A bit of news analysis

After nearly 30 years the unholy Wintel alliance is over. Microsoft have finally realised that there are other processors in the world and have embraced the ARM chip. Superficially this is because ARM processors are far better suited to mobile devices than Intel processors, which is why they feature in portable gaming devices. But there is far more to it than that. Vastly more ARM processors are made every day than Intel processors and they are very easily embedded into other chips and into all sorts of devices. With this move we have the possibility of Microsoft software running on anything with a screen, which these days is a lot of things. Initially Microsoft will go for the low hanging fruit but you can see that the potential for mission creep is immense.

There is lots of bad news in video game retail with many shops now closing and the retail companies in big trouble, something predicted a long time ago on here. I really don’t see any future role for a bricks and mortar video game retailer. Currently they are kept afloat by secondhand sales but this has incensed the publishers who are doing everything in their power to destroy this business model. Supermarkets will continue to sell gaming products for far longer because of the impulse purchase of putting a game into your trolley and because their overheads can be amortized across many thousands of product lines.

Android smartphone sales have caught up with iPhone sales. Another inevitability forecast on here. Apple are in trouble, they are a marketing company who sell a customer experience whilst lagging behind on the technology. Their late adoption of OLED displays and the lack of camera in the iPad being just a couple of examples. Now they have lots of manufacturers marketing Android products, which are often better specified, competing against them. The time has come for a massive technical upgrade of their entire mobile product range. And they need to be more price competitive too.

Just 43 file sharing websites have 53 billion visits per year between them in 2010. If people can steal and get away with it then mostly they will. As a result many industries, from music to porn, are in tatters. Now, with eReaders, the book industry is headed the same way. In the games industry we are lucky because consoles are fairly effective anti piracy dongles and because server based games are too complex for the casual thief to copy. But the lesson must be that if you are going to develop any game it is essential that you have the means to prevent it being stolen by the masses, because if you don’t you are wasting your time.

Games in education. I have beaten the drum about this on here. The fundamental gaming model makes video gaming the perfect educational tool, far better than teachers who are flawed as a mechanism in many ways. The classroom  is outdated and at long last more people in key positions are starting to realise it. Expect to hear a lot more about this in the coming year.

Facebook is not the be all of social networking as the success of Quora and Chatroulette have proven. As social networking and games often end up being the same thing this is pretty important. If someone bright was creating a Facebook replacement they could come up with a far better product. Just look at how clunky Facebook is with video, for instance. And how limited the forums are within it for making new friends.

9 comments ↓

#1 Loc on 01.13.11 at 8:28 pm

Games as an educational tool is an excellent idea. I have an ipod, my kid use it a lot playing angry bird, fruit ninja, watch youtube videos, etc.

Now that I download educational games, he’s playing them. These educational games has help his reading and spelling. Good stuff.

#2 Jack, Harsh Again on 01.16.11 at 7:28 pm

“Apple are in trouble,” – you are the only analyst in the world who thinks this. You must be mad that you didn’t invest in them way back, as Apple couldn’t be kicking ass more and will continue to do so for the foreseeable future.

Your continued obsession with the evils of filesharing rather than understanding that businesses have to adapt to today’s world is, well, breathtaking. You seem incapable of growing an understanding on this subject. Saying the same thing over and over and over again doesn’t make it true.

And if you really think the music industry (as a WHOLE) is in tatters, you are perhaps the stupidest person on the planet. My god, it’s thriving…or did the iTunes store shut down and I missed it?! It’s just the old business plan of selling CDs is almost dead. Big deal. Can you not read and understand the vast number of articles and factual data on the internet clearing(!) stating this? (Or is it you just prefer the fictional data from the record companies?)

“The classroom is outdated…” – ha! You are dead right! But our “under 18″ education system needs to be totally scrapped; a totally new system designed for today rather than 100 years ago is needed – but it will never happen. Oh, and give us a break – most Educational games are lame…if only that wasn’t so.

