20th Level Marketing

Collectible Card Apps?

2012-02-13T23:50:00.000-08:00

Sure, there's been CCGs as software; you can play Magic: The Gathering online, after all. And virtual card games are all over the place, it seems, on a variety of platforms. Toy Fair is seeing a new take on the idea, though, from Nukotoys, with their Monsterology game pictured above. Apparently you flick one of their cards against your iPad or iPhone screen and it will appear inside... check out the video here.
This may or may not fly, of course. It's far too early to tell, and besides you have to see what sort of marketing they have lined up. And if the game is any good; its not easy to design a good card games. It's also not clear how much collectibility they are planning for, either.
Still, it's another interesting trend to keep an eye on for traditional gaming companies.

Boardgames, Meet Apps

2012-02-13T10:27:00.000-08:00

When Life hands you iPads, make apps.

The convergence of boardgames and tablets is happening fast. Check out what Hasbro is showing at Toy Fair: Monopoly, Battleship and The Game of Life in special appified versions. The iPad sits in the middle of the board, and the spinner is on the iPad. As are funny videos that play as you move through the board, from Americ'as Funniest Home Videos. Will they fly? They may not right away, but at the rate tablets are being adopted it shouldn't be long before this becomes popular. (Estimates are that Apple alone may sell more than 45 million tablets this year, and that may be conservative once the iPad 3 hits and they (maybe) reduce the price of the iPad 2.)
Then there's this app, which is shown here:

You have pieces you move around the outside, which integrates with the software (the board knows where your pieces are). I talked to these guys at CES, and tried to convince them to go to the GAMA Trade Show and sign up some adventure game companies.

Really, the adventure game industry (RPGs, boradgames, and miniatures alike) needs to get over to smartphones and tablets ASAP, preferably last year. The ability to completely distribute digitally is an amazing transformation of the business. Not to mention cost savings, and the fact that the core adventure game demographic overwhelmingly has a smartphone, and tablets are growing even faster than smartphones now.

The future is arriving at a rapid pace; get with it or you're history.

Game Industry Sales Down 34% in Jamuary

2012-02-11T22:06:00.000-08:00

Yeah, it's pretty much like that.

Remember how NPD was saying for months last year that sales declines were just a blip, that things would look better in the 4th quarter with all sorts of strong titles being released, and that sales for 2011 would be flat from 2010, maybe down just a smidge? And then the numbers for December hit: down 21% from December 2010, and overall sales for 2011 were down 8%. Time to panic? No, no, everything will be fine in January; this was just lots of sales getting pulled into November, January will be back up.

January sales dropped 34% from January 2011.

OK, time to panic.

That is, if your sales are still all based on shipping boxes to retail stores, you should be wondering how long that will last. Sure, EA and Activision seem to be doing pretty good, selling more boxes than ever... but only of the biggest titles. The midlist is quickly going away, and companies based primarily on less than AAA titles (hello, THQ) are having a very rough time.

Unless they've transitioned to digital distribution, social and especially mobile games. Free-to-play is whacking the business of $60 retail boxes pretty hard, too.

That transition to digital distribution that was going to take many years suddenly doesn't seem so distant. A few more months like January and things will change very fast indeed. I predict that 2012 will see another year of dropping physical retail sales, possibly into the double digits unless the Wii U does amazing business (but it's likely to only have a couple of months of sales in this year).

GameStop better hurry up with those new initiatives into digital.

How Not To Market Gaming Accessories

2012-01-16T17:39:00.000-08:00

Actual poster at a CES Booth

Sometimes you just have to wonder why nobody stood up at the marketing meeting and said "No." Or maybe "Have you lost your wits?" Apparently no one did for this company that makes gaming mice and gaming keyboards. Somehow they though that this slogan would appeal to those crazy Americans.

Really, guys (I presume guys; women usually don't seem to stoop to this marketing level of juvenilia), what the hell were you thinking? Looking at this (which is also the backdrop image for the booth, by the way) I have no idea what they're marketing or why I should care. Features? Benefits? Nope, not there. Odd image of a cat outline with an American flag design over it? Sure, that's there. Whatever that means. And did I miss something or did the Germans actually invade America in World War II? I thought they never got here... I must not know as much history as I thought. Of course, countries that did have legions of German "tourists" during World War II don't exactly have fond memories of the time period.

Save the lame jokes for when you're at the hofbrau knocking back some lager. When you're marketing, try to at least point to the product or service, and maybe even hint at a benefit or two.

Miyamoto Retiring?

2011-12-09T17:45:00.001-08:00

This guy doesn't look ready to retire.

A rollup of stories from IndustryGamers this week, as featured on Kotaku can be found here. There's been a lot going on, and perhaps the most interesting flap has been over an interview that Wired conducted with Nintendo's star designer Shigeru Miyamoto, where he talks about retiring. Of course Nintendo, no doubt worried about their stock price, rushed to say he's not really resigning. I think the truth probably is Miyamoto wants to shift his responsibilities some, and maybe not "retire" in the Western sense of the word (as in not work any more), but maybe change from overseeing development efforts to being more hands-on.

