Entries Tagged 'Opinion' ↓

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?

In an interesting news item it was revealed that outside investors had risked $184 million in virtual worlds in the first quarter of this year and $161 million in the second quarter of this year. Giving an annualised rate of over $600 million dollars a year. This is actually understated considerably as many deals are not visible. Also remember that this is just what outside investors are putting in. The industry itself is also investing heavily in this area so the total spend on virtual worlds development is massive. But much of this spend will be money thrown away.

Virtual worlds have two features that make so many people want to risk so much money. I have seen this myself having been involved with The Realm, an old school 2D MMO and with Dragon Empires, one of many abortive attempts to get a slice of the MMO pie.

The first feature is that virtual worlds can be a license to print money. Not just a bit of money, not even lots of money. We are talking about immense amounts of money. World of Warcraft, the monster that dominates the marketplace, generates several million dollars of revenue every day. Human greed means that there are a lot of people who would like a slice of this. For many even a small slice would do.

The second feature of virtual worlds is that they can do a lot of things that could not have been done before and which cannot be done any other way. The potentials are infinite and massive. An example is the virtual world of Baghdad that all US personnel “play” before being sent there. This doesn’t just teach the physical layout of the place, it also teaches the reactions and behaviour of the local populace and the threats and problems that will be encountered in the real world. Having played this personnel arrive on the ground already up to speed and more able to do a good job from day one. You can extrapolate this idea to an infinite nuber of areas of human activity.

So we have this seductive combination of infinite possibilities and huge revenue potential. No wonder so many people are risking so much money.

But there are a problems. When you write a conventional game the development staff hand over the gold master and go to the pub. Job done. With virtual worlds creating the initial product is just the beginning. It needs constant tweaking, updating and expansion.

One reason for this is “churn”. If there is a competing product or products, and there always is with public products, you will constantly lose customers to it. So you have to constantly give your customers more and better things just to minimise customer loss. The same applies to marketing. This needs to be constant just to replace the customers who have been lost. So for development and marketing an MMO is a never ending treadmill.

Then there are the technical problems. Part of the virtual world lives on a massive server and part (sometimes very little) lives on the user’s computer. These two parts have to work together. Then the server has to run a consistent playing environment to hundreds or even thousands of people at the same time. And all this has to be scalable to many different servers around the world. This is technically and managerially very demanding. Which is partially why most virtual world development hugely over-runs on both development time and budget. And why so many are launched on the public in an unfinished state.

With virtual worlds MMORPGs are the most seductive for investors because they appeal to the greed impetus most. However non MMORPG virtual worlds can make a good investment if you are a monopoly supplier to a corporation or the military. There is no doubt that virtual worlds will play an ever increasing role in many facets of our daily lives.

In the real world many MMORPGs are still born, canned often after many millions of investment. Those MMORPGs that do see the light of day often never make a profit. These are the realities of this sector.

So virtual world investment is only for the very brave. Even proven experts with a track record have failed (Ultima Online, Asheron’s Call, Anarchy Online, Earth and Beyond, The Sims Online and so many more). And the numbers involved in failed virtual worlds each year are almost impressive as the revenue figures for the few that actually work commercially. Far more projects fail than succeed.

Firstly lets define what is meant by fanboy. What we are talking about is someone who has an irrational, emotional attachment to an inanimate piece of electronic equipment that makes them act in a manner that borders on the sociopathic and sometimes even crosses that border. Most gaming enthusiasts, even those who spend an inordinate amount of time and money gaming, are not fanboys. In fact fanboys probably spend a lot less time playing games than the true gaming enthusiast does. This is because, for a fanboy, the brand and the equipment are often far more important than the actual entertainment of playing games.

The vast majority of video game fanboys support the Sony brand. This makes them vehemently, sometimes aggressively anti Nintendo and anti Microsoft. This may sound pathetic to a normal balanced adult but it is true. Let’s look at some of the reasons that people become fanboys.

