A Tree Falling in the Forest

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

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.

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 (Keith) — 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 (Keith) — 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 (Keith) — 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 (Keith) — 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 (Keith) — 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

Microsoft Goes Hollywood: Sequels Are Never As Good As The Original Edition

noreply@blogger.com (Keith) — Mon, 20 Jun 2011 00:05:00 +0000

Our business is growing more like Hollywood every day. Budgets go up and publishers, like studio executives before them, rely more and more on established franchises to hedge their bets. We are just as used to seeing things like Transformers 2 and 3 or Hangover 2 as we are to the ensuing debate over whether the sequel is as good as the original. But this time Microsoft has gone just too far. In fact, so far, there is no need for a debate.

For those of you who do not remember, just before the launch of the 360, Microsoft invented J Allard

and he was good.

I can't help watching the interview and wanting to buy a 360 all over again. But J left and Microsoft decided to make the sequel.

C'mon guys . . . J worked, but can't you come up with something new?

THQ Defends the Homefront: Life Imitating Art Edition

noreply@blogger.com (Keith) — Fri, 18 Mar 2011 16:29:00 +0000

Despite massive investments on the front end, most publishers abandon recently released boxed titles, leaving to fend for themselves like orphans in Dickens' London. Can anyone point to support for Ride from Activision, or Saboteur from EA after launch. Even Mercenaries 2 was left flapping in the wind. But THQ either picked something up during the development of Homefront - thank you John Milius - or chose this time to display the massive set of balls tucked away in the closet for so many years.

As I wrote a couple days ago, the company took an unfair valuation hit due to the compounding effect of a low Metashitic score coupled with an overzealous gaming press. The press ignored the downward trend of the entire industry for the days leading up to the decline and slammed THQ, leading to uncertainty in the financial market. Those guys in mainstream somehow believe the game journalists are experts and use their drivel to provide advice to their clients. The problem is exacerbated by the publisher silence endemic to boxed game release. For a nano second it looked like it might be business at usual at THQ. The press reported the low Metashitic score, and the company was silent. Then the press gleefully reported price cuts at Walmart and Amazon - bite the hand that feeds you much? Then, with the responsiveness of a protective parent, THQ immediately went on the offensive citing first day sales of 375k units. Knowing the nature of the gaming press, THQ took it direct to the world. Mainstream outlets like USA Today and Forbes printed the real story and questioned Metashitic. Unlike the apparently biased James Brightman of Industry Gamers who feels a strange compulsion to add unsupported personal negative commentary to every positive statement, these outlets reported THQ's statements and statements from the company, and analyst reports, shockingly, as analyst reports without commentary. THQ further stuck back regarding the price reductions indicating they were one day only and not an attempt at inventory clearance.

With a strong air campaign in effect, THQ put boots on the ground. Danny Bilson led the charge with his announcement of the need to add servers for multiplayer. He has been touting multiplayer all along and judging by the server access and forums, people seem to like it. I would like to think THQ did not have their hand in it, but in stark contrast to their own review Joystiq posted a curiously positive metareview with each excerpt nailing the THQ multiplayer talking points. I would like to think Joystiq is independent and they did it on their own, but it was posted the same day as a bunch of other THQ posts which give it the feel of coming out of a press call. Anyone who remembers the initially negative reviews of COD: Modern Warfare 2's single player knows multiplayer is the key to longevity for a shooter and THQ is wise to make it a focus of the fight.

I am not going to defend Homefront as the greatest title ever made. There is no question it is a waffle product. Fully baked and hints of greatness in some spots, raw in others and burned in a few more. The title, the sales, the quality and the longevity are completely irrelevant The question the financial community should be asking is not how the critics like it, but whether it will sell. THQ set a realistic goal for break even and a number of analysts are confident they will hit the goal. The message to take away from the launch is there is a new THQ. THQ can now stand proudly as the shining publisher on the hill that supports its developers and stands proudly behind its own product, even after it is out the door. While the gaming press does not have the ability to sense the humiliation of being so completely wrong and change, THQ gained credibility in the eyes of the consumers, Wall Street and the mainstream.

Metacritic Attacks on the Homefront: Call to Arms Edition

noreply@blogger.com (Keith) — Wed, 16 Mar 2011 17:25:00 +0000

Metacritic is an intrinsically flawed concept based on a corrupt ecosystem. It would not be an issue of the game business, like film, music, television and everything else tracked by Metacritic ignored the numbers. I have never seen a film’s failure supported by a headline pointing to Metacritic. Nor have I seen the film press trumpeting the unthinkable number one position at the US box office of Battle: Los Angeles despite its score of 37 – a number which would get any game development executive fired. Why then, do all of the major game news outlets report THQ’s lost 26% of its market value yesterday because Homefront got a 71 – unless you look at the sidebar which says it got a 72, or PS3 which got a 75. Using this logic, we must also conclude the most recent add on DLC for Call of Duty: Black Ops did not sell well because it scored an anemic 78. and we should be stumped by Take Two’s decline despite the 88 achieved by Top Spin 4 on the same day as Homefront. Maybe this is because even Metacritic acknowledges the score does not influence sales. Ironically, and as suggested on this very blog months ago, the same site reported NPD finally acknowledged the company does not really know how many games are being sold. The industry is able to acknowledge NPD is flawed and acceptance of the numbers caused harm. NPD finally admitted we cannot use hindsight to determine how many units are sold. When will be able to acknowledge Metacritic cannot use foresight either?

I've written about Metacritic way too much already, but I just can not stop doing it. Just when I think the site has stretched credulity to the limit, it goes further – and the press buys it. I wrote about the inherent lack of integrity,t he questionable scores that do not get corrected and the critics, who are somehow, but not directly, related to the scores. I find myself having to do it again. I am not going to try to defend Homefront, but once again, it leads to questions about the system itself. The Metacritic score is more a function of THQ’s poor management of the critics , marketing budget and the consumer than the game itself. Little things, like the company’s failure to release a demo removed the core gamers’ ability to make a decision on their own and forced reliance on those who actually had an opportunity to play the game – the critics . The critics who give the scores must be nurtured, supported, provided information and in some cases, publications must be bought. If the words of the critics about the publications themselves are not enough to solidify the point, gamers need only look to the correlation of exclusive covers and game scores. Cover exclusives are secured months before a game is ready to actually be put on the cover. Is there any possible way the magazine with all the game ads in it can know the game will get a 9 out of 10 when it secures the exclusive? So how does it always happen? How about those great big site ads on the sites with the high scores? These are the only the obvious ones. This corrupt system is then passed through an admittedly bias filter to provide a gentle butterfly’s kiss of influence on a Metacritic score.

If we accept the most recent high scores on Metacritic we would conclude XBL/PSN games are better than boxed product. Not only do the new ones score disproportionately higher than boxed product, old games, when released on XBL/PSN seem to age like fine wine. Homefront's lower scores mentioned dated gameplay, but then I noticed the re release of Beyond Good & Evil scored an 85, only two points lower than the score it received when it was first released eight years ago. Of course the sites selected by Metacritic were different than the ones selected for Homefront.

I became curious as to how an eight-year-old game with refreshed graphics is able to outscore Dragon Age II. Sure, a classic is always a classic and if you are looking for a game with a girl, a pig and a camera, nothing else could compare, but in this day of immediate gratification and ever improving interaction, but when bits of old games are maligned, how does the entire assembly retain its rating? So I clicked through to the reviews. I usually start with the highest and lowest scores. The highest was a perfect 100. As in the past, Metacritic gave the score to a bunch of words without a number. If no score is given Metacritic gives one based on what the company believes to be the tone of the review. Unfortunately, I could not determine whether Metacritic was right because the review was written in Greek and there was no translation on the page. Really, I cannot make this stuff up. Google's translate application gave me this:

The gaming industry is a little more time passes quickly, but it is the same or even more relentless and without grief. The Oblivion is not slow to come, and a masterpiece may just within months of its release, becoming a "classic creation" of those who, as usual, nobody has played.

I guess that could be a perfect score – on some planet. I do not have all the data In front of me, but I am going to go out on a limb and say the Greek game market is not one of the world’s largest. Moving further out, I would venture to guess the portion of the audience influenced by game reviews written in Greek is neither the majority nor the most influential. Why is this review given the highest score and included in the computation despite its outlier status?

How and why do we take this site seriously and why are we not up in arms when the completely arbitrary score, purporting to be an aggregation of an irrelevant and corrupt ecosystem can remove a quarter of the value of a company in a day? This is no less than an attack on our business. An attack on THQ is an attack on the advances in the eyes of Wall Street made by EA, Take Two, Activision and every other company in our industry. When will we mature enough to know a rising tide lifts all boats? EA and Activision both stood up this week to finally point out the fiction perpetrated by NPD for all these years. Isn’t it time we did the same to Metacritic?

In Defense of Console?: The Sky Is Not Falling Edition

noreply@blogger.com (Keith) — Mon, 14 Mar 2011 16:06:00 +0000

Before I get started I have to say a word about priorities The first quarter is always a tough one. Products, trade shows and return to work always conspire to make this period a difficult time to prioritize our lives. Last week I was smacked in the face by the deaths of two people well before they were done living. They both spent extended periods of time fighting disease, so the deaths were not a surprise, but nothing can prepare kids who are still kids bury their parents, or parents to bury their child. It is the wrong order of things. I hope no one reading this has to see these things around you, and especially not coming in pairs in a single week. Then we were all struck by the incomprehensible tragedy in Japan. With all of our friends and colleagues in our business tragedies that seem so distant when they happen in other parts of the world, suddenly strike very close to home. At the risk of sounding overly dramatic, I must put down in text that as much as we get wound up in what we do and how important our business is, we are just making games. Games can inspire, entertain, illuminate, educate and a whole bunch of other great things, but at the end of the day, we are not curing cancer - yet, and we are not bringing world peace - yet, so I took a few moments today to remember my priorities.

The big news coming out of GDC seems to be the attack of the mobile device. Stories seem to fall into two camps. People with vested interests in the devices or the games say the days of the Microsoft/Sony/Nintendo triumvirate are over and people on the console side of the world who look at iOS/Android games as a horrible virus, threatening to infect the hearts and minds of gamers and developers alike. Of course journalists continue to the stoke the fire, like James Brightman of Industrygamers.com who seems to be losing faith in the console business model. Everyone assumes the two markets are some horrible combination of cannibalistic and mutually exclusive. They are neither.

I may be relying once again on my brilliant grasp of the obvious and therefore cannot fault others for missing the parallels, but we have seen this same scenario play itself out in every other form of media. iOS, Android and digital distribution are not new media or even new games, they are new distribution channels. Media will adapt and specialize just as stage plays turned into movies and movies turned into sitcoms, but right now, they are just removing friction between game makers and customers. Whether we are talking about the impact of printed books on storytelling or DVDs to film, over the entire history of media expanded distribution expands the opportunity for content creators. But no one sees it immediately. Every time a new format is introduced the old formats feel threatened. Film was perceived as a threat to live performance, but a walk down Broadway or London's West End proves the concern to be overblown. Similarly, television was perceived as certain death for film, DVDs for theatrical release and even the remote control to sponsored television. In each case, the market only expanded - and we are seeing it in games.

