Entries from May 2008 ↓
May 15th, 2008 — News analysis and background
May 14th, 2008 — Anecdotal musing
Originally I trained as an accountant, not because I wanted to be an accountant but because I wanted to learn as much as possible about business before starting my own. This I did in July 1978 when I opened one of the first computer stores, Microdigital, in Liverpool. As home computing rapidly took off I found myself over trading and around 1980 sold out to Laskys, the retail side of the Ladbroke Group. We then expanded by putting stores within stores in their Hi Fi shops and they put me through their management training mill at Carewell Lodge, near to Lingfield Race Course.
I could have ended up in retail for ever except for a dispute I had with my boss, the managing director of Laskys. Basically I created a business plan then generated weekly reports for them and attended monthly metings at head office in London with the board of directors. The problem was that we were doing far too well and vastly exceeding the planned turnover. We had become the biggest home computer retailer in Britain by some margin. I had my staff working silly amounts of overtime (and asking to do less) to keep up because they wouldn’t allow me any more people.
This came to a head in one of the monthly meetings with the board in London. I pointed out that our turnover was several times plan and that we desperately needed more staff. The managing director asked me if I had ever heard of overtime so I asked him if he had ever looked at my weekly reports which clearly showed such information. But he wouldn’t budge and I went home with empty hands. I seriously think that we were outperforming his Hi Fi business so much that he was embarrassed and wanted to keep our wings clipped.
So I went up to Liverpool and put all the prices up. Turnover dropped and my staff got to see their families again.
Next time I went to see the board in London they were most concerned at the drop in turnover. I told them that it was deliberate and as it was still well above plan there was nothing to worry about. They nearly fell off their chairs. And I got to negotiate a severance package.
My consolation was twofold, I found myself in demand for consultancy and the Laskys home computer business collapsed. One of the firms I consulted was one of the very first British video game publishers, Bug Byte, who had employed two of my ex employees from Microdigital, Mark Butler and Eugene Evans. They had recommended hiring me to help with the marketing. Whilst there I came up with the Bug Byte bug logo and changed their packaging from what is at the top of this article to the 4 colour inlay with air brushed illustration that became the template for 8 bit cassette games.
This was the pivotal moment in my career. The point at which I became a part of the video game industry. Since then my career has been both in personal computing and video gaming. But it is video gaming that has been the most exciting.
I had also consulted for a furniture manufacturer and office equipment supplier, Dams, on the Kirby Industrial Estate outside Liverpool. They employed a guy from Manchester called Ian Hetherington.
Then in 1982 Mark Butler left Bug Byte with David Lawson to form Imagine Software, they asked me to join them as operations manager and Eugene Evans also moved over. After a couple of months I persuaded Mark and David to employ Ian Hetherington. When Imagine became a limited company I was made operations director with most of my efforts being put to running sales and marketing. Ian Hetherington was made financial director.
You can read more on here about those early days in Piracy, Imagine Software and the Megagames, I Found an old CV and Gaming Desperately Needs Celebrities.
May 13th, 2008 — Anecdotal musing
The ZX Goldenyears web page about the early days of the industry in Liverpool has stopped working. Luckily it is still in the Google cache. I am copying it here so it doesn’t get lost:
Before the 1980s if you wanted to buy a computer off the shelf it would set you back more than £500 (a king’s ransom in those days) and would have probably been imported from the States. Therefore, most budding computer owners built their own, after all, if you held an interest in computers you were probably an electronics nut anyway, used to building radio sets and calculators. Or maybe you’d be an academic or science professional, since the only people lucky enough to use a ‘real’ computer were those who worked in large universities or research institutes. These early machines may not sound attractive, but it would be foolish to believe that there was no market for them.
In the late-Seventies, Bruce Everiss was an accountant with an interest in computers. He had already set up a computerised book-keeping company called Datapool Services in Liverpool, when he began to make plans to open a computer shop in the city. The computer press of the time was limited, to say the least, but stories about new systems from the other side of the Atlantic persuaded Everiss that this was a market on the brink of something special. “So I begged, borrowed and stole so I could rent a shop. We opened in July 1978.”
