Monday, February 25, 2008

EA Is Kinder, But Not Gentler: Thrill Kill Edition

(Video from Thrill Kill. Don't watch if you are easily offended.)

Mr. Riccitiello is making it clear that he is not afraid of M rated games. In his recent Gamespot interview addressing the takeover offer made to Take Two, he pointed out that he was the one who greenlit The Godfather, EA's first M rated game since Undying and American McGee's Alice, as well as Def Jam, and is a big fan of M rated titles like Bioshock and GTA. However, when doing his pandering, he may want to do a bit more research before speaking. In response to a question about the infamous Thrill Kill which was in development during EA's acquisition of Virgin, he said:

"I never saw Thrill Kill, and I applaud you for digging up that little piece of history. I'm not sure if I would have liked it or not. I'm guessing I might have liked it, but I have no idea."

Thrill Kill was originally cancelled by EA during Riccitiello 1.0 with a press release stating EA didn't want to publish a "senselessly violent game." I wonder whether it is the amputee fights, or the great finishing moves like "Bitch Slap", "Swallow This", and "Head Muncher" that would make John like it.

Looking at potential reactive acquisitions that might be consistent with EA's brand, I would think the home of Clancy, Brothers in Arms and Raving Rabids may come up before the home of GTA, Manhunt and a line of redundant sports games.

Sunday, February 24, 2008

More Kinder, Gentler, EA

I am concerned about John Riccitiello. He gave a very eloquent speech about his great concerns for every company which is smaller than EA and wants to be in the game business. In his mind, and in his life in games, the world order is very simple. There is EA, and there is everyone else. EA was number one when he left, and when he came back. Then he woke up one day and it was not. That must be fixed. Worse than that, the new number one to be will have a game that is vomiting incomprehensible amounts of cash on a monthly basis and EA has nothing of that scale. The whole thing has put John into a bit of a state. His communications are about as internally consistent as those of a two year old on speed. It is clear he really has to work on the filter between the words coming out of the little angel and devil sitting on his shoulders, and the words coming out of his mouth. Unfortunately, much like Ted Knight, he is simply mouthing the things these little guys are speaking into his ears.

The angel is telling him to respect talent. Independent studios are good. Call of Duty, Medal of Honor, Grand Theft Auto, Bioshock, Tomb Raider and most other great games you can think of came from independent studios, so this makes sense. People who made those games like to be independent and tend to leave when they feel their voice is not heard. Here is the angel speaking in John's interview with Gamespot:

" For us, it's all about their studios and their intellectual properties, which we very strongly desire to have as part of EA. And we project it to be accretive for us, so it's a win for EA. We think we would make a great home for their studios. Our decentralized label model is in many ways inspired by conversations I've had over the years with Sam Houser, who runs Rockstar. We think it's that simple. It's great for their shareholders, it's great for our shareholders, and great for their studios."

Then the devil comes out and tells John there is no reason to pay attention to those creative prima donnas. All they ever want is more time, and money, and support and pixels and music and other various bullshitty non mba type things:

"We believe that our due diligence review would require limited access to a small number of senior executives of Take-Two and its legal, accounting and financial advisers. Importantly, no interaction with any of the studio leaders will be required until our other due diligence is completed and the material terms of a transaction are agreed to. "

Strauss Zelnick comes back and accuses him of being an opportunistic bastard, looking only capitalize on the GTA IV, or in more common parlance, the surest thing in the entertainment business. John's angel answered in Gamespot:

"The analysts that are forecasting Take-Two for just their fiscal year have between 8 million and 12 million units of GTA IV forecast. Frankly, the question is what comes after GTA, because that's already in the value of the stock. Realistically, we don't anticipate closing the deal before GTA ships. We're anticipating a transaction that would close certainly not before the GTA launch, so that feels very much like a red herring to me."

Yeah John, that would suck to get only 8 to 12 million units in sales on EA's balance sheets, while EA did not have to currently incur the development for the four years + that the title has been in development. But wait, what's that? Oh it is the devil talking. He has already said he has not spoken with studio heads to find out what they want, and has no idea what the upcoming line up is, or what they want to build. He also said his due diligence will last only two weeks. The devil thinks it has to close before the GTA release and is willing to threaten Take Two:

"Our strong preference is to conduct a private negotiation. If you are unwilling to proceed on that basis, however, we may pursue other means, including the public disclosure of this letter, to bring our offer and the compelling value it represents to the attention of Take-Two’s shareholders.

I am available to meet and discuss any and all aspects of this proposal with you and your Board. Again, we believe this proposal represents a unique opportunity to maximize value for Take-Two’s shareholders, and that the combined enterprise would be extraordinarily well positioned to build value for our respective customers, employees, developers and other business partners. We hope that you and your Board share our enthusiasm, and we look forward to hearing back from you by February 22."

Finally, the angel does not even have a chance to speak before the devil can throw out some threats and try to create uncertainty in the minds of shareholders and board of Take Two:

"We also believe that any delay in this proposed transaction works against the interest of Take-Two’s shareholders, because:

• There can be no certainty that in the future EA or any other buyer would pay the same high premium we are offering today. We place significant value on the ability to close the transaction relatively quickly so that EA’s strong publishing and distribution network, including our global packaged goods, online and wireless publishing organizations, can positively impact the catalogue sales of GTA IV and also the launch and sale of titles released later this year. We want to work with you and your team to complete the transaction in time to begin realizing its significant marketplace benefits in advance of this year’s holiday selling season.

• We believe Take-Two’s current share price already reflects investor expectations for a strong release of GTA IV as well as the longer-term issues that Take-Two faces. Once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors.

• With GTA IV shipping on April 29, development on this important title must now be essentially complete. We believe now is the right time to complete a transaction with minimal disruption for Take-Two."