Facebook won’t be surpassed in countries where it already dominates until something a magnitude better comes along. And, as the startups hoping to compete with FB don’t have that goal, it’s not likely to happen for many, many, many years.

#3 ErdTirdMans on 01.19.11 at 5:29 am

I don’t know why I still read your non-Evony stuff. I guess I like to argue.

Game retailers closing: You seem to want to pin this on digital distribution and publishers hating the secondhand market without even mentioning that specialty stores of all types are disappearing. As more Targets and Wal-Marts open, more and more of any specialized store will close. Big box click-and-mortars combined with efficient online specialty stores “killed” book stores, record stores, and every other specialized market as well. Game stores need to start offering things we don’t get online… like quality customer service and atmosphere.

Apple is hardly in trouble. They serve a particular market, so while they may not always dominate the mass market, they’ll always have a place. Android phones have the same pros and cons as PCs – more widespread, cheaper, come in a larger variety, but rife with compatibility questions.

You can blame file sharing for all the evils in the world, but it doesn’t make it true. You said it yourself on here before that only 1 of every 1000 games pirated were by people who said they otherwise would have purchased the game. If your company rises and falls on 0.1% of sales, then you’ve got other problems.

Educational games are still on the fringe. While Smart.fm, Nintendo, and the like are demonstrating that game-based education works exceedingly well, the foundation for educational games is still extremely flimsy. It’s simply too unexplored at the moment for there to be big breakthroughs coming for the masses. It’s wonderful that the Army and NASA know how great games can be for training, but they’ve know for decade(s) now. What difference has that made?

Facebook is hardly going to be dethroned any time soon. Something truly amazing would have to come along that does something Facebook simply CAN’T do. Otherwise, people will just find ways to make the next big thing work with their Facebook. For example: Twitter

In short, you’re exaggerating really minor developments as usual while patting yourself on the back for having made observations any 1st year business student could have made. Also, 90% of this post was “Here’s stuff I’ve said before a million times”

Bruce: Your Evony stuff was fresh, interesting, and downright godly. Your filler material on the other hand…

#4 Bruce on 01.19.11 at 12:56 pm

@Jack.
When I was brought up I was told that people who need to be rude and abusive to make their case are generally uneducated. This being so I will not grace your comment with a full reply, other than to make the obvious points that you haven’t read the article properly and are somewhat out of touch.

#5 Bruce on 01.19.11 at 1:13 pm

@ErdTirdMans
Many specialists in many areas survive on the high street because they can do it better. Bricks and mortar specialist game retailing will be killed off by file sharing and the move to different business models, not by the supermarkets.
Apple have a long history of achieving dominance in an area then falling away to near oblivion. This is because their proprietary walled garden approach can always be beaten. Currently they are well embedded because of the AppStore, as Android catches up in this area they will lose their competitive advantage. That Android has already caught up with iPhone for sales is amazing and shows that Apple have huge problems going forward. Also I think that the fact that other MP3 players are better and cheaper will catch them out.
File sharing has destroyed a lot of businesses. It also damages the file sharer because if nobody pays for the content then there is no content. Bands tour instead of releasing new material these days, for instance. iTunes is no replacement for the vast lost revenue of CD sales. This is why the big music labels are in such trouble.
You are right about the military understanding using games in education. It has saved them training billions. Formal school education is too entrenched to make the necessary intellectual jump to game based learning. Putting existing course content into a simple reward based game environment is not enough.
Facebook has a big problem in that it is valued at $50 billion. This makes it worth spending a few billion to take them on. There are people around who can do this, there are also people around who could build a far better social network.

#6 Jack, Less Harsh on 01.19.11 at 6:16 pm

I apologize for the tone of my previous comment. It was unnecessary and I would edit out if the blogging software allowed edits. (Another hundred years til we get that! I dis Facebook on that in particular – shameful of them.)

