A Tree Falling in the Forest

ODG at AWE

noreply@blogger.com (Anonymous) — Wed, 11 Oct 2017 23:00:00 +0000

Nothing is more humbling than receiving credit for someone else's great work - not that it stops me. Ralph Osterhout is a close friend of twenty years and four years ago he invited me to start working with him and the amazing team at Osterhout Design Group. To say Ralph is legendary for his work and presence is a disservice to reality. A short list of his inventions includes PVS 7 night vision goggles, Navy Seal Rebreathers, the Shark Dart (look it up), Dry Suits for swimming under the polar ice caps to blow up bad guys' submarines, the Yack Back player from Home Alone, high intensity water pistols, the weapons "Q" presents as his own in The Spy Who Loved me and the magic trick where Teller drowns on stage in Penn and Teller's act and these are just a few. So when he asked me to stand in for him at Augmented World Expo and present the teams work I accepted only with tremendous humility and apprehension. Here it is.

VR/AR for Beginners

noreply@blogger.com (Anonymous) — Sun, 12 Feb 2017 17:14:00 +0000

Pioneers 2016 Vienna

The team at Pioneers are doing a stunningly amazing job of building an innovation community in Europe.

In the summer of 2016 they gave me the opportunity to stand in one of the most awe inspiring venues in Europe to talk about VR and AR. The most amazing part is at the end where I can barely control the excitement of the live demo working.

The Danger of Echo Chambers and Value of Disagreement

noreply@blogger.com (Anonymous) — Sun, 12 Feb 2017 17:12:00 +0000

Ken Rutkowski started a casual group for a bunch of friends to get together on Saturday for breakfast and collaboration. It was never only about business help and support were offered and provided in all aspects of the life and work. The group grew in connection and size and now Ken hosts MeTAL in a theater in Los Angeles.

He asked me many times to come to talk about games and the game industry, but this time he asked me to talk on a day he was not around. I went somewhere else completely. Before mainstream discussions of fake news, filter bubbles and the Russians, I got myself worked about what was going on with social media and search. This is probably the only talk you will ever see that quotes Ghandi, Tolstoy, Karl Popper, Margaret Mead and Stuart Smally all in the same discussion.

The World is a Game

noreply@blogger.com (Anonymous) — Sun, 12 Feb 2017 17:12:00 +0000

In my never-ending quest to prove to my parents - and myself - that my career in games is more than personal indulgence I spend a lot of time thinking about how many things are driven by the technological advances and understanding of human behavior derived from the work of so many creative geniuses. In this talk from Ken Rutkowski's MeTAL in Los Angeles I flap my arms and articulate why everything from the Ford Factory to Uber to a job at IBM is really game and how the game industry learnings can save the world - or at least make it more efficient.

E3: So Long, We Hardly New You Edition

noreply@blogger.com (Anonymous) — Fri, 13 Jun 2014 22:45:00 +0000

When asked, I told people I started this blog as a cathartic outlet. I didn't really care if any one read it, and I wrote when I had something to say. People started to read. I mean, who doesn't like to watch a good train wreck. There was a period of time I had a lot to say, and after a while the compulsion was gone. I guess it worked. I catharted. Or so I thought. This morning I saw this quote from Mike - boy do I miss Doug Lowenstien - Gallagher:

"The video game industry's explosive growth and technological innovation were front and centre at E3 2014," said owner and manager of E3 Michael D. Gallagher.

"Video games are the most innovative and engaging force driving our culture and entertainment experiences the world over. Congratulations to our incredibly creative members, partners, exhibitors, and the hundreds of millions of gamers who engaged with the show online and through social media."

He was trying to say this E3 - the one where I could talk on my phone from the show floor and haul a double wide trailer through the generous aisles - was growing and more successful than E3's of the past and that it somehow represented the game industry. I would try to characterize the statement but I am not familiar with the word to use when "delusional" fails to describe the gap between one's perception and the reality raining down around them and drenching them in its cold wetness until the moisture renders their fingers and toes are indistinguishable from raisins and the cold would place their nipples above diamonds on Mohs scale of hardness. Not a single publisher with a game in Apple's top 10 grossing was represented on the show floor, and if you take out EA and Disney, there is nothing in the top 50. While Wargaming was there, as they are moving to console, no Riot, no Valve or any other significant PC publisher. We were left with console, which is a fantastic market, but one that could not be characterized as explosively growing since shortly after my son was born - he is on his way to college now. E3 remains the useless dick waving display it always, but sadly, the dicks have gotten much shorter. All the big ones were too busy making money and people happy to attend. While I do not know exactly who the 40 plus thousand people were in attendance, I am comfortable positing a majority were there only out of momentum or the need to find a place to kill time around Michael Pachter's party. It does not have to be this way.

The road map to success is clear. I wrote about it six years ago because I saw Comic Con doing it right. It was not really tough, they started with a goal "have a reason for being."

The Con organizers realized they had a rabid fan base, and with the advent of the Internet, and more specifically, blogs, the fans had a voice. Over the course of the next ten years, they transformed the event from the place to see the new comics, to the most significant pop culture event in the world. From a comic lover's point of view, the Con lost an awful lot. Some may even say it lost its soul. From an economic perspective it moved from the realm of curious oddity to can't be missed launch event. Seeing as E3 never had a soul, there is nothing to lose. The biggest reason for the disparate treatment of the same issue - the Con actually likes its consumers and decided to cater to them. Even if the exhibitors feel the need to main line Purell after a day of hand shaking and autographs, they still know where their bread is buttered.

In 2009, probably not inspired by my post, Gamescom started up and had a radical idea. Let the people who love games come in and see the games. They, like the Tokyo Game Show, have a public day. As a result, the conference is exploding. Publishers show up to let the public see the games and promote them to the media. Just like E3 . . . . oh yeah, that's right, only members of the game industry who already know about every game on the floor are allowed in to E3. Gamescom also welcomes the media on site to broadcast live. Just like E3 with MTV and Spike . . . oh yeah, that's right, we threw them out. You can watch the E3 stuff on Twitch, the web based channel dominated by games like League of Legends and DOTA2, which were not represented at E3. It seems not all circles are virtuous.

PAX takes it one step further actually embraces the culture surrounding games with the public. As a result, games are launched there, investment is made and business gets done because everyone is there. Contrast this with E3 who alienates the public and increased friction by requiring ID to be shown along with my FREE ticket. Day one, no ID. Day Two, "just show me a business card," Day 3, "You need a photo ID." Admittedly, I have authority issues, but being late for a meeting in the back of the hall I flashed the guy a stack of my business cards and when he asked for photo ID, I had to ask if he really thought I would be walking with a badge and a stack of matching business cards for a guy who was not me. The guy blue screened for long enough for me to just walk in. I realize video games are just one of the myriad of reasons the terrorists hate us, but does anyone think they wanted to blow up the Activision booth? What other reason could there be to stop a person with a verifiably authentic badge from walking in to see game the publishers brought to the show to share with as many people as possible?

It is nice to see friends from out of town, but I do that at GDC, DICE and Nite to Unite. The parties are a lot of fun and often impressive, but by the third day the same people in a different venue becomes stale. The show floor is a great place to see upcoming games, the 40k + people who marveled at the Dead Island 2 trailer are much more valuable than the 2 million who watched the same thing on line in the first day. Oh yeah, they are not. Maybe this is why so many publishers decided not to show up, and those who did left most of the staff at home.

I am afraid E3 had a great life and it is time to let it die and rest in peace. Like an ailing grandparent, It is increasingly costly to maintain, requiring an ever increasing amount of time and attention and suffering a declining quality of life. Our continued life support is driven by our own selfish need to maintain the familiar world we know and keep happy memories alive, but the patient is suffering. It is time we either invest in the transplant the patient needs to enjoy a high quality of life, or pull the plug and let it die.

Telescreens In The Home - Kinect: I Am Not Paranoid, Someone is Watching Me Edition

noreply@blogger.com (Anonymous) — Tue, 03 Dec 2013 15:42:00 +0000

Maybe cliche' by now, but still creepy . . .

Quote from 1984 About Telescreens

"The telescreen recieved and transmitted simultaneously. Any sound Winston made, above the level of a very low whisper, would be picked up by it; moreover, so long as he remained within the field of vision which the metal plaque commanded, he could be seen as well as heard. There was of course no way of knowing whether you were being watched at any given moment. How often, or on what system, the Thought Police plugged in on any individual wire was guesswork. It was even conceivable that they watched everybody all the time. But at any rate they could plug in your wire whenever the wanted to. You had to live- did live, from habit that became instinct- in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinized.
-1984, Book 1, Chapter One, George Orwell

Quote from Katherine Boehret Allthingsd review about Xbox One with Kinect:

A Skype video call to my mom prompted a “Wow!” from her as she admired the quality of the picture, which she described as amazing. As for audio, she said she could hear me just as clearly when the loud, humming central heat clicked on in my house. As I moved around the living room and talked to my mom from six different places, the Kinect camera panned to follow me, and even zoomed in on my face for the best possible picture. I had a similarly good experience during a call to someone else who was using the Xbox One’s new Kinect.

GameStop Hosed Me Today: How To Fix GameStop in 6 Easy Steps Edition

noreply@blogger.com (Anonymous) — Fri, 23 Aug 2013 17:23:00 +0000

Both of my regular blog readers keep asking why I do not write more. It is easy enough to tell my mom to stop nagging, but I still answer to the other one - even though his English is not so good. That dear reader, is customer service - something GameStop sadly lacks. I realize the global nature of the statement and should explain it is not entirely true. I never met anyone at the top of the company who is not gracious, a pleasure to deal with and painfully conscious of the customer relationship.

Unfortunately, those are not the people we deal with when we buy a game. The stores are run by managers drawn from the mold of The Comic Book Guy from The Simpsons and choose to operate on an entirely different level. Sure, they serve a customer, just not the ones who want to buy a game.

It is very hard to find stores carrying a wide selection of games any more. This creates a wonderful opportunity for a store brand itself as a game focused operation and encourage people who want games to come in and buy them. As a simple guy I still believe GameStop is such a place. Unfortunately, every time I test the hypothesis it is proven false.

I first encountered the problem when I tried to purchase The Beatles Rock Band. The title was one of the most heavily promoted in the history of games. There was even a New York Times Sunday Magazine feature about the release. Having never run a great big retail chain selling games, my simple mind thinks this is a great opportunity to take advantage of the public coming into the store for the first time to buy a game. The mainstream press is featuring a known brand and for the first time, we will have it. Once these customers who are otherwise very expensive to reach are in the store, we can get them into powerup, upsell and otherwise connect in ways we never connected before. Instead, the Comic Book Guy who was standing in front of a pile of the fresh and sparkly new copies of the game told me they were sold out. They were only fulfilling pre orders.

I sometimes still stop at GameStop because it is on the way to Best Buy and I have about a 50/50 chance of being able to pick up a game within the first week of release - I never have a problem at Best Buy. You may ask why I continue to go to GameStop. I promise you it is not for the aggravation, I genuinely want to support the store. What is good for GameStop is good for the industry. I know I rant about used games to anyone who will listen and most people who would rather not, but the company is not only a bell weather, but a critical pipeline for retail sales. Please GameStop, help me to help you.

Today I went into buy Splinter Cell. Standing in front of a dozen copies of the game, the junior Comic Book Guy told me it was sold out.

"But there are a dozen copies right there on the shelf." I said naively.

"Those are all reserved for pre orders." he replied not looking up from the important thing he was doing on the store computer.

"But they are all right there on display and have not been picked up."Comic Book Gal, Lanara the store manager stepped in to explain "We called all of the customers and they told us they are going to pick them up."

"But we are outside the 48 hour window and the policy is to release the pre orders after that time."

"Not mine. As a service to my customer I hold the game for them if they say they will pick it up."

"But if you sell the game to me, you will do two turns from the same facing. I will buy the game and they will buy it when it comes in. You say customer service, but you are providing an accommodation to someone who chose not to comply with their end of the pre order commitment, over a new customer who will otherwise be turned away." Yes this is way to much time spent in the store. I need a hobby.

"I choose customer service over revenue and I am sure everyone in corporate would agree."

Somehow I do not think so. If I pre ordered a game, did not pick it up, and was pointed to this policy:

Product Pickup
As release dates change frequently, we cannot guarantee arrival dates. You will be contacted by the store, at the phone number you provide, when the product arrives and is available for pickup. Items not picked up within 48 hours may not be available due to the high demand for new releases. Your name will be placed on a waiting list at your request, and we will contact you when we receive more. If the product is not picked up within 48 hours, you authorize us to charge you a $5.00 fee to cover the cost of shipping and handling to the store.

I would probably rethink my behavior and I chose to pre order again, I would pick it up on time. As a new customer if I walk in and I am treated like someone who is not a member of the club just because I went in to purchase a very heavily promoted game, I would take my business to Best Buy.

Lanara's behavior hurts the store on a number of levels. It may sound obvious, but GameStop is in the business of moving units. I would completely agree with her Nordstrom's like level of customer service - if there was no stated pre order pick up policy. The policy is in place because GameStop is in the business of moving units. They must move units to generate revenue and cover the outlay for the initial shipment of the product, but equally important, the sooner the unit leaves the shelf the sooner it comes back to be resold as used. We are not talking about single unit because someone ran into car trouble or could not make it over. It is over a dozen. This indicates a pattern of behavior on both sides of the table which must be larger than a single game. Her "customer service" led to a malaise about the pick up window, leading at least a dozen customers to feel they can come in whenever they want. If we look at the aggregate number of games moving through the store and add up the aggregate number of days they remain on the shelf despite willing purchasers and knowing the pre order customer would likely buy another copy from the next order, we are talking about a substantial revenue hit and carrying cost of the games before high margin resale. Worst of all, it is simply not customer service.

When she called it "her" store and told me she could operate it as she pleased and chose customer service over revenue, I had to wonder where the customer service was happening. I am not talking about her not playing "the customer is always right" - although I was - it is the state of the store. Call me old fashioned, but customer service would

dictate a store should not look like a 12 year old boy's bedroom and smell like my grandmother's basement. I should not see empty shelf facing, broken faded standees, a bargain bin full of plain white packaged used games with handwritten names and a countertop you would not touch with Lysol mittens. I have not even gotten to how they treat the customer.

I am not talking about what they said, or even they way they said it. It was they did not say. Instead of "the game is sold out" and ending the conversation to return to the urgent computer matter in the store which was devoid of all other customers, how about "the game is sold out but we will have more in stock next Tuesday. I would be happy to take your pre order and hold one for you to make sure you get it." Or, "the game is sold out but I can see on line that it is available at this other location 2 miles away." This is neither the first time this happened, or the execution of cold fusion. This is a situation they encountered before and can be pretty confident they will encounter again. Does the guy not know when he will get a new shipment? You may ask why I do not just pre order. It is probably a character flaw or premature toilet training, but I just cannot make the commitment. Not commitments in general, I have been married 23 years, just that one.