If the Angel were given a chance to speak, he would probably explain, first, you just said the transaction would not close prior to the launch of GTA IV. But more importantly, if you think the company is worth 2 billion dollars today, how badly can we really fuck up in the next 8 weeks? Especially when we are releasing the biggest franchise in entertainment? Second, you are kind of saying that it will be business as usual for Take Two. Or more succinctly, it will be kind of like EA the month after Madden ships, so you can really feel our pain. Thank you for the empathy, it makes us feel kind of warm and fuzzy. Kind of like a good plate of meat loaf and mashed potatoes. Finally, did you really say that? What is that supposed to mean? If you are leaving the studios alone, they would not really notice when the companies merged anyways.

The angel has already read an interview with Bill Roper that ran on about why he and his team left Blizzard. Maybe John should read what Bill said in that interview, it is after the jump:

"GG: So why on earth did you decide to leave Blizzard in 2003?

Bill Roper: We weren’t really looking to leave, to be honest, we were more interested in trying to find a way to work within the structure at Blizzard. There was a lot going on at that time, rumours about the sale of Blizzard. It was totally unclear what was going to occur, we were getting mixed signals. Our guys would come to us and say: “We’ve heard that we are gonna bought by Microsoft”. Or “we will be sold on the stock market”. We basically approached Vivendi and said: We need to know what’s going on! The problem was that we were getting nothing back, so finally, in an effort to show how serious we were about this, we send in letters of resignation: “We will resign if you do not include us in that process!”. And all we wanted to was to be able talk to someone in France! But they decided not to tell us.

GG: 'We' would be Blizzard North at that time?

Bill Roper: It happened to everyone, but those of us who sent word were Dave Brevik, Erich and Max Schaefer and myself, bascially the management of Blizzard North at that time.

GG: What was the answer of Vivendi?

Bill Roper: We never got one directly from Vivendi, that was part of the problem. So even with the resignations, the answer came back through the usual channels. So we heard from Mike Morheim down south that he had been told by the guys from New York who had been told by the guys in France...

GG: That really gives you the impression that you’re important for the company."

The Game Business - A Great MMORPG

I just completed the GDC expansion pack of the The Game Business. Despite being a bit tired from the DICE expansion two weeks ago, my guild was able to repel an attack from a rival guild and build its reputation. I question the release of the two expansions so close to each other but the consumer base seems to accept them both. I don't know if they will do so in the future. DICE, focused in one place, with a single speaking track and high level folks who actually do shit appeals to the hardcore. GDC, with multiple tracks and opportunities for all types of merchants and craftsman can try to sell items to the people who actually do shit hits the core as well as the mass.

DICE worked out well. I took advantage of a speaking quest which leveled me up to a 55 Priest, increasing my healing ability for my guild members. This turned out to be very important when a rival guild leader, a level 40 Rogue, attacked some of my guild members and attempted to cast a spell of confusion. A minor armor enhancement, combined with the increased level made the GDC attacks benign to the the point of not even being noticeable. He also failed to secure the support of any of the members of his guild.

Unlike DICE, at GDC, my guild avoided core game in the Moscone Village, to focus on the very lucrative side quests occurring in satellite villages established by itinerant guilds for purposes of the expansion pack. Many participated in the endless rep grinding opportunities each night. I did not. I quickly bore of the rep grinding, that goes on at GDC. Party after party, where the same guilds move from one village to the next and engage in more rep grinding through handing cards to NPC after NPC. Sure, some NPC's have a semblance of intelligence, but how many times can you explain your role in the game to a lawyer, banker, or merchant who is just trying to find their way into the business? Newbies can be such a pain in the ass.

While the other blogs are focusing on the events of GDC, it may be a good time to look at the levels of some of the the other guilds and players. Remember, in The Game Business, players can be leveled down, as well as level up. For example, Bruce Hack recently leveled down from a level 60 Warrior to level 20 when it was announced he would be giving up his operating role and most of his items after the Activision merger. Originally, he leveled down to 40, but he lost 20 points when Robin Kaminsky responded to an audience question about the new name "Activision Blizzard" by saying "it is a reflection of where all of the value is in the new company. . .," making it clear that that the only valuable bits are those outside of Bruce Hack's control. Bobby Kotick, on the other hand, leveled up to a level 69 Warlock, only one level behind Mike Morheim himself, who is a level 70 Shaman. Everyone knows that only Morheim, Josh Resnick, Andrew Goldman and the Ray's, who have all received significant amounts of precious lucre, from level 69 Warlocks like Bobby and John Riccitiello can achieve level 70 through the control gained over the Warlocks in their guilds. Many of us thought John would leave the game after his massive item sale, as well as the revenue generated from the independent item sale which contributed to greater wealth outside the game, but apparently the draw of his in game character was too powerful. Who among us can't understand the difficulty in leaving a character into which you invested so much time and effort?

I do expect everyone to max out their characters when they can level up to 80 in the post GTA 4 expansion pack coming out q3 this year. I wonder how the game will change.

Saturday, February 16, 2008

It's All About Design

Sony just announced the first of its new Xperia line of phones. It's slick, its functional, it creates a powerful tingling in the pants of any red blooded, gadget phile. . . the first step is admitting you have a problem. Many will run and and buy it, some may have pre ordered. Some of you may pre order it because you saw it here. But it also very vanilla and a bit off. Look at this picture:

When the thing is just sitting there alone in the flesh you are no longer in the Abercrombie world of the video, and its flaws cry out like little beacons. Before you get to the function, just look at the design. It is square. It doesn't scream for me to pick it up. The front is not symmetrically balanced. I have to flip the thing over and open it to use it, and the screen is not glass. Perfect for the business world, not exciting to consumers.

Even if it does more than the iPhone, and it does, it doesn't make a normal human being feel good looking at it. The iPhone is screams to be picked up. When you do pick it up, its magic. It recognizes that it is picked up. It turns it screen configuration to suit you. Sure, Steve Jobs told us there is only one button and there are really a bunch more, plus a rocker switch, but we forgive him because it feels so good. Set an iPhone down on your coffee table and you want to upgrade your house so as not to embarrass the phone.

