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.

VaioS laptop

Early in the year, I said that one of the trends we'd see was what I called more 'bespoke' design in our computers & electronics. More looking like items of fine craftsmanship, less prominent branding (or - gasp - no branding at all), simplicity and elegance over LEDs & complexity.

The new Vaio S series is certainly an example in that direction. Unfortunately, it still has the logo/branding, but on the plus side, it has a brown/gold option that immediately made me think of Robin Williams life-editing cutter laptop in The Final Cut (an awesome sci-fi flick, if you haven't seen it) which I've pointed to before.

Sony Viao S

A replica of the Final Cut laptop

Williams holding the prop from the movie.

GDC 2011 Trends & Sessions

This year’s GDC was my 18th and I returned from it… spent. Unfortunately I also returned with the dreaded “GDC Lurgy”, the annual disease that spreads when 19,000 sleep-deprived immune-suppressed game developers get together and finger the same touchscreens, and so was knocked out sick for two days this week, thus the late report.

Trends:

It was an interesting GDC this year for one to try to infer industry direction from “sniffing the air” (especially since the olfactory peripheral guys were back this year!). On the one hand, there was a loud and visible emergence/amplification of mobile (iPhone in particular) and social (being almost synonymous with Facebook – which is short-sighted). On the other hand, you had a significant majority of the show (exhibits, sessions, etc) continuing quietly and steadily down the big-budget AAA path. That said, here’s what I took away as trends, as judged by show impressions and conversations.

1. Developers have MANY choices of platforms to target

One takeaway was that given the sheer number of devices playing games today, developers have more choices than ever before in where to focus their game-making efforts. The sheer pace of change, combined with secrecy about numbers from owners of closed platforms as well as successful developers, along with the confusing and/or obfuscated data about new business models (analysts are also having trouble parsing/sizing some of them) means that the choices are daunting, and yet there ARE choices, versus a more limited landscape in the past.

2. Social growth begets social gaming cred

Last year there was a huge amount of interest in Facebook as a game platform, much of that interest perked up by the money that games like Farmville making eye-raising amounts of money. There was also some envy with that, with much of the established industry saying “these weren’t real games” etc. Over the past year, many industry vets have shown up in leadership roles at social games companies, acknowledging that perhaps there’s a real vehicle for game experiences here. To the rest of their nay-saying counterparts, the sentiment was best captured by the yearly “Rant” session, entitled social-gamers rant back. For a poignant, synopisis, view Brenda Brathwaite’s 5 minute rant here.

Note that one of the themes she touched on was an influx of two types of developers into the social gaming scene, the designers looking to explore the medium’s potential, and what she called the “strip miners”, those looking to exploit existing models for maximum revenue and profit. This was also touched on by Scott Jon Siegel’s rant, a transcript of which can be found here.

3. The Mobile gold-rush continues, but with some sobering of expectations

There was of course a ton of interest in mobile, led by interest in Apple for iPhone & iPad games, and with Android being the only other platform of note. Window Mobile 7 is mentioned as a possible credible 3rd, but that’s it. There is trepidation about Android, as the exciting growth and size of the installed base is tempered by a fragmented platform landscape and less lucrative marketplace. That said, people are developing for it more than sitting on the sidelines. Sentiment seems to be that people are marching ahead but testing their footing as they proceed.

4. AAA games get more ruthless

While there was much excitement about the new areas mentioned above, most established companies were clear about the size of these new markets and the fact that they pale in comparison to the established markets for AAA fare. For example, in Jobs keynote, he boasted of $2B paid out to developers in the almost 3 years since the appstore’s debut. In that same period, depending who’s estimates you listen to, the console business generated >$50B of SW revenue for that same time period (Never mind that the $2B is divided amonst 250,000 apps, giving a mean of maybe $4k/app/ and a median that is likely much, much lower. Aka, a brutal hit-curve fall-off).

