A couple digital distribution points of interest

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

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

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

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

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

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

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

And the money quote:

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

Hey Paul. See item #1 above. KTHXBAI!

A couple VC Gems

I have a few of the better (I think they are, anyway) VC blogs on my feed reader, and just recently did some catching up.

A few snippets caught my eye:

1. Ben Horowitz, on "How we picked our first cloud investment" makes this point:

...the first attempts to build applications in the cloud from companies such as Corio simply fork-lifted the leading on premise software and moved it into the hosted environment. While this sounded like a good idea to many VCs at the time, it turned out to miss important details and advantages of the cloud...

Reading this should spin your gears if you are thinking lately about OnLive, Gaikai et al. (And thinking about it further, you might see why I was saying early on that MMOs are a really good customer for these services - Already architected for the cloud, just the network stack sits at a different point in the pipeline). Regardless, key point is that content that is ported is always second-rate compared to content authored from the outset for a platform.

2. Lightspeed Venture Partners has this post (2 months old now) estimating Zynga revenue at ~240M for 2010, down slightly from 2009.

a) It's a fairly thorough model, and they have the spreadsheet shared on google docs if you want to tinker with it.

b) The graph of Zynga's revenue over time sure made me think of Dave Edery's inevitable misery pitch.

Anyhow, something to noodle on.

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

Slush(y) Fund: Piggybacking Bits on Atoms

Someone put this on my radar on Facebook today:

Zynga and 7-Eleven partner to bring game content to ice cream, Big Gulps

Short version is: Buy ice-cream, comes with a code, redeem code in-game for virtual items.

Gimmicky, right? Wrong. Brilliant. OK, why?

I wrote some time ago (wow, 3 years ago!) about how kids "connected toy" products like Webkinz and other entrants were bundling services with a toy.

The most brilliant thing about this is not that "you get a game with the toy!" or vice versa. The way to view it is that the physical product allows the virtual item sale/subscription/etc piggyback on a channel that the customer understands. And if that gets you over the hurdle of a massive number of customers not having credit cards or being afraid to type them into a browser, then it's well worth the cost of the plushy (or in this case slushy).

I'll bet that we're going to see piggy-back revenue models like this (you can call it a promotion, or a bundle) are going to grow significantly.

One way to accelerate it would be to think about ways to remove the friction of having to enter a lengthy code while in front of the PC. Maybe it's texting the code from your mobile to automatically credit your account, or a unique bar code you hold in front of your webcam?

Anyhow, it will be interesting to see how well this does for Zynga. I'm betting it's going to be copied a lot

Better, not simpler

I love this presentation from Daniel at LostGarden on the design of RibbonHero, his MS Office learning game plug-in. I love the point about culling features and complexity being an answer, but the wrong answer. The right, but difficult, answer is to help people to master the complexity.

Wordcamp 2010 public

View more documents from danctheduck.

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.

Book Review: Fables Vol 1

Fables Vol. 1: Legends in Exile is a graphic novel I picked up after hearing two different friends recommend it. It takes place in New York where the characters of fairy tales, cast out from their lands by an evil demon, are forced to live undercover among regular folk.

I thought the premise was original, but the story (from the first volume anyway) not all that remarkable. Where there really is some gold is in the remix of the characters. Snow White as the tough as nails matriarch running the show, Prince Charming as a deadbeat gigolo, etc.

The characters alone make it worth giving the first volume a try. I don't think I'll be continuing, but that doesn't mean others won't find it their cup of tea.

Book Review: The Big Short

I ripped through The Big Short: Inside the Doomsday Machine in a few days. I'd been told it was a easily digestible take on the recent financial crisis.

What I didn't expect was something that frightened me like a horror novel. For such a dry topic, he really turns it into a page-turner.

Some folk have critiqued the book for over-simplifying the topic. Little blame is placed on government, for example. The blame is mainly placed on improperly structured incentives and lack of risk prevention systems in Wall Street firms. These concerns are probably well founded. Nothing is so cut and dried, for sure.

That said, it's a good lesson in how companies - especially large complex ones - can get into real trouble when the left hand doesn't know what the right hand is doing, and in how leadership has a responsibility in both understanding their businesses and making sure the systems are in place to make sure those businesses don't run off the rails. Bottom line: If the buck stops with you, do you understand your balance sheet, and do you feel confident that the people and systems that report information into it are honest and correct?

I recommend the read, though be forewarned that you may find yourself pulling your money out of your mutual fund afterward and shoving it under your mattress.

The Big Short: Inside the Doomsday Machine

Book Review: Ten Rules for Strategic Innovators

Ten Rules for Strategic Innovators: From Idea to Execution is the best business book I've read this year, and may one of my top favorites of all time.