Now, looking at function. Turn on and iPhone and you are seamlessly, painlessly, integrated into not only your life (contacts, calendar, photos, music, but a ton of content through iTunes. Turn on Xperia and you get. . . .you get. . . some driver installation to maybe sync, a store that kind of has some stuff, and email client hell.

The beauty and ease of use of the iPhone causes users to overlook many, many flaws. The design weakness, and lack of integration to the rest of the world will mask the lack of operational flaws and cause users of overlook the product.

Console Wars: It's Not Over Yet

The console war continues after three Christmases for Xbox and 2 for Wii and PS3. While Microsoft feigned a a claim of victory as first to 10 million units worldwide, their press conference is starting to look more and more like George Bush in front of a Mission Accomplished poster.

Microsoft has a lot to be proud of, if we focus on the US. In the month of December, Xbox sold 1.26 million units to PS3's 798,000 in the US. They don't like to talk about Wii which sold 1.35 million. For the year, Xbox almost doubled PS3's sale with 4.62 to 2.56 million units. Wii beat them both with 6.29 million. You can see more in real time at the bottom of this blog.

Unfortunately, and it may sound un-American, but we have to consider the rest of the world. Xbox never made it out of the gate in Japan and still fails to sell. In Europe, sales have been trailing PS3 since last summer. According to Sony, the PS3 installed base is already larger in France, Spain, Germany and Italy than that of Xbox. Sure, these are not traditionally strong console territories, but based on the sales trends, Sony predicts they will pass Xbox in the UK this summer.

Can there be any reason other than the Sony brand? It certainly isn't the games, or connectivity. This could change. Right now most lead skus are for the Xbox, with Sony surviving on left overs. It is a vestige of a late launch. But if the numbers really change, and the publishers pay attention, we will start to see more Sony lead skus, and better games for PS3. Sound to simplistic? Sit in a greenlight meeting. Publishers are reactive. If Sony spreads enough propaganda, perception will become reality.

In any event, this one is not going to be over quickly.

I Love to Say I Told You So: Xbox Is Cable

I wish I could say I hate to say I told you so, but I really don't. I kind of love it. On December 10, 2001 I published the article posted after the jump in the Gaming Industry News suggesting the Xbox was really a cable box. This was about two weeks after the launch of the Xbox. I thought it was kind of odd that while seriously defending itself against the Department of Justice, Microsoft was well beyond the central issue of that case. Publicly they were arguing over placement of the browser in the OS, in reality, the company was moving its focus to the living room.

Much like cancer, Microsoft grows by metastasizing. If they get a foothold in your life, even if it is vaporware or buggy product, it is enough to iterate and grow. Anyone out like Windows 1x very much? My first Xbox - not so great. But my 360 is my friend. It will take media off my other computers and servers and deliver it to the TV, it will let me talk to others, it will even let me order HD movies at the touch of a button. And the feature set grows on a regular basis, slowly relieving me of that nagging need to get other products, like AppleTV, or soon, probably even TiVo.

Being the master of the universe that he is, Bill Gates disclosed his road map for world domination in his book "The Road Ahead." He just didn't think anyone would understand. In truth, we didn't. I was inspired to write the article by the following quote from his book:

Companies that hope to participate in the creation of the
applications and services and enter the content business
through investment and/or influence want to move now,
while the opportunities are open. Some of these companies
connects up the television set. Part of their strategy could be
to offer, for a single monthly fee, the connectivity to the
highway, the set-top box and a package of programming,
applications and services to go with it…. Although supplying
the boxes will increase the up front capital required by the
network operator, the outlay will be worth if it helps create a
critical mass of users.

Even though it predated the Xbox by 6 years, it sure sounds like an Xbox. In the article I suggest Microsoft would flip a switch and open the set top during the first generation of Xbox. I was wrong. They did it midway through the second iteration. It was during CES this year when Robbie Bach proudly announced that Xbox carries as much or more HD linear content as any cable network.

Why am I talking cable networks and game consoles? When measured as a game console, Xbox just passed viability last year. When measured as a cable set top box, the success is unprecedented. Verizon is paying $8,000 per user to upgrade its infrastructure to fiber and place set top boxes in people's homes. Time Warner is also paying thousands for the upgrade. When they are done with the upgrade, the boxes, when compared to an Xbox could be described charitably, as anemic. Microsoft has users paying them. Moreover, content providers pay Microsoft for access to the box. In the words of Bob Weinstein "They got a word for that. . .' cool'."

Microsoft now has over 12 million Xbox 360s installed in homes. This makes them the number 3 cable system in the world and by the end of the year, possibly number 1. They are already number 1 when measured by the size and performance capabilities of the homogenous base.

While we consider HD standards, digital conversions and which devices get access to the scarce HDMI ports on the backs of our new television sets, lets take a look back in time, read the article, and think about what has already creeped into our homes. The whole article is after the jump, just click to below to read it.

From The Gaming Industry News, Issue 5.

There's no doubt about it. The Xbox is not a Trojan horse, as many have already argued, it is more like the amphibious vehicles used to land the troops on the beach in the opening sequence of Saving Private Ryan.

Before I get started, I admit that all of my computers are Macs and I have significant issues with authority that preclude me from accepting Microsoft into my personal or business computing life. I also admit my interest grew when I saw the terms of the Microsoft settlement agreement with Department of Justice included the government's assistance in penetrating schools, the only PC market where Microsoft does not have monopolistic power. Bear with me on this one. I am a child of reality and as such wrote this editorial on my Mac, using Microsoft Word. The Xbox is a true technological engineering feat that is rivaled only by the legal engineering that enabled Microsoft to do what AOL Time Warner cannot. As early as 1995, Microsoft was targeting the set-top market. Bill Gates saw the digital tollbooth moving from the operating system to the set-top box, which he described as "…in every sense a computer." Who cares who owns the bridge if you have the toll- taking concession? In his 1995 book, The Road Ahead, Gates writes:

Companies that hope to participate in the creation of the
applications and services and enter the content business
through investment and/or influence want to move now,
while the opportunities are open. Some of these companies
connects up the television set. Part of their strategy could be
to offer, for a single monthly fee, the connectivity to the
highway, the set-top box and a package of programming,
applications and services to go with it…. Although supplying
the boxes will increase the up front capital required by the
network operator, the outlay will be worth if it helps create a
critical mass of users.

