I recently received a copyright warning from my ISP via e-mail. They said that my IP had been associated with an illegal download of a movie. In this case, the movie was I, Frankenstein. This is the first warning of such kind that I have ever received. And yes, I did indeed download I, Frankenstein from Pirate Bay.
First off, I was pissed. I was pissed because contrary to what copyright-pushing corporations would like you to believe, there is nothing wrong with piracy, as this video perfectly illustrates.
That's not to say that piracy isn't an issue that needs to be addressed; it certainly is. The problem is that current laws are a poor tool to address the issue, and the issue itself is incredibly complex, with aspects to it that are economic, social, ethical, and legal.
But that's all for another post. For this post, all that you need to know is that I was pissed. I was made to feel like a criminal for simply taking data that was freely floating around the interwebs. Some of you will undoubtedly think that this feeling is reasonable, and I should feel like a criminal. An explanation as to why you are wrong will likewise have to wait for another post.
Secondly, along with being pissed, I was confused as all get out.
I don't pirate that much anymore. Back in the day, I would pirate everything I could get my hands on. The
vast majority of it I never watched or listened to, and the vast
majority of the software would never be installed. Still, I pirated it. Today, I might download a movie once per equinox. So it was a real shock to receive a warning long after my pirating days were mostly done.
Furthermore, what an absolutely bizarre movie about which to get a warning! I downloaded the movie specifically because it was purportedly so bad as to be nearly a master class in how not to make an action movie. When your movie is famous for being terrible, you should be happy that anyone wants to watch it at all.
And again, shouldn't you, oh hypothetical interlocutor, be more interested in protecting the movies that people actually wanted to see in the first place. Let's face it, after failing miserably in the box office and being drawn and quartered by critics, I, Frankenstein isn't exactly a valuable piece of media. Most of my motivation for wanting to see the movie was to see a ripped Aaron Eckhart.
In the end, there was a good fifty-percent chance that I never watched the movie. Now that I have received this warning, there is a one-hundred percent chance that I will not watch the movie. I have deleted the file.
Someone, somewhere, thinks that this is a victory for copyright protection. I may as well argue with an evangelical Christian.
So congratulations, whichever company sent that notice. You have successfully stopped someone from watching your colossal bomb that has a 7% rating on Rotten Tomatoes. You go, boy. You go.
UPDATE: I didn't realize this when I wrote it, but Samsung's current ad campaign IS "The Next Big Thing". That's hilarious to me.
Apple and its investors are in a panic right now because tablet and cell phone sales are slowing. First off, I'm amazed that anyone is surprised by this. As soon as the Moto G came out, I knew that we were near the end of the smartphone explosion. And even before that, the writing was on the wall.
Apple's competitors have been trying very hard to be Apple. Aside from Samsung, which through sheer brute force managed to become the default Android phone, smartphone companies are not earning money. That's because they cannot be Apple. Apple is Apple because they were the first out the gate. They created a new market. Along with the apple cachet, this allowed Apple to charge a premium and make huge profits.
The only option for the Johnny-come-lately companies it to compete on price. None of them wanted to do this because it's not sexy. It's also a brutal place to be. But which is better, being in a brutal but profitable market, or being bankrupt? Obviously, for companies like HTC, Blackberry, Sony, and Nokia, they all decided that bankruptcy was the better choice. Man, those MBAs are really paying off.
During this slow motion train wreck, these companies threw everything at the wall. Gaming phones and tablets, curved screens, touch panels all over, specialized hardware. They threw it out there, didn't support it, and watched it die. For the winners, all this change resulted in huge profits. But one of the big reasons for that was that with every generation, big changes took place. The iPhone 3Gs was a huge leap from the original iPhone. That is no longer the case.
As I said, the Moto G was the beginning of the end. It was a good enough phone for less than $200 unlocked. The Nokia 510 is another good enough phone for dirt cheap. When products that are super cheap are good enough, the vast majority of people have no reason to upgrade.
And this is fantastic. I grew to hate Apple and their flock because it was always about the next great thing. This earned them huge sales, but stunted the actual potential of their creations. For example, biological evolution requires a stressful but stable environment for changes and selection to take place. If the environment is always changing, there is no persistent pressure to affect selection and evolution never takes places.
The technology market is the same thing. For practical progress to be made, arbitrary progress must slow down. Technological features and standards must remain static so companies can find ways to implement them. If they expect rapid changes, companies will not invest. Software will remain simple, light-weight, and easy to update.
Everyone who lived through the 80's and early 90's remembers that joke about technology being obsolete before you get it home. That joke stopped working in the 2000's because computers stabilized. Software complexity increased a hundred fold in the 90's not just because of technological advancements, but because the market remained mostly stable. A computer bought in 1995 could run software in 2000. I was using a computer that I built in 2002 in 2011. This allowed developers to dump huge amounts of time and money into development knowing that the market would remain open for years into the future.
Developers today have no idea what to expect from the next iPad or iOS. Android is even worse because Google is treating it like its own little fiefdom. Windows Phone has had three major architectural changes and it's barely three years old, with another change in the pipes. Windows RT is a disaster. Windows 8 is only a slightly smaller disaster.
I've always said, I don't want the next best thing, I want the thing that I buy to be functional for ten years.
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I actually have a personal example of technological change causing harm. Back in the early 2000's, Microsoft was pushing a package of sorts on how to develop robust online applications through Visual Basic 6, Windows 2000, and a few other bits of technology. Visual Basic had already been around for years and had become an immensely successful programming language. This push of theirs was likewise a huge hit. Thousands of develops piled on to create online applications with Microsoft tools.
So Microsoft did the only logical thing: they deprecated all of Visual Studio in favor of .Net. You may not know what .Net is, but I'm sure that you've had problems with downloading updates to .Net to get programs to run. It's a software framework in which a programmer can make software. Any changes to the framework can break software and fuck developers. So when framework changes come down the pipe, it is a terrifying time.
Sometimes, major architectural shifts are great. Apple did that when they released OSX. But Apple had an installed base that was one one-hundredth the size of Windows. They needed change to survive.
When Microsoft did the same thing, they threw the world into chaos. Evolution stopped because people needed to adapt to this new framework, much of which was arbitrarily different.
Microsoft did this because technological stability/stagnancy is a poor profit generator for a company that makes money off the framework. They maximize profits by keeping the framework fluid. Keep customers and developers chasing the next big thing. Indeed, producing a perfect product is the last these companies want, and I hate that.
Look at Windows XP. 30% of computers still run Windows XP and Microsoft is beginning a campaign of annoyance to try to force these people to switch to a newer OS.They made an amazing product with Windows XP. In fact, they made it so good, they were unable to convince people to leave it. And in the twisted logic of software companies, that's a bad thing.
What happened to .Net? Well, I can't directly associate the betrayal of Microsoft's developer base with this trend, but it must play at least a part; Visual Studio saw a massive drop in significance. Visual Basic went from being one of the top three most widely used languages on the planet to, as far as I know, not even in the top ten, although this is a very hard measurement to make. I do know that good old VB6 is still more popular than VB.Net, though, and that says something very important about developers:
They want their shit to work, nothing more.
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For a few years, everyone seemed wrapped up
in the "Post-PC" era nonsense. This was of course just marketing blather
to sell tablets. If anything, we are entering the true age of the PC,
when they become as stable and ubiquitous as cars and refrigerators. Do we see double digit growth in car sales? No. Of course we don't. That doesn't mean we have entered the post-car era.
But sales are what matters, not actual development. So the stability of the PC was lambasted as dying, while the white-hot tablet and cell phone market was thriving. What they actually meant was that tablets and cell phones were obsolescing faster. It was like the 1980's and 1990's PC market all over again. But just as with the PC, the tablet was cruising to stability. It had to. Which again explains why I was so amazed by anyone who was surprised when the steam started to go out of this Post-PC epoch.
Perhaps it is because our experience in the past moved more slowly. But that was a different time, a different world. Tablets and cell phones moved far more quickly than computers did. Because of that, I think they have already reached their proverbial Windows XP moment, where the products and frameworks being bought today will be good enough for the next five to ten years.
And I couldn't be happier. I love tablets. I think they have an immense amount of potential to do great things. But their consumer focus and ever-changing frameworks prevent real progress from happening. Instead, tablets are primarily used as tools to fuck around on Facebook. And while smartphones have a lot of fun apps, the vast majority of them
are mere junk — trifles with which people can while away some time.