GameStop grew, thrived and now survives on the core gamer. This is no longer enough. The people who work in the store are cultivated and allowed to act, talk and maintain the store reflective of that customer base. Unfortunately doing so alienates the other 80 percent of the public who would like to purchase a game. Catering to the core gamer who chooses to pre order is an increasingly dangerous business at a time when game purchasers migrate to digital download. The focus has to be on the broad audience of walk ins who did not anticipate the release 3 months ago.

In his 1996 book, Being Digital, Nicholas Negroponte wrote that everything happening over wires would move to the air and everything in the air would move to wires. He was talking about satellites and cable lines, but change "cloud" for "air" and "store" for "wire" and the thought is painfully applicable to the game business and GameStop's opportunity. GameStop's core consumer, the one who pre orders and turns in and buys used games, will shortly be moving to the cloud. The company believes this console launch will be the biggest in history, yet it is still catering to those customers through physical disks. GameStop will have a great quarter, but it is like gas stations selling Teslas. Every purchaser of a next generation console is getting a free ticket out of GameStop. If they care enough to buy a new console at launch, they are savvy enough to download their games in the future. The core consumer is moving to the cloud, but this is not the end of GameStop. There is still a role for the company with a mailing list of 18 million and 80% of the purchasers of games walking through their store every month. But they have to grab the opportunity before the second number goes away.

Customer acquisition is the lifeblood of the game business and the cost is increasing exponentially with the growth of competition and the silence of digital distribution to the physical world. GameStop is sitting on a tank full of whales in a world while everyone else trying to harpoon them in the open ocean. Every person on the mailing list paid to purchase a game. Every person opted in to receive game information. They just do not get it. If GameStop can unify the on line distribution systems as fan.tv did for video and create the horizontal connections within their community to allow for recommendations and trusted referrals, it can be the one site to rule them all. They will still be in the business of selling games, but they get rid of that pesky inventory thing and collect only high margin affiliate fees. If they want to see how this works, take a look at greenmangaming.com, it is a startup that is eating GameStop's lunch.

You may think this is all very nice, but what about the stores. Well, that is the other half of the Negroponte parallel. Right now hardcore goes to the store and the mainstream orders through iTunes. in the very near future, the casual and midcore will still be using 360s and PS3s and will still be buying disks. They will also be more likely to walk into a mall based game store to understand what this game thing is all about. Lanara was right. Customer service is key, they just do not have any. Just as Apple used impeccable customer service to bring technology to the mainstream and rise like a phoenix from the ashes of brick and mortar, GameStop can lead the market for games. More people are playing games than ever before and none of them know which game to buy next. GameStop should be there to provide the best, curated experience. There is no good reason for customers to go to an Apple Store over than purchasing on line or at Best Buy, but they do because they are made to feel welcome and knowledgeable people talk with them. If people feel welcome to walk into the store, they will and they will be on ramped into the GameStop community.

People seem to like lists, so here are some suggestions in list form:

1) Clean the stores.

It will be expensive, but you cannot afford to not do it.

2) Curate the experience.

First there has to be an experience to curate. Richard Branson revolutionized record retail by making customers feel welcome to stay. He put sofas in his stores and encouraged them to listen to music. People who listened purchase more. A game in a box is no fun. A game running in the store is fun. That is what games do. Encourage the consumers to stay and hand mom and iPad - they type you are selling now - to show she can have fun playing games too.

3) Welcome new customers.

Train employees to engage customers to determine tastes and goals. One major retailer operates an internal competition based on employee's product knowledge gained before work, relevant questions asked of customers and follow up. The store can engender loyalty by educating the customer about hardware and software purchases. The staff can become the game geniuses.

4) Connect the community to each other.

While the world is going digital, GameStop is not. Many sales functions moved on line, but there is no community support. The company continues to broadcasting radio show performances over television. Digital does not mean catalogue, it is bidirectional and horizontal. Let the consumer communicate with the store and each other. Not just forums, but value. Why is Gameinformer.com separate from GameStop.com and why do the forums look and sound like they are stuck in 1999? How did Twitch.tv happen without them looking? Tens of emails go out every week to loyal customers why don't you introduce them to each other. Facebook, Google, Amazon and every other modern company is valued on access to a customer base, why do you let them walk out the door and not talk with them?

5) Start a continuity program.

In the old days we had Columbia House who sold us 12 records for a penny so long as we promised to purchase an equal number at full price over the course of the next two years. Guthy Renker and Beachbody Fitness make hundreds of millions by getting customers to make long term commitments to content they do not even use. The closest thing GameStop gets to this kind of program is a used game bundling program but this targets the wrong audience and does not create recurring revenue. This holiday season every mom should see an opportunity to buy a dozen games for USD 10 and make a commitment to buy four full priced games next year. Instant liquidation of back catalogue used games and creation of predictable revenue. Isn't this better than trying to move used games to people who are interested but cannot find the game in the limited stock of back catalogue spread amongst all of the stores and get commitments for multiple titles rather than a one offs.

6) Stock games.

We understand your the sale of new games is merely a financing tool for building a stock of high margin used games, but right now you are playing it just a bit too cute. According to Lanara the manager, pre orders are used to determine the number of games to stock. She said the company stocks to pre order. This is perfect for a distribution warehouse, but kind of silly for a public facing retail operation. Please go back to the old days. Extrapolate the size of the inventory from the pre orders. You know very well how many units will sell beyond the pre orders, so just stock a few more.

This is the part where I am supposed to tie it all together with a pithy comment and thoughtful outro. Sorry, I got nothing.

Gamification and Beyond: Posting of a My Talk in a Post Edition

noreply@blogger.com (Anonymous) — Sat, 09 Mar 2013 21:48:00 +0000

I saw a good friend of mine who is very smart and I respect very much - he still finds the time to talk with me though. He told me he likes my blog, but asked a question he said he hoped would not offend me. "Do you write your blog for yourself on in the hopes of gaining an audience? Because if you write them for an audience, you really should have a point." I may be paraphrasing a bit, but it came out like that in my mind. It was kind of a funny question because I never really thought about writing for anyone else. My blog is completely self indulgent and admittedly, often only finds entertainment or genius at the point of creation. The blog is actually a permanent record of the thoughts I find fascinating, and often the expression is only intelligible to me.

Along the same lines, when Ken Rutkowski asked me to speak to his METal International group, I was honored, and excited by the opportunity to entertain - myself. Because the only thing I like more than reading what I write, is listening to myself talk. He asked me to talk about the game business. I spoke about history, evolution, transmedia, gamification, sponsorship, cable, set top boxes, meeting Steve Jobs and a bunch more. This talk is nothing like a TED talk in that it is 3 times longer, and 100 times less change the worldy. But it is entertaining to me.

Keith Boesky - Global Gamification from METal International on Vimeo.

On Ownership: Game Objects Are Like Poison Mice Edition

noreply@blogger.com (Anonymous) — Sun, 24 Feb 2013 22:49:00 +0000

Last week I read an article about the US Department of Agriculture's decision to parachute poison mice into treetops to kill tree snakes in Guam. The tree snakes killed all of the birds on the island and the USDA is concerned the snakes may be able to migrate to Hawaii. This reminiscent of all of the times a species was introduced to wipe out another, and it went terribly wrong. The article moved through a series of curiously inappropriate connections in my mind and got me thinking about digital object sales. I cannot tell you why, but I a promise you it is much more of a curse than a blessing. Our perception of digital objects and willingness to pay for them is evolving much more quickly than our understanding of the impact of the market and I am afraid they will get a foothold in our world before we know how to control them. Oh yeah, don't worry about the poison, it is Tylenol which is just as useful for killing black tree snakes as it is for killing a headache.

Remember when it was really nutty to think someone would pay money to buy an game object? If you don't have to remember and still think buying a digital t shirt to put on your avatar is kind of lame, keep reading, you are proving my point. We are evolving, and it is a good thing. DVD racks are ugly and building book shelves is surprisingly expensive.

In law school they taught me ownership is not a single right. It is more like a bundle of sticks. One stick represents possession, another the right to modify, another the right to collect revenue, and so on. The aggregate is infinitely divisible and definable by contract. We used to think the possession of a physical object was the paramount attribute of ownership. No, even you don't think that way anymore. The digital era changed us.

If you think back in the dark recesses of your minds to the pre-kindle and pre-iPod days we devoted space in our house to collections of analog bits. Records, CDs, DVDs and books were all displayed in the common areas. We were buying the ability to access the content whenever we pleased, but also created and satisfied and secondary, and often primary need to display. Your collection became an indicia of taste. You may have even been driven to put books or DVDs out you never read or watched and hidden others to avoid the notion your taste may be odd or worse yet, mainstream. You may think I am talking about porn, but I was thinking Grease - record and DVD, Bee Gees and Abba. Digital access changed all that and is in the process of changing it more.

Devices like the iPod and the Kindle provided us with the access to the content we wanted and sharable playlists and friend notifications from applications like Spotify and Pandora allow us to display our good taste to people who would have had to come to our home or read our t shirts in the past. Now we know the only sticks we really need from the bundle are access and display, not physical possession - and this is changing everything. The evolution of a mindset based on holding physical embodiments of our media (or as George Carlin called it "stuff") to one of access to utility is driving growth of the digital object market at exponential rates.

The concept of physical possession separated from ownership is not new. We applied it for years to the two most expensive purchases most people ever make in their lives, our homes and our cars. I have possession of my home. I can do whatever I want with it and invite whomever I please to access it. I can also block anyone I please from access. Feels a lot like ownership. But my ownership is represented and dependent upon some analog bits in a file cabinet in a city called Norwalk, California. I have never been to Norwalk, California. But if anyone questions my ownership, or I want to sell my home, I need to put a new piece of paper, with my signature verified by an independent third party, in a different file in Norwalk, California. I have possession and apparent ownership, but I do not have possession of the indicia of ownership. The same can be said of my car. I have the right to use and possess, but the actual indicia of ownership is on some analog bits somewhere in Sacramento, California. Since the dawn of property ownership, we accepted possession as something separate from indicia of ownership. The digital model is simply a reversal of the model.

If I am playing League of Legends, I am able to buy skins, champions and other objects that will appear to other players in the game. The objects I buy have no impact on my power or abilities in the game. In the early days this sounded strange to non players - ok maybe it still sounds strange today - but the migration to accept a digital champion in place of an action figure is no different than having music on an iPod instead of on my shelf. Like my music collection, I have utility of my objects in the game, so I get to enjoy looking at objects that please me. Also like my music collection, I receive a social benefit by the display of status associated with the object ownership. Like a house or a car - in reverse - the object exists on a far away server, probably not in Norwalk or Sacramento, but indicia of ownership resides with me. It actually makes more sense.

This evolution which started with music and is spreading like wildfire through the universe of games. In 2002 The New York Times saw the ability tell digital objects as newsworthy. Those wacky gamers were willing to pay money for a collection of words in a game called Gemstone. But the practice was not limited to Gemstone and what started as an underground market quickly grew into an accepted practice and then even started to be woven into the fabric of certain games. It is not stopping there. Zynga took the people who unknowingly accepted the music "purchased" from the iTunes store as fungible with CDs and got to pay for digital objects in their games, thereby paving the way for broad acceptance of microtransactions. So broad, the purchase of game objects, many persistent, is the not only acceptable, but the leading method for profiting from mobile and on line games. This leads to a concern I raised in a post five years ago which remains unanswered.

On the one hand we want the consumer to accept the purchase of the game object, as they do the purchase of a song from the iTunes store, or a coffee cup in the real world. On the other, we are not ready to give them enough of the stick. They are missing the access to relevant information pertaining to value stick. The rights and remedies side of digital object ownership is lagging distantly behind the willingness to exchange value to own them. In the original post I wrote:

My corporations professor, Hugh Friedman, taught us how difficult it is to actually spot a security, but he gave us the definition contained in the United States Code. "SECURITIES - An investment in an enterprise with the expectation of profit from the efforts of other people." Here is another definition I found on line: "Securities are documents that merely represent an interest or a right in something else; they are not consumed or used in the same way as traditional consumer goods. Government regulation of consumer goods attempts to protect consumers from dangerous articles, misleading advertising, or illegal pricing practices. Securities laws, on the other hand, attempt to ensure that investors have an informed, accurate idea of the type of interest they are purchasing and its value." The definition is intentionally broad and is meant to apply to a lot of things, to protect a lot of people. Interests in condominiums, farm animals, land and oil rights, have all been determined to be securities. The definition is the foundation of the Securities Act of 1933, sometimes called the "truth in securities law" and the Securities and Exchange Act of 1934, which established the Securities and Exchange Commission and sets out filing requirements and trading regulation. Both were established in response to the events leading to the stock market collapse of 1929. Prior to these acts, anyone could sell stock to anyone and there were no reporting obligations or restrictions on insider trading or proxy solicitations. In other words, it was a lot like buying and selling game objects today.

We know a share of General Motors is a security. General Motors must comply with certain reporting requirements to maintain its right to allow ownership interests to be exchanged in the public market. While I may not be buying my game object with the expectation of profit - although many do - the price I am willing to pay is based on the information available to me at the time of payment. Factors like scarcity, utility, restrictions and duration of use are all material in my decision and willingness to pay. Most significantly, whether the game be in existence tomorrow.

Last month Zynga shut down 12 apps. One of them Petville, still had one million monthly active users, and before at one point had 43 million. The value of every object purchased evaporated, without warning, overnight. How many people were still purchasing digital objects after Zynga knew the game was going to be shut down? I am not pointing my finger only at Zynga, Star Wars Galaxies sold objects right up until the game was shut down. Shutting down a game is simply a fact of life. Not letting consumers know it will happen is not.

These issues are very exciting . . . . for lawyers. It is kind of like a full employment act because very hard issues mean a lot of work to resolve which means funding for childrens' college educations. This is the second post in a row that I leave without an answer. I throw it out there because I want to raise the issue and let people know we may be getting ahead of ourselves - again.

Sponsor Supported Online Content: Let's Stop Throwing Hundred Dollar Bills in the Bonfire Edition (Update)

noreply@blogger.com (Anonymous) — Sun, 24 Feb 2013 01:01:00 +0000

SSH . . . . . . . . . . . . . . h ! ! ! "All ye, The People of the United States: his Excellency, the PRESIDENT!" This greeting may be heard all over the country, in the not-far-distant future, and not on a phonograph either, if Mr. Paul Calhoun's dream comes true. His idea is to link up all the larger cities and towns by radio with the powerful transcontinental government wireless station at Arlington, near Washington, so that when the President makes a speech before Congress or even his inaugural address, all the people can hear it, instead of a select few gathered within ordinary hearing distance of the speaker as has been the case in the past.

UPDATE 03/01/13

Two very important updates this week and I am too lazy to integrate them and rewrite. I don't think anyone wants to see a redline version of my blog either.

First, it appears Google may be thinking the same way as I am. Some coders found what looks some code to be used for a youtube pay service. Even though some people from Google's domain hit my blog, I don't think I gave them the idea. I hear there are some smart people over there.

The second one is this new TED video from Amanda Palmer. It is hugely relevant, not just because she is good, but she talking about the consumers' willingness to pay for content when asked.

