Game Marketing Tips, Analysis, and News

Monday, January 31, 2011

NGP Vs. 3DS: How Sony Can Win

Sony has surprised me in several ways with their most recent announcements. First, I didn't expect that they would put so many features or so much power into the NGP (Next Generation Portable, formerly known as the PSP2). The device had been rumored for so long I was afraid it had lost its way. Apparently Sony has been busy seeing just how many things they could stuff into it, and the answer is: A lot. If you gave me a clean sheet of paper and asked for a feature set that would be possible (maybe not reasonable)  for a cutting-edge handheld gaming device, it would pretty much look like the NGP. About the only thing I can think of that they left off is an HDMI output, and I can see why they might not want to do that... it could impact the PS3 if you could plug an NGP into your TV set.

The elephant in the room, though, is the retail price. Sony won't say what the NGP will cost, and the cost could be so high it could strangle sales for a long time. (Remember the PS3 at $699? Ouch.)

I remember the PSP introduction, and it seemed like an amazing piece of hardware... but it was expensive. And the capabilities were never realized for a long time; not enough cool games, awkward attempts at movie sales, no online store for music, movies, etc. The device did quite well in Japan, but never was a big hit in the USA. The DS juggernaut squashed the PSP, and price was an important reason. Another was the DS's array of interesting and useful capabilities, like the dual screen, the touchscreen, the microphone, and so on. Game designers got creative, and there were many interesting games. The PSP never had enough games... although that's been changing, but it was too little, too late.

Enter the second big Sony announcement, which in some ways may be more significant than the NGP: The Playstation Suite. Or as I like to think of it, Sony's Playstation Android Terminator, a heavily armed, unstoppable device designed to seek out and terminate its target: The 3DS.

Wait, what is this Playstation Suite? It's a software development toolkit and specifications for putting PS One games on Android phones. There are many details left to fill in, but it looks like any phone that runs Android 2.3 will be able to handle PS One games (assuming the hardware is beefy enough... which most any new Android phone is). Sony will be selling PS One games on Android phones, raking in revenue for games that they wrote off all costs for many years ago. Better still, they'll be getting people interested in Sony games, perhaps looking for sequels on the PS3 or the NGP. I'm sure Sony is exploring the possibility of making the same thing available on the iPhone or the iPad. And I'm sure the Playstation Suite will be working just fine on Google TV, which (no coincidence) is built into some new Sony TVs.

It's a brilliant strategy, one that Nintendo would do well to emulate... but probably never will. They're apparently going to stick with their business model, regardless of how the world might have changed.

Sony, at least, seems well aware of the changes in the marketplace. Sony's not dismissive of smartphones and the impact they've had on mobile gaming; Sony is actively looking to harness that power to their own ends. Nintendo prefers to pretend that smartphones have absolutely no effect on Nintendo's sales.

Sony's executives clearly know the market and what it will take to succeed. They've put together a handheld gaming device with a quad-core processor, a 5" OLED touchscreen, dual analog joysticks, a backside touch panel and a full array of sensors and networking capability. This puppy makes the 3DS look like a DSi with a 3D screen gimmick tacked on and a bit faster processor, which is about what it is.

What does Sony have to do to win?

Three words: Price, Price, Price. Those are the three most important things. The sheer size of the feature set makes you wonder just how much Sony will sell it for. I could easily see a $499 price point, if not more, if you needed to make a profit on every sale. If they price the NGP there, it's pretty much going to be a lovely thing you'll never see in the wild. At $249 they would stomp the 3DS flat. So how much can Sony afford to lose on each unit? That's an unknown. I'm sure they'll hold off on pricing as long as possible, waiting to see what the component prices will be when they actually go into production... and what the game lineup looks like, and how much they can expect to make from it. If the NGP is over $299 it's going to be tougher to get good sales momentum.

Unleash The Media. No, not the Kraken... though maybe that would help, if it could take on some recalcitrant executives within Sony. This device should do what the PSP should have done: have a full array of movies and music available to play on it. (See iTunes for hints on how to do this.) Sony owns a ton of media; if they can just boot a few executives out on their ass in those divisions, maybe they can get some cooperation. Digital distribution is the future of media. The NGP should have books, music, movies, TV, and the Internet...sell them all and you will make a mint, Sony. Don't worry about cannibalizing your other devices; better you than some other company. Like Apple. Duh.

The NGP Needs Apps. Not just games, Sony. The NGP should be able to handle just about every App in the App Store or the Android Market. Make it so. Open the doors to developers, make it easy to get an App in your store. The NGP needs a full range of capabilities to compete with smartphones. You don't have to build them; just give developers the invite and then stay out of the way to avoid getting trampled.

Embrace new revenue models. In-app purchasing, baby. Freemium. Include some free games with the NGP that have a freemium model, and watch the dollars roll in.

Skype. You don't need a phone carrier. Just a killer Skype implementation. There will be a 3G version of the NGP; with that and Skype you can compete with a smartphone very nicely, thank you very much.

DLC. Sell the add-ons to games, new and old. Extend each game in every way you can, and let the fans pay for what they want. Sure, give out free stuff to chum the waters; you'll get plenty of bites on the pay stuff.

Connect to the PS3. Use the Playstation Network. Make sure every NGP owner wants to become a PS3 owner, if they're not already. Have some games use an NGP as a cool add-on (hidden information).

Sony, you have shown hardware that can take the handheld gaming crown away from Nintendo, and defend it against the smartphones. Now it's all about the execution... so do it right.

Friday, January 28, 2011

7 Ways Nintendo Can Win

It's possible for your fans to be too devoted.
Nintendo's been around since 1889, so they have seen business cycles a time or two. They have been up, and they have been down, but overall they've continued to thrive. Lately they have been looking a little tired, as the Wii begins to show its age, and the amazing run of the DS line is also beginning to weaken. As far as the world knows, Nintendo is not planning any immediate changes in the Wii product marketing strategy, and appears to be pinning its hopes for 2011 on a successful launch of the 3DS, their new handheld console. They need something to look forward to; profits have dropped 74% since last year, and sales are down significantly in all areas. Nintendo has lost its mojo; can they get it back?

The Wii still has life, but not at $199. The time has come for another price reduction for the Wii; the last time it was reduced was in September of 2009. It should be obvious to anyone that the Wii has not been able to keep its sales numbers up against an Xbox 360 and a PS3 priced $100 more; the 360 outsold the Wii over Christmas, and the PS3 was close. Don't wait around, either. Drop that price now, before the 3DS dominates the story. Renew your commitment to the Wii; make sure the fans know about some killer new games coming for it. At $149, it should see a nice sales boost. Plan to send it into orbit for Christmas 2011 by dropping the price to $99 in September. Let's see Microsoft and Sony go broke trying to match it. Use the higher sales numbers by making a greater effort to attract third-party developers. Revamp your publishing program completely; you want Nintendo to be know as the easiest manufacturer to work with, rather than the most difficult one.

Get creative with the Wii. A price drop is nice, but you need some innovation. Look for a deal with a TV maker to build a Wii into their TV sets. Get the Wii built into minivan entertainment systems for the kids. Make a special bundle for afterschool programs with fitness titles. Create some PR! Get out there and generate some more stories.

The Wii 2 is overdue. You've missed the window for 2011; the clock is ticking for 2012. If you still want to sell a lot of consoles, you're going to need a new one. The Wii is underpowered and not HD capable, and the games are showing it. The Xbox 360 and the PS3 now have motion control options, taking away the Wii's one unique ability. So it's time to change the equation.  Sure, better graphics performance and HD output are a must. Don't try to outmuscle the competition, though. You need to outsmart them. Some spiffy new interface idea would be great, if you've got one tucked away. Improvements to motion control? Other types of sensors? Whatever you can throw in there. Most important, though, is a strong online component, traditionally your area of weakness. This has to change. You need the best online interface, the best environment for players, the best set of downloadable software. And price it all at $299 for the hardware, if not less.

Make the 3DS more than just a game device. You're competing against smartphones with thousands of capabilities. You should at least make it easy to play music and videos. There have been hints you'd like to play 3D movies; get busy and make it happen. I don't see a downside to putting a music and video player on this thing, though I guess storage is the main constraint, but since you have an SD card slot you'll at least be able to put a few GB in there (and it comes with a 2 GB card). While you're at it, open up the eShop to non-game apps, and let developers expand the machine's capability. The whole App Store thing has been instrumental in Apple's iPhone success; why not use that idea yourself?