I want something more from them, and for that to happen, they need to stop changing. Apple and their ilk will fight this. They always want us chasing the next big thing, real change and development be damned. That's why everyone is starting to flip out about Google Glass and Smart Watches. They need us focused on the next big thing. (See update above)
Tablets and smartphones are no longer the next big thing, and that's great.
I have spent some time trying to track down a reason for this and, failing to succeed, I am posting the question here.
YouTube is a source of near-constant problems for people because cell companies and internet service providers hate it. They hate it because it's so popular and sucks up a lot of bandwidth. Because, remember, telecom companies are generally evil, and their ideal scenario is where you give them $100 every month and then never use their product.
But I digress. I have three computers in my house, two on WiFi and one CAT-5'd into the wireless router provided by Verizon. The two computers on WiFi always provide the option of 1080p in videos that have it, but the computer that is hardwired never does when using Firefox. Chrome sometimes won't show it, but Internet Explorer will always give me the option.
I thought it was my cookie blocker, my ad blocker, my script blocker, or my security suite, but the issue persists in Firefox with all of those programs turned off. I am at a loss.
UPDATE: SOLUTION FOUND
I discovered the problem. I have a few accounts connected to Google, and a few computers, and this led to some confusion.
On one account, I had opted into the HTML5 video beta that is available at the bottom of the YouTube page. On others, I was either not signed in, or had not opted into the HTML5 video beta.
YouTube's HTML5 video option does not currently support 1080p videos. They are only available through the Flash video player.
If 1080p videos are mysteriously not available to you, click "try something new" at the bottom of the page and opt out of HTML5.
My post from yesterday talked about how happy I am that the portable processing market is seeing an explosion of innovation and development so fast that it will soon threaten the traditional computing market. CES is doing more to evince that reality than anything in the past two years.
Samsung, Nvidia, and Qualcomm are all releasing new, super-powered versions of their processors. Samsung is wedging eight full cores into their new processor, Nvidia's Tegra 4 has 72 virtual cores, and Qualcomm's newest Snapdragon 800 will allow for 4K resolutions and graphics power that is more than double the previous generation. When was the last time we saw leaps and bounds like that in the traditional processor space? Oh right. Never.
As the video below points out, the new Tegra 4 already delivers graphics on par with the Xbox 360, and at a higher resolution to boot. At this rate, it will only be a matter of time before this architecture and paradigm eclipses the old, x86 paradigm and architecture for every consumer use.
CES is going on as we speak... I mean write... and by we, I mean I, since you aren't writing. Well, you might be writing. I don't know.
One of the biggest companies that is presenting is Intel, who is showing off integrated television technology about which no one gives even a single shit, and their newest line of processors, about which almost everyone gives at least one shit. Their upcoming processors offer a performance increase over the previous generation of, at most, 15%. This may seem pretty cool, since desktop processors usually moved in increments that large, but it's not. It's boring.
Compare this to other technology markets. Hard drives halve their prices every year while seeing 25% increases in storage capacity. I have two 2TB hard drives in my desktop right now that cost me less than $300 in total. And yet an Intel processor released a year and a half ago is still selling for the same price.
I have frequently suspected that, at least recently, the reason for this comparatively slow progress was that Intel utterly dominated the processor market. Other companies just could not get their act together in any signficant way. Just look at the graveyard of broken processor companies: Cyrix, Transmeta, VIA, IDT. And in almost all cases, their performance lagged Intel's chips. Even today, with only AMD remaining, AMD's chips cannot compete clock-for-clock. Intel is king.
What is a consumer to do? Grin and bear it? That's what we've been doing with Intel for years. Unfortunately, we cannot simply refuse to buy their products. Those of us in the know can buy our own processors from AMD (which I have done), but for the average person who simply wants a laptop to watch Downton Abbey on, they're stuck. It's Intel or nothing.
This tyranny is one of the reasons I suspect so many companies are jumping all over the tablet/cellphone bandwagon. There is no Intel hegemony. Indeed, Intel can't crack into this market to save their life. And precisely because the other companies are tired of dealing with Intel is one of the reasons, I suspect, that they are being less than accommodating.
Another reason is that I think Intel has forgotten what it means to compete. AMD and Nvidia have been going at it for years, doubling their GPU performance nearly every year. We are seeing the same thing in the portable technology space. Processors and GPU's see gains of double, triple, quadruple, every year.
That's the reason why the tablet space is so exciting while the laptop and desktop market is contracting. Because it is energetic! Every year sees something new. Innovation is driving things ever forward. Games on a cell phone look like the first games that came out for the Xbox 360. In two years, cell phones will be more powerful than the Xbox 360. We aren't seeing anything even remotely like that coming out of the old-guard companies.
I am so excited about portable processing. Not because I use it extensively. Truly, I don't. I spend almost all of my time on a desktop and a laptop. But we need something, anything, to get AMD and Intel off their damned asses and really push forward -- really innovate. While I didn't expect it even only a year ago, it is now obvious; the motivation, the fear, necessary to get the old companies to step up their game in the traditional computing industry will come from portable technology. It will come from your pocket.
I use Twitter. I have two accounts. I still rely primarily on my blogs for publication and communication, but Twitter sees some pretty significant activity. And this is, of course, why I'm a bit concerned with the way that Twitter is evolving.
Most of the people to which I've talked think that Twitter is making a pretty huge mistake. I tend to agree. They are taking away value from users instead of figuring out how to earn money with their current value set. That's never the way to grow a business. Truly, it may be the way to actually earn money, but that money will come at the expense of growth and customer engagement. That's why real business savvy is difficult. The perfect businessperson could make money while giving everything away for free.
In olden times, this wouldn't necessarily be a problem. A company could make a mistake, correct it, and move on. But in the tech world, as we have seen, the speed with which a company can fail is blinding. Myspace fell off the map in less than a year. A year! Even being in hardware provides no protection, with Nokia going from the #1 cell phone juggernaut to losing money and on life support in less than two years.
I think that companies can make small mistakes. Importantly, as long as value grows, even a major mistake can be forgiven. But with online-only companies, a major slipup can trigger the landslide of users to something else. Not necessarily a traditional "competitor," but perhaps something different. Did Blogger and Wordpress see Twitter as a competitor? Likely not, but they both took huge hits to their active user bases because of it.
What will rise to challenge Twitter? Who knows. All I know is that something is coming, and if Twitter acts like this, they weaken themselves such that they will fall and fall quickly when it happens. This isn't a doomsday scenario, but the world of Internet software has lit a fire under the ass of every company operating within the industry because the speed with which they can fail has accelerated so much. Every company must remain humble, and this behavior on Twitter's part indicates that they are not doing that.
UPDATE: I just now thought of the best example of this threat: Digg. Digg went from being a golden boy to dead in two years. And now, Digg, under new ownership, is trying to become a "startup" again. The problem is that once you're not new, you're not new. That most recent drop that you see on the chart down there was the release of this new version.
I think that this happened to Digg but not to Facebook during its frequent clashes with users because, firstly, Facebook really only had a single competitor, Myspace. Myspace was failing far worse than Facebook ever did. Digg had an immediate and direct competitor in the form of Reddit. Secondly, Facebook only ever added features. Sometimes, users thought the features overreached or were useless, but it was still an addition. Facebook was adding value. Digg took a bunch of stuff away. What's Twitter doing?
It's not just the Olympics; it's all sports. I'm growing tired of every major sporting event and am even becoming contemptuous of many. The problem, in the main, is commercialism. The avarice, greed, and outright money-blinded stupidity of major sporting events is becoming impossible to ignore.
Haters of big sports have been attacking this element of them for some time. With a simple Google search, I was able to find multiple articles about the overt commercialization of NASCAR going back to the late 1980's. Every football season brings out another article decrying the loss of value in sports, with tickets costing hundreds, if not thousands, of dollars; the major regulatory agencies push copyright to the breaking point in a desperate attempt to control each and every possible manifestation of a game in the public; and to be associated with the game at all requires paying out in a huge way. It. Is. Disgusting.
The Olympic Committee is a grand example of the corruption brought about by financial motivations. The committee is supposed to be non-profit, but how does that jibe with this quote from the Wikipedia page of the IOC:
Until 1992, both Summer and Winter Olympics were held in the same year. After that year, however, the IOC shifted the Winter Olympics to the even years between Summer Games, to help space the planning of the two events two years apart from one another, and improve the financial balance of the IOC, which receives greater income on Olympic years.
Short answer: it doesn't.
Or take this sampling of headlines showing that the stupidity doesn't just end at the IOC, but extends to the dumb-as-rugs media companies and countries that are willing to spend buckets of money in this farce.
