Entries Tagged 'News analysis and background' ↓

I am a great fan of John Riccitiello, the boss of Electronic Arts. He has done a lot really good stuff in the industry and when he left the company it lost its way. Now he is back in the driving seat and they are making great progress. It is great when he does a proper interview because he talks more sense than just about anyone else in the industry. So it was great that he did this fairly comprehensive E3 interview, everyone should read it.

He talks about the increasing quality of EA games but makes the point that the market is the final arbiter “…….wait for it to sell. Then we can look at the results.” He is spot on because a Metacritic score is just a number whereas it is income that pays the bills and keeps the company going. He reinforces the point with this classic quote: “I don’t think the investors give a shit about our quality. They care about our earnings per share.”

As to the console wars, his take is absolutely brilliant: “With EA, my job is to make sure we’re neutral. Years ago, I told you that they make the war, we make the bullets.”

The Wii Motion Plus is seen as a good step forward: “ If I had to pick one thing we suffered from, it was imprecise control on the Wii.” And obviously it will keep Nintendo competitive when Sony and Microsoft bring out their motion controllers.

He talks about the change from boxed retail product to online delivery of content and how it will change the revenue model: “There is a longer-term transition from a disk-based model for retail sales to an “average revenue per user” model. Five to seven years from now, investors will look at EA as how we have 100 million customers where we have an ARPU relationship that amounts to so many dollars a month.” This is a massive change for the industry and for the customers and it is good that EA are ahead of the curve.

And he quite nicely makes the point of just how big and successful EA is: “It’s fair to say that I have 10 franchises that today generate more revenue than Facebook and all of its business partners.”

These few quotes cannot do the article justice. I strongly recommend that anyone involved in the game industry reads it very carefully because with John Riccitiello in the saddle Electronics Arts are going places and he knows exactly where those places are.

• XNA authors to receive 70% of revenue. This is fantastic news and will further motivate a massive push onto this development and publishing platform. We will see innovation and diversity that has been suppressed since the 8 bit days. This is brilliant all round for gaming.
• SCi (EIDOS) loses £100 million on sales of £134 million. So they have cleared the decks and the coming year brings some big releases. I still think that they are fundamentally the wrong size to succeed as a mainstream global publisher of boxed retail product. We will see.
• Wii takes top five positions in UK sales chart. And even more remarkably the number five game isn’t a Nintendo first party title. It seems like no end is in sight for the phenomenal Nintendo gravy train. But dominance like this doesn’t do the rest of the industry any favours.
• Treyarch are developing the new James Bond game, Quantum Of Solace. And they say that it won’t be disappointing (in terms of game quality). They have a point, license based games don’t have a reputation for being any good and as an industry we have no excuse for churning out rubbish. People have to work hard for the money they spend on our games and we should respect that.
• Kazuo Hirai Sets 150m Lifetime Target For PS3. Well it is nice to have targets. To be frank there is no reason why it shouldn’t do this if Sony get their act together in every department and in every territory. At the moment they still seem to lack the impetus necessary to drive large sales numbers but things are certainly getting a lot better than they were.
• Sony PSP continues to sell massively. But it is used primarily as a media player and any games played are most likely to have been downloaded (stolen) using the internet. With 75 millionish sold and the current rate of sales, this could overtake the PS2 if it is left in production long enough. Presumably Sony are making a profit on the hardware on this one.
• Kazuo Hirai, Sony Computer Entertainment president thinks that PlayStation 3 operations will be profitable by March 2009. This is important for the industry, the platform holders are not in this just for the glamour. The bulk of the turnaround will come from reducing manufacturing costs of the PS3 console. Sony have taken a huge hit on how expensive each unit has been to make but they have a high level of expertise at bringing down manufacturing costs. They need to be commercially viable in order to go to war with Microsoft and Nintendo. 
• Microsoft Xbox division makes profit of $426 million for the year. They are being rewarded for their vision and tenacity. It will take a while to get their investment in Xbox and Zune back but eventually there is no doubt that this will become the most profitable part of the whole company.

