Facebook for Games

This idea is so basic and so big that it amazes me no one has implemented it yet: I love Xbox Live but what if you do not own an Xbox, what about a system agnostic version (a Facebook for games, i.e. MyGame). Seriously, how incredible would a single online interface be where you could download games to whatever system you own, talk to other gamers, upload save files, and get a universal ranking (across all platforms). The monetary potential for something like a MyGame is intriguing, you could charge a modest monthly fee for user access, generate ad revenue, and even sell developers access to player’s game files (I am not a developer but I would think this could be a very useful development tool). Let’s take a closer look at the benefits for players, developers/publishers, and ultimately who could implement/run the site.

The benefits of a MyGame online portal for players would be enormous and could revolutionize the way we currently play games. Xbox Live has crated demand for gamers wanting to get achievements, increase their ranking, and status on the site; just imagine if you took that concept and multiplied it by 1000 by using the same system for every game ever created. What if there was a site where a gamer could upload their save files from every Final Fantasy game and get credit for completing them; this would not only create interest for current games, but should spur usage of older generation titles as gamers compete to increase their status/rank. In turn it would be amazing to have all of your save files in one place; how many time have you traded in an old DS game only to have an itch to play it again but not the urge to start over from the beginning (problem solved!). Not to mention the obvious social benefits of discussing games with fellow gamers and the ability to share save files; MyGame would be a Mecca for any serious to moderate gamer.

A universal dedicated gaming portal would also have far reaching advantages for publishers and developers alike. By ranking players for older games, you create demand for the games publishers have sitting on their shelves (code and IP are done); in essence they get additional revenue with little to no costs. Developers in turn get access to players save files that could be broken down to get all kinds of useful data on how players actually played their products; the analyzed save data in turn would give developers a new tool to improve future releases. For both developers and publishers alike, a social game portal could offer countless ways to reward brand loyalty and encourage usage/consumption. Imagine a promotion where Electronic Arts gave away free gifts for every Madden save file a player uploaded: for 3 different years worth of saves files you get a t-shirt, 6 gets you a free game, and 12 might warrant a signed football (from Madden himself). The promotional significance of MyGame could be enormous and open avenues for many smaller games that might otherwise be overlooked (huge benefit for developers).

The question becomes not if a dedicated system agnostic game portal will come to light, but more when and who will be the champion that makes it happen. None of the current console manufacturers (Sony, Microsoft, or Nintendo) will sacrifice their current control/royalties (i.e. walled gardens), so we can rule them out. Individual 3rd party publishers (like EA, Activision, or Capcom) may not have the resources or the political clout to get enough people to agree on a standard. That leaves (in my humble opinion) two major players that might have a shot: Game Stop and Facebook. Game Stop has no system allegiances and has ties to pretty much every publisher (and hence many developers), so they clearly have the political connections. Game Stop also has direct contact with gamers and the largest video game magazine (Game Informer) in their arsenal; combine that with their political power and the need to expand their product offerings (digital distribution is looming) and they seem a natural. On the flip side, Facebook has the perfect existing platform (they already have many aspects in place) and the culture to drive a video game dedicated social platform.

We only touched on a handful of benefits for a dedicated system agnostic social networking video game site (whew, that was a mouthful); clearly this needs to happen (NOW!!!!). Players get rankings, social interaction, and free stuff, while publishers/developers add another promotional tool to their bag of tricks and development data. Due to the complicated conflicts of interest that arise from an independent game site, there are not too many players that could make this happen, but both Game Stop and Facebook seem to have the necessary elements in play to make a go of it. In the end this is about the biggest no brainer idea and has the potential to drastically alter the way we play/develop/sell games (please send all royalty checks to Brian Schorr @ …..).

Digital Distribution or Network not Found?

Everywhere you turn, digital distribution of content is changing our lives; from replacing the daily paper to buying the latest music single, the process is creating new business models and destroying the old. Although music and to a lesser extent movies have experienced growing pains as they adjust to digital distribution, video games have for the most part been untouched by this trend. Why have video games not gone digital and what are the prospects in the future for digital distribution (of console game content).


There are 2 basic tenants that seem to drive digital distribution: content can be easily subdivided and or content can be consumed in a short period of time:


1. Subdivided Content: Ex- buying single tracks off a music CD
2. Short Time Frame: Ex- renting a movie (viewing time 3-4 hours)

Video games do not really fall into either of these categories: for the most part a game is a single entity that is difficult to divide into smaller packets and they take on average 15-20 hours to complete. Even for games that appear to be easily dividable (like Rock Band’s Track Packs or the latest version of SingStar), digital distribution is not taking off on the consoles; why do video game players continue to shell out $30 for extra songs (many of them they may not want) when they could spend far less to get just the ones they desire? Part of the answer to the digital divide for video games is pricing (publishers still charge too much for individual tracks) and connectivity (many players fail to connect their consoles or lack a high speed connection).