Reduce the DSi price. Yes, I know you're hoping everyone buys a 3DS, but $249 is too much for many people. Drop the DSi to $99 and watch the sales soar again, especially when you point out they can use the DS games they buy on the 3DS when they get one of those later.

Really leverage your library. Yes, it's cool you can buy old NES games for your Wii... but the pricing is absurd. Why not experiment with prices and see what price point maximizes your revenue? You can always change those digital prices. While you've got the hood open, why not steal Sony's great idea and make your old games available on iOS and Android? It's more revenue; it's great advertising; and it might get people hooked on your iconic characters, whose latest adventures are only available on your proprietary hardware. I know you've been afraid to do this lest you slow sales of your hardware, but that that's not really an issue for old NES and SNES titles, is it?

Innovate. It's really nice that you have a slew of great characters that people love: Mario, Donkey Kong, Link, Kirby, Samus... but when's the last time you created a new one? Sure, keep doing new titles with familiar characters, but take a stab at making some new ones, too. Innovation is not doing a new Mario game, or even coming out with a Wii in a red case instead of white. Come up with something new in your games. More than that, innovate with your business models. Really embrace digital distribution. Try different monetization schemes; have you heard about free-to-play and how much money it's making? Enable in-game purchasing and watch the dollars roll in.  Try licensing some of your characters to an MMO or a PC game... or a theme park or a new animated series.  Hell, just a series of digital comics released on the 3DS... 3D digital comics, that is. Get some buzz going about all the cool stuff Nintendo is doing... which means you have to do some cool stuff. Get busy!

Will Nintendo actually do any of these things? Maybe, but they'll probably do them later rather than sooner. Management seems averse to sudden movement or change. Perhaps continued poor financials will goad them into swifter action, but I'd hate to see it get to that point. If Nintendo can rev up their engine this year, we'll look back on this as just a minor rough patch for them. I hope that's what happens.

Thursday, January 27, 2011

PSP2 (Now NGP) Vs. 3DS Vs. Smartphones: Who Wins?

2011 will go down in history as the Final War for domination of handheld gaming. The declarations of war have been made (in the guise of launch events for the gaming press), and the machines of war are heading to the battlefield. Three platforms enter... will only one leave? The situation is more complex than that.

Nintendo plays the role of Rocky Balboa, the scrappy kid who became the world champ a long time ago and has been resting on his laurels far too long. Sure, he's been in training some, had some bouts, made a few minor comebacks with the DSi and the DSi XL. But sales have been dropping... Nintendo just announced their latest numbers, and have once again revised their sales estimates downwards for the fiscal year, as their profits have dropped 74% and DS sales will end the year with about 22 million sold, for an all-time total of about 145 million.

Nintendo's war machine for this battle is the 3DS. It's basically a DS with a faster processor and a 3.5 inch 3D display, with a resolution of 400 x 240 in 3D mode. The trick is that the 3D effect doesn't need glasses, but the battery life of the 3DS is a fraction of the DS; 3-5 hours instead of 12-15. The price is $249, and games will be in the $40 to $50 range. Backwards compatibility with DS games is included. The 3DS ships at the end of March in the US. Nintendo's got Rocky Balboa who's been trying to get back into shape.

Sony has finally opened the kimono to reveal the PSP2, now called (for the time being) the NGP (Next Generation Portable). It's got a 5 inch screen at 960 x 540 resolution, dual analog controls, a back-of-the-unit touchpad for control, an Organic LED (OLED) touchscreen, a gyroscope, accelerometer, compass, GPS, front and rear facing cameras, an ARM Cortex A9 quad-core processor, an SGX543MP GPU (a PowerVR chip), 3G, Bluetooth, WiFi b/g/n, and a new flash memory storage for games. Plus backwards compatibility with PSP games. It will ship around the end of 2011, and the price is as yet undisclosed. But you can bet that it won't be cheap; with that spec list I'd put it around $399 at least, that's if Sony wanted to make money on the device from the hardware sales alone. Sony has Ivan Drago (Dolph Lundgren from Rocky 4), the incredible physical specimen with unreal stats.

A glimpse of Sony's NGP.
The final contender is the iPhone 4, and probably this summer the iPhone 5 (as yet, still just a speculation). The current iPhone 4 has an Arm Cortex A8 processor (Apple's version, the A4 chip) with a PowerVR GPU, a 960 x 640 3.5 inch screen, front and rear cameras, full sensor array, and an App Store stuffed with 300,000 titles. The rumored iPhone 5 will use an ARM Cortex A9 dual core, along with a spiffier PowerVR GPU. Apple's bringing a Mixed Martial Arts expert to this boxing match. Pricing will probably be around the current iPhone 4 pricing, with the iPhone 4 moving down to $99 (subsidized) and the iPhone 5 at $199 or $299 (subsidized).

Really, Nintendo's decided to once again avoid battling on sheer technical specs of resolution, polygons, and processor speeds, and instead try to do something different. This is how they succeeded with the Wii; knowing that Microsoft and Sony would be shooting for the most power in a console, Nintendo opted to be different with the interface, and won handily. The 3DS is a hope that 3D without glasses will be a hit with gamers, much more so than mere polygon counts. It's not an unreasonable hope.

Sony's decided, apparently, that the way to win the handheld market is sheer muscle. Bigger, better, faster, stronger, as well as cooler. Interface? Sure, let's throw in all of the sensors and interface ideas we can, and perhaps something awesome will emerge. Actually, it's not an unreasonable hope; give game developers a lot of different tools and they will surprise you every time.

Apple's competing against phones, not handheld gaming devices, but their iPhone 5 will be a pretty close match to Sony's NGP, at least much closer than the 3DS. If game developers can really start to charge somewhat higher prices for really awesome games, perhaps the return on investment for iPhone game development might look more like handheld game development.

Android phones will continue to march along with a wide variety of hardware specs, but you can bet on increasing processor power and more attention to GPU strength. The best Android phones will likely be pretty competitive with Apple's iPhone offerings.

The interesting part is beyond the hardware specs; it's the software and online offerings. Nintendo is trying to advance a bit, ditching the unbelievably awkward Friend codes and moving to a somewhat easier multiplayer matching. They're touting their eShop as a way to buy less expensive games, but of course they will continue to keep those games completely separate from the full price games sold only at retail stores. Sony's got more interesting things going on, with a development environment designed to bring Playstation games to any Android device. This is a brilliant move, basically trying to coopt the smartphone market by bringing the Playstation games to them. It's not clear what pricing will be like, but the really interesting part is that Sony's trying to make it easy for developers to bring games to any platform.

Meanwhile, Apple's going to make progress in the game market without really trying, as they work to compete in the phone market.

Here's my assessment of the three contenders.

Nintendo'ssmartphones and computers. Nintendo's not really changing its business model, and mostly ignoring the digital possibilities, and that will become more and more of a problem for them in the future. They really have to put some serious effort into their digital offerings if they hope to compete. I think Nintendo will have a good launch, but I think by the summer they will be selling 3DS at a rate lower than the current DS rate unless they lower the price.

Sony's exceeded my expectations on their hardware; they are clearly swinging for the fences. They have obviously spent time thinking about the current market, and their Playstation Suite plan is a good response with lots of possibilities for the future. The major question mark is the price; if it's $399 I think it will merely be a niche product. Even at an aggressive $249, it's going to be a touch sell given its size (see below).

Still, there will be multiple SKUs and perhaps some interesting phone-like capability (built-in Skype would be amazing, especially with reasonably priced 3G connectivity options) which may make it a reasonable choice for your only pocket device. Sony will probably want to see a range of full price games, but they're liely to have many more low-cost game choices than Nintendo.

Apple's certainly going to keep introducing better devices, but they'll never add dedicated gaming controls like an analog joystick. Still, they have established themselves as a huge game market without hardly trying. If they finally activate the Apple TV app store and bring those games to the family room, the whole issue gets even more complex. Apple will be hampered if they fail to develop a market for higher priced games, but at least for the iPad and the iPhone 4 there are some encouraging signs.

