Joystiq

With the end of the holidays came the news that EGM is being shuttered. These are disappointing days for many people, not least the hard-working staff that contributed to the respected magazine. I think that the occasion probably merits a mention as much for its inevitability as its sadness.

In days in which even large, mainstream print publications are facing severe financial difficulties, it seems all too obvious that smaller, niche publications are going to face similar pressures. And gaming magazines seem to me to be among the most vulnerable, for several reasons.

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:
This past week, my 360 finally gave up the ghost. It began with an occasional hard freeze, and a day later was freezing every two or three minutes – a tell-tale symptom of impending red rings of death. Unfortunately, my Xbox exhibited all of the symptoms except an actual series of red rings: a problem that, as the Microsoft support agent informed me, meant that my device was no longer covered by the extended warranty. There goes $99. A series of problems sending me e-mails (and later the actual shipping box) have cost me at least a month of playing time ... during the busiest gaming season of the year.

The point is not to complain about my problems per se – I'm hardly the first gamer to have experienced these issues and I'm sure that I won't be the last. But since I haven't been playing, I've had a lot of time to think about the implications of these issues on hardware manufacturers, publishers, developers, and even retailers. Do my problems matter to the businesses that care about me?

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

One of the most prominent words in game journalism and discussion today is "innovation" – how can companies innovate successfully, and how come there isn't more of it in the industry? Implicit in this conversation are three assumptions that don't generally get examined with the same thoroughness: that "innovation" is per se important for gaming, that all innovation is essentially the same in content and value, and that companies promote profitability over innovation. I'd like to talk about these unspoken assumptions in light of the banner few years that we've had as gamers.

I think most people would concede that innovation is important, whether to gaming or to consumer packaged goods. But why? At least in gaming, it's largely because our interest tends to dissipate along with challenge; if you're not being shown something interesting, why pay attention to it? Familiarity may not breed contempt, but it definitely doesn't breed excitement (nor sales) either.

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

One of the issues I've been talking a lot about recently has been the concept of crisis management – how companies respond to problems that may impact their relationship with consumers. Crises don't need to be big to matter; even relatively minor issues can grow big enough to cause headaches. And so it was instructive to see the brouhaha over Spore's DRM, and how EA responded.

For those who don't remember the issue, the basic problem was that Spore limited the number of installations allowed per user as well as the number of user accounts per game copy. I'm not particularly interested in debating whether or not this was a good idea (I'm opposed), but am very interested in talking about how EA responded as concerns began to bubble up from the internet. So, how did EA do?

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:
Another day, another video game banning controversy. Proponents of the ban, unsurprisingly, argue that eliminating the sale of controversial games prevents them from harmful exposure. Yet one of the main arguments against banning games is that they make them even more popular, causing people to take notice of the title and thus spurring more sales than if it had been ignored in the first place. So, what exactly is the impact of game bans on sales in the first place?

Ideally, we'd be able to compare the sales of games pre- and post-ban and see how the regulation impacted them ... after accounting for all the other factors that might have also influenced sales at that time. The data we have don't really let us do that, though, so this is a slightly less scientific attempt to answer the same question, using some of the most controversial games of the past few years.

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

I've temporarily relocated to Seoul for the summer to work for a consumer electronics firm, so I thought I'd spend a little time detailing some of the differences in gaming culture here in South Korea, and the impact that infrastructure has on the gaming business. In short, there are two notable differences in the Korean gaming industry relative to the United States. First, PC games are significantly more popular than console games; and second, gaming is much more mainstream in Korean culture than it is even now in the States. These differences have created structural factors in the country that have profoundly shaped the nature of the industry from a business perspective.

Perhaps the most salient factor is cultural - there is, as far as I can tell, almost no stigma attached to gaming in the country (at the least, it's viewed as a mainstream activity). A number of Korean acquaintances have commented on the Korean fascination with the new and fashionable: when one co-worker went apartment-hunting with a real estate agent, the agent refused to show him any houses that had been previously occupied, on the assumption that they would be of little interest. And part of that fascination seems to be technological, indicating a possible cause of Koreans' embrace of gaming as a form of entertainment. Indeed, I've seen countless people using a DS or PSP on the subway... and my cheap, used cell phone has more free games on it than I've played on any phone since I began using them in the first place.

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:
Guitar Hero IV is on its way, and with it are coming individual games themed around Metallica, Aerosmith, and others. This follows the strategy highlighted by Activision CEO Robert Kotick last year, in which the executive promised shareholders to fully "exploit" the company's franchises on an annual basis. The immediate response of gamers was almost exclusively negative, not least because the prospect has connotations of poor quality and high pricing. Although Activision may be the only company to announce its strategy so publicly, it's hardly the only adopting these kinds of tactics. If it irritates gamers so much, why do companies in the industry do this? And is it as bad as it seems?

