Diablo III, or Should we Say Diablo FLEE

What a joke!! Who was the bonehead at Blizzard/Activision that decided it was a good idea to require a constant internet connection to play a single player game of Diablo III. Not only was the idea to require an internet connect beyond stupid, but then to not have the server capacity to allow players to connect to Battle Net, puts this in the category of moronic. When will publishers learn to not use ridiculous DRM schemes to protect their IP; EA (Spore), Ubisoft (Assassins Creed), and now Activision all collectively gave their customers the finger. I hope Activision gets sued big time for this, there is just NO excuse to put your loyal customers through this kind of pain.

Apple TV and Mario

We blogged about Apple getting into the TV market over 2 years ago, and with recent speculation (based upon filed patents), it looks like this will happen in the near future (hearing sometime in 2013). With Apple entering the TV market, it makes me wonder what this product will look like and what impact it will have on our beloved video game industry.
First off, we start with the current Apple TV, so you get iTunes, all of you desktop stuff, and streaming on your TV. Not bad, but not earth shattering either; Apple will add Siri to the set, so now the whole show can be controlled by your voice (there will be options for iPod/iPhone/iPad control); Apple will combine this with a modified Lion interface, very visual and easy to control. The set will be completely wireless: it will be Wi-Fi out of the box (no need for a cable wire), have a Blue Ray player inside (Apple hates this but will relent due to consumer demand), and will use wireless power transfer (NO power cord). Imagine a picture frame hanging on the wall that you can talk to, to access all of your favorite TV/movie/internet content from your couch.
Even if Apps can not match the depth and breadth of traditional games, they are slowly encroaching on the console game’s turf; it is hard to compete with free or virtually free (sub $2) video games. Having the ability to play App games on a larger screen, will allow Apple to further penetrate the video game market; control will be an issue, but I think Apple will resolve this by using the iPhone/iPod as a controller (most likely with a dedicated App). Having iTunes on your TV will make purchases easy and I am sure developers will start to develop exclusive content for the TV. Apple has already begun to explore content of their own (rumor that they are bidding on the English Premier League rights for 2014) and they have incredibly deep pockets (estimates put their cash pile @ $80 billion); video game assets may make more sense since they share Apple’s technology heritage. Nintendo would make a lot of sense; tons of IP and 40 years worth of games that Apple could convert and sell through iTunes. Nintendo is very Japanese, so this might be tough to get done (culture clash); barring Nintendo I could see EA as a good fit (large catalog of back games and decent IP). I do not think Apple and Apps will take over the console world, but I think they will be very influential; I can see them eclipsing Sony and moving right behind Microsoft for power/control in gaming (still not sure if this is good or bad).
Picture this: Tim Cook walks onto the stage carrying a large picture frame under his arm. There is a living room in the center of the stage (with a blank wall in the center); Tim proceeds to hang the picture on the wall, and sits on a stool by a large counter. Tim takes a brief sip of water, clears his throat, and tells the TV to play the Steve Jobs biography. The biography plays for 2-3 minutes and ends with this Steve Jobs quote, “Design is not just what it looks like and feels like. Design is how it works.” Tim thanks Steve and then takes the TV through its paces. After the demo, Tim again turns to the TV and ask for the Steve video, and ends with this quote, “Everyone here has the sense that right now is one of those moments when we are influencing the future.” TV and video games will never be the same; I think the TV will be amazing, not so clear on gaming.