In addition to pricing and connectivity, many consumers prefer traditional cases and discs due to the value they can get out of them selling them back when they are done. Why would someone pay $50 for a digital copy (which can not be sold back to the store) when they can pay $50 for a physical disk and trade it in for $20 in store credit (when they are done with the game), making their actual game cost closer to $30 (a 40% discount). Unless publishers significantly discount digital versions of games, there is no incentive for users to buy them; this also explains why computer games are much more apt to be downloaded since there is no secondary market for used games (and therefore no trade in discount).


It appears the planets are not aligned for digital distribution in the sort run, but longer term where will it play out for video games. One area that digital distribution should flourish with is older content; older games offer a potential significant revenue stream for publishers but are a burden for retailers (and their over crowded store shelves). I like what Nintendo has done with their virtual console and using digital distribution to release older or niche (small market) games; Microsoft has also done a nice job here with X-box Live fostering smaller independent titles that would never be released through standard channels (i.e Braid). Pricing is key for digitally distributed content though, if publishers set the price too high the market could disappear of stagnate; Valve is doing a nice job keeping games available at inexpensive prices through Steam. Another area that should benefit from digital distribution is micro transactions: buying new costumes, new levels, or additional characters for a standard release. Micro transactions should also benefit publishers by forcing players to keep their original discs (not trading them in), thereby taking a little bite out of the used game market. Again, pricing here is critical as well; charging $20 for new maps or $10 for a costume upgrade that should have been put on the original disc is not going to cut it.

Unlike movies and music, video games are not easily dissectible or rentable, making them less likely to be downloaded; combining this with the vibrant used market for used video games will force publishers to heavily discount digitally distributed content and thereby most likely slow its adoption. Although full game digital distribution for new video games is unlikely in the near term, publishers can use this method for older or niche games and small in game additions: such as costume upgrades or new levels. In the end I see digital distribution making up a small portion of publishers revenue (10%) but done right could open up additional revenue streams and foster customer loyalty.

Are Video Games Collectible?

It is human nature to collect, if something exists, someone WILL want to amass large quantities of it. There are the standard collectibles that have an established community (with websites, price guides, auctions …), like baseball cards, wine, art, and antiques (to name a few) and then there are the not so standard like belly button lint and socks. As video games continue to grow, so does the sub segment of users who both play and collect; I guess this puts them somewhere around stuffed animal heads on the collecting spectrum. The video game industry has even bought into the trend and started releasing “Limited Edition” (LE) versions of some of their premium games; any Halo fan who bought the legendary edition and lives in a small apartment is probably cursing Microsoft as we speak. Does the collectible trend in the industry bode well for publishers and developers or are we heading down a dark path that could set the industry back years (remember the comic book implosion in the early to mid 90’s when the collecting craze took off).

The proliferation limited collector’s edition version of games is a significant trend in the gaming industry, more games are being released with high end versions and the publishers are adding more goodies to the mix. Ten years ago you might have gotten a bonus CD (with music from the game) if you ordered early or maybe even an extra game disc that had a playable version on an older game (i.e. Legend of Zelda: Ocarina of Time shipped with LOZ: Wind Waker), but now you get t-shirts, action figures, posters, and life size replica helmets (thanks Mr. Softy). This is a win-win for everyone: publishers get the added revenue from the collector’s versions (which usually sell for $10-20 more than the standard release) and players get the much valued swag they crave; or is it? Collector’s editions take up a lot of space on retailer’s already crowded shelves, often time 1 LE version of a game might take up as much space a 5-10 normal games (or close to 50 as with Halo 3’s legendary version). Also the added money that the LE costs, comes out of the finite budget most gamers have; if you buy 2 LE games a year (extra $40), that means you can buy 1 less regular game. Ultimately the LE craze squeezes (from a space and $ standpoint) out other less established product; why would a retailer stock Kororinpa: Marble Mania when they can stock the less risky (but infinitely more bulky) Grand Theft Auto IV Special Edition (for both the 360 and PS3 versions).