According to Appdata, at one point Cityville hit a high of over 101 million monthly average users. This is over 10 times the sales of a blockbuster console game, just about 10 times the size of Warcraft and 5 times the purported life to date sales of Grand Theft Auto 4. Rovio is reporting similar numbers with Angry Birds. These titles are reaching and converting tens of millions of new consumers our industry never reached before. These consumers never knew they liked games, and they are finding they do. We joke about the crack model, but it works. They will get hooked on iOS and a chunk of them will move to mid core on the PC and a chunk of them will chase the high right onto the console. We already saw this with the Kinect. I remember a time not too long ago when a platform was considered to have achieved critical mass if it did 1 million units the first holiday season. Kinect has done 10 million to date and these are not core gamers. Social games core audience of middle age women and Kinect’s target marketing on places like Oprah are no coincidence. Consumers already accepted the up sell, all we need to do is convert them to game buyers.

I used this quote about half a year ago, before Call of Duty: Black Ops and Red Dead Redemption, when these same people were saying the console business was dead and I pointed out it why it is not. It comes from an investor in Avatar explaining why he went ahead and invested a film would not earn out unless it was among the biggest films of all time.

“I was really impressed by their understanding of the business, that there is so much competition these days for people’s leisure time that you have to create something you won’t find on TV, on computer games, the Internet, to draw audiences into the theater,” [Avatar Investor] Clayton says. “This wasn’t purely a creative process for them, like it is with some producers. Jon and Jim absolutely understood the need to cater to audience tastes.”

We have an expanding audience of gamers - I hate use the word "gamer" someone who plays games is no more a "gamer" than someone who watches television is a "televisioner" or a movie lover is "movier" after this sentence, let's stop using it - If we want them to use a 3DS, NGP or console, all we have to do is give them an experience they cannot have on an iPhone. While NGP is moving dangerously close to the iPhone model and thereby begging the consumer question, “Why?,” Nintendo’s hardware telegraphs a different gaming experience. iOS and Android eliminated inefficiency, but so far, they have not made games better and even though Angry Birds sells well – amazingly well – we have not seen a platform defining game. To date they prove games are fun and people are willing to play them if we do not require them to leave their homes and pay USD 60. They did impact our ability to sell some handheld games, but their major impact on the dedicated market is eliminating the ability to sell crap. Before iOS, if Nintendo did not sell games for a dollar, they did not happen. Now Nintendo does not control the whole market. When Iwata-san or Reggie Fils Amie talk about the threat of casual, it should be music to consumers’ ears. What they call a threat, consumers call competition and it translates to better games. Now Nintendo and all other third party publishers must earn the premium dollars they are charging. We are already seeing it on console.

As the film business matured and downstream revenue and amortization opportunities emerged we saw the introduction of the blockbuster turn into the requirement of the blockbuster. If you want to see a return on your film, you are either making Transformers, or Paranormal Activity. We are getting to exactly the same place in games. The good news is the market responded and is turning out high quality, blockbuster product that cannot be played on anything but a console. Last week I watched my son play Killzone, with the Move controller and peripheral - until I stole it and started playing myself. We could not have this experience on an iPhone. Sure this is for core consumers, but anyone in the business will tell you, we sell into the core first and then expand the market toward the mainstream. The iOS/Android market is dramatically and exponentially expanding this secondary market. To really see the vibrancy of the market, we need not look to Killzone and peripheral driven games, just look at the player minutes in Black Ops or pent up demand for Dragon Age II. But no one will argue that making blockbuster games is hard, expensive and risky.

In his article, Mr. Brightman believes it is so hard we should quit making them and focus on the obscenely profitable model enjoyed by Angry birds. Mr. Brightman is absolutely correct. Paying USD 140,000 for a game that returns USD 70 million is much better than paying USD 20 million plus for a game requiring 2 million units with an average sale price of USD 60 to break even. He could say the same about the television model in which The Simpsons producers an entire season for a fraction of the cost of a tentpole film and goes into its sixth or seventh or twelfth syndication run generating tens of billions of dollars is a better model than the film business where a tentpole film needs multiple release windows to generate a much smaller return. But Mr. Brightman has only provided half of the equation. I am waiting for the follow up article telling us how choose Angry Birds as the game to pursue out of the other 99,999 being started right now, or instead of the 51 games built by Rovio prior to Angry Birds. Hollywood will pay big money to be able to extrapolate the model into television in film so they can start to know which of the 95% of the television pilots should not be made. It is very easy to focus on the profitable title after the fact. But in markets where half, or less than half of the product makes most of the profit, it is impossible to figure out which half not to pursue. Fortunately, the casual market helps out here as well.

Blockbuster games require large investment, making publishers risk averse. They tend to relay on proven forecastable formulas, quickly leading to clichés. Consumer fatigue sets it in as originality wanes. While it is ill advised to introduce disruptive game play in a USD 40 million game, as the CEO of Rovio pointed out to Venturebeat as he argued console games are dying, iOS game allow for innovation (is it worth pointing out to Mr. Vesterbacka that iOS is in fact a console and he pays 30% more to Apple as a percentage of revenue than we do to Sony or Microsoft and even Android is a platform in the sense Google approves the apps for ads and keeps over 100% more of the revenue than Microsoft or Sony?). In fact, it is brainless not to take a risk in an iOS/Android game and short sighted not to try in a downloadable. Many original game ideas will fail – and that is the beauty. Once again, we have a market where identification of failure costs tens or low hundreds of thousands of dollars, rather than tens of millions. as we just saw with the investment in Rovio, investors and publishers can start to look at successful games and pay the “I did not have to pay for failure” premium to acquire games and the companies who make them.

Rather than looking at the casual market as a blanket threat, we should look at it as a return to the old days. More consumers coming to the market. More opportunity to test new game ideas. More downstream revenue windows and more amortization opportunities to support larger investment and hedge risk.

Googles Pimp Hand is Strong: The Dirty Little Secret Behind App Revenue

noreply@blogger.com (Keith) — Sun, 27 Feb 2011 19:15:00 +0000

I wrote this about a year ago because I did not like the commoditization of content going on in the iTunes store. As games creators started to build for the store, I saw the train and I saw the wall. I just did not know how much track was in between. There seems to be a false sense of creator liberation, leaving the indentured servitude of the evil publishing overlords for a life of rainbows, unicorns and green fields of "direct" publishing and direct contact with the audience . However, as I pointed out over a year ago, the iTunes store is not the haven for creator profitability, it is really an aggregation of stuff large enough to create a compelling argument for the purchase of a high margin piece of hardware. This picture is not so pretty, but it looks like the work of Ansel Adams relative to Google's impact. Through Google's admob's division's domination of the app market on both iOS and Android systems, Google has turned game developers from indentured servants to whores.

Today's game maker is indeed selling directly in a meaningful way for the first time since about 1994, but they are receiving only USD .70 to USD 7.00 per unit sold. App development is running anywhere from tens of thousands of dollars to over a million for things like Infinity Blade, with most of the top selling apps falling in the USD 200,000 to USD 400,000 range - or about the same as the last time developers sold directly in a meaningful way. Some may argue the market is larger, but this pricing scenario certainly does not make for the robust market console and PC games enjoyed when the budgets were at those levels and publishers were taking anywhere from USD 39.95 to USD 99.95 per unit sold. Our audience was indeed smaller, but the budget for the first Tomb Raider was within the range of today's apps and generated over USD 200 million - and it was not the only PlayStation game performing at that level. Many will be quick to point out the lack of COGS, but they just also acknowledge, all the customer acquisition costs remain, and are exacerbated by a much more crowded market. I am not alone the only one to recognize the shortcomings of the sale model, in fact, most developers see it and either skip sale altogether, or relegate it to a second revenue stream through by making an ad supported model of their apps available.

A survey of the top app developers reveals advertising as the major source of revenue. On Android, it is the only source of revenue. Google, through admob, dominates both iOS and Android ad sales. Android developers who lament Google's failure to provide an iTunes like presence for aggregation and sale of apps, fail to realize Google has no incentive to do so. While the developer who put time, tears and sweat into an app sees a game or great work of staggering genius custom designed to unseat Angry Birds and bring joy to greater masses of humanity of than any other product in the history of mankind, Google sees only filler. Like television executives, the content between and around the ads and the people who make them are a necessary impediment to business they begrudgingly deal with. Google joined Apple in an even stronger effort to commoditize content.

In his recent book, "The War for Late Night: When Leno Went Early and Television Went Crazy," Bill Carter recounts a meeting Lorne Michaels, iconic producer of Saturday Night Live, had with the head of NBC when he was about to resign his role as producer. Irwin Seglestein, the executive in charge of creative listened to Michaels lay out the idealistic reasons he had to resign before Seglestein explained:

When you leave, the show will get worse. But not all of a sudden- gradually. And it will take the audience a while to figure that out. Maybe two, maybe three years And when it gets to be, you know, awful, and the audience has abandoned it, then we will cancel it. And the show will be gone, but we will still be here, because we're the network and we are eternal. If you ready your contract closely, it says that the show is to be ninety minutes in length. It is to cost X. That's the budget. Nowhere in that do we ever say that it has to be good. And if you are so robotic and driven that you feel the pressure to push yourself in that way to make it good, don't come to us and say you've been treated unfairly, because you're trying trying hard to make it good and we're getting in your way. Becasue at no point did we ask for it to be good. That you're neurotic is a bonus to us. Our job is to lie, cheat and steal - and your job is to the show.

Google's mission is to sell ads. They do not care what the ads go into. If a sponsor does not like a certain type of app, no big deal - to Google - they move on to something else. They have hundreds of thousands to pick from and Google will always be there. The developer, on the other hand, put in sweat equity, incurred opportunity cost and maybe even their own money to get the thing up and running. Even a relatively big developer like Rovio, which built over 50 games before Angry Birds does not have the portfolio or agility of Google. Mobile encourages a high click through, commanding a relatively high cpm. The only thing Google needs are placeholders to prevent the ads from being served into black screens. They do not want your game, they want your audience. In fact, they want the opposite of your game. They want new stuff. They want your game while it is new, and then, like the network, they effectively cancel it and want a new game, thereby leading to an inevitable churn in the app market. For Google churn is good. For an app developer, it is death. Because if Google, far and away the leading ad provider decides it does not want to fill the inventory on your app, you may as well pack it up and go home. This begs the question, if Google is providing your main revenue stream, and the players receive your product for free, who is your customer and what are you selling them? I say it is Google and your product is eyeballs.

App providers rushing into the ad supported market who say their product is a game are no different than dot com guys who were going to get rich selling dollar bills for ninety-nine cents. If most of your games are being given away for free, they are not your product. You are monetizing the network of eyeballs created by the free distribution of the game. You sell those eyeballs to Google. Google will continue to buy those eyeballs, if they are happy with your app. You may get millions of downloads of a free porn viewer for Android, but your customer, Google will not be happy and will not pay for your eyeballs. In this regard, Google's pimp hand is strong. The choice of the app developer is to cater to Google, or hope they can sell enough apps to support their business. While the direct sales model may be stressed by pricing in the iTunes store, there is some light at the end of the tunnel in the form of digital objects and the growth of freemium games.

In this scenario, an app creator shifts the Google focus, and with it the designation of customer and product from Google and eyeballs to gamers and the app itself. Unlike the box it, ship it, on to the next days of console games, purveyors of these apps are building living breathing products and responding directly to their customers' voracious appetite for content. Development costs are often as high or higher after launch as during initial development, but the payoff is a long and healthy revenue stream. Today this remains a much more "roast duck or no dinner market" than the finger twitchy ad driven app games, but hopefully this market will grow enough to allow a migration back to the good old days of indentured servitude and commodity pricing of the iTunes store.

