New Apple TV Rumored

It doesn't seem like a bad deal when you add it all up... but will Apple actually do this?

We know a new Apple TV is coming... the only question is when, and in what form. The newest rumor making the rounds is that Apple TV is actually going to be... a TV, with the Apple TV functionality built in. Sure, this one's been rumored before, but to me it makes more sense now. Apple has a significant base of retail stores; TVs aren't that difficult to ship any more; there's plenty of room in the market for a new player.

The idea, I think, is to bundle iTunes into the TV and get ready to take on Netflix. That huge data center in North Carolina Apple built could be the necessary component in this push. Of course, the ability to put Apps on your TV is a huge potential money-maker for Apple and for developers. The game market would be right in the crosshairs of such an effort... note in the above picture one of the factors going into the price comparison is a game console.

Still, it would be pretty pricey... I don't see this idea as the real gamechanger. I think Apple TV at $99 is a great buy if you could get a full App Store with it, and access to thousands of games. Such a box would be easy to add to existing setups. While Apple may sell a full TV set someday, I don't think it would ever have a chance to take over the world. Or a significant market share. An Apple TV with an A5 chip could put out some serious game graphics, and at $99 with thousands of games at $2.99 or less would be an instant death threat to the console industry as we know it. Wii U? Wii Who would be more like it... use an iPad for a controller with your Apple TV, or an iPhone, and you've got the Wii U beat before it even comes out.

I think this holiday season would be a perfect time for Apple to bring out the App Store for Apple TV, and a new upgraded Apple TV too with more horsepower. Will it happen? I don't know, but if it does the ensuing hooraw in the game business will be interesting to watch.

EVE Online Faces "Online Spring"

The road to monetization is often a bumpy one, especially when you have a large established base of players used to one business model and you try to introduce a different business model. Such is happening right now with EVE Online, the quirky MMO with the dedicated fan base that's been making money the old fashioned way, via subscriptions. Lately they've introduced an in-game store, and that's when the rioting began.

Yes, rioting. It's complicated... but EVE's in-game economy is connected to the real-world economy, in that you can buy sell things for cash. And EVE players are worried that the new store items may completely unbalance the economy. (I guess Iceland is already familiar with economic upheaval, so why should this be a surprise? The developers of EVE are Icelandic, and Iceland's economy went into a tailspin a few years ago when bank failures occurred... but that's all in a different universe than the game. Sort of.)

Players are outraged over the high prices for some of the items in the store... real-world costs for in-game items that exceed the real-world costs for the same item. Worse, some of these vanity items cost more than major capital ships do... more than $60 for a hat, for instance. Players seem concerned that this will lead to the guy with the biggest spending being the most successful in the game, buying their way to victory.

The problem was made worse by an internal memo that was leaked, where the company envisions players buying ships, guns and other game-affecting items. CCP, the developers, have been trying to calm the waters, but so far it's about as calm as Syria is right now.

Lesson: People take games seriously, especially one where they spend hundreds of hours playing. If you introduce new ideas that threaten to invalidate their hundreds of hours invested in the game, outrage results. Tread carefully when mucking about with game balance.

There's a lot to be said for the League of Legends philosophy: Don't sell anything that can affect the game play. You may miss some revenue right away, but you'll also avoid riots.



http://www.industrygamers.com/news/eve-online-starts-in-game-rioting-over-microtransactions/

Secrets of a Successful Mobile Game

OK, so their games skew young... but kids have money, too.

While there are plenty of companies jumping into mobile games, there aren't that many that are successful at making games people want to play. One of the new hitmakers is Pocket Gems, which has put out 6 games so far with a total of 40 million downloads. Of course, they aren't mentioning how much money they've made, but they seem to be doing pretty good.

What are they doing right? They are focusing on long-term customer engagement. Their games are free-to-play, with the monetization coming from in-app purchasing. Some critics have grumbled that this is not a sustainable strategy, having just a small percentage of your users essentially paying the bills for the rest of the players. What if that small percentage collectively decided not to spend money on in-game purchases any more? Sure, I guess that could happen. Of course, all the molecules in my coffee could decide to move vertically at the same time, but that hasn't happened yet as far as I've noticed.

Seriously, Zynga's whole business depends on the same concept of a small percentage of players funding the entire audience. They seem to have brought in over a billion dollars so far, so I think we can say that this is not some collective hallucination.

Anyway, Pocket Gems is trying to keep players engaged and coming back again and again. It's a different design philosophy stemming from the differing business model. A decade or two ago wiith traditional retail packaged games, it was all about the sell-in... the game was gonna sell 75% or more of its lifetime sales in the first few weeks, and everything was geared to that. You didn't worry so much about reviews or reactions, because in the pre-Internet days the reviews wouldn't reach everybody, and individuals couldn't get their opinions out to the world easily. So you could get away with a crappy game, at least once in a while. Now, that's become impossible. And you have to build an audience over time, which you can only do with quality and a game design that keeps 'em coming back.

GetJar vs. Amazon: Android Markets Battle

Cut The Rope goes exclusive to GetJar... for six whole days.

While developers have had a hard time making much money on Android titles, Android Markets are still competing to see who's going to be the best at distributing Android apps. One way for them to compete is by signing exclusive deals with developers. If you're the only place to get Angry Birds, you're going to get a lot of traffic. GetJar had its traffic spike 10 times normal after it was the first place to get Angry Birds for Android, and they had 1.9 million downloads of the title in a few days. That's what Amazon did with Angry Birds Rio, as well as Plants Vs. Zombies, and it bought them a lot of traffic.

Which is why GetJar got themselves an exclusive to Cut The Rope, the  iOS title that's hit the coveted No. 1 slot in the App Store, which now is coming out for Android... exclusively on GetJar. Well, exclusively for six whole days before it appears in the Android Market. That doesn't sound like much of a window of opportunity, which is no doubt why GetJar plans to promote the game heavily in that time frame.

Of course, we don't know what deal the developer got from GetJar for this exclusive. Nothing succeeds like success; only the #1 games are going to get these kind of promotional deals. Though GetJar is trying to play nice with developers and promises them far more opportunities for promotion and marketing than they'll get with other markets. No doubt true, since most other markets do little or nothing at all. Except Amazon, which is trying to set a new standard for app markets.

I expect we'll see more marketing "opportunities" being offered by markets to developers, such as discounts, advertising, and so on, as ways for developrs to try and gain a little visibility in the seemingly endless sea of apps. (When you want to be found, and you're one of hundreds of thousands of products, you do have to find a way to get noticed.) Some of these "opportunities" may in fact be good ones... some will just be a way to throw money away. I hope to find out which is which before spending anything...

The E-Book Revolution Is Over; E-Books Win

Harry Potter and friends, shown as they are about to zap traditional publishing.

I don't think there can be any clearer sign that publishing has changed for good and e-books are king than this: J.K. Rowling has announced that she will be self-publishing Harry Potter e-books. I guess anyone who thinks that self-pubbing is a sign that your books can't make it in the marketplace is going to have to rethink.

The e-books will be sold through her new web site, Pottermore, which means she'll get to keep all the revenue. I suppose she'll make some sort of deal with Amazon and Apple so that Kindle and iPad users will have easy access to her books, but nothing's been said about that so far. Joe Konrath has some good thoughts on the matter here; he sees it as the continuation of the death spiral for traditional publishing. He's right.

Be careful walking around Manhattan during the next few weeks; falling publishers could be a health hazard.

PopCap Games Being Acquired... By Who?

Time to pop a cork, not just a cap, when you sell your company for over $1 billion.