To those around him, Gates was evidently more worried than he let on publicly about a possible set-top threat to Windows' dominance. J. Allard, who is often credited with building Microsoft's Internet strategy and business, told Justice Department lawyers in 1998, "I understood that he was hypothesizing that a large vendor such as Siemens or Matsushita were able to come out with a hardware- based device that provided an alternative platform to Windows." No one knows better than Gates that gaining monopolistic control is a catch-22. Technology adoption is driven by applications, and applications are driven by the adoption rate. Once Windows became the dominant computing platform, developers favored Windows. Microsoft's first attempt to control the set top was the development of an operating system that would grow the installed base in the same manner as Windows. However, the cable companies were not only slow on the uptake, they were making deals with competitors like Sun and OpenTV. The next move was to invest in the cable companies. But a $5 billion investment in AT&T only achieved a commitment for deployment of 2.5 million Windows CE–enabled boxes (roughly the same amount of money that Henry Blodgett predicted Microsoft will lose on Xbox subsidies). Moreover, the boxes deployed were not robust enough to leverage applications coming down the pike within Microsoft's .NET strategy that would place its software and services online. Worse, if he continued down the cable route he would be subject to regulation. The government had already made overtures at regulation in 1994 and then later passed the Telecommunications Act of 1996. Section 629 of the act was drafted to accelerate deployment of digital set-top boxes and related technologies and to foster competition. Two years after that, in Order number 98–116, the FCC interpreted the boxes covered by the telecommunications act as "[e]quipment used to access video programming and other services offered over multichannel video programming systems include televisions, VCRs, cable set-top boxes, personal computers, program guide equipment and cable modems." A "multichannel video programming system" is one that provides multiple channels of video programming to subscribers. To you and me, that would be a cable or DBS networks such as Adelphia, Comcast, DIRECTV, or Time Warner Cable. These companies are regulated not only for video service, but also for ISP offerings. Curiously, Microsoft, and its Xbox do not appear to be regulated for either. This may not seem like such a big deal. After all, AOL Time Warner has a box of its own and a cable system to drive deployment. We must remember that not only does the Xbox make the AOL TV box look like it was taken from an episode of the Flintstones, by virtue of the Telecommunications Act of 1996, AOL Time Warner is required to allow other companies access to proprietary technology and manufacture of set-top boxes,
Microsoft is not.

The Telecommunications Act of 1996 and the interpretive order were drafted in the pre-Scour and Kazaa days. No one watched full movies over the Internet; we did that on TV. The FCC was only afraid that those nasty cable companies would leverage their unique access to the Bass Fishing Channel into monopolistic control of our collective digital future. The government's focus was the connection between the boxes and the people who controlled the television channels. If a box is used to access a "multichannel video programming system" or services offered by one, the box falls under the regulation. If it does not access a cable or satellite service, it is not regulated. Xbox does not access a multichannel video programming system, it accesses something with more content: the Internet. In a display of prescience that would put Miss Cleo to shame, Gates identified the government's concerns, determined their likely course of action, and devised a plan to avoid regulation. In The Road Ahead, he writes:

But government regulators worry that allowing the network
operators to have control of the boxes will put them in a
position to capitalize on their privileged position. A network
operator that owns the boxes could also seek to exert control
over what software, applications, and services run on those
boxes. There could be limited choices for studios that wanted
to sell their movies. Whether or not to allow various services
equal access to the wires and boxes is one of the tough issues
deregulation is going to have to address.

Maybe it was not prescience. He did have four years after drafting of that paragraph, one year after the passage of 98–116, and Allard to devise a plan for domination of the set top. The challenge was to come up with a machine that was powerful enough to operate .NET applications, not subject to government regulation, and installed broadly enough to eclipse any other set-top box. That is where the Xbox fits in. Although Internet appliances could satisfy the first and second criteria, they were spectacular failures when measured against the third. Existing set-top boxes would require cooperation from cable companies and that was not happening. Moreover, any connection to cable systems brought the boxes under regulations that would require open access to the network and the box, a very un-Microsoft proposition. The answer lay in game consoles.

Every version of consoles in the modern console era (since the launch of the Nintendo Entertainment System in 1988) grew installed bases in the tens of millions. A moderate success scenario would put 20 million boxes in people's homes. That would exceed the current installed base of digital cable and broadband Internet connections. It would also be almost 60 percent of people on line in the United States. Even better, as is standard in the console business, Microsoft has absolute and complete control over all interactive content for the platform. As if that is not good enough, once they receive approval from Microsoft, anyone who wants to publish an Xbox game has to pay Microsoft a per unit license fee for each unit manufactured.

The Xbox game console is a 733 MHz computer with 64MB of RAM, an 8GB hard drive, hardware acceleration, and an Ethernet port that plugs right into a cable or DSL modem, not to mention an operating system that is compatible with Windows XP. Couple this with Microsoft's ownership of the third largest ISP and the .NET applications it hopes will become ubiquitous, and we have a very compelling argument for a powerful network of personal computers that are plugged into our television sets.

I can see the argument and the germ of a massive marketing campaign: "Don't you want to edit your home videos using XP and then watch them in your living room with your Xbox? And of course you want to have access to your Microsoft Passport to make purchases online from your living room. Oh, yeah, and that Windows Media Player thing…" Through services such as Microsoft portfolio company Intertainer, you can access many of the offerings available via cable, right there in your Xbox. Intertainer utilizes Microsoft's Windows Media Player and related billing systems, and offers 65,000 hours of programming from more than 70 content providers including Warner Bros., DreamWorks, Twentieth Century Fox, New Line Cinema, NBC, Discovery, A&E, ESPN, Pearson Television, Warner Music, Sony Music, and others. This does not even address content available on the World Wide Web at large, including first-run pay-per-view movies, which are, or will soon be, available from companies like Moviefly, CinemaNow,, and other online movie services. These have small consumer bases today, but the offerings become significantly more appealing when they come through your television set rather than your PC. If there is a broad installed base of Xbox consoles in use, it will also become among the first viable platforms for interactive television programming.

