Category Archives: Social Games

July 24, 2013 · 11:27 pm

Have video games gotten shorter?

The length of video games seems to be a hot topic lately. As somebody who plays video games on occasion, and probably reads too much about them, it’s an interesting discussion. This article at ArsTechnica was referenced heavily in video game media for a while, with Raptr writing a bit of a nonsensical rebuttal here, which showed that people on average only play a game for 7-8 hours no matter how long it is, an interesting but tangential point. Early 2013 speculation about the price of next-gen games going up provided additional kindling for the conversation, specifically whether it was worth it to pay $70 – $80 if games weren’t going to get any longer.

When considering the question, it’s important to define the scope – there are certainly more video games released each day today than ever before, across a wider range of platforms than ever before. But if the question is “have home console games gotten shorter”, ignoring iOS apps and Facebook games, then I think the answer is no.

I threw together the below charts based on two data sets: the VGChartz all-time sales list, and game length data from (appropriately) gamelengths.com. First I looked at the best-selling game for each year since 2000, and charted the length of the campaign. There are a number of caveats though; many of the top-sellers don’t have campaigns, and many came packaged with a console (inflating their sales numbers). For example, Wii Sports is the best selling game of all time according to VGChartz, but it doesn’t have what you could consider a “campaign”. Similarly, a sports title like Madden doesn’t have a real campaign either. So I ignored any game that didn’t have a length on gamelengths.com, and went to the next best-seller for the year. Also, console only (Xbox/Wii/PS etc.)

Top Sellers by year, with campaign length for comparison

Top sellers by year, with campaign length for comparison

This is admittedly a clunky approach, and only answers the question as it relates to the single most popular games with a campaign each year (along with answering “how much has Call of Duty dominated the last half decade”). Also, Need for Speed Underground was the best-seller two years in a row? Where was I for that game? Gran Turismo 3 was actually the best seller in the year prior as well, but had no official campaign length to quantify. I can guarantee that represents a unique three year stretch in video game history where racing games were king, an era we aren’t likely to see repeated.

Anyway, the chart above doesn’t give us much of a pattern across time. Shooters tend to be in the 7-10 hour range, Action & Racing are in the 10-30 range, and RPGs (of which Zelda really should be classified) are 40+. It would be foolish to make a broad statement about game length based solely on which genre sold the most units in a single year, even more so because Call of Duty tends to actually suck up more total hours than any of the games on this list, if this chart is to be believed, showing that gamers spent 67 hours on average with Black Ops 1 in contrast to its 7 hour campaign.

So let’s take a different approach. How about looking at established series in these established genres to track their progression over time? I, somewhat arbitrarily, picked Shooter, Action, and RPG as my genres, and Call of Duty, Assassin’s Creed, and Final Fantasy as the series to track, respectively. Here we go:

Call of Duty length over time

Call of Duty length over time

As sure as the sun rises, Activision releases a new entry into the Call of Duty series every fall. Call of Duty has barely  moved over the past 9 years, sticking right at that 6-8 hour band where Raptr claims we simultaneously lose interest, but  stick around for another 60 hours. I omitted a few where my source had no reliable  campaign data, but I have a feeling  it’s in the same range.

Assassin's Creed length over time

Assassin’s Creed length over time

Similarly, Assassin’s Creed has been relatively consistent since it’s debut in 2007, adhering to that 20-30 hour mark. If  anything, the first entry was something of a tech demo for the ps2, and it’s been easier to add in content since the basic  engine was completed.

Final Fantasy length over time

Final Fantasy length over tim

Besides the few entries here where I either have no data or the game had no campaign (XI and XIV were MMORPGs), the  FF campaigns have actually trended upwards since the olden days, when cartridges likely limited the number of hours a  developer could cram into a machine. Final Fantasy 3 should probably be in the all-time efficiency hall of fame, providing  a 31 hour campaign on a cartridge that could only hold 512KB of data. For context, the images in this post alone take up  200kb of space, and they certainly don’t provide more than 2 minutes of entertainment!

So in terms of an empirical answer, it looks like no, home console games have not gotten shorter. If anything, the evidence suggests that increased storage capacity has yielded longer games in at least one genre (the RPG). And with the advent of broadband multiplayer, many games that are technically “short” (like Call of Duty), are actually played the longest (67 hours on average for Black Ops, according to Raptr, as one data point). We can also conclude that Shooters have gotten too popular, but at least they aren’t racing games. 🙂

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Filed under Games, Social Games

March 4, 2012 · 3:58 pm

Zynga’s Off-Facebook Platform and Why it’s Important (but probably not lucrative for a while)

Zynga recently launched Zynga.com, to much fanfare and apparent approval by Wall Street. Shares rose 10% on the announcement, and settled at about that heading into the weekend – a big move considering there was no other news on the company. This is a huge step, and it was inevitable because now-public Zynga needs to increase revenues somehow to drive that share price up. There seem to be three major conclusions people have drawn from Zynga.com regarding Zynga’s ability to generate revenue going forward. Let’s break them down and see what’s likely and unlikely to play out:

Users on Zynga.com will generate more revenue from virtual good sales than users on Facebook

