Thursday and got to playtest Chris Hecker’s SpyParty , and even this early it’s a temple-sweating, nail-biter, multiplayer game.

Best Random Art Encounter: I was walking down the street after dinner and happened upon The Vader Project

Can Gucci teach game devs about innovation?

Really good talk by Johanna Blakely on innovation, remix, and the lack of copyright in the fashion industry. Punchline is that the industry can't use copyright to protect innovators, and yet, they innovate. Lots to think about here. Great talk.

Thoughts from DICE 2010 (Dice-10-post1)

I got back from DICE Friday, and my head is still swimming a bit with all the information I soaked up.

Overall, the sentiment seemed cautiously upbeat, certainly more so than GDC. Studio closures are still happening, but there was a feel that a good deal of the blood-letting happened when publishers canned many of their 'B' titles last year.

Like with GDC, there was a good deal of noise about console downloadable, iPhone, Facebook, etc. Unlike GDC though, this conference is heavily slanted toward 'big game' pubs and devs. Many in the audience are clearly biased when it comes to all other platforms and business models. They may be keeping an open mind, but messages like that given in John Schappert's talk ("don't give up on shiny discs just yet") are both a voice of reason, and an indication of the skepticism about these new models. There's validity on both sides. The world is changing, but maybe not as fast as some would have us believe.

G4 has vids up of all the sessions. Some thoughts on a few of those I managed to attend:

Disney keynote. I wrote on facebook while it was happening: "The Disney keynote is an amazing concatenation of stereotypes, platitudes, and stock photo pablum. Several of us in the back are playing 'predict the next slide'. I'll take "old folks playing wii sports in a retirement home" for a thousand, Alex. We have a winner!" ' nuff said.

Designing Outside the Box. Best session of the conference. Lengthier post here. Best quote from it [while poo-pooing convergence] "The iphone is hte Pocket Exception: It's the Swiss army knife. Like a swiss army knife, it does everything (not necesarily perfectly) but fits in your pocket. However, if someone gave you a 24-inch swiss army knife that had a butcher clever, a spatula, knife, fork, spoon, etc, and said here is the ideal device for your kitchen, you would say bullshit. And THIS is why everyone hates the iPad."

EEDAR's Forces at Play. Another one of my favorites. Lots of analysis here. A couple interesting observations though:

• The "focus on quality" the point to as resulting in higher meta-critic scores I read as just "publishers cancelled a bunch of their B titles" - it's a focus on quality, but in a different way.
• The shift away from Q4-for-focused release calendar toward more distributed looked like it was actually cyclical - meaning that early in console life-cycle publishers focus more on Q4 releases - makes sense as the consoles will be big Xmas pushes

The one down-side of the above talk (and one would infer EEDAR's data as a whole) is that while they made a small reference to the fact that they have no data on PC downloadable, iphone, MMO subs, etc, they then didn't note that these things could have been part of what was impacting those trends noted in the presentation.

Randy Pitchford's talk. The talk was OK, strayed from the point in the middle a bit, but came together a bit. I love his historical example to back the main point of the talk, and the way his talk came full circle. Bravo.

The hot topics sessions were pretty good. I posted some thoughts on one of them here.

Lots of others worth checking out, a few of them, not so much. Still, they are posted and free so make a point of viewing them over the next week or two.

It's worth noting that this is a great move on the part of the organizers, putting their money where their mouth is, and showing that the real value in attending the conference is in the networking, so the session vids are just a sales tool. [GDC folk take note!]

Bonus: Best comment from the show, IMHO: At one point when Richard Garriott was speaking, a woman sitting next to me turned and said "Is that the same Richard Garriott that went into space?!".

I replied "Yes it is. However I'll bet that 9 out of 10 people in this room are remarking 'wow! that's the same Richard Garriott that created Ultima' and really aren't impressed with the whole getting shot into space thing!"

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.

Book Review: Starbucked

I find Starbucks a fascinating business. Last year I posted a review of Its Not About The Coffee, which I didn't find very useful at all.