Somehow Nintendo would like to get Miyamoto to sprinkle his magic dust over every title they do, or at least make investors think that he does.

Although I think what is really important is to get a whole crop of designers who can do what Miyamoto does, or at least approximate it. If he could train up some developers, that would be hugely useful to Nintendo. I'm not sure if that;s even possible, though, but it's certainly worth a try.

This Week In The Business

2011-11-20T22:16:00.001-08:00

If only making money from games was this simple.

My son rightly pointed out I should link to this post on Kotaku, which rolls up a number of the top stories on IndustryGamers for the week. It's a good overview on the important stories in the game business for the week.

Nintendo Enables Paid DLC

2011-11-17T13:03:00.001-08:00

Here's a story that I've just posted to IndustryGamers.com, about how Nintendo will be enabling developers to put DLC online in the 3DS eShop and actually charge customers money for it. This is apparently something Nintendo is doing because developers have asked for it, not because the Big N particularly thinks they should charge for DLC. I'm sure gamers everywhere cheer at the thought of free content, especially more free content for games they've already purchased. But is this really a good idea, ultimately, for a business?

After all, the biggest change in smartphone games is the shift to free-to-play, going form only 12% of smartphone games to a project 92% of them in a couple of years from now. If the games are free, how will they make money? Sale of virtual goods... AKA, paid DLC in another guise. If that's the right path in smartphones, is it necessarily the right path for consoles?

Well, maybe, maybe not. I think part of the reason (a big part) that free-to-play (F2P) is taking over smartphone games is that there are so damn many games out there it's hard to get people to commit to buying one. If it's free, then people have one less barrier to trying it out, and then if they like it they might spend money on buying things for it. So F2P is a way to encourage discovery. On a platform like the 3DS, though, there are very few games (compared to smartphones, orders of magnitude fewer), so buyers aren't as overwhelmed... and therefore maybe they don't need to be enticed by free games to make a buying decision.

I see that counter-argument, but I think the bigger picture for consumers is that they see "Hey, I can get a smartphone and have thousands of free games" which may lead them away from choosing a dedicated gaming handheld. Oh, the hardcore gamers will see the advantages of the dedicated handheld, but that audience isn't very big compared to the size of the smartphone buying audience. The comparison between $30 games on a 3DS and free or $1.99 games on the smartphone isn't helping dedicated handheld sales at all.

The real tough part is that making a game F2P means fundamental design changes; you can't just take any old game and make it F2P and expect it to work properly. And many $30 games aren't really worth the full price, especially when it's easy to find them used. I think games have sustained really high prices for a very long time, but the party is rapidly coming to a close. For every Call of Duty or Skyrim, there's dozens of games that don't even cover their development and marketing costs.

I think Nintendo's fighting a rearguard action here, but the industry as a whole is inexorably moving to lower game prices up front (in many cases, free) and looking to make their money after the initial game acquisition. Companies are trying like hell to increase customer engagement with game brands, using Facebook and multiple tools to keep you continuously interested in their game. Companies are racing towards this goal of comprehensive, multiplatform brand engagement, but I'm not sure what exactly they'll find at the end of the race.

2011 has been a year of big changes, but 2012 may be even bigger.

Things Are Changing

2011-11-16T11:10:00.001-08:00

I just posted an interview on IndustryGamers.com with Warren Spector, where he talks about how things have been changing in the game business. Check it out here. I was thinking of calling it When Dinosaurs Ruled The Earth, but thought better of it.

I'll be interviewing other Game Industry Legends in the coming weeks, like Richard Garriott and Sid Meier. It's interesting to compare and contrast their thoughts about the vast changes taking place in the game business these days.

Apologies to my audience here, but the exigencies of IndustryGamers have kept me hopping. I hope to get back to regular posting here soon.

Book Publishing 2.0 Emerging

2011-10-29T09:31:00.000-07:00

As if we needed any more evidence, Kobo has announced it's signing deals directly with author, just like Amazon. It's as Amazon exec Russell Grandinetti told the New York Times recently:

"[T]he only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity."

Which is something Joe Konrath and others have been saying for a while. It's a great time to be an author, especially if you have some understanding of business and marketing. Some authors are lost in this brave new world without a publisher to take care of everything for them, no matter how ineptly that might take place. I've heard one best-selling author describe how she just writes a huge number of pages, and then her editor turns it into a novel. (One of the many unsung editors who deserve far more credit than they ever get.) The author sounded like she really couldn't be bothered with figuring out how to tighten up her work, put it in order, make it make sense... I think that sort of author, who is deeply reliant on a publisher's help, is going to struggle without a publisher.