Initially this looks like a giant amount of potential revenue: Facebook’s IPO docs revealed that they get about $400 million from Zynga’s virtual goods sales, for doing pretty much nothing besides making the Credits system available. If Zynga could get all that back by moving off Facebook, it would increase revenue by 25-30%, a huge number. But one point that is being overlooked in casual discussion of this story is Zynga’s continued commitment to Facebook Credits, even off-Facebook. Zynga committed to using Facebook credits in a 5-year deal they made with the social network back in Fall of 2010. No criticism whatsoever of that deal – it likely played a key role in moving Zynga from strongly positioned to dominant market leader on Facebook, but now comes the downside for Zynga. Any work they put into moving users over to Zynga.com is in some regard wasted, because Facebook still gets the same cut of the revenue until 2015. As it pertains to the stock price, that 30% increase in revenue from virtual goods will definitely be significant down the road, but discounting those cash flows to today, and being unsure what percentage of users will be transitioned to Zynga.com anyway, this alone shouldn’t account for much of the stock’s movement. So in summary, while this user migration will help revenue from virtual goods eventually, Zynga won’t really see those benefits for 3.5 years.

Zynga will generate ad revenue from Zynga.com

This one has some merit and is what I would be looking at if I was a stockholder (I’m not as of writing, in case that was unclear). Let’s do some back of the napkin calculations: Facebook sees roughly 89% of it’s revenue from ads, or about $3.2 billion. Yep, that’s a lot of money, but Facebook also has 845 million users, around 500 million who return daily (DAU). That’s roughly $6.5 per year/per DAU, or $3.8 per year/per monthly active user. Zynga, by contrast, has about 59 million DAU. Let’s assume Zynga.com can get 25% of those users (~15 million) to visit their platform each day, and can generate ad revenue at the average of Facebook’s two rates, or $5.15 per user – that would generate about $76 million in revenue over the course of a year for Zynga. That’s probably a solid target for next year for Zynga, but in context it isn’t a lot of money for the company, which raked in revenue of about $300 million last quarter. So while Zynga.com might get to the point where it’s generating $76 million in ad revenue in a year, that amount is only 6% of the company’s annual revenue. Definitely a revenue stream to go after, but probably not something that should drive the stock price up 10%.

Zynga.com will turn Zynga into a game publisher

This one is admittedly tough to gauge, because there are two huge questions which will need to be answered that get in the way of accurately valuing this revenue stream: 1. Will developers trust Zynga? 2. What benefits can Zynga offer a developer that Facebook can’t?

Zynga has been accused of cloning other developer’s games throughout their short history, and developers may consequently be hesitant to support Zynga’s platform, or may not trust Zynga with their user data. On the other hand, a dedicated social network comprised of virtual good purchasers may offer developers some advantages over Facebook’s network. The advantage for Zynga is that they can take some cut of the revenue other developers generate. Sounds nice, but what company could buy in enough to generate significant revenue for Zynga in the first place? It’s unlikely EA will be jumping to join Zynga, as EA has emerged as their primary rival. Of the top 15 games on Facebook, excluding Zynga and EA, Wooga has about 10 million DAU, King.com has about 6 million, Tetris has 3.7 million, and a foreign title (no offense foreign title lovers!) has 2.5 million. That’s a combined ~23 million DAU. If ALL of those games jumped on to Zynga.com and took 25% of their users, that would only be about 4 million users. That’s nice, but Zynga has SIX games with more users than that each, and Zynga would only be taking a small cut of whatever revenue those users generated (plus some ad revenue!). That’s chump change for Zynga. So while publishing other games may be a revenue stream someday down the line, it’s probably not going to be a very large one anytime soon.

In summary, Zynga’s new platform is an important step for social games, and with relatively flat user numbers the company is feeling pressure to develop new revenue streams – but none of the revenue streams alone seem significant, at least until the Facebook deal expires in 2015.

(And on the other side of the gaming planet, Journey comes out in 2 days)

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Filed under Social Games

February 29, 2012 · 2:38 pm

Discovery of games by platform (for me)

This post started off as a reflection on the importance of the Kickstarter/Double Fine fundraising event in the history of the game industry – but then I got bogged down in thinking about all sorts of other issues associated with small game developers in general. So, as background to my awesome reflections on whether Kickstarter is going to change the world of game financing, here’s a slightly different topic: how does a consumer actually discover a game? 

This might not sound novel – in fact, I’m sure it’s not (but what on the internet is?). Discovery is a popular topic, indeed a buzzword, in the social/mobile game development universe. Putting your game in front of more consumers is key, and Tapjoy made a lot of money doing just that before Apple shut their main monetization strategy down. User acquisition moves mountains of money and gets lots of attention in social/mobile, and though it is less frequently discussed in the technology/video game blogosphere, similar mountains of money move to do the same in other game platforms, albeit with altered terminology.

Below is my chart of how I personally discover games. Behold!

Hmm, it’s deceptively small, so click it! Anyway, here’s my notes on the subject:

* Obviously this is overly-simplifying a lot of interactions – if something is reviewed positively, I’m more likely to hear about it from a friend, and it’s more likely to be on a chart in a favorable spot. But the basic gist of this chart is how much of my personal knowledge of a game’s existence and quality comes from various categories. I almost never become aware of games on Facebook, for example, based on a review, whereas I almost always become aware of a “Small Ball” game because of a review.