ORIGINAL POST

As I lie (lay?) here in my sick bed, mainlining Dayquil and trying to prevent the coughing from sharing a lung with the computer in my lap, I started to think about monetization of on line video. While I know this sounds cliché. After all phenylephrine always causes the mind to wander into online business models, but just in case the sirens of genius are influencing the fingers dancing on the keys more than the cough medicine, I am writing it down. If this is coherent to you, I am not speaking in tongues, and you may find something of interest below.

Online video is creating a larger audience than any other form of media or communication in the history of the world. However, the leading lights of this industry are shoe horning the television sponsorship model into the business and does not seem to work. Despite the audience’s scale, revenue generated from sponsorship is not even high enough be considered a rounding error on a margin of error for a basic cable network.

In this video from DLD, Maker Studio’s chairman Ynon Kreiz pointed out that the,185 hours of London Olympic broadcast on television US in primetime generated 67% of NBC’s total revenue and the 5300 hours via digital platform that generated only 7% of the revenue (If you skip to the marker you can see the part I am talking about, but the whole thing is worthwhile)

These companies can argue the inequities of sponsors paying more the people “maybe” watching something like The Daily Show on television than the same broadcast on line where we know who and how many are watching, or the empty inventory in the on line Lance Armstrong interview relative to record ad rates on OWN, but while they do this – and logically and in a vacuum they may be right – they are merely singing in a Greek Chorus to shield themselves from reality. Even though the television audience is shrinking, sponsors see it as growing in value. Morgan Stanley, as reported by Busines Insider noted as television viewership goes down, CPMs go up. A 50% decline in viewership since 2002 led to only a 6 to 7% decline in revenue. At the same time, Comscore indicated that despite the ability to target, on line suffered from perhaps a higher percentage of wasted ads. In the “U.S. Digital Future in Focus report 2013” Comscore pointed out that even though 6 trillion ads were served last year “research showed that an average of 3 in 10 ads are never rendered in-vie, leading to significant waste, weaker campaign performance and a glut of poor-performing inventory that imbalances the supply-and-demand equation and depresses CPMs. This should not be a surprise when you consider the very existence of sponsor supported television relies on the existence of friction and online video success only succeeds without it. Rather than continuing to fight this uphill battle, on line should stop ignoring the unique attributes of the web, and look how it enables distributors and content creators to finally charge the right side of the equation – the viewers.

A little under five years ago I wrote why I thought on line video was going down the wrong road. While I may have overdone it a bit on the ARG stuff Nikki Finke made me look smarter in hindsight because she cut it out when she ran it on Deadline. The point is made here:

Our agency friends further exacerbate their problems with a continued reliance on a dying model, ad supported television. The sites are sponsor supported. If cable fragmentation hurt network sales and cable is not worthwhile from a revenue standpoint, what do you think web fragmentation will do? Yet, even though none of these applications have shown a significant return, they still rely on sponsors. The widget guys show a myriad of additional revenue streams. They are able to sell digital objects, upgrades, added utility and a ton more things of value to the community. Oh yeah, and eventually, access to their channels to the Hollywood guys.

If the agencies want to profit from the new opportunities, they have to stop thinking evolution and more revolution. Television is a solo experience. A show can build an audience, but it does not build a connected community, and with very few exceptions, the community has no impact on the show. The audience watches, and then shares around the water cooler the next day. The web is about community. Real time community. I can feel impotent in real life, I don't need my computer tell me I have to sit and listen to what someone else has to say. My computer empowers me and let's me join in, my entertainment should as well.

My post focused on the content, not the business structure. Admittedly, I did not even think to write it at the time. I just thought charging the customer followed logically. I wish I could say I am the first person to disclose this concept to you, but sadly, I am not. I am merely cribbing from other businesses that work. Many executed before me – not the first time I talked about something while others actually did it – and I do not understand why more of it is not happening on the web. Netflix, HBO and Sirius radio prove the model, but are not the only places consumers are showing a willingness to pay directly for content. FreddieW generated 800 million views on his youtube channel. If his revenue looks anything like Psy’s from Gangham Style, this massive audience may have put him well into the “thousandaire” status. But when he asked his viewers to pay for content directly, they gave him over $800,000 on kickstarter. In ad sales terms, he got an $80 CPM for something that does not exist. The HBO audience made it even more clear last year when a fan took it upon himself to create takemymoneyhbo.com. Within 48 hours 163,673 people voiced their willingness to pay for a streaming service. HBO did point out that Techcrunch’s assessement of why HBO should not do it makes sense, but the evidence of consumer willingness shows it is not wrong for a non legacy content library to pursue the model – hello Netflix. It’s time to remove the middleman and go direct to the audience who will pay more and drive better content.

My cursory research revealed the range for the highest CPM content on line is video at $11 to $25 (I know incentive video can be much higher, but it is also very limited). Just for the fun of it, let’s look at revenue from Netflix on the basis of their revenue generated per thousand. Measured in clumps, they have a CPM of $8,000. This means a Google channel must serve 2,650,000 video ads in a month to equal the revenue generated by 1 thousand Netflix viewers. This may not sound soooo bad until you realize this means over 10,000,000 videos when you factor in Comscore’s recent data indicating only 23% of on line videos carried video ads. That’s not all. Again, looking to the most favorable data, the highest percentage of audience indicating they watch video ads often or all the time, at 47%, is on youtube. Factor this in and 20,000,000 videos must be served in a month to equal the revenue prepaid each month by each thousand Netflix customers. Even as the market grows, the scale needed requires content to be diluted to the lowest common denominator, the antithesis of the web’s promise. I chose Netflix because it is easy, but we can look at any number of pure subscription, or pay as you go – iTunes- content companies on and off line as examples of consumers’ willingness to pay for content.

Instead of accepting these facts, both content and the medium are bending to the force of over USD188.5 billion spent annually on video broadcast on television. The mistake is made in the assumption the dollars are being spent on content, they are not, they spent on viewers.

Let’s walk through this logically. Television networks love friction. The industry’s midwive was the need to stand up to change the channel. Ad agencies thought their business was over when the remote control came into play. And time shifting with VCR’s, forget about it. Friction serves the business model. This because NBC, CBS and ABC’s “product” is viewer and the customer is the sponsor. The content is the capital expenditure used to build the product. Friction helps to build the product and create inventory for the customer. The web is about a lack of friction. The friction equivalent of an eyelash on an asphalt road can be the difference between success and failure. The web carries no need to set a recording, start an appointed time, or change a channel. The content is always there. Advertising pre roll, registration, pay walls are all friction that drive traffic lower. The consumer is no longer captive. The new reduced friction empowers the consumers and allows us to shift from being a product into being the purchasers of a product. Content and curation are the product and the customer is the viewer- ust like Netflix, HBO and Showtime. So why are continuing to treat the audience as the product rather than the customer?

When we look at the value chain for content on television, it is kind of a wonder it lasts. The sponsors are funding, and thereby selecting the content. Networks act as arbiters between consumer taste and sponsor willingness to pay. Networks commission the most audience appealing, least offensive to a sponsor content and sell the audience to sponsors. Consumers choose what they like, but they select from the lowest common denominator pabulum supported by sponsors (DIGRESSION ALERT: For something really interesting, take a look at episode 1 of Black Mirror to see a dramatization of a television news service which was not able to broadcast a newsworthy video readily available on the web). We see no better evidence of the disconnect than the quality shift when content itself is the product. On networks like HBO, or cable channels covering deficits on foreign sales, we see shows capturing the country’s attention in meaningful ways. Breaking Bad, The Sopranos, Mad Men and Downton Abbey all came from a model where the show is the product. The show has to be good enough to appeal to foreign markets, rather than good enough to appeal to sponsors at an up front and a large audience each week.

The current model did not “evolve” to the web, it was bolted on without significant change from television. This is more than strange when we consider the web is a model of efficiency because it removed friction from both sides of the equation, and the television model gained its power from inefficiency and friction. The advertising unit model grew from radio in the 1920’s, into television in the 1950’s – with government help – and was twisted and crammed on to the web. In reality, if just a few attributes of the web were around in the 1920’s, we would never be here. Ad units exist because radio’s pioneers could not figure out how to charge the customer directly. By the time television arrived and was able to do it, the horse was out of the barn. In the early ‘20s the user base was growing like a weed and no one knew how to pay for content. The first sponsored show happened years earlier in 1916, when a Westinghouse assistant chief engineer started playing phonograph records over the radio. He ran out of records and called Hamilton Music Store to get more. They agreed to supply him with records if he would tell the audience where he got the records. Despite a willingness of advertisers to buy the audience most of the content was funded by hardware manufacturers. They knew people buy the hardware for what it does, not what it is. Steve Jobs did knew this when he commoditized content to sell enough hardware to build the most valuable company in the history of the world. Then Commerce Secretary, Herbert Hoover said “It is inconceivable that we should allow so great a possibility for service to be drowned in advertising chatter" The problem was troubling enough for Radio Broadcast, the most prominent trade magazine of the day, ran a contest to figure out who would pay for radio. The winner was to be selected by a prestigious panel of industry luminaries. The request rings strikingly relevant t some 90 years later:

WHO IS TO PAY FORBROADCASTING AND HOW?A Contest Opened by RADIO BROADCASTin which a prize of $500 is offered

What We Want

A workable plan which shall take into account the problems in present radio broadcasting and propose a practical solution. How, for example, are the restrictions now imposed by the music copyright law to be adjusted to the peculiar conditions of broadcasting? How is the complex radio patent situation to be unsnarled so that broadcasting may develop? Should broadcasting stations be allowed to advertise?

These are some of the questions involved and subjects which must receive careful attention in an intelligent answer to the problem which is the title of this contest.

The winner, H.D. Kellogg, Jr. of Haverford Pennsylvania received $500 for his suggestion that consumers should pay a tax based on the power of the hardware purchased and a newly formed arm of the government would administer the fund. Even though this remains the model for the BBC, this is America and we did not want the government involved. Instead, for lack of a better idea the ad unit took over.

By the 1950’s when television started to take off, the ad sales market was accepted by the public, and more importantly, very large. Zenith found out the hard way in 1951. The company started tests of its “Phonevision” subscription based television service. Sure it was cumbersome, but the system failed under government lobbying from movie theater owners and advertising interests, not the friction in the system. If the model was viable, it would not have needed government intervention to survive.

Maybe I am completely wrong. It would not be the first time, I did tell Steve Jobs the iMac would not work. But even assuming I am wrong, The Makers, Machinimas and Google channels of the world are still bringing knives to the gun fight. Jeff Bewkes made the point painfullyobvious at last year’s ignition conference. He said the investments from the new companies are cute and welcomed them to the kiddie table. Google is doubling down this year and will spend USD 200 million on content this year. A huge amount of capital to spend in a non-leveragable high-risk business, but it gains perspective only when we consider Time Warner spent USD 5 billion on content last year. They had to because content creation is expensive. The money goes not only into the content you see, but content you do not see. Development is more expensive than production and it takes a lot of it to deliver the cream to the audience.

The online club may not be scared by the size of the investment, but they should realize that Time Warner’s investment is not only justified by the other release channels, but comprises the lion’s share of content sponsors and consumers are willing to pay for on line. When we consider the ownership of Hulu, Cinemanow, HBO and even the 60 Minutes mobile app, when they want to distribute their content, they go direct. Even giving the new guys the benefit of the doubt, the old guard wins. They speak with the hubris of a disruptive actor, but the model is not disruptive, it simply a new distribution channel.

People seem to love lists, so I am going to put in a list of a handful of truisms we should all accept. Since they do not change, let’s call them immutable rules.

1)            Television is one direction (passive)

2)            Online is bi directional (interactive)

3)            Sponsors pay distribution channels for large collections of captive demographics who will watch an ad

4)            Online thrives on specialized content to small sociographics of viewers who hate ads and will do anything, including spending money, to skip them when possible

5)            Every successful online venture is based on adapting quickly to audience analytics

6)            Linear content is not tunable.

For those of you wondering when I am going to get to games, or as some would say, the only thing I know anything about, let me do it now. For those of you not interested in games, let me just take a moment to blow your mind. This year Telltale Games created a game with appeal to a television audience. The Walking Dead game is somewhat limited when it comes to interactivity, but there is a strong story line and its accessibility does not dissuade traditional game players from getting involved or from validating it with more than its fair share of awards. More importantly, by leveraging the unique attributes of the web with high quality content, consumers paid to play the game. According to Forbes 8.5 million of them paid an aggregate of USD 40 million or in ad talk, a USD 4,705 CPM. This is even more stunning when we consider 11 million people watch the show in US when it runs on television. That is a higher tie ratio than NASCAR.

I wish I could conclude this piece with a disclosure of the perfect on line business model. I can’t. If I could I would do it and not spend all this time writing. However, I hope I can get smarter people than me to start exploring proven alternative business models away from traditional ad unit sales. The game industry uses events, subscription, velvet rope, previews, in app purchasing and freemium models, among others to generate scalable businesses from content in an interactive environment. Deep down in my heart I know one or more of these is the answer. We just have to focus on the medium.

In a culture like ours, long accustomed to splitting and dividing all things as a means of control, it is sometimes a bit of a shock to be reminded that, in operational and practical fact, the medium is the message. This is merely to say that the personal and social consequences of any medium- that is, of any extensions of ourselves - result from the new scale that is introduced into our affairs by each extension of ourselves, or by a new technology. . . The electric light escapes attention as a communication medium just because it has no “content.” And this makes it an invaluable instance of how people fail to study media at all. For it is not till the electric light is used to spell out some brand name that it is I noticed as a medium. Than it is not the light, but the “content” . . . that is noticed.
Marshall McLuhan

Someone Gamed Apple's App Store:Revenge of the Dentists Edition

noreply@blogger.com (Anonymous) — Mon, 03 Dec 2012 22:16:00 +0000

It is encouraging to know the likelihood of breakout success in the app store is over 100 times better than the likelihood of winning the Powerball lottery. Unfortunately based on the sheer volume of apps in the store, it is still in the million to one range. Fortunately, unlike Powerball, we can increase the likelihood of success by charting. The top ten apps are easy to find and can build enough momentum to get millions of downloads. In this freemium world of ours, millions of free downloads means tens, maybe hundreds of thousand paying players. Most developers cross promote to their base, or use services like Appoday or Freeappaday to achieve the necessary velocity to crack the charts. But apparently, it is not the only path to success. Maura Thompson used a different method. She targeted a market with a large pent up demand and built an app for them - wanna be dentists.

You want to be a dentist? Ok, here is your chance! Dozens of Dental Surgery are waiting for you!

In this COOL Virtual Dental Surgery game you will have lots of fun drilling teeth, filling cavities, and using your dental skills to solve lots of dental dilemmas. hit the road and travel cross-country to lots of destinations, meeting new people and their mouths . . .