Most authors are certainly going to need a graphic artist to design a cover, develop formatting and such; an editor to at least find typos, and probably to help refine their writing; technical help in preparing their books for various electronic platforms; business and marketing advice on banking, company structure, how and where to market, and a zillion other things. Certainly some authors are familiar with some or all of this; some may even be able to do a pretty good job of all those things. Most will need to find people to help them with some or all of these tasks, and usually for a flat fee. These are all functions that publishers took care of, but they took an enormous percentage of sales to do all that... which makes sense given that books then had a huge capital cost and inventory and shipping costs. All that has gone away with digital distribution, and even with print-on-demand. Bookstore and newsstand distribution is still the one area where the self-publisher can't go without a partner, and that may be a good reason to go the traditional route with a book... at least so you can attract attention to all those other books you are selling yourself digitally.

I'm also excited to see that authors are beginning to experiment with different lengths, and styles of publishing. Let's see those monthly pulp adventures return, the 90-page adventures of The Shadow and Doc Savage and countless others. The new magazine era is upon us, for digitally published content. Apple's new Newsstand app in iOS 5 is apparently causing huge jumps in sales for magazines. Which is great, because that may help magazines finally make the transition to digital.

It all means I'm going to have to make some time to work on the books I want to write...

New Way To Publish An Ebook

2011-10-19T19:57:00.000-07:00

The online book publishing service Blurb is offering a way to publish collections of photos as an e-book for the iPad, for only $1.99. If you're in downtown Manhattan, watch out for falling publishing executives. The end is near for traditional publishing.

Baby Game, For Real

2011-10-17T10:45:00.000-07:00

See, it says Serious Game, so you know they aren't foolin'.

Seriously, why can't we get games like this in the USA? The Mommy Tummy game certainly has unique aspects for a marketer to grab onto. Look, you get to wear a suit with special chest and stomach sensors, and simulate an entire pregnancy in only a few minutes. Don't jump around too much, or you'll have a miscarriage!

His kung fu is strong.

Although perhaps they need a longer game play experience than 2 minutes... maybe they could stretch that out to a few hours. Make it multiplayer, let someone else play the baby... just for kicks.

As a sequel, perhaps a simulation of raising a child. For added realism, it deducts amounts regularly from your credit card.

Maybe this one isn't going to be hitting the top of the bestseller lists soon, but it's definitely thought-provoking.

2011-10-11T10:23:00.001-07:00

Zynga is about to announce something big... Probably support for Facebook's newly announced HTML5 app for iOS and Android. Sounds cool, but how will in-app payments split between Apple, Facebook and Zynga? More to follow.

Steve Jobs, R.I.P.

2011-10-05T22:11:00.000-07:00

It's a sad day in the high-tech world. Steve Jobs has passed away. He was the driving force behind the Apple II, which created the computer game industry, and later the iPhone, which transformed the industry. Let's not forget Pixar, either, and the amazing movies that they have made. Or the iPad, which is busy remaking the laptop market and creating a whole new category of devices.

I never met the man, though I did go to a few Homebrew Computer Club meetings back in the 1970's. I still remember when Ty Roberts (now CTO at Gracenote) came by the Hero Games offices in 1983, to show us the prototype of this awesome new computer called the Macintosh... Ty wanted to create a Champions game for it. That was cool, but what that computer really meant was that a few years later, with a laser printer and Pagemaker software, it made putting out books incredibly easier. And all of that was really because of Steve Jobs' vision. I hope his companies continue to do great things, and carry onward in his memory.

Requiescat in pacem.

New Directions

2011-09-19T08:40:00.000-07:00

I'll be hanging out here.

I apologize for not posting much in the last week, but I've been busy. I've accepted a position as the West Coast Editor for IndustryGamers.com, where you will see my byline regularly posting on a variety of topics. I'll be continuing this blog, but my focus will shift away from news and analysis (since that will be on IndustryGamers) to marketing tips and items about the book trade.

Look for some new pieces here daily, once I get into the groove... In the meantime, check out some of my latest stuff:

The 3DS vs. the PS Vita: Who Will Win?

How The iPhone 5 Could Reshape Gaming

Japanese Game Marketing

2011-09-13T09:44:00.000-07:00

Love the title.

I watched Nintendo's press conference live last night, and it was an interesting experience. It was all in Japanese, so I didn't understand much of what they were saying. At then end of the stage presentation, Nintendo ran a series of commercials, trailers, and interviews for over an hour. (I guess this was their way of getting people to leave the auditorium.) It was an interesting insight into Japanese marketing techniques.

There was a seemingly endless series of cartoons where Gatchaman was busy selling Monster Hunter Tri G. The classic Tatsunoko animation (resembling the worst of Hanna Barbera) was spiced up with 3DS's drawn in, along with a caricature of an American professor (speaking hilariously bad Japanese) and clips from the video game. I tried to imagine if, say, Activision used old Scooby Doo episodes to sell Modern Warfare and included a Japanese caricature speaking broken English... but the film in my head kept breaking. I know that Japanese like kawaii (cute) things, but this was the visual equivalent of fingernails on the blackboard. The Monster Hunter visuals were compelling, but just as I was enjoying those the animation would come back like an annoying sidekick.

I thought that was odd marketing, but then I saw the ad for Loveplus, one of those Japanese dating simulations. This ad featured a couple of young Japanese hipsters and a young Japanese woman playing the dating sim... which featured a Japanese schoolgirl in traditional schoolgirl attire. Very creepy to anyone who's ever watched Law & Order: Special Victims Unit.