Word is coming from TechCrunch that PopCap Games, makers of such hit games as Bejeweled and Plants Vs. Zombies, is being acquired, with the purchase price rumored to be north of $1 billion dollars. The big question is, who's the lucky (and wealthy!) buyer? There's no shortage of suspects, but one name that springs to mind right away, Zynga, is not in fact the buyer. Though Zynga did look closely at PopCap, in the end they decided the price tag was a little too much for them. PopCap's revenues are said to be in the range of $100 to $150 million annually, which puts the purchase price well over a 10x multiple... which is very pricey as these sorts of deals go (a 3x multiple is considered a standard valuation).

If Zynga's not the buyer, who does that leave? Well, there's... EA, who's certainly not averse to growing by acquisition. But that purchase price is a significant chunk of their $7.9 billion valuation. So it may be too rich for them... then again, they've been eyeing Take 2, so they are not opposed to spending a lot on an acquisition if they think it's a worthwhile strategic move. I'm not sure that PopCap is worthy of such a healthy valuation, though.

Activision, of course, could really use some diversification... they are basically nowhere in casual, social, or mobile gaming, which are the high-growth areas of the industry (traditional games being in negative growth for the past three years). Or perhaps an Asian company like TenCent wants to get into the Western market in a bigger way.

I expect the answers to be revealed over the next week or so. It'll be interesting to see who shows up as the mystery buyer.

With Great Marketing Power Comes Great Responsibility

Hopefully, it will be Duke Nukem: Never Again.

You can create a terrific marketing campaign for a product that's not so good. Should you? When does your desire to create the best possible image for your product become a liability? I submit that happens when your rhetoric outstrips the quality of the product. Unless you're planning to make a lot of sales quickly and then disappear, you need to be concerned about your long-term sales prospects. If not for the current product, then for the next product. Overselling a product leads to disappointed customers who are less likely to buy the next product you're selling.

All too often we see this happen in game marketing. This article about game marketing has some very good points. Duke Nukem Forever is the latest example of an oversold game, which has rapidly gained a very poor rating among critics. Homefront and Brink are two other titles released this year that also suffered from marketing hyperbole. One fine example is pushing the "story" content of Brink, when that consisted of some simple cut scenes before and after each match. No campaign, no characters, no story... just a series of maps with some cutscenes inbetween. Yet it was marketed on its compelling storyline.

This not only hurts the company publishing the oversold game, it hurts the whole industry. Customers who don't get their $60 worth of value are going to be more difficult to sell a $60 game to the next time. They will be less willing to believe you when you say the game is good. This sort of marketing drives down the price for everybody, and helps push players to free-to-play games and used games and other things that developers don't make money from.

Marketers may think they are doing they best they can by praising a game to the skies, but in this age of rapid dissemination of information a bad game quickly gets exposed as crap no matter what it says on the package or on the web site of the publisher. So your chance of getting a good sell-in before the customers realize the game sucks is not really a viable strategy. Besides, the retailers will just send it all back if it doesn't sell. And every time a customer gets burned by a $60 purchase, you can bet he's going to sell it to GameStop and make sure he checks to see what the reviews say before he drops another $60.

Marketers, do us all a favor and don't puff up a game to be something it's not. Present it in the best light, sure; that's your job. Don't transform it into something it's not. And if you're not a marketer, make sure your marketers get this message. For everybody's sake.

Lawsuit Against Activision Moves Forward

Lawyers in action.

A judge has ruled that there's enough of a factual basis to move forward with the lawsuit against Activision by Infinity Ward co-founders Jason West and Vince Zampella. Not good news for Activision, though of course they have their countersuit against West and Zampella to keep hope alive. If you remember, this case rests on the claim by West and Zampella that Activision fired them in order to avoid paying them big royalties due from Call of Duty... really big royalties (as in $36 million worth). Activision argues that the duo were in collusion with Electronic Arts to sneak away and form a new studio, so they were fired. After their firing, most of Infinity Ward's employees (including all of the key creatives) left, which is certainly evidence of a less than healthy relationship with Activision.

Discovery will go on for several months, and we can expect Activision CEO Bobby Kotick to have to answer questions about his role in the whole affair.

Meanwhile, Activision and EA are gearing up for full-scale marketing warfare over Call of Duty and Battlefield 3 this fall. They'll be battling in court, in the marketplace, and on the virtual battlefield. It's not all playing games at that level... be glad you don't have big-company problems.

Who's going to win? What are the facts really? I have no idea, but I can see the scenarios being realistic on either side. My guess is that both sides need to go through discovery in all the associated lawsuits in order to get a look at everyone's hand. Once that lengthy and expensive process winds up (which will take several months and chew up many billable hours, you can bet), the real strategizing will occur. Each side will look at the cases and decide what their chances are at trial. You can never really be sure how a judge and a jury will decide, so you're taking a big chance when you decide to go into court with your case. Thus, both sides will have a reason to sit down at a conference table and see if some sort of settlement can be hammered out. I expect that will happen, although the process will doubtless be difficult, and the case will be settled out of court. No doubt the details we'll be sealed and we'll never learn exactly how much was paid to whom. The whole affair will be quietly buried with a press release, so that both sides can move forward with selling software to pay the legal bills.

There's only one sure winner in this situation: The legal firms, who will no doubt make millions. The lesson: Avoid lawsuits and actions that will tend to generate lawsuits, because it's a huge distraction from the business of making games.

Lending E-books

Borrow me.

The e-book industry continues to evolve, with more and more of the traditional practices of paper books somehow finding their way into the new format. One of these practices is lending a book. Yes, it's possible to lend an e-book, and this article covers some of the companies making it possible.

For example, Lendle uses Amazon's API to allow you to lend out your Kindle e-books to other Kindle users. You have to be willing to lend your own e-books in order to borrow someone else's, but that's not a big restriction. Best of all, your book should be in the same condition when you get it back.

This removes one of the barriers to buying an e-book; I'm more likely to buy one if I know I can lend it to someone. This may not make authors terribly happy, but being found is a bigger problem for authors than piracy. Lending is a great way to get someone to try out a new author, and if they like it they'll become purchasers. There's nothing I love better than finding an author I like... it means I can collect everything that author has written and know I'll be getting something good.

The Decline And Fall Of Nintendo

"Wii U" is the sound of an air raid siren warning of impending destruction, Nintendo.

Nintendo has been the iconic leader of the videogame industry since they re-invented the business in the 1980's. The industry had been crushed by the flood of Atari games of questionable quality, and was in a state of shock. Some predicted that it was a fad that would never return. Then Nintendo hit it big with the Nintendo Entertainment System (NES), and gradually the industry once again became popular. Nintendo's arch-rival Sega was very successful with the Genesis, but Nintendo kept their crown with a succession of amazing titles and newer consoles. The NES was followed by the Super NES, and then the N64, each bringing a substantial boost in graphics power and a raft of great new games.

Sony entered the fray with the PlayStation, which quickly became a hit. Part of the appeal for the PlayStation was the use of a CD as the game medium. This didn't matter so much to the consumer, but it made a huge difference to publishers. CDs were easier and cheaper to produce, and could be produced much faster than cartridges. Cartridge production, and the bottlenecks imposed by Nintendo, could delay the release of games for months. Worse, you could have a hit game and be unable to restock for months while waiting for your cartridges to be produced and shipped by boat... and then perhaps the enthusiasm had waned and you were stuck with a warehouse full of unsalable games.

Microsoft joined in the fun with the Xbox, which also used a disc as the format. Nintendo, now beset with two strong competitors, finally bowed to the inevitable and released the GameCube, which used a disc. But Nintendo's intransigence at adopting a new format (not even a new business model, mind you) had cost them the leadership position in the marketplace.

Consoles continued to advance, and with the PS3 and the Xbox 360 Sony and Microsoft pioneered a robust online service that fostered multiplayer action, community, and sales of downloadable products. Nintendo made a half-hearted effort to get online with the Wii, but mostly they were happy to be outselling Sony and Microsoft for a couple of years. The price advantage of the Wii and the popularity of motion control among a wider than traditional gaming audience more than made up for the weak online offerings. (Friend Codes...Really, Nintendo? How could anyone take your online efforts seriously?)