Many books have been written about intrapreneurship, the incubating of new businesses or products inside large companies. This is the first I've come across that looks at the causes of success and failure when those incubation projects are brought out of the back room and re-integrated into the larger fabric of the company.

It's at this point that many fail, and they do so for a number of reasons. This book looks at a number of case examples and illustrates what things were done right and wrong, and more importantly why this is the case.

The book hit close to home with me because there are many examples (both good and bad) that resonated with the Larrabee project I came back to Intel to work on. This aside though, I found it relevant to many efforts I've seen at Intel and Microsoft and at other companies through conversations with friends.

If you work at a large company and are interested in the dynamics of trying to bootstrap new products or businesses within those walls, you owe it to yourself to pick up this book.

Ten Rules for Strategic Innovators: From Idea to Execution

Behold: Nature

Awesome timelapse footage of the volcano in Iceland:

Iceland, Eyjafjallajökull - May 1st and 2nd, 2010 from Sean Stiegemeier on Vimeo.

App demonstrates Facebook privacy pains

Following up on my last post, a friend developed this:

http://youropenbook.org/

Go there and type a few keywords in that you figure people might want available to friends like "parole officer" or "DUI" or "Lost my virginity". I'm certain most of these people have an idea this is being made available to the world.

Also, danah has another awesome post on the subject.

Thoughts on the Facebook privacy outrage

Many are expressing a lot of angst about Facebook's privacy policy changes over the recent months. Here's some essential reading on the subject:

Matt McKeon has done an awesome bit of data-viz porn on the subject to help folks grok how FB's policy has changed over time. You can go play with it here. (As a bonus, Paul L pointed out to me how Matt's released source to the app to do this). Here's a snapshot:

If the above gives you the 5-second dump on what's changed, then the incomparable Danah Boyd's lengthy post on the subject will then let you simmer on the implications. Danah is one of the smartest people I know of looking at what SN's mean to people and how society is being shaped by them. Her post is essential reading for everyone. Period. So are a number of the posts she links to.

Talk of course has turned to whether there is an alternative to FB, and whether they've overplayed their hand. People are looking to alternatives and wondering whether someone can use this as an opportunity to topple the unstoppable giant*. A fave underdog in recent days is Diaspora, a Kickstartr-funded project that used the angst to raise $145k in 12 days (from >4000 people, 9 of which gave over $1k) - that's a lot of protest money.

*which is silly. How many times have we heard "no one can stop the unstoppable (yahoo, GM, Microsoft, Everquest, Genghis Khan, etc)"?

The idea of an alternative with more user-centric privacy controls is interesting, as is the idea of a distributed network like Diaspora's attempting.

My own opinion is that if people really start leaving FB in droves, or if regulators start getting heavy-handed (Danah points out that they are sniffing around), then FB can choose to dial back their policies. They'll be OK on this front if they do so soon enough.

It won't matter though. I still believe that FB is going to collapse under their own weight - and by that I mean the narrow, limited way in which they link people, and the band-aid solutions they have to add on to try and work around this. As I've pointed out at length before, the problem is that Facebook doesn't understand the difference between an adjective and a noun.

Google Chrome Speed Tests

There are a couple remarkable things about this bit of marketing.

1) It's Google doing marketing, which I can recall them doing so overtly for other products. Normally it's "offer the feature/product/service, let word of mouth do the rest"

2) It's a *spectacular* way of simultaneously claiming superiority on a feature without having to compare directly to competitors, AND poking fun at how absurd it is to be differentiating on speed of what for most people is 'fast enough'.

3) It's dead awesome.

The digital divide is alive and well

I did two volunteer activities recently that happened to fall back to back. On Friday I gave a career day talk at a middle school in Gresham (town east of Portland), one that I've done in past years. On Saturday, I gave a talk to a different group of middle school kids participating in the Oregon Game Project Challenge,

The first of these talks was about video games & tech careers, the latter was about predicting the future in tech (and how such predictions are almost always wrong).

Having the two talks back to back highlighted the disparity in tech knowledge and access that exists across communities even within a (relatively) homogeneous place like the PDX area. Now granted, the OGPC group was self-selected game enthusiasts. But even with that being said, I saw some kids in the hall doing last minute tweaks on their entry, working on a macbook pro while checking references on a Kindle.

Contrast that with the middle school I was at. Last year, the teacher I was working with explained that the schools computers were used almost exclusively for standardized testing, giving no student time for tech access for electives or homework. This year she bashfully showed me the one room of machines they now have for students... why? because the machines are too outdated to run the latest standardize testing platform and other required software. So students without their own machines have shared, part time access to shiny blue twelve year old iMacs. Discouraging to say the least.