Not so with Starbucked. It's a far more even handed look at the Starbucks phenomenon. It both gushes about the ingenuity and bravado of its management in growing the company as it has, and also shines light directly on the areas of criticism the corporation receives.

On the positive side, the book looks at how Starbucks spread the taste for better coffee, brought it's own version of the italian cafe to America and then to the world, and had the bravado to put a starbucks across the street from a starbucks and prove that it RAISED sales of the first store.

On the other hand, it doesn't shy away from talking about the plight of coffee growers, asking whether mom and pop independant coffee shops are being crushed by mega-chain outlets, and whether their ecological and humanitarian efforts are just a thin veneer on an otherwise profit-driven machine.

Both sides of the argument hold some good lessons, so give it a read.

Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture

---

There's another discussion to have about this book, which is a parallel with a part of the games industry, which I'll discuss in another post. The book talks about this argument that the Starbucks mega-chain is putting mom and pop coffee shops out of business. Then it goes on to cite evidence that there are actually MORE independant cafes now than before Starbucks inception, and goes on to make the case that while there certainly is the issue of competing with Starbucks, this is dwarfed by the growth Starbucks has brought to the market itself. In other words, Starbucks brought people to $3 latte's that were never there before, creating a market that didn't exist.

Doesn't this sound familiar?

Both World of Warcraft and the Wii come to mind as games phenomena that some argue have kept gamers from buying more product and spending more money. Others then argue that these have grown the overall market. Time will tell which is correct, but if Starbucks can grow the overall market for indie coffee shops, then its certainly feasible that WoW and the Wii will prove to have done the same for gaming.

The Passion Trough and the Ho-hum hump

Seth Godin has an interesting post up about weak analysis of data - in this case, a poor reading of data by a NYTimes blogger's analysis of Kindle review data on Amazon. I think it holds some lessons for the games industry, if you'll bear with me.

Its worth reading both posts, but here's the synopsis: Analysis of the reviews of all three Kindle products (breaking them down into a pie-chart of 1-5 star ratings) shows an increase in the percentage of one-star ratings over time. Conclusion: Kindle customers growing more dissatisfied over time.

There are a number of reasons this is erroneous. Many 1-star reviews are by non-owners ("I'll never by Kindle because..."), the early adopters more passionate than others, they are different products, etc.

However, the more interesting thing to me were these comments by Seth:

Amazon reviews never reflect the product, they reflect the passion people have for the product. As Jeff Bezos has pointed out again and again, most great products get 5 star and 1 star reviews. That makes sense... why would you be passionate enough about something that's sort of 'meh' to bother writing a three star review?

...

The Kindle has managed to offend exactly the right people in exactly the right ways. It's not as boring as it could be, it excites passions and it has created a cadre of insanely loyal evangelists who are buying them by the handful to give as gifts.

I think the lessons here are to Ignore graphs intended to deceive, and to understand the value of the negative review.

Point being that the negative reviews have value as well. For one thing "there's no such thing as bad publicity" (not true of course, but there IS a downside to NO publicity at all. The sound of crickets chirping is not accompanied by the sound of cash registers ringing). Another thing is that the negative reviews let you know who *are not* your customers.

So, what's this got to do with games?

Well, the industry puts some stock in review aggregators like Metacritic, and others are claiming this may not be indicative of a game's potential sales.

However, Seth's post made wonder whether we're looking at the right thing. Take the following fictitious graph:

The vertical axis represents number of reviews, and the horizontal axis represents 1 through 5 star ratings. Series A represents what I call the "passion trough" - reviews polarized toward 1 and 5 star ends of the spectrum (Seth's point about passionate reviewers). Series B represents the opposite, what I call the "Ho Hum Hump" - reviews clustered in the 'meh' range. Each of my fictitious products get 150 reviews

So, which is preferable?

Well, for one thing, it depends what you consider a "3" to mean. If that's a passing grade, then series B is preferable - two thirds of people gave you a passing grade. Series A gets only just over half.

Traditional thinking would be aiming to satisfy this. Do the best you can, for everyone - even if it costs you some of the more passionate customers. Better a 3-star with everyone than a 5-star with only a few people. (Some of the tradeoffs we've seen to 'mainstream' titles might lead you to call this the 'compromise chasm' :-)

I think this would be the wrong conclusion though.