Now we come to the last two years of the game industry. Massive changes on a scale not seen since Atari collapsed have transformed the business. Mobile gaming on smartphones and tablets has grown swiftly, to the point where its sales will surpass handheld console software sales this year, even with an average selling price of less than $2 versus about $30.

Free-to-play games, downloadable content, digital distribution, subscriptions, ad-supported... all of these market areas are zooming. In a short time the free-to-play model has burned through the MMO market, to the point where it's unusual that a new game isn't offered with that model, and old games are rapidly converting. Digital sales are on a pace to rapidly overtake retail sales within a year or two.

Social gaming has created new game companies with market caps that rival the biggest and begin to approach Nintendo's. Zynga has a current market cap, pre-IPO, of about $10 billion, versus Nintendo's current market cap of $27.5 billion, and compared to EA's of $8.1 billion and Activision's $13.7 billion, that's not bad. Of course, if you want to look at profit margins, Zynga hasn't released that info... but all indications are that their margins are huge.

Meanwhile, retail sales of traditional packaged software have fallen for two years running, and this year looks to make it a third year in a row. Consumers are busy playing games they already have in multiplayer mode, buying downloadable games or new content for games they already have, or playing games on their smartphones or on Facebook. Looming on the horizon, streaming games from OnLive and Gaikai are being built into more devices, and smartphone technology will be connected to TV sets in the family room to bring their open development model, thousands of titles of low-cost games right into direct competition with consoles.

What is Nintendo's strategy in this time of essential transformation? Why, keep doing business the way they have for years. Sales are dropping fast for the Wii? Wait a while, reduce the price a bot, and announce a new console with a new feature and somewhat better performance. The exact same business model of selling software in retail stores, though. That should fix the problem, right?

You'd think Nintendo would have learned something from the 3DS debacle, where sales have been so far below their expectations as to be embarrassing. (I mean, you get 1.06 million units sold in Japan, your home market, in three months, when you had projected to sell 1.5 million in the first week? Pathetic.) No, instead Nintendo figures that there's really no problem here, just put some more money into marketing and when some new games come out everything will be fine.

Nintendo's take on the free-to-play phenomenon that has generated hundreds of millions (if not billions) in profits in a couple of years? No way will Nintendo do any of that, Iwata-san tells the Wall Street Journal. Nintendo won't be doing any of that nonsense, it would be bad for the industry, not to mention Nintendo itself.

To me, this signals the beginning of the end for Nintendo. Perhaps their perspective is skewed because there isn't much of an online market in Japan, where most kids don't have computers, and aren't downloading or playing games on computers or smartphones. Whatever the reason, the market is changing fast, and Nintendo has just declared they don't believe in reality.

It's sad, really. Think about how well Nintendo could do by offering Pokemon as individual downloads... or Animal Crossing... or new dungeons for Link to explore. They have so many iconic brands that are not realizing their value, as we wait ever-increasing lengths of time for new titles to come. Meanwhile developers flock to other platforms, and the creative energy goes elsewhere.

The 3DS is just the first warning sign. I don't think the Wii will have a strong life, even if Nintendo reduces the price yet again. The Xbox 360 continues to roll up new sales in part because there's a lot of great games coming out for it... not just in retail stores, but online. The PS3 is growing, too... and those two consoles are twice the price of the Wii. The Wii U, when it finally arrives, will be dealing with handicaps of a high cost and a small library of games, while the existing consoles and the new smartphone-based gaming juggernauts will be conquering the market. Without a significant online presence, Nintendo is doomed... and they show little signs of any progress even towards something half as good as Xbox Live or PSN. PSN has already started exploring free-to-play, and I'm sure by next year that business model will be well-established on consoles. Just not Nintendo's consoles.

What could Nintendo do to succeed? Embrace online, create a robust online experience, leverage their IP into new business models even if they aren't the ones producing the software. Sure, release a new console... but make sure your key software titles ship with it, not months afterward (the 3DS shows the folly of delayed release of key software). Keep the Wii generating revenue, reduce the price to $99 this holiday. Be ready to cut the 3DS to $199 for the holidays, or sooner if need be, and pack in a software title. Throw open development for the 3DS so that it can do more than just play games; make it easy for developers to extend its capabilities. Embrace digital distribution of your titles, create DLC for your hit titles. If Sony can get their old PlayStation titles onto Android, you can too.

Drop the prices on your old software to see where you can maximize revenue. Everyone with a Wii should have the incentive to get lots of old NES and SNES titles... run sales, promotions, get people excited about turning on their Wii to see what the latest is.

Nintendo, you have so many advantages, and you're wasting them right now. If you were a US company the vultures would be circling, looking a for a white knight to buy them out and start leading the business in the direction of profits once again. Hey, Apple, want to take over a slightly used game publisher?

Sadly, I don't see Nintendo changing much, nor do a I see a company buying them out. The likely scenario is a slow fade into irrelevance, as other parts of the industry grow faster. With a few more years of this sort of decline, Nintendo may have to dial back further and just become a software company. Hopefully, their best characters will survive in some form. Nintendo may be able to remain a viable company, but I don't think they'll ever lead the industry again.

3DS Sales Continue Slow

It's lonely here in 3DS land.

Nintendo continues to struggle with selling the 3DS. While they recently achieved the milestone of 1 million units sold in Japan, that's not something to celebrate for them. Why not? Because it took Nintendo far longer than they originally predicted to sell that number. Nintendo initially projected that they would sell 1.5 million 3DS units in Japan before the end of March. Instead, they've just now hit 1.06 million units, some three months later than they envisioned (and still 500K short of their goal).

Nintendo's hoping that the introduction of their online eShop, and some better games scheduled for later this year, will boost the sales. So far Nintendo has pooh-pooh'ed any suggestion that they might have to lower the price, especially with the PS Vita coming later this year at the same $249 price point as the 3DS. Sure, they can say that now, but if 3DS sales don't jump up in the next few months the question of a price reduction will surely be raised again.

It will be interesting to see if the Wii price reduction gives it a boost this summer. Nintendo may be getting just a tad desperate looking forward to the holidays if their sales picture doesn't improve by then.

I don't think 3D movies on the 3DS will be enough to save it... especially since 3D seems to be treated with increasing disdain by movie-going audiences, who rightly see it as an attempt by studios to justify higher ticket prices.

Ominous Trends

Look at all the innovation at E3!

This article on Cracked.com talks about some ominous trends in videogaming. It's an amusing read, but there's some key points that are worth thinking about.

First, there's not a lot of variation going on... unless you count different flavors of shooter, that is. Innovation is being confined to the creation of better textures or particle systems, not game designs. Why? It's an obvious consequence of higher development costs and lower average sales... while the sequel generates the most reliable revenue. Publishers are getting the message: Better make a sequel to something you know is a success, otherwise you have a high risk of not getting your investment back. And when development takes 2-3 years or more, and the investment is tens of millions of dollars (or more!), you don't like to take chances.

On the flip side, when a manufacturer is pushing hardware sales, they may get innovative as all heck in order to get you to buy more hardware. Even if it means a crappy game, as in Star Wars Kinect. Sure, you can wave your arms around to control your light saber... but you can't walk around.

Too many games are coming with DRM still that requires a constant internet connection, which just makes things annoying. More games are relying on downloadable content (DLC) to make a profit, but all too often they're leaving out stuff that really should have been in the game in the first place, then charging you for it. Or offering DLC that unbalances the game play, leaving you frustrated if you didn't buy in and the guys with the DLC are kicking your butt.

These are all teething pains of the transition to new business models for the game industry. The big publishers are still feeling their way to a new business, and they're stepping on our toes as they stumble around. Meanwhile, smaller developers on new platforms are being innovative and interesting... but they're having a hard time finding their audience and making a profit, too.