For developers, it's just getting more difficult to make choices. You have to decide on allocating your development resources, and that is getting tougher. One thing's for sure, though: Develop your brands and milk the IP you create as much as you reasonably can. Any game you create should be considered as a product line, not just a product. The development is an ongoing process, and so is the marketing, not a one-off event that you fire and forget. Create something that's extensible, refine it, make it popular, then put it on everything that uses electricity.

Tuesday, January 25, 2011

Facebook Drops The Bomb

Yeah, winning loot is easy... if you're Facebook.
The move was inevitable; the only question was when it would happen. We now have the date for the nuclear event: July 1, 2011. That's when Facebook will require all Facebook Games to implement Facebook Credits, which means a cool 30% rakeoff for Facebook.

Oh, it's not exclusive; developers will be free to use their own credit system as well as Facebook Credits. But all games will have to use Facebook Credits. Facebook will also offer incentives for developers that use Facebook Credits exclusively, such as premium placement on their Games Dashboard and special promotional opportunities.

Rumor has it that Zynga ships Facebook $30 million or so every month for its share of Facebook Credits; I'd have thought it would be somewhat higher. Clearly this will help Facebook reap more revenue. But it also has benefits for developers. A unified currency will benefit smaller developers, because a user will already likely have Facebook Credits handy... so they won't have to pull out their wallet to buy something inside your game. Yeah, it's a bummer for games already on Facebook, as they stand to lose 30% of their revenue stream. But this has been clear for almost a year, so companies have had plenty of time to adapt to it.

Facebook's giving some warning so there's still time to modify the plan based on feedback from game companies. (Feedback: The high-pitched whining noise coming from game developers.) I can't really blame Facebook for wanting to get their cut of the action, and Facebook Credits do offer a useful service. Companies thinking about putting a game on Facebook will just have to decide if giving up 30% of the income is worth the additional exposure; I'd bet it is in most cases. But companies will do well to create their own brand, identity, and gaming possibilities outside of Facebook as well, so they aren't too dependent on what moves Facebook may make in the future.

The largest social game companies have been busy doing just that in the past year or so. Mobile gaming is a major growth area for them. But the Facebook juggernaut is heading in that direction, too... it's a rapidly evolving market, fraught with danger for the unwary or the slow to change.

Monday, January 24, 2011

Dead Space 2 Marketing

EA's gotten creative with their marketing for the upcoming Deadspace 2 game. Their marketing team figured that, hey, this game is not going to be your mother's favorite video game, and someone must have said "Let's prove it!" So they brought in dozens of mothers and filmed their responses to clips of the game, and now they're busy marketing the game as something your mother will hate.

Personally, I'm pulling for it. At least it's nice to see some creativity displayed in marketing efforts. It's funny, and it certainly acknowledges the target market. It also illustrates a key marketing principle: Don't be afraid to give up a market in order to better target a more important market segment.

It's also worthy of note because this is a technique you can use even without a massive marketing budget. Sure, EA is spending money to get the word out about the videos, but you can achieve much of the same effect by making your own video and putting it on YouTube, then working social media to help it go viral. If you've got an interesting enough idea behind the video, you can get a lot of attention.

Is the game any good? Well, some reviewers seem to like it. I certainly think the marketing efforts are worthy of note.

Friday, January 21, 2011

3DS vs. iPhone 4

It's kind of sad really. The King is dead; long live the King. Nintendo has announced more details about the 3DS, the most important being the price: $249 in the U.S. It's cheaper than the price in Japan (which is equivalent to $300), but it's still an eye-opener for this market. Software prices have not yet been announced, but Nintendo has signaled that they will be higher than DS software prices; expect prices to range from $40 to $50, or possibly even higher.

This is coming at a time when Nintendo has just lost the title of best-selling handheld gaming device to Apple. Apple now has over 160 million iOS devices sold, compared to 145 million DS series handhelds sold worldwide. Worse, in 2011 Apple is probably going to sell around 100 million iPhones and iPod Touches, along with perhaps 40 million iPads. Nintendo in their wildest dreams may sell about 30 million DS devices of all flavors... a fraction of what Apple will sell.

Yes, but the 3DS has 3D without glasses. True, and it may look pretty neat. But it's also probably not good for long play sessions due to eyestrain and headaches. Nintendo's got the answer, though; the battery life of the 3DS is only good for about 3 or 4 hours of 3D game play anyway (compared to 12 to 15 hours on a DSi).

Let's compare tech specs: Screen resolutions... the iPhone 4 is 960 x 640 on a 3.5 inch screen, while the 3DS has a 400 x 240 3.53 inch screen (800 x 240 in non-3D mode). Processors? The iPhone 4 has a Cortex A8  running somewhere around 800 MHz along with a PowerVR graphics chip at some unknown clock speed; the 3DS is running at 200 MHz. Cameras? The 3DS can take 3D pictures... at VGA resolution (0.3 MP), which can only be displayed on the 3DS. The iPhone 4 can take 5 MP pictures, along with 720P video. The iPhone 4 has a raft of other sensors like GPS, compass, gyros, motion... the 3DS can sense motion.

You can get an 8GB iPod Touch for $229, or a 32 GB for $299. Same as an iPhone, but without the phone contract... the phone prices are subsidized, of course, but you can get one for $199.

This is all leaving out the (rumored) iPhone 5 that will probably be arriving this summer. No one knows what features it will have, but the likeliest is a new processor: the A5, which supposedly is a dual-core monster which delivers 4x or 5x the current performance with graphics. If Apple follows its usual practice, the current iPhone 4 will be moved down in price while the iPhone 5 will occupy the current price slots.

When you look at software like Infinity Blade for the iPhone 4, it's pretty damn impressive. We'll see more of this as the iPhone audience expands, and developers realize the potential of the devices. The platform is getting yearly upgrades, and it's just going to zoom past Nintendo. The disparity in 2 or 3 years will be shocking.

I'm sorry to see Nintendo go. It's a wrenching change for the game industry, with a whole different series of development and marketing challenges ahead. Oh, Nintendo won't just vanish right away. The 3DS will have a lot of sales, lots of laudatory reviews and game industry execs touting its virtues so they can sell software. But ultimately I think consumers will continue to flock to smartphones and tablets at an order of magnitude higher rate than the 3DS (I didn't bother to add in the Android market to the above discussion). Any publisher is going to want to direct its resources to the biggest market. Yes, having an early title for the 3DS will be a moneymaker... but there's even better potential in smartphones. 2011 will be the year mobile game revenues (smartphones and tablets) pass up handheld game revenues (3DS, PSP2, DS, and PSP). And the gap will just grow wider.

Thursday, January 20, 2011

Androids Kongregate

In rapid succession, Kongregate announced the debut of the Android App in the Android Market. Woo hoo, say gamers. Over 300 free Flash games now available on Android. And then, later that same day, it gets pulled by Google. Why? No one knows.

The idea of moving Flash games over to a mobile platform does sound interesting, offering new users and potentially some paths to revenue for the developers. Advertising revenue? Could be. Perhaps even in-app purchasing, when Google gets around to that some day. Since Flash is not welcome in Apple  territory, Android would seem like the perfect place for Flash games to find a home.

Alas, it's not happening. At least not right away. Maybe we'll find out more soon, or maybe the app will reappear.

Wednesday, January 19, 2011

iPhone Games Market 2011 Will Be Huge

Apple pulled out all the stops for the last quarter (their fiscal year Q1) and bettered not only their best quarter ever (that would be the previous quarter, at $20.34 billion), but even beat their own estimates of $23 billion to rack up an astonishing $26.74 billion in revenue. A healthy chunk of that, $6 billion, was profit.

What was responsible for this? Everything. Over 16 million iPhones sold, a year-over-year growth of 86%. Over 7 million iPads (now there are over 15 million iPads out there). iPod Touch sales were up 27%., so it's not just iPhones out there. Oh, and 4.13 million Macs and 19.45 million iPods were sold, too. Apple could have done even better had they been able to build more of everything. The iTunes store took in $1.1 billion, too.