The Stupidity of Crowds and The Wisdom of Aspergers: Death of Innovation in America

noreply@blogger.com (Keith) — Mon, 21 Feb 2011 01:07:00 +0000

A few posts ago I promised to write about metrics based design. The kind of stuff going on inside the social game companies who like to listen to the crowds over the designers. I was thinking and thinking and then I realized that even though it just does not feel right to me, I am a “suit,” not a game designer and I am not going to figure it out. But it led to me to think about a bigger issue. The power of the Internet and growth of social network brings an increased focus to the "Wisdom of Crowds." I've fallen for it too, writing about the hive mind and how quickly a group can come together to solve a given problem. It is easy to be seduced by the aggregated brilliance. I mean after all, how can you question the resource responsible for contributions like Metacritic, Cheez Whiz and Abba?

The crowd wisdom concept did not start inside Zynga. It is attributed to Sir Francis Galton who held a contest at a county fair to guess the weight of a cow. While the guesses of livestock experts varied widely, and none were close, the average of the 1000 guesses came within a single pound. The same experiment has been repeated over and over with people guessing the number of jelly beans in a jar and any number of random objects in equally random containers. This should give us unwavering certainty in a crowd’s ability to determine “average.” Crowds are really good at averages and lowest common denominator. Unfortunately, their power and scale make them even better at quashing new ideas, and innovation. The Japanese say "the nail that sticks up gets pounded down." While crowds can be helpful in addressing issues, they suck when it comes to framing it and we cannot confuse the power to determine mediocrity with the ability to innovate. Innovation happens on the edges of the bell curve. Crowds are the big bubble in the middle. You know, the objects of politicians and television network’s pandering.

Innovation must be strong. We like to use the word “disruptive” a lot. The crowd is a vicious predator of innovation. Crowds ostracize our greatest innovators, the people whose work advanced humanity. When Francesco Redi started his experiments, science “knew” maggots spontaneously generated from decaying meat. Abiogenisis was a known fact since the time of Aristotle. The proof was easy and obvious. Set a piece of meat on a table and few days later there were maggots. Reddi did not believe it, so he put meat in covered jars as well as uncovered jars and proved them wrong. The heretic became the hero, or in Einstein’s words, “to punish [him] for [his] contempt for authority, fate made [him] an authority.” The same can be said for Copernicus, Galileo, Newton, Darwin, Einstein, Pasteur, Salk and Stiglitz. Pioneers of silly ideas like the Earth revolving around the sun or injecting disease from cows to cause immunity. They all made great contributions by not listening to the crowd and today, we remember their names and benefit from their conviction. You would think an educated world would spot this pattern and accept ideas from the edges, but it does not. Even though today’s scientists are no longer subject to death or imprisonment, excommunication remains a fact of life.

I first heard about the phenomenon in a lecture by Nobel Laureate Kary Mullis. Well. . . it wasn't really a lecture, it was kind of a lunch on the beach because Kary loved to surf and if people wanted to hear what he had to say, we had to go to the beach. A group of guys in suits sat at the USCD sponsored event on Wind and Sea beach in La Jolla. Kary told the story about a paper he wrote about AIDS. He started his research paper with the phrase "HIV causes AIDS." As a scientist he needed to find support for every statement, so he started to look for the study supporting the conclusion, and the only thing he could find was a CDC memo written by a non-scientist. It was a statement, not a conclusion and it was completely unsupported. Worse yet, Kary’s research disclosed cases of AIDS with no detectable HIV. When he started to ask about them, the AIDS community got very upset. Undeterred, Kary hypothesized AIDS is made up of tens or thousands of viruses, only a few are visible by current technology. He saw an HIV correlation, but no causation. He theorized AIDS was caused by a pooling of viruses, visible and invisible, through sexual contact into a giant toxic cocktail. In other words, he engaged in the scientific method. He established a hypothesis and published it to be tested. As you can find on the Wiki page about Kary, he gets the “red flag” argument: “Medical and scientific consensus rejects such statements as disproven.” The hypocrisy of the statement would be funny if it did not suck the oxygen out of every alternative theory. The support for these statements and others according the crowd sourced authority is “Confronting AIDS: Update 1988” from the Institute of Medicine of the U.S. National Academy of Sciences. But their argument is based on consensus, not proof:

New information about HIV infection and its apidemiology has emerged either not confirm or alter earlier impressions of the disease. One question that has been resolved is the causative agent of AIDS. HIV and AIDS have been so thoroughly linked in time, place, and population group as to eliminate doubt that the virus produces the disease. The committee believes that the evidence that HIV causes AIDS is scientifically conclusive.

Another report, from the National Institute of Allergy and Infectious Disease applied the Koch postulates to determine whether HIV caused AIDS. The postulates were developed in the 19th century as tests to prove a link between putative pathogenic agents and disease. But even in this report cited as conclusive evidence, the support for the third postulate -transfer of the suspected pathogen to an uninfected host, man or animal, produces the disease in that host – is given as “the polymerase chain (PCR) and other sophisticated molecular techniques have enabled researchers to document the presence of HIV genes in virtually all patients with AIDS, as well as in individuals in earlier stages of HIV disease.” I am not going to address the irony of the reference to the test Kary invented being used to undermine his credibility because the focus should be on the word “virtually.” This means some AIDS patients do not have HIV. Why attack the person who questions why? The purported support is not based on science, it is demanding faith in consensus. No matter how many wrong people agree upon the same wrong thing, it remains wrong. While Kary’s theory made logical sense, in light of the knowledge, or lack of knowledge available in the early nineties, it was too late. The research community latched on to the idea of HIV causing AIDS and research dollars were only available to studies pursuing the HIV/AIDS link. In fact, the pull was so strong; cancer researchers were reframing their cancer studies as AIDS research into Kaposi's Sarcoma and other cancers common to AIDS patients. As a result, AIDS research since the eighties has deviated little from the HIV connection. The very definition of AIDS has evolved from a syndrome to a disease defined by the occurrence of HIV.

I don’t know whether HIV causes AIDS or whether AIDS is a syndrome or a disease. I do know that after the billions of dollars spent in a single direction we are yet to find a cure or vaccine against a disease that’s been killing people since the early eighties. Sure, we can point to prolonged lives for HIV positive people, but if Kary and others are correct, they never would have developed AIDS in the first place. What would be wrong with allowing a couple of Galileos to have a look in a different direction? When no one has an answer, are the pursuit of alternative theories and the consensus theory mutually exclusive?

Through the control of dollars, consensus rules every area of science. I found this really neat website with all different ways to visualize complex data sets. The site displayed this image addressing the scientific consensus around human caused global warming. The image powerfully displays the consensus counter argument against new ideas. In this case, climate change. It kind of gives you and idea of what it is like to be the guy with the alternative hypothesis. "All the cool kids say your wrong." Reliance on consensus must be seen as a red flag in any argument.Sometimes, we get battling armies of scientists from both sides as if the volume of scientists in agreement make a difference. Science is beautiful because no matter how many people believe something to be a certainty, it only takes one person to prove them wrong. It is true 90 percent of published climate scientists surveyed believe in "human caused" global warming. But, as Richard Lindzen, one of 11 scientists responsible for the oft cited 2001 National Academy of Sciences report on Climate change said:

But--and I cannot stress this enough--we are not in a position to confidently attribute past climate change to carbon dioxide or to forecast what the climate will be in the future. That is to say, contrary to media impressions, agreement with the three basic statements tells us almost nothing relevant to policy discussions.

Like Mullis, Lindzen, despite acknowledged brilliance, years of research and peer reviewed support often carries the word “naysayer” when his name appears in print. But he is right. The agreement is characterized as “human caused warming” because they do not agree carbon is the cause and they do not even agree with the pace of warming. In the presence of such great uncertainty and cataclysmic peril, unsupported facts get mixed in with scientific data, and when spun around and repeated enough, they become "true." Just as in the case of the AIDS infrastructure rising from an unsupported fact, in its 2007 the IPCC included a similarly unsupported statement that the glaciers in the Himalayas would melt entirely by 2035. The finding came from a popular British magazine, not from peer reviewed literature. Even though it was unsupported the statement provided a much needed visual to a cause in need of public support and understanding. All of the focus on carbon created a financial, scientific and political industry around management and reduction of carbon, which is suffocating any other analysis or efforts in the area of climate studies. In reality, our climate system is one of the most complex systems we will encounter in our lifetime. Carbon may be the cause, or it may be something we cannot even see or comprehend.

The truth is, we just do not know and the pursuit of a carbon-based solution may be pushing a solution deeper into the future. More significantly, the research and propaganda are leading the public to believe that if we change enough light bulbs and drive enough Priuses, things will get better. Unfortunately, this is sadly untrue.

If the scientists claiming carbon is the major contributor to warming are correct, we are too late. Reduction to zero will not impact the warming trend during our lifetime or likely even our children’s. If the carbon folks are right, the planet is getting warmer and reducing carbon will not help. If the carbon folks are wrong, the planet is still getting warmer and this will not be the first time. We are only parasites to an Earth to an uncaring Earth.

This picture is Edwards Air Force Base desert just outside Los Angeles. It is built on “Lake” Rodgers. The climate changed and this lake, along with the arid farmland a world away in the Sahara disappeared. When the lake dried the shrimp living in the lake burrowed into the ground and waited for rain. It only happens every 25 years or so, but when it rains, they came out. There were no climatoligists around to talk about warming and no scientists theorizing on how to stop it. The shrimp adapted to the hotter, drier climate, and the people adapted. Why aren’t we looking to do the same? There is no reason to stop the carbon research or to be more conscious of the footprint we make, but should the efforts toward living in a changed world be dwarfed so greatly by the hundreds of billions and perhaps trillions of dollars going into carbon reduction? How about some of those dollars going to living in a warmer world? Some more can go to relocating those folks who are losing their entire countries in the Pacific?

So who are the crazy ones? When the crowds are so vocal, a special superpower is often used to fight against them. The very people who are shunned by the crowd for being different are the ones who move us forward. Fortunately, people with these powers have been walking around for years. They were described by a guy named Hans Asperger:

"for success in science or art, a dash of autism is essential. The essential ingredient may be an ability to turn away from the everyday world, from the simply practical and to rethink a subject with originality so as to create in new untrodden ways with all abilities canalized into the one specialty." (Asperger 1979, p.49.)

Einstein agreed when he said “A foolish faith in authority is the worst enemy of truth.”

Asperger defined a syndrome characterized in part by an inability to understand peer pressure or be political - one half of the wonder twin power that makes people with Aspergers so valuable in the face of mob rule. The very attributes causing them to be shunned from the crowd are accompanied by the power to ignore the crowd. The other half is the ability to recognize patterns others do not and focus on details while unable to see the big picture. When those powers touch in a person who is willing to spend long hours alone in a lab or in front of a computer, you get very different, and often great results. It should be no surprise then that in his book Asperger’s and Self Esteem: Insight and Hope through Famous Role Models. Norm Ledgin, claimed Marie Curie, Albert Einstein and Mozart all had Aspergers – his earlier book, Diagnosing Jefferson, described why Thomas Jefferson likely had it. Others have added Shakespeare, Jane Austen, Darwin, Galileo, Picasso, Benjamin Franklin, Margaret Mead, Aristotle and Bill Gates to the list of contributors aided by Aspergers, and according to Wired Magazine, a growing chunk of Silicon Valley.

