Entries from October 2007 ↓

Wow, there is a lot happening. I thought I would combine a few things in one article:

Russian chessboard killer found guilty. Let this be a warning about the dangers of these so-called board games. The prime minister should immediately set up an inquiry headed by a TV personality, say Terry Wogan, into the effect of this evil on our dear, saintly children.

Nintendo triples half yearly profit to 188.78bn yen (US$1.65bn, £810m). This is excellent news. Profit is what makes the world go round and Nintendo must now be the most profitable game company ever. They need it too, to stand up to the might of Microsoft, Sony, Apple etc. This will really help the Wii replacement to start life with a bang.

Microsoft buys stake in Facebook. A couple of stories here. Firstly Microsoft, having been burnt with episodes such as Rare, no longer seek to own what they covet. Instead they seem to be happier these days to form mutually advantageous strategic alliances. Secondly Facebook is morphing from being a social networking site into being everything. A one stop personal internet for everyone.

Alliance between Top Gear and GT5. The cleverest thing that Sony have done in a long time. The synergies here are massive. People forget that the BBC is one of the world’s biggest media companies and one of the most respected. Top Gear is a flagship programme broadcast globally. The only really big pity is that the BBC hasn’t got their own gaming act together yet. They are letting opportunities slip by. As you can read in this previous article.

Wii Sport dominates BAFTAs. Having been involved in BAFTA submissions in the past it is nice to see them actually in touch with reality. We stopped submitting because of their long history of stupid nominations. The BAFTAs have a potential to do a lot of good for our industry if they are taken seriously.

Action against peer to peer piracy. Well at least they are talking about it. This costs us hugely and we don’t.

The Church of England forgives. Strange to see them acting as Christians. This business is so out of touch with reality that they have thrown away a major opportunity to connect with potential customers.

360 Arcade. Very nice to see the industry taking expanding the market seriously. It has only taken 25 years to get here.

I think I will do this again when the stories mount up. If you want you can add any stories I have missed in comments.

One of the biggest issues and trends in gaming is the way that gaming is drifting towards social networking and vice versa. So eventually they will meet in the middle and make up one big industry. I have written about this on here before.

In May this year Facebook opened itself to outside developers. In 6 months over 6,000 applications have been written (some of which are games) and already millionaires have been made. So Facebook is now a gaming platform. In the last year their membership went up by 134% whilst rival MySpace has only seen an increase of 12% (though it is still much bigger than Facebook). Much of this difference is down to those 6,000+ applications. It hardly came as a suprise then when last week Rupert Murdoch announced that MySpace too would allow external developers in (maybe he is reading this blog!). And this week Oberon Media announced that they are creating a game channel there. So now MySpace is a gaming platform.

There is obviously a massive market here for games, monetised with advertising. However there is also a great viral marketing opportunity. To create mini games on Facebook and MySpace that work to support your mainstream games on the dedicated platforms. You could easily reach tens of millions of exactly the right demographic for very little spend.

So are you a social networker? Can you see the opportunities here? Please add your comments.

I have been there twice when this has happened. The first time it bust the company I worked for, and it was not the only one. The companies that survived were considerably weakened. The second time the company I worked for had massive redundancies in order to survive whilst many around went bust. This danger is still costing the industry billions every year. Yet not much is done by the industry to protect itself.

Yes, I am talking about piracy. The first time, at Imagine, it was tape to tape copying in the 8 bit market that suddenly came from nowhere and totally cannibalised sales. The only, imperfect, answer that the industry could come up with was to lower price points till the games weren’t worth copying. Hence the era of budget games. The second time, at Codemasters, it was the sudden appearance of cheap CD burners for PCs racked up in criminal back rooms that destroyed the market for PS1 games. We lost about a quarter of the workforce and cut costs to the bone. It was only a global PC hit, Operation Flashpoint, that kept us going. Then the gradual increase in installed base of PS2 and Xbox allowed a return to normality.

And it could happen again. The current proliferation of platforms makes it a little more difficult, if one is destroyed by piracy you still have the others. However piracy is still here. Nintendo have just siezed 10,000 pirate devices in Hong Kong. And according to their own figures piracy is costing the companies that create, license, market and sell its products $762 million a year in sales. Extrapolate that across the platforms and the industry is losing billions.

My own experience in the industry is that nobody cares. Or they pay it lip service. It is always someone else’s problem. ELSPA do a good job and their anti piracy unit does wonders on a shoestring. I worked with them lobbying our local MPs to get the UK IP law changed. But it is not enough, especially with peer to peer IP distribution so rampant.

So if you work in the industry piracy is costing you. What are you doing about it?

This is what is happening right now to downloadable console content. According to IDC. Which supports this previous article here.

They are saying that the total online console revenues in the USA will triple from $133 million in 2006 to $583 million in 2007. But that this is made up of two elements, subscriptions and content. Subscription revenue will go up by 158% and content revenue by the headline 1,029%. In one year.