However, given that console SW market is not expected to see any remarkable growth, this means that when the pond isn’t getting any larger, the fish start fighting one another for the food. The big fish get bigger, and the medium size fish starve. This means that the console title hit curve will become even steeper, as mega-blockbuster franchises focus on achieving numbers like those we’ve seen lately for CoD, Red Dead Redemption, and their ilk. As they manage their portfolios tightly, $50M titles will manage to get their many-multiple returns (e.g. Call of Duty’s latest incarnation is estimated to have taken in excess of $1B in retail sales). As these mega-blockbusters compete for share of mind and share of wallet, the place the money will come from is the “AA” titles. Those with significant budgets($10-$40M) but falling short in the awareness building, etc. If 2008-2010 saw the demise of the B title, we will start to see some of this same effect on AA titles, making the hit curve even steeper. (Note: here’s a good quote echoing that sentiment from Cliffy B).

5. Early prep for the next-generation of AAA games

Some folk were talking next-generation tech for the next generation of consoles, without being specific about when that might be. Epic Games had a theater presentation going with a demo of their next-generation tech, using a high end PC and triple-SLI high end discrete setup. I’ll leave the dissection of tech up to others (vid of demo here), but suffice it to say that it bolstered my confidence that the next generation of consoles WILL be able to deliver a visual experience that is demonstrably different than the current generation. Perhaps not the same degree of leap of, say, PS2->PS3, but still noticeably different. And as there is clearly a market for $50M+ titles, I’m confident there’s a market for next-gen consoles (and PCs). A rumor was circulating about a next-gen Nintendo console debuting at E3, but I’ve been unable to get any industry confirmation on this. Anyone know better? :-)

6. First warnings on Closed vs Open

Several sessions had industry veterans warning on the long term costs and risks of being subservient to closed platforms. Veteran Trip Hawkins had a ‘rant’ session on this, pointing to the browser as the path to salvation. An even more direct-to-the-point talk was one of my favorites of the conference, from Dan Cook of Spryfox, who’s talk was entitled “How to survive the inevitable enslavement of developers by Facebook”. (Dan promised to post his slides soon to his blog at: http://www.lostgarden.com/)

7. Indies are Hot

In a good way that is. The IGF (Independent Games Festival) was filled with a massive number of REALLY polished and innovative games. Many of these are falling into the category of what Chris Hecker called “AAA Indies”, or in other circles, “Perfect gems”. The idea being that rather than being an all-encompassing experience done on a shoestring budget, that they are games that take a single idea or game mechanic (the ‘gem’) and polish it to perfection.

On the plus side, everyone now considers indie fare as a must-have in their portfolio of titles for their platform, and so between that and the number of platforms, there is no shortage of ways that indies can get games to market. On the down side the level of polish expected means that by and large, indies are expected to develop multi-hundred-k titles on their own dime. Publishers and platform vendors alike are signing deals with these guys, but with mixed results, leading to the same risk aversion we see with AAA games. Budgets like they've normalized for console downloadables around a ceiling of $800k-$1M, and while titles like Spyparty and Limbo are likely sign-ons, titles like Dinner Date (my fave, and described as ‘You play as the subconsciousness of Julian L, waiting for his date to arrive. You listen in on his thoughts while tapping the table, looking at the clock and eventually reluctantly starting to eat...’ are far more risky to fund, but necessary for the medium of games to reach its potential.

8. The Last stand of the handhelds (or is it?)

Lots of talk about Sony and Nintendo’s bets on the NGP and 3DS respectively. While there was also theorizing about the console’s demise in the era of more multi-purpose platforms, there was a general sentiment that the place this battle will first come to a head is in handheld. It can be summarized as follows: “Can a dedicated-function device (3DS, NGP) built on a business model of $40 games, offer a sufficiently compelling experience to justify the cost over a general purpose device (iPod touch, iPhone) with $0.99 games”. To their credit, both Sony and Nintendo are taking this seriously and have very compelling offerings to bring to the table:

- Nintendo: 3D display, dual display, first to market with streaming 3D Netflix (trailers at first), exclusive deal with AT&T for 10,000 free wifi access spots in NA, amented reality games, and of course, a killer IP lineup including Mario and Zelda.