We can help by spreading the word about games we like on Facebook and Twitter and other social media. Especially if the game comes from a small developer. It's not like Zynga really needs me to say how much I'm enjoying Empires and Allies when it's already got 10 million players. I'd rather mention Hexalex on the iPhone as an example of a neat word game with some nice features, well worth your $2.99. Take the time to post on Facebook about a game you're enjoying; the developers will appreciate it.

May 2011 Game Sales Lowest in 5 Years

Looks like Luigi glanced at Nintendo's sales figures for May.

While the traditional game industry was whooping it up at E3, trying to convince everybody that things are gonna be great, the sales figures for May came in. Overall retail sales for the game industry in May dropped 14% to $743.1 million, the lowest monthly sales total since October 2006. Ouch.

To make it even worse, Microsoft saw sales of the Xbox 360 jump 39%, and Sony saw PS3 and PSP sales increase, though NPD is no longer breaking out the numbers... as I said before, the news was getting a little harsh each month so NPD has backed off from being so precise. Still, they did say that overall hardware sales dropped over 5% for the month. So if Microsoft saw big hardware sales, and Sony saw hardware sales go up for both its platforms, that means Nintendo had a really, really bad month. June numbers should tell us what impact the Wii price cut had... but it doesn't look all that positive right now.

Software sales really took it on the chin, with a 19% drop. Analysts blamed a light release schedule, and perhaps some dollars were shifted to the Call of Duty map pack which of course isn't tracked by NPD or anybody else (except for Activision, and they ain't talkin').

So aside from the uplift the industry got from the nice report last month, we're back to the steady decline of retail software sales. The fact that hardware continues to do well could be due to several factors. One is the increasing use of game consoles to watch Netflix, which is certainly the biggest time spent on consoles in my household. Sony said at E3 that 30% of Netflix traffic comes through the PS3, which is interesting... I'd bet more than that comes through the Xbox 360 given the disparity in installed base.

Another factor is probably the increased game play time of individual titles through multiplayer online play. If you spent $60 on Call of Duty, why by another game when you can play online with new people all the time? Refresh things with a new map pack and you've kept yourself from heading to the game store and dropping $60 on some new title that may or may not be as much fun.

Finally, the indie titles available online for consoles must be having some effect. Those titles can sell in the hundreds of thousands... and that's dollars not appearing on retail sales charts.

Total spending on games appears to be on the rise, but it's certainly shifting away from retail stores and from traditional console titles with no DLC. Sadly, this appears to be leading to even less innovation on major console releases at retail; just look at the E3 announcements and all you see are sequels. Original titles are as rare as an understated press release.

Free-To-Play For Any Game?

Free games coming soon...

When you're looking at different business models for gaming, one of the ones that usually pops up is "ad-supported." Meaning that advertisers would pay to present games to customers, who could then play for free. It's the network television model, where you fast-forward put up with some commercials in order to watch a show.

Now online game marketplace Gamersgate is attempting to bring that model to PC games with a new service, Freegames. A closed beta is opening up later this month, with the service expected to roll out in September. There'll be ads on the site, and ads while you download, and ads before and after you play. Like most of these ads, users will probably quickly learn to ignore them. Well, that's OK if they can still line up advertisers, I guess.

A more useful model would be the sponsored game, where some advertiser sponsors some downloads in return for the recognition and warm feelings a free game will generate. I think this sounds like a more useufl marketing tool.

Gamersgate is expecting to launch with some 200 titles, and is still busily negotiating with publishers over exactly what titles will be available. It's worth keeping an eye on this to see how it goes.

I expect it's going to be more helpful for larger publishers with established titles; advertisers are unlikely to rush in to support your unknown indie title until you've built some audience for it.

E3 Post-Mortem: Who Won, Who Lost

See full-size infographic here.

Now that the booths have been struck, the loudspeakers turned off, and the booth babes are fully dressed again, it's time to sort through all of the information, misinformation, hype and rhodomontade to figure out who won, who lost, and who's going to be up and who's going to be down in the coming year. Some interesting data on that point was compiled here by Webtrends, shown in the graphic above.

Adding up total mentions on the internet, Nintendo won with 43.1%, Sony had 31.2%, and Microsoft had 25.7%. Of course, it's not just who got talked about the most, it's what people said about it. Nintendo, going into E3, was certainly the favorite to get the most buzz, since they were introducing a new console.

Nintendo's introduction was certainly not an unqualified success. One very independent measure is what happened to Nintendo's stock price, which dropped 5.7% the next day and then another 5.2% the following day. Many people were confused by the presentation, which focused more on the Wii U controller than on the Wii U itself, to the point where some observers were wondering if Nintendo was introducing some sort of tablet gaming device instead of a new console. It didn't help that Nintendo was more than usually vague about speeds and feeds, leaving the tech journalists without much to talk about. Even when it came to game software, we were shown technical demos and some concepts about game design rather than actual games. Clearly this new console is quite far from being ready for release. It feels to me like Nintendo was rushed into announcing the device by the rather alarming drop in Wii sales over the past 6 months, and the disappointing 3DS sales, which between them has left Nintendo in rather poor condition.

Meanwhile, Sony had to spend part of its time apologizing for the massive security problems and the PSN shutdown. They did manage to redirect attention to their new handheld, announcing the name (PS Vita) and the price ($249). The name is about as enchanting as the Wii U name; Japanese companies seem to have problems coming up with really good names in the last decade or so (I still like Super Nintendo Entertainment System, myself). The price announcement was a surprise, and puts Sony in a good competitive position against the 3DS this holiday season. Assuming, that is, that Nintendo doesn't drop the 3DS price before the PS Vita release, which would be the obvious tactical move.

Microsoft didn't have any new hardware to talk about, which left them pushing existing hardware... specifically, Kinect. They showed Kinect enabled for nearly everything, though it was pretty clear that adding Kinect capability to a shooter is not exactly a must-have combo. Announcements for Xbox Live video content and new games were the primary news for Microsoft.

Publishers were, of course, mostly talking about their new titles. Electronic Arts was pushing their new Origin service, a combination of digital distribution and social network. Activision was talking about their new Call of Duty Elite subscription service. Both of these things mark the shift of the industry from purely depending on retail store sales to moving to digital revenue and subscription services.

Overall, I saw nothing coming out of E3 that would help the traditional retail sales market. It's harder than ever for a title to succeed at retail, unless it happens to be a sequel to a best-seller. Software sales through retail stores have sunk for three years running, and while sales of accessories have masked it somewhat this year, it's clear that trend will continue. Digital distribution and other business models are the future of the gaming industry. Some publishers seem to be fully aware of this, others are being dragged into it... and some are closing their eyes and hoping it goes away.

I think Nintendo has an interesting new console that will do OK for them, but it will not be as successful as the  Wii. Sony has a better handheld than the 3DS in their new PS Vita, but it remains to be seen if a $249 dedicated gaming device can really be a huge success in a world of smartphones and tablets with thousands of free games. Microsoft seems to be hoping that their Kinect, expansion of Xbox Live to Windows and smartphones, and the smartphone partnership with Nokia will be sufficient to maintain their leadership position in the console business.

I think huge changes are still heading for the console business, and Nintendo seems ill-positioned to meet those changes. Sony and Microsoft, at least, have worked hard on their networks for their consoles. Nintendo has barely acknowledged its existence. I fear for their future.

As for the game industry, E3 no longer represents the future. The revenue is quickly shifting to digital distribution, social gaming and mobile gaming. Console gaming will continue to be a major force, but it will no longer be the only game in town.

Wii U: The Future

The Wii U controller is bigger than a 3DS opened up.

