Mobile Graphics Power Approaches Consoles

If you need any more proof that the graphics power of mobile chip sets is approaching that of current-gen consoles, check out the video above from Nvidia's Project Kal-El, a 4-core version of the Tegra dual core mobile CPU. You can expect to see this coming to Android tablets later this year or early next year, I'd guess.

I expect Apple will be responding with their own 4-core chip in the same time frame. They're not going to give up their current 85% tablet market share without a fight. These quad-core chips will also be making their way into smartphones, of course, as well as the new crop of TV-connected devices that should be taking over family rooms near you. These graphics look to well exceed the current Wii graphics; no wonder Nintendo's busy getting a new console out there.

Raptr Social Gaming Network

Raptr is social networking for gamers.

There are huge communities of gamers on Xbox Live, PSN, and other places... but they are in separate walled gardens. The social network Raptr aims to connect all of these different gaming communities, and to that end they've recently added a personalized news feed for gamers. It's a nice way to stay in touch with what's happening in the games you're interested in, without hunting down the news yourself.

Of course, you can share all of your achievements, but this is also a place where you can share anything that interests you. You can chat with your friends across gaming platforms, and mix and match your gaming buddies. It's perfect for gamers who are into more than one type of gaming. You play Xbox and PC Games? Raptr helps you cross the streams.

I'm sure it will also become a prime place for game marketers to connect with their customers. As yet, that opportunity is undeveloped, but I'm sure they'll get around to it. Gamers can enjoy the site for what it does today; marketers can look forward to what it will do tomorrow.

GameFly Gets Digital Distribution

Now owned by GameFly.

A change in the digital distribution market recently occurred when GameFly, the game rental subscription service, announced it's acquiring Direct2Drive, the digital distribution portal owned by IGN. There's no word on whether this will mean any changes to the service. Any wise company would keep things running the way they are for a while, at least, until they had a chance to analyze things.

This is a way for GameFly to expand beyond disc-based console games into the PC market. Will they consider renting PC games? Streaming games? Their business model is looking a trifle uncertain in the long-term, as the console market continues to shrink. The real threat is the pernicious spread of the free-to-play game... no one would bother to rent one of those. GameFly is smart to see that they need to diversify their revenue to cope with the changing marketplace of tomorrow.

This, too, is part of what marketing should do. Effective marketers need to be aware of what's happening in the years ahead, so they can craft their marketing messages more effectively, and also so they can guide their companies to change with the marketplace. Marketers should be closely watching the events in their industry so they can tell the rest of their company what's going to happen next.

Discounted Digital Distribution

You do have to wonder where some of these names come from.

One of the great advantages of the internet is using it to search for discounts before you go to buy something. Now, of course, there are many tools for doing that for ordinary purchases. Digital distribution is not being left out, either, as a website called ShockedFish lines up the best deals on digitally distributed titles.You can search for discounted titles by a number of parameters, such as discount % or Metacritic ranking or type of game.

Good news for consumers, but maybe not such good news for developers? I tend to think that the big problem these days is getting your game found by someone, and this is another way to help. You still have to be in control of your pricing, and it's a good idea not to let pricing dictate your marketing. If cutting your price is the only way you think you have to get your games in the hands of customers, you may have already lost the war. Sure, smartphone titles seem to be involved in a race to find out how low pricing can go... but if you start out at free you can never excite interest by discounting.

Minecraft Junkies Rejoice

Minecraft has garnered plenty of fans so far, over 1.6 million of them, and it's still in beta. Now there's news that Mojang (developer of Minecraft) is bringing the game to a mobile platform... exclusively to the Experia Play, AKA the PlayStation Phone. Well, I'm sure this will get onto other smartphone over time, but at least for a while it will be an exclusive. Mojang will be showing this off at E3. A nice coup for Sony to bring attention to the phone, and the whole PlayStation Suite concept (PS titles on Android phones), and distracting the press form any little minor security issues they may want to talk about at E3.

Real App Sales Numbers

Check out the larger version here.

Getting real hard numbers on how many apps you're likely to sell is difficult. Distimo has just provided some real solid data on how many apps developers really sell on the Android platform, and some numbers for Apple, too. There are some discouraging numbers in there. Like this one: Almost 80% of all paid Android apps have been downloaded less than 100 times. Even among free apps, almost 20% have been downloaded less than 100 times.

This shows how few paid apps are sold; larger version here.

While you can indeed move a lot of apps, it isn't that common an occurrence. Looking at paid apps, there are only 5 games in the Android Market with over 250,000 downloads; by comparison, the App Store had 10 games that had over 250,000 downloads in the last two months alone. Even though the App Store has over three times the paid apps that the Android Market does, clearly iOS users are more likely to spend money on apps.

Here's reality: Some 96% of Android apps sell less than 1,000 units, and most of those are less than 100 units. If you are a developer, you can see you're unlikely to make any money from your Android app.

While Google has been working on improvements to the Android Market, and selling lots of Android devices, you can't count on that to lift your app revenue to the point of profitability. So why do an Android app at all? Perhaps you can cross-sell a number of other apps, or hope to monetize your app through advertising (but that means getting lots of downloads). Maybe you have other products your app can help you sell... or maybe you just want to try out some design ideas when there's no restrictions on what sort of app you can offer.

I can't emphasize enough the importance of proper business planning before you spend any time developing an app, either for Android or iOS. Really, while the situation is certainly better for an iOS app, it's not all that dissimilar. Most iOS apps sell less than 1,000 units, too. That's not a great return unless you only spent an hour or two putting your app together, which seems unlikely.

A successful app is going to be a lucky break, and it's going to have to be very well executed, too. Regular updated content and solid marketing are going to help, but there's no magic potion that will make your app a hit.

Zynga Readies IPO

Now you know what the dog is hiding... money.

Since LinkedIn had their IPO and zoomed, other companies have reconsidered their pending IPOs. Rumors are flying that Zynga will be making their initial public offering soon, now that the market seems to be ready for IPOs again.

Some people have been critical of the valuation that Zynga is sporting, which is somewhat north of Electronic Arts ($8 billion compared to $7.71 billion). It does seem amazingly high given that Zynga has only been around a few years... on the other hand, it's going to pull in somewhere around $2 billion in revenue this year with an eye-popping gross margin. (Hey, those virtual goods are made from handwoven profits.) There's a lot of concern that this kind of valuation is a bubble, and that social games are due for a major crash soon. Others disagree.

I think that there's certainly way too much venture capital being thrown at social gaming or anything that smacks of it these days. That's different than the question of whether or not social gaming will disappear soon or at any time. I think social gaming has tapped into a much wider audience of gamers than the traditional "teen-age boys of all ages" demographic that marks hardcore gaming. It's ironic, really, that for many years game publishers would wish out loud that they could sell games to women, to people older than 30, to everyone. Now their wish has come true... only it's not the kind of games they're used to making or even games that they like to play.Their companies are mostly not benefiting from this huge new market, which naturally leads to jealousy.