For one thing, per Seth's point, I'm guessing the reality would be that Series B would get far fewer reviews, all other things being equal. It inspires little passion in people. Whereas A is more likely to inspire reviews - both good and bad.

Secondly, For Series A, on third of the reviewers are VERY passionate about the product, and therefore perhaps likely to buy it. For Series B, all those people giving it the middle of the road review are also people with a lot of alternative products to choose from.

Someone will need to crunch the numbers to determine if the above is indeed the case. If I'm right though, then we're looking at the wrong thing by looking at average score. We should be looking at standard deviation, total number of reviews, etc - if looking at Metacritic at all. Not to mention looking at user reviews vs press reviews, but that's a whole other topic.

My gut tells me you are way better off with the trough than the hump.

Good Documentary on The Silver Ball

I recently watched TILT: The Battle to Save Pinball [Official site here], a documentary about the decline of pinball, of Williams (the industry's leading manufacturer), and of the effort to save the industry through one last big R&D project.

I really liked it on a number of levels.

First off, it was really fun to see the design process behind the games themselves. Seeing footage of these guys storyboarding out designs, laying out playing fields in cad packages, considering technology tradeoffs, etc. This was all really cool. Very similar to what we see in game design, but with a tangible, physical element that we don't have (except maybe at Harmonix?)

Secondly, it was humbling - and maybe a little frightening - to see how quickly the industry declined. Many assume it was videogaming's introduction that lead to pinball's downfall. That certainly was a factor, but for several years pinball continued to grow even at the height of the arcade boom. So there are other factors we can learn from, and that have some similarity to games - concentration on few genres/themes, viewing big licenses as an excuse for poor gameplay, increasing complexity to win the hardcore consumer may have frightened off newcomers, etc. The footage of pinball trade shows at their high look an awful lot like E3 does today. Most of those attending didn't realize they'd be out of a job in a few short years.

Highly recommended for anyone in the games industry and/or those who grow up pumping quarters into Black Knight, High Speed, and others.

[Update: A friend was in town for a visit so we dropped by Ground Kontrol. Shame on me for having been here over a decade and never set foot in it before! Anyhow, I got to play Revenge from Mars, the first game based on the Pinball 2000 machine/platform. Its pretty rad but definitely not for pinball purists. The reflected video overlay is pretty neat but is distracting from the ball and playfield underneath. It feels like they could have done something like painted the playfield a dark color in order to light up just the ball, so that the ball's location would come through clearly. Anyhow, if you ever see one, give it a go. Piece of history!]

Correlation vs Causation, and the MetaCritic MetaQuestion

This piece on Gamasutra offers an interesting take on the metacritic issue, concluding that review scores are among the least important of the factors affecting game sales.

The same subject came up at a round-table discussion at MIGS that was lead by EEDAR's Jesse Divnich.

An interesting snippet from the Gamasutra piece that is worth chewing on a little:

Analyst Doug Creutz says "We believe that while Metacritic scores may be correlated to game quality and word of mouth, and thus somewhat predictive of title performance, they are unlikely in and of themselves to drive or undermine the success of a game"

This highlights a point I brought up at the MIGS round table: That there's a difference between correlation and causation. Scores can be correlated to sales, but not necesarily affect them.

The correlation is fairly straight forward. Most game reviews are written by reviewers who fit the mold of the "typical gamer" if there is such a thing. A high meta-critic score is a small sampling of people who fit the demographic of the customer. "9 out of 10 people gave this game a thumbs up". These reviews serve as this indicator *even if not a single consumer ever reads them*.

Now, whether the average consumer consults these reviews and uses them to decide on a purchase of one game over another, and how that factors in versus everything else vieing for their attention is another matter. I have no idea whether there is any causation here, but it is certainly a more tenuous assertion than the correlation above.

Does it matter though? Of course, and here's why.

If you beleive in the correlation, then you can use meta-critic as an indicator of sorts. The publishers seem to be doing this, and there has been plenty of talk about developers having bonuses tied to MC scores and the like.