Nintendo has to be a little disappointed and perhaps puzzled by the reaction to the Wii U introduction. Sure, the industry generally had nice things to say about it. Third-party developers actually got invited to be on stage for Nintendo's presentation of its new console, which is a first. They returned the love by saying nice things about the console, no doubt hoping that Nintendo will be more helpful with third-party development then they have been in the past.

The puzzler, for Nintendo, was what happened to Nintendo's stock price after the announcement. Wouldn't you expect that the stock, which had been trading near a historic low, would see a bounce when Nintendo actually unveiled their new hardware? Nope. Nintendo's stock dropped 5.7% the day after the announcement, and the day after that it dropped another 5.2%. Analysts, it would seem, are not impressed.

Of course, Nintendo pointed out that their stock dropped when the Wii was announced, too. And it dropped 10% when the 3DS was announced, though given how that's been selling a drop in the stock price seems like a reasonable response.

Certainly we don't really have all the information yet to really judge the Wii U. We don't know the graphics performance or the price point or the ship date, or what the launch titles might be or how they look. Yet there is cause for skepticism about the Wii U's chances. I doubt it will do as well as the Wii did. The Wii had two big advantages going for it: It was substantially cheaper than the PS3 or the Xbox 360 ($249 versus $499 or $599), and it had motion control. The latter was new and had some possibilities for game play, but many people were skeptical that it would really be useful. To some extent, they were right; the Wii controller was great for some new types of game play, but never really worked for things like shooters. Many developers never really put a lot of effort into the Wii, and it showed. The Wii sold very well, but ultimately the software library is quite disappointing.

The Wii U will be at least as expensive as its competition, and quite possibly $50 or $100 more (or even higher, if Microsoft or Sony drops their price in the next year). I doubt the graphics performance will be substantially different, at least to the naked eye; in fact Nintendo was showing Xbox 360 and PS3 graphics as part of their Wii U demo, passing it off as Wii U graphics, until they were caught at it. Which leaves the Wii U's controller as the only differentiator, and that's going to be up to software developers. Will they really put in the necessary extra time and effort to develop for the Wii U's special controller, or will they just port over titles and do something that's quick and easy in terms of supporting the controller? Given budgets for game development these days, I think we know the answer.

It will be up to Nintendo to demonstrate with their software how the Wii U is special, and if they do then maybe some third-party developers will spend the extra time and money to do the custom development work.

My guess is that the Wii U will allow Nintendo to compete more evenly with the Xbox 360 and the PS3, but it's not going to be a huge success. They really missed their chance here by focusing all their effort on the hardware. You'll notice there was no mention of online gaming, digital distribution, social gaming, DLC, or any of the other things that have turned the industry on its ear in the last few years. Nintendo doesn't really understand that stuff, and obviously hopes that it will all just go away and people will go back to buying new consoles because they are, well, new. I just don't think that's enough these days, and I think so far the 3DS is a pretty good argument in support of my position.

Nintendo's got a lot of software mojo, and if they produce some killer games with their iconic properties people will buy them, no doubt. But I don't think Nintendo will be leading the industry into new growth with this sort of hardware. They're still fighting the last war, and the battle has moved to new areas. Sony and Microsoft seem to have some understanding of this, emphasizing their networks, music, video, and other capabilities. Nintendo looks very 20th Century, I'm afraid. Great if you're a nostalgia buff, but not so great if you're hoping their stock price will soar.

Latest Gamer Demographics: 37 Years Old

Not an actual chart of demographic data.

The standard image of the gamer in the media is a teenage boy... well, the latest survey information shows that it's really teenage boys of all ages. And women, too. This survey is from the Entertainment Software Association (ESA), and it surveyed 1200 households across America. (The PDF of the full survey can be found here.)

Some key facts from the survey: The average gamer is 37 years old. Some 42% of gamers are female, and women over 18 make up more than one-third of all gamers.

Interestingly, some 55% of gamers regularly play games on their smartphones. Looks like there's more overlap than Nintendo would care to contemplate between gamers on traditional consoles and smartphone gamers.

This sort of demographic information is crucial to determining your marketing your plans. You've got to have a reasonable idea of how large your market is, and who you are aiming at, if you hope to do a good job of getting your message across.

Sadly, demographic information is all too hard to come by unless you're a big enough company to purchase surveys. The rest of us need to glean what facts we can from surveys such as this one.

PS Vita (NGP) vs. 3DS vs. iPhone 4/5, Round Two

Now that Sony has announced the most important piece of missing information about their new console (The price, not the name), and we have some sales history of the 3DS to examine, it's time to revisit the head-to-head comparison of the three major contenders for the handheld gaming crown. I first examined these three platforms in this post, after Sony first announced their new handheld gaming device.

Let's look at the hardware specs first. The 3DS has a 3.5" 400 x 240 screen on top (that's 3D mode resolution; it would be 800 x 240 in 2D) and the second screen below is 320 x 240. The PS Vita has a single 5" screen with a resolution of 960 x 544. The iPhone 4 (and likely the iPhone 5) has a 3.5" screen with a resolution of 960 x 640. The PS Vita has the largest screen that's close to the highest resolution screen, which is the iPhone screen. The 3DS has the glasses-free 3D effect which none of the other devices have, but for about 15% to 25% of the customers the 3D effect either doesn't work or produces nausea and headaches, or is just unpleasant.

What about graphics performance? Clearly the PS Vita, with its quad-core ARM A9 CPU and Power VR graphics co-processor has the others beat. The iPhone 4 has a single-core ARM-based A8 CPU, but the iPhone 5 is likely to have the same A9-based dual core CPU that the iPad 2 has. It still won't be up to the performance of the PS Vita, but it won't exactly be a sluggard, either. The 3DS has some custom silicon in there, so it's hard to say for sure how it compares. According to this article, the 3DS can put out about 30 million triangles per second, about the same as an iPhone 3GS and slightly less than a PSP. Which means it's way, way behind a PS Vita or an iPhone 5, by about an order of magnitude I'd guess. The fillrate in pixels per second is about 1.6 billion for the 3DS, which is definitely better than the PSP at 664 million or the iPhone 3GS at 500 million... but certainly way behind the PS Vita or the iPhone 5 (the iPhone 4 has a raw fillrate of at least 700 million pixels).

Finally, there's the price point comparison: The 3DS is $249, the iPhone 4 is hard to compare since it's under a contract, but you can get an 8 GB iPod Touch for $229, and the PS Vita will be $249.

I have to say that the 3DS doesn't stack up well at its current price point. Certainly its sales have been weaker than Nintendo projected, and it's currently limping along at a fairly low level. Nintendo is hoping that some strong software titles and more marketing spending will bring up its sales, but I think Nintendo will have to cut the price to $199 before Sony launches the PS Vita, or shortly thereafter.

Nintendo's big edge with the 3DS was to have been the 3D effect, but that's gotten a mixed reception from customers. Even Nintendo has been busy de-emphasizing its importance. Without that, thought, the 3DS doesn't have any advantages over the competition aside from exclusive software titles. Which is no small advantage, as Link and Mario and Starfox and others are a huge draw. It may not be enough for Nintendo to overcome the hardware and business model advantages of iPhones, the PS Vita, and of course Android smartphones and tablets. There are far more mobile gaming options than ever before, and smartphones and tablets have a variety of other features that make them extremely attractive.

Sony seems to be working towards having a variety of inexpensive downloads for the PS Vita, as well as movies, and perhaps will be more open to other functionality. Nintendo has said they will have 3D movies available, but 3D movies aren't doing all that well at the box office either. The 3D fad may have run its course... which would be a bad thing for Nintendo since it planned for 3D to be the major selling point of the 3DS (hence the name!).