Today, interactive television and videoconferencing remain unfulfilled buzzwords because the installed base is so fragmented, that no single platform can support the development costs of the content. With the homogenous base, it starts to make sense for content creators to develop for the platform.

Yeah, yeah, yeah, but how are they going to beat Sony and Nintendo? Xbox games are not as appealing to gamers as those found on the other platforms, and both of the other platforms are more popular than Xbox. First, although Sony and Nintendo are talking about networking their boxes, they do not pose the threat or have the viability of the Xbox. Nintendo is contemplating networking for games. Sony's network is a pipe dream relative to Microsoft's positioning. PlayStation 2 has no hard drive and no resident broadband connection. Anything Sony wants to deploy through the box will require peripherals and updated operating systems and memory. Second and perhaps more importantly, Microsoft is following a strategy that worked for it before: Get a foothold, and iterate. They want to get a position in your home and continue to expand and improve until they consume more and more of the applications and operability for the platform.
MSN, after all, looked a lot scarier before launch than after, but it is still around. Xbox will be around for a long time. This is not a battle that will be won in a single platform cycle. It is a war of attrition. When measuring competitors, Microsoft, with its hubris restored, is poised to win.

Microsoft CEO Steve Ballmer is not exactly bashful about his company's latest dream of domination. On November 30, two weeks after the Xbox launch, he said, "We know we have to
succeed [with a game strategy] but there is a broader concept there that we will pursue at some point. You can say, is it the end of the road or is there a bigger play? And the answer is yeah, there's a bigger play we hope to get over time." I believe him. Even if their first try is wrong – witness Windows 1.0 – they will ultimately get it right. I have every confidence that Xbox will be so integrated into our homes that one day I will be forced to upgrade the Xbox OS to change a lightbulb in my house.

Friday, February 15, 2008

I Need This

Is there anything better than bubblewrap? But you can only use it once. Japanese science fixed that.

Here is a little piece of endless bubblewrap to carry in your pocket. Here it is

An Amazing Read

If you've got some time on your hands, definitely check out The quality of writing makes my site look like it was written by a first grader with boxing gloves. It is thoughtful, articulate and very, often laugh out loud funny. The coverage of trips to Japan will have you rolling on the floor and the position statements about making fun of Scientology or supporting Obama are well presented.

Thursday, February 14, 2008

A Brief Reminder of Excellence

This timeless piece of art is a Rolls Royce from 1925. It doesn't look like any other Rolls Royce. The designer and builder were obviously not looking to just get it out the door. They weren't shooting for something solidly in the 70s. There is no compromise. It is inspiring.

Should we be Proud?

Every time I got a C, or worse, on a test I would go home and tell my parents that all the other kids got Cs also. It wasn't always true, in fact it was never true, but as a kid, I was able to rationalize that it was ok. Sure I didn't know the material well enough to do well on the test, but neither did anyone else.

So when EA puts the above chart in its analyst presentation, is it saying that they got a C, but it is really ok because most of the others got Ds? Or are they saying "Yeah, we are fourth best"?

Is it the industry's fault or the critic's fault that the best we can do is a C?

Gamestop needs an Intervention

Gamestop continues to engage in self injury and I think we, its friends, should all get together and stage an intervention.

According to the Wikipedia:

Self-injury (SI) or self-harm (SH) is deliberate injury inflicted by a person upon his or her own body without suicidal intent.

This pretty much sums up their used game behavior. They don't want to kill themselves, but they can't stop harming themselves through the sale of used games. Their self injury manifests through the Tourrette's like statement that slips from the lips of every counter person during every game purchase. "Would you like to buy a used version of that game?" As a consumer, you always picked used. It is a DVD for god's sake, it's not like it will be broken or worn out. Moreover, it is guaranteed to work and costs anywhere from 10% to 50% less than the identical, albeit virgin, item sitting on the shelf. No one gets hurt and the consumer benefits. Right? Wrong.

The game publisher gets paid for the initial sale of the game. The payment allows the publisher to recoup the cost of the game, maybe pay the developer and the IP holder if they are so inclined, and invest profits in the product. The more games they sell, the more to invest in future games. If a game comes back in trade and is resold, Gamestop enjoys a higher margin on the resale, but they take 100% of the revenue away from the publisher. Gamestop grows, while industry revenue shrinks. While Gamestop may appear to be one of the top retailers, in fact, they are a gatekeeper which is turning consumers away at the gate.

I would not have a problem if Gamestop were primarily a resale shop. However, Gamestop leverages the production and marketing investments of the publishers to harm the publishers. Each top tier release carries a marketing budget which is roughly equal to the production budget of the game. The marketing budget drives consumers to stores like Gamestop to buy the game. Here is the issue. After the publisher paid to put the person in the store, the counter bot says "Don't give money to the publisher who invested in this game and drove you to the store, give it to me so I can keep it all and not pay them. I'll give you this copy of the game which I have already sold three times and taken back in trade." I the short term, Gamestop's profits increase. In the long term everyone, including Gamestop is hurt because game development stagnates

We can fix this. As consumers, don't support used game sales. You are paying almost the same amount of money, to the wrong guy. Gamestop is not an awful lot better than someone filesharing music. As publishers, stop selling to Gamestop until they stop selling used games. When was the last time you walked up to check out at one of the top 3 movie retailers and they asked if you wanted to buy the used dvd? You haven't. Hollywood won't allow it. How about restricting access to the full game to the first person who actually buys it? We can do that.