• Well it is an earthquake of a news story. The whole gaming interweb is on fire over this one and the Sony fanboys are going apoplectic. Yes Final Fantasy XIII is going on the Xbox 360 and it looks amazing. Hardly surprising when you consider that Square Enix are in business to make money. But a major coup for Microsoft as they chip away at the Sony exclusives whilst building their own formidable catalogue of Xbox 360 only games. Expect Metal Gear Solid to go 360 soon. The balance of USPs moves inexorably further in Microsoft’s favour. The industry analysts must be having kittens.
• Music is coming to console gaming in force. We already have the successful Guitar Hero and Rock Band franchises. But soon we will have Microsoft Lips with motion sensitive microphone and iPod/Zune compatability. And from Nintendo, Wii Music looks like being the next Wii Fit, giving them a whole new demographic this coming Christmas.
• Online is replacing physical distribution at a dizzying pace. Far faster than any analyst predicted or the industry expected. Xbox live now has over 12 million new members with a new member joining every 5 seconds. And they have spent over a billion dollars on the site. But remember, this is still just the beginning.
• GTA is coming to the Nintendo DS and promises to very quickly become one of the most pirated games ever. The brand is big enough for T2 to make a profit from the game. But still far more people will be paying stolen copies than legitimately owned copies.
• Logistep catches peer to peer software thieves by pretending to be a peer. It then has all the IP addresses of users computers that automatically offered a game. Using whois they know how to prosecute. And this is what they are doing with many hundreds of prosecutions. Unfortunately Swiss law is lagging behind the technology which is causing a few problems. But these are bound to be solved and yet more game stealing criminals will feel the long arm of the law.
• Both Sony and Microsoft have made announcements to put far more films and TV content on their consoles as downloads as they both strive to become entertainment hubs. This leaves the Wii out in the cold with it’s lack of hard drive and HDTV. Nintendo will need to act soon if they do not want to be left behind.
• Jack Tretton of Sony says that the much delayed Home service will be worth the wait. The problem they have is that with each delay Microsoft Live stretches out a further lead. In content, in technology, in users and in income. Even after Home comes out Sony will be left with a mountain to climb.
• BT in Britain to invest £1.5 billion in high speed fibre optic broadband. About time too. The Koreans are years ahead of us. Copper cables coming into houses have finally reached their limit. We need to grasp the nettle worldwide and rewire with optical fibres. The interweb is the most important infrastructure of our time.

• Lots of Xbox rumours around as Microsoft celebrate their Xbox division profitabilty by consolidating their market position. Here are some: “Microsoft seems to be slimming the system down to a ‘Wii-like’ size. (A Fat overweight Wii )
  This model should have the CPU+GPU Combo Dye with the E-DRAM off to the side.
  That’s all the information I have on that.
  Now I’m not 100% sure on this so do not get hyped up, but speculated release is Late Winter 2008ish?
  Side note, ATI/AMD has been working on a CPU/GPU Combo dye for sometime.
  The Next Generation Xbox after the Xbox 360… thats expected to have a Blu-Ray Drive?, 1TB HDD, and a Quad-Core CPU.
  Speculative Date is considered 2010~.”
• Whilst we are on rumours here is the purported spec for the PSPhone:
  • 4.3″ 16:9 widescreen TFT LCD display at 480 x 272 pixels and 16.77 million colors
  • 2 megapixel camera
  • Built-in web browser
  • Built-in podcasting
  • Flight mode
  • Bluetooth
  • Memory Stick Micro/microSD memory card slot
  • Streaming audio/video
  • Video calling
  • Speakerphone
  • Alarm clock, calculator, calendar, other PIM functions
• ELSPA (in the UK) grow cojones as they come out strongly in favour of the proven Europewide PEGI age classification and against the unwanted beaureaucratic BBFC alternative. Let’s hope the government listens to what the experienced professionals want and not to the empire building QANGO that is BBFC.
• Mod chips still illegal in the USA and the Feds are doing something about sorting the problem. Good on them, it is about time the UK government sorted the UK situation after the courts wimped out. I know that one in a hundred modchip owners has a legitimate excuse for using one. But still the other 99% of modchip users are only interested in stealing.
• Number of USA households with consoles increasing only very slowly. The vast majority of new machines are going into existing console households. Interesting this, mainly it tells us that the industry still has an immense amount of potential.
• Google Lively online world taps into major social networking sites. Ha, both Google’s involvement in virtual worlds and the integration of gaming and social networking have been covered on here a long time ago (apologies for the gloat). The first is a logical extension of Google’s capabilities the second is an inevitable result of human behaviour.
• British Channel 4 TV broadcaster moves into games. I am surprised this has taken so long. Television is a media in decline with lots of talent and masses of IP. Gaming, because of it’s innate advantages, is growing massively but is very short on IP and talent. A marriage made in heaven. When will the other TV channels grow up to reality?
• British government nervous on game industry tax breaks. This is like fiddling whilst Rome burns. The British game industry doesn’t even get the same treatment as it’s film industry despite being massively more economically important. But it is moving to Canada at some speed. So soon there will be nothing left to give tax breaks to, just ask the French about what happened to their game development industry.

Anything that can be represented digitally can be transmitted over the web. And if it can be transmitted legally by legitimate owners it can also be transmitted illegally by thieves. This is destroying the recorded music market, where the download size is small and the MP3 technology widely understood. So musicians are having to rely more on radio station and live performance income. In film it is difficult to replicate the experience of a real cinema and the downloads are big, but with broadband the incidence of theft of movies has become massive. And we all know that when it comes to games, piracy destroys whole formats once technical protection is bypassed. Just now we are seeing this in PC and PSP gaming. Boxed retail on both these formats has been decimated.