Add to this the suffering that the athletes must go through, dealing with absurd rules that no sane person would accept or put up with. Do this, penalty! Do that, disqualified!
The functional problem is the sheer amount of money at stake. Whenever there is a lot of money to be made, the number of cooks in the kitchen increases by an order of magnitude, and it ruins things. Sports, and the Olympics specifically, are no different.
The aspect of this mechanism that is driving me away is that, in the fight for all of the money, they are fucking everyone else, and seemingly doing it with glee. The viewers, the cities, the athletes, the fans, everyone is getting fucked. And when the IOC, London, the NFL, and any other organization does something that is a bald-faced money grab, they are literally saying to everyone "we are going to fuck you, and you are going to take it because... you are going to take it."
No. I'm not going to take it. Not anymore. When you are visibly and undeniably disdainful of your audience, and your willingness to bully, blast, and otherwise be belligerent knows no bounds, I have no interest in even recognizing that your events are taking place.
I
like Google. I really do. I think that there have been moments in
their history where they could have done better —censorship issues
in China being one of them— but overall, they are a vastly superior
company to other tech heavyweights like Apple, Microsoft, and Intel.
That said, I still yearn for an OS that isn't Android.
Android
is something of a mess. Many geeks don't understand the actual
problem of fragmentation in the OS because they've never
experienced it. Many of them are usually at the cutting edge,
sporting a cell phone that is either cutting edge or at least
current-gen. For those who don't have the money, time on their
contract, or like me, simply prefer to buy unlocked cell phones,
fragmentation is a major problem.
For
example, the Sony Ericsson Xperia X10/X10 Mini/X8, Pro, and other
phones were pretty big successes for Sony. They are technically
Android phones, but they barely run the OS. Getting them to
run at all smoothly requires rooting and a custom ROM using the
newest version of Android.
Making
matters worse is the immense amount of noise being generated by the
manufacturers and carriers. Carriers mandate locks on the phone and
un-deletable software, while manufacturers muddy the waters
with custom versions of Android that frequently are inferior to the
stock Android interface. Google's answer to this problem is the Nexus
line of "pure" Android devices, and I think that it's a
pretty good answer.
But,
what if I don't want the Nexus? What if I want the HTC One X. If I
get it unlocked, it's either the super-expensive international
version that doesn't run on AT&T's high-speed network, or it's
simply an AT&T phone with all of the same junk that's on the
locked AT&T phone... it just costs more. In this regard, both
Windows Phone and iPhone are superior, since locked or unlocked, it
doesn't matter. It's the same phone.
I
yearn for an OS and phone that isn't victim to all of the noise,
noise, noise, noise from the carriers and manufacturers.
Similarly, I yearn for a well-made platform that isn't reliant on a
major corporation. That's a difficult thing. Linux has been around
for well over a decade and still isn't a significant replacement for
Windows or MacOS. Open source can work, but it's always easier to
have a major presence behind any initiative.
Jolla
and MeeGo have all of the work done by Nokia, and MeeGo specifically
still has support from large numbers of hardware companies who are
keen to avoid an OS duopoly of iOS and Android. MeeGo also has the
support of geeks who would like an OS over which they have more
control. Because while Android is open and tweakable, it is still
Google's baby, and they raise it as they see fit.
I
hope that MeeGo catches on. I'll totally make an app or two for it.
In a case study of how to be clueless and alienate customers, Viacom has blocked online streams of The Daily Show, Jersey Shore, Colbert Report, and a number of other properties where full episodes were available for free. Why would Viacom so wildly shoot themselves in the foot? Duh! Because they're in a pissing match with another giant company, of course!
DirecTV has refused to pay a significant rate hike to carry Viacom channels, resulting in the loss of twenty-six channels including Comedy Central, Nickelodeon, and MTV. DirecTV responded to hardball tactics by posting on their home page places where users could get Viacom shows directly from Viacom!
Yes. All that DTV did was tell people what Viacom was already producing. So to really drive home that the entire company is a gigantic child, Viacom screamed "no!" and took those streams away from everyone, regardless of whether they are involved with this issue or not. Viacom hurt 100% of its customers. That's a bang-up way to generate business, no?
This video shows a demo of what they thought the Internet would be like in the future. Considering that they were still looking at things from a primarily analog perspective, this isn't a terribly bad piece of futurizing.
I love the healthy dose of sexism that was thrown in for... the hell of it?
Predicting the future is the kind of endeavor into which there will always be prejudices injected. Predictions from the hyper-conservative post-war era always have technology being used almost exclusively to support extant social norms. For all intents and purposes, life is exactly the same, just with some weird gizmo doing things that people were already doing perfectly fine. Just imagine how funny it would be if their predictions were completely accurate.
"After dinner and homework are all done, the family sits down together to watch hours and hours of videos about cats. Because in the future, cats have become the predominant form of entertainment."
In case anyone thinks that there isn't a horrible lack of creativity in the video game market, just go to Steam's website and look at the promoted games on the homepage. I did that and found this.
Man with gun.
Man with swords.
Men with guns.
Men with guns.
This one appears legitimately inventive. Good show. You'll notice that this is the only game with a mustache. Coincidence? I think not.
Man with gun and small sword versus zombie.
Man with sword.
Cars. Derivative, certainly, but not for the purposes of this comparison.
Man with gun.
Man with gun versus another man with a gun who is also holding breasts prisoner. He is obviously a terrorist because only terrorists hold breasts prisoner.
The only other legitimately inventive game. And again! A mustache! It's a sign. Also, breasts.
Epic ships in space flying toward you.
Epic ships in space flying away from you.
Man with nail gun.
Zombies. One assumes there is a man with a gun nearby.
In my younger days, and by younger, I mean a few years ago, I played a lot of video games. I loved Sonic, Mario, Earthworm Jim, and any number of other titles (did I just date myself?). Lately, I've been playing increasingly fewer games. Controllers lie dormant. Some of my systems aren't even plugged in. I'm simply not interested. My reasons are numerous, but one thing that exacerbates the issue more so than any other factor, and the point that I want to discuss in this article, is that the various game companies are completely oblivious to the idea of value.
As I write, I am staring at my Xbox 360. It sits across the room. It's my second one, because as happened with every 360 that was purchased on launch day, my first one died. The 360 could be one of the coolest things ever made, dominating the technological zeitgeist for even the most casual users of gadgets. It could have been the iPad of the living room. Instead, Microsoft kneecapped it. The poor Xbox never once came anywhere close to fulfilling its potential. It could have been a computer. It could have been a media player. It could have been a media server. It could have been the true center of the living room. Instead, it's the mildly successful also-ran of the video game world. It's insanely popular with "core" gamers and no one else.1
The reason why my Xbox invades my thoughts is that Microsoft and Verizon recently announced the ability to watch a small package of Verizon FiOS channels via the Xbox. Then, Microsoft announced "partnerships" with Comcast, HBO, and Major League Baseball, allowing users to stream video through their Xbox. According to the press releases -and as we all know, press releases are always measured and completely free of hyperbole- these agreements give you the freedom to watch whatever you want, however you want.
Only, they don't.2 In a technology world moving by leaps and bounds every year, what needed to be announced was something truly amazing and innovative. This is not that. As a response to the rapidly-shifting market, this isn't a measure. It's not a half-measure. It's not a quarter-measure. This thing isn't even a tablespoon.
All of these announcements "announce" either something that no one cares about, or is something that people have been able to do on their computers for years. You need memberships for the media and Microsoft's proprietary Xbox Live service and your internet access. Truly, Microsoft may as well have announced the ability to play Playstation games on the Xbox, but only if you already have a Playstation.
Microsoft made another Xbox-related announcement about a month later, where they affirmed that no new Xbox will be announced or even much discussed in the following 18 months. They are resolutely confident in the ability of the Xbox as a platform to continue on for the next two years. Most people responded with a wide-eyed stare, of course, since video game sales were, at that moment, declining, and in many cases, doing so precipitously.
In fact, as I write this, video game sales have plunged for the fourth month in a row. Nintendo is going to post its first annual lossever. Microsoft's only division that saw a decrease in business is its entertainment division, which essentially is the Xbox and nothing more. And Sony is against the ropes in ways it has never been, having posted a $5.6 billionannual loss.
This is not because there hasn't been a new system released in some time, even though many game developers like Ubisoft seem to think that. It's not for a lack of good software, seeing as the quality of games is increasing.3 Indeed, it's not because the game companies aren't being good game companies. In most ways, they are doing exactly what they've been doing for over thirty years. And that's the problem.