C'mon people our distribution channel is so riddled with holes, it cannot even be called a channel. It is more like a distribution sieve. Let's start fixing it.

Blockbuster and Gamefly are Enablers . . . and it Kind of Sucks

Blockbuster and Gamefly are enablers with a capital E. Don't even get me started on Gamestop. According to Webster's dictionary:


Main Entry:
\i-ˈnā-blər, -bəl-ər\
: one that enables another to achieve an end; especially : one who enables another to persist in self-destructive behavior (as substance abuse) by providing excuses or by making it possible to avoid the consequences of such behavior.

Can you name one other industry which distributes first run product in an ancillary channel on the very same day it releases in its primary channel. We put out games and expect consumers to pay $60 on the very same day we allow them to pick it up at Blockbuster for 1/12 the price, or Gamefly by ticking a box. What the fuck is that?

When I was at Eidos, in 1997, Blockbuster was just entering the game business. They called and asked me to supply games to them for rental. I quickly did the math - I have this Tomb Raider game that is about 16 to 20 hours long, people may play through the whole game once, and most don't play more than half, they usually stop playing after a week or so and never pick it up again, they pay the retailer $50, of which I get $16 to my bottom line . . . . you want to give that person the same game for the same period of time and then give it to someone else, and someone else, and someone else, and only pay me once? My brilliant grasp of the obvious led me to the conclusion that this was just not a good business decision. They kept calling back telling me things like "people will play the game and then want to buy it." This was an interesting point coming from a company which at the time operated an entire business renting movies and did not sell them. Despite movement into the market by other publishers, I never agreed to allow rental.

Looking at the market today, the publishers are being hosed. Games are getting shorter. This is not a bad thing, because overall, they are also getting better. However, replayability is a publishing fallacy. Sure my son watched Daddy Day Care a dozen times, but other than the hardest of the hard core, how many of us have ever picked up a game once it was completed? Unless a game is built for multiplayer like Halo or Call of Duty, people play them once and move on. Even Bioshock is only replayed by a select few.

Blockbuster and Gamefly are purchasing game units, but they are significantly eating into sales, and therefore revenue, and therefore future growth and expansion of the business. Publishers have to stop looking at rentals from Blockbuster and Gamefly as beneficial and look at them for what they really are, lost sales.

Wednesday, February 13, 2008

A Kinder Gentler Electronic Arts

A couple of posts ago I wrote about how inspiring it was to hear EA's CEO talk about respect for creativity and the need to maintain the integrity of team. The part I missed was how EA defines a team. Internally they are developers, outside they are prey.

Recently a developer who finished a product made a responsible business decision and in the interest of ensuring the long term stability of the company let some people go. Not a fun thing to do, but something that has to be done from time to time. The funny thing is that the company will ship two games on six skus this year! I know it will shock those of you familiar with the game business, but word spread quickly. EA responded by sending emails targeted at various company employees. Since I am confident the emails were an expression of EA's altruistic desire to make every one of the developer's still employed team members feel wanted, I thought I would post them here. You can have a look after the jump.

From: Christina Kerekes
Sent: Tuesday, February 12, 2008 2:47 PM
Subject: What you may not know about EA!

Hi **********,
I can see from our files that my team has corresponded with you in the past, you have an impressive profile on LinkedIn so I am both excited and also hesitant to reach out to you at this time, we have heard through the proverbial grapevine that there may be some changes in the near future at DEVELOPER so I was hoping to connect with you and share some news about EA. We are extremely proud of our new approach to acquiring talent: instead of trying to fit someone into a particular job description, we reach out and find out YOUR career goals and wishes, such as career path, studio or game of preference, etc. Then we take a hand-held approach and make sure we can meet all of the items on your career "wish list". And with all the buzz of our new re-org, coupled with a brand new line of games coming out in the next year, this is truly and exciting time to join EA! Please feel free to contact me should you want to hear more about a future with EA -- and if not, then please feel free to forward my contact information to anyone you may know who is as qualified as yourself. I look forward to hearing from you!
All the best,


Christina Kerekes
Lead SE Talent Scout
Global Recruiting

From: Peter Grassi
Sent: Tuesday, February 12, 2008 4:21 PM
Subject: Opportunity with EA

Hi ******,

I noticed you are the *** with DEVELOPER, a company we admire. Currently, we are looking for a COO at a few of our key EA studio locations. I've included a brief synopis of the role below for your review.

The COO, in partnership with the GM, is responsible for planning, oversight, and execution of the studio’s business and operating plan. Working with other leaders, the COO will drive the planning process for the studio and deliver a three year strategic plan and one year operating plan. The COO will work with studio leaders and project teams to ensure timely delivery of high quality products. A key focus for the role is to improve systems and processes to promote quality execution, improve the way we work, and foster creativity and innovation.

****, if you are interested in discussing this role, please let me know the best way to reach you.


Peter Grassi

Senior Recruiter
Electronic Arts

Tuesday, February 12, 2008

All We Are Saying, Is Give Games a Chance

Games are a tremendously unifying force, but like angry revolution songs of the sixties or gangster rap today, we make zero sum games that empower through violence. When you look at multiplayer games, you see we are removing countries, religion, language, distance, class, culture and all other divisive forces through games, isn't it time to build one with unifying content on a unifying platform?

Games can destroy, and games can build.
Games can empower and inspire.
Games allow a young generation to rebel and find their own voice.

The establishment is afraid of games because they do not understand. In 1970, the White House was afraid of John Lennon, today it is afraid of Rockstar Games. Lennon disseminated his message through songs because he knew 100 million people would hear what he wrote. 200 million people own a game platform. 3 billion if we count phones. Like music, games move seamlessly across borders and afford total communication

John Lennon and Yoko Ono introduced the concept of Bagism. In short, by wearing a bag, we remove the obstacle of prejudging someone according to the length of their hair or the color of their skin, enabling certain people to be more inclined to take the words and ideas of others more seriously. Thereby affording total communication. Or as explained to David Frost:

John Lennon : If people did interviews for jobs in a bag they wouldn’t get turned away because they were black or green or long hair, you know, it’s total communication...