Of course all this stealing of huge amounts of data over the internet clogs things up for legitimate net users. Some estimates are that as much as 80% of all internet traffic is bit torrents, the technology used by these thieves (a small amount of this bit torrent traffic is actually legitimate). Obviously this is a huge inconvenience and cost to the whole internet which is why the internet service providers (ISPs) try and control it. They use technical means such as traffic shaping and bandwidth throttling to implement an acceptable use policy (AUP), often without telling the customers.

Quite frankly the ISPs would rather not have the thieves on their networks. Not only are their activities illegal, they also clog up and slow down the internet for everyone else. So consensus is moving to a three strikes and your out policy. Basically individual pirates are sent warning letters about their illegal activities. If they persist after three warnings then they are cut off. Leaving the internet more effective for legitimate users and helping prevent the billions in losses suffered by the music, film and gaming industries. Virgin, a large ISP in the UK is already doing this.

Now the three strikes policy is being implemented in European law. The “Telecom Packet” in front of the European parliament this week puts this in statute, though it will be up to individual countries to implement it. Let’s hope they do, and rigorously. Bit torrent has resulted in the biggest binge of stealing in human history, it is about time it was brought to an end.

Oasis have a new album called “Dig Out Your Soul” on October 6 and they are desperate for some publicity. So they have proclaimed that they are not going to put it on the internet like Radiohead did. Noel said: “That’s not our bag. I didn’t spend a year in the most expensive studio in England, with the most expensive producer in America, and the most expensive graphic designer in London to then give it away. F*** that.”

Obviously that didn’t get enough impact, so now he has followed the fashion amongst publicity seekers and had a go at videogames: “I was up in Liverpool for a week a couple of weeks ago and even on the news there it’s every single night. I don’t even know what Cameron or Gordon Brown are going to do about it. I was watching a documentary on Panorama and another one about kids carrying knives and violence. One of the lads, a little lad, made a telling comment.The guy said, ‘Do you not think there’s anything better for you in life?’ And he said, ‘Yeah, there probably is but I’ve never known anything else’. People say it’s through violent video games and I guess that’s got something to do with it. If kids are sitting up all night smoking super skunk and they come so desensitised to crime because they’re playing these video games, it’s really, really scary.”

Well I won’t argue with what he says about drugs. He is the expert on that. But what he has to say on video games is just a load of hogwash, and every informed and educated person knows that. The Byron Review and Grand Theft Childhood have told us that there is no negative association between video gaming and violent crime. In fact the reverse is probably true, games act as a catharsis thus leading to the reduction in youth crime we have seen in recent years.

Of course Gallagher is hoping for the double whammy. Not only is this getting him lots of publicity for the new album, it might also lead to parents restricting game purchases. And kids spend their money on games instead of music these days. So Noel is giving the competition a good kicking here.

• New Sony patent reveals details of upcoming handheld touch screen console. Maybe. The inventor is Phil Harrison. But if this is all it takes to file a US patent I think I will run off a few this afternoon.
• Japanese researchers develop 42 Gbyte DVD. When you consider that BluRay is 25 Gbyte for single layer and 50 Gbyte for dual layer this is a significant advance. Online delivery may well be taking over from physical media but this still may be something Microsoft might like. Especially with its inherent anti piracy benefits.
• Massive update for Xbox Live rumoured. Including 3D Dashboard, support for gesture interface (motion sensor), social networking and avatars. Combine this with the imminent US price cut and rejig of hard disk sizes and you can see that Microsoft are putting together an even more compelling package. I just hope they sort out the front end of XLA so that it can more easily handle a huge library of games.
• Game file sharing pirates zapped in court. Excellent news that these thieves are going to have to pay up. Pity it’s only £2,750. Adding an extra zero to the punishment would be more realistic. Let’s hope loads more of these thieves get zapped soon.
• Activision executives get $6 million bonus. And quite right too, why should City types who don’t make anything be the only ones to get big salaries? To build a publisher to world number one deserves rewards like this. Let’s hope it attracts some more top class management into the industry. We need it.
• Paedophiles using game consoles to meet their victims online. No surprise here then. These sick and evil people will use every means possible for their perversions. Society is too soft on them when they are caught.
• Excellent Bobby Kotick interview in The Times (which really has switched from being anti to pro gaming). You can see how he earns his salary with some excellent stuff on player demographics, the economic downturn and looking after employees. I wish more managers in the industry were this incisive.
• Huge controversy over torture game. Not what the industry needs or wants. But it does show up just how stupid the BBFC juggling for power and added bureaucracy is. Their ability to do anything about this game would be precisely zero.