- Sony: High-end HW that should do a killer job on 3D tiles, playstation back-catalog content, a good IP catalog including Metal Gear, etc, also a focus on augmented reality, and a touchpad in back*.

(*Prediction: everyone is undercalling the touchpad on the back of the NGP. I predict this is going to prove to be the controller that finally cracks first-person shooters on handhelds. Every other attempt has sucked)

It certainly will be interesting to watch it play out. My personal hunch is that Nintendo is safe, despite a device inferior to the NGP, based mainly on their 1st party IP. Sony has a harder challenge. They’ll find a market, but I’m doubtful it’ll be large enough to keep the ecosystem aloft.

Favorite Sessions Attended

I managed to attend a dozen or so sessions. Here are my favorites:

I. Nintendo Keynote: Consisted of 3 sections, each of which was quite interesting:

Part 1: Nintendo background, growth of market, lessons learned

• Iwata gave an overview of his history at Nintendo and lessons learned. Among them that content is king (e.g. He gave the example of having programmed a technically superior game to his counterpart/rival Miyamoto, who’s game contained an Italian plumber named Mario – lesson learned)
• Nintendo has surveyed 5,000 users across all age groups/demos for the past 7 years. Probably an unparalleled insight into gamers. Great graphs showing gamings permeance into culture over time. Bottom line is that the population that isn’t gaming is shrinking and aging over time. Near future will be everyone(!), Google for any of the numerous liveblogs to see the charts.
• Industry quotes echoing some of the trends I mentioned above as to AAA games: e.g. "We’re all playing much bigger gambles, and that’s getting scary” – Mike Capps, Epic

Part 2: Reggie came out to do the infomercial section: 3DS: First to deliver streaming Stereo3D on Netflix (!), Record Stereo Video or take Stereo Pix, AT&T deal to provide 10,000 wifi hotspots for 3DS owners free of charge across US, at airports, malls, etc, Improved digital store, Mario & Zelda titles in the works <-- note how games was the LAST item discussed in the infomercial section.

Part 3: Iwata came back out, talked about Industry concerns. This was a two part thing: ( A) Large games mean increasing specialization; harder to develop talent that sees “whole picture”. Those that do are aging. (B) and this was uncharacteristic of Nintendo: A direct attack on Apple and to a lesser degree, Facebook. Short version goes like this: Closed systems have hundreds of titles, “big app sites” have many tens of thousands – not enough for everyone to make money. Those systems not designed FOR games specifically care more about harvesting the ecosystem than nurturing it. Nintendo cares about protecting value for devs, and value in games (i.e. 0.99c games will lead to low quality fare). It was definitely a defensive attack, but not without an element of truth

II. NG Moco’s Neil Young on why Japan is a leading indicator of the worldwide mobile market

This was a great session for 3 reasons: (1) Half of it was really a back story on how the startup got off the ground up until it’s acquisition, (2) Great insight on the future of mobile, (3) Neil is a great presenter and presented almost half of his talk while impersonating his VCs, one of whom he swears is a shoe-in for Michael Myers “Fat B**tard” character.

Interesting conclusions they reached before re-vectoring the company: Being a mobile games publisher was unsustainable. Back of envelope math: Would need to have 3 titles in top 10 – every day, all year, to be a $20M company – Almost impossible to do. Note that market bigger now, but regardless, decided this was the wrong path to being a multi-billion dollar company. Re-vectored around F2P games, and targeted an acquisition/partnership that would let them broaden the service across platforms and geographies.

Great quote: “In a world where there are more apps than appetite, customer relationship is the real valuable IP”

Hope he posts slides, there was some great info on growth of japanese mobile market as indicator of future.