Now, using carrots'n'sticks motivators for developers, and tying those to MC scores is being done to drive behavior, I assume. It is essentially the publisher telling the team "Please go do what it takes to acheive 90% or better".

If you beleive only in the correlation, that the reviewers are essentially a sample group of gamers, then you focus on building a great game that they and everyone else will find enjoyable. [A cynic like me would say you also focus on building a marketing frenzy that will have everyone salivating for the title, so that reviewers are ready to write their 98% review before they've laid hands on the game - but again, you are doing nothing for the reviewers that you wouldn't do for the consumer as well]

But if you beleive in causation, then you focus part of that effort in gaming Meta-Critic itself. You go out and try to influence reviewers, beleiving that gaming a high score out of the system will result in high sales.

So the meta-level question about metacritic is whether you beleive it serves as a focus group, or as a marketing tool. I beleive its the former, but choose your own opinion and proceed accordingly.

Addendum: As I was writing this I had an interesting epiphany: If viewing MC as a 'focus group' of sorts, then it would be interesting to treat as such. Do games score extremely high with a subset of the focus group and low with another? And if so, how do those fair vs those with a more homogenous set of scores. Does an 80 MC title with scores ranging from 60-100 fair better or worse vs one with scores ranging from 75-85. In short, does MC standard deviation indicate something? Hmmm.... time to curl up with Excel and a glass of wine...

Protesting Pachter's iPod Publisher Plea

Michael Pachter is normally a pretty rational guy as far as analysts go. However, I found his quotes in this piece on GamesIndustry.Biz to be strangely off the mark.

In the piece, Pachter claims that publishers are at risk of spoiling their own party, so to speak, by publishing games on iPhone and iPod Touch at prices lower than those they command on other platforms. He states,

"Putting well established franchises such as Madden on the iPod Touch for USD 10 cheapens their value, he explained. "Whether it's the same experience or not, and it's not, why would I ever spend USD 60 for Madden if I can get it for USD 10 on my iPod Touch?"

He goes on to state that this contributes to the risk of the iPod Touch displacing the DS (and one would assume PSP as well),

"It's a serious threat to pricing. And once people start to look at this as a substitute for the DS for smaller kids, for 12 and unders, then you're going to train a whole generation of 12 and unders that this is a perfectly acceptable gaming experience at that low price point."

I believe his line of thinking here is seriously flawed. I beleive this for three reasons:

1. Different platforms merit different pricing. I'm surprised at the first quote. Madden on PSP today retails for under $40, vs $60 on PS3 or 360. By his line of thinking, why would anyone buy the $60 version? The reasons are that the experiences *are* different, the consumer may own a particular platform and not be swayed to another for an individual title, and the economics of each platform is different (dev cost, distribution costs, etc). To take it to the extreme, There's a version of Prince of Persia on cell phones that doesn't go far in displacing the $60 console version, despite selling only for a couple dollars.
2. Meritocracy in the market. Pachter seems to claim that kids playing on an iPod touch won't 'move up' to other platforms as the previous generation did from GBA to DS/PSP/Home consoles. First, I'm not sure this platform graduation is anything but myth. If true though, the reason the gamers would 'move up' is because the next platform would offer a higher quality experience and or different content to suit their changing tastes. If other handhelds, or home consoles for that matter, can't offer a superior experience to the Ipod Touch, then they will fail - and should fail. On the other hand, if they do offer a superior experience, then they should be able to charge for it. If Nintendo or Sony can't compete on their own merits, it's not up to EA to prop them up - and if they do, then they should be compensated in a way that lets them lower the price of titles to better compete.
3. No man, nor publisher, is an island. The Appstore, while not an open platform*, is certainly more open than the controlled, curated, catalog of titles available for handhelds. What that leads to is the tens of thousands of apps that we've seen show up on it, and I'm not sure that any publisher, even EA, refusing to publish on it is going to make any difference whatsoever. [I suppose that a cartel of publishers could agree in unison to boycott the platform, hoping that absence of ANY big-name content would poison consumer interest in the device. This has happened in the past with things like music labels boycotting Napster, or (IIRC) movie studios with betamax - however, its legality is questionable, the games publishers aren't organized in such a fashion, and there's enough of an indie community that I don't think this would work anyway]. In any case, the publishers seem to be faring fine while still charging a premium for their IP (see the top grossing list)

I guess what has me so bent out of shape is that it sounds so much like the death knells of the music industry. "$0.99 downloads will kill us all! What will become of our glorious CDs?"