Some other key facts to chew on: The iOS device market is now at 160 million. Apple has about $60 billion dollars in cash, in the bank. Over 80% of the Fortune 100 companies are testing or deploying the iPad now.

So what does this all mean for games and e-books?

In 2011, look for a huge explosion given the Verizon iPhone will send iPhone sales for Q1 to the 21 million unit neighborhood, or maybe beyond. Apple could be looking at selling over 100 million iPhones and iPod Touches this year. And perhaps 30 to 40 million iPads. And now that there's a Mac App store, and Mac sales keep growing, there's yet another easy place for developers to market their iPhone games (a quick port to iOS is the work of a week or two). E-books will find an even broader market with that number of iOS devices growing so rapidly.

There is a dark side, though: It will get even harder to get noticed. Sure, successful games from well-known companies will get an even bigger market. But new games from unknowns will have even more competition for awareness. Marketing iPhone games will be getting harder, not easier.

As for Nintendo, I think it's game over, man. Look, this year alone Apple will be selling nearly as many iPhones as all the Nintendo DSes ever sold. Sure, sure, the 3DS will sell a bunch. But it will never be the best-selling handheld game console, nor even close. Apple is running away with that title. And Nintendo can never catch them.

Tuesday, January 18, 2011

Kinect Moving Faster Than Move

A survey from six months ago, before the releases.
Some numbers provided by industry analyst Michael Pachter point to a rather disappointing sales result for Sony, at least when compared to Microsoft. Seems like Kinect bundles outsold Move bundles by 5 to 1 in December. And the two top Kinect titles outsold the two top Move titles by 13 to 1. Microsoft claims to have shipped a total of 8 million Kinects thus far, which is not the same as sell-through, of course. Still impressive, though.

 Ultimately, I suspect Kinect has importance for Microsoft beyond games. They hope it can be a catalyst for selling more Xbox 360s for non-gaming usage, as a useful interface for watching movies and other non-gaming activities. I remain skeptical about that, though I think Kinect has more of a shot at that than the Move. Will either mean a big market for motion control games on non-Wii platforms? No, not unless they're packed in with each and every console sold, which isn't likely to happen any time soon. If ever.

Marvel Comics Shows How Not To Price E-Books

Digital comic pricing? It feels about like that.
Digital comics are priced in a wide variety of ways. You can read Marvel digital comics online, via your web browser, for $10 per month (or $5 per month if you buy a whole year at once). 6,000 issues are available to read, with more being added regularly. This is in contrast to their iPad application, where each digital comic costs you $1.99. Meanwhile, they have digital comics collections on DVD for $50 each, where you might get (say) 500 issues of Amazing Spider-Man. Yet they stopped authorizing these years ago.

New comic books cost $2.99 in a retail store (mostly), or you can get the digital version for less... if you care to wait. Some companies (like Archie Comics) are making digital comics available the same day as the print version, for $1 less. This is, of course, pissing off comic book retailers (those who still exist).

What a mess. Not even counting the clumsiness of Marvel's digital comics reader.

Some have argued that Marvel has to have a consistent price for their comics, regardless of the age of the comic. Why?

Comics that were created decades ago were also paid for long ago, and all costs written off. The costs now are for digitization and for the bandwidth necessary to get the comics to the reading device. Perhaps non-trivial, but thousands of comics have already been digitized. Bandwidth is cheaper all the time.

What's wrong with how Marvel is pricing their digital comics? I see no sign that they are trying to optimize their revenue by experimenting with pricing. They have a marvelous (pun, as always, intended) opportunity because of the vast size of their catalog to try dynamic pricing experiments to find the optimal revenue point. Bundle groups of comics at different price points; you've got so many comics you can easily do A/B comparisons. Gather lots of data on how many you sell, and find the optimum price point to maximize revenue. Apply to your entire comic library, and sit back to watch the profits roll in. And not incidentally, revive comics as an art form.

OK, there are issues to be resolved with newer comics, especially if you're trying to keep retail stores going. But $1.99 for each comic on an iPad? I really doubt that's the optimal price. Tablets are poised to become a huge market in the space of the next year, and comics are a perfect fit for the medium. Yet the companies with vast libraries of comics, most of them never seen by prospective audience, are pricing them way beyond the buyer's desire. Wouldn't someone be interested in the early days of the X-Men or Spider-Man? Sure, but not at $2 for 20 pages of (let's be honest) rather lame artwork and story by today's standards. How about if you could read the first 100 issues of Spider-Man for $10? You'd probably jump at the chance if you're at all interested in the character, because that's a lot of content for the money. And not a lot of money to risk. Sure, it's not the $200 Marvel could have made... but how many people are they really going to make that from? Maybe 100 people? And how many would buy that for $10? Perhaps 10,000? The math isn't hard.

This is the same idiocy that's occurring in the music industry. Record companies have vast collections of music that was all bought and paid for decades ago. Yet they're trying to charge a uniform price for it. (OK, this one is primarily Apple's fault for enforcing a 99 cent standard... but the music business has gone along, when they weren't pushing to be able to charge even more for a track.) Is that really the optimal price? How would you know for sure without extensive price testing?

Book publishers are looking at the same issue, and stupidly making the same mistake. They're trying to price e-books near the price of physical books so they don't hurt those sales. At the same time they're trying to get everyone to believe that e-books cost nearly the same to produce as physical books, which is why they should be priced the same. Maybe the office overhead is the same... but for books created decades ago, that office overhead was long ago paid for or written off. So why should the e-book from 1963 be priced the same as the latest one? Shouldn't you be trying to find the price point that brings in the most revenue? Fortunately, authors who are reclaiming their e-rights and self-pubbing are quickly figuring out the right way to maximize their own revenue.

If Marvel could be smarter, I think they'd make a whole lot more money. And comics could be a lot more popular. If the audience was big enough, prices could drop to more reasonable levels while still paying a nice amount to artists and writers. The huge back catalog of Marvel and DC is the perfect way to revive interest in comics as a medium without spending a huge amount subsidizing new comics. Will they figure it out? I'm not hopeful they will.

Monday, January 17, 2011

App Store Marketing 2011

App Stores other than Apple's may be smaller, but they are growing faster.
The whole App Store idea is growing and changing. First off, the phrase "App Store" is the subject of a fight, as Apple's trademark application for the term (filed in 2008) is under attack by Microsoft. Not unreasonably, Microsoft is arguing that the term App Store is generic, like "shoe store", and should be available to all. As you might expect, Apple disagrees. You'd expect Apple to want the term reserved for themselves. It's amusing, though, how fast technology has forced the progression of language. Why, back in the Twentieth Century it could take decades for a company's trademarked term like Kleenex or Xerox to become generic. Now it happens so fast the trademark hasn't even been granted before the term becomes generic.

Anyway, regardless of what you call it, stores that sell Apps have been growing and changing. Here's some interesting data on on various App Stores have been growing in the last year. Blackberry, Android and Ovi app stores have been adding apps at a tremendous rate far outstripping Apple's. Of course, they have far further to travel since they are smaller. And Blackberry and Ovi desperately need apps to compete with Apple and Android, though this seems like a rearguard action that will do little to delay the outcome of the war.

Something entirely different is coming up with the Android app market. One of the interesting things about the Android Market is that Google has always said other companies are free to create Android app markets of their own, unlike Apple who assiduously tries to keep it all to themselves (though Cydia offers some interesting capabilities to those willing to jailbreak their iPhones). Now Amazon is about to take them up on it... and Amazon is planning to change the way apps are priced.

Typically, app developers set their prices and the app store takes a 30% cut, passing 70% of the revenue on to the developer. Simple, straightforward, no muss, no fuss. Amazon, though, has invested a lot of effort into figuring out how to maximize revenue from pricing. Amazon has engaged in dynamic pricing in the past in an effort to maximize revenue. So Amazon is setting up their Android App Market to allow them to do that with Android apps.

Here's how it will work: The developer sets a Manufacturer's Suggested Retail Price (MSRP) for their app; this MSRP has to be less than or equal to the lowest price of the app as listed anywhere else. Amazon will pay the developer 70% of whatever Amazon sells the app for, or 20% of the MSRP, whichever is greater. So Amazon can put the app on sale, or give it away for free if they like. If the developer lists an MSRP of $5, Amazon will pay the developer $1 if Amazon gives the app away for free. If Amazon sells the app for $2, the developer gets $1.40. It may well turn out that the developer will make more money overall by Amazon selling the app for $2 than at the MSRP of $5. (For instance, if Amazon sells 100,000 copies at $2, versus the developer selling 1,000 copies at $5, the lower price is clearly better for everybody.)