David Frost : ...They'd get turned away because they were in a bag...(Audience laughter)

John Lennon : Well no, if that was specified that when you interviewed the people that you wanted to employ, and you had this prejudice, and the people had to wear a bag - then you'd only judge them on what they communicated to you, and You wouldn't have to think 'Oh he's wearing black suede is he, don't like it'....

100 million people in Asia, Europe and North America play massively multiplayer games inside the bag John Lennon described, but nobody has built the game world's "Imagine." Today in the massively multiplayer world Chinese gamers play across borders with Koreans, who at least on paper, would not be friends - or even speak. They are judged only by their contribution to the game and the guild, not the color of the skin, nationality or religion. Each new perspective enhances the game, rather than detracting from the interaction.

The Non Zero Sum Game


Games need not be violent or zero sum. Imagine a game where people are incentivized to join together in communities to solve issues. Imagine the entire game community winning as a group. We have seen the power of the Seti and the Folding distributed computing projects. We are also seeing the power of the "Hive Mind" in alternative reality games. What if we combine the power of distributed computing with distributed mindshare and make a non zero sum game which not only educates, but contributes to the solution of world issues? The first step to solving any issue is understanding. Through games, people will communicate, empathize, and help.


The barrier to mass market appeal of games is not the nature of games, or the content, it is the interface. As Apple showed with the Macintosh and Nintendo is showing through its Wii, if you remove the interface, you open the market. I gave a Wii to my 72 year old father in law who never touched a game. He has not stopped playing Tiger Woods Golf. Our vision can remove the interface and make games accessible. If people can access and play the game without a game controller and without a visual interface, they will join in droves.

Do Well While Doing Good

World of Warcraft from Vivendi Games is closing in on its 10 millionth paid subscriber. The add on pack to the game sold in the US alone at the rate of 100,000 units per hour for the first 24 hours, unprecedented for a PC Game. Companies like Webzen and Shanda have games in Asia with subscription bases of over 40 million people. Nexon is expanding globally. While this is impressive, the real value is in the network. World of Warcraft is a platform. Let's turn on the power. Let's use these platforms to take distributed computing three feet further into every living room and exploit distributed thinking.

As gamers, we have the power, the following, the ability. Let's make the world better.

DICE Summit Takeaway: Activision and Electronic Arts

I attended the DICE Summit last year and it is truly a great event. Great people, great hallway conversation, great talks. The people who actually do shit are there to talk about it without all of the noise and interference of GDC. Heavy gamer concentration. Gore Verbinski encouraged developers to make the suits shit their pants. He's right, we should. It is kind of game of chicken, we have to hope they shit before we get the runs over milestone payments.

The most interesting stuff though came from the talks given by the number one and number two publishers in the world, EA and Activision - the position changes depending on the day of the week. You can read about it after the jump.

Former Hasbro and Pepsi Cola executive and current Head of Worldwide Studios Robin Kaminsky, gave an intimate (one Activision executive told me that it was perhaps too intimate) view of Activision's research and a post mortem of the Call of Duty marketing campaign. Activision has always been a conservative and somewhat rigid company. They try to mitigate and limit risk as much as possible. Robin showed a bunch of charts and graphs illustrating a fascinating conclusion. In summary, if you make a great game, and market it enough to let people know you made it, you will sell millions of units. I wonder how many mbas it took to reach that conclusion.

It is easy to be snide, but Activision did in fact take it one step further. They made a great game, which too few companies seem to be doing lately - anyone played MOH Airborne? - they introduced it to the market, like everyone does, but they also supported the game post release. Most companies stop the marketing days after release. Activision continued to support the game from a marketing and content standpoint and continues to support the title. Great move! Too many publishers fail to support their products, or try to make up development overspends on marketing. Activision supported the developer and the title, and deserve the success.

Former Sara Lee and Pepsi Cola executive and current CEO of EA, John Riccitiello gave a very developer friendly presentation about the new and improved EA. His speech can pretty much be summarized the value of a developer really is in the people. John acknowledged that to the detriment of companies like Bullfrog, Origin and Westwood, EA has not always treated the talent with enough respect. He even acknowledged he was complicit in the mistakes. All in all a very refreshing speech.

He explained how a centralized production model cannot work and how EA has decided to go the external studio route. Activision has shown through support of Neversoft, Treyarch and Infinity Ward, that the new EA model can work. Ubisoft on the other hand has shown that some of the best games in the world, and most consistent slate, can be generated by internal development without separate studios. Right or wrong, with regard to the premise, it was great to hear the CEO of EA talk about respect for the studios structure and the desire to build and maintain the "city states." It will be interesting to see how long Senior Management will put up with autonomy if the games are not delivered on time.

It was truly refreshing to be able to walk away from speeches by the two largest publishers in the world with the messages 1) respect talent if you want great games; 2) great games sell; and 3) great games only sell if you market them well.

Sunday, February 10, 2008

I Announced the Juno Game?

I was invited to speak at the DICE Summit 08. I never spoke at DICE before and I was excited by the invitation. The conference is for game people, and you can't swing a dead cat without hitting someone who invented an amazing game. My panel was a free form, intentionally raucous debate inspired by the movie fight club. The other side of my debate was a really smart guy by the name of Mitch Lasky. Mitch was a very senior guy at both Activision and EA and was the founder and CEO of Jamdat Mobile. In other words, lots of success. We talked about consolidation, the world heard the announcement of the Juno Game.

After the jump is the tragic email chain with Tor Thorsen the writer who wrote the Gamespot piece that started it all, but was not at the talk.