Yes, that really is the game's description. Now don't get me wrong. I've got nothing against dentists. My grandfather was a dentist and so is one my favorite uncles. But this is the first time I ever saw the words COOL, dental surgery and game all collected into a single sentence. This could come off as sour grapes. The good Maura Thompson found success where so many others did not, but I like to think this rant was ignited by bigger issues in the app store. Success is determined by discoverability and Discoverability is broken. Developers are playing playing a game with unknown rules and outcomes doled out from a slot at the bottom of a very, very black box.

Dental Surgery was released on November 20 of this year and ascended to the number 1 position in the app store shortly thereafter. I first noticed it on the 30th. It was kind of funny at the time and I thought someone at Apple was awake enough to see the game's position and do something about it. While I could be completely mistaken, the 3960 1 star reviews relative to 898 1 stars could indicate something is amiss. If Maura Thompson figured out how to game the app store, moved the app to number 1 for days and no one at Apple cared, there is a problem - and I want to meet her. If Maura Thompson legitimately built an app thousands felt compelled to download, but a vast majority found it to be . . . in the words of Tiger75 "is a piece of crap!" there is a problem. Either way [I am waiting in silence as I hold my microphone out over the audience]

Let's first take a look at gaming the system. Everyone respects the rogue who takes it to the man. The person who provides solace to everyone who is not Supercell and Rovio by climbing to the top of App Mountain and planting a flag for the independents. We rally around him - or in this case her - and celebrate the victory while defending her from Apple's attack for the game played on the system.

Then the attack is followed by what should by now be called a "Mitnick," the offer to join the company. "How about you trade in that thar black hat for a white one?" But if this is not happening. Where is the Posse? If the number one position is the result of impropriety and Apple fails to react, the chart may soon become as useful as results 3 through 42,000,000 on a google search. Arguably they are useful if you are interested in finding out how a "hot nude lesbians waiting to meet you" corresponds to the search you did for an LED light bulb, but they are hardly going to help you find the the light bulb. Just as Google continues a glacial paced shift from useful to useless, Apple's only source of discovery may be commencing a migration.

But let's redirect and give Apple the benefit of the doubt. This post was typed on a Macbook Air and there are three iPhones, four iPads and countless Macs and iPods in my home. I bought all this equipment because I trust Apple. I continue to buy because I like the ecosystem. It works, and it is quality. This post was inspired three years ago by the attacks on Apple's walled garden approach.

Contrary to [Jason] Calacanis’ opinion, Jobs is not a dictator. We elected him with our dollars and put him up for confidence votes regularly. If he doesn’t listen, we can vote him out. We’ve done it before. Throughout the nineties, with no Uncle Steve and no network of developers, Apple suffered. And even though Uncle Steve is not always right – the Cube launch – at least Uncle Steve 2.0 reacts quickly – the Cube death. He reacts to the market. When it comes to the iTunes and the app store, Uncle Steve is more Frederick Law Olmstead to New York’s Central Park, than Michelangelo to the Sistine Chapel. He built a garden and invited the world to plant seeds. Like Central Park the form is established but the content will change. Also like Central Park, some content just doesn’t fit and has to be rejected or pruned. So far, it seems Jobs is the guy to do it. Jobs 2.0’s decisions are driven by long-term concerns over viability and stability of the platform. Do you think it was easy for him to allow an investment from Microsoft when he got back to the company It was an important decision that supported the continued relevance of the platform. Do you really need more proof?

So, here is the dirty little secret. It’s not [Douglas] Rushkoff’s disclosure that Apple is really evil, it is Apple is out to make a profit. At the present time, a walled garden is the best thing for the company. It will continue to operate in the best interest of its consumers, and its long-term viability. If there is conflict between the two, it will favor the company. Some of these decisions may include keeping competitive products off the platform for purely competitive or strategic reasons, but right now and fortunately, consumers have alternatives. If Apple goes too far, it could be 1992 all over again. I won't wait for the thank you card to the game industry for telling them what to do.

I supported Apple's approach because those of us old enough to remember the first run of "Mork and Mindy" remember Atari's crash. The game industry exists today because platform owners, starting with Nintendo, make sure content released on the platform is good. Atari users had so many bad purchase experiences when choosing from a very crowded market, they simply stopped buying. We see a flavor of this in the Android market today which is only a fraction of iOS sales. Before the stories of his ouster from Apple, the press covered Scott Forstall as the guy who told Steve Jobs the app store should be open. Jobs originally wanted it closed because he knew he had to give all consumers an Apple experience on their Apple product. It is not really clear which side originated the walled garden, but it worked. As Ronald Reagan said before me "trust, but verify."

We see in cases like the recent maps issue where Apple decided their own maps were not ready for prime time and highlighted other map applications in the store. Apple will intervene and provide guidance if an app is not up to snuff. Apple's decision to select and monitor content suggests the consumer can be comfortable enough to download, but Dental Surgery indicates otherwise.

Wait dear reader, before you jump down my throat and tell me Apple should not make decisions based on content. First they ban the dentists, then it is morticians and taxidermists and where does the madness end? No one will be safe. Don't worry, I am on board with you. If the App is just not my taste or subjectively weak in the game play department but the market likes it - let it live. I can't figure out what is going on in Rage of Bahamut, but you will never see me call for it to be yanked from the store. Is anyone going to support the original Madden Football beating Deer Hunter as a paragon of quality game play? But Dental Surgery is not just subjectively bad. According to the one stars, it is riddled with freeze bugs and lacking instructions. So the consumers who download this game can't play because it doesn't work and even if it did work, they would not know how. How does this stay on top?

Apple's undertaking is monstrously large. While Microsoft, Sony and Nintendo deal with hundreds of games a year, Apple must deal with hundreds of thousands. Too much diligence creates anger in developers and hunger in consumers. Not enough means bad apps fall in the hands of consumers. There is a happy medium. Apple responded immediately to complaints generated by Capcom's Smurf Village and called for revisions in the game and revisions in the app store to prevent abuse of unwary consumers. Just like Kotaku's description of Google's shoot first, ask questions later treatment of financial anomalies, If Apple hopes to maintain consumer trust, it must respond anomalies in the charts. Unlike initial review, it would not a herculean task to assign a single person the responsibility of downloading and using the top ten free apps - especially the ones remaining in the charts for a week.

Recapping: Recognition of Genius

noreply@blogger.com (Anonymous) — Sat, 29 Sep 2012 14:49:00 +0000

Sometimes I even amaze myself. I was looking back at an old post - less narcissistic than googling myself but more than tweeting and thinking someone cares - and found this genius vision of the future. If I did this a few hundred years ago I would have been revered for magical powers - or killed as a witch.

This post was written about three and a half years ago but shows an uncanny, crystal clear vision of the digital and mobile game world - or another statement of the obvious. You be the judge.

Once we get to the other side, we will realize the USD 59.95 price point, and even the USD 49.95 were not carved in stone by the finger of the almighty. They are an industry created construct, which continues to drive us to make USD 20 million “Fields of Dreams.” In this insidious cycle, the consumer demands a certain amount of gameplay for their dollar and we supply it. Perhaps in this new world we will be able to build games of all sizes at various price points. Without inventory we can shift prices up and down and all around until we determine the proper price for each type of game. Really, Gabe Newell says its ok. We can take risks again. New mechanics and gameplay can be released in smaller versions or even to limited large scale beta groups to see if we are on the right track before putting in the second USD 15 to 17 million. We can even capture the long tail currently exploited by Gamestop in their bargain bin. I don’t know if I’ve seen the future or if the revolution will even happen in time to rescue the industry as we know it. I do know we can’t be so ignorant as to believe we are immune to the reconfiguration of the markets for every other form of media. If we don’t choose to be proactive in the change, it will be done for us and we won’t be happy.

Definite Answer to What is Wrong with Zynga: Obvious Edition

noreply@blogger.com (Anonymous) — Thu, 13 Sep 2012 19:38:00 +0000

I pride myself on my “brilliant grasp of the obvious.” But sometimes concepts bathed in divine light before my eyes are hidden to the entire world leaving me sitting like the solitary school-boy laughing to himself in a corner while the world doesn’t know why. My gift tells me Zynga is in a good place.

For those of you who feel I put too many words to my thoughts on this blog, this time I will get to the point before I digress. Even though you cannot swing a dead cat without hitting a Zynga naysayer, show me one person in the business who would not give their left nut – women included – to be in Zynga’s position today. Lots of these well intentioned but sadly misguided folks are offering advice and statements about what should be done, and I will certainly start listening, as soon as one of them shows me the 2 plus billion dollar company (Zynga’s current “depressed” value) with 60 million people a day checking in that they built. They can all provide input from high towers about directional changes and missed opportunities revealed by hindsight, but it is just not useful. My old boss at Eidos, Charles Cornwall was an investment banker who said making games, like any other form of entertainment, is about distribution and access to capital. He then accessed both and grew a company from nothing to the second largest publisher in the world and a billion dollar market cap in a little over 2 years. The fundamentals of the business have not changed and Zynga has more of both than any other company in the business and perhaps, than any game company in history.

No one is going to say Zynga has not hit a dry patch relative to the massive growth it enjoyed early on, but remember when Activision, the largest game publisher in the world, went through a prepackaged bankruptcy and emerged with less money and a lower valuation than Zynga has today? Historically, publishers gained access to fixed distribution channels through relationships with third parties who owned them. These could be retailers and at one point, middle men like GTI. The publisher owned the content and the relationship with the retailer, but the connection to the consumer was only as strong as the retailer’s tie to its customer. We hardly ever found out who purchased the product. Zynga knows who buys it and they touch more of them.

Let’s put Zynga’s audience in perspective relative to other media. In two and a half days the company is visited by the number of people who saw this year’s number one movie, The Avengers, globally, during it’s entire box office run. Wait, before you point out these people paid for the film and do not pay for Zynga games, compare it to the multi billion-dollar television market. The final episode of MASH, the most watched television show in US history had 50 million viewers. The average daily viewership of all four US television networks combined ranges between only 40 and 50 million per night. This is a powerful distribution channel for games and in a world of on demand movies and time shifting of media and disappearing print media making it impossible to know which media to buy, it is a powerful channel in the media world as well. Zynga’s customer acquisition numbers to grow this audience are well reported, but now that it is there, the cost to reach this number of people is very low. All the company has to do is make a hit. This gets us to the money part of the truism.

One of the first examples I use to show the differences between the film production and video games is the different meanings attributed to the word “development.” I explain how in film, the word means working on a concept to see if the studio can come up with a shooting script and cast. During this time one person is working and no commitments are made to production. Games, I explain, are the polar opposite. “Development” means we are making something. A team of people is working and a product will be completed and released. While this paints a clear picture for the uninitiated, it is not an entirely accurate description of the business when I worked at a publisher and it is not an accurate reflection of Zynga. The hyper accurate analysis of the term reveals they are exactly the same process.

We knew how much product we could push into a channel and sell through regardless of what was in the box. In the short term, if we did not exceed the number, we knew our “development” of new IP was covered. In the long term, if we abused the consumer by putting shit in the box, we lost our brand and therefore, our channel. If the product sales exceeded expectations, we made sequels. If not, we moved on to the next new IP. The market for console is much different now, but not for Zynga. By virtue of its audience size and infrastructure, Zynga is able to build out concepts, test them, determine revenue potential and tune, move forward or kill all before it incurs major expense. Publishers like Acclaim and Midway are gone because they ran out of money to develop products. With 1.4 billion dollars in the bank, they can do a lot of building, testing and tuning. Only a meticulously executed strategic focus on hit avoidance could cause the company to burn through its pile of cash and build something worth while.

I do not know Zynga’s specific plans, and while this bothers a lot of folks actively writing about the subject, I am not bothered. If you were trying to find success in a highly competitive market, would you telegraph your next move? However, the company announced it will be looking more toward the core market (code words for increasing the percentage of whales), looking at mobile and preparing for a potential change in legislation which could make gambling legal. I understand why gamers attack. The industry hates to see anyone succeed and if a company breaks out and starts minting money a chorus forms to sing about why the winner is “not really a game” or “missing the point” or just a bunch of assholes. Unless of course you are EA and then you are either management who is angry about the number of employees who moved over to Zynga or one of the remaining employees who is upset to be standing on the sideline while all the other kids got picked. I can even understand why the mainstream is on the attack. I mean, the only thing more popular than building heroes and putting them on giant pedestals is tearing them down. It is kind of the American thing to do. All those people who missed out on the opportunity to make money while the company was private, can hold themselves out as the smart ones who never got in. But c’mon on folks. If Zynga does well, we all do well. If Zynga does poorly, the financial world hates games again and we return to the tiny incestuous world we are trying to escape. Let’s give the company some breathing room and watch the folks who built the company to where it is put it back on a growth path.

Is Amazon Appling Apple?: New Kindle Fire Edition

noreply@blogger.com (Anonymous) — Fri, 07 Sep 2012 06:03:00 +0000

This is the exact post I put up in January of this year. I could say nothing has to do with my being lazy, but I would be lying. I am proud the post Jeff Bezos' announcements today made the post almost as relevant today as it was the day I wrote it, and perhaps I am showing off, but it has really been a long time since I wrote a new post and this is a good way to get started again.

By now I am sure Walter Isaacson's report of Steve Jobs feelings about Android is news to no one. At one point during the interviews leading up to the greatest retelling of the monomyth since Luke Skywalker, Jobs said:

I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40bn in the bank, to right this wrong," . . . . I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this.

Apple never hid its focus on what products can do, rather than providing tech specs. In fact, from the day he returned to Apple, Jobs talked about it to anyone who would listen. The message was clear in the first iMac commercial telling people they were two steps away from getting on the Internet,

At the same time, Dell, the world's largest computer maker, Dell, was running a commercial showing an astronaut floating in space. Twelve years later, Palm still didn’t get it when they launched an iPhone competitor by showing people dancing in a field,

and Motorola was no better with their iPhone killer introduction looking more like a teaser for a Michael Bay film than a phone.

Jobs vision for Apple was not at all curious, but it was certainly curious that no other technology company copied him - until now - and Amazon copied it all.

Apple did a ton of things right to make the iPad work, but the most important was ensuring the quality of the user experience by building and guarding its own ecosystem. Unlike Google, Apple makes sure there was only one type of hardware, running one flavor OS. Then it built a wall around its beautiful garden.

Ensuring the user experience is so important, Apple takes great steps to protect its garden from the detritus left by foreign bodies. It entered into license agreements for distribution of broad swaths of content and committed to review and approve every single piece of software introduced into the garden and even acquired an ad service to make sure the commercials inside the products accepted into the garden would be up to Apple standards. The result, is the single largest homogenous technology base in the industry. Oh yeah - one more thing – Apple has everyone's credit card number.

Amazon was hitting its stride at the time Steve Jobs returned to Apple, and Jeff Bezos also knew success depends on customer service. The company started to provide customer service when it was easy. It only had to deliver the right product on time, and have a customer support phone number. Just like Apple’s simply providing a computer that worked, Bezos simply gave customers what they ordered. At the time, both concepts were revolutionary. Like Steve Jobs, Jeff Bezos did not stop after the easy parts. Just as Jobs famously made sure the parts of the products on the inside are as beautiful as the outside, Bezos invested vast amounts into building unseen technology to magically enhance the user experience – even in ways the consumer never noticed. By doing so, he built a massive user base into a massive company. Oh yeah- one more thing- Amazon has everyone’s credit card number.

