How many complaints have you heard about Apple destroying the video game industry? Competition is so high, prices went so down, no publisher can pay the development of a high quality video game selling at 99 cents….

But a few publishers, mainly newcomers, are making good money –which means it is possible. Here we are going to analyse market data to understand which variables make a successful application.

Application stores like App Store, Android Market or OVI have increased competition, shrunk margins, and up to a certain level cannibalised the console market. But on the other hand they have also introduced positive novelties for publishers:

* Zero distribution cost
* Huge market size
* New technologies
* More than everything: data. Publishers can monitor almost on real time the effect of price changes or, for instance, on-line ads.

Let’s then take the available data, and see how we can build a relatively simple model to forecast the success of a mobile game.

First question: when will a game appeal to customers?

1. If it’s good quality
2. If it has good visibility.

At In Numero, we monitor the Customer Satisfaction and the Web Visibility for about 4,000 applications. Let’s then plot the following chart: on the horizontal axis a number which ranks Customer Satisfaction and Web Visibility of Top Grossing games, i.e. it is “1″ for the application with highest quality and highest visibility, and on the vertical axis the Top Grossing ranking. Ideally, applications on top of the Customer Satisfaction and Web Visibility ranking should be the stars on the Top Grossing ranking. Below is the chart.
Although there is a certain correlation between the two variables, the result is not satisfactory. We could hardly predict grossing levels from this chart. But if we have a look at the table below (the five most visible iPhone applications, all with excellent customer Satisfaction) we see something strange: The price factor The two games with the lowest price, Angry Birds and Tiny Wings at $0.99, are grossing much more than the ones with higher price. We should not rush to the conclusion that publishers should always price their games at 99c, but we can plot a similar chart as above, where the index on the horizontal axis has a new factor, which “penalises” applications with a too high price: The linear fit (the straight line) in the chart above can predict better when a game with a certain “index” is going to generate revenues or not. It makes sense: between two games, both with the same visibility and quality, customers are going to buy the cheaper one. When my nine-year old nephew saw FIFA 11 priced at $5, decided to invest his little money in a $30 console version. If the iPhone was $1, he told me he would have bought both –one for the boring holiday trips, one for home.

Dynamic Pricing

The particular day (2 March 2011) data are referring to, no game was very close to launch. But we know that, for instance, Dead Space was a superstar in January, when In Numero was not yet scraping iTunes data. And still its price was well above 99c. Why did not last? Because fans of the console version, with a bigger budget than my nephew, bought the game during the first two-three weeks after the launch. After that period, the game is considered for purchase mainly by the occasional customer, who wants a simple game to play during a boring lecture, or during commuting. And this customer would just download the best and cheapest game in the top most popular games.

We then introduce a new factor, which penalises products far from launch, depending from the price. Or: if a publisher launches a fantastic game at $9.99, it would sell well during the first weeks, but then revenues would go down unless the price is reduced. (For a better understanding, try this simulation). Here is the chart: It is hardly visible by eye, but the average error on prediction has been reduced by more than 15%. After launch, prices have to go down. Not in the same way on all platform: where a game on the iPhone must approach $0.99 after a while, a game on the iPad can be priced higher, because customers recognise a higher value to the product.

Conclusions

The model can be developed further, considering the relative size of the market for each particular game, the distribution of the value given by customers to that game, and the distribution of prices for a certain segment –being the most expensive in a group of very similar games is not the best recipe for high revenues. But what should be clear, is that no “right price” exists –only a series of right prices. On the fast digital market, prices must be dynamic and value based.

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You can do the same:

info@nickclegg.com,
leader@libdems.org.uk,
libdemleader@parliament.uk,
nickclegg@sheffieldhallam.org.uk,
cleggn@parliament.uk

Hi Nick,

You asked for input on laws that need removing. This is one of the prime ones.

1) Currently if you are accused of libel you are guilty till you prove yourself innocent. This is against natural justice and is onerous and expensive to defend. This should be changed to the accuser having to prove that they were libelled.

2) We need a free speech act, like most other countries have, that enshrines our rights to free speech.

3) Companies or other organisations should not be allowed to claim for libel or finance anyone claiming for libel. Only individuals should be allowed to claim and the no win no fee system will fund valid claims.

4) The initial forum for hearing libel complaints should be low cost tribunals. It is ridiculous using the immense cost of the High Court because somebody objects to what someone else has said.

5) The test for jurisdiction of the English legal system as a suitable venue for an action should be much stricter. Currently we are the libel tourism destination of choice which makes us the laughing stock of the world.