Social elements are finding their way into games on many different platforms, and we're seeing many new types of social games on Facebook and in browsers. It's a period of great experimentation, and we're just seeing the beginnings of what games will be in the future. Sure, individual valuations of companies may be overblown. Will Zynga be fairly priced when it goes public? Beats me. It'll probably jump up when it's offered, then fall back at some point when the initial excitement fades. But I expect that in the long haul Zynga will do quite well. Their first-mover advantage has been solidified with a number of smart decisions, and I don't see them getting stupid right away. The high growth rate will certainly slow, and we'll have to see if they're smart enough to shift gears and slow down properly as growth slows.

Social gaming is here to stay, and even if you don't plan on creating or playing social games, you'll need to deal with this reality in the game industry.

Prison Labor For World of Warcraft

This is gold farming outside of a prison... this would look like heaven to Chinese prisoners, no doubt.

If you've stooped to buying gold from a gold farmer to pad your World of Warcraft account, you may have felt that you were just a casual lawbreaker... not really hurting anyone. Well, think again. This article in the UK's Guardian newspaper reveals that some Chinese prisoners are forced to sit in front a computer 12 hours a day and fight dragons in WoW. If they don't meet their gold quota, they are beaten by the guards. The operation would bring in thousands of dollars for the prison administration.

Aside from the beatings, being forced to play WoW all day sounds like my son's ideal existence.

Hey, maybe this is the solution to California's prison problem... don't just release the 30,000 prisoners the Supreme Court has ordered you to let go, send them home to work off the rest of their sentence farming gold to help fill California's budget gap.

More seriously, though, it's appalling that this is what passes for government in China. It makes you wonder if they'll ever go legitimate... seems like it's just like Michael Corleone promising Kay the family will be completely legitimate in five years. Sure, and the Chinese government will really crack down on copyright, trademark and patent infringement real soon now. Uh huh.

It does raise issues of exportation of goods produced by forced labor... and now it's apparent it's virtual goods, too, that can be produced by forced labor. One more item to add to trade talks, I suppose. I do wonder how much the unlevel playing field in China benefits the fast-growing Chinese game companies, which are now beginning to purchase Western game companies. Funny how Western companies seem to have a lot more difficulty buying Chinese companies... and non-Chinese game consoles are banned.

The Zynga/Facebook Crisis

Bing recounting the near apocalypse.

You may remember last spring, when the Facebook was trying to push Facebook Credits onto every social gaming company... which meant an instant 30% haircut on their income... and Zynga was getting ready to throw down over the incident? Apparently the crisis nearly went nuclear, at least according to this interview with Bing Gordon. (Bing was my old boss at Electronic Arts, back when it was less than a hundred employees... now he's a partner at Kleiner Perkins and led their investment into Zynga.)

He characterized the situation as very tense, and apparently it came very close to a breaking point, but in the end both companies stood down and entered into a five-year agreement where Zynga uses Facebook Credits. It may seem like Facebook had the power, since it was their platform that they were allowing Zynga to use; but you have to remember that Zynga was responsible at that point for some substantial percentage of Facebook's total traffic and time spent on Facebook. If Zynga had pulled back from Facebook and directed its users to a web portal, both companies would have been hurt.

So everything's settled, right? Well, it still seems to me that Zynga should work towards diversifying their revenue streams such that no one entity (like Facebook) exerts power over a majority of it. A tall order, true, but certainly something that would let executives sleep a little better at night. It's a bit unsettling to think that Facebook could look around one day and say, hey, we're not really making enough money... maybe we should take 35% instead of 30%. This is another reason to hope for a substantial Facebook competitor to emerge, because competition would help keep prices down for developers.

iOS Apps Hit 500,000

Just a bit of the entire infographic, showing the top titles...

It's just getting more and more crowded out there on the virtual store shelves. The number of apps approved for Apple's App Store is now over 500,000, with over 400,000 available for download. Good luck finding any particular one, if it's not a best-seller.

I urge you to click through and check out this infographic which is chock full of details about the apps, but it's unfortunately too big to put into this blog post. As you look at the info, remember it covers all iOS devices, and that iPad apps tend to be more expensive than iPhone apps. Some key tidbits:

• There are over 85,000 unique developers.
• 37% of all apps are free
• The average price for a paid app is $3.64
• Of all apps, 29% are 99 cents, and 13% are $1.99
• Games started out as 24% of all apps, and are now 15% of all apps

Apple Fires Back Against The Trolls

This may be a picture of Lodsys' CEO.

Apple's legal team has fired off a letter to the trolls at Lodsys, basically telling them to lay off their threats to app developers over use of Lodsys patents on in-app purchasing. Apple's licensed those rights and app makers owe Lodsys nothing, according to Apple. Besides, Apple's lawyers are bigger, hairier, and meaner than yours. Nyah, nyah, nyah.

Hopefully this will shut down the attempt to extort fees from app developers; we'll see how Lodsys responds. My advice to them is to quietly slink away before Apple costs them more than they can ever hope to earn in the next few decades, by way of lawyer fees.

The Future Of Retailing

Imagine games here instead of pastries.

I've talked a lot about digital distribution and how that's the future of the game industry and the book industry. It's extremely important to note, though, that this does not mean that traditional retail stores and physical products are going away. The product mix at retailers will need to change, as will many aspects of their business. Surviving stores will take advantage of their physical location and the innate desire of people to get together, plus the fact that special editions of books and games can't be downloaded if they have nifty physical components.

Which is why this announcement from Square is so interesting. This is the company that introduced a little square gadget last year that plugs into the audio jack of an iPhone and allows you to swipe credit cards. Which is pretty nice, when there's no contract to worry about and the transaction fee is only 2.75%. They have been growing rapidly, and now they're processing $3 million a day in transactions. The next step is what's exciting; they are launching Square Register, a whole register/payment processing/customer interaction module function on an iPad.

Customers will be able to see their whole transaction history with a merchant, be able to make purchases with their smartphone, get special deals, find other Square-enabled merchants, and a whole slew of other features. Merchants will get Google Analytics-style data on all their customers and be able to analyze what specials are working, what items sell best to what type of customers, etc. Heady stuff for small local businesses.

This could give the small retailer (the Friendly Local Gaming Store or Bookstore) a real edge in the competition with the big chains. It's this sort of disruptive technology and service offering that can help the little guys flourish in the new digital era.

Best of all, this stuff is going to be cheaper than buying high-end cash registers, renting credit card machines, and dealing with ridiculous payment processing contracts. Sure, you'll need a cash register for the cash transactions, but you can use an inexpensive one for that. Read the whole article, it's a fascinating look at what retailing can be like for mom-and-pops who can embrace technology.

3DS Will Outsell All Other Consoles in Japan?

Current 3DS sales figures make puppies cry.

In a rather bold prediction, video game publisher Enterbrain is claiming that the 3DS will outsell all other consoles this year in Japan, with a total of over 2.8 million units by the end of this year. Interestingly, they see the total 3DS sales dropping in 2012 to 2.475 million.