Instead of evolving with technological development, the game companies continue to beat the same drum. And since times they are'a changin', as they always do, it eventually comes to the point where the only way to grow profit is not to change drums, but to force people to dance differently.
Thus, we see the video game companies continually try to trap customers in such a way as to maximize money from them. While this seems like good business sense, it is actually the opposite. It is the mission that destroys a company. The real end of good business sense is a focus on what else the company can do for the customer. Business saavy comes from figuring out how to make money in this process.
That is a much harder prospect. Because the ideal situation for a video game system is giving the customers everything for free. The greatest business genius in the world could figure out how to make money from that. Currently, every game system except for Nintendo sells the system for a loss and makes up the profit on games. In essence, they were giving away something in hopes of earning it back. This worked fine right up to the Xbox, which never earned a profit for Microsoft.
What's even more absurd is that the game companies are, in essence, fighting the very same business model that they are using now. Their original model gave away the system, and now they argue that they can't just give things away. Wait. What?
It's as though, instead of realizing that the market was shifting, the response of the entrenched companies was to double down on what they knew. And like so many companies that enacted the same strategy, it's killing them. Truly, the sickness that courses through the veins of these corporate corpora will ultimately be fatal if left untreated.
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The last time that I started my Xbox360 to actually play a game was over a year ago, when I played Halo: Reach for the last time. Before that, the last time that I played was to reach about the 75% point in the RPG Blue Dragon, before stopping and never finishing. I have never, not once, used my Xbox for any other media purpose. I have never used Xbox Live Arcade. I have never downloaded trailers. I have never played a multiplayer game online. For me, the Xbox is used exactly like my Nintendo was back in the 80's. I put a game in and press start.
As game systems have tried to become platforms, this simplicity is lost, and that's not necessarily a bad thing. But since the transition from game system to platform has been so incompetent, we have the ridiculous situation of everyone I know owning a game system, but not playing any games. Now, for example, everyone I know who streams Netflix to their television does so with a Wii: a service about which Nintendo could not care less. Do you think that Nintendo would pay some attention to this, now that they are losing money? You might. And you'd be wrong.
The two opposing philosophies of business and design clash on the Xbox in ways that are unmatched anywhere else in the technology world. Microsoft gives us trailers, movies, and TV shows... all of which are available freely on the web. So, of course, Microsoft doesn't give us access to that. Noooo. That would be much too easy. Microsoft would rather restrict your access to freely available stuff. Of course, then they have to answer the question of why anyone would watch media on their Xbox that they could watch on their computer? Aside from saying "yeah, but it's on your TV... ooooooh," Microsoft hasn't really provided an answer.
So as a platform, the Xbox sucks compared to a computer. Hell, it sucks compared to an Android tablet plugged into a TV. But that's fine, right? I mean, the Xbox is primarily about having fun with games. So as long as it gets that right, it's good. And arguably, the Xbox is getting a lot correct in this regard, but only for a particular demographic. They are the ones who are buying 4,765,897,492 copies of Call of Duty on launch day. I am not a member of that demographic.
I want to put a video game into a system, turn the system on, and play. On the Xbox 360, you cannot do this. You have to sign in. You have to update. You have to have ads streamed to your system. This set-up sucks. If I had more abilities with my system, as I mentioned, this wouldn't be necessarily bad. I might put up with it if I could easily play any video file from my computer on my Xbox, browse the real internet and watch Hulu and Youtube, install my own software, or otherwise have a system that isn't tailored and restricted in such a way as to try to milk me for as much money as possible. As is apparent from the demographics of the system, only the hard-core gamers care enough to let Microsoft do that.
The Wii provided at least part of what I wanted. It was a game machine. I put games in and I played. Nothing else. The Wii had a few fun things to play around with -weather, news, Netflix, etc.- but it was primarily a game machine. I appreciated that. But as I have been hitherto saying, that is no longer enough. Nintendo still limits what can be put on the system. They still deny the threat of cell phones and tablets. They still say that a business model of cheap games could never work.
Much like Microsoft, Nintendo's sales have been in free-fall. As I write this, Nintendo has just announced its first annual loss ever. Sales of the Wii missed targets by 25%, the same for the 3DS, and nearly 50% for the DS. And yet, instead of realizing that a sea change has happened, instead of recognizing the complete paradigm shift that is taking place, the president of Nintendo reaffirmed that no changes to strategy are necessary.
I've wasted more time in Angry Birds than I care to admit.
Nintendo's myopia is only further confirmed by their quixotic quest to stamp out system modding and piracy. It reveals a company that is just as clueless as Microsoft, but their DNA allowed them to stumble into the best model, one where games are paramount and easy to use. Now, the games that Nintendo so treasures are moving to different platforms, ones that are more liberated, cheaper, and easier to use: to wit, computers, cell phones, and tablets.
For example, for the most part, I've moved over to free games online at places like Armor Games and Kongregate precisely because I can simply press a button, play, and then leave when I want to. Most of these games are no where near the epic experiences that Nintendo and their ilk provides, but obviously, at least for me, the value of that extended experience is not enough to get money from my pocket and place my butt on the couch.
I am just an anecdote. But all three major video game companies hitting the skids is not.
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At the root of these myriad companies' problems is the same thing: value. As the world advances, where value originates changes. Entertainment once came from traveling minstrels, then centralized theaters, then movies, then home media. In turn, home media companies had to compete with computers and video games. And now everyone must compete with the internet, pocket computers, and even new forms of book distribution. There are more competitors for consumer attention and dollars than ever before, and with a middle-class that is earning less than they have in over two decades, if you fail to deliver value, your customers will leave.
The very heart of value is enabling. A company creates more value by enabling more things. A company reduces value by charging more for the same thing or charging the same for less. Value comes from providing something new, be it completely new or simply a new price. Growth comes from value. Life comes from growth. Life provides the ability to continue providing new things to customers. If you are not growing your value proposition, you are shrinking. If you are shrinking, you are dying. If you are dying, YOU ARE DYING. This is the nature of business.
Cell phone manufacturers are an excellent example of this phenomenon. One only has to look at the list of once-great brands that have since either fallen by the wayside or been completely eliminated. Motorola was once the absolutely dominant American brand. They went from a major player, earning billions, with double-digit market share in 2005, to irrelevancy and bankruptcy in 2008. Nokia went from the #1 cell phone company on Earth, to fighting for its very life in only three years.
The dramatic fall in the cell phone industry is only one place where this happens. Any industry where the quality of the product fluctuates so wildly can experience similar upheavals. By quality, I don't mean manufacturing quality, I mean quality in the sense that the product is suffused with a set of particular qualities that affect buying decisions. Qualities such as cost, desirability, color, brand, speed, etc.
You see similar wild drop-offs in any industry where the desired qualities change so quickly. In cell phones, which have evolved into pocket computers, it is because technology on that scale is evolving at an incredible rate. People always want the best screen, the most memory, the newest material, and so on.
But as I said, this isn't unique. Fashion, entertainment, interior design, and even baby names all see similarly rapid rises and falls. All that's required is a change in sentiment and boom, the entrenched players fail. And with the internet, changes in sentiment can be near-instantaneous.
Defending one's business from this is recognizing where value comes from and charging hard at it. There are many fashion brands that have been permanent fixtures on the Saks Fifth Avenue shelves. They do this because they reinvent their style every year. They chase the next big value shift. Only when a company rests on its laurels, does the market have a chance to grow around it.
There are two ways to provide value: the superstar model and the appliance model. The former is manifested in a fashion company. They are always trying to find the next new thing. They understand the basics of what they provide, but are always attempting to break the mold. Of every company in the technology market, the best one that I think exemplifies that is Google. Just look at all of the weird crap with which Google has experimented.
The latter model, appliance, means that a company knows what their product is being used for and simply provide more and better of the same. They are always on a quest to lower costs or provide a better experience. To use the example of the cell phone industry, Apple was the superstar with the iPhone. Other companies could have competed against that by making their phones with better screens, more memory, better audio quality, better materials, etc. It's still a phone, just better in every way than the previous model.
The appliance model, and the potential longevity it provides, is best manifested in the automotive industry. With every iteration, they build something that's fundamentally the same, but better: more power, better materials, lower cost, nicer stereo, etc.
While the superstar model gets all of the attention, I think that both models are of equal value. Both will, when executed properly, generate a great reputation and allow your company to continue. The superstar can easily rest on its groundbreaking efforts and simply make better versions. Apple is doing this with the iPhone. Likewise, an appliance company can leverage its reputation to attempt a new product type. The best companies frequently cycle in and out of both models.