• Sony make sexy looking kit. Always have done, always will do. Lots of people will only buy Sony kit just because it looks so good. Nintendo kit is always just functional and the original Xbox was an ugly brick. Microsoft have learned their lesson with the 360 which is very nicely styled. It still isn’t a Sony though.
• The Sony brand dominated the market for a long time. To the point that in mass popular usage the word “Playstation” became synonymous with the word “console”. In the real world Nintendos and Xboxes are often referred to as “Playstations”. This is just like most people calling petroleum jelly “Vaseline” or vacuum cleaners “Hoovers”.
• Sony marketing baffles brains. With Playstation 2 they called the CPU the “Emotion Engine” and issued press releases on the wonderful and amazing things it would do for games. When the reality is that the Xbox was more powerful. Likewise they hyped up the Cell processor in the PS3 saying that the first PS3 down the production line would be the world’s third most powerful computer (this is just from memory so may not be exact, however the claim was outrageous) when in fact there is little difference between the capabilities of the PS3 and Xbox 360. In fact so far the vast majority of games run better on the 360.
• A lot of the great hardcore gaming franchises historically appeared first on Playstation. Mainly because for a long time there weren’t many other options for a developer. Just now the 360 has the best gaming catalogue in this generation but the fanboys haven’t woken up to this. They relive past glories and hope for future promises.
• Gamers spend a huge amount of time playing games. Sometimes 30 hours or even more per week. So the console becomes the gamer’s “partner” in his entertainment. It is his buddy in all the adventures that he has. So he becomes emotionally involved with his little friend. Even though it is mainly a moulded plastic box.
• Gamers spend a very high proportion of their disposable spend on their hobby. This is a big commitment that means making other sacrifices. So for this spend gaming owes something back. Something more than just entertainment. Something bigger and more fulfilling. Something emotional.
• Peer pressure, let’s face it, everyone is a lemming in one way or another. Look at all the yuppies in their BMWs because they have to have the badge. So it is with a certain demographic that Sony targeted with their marketing. If you were in this demographic it became more than cool to own a Playstation. It became essential for your self esteem. Because your peers would look down on you if you couldn’t walk the walk. And that meant you were left with little option but to buy one to gain the bragging rights and in turn put pressure on anyone in your peer group without a Playstation.
• It is an unfortunate male characteristic that they like to form gangs and then bully people who aren’t part of their gang. You see it in every schoolyard. And when men grow up they still do it but in other ways. At the football club, in the pub and at work. In fact anywhere the tribal genetics can break through the thin vaneer of civilisation. So it is with a Sony fanboy, he can get on the internet and join in harassing and bullying anyone and everyone who isn’t a member of his gang. In fact many fanboys enjoy this online warfare so much that they have little time left to actually play games. It is all very Lord of the Flies.
• Defending the honour of your family. To many fanboys the emotional invovement with their machine is such that it has become a member of the family in everything but name. So when something comes along that could be better in any way then it becomes a matter of honour. And the Wii and 360 are both better than the PS3 in some ways. So that means war. It is very obvious that if the competing consoles hadn’t been so good then the Sony fanboys wouldn’t have been so vehement and agressive. This is the biggest single factor in the current Sony fanboy phenomenon.

It is not just Sony Playstation that creates fanboys. Apple have the same effect (though to a lesser extent) with their computers and with their iPod/iPhone. And, quite interestingly, if you look at the reasons above many of them also apply to these Apple products.

Finally fanboys love articles like this. It makes them feel important and gives them a focus for their anger and resentment.

Since the very beginning of video gaming there have been reviews and to go with those reviews there have been scores. These have been useful tools for the public when coming to a buying decision, especially when games are expensive to the point of being overpriced. And as a tool for the publisher to get an independent (supposedly) view on the merits or otherwise of their game.

Of course scores have been the subject of abuse. By publishers buying a drink, or even more, for the reviewer or their boss and maybe even using the blackmail of advertising spend. By journalists being deliberately controversial to court publicity for themselves or their journal. I experienced this at Codemasters when Edge gave Severance, Blade of Darkness two out of ten which was just pure sensationalism from them. Other examples are Amiga Power giving International Rugby Challenge 2% and Sega Zone giving Socket: Time Dominator 0%. These abuses from both sides reduced the credibility of an individual score for a game.

So it is especially useful if you can see a lot of different review scores for a game at the same time and so discount the obvious aberrations. This is what Game Rankings does and I have used this countless times as a tool to help in my work. Most notably to prove to the directors of Codemasters that their game quality was slipping in comparison to their direct competitors.

Then in 2001 Metacritic came along and changed the world. Firstly they convert all the review scores into percentages, then they average them to come up with one figure. (They also weight the average so more respected reviewers have more influence.) This single figure to represent a game is a very powerful thing and everybody in the industry is far more aware now of game Metacritics than they ever were of individual review scores, they have become the standard benchmark for the industry.