All our rights and freedoms are based on free speech. And we don’t have free speech because of repressive libel laws that are abused on a massive scale.

regards,

Bruce Everiss

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England’s libel laws are unjust, against the public interest and internationally criticised – there is urgent need for reform

Freedom to criticise and question, in strong terms and without malice, is the cornerstone of argument and debate, whether in scholarly journals, on websites, in newspapers or elsewhere. Our current libel laws inhibit debate and stifle free expression. They discourage writers from tackling important subjects and thereby deny us the right to read about them.

We the undersigned, in England and beyond, urge politicians to support a bill for major reforms of the English libel laws now, in the interests of fairness, the public interest and free speech.

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Game Based Learning is at the end of this month, on the 29th and 30th in London. Everyone of any substance in the industry should be there. The reason is that gaming for educational purposes is going to grow to become far, far bigger as an industry than recreational gaming. In fact most people would be surprised about just how big it already is. Military and industrial trainers are far more pragmatic than the hidebound formal education sector and so have adopted game based learning with open arms for the massive benefits that it brings.

The fundamental mechanism of gaming is that you start off with knowledge or assets, you are then asked to apply these to a problem, when you solve the problem you are rewarded. This is just brilliant for teaching. Vastly better in just about every way to the highly compromised historic classroom system. That we haven’t already moved across wholesale is a measure of our own ineptitude and a huge disservice to all those still suffering from old fashioned educational methods.

So this conference is essential stuff. Here is the programme. See you there.

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You may never have heard of ARM microprocessors, but you use many of them every day. They are in virtually every mobile phone and every PDA made, there are lots of them in every car, running systems like airbags, fuel injection and ABS, in fact they are embedded in most of the world’s electronic devices. Many billion of them are made every year, 90 are made every second.

And they are one of the cornerstones of the technology that makes video gaming possible. They are in the Sony PSP and the Nintendo DS, they power the iPod Touch and the iPhone and they control many of the world’s hard drives and internet routers.

ARM is an acronym, with another acronym inside it.

A stood for Acorn, a British manufacturer of home computers between 1978 and 1998. Successful models include the Electron, BBC Micro, Archimedes and the Atom. The earlier machines used 8 bit 6502 processors, but when Acorn wanted to create a graphics user interface the 6502 was not powerful enough. They discovered that a class of students in America had designed their own processor, this emboldened Acorn to do likewise. It was largely designed by an engineer called Sophie Wilson and was made as simple as possible for a 32 bit processor with just 30,000 transistors. And in 1987 it went into the Acorn Archimedes.

In 1990 the A changed from representing Acorn to representing Advanced when the processor was farmed off into a separate, new company, Advanced RISC Machines Ltd, jointly owned by Acorn, Apple and VLSI technology. When they went public in 1998 they changed their name to ARM Holdings because they thought that the investing public would not put money in a company with RISC in its name!

R stands for RISC, as I have already said. RISC is itself an acronym, it stands for Reduced Instruction Set Computer. This does what it says on the tin. If you reduce the number of different instructions that a microprocessor can execute then it can execute them more quickly. This can be a big difference as each instruction takes less clock cycles (mainly just one cycle with the ARM). Also the processor will be a lot simpler, so will be cheaper to make and use less power. The downside is that you need to use more instructions in your software than with conventional microprocessors.

M stands for Machine, which is what a microprocessor is. But you need different powered machines for different jobs, so now ARM create a whole range of these machines (over 580 different processor designs) to perform everything from the simplest task to being the main processor in a portable computer.

ARM don’t actually make the chips, they license the designs out to most of the world’s chip manufacturers, over 200 separate companies make them. These people in turn use the ARM designs in a myriad of different ways, often embedding the ARM processor on a chip with lots of other components. In fact today it is not uncommon for all the components of a computer to be on the one chip, this also has an acronym, SOC, or System On a Chip.

An example of an embedded ARM is the Wii, which has one embedded in the Hollywood graphics chip, this works with the main (non ARM) Broadway processor, controlling input and output. The hidden, embedded nature of this ARM was what made the Wii system so hard to crack.

An example of an SOC is the Apple A4 chip in the new iPad tablet computer. This one chip contains an ARM Cortex-A9 processor and an ARM Mali 50-Series graphics controller with all the electronics they need to make up a complete system.

One feature of ARM chips that has made them so popular is their very low power consumption. They give the most processing power possible for a given amount of electricity. Part of this come from their fundamentally simple and elegant designs, they contain less components than the alternative solutions to getting the job done. Part comes from the fabrication techniques and actual silicon technology. And part comes from very clever power management. The speed at which different parts of the chip work is controlled to be as slow as possible commensurate with getting the job done. From flat out to total stop. This efficiency brings secondary savings when heatsinks and cooling fans aren’t required. Overall it makes them the processor of choice for any portable device.

ARM is a British company, based in Cambridge and with offices all around the world. They turn over about £300 million a year and employ nearly 2,000 people.