If you look closely at these figures compared to current 3DS sales, they would have to sell about 84% more than it's currently selling... every week for the rest of the year. Which seems more than a little optimistic given how lackluster 3DS sales have been so far. I really don't think a software title or too is going to make a huge difference at this point.

Of course, this just represents sales in Japan; worldwide sales would be perhaps triple that amount, maybe as much as 8 million units. To put 8 million units in perspective, that's about a month's worth of iPhone sales... or three week's worth of sales for Android smartphones.  Or  about two month's worth of iPad sales.

Perhaps you can see why I think smartphones and tablets are much more important to the future of gaming than the 3DS. A 3DS game by the end of this year might have 8 million installed units out there to sell to; an iPhone game or an Android game will have well over 100 million installed units to sell to. Heck, even iPads will have around 50 million in place by then.

So far Nintendo's stepped up the TV ads for the 3DS, but that doesn't seem to be moving the needle. I hope they've got some plans to reveal at E3 that will revive the 3DS, but I'm not expecting much.

They Just Don't Get It

Typical software pirate?

Sometimes you just have to shake your head in wonderment at how people can refuse to see the obvious. Here's a good example: Lionhead's Mike West, the lead combat designer for Fable III, complains about secondhand sales being worse than piracy. Well, he's complaining about both, really. I can understand that if you think pirates are taking away your game sales you'd be mad. But no one really know how many actual sales are lost to piracy. Sure, sure, there are estimates... from organizations with a vested interest in estimating high. It's certainly not clear that a pirated copy would have been a purchase if piracy was impossible. Certainly, some percentage of pirates would buy a game if they had no other choice... but is that percentage really high? No on knows for sure.

Complaining about secondhand sales, well, that's somewhat different. First of all, secondhand sales are perfectly legal. And in this industry you have to be careful about saying too many nasty things about secondhand sales of games, because pretty much all the major retailers sell secondhand games right along with the new ones. You really don't want to piss off your major retailers that give you the majority of your revenue, do you?

Ultimately, though, developers can do very little about either piracy or secondhand sales. You have to figure out how to deal with those realities. Sitting around complaining about them does not help your profits one little bit. Counting up money you might have made if someone had bought a new copy of your game instead of a secondhand one is a waste of time. Developers need to embrace the realities of the marketplace and figure out how to use them to their advantage.

Piracy means that people are learning about your games and hopefully enjoy playing them... which is then an opportunity to sell them something. Perhaps DLC, perhaps a special edition with the cool figures they can't get anywhere else. If you've got a regular service going on, piracy is not a problem... Blizzard doesn't worry about it. Sell them physical goods that can't be pirated. Have them sign up for access to special forums, but only if they are registered users. Does Zynga worry about piracy? No, they don't. They spend their time refining their games to appeal more to their players, and coax them into buying items.

Secondhand sales have become a significant part of the business because prices are too high for the value contained in most games. Which is why customers are flocking to social games and mobile games, and free-to-play MMO's... they can try things out, and spend money where they see it's worth it to them. The mobile game model of free or low-cost is going to be in the family rooms soon, so developers had better learn how to make money from it. The developers who spend their time complaining instead of designing are the ones who will fail in the new game industry landscape.

Android Leads In Share, iOS In Revenue

See a larger version here.

Here's a recent survey of global smartphone market share that may influence how you allocate your development dollars. Android has 53% of the market, iOS has 28%, RIM has 16% and everyone else is a trace element.

The key question is really how much money can you make on a platform, and this is where iOS wins with 50% f all the revenues. Android has 39%, and RIM shrinks to only 9%.  This is no doubt due to in-app purchasing being baked in on iOS, and the severe hardware/Android version fragmentation. Yes, Android is more open than iOS, but that leads to a much wider array of hardware and Android versions, which makes developing and testing software significantly more difficult.

Of course, the picture is going to change over time. In the near term, we can expect Android and iOS to continue growing at the expense of RIM. Nokia's collaboration with Windows Phone 7 won't really move the needle, if it does at ll, until next year sometime. I expect Android revenue numbers to improve as the effect of integrating in-app purchasing takes hold, and the effects of their store improvements occur. Until Apple makes a serious run at the lower-cost smartphone market (which might happen this year or next), I think Android will continue to outgrow them.

Video of Wii 2: Nintendo Fights The Last War

Some interesting video from what's apparently a private developer presentation of Nintendo's new console... you can see the drawing of the controller, and the unit itself sitting on the table. From what this shows it seems the rumors about a controller with a built-in display are true.

The case design may or may not be the actual case design; it's easy enough to mock up a case or change it.Then again, the case design is really about the least important thing for a console. The price is more important, and I think that having a display in the controller is good evidence that the price point on this puppy is going to be north of $300. I suppose Nintendo could make the display controller optional to reduce the price point, but then that reduces the chances for third-party support of the display controller. And if the display controller is a key selling point of the new console, it would seem odd not to put one in the package. So I'm predicting there will be a display controller packed in with the console.

It does make some fiscal sense for Nintendo to leave out a hard drive; it's an expensive component, and requires  more power and other support. Cost is usually a key factor in console design, and especially for Nintendo, who hates to lose money on each console. They don't have the deep pockets of a Microsoft or a Sony to be able to afford a loss leader and hope to make it up on high-margin software later on.

Of course, if they wanted to support a local area network so you could store things on your computer's hard drive and just pass them along to your console, that would be an interesting way around the problem. But not one Nintendo is likely to use, seeing as how that would make piracy even easier. Nintendo spends a lot of time and effort to close down piracy, which makes sense given how high their software prices are.

I still think that Nintendo is building hardware to fight the last war, and creating something that's poorly positioned to fight the next battle in the family room. Nintendo's Wii 2 will be expensive (over $300, maybe $400 or even more) and rely on discs sold in retail stores, and have very limited functionality besides gaming (probably Netflix, maybe a music streaming service). Its main selling points will be graphics horsepower and a controller with a display. There will be some downloadable games available; they'll be small and with development tightly controlled by Nintendo.

Meanwhile, consoles based on smartphone technology (Apple TV and Google TV), and streaming consoles (OnLive) are heading to the family room on or before Nintendo's time frame. These consoles will feature low price points ($100 to $200), games distributed digitally, and a huge array of other media options and app functionality. Development will be wide open, and thousands of apps will be available. App prices will be low (less than $5 to $10) and many will be free, with a variety of monetization models (freemium, subscription, advertising-supported, and others). These consoles will also have the option of using smartphones or tablets as display controllers, as well as more traditional controller options. Motion control will be readily available, too. Social games will flock to these new consoles.

Nintendo may sell some goodly number of their new consoles, but they will be massively outsold by the smartphone-based consoles. Microsoft and Sony had better get some planning done about how they will respond to these events. Sure, they are both making more moves in the right direction than Nintendo, and right now the Xbox 360 and the PS3 are selling better than ever. In the tech business, though, things can change very fast. Look what's happened to RIM and the Blackberry... that can happen to consoles, too.