People kept making music. People are going to keep making games. Whether to adapt to change is up to you, but don't expect the market not to change because you don't like the way it's changing.

Make excuses or make money, your call.

Getting Hired

A few people have linked to this awesome story from Tim Schaefer about how he did a very unique job application that landed him his job at Lucasarts many years back. It reminded me of another unique approach I'd read about, taken by John Newcomer, designer of Joust, who got hired by Williams after handing in a resume rolled up and stuffed down the neck of a rubber chicken.

It kind of amazes me that in an industry as competitive as gaming - scratch that - in all job markets ranking above "would you like fries with that?" - just how many people apply for jobs by submitting resumes with form-factor cover letters, and then showing up for interviews with minimal, run-of-the-mill prep.

Of course, you can go part-way on this and still not make the cut. We had someone a while back interview for a position, and he came in with a presentation over 50 slides in length he'd prepared on our product, competitors, market trends, etc. Really exceptional. One of the people on the interview loop asked him "this is kind of lengthy, and I'd like to spend most of the time talking with you. Can you go to the summary slide?". "umm... summary slide?". Fail!

Anyhow, food for thought

Four Pointers on the Future of Games

I read a number of posts over the past week or two that opened my eyes. Here they are:

1. Dan Cook's 'Flash Love Letter' series of posts (two so far: one, two. With more coming soon) on Flash games, the opportunity for premium flash games, how to monetize them, existing (flawed) feedback systems when distributing through portals, etc. His blog has always been gold, but this series of posts shows that he understands this space better than almost anyone who's writing about it. Much of it applies to all digital distribution and not just Flash games.
2. Raph's liveblog of the AGDC panel on monetizing online games: Free-to-play biz model experts discuss successes and stats around different tweaks on the biz model and how it's evolving. I remember when I first worked in casual games, being surprised about how scientific (in the sense of hypothesize-->test-->measure-->analyze results) the business was compared to traditional big-budget retail games. This group takes it up a notch. A must-read.
3. Alice's post on Smokescreen. Smokescreen is an online game that aims to educate teens about issues involved with their online activities, like identity, privacy, security, etc. By all means go play it - at least see the first mission through. It will challenge both what you think is possible in an 'educational' game, and in the quality of production possible in a publicly-commissioned game. On the latter note, I'm not sure what the budget was here, but its clearly NOT your $50k flash game. It's polished, rich, and deep. It doesn't take much to extrapolate a few years out and think about what it means when your games have to compete with free-to-play, $10M+ budget titles funded by your taxes.
4. This GamesIndustry.biz post on Bobby Kotick's comments about 'untethered' Guitar Hero. Kotick has done his share of talking out of his rear, but this is not one of those cases. The idea of a stand-alone SKU of guitar hero, connected to a dedicated service, is not as ludicrous as you might first think. Music games are a phenomenon and there are still a lot of households without consoles. If some of the people who shelled out $250 for a Wii did so to buy 'the Wii sports machine', then I don't see why this wouldn't hold for people that want GH or Rockband but don't own one of the big 3 consoles. And if this is a route for publishers to connect directly to their customers without console holder as middleman? Hmm..

As I said above, these are four must-read posts. A lot of hints as to where we'll be going over the next decade are to be found in there.

Good Brenda Brathwaite article on Escapist

Escapist has a great article entitled Ivory Tower Defense from Brenda Brathwaite, discussing the unjustified “those who can’t teach” lack of respect for academia in the games industry. It certainly swayed my some of my prejudicial opinions.

The used games stew simmers on

A while back I posted some thoughts on the entry of other retailers into the used-games biz (both here and on Gamasutra) after Best Buy, Amazon and Toys R Us all announced they were jumping into the controversial yet attractive-margin business.