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As regular readers will know I have said many times on here that the use of gaming in education will grow to be bigger than their use as entertainment. We consume an enormous amount of education over a lifetime and the classroom is an incredibly inefficient mechanism for learning. Already the military are significant users of educational gaming, they are more pragmatic and less hidebound than their cousins in the formal education sector. But eventually our schools will bow to the inevitable and use games as the primary mechanism for gaining knowledge and skills. It is a matter of when, not if.

Which brings us to the significant annual conference that covers this area, Game Based Learning 2010 on the 29th and 30th March at The Brewery in London. I went last year and found it massively useful. I will be there this year.

They tell me: “Our early bird registration period ends on Jan 31st and we think is excellent value at £345 + VAT given that in addition to a fully inclusive 2 day conference, there is a social networking evening with drinks and the choice of an additional workshop hosted during 2010 in London by Playgen and every early bird receives a FREE digital camcorder so that they can record parts of the conference that interest them. With the latter, I’m hoping that this will encourage some video blogging and uploads to YouTube, etc so we can collate a variety of perspectives of the event.”

Confirmed speakers include:

• Ed Vaizey, Shadow Minister for Culture and the Creative Industries
• Siobhan Reddy, Executive Producer & Kareem Ettouney, Art Director, Media Molecule
• Matt Mason, Author, The Pirates Dilemma
• Alice Taylor, Commissioning Editor, Education, Channel 4
• Michael Acton Smith, CEO, Mind Candy
• Derek Robertson, Learning & Teaching Scotland
• Stephen Heppell, heppell.net
• Ewan McIntosh, CEO, NoTosh
• Jonathan Stewart, Consultant Surgeon, Director, Hollier Medical Simulation Centre
• Major Roy Evans, Army, Ministry of Defence
• Dan Giove, Founder, DubSpot
• Sean Brennan, Managing Director, Bethesda Europe

And their marketing blurb: “With themes exploring how social media, commercial off the shelf and serious game technologies are improving learning in schools, universities, healthcare, military and corporate training the conference will bring together international thought leaders, innovators and practitioners from the education, entertainment and technology sectors.”

See you there!

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This makes absolute complete and utter sense. People buy perceptions, not reality. And people are far more concerned about peer pressure than they are concerned about their own judgement.

There is a make of car that is distinctly average. In fact some of the smaller models are not very good at all. Yet it manages to sell extremely well despite selling at a premium price. Because people want to be seen behind the badge. They will pay thousands of dollars in premium to buy just a few dollars worth of chrome and enamel badge. And most people buy silver and grey ones, because that is what everyone else does. All due to the power of marketing. The brand is presented as sporty which is just the image every housewife wants when she does the school run. Customers just don’t realise when they are victims.

If you are a game developer and you tell your mum about the game you are working on then that is marketing. Marketing is any communication. So it is a fact that a game with zero marketing will have zero sales.

Over the years I  have never seen a game get the sales that it deserved just for its quality. Yet I have many times seen a game get far more sales than it deserves because of its marketing. And I have also seen many good games fail because of bad marketing.

Just look at the five games I was writing about yesterday. They are virtually identical yet they have massively different numbers of players. The difference is just the marketing. Marketing is more important than the game, this is a self evident truth.

Yet still there are very many game publishers who do not understand this. Many self and small publishers on the iPhone App Store, for instance. There you can see that marketed games sell well, non marketed games sell badly. It has precious little to do with the quality of the game. (Unless it is a total dog).

Now EEDAR has done research in the game marketplace from which they say “Marketing influences game revenue three times more than quality scores”. And actually the difference is even bigger than that, because the scores form part of the marketing!

So there you have it. If you want to sell more games and make more money then send me an email and I will come and sort it out for you!

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30 years ago commercial videogames for home computers arrived in Liverpool when I brought a pile of Apple 2 games to Microdigital that I had bought at Computer Components of Orange County in California.  A couple of years later, in Liverpool, Bug Byte software was set up, one of the very first British video game publishers. From this, also in Liverpool, there came Imagine, Software Projects, Psygnosis, Denton Design, Jester Interactive, Bizarre Creations, Rusty Nutz etc

Then in the mid 80s I worked at Codemasters, just outside Leamington Spa in the centre of England. From this there are now has a whole pile of gaming companies in the area. This is not something unique to the gaming industry. It happened with shoes in Northampton, with bicycles in Coventry and with pottery at Stoke on Trent.

There are now lots of game development clusters around the world, usually created in the fallout from just one pioneer. In the UK we have cluster in Dundee, Guildford, Brighton and several more. In China there is one in Shanghai of at least 20 companies as a result of Ubisoft being there. In America there are lots of clusters, Austin, Texas has very many game companies as do Los Angeles, Seattle and Boston. In Canada Toronto and Montreal have grown quickly as the locations for many companies. And Seoul, Korea has around 60 companies.