Smartphone Games Zooming

Some impressive numbers of games being downloaded per day.

Smartphone games are soaring high, with over 5 million games downloaded per day just in the West. OK, 88% of those downloads are free, but that doesn't mean developers aren't making money from them. More than half the games these days have in-app purchases as an option, or are cross-selling other games. Or they are making some money from advertising.

Speaking of which, Angry Birds has now hit the astonishing figure of 200 million downloads. That's over all platforms, of course. Some 5 million of those are on the Chrome browser. However you look at it, though, that's a lot of downloads. Not bad for a $140,000 development cost. Rovio is now planning for an IPO.

Meanwhile, naysayers like Nintendo and the now-infamous Denis Dyack say smartphone games are hurting the game industry. Yeah, tell that to Rovio. Of course, if the average gross is $700 per game, that's not a lot. According to Dyack's quoting an EEDAR conference, that's what they said the average smartphone game brings in. I really don't know where that number came from, but it seems absurdly low. I'm perfectly willing to believe that 90% or more of smartphone games don't really make money, at least not a significant amount. But to really hit an average of $700 there would have to be a whole lot of games making less than that in order to balance out the ones that are making millions.

I think the odds certainly favor a smartphone game not making much money at all. Perhaps that will reduce the number of new games rushing into the market, but it sure doesn't seem to have done much at this point to reduce the number of new games.

Piracy might, though, if you listen to the strident anti-pirate crusaders. Is piracy a problem for smartphone games? Not enough to worry about, say developers.When a game is free, who would bother to pirate it? With most games going to the freemium model, piracy turns out to be a non-issue.

When games are priced lower, piracy goes away. When you can track every customer, and you're selling virtual goods for the game, you don't really need to worry about piracy. Piracy becomes a marketing tool. The worse problem these days is going unnoticed; you really need to be worried if nobody wants to pirate your game.

I do think the smartphone game market is ridiculously crowded, and the tools to let good games stand out are still not that robust or widespread. There are ways and means to make money on smartphone games, and it's not just about being lucky. Good design, excellent execution and smart marketing are all important. Sure, luck is still important to becoming a mega-hit. Persistence is probably the most important quality you can have; keep making good games and eventually one of them will do really well. The real trick is to keep your costs down, and find ways to be profitable without relying on a mega-hit.

Zynga Buys Another

OK, maybe this game does represent the end of culture as we know it.

I didn't realize that there's a Game-Company-Of-The-Month Club. It must work like the old book clubs, where they send you a selection every month and unless you return it, you get billed for it. Zynga must have signed up for one of those... how else to explain the fact that they seem to buy a new game company every month? Perhaps a little faster than that, with 14 acquisitions over the last 12 months. So far, anyway.

It's a good way to pick up talent with demonstrated ability, and not incidentally grow your portfolio of games. One of the concerns for a company with a big hit or two is to make sure in case that big hit falters, you've got enough other titles to pick up the slack. Not that Farmville is going away any time soon, but Zynga's definitely making sure they have enough other things going on.

It's kind of funny watching some of the reaction to Zynga, like this rant from Denis Dyack, founder of Silicon Knights. He thinks Facebook gaming is going to crash hard, very soon... probably because he's not doing it, and his games aren't doing all that well. A good takedown of Denis is here. Really, it's pretty simple to figure out, Denis. If a company's making good money, which I'm pretty sure Zynga is, then clearly somebody somewhere likes what they're doing, and they're voting with their dollars. Doesn't mean you have to like their games, but ranting about how unfair it all is doesn't not help you.

One of the important lessons I learned as a game publisher was the difference between "a game I really loved" and "a game that makes a profit." Sadly, those two are not always the same thing... and then you have to decide if you're in business to satisfy some inner artistic desire, or are you there to make money. Do both when you can, to be sure, but you need to make a profit if you want to keep the doors open.

Yes, the rapid rise of Facebook gaming does make one wonder if it's a Pet Rock, or something like Guitar Hero. But when it's not just Zynga, but a number of other companies, and many different titles, and the users number in the many millions, it's gone beyond fad territory. I'd worry about Zynga if all they had was Farmville, and they were totally dependent on Facebook. But they seem to this outsider to have a good portfolio of games (Cityville has outshone Farmville), and heck, Farmville is not doing too badly at all even after quite a while on the market. The next challenge for Zynga will be managing the transition from insane growth to just growth, at whatever point that occurs in the next few years. We should all have such problems.

Bottom line: Social gaming has uncovered a huge market of players, and there are still a lot of places where it has yet to penetrate. Plus, the designs are still at the early days, and many new types of social gaming are doubtless still to be seen. I think there's a lot of growth potential left in the business, and still room for new players... at least until they get hoovered up by the likes of Zynga. Not a bad fate, really, especially if you get to keep making games you enjoy.

Trolls Attack Developers

No, not these kind of trolls. But it's a scary thought.

As if making money from developing iOS apps wasn't hard enough, now there's a company that wants to take a piece of your action. That is, if you're using in-app purchasing, which is rapidly becoming the most popular way to monetize an iOS game. A company called Lodsys has warned iOS developers that they are in violation of its patent, and they want you to give them a percentage of your revenue from your iOS app. Some iOS developers are getting legal nastygrams from Lodsys threatening legal action if there's no response in 21 days. Or, I suppose, a check.

Apple has had no response so far, but they are doubtless concerned about the issue. After all, if iOS developers give up 30% to Apple they sort of expect that Apple will take care of legal challenges. Meanwhile, apparently Lodsys has been receiving a lot of feedback about their action, and they've started a blog in response. I doubt they'll find much sympathy for their position out there.

Apple needs to step in and take care of this, sooner rather than later. After all, Lodsys apparently has reached agreements with Apple (and Microsoft and other large companies), but they are trying to get a piece of the multibillion dollar app market, too. This greed may rebound on them if it encourages Apple and some of the other companies to wage legal war on them.

Console Apocalypse Predicted

That's pretty much what the future looks like for consoles, I fear.

I guess I'm not the only one who sees signs and portents of the End Times... the end of the standard console market. Computing power continues to increase rapidly, and the smartphones have hastened the advances. The 7 year cycle of the home console is now woefully inadequate to keep up with the relentless march of technology. Worse, raw horsepower and pushing polygons is now less important; games are growing more because of business models than 3D models. The advance of technology is being used to reduce the cost of producing HD graphics for a home display, striking the consoles in their weakest point: price.

The real weakness in the console market is the dependence on physical distribution of games. This keeps publishers tied to high price points (now $60), and high development budgets (since you have to put $60 or more of entertainment value in each package) and dealing with retail stores and returns and inventory and packaging. When you take all of that away with digital distribution, you are freed from the need for high price points. Which means content can be of variable length, and lower development budgets are possible. Alternative business models like free-to-play or ad-supported are viable. A huge range of possibilities opens up... most of which traditional console makers are afraid to use.

