Entries from August 2008 ↓

Until recently gaming was going through a very strange phase lasting for the last ten years or so when the games that the industry produced and which the public bought became progressively more hardcore. By hardcore I mean that they were in narrow genres, were progressively more complex, were difficult for the neophyte to get into and appealed to a large but still limited demographic.

And now we have had an explosion in casual gaming. The most visible leader in this area has been Nintendo with first party games on the Wii and DS. But there has been massive growth in other casual areas such as online PC casual gaming portals and now iPhone gaming. Casual games are characterised by being easy to get into and appealing to very wide audiences.

So now video gaming is currently being perceived as being an industry of two parts. Hardcore and casual. But this is very wrong because what is happening is that we are going through a phase. And that phase is just a growing pain as video gaming matures as a mass  entertainment media. We have the advantages of interactivity, connectivity and non linearity that will see us become the largest entertainment media in the world. But first we have to learn to give the customer what the customer wants and we are still very early in the learning curve of knowing how to do this.

What will happen is that the existing hardcore genres will continue. But they will become less obtuse and more user friendly. They will learn lessons from the current casual craze and borrow many of its features. And there will be a blossoming of new genres (this is already happening) that will provide all things to all people. Technology like XNA and Flash will provide some of the mechanics for this outpouring of creativity.

So hardcore as we know it will no longer exist. Instead there will be shades of grey between the two extremes of what are just now known as hardcore and casual. Game makers will be free to pick and mix features and benefits in a far more creative way to pitch at exactly the level of complexity, user friendliness etc that they want for that particular game for the audience they want to reach.

It is only after this step has been made that the industry will be able to fulfill its destiny. We are still at the very beginning of what video gaming will achieve and we have a lot to learn on the path to getting there.

There have been rumours that Microsoft were going to make Xbox live free for all, instead of the current system where a base service is free and the feature packed Gold service is charged for. But why should Microsoft make it free?:

• It is the best online service of its kind by far. Miles ahead of supposedly rival offerings from Sony and Nintendo.
• It cost Microsoft a fortune to develop. An investment they need a return on.
• Continued investment is needed to keep going with the fantastic rate of enhancements coming from Microsoft. The money has to come from somewhere.
• At £39.99 (UK) per year it is the best value in gaming short of stealing games using torrents.
• Many millions times that £39.99 add up to a significant income stream for Microsoft, why throw it away?
• As the industry moves further to a subscription basis this is the future. Why give up on it now?

If anything what Microsoft should do is to further stratify the offering:

• Platinum, for the true gaming enthusiast with every feature possible at £99.99
• Gold, as is at £49.99
• Silver, minimum service with a few key added features £29.99
• Bronze, minimum service

Then they will make more money from the keenest gamers to spend on the more advanced features that they want. And they would make more money from the people who currently pay nothing but who would pay a bit for some added features. The trick is to always have the motivation there to upgrade.

There are two great strategic effects coming together here with some serendipdy.

The first is that Ubisoft are very well managed as a company. They have a fantastic global studio structure and were the first into China and one of the first into Canada for development. They make quality games and have moved strongly to original IP, which is the way to go. This makes them very profitable. And this profitability gives them competitive advantage. They can borrow money more easily and cheaply. And their stock has a higher price if they want to buy something using equity or if they want to merge.

The second is that the video game publishing industry has enormous competetive advantages of scale, especially for globally sold boxed product. This is why it is inevitable that our industry consolidates into a small number of big players. Why Activision and Vivendi have merged and why Electronics Arts want to buy Take Two. And with big media companies like Warners and News Corporation moving into gaming there is a time imperative. Companies that don’t consolidate to become massive will themselves fall victim to the consolidator.

So with these two strategic forces it is hardly surprising that Ubisoft are looking at Merger and Acquisition (M&A) activity. In fact it would be very remiss if they weren’t. But typical of Ubisoft they are going about it with great care: “Our idea is to increase the speed of our growth organically, whilst looking at other opportunities for external growth within a certain limit. It’s sensible. We feel that mergers and integration is something that can be very damaging to a global company.”

So who might be potential suitors? Infogramme, obviously, would be cheap and it has the advantage of being French, like Ubisoft. It also has a whole pile of heritage original IP from its various acquisitions and from Atari. Sci/EIDOS would be a good buy for the same reasons of cheapness and IP catalogue. In fact either of these has the potential to unlock the great heritage of original British game IP that is currently locked away, ignored and unused. Another tempting target for its original IP would be Codemasters, whose games, if produced in low cost Ubisoft studios and marketed by the global Ubisoft publishing organisation, would be vastly more profitable. Likewise Sega must be very tempting as its stock value is held down by under-performance and in no way reflects its storehouse of brands. And there are Take Two and THQ that would both probably be better off owned and managed by Ubisoft.  Of course Ubisoft could buy multiple targets, the problem then is digesting them and getting the best value for their investment.