III. Game Design Challenge: 3 designers face of in designing a game around a given, difficult-to-design-for theme. This year was “bigger than Jesus” a design challenge around designing a game that could serve as a religion. Entertaining, thought provoking. My favorite (and not the winner) was Jenova Chen (of That Game Company) who’s religion was centered on the propagation of ideas, and who designed a meta-game on top of the TED website. Cool concept, and I'm betting he'll get a TED invitation out of it!

IV. Epic Legal Battles: A panel of games-specializing lawyers and legal profs each gave a mini-presentation on areas of pending increased legal activity over the near future. I agree on all counts:

• Collision between Games and Gambling. To the degree that players can get any real-world value out of the game, or get anything of perceived value, you stray close to gambling laws that are deliberately vague. Ticking timebomb? [KP: Yet another reason that the industry needs to continue to lobby for games as art deserving of free speech protection and respect as an artform. Gaming’s esteem by the general populous will determine how it withstands coming under the eye of scrutiny, which it inevitably will]
• Antitrust: Finger pointed directly at Apple and Facebook, but this could apply to any closed platform. Good quote on the idea of filing suit against Apple “you could. It’s like lying down across barbed wire so your friends can then walk over your body”
• Destroying Worlds: When a game is a service, and you find it no longer is profitably, and you want to take it down, you violate a contract you have with the remaining players. Despite whether or not the fine print says you can do so or not, their hearts are in it, and they may want revenge.
• Privacy: We’ve only scratched the surface. The more people put online, the more they’ll care. Also, laws are coming up to speed with the issue and as new laws go into effect, games industry will need to deal with it. Example given of ‘cookie law’ going into effect in EU in May.

V. Social Game Developers Rant. The rant session is always one of the better ones of GDC. See trends II and VI in the trends section above for links to a couple of the better ones.

VI. Moriarty's 'An Apology to Roger Ebert': I’m not sure this was labeled the closing keynote, but it may as well have been. It was a brilliant speech about games, art, culture, and a provocative close to the conference that kicked off hundred email/twitter threads about its ideas. The full transcript is online here:

Predictions for 2011

At almost three weeks into the new year, I suppose its getting on the late side for "2011 predictions" posts. That said, I'd made some notes to author such a post, and the recent CES trip I did helped crystallize this thinking.

I think these types of posts are healthy to do for two reasons. The first is humility. I'll surely be wrong on a number of these and so when I look back on them in early 2012, I can be reminded of just how off base I was (and thus generally am!). Secondly these assertions can start conversations. Ones in which I hope you, esteemed reader, will partake.

Lets first dispense with the usual stuff you are hearing around the internet: There will be lots of smartphones (duh), tablets will take over everything (they won't, but they'll be a big category), TVs will get thinner (would they get thicker?), etc. A lot of these things you can take for granted as true or false, either believing vendor claims or not. The more interesting things come in thinking about implications and general trends that result thereof.

So that said, here are a few that come to mind.

1. "Bespoke Design" and "Devices of Emotional Attachment"

For years now, the PC industry has wondered why it is that its machines can't hold a candle to Apple's when it comes to design. I think that the consumer electronics industry as a whole has come to terms with this. In the past few years they have been copying Apple (e.g. remember when everything went "white plastic"?), but this isn't the answer. The answer is in designing things that people care about. Either because they embody something they stand for, allow them to state their place in a tribe, or recall an era for which they have affection. Examples include Google's Chrome laptop (logo-free minimalist bespoke look), Fuji's retro looking camera, or similar examples from Leica or Olympus. Combine this with things like falling manufacturing costs and a premium that people will pay for this kind of design, and there's opportunity for many small hardware niches (e.g. laptop vendor that does build-to-order chassis based on custom materials).