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

It's not unreasonable for a gamer to look at their console and wonder how it might help them professionally. Being financially rewarded for doing something we love has been the holy grail of gaming (and indeed, most hobbies) since well before talk of gaming leagues and Wizard-style competitions. But despite our best intentions, it's rare to find a cubicle-dweller whose carpal tunnel syndrome is caused by a controller rather than Microsoft Office.

And this is why I was interested to read a recent post from Massively on the benefits of putting MMO experience on your resume. Job hunting is something that almost everyone needs to do at least once, and since government statistics suggest that new workers are now likely to switch jobs 7-10 times in their lives, doing it well is a key skill set. So, can games help you here? My answer is a qualified "maybe."

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

Much as many people expected, Activision public relations recently confirmed that (one song aside) Aerosmith's catalogue will remain a Guitar Hero-exclusive for the foreseeable future. There's a considerable amount of public speculation as to whether or not this will spark future fights over exclusive content, and I'm inclined to assume that it will. The incentives are just too strong to avoid future conflict – the battle between Guitar Hero and Rock Band is a great example of the prisoner's dilemma.

The prisoner's dilemma is a common building block of game theory, which is often used in business strategy to describe potential competitive responses or explain company actions. It's so named because of the story that was used to illustrate its problem. Imagine two fugitives that have robbed a bank and were just picked up by the police. Each man is taken into a separate room, and the police make the following offer to each: if they confess to the crime and help to implicate their partner, they'll receive an extremely lenient sentence. However, if they stay quiet and their partner implicates them, they'll receive the maximum penalty - while their partner gets off scot-free. Of course, if both confess, the evidence they provide isn't particularly useful, and they'll each go to trial, ending up with a sentence somewhere in the middle. What should each man do?

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

Earlier this week, Next Generation published a list of the top 100 selling games of last year. Some sites used the list as an opportunity to analyze the impact of review scores on video games, or to alternately lament or exalt the state of gamers' sophistication, but I'd like to address one of the more perennial issues of the gaming community: Whether artistic and financial success are ultimately incompatible in this industry.

This isn't a new debate for most of us. The conventional wisdom is that, with few exceptions, the market rewards the common denominator: Cheap, quick, and easy games will beat sophisticated titles any day of the week and twice on Sunday. You can see variations on this theme throughout the gaming media; the notion that indie games can't make money, that gamers are violence- and sex-obsessed children, that stories and ideas just don't matter. Yet I'd argue that this conventional wisdom is wrong, and getting more so by the day.

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Each week Jeff Engel and Geoff Brooks rendez-vous on Joystiq to contribute Counting Rupees, a column on the business behind gaming:

The politics of video games are well covered by other websites, but it's worth spending a little time to think about the business implications of politics on the industry and its customers -- particularly in light of recent events like the UK game study. Just how much day-to-day impact does this maneuvering really have? For all of the angst found in the gamer community over issues like the latest ridiculous violent video game ban, I'd argue that the average gamer is actually pretty well-insulated from the mess.

So who does get affected? Well, the answer lies at least in part in figuring out the touch points that politics has on politicians, developers and publishers, and the people who buy and sell games in the first place. At its most basic, there are some essential conflicts of interest between these groups that get mediated by politics, and we can use them as the lens by which to think about this further.

Let's start off with consumers themselves. What do they really want? Well, game players want to be able to play whatever they want, whenever they want to play. But they're not the only stakeholders here; for younger players, parents play an important role as intermediaries in determining what games get purchased and thus what games are available. Parents, more than anything, want control: the ability to control what their children play and filter out products that they view as offensive or objectionable. Industry figures have similarly simple incentives. They want to satisfy players' demands and supply the games they want -- that's how they make money. It's in their best interests to avoid any restrictions whatsoever on what they can produce or how they sell it. Retailers also have to worry about their brand image and how they're publicly perceived, which is why Wal-Marts don't stock Adults-Only rated games.

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Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:

N'Gai Croal of Level Up recently pointed to an interesting development factoid from EA CEO John Riccitiello's 3rd quarter earnings call. A Cowen & Company analyst noted that many publishers have had difficulty in completing PS3 titles quickly and asked whether or not EA had made progress in narrowing the development times between PS3 and 360 games. The answer appears to be that meeting technical specifications is no longer an issue for games where development led on the PS3 – but where development was either parallel or started on the 360, there's still a notable lag in speed and quality.

Croal e-mailed EA with an obvious follow-up question: If that delay can be eliminated by starting with the PS3, would EA consider mandating that development begin there? Director of Communications Jeff Brown responded that no, the company doesn't provide such edicts and that a number of factors are considered when selecting a game's development path. Why might this be the case? I think this decision probably makes sense from a business perspective for several reasons.

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