Why? Because stepping in that direction means pissing off the retailers, who are still responsible for the majority of their revenue. So they take baby steps, and new game companies without a physical distribution legacy are free to grow into that space. And find ways to undermine console makers, like OnLive or Gaikai or Apple TV or Google TV.

I think the 3DS is a harbinger of what's going to occur for consoles. Nintendo's new box, regardless of hardware specs, will probably be in the $300 or more price range and rely on physical distribution of game discs. Those two factors will mean it will never sell as well as consoles of the past, as new business models with $99 boxes begin to take hold in the family room.

Hardcore gamers are still tied to consoles, but even that will change over time as the new wave of boxes develops even greater power and capabilities. Remember, the smartphone-technology based family room boxes (Google TV and Apple TV, et al.) are based on smartphones that get a significant tech boost every year. Apple's last boost (from the A4 last year to the A5 this year) was about a 9x graphics improvement. How long will it take to catch up and then pass current consoles? Far less than their 7-year cycle.

Sony and Microsoft have some idea of what's happening, and are making some moves to cope. But both of those companies are not used to being nimble, not the way Google and Apple are. At least Sony and Microsoft have a chance at maintaining a reasonable market share... I am very worried about Nintendo. I fear they are heading towards just becoming a software company, like Sega did. Sounds like the big tech improvement for their new console will be controllers with a display screen... which is arguably what smartphones are for the new wave of consoles.

It's a time of great changes... and some will thrive on those changes as others wither. Place your bets now, folks, the game of games continues...

Sony Tries Again, Misses

Sony is still looking for some good news.

Once again Sony has written to developers and managed to tell them not much. I can understand why Sony would not want to make a blanket, public statement to the effect of "developers, we'll cover all your losses." They don't want to create more liability, and possibly have developers inflating what they might have lost. So Sony is probably telling developers, quietly, that they'll make good on the losses in some fashion.

However, Sony loses out by not making a public statement, because developers who might be considering creating PSN titles are certainly not as interested now as they might have been a month ago.

Sony's probably hoping that all the bad press will blow over soon, but while PSN is back up in most place the online store still isn't operating. Which means developers are still not able to sell anything, and they're probably wondering when they will make money from the PS3 again.

At least Sony's got some free games going out to the fans, who will probably not remember the outage too much in a month or two. Developers have longer memories, especially when large sums of money are involved. I still think some public declaration of future loss indemnification would be a good idea for Sony... or perhaps Microsoft will try that.

PSN Not Secure Enough, Says Japan

See the original here.

Sometimes you just can't get no respect. Sony's bringing PSN back around the world... except for Japan, where the government wants more security measures in place before they'll allow PSN to come back. I guess we're not entitled to as much protection as Japanese consumers deserve.

This is all going to make a great PR case study someday. Perhaps not as much fun as Facebook attempting to use a PR agency to dish dirt on Google, but instructive nonetheless. (Though reading the sordid tale of Facebook and PR giant Burson-Marsteller is highly entertaining in an oh-my-god-did-they-really sort of way.)

WoW Loses 600K

I know there's a certain amount of churn to be expected in the user base of your MMORPG. I find myself a little bit astonished that the user base of World of Warcraft actually declined by 600,000 users after the release of the latest expansion, Cataclysm. Two months before the release of Cataclysm, WoW subs hit 12 million. Today, the number is 11.4 million.

Blizzard president Mike Morhaime says that players just blew through the content faster than ever, because the players are getting better. So Blizzard intends to speed up the release of new content, though exactly how they plan to do that isn't mentioned.

Not everyone agrees with that explanation for the decline, though. This long-time player just got fed up with the incredible rise in difficulty level. It's certainly got to be a difficult task to keep the experienced players happy while still attracting new players. It's true that WoW at the high end has become a very technical game, requiring a high level of knowledge of all the spells and items and their interactions so you can optimize your character. That prospect is rather daunting for a new, casual player.

Still, I remember that one of Blizzard's design goals with Cataclysm was to bring new players into the game. I'm sure it did, to some extent, but clearly they are not bringing in new players fast enough to replace the old players who are leaving. WoW needs to make sure they are solving the right problem here. Is the real answer to make the shift to free-to-play?

I'm sure that's being considered, but it will be a difficult process at best. It will be interesting to watch the progression...

PSN Coming Back, But Sony Isn't Secure

Encouraging hackers to create more downtime?

Two stories at odds with one another...

First off, Sony is bringing back the PlayStation network... actually, PSN should now be up for everyone. You'll need to download a software update, and of course you should be changing your password, but now you can enjoy your PSN goodness again after nearly a month without it.


Second, how secure is it really in Sony's network? Reuters did some investigating, asking the CTO of the partially government funded US Cyber Consequences Unit to check out Sony's security. He found numerous problems just by doing some Google searches, locating servers, files, and sensitive areas that should have been locked down. Reuters was kind enough to tell Sony about what they found, so hopefully those areas have been secured now. Still, being able to just Google and find a security management console for A Sony web site is disturbing.

At least Sony has brought back the network and they can try to move past this nasty little incident and hope that everyone forgets all about it, preferably before E3 takes place. I suppose it can happen, given how everyone was able to look past the Red Ring Of Death problem that Microsoft had with Xbox 360's. Of course, in that case it was pretty clearly a hardware design issue, and once they changed the design the problem mostly went away. It's not exactly the same with network security. We all hope Sony has learned a thing or two about locking down networks against hackers, but how can we really be sure?

Sony has announced a bunch of freebies for customers to try and make up for the problem, and I'm sure the customers will probably not hold it against Sony for long. At least, that should be true if no unusual charges show up on their next credit card statements. The bigger issue for Sony is the developers who lost a lot of money from the outage. Perhaps they are being handled quietly, individually, and being asked not to comment further. But Sony does need to make some public gestures to reassure potential developers that they will not lose money being PSN developers.

Wii, 3DS Sales Dive

Mario may be flying off the shelves, but the 3DS and the Wii aren't.

Looks like Nintendo's got an even worse problem than they thought. Both Wii and 3DS sales have really tanked in April. How bad were the numbers? In April, Wii sales were 172,000 units, which was down 38% from last year and down 40% from March. Ah, you say, desperately seeking an excuse for the big N... maybe all console sales were bad in April? Nope. The Xbox 360 saw sales jump 60% over last April, to 297,000 units, and even the PS3 was up 13% to 204,000 units, despite a wave of bad PR from the PSN debacle.

The Wii is now safely ensconced in 3rd place, and unless Sony tries even harder to sully the PlayStation brand, that probably won't change. Looks like it's well past the time for a new console introduction... maybe Nintendo will want to speed things up a little and launch it by this holiday season.