Then there was the surreal ad for Tekken 3D Prime Edition, featuring a Japanese businessman in his office who gets attacked and defeated by one of the Tekken characters flying through his window... and at the end we find the Japanese businessman was working for Capcom. OK, it was surreal, but bonus points for taking a shot at a rival.

All in all, it was an interesting exercise revealing just how different Japanese culture is from American culture, and how you can't expect marketing messages to transfer between them. You have to create a brand-new marketing campaign for each country; you may even need to change the name of the product. Like Square Enix's new RPG, Bravely Default: Flying Fairy, which would probably find a new title before coming out over here. And many titles, like Loveplus, aren;t even worth the cost of translating them; they're just so far away from what customers would buy that sales would be miniscule.

Games Sales Down 23% In August

2011-09-12T05:14:00.000-07:00

The chart is small, like the overall sales numbers.

The relentless slide of traditional game sales continued in August, as sales dropped 23% over last year. Last year, $873.8 million; this year, $669.9 million. Software sales were even worse, with a 34% drop to $264.8 million. Hardware fell 12% (to $249.4 million), and accessories dropped only 1% (to $134.7 million).

So far this year, overall sales are down 5% from last year. Of course, NPD was quick to point out that there are a lot of good titles lined up for the 4th quarter: Modern Warfare 3, Battlefield 3, SkyRim, SWTOR, and more. NPD's Anita Frazier expects with all of those blockbusters, sales for the year could end up at flat or maybe even a little positive.

I suppose it's good to be optimistic, but I think a more realistic assessment is that the industry would be lucky to see sales end up at even for last year. With all of the big titles coming out around the same time, there's no way customers will have the money or the desire to get all of them. Take one example: Are people really going to buy both Modern Warfare 3 and Battlefield 3? Not when they're coming out within a couple of weeks of one another. Customers will pick one or the other, and then play it for weeks or months until they feel they've gotten their money's worth. Now, if one of these titles came out six months ago... or six months from now... they'd sell a lot more.

More than that, many of the customers for the biggest titles are the type who buy multiple titles... when they can afford them, and when they're not already busy with a new game. Look, if you've been eagerly awaiting Star Wars: The Old Republic, you're going to spend all your gaming time with that once it comes out, at least for a few weeks. Which means you're not going to be picking up Battlefield 3 for a while, even if you plan to eventually. If you have no time to play it, what's the point? So that purchase gets pushed off a month. This scenario will be repeated in many variations. Too many titles at the same time means lower sales for everybody.

It's going to be a very busy holiday season, but don't expect the overall industry tally to be higher than last year. If it is, that's truly reason for celebration... before the sales declines continue in 2012.

Can Free Apps Sell Games?

2011-09-09T05:23:00.000-07:00

GetJar is trying a new gambit in an effort to generate more app sales. They've implemented the GetJar Gold store, where they've taken 50 top Android apps and offered them for free. It's "free app of the day" on steroids, and represents a serious effort to draw some attention away from Amazon's app store. The 50 titles available at launch include such hits as Fruit Ninja THD, Pocket Legends, and Age of Zombies.

The developers of these games will get paid by GetJar, so it's not a bad deal for them. GetJar plans to generate revenue from GetJar Gold by offering sponsored listings to other app developers. Developers can bid from 1 cent to $1 or more for each install they get by being listed. Sponsored apps are shown with a different color coding alongside the high-quality free apps.

It's a clever method to entice a horde of buyers in by offering high-quality free apps, and while they're busy downloading some of those, customers will be seeing other apps they might never have found. It will be interesting to see how well the model performs.

These days, though, small developers should be happy to have some new way to try out in order to find more customers.

Who's Spending Money For Freemium Games?

2011-09-08T17:20:00.000-07:00

The 18-24 crowd spends more time, but the 25-34 crowd spends 3x the money.

That's a key question for mobile game developers. At least, it should be if you expect to maximize the revenue you get from the freemium game you're developing. (And if you're a mobile developer who's not working on a freemium game, you're missing out on more than half the revenue produced by mobile games.) Mobile analytics firm Flurry has some data for you.

The data was gathered from a sample of iOS and Android freemium games with over 20 million users across more than 1.4 billion sessions, so I think most people would agree that's a statistically significant sample to look at.

From the chart you can see that game usage skews heavily towards the younger audience, which shouldn't surprise anyone. I'd also guess that smartphone usage tends to follow a similar distribution, with the over 55 crowd being the least likely to even have a smartphone, much less play a game on it. However, the money is definitely coming from the older audience; teens don't spend much at all on freemium games even though they play a lot of them. The real pot of gold lies with the 25-34 age range (spending nearly half the money) and with the 35-54 group (spending more than a quarter of the money). If your game targets those older spenders, you could make more money with fewer overall downloads.

This is important data as you consider the design of your game, the style of the artwork, and the marketing. If you're interesting in maximizing your returns, you need to consider the realities of the marketplace.