Lots of tablets launched last year, but Amazon and Apple were the only ones to launch tablets with clear paths to doing things – and they are the only successful players in the market. It is also no coincidence both tablets are neutered relative to most of the others on the market. Techies think everyone wants to customize and program their shiny little noisemakers, but Apple was the first to identify that just like in video games, the perception of freedom is much more important than freedom itself. Steve Wozniak said it best when I asked him whether he thought the iPhone was a modern version of the Newton (little known bit of trivia – Jonathon Ive designed the Newton 110) and he said

No, the Newton learned you, you learn the iPhone.

Any game designer will tell you that giving a player too much freedom will make them bored. Players must be led in a way they do not know they are being led. That is why Amazon and Apple would make great game designers. While the two companies pursued the same consumer, in the same manner, they attacked the market from completely different directions.

At its very core- no pun intended, - Apple is a hardware company and Amazon is a retailer. This is important because their decisions will be made to maximize revenue in their core businesses.

Some may say Apple is more than hardware, but the company, like Sony used to do and Nike does with shoes, makes its money on selling hardware at higher margins than any other computer company. Jobs always said the software hardware relationship was critical to making the best products, but, for the most part, the software, is not sold on its own and most software businesses within Apple are small relative to hardware sales. In laying the groundwork to launch media devices Apple successfully commoditized music, television, film and game content and gave it to the consumer, so the company could make its profits on the hardware. Jobs compared the company to BMW and if you look at the product lives and update cycles, they are not dissimilar. “I am going to sell you the greatest thing the world has ever seen, and then I am going to show you why it is inferior to my new greatest thing the world has ever seen.”

Amazon is a software company and it is slowly but surely turning its retail products into software. Unlike Apple, hardware only exists to facilitate the software transactions. The company built more software than any other retailer on the planet, but like Apple they don’t sell it. All of the coding goes into an invisible infrastructure with a public appearance that is charitably described as "dated" – but in the case of Amazon this is its strength, not a weakness. With many, if not most of the same content relationships as Apple, the company sells streams as well as downloads. However, Amazon makes its money on the content sales. The company looked to its first hardware device years ago as a lost leader to enable increased engagement with consumers, and higher margins on content sales. In determining what people want in a device, Apple found people did not always need the power of a computer. So it looked at computers, pared them down to the most common uses, put them on a tablet and sold them at a great margin. Amazon realized people did not need all of the expensive stuff built into an iPad, so it pared its tablet down to the most common uses, and priced it slightly below cost. In doing so, Amazon commoditized the tablet. Amazon did not steal the concept of selling digital media into their own hardware, and the first Kindle actually launched well before the iPad. But it did steal, the concept of content over hardware. Every other company was trying to make a better table than Apple, and some did. Amazon was the first to realize they could launch a worse tablet, so long as consumers were able to easily do the things they like most. Choices are limited, but they are limited to what people want. They want this stuff so much, they bought a million Kindle Fires a week. This story plays out like John Woo directed it. Apple is underpricing Amazon on the content, while Amazon is underpricing Apple on the hardware – unless you look just out of frame at the bigger gun Amazon is pointing at Google.

If you are reading these words, you just spent a whole bunch of time reading gaseous belch about why content and access to content are more important than hardware in the tablet world but nothing about Amazon fighting Google. This is where it all comes together. The consumer only cares about content and the providers and creators of content care about getting paid for content. Payment depends on the size of the installed based and the ability to settle a transaction. Because there is no single source of content and Google is still asking nicely for people to put their credit card data into a Google Wallet, no one really gets paid for selling content on Android. The only money made, even on apps like Angry Birds, is through advertising – and for obvious reasons, Google is just fine with that. But before a content provider decides to release an application for free and support it long enough to grow a base large enough to generate significant revenue, it has to run on Android. Therein lies the rub.

Unlike Apple with its single OS and device, Android has a variety of flavors and devices and they are not all the same. Deployment on Android reminds many of the bad old days of PC development because applications must be tested across many platforms and configurations. Kindle Fire to the rescue. By building the Kindle Fire on a customized layer of Android version 2.3, (Gingerbread) and then selling it to 14 million people, Amazon created the second largest homogenous base of users in the tablet world and by far the largest homogenous base of Android users and the only one with a built in payment method. This should be a big win for Google. Just like IBM carried Microsoft's OS to the world like a virulent, pestilent disease, the Kindle Fire is spreading Android over iOS and finally making it worthwhile for developers to invest time in apps. Right? Not really. Amazon is giving consumers a better reason to shun the higher functioning, newer, pricier Google Android devices in favor of the neutered, smaller tablet running a two generation old OS. All in all, this turns into a big plus for Apple. Apple will continue to make BMW's and Amazon will make Chevy's. The market needs both. A Chevy does what a BMW does - gets you from home to work and back again with the occasional trip to see a movie - and for its real world uses, performance is identical. But people buy BMWs for a few added bells and whistles and all those things they will never do with the car, but can. And of course the prestige associated with telling the world you paid more for your car than a comparable Chevy.

I could argue Amazon is killing Android, but it is not. Google is killing Android. Even though Google is touting the virtues of Android 4.0 (Ice Cream Sandwich), it continues down the same path as earlier versions. Specifically, it will not run on all prior hardware devices, it is will not be universally deployed, and it will be operating on a number disparate hardware platforms. No matter how much Google says it is the same, the hardware will cause variation in performance that impacts the applications. The decision for content providers looking at developing for a disparate base with no payment method vs developing for a large homogenous Kindle Fire base with a built in payment method and promotional channel is very easy.

Begging the question, without the quality applications, can Google grow 4.0 as quickly or successfully as Amazon grows the Kindle Fire? With Kindle serving as a gateway drug to iPad's and slowing Google's march, I have to think Steve Jobs is smiling somewhere.

Orbis: It's the End of the World Again: Analysts are Shitheads Edition

noreply@blogger.com (Anonymous) — Fri, 30 Mar 2012 15:23:00 +0000

I love this kind of story. Some anonymous source on a website told the world the next PlayStation will be called "Orbis" and that it will not play used games. As some random guy with a blog, I would expect me to write something about this - I did not - but why are all of these "professionals" weighing on speculation and being so very, very wrong in the speculation layered on top of speculation. While the only basis for validating the speculation is the memorialization of the thought in a series of letters comprising words on a page, the analysts feel the compulsion to comment. The very, very sad part is their commentary betrays them and shows why they are so often so very, very wrong. They see the wall, they see the train tracks, but the do not realize they are sitting on an airplane. Michael Pachter of Wedbush, David Cole of DFC Intelligence and Lewis Ward of IDC all focus on a recent announcement suggesting PS4 - they say it is called Orbis but if Sony caught on to Microsoft's game in the last round they are giving different code names and feature sets to everyone so they know who leaks details - will not allow the play of used games. Their grasp to this nugget like rats to the flotsam of a sinking ship points them to impact on Gamestop. This is a valid concern. One half of Gamestop's business is the resale of used games. The focus may be well placed, but the conclusion ignores even the speculative facts put out in the original post.

If you then decide to trade that disc in, the pre-owned customer picking it up will be limited in what they can do. While our sources were unclear on how exactly the pre-owned customer side of things would work, it's believed used games will be limited to a trial mode or some other form of content restriction, with consumers having to pay a fee to unlock/register the full game.

Used games are not blocked, they are limited. Fellas, this is not a whole lot different than what is going on today. There is a long list of the most popular games on the market that only allow full use to the first player. This article suggests the paywall - or repay wall - will simply be moved closer to the beginning of the game. Analyzing this point would also lead to a conclusion of potential benefit for Gamestop and the publishers. If the games are limited utility, the value, and therefore the price goes down. However, no one said they are useless. The games are still low cost demos and entry points for consumers. If there is enough value on this side of the repay wall, consumers may pay twenty dollars for the limited use disk. If they like the game, they pay another 20, or micro transactions, to the publisher, and everyone makes money. Used revenue per disk will go down for Gamestop, but volume could increase significantly as it did when the price of home video was reduced from $99 to $59 to $20 and to $5. The only potential users are the console manufacturers who will not make the fee on the manufacture of the shiny disk, but this could be made up on transaction fees for the downloads.

The weird thing about the focus on the used games half of Gamestop's revenue is the failure to consider the much larger and much more significant threat. If these consoles go to direct downloads or cloud based gaming Gamestop will lose revenue from the sale of the shiny disks and lose the access to the inventory of used games. Seeing as Gamestop's entire business may in fact be built around consumer funding of their used game inventory, every download game is a double impact on Gamestop revenue. Gamestop's CEO, Paul Raines, is a very smart guy. He supports Gamestop's relevance by saying digital is further out than we think. Storage is simply not there to collect all of the games we want to play. Unfortunately, cloud computing and access may make storage irrelevant and console manufacturers would be short sighted to ignore the rest of the world and not take advantage of the technology - of course this would not be the first time. Paul knows this and is driving the company in the direction of digital. They do have a long, long way to go, but there is a world where a retailer offers stellar service, enhanced value and in exchange generates high revenue per square retail foot selling things that are all available on line and a transaction fee for downloads. Today we call it the Apple Store. Gamestop just has to figure out how to get there. The analysts have to figure out how to analyze.

Revenge of the EULA Reader: Meta Me in a Bubble Edition

noreply@blogger.com (Anonymous) — Fri, 23 Mar 2012 18:52:00 +0000

This morning I read this great post from an artist who actually read the Pinterest EULA. I linked to her article in Scientific American because I want to make sure she gets credit for what she wrote by people reading from her page - or as she may say, the kind of thing she is afraid will not happen by virtue of the Pinterest EULA. I don't want to hold Pinterest as only the company in the world who sticks stuff like this in EULAs. In fact, I wrote about problems with other EULAs before my 23 and me post is by far the most popular post I ever wrote. I venture to say more people read my post about the 23 and me EULA then actually read the 23 and me EULA. EULAs, in the sense they are being used by the Pinterests, Facebooks, Googles and Linked ins of the world, are legal fiction granting the drafters the rights to use our data the way they want to use it today and how they may use it in the future. I saw legal fiction not just because there is not a single word in any of the multi thousand word agreements in the "signer's" favor, but because the companies providing the documents know no one reads them. Hence the beauty of the Scientific American post by an artist and not a lawyer. How the world will change if people start reading and perhaps even objecting to the agreements.

These sites and services argue our data is collected in consideration of services provided for free under the EULA. But does this argument really hold up? If the services are being provided in exchange for our data, the services are not free. The services cost our data. We are paying for services by providing our data. While we can be certain our data is appreciating in value with each click we make - Facebook has every single click I made since I signed up and keeps collecting them - and each advance in data mining, we cannot be certain of the services, or accountability for break down, in the services provided. Finally how do we know the value of the services is commensurate with the value of the data being provided? Time for the radical proposal. What would happen if I actually owned my data?

We are bordering on a sci fi concept here, but each one of us is creating value unique to us in the form of a "meta me" and we are not benefiting. There are things we do every single day that has value to ourselves, our community and even sponsors, and others are aggregating us into a pool and slicing and dicing us into the equivalent of securities derivatives for resale. We, the owners, the creators see no value. I should own not only my data, but the metadata that defines me. If I create a profile of myself - I am not saying virtual because the profile of my clicks and purchases is very real - that profile is no less mine than the compilation of the words in this post. The choices I make on line, coupled with my identity are a valuable creation. No stronger evidence exists than the payment Google receives by selling my data to sponsors. Even though my data is more valuable to certain sponsors than other people's data, we all get the same services. I appreciate Google telling me where I can find things on the web and Facebook letting me keep in touch with friends but when did I decide they should be able to keep all of the profits they make selling meta me? Wouldn't it be great if we could put a bubble around our data and make purchasing decisions on line the same way we make purchasing decisions in the real world.

When purchasing moved on line we disintermediated the middle men. Travel agents and insurance brokers fell. Next we ate the record executives and ad sales guys. The funny thing is the disintermediators like Google did such a good job of disintermediation that they grew into the intermediaries. Google's first argument to sponsors was TV and Radio are only thinking they are giving you and audience. We are accountable and can track clicks. Sure they try to stomp out click farms and other forms of fraud, but when I see the same ad for an elliptical coming up on every web page just because I clicked on a review page six months ago is it really an effective use of the advertisers' money? The advertiser would be much better off going directly to me, rather than buying my anonymized data as part of the derivative sold by Google. It is time for Google and Facebook to become the broker, rather than the owner.

If I put meta me in a bubble I would be able to determine the value of my data. Some opportunities are easy to imagine. I can opt into a network If I wanted to watch purchase a tv show in iTunes or watch a premium show on Hulu, a notification may pop up telling me to put away my wallet because Coke would like to buy my show for me. That would be nice. They would not even have to show me the commercial.

I would feel good about them already. Now to the tricky stuff. Why can't I opt into Facebook or Google services in exchange for a cut in the revenue? They have infrastructure costs to cover and there is value in the brokerage service of finding the best paying customer for may particular data, but what about the profit. They would not be in business if there was not a profit. I want some of that. I might not feel so bad about the use of my data I get a monthly statement, the same way an adsense or admob user does, indicating the value of my data to Google. I might also have the market information to know the value of my data and knowingly determine whether the services I receive, like gmail or google voice, are a valuable enough for me to let them leverage the value of meta me.

Overthinking a Garage Door Opener: We Will Not all Make it Into the NBA Edition

noreply@blogger.com (Anonymous) — Mon, 20 Feb 2012 02:51:00 +0000

Anyone who has spent more than ten minutes with me knows how highly I prize my Malcolm Gladwell Outliers-like developed grasp of the obvious. But living in my very myopic, self centered, cloistered world it is hard to identify things that are obvious to the entire world and not me from those obvious only to me. This weekend I installed an auto mated garage door opener and stumbled upon the value of doing things in the physical world. After spending more hours than it should take and skinning more knuckles than reasonable, I achieved great satisfaction in pushing the remote and watching the door open and close. In fact, I achieved so much satisfaction, one day later I am still pushing the button to admire the physical manifestation of a day's work. At the top of this post you see a video from Mike Rowe from a talk actually given at the E.G conference, not TED, highlighting the value of the lost art of "real" work. I deeply, deeply believe what he said and having wasted four years of college because I was filling out a check list rather than striving for a goal I proselytize his message on a regular basis - with words. Now I did it with deeds.

It made me feel really good to invest a full day working with tools into a garage door that will go up and down with a push of various buttons, but I am not advocating garage opener installation training. There is a whole physical world we ignore through our work and more importantly through our ascription of value. When my grandfather was fourteen years old he was provided with a variety of options. College was available, but pharmacy as a trade was presented as an equal viable option. He chose pharmacy and entered a trade school in junior high. As a parent of a sixteen year old boy staring to consider the college path I am hypercritical of where we, the big "we," ascribe value. We, the imperial one, highly value those folks living in the rarified air how create the disruptive technologies that change our world. The Zuckerbergs, Gates, Jobs, Brins and Pages who show up on the cover of Time Magazine and make billions. However, as a parent I have to consider the percentage of these relative the rest of the world and realize the irresponsibility of supporting disruption over contribution.