It is irresponsible to believe everyone diagnosed with Aspergers or some other spectrum disorder is going to change the world., But social media is elevating metrics over innovation and connecting and amplifying the voice of the status quo, and by extension the march toward mediocrity. We should all aspire to embrace a little Aspergers into our every day thought. Some times lowest common denominator is not the answer.

Egyptian Uprising, The Game: The Gamification of a Revolution Edition

noreply@blogger.com (Keith) — Thu, 17 Feb 2011 20:18:00 +0000

This morning we woke to news of President Obama heading to San Francisco to meet with these guys:

*John Doerr, Partner, Kleiner Perkins Caufield & Byers

*Carol Bartz, President and CEO, Yahoo!

*John Chambers, CEO and Chairman, Cisco Systems

*Dick Costolo, CEO, Twitter

*Larry Ellison, Co-Founder and CEO, Oracle

*Reed Hastings, CEO, NetFlix

*John Hennessy, President, Stanford University

*Steve Jobs, Chairman and CEO, Apple

*Art Levinson, Chairman and former CEO, Genentech

*Eric Schmidt, Chairman and CEO, Google

*Steve Westly, Managing Partner and Founder, The Westly Group

*Mark Zuckerberg, Founder, President, and CEO, Facebook

They say he is going to talk about spurring innovation and the economy, but coming on the heels of the Tunisian and Egyptian uprising and with growing unrest throughout the Middle East, I would hope he is talking about something else. These are the leaders of the tools used to bring down the Egyptian Government. On the one hand let's hope he is trying to figure out what happened in the interest of protecting his own job. Tea Parties are one thing, but. . . . On the other hand, is the uprising proof of the superior efficacy of digital tools over boots on the ground? To the leaders of the world this is all new. To gamers, it is just Tuesday. While game makers like Scvenger, Blippy and Foursquare "gamify" life and others theorize about it, the Egyptians gamified a revolution.

Jane McGonigal is promoting her book, Reality is Broken, by pointing out the value of 21 hours a week of gameplay. She argues gamers are developing skills that are useful in the real world and all we have to do is build games to let them solve the problems. However, the gamers skipped the game. The uprising's use of the social web, and for that matter, the uprising itself, is no different from what gamers know as alternative reality games, or" ARGs" - without the "A." Just off the top of my head can point to ARG's for Hellboy and Batman that organized and drove people to real world protests based on a fictitious fact set and imaginary cause. In case anyone ever wondered what would happen in these scenarios if the stakes were real, we saw it played out in Egypt. The leaders of the revolution used social tools to spread a message, gain credibility and encourage protest. If this were an MMO we would say they leveled up, built a guild and went on a quest.

This Internet thing can be scary. Western governments all call for the growth of democracy and the Internet has done exactly that, whether the rest of the world likes it or not. We say the leaders in a democratic administration serve at the will of the people but we are just now providing the voice to show what this really means. Governments are trying to assert sovereign power based on borders in a borderless world. The Egyptian government learned they could not turn off the Internet. The Jordanian government learned they should listen to the voice of the people - hopefully they did it in time.

Don't get me wrong, job creation is important, but if I was in a room with those people tonight, I sure wouldn't be talking about jobs.

Jeetil Patel Say Sell EA: Time to Buy ERTS Edition

noreply@blogger.com (Keith) — Thu, 03 Feb 2011 21:10:00 +0000

I owned EA stock for a while. It happened to be wrong while for profit but a very good while for someone looking for a very good way to offset gains in the rapidly rising market. The stock flatlined since I sold it and I did not pay attention to it until I saw the "sell" articulated by Jeetil Patel of Deutsche Bank. Based on his past performance, this rating is a stronger buy indicator than the company's balance sheet could ever be. Forget the forecast he issued the day before the earnings release which was way off, and excuse him for not knowing EA would announce a USD 600 million stock repurchase - no one could anticipate that. These are only embarrassing. Focus on his reasoning. It is bordering on - I would really like to use the "R" word but it is so politically incorrect now and I do not want to say criminal because it really is not - fraud to hold oneself out as an expert and provide an analysis as stupid as Baron's reported him to provide.

Patel’s concern with Electronic Arts is that their product line is simply too broad, in contrast to Activision, where single hit titles have taken the lead, such as Call of Duty: Black Ops, which swept industry sales over the holiday, according to the same NPD report cited above.

This made an awful lot of sense when I heard it from Steve Jobs, but he was talking about an inventory carrying manufacturing company. Jobs explained the need to take Apple's product line down from tens of variations on the Mac, to four simple products. Mr. Patel seems to forget, or never learned, EA and Activision are in the entertainment business. Most people with a brain in their head see strength in numbers when it comes to franchises in an entertainment company. If Mr. Patel wrote this last year he probably would have admired the two prong attack of Guitar Hero and Call of Duty. Does his reasoning mean Activision is better for the collapse of a billion dollar market? If this is the case, then Activision should really focus on burning out Call of Duty so it can put all of its effort into Warcraft. While they are at it, tell Blizzard to scale back on Starcraft and stop production on the new MMO.

The shame lies in Mr. Patel’s failure to identify, or acknowledge what is turning out to be the only publisher positioned to move forward into the next decade. Every other publisher that fell from the number one slot either disappeared or continued as a hollow shell of what they once were. EA looks like it may be turning itself around. There is a glimmer of hope in their core business, and unlike the other publishers who are either in denial or chasing their own tail in social, iOS and freemium, the places where money is being made, EA is making money and leading the field.

A few clicks of light research would have revealed Dead Space 2, EA's strongest launch in years to Mr. Patel. With Dead Space, EA shows an EA internal team other than Bioware is capable of launching a title in the 90's. No small feat considering as only Take Two and Ubisoft join EA on the list of publishers with multiple internally developed franchises scoring above 90 and each of those companies spent significantly more than EA to get there. Couple this with the Syfy feature and a top selling iOS title and it looks like the breadth of EA's production did not preclude their ability to properly market and support the franchise either. This glimmer of hope in the core business is interesting, but the rest is exciting.

Even though this post was read by hundreds of people from the EA domain, I can't take credit for the company's focus on digital distribution. Riccitiello has been talking about it for years now. But in a very unusual move for a publishing CEO, he is actually following through on his promise. The company showed over USD 200 million in revenue from digital distribution and is still on track to show USD 750 million for the year. Perhaps more significantly, EA dominates the app store and while it is a distant third to Zynga, it is the only console publisher in the top 15 developers of social games. Each of these delivers significantly higher margin revenue than console and provide an opportunity for game makers to take risks on new franchises.

I am not saying I am ready to put in my purchase order, but I am certainly ready to let Mr. Patel and the other naysayers know, the game publishers are not quite dead yet.

A Brave New World: DLD Conference Edition

noreply@blogger.com (Keith) — Sat, 29 Jan 2011 01:00:00 +0000

I am sitting in a Munich hotel room for the first time in 27 years and the only thing that’s changed is me. On the train from the airport I realized I am old enough to measure time between actions in decades. Not so long ago 27 years was a reasonable age for a person and now it’s the time in between two trips I took as an adult. The area around the tube exit in Marianplatz is the same, the Glockenspiel looms overhead and the crowd is standing in the same place I left them 27 years ago. In Europe, where “old” describes increments of hundreds of years this is normal, but in America, “old” is measured in single digits so it is unusual. Other than a 275 Euro a night difference, even my room is indistinguishable from the youth hostel I stayed in as a newly minted high school graduate.

I naively booked the hotel because it had “four seasons” in the name. I say “naïve because I thought four seasons referred to hotel chain when it reality, it can only refer to the number seasons it is open in a year. A room ¼ the size of the smallest room I ever occupied in Tokyo – 30 years ago – does not win the most unique aspect. It is the ability to study real time weather patterns from my bed. The last time I slept in a bed this size there were Flintstones characters on the sheets. The bed is situated just to the right and two feet down from an aluminum-framed window installed by someone who obviously has a grievance with caulk. Turning on the heat upsets the window’s cold breeze, causing the formation of a jet stream right across my pillow. My son tried to explain aerodynamics and weather patterns to me in the past but I never understood them until I was living in the middle of one. Quickly learning one man can not stop the jet stream, I addressed the cold by taking a German “four star” towel and putting across the bottom of the “four star” drapery, thereby guiding the jet stream out the top of the drapery and across the ceiling . Not quite McGuyver, but it got me through the first night.

I may sound like the ugly American, expecting so much from a room and complaining when it does not feel like the Ritz – which incidentally is so old it does not feel lik the Ritz anymore – but stereotypes are there for a reason. Like, ugly Americans who complain to Germans conforming to very rigid rules. I learned the latter when I called down to the front desk.

“Do you have wifi in the hotel.”
“Yes”
“That’s strange, I can’t get a signal in the room.”
“We don’t have it in the rooms, it is in the lobby.”
“Oh, is there someone I can access the Internet in my room?
“Yes there is Ethernet.”
“Oh thank you.”

I am typing to you on a MacBook Air which does not have an Ethernet port. Fortunately, I saw an Apple Store just outside the station - only a five minute freeze my balls off walk from the hotel. I figured I should get out anyway because it was only 7:30 and I wanted to stay awake long enough to fight jet lag. The folks in the Apple Store were exceedingly nice and everyone made great efforts to speak to me in English – which is much more than I can say about my lack of effort to learn how to say anything beyond “bier” in German. My certainties were rattled by the multiple genius bars in the rather small store and ratio of two geni to every customer with no line, but I chalked it up to German efficiency. They quickly provided my adapter and Ethernet cable and sent me on my way. Noting I bought a hat for a reason I made a mental note to wear it the next time I went out and walked back to the hotel. I plugged the adapter and Ethernet cable into their respective ports and got – nothing.

“Excuse me, I am sorry to bother you, but I am using the Ethernet port in the room and I can’t seem to log into your server.”
“Of course not, it’s down. It has been down for a couple days and probably won’t be fixed for a few more.”
I was a bit upset about the walk and all “ But you told me you had Ethernet access to the Internet.”
“We do.”
“But it’s broken”
To which the gentlemen replied “You only asked if we had it.”
Thank you Rain Man

.

I managed to avoid creating snow in the higher altitudes of the room, bundled up and slept through the night. In the morning I headed off to DLD. As I walked out of the hotel I found myself walking with someone who was also on his way over. I asked what he did and it turned out he was just leaving employment at Microsoft in a very high level position at Microsoft. He sold his company to them and it sounded a bunch of companies before that, just a taste of what was yet to come. The invitation indicated there was a shuttle to Davos after the conference but I did not expect it to be full. In fact, my failure to receive a Davos invite put me in a small and conspicuous minority. I found myself in a sea of CEOs, bankers and journalists from all over the world. It was TED without the movie stars. Each person was able to make me feel utterly, professionally insignificant in very few words beyond hello.

“Hi, I am ____ and my app just crossed the 100 million download mark.”
“Hi, I am ____ and oversee 57 countries for _____”
“Hi, I am ____ and I just invented a company last year that grossed 1 billion.”

Some of these people even got up on stage to talk. In case the intimidation factor did completely play itself out, they were happy to repeat the introduction in any one or more of the eight to ten languages in which they were all fluent.