**“My Friend Said it was good”: This is straight, old-school virality. I end up buying a rather large portion of my apps because friends say they are good. If I trust a friend’s opinion, I’ll buy almost anything they suggest in mobile. For blockbuster games, by contrast, the market is so large and I know so many people who play games, I give little credence to one friend saying the game was good. I’m sure you DID like Infamous 2… but I don’t care. I probably already know about the game and its quality by the time most friends have a chance to recommend it.

***“Reviewed Positively”: “Small Ball” games rarely have the ad-spend to raise awareness of their existence, so a lot of the legwork is done by positive reviews and old-school virality. I heard about Trenched/Iron Brigade (I hear you out there Mr. “Omg Double Fine talk about them more” – don’t worry, I’ll get to you) from a friend, so I bought it. Good reviews on Limbo and Braid probably drove the majority of their initial sales. For the other platforms – Blockbuster games are frequently seen as getting de facto positive scores from review sites, in part because they spend that “shitload on ads” at the very places that review them, a conflict of interest that savvy media consumers like myself are slow to forgive. I’m probably starting to conflate knowledge of game with likelihood of purchasing game here, as a positive review of a small ball game leads to a buy from me way more than a positive review of a blockbuster does, but oh well, it’s my chart!

*****“High Spot on Chart”: Lastly I want to point out that this category drives discovery disproportionately for App store / mobile right now, something that must change eventually if the medium catches up with other platforms. And for Blockbusters, nobody reads sales charts unless they are really into the industry and frequently visit Gamasutra, at which point the person probably knew about every game beforehand anyway.

That’s all for now – next post, I’ll stay on this games tangent and talk a bit about Kickstarter and try to connect the dots with this post.

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Filed under Games, Social Games

January 29, 2012 · 12:10 am

Copyright in social games drama as Nimblebit takes to Twitter to vilify Zynga

Copyright in social games is one of my favorite hot IP issues – back in the day, people sued Zynga for copying their games (though, admittedly and perhaps tellingly, not for copyright infringement). Then, Zynga sued other people for copying Zynga’s games, and those people defended themselves by saying that they both copied the games from somebody else. Now, eschewing the legal system, a small developer is taking to the streets (ie Twitter) to spread the word that Zynga is copying their game, Tiny Tower. Zynga has good reason to copy Tiny Tower, as the game was named iPhone game of the year by Apple. But the copying is pretty blatant, as can be seen by some side-by-sides created by the Tiny Tower developer (Nimblebit).

The whole thing is great theater and it inspired a field day on Reddit, but what does it mean? Would Zynga be liable for infringement if Nimblebit chose to sue? (Note to all small game developers reading at home: Don’t warn an infringer like this if you want the option to sue, ever. /end lawyerish). I wrote pretty extensively about the gray area in copyright in social games back when Zynga sued Vostu, because the issues are in some respects totally unique. For one, while any single game is clearly eligible for copyright protection, it’s not clear how far that extends in the context of a game – straight copy and paste of the art from one game would clearly be infringement, but what if you just have your own artists and engineers reproduce the basic elements of the game, the UI/UX, and the mechanics? Now you are moving from the realm of copyrightable creative content to uncopyrightable genres and ideas, which games in general have been building on for years. As Vostu noted in their defense, the big games on Facebook are largely paying homage (to put it nicely) to a PC or Game Boy game (remember when game boy was “mobile games”?). Secondly, copyright law has been seldom deemed to protect the menus and interfaces of computer software, but that’s largely what most of the copying allegations in the social game space point to as evidence of copying. To really get into some common copyright terminology, it is often stated that copyright protects the “expression” and not the “idea” – in this context, both genres and user interfaces fall more on the “idea” side.

An excerpt from Nimblebit's anti-Zynga screed

Anyway, the short answer to the Nimblebit lawsuit hypo is that they probably wouldn’t win, but I’d love to see the issue of copyright in social games tested more thoroughly in court. There’s two dimensions to the issue as I see it, one non legal and one legal:

Does game copying hurt consumers? 

The issue of copyrightability as between two game developers never came up often in the context of console games, the basis for what we have in terms of precedent, because the production and distribution cycles made it practically difficult to see a successful game and push out an identical competitor before it was too late to capitalize on the popularity of the original. Now, game production cycles on web and mobile are so fast and iterating happens so quickly that games are experiencing duplication as a threat like never before. Companies like Nimblebit can spend a ton of time and money creating a game that another company (ahem) can copy in a matter of days. Full disclosure: I really like Zynga and I’m sitting on the couch of a friend who works for Zynga as I write this. But Zynga isn’t the bad guy here regardless – it really isn’t clear where the line is between paying homage to a game and infringing the game’s copyright. Zynga adds a lot of value to a game beyond the graphics and game mechanics in the form of an extensive network of users and a level of polish that only a public company can provide. To put it another way, no matter how many different Scrabble clones there might be out there, the free market is inevitably going to settle on one as the network effects push users to the game where there friends are, until everybody is playing Words With Friends. Users aren’t necessarily hurt by the copycat culture in social games, because network effects will push people to one platform anyway, and the art isn’t usually what’s drawing people to the game in the first place.

Is the copying we are seeing now a violation of copyright law?