In the pre rock concert days of the TED conference - when reporters were not allowed and speakers wrote their own presentations about their passions - Dean Kamen used to talk about the value of exercising your brain. He started his talk by addressing the financial and social value we placed on athletics. Athletes are adored by, and paid, millions. But there are only three hundred and fifty places in the NBA and the realization of the dream to achieve one those places is reserved to relative few. He further explained the limitations of advancing athletic skill relative to the infinite ability to expand our brain. He put actions behind his words and created US First. Within a few years he had high school children in schools across the country prizing engineering skills over athletics. This is a wonderful thing but as a whole we still focus the lion's share of our attention on the breakouts rather than the contributors. There is a reason the hourly rate of plumbers is climbing faster than the hourly rate of attorneys. It is simple supply and demand - and it is our fault. We are minimizing the value of the careers that lubricate the friction of everyday life in favor of the extraordinary. By definition, the extraordinary is small in number. As a society - and I a may be speaking very US centric here so excuse me if you are reading this outside the US and feel it does not apply - we are creating college as a goal rather than a means to a goal and prizing the financial rewards of the relatively few successful entrepreneurs over the passion which drove them to their product in the first place.

I am a very simple guy with a very limited world view. But in my professional world view - the game one not the lawyer one - I see a myriad of opportunities which do not require college. The perspective of the actual consumer is under represented and highly useful in the industry. What would happen if one of these kids starts to hone their skills in their formative years. They, like those of us who started in the eighties, start to use the tools available to them and learn to use Unity, or build an app. Or maybe even being a tester. They will find themselves developing marketable skills that may displace the current need for a liberal arts degree. They may leave high school and join a developer or a publisher. They may be content for the rest of their lives. Or maybe, one day, they will look over at a guy with more skills, who's walls go all the way to the ceiling and drives a Porsche and ask him how he got there. The guy will explain he got a degree. Now that kid will go to college with a purpose other than watching cartoons and smoking pot until they move back in with their parents. Or, something may burn so strong in their belly they have to leave it all behind to pursue their idea. A pursuit born of a compelling need to build it and get into the world, not the need to be a billionaire.

Don't get me wrong. I am still riding my son' ass to go to college, because I am deeply afraid of him living in my home forever and he is not training a plumber's apprentice, but I hope I afford him the breathing room, understanding and support to allow him to determine his own goals provide the platform for him to achieve them - regardless of how much Mark Zuckerberg is worth after the IPO.

Facebook, Google and our Dwindling Privacy: Take My Data Please Edition

noreply@blogger.com (Anonymous) — Mon, 20 Feb 2012 00:13:00 +0000

I read this article about the trade off for privacy and this quote from Ron Conway really stood out "For that value tradeoff, they're willing to provide information." I completely agree with him and not just because his support of his iconic investments is legendary. But his statement is not really relevant to most of what is going on at companies giving rise to the concern. We really do not know and cannot imagine what is being done. The government is not allowed to access the same information without a warrant, but the fiction of "consent through EULA" finds permission buried deep inside what consumers call a "click through agreement" and the drafters call a license grant.

Rather than go into a whole new rant, I am just reposting something I wrote about a year and a half ago. Sadly, even though we are becoming more aware from great editorials like this one by Lori Andrews in the New York Times, other than attempts by the powers that be to reframe the argument, not much has been done. Have a look at the video at the top of the page for Mitchell Baker's simple and logical solution, but in the mean time you can read my post from June 2010 to see what set me off. . . .

Sure E3 is going on and you might click through to this post to read something I had to say about it. Do you really think there is anything left to say? It is back and the whole LA Convention center is full of unicorns shitting rainbows while puppies dance on their backs. If you cannot make it down there, you may be better off. You do not want to step in a rainbow pile. There is so much E3 news I went ahead and wrote about something that is bugging me. But if you would rather see E3 stuff, here to go ahead.

I purchase a bunch of random things through itunes and because there is no real correlation between the timing of the purchase and the timing of the confirmation receipt, I often do not even open the purchase confirmation emails. But last week I got a few emails in a row and opened them to find out I purchased:

ViKey - Bộ gõ tiếng Việt - TELEX, VNI, VIQR, v2.0, Seller: Dinh Ba Thanh,

MyFlickr, v1.0, Seller: Do Tuan Anh ,

VnExpress 2010, v3.1, Seller: Do Viet Tuy,

VietnamCar 2010, v1.0, Seller: Do Viet Tuy,

DTCK 2010, v1.0, Seller: Do Viet Tuy, and

CafeF (Special Edition), v1.0, Seller: Pham Cao Phuc.

Another email told me I purchased VietStock 2010, v1.0, Seller: Do Viet Tuy. Curiously, I did not remember buying any of these things. I went to call the iTunes store, but I could not, there is no number. I looked on line and I noticed hundreds of posts on the official Apple discussion boards and across the web about people who had their accounts hacked and found no assistance from Apple. They all said the only recourse was through the credit card company, so I called my credit card company and they without any questions, they voided out the charges. They said it happens all the time.

After hanging up I realized I could not upgrade my iPad apps. iPad apps and related upgrades are tied to the user account at the time of purchase. My cunning grasp of the obvious connected the two issues. I called iPad support and devoted the next hour of my life speaking with a series of very helpful and happy Apple cult members who were very sorry I was having issues. Apparently they can call iTunes help, but consumers may only reach it by email. While they were genuinely kind and helpful, was somewhat disheartened by their responses. Apple gathers a bunch of data and asks for permission to use it. They tell me their genius will suggests interesting songs and movies if I let it track what I buy. Apps will be better if they can track location and if I lose my device, they can even tell me where my iPhone or iPad is if I just give them permission. When my credit card numbers were stolen Amex was able to identify aberrant usage within one charge. I’ve used the card all over the world with multiple purchases in multiple cities in a week and they never asked a question, but one charge in one grocery store in Los Angeles, and they nailed it. They called and asked if I made the charge, I told them I did not, and I had a new card in my hands within twenty four hours. So again, applying my highly regarded grasp of the obvious right around minute 46 of our getting to know you call I asked the very kind Apple person

I’ve had the account for about four years. Wouldn’t the store identify a sudden burst of purchases in Vietnamese and at least ask if it was me?”

“Oh no Keith” we are on a first name basis now, they are nice, they are Apple and they care about me ”that would be an invasion of your privacy and we would not do that. We would never look at what you buy.”

“BULLSHIT” I wanted to yell, but I didn’t. This NPC is too far gone. Far be it for me to embark on the deprogramming.

Contrary to what my Applebot told me Apple does take our data. Even though we don’t read the scrolling EULA, which was handed down through generations of very clever, albeit wordy, legal monks in the purest pursuit of full disclosure, we see their recommendations. Unless we believe in the recommendation fairy, the continued improvements points to their watching us. They tell us so. They promise provision of better service by parsing, analyzing and searching for correlations. What we may not know - because no one really reads the EULA - is Apple’s interaction with you does not end with the purchase. The company better serves you by tracking what you are playing in your library, how often it is played and when you last played it. We would be pissed if a little sister did this to you, even worse if it was a parent, but we let Apple do this and use it. I am not coming down on Apple here, Amazon has been doing this for years, as has TiVo, your credit company and Google. When it comes to our privacy, this is just one of the many aspects we give up without thought. Probably because it is too hard to wrap our heads around the value and amount of meta data flowing from the real data we provide and we really do not think any will do anything with it. We could not be any more wrong.

In the old days if you told someone you bought an album or a book it did not mean anything. But our data no longer exists in a vacuum. Now, the cloud around that data seamlessly blends with other clouds of data, exponentially growing with each merger. The cloud grows as the amount of data grows. We only see the data pile, whole new branches of science are looking at the invisible cloud and this stuff, is being used against us.

The press is going nuts over Facebook privacy policies, but the discussion of access to, and spread of, data we never intended to share is much quieter - bordering on nonexistent. In addition to what we disseminate by putting something up on Facebook or purchasing through iTunes or Amazon, we build vast silos of data just by using a browser. We have a personal silo on Facebook full of pictures, thoughts and connections,
a web activity silo stored on our ISP, a financial silo held in credit reporting agencies and banks built through our purchases and credit requests, a personal interest silo when we click on an ad, and more we can not even conceive. It is hard enough to imagine what companies are doing with the data we provide – Facebook can predict future hookups between members with 33% accuracy – we cannot even begin to wrap our heads around what will happen once the silos connect and network effect kicks in.

The Financial Silo.

Almost all of us are comfortable using credit cards. Aside from the risk of the waiter or store clerk stealing your number, we really don’t think about the individual purchase. Some people even feel comfortable enough to register with Blippy.com, making a game of broadcasting everything they buy. Why should we be concerned about individual purchases? Who could possibly care about your buying a 12 pack of Diet Coke and a game at Wal Mart? No one ever thinks these purchases speak to who we are, but credit card companies and banks build psychological profiles based on what we purchase and where we buy it.

The exploration into cardholders’ minds hit a breakthrough in 2002, when J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. Canadian Tire’s stores sold electronics, sporting equipment, kitchen supplies and automotive goods and issued a credit card that could be used almost anywhere. Martin could often see precisely what cardholders were purchasing, and he discovered that the brands we buy are the windows into our souls — or at least into our willingness to make good on our debts. His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a “Mega Thruster Exhaust System” was pretty likely to miss paying his bill eventually.
Martin’s measurements were so precise that he could tell you the “riskiest” drinking establishment in Canada — Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the “safest” products — premium birdseed and a device called a “snow roof rake” that homeowners use to remove high-up snowdrifts so they don’t fall on pedestrians.

These profiles are then used by credit card companies and banks to determine when to offer home loans, lower existing credit lines, or deny new credit, Without even thinking about it, we are building a profile of ourselves which is available to all who review our credit. With the passage of the new federal banking bill, the US Government will also have access to these records.

Web Surfing Silo

While credit card companies, and the US Government are building profiles of us, we are building profiles of ourselves. Our surfing habits create a unique “Clickprint” that can empower those reviewing the data to anticipate our behavior. Reams and reams of data are gathered and despite the statements contained in privacy policies, distributed. In 2006, AOL fired its CTO over the releases of stored and anonymized search data. AOL found the supposed anonymous data could be used to identify individuals making the searches. Balaji Pdmanabhan and Catherine Yang of Wharton and UC Davis, respectively, identified the reason for the concern in their paper “Clickprints on the Web: Are There Signatures in Web Browsing Data?” They found retailers can distinguish between different users in as little as three sessions and behavior can be identified in anywhere from 3 to 16 sessions. Imagine the profile we build when all of our surfing habits are taken into account. Four years later the situation is even worse.

In a more recent paper, Balachander Krishnamurthy and Craig Wills of AT&T Labs and Worcester Polytechnic Institute showed how advertisers can identify users by simply looking to the referral page for the click through.

A key question that has not been examined to our knowledge is whether Personally Identifiable Information (“PII”) belonging to any user is being leaked to third party servers via Online Social Networks (“OSN”). Such leakage would imply that third parties would not just know the viewing habits of some user but would be able to associate these viewing habits with a specific person.

In this work we have found such leakage to occur and show how it happens via a combination of HTTP header information and cookies being sent to third-party aggregators. We show that most users on OSNs are vulnerable to having their OSN identify information linked with tracking cookies. Unless an OSN user I aware of this leakage and has taken preventive measures, it is currently trivial to access the OSN page using the ID information. The two immediate consequences of such leakage: First, since tracking cookies have been gathered for several years from non-OSN sites as well, it is not possible for third party aggregators to associate identify with those past accesses. Second, since users on OSNs will continue to visit OSN and non-OSN sites, such actions in the future are also liable to be linked with their OSN identify.

Tracking cookies are often opaque strings with hidden semantics known only to the party setting the cookie. As we also discovered, they may include visible identity information and if the same cookie is sent to aggregator, it would constitute another vector of leakage. Due to the longer life-time tracking of cookies, if the identity of the person is established even once, then aggregators could internally associate the cookie with the identity. As the same tracking cookie is sent form different Websites to the aggregator, the user’s movements around the Internet can now be tracked not just as an IP address, but as associated with the unique identifier used to store information about users on an OSN. This OSN identifier is a pointer to PII about the user.

The leakage through sale of data was not only found on Facebook, but Myspace, LiveJournal, Hi5, Xanga and Digg as well as Google through DoubleClick and Yahoo through Right Media. While this may cause us to shake, there is more to be concerned with than teh leaks we can identify and stop. Facebook and Linkedin have actually created data science teams to analyze data and look for behavioral correlations to clickprints. According to a book critical of Facebook, Mark Zuckerberg used to play with the data to entertain himself.

As the service's engineers built more and more tools that could uncover such insights, Zuckerberg sometimes amused himself by conducting experiments. For instance, he concluded that by examining friend relationships and communications patterns he could determine with about 33 percent accuracy who a user was going to be in a relationship with a week from now. To deduce this he studied who was looking which profiles, who your friends were friends with, and who was newly single, among other indicators.

The threat is not ephemeral. Just to make sure, the FBI wants your ISP to keep all of your data for two years

Merging The Data

Ok, so the banking and credit side of the world knows about financial situation and the retail side of the world may know about our interests and peccadillos, but I am just being overly sensitive. Relative Loss of privacy is simply a cost of living in a faster, more fluid world. Right? Not really. What happens when the silos merge? Banks, credit card companies retailers and others can all merge the silos. Each has access to both silos by virtue of advertising programs and voluntarily provided data. We opt into the financial solo, but no one realizes a click through
on a credit card or refinance offer potentially merges silos. But if I am not doing anything wrong, there is nothing to worry about. Sure, you are not doing anything wrong in the present, but how does it look through behavioral prediction – a science, by the practitioners own admission is inaccurate at best. In a Minority Report kind of way and erring on the side of caution, companies wanting to protect investment will reduce your credit , and the TSA may put you on the no fly list on the basis of information taken completely out of context. Analysis of these vast data and metadata libraries is done by computers, not humans. Computers, sifting through reams and reams of data, spitting out tinier but still vast reams of data for application of algorithms for conversion into measures within a “acceptable” margin of error. Anyone whose credit rating has been dinged by a mistaken attribution knows the hell of being caught in a “guilty until proven innocent” cycle after falling within the margin of error. Imagine what happens when it gets into the hands of the government.

It gets even scarier when we consider Google not only has the search data, but Google desktop, creates metatags for every file on a computer, gmail indexes every email and its content, the proposed Google health service will provide access to medical data, and android phone provide communication and location data, google voice transcribes and indexes all voice mails and frequently called numbers, and the facial recognition could give access to comings and goings in public places. Google, and many others, will know everything about us, because we told them.