I sat in on a panel of young app guys who were likely not alive the last time I was in Munich. In fact, I felt like the underwear I was wearing was probably older than their aggregate age. One ran US for Rovio, creators of Angry Birds, another created Tom the Talking Cat , the next created Getjar and the last one created Doodle Jump with his brother. They all carried a certain level of earned arrogance accompanying the dissemination of a product to more people than had ever owned one thing in the history of man kind. Tom the Talking Cat makes the aggregate sales of Mood Rings and Pet Rocks appear non existent, while carrying marginally more utility. I remembered when people used to talk about console games the way they are talking about apps today. The funny thing is, our console games looked just like those apps when we were the golden children. Simple, low cost development you could pick up and play with low enough budgets to build without projections and take real risk. It was really interesting to speak with each of these creators after the panel. The Rovio guy told me he wanted Angry Birds to be bigger than Mickey Mouse and I started to laugh.

He said, “no, really, I mean it. “
“I, know” I told him. “I am not laughing because I don’t believe you can do it. I am laughing because that is the same thing I told my boss, Charles Cornwall at Eidos when we were promoting Lara Croft. Walt Disney used to say ‘It all started with a mouse.’”

Calling it an “injection medium” I entered the game business as a way to platform intellectual property. It worked while games were cheap, but the opportunity started to fade as games got more and more expensive. Now it is amazingly, unbelievably exciting to see these companies thinking this way and iOS providing a cost effective opportunity to test, pilot and launch IP. Angry Birds was Rovio’s fifty second game. The download numbers are mind boggling and trying to comprehend them is like trying to understand the national debt. But I am still a strong believer in gravity and I wonder whether the launch of these quickly spreading apps are American Idol type fame – remember any of these people, rock on Ruben Studdard – or truly Mickey Mouse.

Next I went to Sean Parker’s panel. My only awareness of the guy comes from the film “The Social Network” and a profile in Vanity Fair. People seem to like to pick on the guy and being involved in any one of the companies he was involved with may be an accident, but putting Napster, Plaxo and Facebook all on the same resume points to substance. These nattering nabobs seem to forget he had to get into the companies and do something before being unceremoniously removed. He may have done something wrong, but he had to do something right in the beginning. I, and probably the whole audience, was wondering how he felt about the not so flattering portrait in the film. This elephant seemed to be stowed quietly behind a curtain until his fellow panelist, Paolo Coelho opened with the question. He said it was a beautifully filmed work of fiction and the character in the film who was not him shared only his name. I could understand the position but I was surprised by the support he gave for his position. He explained it must be a lie because there are no Victoria’s Secret models or nice bars in Palo Alto. Maybe it is just me, but if I were him, the only part I would admit to being true is sleeping with hot women. Does he want us to believe the film is not true because in reality he only sleeps with ugly women and does not appreciate the mischaracterization? He also said he never threw a check at Eduardo Saverin and they remain friends. So we should not believe the film because he is really friends with the other guy who got squeezed out and he sleeps with ugly women.

I also went to a Juan Enriquez speech. I love me some Juan Enriquez talks. His concept of Homo Evolutus becomes so cool when he makes very simple connection to current discoveries and shows us how we can really reattach Luke’s hand. Well not really that, but he did talk about creating life, growing body parts and storing memories in jars. Just in case the people sitting a literal stone’s throw from the very spot Hitler spoke of the genetic superiority of the Aryan Race, Enriquez explained discovery of genetic markers for physical and mental superiority. One marker showed up in ever mountain climber ascending to super altitudes without oxygen. Another was in 87% of Olympic power sport athletes. He also broke a few down by race. Of course Enriquez was not proposing killing anyone and John Stewart taught me not to throw the Hitler name around, but the proximity and similarities felt a bit awkward. Enriquez said he was not addressing any medical or ethical issues. Shouldn’t he? Shouldn’t someone? It is ok to segregate people based on genetics? Enriquez is partnered with Craig Ventner, who recently created synthetic life. If Mr. Enriquez can point to a single time in the history of mankind that interfering with nature turned out well, I will be able to sleep tonight. Otherwise, feel free to call, I'll be up.

The conference closed with a talk given by Eric Schmidt which I really wish I did not see. To say it scared the shit of me is like saying the sky is a bit high. I've written about scary Google stuff in the past, but this took it to a whole new level. This room’s elephant was his recent departure from Google’s CEO position. No one wanted to mention it. I don’t know why a room full of journalists would, it is only internationally relevant news that came out of nowhere with no public comment after a ten year tenure. He proceeded to give a talk, which sounded like it was written for a bad 1970’s sci fi film. The thesis was “Technology should work for us.” His repeated statement of “more humanity through computers” sounded eerily close to “better living through computers.” It made me feel he should be in a seamless white glowy suit talking about “Omnitech” or some other benign sounding corporation standing in front really bad Soylent Green kind of stuff. The subtitle to the panel could be “with your permission.” Because as he told of how computers can know where you are and suggest restaurants and dry cleaners, tell you where your friends are, pull up relevant files, he always said “with your permission.” He even said the computer would be able to see the proximity of you and your friends and use predictive modeling to determine whether you would meet. He emphasized users’ need to opt in to receive the better life through technology. I could not help but wonder whether I opted in for Google to take my clickprint, track my ad usage? Did people on gmail and google voice consciously opt into to have email and phonecalls transcribed and indexed for incorporation into Google’s vast pool of data? How exactly did Google get permission for its camera cars to grab all the data “accidentally” which was never destroyed. When someone opts into these benign, better living through technology conveniences, do they understand the cost? The Europeans seem to understand. Executives from Microsoft, Salesforce and other US companies moving data to the cloud were asked about US government regulations requiring government access to data and without exception, rather than making any attempt to justify the regulation, they each pointed to overseas servers. They promised to keep the data black by keeping it out of the US. But, what about Google? Sure, many servers are operated outside the US, but all the ones touching my stuff are subject to US law and perhaps their cooperation agreement with the NSA. Where is the line between the government and Google? Schmidt concluded with his dream of driver less cars. He said Google modified a few Prius’s and even though not technically legal, drove them thousands of miles around the US without incident. It is so dangerous for people to drive cars, he reasoned, it should be done by computers – with their permission. If I believed in conspiracy I would say Google is Illuminati and collecting all the world’s data under one roof. Once they parse the data and put us all in cars under their control, they will be able to decide who gets driven home and who goes off the cliff in the great reduction.

The single through line through all the talks was our migration from webcentric to local. Dennis Crowley for Foursquare, Andrew Mason of Groupon, folks from Google, Endemol, Skytv, and every other company emphasized local. Technology to know their local community better. Jeff Pulver and George Dyson pointed to a third wave of computing. Getting away from the search for data and communication with computers at the other end and more toward technology to connect to people. Dating services were not represented, but they no longer carry the stigma of desperation associated with their use. The rise of facebook and other social networks shows technology intermediating links to people who communicate with each other. It draws a picture of people wanting to talk to each other, rather than the computer and wanting to get away from the screen an into activities within their computer. Kind of step back into the real world and away from the metaverse. I know the thought is overly simplistic and probably not true, but at least it let me sleep last night.

Blast From the Past: Don't Blame the Games It's Not Their Fault Edition

noreply@blogger.com (Keith) — Tue, 07 Dec 2010 22:48:00 +0000

With so many buggy and unfinished games are falling down on us like pretty snow flakes during the holiday season, only to be shunned by their publishers when the game's only fault is fulfillment of the prophecy established long before their production, I felt it is worthwhile to repost this golden oldie from two and a half years ago. Some things just don't change. . . . . .

Games are like children. If you nurture their growth and support them once they leave the nest, they will be happy and support you and bring you joy the rest of your life. If you treat them poorly and stunt their growth, they will enter the world angry, not contribute to society, and like the Menendez boys, quite possibly kill you. In a Dickensian way, Fagin - like publishers are sending games out into the world deformed, immature, socially retarded, and ill equipped to face a cruel world. These emotionally undeveloped game are expected to perform in the real world and send money back to Fagin. When the handicapped games displease the publishers with a "please sir, may have some more," because the subsistence level support did not allow them to grow, publishers withhold support and expect them to fend for themselves. No marketing for you. Fend for yourself, or die. These publishers don't realize, a piece of them dies with each wasting and withering game. It seems kind of silly, especially in a world where we see the fruits of early intervention, and holding our games back for extra nourishment and support in Bioshock, Halo and years of Mario.

Publishers seem to take an adverse stance relative to developers, both internal and external. In most cases, it is much easier for them to see the expense than the upside of the investment. They threaten to withhold money if the title is not complete, or refusing to extend release dates for polish. This leads to an interesting discussion.

"I know I added some features, but you agreed, why can't you finish the title?"
"We don't have any money."
"You'll be in breach."
"We don't have any money."
"You are contractually obliged to deliver on time."
"We don't have any money."
"If you don't deliver, we will sue you."
"We don't have any money."
"Ok, wrap it up and give us a gold master candidate?"
"We don't have any money."

And then the publisher walks away. Of course developers have a responsibility to deliver a title, but even Riccitiello acknowledged, quality and dates fixed 2 or three years ahead of time are not always the best bed fellows. It is very hard, if not impossible to know exactly what is going to show up on screen two to three years from the day you start. The things you thought would be fun turn out not to be. The stuff you thought you could do, you could not. Stuff you couldn't imagine, turns out to be possible, the publisher makes unilateral changes, the publisher's producer makes changes without telling the
publisher, and the publisher and developer mutually agree on changes. Unfortunately, too often, the revised game does not fit into the aggregated marketing, Q/A, localization, music, voice and production costs into a single "not to exceed number." So when these changes occur, money is drawn from another area, reducing the likelihood of success. Remember the campaign for Psychonauts? Neither does anyone else. Or, one of my favorite conversations:

"We started testing multiplayer today. We've assigned a team of 6 men."
"But we have eight player multiplayer."
"I know, but we spent extra money on the game."
"You extended the schedule by a quarter, and added a new city."
"I know, but it cost money."
"But multiplayer won't work."
"They are very good."

I cannot conceive of why it makes sense to spend millions of dollars getting a title to the goal line, and then stopping. Regardless of quarterly why would a publisher invest so much money in a game, and then hold back on Q/A, leading to ship of a buggy game? If you ship a quarter late, you have a bad quarter. If you ship a quarter early, you lose a franchise, and all of your investment.

It is time the publishers stop looking at these titles as "handicapped" and start looking at them as "handicapable." If you feel the game is too deformed to ever be accepted by the cruel world, please put it out of its misery, your misery, our misery. No matter how much you cut back, the costs only just begin at release. Once a publisher releases the game it incurs not only the visible costs of marketing, manufacture, shipping, etc., but the possibly more expensive unseen costs of damage to reputation incurred in the critical and consumer communities. Each bad game is a shovel full of dirt drawn from a new hole. If you feel the game can be mainstreamed with some support and therapy, support it. There is no in between.

The publishers should be reviewing games on a regular basis and making hard decisions. The decisions should be based on a clean slate review. The amount of money into a title should not be a factor in determining whether to proceed. It is either good enough to wash its own face after release, or it should be killed. Think like a Japanese publisher. Do you think Nintendo was looking at the budget on Mario Galaxy? Publishers should know when a game goes bad. It is their job. They should see when a developer is not going to make it or the title just won't come around. A bad game, is a bad game and it is obvious in development. At most, provide input and give it another quarter, see if turns around. If not, kill it. They must be honest with themselves, and kill it. Remember Daikatana? I wish I didn't.