Maybe, maybe not. Okay, probably not. It’s a weird issue, because to say there is no copyright in social games, or more specifically that copyright only protects against exact replication of graphic assets, is to say that social games have really no effective IP protection at all beyond unauthorized reproduction. To say that copyright protects more, however, would be to extend copyright protection to the area of a genre, something more akin to an idea than an expression of an idea. It would also be a complete disaster for the game industry in many respects if a court ruling gave more than cursory copyright protection to game developers over entire genres, as there has been an implicit understanding that genres aren’t copyrightable since the the first Wolfenstein clone. But as computers become more and more a part of our lives, and as games on those computers become more and more valuable, is the network effects + limited consumer harm enough of a rationale to support an environment where Zynga should inevitably push out every competitor through copying as soon as that competitor hits on a strong genre? (I hate ending a long post with this, but it’s true in this circumstance) – only time will tell. For the most part the big companies aren’t going to push the issue because the stakes are too high and the companies are doing fine in the current environment.

Update: Of course, just a few hours after writing this, Spry Fox sued 6waves lolapps over the cloning of their popular new game, Triple Town. I’ll read the complaint and write more if it gets interesting, though with Spry Fox being a rather young company, I’d be surprised if they rejected any reasonable settlement offer to pursue litigation.

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Filed under Copyright, Games, Law, Social Games

October 25, 2011 · 3:08 pm

Breaking my hiatus with a flurry of random thoughts

After a long hiatus for some personal reasons, I’m back! But, this means I have a store of ideas that I didn’t write about. Some of those ideas are now no longer worth covering because they’ve been beaten to death by other sites, but the ones that are still interesting I’m just gonna run through right now to get it out of my system, no rhyme or reason, and little theme besides being among the topics I frequently write about. Let’s get going:

Arkham City is great, but the initial user experience is flawed, and the game outlines a problem with comics-as-broad release media

Loved Arkham City. Played a LOT of it last weekend, probably only possible because my girlfriend is out of the country at the moment. Arkham City launched with a pretty bold, but increasingly common plan to increase sales and profits. Sales, by offering a ton of extra content for new game purchasers (as opposed to used game purchasers), and profits, by having a ton of extra downloadable content to squeeze a few extra bucks out of hardcore fans. It’s hard to fault Rocksteady, the studio behind the game (or any of the other members of the supply chain), for this approach – the used game market is a constant concern for studios, especially during a recession, and providing lots of bonus content both incentivizes new game purchases (by including the content for free with new games), and giving the studio a way to make money on the used games (through the customers then paying for downloadable content). I’ve ranted about terrible DRM as a system that only punishes good customers on my blog before, so I should be in favor of this setup, right?

The problem is, the customer is still the loser here. I bought the game (in fact, I pre-ordered it!), and my reward was that the first time I sat to play the game, I had to enter 3 separate 16 digit codes into the Playstation Network, wait for each of those 3 packages of content to download, and then wait for each of those packages to install. So I spent 15-20 minutes downloading and installing the content I paid for before I even got to fire up the game. Loading screens are obviously a problem for any game with downloadable content, and installation is unavoidable in some situations (PC games in particular) – but having your big blockbuster piece of work open with 20 minutes of downloading and installing is not exactly a killer introduction to the product. Is it better than a lot of DRM? Definitely, because at least it rewards the honest customer with more content rather than punishing them with potentially invasive bloatware. But it’s still a pain, and there must be a better way.

In another unrelated complaint, of the many reviews for Arkham City I saw this week, only one (Kotaku) mentioned a major gripe I had with the game – it doesn’t really push the Batman plot anywhere. This is a problem with any comic-based mainstream story at this point, in that the non-comic media is often limited to stories drawn from the official “canon” of the lore as told in the comics. Put another way, Batman can’t die unless he dies in the comic. Obviously nobody is going to kill Batman anyway, but this mostly holds true for every plot element – none of the villains can die unless they die in the comics. So they are stuck rehashing events that comic fans would already know, and they can’t deviate far from the story as outlined in the comics. This has basically been an issue for every single superhero movie in the recent wave of superhero movies, and while it hasn’t hurt box office numbers much, it might in the future as the limitation plays out over sequels. I’d love to see more companies take the JJ Abrams/Star Trek approach with their IP, giving full reign to a new retelling of an old story keeping just the characters and breaking canon.

Seed stage funding bubble, part II of my post on regulating securities of private companies rumored to come soon

Basically everybody reported on a WSJ article that claimed there was a dearth of funding out there for seed stage companies. It was vigorously responded to, mostly by people refuting the sentiment. My opinion is that while the data the WSJ looked at seems to match historical, quarterly variations in funding statistics, it still seems obvious that new technology has been making it easier to invest, while not making it quite as easy to gain liquidity and get out. Assuming there is a class of people who only want to invest in the seed stage (the angels), then those people have had an easy time of late finding companies to invest in, without finding an easy way to get liquidity from even successful early investments. Angel.co has made finding companies to invest in quite easy, but the time it takes to get money out of those investments hasn’t been quickened in any respect (in fact, given the many delayed IPOs and general malaise of the economy, it’s probably harder than it has been in the past). SecondMarket is definitely doing something to help liquidity for pre-IPO company stock, but it is probably being utilized by employees more than investors, and it’s still a relatively small group of companies compared to the number of companies on Angel.co. So, to me, it seems quite natural that there would be a slowdown in seed funding, and that companies who found plenty of seed investors would have trouble finding Series A and B money. Tech is also prone to bubbles, but that’s for my future, upcoming post on private company regulation.