The other end of the collecting spectrum is propagated with people who crave rare out of print (OOP) games, usually in their pristine factory sealed condition. If you have played video games long enough, you will eventually hear some second hand story of the person who spend $250 on Ebay for a complete copy of Panzer Dragoon Saga (Saturn) or the guy who plunked down $90 for a used copy of Marvel vs. Capcom 2 (PS2) @ Gamestop (disc only!!); although both games are fantastic (I have spent many house with each), paying 2-5 times retail seems ridiculous (even wasteful). The fact that these games command such large sums of money in the secondary markets, suggests that there is plenty of demand to warrant a re-release or even an updated version on a newer system like Valkyrie Profile on the PSP or Final Fantasy IV for the DS; publishers are throwing money away by letting their old code (games) sit on the shelf and gather dust. The video game industry should take a page from their older and larger brother: cinema; Disney is always re-releasing their animated films, pulling them, and then re-releasing an updated version (with more content), or the multitude of versions of Lord of the Rings that New Line Cinema released (I can think of at least 3!).



In the end I do not like the collectible craze and feel it has the potential (if not already) to substantially damage the video game industry. The LE version of games takes up space on crowded retail shelves and takes significant dollars out of player’s strapped budgets (that could be spent on other games). People will collect video games; there is no way to stop it (like I said before, it is human nature), but the industry should not pander to it. The paraphernalia that comes in LE edition version of games should be given away through the mail to loyal customers (similar to what Nintendo does with their new “Club Nintendo”). OOP games should be kept in print through either digital distribution or several older games packaged together on 1 disk/cartridge (i.e. Square’s Final Fantasy I & II or Namco’s various arcade collections). Collecting is not inherently bad, but the video game industry’s reaction to it is.

One Man's Trash, Another Man's Treasure

Are used video games good for the industry? I have had many conversations about this topic, and with the spate of recent poor earnings from video game publishers (and the bankruptcy filing of Midway), the debate seems to be heating up. Video game developers and publishers feel (off the record), that used games are equal to piracy; they argue that used games cannibalize new software sales and reduce their profits. On the other hand, allowing consumers to sell their old games puts more money in their pockets, which often gets funneled back into the video game industry (leading to higher sales).

Before we tackle the issue of how much damage (or lack there of) used game sales cause, there is the question of legality. Some in the industry have proposed that, since they get no revenue from used games (similar to piracy) they should be illegal to sell. The lost revenue is a concern and there is some violation of the developer/publisher’s intellectual property rights (when used games are sold), but they pale in comparison to the basic property rights of the consumer. Violation of consumers’ property rights (through DRM software) is never good and usually leads to lower overall sales (why does Spore score a 2/5 stars on Amazon??). Enforcement of a used sales ban would be difficult at best; what if someone legally bought a game and lent it to a friend (for say 2 weeks) should that be illegal; again, this is technically a violation of the developer’s IP (potential lost sale). One might say that 2 weeks is not OK (too long) but 1 week is fine, or maybe only a day (is acceptable); where do you draw the line (classic slippery slope). Further, opening the door to making used game sales illegal, brings up questions about other media (music CDs, books, movies, comics, …) and how would you handle used sales of those products and why is there so much animosity towards used video games but not so much so for movies or CDs? Do movie studios handle their products differently to negate the effect of used sales (a question for another time perhaps)?

The primary industry argument against used video game sales is that they cannibalize new game sales, which therefore costs developers/publishers money. The cannibalization argument is valid, but the questions remains, to what extent; the publishers would have you believe that it is 1:1 (or 100%), or in other words every used game sold deprives them of a new sale. In reality the cannibalization rate is nowhere near 100% since many people purchase used games due to their lower cost (and would forgo the purchase of a new game if forced to spend the extra $$) and the fact that they are returnable (how often have you purchased a new game only to find you do not like and are now stuck with it); I would put the cannibalization rate closer to 60% (due to these 2 factors). Also, a good portion of used game sales goes back into the industry; often used trade in credit is used for new product, which directly benefits the publishers. If the average gamer could only spend $1000/year on games, they can only buy 20 new games (@ $50/piece); but if they traded each used game in for $18 credit they could buy 27 (and increase of 35%). Combine the lower level of lost sales and the higher level of spending they generate, and used games may actually turn out as a benefit for the video game industry.

The bottom line is that used game sales are legal and to make them otherwise would either be impossible to police or create a consumer backlash that would tend to lower sales (see the DRM argument for the PC version of Spore as an example). In reality used game sales are probably a slight positive to the video game industry, since not all people would necessarily buy the game new and you are increasing the cash gamers have to spend. In the end, used sales are clearly not the threat (can we say scapegoat) that many developers and publishers are making them out to be. Maybe if publishers embraced the idea and tailored their offerings to better suit the market, used products would cease to be an issue; most publishers do a poor job with their IP (both content and old code/games = evergreen), but this is a discussion for another week…

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