The converse is also true. If a game is on the verge of greatness, but the budget and timing will not allow it to get there, double down. Publishers are in the business of making games. They should know when there is magic on screen. If they see it, support it. Sure, there is plenty to "save for the sequel," but get the good stuff out and make it great. The list of games hit games with schedule extensions is much longer than the list of hits from games rushed to make a date. If the publisher kills the bad ones, there is money left over to build the good ones. This is not to say developers should be relieved of their responsibility to deliver. But the check on poor performance is termination, not cut backs. This is still a business. The publisher's responsibility is to see and nurture greatness. The developer's responsibility is to create greatness.

Ok, so the game is supported, and nurtured, and given the support it needs. It is ready to leave the nest. Fagin looks angrily at the game, screaming,

"You cost too much. I've given you every penny I am going to give you."
"But, sir, no one will know I exist."
"It's not my problem. I gave you everything you asked for. If you are truly great, people will find you."
"But they just walk over me in the street. I can't get to the front of the store unless you pay them. They won't even mention me to customers."
"You should have thought about that before you asked for more money."

If a publisher decides a game is good enough to complete, it is good enough to support. Even notorious spendthrift, Activision, knows great titles are not enough. They must be supported with marketing. And not the usual 8% of projected sales marketing. Real marketing.

In most cases, video game publishers market only set aside enough budget to market to the video game community. The sales guys go into Wal-Mart, and the buyer says "What's your MTV buy? What's your ESPN buy?" Sales then reports back to marketing, and media is directed to those channels. PR and marketing focus on gaming publications. The result, everyone who knows the game is coming out, gets to know the game is coming out. If you walk into magazine stand with 100 magazines, you will see a dozen gaming pubs with the latest sequels on all the covers. Turn around, and you will not see a game on any other covers. This is curious, as every publisher who branched out into the mainstream, found great success. Guitar Hero advertised on American Idol, Call of Duty, Halo and GTA IV on network, and they sold - a lot. It is imperative to market to the core audience, but core is only the beginning. With the budgets we are dealing with, we publishers must reach the main stream to survive. The most common publisher responses, are "if the game sells well, we will invest in more marketing" or, "those games are fanchises." Yes, those games sell well and are franchises because they were supported. They did not sell well and were not franchises before the marketing money is invested. Do I have to write any more about that thought process? Maybe just this conversation,

"We gave you the biggest action film franchise in the world, what are you doing the mainstream."
"Core is very important, our marketing and PR focus is there."
"Those plans are great, but you can get the cover of Time Magazine and People with this."
"You don't understand, they don't care about games."
"They care about this franchise. I got Lara Croft on the cover of Time and Entertainment Weekly two years before the movie."
"Yeah, but she's an Icon" said the PR guy who is not old enough to have ever lived in a world without Lara Croft, and not quite as old as many of the socks in my sock drawer.
"Not when I started."

Tomb Raider was launched in a different world, the game was held back 6 months for polish. Larry Sparks' marketing program in the UK included bus stops, movie theater advertisements, mainstream magazines, Pepsi co-marketing and the video wall on U2's Zoo TV tour. It was ground breaking at the time, and it led to a world wide, company carrying, franchise property. While the plan is not so ground breaking today, we have seen with Call of Duty 4, Guitar Hero, GTA IV and Halo, it still works. If you think the game deserves to live, hold on to your balls and run full steam ahead. Invest what you need to invest to make a great game. Tell the world it is there, and then tell them again. If you don't believe in the game enough to fully support it, kill it right now, you will never get your money back. Anything in between, and you are pissing money down a rat hole.

The Media is Reporting the Game Industry is Over: Why are They Such Babies Edition

noreply@blogger.com (Keith) — Mon, 15 Nov 2010 23:14:00 +0000

My posting continues to move at a glacial pace. For a while, there was nothing new to say. Then, all of sudden, the world exploded with new ideas and I had no time to write. I attribute the plethora of new ideas - things other than marketing gaffes, publishers' hosing of developers, the need for independent finance and the folks who are saying they have it or xBox becoming cable - as a reflection of increased sensitivity attributable to too much travel and too little sleep. But bubbles are growing, companies are reacting, and CEOs seem to be turning into either Chicken Little or ostriches with heads in the sand.

Some of the new stuff floating around in my head is:

- The abandonment of seasoned game designers in favor of metric driven design - catering to metrics let you keep more players, but are those players worth keeping?

- The complete lack of game sales data for XBL and PSN - Do the platforms really think they are helping us by cloaking sales in a shroud of mystery?

- The matriculation of Japanese developers to the west and Japanese publishers to western developers - Does this mean we figured it out?

Before I get to those truly useful topics, I am going to display a gross lack of maturity and focus instead on something that pisses me off. I talked about issues with the gaming press in the past, and I am not the only one. But what happens when unwarranted attacks on the industry come from financial analysts and mainstream press? We are enjoying great success as an industry. Call of Duty showed year to year growth, Rockstar launched a new franchise, Bethesda proved successful with an externally developed game, two hardware companies successfully launched peripherals and Nintendo showed a resurgence in sales without a new introduction or material change to the Wii. Additionally, Kinect took the "fastest selling electronic device" title away from the iPad. With all this going on, I am amazed by the number of people covering the industry who covet and highlight failure - even when they have to build their own gray cloud around a silver lining. After questioning the success of Kinect Michael Pachter announced the PSP2 will be dead on arrival? While we can take solace in the fact he is wrong more often than he is right, how can you announce the death of a platform yet to even be announced? He cites market saturation. On this logic, we should stop making new mobile devices. There are almost as many cell phones in the world as there are people so there cannot be a market for new ones. No room for that facebook thing either with Myspace having tens of millions of users. No need for itunes either because all the world's music exists in digital form on disks. He also points to iOS's pricing model as an advantage. Did someone tell him the unannounced pricing strategy for games on the unannounced platform? Are they necessarily going to be the same price as they are now? Sony is sitting on years of games developed for four different platforms. I watched my kid and four of his friends put down Call of Duty and every other recent game to spend an afternoon playing Parapa and loving it. Would Pachter be right if Sony unlocks the vaults and makes those games available at iTunes prices? Isn't he also assuming no freemiums, micro-transactions, Zynga bucks or other models? But no one asks these questions. The media eats this up like a baby in front of a birthday cake and spreads it all around the web only to be re reported to by even lazier web site managers. Looking at the re links of the Pachter story, you will see a modern day game of telephone with each new link losing a bit of the context and pointing only to the subsequent link and not the originating post.

It may be fun to pick on Pachter -some may even call it sport - but it is not so fun when someone who is held up by his employers as an accurate view into the industry, like Ben Fritz, puts out this kind of story. It showed up on the front page of the Business section of the Los Angeles Times, and was linked all over the web and distributed through outlets Industry Gamers and even mainstream business sites related to financial results. In an "if it bleeds it leads" kind of way, the headline, " Once-Hot Nintendo Wii Now Struggling for Sales" makes us think Nintendo, and perhaps the game market, is down. The day it came out I got a bunch of calls and emails from people outside the game business questioning whether they should buy Wii for their kids. They were afraid to invest in a dying platform. While this is an interesting headline it belies any research for the article beyond the anecdotal support afforded by a visit to his local independent video game retailer. Is it really a surprise to see the retailer who caters to core gamers not selling the platform targeted at the mainstream? If the writer performed any research, the headline might have read "In Critical First Week of Holiday Shopping Season Nintendo Defies Logic by Moving Back to the Number One Home Console Position by Making the Console Red." Wii sales are in fact down from last year, but only because the last few years Nintendo beat Microsoft and Sony by light years. This holiday season, Nintendo slowed down to beating units sales only by miles. The week of the article, as well as the week before, Nintendo was ahead of both Microsoft and Sony in sales. Nintendo actually sold over 30% more units than either of the others and is growing to a pace of one million units a week in world wide sales. Sony and Microsoft spent billions of dollars to develop and release new hardware and Nintendo's only new innovation was Red. No price reduction, no hardware, just color and when the family shoppers went back to the stores for holiday shopping, they outsold the other two consoles. Even if Sony and Microsoft move back into the sales lead, it will be years before they erase Nintendo's thirty million unit lead. A bit more research would have shown five of the top ten titles for home consoles in America were for the Wii - more than both Sony and Microsoft.

Had our writer chosen to acknowledge any of this data, or asked for a copy of the deck Reggie Fils Amie presented at the BMO Conference the writer references but substantively ignores (Fils Amie pointed out the Wii's trajectory, even with the slow down outpaces the PlayStation 2 which remains the best selling console in history), he would have used the telegraphed quote from the game industry NPC who identified the Wii as a fad as dissent rather than support for the article. I may be way off base here, but to me, the Pet Rock is a fad. A 77 million unit installed base and growing, with five titles in the top ten is a business - granted they are all from Nintendo, but we will talk about that later. A fad descriptor is an easy justification by reporters who are too lazy research and game executives who are too complacent to innovate. Brian Farrell, CEO of THQ, knows this. While the other publishers were reducing Wii exposure, THQ invested in, and innovated with the Udraw tablet. Some business books call this leveraging a blue water opportunity. THQ simply calls it the thing that drove the stock price up over 25% in less than a month. Farrell said it in the article, but it was buried. "If you make unique and innovative games that speak directly to the Wii audience, you succeed." Amen to that.

I would not be so concerned if this article existed in a vacuum and evaporated into the dank, dark oblivion in which it belongs. But this type of lazy reporting comes from blind faith reprints of executive comments with little or no research. The writer does not have be our answer to Mike Wallace, but come on. Use more than a single source within walking distance. He lends support for people like the CEO of Disney to announce the market conditions, not product choices, are driving them from the console business. He blamed the shortcomings on the console on the console business itself, as one "that's obviously facing challenges." I guess this is true, if you read the LA Times, but the announcement came the same day Activision Blizzard announced the largest one day sales event in the history of entertainment - and went on to generate USD 650 million in five days. An amount great enough not only to wipe out all of Disney's USD 234 million in losses on the year - with a profit - but to prove Iger's assessment of the market completely wrong. Activision Blizzard out Disneyed Disney. Activision started treating games like movies while Disney continued to treat them like lunch boxes. Disney could dominate the market if they could figure out how to deliver a high quality branded experience into an existing fan base - like very other aspect of their business. Not to mention the rising significance of the brand extensions Disney created and mastered in every other form of media. We have not even begun to scratch the surface of the USD 29 direct download game and publishers already created downstream revenue windows by converting games like GTA 4, Red Dead Redemption, Call of Duty and others into platforms for follow on sales. Like film, block buster games are turning into the gift that keeps giving. Disney is in a position to eat our lunch and instead they are leaving the meal on the table.

The truth is Disney wanted out after years of losses. Nothing wrong there, just don't blame the market. Acknowledging a robust market would have forced Iger to admit the losses were caused by disastrous product choices, lack of brand leverage and poor marketing support. Instead reports by folks like our pal at the LA Times allow Disney's CEO to ignore the decision to put the best known character in the world in the company's most ambitious game on the single platform dominated by first party - remember those five top ten Wii titles I mentioned, they are all from Nintendo. Every other publisher hedges a bet like this by releasing on every platform available. They also made big budget investments in original IP when the company's very DNA is leveraging its beloved, engrained, content library. Hindsight may be 20/20, but looking at this year's lineup, foresight would prove equally clear. The major titles were the Wii exclusive Epic Mickey, Split Second and Toy Story 3. Split Second was a solid title, but how many consumers look to the Disney brand for quality racing? In a world of Gran Turismo, Forza, Midnight Club and Need for Speed, a racing game is enough of a stretch. But a racing game without licensed vehicles? Disney chose to not even extend the warmly received "Pure" brand from the year before. When the company did come up with a strong game and released Toy Story 3 on all platforms, they chose not to tell anyone. Relying on the film promotion to sell the game, the game's campaign was the antithesis of Disney's normal promotion.