I guess you weren’t too prescient on Apple, eh…

From the NYT – “Apple said its net income in the last three months of 2010 rose 78 percent from a year earlier to a record $6 billion, or $6.43 a share, from $3.4 billion, or $3.67 a share, a year earlier. Revenue soared more than 70 percent to $26.74 billion, from $ 15.68 billion a year earlier.

…sales of Mac computers have once again far outpaced the overall market for PCs, growing 22 percent, to 4.1 million units. Sales of laptops were particularly strong, growing 37 percent from a year earlier.

Sales of iPhones continued to defy expectations, as Apple sold 16.24 million units, 86 percent more than a year earlier. The company also sold 7.3 million iPads, 75 percent more than in the previous quarter. ”

Perhaps you define the word “trouble” differently than the rest of the planet?

And way, let’s check in a year from now and see if your dire prediction for Apple comes true. You even have a head start, with Steve Jobs going on a long medical leave.

#7 ErdTirdMans on 01.21.11 at 5:10 am

Bruce:

On piracy…

People have always stolen copyrighted property. In the old days, it was by having their buddy make a copy of a cassette\VHS\diskette. In rare cases, the thief would enjoy the music\movie\game so much he’d become a fan of the band\director\developer enough to pay money he wouldn’t have paid without the demo, or at the very least purchase future releases now that he’s determined the company produces stuff he likes. In most cases, he’d just move on and the company would see a very minor loss.

The difference between then and now is not that everyone has suddenly become a thief and industries have no one to sell to. The difference is simply scale. A lot more people are stealing, but a lot more people are also buying. The internet has made both actions much more convenient. Piracy is the scapegoat for companies who can’t deal with the greater competition brought on by the lowered barrier to entry into these markets.

At the end of the day, people who have money buy the best of what they’ve seen\heard\played. People who don’t steal it, and the company producing it loses nothing, because they wouldn’t have made a sale in the first place. The piracy that matters – the people with money who steal it anyway – is a lot more rare than you seem to think.

On retailers closing…

I didn’t say supermarkets, I said big box retailers. Maybe there’s a difference in dialect here. Supermarkets in America refers almost exclusively to grocery food stores. What I’m referring to are places like Wal-Mart that carry damn near everything. Every year, I swear my local Wal-Mart adds another aisle of video games, and they’ve got all the new releases in stock. Sure, they rarely have the strategy guide to go with it, but sales of those are plummeting anyway. Add in the slow shift to digital distribution channels, the inefficiencies of brick-and-mortar versus internet-only, and the razor thin profit margins on reselling of video games, and you have your reason why game retailers are disappearing. You don’t even need to mention piracy or the idea that publishers are trying to discourage the secondhand market. Video game brick-and-mortar is simply too inefficient to last.

On Apple…

Of course their ultra-proprietary method is what prevents them from maintaining dominance. I said this. I also said they’ll always have their niche, and with millions already high on Apple, it’ll be a long time before they fall by the wayside. Apple’s PC market share has risen over the years mainly because there is a huge market for plug-and-play always-compatible computers that have dedicated support staff. That market won’t disappear unless everyone suddenly gets a degree in computers. This is less meaningful in the cell phone\portable media industries, but still applies. To put it simply, their brand represents supreme engineering, support, and simplicity. Plenty of people will pay a little more if that’s what they get for it.

On education…
You… agree… with my disagreeing with your assessment that big things are coming in educational games? Odd.

On Facebook…

Hell, a monkey could design a social networking site that functions better than Facebook in a lot of ways, but he still has to convince its 600 million users to adopt a completely new platform.

#8 Jack, Less Harsh on 01.25.11 at 5:09 am

An interesting post on Piracy at Techdirt (a site that has featured you, but whom you disagree with, to put it kindly)…

http://www.techdirt.com/blog/wireless/articles/20110120/06393612743/taking-long-view-app-developer-happy-that-piracy-doubled-his-sales.shtml

#9 Bruce on 01.25.11 at 6:29 pm

@Jack
This says it all really: http://www.gamesindustry.biz/articles/2011-01-24-ukie-games-piracy-4-1-against-legitimate-sales

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