Another fantastic advantage of M&A activity using equity is that it would dilute Electronic Art’s stake in the company.

• More bad results from Sega Sammy. Q1 08 figures just released showed a nett loss of $105 million. They really are a prime, juicy, take over target for all that heritage IP they own.
• Midway have management cleanout. Chicago studio boss Mike Bilder, marketing vice president Mona Hamilton, and media relations VP Reilly Brennan are all gone. It is about time something was done to sort out the abysmal underperformance of this publisher.
• Yet another MMO fails. Auran will shut down its servers and website for MMO Fury within 48 hours due to the studio’s inability to “find a viable business model.” These things are licenses to print money when they work. But that is a lot more difficult to achieve than people think.
• Xbox 360 games with extra downloadable content have a 16 per cent increase in their life span. That is a lot of extra publisher revenue and begs the question: “What reason can there be for not doing DLC?”
• Konami profits up 165.6 % year over year in its Q1 results. Precisely what you would expect of a well run publisher in the current boom. It is a pity that so many publishers are still not well run.
• Wii Fit continues to dominate UK charts. Yet there are still people in denial about the seismic shift in the game industry from niche to mass market.
• Microsoft to put more money into developer relations and content deals in Europe. This makes a lot of sense, Microsoft still underperform in Europe compared to the USA. So paying more concern for Eurocentric content is bound to help.
• Travellers Tales to diversify into TV shows. Excellent news. If you have creativity and IP, why not capitalise on it across all available media, even technically limited ones like television?

This is what Christian Svensson, Corporate Officer/VP of Strategic Planning & Business Development has to say on the Capcom message board: “I’m not sure about how Capcom in general feels but It’s not doing as well as I would like in the US at retail. It’s such a good version and it really deserves better sales. I know it’s getting pirated to hell and back (it was up on torrents literally the day it shipped). I certainly have pushed for digital distribution on the title (globally, I’m responsible for all DD deals) but Capcom Japan so far has not allowed it. For the record ALLCEI developed titles will be distributed extremely widely via digital channels (not just Steam or Direct2Drive, but more than a dozen partners across more than 100 sites/portals for everything we do). I’ve spent the last year building up that channel and I’m continuing to add partners even in advance of Age of Booty, MotoGP, Neopets, Dark Void and Flock shipping. I have a presentation I’m making shortly that I’m hoping will make that approach something we do with all of our PC content, even those developed in Japan, but no promises. It might not happen. In the mean time, Ben Judd has completely understood CEI’s strategy and Bionic Commando Rearmed will have broad digital distribution for PC (not quite as many as CEI titles, but close).”

So:

• Once again the thieves are harming gaming.
• Boxed retail PC games are facing extinction because of the thieves.
• Digital distribution with strong DRM has become the only viable distribution method for PC games.
• Steam will become even more central to PC gaming.

Further analysis, following on from this story here.

If you were marketing this game you could spend, say, £200,000 getting David Hockney to do the box art or you could spend the same money on Tera Patrick being a “Special Producer” and both would get you masses of worldwide publicity. But that publicity would reach different audiences. And which audience would be most likely to buy Saint’s Row 2?

There have been a lot of people getting morally outraged about this and saying that it lowers the tone of the industry and causes damage to our image. This is utter rubbish. Jenna Jameson wrote a book “”How to Make Love Like a Porn Star” and Heather Hunter wrote “Insatiable: The Rise of a Porn Star” , did this damage the book industry? And when porn star (Party at Kitty and Stud’s) Sylvester Stallone started making box office films did it damage the Hollywood movie industry? Of course not.

The fact is that the big global entertainment media such as books, films, and, yes, games are big and diverse enough to handle an almost infinite range of ideas and content. So anyone who says that Tera Patrick is demeaning or damaging the game industry are in fact doing exactly that themselves. They are saying that gaming should some how limit and restrict itself creatively. That we can’t go where books and film go.

My position is that we should welcome this whole Tera Patrick event. It shows that the industry is growing up and looking at broader horizons. It shows that we are trying to be inclusive and reach out to wider demographics. And it shows that the narrow minded traditionalists and self righteous moralisers are being left behind. Which is what we need if we are to develop, go forward and realise our potential as an industry.