2. "Appstore Fatigue" and the coming competition over connected commerce

(This is a big one on which I'll do a lengthier post in the coming weeks)

In a quick - by no means comprehensive - survey of products at CES, I counted no less than twenty "appstores" across a variety of phones, tablets, PCs, Netbooks, TVs and settop boxes. With the improved capabilities that apps bring to devices, and of course the revenue stream it brings to the vendors, it's not surprising that so many device vendors are doing just this. However, I believe it's unsustainable at current rate/scale. It will have fallout in a number of ways:

• “AppStore Fatigue”: Consumers are not likely to trust (or want to bother) maintaining an ongoing commercial relationship with every device they own, though it appears that every device is going to ask for one. Consumers are going to forgo some in favor of others. Those appstores that fail to resonate with users are going to become ghost towns of sorts. Users being assaulted with yet-another-appstore will suffer ‘AppStore Fatigue’, not wanting to fire up yet another appstore credit-card entry. Those launching appstores will have to think about how to incite that customer in the door. I’d imagine we’ll see lots of “Comes bundled with $50 worth of AppStoreBux” types of offers. Similarly, developers will be faced with a huge choice of channels. Even with lightweight click-to-accept agreements, most will not have the bandwidth to launch on every service and customize for services/devices. This is playing out exactly as the PC Download Casual market did in 05-06 when I worked at MS. As it did then, it will lead to lowest-common-denominator development, a rise of distributor/aggregators, and developer focus on the 1-2 leading platforms leaving others to wither.
• "Competition over Connected Commerce". Again, I'll address this in longer post, but the short version is this: A large part of determining who will win here will be dependant on which vendor walks the line best between (a) giving developers tools to innovate in commerce (light up new business models, create new pricing models, develop external direct commercial relationships with customers) and (b) presenting the end user with something that they can still understand, navigate, and trust. Consider that developers on the AppStore are lighting up new hybrid business models daily or weekly, while Xbox took several *YEARS* to light up a F2P/item-sales model in ONE game. This is going to be the front on which the most exciting innovation is going to take place.

3. Stereo 3D will reach a point of "undeniable lack of success"

Fall 2010 didn't see the furious adoption of Stereo3D that the more bullish were predicting. At CES this year, plenty of vendors were still hawking it, but (a) with less enthusiasm, and (b) as only one of several things they were showing, not the main attraction. My belief is that by end of year, it will be evident that Stereo3D is a niche at best, and likely a small one at that. Vendors will blame the glasses, but this is a red herring. The real issues are more fundamental, and I beleive insurmountable:

• There are fundamental physiological issues with Stereo3D at close distances that make it fatiguing at close distances. This isn't an issue in the cinema where the focal and convergence points are near-identical but becomes and issue at close range. Headmounted displays are extremely uncomfortable. TVs and PCs for extended periods, YMMV.
• Authoring 3D Content costs money. The model Hollyowod is pushing is predicated on a long-term-sustained premium over the whole content waterfall. While theater goers are paying the premium for ticket prices, it's not at the level they'd like and it's not clear that cable, blue- ray, etc, will be able to command a premium at the same level.

The two things that Stereo3D has in its corner are home-theater enthusiasts and sports (gaming enthusiasts are mice nuts in comparison) . I'm not in the camp that beleives these two niches are enough to evade a collapse, but who knows.

4. 3D printing, on the other hand, is about to take off

Several sub-$2k printers, several startup services allowing printing of your own designs (Ponoko, Shapeways, Figureprints) or offer boutique products for sale. Feels on the cusp of something big, though what exactly I'm not sure. Print your own board game pieces? design your own jewelery? Maybe Alice will figure it out for us! There's certainly some overlap with #5:

5. Gaming's Virtual & physical worlds meet

There were a number of toy manufacturers around CES this year, and some of them are doing interesting work in melding physical toys/games with the virtual. There was of course a first step in this direction with toys like WebKinz, BarbieGirls, and BuildABear, but this was only a commercial link, using physical toy as proxy/token for the games cost of entry. What we are seeing now are things like Mattel’s Rock’em Sock’em robots having a complimentary augmented reality game, SphereO a remote controlled robot ball that you drive via smartphone; and ARDrone, a remote controlled helicopter that you pilot with your iphone while simultaneously playing augmented reality games (e.g. 2 real-world copters, but the ‘bullets’ and ‘rockets’ are in virtual space). Also, I got a chance to play Sifteo, a tactile game platform made up of physical cubes that react to how to you move/tilt/connect them. I think all of these are indications of an interesting trend melding the virtual and real worlds. The uber-smart Frank Lantz once said “we think of games as something you put into computers, but this is wrong. Computers are something we put into games”. I think this captures the essense of this trend – that we’re finding ways for technology to pervade and enhance all aspects of play, on and off the screen (which includes things like Nike+, etc)

6. Apple has a gaming platform.

Well, they have two of course. The iPad and the iPhone. What I mean though, is that this posturing (part BS'ing, part wishful thinking) from game console manufacturers about iPhone not really competing with the DS/PSP (it does) and iPad not competing with high-end consoles (they do for share of wallet) is no longer going to fly. Market data will emerge that proves that Apple's platforms are taking gamer money out of the pocket of traditional game platform manufacturers.

7. The Post-PC-Era will officially arrive.

Classify it how you will; Smartphone & tablet growth outpacing PCs, or more people connecting to the Internet on non-PC devices, or any other metric, it will be clear that it's no longer a PC world. This will have all kinds of implications for people developing games content. HTML5 (and

related tech that often is thrown into that bucket) will become increasingly important, cross-platform services will become attractive for gamers, and we'll see the emergence of #8

8. Brands-as-Memes.

This proliferation of app-enabled platforms will lead, I think, to another interesting phenomena. It will be hard and expensive for large-budget games, outside of their core market, to get onto enough platforms to rise above the noise of the collective conciousness. On the other hand, smaller titles, being able to appear across iPhone, iPad, Facebook, consoles and PC, will - when they 'hit' - spread across the cultural landscape like wildfire. Red Dead Redemption made tons of cash, but its got to be a little bit frustrating to work on a $100M AAA blockbuster thats supposed to be the biggest thing in gaming, only to turn on the TV and see that everything from SNL skits to Jay Leno monologues are talking about Farmville and Angry Birds. When Angry Birds gets this level of virality, its no longer just a brand, it's a meme.

9. E-reader apps & services will see an explosion of innovation

The first wave of e-reader devices, apps and services have been too focused (a) on improving their supply chain and costs, and (b) too focused on emulating paper, not on surpassing it. The device war is going to be waged on a number of fronts (Kindle will stick e-ink, but they'd better add a touch interface), but for 2011 its going to be Kindle loyalists and the iPad juggernaut, with some niche-serving tablets in peleton further back. On the software front though, there is room for a ton of innovation. Trying win customers over, people will build social networks or latch onto existing ones, and then layer on features for book clubs, shared annotations, circle-of-trust recommendations, book lending/sharing, gifting, treasure-hunt games, and of course acheivement systems. Lots of magazines and newspapers trying their hand at different interpretations of what their content should look and function like on digital platforms. HTML5 will make it easier and cheaper to produce high quality typography and layout and to make it portable. There's also a ton of work to do to make text more readable on screens.

It took us a few thousand years to get paper to where it is today. YOu didn't think we were done with e-readers upon reaching the iPad, did you?

Some people to watch in this space: Craig Mod, James Bridle, Bill Hill, Copia (who have the right idea, and whose feature set will likely be copied by Amazon and/or Apple)

10. Cracks in gaming's walled gardens.

Consoles are walled gardens. Platforms like Apple's are as well, but less so. As I wrote about a while back, as consoles are tempted - or demanded by their partners or customers - to reach out into the broader Internet to leverage the benefits of other services and platforms, they'll start to lose some degree of control on their platforms. The recent Steam/PS3 headline is a prime example.

And now, FIVE more bonus predictions!