The iPhone (and Android smartphones) have suffered from a lack of top-quality games, but titles like Infinity Blade have shown that it's possible to do some very impressive games for the hardware. (And with Epic Games announcing they've brought in more than $10 million dollars from Infinity Blade, it's clear you can make real money from these games, too.) I expect we'll see more high-quality games for smartphones in the coming years.

Verdict: On the raw hardware level, the PS Vita has the horsepower, the biggest screen and the best array of features. The iPhone/iPod Touch has an impressive variety of apps, many of them free, and quite decent hardware performance even though it lacks dedicated gaming controls. The 3DS is bringing up the rear right now, but with better software and a lower price point it could be quite competitive. Nintendo may well release a sleeker, less expensive version next year, and then it will be a different story.

Wii U vs. Xbox 360 vs. PS3: About Even

Wii U. Better than Wii Wii, I guess.

Nintendo has announced the final name of Project Cafe: Wii U. Just when you thought the Wii name was the strangest console name ever... Wii U. Nintendo introduced the console with some nice accolades from industry executives, some good-looking graphics videos, and plenty of laudatory exposition. Actual details about the hardware were rather scarce. Here's what we know:

• 1080P HD graphics output
• Controller with 6.2 inch screen, dual analog controls, touchscreen, camera, microphone
• Output can be from the Wii U to a TV or to the controller
• Backwards compatible with all current Wii controllers and games
• Games on proprietary optical discs
• 4 USB slots
• Release in 2012

What's missing? Well, you'll notice that what they didn't say is perhaps more important than what they did say. No mention of a hard drive in the console... so you can count the rumors that said there wouldn't be one as confirmed. If they were putting one in there they would have mentioned it. What they will have is some internal flash memory, size unspecified, and the ability to connect an external USB hard drive.

Graphics resolution? No specs at all, just some nice looking video. Which means that the Wii U graphics power will probably be around the level of the Xbox 360 or PS3, perhaps somewhat below. If the graphics output was substantially better in any way (resolution, polygons, texture mapping) you can bet Nintendo would have touted it. They didn't, so I think it's a safe assumption that the Wii U will not be setting any graphics records for home consoles.

The Wii U controller.

Price? No, no mention of that. Again, I think if they were planning to have a substantial price advantage over the Xbox 360 or the PS3 they would have mentioned it. Although, since they are more than six months away from the release date, keeping their options open is a good idea. Microsoft may well decide to drop the Xbox 360 price for the holidays, with the spectre of the Wii U looming for 2012. I'd guess that Nintendo will come in at least at $299, and quite possibly higher.

There was also no mention of digital distribution, any differences in how Nintendo deals with developers, or any of the new things that have been upending the game market like social games, free-to-play, or other new business models. Seems like Nintendo is counting on business as usual; if they were gonna do something different you'd have heard them talking about it.

It's not clear, either, exactly when the Wii U will appear. I'd guess earlier in 2012 rather than later, since this announcement will probably slow Wii sales even further (especially since the Wii U is fully backward compatible).

How does the Wii U stack up against its competition? Lack of a hard drive really cripples its ability to compete with downloadable content, or even streaming content that needs substantial caching. Assuming graphics output to be roughly the same, and the pricing to be about the same or higher, the real differentiation is the controller with the screen. Though Sony may have that covered with the PS Vita, and Microsoft has already shown a connection with Windows Phone 7 devices. The installed base of the Xbox and the PS3 are huge advantages, as are their software libraries. Motion control is no longer a unique feature for Nintendo. I think all the Wii U does is level the playing field; I think Nintendo is going to have to show some unique and compelling software titles for the Wii U to make inroads against the Xbox 360 and the PS3.

Sony Announces PlayStation Vita, Amazing Price

3DS, this machine's coming to get you.

Sony has announced the name for the NGP (Next Generation Portable): PlayStation Vita (pronounced VEE-ta). Yeah, I know, it sounds like something from Jersey Shore. Well, it's better than the Wii. Regardless of what you think of the name, though, the astonishing thing is that Sony announced the price: $249 for the Wi-Fi version, $299 for the 3G/Wi-Fi version.

Sony has thrown down the gauntlet at Nintendo's feet, pricing the PS Vita exactly the same as the current Nintendo 3DS. In a head-to-head hardware matchup, the 3DS pales in comparison to the gorgeous HD 5" OLED touchscreen, rear touch panel, dual analog controls, dual cameras, and amazing raw horsepower that puts it close to the PS3 in performance.

Given that the 3DS has not exactly set the world on fire with its sales or its features or its software so far, this is shaping up to be a real battle for the holiday season when the PS Vita finally ships. Nintendo has about six months to ship some really strong titles, encourage third-party developers to do the same, get some good marketing programs in place... and maybe reduce the price to $199 before the holidays. So far, the software for the 3DS has not been impressive, and the hardware is clunky, and customers don't seem to find the 3D effect more than a gimmick (and one that about 25% of the audience either can't stand or can't notice). I think the 3DS will have to be $50 cheaper than the PS Vita if it wants to be at all competitive. A better version of the hardware would be nice, one that was smaller and lighter with better battery life.

Sony's not ignoring the threat from smartphones, either, by making the PS Vita compatible with the PlayStation Suite for Android. Old PSP titles that were downloadable can play on the PS Vita, too. This all may not be enough to really deal with the threat of smartphones, but Sony seems to understand the nature of the problem, which is more than I can say for Nintendo.

It's shaping up to be an interesting Christmas this year.

How To Analyze E3 2011

I believe this refers to the level of hype.

The circus is in town this Tuesday, and it's going to be loud. That's always been the case with E3; at the beginning of the show it's not so bad, but gradually each display with speakers on it gets turned up louder in order to be heard better over the crowd noise and the other booths... and once one is turned up, nearby ones have to be turned up also... and before you can hack a Sony website, the expo hall is pulsating with the maximum volume output from hundreds of speakers. It's an almost physical assault on your body when you step in there.

Equally powerful is the onslaught of marketing hype. Claims are inflated, then pumped up a little more... then untethered from reality to float freely into the blogosphere. E3 is a cacophony of thousands of voices all shouting to be heard, waving shiny objects to catch your attention, and claiming to be the most important thing at the show. (Just check out this list of press conferences for the first day... imagine attending a dozen of those.)

How do you deal with this wave of information? How can you derive any useful data from it? First you have to decide what you're looking for, since there's many things you can learn at E3. Are you trying to find out what will be the hit games for a particular platform for 2011? That narrows your search considerably, and you can just compare lists of Top Games of E3 2011 from a batch of game enthusiast websites to find the names that recur on each list. Information found, and you didn't even have to sit through a press conference to get it.

If you're looking for something more subtle, such as industry trends for the next year, or whether Nintendo's new console will be a hit, answers will be harder to find. Determining industry trends may be easier from a distance than when you're actually at the show. I plan on sifting through the reporting on E3 to look for key pieces of information. For instance, what are the three most important announcements from the biggest companies? Finding out what they consider to be most important gives you a clue to where they will be putting their marketing emphasis in the year ahead... and you think about whether that is really something important that can change the industry, or is just another AAA game that might sell well but won't affect the direction of the industry.

Look for major new business initiatives, new investments, new hardware, new business models, acquisitions and mergers, major business deals. Ask yourself "If this things goes as well as it possibly can, how would it affect other companies?" If the answer is "Not much" then it's not an important industry event no matter what happens. Ignore it and move on.

Once you skip past the 47,000 new product introductions and just look at the list I mentioned in the last paragraph, you'll find it's going to be much easier to figure out what's going to be happening in the industry over the next year.

Oh, and in general you can expect companies to be cheery and upbeat about their prospects for the next year, regardless of whether or not they actually expect that to happen. They'll also probably be positive about the industry as a whole. Third-party publishers will likely say they are excited by new hardware (like Nintendo's Project Cafe or Sony's NGP) and think it's going to be a hot seller. Why? Whether or not they really do, they hope that saying those things will help make the hardware sell well... because if it does, any products they create for it will do better. So they're just trying to help themselves out.