From the point of view of a developer there are many advantages doing business in a cluster. The human resources and services are all there, geared up just right for running a gaming business.

From the point of view of an employee there are many advantages to working in a cluster. Job mobility without moving house and security of employment being significant advantages to anyone.

But a further advantage of clusters can be found in the pages of Adam Smith’s 1776 book, The Wealth of Nations. A cluster will support the division of labour with specialist companies forming to service the industry. For gaming this could be sound, QA, translation, motion capture, marketing and other technical services which make doing business in the cluster more flexible and effective.

And then there are the politicians. Political attitude has a huge bearing on the success of a company. So it is vital for a game business to nurture local and national politicians as well as the civil servants who do their bidding. When an industry employs several thousand people in one location it can exert considerable political power to its advantage.

This is just one reason why companies within a cluster should co-operate, even if, as is often the case, there is previous bad blood arising from business dynamics. The businesses have many areas in common that can be addressed more effectively jointly. There should be CEO level meetings of every company within a cluster every month.

And, of course, government can leverage these clusters to generate national wealth, something we have seen the Canadians do with startling success and something the British government has failed abjectly at. The game industry is already worth many tens of billions of pounds in economic activity and will grow to be a lot bigger still so this is of critical national importance.

So there we have it, if you want to start a game company then do it in a cluster, if you want to work in the games industry then you are best off in a cluster and, if you are already part of a cluster, ensure that you leverage it for your maximum advantage.

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There are now many hundreds of millions of people playing video games. It is inevitable that many millions of these are great gaming enthusiasts and that many of these want to work in the video game industry. My advice, based on 30 years in and around it, is don’t. And here’s why:

• Playing video games is fun, it is entertainment. So you might think that making video games is fun. It isn’t. Not more or less than other jobs. Because that is what it is, just another job.
• People who are industry wannabes always say that they want to be game designers. This is because they don’t know how a game is made. In fact there are very few game designers involved. On any development team the main sort of people are artists (of different sorts) and programmers (of different sorts).
• Being keen about video games is no qualification whatsoever for working in the industry. Being a good computer programmer or artist is a much better basis. Even better is to be very good at maths. Game companies want people with the skills to make games and being an enthusiast isn’t a skill.
• The competition to get into the game industry is fierce because there are so many wannabes. So the industry can be very, very choosy. When I was at Codemasters the minimum degree to get in was a 2.1 and you had to score over 130 in an IQ test.
• Because so many people want in the wages are terrible. Similarly qualified graduates going into other industries will typically earn a lot more.
• If the wages are bad then the working conditions are worse. Crunch is a widespread practice in the industry. Huge numbers of hours of unpaid overtime.
• Career advancement is typically very, very slow. This is because most of the jobs are at a similar level, programming and creating art.
• The work itself is often tedious, repetitive and boring. It is a hard slog to create all the dots that you see on the screen. There really are lots of better and more interesting jobs in the world.
• Job security is awful. Companies routinely get rid of people as the work flow fluctuates. No matter how good you are it is ridiculously easy to find yourself out of a job.
• The training industry has jumped onto exploiting the wannabe. Lots of colleges and universities have jumped on the bandwagon. There are now hundreds of supposed game industry courses in the UK. Yet amazingly only 6 of these are accredited by Skillset! There are now more people in training for the video game industry than there are in the industry. The vast majority of these people are wasting their time and money.
• Game companies are mainly not very well run. This is because it is an immature industry and the management skills and practices are just not there. It is much, much nicer working in an organisation that is run properly. Which you are far more likely to find outside gaming.
• The industry is firing, not hiring. Lots of game studios have closed, many have shed jobs. Electronic Arts alone is shedding 1,500 people. There are lots of very good, very experienced game developers who can’t get a job. Against that newbies don’t stand a chance.

The proof, as they say, is in the pudding. And over the years I have seen lots and lots of people leave the video game industry. They move to other industries where the work is better, they earn more money, they get promotions and they have job security.

If after all this you are still determined then I have some advice. Don’t train for the video game industry. Instead train to get a very good qualification that the game industry needs but which you could use in other industries. Maths and physics are the prime examples. There is a huge shortage of graduates in these subjects, so you would be far more attractive to a game company. Good artists and C++ programmers are more common, so less valued. But they are still both qualifications that can be used in many industries.

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But he has found an interesting way to market his campaign. He has set up a bogus Twitter account called bruceongames2 and made tweets to it pointing to websites that support his hate campaign. Then comes the clever bit. From this account he then followed the followers of my legitimate account. Each one then gets the follow notice, and then if they click through to find out why I’ve apparently started another account they get to see all his hate tweets.

My legitimate Twitter account is Bruciebabe.

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