Anyhow, given that the Friday talk was to 150 kids, here's an update to the Q&A I gave at the beginning of 98's year's talk:

• Number of kids who play games: ~98%.
• Number who have a parent that plays games: ~%50
• Number who have a grand-parent who plays videogames: :20% (Yes, the Eberts are dying off)
• Number one title I got questions about: COD:MW2 (2 years ago it was GTA: San Andreas). Someone's not checking those ESRB ratings :-/
• Surprising number of questions about hardware (which do you think is more powerful, PS3 or 360? Is the PC more powerful? Is iPhone more powerful than PSP? etc)

Anyhow, both talks were fun, but it's always frustrating to see some kids held back because of lack of access to technology.

Book Review: Tea Time With Terrorists

I recently finished Tea Time with Terrorists: A Motorcycle Journey into the Heart of Sri Lanka's Civil War. The author, Mark Stephen Meadows, and I are on the same mail list and I thought enough of his ideas to buy the book knowing nothing about it. And wow, I sure am glad I bought it.

Finding himself in Europe when 9-11 happened, Mark watched from the outside as our government and media conjured up a boogie-man of 'terrorist' that quickly took on a hype beyond even the events of that day. Questioning what he was being told to fear, and feeling that the best way to deal with fear of the unknown is to make it known, he decided to spend some time meeting some terrorists and finding out what makes them, well I suppose 'tick' is a poor choice of word.

After a little research he settled on Sri Lanka as his petri dish, flew down to the tourist capital Colombo, rented a motorcycle and headed north to the home of the Tamil Tigers and what has essentially been a war zone for ~30 years. The Tamil Tigers having the unique distinction of having invented suicide bombing and exporting that to other terrorist organizations.

Thus begins a very unique travelogue. It's part introspective, part narrative. A look at the horrors people can commit, and the beauty that people can find in living their lives despite this.

Mark comes off as two parts Indy Jones (playing motorcycle bullfighter with trucks, getting escorts at gunpoint, etc) and one part Mr Magoo (leaving the road to investigate a bombed out tank, only to realized he'd wandered to the middle of a minefield).

All the while he approaches his adventures with the type of drink-heartily-of-life gusto to which we should all aspire.

If you are looking for an insight into the mind of a terrorist (he meets and interviews several), a portrait of a beautiful country, or a great story of travel and adventure, this book is for you. It delivers on all three counts.

Tea Time with Terrorists: A Motorcycle Journey into the Heart of Sri Lanka's Civil War

Book Review: The Universe In A Nutshell

I picked The Universe in a Nutshell an audiobook and listened to it during my commute. It's Hawking's more accessible overview of astrophysics and it's history.

It's a fun and accessible read for those that have an interest in the subject matter, but aren't well versed on it (or have let their knowledge atrophy). I don't think I'd recommend it as an audiobook for commutes though. For one, it's not exactly concentration-free. Secondly, he refers to the occasional diagram which of course you can't see.

There are a couple sections of the book where he talks about thought-trends in the scientific community and how often they fall by the wayside for the next big thing. For a field with a storied history, you'd think they'd learn that their history indicates that each idea has a high probability of not being "the final theory". Kind of reminded me of our own obsession with whatever the current 'big thing' is (microtransactions, facebook, etc).

Ilomilo!

Polish + Cute + Platform/Puzzler. Coming to XBLA. Looks awesome. This and Monday Night Combat are all I'm really excited for... esp since hearing that Joe Danger isn't coming to the platform :-(

Vintage Book Win!

Score!, originally uploaded by Kim Pallister.

I got this awesome book via ebay. "Inside the Personal Computer" is a somewhat dated but still useful and highly intuitive pop-up book on how computers work. Great for the kids

Thanks to Margaret Robinson for the pointer. Someone else has captured pics of the inside here:

http://jonathanryan.org/2009/04/28/pop-up-guide-to-the-personal-computer/

Sigh. Games as Art (again)

So Roger Ebert has gone curmudgeon on games again, this time using Kelly Santiago's TED talk as fodder. She posts a good rebuttal here. Kotaku's Brian Ashcraft also chimes in with a good response.

If you were following, you might have missed this really good response from the esteemed Scott McCloud. The whole thing is worth reading but here's an excerpt:

If you’re asking if videogames are art, I think you’re asking the wrong question. I don’t think art is an either/or proposition. Any medium can accommodate it, and there can be at least a little art in nearly everything we do.

Once in a while, someone makes a work in their chosen medium so driven by aesthetic concerns and so removed from any other consideration that we trot out the A-word, but even then it’s a matter of degrees, and for most creative endeavors you can find a full spectrum from the sublime to the mundane.