Disney executives are not alone, in response to abysmal Harry Potter sales, a senior EA executive is quoted all over the place for positing the movie license business is falling apart. Not a single outlet reprinting the story or accompanying post pointed to the game's 37 on Metacritic - clicking on "metacritic" in the tag cloud to your left will show you how little regard I have for Metacritic, but EA still believes in it. His statement also ignores multiple millions of units sold of Lord of the Rings games from EA with Metacritic scores in the mid eighties as well as the dramatic decline in perceived quality of the Harry Potter franchise itself since EA's mid 70's sold over 10 million. It also ignores the more recent success of the Scott Pilgrim game which actually did better than the film, and even closer to home, the strong selling, high 70's Lego Harry Potter game released by Warner Brothers. Of course he acknowledges the need for quality and polish when addressing Mirror's Edge and Dead Space "if you’re going to be bold with that kind of concept, you need to take it as far as it can go in development." If this is a way of saying the movie games they released - and Activision's recent Bond title for that matter - are crap, I must agree. But why are polish and a movie game mutually exclusive? He starts to accept responsibility but immediately makes a u turn and blames the market “there were issues with the learning curve, the difficulty, the narrative, and then there was no multiplayer either." Learning curve, difficulty and narrative, absolutely right. EA blew it. But using Mass Effect and Dragon Age as a control group of games with smooth learning curves, balanced difficulty and strong narrative, he would quickly see multiplayer is not as significant as he may believe. Then again, this is the guy who last May said:

"I think any franchise that's been around for a long time, they get in a rut, they become over-annualized. They run out of innovation. The team pounds on a game every year, and they get tired, they run out of time and effort to be innovative and try and take some new risks. That was my view on how the franchise has fallen."

Tell that to the folks up at Ubi whose third Assassin's game in three years is selling better than the first two. Perhaps this is because they have smooth learning curves, balanced difficulty and strong narratives. The only thing for this guy to do is take a quick read through this and write:

"Mr. Consumer of EA Games, we are sorry we let you down. We apologize for Mercenaries 2, Medal of Honor: Airborne, for getting your hopes up about Medal of Honor again this year, and for expecting you to buy a Harry Potter game we believe is best used as a pooper scooper. As you can see from this year's Need For Speed and anything with the Bioware name on it, we can deliver quality every once in a while. However, somewhere along the way, we forgot how to do it on a regular and predictable basis. We are now going to buckle down, make great games and re earn your trust. Thank you for your patience, we will tell you when it is time to buy."

While there are some bright spots in the executive ranks, the fail to receive anywhere near the coverage. If the reporters choose to blindly reprint something and place their by line on it, how about following this guy? Just about the same time Disney came out and blamed the industry, Viacom announced it was putting Harmonix on the block, or in business parlance, "reclassifying it as a discontinued business unit." CEO, Philippe Dauman, said the sale was because "the console game business requires an expertise and scale that we don't have." There is no question where the buck stops and where responsibility is allocated. Having conquered every form of other media, Viacom does have the expertise and perhaps misapplied it, or chose not to use it, but that is another story. Instead, of delving into why games continue to elude a bunch of really smart people at one of the world's largest media companies, the very same writer chose to speculate and write a "story" that may or may not even exist.

I am certainly not a reporter, just some guy who decided to start posting on blogger. But I can not be the only who is frustrated by the continuous attacks on our industry. "Viral" as a description of these stories has never been more apropos. They are infecting our business and creating the conception in the finance and media world that entering the game business is slightly more costly and slightly stickier than declaring ware on the ground in Afghanistan. A presumption of loss must be faced by every game proposition seeking support. If you are frustrated by these reports, write about it. Post in the comments, write to the reporter, start your own blog. Do anything, just let people know we are not dead yet.

Preparing for the Supremes: Raise the Ramparts Edition

noreply@blogger.com (Keith) — Wed, 27 Oct 2010 00:04:00 +0000

Having written about all this stuff already, as we close in on the United States Supreme Court's hearing of arguments in a history making case which will define the future of the game business.

The Supreme Court will determine whether the legislation described in this post is Constitutional. While other US Circuits determined games to be Constitutionally protected free speech, the 9th Circuit never has and the Supreme Court will likely determine once and for all whether our work product is protected by the First Amendment. If you read the post, you will see State Senator Yee, who introduced the legislation, unbound by the strictures of reality or truth, was able to create quite a compelling argument in favor of regulation of games sales. Unfortunately, as explained here, the same tactics were used at the Federal level when two congressman misrepresented data relating to sales of games to minors. They used a three year old FTC secret shopper report to show a failure to monitor sales to minors when the more recent report showed the game industry had a better monitoring rate than any other media.

Attacks on the game industry are not uncommon. The arguments are always supported by the threat of danger to our children. The exposure to violence will corrupt the innocent, so they say. A noble purpose and surely one to provoke strong sentiment and support from the ignorant. Who is really going to stand up and say "let's harm the children." But as you can see in this post about how this argument killed the comic book industry and threatens ours, the potential chilling effect is far greater than the potential benefit - which as you can see in this post, is questionable.

Hopefully the Supreme Court agrees games are protected speech and parenting is best left to the parents.

Metacritic's Fallout: Calling Metarcritic on its Bullshit Edition

noreply@blogger.com (Keith) — Sat, 23 Oct 2010 15:06:00 +0000

This blog was originally a place for me to vent. After about a year, I found the same things making me angry, but I already wrote about them. I don't know whether that means I did not have many things to be angry about because all my buttons have been hit, or I am a very angry person and it took me a whole year to get it out. I certainly did not expect to change things - the blog is cathartic, so once it's out I have no compelling need to wright about publishers' mistreatment of developers, bad marketing, myopic product releases, used games, ratings, or parental responsibility - again. But every once in a while something so egregious comes along and, I just can't help being redundant. One of these things Metacritic's continued feigning of objectivity in the face of blatant bias. I wish I could say this particular rant is unique, but it's not. It is just something that set me off before and set me off again.

I have written in detail about why Metacritic's methods are flawed, as well as Metacritics statement of non affiliation with any studios, when it is actually owned by Viacom sister company, CBS. But the most relevant post was the one about skewing the data on Wet, a game released by an affiliated company.

For a while the Metacritic score on Wet was riding around 80, it is now a 64. Part of the boost was attributable to Armchair Empire's 88, which you can see here. But if you click through to the actual review you would see a score of 75. This has never been corrected. Now at the time I was not saying this error had anything to do with Les Monves position as CEO of CBS and position on the board of Bethesda parent Zenimax, but I thought it was interesting.

Today I started to read about Fallout:New Vegas and saw a lot of griping about bugs in the game. With all the heat around the game and development time, this was surprising. More significantly, Bethesda's business development guy told me Metacritic scores are very important. So important he will not even talk to a studio without an 80 plus game. Admittedly, curiosity got the better of me, and probably a bit of gloating, so I went to Metacritic to see the scores for the game with the crash bugs. Surprisingly, it stands at 84 and with mostly positive reviews. A cynic could say the positive reviews were made by large outlets which enjoyed Bethesda's marketing largesse. But in reality, the game is strong and very ambitious and the adherence to the brand and scope while it is running seem to outweigh the bugs. I guess it is kind of like ignoring the continuity errors in Star Wars.

I could go along with the 84 and most of the reviews support the score, but the same giant, glaring, festering boil of impropriety marring the WET score makes an appearance here. The highest score on the list never really happened. Sure a bit of finesse was used this time, but the result is the same. Fallout: New Vegas' highest score is a 100. Notable, because not many game receive a 100 from any outlet and if a game does achieve a 100 it is worth a look. After all, someone thought it is a perfect game. In this case, The Guardian, it is not a game site, but it is a significant mainstream presence with a history of solid game reviews. I clicked through to the review and noticed it had no score. This is not unusual. Metacritic has a policy to address this situation:

Many critics include some sort of grade for the movie, album, TV show, or game they are reviewing, whether it is on a 5-star scale, a 100-point scale, a letter grade, or other mark. However, plenty of other reviewers choose not to do this. Hey, that's great... they want you to actually read their review rather than just glance at a number. (Personally, we at Metacritic like to read reviews, which is one of the reasons we include a link to every full review on our site....we want you to read them too!)

However, this does pose a problem for our METASCORE computations, which are based on numbers, not qualitative concepts like art and emotions. (If only all of life were like that!) Thus, our staff must assign a numeric score, from 0-100, to each review that is not already scored by the critic. Naturally, there is some discretion involved here, and there will be times when you disagree with the score we assigned. However, our staffers have read a lot of reviews--and we mean a lot--and thus through experience are able to maintain consistency both from film to film and from reviewer to reviewer. When you read over 200 reviews from Manohla Dargis, you begin to develop a decent idea about when she's indicating a 90 and when she's indicating an 80.

Note, however, that our staff will not attempt to assign super-exact scores like 87 or 43, as doing so would be impossible. Typically, we will work in increments of 10 (so a good review will get a 60, 70, 80, 90, or 100), although in some instances we may also fall halfway in-between (such as a 75).

This is a long way of saying they make up a score if the reviewer does not provide one. No big deal - unless the core happens to be an outlier, it happens to be objectively inappropriate, and it favors an affiliated company. While the review is generally favorable, it had a few negative statements, like:

Familiar problems, such as regular crashes – I've had to switch my Xbox off using the power button roughly once every two hours so far – and a lack of signposting for irrevocably game-altering decisions can be frustrating, though perhaps understandable given the huge scope of the game. Getting into the habit of regular saving is more important than ever.

If Metacritic had not allowed this statement to stand in the way of a 90, I would not be saying anything. However, in spite of this line Metacritic interpreted the Guardian's review as saying the game is perfect. I am sure perfection was the front of mind for the reviewer each time he had to stand up to reboot his Xbox. This may be a big deal, or it may not. There is no way of knowing how much impact the 100 had because all scores are not treated equally. Different reviews are given different weight based on Metacritic's perception of the review and publication. We can see the PlayStation 3 version which did not include the Guardian's 100 - or about 18 other reviews - and it is a full 3 points lower.

I am not saying Metacritic was swayed by their parent to place an artificially high highest score on two Bethesda games, and I didn't say it last time. However, the first time seems like a simply - uncorrected - error. The same poetic license applied to a high score a second time may merit a head scratch. Will there be a three peat?

Why Does NPD Hate The Game Business: Calling Them on Their Bullshit Edition

noreply@blogger.com (Keith) — Wed, 29 Sep 2010 16:27:00 +0000

NPD has a problem. Their value is based on accessing and protecting a data set while their access continues to shrink and the data points continue to grow. They like to tell us they are able to track physical game sales, but they do not have access to sales data from our biggest retailers. Until recently they never covered on line and when they did they found their previous reports were wrong. Now they chose to issue a report relating to the console DLC market when they have no access to sales data. I, along with any one who sat in a room with a publisher in the last year, have better information on the DLC market than they printed. Just in case their assessment of only 6% of the market actively downloading did not ring hollow to the publishers currently showing a solid return on DLC, they highlight:

"Internet connectivity is an important feature across multiple devices:
60% of e-reader owners cite it as their favorite feature"

Excuse me while I call them by their first name, boneheads, 100% of e-reader owners are buying 100% of their books via download and Amazon alone reported selling almost 50% more e books than hardcover.