Market Size For Gaming Platforms

2011-09-02T04:27:00.000-07:00

Numbers of console sales thru March of 2011.

One way to look at where to invest development resources is in how rapidly a market is growing. Yes, the installed base is nice, but it's also true that new owners of a platform are more likely to pick up new games... especially ones that show off the power of their platform.

Let's look at the console market, for example. Excluding the holiday season, the Xbox 360 has been selling somewhere around 250K to 300K units a month lately; the PS3 (prior to the price cut to $249) somewhere around 200K units, and the Wii about 175K units. Of course, they all have installed bases in the tens of millions; the Wii is the champ there at around 90 million sold worldwide, the Xbox 360 around 55 million, and the PS3 around 45 million.

Those numbers represent a pretty solid market base to sell games into. Sure, there are many more computers, but consoles are mainly for games, and computers are used for many different things. How does this compare to smartphones? Android smartphones are selling at the rate of about 18 million per month right now, with over 100 million out there already. Apple's iOS devices have an installed base around 200 million, if you include all the iPod Touches and iPads; the phones alone are around 120 million. And iPhones sell at the rate of about 7 million per month. Yes, these are not primarily game devices; at the same time, it's true too that games represent one of the biggest (if not the biggest) types of apps sold on smartphones. So gaming is clearly important to smartphones.

Smartphone worldwide sales in Q2 2011

Yes, Nokia is still selling a lot of Symbian smartphones, but it's not attracting new development as the company has already written its obituary.

Finally, let's look at tablets. Apple has sold about 30 million iPads so far, and they are currently moving out the door at about 3-4 million per month. Android tablets are perhaps half that. Again, games are the largest category of apps sold for these devices, so while gaming is not the primary reason people buy tablets it's clearly important.

How about handheld consoles? Well, the 3DS was selling about 100K per month before the price cut; we'll have to wait awhile before we see what the new level is.

I think you can see why smartphones and tablets are catching the attention of game developers. While it's very hard for most games to get any traction, if you do have a hit you can do very well indeed. Those companies who have figured out how to get their games before a large audience are doing quite well; other companies are busy trying to figure out how to emulate their success.

This also explains why game developers should be paying attention to Amazon's rumored tablet. If Amazon can sell 1-2 million tablets a month, which is not unreasonable to expect, that's a substantial market opportunity, especially for developers who can be there at the beginning.

The Amazon Tablet Vs. iPad 2

2011-09-01T04:30:00.000-07:00

No doubt it won't look like this.

We are fast approaching the holiday selling season, and if Amazon is going to launch an Android-based tablet they'll have to act soon if they want to maximize their initial sales. A number of rumors have been making the rounds about these tablets, so I thought I'd round them up and provide my own thoughts.

Why is Amazon's entry into the Android tablet market important? Primarily because nobody has succeeded in creating an Android tablet that comes anywhere near the iPad in terms of sales. The closest is perhaps Samsung's Galaxy Tab, but even that is a distant second. Apple's managed to combine a smooth interface with a solid combination of hardware that other manufacturers are hard-pressed to match at Apple's price points. So there's an opportunity here for Amazon to use its advantages to secure a leading position in the Android market, and provide a credible threat to Apple's dominance. More competition is good for consumers, and tablets are an important market for games and books and other media.

The rumor mill is buzzing that Amazon is aiming at the low end of the market, planning to undercut Apple's prices. I think this is where the opportunity is best for Amazon; analysts think they could sell 3-5 million tablets in Q4 alone.. The trick is to give people the features they desire at a price they can afford. How can Amazon achieve this?

Here's my advice: Minimize the feature set to keep the costs low. Amazon is said to be using only a two-finger-capable multi-touch screen, instead of the ten fingers an iPad or a standard Android tablet can handle. Remove the cameras; this tablet will be for consuming content you buy from Amazon, not taking pictures. No need for a really fast processor, either, or for lots of flash memory. Give it a memory card slot and let users pay for extra storage. The target price should be $299 or less. Perhaps sell a 10 inch tablet for $299 and a 7 inch tablet for $199. Make the interface smooth and responsive, and provide a good selection of apps. The screen needs to be good... maybe one of those hybrid E-Ink and LCD screens, giving you the best of both worlds?

Amazon's goal should be in selling lots of content. They have a clunky interface, but a terrific recommendation engine. They've certainly encountered some problems with their version of the Android market, but here's a chance for them to fix the problems.

The key feature is going to be Amazon's vast array of media and their ability to suggest things to buy. If the price is low enough, millions will take advantage of it. Amazon has its doubters, though. Others see how Amazon could be a huge winner. It all depends on the execution. Amazon will really need to get these tablets out in October or earlier, and have some big TV advertising buys planned. The hardware, if it really is by Samsung, should be high-quality. Amazon has shown they can produce a good piece of hardware with the Kindle. (An interesting question here is whether Amazon stays with the Kindle brand, or creates an entirely new name... I'd bet on a variation of Kindle. Why not build off of the success of the Kindle?)