Some people forget that we are entertainment. And part of entertainment is to titillate. This is a standard element in books, television and film. If they can titillate then why can’t games? Also some people forget that we are in this business to sell games. If just about every other business in the world uses sex to sell things, then why can’t we?

So, to Tera Patrick:
1) She is is a bright, well educated lady.
2) She owns her own film production company.
3) She has a lot of experience directing and producing films.
4) She has been involved in two game development projects already, this is her third.
5) She is a keen gamer, with a good knowledge of gaming.
6) She has a very high media profile globally.
7) The core demographic of her fanbase is a close fit to the core demographic for the game.
8 There are many opportunities for cross promotions between the two brands.
9) She has been masthead publisher of Genesis magazine since 2003 so has a lot of experience of brand co-operation.
10) She has considerable potential to add value to both the game development and the game publishing side of the project.

The people at Volition have a creative problem here in that Tera Patrick is almost too good. The possibilities and potential of what to do with her in the production and marketing of the game are almost infinite. So bolting down exactly how to pitch the whole thing is a matter for some very good judgement. They could be too tacky. Or they could be too highbrow. What is needed is something in between. And the first video seems very well judged. It is obviously very, very tongue in cheek and thus quite funny, self deprecating humour that is taking a tilt at the stereotype. It is being watched by an immense audience of potential customers. And it gets the features of the game over superbly well with some great in game action sequences.

The video has had an enormous marketing impact. Just type “Saints Row 2 tera patrick dev diaries” into Google to get some idea of the immense reach and impact this video has had in just a few days. And as it is the first of a series, the cumulative effect will be immense. You have to take your hat off to the marketing guys behind this, the game is going to sell like crazy.

One of the features of the Sony Playstation PS3, over it’s short life, has been the inconsistent and misleading messages coming from senior Sony management. Starting in early 2006 when Ken Kutaragi announced that the PS3 would be simultaneously launched in November of that year in Europe, North America and Japan. With 6 million units to be shipped by the end of March 2007.

In December 2006 Phil Harrison (then president of worldwide studios) said: “Backwards compatibility, as you know from PlayStation One and PlayStation 2, is a core value of what we believe we should offer. And access to the library of content people have created, bought for themselves, and accumulated over the years is necessary to create a format. PlayStation is a format meaning that it transcends many devices — PSOne, PS2, and now PS3. If the developer wrote the game according to our technical requirements checklist, we will have what we believe will be almost perfect backwards compatibility.” Having in August that year also criticised Microsoft for planning to put two versions of the new Xbox 360 console on the market, claiming the decision will merely “create confusion” for consumers.

In fact as late as February 2007 Harrison was saying: “I believe that the Sixaxis controller offers game designers and developers far more opportunity for future innovation than rumble ever did. Now, rumble I think was the last generation feature; it’s not the next-generation feature.”  And in March he said: “We have made a technical change to the machine which moves us from being a hardware-embedded backwards compatibility solution to one which is a combination of hardware and software.”

In January 2007 Sony America boss Jack Tretton revealed that the platform holder wouldn’t reduce the price of PlayStation 3 until at least mid 2008 saying: “I think the consumers that get their hands on a PlayStation 3 clearly see the value and not only want to buy one for $599, in some instances they’re willing to pay ridiculous prices on eBay.”

SCEA’s senior vice president of marketing, Peter Dille, said backwards compatability went because of price:”We’ve been hearing loud and clear that price is more of a primary concern to consumers.” Meanwhile Jack Tretton said the removal of PS2 backward compatibility wasn’t “dramatically reducing Sony’s cost of manufacturing” instead it was done to ”encourage buyers of the entry-level PlayStation 3 to purchase more games designed specifically for the new system.” But David Reeves, president of Sony Computer Entertainment Europe disagreed with both of them saying removal of backwards compatability: “has been the result of extensive research into the entertainment needs and preferences of the next-generation PS3 owners”. If three different reasons aren’t enough for you, Ray Maguire, boss of Sony UK said: “we’re still better off using that money that we’d put into backwards compatibility in either investing in new games or using that money to help support bringing the price down so that people can get into the franchise”.

Meanwhile Sony Computer Entertainment president Kaz Hirai said that Home would not be realeased in 2007 and would be delayed until it could “truly meet the needs and feedback of the users.” And that it wasn’t because of technical problems.

And back to Sony Worldwide Studios boss Phil Harrison who, talking about Europe, said. “This is the third continent out of three, but it is the most important.” Which is why we pay more for the hardware and are behind on game releases.

So, there you have it. If the bosses of Sony don’t know what is going on with the PS3 then how are the customers supposed to?