Perhaps the 3DS will save Nintendo's profits and sales while the Wii sinks into oblivion? Not with a performance like April, with only 194,000 units sold in the month. That's less than half of what the 3DS sold in its launch week in March... about as grim a drop-off as you could imagine. Well, that was the US... maybe in Japan the 3DS is doing better? Hey, what about sales during the first week of May in Japan? That's Golden Week, a big holiday in Japan and usually good for some nice game sales.

Sorry to disappoint you, but 3DS sales were flat during Golden Week, selling just over 29,000 units. Meanwhile, the PSP sold nearly twice as many units as the 3DS, almost 55,000.

Nintendo' sgoing to have to pull some rabbits out of its hat at E3 to keep the rest of this year from being pretty dreadful. Wii at $99 by Christmas?

Sony, Running Out Of Feet, Shoots Itself In Another Appendage

It only does everything.

Just when you think Sony's had enough time to figure out how to talk to people about the PSN/SOE hack attack, they issue another public statement and you think "Have these guys learned nothing?" This time, Sony is attempting to deal with developers. You know, those companies that provide the games that are sold on PSN... those companies who have seen their PSN revenue drop to zero for the last three weeks, with no end in sight.

Apparently there's been no official communication from Sony to developers regarding the outage until a couple of days, ago, when VP of Publisher Relations Rob Dyer sent out this email. It's worth reading as an example of how not to communicate in a crisis. Let me summarize the contents of the letter for you: "We had a big break-in and customer data was compromised. We deeply regret that this occurred. We are sure it won't happen again, and thanks for your support. We'll keep you updated."

Let's start with the fact that this email was sent out, not on day two or three of the outage, but after more than three weeks of outage. Good communication? That's an insult. Sure, I bet all the developers were in communication with their account executives at Sony about the issue, and were getting information. But that's back-channel stuff, not Official Word. Not something you can take to your investors or shareholders to explain what happened to your revenue numbers this month. Or when that might stop.

As to the content, Sony didn't tell developers anything they didn't already know about the break-in or the outage. Sony didn't even really apologize; they just "deeply regret that this incident has occurred." Nice use of the passive voice there, Sony, to avoid taking any responsibility. Maybe the lawyers wanted them to avoid any language that might open them up to a lawsuit. I don't know whether that will work, but certainly it's not helping make anyone affected feel any better.

Finally, you'll note the important thing that's missing from this letter: Any mention of recompense to the developers for the lost revenue. Or, indeed, any mention of revenue, even obliquely. If you have lost thousands, or hundreds of thousands, or maybe even millions of dollars because of lost sales, you might be a trifle peeved that Sony isn't mentioning that fact.

Microsoft, if they haven't already done so, should be communicating with all the PSN developers and saying something like this: "Hey, put your games on Xbox Live and we'll guarantee we don't have an outage. In fact, we'll back that up by promising to pay you the average daily sales you normally get if any outage ever does occur." Microsoft could probably even get an insurance policy to cover those costs for them.

Sony should, in fact, be telling their developers that they'll be recompensed for their lost revenue. Hell, they should have told them that on Day 1 of the outage. Any developer that looks at creating a PS3 exclusive title for download will doubtless conclude that's just stupid, because then you might lose a month of revenue with no warning. At least if your title is on Xbox Live as well as PSN, you'll only lose part of the revenue. With this logic, PSN will not be seeing exclusive titles... which loses an advantage to Microsoft. Bad play, Sony.

Sony still gives the impression of floundering, after three weeks of crisis. It's going to be a very difficult E3 for them; I hope they get their act together soon. But hope is fading after three weeks... this incident is going to have long-term damage to the Sony brand, I fear.

Blogger Outage Over

Sorry for the lack of posts lately, but Blogger was taking a break for a while. Seems a "maintenance update" was actually about causing the need for more maintenance, rather than preventing the need for maintenance. Oops.

I had this really great post that apparently got lost in hyperspace; search teams are combing the 11-dimensional spaces for it, and if it shows up I'll re-post. Otherwise, I'll return to some of the news that's been buzzing around.

Chrome Web Store Now With In-App Purchases

Coming soon to a desktop near you?

More news out of Google's I/O conference... the Chrome web store  (now featuring Angry Birds, BTW) has implemented in-app purchasing. The Chrome store is now available worldwide, too. Interestingly, in-app purchases are only charged a 5% fee by Google. Google also notes that in-app purchasing can be added to your app with one line of code. Impressively simple.

I'm going to stand out of the way now of game developers rushing to take advantage of these terms... hey, if you've got something that works in a browser, why wouldn't you try putting it into the Chrome store?

Adding to the appeal, Google is announcing some new Chrome laptops from Samsung and Acer, along with an interesting sales pitch: No money down, just get your Chrome laptop for $28 a month (if you're a business) or $20 a month (if you're a student). And these laptops come with Wi-Fi, and there's a 3G option, too. Interesting... I'm not sure if people will want to live in their browser all the time, or if this hardware will take off. But it's another reason to consider a browser-based version of your game, certainly. Oh, and you get Netflix and Hulu, too.

One more interesting thing: Google showed a desktop Chrome box from Samsung, too, called the Chromebox. No details... but lots of speculation. Set-top box? Competition for Google TV? Or just a way to do a Mac Mini at half the price?

Sony's PSN Outage Costing Developers

Will Sony debut a new PSN logo at E3? Probably not this one.

Sony's still not ready to say exactly when the PlayStation Network will return,,, they are still conducting "comprehensive system checks". A report from Bloomberg pegged May 31 as the date, but Sony has denied there's a firm date for PSN's return. Perhaps... but the pressure is growing on Sony every day that passes.

It's not just 100 million gamers annoyed at Sony for allowing hackers to get to their data; it's developers who sell products on PSN. That is, they used to sell products on PSN, and they hope to do so again someday. Meanwhile, they are not making any money. In some cases, this is a substantial hit; Capcom has gone on the record as saying the PSN outage is costing them hundreds of thousands of dollars, possibly into the millions. (Damn, does this mean the price of smurfberries is gonna rise? Maybe you might want to purchase a wheelbarrow or two.)

They're not the only ones; Q-Games, developer of PixelJunk, says they're losing a lot of money, too. While Sony has announced some efforts to compensate gamers for the lost network time, nothing has been announced so far to help developers. Maybe Capcom can absorb a million dollar loss, but they aren't happy about it; smaller developers who may be more reliant on the revenue from their PSN games could be seriously hurt.

Game developers are no doubt starting to wonder if they should be investing resources in PSN games if the service is going to be unable to generate revenue for weeks or months at a time. Or if that's deemed unlikely to happen again, if they've been hurt by Sony and not properly assuaged, perhaps they may just put their efforts into Xbox Live instead.

Sony's got to spend time on damage control on many fronts here: PR, developers, financial industry, network security, and key executives wondering if they'll keep their jobs after this debacle. All when they should be working hard on E3 and the big PR opportunity to look good for the world for the coming year. Now, though, they'll have to work hard just to avoid looking like villains or inept bumblers. (I'm sure they feel some sympathy for the Pakistani officials who are trying to avoid both of those categories right now.)