-----Original Message-----
From: Keith Boesky []
Sent: Wednesday, February 06, 2008 11:21 PM
To: Tor Thorsen
Subject: Juno


I did not say that a Juno game is in development. I have never even seen the movie. The reference to Juno was made when I analogized a low budget, small game breaking out and being a hit to examples from the film business like Juno. Kelly then said he never heard of it
and I said it is a successful film. Then I referenced My Big Fat Greek Wedding and Blair Witch as other examples.


Boesky & Company

On Feb 7, 2008, at 8:23 AM, "Tor Thorsen"

Hey Keith,

Well, the quote I have in the notes is "People are making a game basedon Juno to cater to this [casual] market" when you responded to
Min's claims that Nexon's games were driving the casual market. You replied that that's not the case, as games are being made just to cater to said market, and gave the upcoming juno game as an example.

The rumor is that Fox Searchlight, Crave Entertainment and 7 Studios are working on a juno game a la the Napoleon Dynamite game, and I
took this as public confirmation of the project. We videotaped the session so I can go reference the videotape, if you'd like.

Cheers _ TOR

Tor Thorsen
Senior News Editor | GameSpot

GameSpot | |
235 Second Street | San Francisco, CA 94105

-----Original Message-----
From: Keith Boesky []
Sent: Thursday, February 07, 2008 9:10 AM
To: Tor Thorsen
Subject: Re: Juno

Please go back to the tape. That is absolutely not what I said and now it is spread across the web and attributed to me. Not cool.


Boesky & Company

-----Original Message-----
From: Tor Thorsen
Sent: Thursday, February 07, 2008 9:22 AM
To: 'Keith Boesky'
Subject: RE: Juno

Well the last thing I'd ever want to do is attribute something to you which was inaccurate, so I'll go dig up the tape. However, the reporter we had on the scene took very thorough notes and_insists_ that's what you said, and he's never been wrong before, so I don't really see how there could've been any confusion.

On Feb 7, 2008, at 9:56 AM, "Tor Thorsen"

Hey Keith,

So this day gets better and better: So apparently the videographer on hand was simply filming "highlights" and didn't have the tape running the whole time, so there's no footage of the disputed section. However, my reporter is adamant the quote is accurate and has notes detailing the context to pretty thorough degree. (His name didn't get put on the byline because I wrote the story body and the byline was auto-generated by our content tool.)

To give you a public forum for your grievance and to make sure its seen by people currently linking to the article, I am going to adjust the article. I'll give it a more speculative tone and update it with your strident denial that you revealed a juno game was coming to market.
That way, people will know that you've publically distanced yourself from the quote and are insisting it was taken out of context.

In addition, our of professional courtesy, I'll remove your name from the dek so it won't be as prominently featured and will reference the aforementioned rumors about the Crave/7 Studios project. Would that be to your satisfaction?

-----Original Message-----
From: Keith Boesky []
Sent: Thursday, February 07, 2008 10:14 AM
To: Tor Thorsen
Subject: Re: Juno

I don't want a denial issued. I want an accurate statement. Your position is very irresponsible in light of a statement made in front of 200 people.


Boesky & Company

On Feb 7, 2008, at 10:33 AM, "Tor Thorsen" wrote:

All right, well to defuse the situation I was going to change the story to the following--let me know if that's satisfactory.

Now, it appears that Fox Searchlight Pictures, the studio behind Juno might be set to earn even more revenue from the film.
Today during the opening session of the D.I.C.E. Summit in Las
Vegas, former Eidos Interactive president and current intellectual-property migration specialist Keith Boesky made comments
which GameSpot interpreted as indicating that a casual game based on the film is in development.

[UPDATE] Later, though, Boesky clarified his comments, saying, "The reference to Juno was made when I analogized a low-budget, small game
breaking out and being a hit to examples from the film business like Juno."

Would that be to your satisfaction?

Mitch and I went back and forth for an hour on the realities of consolidation in a world where innovation happens on the edges. Guitar Hero, Bioshock, Grand Theft Auto, Call of Duty, Tomb Raider, Crash Bandicoot all originated from independent studios. Now they are part of consolidated companies and are blessed with sequel after sequel. I can talk about this a lot, and much to the dismay of those around me, I often do. I though the people in the audience cared about this, and from the questions we received, it appeared they really did. However, the reporter taking the notes which were then relayed to the Gamespot reporter who wrote a blog piece, really felt this discussion was insignificant. The important part was the announcement of the Juno game. The funny thing is, I never announced it. I have not even seen the movie.

Maybe this is a commentary on the blogosphere, maybe this is a commentary on poor, irresponsible reporting, whatever it is, I have to vent. At the end of two hours of discussion which included Minho Kim of Nexon, publishers of Maple Story, and industry veteran Kelly Flock, I mentioned how great it was that XboxLive, Sony Network and the emerging casual game market provides a platform for smaller games that can be built quickly and inexpensively, and can find an audience. I suggested that much like the movie Juno, which was low budget, but made over 100 million dollars, small games can break out. Kelly asked what Juno was, so I also mentioned, My Big Fat Greek Wedding and Blair Witch. The four other panelists thought it made sense, as did the 200 people in the audience. I am sorry, make that 199 people in the audience. The reporter felt something different.

I got back to my room at midnight and saw a google alert indicating that Gamespot reported my announcement of a Juno game. There were 4 other links as well. All making fun of the idea. I never announced a Juno game. So I wrote to Tor Thorsen, the reporter who wrote the story and got a series of responses that are too amazing to describe, so I will just put them in here. It turns out Tor was not there. He was working off of someone else's notes. Even though the event was video taped, even though there were 200 people who disagreed with him, he would not change the story to be accurate.

As a result, and at last count by google search, there are 443 web sites citing me for my announcement of the Juno game. Moreover, in some kind of evolutionary game of telephone (chinese phone tag for you brits) I have been given a title and had it convoluted and denigrated. Gamespot anointed me an intellectual property migration specialist, their words not mine, other sites called me a marketing specialist, kind of nice not true. All in all, it is kind of a pisser that someone can't plant a meme like this watch it spread like wildfire. Of course, the analogy breaks down when we consider that wild fires can be put out.