Electronic Arts goes Bankrupt

Electronic Art’s recent Project $10 has the company once again attacking it’s consumer base for it’s own financial gain; you would have thought they would have learned their lesson from the DRM Spore debacle. Make no mistake, whether there is a one and done code (for some DLC) or limited installs of a new game, this all centers around digital rights management; more and more publishers feel they can infringe on the consumer’s rights for their own personal gain. In addition to EA’s misguided efforts to reclaim lost revenue from used game sales, recently Ubisoft announced that they are using an online verification system for PC games and Sony is requiring an online code to unlock portions of certain games (i.e. online play for SOCOM). Both policies are infringing on consumer’s first sales doctrine rights; how long will it take for a smart lawyer to realize this and initiate a clash action lawsuit. I understand where publishers are coming from, but I think there are better ways to handle DRM that do not exploit consumers and may even generate some good will (enhance and future sales).
Free DLC- If used game sales are the issue, prevent the discs from being traded in (stop the problem at the source), by giving consumers free DLC. Free DLC is a no brainer, if consumers knew that they could get added use out of the game they would keep them longer and there would be nothing to trade. Publishers will argue that the DLC costs them money, but this could easily be recouped if they combine the DLC and release it on a compilation or Game of the Year Disc/version.
Limit Game Print Runs- Do not over print games; this is a huge factor that generally leads to devaluation of game values across the board. Many Japanese developers (Atlus being the prime example) will limit initial print runs and pull games quickly once sales slow; this creates a sense of urgency with consumers, “if I do not buy it now I may not be able to get it later”. The same technique is used with sales promotions (that only exist for a short time); buy now or lose is a powerful motivator.
I think EA is heading down a dangerous path that at the best will alienate their fan base and at worst may bankrupt the company. There are clearly better ways to handle DRM, it just takes a little thought and some motivation and we can make a healthier video game industry where everyone benefits.

The Apple Does Not Fall Far From the Tree

It seems that every analyst out there thinks that Apple is poised to enter the video game fray, and that their initial volley (the I-pod touch and I-Phone) will takeover the handheld market (with it’s 3 billion download app store). According to apple’s most recent financial report they have over $20 billion in cash and short term investments with which to play; in addition Apple has made overtures in the past to enter the home console market with the Pippen (recent rumors have Apple dusting off the name and retrying). In reality Apple has 3 basic strategy paths that it can follow: content (which includes video games but also movies and TV), distribution (cellular or cable), or hardware.

Apple has little content and not a lot of experience managing or creating it (very different business models work here) so I would think this would be a slim chance Apple would go this route. Some might mention that Jobs did own Pixar at one time (a very successful movie studio), but in reality he never had a hands on role there and Pixar’s greatest successes came after he left to go back and run Apple. Without content it is hard to be a serious player in the video game market; both 3DO and to a lesser extent Atari tried and failed.

Distribution would be an interesting play; Apple could get some healthy subscription based revenue, which they already supposedly get a piece of from AT&T (for the iPhone). But (again), Apple has no experience in running this type of business and the capital structure of these types of companies make me think this would not happen either; imagine Apple controlling 100,000 employees doing everything from laying fiber to helping you setup your wireless router (does not seem to mesh).

On the other hand, a consumer electronics binge might be just what Apple needs. Apple already makes some of the best computers, mobile phones, and MP3 players on the market and their slick interface (Mac OS X) could do wonders for other devices. Say Apple buys a major flat screen TV maker (like Vizio) and incorporates Apple TV functionality directly into the set; the gap between PC and the living room is smashed and Apple is running the show. This would also allow Apple to further expand iTunes into TV and movies; a move that they are already negotiating with several studios. Also imagine Apple’s designers turned loose on your TV, just imagine all of the upgrades they would bring that we never knew we needed.

Apple’s core competency lies closest to a consumer electronics giant; they even recently shed the computer portion of their name (further evidence they are wandering away from their PC roots). Apple does not have the studio mentality or structure in place to create significant content; even if Apple wanted to there is no guarantee they could do it better than any of the existing players (they have NO track record here). Although video games are not in Apple’s future, a definite foray into hardware could propel Apple into the forefront of the next generation living room; something I for one would enjoy seeing.

Oh The Horror!

I was thinking the other day about the huge popularity of anything dead, or more specifically anything undead. Zombies and vampires are all of the rage, from the mega hit Twilight to the cutting edge True Blood (at least for TV) to countless video games (Fatal Frame, Silent Hill …) and comics (Walking Dead, 30 Days of Night, North 40 …). I could not help but wonder what started this modern day revival of classic horror franchises, and my mind kept racing back to the early days of the Playstation 1 and my first encounter with Resident Evil. It was 1996 and I was truly blown away by the combination of game play and atmosphere that RE was able to bring to the screen; I still remember jumping back when the giant spider fell from the ceiling, the terror that the game invoked was amazing. Unfortunately (like many PS1 games), the original RE has not aged well (the graphics and control are not on par with modern standards) and I think this clouds people’s view of this truly revolutionary game. To start the New Year, lets take our collective caps off to Capcom and Shinji Makami for ushering in the new age of horror and giving us so many sleepless nights.

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.