Anyway, Sony, remember the developers... you'd better make some gestures in their direction, too, or you could find that PSN has a lot fewer new games in the future.

How Not To Advertise

An ad from Popular Mechanics.

This is not a game ad, but it serves to illustrate some important things NOT to do when creating an ad. First of all, this ad is in a marketplace section, so it's a small size. Which means that putting a package shot in the ad, especially when the package is rather complicated and difficult to read, is a mistake. You'd be better off putting in a picture of the trimmer itself.

Second, where's the call to action? Am I supposed to buy this? Head to the web site? Look for it at a retailer (which one?) Or am I supposed to scan the QR code... assuming I have a smartphone, and know what a QR code is... which seems like a bit of a stretch. If you're going to devote a substantial part of the ad to the QR code, you might want to improve the odds of its being used by  giving me some reason to try it.

Really, though, my main beef with this ad is the content. The headline should be something that grabs my attention and makes me want to buy the item... some key feature that's so compelling I have to know more, and I want to own one. Lithium ion? Is that important in a hair trimmer? I never really thought about it... maybe the body copy will explain why I want this thing.

Three times the run time! Wait... my corded trimmer runs as long there's power coming into my house... this must be referring to a cordless trimmer. Which I may not have. Or maybe my entire body needs to be shaved regularly and I just run out of power half way through the process, it's so annoying.

Ah, but this trimmer has twice the torque! Here we get to a really fun feature. Is your hair so thick a regular trimmer just can't get through it? Who has this problem -- Sasquatch? Seriously... is there some human who has hair that defeats electric trimmer blades?

The lesson here is know your target audience; know the audience likely to be seeing this ad; and then focus in on the key features that appeal to this audience. Maybe they thought Popular Mechanics readers like power tools, and just saying Lithium Ion will make them run right out and buy this. Hey, guys, this is not a power drill or a grass trimmer (though maybe it can do that with all the torque it has). I think you're better off talking about features that might matter to a cordless trimmer buyer... maybe effectiveness, or cost, or reliability, or why it's convenient to spend more and eliminate a cord.

Don't try to sell me on features that are meaningless to this item. You'll just leave me... torqued off.

Breaking: Android News From Google I/O

It's in yur base, killing yur market sharez.

Google's I/O developer conference is underway, and some of the news is of great interest to game developers:

• Android activations have hit 100 million devices now, and new activations are happening at the rate of 400,000 per day. There are now over 200,000 apps in the Android Market, and they've had 4.5 billion installations.
• Google TV is getting Android 3.1, the Android Market, with Sony, Vizio, Samsung and Logitech all on board with selling hardware. Hopefully we'll hear more specifics in the next day or two.
• The Android version coming in Q4 of this year is called Ice Cream Sandwich, and it will work on phones, tablets, and Google TV too I bet, intelligently detecting the nature of the device and configuring the interface accordingly.
• Android goes multimedia: The Android Market is launching movie rentals and a music streaming service for Android devices or web browsers is coming up, where you can upload your own songs (up to 20,000 of them) and have them available anywhere. Who needs local storage?
• Google invades the rest of your home, announcing a link to home automation. These guys are everywhere.

In-app purchasing is also due to kick off soon, which will certainly help game developers. Also in the works is a plan to get all the phone manufacturers on board with upgrading Android on their devices in a more consistent way. Hopefully this will happen, because device and OS fragmentation is a huge problem for Android developers. While the Android market in aggregate is huge, it's really a collection of much smaller markets with significant differences between devices and Android versions... differences that may require you to test your game out on dozens of devices.

There will be more news coming, and I'll keep an eye on it.

Smartphone Market Share: Android Up, iPhone steady, Blackberry Who?

Market share... isn't that something RIM used to have?

It's interesting to watch to the market share numbers for smartphones over time. There are no big surprises in the numbers themselves: Android continues to rise (up to 34.7% from 28.7%) , Apple gains slightly (up to 25.5% from 25%), Blackberry continues its headlong plunge (dropping 4.5% to 27.1%; they've gone from over 40% a year ago to about 27%), Microsoft continues to go from bad to worse while awaiting Nokia's introduction of Windows Phone 7 phones.

The real surprise, to me, is what has to happen before RIM takes action to prevent (or, at least, delay) its complete loss of market share and relevance. Are they striving to be the beeper company of the 21st century?  Apple should pass them this quarter in terms of market share, and from there RIM is just racing downward to see how long it takes to reach Microsoft's market share of under 10%.

At least Nokia figured out that it was in trouble, though they had to completely change out their management team in order to come to that realization. Now they are trying to do something about it by adopting Windows Phone 7, though how successful that effort is we won't know for a couple of years. RIM, though, just continues making Blackberry phones with minor improvements as if nothing has happened in the phone market. Kind of sad, really. It must be ego; the co-CEOs of RIM just don't want to admit how badly they've screwed up, and so they will continue to deny there's even a problem until they're escorted off the campus by security. Let's hope, for RIM's sake, that occurs sooner rather than later.

Meanwhile, if you're a developer looking to make some money on games, better try iOS or Android. I guess there is an opportunity for a small developer on Blackberry or Windows Phone 7, since you could stand out in a field that's much smaller than Android or iOS, and thus get some attention and brand equity before taking your title to the platforms where you can really sell a lot of copies. For larger developers, though, there's nothing to gain by looking at the Blackberry marketplace. Except, perhaps, a delightful frisson of schadenfreude.

GameStop Acts On Impulse

How to caption this graphic...GameStop Impulsively Spawns Labs?

Traditional game publishers are making more and more money from digital distribution. Even Activision, long known for sneering openly at anything other than a disc sold in a store, is now touting the fact that half their revenue in the latest quarter came from digital distribution (of course, I think they're counting WoW subscriptions in there). This may be good news for publishers hoping to see a bright future coming out of three years of down sales for the industry, but there's one player who's not so happy at the expansion of digital distribution: GameStop.

They are taking the threat seriously, and there's no better evidence than their recent purchase of Stardock's Impulse digital distribution service. Sure, it's not Steam (who has about 70% of the digital distribution market), but Impulse accounts for about 10% of the digital distribution business. GameStop should be able to expand that with their resources.

Interestingly, GameStop has also bought Spawn Labs, which has game-streaming technology that hopefully can compete with Gaikai and OnLive. While I'm on the subject of game-streaming, there's a new kid on the block called Happy Cloud, which has an interesting twist on the idea of streaming games. They don't want to stream you the game so much as make your download of the game happen a lot faster, in a way. They set the game up so you can start playing quickly (in a few minutes), and not have to wait until your multi-gigabyte download is finished (hours later, usually). This opens up the possibility of impulse buying, and Happy Cloud is open to licensing the technology to other digital distributors. This could really speed up the spread of digital distribution.