To begin with Microdigital stocked Apples, NASCOM and S100 machines. Then came the Science of Cambridge SC/MP 2, HP 85 and Commodore PET. Mountains of books were sold too, satisfying enthusiasts’ thirst for knowledge. There was even a repair service for home kit builders and a magazine called Liverpool Software Gazette. It was a place where teenagers were encouraged to come on a Saturday morning to play with new technology, and where budding computer owners could finally buy across the counter rather than by mail order, with its inherent lack of customer service.
It was an exciting time for Everiss; at the tender age of 22 he was presiding over a landmark in British computing and in such a small pond he was able to make a big splash. This was typified by the time that he announced to anyone who would listen that he would not be stocking Acorn’s new Atom computer due to the manufacturers’ production problems. His outspoken behaviour led Personal Computer World to describe him as ‘incorrigible’ and would earn him a reputation within the industry as a man apt to make memorable pronouncements.
It wasn’t just people looking to part with cash who were coming through the door, there was also an army of young enthusiasts who were eager to join the staff and sell these amazing new machines. And it was this group of employees that would come to form the basis of Liverpool’s remarkable computer scene.
Within two years of its opening the company had expanded to a point where Everiss was finding it difficult to manage with so little business experience. One of Microdigital’s customers was Alan Sterling, a director of the hi-fi chain Lasky’s, and he offered a solution. As Everiss explains, “They made me an offer I couldn’t refuse. We set up stores within stores nationally for them and then integrated into their mainstream.”
Many of the Microdigital staff moved on to set up a software company called Bug Byte, while Everiss spread his talents around. He approached publishers Felix Dennis with the idea of a trade magazine; the result was Microscope, which is still running today. He also worked for Bug Byte on a consultancy basis, helping with their marketing, a field in which he always showed great aptitude. He even dabbled in journalism, before moving into his next permanent position.
Bug Byte followed the trailblazing efforts of Microdigital by rapidly becoming one of the leading software companies in the country. It had been founded by a handful of the few computer ‘veterans’ in the country and they put their experience to good use in producing some of the most memorable early titles for the ZX81 and the ZX Spectrum. Their success attracted talented programmers like Matthew Smith, the genius behind Manic Miner, and for a while their continued success seemed guaranteed. However, with so much creative talent trying to express itself, it was inevitable that some members of the Bug Byte team would want to move in their own direction. Most memorably, Alan Maton and Matthew Smith split off to form Software Projects, while Dave Lawson and Mark Butler left to create Imagine Software.
In 1982 Bruce Everiss was invited by Lawson and Butler to become the operations manager of Imagine. Success had come suddenly for the new company thanks to Arcadia, a shoot ‘em up title written by Dave Lawson. For a brief, dynamic period Imagine came to represent the meteoric rise of the home computer industry; a shining example of the sort of affluent lifestyle that could be achieved in this almost mythical new medium. Not that the directors of Imagine were only interested in success – they wanted to be seento be successful too. This required media attention and now the Bruce Everiss PR machine went into overdrive, ensuring that Imagine achieved the sort of exposure that other companies could only dream of.
Looking at the back-catalogue of Imagine games it’s difficult to understand how they prospered to the extent that they did. So much of it had to be due to the level of hype they generated, fed to a software-hungry market with few preconceptions. And head of hype was Bruce Everiss. Perhaps his greatest feat was to attract the attention of the general media with a wild story of how 16-year-old programmer Eugene Evans (another ex-Microdigital employee) was on a salary of £35,000 per year and owned a sports car that he was too young to even drive. “We had to bring computer games to a wider audience,” says Everiss on the subject, “and the cult of personality was a tool we used.”
The Imagine HQ reeked of success. It was a plushly-carpeted office, decked out with dozens of expensive Sage terminals, staffed by nearly a hundred programmers, technicians, artists and musicians. Such extravagance seems to have been justified at the time, after all, they were doubling their turnover every month. “We knew that we were going places,” explains Everiss. “Some at the time called it arrogance and maybe they were right. On the inside it was just hard graft and constant success.”
However, the bubble was about to burst. Much has been made of the effect of the ‘Mega Games’ and they have often been blamed for Imagine’s downfall, but there were many other factors to take into account. The Mega Games were intended to be a revolutionary way of taking Spectrum Software a step further. They would use a hardware device that would be attached to the back of the computer, granting extra memory and eliminating piracy in one blow. The only drawback was that the games never got further than the design stage, while the intended cost of £30 would have been unworkable in an increasingly competitive market.