Developers may be annoyed at the idea that they won't have control of their price, but clearly Amazon's interested in finding the maximum revenue, which is good for the developer as well as Amazon. Pricing digital goods is not the same at all as pricing physical goods. I think Amazon's going to be very successful with this idea... if developers will get past their prejudices and put apps into the Amazon app store despite losing total pricing control.

Friday, January 14, 2011

Game Sales 2010: Old Market Down, New Market Up

The numbers are in, having been smuggled past NPD's new Iron Pay Wall. It's the best of times, and the worst of times. Game sales are up, game sales are down, game sales are flat all around. It's a complicated picture, and it's best understood by breaking it down into the component numbers.

First off, let's look at the traditional market: physical video games and hardware sold in retail stores. Total sales in the physical channel fell 9% to $5.06 billion in December, bringing the total for 2010 to $18.58 billion, representing a 6% drop. Remember, that's from 2009 numbers, which were already down over the previous year. And that's after a big boost to the numbers from the introduction of Kinect and Move, expensive peripherals that sold in the millions. When you just look at the software, the picture is hardly better: U.S. retail game sales, including portable, console and PC game software, generated revenues of $10.1 billion, a 5% decline over the $10.6 billion generated in 2010.

Meanwhile, increased sales of used games, digital downloads, mobile and social games were up, enough to bring game sales overall to about the level of 2009, at $15.5 billion. That number's only approximate, because NPD is unable to track those categories with precision. I'm not sure how they generate those numbers, since much of that activity is not released by the private companies involved. Maybe they read the entrails of goats, or possibly throw darts.

The key things here are that game sales are shrinking still in the traditional markets, and growing enough in the new markets to offset that. Gamers are shifting their dollars. Publishers had better follow them, or risk getting left behind.

Capcom Responds, Makes It Worse

The real 'Splosion Man. Accept no substitutes.
Now Capcom has responded to the controversy over its blatant copying of Twisted Pixel's 'Splosion Man game, and they've handled it with as much grace and class as they did the Smurfberries incident. Which is to say, none. Here's Capcom's full statement on the matter:

 "While Twisted Pixel did have discussions with our console game team about publishing 'Splosion Man' on game consoles, Capcom Mobile is a different division of Capcom with separate offices and as such, had no prior knowledge of any meetings between the console game team and Twisted Pixel. 'MaXplosion' was developed independently by Capcom Mobile. Nonetheless, we are saddened by this situation and hope to rebuild the trust of our fans and friends in the gaming community."

Note how Capcom adroitly avoids any mention of whether or not their game resembles Twisted Pixel's game. Which is the elephant in the room, is it not? And whether or not Capcom Mobile had any knowledge of meetings, it's pretty clear by looking at the games that somebody at Capcom Mobile had certainly seen 'Splosion Man. And liked it enough to copy it. Capcom didn't even bother to trot out the word "coincidence;" good thing, too, or else the laughter would have been overwhelming.

"We are saddened by this situation"? Really? Yes, they are sad they got caught. If they were really sad, they'd be firing the person or persons responsible at Capcom Mobile who apparently thought it was reasonable and ethical to copy someone else's game. OK, if you must, use the game mechanic; those aren't copyrightable. But at least have the grace to use a different artwork style, or spend an hour coming up with a different back story. Rebuilding trust in the gaming community will take a long time if you're not even willing to own up to your mistakes, much less correct them. I guess work is easier if you don't have to spend time thinking up new ideas for a game, just redo someone else's without paying them for the idea.

And they still have just blithely ignored the ethical issues of The Smurf's Village, where Capcom is making a mint selling smurfberries to children too young to know what a credit card is.

I hope there's some backlash among fans; apparently the only way Capcom may address these issues is if someone, somewhere at Capcom thinks it might be costing them money.

Facebook Asian Growth Due To Games

Map created by data samples from Facebook's network.
We all know that Facebook's been growing like crazy, and has hit the 500 million user mark. It's become the Web's most popular destination. What isn't so widely known is that much of the recent growth is due to Asia. Crazy four-digit growth rates like 1,000 percent growth in Malaysia. Think that's a lot? Thailand grew by 4,000 percent, and Taiwan shot up an amazing 7,500 percent. Indonesia is now the largest Facebook population outside of the US, and 80% of the people there have no Internet access. What's responsible for this amazing growth? If you said games, you are correct.

Farmville leads the way... many people in Asia sign up for Facebook purely to play Farmville. Maybe it's something in the culture, but Farmville has just seemed to resonate somehow. (Now, if Zynga could just add gambling to it somehow, they'd really get the Asian market playing!)

While much of Asia is rushing to join Facebook, it's not all success for the social network. China is the great prize, of course, with a billion potential customers. There are 147 million people on RenRen, the Facebook equivalent run by the Chinese government. (Just guessing here, but you probably can't post about just anything on RenRen.) Facebook would have a huge audience in China, if they could get past the Great Internet Wall. But so far China is intent on keeping Facebook at bay by completely blocking access to it. The Chinese government is worried about the potential for Facebook to facilitate social unrest. Facebook has to find some way to deal with the government's concerns if they want to get into that market, but it may mean making concessions that will be more than a little uncomfortable. Don't expect it to happen any time soon.

China's not the only country Facebook's having difficulty taking over. Japan and South Korea are also proving to be tough nuts to crack; between those two countries there's only 4 million Facebook users. It's not an official wall, it's just loyalty to their homegrown social networks.

There's still plenty of growth for Facebook to achieve, and games will go right along with it. Translations become an issue there, so localization will be important for companies that want to follow Facebook's growth in different markets.

Thursday, January 13, 2011

Half of iPhone's Revenue From In-App Purchases

This chart is very interesting if you're trying to see how apps are generating revenue for developers. You'll note that in-app purchases now account for half of all iPhone app revenues, up from about a third just six months ago. The iPad is not as dependent, perhaps because the average price points are higher. Also please notice that free apps are generating one-third of all the revenue from iPhone apps.

The rapid growth shows that advertising as a revenue generation model for the iPhone has not taken hold. I think Apple's iAd program can be fairly judged to be a flop so far. I think Apple's insistence on heavy involvement with the development of iAds has kept a lot of advertisers at bay. Without advertisers, there's not much reason for developers to sign up their apps to put ads in there. The relatively intrusive nature of iAds, especially on a small screen, may also be having an effect.

In any case, it's pretty clear that the monetization strategy for the iPhone app developer has to be either in-app purchases, or the price of your app. Advertising just isn't doing it. Primarily, the games are the place where in-app purchasing is having the biggest effect. I expect this trend to continue, and in-app purchasing will be providing an even bigger share of iPhone app revenue in a year. You can take that to the bank...

Wednesday, January 12, 2011

Capcom Mobile's Blunder Blows Up In Their Face

Nah, hardly any resemblance... is there?
It's worth noting that gameplay, in and of itself, cannot be copyrighted. Ideas aren't copyrightable, only the particular expression of an idea. So it should be no surprise that many games are "paid homage to" in different ways... but usually more of an attempt is made than in this case to file of the serial numbers. And usually you don't see a big company like Capcom doing the copying.... but that's what Twisted Pixel is seeing with Capcom's iOS game MaXplosion, which resembles Twisted Pixel's Xbox Live game 'Splosion Man to an amazing degree.

So amazing that many fans have commented on it; it's pretty obvious. The really amazing thing here is that Twisted Pixel has made the correct, if emotionally unsatisfying, decision: They aren't suing. Legal action costs a lot, and in this case I'm sure their lawyers advised them that they didn't have good grounds for action. Yeah, it's clearly "inspired by" but nothing too actionable. This is a story, indeed; a developer smart enough to avoid legal problems, and pivot to using the issue to their PR benefit. Well played, Twisted Pixel.