As regards the video game industry, Nintendo brilliantly took both routes. They created a superstar new product while also focusing very much on the core experience of game play. Microsoft and Sony, with their explosive and flashy new systems, appeared to be shooting for superstar status, but actually took the appliance approach. Their game systems didn't try anything new. They had the same controllers. The same setup. The same games. The same ever-ageing demographic.
Theoretically, this shouldn't have been bad. As I said, both approaches can succeed if the companies maintain a perspective on value. But instead of doing that, both companies significantly reduced value by charging extremely high amounts for their systems, increasing the average price of new games, locking out third-party accessories, and doing little to appeal to those who were not "core" gamers, willing to pay for the newest blow-people-away game.4
Sony lost its view on value the most, Microsoft second, and Nintendo least. Not surprisingly, those line up exactly with the total success of the systems.5
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A middleman’s business is to make himself a necessary evil.
– Neuromancer by William Gibson
The loss of focus on value is greatest in the industries that were most predicated on middlemen. The music business failed so quickly because it was constructed around record companies that existed because it was, at the time, hard for artists to directly connect with fans. Now, instead of focusing on the value that they could still be providing, the record labels are obsessed with trying to force the world back into an old business model that only worked to begin with because of technological limitations.
The video game business is in a bit of a nether region. They offer games, which don't have value, but everything surrounding the games is very expensive. As such, companies can attach those games to other products and services without much real innovation. Xbox Live is a good example of this. While Microsoft has done little with Xbox Live aside from gaming, it is at least better than Sony and Nintendo, both of whom are ignorning the online revolution and are instead waging a massive, fruitless quest to stamp out system modification (oh, and there this whole deal). At least Microsoft realizes to some tiny degree that the market is changing and that what you sell must change as well.
But instead of focusing on that, instead of focusing on making the hardware and service as excellent as possible, we have Microsoft's strategy, which is to try to become the Apple of video games. In this plan, they have a massive, vertically-integrated ecosystem from which they can squeeze money from things that don't actually have value. Microsoft, just as Apple did, is trying to turn itself into a middleman.
This can be immensely profitable if done correctly, as Apple showed, and the various media companies showed in decades past, but it is necessarily bad for the consumer. It keeps prices high. It reduces competition. And importantly, it reduces the motivation for the company that rules the roost to make any advances or changes that can affect its position.6
In its pathetic and desperate attempts to be Apple, Microsoft has forgotten what wins. Openness wins. That's why Windows dominated Apple. That's why AOL died. That's why I think that the iPhone will eventually fall to Android. That is why the Xbox, Wii U, and Playstation will all inevitably fall into obscurity. Because instead of trying to increase value every year; instead of trying to grow, advance, develop, change, and push the market forward; instead of doing anything, they simply do what they do. Year in, and year out. It's no wonder that other forms of entertainment and interaction are growing at the expense of video games.7
Truly, the video game world is in a precarious position. All that someone has to do is make an attractive device that bucks the market, and everyone knows this and wants it. That is why so many people jumped on the recent news story that Steam and Apple may be considering a joint game system. Because Apple's goal would obviously be to do what the Xbox should have done, but never did. I don't see that being made right now, but as the technology world has shown time and again, the next big thing is always just around the corner.
For example, Canon's 5D Mark II, released over three years ago, redefined low-end video capture. Near-cinema-level video was accessible for a tiny budget. It turned video production on its head. The world went crazy. Instead of pushing things forward, Canon stagnated for three years, then finally released a new camera, the 5D Mark III, with no video upgrade at all, for over $1,000 more than the original camera. It was because they wanted to sell the good cameras to Hollywood for a massive profit and didn't want to undercut their new baby.
But just as the world felt the cold death of technological stagnation setting in, the next big thing turned the corner.
Blackmagic, a small media company that dealt primarily with video capture and post-production hardware, released their Cinema Camera. It costs $3,000 and absolutely blows away everything from every other company on Earth. The only way that a customer can buy a better camera, or even find a comparable camera, is to spend $20,000 or more at another company. And a price-to-price comparison isn't one, with no other company even coming close at the $3,000 price point. This camera is a seismic shift. EOS HD even went so far as to say that "the fall of the big guys" has begun.
If you ever, EVER artificially restrict the value that you could be offering to your customers, you open your company up to competitors who will drop a product on the market that does what you refused to do, and by the time you have managed to get a product out of your pipeline, you're out of business. Want evidence? Just ask Nokia and Sony Ericsson how it worked for them.
When a company tries to become a middleman and restrict access and behavior, they become a gatekeeper. They have value only as long as they are the only gate through which to pass. No company should ever want to be a gatekeeper! That guarantees, literally guarantees, that the company will go out of business in the future. It means that a company only has value as long as its competitors stay down.
We, again, see the legacy media companies doing this. They try to pass laws. They try to make their own media outlets like the perennial failure Hulu. They try to recreate their own mini-monopolies as some last-ditch effort to avoid irrelevance. Microsoft does not want to be this. The entire video game industry does not want to be this. But instead of adapting, they are putting their fingers in their ears and going la-la-la all the way to bankruptcy court.
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In their myopic quest to build and control mini-monopolies, companies forget that success in the past was not achieved because someone was actively trying to build a monopoly. Well, sometimes they were. I'm pretty sure that Rockefeller was actively trying to build a monopoly. But even then, he did not start off thinking "Mua hahahaha! Soon I shall control it all!"
All of the Captains of Industry grew their wealth by expanding value and creating better products. They connected railway lines, manufactured better steel, built a car for the masses, and expanded the use of petroleum. Their companies turned toxic after becoming monopolies, but they did not get there by acting like one, nor did they succeed by trying to initially circumvent free-market concepts.
Music companies did not become rich middlemen because they were actively trying to be. They became that way because the technology required a middleman. They simply filled the gap. Someone had to record the music, press the records, distribute them hither and yon, pay for advertising, and all other related tasks. They were actually providing a great deal of value in their position as middlemen, and as such, they became enablers. By enabling, they increased value, even though the side-effect of this was an iron grip on the process.
No matter the value that is created, no matter the extent of a company's enabling, this is fundamentally a closed system, whether the companies involved actually wanted it that way or not. A creator could not get in without going past the gatekeepers and the gatekeepers had fundamental concerns. For example, record companies had a finite amount of resources that were available to invest in the best music, so if a musician's music didn't past muster, he or she never gained access. That there may have been a small market that wanted his or her music was immaterial. The record companies had to focus on profits.
But as time went on, the fundamental limitations weren't enough. The companies tried to force artificial limitations on the market, such as when they tried to ban tape recorders in the 1970's and VCR's in the early 1980's.8 They didn't know it at the time, but that was the beginning of the end, not Napster. Instead of growing value, they became resistant to growth. They became toxic. And they have been toxic ever since. And as technological development grows faster, the speed with which these companies fail has increased to the point where a multi-billion-dollar company can fail in only a few years.
But I digress. This is about modern companies doing modern things. In Microsoft's quest to create an Apple-like model in the video game world, how Apple did it is happily forgotten.
The iPhone did not become the dominant smartphone because of Apple's work, it became that way because of the army of developers working on its semi-open platform. Apple tried the whole Microsoft tack early on, when they didn't offer developers an API. Instead, they said that apps could be developed within the browser, because remember, this was practically a desktop. That bit of mind-numbing stupidity is often forgotten as people lay endless praise at the feet of Apple, because Apple did something truly worthy of that praise: they realized their mistake.
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In 2008, almost a year after the iPhone had been out and coinciding with the release of the iPhone 3G, Apple opened the phone's API and launched the now omnipresent App Store. This completely contradicted the statements made by Steve Jobs during the launch of the original iPhone, where he argued that no one needed an API since they could easily make applications within the phone's Internet browser. This was an awful idea and everyone knew it. After months of market pressure, Apple announced in October 2007, three months after the launch of the original iPhone, that they realized the error of their ways and would be opening the phone.
They didn't open it all the way, though. They restrict the apps that can be in the App Store, and this is frequently done to just squelch competition. They prevent people from doing what they want with their phones and tried to criminalize the act of jailbreaking the phone. Think about that. They tried to criminalize a person doing something with their property. Apple officially went toxic.
To see the inherent strife in this approach, look at the endless struggle with the so-called jailbreakers. The percentage of iPhone's that are jailbroken in secondary markets like China approaches or passes 50%. The percentage in the US is nearly 12%. For such a technical and esoteric thing to do, those numbers are astonishing, especially when you consider that Apple is actively trying to prevent this.