Tale of two major branding efforts of social games, with very different results

Probably the two most anticipated social game releases on Facebook this year were by traditional console/PC powerhouses new to the Facebook platform. I’m talking about EA’s Sims Social, and Firaxis’s CivWorld. Both were closely watched, as they both were backed by major studios, utilizing the full force of their IP, hoping to break into the Facebook social game scene. Obviously there is a major difference between the studios in that Electronic Arts has 45 titles on Facebook right now, and they’ve spent hundreds of millions of dollars on acquisition like Popcap and Playfish to become a force in the social game market, whereas Firaxis has just the one title, CivWorld, and no experience on Facebook (parent company Take-Two also has no titles on the platform). Both games have been out for a while now (CivWorld in July, Sims Social in August), so it’s safe to make some conclusions about how the efforts went.

Who won? Sims Social by a landslide. Sims Social reached an all-time high of 65 million monthly users (though they took a 20 million hit when Facebook updated their user calculation algorithm), and they are currently cruising along with about 8 million daily users. CivWorld, on the other hand, completely crashed. The all-time high for CivWorld was only half a million monthly users, and they’ve since slid quickly to less than 100,000 monthly users and only 10,000 daily users. I haven’t played either game enough to know if there was some sort of specific disaster with CivWorld, but I played both and they were both solid efforts. Reviews were mixed for both (nobody knows how to review a social game yet, though), but obviously the results were dramatically different.

There are probably numerous takeaways here, but the big one is that having a strong IP, with lots of buzz, and even a strong game itself, isn’t enough on Facebook. The Firaxis team just simply doesn’t have the experience that the EA team has, and obviously those Playfish and Popcap acquisitions are paying off in some fashion. EA knows how to make social games now, and Firaxis doesn’t. Lots of factors go into that – the ability to effectively cross-promote with other games in the network is obviously a huge advantage for EA, but one would have thought that the amount of exposure CivWorld was getting could have made up for that. Now we know that no amount of exposure can make up for a huge installed user base and multiple games to draw experience from. Zynga has probably known that for years, but if there was any question, CivWorld’s flop may have settled it. People may look at EA’s success as a sign of weakness for Zynga, but that’s overlooking the fact that EA spent over a billion dollars to acquire two huge social game studios to reach a point where it could leverage it’s IP into fans on the platform. A billion dollar barrier to entry is pretty solid protection for Zynga’s business model.

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Filed under Copyright, Funding, Games, Social Games

September 29, 2011 · 1:30 pm

State of the Android market; is the patent fight going to encourage the move to Facebook as an operating system?

A bunch of things have happened recently that seem to be pointing to an inevitable conclusion in mobile devices – Android is going to die, and if HTML5 comes around soon enough and with enough developer support, the mobile operating system as we know it might die as well.

The most recent cluster of news in the space consists of Samsung agreeing to a patent licensing deal with Microsoft over Samsung’s Android devices, Samsung joining forces with Microsoft and Intel to work on a new mobile operating system based on Linux, Google buying Motorola to bolster it’s ability to mount a defense of Android (which should have the unpleasant effect of scaring away the other OEMs who push out Android phones), and Amazon launching an Android-based Kindle Fire which aims to be an ipad killer. Oh, and Spotify’s partnership with Facebook is coming to fruition, proving to be a rather genius way to ween people off of itunes (i’ve barely opened itunes since starting with spotify, and once I can open spotify through Facebook on my phone, I may never touch itunes again).

How does all this information fit together?

Amazon is going to get hit with a patent infringement suit from Apple really fast. Then Android is going to die.

Apple has been aggressive, to say the least, in attacking the Android ecosystem with patent suits. Microsoft has done the same. The combined effect? Companies will be wary of putting money behind a system that may get them sued into oblivion. If Amazon somehow evades the ire of the anti-Android coalition, maybe Android is saved as a potential OS to compete with Apple’s iOS. But given Apple’s aggressive attacks on Samsung in Europe over tablet competitors and their attacks on the Android ecosystem in general, I wouldn’t hold out hope that Amazon is going to get away with launching a major Android tablet without Apple taking action. Maybe there is hope beyond the Kindle Fire, but I’d also wager that if it fails, it’s going to be the last major Android tablet to come out. Android tablets have done absolutely horribly this year, to the point where retailers are having to discount them to almost half-price just to move them. Given the lukewarm reception and patent woes, it’s a bad investment for companies to keep cranking out Android tablets. If companies continue to be exposed to massive patent suits for using Android, it’s only a matter of time before the entire OS collapses.

Facebook is in a better position than ever to become the mobile company they plan to be.