Shame on Capcom, though. (Full disclosure: I worked for Capcom US many years ago.) While it's skating by legally, it's certainly not terribly ethical or in good taste, and Capcom should be ashamed of themselves. They have enough talent to do their own original work, and this should be an embarrassment to them. If I was running the studio I'd find out who was responsible and set them loose, because I'd want people who are more creative and more ethical creating games for my company.

Capcom Mobile is certainly making a name for themselves quickly. This dubious misstep follows on the heels of the The Smurf's Village fiasco, where we found that many parents discovered that their kids were playing the game and running up big credit card charges by buying smurfberries in the game. And Capcom Mobile's response was that, well, adult power players wanted a way to power up in the game quickly. Adult power players in the Smurf Village? Paging Chris Hansen...

F2P Means $$$

Turbine's little experiment with moving their MMORPGs from subscription to free seems to be working. That's a pretty big understatement, according to Turbine. The move has resulted in Lord Of The Rings Online tripling its revenue. The player population has increased, and so has the level of activity. The success isn't limited to LOTR, either. Implementing the same model on Dungeons & Dragons Online in 2009 has shown a 500% increase in revenue, according to Turbine.

Certainly competing with the World of Warcraft juggernaut is difficult, but the free-to-play mechanism seems to be working out extremely well for Turbine. This certainly seems like the way to get some traction for MMORPGs in the current environment. It will be interesting to see if some of the new MMORPGs that have launched with subscription plans continue to hold onto that, or make the switch sometime during the year.

Of course, the landscape will alter in a big way when WoW itself makes the transition to F2P, but I don't expect that until 2012 at the earliest.

Tuesday, January 11, 2011

The Mac App Store

The Mac App Store has opened for business, and it's delivering some changes that have important ramifications for game developers. In case you're not a Mac user and missed the news, the Mac App Store is an App Store similar to the one on iTunes for iPhone and iPad. But this one is separate from iTunes, and it doesn't have a huge number of apps so far -- about 1,000. You just download the App Store to your Mac , and then you can browse for software you might want to download.

What's the big deal? Can't you already download Mac software from a variety of places? Sure, but this puts everything in one place. Well, not everything, but I'm pretty sure that will be more nearly the case after a month or two. Better still, it makes installing Mac apps easy; right now it's confusing unless you're very familiar with OS X. Many of the apps are more iOS-like, in that they are focused around a single task rather than being an enormous collection of features. Better still, many of them have adopted more iOS-like pricing, so you can find free apps and low-cost apps, not just $50 software. So there's a lot to like about this new way of acquiring software.

On the other hand, there's some drawbacks as well. If you've already bought the software, you'd have to rebuy it if you wanted to get the free updates possible through the App Store. For now, there's no free or trial versions of software available, so you'll have to find those elsewhere. There are other concerns, but many of them may well be addressed by Apple over time.

Users seem to approve; the Mac App Store hit 1 million downloads in its first 24 hours of operation.

What does this all mean for gaming? A lot, actually. Games are a large part of the apps being offered here, with many iOS developers jumping in to create OS X versions of their games. Mostly it was easy; they took a week or two just to tweak things for the platform differences, but the code moves over easily. (Not surprising if you realize the operating systems are so similar at their core.) App developers now have a very large market opened up to them for very little effort on their part. And a greater flood of software will make Macs more attractive... particularly if it beefs up the supply of games, the Mac's perennial weak point.

Isn't this what Games for Windows should be? Yeah, you'd think. Microsoft could make an app store for Windows... but they likely won't any time soon, I bet. Too revolutionary for them. They are edging closer to getting it together though, with Windows Phone 7, Xbox Live, and now Windows on ARM chips... if they can just break free from the interface tyranny of the past, they could be a contender in the brave new marketplace.

The Mac App store is another sign of the apocalypse, the vast paradigm shift in how software is designed, sold, and used, and the computing platforms it gets used on. Games are just a part of this vast shift, as we move to smaller and more mobile platforms (tablets and smartphones), and more focused applications instead of bloatware (I'm still trying to figure out why Microsoft completely changed the interface to Office software without any way to access the old interface... accelerated my transition to OpenOffice, I'll tell you). It's time for game developers of all types to rethink their business models as many associated markets are rapidly changing: books, games, software. And it's not just the products, but the very business models are changing, too.

Monday, January 10, 2011

Smart TV 2011

Not exactly Smart TV the way it's been promoted.
Gaming in 2011 is facing the onslaught of a new segment, courtesy of the Internet-connected TV. We've seen several types of them, including some with Yahoo! Widgets built in; Apple TV to connect to any HDTV; and Google TV (as a separate unit from Logitech and built into some models of Sony TVs). The market is getting even more crowded in 2011, with both Microsoft and Cisco joining the party. Yes, we'll see Windows TV by and by, and Cisco's got a series of cable boxes that connect to the Internet. Even LG is joining the fun with a separate box to upgrade earlier LG TVs. Some observers believe this is just a continuing failure of the tech business trying to enter the TV business, and it will continue to fail.

It's true that so far no smart TV device has really been a hit with customers, and certainly none of this has any relevance to gaming, does it? Well, it does, and here's why. Someday, one of these companies will actually figure out that an App Store for smart TVs could make a boatload of money, and they'll actually fire one up. (Google, at least, has announced their intent to do so... sometime this year, hopefully.) It won't take a whole lot of expensive power inside a Smart TV to make playing thousands of games possible... just look at what smartphones can do. Current app developers will cheerfully port their apps over to this new market, and it won't take them long to do so (weeks, probably). Then we'll see a whole new market emerge, and the console makers will be the first ones affected. Imagine the kind of apps you can get on your smartphone suddenly available on your TV... in high resolution, at a low price or free to play.

I suspect Apple will pull this out of their hat at some point this year, though I can't say when. Perhaps when nothing else major is going on... and with iPad 2 expected as early as a February announcement, and an iPhone 5 probable for this summer, I'd expect something in the fall. Google will likely try to hit earlier than that, probably springtime. Will Microsoft get into the act? If they're smart, they'll hook this into their Xbox Live/Windows Phone 7 plan, and make apps available for all of their platforms... but internal battles will probably keep this from happening.

Still, this will be a major new market for small developers, once it gets going. But it will be a body blow to traditional console gaming...

Sunday, January 9, 2011

OnLive Getting Livelier

OnLive has been forging ahead lately with some interesting deals. First off, they've added a flat-rate plan, which gets you all the games you can eat for $10 a month. This should help attract more users, especially those who like to sample a wide range of games. The sticking point right now is the game selection isn't huge; only a few dozen right now. Until that expands, the appeal of a flat-rate plan may be limited.

Which brings us to the next big deal. Or rather several big deals. OnLive secured a major patent on their technology in December, which will make it harder for competition to occur. They've hired away Pandora's COO Etienne Handman to serve as their COO, which will give OnLive some solid experience with streaming media and media companies other than games (if you're not familiar with Pandora, you should be). And last but certainly not least, OnLive has signed a big deal with Vizio, where Vizio will be building OnLive into a wide range of HDTV's, Blu-ray players, and tablets. This is a great feature for Vizio ("It's like having a console built in to your TV!) and will bring a slew of new potential subscribers to OnLive.

Hopefully OnLive can use these deals to leverage some more games out of publishers; they really need their service to be more populated. While I'm still rather skeptical of the service, given the technical limitations and the requirement for pretty high bandwidth, it's a good way to get first-run titles in front of a larger audience, which can benefit sales for the industry. As higher bandwidth becomes more available (someday!) the service will be more useful. The real test is in the next six months. If they can't succeed in signing up a lot more content in the near term, I don't think the service has much of a future.

Saturday, January 8, 2011

3DS Games Will Be Pricey

With the 3DS, small characters will emerge and steal the money from your wallet. At least, it'll feel that way.
At least, that's the rumors I'm hearing. Sounds like Nintendo will be looking at retail prices in the $40 to $50 range, as compared to the current $30 to $35 range of DS titles in the US. Of course, the actual retail price of the 3DS in the US has yet to be announced; if you just take the current Japanese price and work the exchange rate on it, the US price would be $300.

I'm sure part of this is Nintendo wanting to recoup the extra development costs of 3DS games (it will be a pretty significant boost, from what I hear). Another part of it is a reaction to the positive comments Nintendo got on the 3DS at the last E3 show. Hey, the industry loves it, so we should be able to charge more, right?