In the old days, when they were not being investigated, these companies would stand up for us. Google actually stood up to the US government and refused to offer certain services in China to avoid the risk of having to disclose data. Pre 9/11 the US Government did not have access to the data, post 9/11 through the Patriot Act and the new rules contained in the recently passed Federal Banking Bill, they get access to both silos. Even Google is not protecting data. The data accidentally gathered while mapping streets in Europe was recently handed over to authorities in Germany, France and Spain. Google admitted the collected data was in error, but they are handing over data which the governments may or may be actually be entitled to collect. The data ties IP addresses to the sites accessed.

In the even older days, we could live without footprints. When you wanted to see someone you would send a calling card. You could not get into someone’s house unless you were invited. No one knew where you went unless you told them. If a company wanted information about you, it asked for it. If the government was interested
in what you were doing, they investigated through formal requests to the courts and subpoenas were issued after a showing of cause. Today, in the interest of “helping companies to help us Each one of us has a Great Pacific Garbage Patch of data we never knew we built. It is time to clean up our garbage patches. Each data set we provide, wittingly and unwittingly, is part of a network, each connections grows the network, and therefore computing power, exponentially, until something much more powerful than us, is mixing, matching, dissecting, connecting, analyzing and organizing every piece of data about us. And the thing doing it, really doesn't care. The danger lies in what we do not know. The loss of privacy is increasing on an exponential rather than a linear course and when the last glimmer is extinguished, it will leave with a whimper, not with a shout.

The Brave New World of Advertising: Back to DLD Edition

noreply@blogger.com (Anonymous) — Fri, 27 Jan 2012 03:28:00 +0000

I once again had the honor of being invited to the DLD conference. I guess no one read my post from last year. In case you are curious, my hotel was better. . . well, better is a complicated concept. There is no weather pattern over my bed, but of course there would not be as heat rises and tends to collect in the attic - or as they call it here, room 504. It may not really be the attic. I only call it that because the elevator stops on the fourth floor and I had to exit the warm portion of the building and walk up the wooden staircase to the fifth floor to get into a room with a slanted ceiling and a dormer window. My client picked the hotel and did warn me it was not the caliber of the one I stayed in last year. But with the frostbite wound earned in my five star hotel room last year still visible on the little toe of my left foot, I figured it could not be worse. The VC's behind this startup are certainly very proud of the selection, it reinforced my belief that I am too old to be a startup. It was not until I was here that I learned the English translation of the name of the hotel's street is probably "Street where women take their clothes off and dance on tables for money" or perhaps "place where people can display their ability to make arabic signs and hang them in between sex shops." This a stark contrast from last year which looked like it was designed by the level designers from Wolfenstein.

Like many other European hotels and gas station bathrooms along Route 66 in the United States, the room key has a very large attachment to remind me to leave it at the desk before I leave. Unlike other European hotels, the front door of the hotel is locked at 9 in the evening and because the key for the side door is also attached the brass and fringed fixture so I was instructed to carry the apparatus which was roughly the size of a small child, with me all day. So to answer those who were thinking it but afraid to ask, I was indeed excited to see you, but it was actually a key to room 504 at the Hotel Deutsches Theater in my pocket.

The conference itself is great. It is very much like going to TED or EG, if half of the people spoke a different language. The interesting part is that it is not always the same part. A healthy slice of Americans are thrown in for flavor with a smattering of Indians and people from other parts of the world, the conference is predominantly German and Isreali. So at any one time, a good chunk of the people milling about during the break choose to speak either German or Hebrew. As a patriotic American, I chose to speak neither. The language differences afford a very effective brush off ability. Rather than the usual "Hey, I'll be here all three days, let's catch up later." Someone who does not want to talk to me can just give me a blank look with raised palms in an "I don't speak English" kind of way. Fortunately, the panels remain entirely in English and most of them do not sound like an episode of Sprockets. Once again, there were big names and big ideas. There is not another place on earth where Jack Dorsey, Freeman Dyson and Yoko Ono would be on the same schedule. I am not going to go into it because you can read better coverage at sites like Wired, the WSJ, All Things D or by doing whatever it is you do with the hashtag DLD, or see it streaming by searching DLD 2012. But one panel stood out in my mind not for what was discussed, but for the elephant sitting in the room that was not discussed.

The panel was called "New Studios" and was made up of Danny Zapin of Maker Studios, Jesse Draper of The Valley Girl Show, Yoel Flan of The Shine Group , and Mark Read of WPP. It was a mixup of old school money with new school content. Maker Studios built tens of millions of subscriptions on the web and Jesse Draper built a syndication network across the web and physical locations that reaches several million. The role of the industrialist was played by Yoel Flann who is aggregating shows and Mark Read played the role of status quo proponent. Mr. Read pointed out, quite correctly, that television is not going away. In fact the markets are growing dramatically in BRIC countries. He explained how CES was dominated by screens. Big screens, small screens, in between screens. My favorite line was in response to my question when he channeled Dr. Seuss with "in the future we will see four screens maybe more screens." What Mr. Read failed to address is how the content is going to get to the screens. Even though all those screens look the same from the front, they are very, very different from the back. They are all IP addressable. This means people who already use DVRs to allow them to care very little about which network is broadcasting a show, will soon care very little about whether there show is being broadcast by a network, cable operator or website. Great news for everybody sitting to the left of Mr. Read, but in a Darwinian way, not so good for him. According to WPP's last publicly available annual report the revenue for all of the advertising agencies within the group was right around one half the revenue of the media management group. The profit of the agency is driven by the high margin media buying business. A cynic would also point to the reduced accountability of buying a Super Bowl ad with Neilson reported numbers relative to seeing actual click through from a web campaign. Mr. Read cannot buy up inventory from the others on the stage because it is simply too expensive. The cheaper the ad buy the more expensive the dollar being spent. So what happens moving forward?

From the consumer side we know we will see one screen, and depending who you listen to, we will talk, gesture, dance or sing to find the show we want to see. From a personal perspective I can tell you my son really does not care whether the latest episode of Top Gear comes in from BBCA on our cable system or through the mac mini plugged into the television. The only thing he knows is he sees it six months sooner streaming on the web. But from a sponsor perspective things become very convoluted. Today, on buy goes into one box. If I want television I use television metrics and I buy from one party via one set of rules. Prices vary between network and basic cable (with some basic cable shows drawing more than network there is no logic, but it still works this way) but it is all basically the same. If I buy web I use a completely different set of metrics and a completely different rule set. But what will it look like when I have the choice between 1.5 million eyeballs I think are watching the Daily Show on Comedy Central at 11 p.m. and a guaranty of delivery 1.5 million eyeballs to my product in the same time period through the very same screen? Especially when the latter is significantly cheaper than the former. The decision becomes easy and the argument that "network will always be network" becomes even weaker than it is today relative to cable. The decision becomes easy and the argument that "network will always be network" becomes even weaker than it is today relative to cable. There is an old line attributed to everyone from Henry Ford to John Wannamaker that half of all advertising dollars are wasted, but we don't know which half. Well, now we do. The only question becomes "what happens to those companies who make the lion's share of their profit from selling both halves?"

Amazon's Special Gift to Steve Jobs: Android's Success is the Biggest Threat to Android's Future Edition

noreply@blogger.com (Anonymous) — Mon, 02 Jan 2012 22:28:00 +0000

I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40bn in the bank, to right this wrong," . . . . I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this.

The timing of that last breath relative to the life of Android is also news to no one. What I have not seen is the realization that Google may have stolen the frame, but Amazon stole the art. And while the media continues to report on the Amazon vs. Apple battle for the bedtime and reclining market, the real battle is Amazon vs. Google. The success of Amazon’s Android running Kindle Fire and focus on the Apple battle masks Amazon’s role as the new standard bearer in Steve Jobs’ war against Google which may well have cause Google to be hoist with its own petard.

Apple never hid its focus on what products can do, rather than providing tech specs. In fact, from the day he returned to Apple, Jobs talked about it to anyone who would listen. The message was clear in the first iMac commercial telling people they were two steps away from getting on the Internet,

At the same time, Dell, the world's largest computer maker, Dell, was running a commercial showing an astronaut floating in space. Twelve years later, Palm still didn’t get it when they launched an iPhone competitor by showing people dancing in a field,

and Motorola was no better with their iPhone killer introduction looking more like a teaser for a Michael Bay film than a phone.

Jobs vision for Apple was not at all curious, but it was certainly curious that no other technology company copied him - until now - and Amazon copied it all.
Apple did a ton of things right to make the iPad work, but the most important was ensuring the quality of the user experience by building and guarding its own ecosystem. Unlike Google, Apple makes sure there was only one type of hardware, running one flavor OS. Then it built a wall around its beautiful garden.

Ensuring the user experience is so important, Apple takes great steps to protect its garden from the detritus left by foreign bodies. It entered into license agreements for distribution of broad swaths of content and committed to review and approve every single piece of software introduced into the garden and even acquired an ad service to make sure the commercials inside the products accepted into the garden would be up to Apple standards. The result, is the single largest homogenous technology base in the industry. Oh yeah - one more thing – Apple has everyone's credit card number.

Amazon was hitting its stride at the time Steve Jobs returned to Apple, and Jeff Bezos also knew success depends on customer service. The company started to provide customer service when it was easy. It only had to deliver the right product on time, and have a customer support phone number. Just like Apple’s simply providing a computer that worked, Bezos simply gave customers what they ordered. At the time, both concepts were revolutionary. Like Steve Jobs, Jeff Bezos did not stop after the easy parts. Just as Jobs famously made sure the parts of the products on the inside are as beautiful as the outside, Bezos invested vast amounts into building unseen technology to magically enhance the user experience – even in ways the consumer never noticed. By doing so, he built a massive user base into a massive company. Oh yeah- one more thing- Amazon has everyone’s credit card number.

Lots of tablets launched last year, but Amazon and Apple were the only ones to launch tablets with clear paths to doing things – and they are the only successful players in the market. It is also no coincidence both tablets are neutered relative to most of the others on the market. Techies think everyone wants to customize and program their shiny little noisemakers, but Apple was the first to identify that just like in video games, the perception of freedom is much more important than freedom itself. Steve Wozniak said it best when I asked him whether he thought the iPhone was a modern version of the Newton (little known bit of trivia – Jonathon Ive designed the Newton 110) and he said
No, the Newton learned you, you learn the iPhone.

Any game designer will tell you that giving a player too much freedom will make them bored. Players must be led in a way they do not know they are being led. That is why Amazon and Apple would make great game designers. While the two companies pursued the same consumer, in the same manner, they attacked the market from completely different directions.

At its very core- no pun intended, - Apple is a hardware company and Amazon is a retailer. This is important because their decisions will be made to maximize revenue in their core businesses.
Some may say Apple is more than hardware, but the company, like Sony used to do and Nike does with shoes, makes its money on selling hardware at higher margins than any other computer company. Jobs always said the software hardware relationship was critical to making the best products, but, for the most part, the software, is not sold on its own and most software businesses within Apple are small relative to hardware sales. In laying the groundwork to launch media devices Apple successfully commoditized music, television, film and game content and gave it to the consumer, so the company could make its profits on the hardware. Jobs compared the company to BMW and if you look at the product lives and update cycles, they are not dissimilar. “I am going to sell you the greatest thing the world has ever seen, and then I am going to show you why it is inferior to my new greatest thing the world has ever seen.”

Amazon is a software company and it is slowly but surely turning its retail products into software. Unlike Apple, hardware only exists to facilitate the software transactions. The company built more software than any other retailer on the planet, but like Apple they don’t sell it. All of the coding goes into an invisible infrastructure with a public appearance that is charitably described as "dated" – but in the case of Amazon this is its strength, not a weakness. With many, if not most of the same content relationships as Apple, the company sells streams as well as downloads. However, Amazon makes its money on the content sales. The company looked to its first hardware device years ago as a lost leader to enable increased engagement with consumers, and higher margins on content sales. In determining what people want in a device, Apple found people did not always need the power of a computer. So it looked at computers, pared them down to the most common uses, put them on a tablet and sold them at a great margin. Amazon realized people did not need all of the expensive stuff built into an iPad, so it pared its tablet down to the most common uses, and priced it slightly below cost. In doing so, Amazon commoditized the tablet. Amazon did not steal the concept of selling digital media into their own hardware, and the first Kindle actually launched well before the iPad. But it did steal, the concept of content over hardware. Every other company was trying to make a better table than Apple, and some did. Amazon was the first to realize they could launch a worse tablet, so long as consumers were able to easily do the things they like most. Choices are limited, but they are limited to what people want. They want this stuff so much, they bought a million Kindle Fires a week. This story plays out like John Woo directed it. Apple is underpricing Amazon on the content, while Amazon is underpricing Apple on the hardware – unless you look just out of frame at the bigger gun Amazon is pointing at Google.

If you are reading these words, you just spent a whole bunch of time reading gaseous belch about why content and access to content are more important than hardware in the tablet world but nothing about Amazon fighting Google. This is where it all comes together. The consumer only cares about content and the providers and creators of content care about getting paid for content. Payment depends on the size of the installed based and the ability to settle a transaction. Because there is no single source of content and Google is still asking nicely for people to put their credit card data into a Google Wallet, no one really gets paid for selling content on Android. The only money made, even on apps like Angry Birds, is through advertising – and for obvious reasons, Google is just fine with that. But before a content provider decides to release an application for free and support it long enough to grow a base large enough to generate significant revenue, it has to run on Android. Therein lies the rub.

Unlike Apple with its single OS and device, Android has a variety of flavors and devices and they are not all the same. Deployment on Android reminds many of the bad old days of PC development because applications must be tested across many platforms and configurations. Kindle Fire to the rescue. By building the Kindle Fire on a customized layer of Android version 2.3, (Gingerbread) and then selling it to 14 million people, Amazon created the second largest homogenous base of users in the tablet world and by far the largest homogenous base of Android users and the only one with a built in payment method. This should be a big win for Google. Just like IBM carried Microsoft's OS to the world like a virulent, pestilent disease, the Kindle Fire is spreading Android over iOS and finally making it worthwhile for developers to invest time in apps. Right? Not really. Amazon is giving consumers a better reason to shun the higher functioning, newer, pricier Google Android devices in favor of the neutered, smaller tablet running a two generation old OS. All in all, this turns into a big plus for Apple. Apple will continue to make BMW's and Amazon will make Chevy's. The market needs both. A Chevy does what a BMW does - gets you from home to work and back again with the occasional trip to see a movie - and for its real world uses, performance is identical. But people buy BMWs for a few added bells and whistles and all those things they will never do with the car, but can. And of course the prestige associated with telling the world you paid more for your car than a comparable Chevy.

I could argue Amazon is killing Android, but it is not. Google is killing Android. Even though Google is touting the virtues of Android 4.0 (Ice Cream Sandwich), it continues down the same path as earlier versions. Specifically, it will not run on all prior hardware devices, it is will not be universally deployed, and it will be operating on a number disparate hardware platforms. No matter how much Google says it is the same, the hardware will cause variation in performance that impacts the applications. The decision for content providers looking at developing for a disparate base with no payment method vs developing for a large homogenous Kindle Fire base with a built in payment method and promotional channel is very easy.