They were not the cause of Imagine’s downfall though. Far more important was complacency and a delusional belief by directors Dave Lawson and Mark Butler in the the sort of hyped corporate self-image that Bruce Everiss had created. It was an expensive image to maintain and several of the director’s decisions made it increasingly difficult for Everiss to sustain Imagine’s success.
During the Christmas of 1983 Imagine had bought out the entire capacity of the country’s largest tape duplicating plant in an effort to scupper the output of their competitors. This apparent masterstroke backfired horribly however, leaving Imagine with a warehouse full of unsellable stock, forcing them to slash their prices in the New Year and infuriate retailers in the process. Their second misjudgement was to agree to write software for the publishing house Marshall Cavendish. The sort of games that were expected and what Imagine were able to deliver in the time available differed somewhat, and when Marshall Cavendish pulled their investment it tighten the screw on a company who were spending a vast amounts of money to keep themselves at the top of the software tree.
“There were two main problems with Imagine,” comments Everiss. “Firstly, the cost base became too high, too many staff and very expensive office accommodation. Secondly, development stopped producing product to sell, they expected the existing catalogue to sell for ever.” With unpaid creditors blocking the phonelines, the end was nigh for Imagine. As the crisis intensified, Dave Lawson, Mark Butler and financial director, Ian Hetherington, became distant figures, scarcely seen about the Imagine offices. When the bosses did meet, discussions about the Mega Games went on as though their problems didn’t exist. “I think it was very difficult for anyone to accept reality,” said Everiss. “For a star to shine so bright and fall so fast. It was impossible to take corrective action as the whole mentality and decision making process was founded on continuous success.”
As the foundation of success on which Imagine was based began to disintegrate, Hetherington began laying plans for a ‘lifeboat’ – a way for Lawson, Butler and himself to jump ship unscathed. In the meantime Everiss was fighting to pilot a rudderless ship. It was only towards the end that he became aware of the extent of the problem. “I’m not a signatory on the bank or anything,” he said at the time, “but I’ve had a look at the financial records of the company and there has never been a VAT return, never a bank reconciliation, never a creditor’s ledger control account, never any budgeting, never any cash-flow forecasting, no cost centres, not even an invoice authorisation procedure. Just no financial controls at all.”
Remarkably, the death of Imagine was recorded by a BBC film crew as they were making a documentary supposedly based on the success of the British software industry. What they ended up with was something very different. In the final weeks, the Imagine offices began to descend into chaos, with Everiss attempting to hold what remained of the company together. Employees were sitting around playing games and watching videos, while others entertained themselves with fire extinguisher fights. Lawson and Hetherington had vanished to the States, leaving Everiss to try to find jobs for around 60 people. Beleaguered and defeated, he was left with no option but to resign. “Dave and Ian, being too much of cowards to face up to me, have told Mark that they wouldn’t want me here when they returned,” he remarked at the time.
In the immediate aftermath, Everiss admits that there was considerable acrimony, but in hindsight he has only one real regret. “That I stayed at Imagine too long. Once the writing was on the wall I should have taken my then intact reputation elsewhere. Loyalty did not serve me well.”
In 1985, Bruce Everiss joined Tansoft, the owners of Oric as managing director and made a typically bullish announcement: “My first aim is to establish the Oric Atmos in its rightful market position.” On hearing this his predecessor, Paul Kaufman, said, “His reputation says it all. The only thing that annoys me about his appointment to managing director is that he is now driving around in what used to be my Mercedes.”
Sadly, Oric was fighting to survive in market completely dominated by the Spectrum and the Commodore. Although it had a foothold in France, in the key market of the UK, it failed to impress. In a trade journal, Everiss said, “Oric’s performance in the UK this year was a total disaster. The company built up massive debts and is scheduled to repay £3.5 million to creditors by March.” Everiss was about to find himself aboard another sinking ship.