I think Nintendo is moving into dangerous waters here. The market conditions are very different now then when the DS was first introduced. The smartphone competition is gunning for the lion's share of the handheld market, and one of their big weapons is game pricing. As in, free, or just a dollar or two. With that kind of competition, can Nintendo really get away with a premium software price? I'm sure the third-party publishers will all follow suit.

Those better be some damn impressive titles. I foresee a difficult sales environment for the 3DS if they shoot for premium pricing for both the hardware and the software. Yeah, the initial sell-in will be good, but look for a big sales fall-off after the first couple of months.

Friday, January 7, 2011

Predictions For Adventure Gaming 2011

I get an excuse to show my game from the dawn of time.
I've dealt with other segments of the gaming market, so I might as well have a go at this one. Adventure gaming is in many ways the progenitor of the electronic gaming market, and is still a rich source of inspiration to electronic game designers. Roleplaying games, card games, board games, miniatures games and other less easily classifiable games are found in specialty gaming stores around the country, and some products make it into wider distribution through bookstores or other types of stores. Occasionally a product like the Pokemon trading card game breaks into wider mass-market distribution, but for the most part adventure gaming products are in limited distribution.

The industry has had its ups and downs over the past few decades. Once a sleepy little backwater of miniature games and war games, adventure gaming had its first big expansion when roleplaying hit with the introduction of Dungeons & Dragons in 1974. The concept took off and hundreds of products followed over the next decade (including my own roleplaying game Champions). Roleplaying was a phenomenon that got national attention, until the growth of electronic gaming (mostly computer gaming) in the 1980s took away some of its audience.

The next great expansion was the trading card game (TCG), which was led by Magic: The Gathering in 1993. Again, the phenomenon burst across the national consciousness, new stores opened, and many companies expanded (including Wizards of the Coast). Collectible miniatures games introduced in 2000 (HeroClix) was another boomlet, though not to the scale of the TCG.

The industry now is smaller than it was in days of yore (that would be the ancient times of the '80s and '90s). Much of the mojo (read: entertainment time and dollars) has been stolen by electronic games of all varieties. Still, there's great creativity in the adventure game industry and new products continue to attract buyers.

  • Publishers find more and more revenue coming from e-book sales. The e-book segment has grown tremendously, as witnessed by (I believe I was the first to put e-books into a retail store, on a floppy disk in Acrobat 2.0 format in 1995.) E-books have become much more acceptable as a format, especially with inexpensive laptops and now tablets making it easier to use them in a gaming session. The major problem is the pricing; most adventure game publishers still price e-book versions of their rules quite high, which means piracy is an issue. Since many adventure game publishers depend on physical book sales, they are loath to reduce prices on e-books and so make it harder to be profitable on paper versions of the same book. I predict we'll see more experiments with lower e-book pricing, and greater e-book sales overall.
  • The number of retail stores continues to shrink. Game stores are an endangered species, and increasing electronic distribution is part of the reason. Bookstores are also endangered, and the combination will drive adventure game sales even more towards mail-order, convention sales, and electronic sales. The rate of attrition will slow, as surviving retailers are (by necessity) good ones, and are adept at finding ways to bring in customers and offering a variety of goods for sale. In-store gaming is a big help, as are miniatures games.
  • The explosion of e-book readers will be good for adventure gaming. Not just dedicated e-readers like Kindle, but also tablets and smartphones. If prices are reasonable, then all the players can have easy access to rules without lugging around huge books. More e-book readers means more willingness to buy e-book versions of rules, or at least a larger potential customer base.
  • The growth of smartphones will be good for adventure gaming. Not just because they can be used to read e-books (not well, unless rules are formatted especially for them... which would be a great feature that some publisher is going to stumble upon someday). Smartphones are also handy little computers, as witness the number of die-rolling programs out there. Many other aspects of gaming can be aided by smartphones... and we'll see more of that this year.
  • Adventure game companies will increasingly turn to technology. By necessity, adventure game companies have embraced the Internet as an easy way to communicate with customers. Now Facebook is a becoming a very important tool for customer relations. Twitter is everywhere. Social media is great for marketing purposes, and for connecting a farflung network of fans. I think we'll see more connections with social gaming and mobile gaming... many small games would make great smartphone apps, and some of Reiner Knizia's games are making their way to Facebook. We'll see more of this...
Adventure gaming will have another bumpy year, as new technologies continue to disrupt the same old way of doing business. Companies that take advantage of the trends will continue to do well; others, not so well.

Thursday, January 6, 2011

Portable PC Gaming Re-Imagined

There's a flood of new product info coming out of CES, and this one caught my son's eye (tip o' the hat to Greg): The Razer Switchblade. Check out the video here to really get the idea.

They've got some Intel magic in there that's doing a pretty good job with the graphics, but the keyboard is the real hotness: They managed to put reasonable transparent keys above an LCD screen, so the keys are instantly reconfigurable to any game (or other usage). I can see this having an impact far beyond gaming, if it's used widely.

Of course, the success of this device depends in large part on its final specs, especially the price. If it has a fatal flaw (like poor battery life, or buggy performance, or crappy frame rate) it won't go anywhere. If the price is too high it may find a few buyers, but the larger market opportunity would be at lower price points. To my mind it will have to be under $1000 to have a shot, and the closer it gets to $500 the better. Tablets are going to be out there in many variations, and efforts to bring gaming hotness to them will be legion. (You could do the same trick the Switchblade is pulling with the keyboard with onscreen hotkeys on a multi-touch screen.) No info yet on release date or price, but it's worth keeping an eye out for it.

Social Gaming 2011 Predictions

What's coming up for social gaming in 2011? One word: revenues. This category of games is still growing rapidly, despite Facebook's changes to viral messaging. Major publishers have acquired social gaming companies, and are exploring ways to connect their non-social game content to social gaming. Facebook continues to grow, now becoming the most popular destination on the Internet. So we can expect social gaming to follow along, as it makes use of some of our most powerful urges. It's funny that for decades the game industry was looking for a way to attract a wider audience than just teenage boys of all ages. And when it finally does, it turns out that the larger audience isn't interested in the types of games they know how to build.... it takes a new type of game to attract a new audience. So the hardcore gamers turn up their noses at social games, as they capture more and more of the gameplaying audience and their dollars.

Now for some predictions as to where social gaming is going in 2011.

  • Zynga continues to grow, but at a slower pace. One of the big stories this year was the dethroning of Farmville as the biggest social game... by Zynga's Cityville. A company that has mastered the art of eating its own young will go far. Their rocket-driven rise will slow, but they have enough velocity to stay in orbit.
  • Social gaming elements continue to be more integrated into old-style game publishers. FIFA, anyone? Expect more connections between social games and other types of games. Many MMO's now have social game "versions" that at least connect you with the branding and some of the style of the MMO. It's a relatively easy way for a game to use social media to connect with fans. The interesting part will be as publishers figure out ways to connect the two types of games more deeply, which I expect we'll see this year.
  • Licensed social gaming takes off, with several high-profile licenses announced. It seems inevitable, but the biggest players haven't needed to go this way yet to build market share. Smaller players will discover licensing is a good way to build visibility. What's going to be licensed? Anything from popular culture that has a big audience... movies, books, music, celebrities, TV shows, comics. It's already happening, but it hasn't hit the big-time yet. 2011 will see it happen.
  • Social gaming gets gamier, attracting more of the hardcore types. There are a few games out there that are much more based around traditional game elements, and we'll see more of them. Some of them will start to get some visibility, too. We won't see fragfests (OK, maybe we will) but expect to see more variety in game designs.
  • Advertisers begin to get social gaming. This year should see more product placements and ads in social games, as advertisers gravitate to millions of monthly users who spend lots of time in social games, and social game companies find a nice source of revenue. Again, it's already happening, but it should accelerate rapidly. The newness is a barrier, and lack of standardized buying and selling. When companies make it easy to buy advertising, and demonstrate results for advertisers, you'll see them pile on.
  • Social gaming uses more marketing. As competition intensifies, social gaming companies will get more aggressive with marketing (especially as the easier viral marketing capabilities are hobbled by Facebook). We'll see advertising, branding (NASCAR  racers?), event marketing, and all sorts of fun stuff. Especially as traditional game companies, with more experience in these techniques, attempt to muscle their way into a good market share.
All in all, another year of solid growth in social gaming is ahead. Now if you'll excuse me, I have to go back to another expedition...