What's important to note is that those numbers are likely not because people want free apps. Most apps cost so little as to make the danger of getting them through non-official channels not worth it. The average price for an App Store application was only $1.47.9 When an app costs $0.99, as many do, it's pointless to pirate. No, those numbers are so high because people, once they become acclimated to a device and a system, yearn for fewer restrictions. Even the name itself, jailbreaking, implies freedom from shackles.
The App Store wasn't created specifically to lock people to the iPhone. Truly, as mentioned, Apple's early model for app development, which would have used various internet markup languages, would have been completely open. Anyone, anywhere, could have made an "app." The locked App Store was created because Apple needed to create a seamless, secure experience that allowed people to press a button and get an app. Nothing like that existed. The App Store's creation increased value, enough so that the iPhone has independently created an entirely new market.
Remember that market share chart? Well, it only tells half of the story. This chart is in raw dollars.
That massive slab of blue that represents the stratospheric profit of Apple is a testament to the success that can be had when a company enables in a truly novel, innovative way. Apple turned cell phones from phones with a few computer-like features, to fully-capable pocket computers that just so happen to make phone calls as well. The App Store birthed a revolution.
As the market evolves, though, the value that was inherent in the App Store's locked model is evaporating. The channels through which people with cellphones can get new apps are expanding every day. Soon, the Apple App Store will either have to open up, increase services provided, or face a decreasing value proposition. And if Apple continues with its oppressive activity in the App Store as a solution to the problem, they court oblivion.
Why did I just go on this enormous tangent? Because the success of the iPhone is a case study in the profit that can be had from going the extra mile to deliver truly innovative value and the ease with which entrenched players can be utterly destroyed. And since the inception of the App Store, it has similarly been a case study of the conflict that can easily arise from a company losing focus on what is actually valuable. The strife within Apple mirrors the industry on the whole. The risk for Apple, as it is for every company, is if their products suddenly stop offering enough value to offset the toxic behavior, their fall will be fast and brutal.
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Everything that a company does must be done with an eye toward enabling and increasing value. Prices must go down, services must go up, and if possible, whatever the customer wants needs to be delivered. It is the very definition of free market growth. What the game companies are doing is trying to directly contradict free market economics with the creation of mini-monopolies.
But since these mini-monopolies aren't true monopolies, they are affected by outside systems and variables. And this is a good thing. These outside variables, unaffected by the monopolistic forces within the video game system, follow free-market principles. They are enabling forces that are positive for the consumer. So, instead of reducing value in the system to which they are tangentially associated, they actually increase value.
If you want to compete with used games, lower the cost of the game.
A convenient example, the used game market. It is good. It is enabling. It is of extreme value, especially to the hard core gamers that are the heart of the multi-billion-dollar industry. The ability to resell a game increases the game's value. If I know that I can resell something, I'm more willing to spend a lot on it. To see this in action, one need only look to one of the primary industries on the planet, the automotive industry.
The true cost of a car, as measured by Consumer Reports, Autocar, Automobile, and nearly every auto publication in the world, includes the expected resale of the car. It's one of the reasons why Honda and Toyota so frequently top "best deal" lists, even though they were more expensive than their competitors' models. So to compete, companies like GM and Kia had to lower their prices to close the gap.
If you want to compete with used games, lower the cost of the game. This lowers the value gained from trading it in, meaning that more people will opt to keep their games instead of sell them, thus reducing inventory in the used market. It also lowers the future value from selling the game, causing more people to buy the game new.
This isn't hard. This is basic economics. But apparently, the video game industry is filledwithpeople that just barely passed 7th grade.
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As with the music and movie industry, a major problem that, while easily solved by a chimpanzee that has taken Econ 101, has positively befuddled the video game industry, is the inherent valuelessness of software. One of the key aspects of modern economic thought is the principle of diminishing return. This is sometimes called a law, but I think that is inaccurate. There are no laws in human behavior. One aspect of diminishing return is that the cost of a good will eventually fall to the marginal cost of producing one more copy of that good.
So for example, a company is producing bicycles, if they produce more, they will sell more. But eventually, it will produce so many that those who would buy at the original price are used up, thus necessitating a price drop. Lather, rince, repeat, until eventually, the price has fallen to the price of manufacturing. This is an element of the much-feared race to the bottom.
Obviously there are limitations to this, as is the nature of economics. This theory assumes perfect systems, which we of course do not have, and it also assumes that the product in question does not change. Luckily, there are many ways that a company can "buck" the concept, such as good branding, design, or distribution. But in general, this rule always affects a market. It can't be stopped because the number one, number one, determinant of whether someone will buy a product or not is price. As such, prices will tend to trend downward.
So let's take that rule and apply it to games and any such digital information. After the information is out there, what is the cost of making one more copy?
Zero.
Or so close to zero as to make no difference. As such, basic economics states that the cost of games, music, movies, truly anything that can be broken into ones and zeroes, should be free. Not because data want to be free, or any other such techno-utopianist nonsense. They should be free because they cost nothing to replicate. And in a system that bases value on scarcity, a good that isn't scarce isn't worth anything.
Value comes from other elements. And regardless of the various old-guard companies protestations to the opposite, there are many places to derive value in this brave new world. And if the old guard wants to ignore these possibilities, other companies will simply step up to the plate. And as I've repeated throughout this, as the speed of technological development increases, the speed with which a company can fail also increases.
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When a company has been fighting behavior for a significant amount of time with no headway, they are stupid to continue.
Growth happens. Regardless of what the incumbent companies want. The best that they can hope to achieve is to slow that growth. We see this with large, legacy companies using their influence to try to maneuver government to pass laws against progress. The media industry is forcing through dozens of bad laws every year in their positively quixotic quest to stop advancement. They get copyright extended, make technology illegal, and spend millions in taxpayer dollars to block websites like The Pirate Bay that simply crop up in another form the very next day. They positively wreak havoc.
So not only does growth happen, trying to stop it harms everyone.
The market says what it wants. If users are doing something that a company doesn't want, they aren't wrong for doing it. The company is wrong for not wanting it. The market is always right, regardless what the company believes. This is obviously not a hard-and-fast maxim, since holding that perspective can be just as myopic as resolutely rejecting it. But when a company has been fighting behavior for a significant amount of time with no headway, they are stupid to continue. The righteousness of the act is immaterial.
At the risk of becoming political, I look to the Drug War. Each year, we increase spending, increase incarceration rates, increase incursions into other countries. Each year, drug use stays the same and drugs become easier to get. As we learned above, this makes perfect sense. When you fight something and drive it out of legitimate channels, you increase its value. If you increase its value, ever more producers will step in willing to provide.
As an economic entity, a company needs to embrace what it fights. By embracing it, it controls it. It controls the revenue channels. It controls the price. It controls the customers. By fighting it, the company abdicates control. And do I even need to say how dumb that is?
Games, music, movies, they are all fundamentally the same thing. They are 1's and 0's. That means that copying the information is cheap and easy. Legacy companies cannot seem to accept this. They fight it. They have lost control of the brave new, digital frontier. The stupidity of this decision beggars the imagination, because they could have used their money and strength to gain a significant foothold in this new gaming world.
Instead, we have companies like Doublefine showing the big boys how it's done. They raised over $3 million on the service Kickstarter for a classic-style adventure game like King's Quest, and that isn't surprising. Some, like at Kotaku, the video game website, have tried to argue that this is only applicable to dead genres. That's, of course, wrong.
Compare that to the Kickstarter project of Christian Allen. This is a guy who has worked on some big, recent shooters, and who wants to make an "old school tactical shooter". He has made...$48,000 at time of posting. He can call it "old school" all he wants, but the words "tactical shooter" sound like the kind of game that gets released every few months on a current generation console, which in turn - and regardless of the kind of game he has in mind or its chances of success - reduces the effectiveness of his campaign.
It's sad, and can be brutal, but that's how Kickstarter is going to work, at least for video games that need any sizeable amount of money (as in, anything more than an indie game that only needs $10-$20,000). Despite what it actually is - and what it's pitched as makes it sound cool - Allen's game sounds like something we're getting already from publishers.
His other problem is that, while he's got some great games to his credit, the name "Christian Allen" isn't one consumers are familiar with. Since the service relies on people putting money down with almost nothing but a pitch and a name to go on, they're going to go with what they know. And what they know is the people they already know and the games they grew up on.