This tablet (or tablets) could represent an important expansion of the tablet market next year. Amazon could capture the #2 spot behind Apple, and put pressure on other Android tablet makers to step up their quality and pricing. Of course, Apple already has a plan to deal with whatever tablet threat might emerge. I'm sure they plan to introduce the iPad 3 next year, with a Retina display (4x the current resolution), better cameras, and a significantly more powerful processor. At the same time, they'll reduce the price of the iPad 2 to counter any threat there might be at the lower end of the market. Oh, it's going to be an interesting marketing battle next year...

A New Console

2011-08-31T05:19:00.000-07:00

A new console contender? If you live in India...

There's a new console being planned, by a startup called Zeebo, but its focus is not on games, it's on education.. They've been around since 2007, and initially their aim was to get consoles into developing countries like Brazil and Mexico, where they introduced the Zeebo in 2009. The unit plugs right into a TV set, and accessed the Internet wirelessly via 3G (which is also how software titles were distributed). Apparently Zeebo didn't go over well enough in those countries, for they are refocusing their efforts on India as well as other emerging markets. Current Zeebo operations in Brazil and Mexico are shutting down as of the end of September, and the devices will no longer be able to connect to the Internet.

Zeebo is planning on a new version to be introduced in 2012, and reducing the emphasis on gaming. It's an interesting vision, trying to bring Internet connectivity, software sales, education and gaming to a wide audience in the emerging world. I'm not sure how successful this will be, since they've already tried in Brazil and Mexico without sufficient success to continue. Much will depend on the pricing, and on the sort of content they can get onto their system.

I'm dubious that they can reach a sufficient scale to be a big success, though. I think their vision of inexpensive Internet access will be realized by the spread of smartphones to emerging markets. The size and amazing growth of the smartphone market can drive hardware prices low enough to be possibly affordable in emerging markets, especially since the devices are small and don't use much power. Solar charging becomes quite possible. Tablets will follow along as screen prices continue to drop. Distribution will take place digitally, thereby avoiding all the problems of retail stores and getting physical goods shipped in a country with a poor road system.

The result will be a huge market emerging for games that never existed before, if you can make your games accessible in a variety of languages. Many games need very few words to be playable, and these will be the ones that make their way quickly to new markets. There are many implications in the spread of this technology, and astute marketers should begin to think about how to bring their games to emerging markets.

Product Naming Case Study: The 3DS

2011-08-30T09:56:00.000-07:00

Naming products is a difficult process. An ideal name is short, memorable, an undisputable trademark, has no easy way to mock it, doesn't mean something bad in common languages, and it embodies the key features and positioning of the product. It's an extraordinarily difficult feat to achieve all of those goals, and correspondingly rare. Usually names fall short, sometimes far short, of more than one of those points. Even less-than-stellar product names can take many hours of work to create and approve.

One aspect of of product naming is that a product name can also turn into a negative factor, sometimes merely by chance. Usually this happens when you move a product to a foreign country and find the product name doesn't work. A classic example is GM trying to sell the Chevy Nova in Latin America, but "no va" in Spanish means "it doesn't go", which is a less than useful association for a car.

Nintendo's most recent hardware has had some interesting names. Back in the early days, they stuck to pretty straightforward names that were easy to remember and obviously had no trademark problems: The Nintendo Entertainment System (NES). The Super Nintendo Entertainment System. The Nintendo 64. All had the company name as part of the product name, so it was clear what company was making it. These products reinforced the meaning of Nintendo as a key gaming brand. Although the N64 didn't really say it was a game machine, by this time the word Nintendo was so strongly associated with gaming the point was made.

Next up was the GameCube, which was descriptive to a fault. It really wasn't an exciting or evocative name, and didn't point to any product benefits. Yet Nintendo's brand by this time was plenty strong enough to compensate. Subsequently, Nintendo choose to find a readily trademarkable name that had some unusual resonances: The Wii. This was probably the most radical name in Nintendo's history, and it attracted a great deal of commentary (much of it negative). Again, though, the power of Nintendo's brand carried the company past any negatives, and the best-selling hardware shut up detractors pretty quickly. After all, if it was selling like hotcakes who cared what they called it?

The Gameboy was a little bit odd for America, but the overwhelming success of the product eventually transcended the relatively weak name. (Weak because it really didn't point to any product benefits, and seemed a little off-putting to half the potential audience.) The Nintendo DS was a fairly obvious name to point to the device's main differentiation: the dual screens.

Now we come to the Nintendo 3DS. I'm sure that when Nintendo was working on the prototypes, and somebody said "What will we call it?" somebody quickly suggested "Nintendo 3DS!" Sure, the device has glasses-free 3D display, and it's basically an advanced version of the DS. At that time, too, 3D was making a resurgence. James Cameron's Avatar was setting box-office records, and the movie industry was making plans to have 3D in every theater, with every movie being in 3D, as a way to get people to come back to theaters to get something they couldn't get at home. (And, not incidentally, charge them a lot more.) Meanwhile, TV manufacturers realized they might have a way to get people to buy new TVs even though they might have just bought an HDTV in the last year or two. And game publishers, watching console game sales sinking, saw the possibility for a new technology that could revive game sales and be relatively easy to add on to existing consoles.