Wednesday, January 5, 2011

Gaming addons for tablets

Here's an interesting idea: a joystick you can add on to your iPad for better game controls. It's $25, so you have to be willing to spend more than the cost of several games to buy one... but it is interesting, if it works as well as they describe. I don't think it will catch on in a big way, but it does show that gaming on tablets is enough of a market to encourage add-ons.

If only you could download it...

Tuesday, January 4, 2011

PC Gaming 2011 Predictions

Continuing my series of 2001 predictions, I'll look at PC gaming. I define this as a wider field than some might; in this area I include MMOs, boxed retail PC games, downloadable games, Flash games, and F2P games like League of Legends. While the boxed retail PC game has certainly had a difficult few years, people still spend a lot of time playing games on their PCs. The PC game market's biggest threat may be the emergence of the tablet market, as it eats into PC and laptop market share. A tablet may be a better way to game for many people at home; it starts up right away and games are easy to install and acquire. Of course, tablets lack the control possibilities of a PC, so certainly hard-core gamers will still be attached to their cutting-edge hardware. Still, many game makers will want to look closely at the tablet market, if they aren't already.

Anyway, here's some of my predictions for PC Gaming in 2011.

  • The Star Wars MMO has a disappointing reception. Oh, they'll sell a bunch right away, but there will be a chorus of complaints about game balance, play style, and the Star Wars universe fidelity. I can predict this without having seen the game because that's the way MMORPGs launch: Game balance is wonky and they prefer to get that right while people are paying for the privilege of testing. Early adopters will complain about it, and complain about what they get to do or can't do, and Star Wars fans will no doubt find things to complain about. The real key is whether the game is compelling enough to attract people despite the flaws, and stick around long enough for the flaws to get fixed. I think it will be, but I don't think this is going to replace WoW. 
  • WoW remains subscription priced, but adds more items to be purchased in-game. Speculation will continue about a shift to F2P, but it won't happen this soon. Meanwhile, though, Blizzard will rake in more dough by ramping up the things you can purchase in-game. Plus they'll be making a renewed push to add more gamers and get their subs growing again, which won't have much effect. There are too many other gaming choices competing for players, and that sub price will get to be a heavier burden over time.
  • Most new MMOs launch as F2P; the ones that don't struggle. We'll see a number of high-profile entries into the MMO space this year, many of them with subscription pricing.  If these games don't grab and maintain a big audience, as I predict, the subscription model will be pretty much left for dead as far as new games are concerned. Certainly D&D Online's success has inspired other MMO's to follow suit. Game design is an issue, of course, but I think this will be the norm going forward.
  • Steam continues to grow and gain market share. This is an easy prediction to make; nothing succeeds like success. They're doing a lot right, and continue to refine what they do. As retail stores contract their shelf space for PC games, Steam will expand to fill the void.
  • PC games at retail continue to fade away. The flip side of the last prediction. Have you looked at the retail space devoted to PC games lately? Ugh. Aside form the occasional high-profile title like Call of Duty: The Sequel, there's a wealth of cheesy game shows and assorted low-priced stuff. Not very lucrative for the retailers, I'm sure. The smaller package size has meant less selling goes on in the store; the shelf isn't pulling in customers. GameStop better hope console games stay healthy at retail.
  • F2P games become even more popular. A major RPG is announced as F2P. Free-to-play is kicking ass and taking names. I have no inside info on Riot Games and how League of Legends is doing, but I infer from the fact that they're looking to hire dozens of people that it must be doing pretty well. I'm expecting somebody to realize that a Diablo-style RPG based around a F2P business model would make a pile of money. It's what Diablo III should be if they really want to make a bundle.
  • Call of Duty does not add a subscription plan. Some analysts have called for this, but it's not gonna happen. At least not right away; it may be part of a future release. But I don't think will see a move to try and migrate a user base over to a pay model when they purchased a game under a different expectation. If Activision really wants to do this, I'd say do it with a new release that you charge less for upfront... maybe even a free release.
  • DLC rules. Downloadable content expands even faster and generates a lot of money for companies. On the other hand, users may feel burned if they think they have to pay for DLC in order to compete at a game. Or that someone can pay to get some nifty ability that totally destroys you if you haven't paid. Game design issues will certainly impact marketing and business results here.
It'll be a good year for PC gaming overall, as long as you're not a retail store.

Monday, January 3, 2011

7 Console Gaming Predictions For 2011

In 2011, radiation from 3D TVs will cause gamers to emit a green glow.
The console gaming market is now the "traditional" game market, composed  of software sold in retail stores. Of course, publishers are exploring other business models and types of games, investing in social games, mobile games, freemium games and more. The console gaming market is the bulk of game sales; if you just look at software, it was $10.6 billion in the US this last year (if you add in hardware sales, including accessories, the total is north of $21 billion).

The last couple of years have not been kind to the traditional segment of the business, though. Sales grew an amazing 28% in 2007 to hit a total of $18.85 billion overall ($9.5 billion in software), but the worldwide economic problems of 2008 were bound to have an effect. Game sales in 2008 were up 19% to over $21 billion (up more than 26% in software to over $11 billion), though signs of the slowdown were already showing up in holiday sales. Then 2009  showed up and hit hard with an 8% decline in overall sales to $19.66 billion (software slid to $10.5 billion).

While the year-end figures aren't tallied yet, 2010 looks like a decline again despite a record November that wasn't enough to rescue the year. Total sales will probably end up a few percent below last year (it was down 8% until November, which was enough to make it only 5% lower than last year). What's on tap for 2011?

  • Software sales continue to erode. The overall picture doesn't look great for $60 software titles. While some releases will do well, overall I think the sales decline will continue as gamers move to lower-cost alternatives. And more lower-cost alternatives will continue to appear, and they'll be better.
  • Console sales stay steady due to price cuts. Much as they will resist it, price cuts will happen by the holidays for all the consoles, though they may be minor. Or they may be hidden by increasing the value of the bundle you get (an extra controller, more software, etc.) Growth in smartphones, tablets, social games, and F2P (free-to-play) will tend to keep people from console purchases unless the price gets more attractive.
  • Big hits are rare, and will get rarer. The high sales points get even higher for titles like Black Ops, but fewer titles will achieve orbital status. The publishers with the megahits may do well, but the ones without will be gasping for oxygen. It's going to be a cruel market.
  • XBLA and PSN continue to grow sales. Meanwhile, though, those sneaky little download games will continue to gain despite the barriers placed in their way. (I mean, Microsoft Points instead of dollars? Really? Or how about that interface, and all of the non-existent tools for finding the types of games you're interested in...) Heck, even WiiWare will do better, despite Nintendo's almost criminal neglect. It turns out that customers are interested in lower-price titles they can have via download without a trip to a retail store. Who would have thought that?
  • Nintendo finally reduces Wii to $149, then to $99 by Christmas. This one is actually more wishful thinking than a prediction. Yes, it would certainly be sensible for Nintendo to do this, but since they've been studiously avoiding sensible moves lately who can say what they will actually do.
  • A successor to the Wii is finally announced, but it won't appear until 2012. Although Nintendo may not actually announce this, and information will just leak out, to avoid ruining already devastated Wii sales. By the time it actually appears the market may be so different that no one will care, unless Nintendo embraces the market changes.
  • The 3DS and PSP2 appear to good initial sales that quickly decline to disappointing levels. Partly because the price points will be so high initially. Once the fanboys have gotten their units, less fanatical customers will look at the prices and think about buying a smartphone instead. Many will. Developers in particular will be annoyed, because developing for these new handhelds will be significantly more expensive than the old handhelds, yet software sales will be worse. This will lead to a quick fall-off of third-party support.
Overall, I expect the console business for 2011 to be up somewhat, mostly due to Kinect. Move, and price cuts. The software part of the business (at least the traditional retail boxed part) will be flat. Significant growth will continue to be in other areas like mobile, social, DLC and F2P.