This only makes sense if we assume that indie guys are the only ones Kickstarting games. There is no reason whatsoever for that to be the case. Instead, what this large amount of money reveals is precisely where value can shift, and that the money of the current system can be found elsewhere.
The Kotaku article does make a good point, though: with everyone trying to get their voice heard, the din becomes so overwhelming that buyers don't know where to put their money. The solution lies in the very companies that swear up and down that without the current, dead system, they would cease to exist: the publishers.
The publisher becomes the name. The publisher becomes the filter. Kickstarter doesn't even need to come into the equation. Ideas are pitched, and a publisher puts its weight and reputation behind it. That provides the filter for the ideas that the public wants and gives indie developers with good ideas the opportunity to get their work heard above the din.
This also gives a great tool to publishers, since they can know precisely what game players want before they pony up any development cash! They can put ideas up there, attach a price, and see what sells. These are valuable data! It's game sales and market research all wrapped up in one. This amazing value is being ignored by the big players in the industry.
Publishers would then be of enormous value to a small developer. The publisher "knows the ropes" as it were, and can tell the developer how many copies a particular game is likely to sell, how much the copies will sell for, and how much they would likely get in pre-sales. Some developers will eventually get big enough to bypass this system and go directly to the audience, but most will not, and there will always be an endless supply of small developers waiting in line to get their ideas heard.
Even before Doublefine, this business model could have been foreseen simply by the rise of Gamestop. Look at the average presales of games on the Xbox or Playstation 3. The numbers are enormous. Assuming a production budget of $20 million (the current average),10 they would need to presell less than one million copies to pay for the game before development even began. And considering big games like Battlefield 3, which pre-sold three million games, and then sold over 10 million copies in its first week, these numbers are achievable.11
This process is one of many ways to monetize data. Because remember, once data are created, they are infinite, but before they are created, they are very finite indeed. The creation of data has value. Data themselves do not. Yes, I could copy a game, but only if it has already been created. If I want the game to be created, though, I need to pony up. I need to become part of the creation process.
This is great. This is the business model that would have never been possible before the Internet. It allows consumers to become part of the process, as opposed to just, well, consumers. They are given the ability to literally vote with their wallets for what games get made. It helps to alleviate the risks associated with taking on a massive game development project, which as was mentioned earlier, are getting ridiculously high.
This opens up the industry in ways that were once only fantasy.
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As I mentioned, the opposing drives to both embrace and shun the new world are most strongly manifested in Microsoft, the Xbox specifically. They are software and hardware; old and new; conservative and progressive. Just as with the totality of Microsoft, there are very few things out there that, even after being beached on the market for over half a decade, are still as overflowing with potential as the Xbox is. All that Microsoft has to do is, ahem, completely overhaul their business model.
This sounds a lot harder than it is. What is currently being done need change only a bit. Programs will still be made, MSN will still operate, and Windows will still release a new version that only becomes acceptable after the first service pack. All that changes is the way that these products get wrapped and sold.
If I was the product lead for Xbox, I would make bold changes. My mission would be to destroy the competition by taking all of the steps that they were unwilling to take. I would accept all of the windmills against which they continue to tilt and learn how to make money from them. The fact that Microsoft isn't jumping on this just blows my mind. Nintendo and Sony are more vulnerable now than at any point in the last twenty years. Microsoft could become the name in home entertainment.
I would immediately drop the price of all new games to $30, last year's games would be $20, and older games would be $10. As I mentioned, the price of the product is the #1 determinant of whether someone will buy something or not. There are massive numbers of people out there who simply will not buy at current prices. Change that.
Lower the price of a good and increase sales. Steam saw this happen. Author after author has discovered that by reducing the cost of their books, their sales numbers can increase not by double digits, or triple digits, but by quadruple digits. 5000% increase in sales? Sure. It's happened.
This would reduce used game sales, reduce piracy, and increase the number of games sold. More games means more fans, more fans means more revenue channels, and more revenue channels means more chances to sell ancillary goods and services. Microsoft should also be keenly interested in the resulting increase in sales of the system (especially now, with sales dropping). As time goes on, the number of cheap games available also rises. This increases the value of the system, and causes more people to buy it, even when its price stays the same. And this is precisely the growth curve that we saw.12
I would immediately stop the mandate from above that Xbox needs to toe the Microsoft party line. Xbox needs to open up as much as possible. You will never have some massive, beautifully integrated system where you can happily milk users of money, be it on their laptop, desktop, tablet, cell phone, or television. And the more that you try to achieve that ridiculous goal, the more that you will push people away.
I would open up development of the Xbox 360 and foster a hacker community around it. Instead of banning users who modify their systems, I would include them. They are the hardest of the hard-core, the most dedicated. Even if their primary goal is piracy, all that reveals is that they care so much about games as to undertake a risky endeavor that could destroy their machine. They are the biggest fans and instead of being embraced, they are treated like criminals. Obvious to anyone with half a brain, this is counter-productive and just plain stupid. It is rumored that Bill Gates once held up a modified Xbox at a Microsoft board meeting and asked "How can we engage these people?" Apparently, that question never left the board room.
Well Bill, I'll tell you how you engage them. It's not hard. Simply stop pushing them away. Create a hacker equivalent of Xbox Live. I recommend calling it Xbox Undead (geeks love zombies... for some reason). Users can freely connect whatever the hell they want to the network. Encourage development of the network by the network. It becomes a massive, open-source gaming environment, managed by Microsoft, and powered by Xbox. Just imagine the possibilities.
When games cost $60... I have a large incentive to simply derive entertainment elsewhere.
Microsoft needs to develop the community around the Xbox as interactive, not merely consumptive. Host annual hacker/development conferences. Call them X-Con, or something like that. Have contests where creators must rapid-prototype a game in 24 hours for a competition. Have shows for the coolest modification to a system. Sell booths for small-run accessories by minor companies that Microsoft helps fund.
What Microsoft is trying to do is generate support for the Xbox brand. Microsoft should explicitly say that the compact that is being made among them, the consumers, and the developers is that they will design and build a standardized system (the hardware, software, and services) and offer access for a price. And once access has been granted, people are free to do almost anything they want in order to drive progress and earn money. Everyone becomes involved in the growth, maintenance, and money-making potential of Xbox. Instead of just a soulless monolith of a company hawking a product, they will become the jovial leader of a common group.
All of these ideas operate in accordance with basic economic understanding and theory. Making data and then trying to tie those data up via hardware or software restrictions is tilting against an economic windmill. Success is not had in fighting this and reducing value for people, it is had in shifting the money to another part of the equation that still has value. You don't use the hardware to tie up software, you use the hardware to enable software, thus people are forced to use your hardware/software combo because they want to.
Microsoft and game companies don't seem to get that the value that they offer is not the game, but the things around the game: the services. People buy through the iPhone's App Store because it is easy, safe, and streamlined. I could jailbreak my iPhone and get everything for free, but it is the polar opposite of easy, streamlined, and safe. That is the value. That is the reason to buy. And when apps cost less than $10 most of the time, I have little financial incentive to pirate when buying is affordable and easy.
When games cost $60, I have a large financial incentive to pirate. I have a large incentive to buy used. And most damning of all, I have a large incentive to simply derive entertainment elsewhere. The last one is the true risk for the video game industry - not pirates, not Gamestop. The real threat is that people will find what they want somewhere entirely different.
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If changes like these are not made, I see the video game world dying under the weight of its own bloat just as it did with the fall of Atari and before the rise of Nintendo.
Yes, the market will never completely die; it's far too advanced for that to happen. There will always be companies producing games, and there will always be gamers going to "cons" where they blow each other away in some game or another. What will go away is the vibrancy of the market. It will not disappear, mind you, it will simply go somewhere else: to cell phones, tablets, and computers. And in this exodus, storied names will die. The old market will whither to make way for the new. And while I do not think that it will be as bad as the great video game crash of 1983, it could be.
Because today, if a company does not have a pillar in the increasingly drab world of "core" gaming, they are left behind. Activision is predicated almost entirely on the strength of Call of Duty, which sells a bazillion copies with every iteration. Electronic Arts and Ubisoft are of similar foundations with franchises like Madden, Battlefield, and Assassin's Creed. They do not produce new games with new ideas and concepts. They produce the same product, iterated year over year, for the same audience.
The target market for these products, these core games, is of a character that they will accept annoyances in their interaction. They will deal with oppressive digital rights management (DRM). They will deal with a lack of vision. They will deal with high prices. They will deal with reduced value. They will deal with treatment illustrated by this horrifically candid interview with EA president John Riccitiello...