Facebook has been vocal recently about wanting to be a mobile company, and if their Spotify partnership is any indication of where the company is going, I think it’s only a matter of time before they become the default starting location for all things on mobile phones. I was lukewarm on Spotify when it launched – my review of my initial experience concluded with a passing grade of “B” for the service, but that was on the first day it was available in the US. I said I wouldn’t still be paying for the service after a month, but 2 payments later and I’m still using it. I can’t stress how important Spotify’s partnership with Facebook is in my mind – this partnership puts Facebook in position to attack the core of iOS – iTunes. As I mentioned, iTunes is going to die in the face of this partnership – Spotify + Facebook nails the social element of sharing music unlike any prior service, and it just simply offers more than iTunes at this point. So Facebook has an iTunes killer now (only a matter of time before Spotify runs inside Facebook), they’ve got big dedicated app developers (Zynga, EA, Kabam, etc.), they’ve already had messaging and chat, we know they are working on an app market based in HTML5, and the newsfeed is an excellent homepage if you snap a basic web browser on the top. Plus users are comfortable navigating Facebook, so the transition to Facebook-as-operating-system would be seamless for most. Only a matter of time in my mind, and if Facebook approaches device-makers who are frustrated with Android and looking for an alternative, Facebook could make major in-roads into mobile almost overnight.

Google+ can’t transition to mobile like Facebook.

Why can’t Google do the same thing with Google+ that Facebook is going to do with… Facebook? They could, but they don’t have nearly what Facebook has in terms of critical user mass, nor do they have the partnerships in place to transition app developers to Google+. Developers don’t work directly with Google on Android apps like Facebook developers do with Facebook, and if Android dies anyway, the transition from Android to a different Google+ system would likely be more rocky than for Facebook to move developers from web to mobile (especially if web IS the mobile OS… it’s like the twilight zone). Also, Google is tied to Android now with it’s Motorola acquisition, making a transition away from the OS unlikely.

So I’m liking Facebook right now, I think Google is in a tough spot with Android because of the patent issues (forced to buy a company to acquire patents to defend an ecosystem that other device-makers don’t want to be a part of if Google owns a competitor), and Amazon has to really really hope that Apple doesn’t notice that they just launched an Android tablet.

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Filed under Misc, Patent, Social Games

September 15, 2011 · 11:56 am

Nintendo seems to be in deep denial over mobile games, still thinks the iPhone is off limits, still thinks the 3DS is the future of mobile

Nintendo’s President is insisting that the company won’t get into the iphone development game, instead focusing on producing content for their own hardware platform. After saying that development for iphone was absolutely not under consideration, Iwata said:

“If we did this, Nintendo would cease to be Nintendo. Having a hardware development team in-house is a major strength. It’s the duty of management to make use of those strengths. It’s probably the correct decision in the sense that the moment we started to release games on smartphones we’d make profits. However, I believe my responsibility is not to short term profits, but to Nintendo’s mid and long term competitive strength.”

As some background, Nintendo recently released the 3DS, they’ve already had to drop the price once because of lackluster sales, and still the system is expected to miss sales targets. As more background, Nintendo has been very slow to get with the new world of games – whereas hardware makers like Microsoft and Sony are encouraging lower price point games on their Live Arcade and PSN networks respectively, and whereas game developers are increasingly tapping that low price point market (see Electronic Arts purchasing social game companies like Popcap and Zynga purchasing mobile companies like Newtoy), Nintendo is still running a business model that looks a lot like what they did in 2000, trying to push their own hardware with limited internet connectivity out, hoping their creativity in first-person development is enough to sell the systems.

And look at that middle sentence in the quote from Iwata – Nintendo knows they would make profits on games released for iphone. Apparently Itawa thinks that development for iphone would only boost short-term profits though, and not mid and long term strengths. This is ridiculous in my mind – maybe 3DS sales would be hurt if every game was released concurrently with an iphone version (ok, they would definitely be hurt if that happened), but sales of games on the rest of Nintendo’s hardware would only be helped. The Wii U is coming out next year, and being the only major hardware company with a huge first-party game development team that cranks out instant classics is a huge strength compared to the other hardware makers, but maximizing that strength depends on Nintendo getting into the iphone market now.

Here’s what I envision being the best case for Nintendo – 3DS sales are mediocre (yep, that’s the best case), and resources shift to Wii U at and around launch. Nintendo takes advantage of their in-house development strengths by releasing games for the Wii U concurrently with iphone games that extend the experience to mobile and impact the console versions, a direction many console developers are already moving in. Nintendo, because of the strengths Iwata notes, is uniquely positioned to take advantage of a market where a console game and a mobile game interact – they have the developer prowess and some of the best IP (Mario, Starfox, Kirby, Zelda, etc.) on the planet to make it happen. The Wii U already has a damn ipad/iphone for a controller – let your hardware geniuses figure out how to match the controller up to interact with the user similarly to how an iphone interacts with the user, and then release mini-games for the iphone that report back to the game (maybe even grab a hot patent on that, while they are at it! Or pay Intellectual Ventures if they already have one…).

Let me put it another way: If you were Nintendo’s President and Apple came to you and said “we really want to release a phone that looks exactly like your console’s controller – we are going to manufacture it, get the wireless providers onboard, sell it in our stores, and foster a huge game development community for it, and all we want from you is to put some of your mini-games on it for our millions of customers to buy, are you in?”, would you say no? So far Nintendo has said no. Because they want to support their own in-house hardware team, and don’t want to give up on mobile. Seems like a huge missed opportunity.

There’s some larger context here in terms of Sega’s transformation into a third-party developer, and Nintendo not wanting to go that route (being the only purely-gaming company left to make hardware). And I LOVE Nintendo, but they need to unchain their game development from their hardware development if they are going to make it past this next console cycle. If they don’t, I predict the Wii U to be the last console release for the company. I’ll be glad to eat those words if I’m wrong, because I’ve been waiting for the next Smash Bros for years.