Ignore all the happy talk. Look back at last year and see how positive everyone was about Nintendo's 3DS. It was awesome, killer new technology that would really boost the business for everyone. Uh huh. The reality is much more anemic. The 3DS has had a good first week and lackluster sales since then. We can hope Nintendo will boost its sales with some powerful new titles and heavy marketing spending, but that's by no means certain. Me, I think its problems go beyond poor launch titles and not enough marketing; I think 3D is a gimmick that people aren't really that interested in, and the hardware is clunky and expensive, and their business model is antiquated. All those things can be fixed... but I'm waiting to see if Nintendo begins to address them at E3.

So discount what industry types with a vested interest say about new hardware. Look for hard numbers when execs speak about their products. If they really are happy they won't be afraid to quote actual sales figures. If they say things like "We're thrilled with the sales!" rather than a specific number of units, they really aren't thrilled. You shouldn't be either, in that case.

Best advice: Follow the money. And follow the sales numbers. Don't follow the shiny objects.

More E-Book Publishing Options

The e-book field continues to evolve, as publishers and authors figure out that e-books can be more than just a regular book output as a PDF instead of a printed, bound version. A Spanish company, 24symbols, as recently gone into beta on a book publishing service that offers both ad-supported and subscription options. They are looking at reading e-books as a web activity, perhaps one that you do along with friends. They're exploring a variety of models, including the freemium model. It's a way to offer content in a variety of payment plans, offering a way to find more readers for content.

This kind of experimentation is important as we all are finding out what works and what doesn't. I'm sure the nature of e-books will continue to evolve rapidly. Which means that something that's the right course of action today may not be correct tomorrow. Stay flexible, and stay in touch with what's happening out there. Your profits may depend on it.

Android Market Share Jumps, Blackberry Sinks

Nielsen's numbers look very similar to Comscore's.

April's Comscore report on US smartphone market share, which echoes the Nielsen numbers, continues the trend we've seen over the past year: Android market share grows (up over 5% since January, to 36.4%), Apple's share grows a little bit (up 1.3% to 26%), and RIM's Blackberry market share heads for the depths (dropping 4.7% to 25.7%). Congrats to RIM, they now have a solid hold on third place and can look forward to fourth place if Microsoft succeeds in its alliance with Nokia to boost Windows Phone 7 into competition. Nokia had better get busy, though. Apple and Googl are rapidly moving targets, improving both their hardware and their software regularly. Nokia and Microsoft have to really come from behind.

At this point I'm not sure what features Nokia could really put into their phones that would significantly differentiate them from their Android and iOS competition. Nokia knows how to build sleek phones with good screens, but so do a lot of companies now. Even Nokia's volume advantage is not in play here...Apple's got huge numbers, and so do a number of Android phones, and it will be a while before Nokia could even match those volumes, let alone pass them significantly. So I don't see any price advantage on the manufacturing side.

Which leaves the software side for the advantage. Microsoft has an interesting interface, but they are woefully behind in lining up developers, much less a library of killer apps. Apple has a long lead in cutting deals with major media companies for content. What's Microsoft got aside from Xbox Live? Not much, honestly.. oh yeah, they have Skype now. But they wouldn't try to make that proprietary... it would kill most of the value of Skype. Still, Microsoft is trying hard, and they do have a lot of money to throw at the problem. They may come up with some competitive apps.

Meanwhile, Android continues to grow... but developers continue to struggle to make money on the platform. Apple continues to grow its market share slowly, but they seem to be a much better place to make money for developers. I suspect that new announcements for Apple at their developer's conference this week may help their growth numbers. Rumors continue to swirl about what to expect in the next iPhone, whether it may be a less major update than the last one. The more important thing to Apple's overall growth in iPhone numbers is going to be pricing. I'm sure they'll introduce a new iPhone at the high end of the price scale sometime this year. Will they then move the iPhone 4 down to a lower price? Probably, and that could mean a substantial boost in numbers. If Apple does indeed introduce a new iPhone designed to be smaller, lighter, and less expensive, that could also be a big boost.

EA Launches New Digital Distribution Service: Origin

Electronic Arts has been making serious moves into digital distribution, and is now bringing in more than 25% of its revenue digitally. They have been moving into social games and mobile games in a serious fashion, and now they're making a solid move into digital distribution with a new service they call "Origin." (Old-timers should not confuse this with Origin Systems.) The service will have 150 titles to start with, and will be the exclusive digital distributor for their new MMO Star Wars: The Old Republic. Obviously EA figures this will be a must-have title that will help drive business to their new digital distributor.

EA sees themselves as becoming a "software platform" and becoming a central hub for gamers. Apparently they feel they can accomplish this without pissing off other distributors or retailers, which will certainly be a neat trick if they can pull it off. We're seeing Activision trying to sell a premium service to Call of Duty fans, and I guess this is EA's idea of how to appeal to their fan base with more service offerings.

It does seem like a useful strategy for these companies to expand their digital offerings and try to connect gamers more strongly to their house brands. The success of these efforts depends to a large degree on how well they are executed. Certainly gamers are social animals, and like buying things online... but that's not the same as having them line up for these new offerings. Will EA still make its games available through Steam and other places? I'd assume so. Will their Origin service have exclusive offerings of games, or perhaps some DLC? Probably... if it doesn't have something gamers can't get somewhere else, why would they go there?

The real thing to watch will be the discounting. Will EA be able to maintain their full retail price for games as downloads? If they don't, retailers would certainly be unhappy. We are going to see just how well EA can segment off its distribution channels. They'll have some tricky maneuvering to do.

OnLive Gets 100th Game, Facebook Integration

OnLive has been busy working on new agreements, and at E3 they will be showcasing their 100th game, Red Faction: Armageddon, which will be their first exclusive PC demo. Now that the OnLive library has hit 100 (up from the 19 they launched with), it's going to have an easier time getting players to sign up. Which in turn should make it easier to get more games to join their library.

More important, perhaps, than the milestone of 100 games is the expanded integration with Facebook. OnLive is clearly planning to leverage the viral marketing aspects of Facebook games by integrating Facebook into their games. It's not just posting messages to your Wall, it's an attempt to add spectating, video clips, and other advanced features to all the games OnLive serves up, all plugged into your Facebook account.

Done properly, this could help OnLive get more new members as they leverage the social networks of their players. OnLive is also pushing a new SDK to enable developers to take full advantage of their Facebook integration.

Meanwhile, OnLive is also pushing into the UK this fall. I'm sure they will be looking at Europe soon after. PLus they have more announcements lined up for E3. They are putting out their story early, which is a smart move to avoid getting lost in the wave of announcements that will be coming out of E3.

While OnLive is trying hard, it seems to me their ultimate success is still in question. They've made it to 100 games, but their $9.95 a month all-you-can-eat service has about 50 games available. Otherwise, you can rent games for 3 days, or you can buy them. The advantage of buying them from OnLive as opposed to just getting them for your PC is that they will have the most high-end graphics available... though of course you will have to deal with potential lag issues. The 50 games on the service are not your most popular titles, of course. It remains to be seen if publishers will want to let OnLive get the rights to their most popular games.

The other issue is still the high bandwidth required for the service to work properly, and even then you can still get into lag situations. Perhaps these issues will be less important over time, but the marketplace is changing. Will OnLive adapt itself to what players want? It will be interesting to watch what happens.

Smartphones Are Game Controllers With New Tech

Just the other day I noted that Qualcomm has a new chip to make it easy to connect tablets and smartphones to HDTVs, by beaming the output wirelessly. If you already have your HDTV on the Internet (with an Internet-connected TV, or by a computer connected to it), now your connection to a smartphone is already here. Brass Monkey makes an SDK for game developers to turn smartphones (iOS, Android, and others) into game controllers, and they've just acquired Emotely, adding instant multi-user capability and HTML 5 support.