Nintendo was in desperate need of a sales boost, too. A new handheld device riding the wave of 3D enthusiasm seemed like the perfect answer. What better way to ensure that the device was associated with the 3D craze than to put 3D in the name?

The upside to the 3DS name seemed clear: The name clearly associates the device with 3D, and thus with the enthusiasm for 3D being generated by the movies, TV makers, and the game industry. So the 3DS name should help boost sales by some amount. Perhaps no one even mentioned the possible down side: What if 3D turned out to be just a fad? Or, worse, if 3D actually turned out to be a negative feature for customers? Then the name might be a drag on sales, reminding customers of a feature they don't like or don't care about, and making it seem like the device is all about that feature.

Of course, this is exactly what has happened. Satoru Iwata realized this early on, and noted in public statements that the device wasn't all about 3D and that you could have non-3D games on it. But if you leave your little 3D slider in the off position on the 3DS, you're left with a DS that is clunkier than a DS Lite and has about 1/3 the battery life. At least, it still has more horsepower, and when you're not using 3D the main screen is a fairly high resolution. The lower price tag is going to help significantly, too, by showing that you can get the extra features with paying a huge amount more than you would for DS.

I expect that a new version of the hardware is in the works, at least to make it less expensive to produce, and possibly to add a second analog control, improve the battery life, and maybe make it slimmer and lighter. This is a natural evolution that console maker inevitably work on (at least, the part about making the device cheaper to produce). I think Nintendo will be looking closely at possibly rebranding

This is a cautionary tale for marketers, though. Naming is a two-edged sword; think carefully before you hitch your product's success to single feature or a pop-culture craze. That may be OK if your product is only going to be on sale for a few months, but if you expect to be selling something for years you need to take a longer view. A blander name might not give you an initial sales boost, but it may also avoid a sales problem. Nintendo's done pretty well in the past with names that are not terribly exciting in and of themselves, but they let the quality of the product add value to the name. And some solid marketing spending, too. Marketers, take heed.

The Next Console Generation

2011-08-26T05:34:00.000-07:00

If I saw this in my family room I'd figure the invasion had started.

Some analysts have started to say that we really need a new generation of consoles to turn around the sagging sales of the traditional game business. We're in the third straight year of a slump, and it's true that the current consoles are getting towards the end of the usual console lifespan, as the Xbox 360 hits its 6th year and the PS3 and the Wii in their 5th years. Previous generations of consoles have seen new generations introduced in around year 5 or 6, so by that reasoning we should be due for a new round of consoles.

Nintendo has already announced their next-generation console, the Wii U. Sony and Microsoft have said they are working on new technology, but have no plans to introduce new consoles right now. I'm sure they'll determine the proper time to ship a new console based on how well the Wii U does, and if sales of their current consoles start to slip significantly.

I don't think a new console generation in the traditional sense is the solution to the industry's problems. The usual "next-generation" console would have a significant increase in graphics power, and probably storage capacity and connectivity; a 5x to 10x jump in performance is something we've come to expect. Of course, that would mean substantially higher hardware prices, too. An "Xbox 720" or a "PS 4" would likely have to be priced in the neighborhood of $499 to $599 to offer a substantial jump in graphics. The Wii U is anticipated to be around the level of the Xbox 360 and the PS3, probably somewhat better, and the price tag will probably be in the range of $299 to $399, or maybe even more.

I think this is the wrong direction for console hardware. The sales figures should be telling us that customers thing games are priced too high already, which is why they're buying fewer of them (and buying a lot of used games). Higher resolution means higher development costs, too, and publishers are already seeing budgets that make it very difficult to turn a profit on most games.

The big threat to the current console generation is coming from tablets, smartphones, and connected TVs. They all share the same basic ARM technology at their core, which is very low-power and inexpensive. The smartphone/tablet/connected TV market is an order of magnitude or two larger than the console business, which by the inexorable laws of high-tech manufacturing means the console business won't be able to compete on price-performance. Look, an Apple TV is $99, and with the next generation of chips in it the Apple TV can outperform a Wii, graphically.

Microsoft and Sony, at least, have been working hard to build a compelling online experience and a big audience for Xbox Live and PSN. They should leverage that by expanding the variety of software available to their customers. Open up the development for your platforms, make it easier and cheaper to create titles or all types. Encourage more hardware add-ons. Make a new generation of your consoles, but focus on making them more flexible, extendable, and cheaper. Heck, switch over to ARM chips to get the same cost advantages as the smartphone folks. (Microsoft, you're in bed with Nokia... use their manufacturing expertise. Sony, you've got a deal with Ericsson...)

Microsoft and Sony have the advantage of an existing large audience and the market share and the branding. Don't wait around for Apple and Google to steal those things from you. Push your consoles down in price faster. You can make a more expensive, spiffier one if you really want to, but before you do make the $99 Xbox 360 or the $99 PS3. Make it easier to use network storage, cloud storage, or to plug in a USB hard drive or flash memory. Use your motion control to create a smooth interface to all different media. Microsoft, exploit that Windows Phone 7 connection. Sony, bring Android in to the PS3 and embrace that wholeheartedly. Imagine Sony being the first to bring the Android Market to the family room with games designed for the HDTV screen... they would dominate before Google even has a chance to get started.