The topic popped into headlines again this week as Walmart floated a test balloon of used-game kiosks in 77 of it's US stores. Walmart isn't running the business itself, but renting retail space to E-Play, the company that runs the kiosks.

The Walmart name prompted some press calls to analysts, I guess, because we saw quotes from Todd Greenwald ("we don't beleive this proposition poses much of a near-term threat") and Michael Pachter ("I can't see this having tremendous appeal to hardcore gamers, unless the credits are substantially higher than those offered at GameStop"), both citing it as sort of a non-issue.

If you cut through the analyst speak though, you can paraphrase to 'not a threat until they get it right', and 'not competitive until they make it so'. 

Does anyone really beleive that won't happen? Walmart is a company that put itself on the map through ruthless attention to efficiency improvement. I think they'll clue in to any customer sentiment that payment terms matter, that buy-back pricing is uncompetitive, that used-game pricing is uncompetitive, or any other metric that matters.

To posit that GameStop won't see a credible assault on their attractive used-game business seems naive to me. It will certainly happen.

And as I claimed last time, I beleive this is a good thing for the industry. Lowering the margins on used game distribution will make games a better value for consumers by increasing the buy-back price or lowering the used game price, and/or make new-game promotion more attractive to retailers because of less incentive to move used games. 

At the end of the day it means more money in either the industry's pockets or consumers, or both, and that's a good thing.

[Cross-posted on Gamasutra]

Dataviz musings

Short version of this blog post:

This is a pretty cool little data visualization on box office receipts over time. Not very useful, but cool and fun to play with.

Slightly-less-short version of this post:

It sure would be cool if we had a version of the above data visualization that was interactive (more than scrolling), say like this, and that we had it for, say, game releases & sales data over time. Oh, and for like 10 years worth of data. Hmmm. Yeah, that'd be nice.

Lengthier version of this post:

I've been wrestling with some gnarly data visualization stuff at work, trying to get some trends to pop out of complex data sets in a simplified and obvious way. It's been a pain, I've spent a bunch of time looking at different chart models like circular histograms, donut charts, radar charts, etc. None of them really does what I need, so I'll just have to resort to building something myself.

While looking at all these things though, I've been thinking a lot about how dramatically the impression the visualization can sway depending on the choice of how it's visualized. Also, on how much better the data can 'pop' when its interactive. The example above lets you scroll back and forth through time (do so and the holiday/summer blockbuster cyclical nature of the box office is plainly obvious). Also, mousing over individual movies lets you see their rate of decay and staying power (check out films like Forest gump or Sixth sense, for example).

I'd like more tools though. Zoom. Band-pass filter. For example, is there a macro level cycle at play? (like lemmings!). Or did the advent of VCR, DVD, Cable, Blue-ray have any material impact?

Of course, I care about having all this for games more than movies. There are a couple things holding us back.

The biggest is a lack of decent data. As I'd previously mentioned, we don't have The Numbers for games. We have NPD data which is NA only, lousy for PC, decreasing in relevance as DLC, subscriptions and digital distribution gain in relevance vs retail. Other research groups publish numbers but it's all pretty fragmented and worse, its expensive. 

The opacity of the online services sales figures also doesn't make things any easier. VGChartz does a half decent job deciphering numbers but that's only an artifact of how leaderboards work consistently across XBLA titles. Good luck doing the same with Steam and it's brethren.

The second thing we need are better tools to parse the data, especially if it's coming from numerous asymetrical sources. Things like Motioncharts (Google docs' integration of Gapminder)can help but then someone needs to go mash that data in there in a useful way. The good news on this front is that there are a bunch of dataviz apps that seem to be waterfalling down from nichy segments of the market to general business usage or integrated into the cloud apps (motioncharts being an example of exactly this).

The third thing we need is for someone to build gaming's equivalent of The Numbers. If this stuff exists in a few spreadsheets buried within MS or EA, it's not of nearly the use it can be when the whole net can dig in and start doing some archeology on the data. 

Anyhow, I've got a big spreadsheet to get back to...