And this is without the platform holders trying. They still prefer to ship cardboard and plastic round the world for their mainstream product releases. If they actually embraced digital distribution as their main business model then the growth would be much higher than a mere 1,029%. Maybe they are keeping this for the next generation of consoles, let’s hope there are no holes in the DRM.

Are you getting a slice of this cake? If so use the comments to tell us about it.

Gerhard Florian of Electronic Arts has made waves by saying that we need an open standard gaming platform. This has been covered on here before. He says that EA are developing for more than 14 platforms and that one day set top boxes will take over.

First we have and open standard platform already; it is called the PC. And this platform is going through a phase of massive growth as a gaming machine, but not the type of games mostly seen on consoles. Where the PC is booming is in casual gaming and MMORPGs. And in those products that are part game, part social networking.

Second, standards for home machines have been tried in the past with MSX and 3DO. Both of which failed, mainly because the machines were too expensive. The console business model relies mainly on the manufacturer subsidising their console and making the profit on the games.

Third, a standard has a problem because we have rapidly changing technology which would make it quickly obsolete. Imagine if everyone was forced to still be using PS1s. The changes are not just in the power of the device but also in the way they are used. Gesture interfaces are now being introduced that make gaming a lot more accessible. The Wii and DS are prime examples and there is a lot of exciting new innovation to come in this area.

Fourth, the industry is driven by the competition between the platform holders. They take multi billion dollar risks to keep or improve their global position against their competitors. To adopt a standard would be to get rid of the whole point of their businesses.

Fifth, we are at a time of great platform proliferation. We are headed for a time when Nintendo, Sony and Microsoft each have three models. An older and cheaper home machine and a newer, more expensive model. All three will also have a portable machine. And Apple are entering the market with their iPhones and iPods. Also one day the mighty Nokia might finally get their act together.

So I don’t see the big three platform holders throwing away their businesses just yet. In some way it is a pity because an open platform has the huge advantage of getting rid of the censorship we now suffer from the platform holders. This censorship limits what kinds of games are produced and so holds back the whole industry.

So what do you think of the idea of an open platform? Is it sensible or stupid?

During the early 1980s there were a number of superstar journalists in the area of microcomputers and home technology. They did a fantastic job of driving public awareness. People like Guy Kewney and Dave Tebbut. And I was quite friendly with them, which worked both ways. I told them what was happening inside the UK industry and they told me lots of background to news events.

One of the journalists I was friendly with was Jerry Saunders, who was a linguist. Every year he learned another language. Previous to journalism he had been a spy. Working at GCHQ in Cheltenham. He had resigned in disgust after the Falklands war when he had been at the centre of the work to tell the British military commanders and politicians what the junta had been eating for breakfast. The reason he resigned was typically British. After the Falklands all the wrong people at GCHQ got promotions and honours and all the right people didn’t.

Roll on 20 years and I am talking to another British GCHQ spy. This time in Cheltenham. And I am buying a car from him, a Caterham. Like Jerry he is exceptionally bright. But things have moved on. This guy is an internet spy. Presumably looking inside other people’s computers all over the world. Without them realising.

These days, with the so called war on terror, there is a lot of recruiting of spies. At GCHQ they obviously want to recruit people who are very computer literate, as well as being prodigiously bright. So it really comes as no surprise that they are advertising jobs within computer games. It will give them exactly the people that they are looking for.

In fact it is a big surprise to me that computer games aren’t used more for marketing. The US Army has had a massive recruitment success by using a game. Yet they are the exception rather than the rule. And the game playing demographic is a highly important and difficult to reach one for so many goods and services.

Once again it is because often the people controlling the budgets are the over 40s and they haven’t the faintest idea what they are doing. The world has moved on and they haven’t kept up with it.

So are you a spy, or over 40? Do you think we are misunderstood, or only by the Daily Mail?

You have read on here before that Sony try to conquer the world by creating media standards. It is a fixation for them. The idea is that like razors and razorblades they make far more profit on the media than on the player. Most famously they lost the video war to VHS when their own Betamax was a better standard.

But Betamax is only one of a litany of failures. Does anyone remember Mini-Disk from 1991? Sony Dynamic Digital Sound from 1993? The HiFD from 1998? MusicClip from 1999? Then there are the failed standards that they are still trying to foist on us like Memory Stick, Connect, eBook and the UMD drive on the PSP. Their last successful standard was the 3.5 inch diskette in 1983. Against this history you must wonder about the future of Blu-Ray.

And now another one of Sony’s standards has bitten the dust. When Sony re-engineered the PS3 to make it cheaper to manufacture (the 40Gb model) they took a lot out. Most famously backwards compatibility to PS2. It also lost it’s memory card reader and two USB ports. But quietly and almost un-noticed it lost the ability to play Super Audio CDs (SACD), Sony’s failed attempt at super HiFi audio disks. Not that anyone is going to notice.

So what do you think of the Sony business model of trying to create media standards?