11. HTML5 begets real apps: Real, viable competitors to Office, Visio, Photoshop, etc, etc.

12. Android consolidation. Such a mess right now there has to be some consolidation in device UI and form and application distribution or the app landscape will be bleak.

13. Games market analysts will struggle to segment an amorphous landscape. They used to segment handheld differently than phones, differently than console, retail vs digital, etc. Things like iPad blur all those lines. It'll be hard to make sense of the market.

14. No 'official' Kinect for PC. Some are predicting it. I just don't see it happening. It was so hard to bring Live to the PC, and not particularly successful, that I can't see them overcoming all the calibration/usage issues, nor the high demand for it materializing.

15. Tablets as producer platform: People are framing tablets as 'consumption-only' devices because largely today they are. However, people will innovate on the platform and turn them into production/editing platforms, and we'll see them take off for real in many niches as PC replacements, not compliments.

That's it! Let loose the commentary on this broad-reaching food for thought!

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!

Playfish's Smart Move in the Facebook Gold Rush

This is a good piece on why Playfish sold itself to EA.

New markets (for game makers or anyone else), the successful ones anyway, tend to turn into gold rushes. Someone takes a chance, stakes a claim, hits gold, and then in come the hordes of followers that heard about the guy that got rich with only a mule, a pan, and the clothes on his back.

In recent years we saw a casual games gold rush, a console downloadable (lead by XBLA) gold rush, an iPhone gold rush, and now it's "Wagons, Ho!" for the Facebook gold rush.

With each of them, the market achieves an equilibrium over time as competition increases faster than consumer spending does, and eventually you get to the same place as the rest of the games industry: A hit driven business in which a minority are profitable, a very small minority are extremely profitable, and the majority go bust trying to get to the top end of the curve.

What *differs* though, in how these markets evolve, is the tactics taken as the marketplace crowds. The strategies available are the same across all of these, but which is the right one, tactically, varies by platform.

They are:

1. Lowball on price: The PC casual download biz eventually went this way, and many are trying this tactic on the iPhone, but I believe it's a fools game, and some of the others below will turn out to be the real winners for that platform.
2. Out-Innovate: This one is easy. Go invent an awesome game mechanic/biz model/etc, that no one else has thought of, and that everyone loves and finds addictive. Oh, and make it hard to imitate. Easier said than done. The problem with this one is that there's no clear path.
3. Spend your way out of the clouds: Spend on development, spend on marketing, etc. Build a better looking title, get pretty screenshots, and then go pound the pavement to get more ink/photons than the other guy. (We saw many XBLA titles go this way as budgets went from $100k to $1M)
4. Out-Brand: This is another flavor of spending your way out of the clouds. Specifically, license IP/Brands, from games or elsewhere, can help your title stand out in a crowded space. This works especially well with a less scrutinous audience (doesn't necessarily mean hardcore, could mean just more price or time sensitive).

The interesting thing about the Playfish acquisition is that they pretty clearly are claiming that #4 is going to be the strategy of choice for Facebook, and I have to believe they are right.

Dropping price doesn't work because the FB games are mostly free/freemium. Innovation is risky everywhere (better to be 'fast follower'), and increasing the game budget... well that will happen, but it's not clear where it ends, or if FB games are ready for Unreal engine license.

So that leaves out-branding, and as the article points out, the EA acquisition gives Playfish the financial resources with which they can go do this, plus a great set of connections at EA with their own IP and licenses from other EA partners.

[note, of course you'll see ALL the above strategies employed in each of these markets, but there will be majority gravitation toward one or two at any given time]

In the margins

Alice pointed me to this very funny list on Joe Ludwig's blog of "50 things I never need to hear at another conference" (in this case, lampooning the wisdom of the Austin GDC crowd):

1. Korea is the future.[]
2. Free to play with micro transactions is the one true business model.
3. Client downloads are death.
4. We must look beyond the core gamer audience and embrace more casual players.
5. Women are 50% of the audience.
6. ...