Based on the report's citing of only 6% of consumers downloading content, the headline grabbed across the web is screaming "DLC is not working." An innocent reader may assume the number is the result of tracking - probably because NPD built its brand on accessing sales point data and tracking real sales - but it is really the result of a survey. Of whom? The consumer population. Does the overall percentage of the public matter, if our industry, and others, are profiting? The report indicates 75% of U.S. consumers aged 13 and older did not connect or download content in the previous three months. Who cares? 61% of Netflix subscribers download content, Apple distributed billions of apps, Kindle and Nook owners download millions of books - surpassing hardcover sales and in our little old corner of the world, consumers download millions of demos, millions of additional levels and millions of XBL/PSN only games. But they should not listen to me. Look at their own report indicating 50% of PC sales are DOWNLOADS. Enough sales are occurring in all of these areas to make each sector profitable. Measuring and reporting on the downloads as a function of population is akin to saying 100% of Chinese residents did not purchase an Xbox 360 game last year. They would be right, but we still have multi billion dollar console industry.

NPD's is acting like the bully in the school yard. They want the consoles to open up the stores to them. Nothing wrong with that. We want the same thing. If Microsoft and Sony released sales data publishers and financiers would be able to forecast sales and make commitment to build and expand the market. I can not tell you how many publisher meetings are dominated by anecdotal data and a bunch of fingers sticking up into the air trying to divine the winds of the download market. But I do not see publishers forcing the console companies' hand by publishing negative performance reports. Just like NPD's flawed report last spring, this report is read and misunderstood by financial analysts who value our companies based on future performance. If they read only 6% of consumers download, rather than the real percentage of console owners who are downloading and the number of dollars spent by those console owners, they could dramatically understate the value of our companies and our future. Thereby hindering access to capital and interest in the industry. If they do not believe me I am happy to allow them to sit in on any one of my meetings.

If you are not NPD, please click through to another page and your regular blogging will continue after this private note to NPD.

Fellas, wake up. You got our attention, but there is a difference between good attention and bad attention. Telling the word our market sucks is not a good way to encourage Microsoft and Sony to let you into their tents. Grow up, think, cooperate. We in the game industry are the hand that feeds you and you should not bite it. I paid thousands of dollars for your report. Not anymore, I am done and I am not alone.

Appeals Court Holds Used Game Sales Are Illegal?: Light At The End of the Tunnel Edition

noreply@blogger.com (Keith) — Sun, 12 Sep 2010 15:03:00 +0000

I am not going to go into again, I already did here, here and here, so take my word for it. Selling used games is harmful to game innovation. While publishers are engaged in a arms race against the ever growing number of used game sellers, the industry may be saved by the courts. In Vernor v. Autodesk The 9th Circuit Court of Appeals just ruled a properly worded EULA will preclude resale of software.

In the Vernor case, Vernor purchased copies of Autodesk software, did not open it, and resold it on ebay. Vernor contended he was protected by the first sale doctrine because he did not make copies, and did not open the box and become bound by the EULA. The court held otherwise and found Vernor a licensee of the software and therefore bound by the agreement which forbade resale.

Games and other software are legally resold under the first sale doctrine. In 1908, when contemplating the resale of printed, coyprighted works like books or music, the U.S. Supreme Court determined the rights of the copyright owner were exhausted after the first sale. The material's purchaser was allowed to resell the work, so long as they did not make or retain copies. The court did restrict the ruling to works which were sold, not licensed, hence the new ruling. Put simply, if a person is an owner, first sale applies. If they are a licensee, it does not. Without the protection of first sale, software cannot be resold.

The determination of ownership or license is made by the written agreement provided with the software. Specifically the Vernor court described the test as

where a transferee receives a particular copy of a copyrighted work pursuant to a written agreement, we consider all of the provisions of the agreement to determine whether the transferee became an owner of the copy or received a license. We may consider (1) whether the agreement was labeled a license and (2) whether the copyright owner retained title to the copy, required its return or destruction, forbade its duplication, or required the transferee to maintain possession of the copy for the agreement's duration.

The court tells us, if the right words are contained in the big mess we button through at the beginning of a game or other software installed on our computer, Gamestop cannot resell it. The binding part of the decision, the holding provides:

We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.

The best way to ensure a place behind this shield is to exactly what the court said. The court ruled in Autodesk's favor because it's EULA reads:

Autodesk retained title to the software and imposed significant transfer restrictions: it stated that the license is nontransferable, the software could not be transferred or leased without Autodesk's written consent, and the software could not be transferred outside the Western Hemisphere. The SLA also imposed use restrictions against the use of the software outside the Western Hemisphere and against modifying, translating, or reverse-engineering the software, removing any proprietary marks from the software or documentation, or defeating any copy protection device. Furthermore, the SLA provided for termination of the license upon the licensee's unauthorized copying or failure to comply with other license restrictions.

This all seems so clear. We are saved, right? Not really. This decision was made by the Court of Appeals for the 9th Circuit. While this Circuit hears many technology cases and the judge has a history of decisions not being overturned, the court is only one of 13 Circuits in the United States. Unless this case is raised to the Supreme Court for Appeal, it will be binding only on cases brought within the Circuit. It is only persuasive in other Circuits. If another Circuit rules the other way, it would be up to the Supreme Court to determine who prevails - if they are willing to do so. This may take a very long time. The actions giving rise to this case occurred in May of 2005. The first court ruling on the case found first sale applied and Vernor could resell. It was only after the appeal, five and a half years from the action, we know the outcome - unless there is another appeal. However, it gives us hope and as an industry we should embrace the decision and establish a standard license for out software.

If the EULA's do not include the Vernor court's magic language, change it. This will pave the way for The ESA, or individual publishers to bring an action against used game retailers to stop the practice once and for all.

Games Sales Down?: The Glass is Half Full Edition

noreply@blogger.com (Keith) — Fri, 23 Jul 2010 17:09:00 +0000

For the fourth straight month mainstream media is reporting declining sales and the demise of our business. I am amazed when I read an article about rumors of seconds old Playdom in discussions with Disney for an acquisition at a valuation of USD 600 million or Zynga securing financing at purported USD 2 billion valuation while analysts and commentators say the game business is dying. Are they making games, or just money? We are not in the midst of a declining market, we are suffering from a lack of measurement. Genius analysts are out there with quotes like,

For the month of June, Pachter predicts game software sales measured by NPD will decline by 8% from the same month last year. Doug Creutz of Cowen & Co. predicts a 17% decline for June, and said he expects the slowness to continue through the summer.

and they treat it like it is relevant to anything at all. It is kind of like saying "buggy whip sales" are falling through the floor so consumers obviously do not want to travel around in vehicles with wheels. Please stop confusing demand fora distribution channel with demand for content.

NPD is a bad resource and it is becoming less and less accurate as a measure of sales. They never tracked Wal-Mart which ranges from 30% to 90% of the sales on certain titles. They also omit Sam's Club and Toys R Us. Sure there is a multiplier, but who knows whether it is accurate on a title by title basis. Kind of like the television business knowing Nielson was not accurate, but living with it, we lived with NPD. If I sell a game in a box at Gamestop, I am measured. If I gain a subscriber to Farmville, sell a game through xBox Live, PSN, Wii or DS, sell a USD 40 virtual good in a freemium game or log my 10 millionth hour in a browser based game, I am not. Strangely, social game subscriptions, console downloads, freemiums and browser based are the fastest growing segments of our market. Consumers are choosing to spend their time differently, but they are still spending their dollars with us.

I am not just making this up. This week, NPD started tracking PC download sales and found they are equal to boxed sales. Or in the eyes of an analyst, PC sales doubled this month.

This should not be a great surprise. Apple passed Wal-Mart as the number one music retailer in 2008. 61% of Netflix subscribers download movies and tv shows and Amazon announced it is selling 143 digital books for every 100 hardcover books sold. If consumers of every form of media are saying they do not want to leave their homes to buy a shiny disk or pile of paper or store the thing when they get home, why would we think bits that compile into games would be any different? Immediate gratification and freedom from having to stand up to get something off the shelf are very compelling arguments.

Adding up the connected Wii's, DS's, 360's and PS3's, there are well over one hundred million connected devices in the field. Consider iPad,iPhone and other platforms we are still getting up to speed on, and there are a lot more. Consumers are buying games for these devices through digital channels. Publishers generally do not release their numbers but several dlc only games reported sales in the millions. Anecdotally, conversations with the publishers of recent dlc only games tell me sales either meet or exceed expectations in every case. Consumers are buying these games, giving publishers enough confidence to invest in increased quality. Today's dlc is better than last year and it is only getting better. It is easy to ignore the release of a USD 60 game when it is sitting on a shelf in a store. It is just as easy to push the button on some Microsoft point to buy the immediate gratification of the shiny object flashing before your eyes.

If I manufactured the resin used for shiny disks, I'd be concerned, fortunately, I am in the business that puts the stuff on the disks.

The Workshop's Sorcery: Sony's Best Move Game Edition

noreply@blogger.com (Keith) — Fri, 25 Jun 2010 20:16:00 +0000

Congratulations to The Workshop on finally getting to announce their first project as a company. They have been working very hard and deserve every kind word. I could write a bunch more, but instead I just wholesale stole this post from Kotaku:

Shown exclusively during the Sony E3 2010 press conference, SCEA's Sorcery made enough of an impression on us to score a Best of E3 nomination for Best New Game. How'd that happen?

Your PlayStation Move controller is a magic wand.

Okay, you might need a more in-depth explanation.

Your PlayStation Move is a freaking sweet magic wand.

Sorcery, developed by The Workshop, places you in the shoes of a young sorcerer's apprentice. The Nightmare Queen has broken her pact with the humans and threatens to plunge the land into eternal darkness, which the humans really should have seen coming. Forging a pact with someone called the Nightmare Queen always ends in tears.

Anyway, your young apprentice takes up a magic wand and sets off into the Faerie Kingdoms to set things right.

The story is pretty generic, but the action isn't.

With so many Move titles seeming like prettier copies of Wii games, Sorcery is our first look at something fun and innovative that takes full advantage of the PlayStation Move's capabilities. The Move acts as your wand, the characters arm movements following yours precisely.

You've got an arsenal of twelve upgradeable spells at your disposal, but the real fun comes when you start mixing them together. During the press conference demonstration, the producer for the game drew a line to cast a Wall of Fire spell. Then a spiral motion brought forth a whirlwind. Sending the whirlwind through the fire resulted in a spinning firestorm that completely decimated the poor, innocent goblins advancing on the main character, doubtlessly looking for hugs.

The game also contains alchemy, with the Move globe changing color to indicate potions are ready to drink.

It seems like the sort of simple little game that should have been produced on the Wii years ago, but hasn't been. It's the kind of game that proves that while the Move technology is somewhat similar to the Wii remote, there is still plenty of ground that Wii developers have yet to cover.

Plus, your PlayStation Move is a totally kick-ass wand.

What Happened to Privacy: Naked to the World Edition

noreply@blogger.com (Keith) — Mon, 14 Jun 2010 21:44:00 +0000

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.

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A Tree Falling in the Forest

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Fri, 04 Apr 2008 00:00:00 PDT

What a World: Byron Review - Parent Edition
grown up talk about game ratings

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Mon, 31 Mar 2008 00:00:00 PDT

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