In 1986, after Oric had folded, Everiss joined the newly formed budget house, Codemasters in 1986 for a year, looking after their marketing. For him it was like being involved at the start of Imagine again – the excitement and sense of possibility of a new venture. Thankfully, Codemasters was rather better managed than his old employers and in 2000 he returned to them as Head of Communications, taking care of their PR in all the world’s markets. In the interim, Everiss had kept himself busy setting up the All Formats Computer Fairs, which he still runs today and have proved extremely popular in North West England.
Although he has often been considered controversial thanks to his forthright approach, the effect of Bruce Everiss on British computing has been considerable. From creating a cradle of talent in Liverpool, to his involvement in the city’s computing dominance of the early Eighties, he has shown a commitment to the medium that has helped to establish Britain as one of the world’s most important software producers. Furthermore, he raised the profile of computing beyond the attention of enthusiasts and into the psyche of a much wider audience. And for that we should be grateful.
May 13th, 2008 — News analysis and background
Rock Computers are the multiple award winning manufacturer of specialist high power gaming laptop computers based in Warwick, England. Unfortunately one of their employees was a thief and stole £200,000 off the company which he spent on online gambling and prestige car rental. This has forced Rock into administration and it can now be bought as a going concern:
Dominic Wong and David Langton of Deloitte & Touche LLP were appointed as Joint Administrators of Rock Group Plc (“Rock”) on 8th May 2008. The Administrators are working closely with the management of Rock to attempt to secure a sale of the business as a going concern.
Reasons for the failure of the business
The failure of Rock is partly attributed to the cash flow difficulties faced as a result of stock misappropriation by a former employee. This led to suppliers reducing credit limits, further adversely impacting upon cash flows. As a result of the recent difficulties faced by Rock in obtaining regular supplies of key components, Rock had effectively ceased to trade prior to the Administrators appointment.
Selling the business
The Administrators have maintained a skeleton staff whilst attempts are made to achieve an early sale of the business and assets as a going concern. The Administrators are currently liaising with a number of potentially interested parties in this regard.
Trading
It should be noted that Rock is unable to maintain normal trading activities during this interim period, including fulfilling sales orders and undertaking service and warranty work.
Equipment should not be forwarded for repair or warranty work at this time pending clarification of whether a going concern sale of the business has been achieved.
If a going concern sale is achieved
If a sale of the business and assets as a going concern is achieved, a purchaser of the business is likely to wish to fulfil outstanding sales orders, recommence service activities and complete warranty work.
If a going concern sale is not achievable
Should it not be possible to achieve a going concern sale of the business and assets the business will close. Rock will be unable to fulfil outstanding orders and current and future service and warranty work. In this eventuality :
• Should you have recently ordered and paid for equipment that has not been supplied, you will rank as an unsecured creditor. If your payment was made by credit card, you may be able to obtain a refund from your credit card issuer.
• In relation to warranty work, we understand that Rock maintained an insurance policy to cover the extended period of the warranty (years two and three following purchase). This policy did not cover warranty work arising in the first year following sale.
• In relation to the insurance backed period of the warranty (years two and three) we are currently liaising with the insurance company for confirmation of how they wish to handle claims arising.
• In relation to claims arising in the first year of the warranty, any claim / costs incurred represents an unsecured claim. If the equipment was purchased by credit card, it may be possible to obtain reimbursement from your credit card issuer.
Creditor queries
Any amounts owed to creditors prior to the date of Administration will rank as an unsecured claim. The Administrators will shortly be sending a letter to all known creditors which will explain the Administration process and will detail the process for creditors to submit their claims.
Further updates
The Administrators will provide further updates in due course.
The affairs, business and property of Rock are currently managed by the Joint Administrators. The Joint Administrators act as agent of the company and without personal liability.
May 13th, 2008 — Opinion
The video game industry must be one of the most attractive areas to invest in right now. The business is booming, growing far faster than anyone predicted, as it makes the transition to being popular entertainment for the masses. And the industry is still at it’s very beginning, it will grow to be bigger than movies and TV combined as it leverages it’s key advantages of interactivity, connectivity and non linearity.
In recent years the industry has fragmented into many genres on many platforms, this trend will continue for some time. Also technology has changed the marketing, sales and distribution model, significantly reducing the entry cost into many areas of game publishing. And there is the constant spectre of piracy, with over half the video games in the world being stolen it is important to invest in areas where at least a majority of customers actually pay for playing the game.