Anyone who's done a lot of these conferences feels the sense that they've heard it all before. This list is a stinging reminder that this is indeed true.

Of course, often the most interesting part of an article is what's between the lines. The most interesting thing, for me anyway, about GDC and for that matter all conferences, is not the main content. It's the side note during a lecture about some product or feature's back story, it's the note in a post mortem about the cool idea they had but couldn't follow up on, the hallway or dinner conversation that happens after the lectures and panels are done.

The most interesting things are in the margins.

The first wave of bad news

Lots of axe-weilding around the games industry, and in the tech industry in general. A few recent examples:

EA lays off 6% of workforce

THQ plans reduction of 250 heads

Brash hit by layoffs, cancels titles (not surprised, given their initial titles' poor reviews, which seem to stem from an attitude of "hollywood license + low quality game = ok", as others pointed out when they originally announced. Guess you can burn through $400M pretty quickly these days. Fools and their money, etc.)

Wild Tangent closes internal studio, cuts staff

Avalanche lays off 77

Google will give you plenty more examples. 

Unfortunately, i think this is just the battening down of the hatches. The real trouble comes if people tighten their belts a notch or two this Christmas, which I expect will absolutely happen. After that we'll likely see another wave of layoffs.

So much for 'recession proof', which was crazy to think anyway.

Shitty times. And I think it's going to get far worse. The layoffs in other industries have a ripple effect on people's spending; budget clamp downs in all industries are going to cut advertising budgets, which are a big part of the casual games business, etc.

Should VCs invest in casual game developers?

I wrote a rather lengthy piece on my other blog, melding some thoughts on Casual Connect opinions and some observations at DICE.

Rather than cut and paste, I'll just point you there.

Ooma OOBE, and Apple packaging perversion

A few months back, Vlad and I attended an entrepeneur event in Seattle. Michael Arrington was one of the speakers. He mentioned having a give-away token for a free Ooma, which he'd give to the first person that approached him for it after the session. Vlad was that person, and since he couldn't use it for some reason, he gave it to me.

Ooma is a one-time-purchase device that gives you VOIP phone service over your broadband with no monthly charges, no long distance charges in US, a broadband voicemail box, etc. Your regular household phone(s) plug into it, and then you use the phone as you would normally.

You could view it as a hardware device purchase, or you could view it as a lifetime subscription option to phone service. Spend a few hundred now, no phone bill later (or forever).

I filled out some online forms, and a couple months later, after I'd forgotten all about it, a big honkin box arrived in the mail.

I still haven't hooked it up (for reasons I'll get into later), but I did want to talk about the packaging.

The gizmos (the Ooma, and an an auxilliary 'scout' device) each arrived in a very attractive, very HEAVY, glossy cardboard box.

This is what the devices look like.

Anyhow. The box is super thick, with a cover that is five sides of a cube and slides off of another five sided cube to reveal a felt-covered plastic 'holder' for the OOMA, which conceals the AC adapter, cables, etc. There's a also a large glossy manual and quick-start guide.

The thing this made me think of is just how much everyone has been influenced by the Apple out-of-box experience ('OOBE'). I've heard (sorry, have never purchased an Apple product), the Apple OOBE described in near-fetishist, near-religious, fashion by those that have bought their products. It's clear that others are aspiring to capture the same type of feeling.

Ooma's not the only culprit. I've purchased a couple Zune's and they are definitely mimicking the same thing. Xbox360 as well to a lesser degree.

It does make me wonder about a couple things:

• How soon before this backfires with the environmental movement? Others have learned a lesson here (Barbie was an example featured in Fast Company recently).
• What's the cost of the packaging, and could the savings be passed on to the consumer?
• Again, borrowing from teh Barbie example, could the packaging be practical? Why not sell Zune's or Ipod's packaged in a leather or rubber protective case - an accessory people often buy anyway?

Food for thought.

As for the actual device - I'll let you know how it goes after I actually plug it in. :-)

For those that are curious, here's a shot of the ports on the back.