Begging the question, without the quality applications, can Google grow 4.0 as quickly or successfully as Amazon grows the Kindle Fire? With Kindle serving as a gateway drug to iPad's and slowing Google's march, I have to think Steve Jobs is smiling somewhere.

Check it Out: Facebook Games Get Deeper Edition

noreply@blogger.com (Anonymous) — Mon, 03 Oct 2011 17:04:00 +0000

I am not one to argue Farmville is not a game. I love Zynga's ability to show over 100 million people they really like to play games on line. But what about people who play other games and quickly grow bored? This market has been rumbling for a while and they seem to have found one of the first games. After receiving great reviews and feedback at E3, Liquid Entertainment and Atari's D&D: Heroes of Neverwinter made it to Facebook.

Go ahead, jump in and play. Almost 300k other people did in the first week or so . . . . .

Publisher Trash Talk: The Cadillac of Game Publishers Edition

noreply@blogger.com (Anonymous) — Wed, 24 Aug 2011 19:20:00 +0000

EA and Activision's back and forth banter is making a lot of press - and is certainly fun to watch - but it is sadly nothing new. Those of us enjoying our formative beer imprinting years during the rise of Corona may remember the workers are pissing in Corona rumors started by US Heineken distributors and there are many other similar stories over the years. While at a car show in Pebble Beach over the weekend I came across an old Cadillac ad providing the best way to address these campaigns. In those days they did not use the press, they did not use a whisper campaign, they just talked about themselves.

In 1915, when Cadillac was establishing its reputation as the "Cadillac" of cars, it was the first to market with a V8 Engine. Packard, the major competitor, did not like this and responded by spreading rumors about reliability. The lead copywriter was frustrated by all of the misinformation in the market and tried to figure out the root of the problem. After much thought, he identified it as "The Penalty of Leadership" and sat down and dictated what would become the "Cadillac of responses" for use in the Saturday Evening Post:

In every field of human endeavour, he that is first must perpetually live in the white light of publicity. Whether the leadership be vested in a man or in a manufactured product, emulation and envy are ever at work. In art, in literature, in music, in industry, the reward and the punishment are always the same. The reward is widespread recognition; the punishment, fierce denial and detraction. When a man’s work becomes a standard for the whole world, it also becomes a target for the shafts of the envious few. If his work be mediocre, he will be left severely alone - if he achieves a masterpiece, it will set a million tongues a-wagging. Jealousy does not protrude its forked tongue at the artist who produces a commonplace painting. Whatsoever you write, or paint, or play, or sing, or build, no one will strive to surpass or to slander you unless your work be stamped with the seal of genius. Long, long after a great work or a good work has been done, those who are disappointed or envious, continue to cry out that it cannot be done. Spiteful little voices in the domain of art were raised against our own Whistler as a mountback, long after the big would had acclaimed him its greatest artistic genius. Multitudes flocked to Bayreuth to worship at the musical shrine of Wagner, while the little group of those whom he had dethroned and displaced argued angrily that he was no musician at all. The little world continued to protest that Fulton could never build a steamboat, while the big world flocked to the river banks to see his boat steam by. The leader is assailed because he is a leader, and the effort to equal him is merely added proof of that leadership. Failing to equal or to excel, the follower seeks to depreciate and to destroy - but only confirms once more the superiority of that which he strives to supplant. There is nothing new in this. It is as old as the world and as old as human passions - envy, fear, greed, ambition, and the desire to surpass. And it all avails nothing. If the leader truly leads, he remains - the leader. Master-poet, master-painter, master-workman, each in his turn is assailed, and each holds his laurels through the ages. That which is good or great makes itself known, no matter how loud the clamor of denial. That which deserves to live - lives.

The ad was a huge success. When asked why it worked, Theodore MacManus, the author had a simple reason. “The real suggestion to convey is that the man manufacturing the product is an honest man, and that the product is an honest product, to be preferred above all others.”

I know we do not talk like this any more, but its sure gets to the heart of the matter. It is really the same message Steve Jobs conveyed years later in the Think Different campaign - but with teeth and venom. He is not weighing right or wrong, or high road or low road. It is a collection words assembled to completely and articulately deflate anyone who chooses to challenge them off the playing field. If you have a product to put against my product, have at it. Otherwise, keep your mouth shut.

How much cooler, and more effective, would either side have sounded if they read this before they responded. I realize you can not use such a large collection of words in our age of sound bytes and sub 140 character strings of characters. But translated in today's terms, they could have just said "The two games are releasing within weeks of each other. We are confident the market will prove us right."

Gamestop: Used Games, We Just Can't Quit You Edition

noreply@blogger.com (Anonymous) — Tue, 23 Aug 2011 23:25:00 +0000

After realizing my call for the destruction of Gamestop was for naught, I had to come to terms with the need to accept their business model as a fact of life - even though they are killing the geese who so lovingly innovate, fund, develop and so lovingly deliver golden eggs into their grubby, cold, clammy, unappreciative hands. I even moderated a panel with Gamestop's CEO, and kept my opinion to myself . . . mostly. But do I really have to accept their repeated efforts to persuade us their actions are good for the business. Does the crack dealer stand on the corner and say he is enhancing the junkie's lives, or does he just take their money? Gamestop senior executives do understand that if they have to keep repeating that their actions are good for the industry, they are probably not good and constant repetition will not make it so.

In a recent interview in Edge, Mike Mauler, EVP of Gamestop International said:

"I can understand the feelings," he tells us, "[but] we've sat down with developers and publishers and really gone through the data. I personally think there's a lot of benefit to the publisher.

"A great example is sequels, where there's a large percentage of people who are just not going to spend $60 every single year without being able to do something. They'll look at their shelf and see ten FIFAs, Pro Evos or Maddens.

"Being able to take the older one and do something with it in order to buy the next version is really important to consumers. That drives new sales quite a bit."

To say this is the stupidest thing I ever heard would be an insult to the memory of the pitch I heard for the sperm racing game. This whole new level of stupidity is inconsistent on it's face. He explained the data TO developers and publishers and HE personally thinks there is a benefit? He could not say the game makers see the benefit. He may as well have said he spoke with the plant in his office - or the other EVPs.

I understand they can no longer spew the used car analogy with a straight face, but couldn't they come up with something better than the rest of the argument? The sentence seems to be missing a few words "a large percentage of people who are just not going to spend $60 every single year IF WE GIVE THEM THE OPPORTUNITY TO SPEND MUCH LESS." Isn't this like saying, no one will pay to see Transformers 3 because they just saw Transformers 2 a couple years ago? If Gamestop was not reselling these games at 10% off the very same week they come out, and less every week thereafter, consumers would be pay the USD 60. Those who won't pay will go online and download the older version on XBL or PSN, where the publisher who funded the game and took the risk can be properly compensated. Gamestop, or should I say the Mother Theresa of the game industry, is really not helping anyone by taking the old games off their hands, or capturing all the money they generate. We still get back to the fundamental fact that publishers take risk to make and market games and only get paid on the one sale, while Gamestop profits from multiple sales of the game. Each downstream used sale is one less unit sold by the publisher and therefore less revenue on the game. This impacts initial sales as well as re orders. A healthy stock of used games means Gamestop will not reorder from a publisher.

If this was the whole picture, I could stop here, but you know my posts are never this short. It is time to for Gamestop to fess up and acknowledge their real business. Relative margins reveal Gamestop's actual business to be the collection and resale of used games. New game and accessory sales revenue may equal or exceed the used game revenue, but they do not come close to matching the profit. The stock of used games is financed by the very publishers who are being harmed by the market. They put up the risk capital to make and market the game and put the unit on the shelf. Publishers receive a one time, per unit fee for putting the game into the Gamestop system and are required to pay marketing development funds to Gamestop to have posters and other promotions in store. But Gamestop does not pay for the games, customers do. Gamestop only provides credit until the games are sold. The consumers' payment covers Gamestop's initial outlay, plus a profit. Because Gamestop pays on terms, the consumers' money is in the bank before Gamestop ever makes a payment on the new game units. If the consumers do not sufficiently cover the expense, Gamestop will call on the publishers for price adjustments and protection. While this business shows a profit with no downside risk, the entire retail side is merely a highly cost effective way of funding the used game inventory. To ensure return of the games, consumers who buy a games are bombarded with offers to turn them back in for credit. Each turned in game builds the used inventory, at no cost to Gamestop. When sold, the only person receiving the benefit, is Gamestop. When I put it this way . . . . I don't want to say it sounds like laundering, but . . . . . They take a game unit a publisher should get paid for, run it though a consumer, and turn into a game unit they can sell over, and over, and over, and over without compensation to the publisher.

I feel better now.

Privacy 2.0: Google and Facebook's New Definition Edition

noreply@blogger.com (Anonymous) — Fri, 12 Aug 2011 17:06:00 +0000

A while back ago I wrote a big, long rant about the lack of privacy on line. I was, and continue to be, frustrated by the non-consensual insertion of Google and Facebook’s appendages into the most personal crevices of our lives. The growth engine of Web 2.0 - are we on 3.0 yet? - is the aggregation, analysis and leverage of personal information. Web sites are able to passively collect the very same information people used to have request in person. While this collection is the most significant invasion of our privacy since the Spanish Inquisition, We are not able to use the word “privacy” to describe the action because the major benefactors of our ignorant largesse co opted the word. Kind of like when liberals rebranded “progressives.” The current rebranding campaign was launched a while back and continued in earnest at panel discussion on social media sponsored by Marie Claire magazine. Ms. Zuckerberg, sitting with Eric Schmidt and Erin Andrews, victim of cyber harassment, told the audience:

People behave a lot better when they have their real names down. … I think people hide behind anonymity and they feel like they can say whatever they want behind closed doors.'

What kind of asshole could argue with this? Certainly not the one writing this post. But who said the privacy we are concerned about relates to our relationships with others on the web? Sure, the inner bully each one of us suppressed upon graduation from high school may be seduced by the anonymity afforded by the Web, but do Facebook and Google really have to be the Web police. Cyber bullying is a crime and when committed, offenders are prosecuted - Andrews offender is in prison. We do not need them to analyze the Web’s capture of our mental phenotype, but they need us. Facebook and Google were on stage with the victim of an egregious attack to steal the very relevant definition of the word “privacy” and create a new one more favorable to them. They cannot stop the public debate over privacy, but they can certainly change the meaning of the word. Change "privacy" from the ugly reuse of your communications and clickprints and turn it into the "we are here to help make sure no one hurts you."

I learned this one in Philosophy 1 at UCLA. If you frame the argument, you win. No one in the world would advocate anonymity as a shield for bad acts, but this is not the privacy we must demand. We should all be concerned with the access, use and sale of our data by Google and Facebook. Not only are they using the data in ways we cannot imagine to influence everything from loans to job applications, but our very worldview is being shaped by the targeted provision of the search results and newsfeeds we naively believe to be objective. As Eli Pariser outlines in his book The Filter Bubble: What the Internet is Hiding From You your Facebook news feeds and you search results arrive only after they have been filtered by algorithms to determine what “you will like best.” You are not seeing your most active friends lives on Facebook or benefiting from Google’s patented “Page Rank” algorithm. You are receiving what they “think” you will like based on your profile and their determination of how to maximize click through. The gap between our perception and reality is a cloud on our worldview and since Google holds the position of the number one search site in the world, the cloud is a breach of the public trust. Their excuse – “ we are only here to make things better for you” – kind of sounds like it should be coming from a disembodied voice while we sit in a clean white room eating Soylent Green.

Of course they cannot do all of this without our consent, and they say they have it. They hide behind a EULA to say we consented and the use of the information is explained in their privacy policy. They even send us emails every time the privacy policy is changed. But if they think we read the EULA, they are on crack. Some may say it is our own fault for not reading the agreement but the thing was not written as a disclosure document, it was written as a cover your ass document for lawyers forced to defend against zealous class action lawyers. The consent language in the document is incomprehensible to a non-lawyer and a big nebulous gob of ambiguity to lawyers. EULAs are the rufis of the contract world. Facebook and Google are not the only ones who use them.

Every piece of software we use takes advantage of this legal fiction. It is even the thing you did not read but clicked agree to be able to buy stuff on iTunes. Sure software is only rented and we cannot copy, blah, blah blah, but nobody was indexing and analyzing the words I typed after I clicked on the agree tab and started using Microsoft Word. This body of contract law, which was created to protect the creators of software after the fruits of their labor were released into the world somehow morphed into a tool to extract consent to data, capture from consumers.

Can we really consent to the use of our data if the consent was not knowingly granted and the party acting on the consent had reason to know the contract was never read?

How about getting rid of the EULAs and instead, use a nice, big, bold, cigarette pack statement:

WARNING: USE OF THIS PRODUCT MAY BE HARMFUL TO YOUR PERCEPTION OF THE WORLD, RELATIONSHIPS WITH FRIENDS, ABILITY TO SECURE CREDIT AND FUTURE EMPLOYMENT OPPORTUNITIES. WE WILL INDEX AND HOLD ONTO YOUR DATA FOREVER, CREATE A PROFILE OF YOU, AND USE IT FOR THINGS YOU CANNOT EVEN IMAGINE.

Check it Out: The Start of Something Big Edition

noreply@blogger.com (Anonymous) — Fri, 01 Jul 2011 14:52:00 +0000

Incinerator Studios launched their new Playdek venture with Ascension: Chronicle of the Godslayer - much more to come soon. Don't listen to me though, I am biased, check out the five star average from the 77 ratings that came in during the first 24 hours of the launch and read the reviews in the store.

Here is a better description than I could write:

Ascension: Chronicle of the Godslayer, is the first officially licensed deck building card game for iOS. Play alone or with friends to battle against the Fallen One for honor and victory. Conceived and designed by three Magic: The Gathering tournament players, Ascension will provide hours of engaging and strategic game play for enthusiast and experienced gamers alike.
For millennia, the world of Vigil has been isolated and protected from other realms. Now, the barrier between dimensions is failing, and Samael, the Fallen God, has returned with his army of Monsters from the beyond! You are one of the few warriors capable of facing this threat and defending your world, but you cannot do it alone! You must summon powerful Heroes and Constructs to aid you in your battles. The player who gains the most Honor Points will lead his army to defeat the Fallen One and earn the title of Godslayer!

FEATURES

Full asynchronous support for multiplayer online games
Play against multiple A.I. opponents using varied strategies
Play against others with “pass and play” multiplayer
Introductory tutorial to teach you how to play
Enhanced visual optimization for iPhone 4 and iPad using high resolution graphics designed for the retina display
Maintain and save multiple games
HIGHLIGHTS

Recruit Heroes and Constructs to bolster your deck
Defeat Monsters for Honor and rewards
Automatic cleanup, shuffling and scoring
Universal App – play Ascension on iPhone 3Gs, iPhone 4, iPad, iPad 2, iPod Touch 3, or iPod Touch 4 for a single low price
1st officially licensed deck building game for iPhone and iPad
Over 50 beautifully detailed cards, hand drawn by Eric Sabee
Version: 1.0
Platform: iOS Universal App