What's it all mean? Well, for starters, a variety of controller options for games that are being piped into your HDTV. Users can even create their own control configurations and share them. This technology is usable right away if you've got a web-based game that can be shown on your computer or your TV, and you can have up to 8 players in the game with a simple app. This will be a supercharger for the Apple TV/Android TV boxes, enabling very cool gameplay options. Instant party games where everyone hauls out their smartphones and plays the same game. Your smartphone, while lacking joysticks and buttons, has a dizzying array of sensors and a nice screen that can be configured in near-infinite variety to meet the needs of each game. Plus you can get hidden information... the drawbacks of a touchscreen as a controller are minimized when you have a screen dedicated to a control interface, rather than trying to have the screen do double duty as the play field and the controller.

I expect game developers should be all over this, as the SDK seems very flexible and easy to implement. It's going to be another nasty blow to the current console market. Sure, Nintendo's new console will have a controller with a screen... but they will be expensive and have several orders of magnitude fewer games.

Board games should be heading for the family room TV with this technology... it's a major opportunity for the adventure game field, if only they can figure out how to grasp it.

A tip of the hat to Steve Pieraldi for spotting this technology... it's definitely a gamechanger... ahem.

DC Comics Reboots; Digital Versions Get Same-Day Release

Superman, Aquaman, Green Lantern all have popped collars... it's a dark future indeed.

DC Comics has decided to reboot its lineup, possibly in response to the ongoing lawsuit with Siegel & Schuster heirs over the rights to some of Superman's basics (his costume, Lois Lane, Kryptonian origin, etc.). Thus they have a chance to eliminate the elements they might not control about Superman, and start the comics over again.

It's not just Superman, it's all of their major characters. They'll be revising costumes, starting 52 different comics from issue #1, and generally updating and revising everything. It's a major redo that's sure to piss off some old fans, but they hope to bring in many more new ones.

One of the biggest things about this redo is that DC plans to begin releasing the digital versions of their comics day & date with the print versions. This is going to ignite a firestorm of protest from retailers, no doubt. They feel the delayed release of digital titles is crucial to their business. They may be right... but the fact that digital titles are so ridiculously expensive has to be helping them.

This is an important step towards sanity in the comic book business. Let's face it, digital comics are the future. As tablets become ubiquitous, it's an opportunity to get past the high cost of printing and get a whole new generation hooked on comics. But as an entertainment value right now, comics suck. For $4 you get some fraction of an hour's entertainment (if it takes you an hour to read a comic book, you have bigger problems to worry about). You can get a good iPhone game for less than $4 and spend far more time than an hour playing it.

The real wonder is that DC and Marvel haven't figured out how to leverage the gold mine of their old comics. Thousands of issues gathering digital dust, because they're trying to sell them for $3 each. Insanity. Try some different price points and see how many thousands or millions of new comic fans you can create. The older the comic, the lower the price should be. It's the inverse of the printed product; who really cares about Spider-Man issues from the '60s? Complete story arcs for $1 or $2 would be a reasonable value.

Maybe this move by DC brings the day closer when comics will fully embrace digital distribution. Meanwhile, comics retailers will need to figure out how they will survive as the market moves in that direction.

Smartphones Converge With Set-top Boxes

Wireless HD video from your smartphone to your TV... made to order for gaming.

It's pretty clear that smartphone technology is heading for our family rooms, and a new technology announced by Qualcomm will help make it happen. Qualcomm's got a tri-band chip that will offer dual-band WiFi, Bluetooth, and 60 GHz wireless  video transfer for speedy HD video. So you won't need to hook your tablet or your smartphone up to your TV with a cable; you'll be able to shoot video right to your HDTV.

Sure, you can play videos you happen to have on your smartphone... but really, the benefit of this technology will be playing your smartphone or tablet game on your big screen. Your controller is also your game machine... and at the rate the mobile video tech is advancing, these game machines in smartphone clothing will be surpassing current consoles soon.

If you thought the possibility for disruption of the current console market depended on Apple or Google or others producing dedicated boxes for the family room, think again. The capacity to destroy the current console market could be built into every tablet and smartphone in a year or two. Keep an eye on what's announced at E3, and see if any of it will in any way be a useful response to this apocalyptic technology. I'm betting it won't be...

Portal 2 ARG Examined

You may recall the interesting Alternate Reality Game (ARG) that Valve ran to promote the launch of Portal 2. It excited some controversy, with some fans becoming upset that the game didn't work exactly as they had thought. The whole process is examined in depth in this Gamasutra article, which is worth a look.

The controversy arose because the ARG was designed to reward the players with the early release of Portal 2; the amount of time the release would be moved up depended on the amount of time all players spent on the indie games being promoted by the ARG. This wasn't exactly clear to everyone; some people thought the game would be released early merely if enough people purchased the indie game bundle.

This was a rather complex ARG with a lot of moving parts, and the article goes into depth on how the plan was created and executed. This is a good guideline for creating your own ARG, showing what sorts of considerations go into it and how involved the process can be.

I applaud them for their ambitious and creative marketing attempt, even if it had some flaws. Even the controversy helped them, I think, by publicizing the promotion.

Lodsys Still Trolling App Developers

An excerpt from Lodsys' blog posting. See, Apple made them do it.

Some guys can't take a hint. Even though Apple sent a public nastygram their way, the guys at Lodsys are not shying away... they've moved up their lawsuit filings apparently because of Apple's action. So some app developers (like Iconfactory and Wulven Games) are going to have to respond to the legal actions. Meanwhile Apple must be trying to sort this all out... and Android developers are next on the hit list. It does take some chutzpah to see if you can anger both Apple and Google at the same time. Lodsys' lawyers will no doubt be racking up more than few billable hours.

A nice way to kick off Apple's Developer Conference coming up... I bet there's a resolution by then, or at least a clear signal from Apple that developers need not be scared by this. Hey, Apple, I hope you're handling the legal issues for these small developers... it's tough enough making money on apps without some patent troll costing you all your profits in legal fees.

Paper Games Up, Origins Moves

Sales overall for the paper game business were up in the first quarter of 2011, led by stronger sales of collectible card games. The two leaders in RPGs are D&D and Pathfinder, with Pathfinder making a stronger showing in the hobby stores while D&D does better in mass market channels. I think it's pretty clear that the old-line gamers tend to prefer Pathfinder to the new edition of D&D.

Meanwhile, Hasbro's sales were down 12%, and it's reorganizing its games group and relocating it to Rhode Island, in the process laying off 75 people. Wizards of the Coast is doing well, though, on the strength of recent Magic: The Gathering sales.

In other gaming industry news, the Origins convention is moving from its traditional lat June/early July dates to late May/early June, beginning in 2012. Why? To cut costs for exhibitors and attendees, since the convention hotels offer lower rates earlier, and airfares would also be lower. This has the added benefit of moving it further away from GenCon, so the two big summer cons have some breathing space in between.

Board games and non-collectible card games have been holding their own in the hobby trade, but mass-market sales have been weak. I expect that the wider availability of inexpensive games on smartphones and tablets to continue to pull dollars away from traditional games.

The big transition that's staring the RPG industry in the face is the move to e-books. The high prices that many publishers place on their e-book versions of their RPGs is not sustainable. Just as we've seen indie authors undercutting traditional publishers in the e-book space tending to drive e-book prices down, similar pricing pressures will move e-book prices down for RPG books. The publishers are going to have to change their business model, which is never easy. As tablets really take hold, customers will value properly prepared e-books for that form factor. This will take extra effort, but when you no longer have to worry about printing costs there's some room in the budget. Print-on-demand should be able to take care of the traditional hobby store market, though special editions will always have a place if your fan base is big enough.