In 2004 Jason Hall of Warner Brothers started putting Metacritic scores into contracts with game publishers in order to protect his brands. Their royalty payments became higher if the game received a low score. Publishers seized on this idea with their contracts with developers, whose income therefore no longer depended purely on sales, it also depended on Metacritic and therefore review scores and therefore game quality. This practice has now become widespread throughout the industry with stories of a million selling game netting it’s developer zero income because it’s Metacritic was below the contractual minimum.

Investors too have caught up with the importance of Metacritic and now a company’s stock price will go down sharply when a new game gets a bad score (and vice versa). This can change the value of a company quite markedly on the basis of the magic number.

With all this it will come as no surprise that game developers now remunerate their staff partly on the Metacritic scores that their work produces. Bonuses are often  directly tied to the score.

The simple fact is that there is a very strong correlation between review scores and sales with only the occasional exception. “Activision Chief Executive Robert Kotick says the link was especially notable for games that score above 80%. For every five percentage points above 80%, Activision found sales of a game roughly doubled. Activision believes game scores, among other factors, can actually influence sales, not just reflect their quality.”

John Riccitiello, CEO of Electronic Arts, uses Metacritic as one of the most important measures of the performance of his company and is unhappy when they go down, telling Wall Street analysts “Our core game titles are accurately measured and summarized by these assessments, and that is a very big deal.” He is determined to get the company average score over 80, which is a good target for everyone in the industry to have.

And finally, for consumers spending $60 on a game, Metacritic is one of the best ways they can be sure to get value for money. 

The Conservatives have just won the Crewe and Nantwich by-election from Gordon Brown’s Labour party with a huge 17.6% swing. This is massively good news as it presages our getting rid of the current hated, failed, incompetent Labour government. Which has to be a good thing for everyone in Britain except for all the Labour MPs who are going to lose their parliamentary seats.

But before you cheer too much or too loud it would be good to remember that the Conservative leader, David Cameron, has the typical mistaken Daily Mail attitude towards video games that so many of his generation share. He just doesn’t understand them and that lack of understanding comes out in what he says. Which might just end up being government policy when he wins the next general election.

In the Conservatives paper “It’s Time To Fight Back” they argue that depictions of “extreme, casual and callous violence” have a “coarsening effect on the ethical sensibility of young people”. An attempt to link in game violence with real life violence. An attempted link which is totally wrong and discredited. Surely the Conservatives are not looking for a scapegoat here.

In August last year David Cameron said: ”Yes, tough laws, strong action on the police, but also action to strengthen our society.  And that includes, I think, video games and things like that where we do need to think of the context in which people are growing up.” You can see where this is going, obviously banning GTA IV would strengthen our society. He also said: “the companies which make music videos, films and computer games have a social responsibility not to promote casual violence, the gang culture and the degradation of women.” Notice, no mention of books. Yet books are the worst popular medium for this sort of content. And books have no age rating.

He really needs to get a grip. He needs to learn that video games are just another form of popular entertainment media, like books and film. And that there is no problematic link between violence in entertainment media and violence in the real world. Then he needs to clearly tell the world that this is so. Until then his credibility is undermined.

The average Olympic contestant is 24, the average Olympic viewer is 46 and the average International Olympic Committee member is 61.7. And their president, 66 year old Jacques Rogge, is worried about the competition from video games:  “Kids are attracted to visual, interactive forms of communication. It’s not going to be easy for sport to counter that.”

But, worryingly, he then goes on to say: “You won’t hear me saying sport is not fun - it is. But it requires austerity and discipline. The answer is achievement. You will never achieve in a video game. It is not really success.” But, presumably he thinks that sports are. And this demonstrates just how out of touch with reality he is.

To me a top professional video gamer, like Jonathan Wendel, is exactly the same as an Olympian. They take a mundane entertainment that we can all do and reach a stratospherically higher level that only a handful of people on the planet can achieve. They inspire by taking the human condition to rarefied places.

But surely being an Olympian or a professional gamer is not achievement or real success. It is just taking a form of entertainment to the nth degree. Real achievement or success is raising chidren to be good citizens, building a business from nothing, serving your community well or advancing an area of human knowledge.

And the Olympics lost all credibility when they started dishing out half a dozen gold medals to one person. For swimming.

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.