The king of the market, the gold standard, is the subscription MMO. When these work they become massive cash cows generating tens of millions in monthly revenue. But they cost many tens of millions to make, need constant ongoing investment and have a very high probability of failure. The current leader is World of Warcraft which took the market over from Ultima Online and Everquest. One day it’s position will be challenged but it doesn’t look like happening any day soon.
Next comes the free to play MMO, often aimed at younger players. These are even bigger in player numbers than the subscription MMOs and seem to be less risky as businesses. Revenue comes from advertising, premium membership levels and micro payments for in game items. Some of the big players are RuneScape (6 million),Habbo (86 million avatars created, 8 million monthly unique users), Maple Story (nearly 60 million), Dofus (4 million), Ragnarok Online (25 million), Guild Wars (3 million), Club Penguin (4 million) and Webkinz (over 3 million).
Console gaming is easier to understand. Hit driven boxed retail products just like music CDs and film DVDs. The main opportunities are with the Microsoft Xbox 360 and the Sony Playstation PS3 which are both a fair way from peaking in their product cycles. Product quality has now become immensely critical as knowledge travels instantly via the internet. To Metacritic below 8 is increasingly uncommercial, which is a good thing for everyone. Get it right and you too can gross half a billion dollars in one week as GTA IV just has. The total cost of developing and globally marketing a cross platform AAA game can now be in the tens of millions of dollars area. You need big resources so your hits can finance your inevitable misses, one reason the industry is consolidating into a small number of big players.
The console acts as an anti piracy dongle and is the main reason for the success of these platforms. The downside is that the platform holders take a fee out of every game published. These two factors together mean that console games are ridiculously expensive. Something that could eventually come to damage the business model.
The Nintendo Wii is not worth developing for. It is nearer the end of it’s life cycle than the other two consoles and it is mainly first party games published by Nintendo themselves that sell. Third party titles from other publishers are mainly low quality shovelware that have now frightened the consumer off.
The two handheld consoles, the Nintendo DS and Sony PSP are also not worth developing for despite the immense numbers of these that have been sold. Quite simply piracy has ripped the market up. Vastly more people will steal your game than will pay for it.
Casual gaming is huge and probably growing faster than any other area of gaming. The ability to just drop in and spend a little time having fun then log out and get on with the rest of your life is very convenient. Far more appealing to many people than the commitment needed by hardcore games. There are 200+ million people who play online casual games every month. Both downloadable and browser games. Services such as Pogo.com, Sandlot Games, Big Fish Games, Boonty, PlayFirst, Reflexive, RealArcade, and Trymedia Systems. Games are cheap to develop using Flash but the average quality is still very low, something that will change as the market matures. Revenue can come from advertising, premier membership and micropayments.
Traditional boxed PC retail games that have been with us for decades are just about dead, with most publishers giving up, killed by rampant piracy. Instead there is a new breed of PC game centring on online play and sometimes episodic content. With unique user keys and services like Steam these can be made largely pirate proof. The PC game reinvented.
Mobile phone gaming has been declining in popularity. Largely because the market is doubly fragmented. Too many different platforms and too many different air time providers make it almost impossible as a business model. All this is changing immensely rapidly with gaming on the Apple iPhone and the reinvention of Nokia nGage as a software based gaming platform. These two will certainly overtake casual gaming to become the fastest growing sector of the business and have the potential to grow to become one of the major forms of gaming. This is the most exciting place to be just now.
There are still more valid business areas in gaming. All three platform holders now sell games online. These are smaller and so easier to make then their full price boxed equivalent and the revenue stream is steady over a long period rather than spectacular over a short life. This business can only grow and grow and is well worth investing in, just make sure that you put marketing effort behind your games on these services, you can’t expect good sales otherwise.
Finally there is gaming on the social networking sites such as Facebook and MySpace. This is still small but has massive potential and we have seen the first cult hit with Scrabulous.
So there you have a quick sketch plan of the market. It is a dynamic and exciting place and you can be sure that it won’t be the same twelve months from now.
May 12th, 2008 — News analysis and background
I don’t want this blog to become some sort of media watch, but we are at a very critical point in the development of the video gaming industry and it’s relationship with the press. We are in the middle of a transition of gaming from being a hardcore niche hobby to it being a mainstream activity enjoyed by most people. Eventually it will be bigger than film and TV combined. And the popular press are having problems getting a grip on this. Especially Fox News in America and the Daily Mail in the UK.