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September 8, 2011 · 7:56 pm

Walmart makes lemonade in class action settlement, Twitter reveals user numbers, Patent reform to pass today

Random news from the day/week:

Walmart manages to settle a suit in a highly creative way that really hurts Netflix, if it goes through

Summary – Walmart is sued in a class action along with Netflix, with the suit claiming that the two conspired to split up the DVD market into retail and rental spaces. Maybe the settlement proposal would be good evidence in court that that ISN’T what Walmart had in mind – Walmart just acquired Vudu, a competitor to Netflix, and Walmart has recently proposed a settlement where Netflix customers will receive gift certificates for $40 at Walmart. Netflix has pointed out that this will incentivize people to switch to Walmart’s own streaming video service, using Netflix’s channels to market directly to the people most interested in streaming video! I don’t know a lot about the specific law behind class action settlements, but this would be a pretty amazing turn of events for Walmart if the settlement is approved early next year.

Twitter revealed their numbers today, strong user numbers, but is it really that impressive?

Numbers for Twitter: 100M monthly active users, 50M daily active users, 400M unique visitors per month. Some pretty crazy designer numbers too, such as every NFL team is on Twitter, 75% of NBA players, and 87% of the Billboard Top 100 artists. The bad news? 40% of those active users don’t tweet. Last I heard, this activity was generating roughly $150M in revenue for the year.

First off, I love Twitter and I defend it’s merits in the face of criticism all the time. But just for fun, look at CityVille’s stats. Zynga makes $600 million in revenue from Cityville, Empires & Allies, Texas Hold ’em and Farmville, which have a combined 186M monthly active users and 34M daily active users (Zynga actually makes $600M from all their games, but those 4 are the biggest). I’m not saying Zynga is analogous to Twitter – But Facebook gets 30% of Zynga’s revenue (haven’t checked the S-1 to see if that 600M is before or after Facebook takes the cut, but I imagine it’s after). These are definitely some back-of-the-napkin figures I’m spewing out, but even a conservative estimate would have Facebook collecting more just for hosting Zynga games than what Twitter makes on ads in a year.

I’ll admit that’s a little unfair and comparing Twitter to Facebook and Zynga is harsh – Facebook is a fully developed platform and the most popular social network in the country, Zynga a one-of-a-kind game company – but Twitter is probably approaching the climax of it’s growth and it can’t make more in revenue than Facebook gets from a social game company. It also has a ton of users that aren’t really active. Like I said, I love Twitter, it’s much more interesting to me than Facebook, but the monetization is lagging.

Patent “reform” passes today

A much-lauded and much-criticized (see conflicting reports in picture above) patent bill has passed Congress today, signaling the first significant shift in patent law in decades. Some say it does nothing, some might make comments about rearranging deck chairs on the Titanic, and both are right. The biggest change is the switch to a first-to-file from a first-to-invent system, which, while theoretically significant, probably won’t impact any of the major problems in patent law that industry criticizers frequently note. The next biggest changes are some dramatic adjustments in the way the USPTO can charge fees, opening the office up to raise a significantly larger amount of money by charging more. This might turn out to be the biggest practical change – an “activist” USPTO might consider raising fees for certain activities to discourage abuse. But one need not even pray that the USPTO turns activist to be optimistic that this change will trickle-down to improve other aspects of patent law – simply raising enough money to hire some more patent examiners might be enough to see an increase in the rate of rejected applications. There will be a deluge of articles in the next week detailing how much or how little this reform will change patent law, but until we see how the USPTO decides to utilize the fees they collect, we can’t really know.

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September 1, 2011 · 11:29 am

Slide’s Demise – How should a company treat social goods when it destroys their value?

Slide, bought by Google for roughly $228 million about a year ago, is being disbanded. Economically it’s a pretty interested case study for the lifecycle of a social game company (or any small tech startup, really) that gets acquired and then does poorly. One could argue that Slide actually got acquired when it was on the downswing already – it was valued at $500 million in 2008, reportedly. But seeing as the company is about to be abandoned, Google probably sees that $228 million as a high price for a year of access to talent and a half million monthly active users. Slide hasn’t released a hit game since SuperPoke Pets in 2008, but the game still has over 100,000 monthly active users, and they are more than a little upset about Google’s abandonment of the game.

Apparently Slide had great engagement numbers, because the protest has been quite vocal for a mid-sized game. One (relatively unheard of) news outlet ran a headline that it was upsetting people with disabilities because of how much that category of people enjoys the game. But reputable sources have picked up the story as well, and some note the possibility of a class action lawsuit against google, though I imagine that observation is simply from reading the comments in the Techcrunch article where the story first appeared.

Why is this interesting? Well, it’s the most vocal response to a game going under we have seen, and its also possibly the first time where a game is going completely defunct without (currently) any way for the players to move their stored value in the game to another game. Other companies have closed social games before, but usually that’s in the context of a dying game where the developer is moving resources to a new project – and with it, they hope to move the players by offering to give players who switch a heavy bonus for their loyalty. Slide, however, is being completely disbanded, and Google doesn’t seem to have an obvious solution for how to deal with the disgruntled players – they haven’t launched any sort of liquid credits system on their own game platform yet, so they can’t just give the players some bonus on those credits. Legally, I’m sure Slide/Google has no obligation to do anything – I haven’t read their terms of use, but I’m sure they state what most games state, which is that all goods remain the property of the company. But as the free market has noticed in this situation, it’s not always usually ever best to enforce your legal rights to the fullest extent against your valued customers.