The upshot of all this news is a further expansion of digital distribution is in the offing, and GameStop doesn't intend to miss their opportunity. Having a retail presence does offer some interesting possibilities for merchandising that Steam won't be able to match. Kudos to GameStop for understanding how the marketplace is changing, and making some moves to try and adapt their business. Let's hope they pull off a successful transition to the future.

Sony Offers Identity Theft Protection

It's been a busy week for Sony, as the scramble continues to deal with the enormous hacker intrusion and the consequences to Sony's brand. A major development this week has been a public letter from Sony CEO Howard Stringer. The gist of the matter: Howard Stringer apologizes. Finally. Why on earth it took two weeks for Sony's CEO to make a public statement can only be attributed to the Japanese culture, I suppose, where admitting a problem is the very last thing you want to do. All very well and good in Japan, I suppose, but Sony is an international company, and they need to handle their international customers, too.

Meanwhile, Sony has offered a free identity protection service for 12 months through Debix, Inc. for PSN users in the United States. Users in other territories will hopefully be offered similar deals. Hey, you'll get priority access to licensed private investigators! I bet you never thought you'd get that with your PSN membership.

Meanwhile, the return of PSN has been delayed for some indefinite period. we're now at 19 days and counting, with no specific start date being mentioned yet. Just to rub salt in Sony's wounds, apparently, the hackers responsible for the attack (who have been lying low) posted personal info from 2500 PSN customers to a dormant Sony web site. Sony did manage to notice and shut down the site, but it is one more embarrassment to add to the list. 

Sony's considering offering a reward for information leading to the arrest of the hackers. Hey, maybe you can win a free game! The identity of the hackers remains a mystery, at least publicly, though some Anonymous veterans have stated in interviews they believe that members of the group were in fact responsible, despite denials.

So the wounds continue to ooze, and Sony's efforts to stop the bleeding have so far proven too feeble. Maybe it's time for Kevin Butler, Sony's faux VP they use for PR purposes, to go on the record about the situation. At least we can get some laughs that way. Sony needs some dramatic victory to really turn the PR situation around... maybe they should call Seal Team Six.

3DS Sales Still Weak

3DS sales are moving about this fast.

If you were wondering about 3DS sales, wonder no longer. It wasn't just a temporary glitch. The 3DS is being regularly outsold by the PSP in Japan, with the PSP hitting almost three times the sale of the 3DS. True, the PSP is half the price... but it's been on the market for many years.

The PSP sold almost 80,000 units compared to the 3DS at 28,000 units. In case you're wondering, the DSi LL sold a little over 9,000 units, and the DSi sold about 7500. These are really not good numbers for Nintendo. It's partly reflective of the lackluster launch titles, to be sure. But who's to blame for that? Nintendo should at least have been able to control the software titles they did in-house, and delayed the launch of the 3DS until they had at least one killer title for it. Nintendo made a huge mistake in rushing the 3DS out before it was really ready. Why would they do it? Because they saw their sales for the Wii and the DS line sinking fast, and felt they had to do something to brighten the sales picture a little (even so, their sales were down 29% for the year, even with the launch of the 3DS in there).

Nintendo was in this pickle because they refused to lower the price of the Wii last holiday season, figuring that they didn't need to. Similarly, Nintendo felt that initial reaction at the last E3 was so strong for the 3DS that they didn't need to market it, or wait to launch until better software was available. Bad choices, obviously.

I'm sure Nintendo's hoping that Ocarina of Time and other titles coming soon will revive sales (that, and some actual marketing efforts... maybe an ad or two, Nintendo?). I think they're still missing the larger industry trends, which are moving away from the directions they are going.

And, by the way, 3D is not a must-have for everybody. Not in movies, and not in games. At least Nintendo has admitted that... now. Not the same thing they were saying before the 3DS launch, but I guess they have learned something.

AppDroid Apocalypse, Nowish

The face of destruction.

With Google's I/O conference coming up next week, it's a good time to look at what's happening to Google TV and Apple TV. According to this report, Google TV 2.0 will be coming with support for other chips than Intel, Android 3.0, and a full Android Market unleashed. What's that all mean? A lower price tag, since ARM-based chips are much cheaper than Intel's, an easier interface, and better graphics.

Which all means that Google TV may have a chance... if Google has been smart enough to cut some deals allowing content from major broadcasters to be shown through Google TV, unlike the first version. Sorry, Google, but if people can't watch the TV they want to watch through Google TV, don't expect the unit to take off.

Meanwhile, all is quiet on the Apple front... too quiet. Rumors have been bubbling up about the massive data center Apple has constructed in North Carolina, which apparently will be used in some fashion for iTunes. But it's probably connected to Apple's recent purchase of iCloud, and the streaming music service, and the deals Apple's been cutting with major music labels. I suspect even more than that... other rumors have Apple eying Netflix's business.

It all makes sense to me. Apple could certainly turn Apple TV into another huge growth center if they can put the pieces all together. Imagine streaming video deals where you could use the Netflix model, which has proven so popular Netflix now has more subscribers than Comcast. If you focus on streaming content, which you can do if you have a massive data center, then you don't need large local storage... a few GB in an Apple TV unit would suffice, thus keeping the costs of the unit way down. Streaming video, streaming audio, purchases kept in the cloud instead of stored locally... Now you put an A5 chip in the Apple TV, and suddenly the graphics power is now better than a Wii, and closing in on Xbox 360.

Flip the switch and allow the full App Store to be there on Apple TV. Now you're seeing a $99 box that outdoes a Wii for gaming power, easy use of an iPhone or an iPad as a controller (easily outdoing the planned Wii 2 controller-with-a-screen we're hearing about), and thousands... no, hundreds of thousands of apps available. Most of them for free or a few dollars... tens of thousands of games, and thousands of other types of apps, and more created every day.

Yeah, this is all coming soon to your family room, once Apple gets all the pieces in place. The media deals are the hardest part. The data center is ready, the hardware is ready. The gaming industry? Not ready. Nintendo, Microsoft, Sony... this is the next enemy you have to fight. Apple has hurt your handheld business, Nintendo, now they are aiming right for your jugular in the family room. Sure, Nintendo has their new console planned... but it will be hundreds of dollars, not $99. And I see no sign that Nintendo is going to embrace the new app business model that has propelled the smartphone business to amazing growth in the last few years.

Just to make it all worse, Apple is on a one-year hardware cycle, where the hardware gets a significant power boost every year. Think the new Apple TV that will be coming, with an A5 chip, is too wimpy? Wait a year for a newer $99 box. Another year or two after that and it will be more powerful than Nintendo's new console.

I still think Nintendo, Microsoft and Sony have some amazing assets in this fight, and a chance to continue to hold significant market share in the future. But unless they start embracing the future sooner rather than later, they are going to see their market share diminish between the onslaught of Google and Apple. The handheld business is just about a lost cause now, though Sony seems to be fighting an intelligent rearguard action with the NGP. Next up is the console business... and I can see that being upended the same way the phone business was upended in a few short years, by Apple.

Developers, get ready to rumble...