The issue here is ignorance of journalists and the problems are age and perception.
The age problem is that the senior people (with all the power) in the media are too old to understand. They went through their formative years before video gaming became popular. So they have no concept of the art form that gaming is or of it’s social resonance. They can understand the Beatles but GTA IV is beyond them.
The perception problem is that a lot of the media persist in the notion that gaming is a solitary activity for adolescent boys. Which is completely wrong. Gaming is most prevelant for people in their late 20s and early 30s. Unlike all previous popular entertainment media gaming is immensely social with multi player on a single platform or via online connection. It has bought about a quiet (and largely unreported) revolution in human relationships. And gaming is relatively non violent compared with films and books.
So we have a situation where a lot of media are at odds with many of their readers. The press are generating a plethora of anti gaming articles that bear no relationship whatsoever to reality. And most readers of these articles can see just how stupid they are. Which reflects very badly on the journalist writing them and on the media who publish them. Basically the Daily Mail, Fox News etc are just shooting themselves in the foot.
However some of their readers and viewers don’t understand gaming and so may believe these stupid articles. Which is leading to a polarisation. On the one hand there is now a majority who understand gaming and who are bemused by the ignorance of the media. And there is a minority who have taken the lies on board and who believe that gaming is some sort of great social evil. I have had discussions with some of these people and they have been totally brainwashed.
However there is a glimmer of hope. Earlier this year Janice Turner and Giles Whittell wrote articles for the Times that were litanies of ignorance and prejudice. They were text book examples of how badly wrong the media can be about gaming. Then the Times made a massive U turn in an article about GTA IV. The writer of the article was obviously not a gamer but at least the sentiment was headed in the right direction at last.
The Mail, though, is a different matter. They are the bastion of indignation and fear, displaying an unheathy obsession with immigration and house prices. And a long running war against video games. Recently two rent-an-article journalists have put substantial blots on their career records by writing very silly anti gaming articles in the Mail. Anne Diamond went first with a totally crass sensationalist piece about adult games having adult content. But this was bettered in the stupidity stakes by Rosie Millard writing an article that said more about her parenting skills and intellectual grasp than it did about gaming.
The Rosie Millard article was so bad that the Mail website did not receive one positive comment that they could publish. Instead it was inundated with negative comments that they refused to publish. Many people wrote letters to the editor. And there was a uniform negative response across the online media. I hope the fee that Rosie Millard received for this article was worth the massive damage to her reputation.
Which brings us to GTA IV. The Mail’s attitude was that it is ”a squalid game that steals young minds”. Which flies in the face of academic research such as the book Grand Theft Chidhood. In other words they were wrong, as usual. So it is amazing that they have now done a complete about turn. A 180 of enormous ramification for the popular reporting of gaming. If we can win the Mail over then we have a chance at defeating ignorant prejudice everywhere.
The volte-face comes in a TV &showbiz review of GTA IV by James O’Brien. He obviouly realises that this is one of the greatest games ever, but more than that it is a major global cultural event. At last the Mail reports gaming as it really is: “There’s no denying, however, that this latest version of the Grand Theft franchise is a phenomenal technological and creative achievement that is set to generate more money for its British designers than any Hollywood release in years.” and “The action is as epic as it is violent, with graphics and cinematic “motion capture” technology delivering a degree of verisimilitude so great that it frequently feels more like participating in a movie than playing a game. Stunts are better than ever, but the driving itself is a revelation.” and “Killing is occasionally optional, dialogue and cut scenes are devoted to Nikos’s inner turmoil and while criminality and violence are certainly glorified, its perpetrators are somehow not. Even Nikos has sufficient soul to see his employers for the scum they are.”
Intelligent and informed stuff. And almost unbelievable that it was in the Mail. Let’s hope they can maintain these new, high, journalistic standards. And not fall back to the ignorance and prejudice that was their former hallmark on the subject.
May 9th, 2008 — Housekeeping
I have started a new community forum for the area around where Codemasters is and where I live.
http://harbury.villagebuzz.co.uk/