This is the strategy of a company that is working very hard to reduce value in their products, not grow with technological development. And while players of these games will deal with that, others will not.
Not surprisingly, other companies that do not have the game, but are still behaving like EA, are dying. They do not seem to know how to adapt, or are unwilling to out of arrogant intransigence. As such, we have stories like this.
Sega is losing money. One of the thecompanies! Sega and Nintendo defined the resurrection of video games in the 1980's. The Genesis, Saturn, and Dreamcast. For thirty years, Sega has been a part of the industry. And while Sonic has not seen a really good game in a long time, Sega has not been without its hits. This isn't just about bad business decisions on Sega's part. It's about value, and how Sega was not providing it. They could have leveraged their massive catalog and sold classic games for $0.99 each. They could have released a licensed emulator to play these old games. Instead, they released a mildly reworked collection of games and tried to charge $30 for it. They could have sold their racing games, which already earned their money back years ago, for cheap. They didn't. Recently, they hailed their fourteen-year-old game Virtual On: Oratorio Tangram, as though it was special that they were selling it for only $7.50 instead of $15.
Here's a shock: this didn't work.
There is this strange idea, illustrated by Riccitiello's interview (and manifested inothercompanies, as well13), that a company is providing sufficient value if people are paying the price that is asked. That is stupid. It's like saying that my house is fire-proof because it has never been on fire. It seems to stem from the inability to quantify value. Economics tries its best, thus the concept of money, especially fiat money, but value itself is abstract and detached from any measurement. Value is a relational concept. Something does not have 23 units of value. Something can only have higher or lower value than something else.
Video game companies do not sell games. They sell value in the form of entertainment.
That is why value growth is so god-damned critical. A company can never know how valuable its product is. All it knows is that this year's product is more valuable than last year's product. If the company always grows its value, it decreases the chance that a competitor can blow its products out of the proverbial water.
That fear is the beating heart of the free market. The fear that, at any time, a competitor can come and steal market share by providing higher value, keeps companies innovating. Sometimes, though, that threat isn't readily apparent. This can be because of arrogance, as with Nokia, or because the industry is a slow-moving industry. For example, I'm sure that many small grocers and markets thought that the value they provided was more than enough to sustain them. That was, of course, until Wal-Mart came to town.
The video game industry is facing its Wal-Mart today. And they are doing exactly what small grocers around the United States did: nothing.
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Video game companies do not sell games. They sell value in the form of entertainment and entertainment can come in the form of nearly anything. I can be entertained by gardening, cars, exercise, or chronic onanism. Truly, there are few things in the world that are as highly competitive as the entertainment industry. Game companies must realize that their competition is not each other. Their competition is EVERYTHING that can entertain. If they don't keep pace, either with continuing development or reducing prices, they will be overwhelmed. That is precisely what happened in 1983.
A company does not sell things. No matter what they sell, their actual product is value. They must disconnect the concept of value from what they are actually selling. That value may come in the form of a product or a service, something durable or something consumable. But all companies are fundamentally selling the same thing. To succeed, they must maximize that value, because that's how they make their product better.
Likewise, when it is understood that, along with all the companies within a specific market, every company everywhere is selling value, it is an inescapable realization that everything in the world is, in fact, competition. If a company is selling laptops, they not only compete with other laptop manufacturers, they are competing with Nike, Starbucks, and Old Spice. Everyone has a limited amount of money, and the only way to guarantee a slice of that pie is to maximize value. A company must provide so much value that anyone who is even remotely interested in their product will take it. That's why free data are the best data; it completely eliminates any reason to not take it.
Let me say that again, the only way to compete is to maximize your value. If you reduce your value by trying to maximize profit or arbitrarily differentiate products, you are guaranteeing your eventual death. It may not be now. It may not even be next year. But it is a guarantee. You will be the record industry. You will be Motorola.
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At the beginning, I said that the traditional video game industry's failure is inevitable. But just as the music industry's slow, painful death has provided the ash from which the phoenix of online music distribution can rise, so too will the classic system/publisher/developer model give way to something better. The profit possible from disrupting a massive industry is too great to let it simply sit, and few industries are as massive as the video game industry. It may be gradual, as we are seeing with the agonizingly slow death of the music industry. Or it may be rapid and sudden, like the fall of so many cell phone companies and the 1983 crash.
But as always, the world will go on. Just because people stopped buying video games in the mid 80's doesn't mean that they stopped buying entertainment. The money was still spent. People just stopped giving it to the game companies. It doesn't matter if your company is around or not. No one cares about you. Life always goes on with one company or another.
And that is the ultimate point: life goes on. The economy is like nature in that it doesn't care about specific constituents of the system; it cares about the system. Nature cares about life, and the economy cares about value. For the economy, value is life. It is the driving force. It is always there. It is the very stuff from which the system is built. If your company tries to fight this, it is doomed. No matter how good your company is, it is doomed.
Because as Jeff Goldbum's character in Jurassic Park said, life, uh, finds a way.
1: The Kinect has introduced a large number of popular party games which has increased the system's popularity with the casual market. The X360 still pales in comparison to the Wii and mobile gaming, though, and lags the Wii in overall installed base by over 30 million systems.
3: There is a disconnect between A+ titles as rated by reviewers and players, though. The players are getting tired of the same old game, over and over, and this is illustrated in the unprecedented rift between user reviews and critical reviews of Modern Warfare 3 on Metacritic. In this article from late 2011, A writer at IGN said that low user scores come from a vocal minority, and that he fully expected the user and critical scores to reach parity over time. Well, guess what never happened? That.
4:http://news.teamxbox.com/xbox/8962/Xbox-360-Only-Authorized-Third-Party-Accessories/ That link is shocking in its reveal of Microsoft as dumb, dumb, dumb. "Microsoft has made it very clear that it's all about profitability" The sheer magnitude of the wrongness of that perspective is why the Xbox 360 has never become the mega hit that it needed to be. Microsoft cared about squeezing money from people, instead of giving them a reason to buy.
5: "Success" needs to be explained. The Wii never did very well for third-party companies, so in that view, the system did worse than either the PS3 or the Xbox 360. But from the perspective of the company that made the system, only the Wii has made profit. Similarly, as far as consumer acceptance is concerned, the Wii devastated the other two systems. The Wii has sold 96 million systems (as of April 2012). The Xbox 360 has sold 66 million. And the PS3 has sold 63 million. In fairness to Microsoft, it has sold very few systems in Japan, while both other systems have done very good business there.
6: An excellent example is the studio system before World War II. Studios either directly owned or kowtowed theaters into accepting ridiculous deals. They would shovel out crap for years until ticket sales dropped, and only then would they release new ideas and new technology. Or for a more recent and more technological example, look at Intel in the 1990's. They milked every chipset for everything it was worth, even going so far as to drive IBM to develop PowerPC chips with Motorola and Apple to escape the monopoly.
7: As mentioned in the article, sales of video game related hardware and software is anemic, while tablets and cell phone sales are growing by literal leaps and bounds. Apple sets sales records with its iPhone and iPad every quarter (selling as many iPhones in one quarter as the three game systems combined sold in a year), and the top paid applications for both of those devices are games. It doesn't take much imagination to see the connection. Gamestop certainly does, seeing as they just expanded to selling tablets in 1,600 US locations.
8: In a case of near-hilarious irony, Sony was the company pushing for technological advancement against an intransigent Universal Studios. Then Sony went and bought some media companies, specifically Columbia Pictures, conveniently changed their tune, and it's been downhill ever since. Reaching the point today where, oh right, Sony lost nearly $6 billion. Oops. http://en.wikipedia.org/wiki/Sony_Corp._of_America_v._Universal_City_Studios,_Inc.
9: Those numbers are rising, though, and iPad apps average nearly $7. Prices like that will be unsustainable, and the value equation from jailbreaking increases with every price hike. Going much higher than $5 for an app is a bad idea when most apps never make a profit. And as the value of the locked App Store decreases over time, applications will need to maintain a low price to prevent large swaths of people from going to other channels.
Making matters even worse is the biased nature of app purchase demographics. Much like the video game world where "core" people constitute a great deal of purchases, so does a core group of customers constitute the majority of app purchases. Truly, over 70% of users buy almost nothing. The reason why app makers are earning money is because the pool of people is so damned huge. Raise prices, reduce the pool. That's bad.
13: Not surprisingly, all three of the companies mentioned in this part, EA, AT&T, and Verizon, were featured in The Consumerist's Worst Company In America list for 2012... and 2011, 2010, 2009, 2008... you get the picture.