Yes, I understand this requires throwing some cherished business models into the compost pile. Recycling those business models should provide a rich fertilizer for the growth of your new business models. If you wait to see whether the traditional new expensive console will fly, it will be too late.

Nintendo, you guys are so far behind Microsoft and Sony in embracing the new digital reality I don't know if you can catch up. You seem to have become aware that something is seriously wrong, which is good. You'll need to make a drastic move to catch up, let alone pull ahead. Start thinking big; call Apple and see if they want access to your brands. Cut a deal with Apple and gain all the manufacturing scale advantages Apple can offer. You can give their technology the very best gaming brands in existence. The combination would be very hard to beat, but it's going to require some daring, unconventional thinking and dealmaking.

I really don't know what's going to happen over the next few years, but if the traditional console makers stick to the traditional game plan, I think they're going to be in deep trouble. If they get creative, they could see a new era of growth. Grab some popcorn; it's gonna be a really good show.

GameStop Wants OnLive To Play Dead

2011-08-25T05:01:00.000-07:00

The smoking gun memo.

The followup memo.

This has to be one of the more unusual stories I've seen lately. Square Enix recently shipped Deus Ex: Human Revolution, and had worked out a promotional deal with streaming game service OnLive. Onlive gave them vouchers, which Square Enix put into every boxed copy they produced; the vouchers give you free access via OnLive to the streaming version of DEHR. I'm not exactly sure why Square Enix thought this was a great idea; why would you want to stream the game if you already owned the full version? I suppose because the streamed version might be higher quality than your PC could produce, since OnLive uses the gnarliest computers they can build to generate the streaming games, and unless you're a real gaming fanatic your PC probably can't match the graphics they can pump out.

Anyway, this all seemed like a typical cross-promotional marketing move. It was, until the boxes arrived at GameStop... then the memo went out to all GameStop employees: Open those boxes and pull out the vouchers and throw them away, then tape up the boxes and sell them as new. Later, word went out to just pull at the copies of the game and send them back to Square Enix. Square Enix acknowledged that they had failed to mention this voucher to GameStop, and bascially accepted the right of GameStop to refuse to sell the game with voucher.

As you might expect, once news of this hit the net, customers were not happy that GameStop was taking away something of value they thought they were getting. Now, GameStop's official position is that they don't want to support a competitor. I tried to check out GameStop's Facebook page where they had posted their official response, but it was not available. Probably swamped with angry comments.

OK, I understand that GameStop has purchased Spawn Labs with the intent of providing streaming game services at some point. GameStop also owns Impulse, a digital game distribution service. Would GameStop then pull Steam coupons from games? Where does this whole process stop?

GameStop's response was pretty hamhanded, and is going to generate a wave of bad publicity for them. Are they really that scared of OnLive? Seems like they are doing OnLive a favor by causing this publicity. If GameStop hadn't said anything and just ignored the voucher, it would have been gone and forgotten in a few weeks. They're going to have to compete against OnLive, but they're not ready with their competing service yet, so doing this doesn't get them any customers right now. If anything, it may lose a few. Or provide some nice PR value for OnLive.

Sometimes the best response is just to ignore something and continue with your own efforts.

Clever Ad Scheme For News Sites

2011-08-24T05:45:00.000-07:00

One of the tough decisions facing newspapers has been whether to give away their content for free on the Internet, or to keep it hidden behind a paywall and charge for it. If you're free, you can get plenty of pageviews, but advertising revenue is elusive. If you through up a paywall, you may lose so many readers you can't make enough money. The New York Times has been trying to split the difference, allowing certain articles to be free and trying to keep the rest for subscribers, but they admit that so far they've broken about even on the effort (lost about 24% of the readers, but gained enough revenue to compensate... barely). Now a company called DoubleRecall has an interesting scheme that may make publishers, advertisers, and customers happy.

A publisher who wants to put content behind a paywall can offer DoubleRecall ad units, which requires a reader to read a short message and type in a couple of words (highlighted by the advertiser) to gain access to the content. This unlocks the article for a limited time, or can provide other benefits (like virtual goods) to the reader.

DoubleRecall says their research shows this process boosts name recognition by 11 times over traditional methods. Ads can fetch a CPM (cost per 1,000 impressions) of $120, which is about 10 times as much as a traditional banner ad. There's also a social ad at the end of the content that allows the user to retweet the brand message, reply to the sponsor or click through to their web site. DoubleRecall says they've been getting a 12% clickthrough rate on these ads.

Some of this may be due to the novelty value; I'm not sure how well people would like this if they had to go through the process again and again and again, on multiple sites. Still, this is an interesting idea for web sites and mobile apps as well. Part of the success depends on their ability to find plenty of advertisers; let's hope they have some luck with that.