What really caught my attention about this story was how the debate has been framed – All Things Digital starts their coverage of the news with the question of whether a virtual good is like a halloween costume, where the consumer has an understanding that the goods aren’t going to hold their value. Social game items are hardly the first virtual goods, but they may indeed be the least liquid and hardest to price – even if your halloween costume is topical, you still have it after halloween is over, and you still have that shot of selling your Sarah Palin costume to the person throwing a 2011 themed Halloween party in 10 years. Once you buy that gold gun in a social game, unless the game has a trading market (which few do at this point), you are stuck with it until the game closes. I say goods from social games are hard to price because, unlike virtual goods in other contexts, you don’t really know how long the status you are purchasing will last. For example, if I buy a virtual good over xbox live for a console game, I have a rough idea of the lifecycle I should expect – I know whether a new game has been announced, I know how long the game has been out and how many people are playing it, and I know the history of the developer to some extent. It’s basic free market price movement – But with a smaller social game company (Slide’s close was obviously more of a surprise, but one could imagine the same happening with a smaller dev) that sort of information just isn’t out there to base a pricing decision on.

Social games simply don’t have a history as an industry to see this kind of pricing, but they will get there. Slide’s failure is likely burned into the minds of the disgruntled SuperPoke players, who I imagine will be more skeptical of the companies they “invest” their money in. Everybody who has heard the story is likely to make a similar analysis and eventually the market for virtual goods in social games may see slower growth if consumers become wary of making a significant capital investment in a game that may go under at any moment. Companies could be more transparent upfront about the fact that the social goods are the sole property of the company, and that you are just leasing them, something typically buried in the terms of use anyway, but a better approach is probably just to make sure you have some method of transitioning users to other games – are you really telling me no company would be interested in offering SuperPoke players free in-game items to get them into their game? These sound like some pretty solid users to have on your game – hell, I’d be surprised if Google couldn’t make money by offering to sell an interstitial with a cross-promotion to a Zynga game at this point.

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August 5, 2011 · 2:51 pm

How the future of Social Games is related to patents, to Google+, and to Zynga’s deal with Facebook

Social games are an industry I follow pretty closely; I currently work for a social game company while I’m attending school, and I’ve always been a fan of videos games and interested in startups, which collide in the realm of social games.

The industry is young, but already the first phase is coming to a close in a sense. Facebook was the first dominant platform, and Zynga the first dominant developer on that platform. The iPhone became the next truly conquerable territory, and Rovio probably captured that market better than anybody else. There’s a few things that I think will shape the next phase of social game development:

The result of the Lodsys patent suits

Lodsys is currently suing a bunch of mobile companies (including Electronic Arts and Rovio) for patent infringement. Lodsys is a “patent troll” – a term used to describe an entity that doesn’t make a product and acquires a patent solely to license it, or sue if companies decline to license. Lodsys is hardly the first company to take this approach, but it is one of the first to actively go after mobile developers on ios and Android. If Lodsys succeeds in gaining licenses, or if nobody steps up to pay to challenge the patent in court, the chilling effect on app developers could be big – and it could potentially slow growth of social games on ios and Android if the developers fear that success will lead to an inevitable patent suit.

Google+’s success, and their games platform

Google+ is definitely a product that many game developers are cheering for. Game developers would love another platform to publish on aside from Facebook – Facebook is a wonderful platform, but ever since Facebook cut down on the ability of new games to access virality channels, it has been hard for new developers to gain a big following on the platform. Facebook is actually saying that they will start integrating some new virality that social games can access, specifically reopening the possibility of game activity posts being displayed on the new feeds of Friends who are interested in games, but a new platform would have all sorts of other benefits. For one, Google+ may start out by offering developers an open platform for payments, whereas developers are now forced to utilize Facebook Credits for monetization on Facebook. Additionally, Google+ might push down the industry standard 30% cut that both Apple and Facebook take for their game platforms, mobile and web-based, respectively. There have already been rumors that Google+ will launch their platform asking for only 20% of gross revenue as compared to the 30% that Facebook takes, which could both help developers monetize by increasing their portion, and expanding the potential audience by letting more users play for less while still making a profit.

The contents of the Zynga/Facebook deal

Zynga and Facebook cut a deal back in 2010, and the details of the deal are only rumors, but it could have a huge impact on the future of the industry. The main issue is if Facebook got some sort of commitment from Zynga to stay on Facebook exclusively for a period of time, and if Google+ launches their games platform within that period, then Zynga may not launch titles for Google+. While that would obviously be a huge win for Facebook, it isn’t necessarily a huge win for Zynga, Google, or even other developers. Zynga brings a gigantic user base with it wherever it goes, and without a Zynga title available at launch, the Google+ platform may not take off. While it might be interesting to see what would happen on a social game network free from Zynga for a period of time, developers as a group might lose out by having fewer total users interested in the platform.

Those are the big issues as far as I see them in terms of what will shape the future of social games and the platforms they appear on, or, at least, it’s three of them. 🙂

 

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