brinking - nabeel hyatt

Harvard panel on non-competes and the example of Turbine

I wasn't able to make the event at Harvard about non-competition agreements recently due to my second kid being born, but wanted to share Scott Kirsner's coverage of the event:

Harvard prof. Lee Fleming said that people and ideas move from states that enforce non-competes to states that don’t (think California.) His research has found that non-competes squelch employee mobility by about 20 percent, and 30 percent for experts in a given field. Fleming asked whether non-competes might stifle the reallocation of the best people to the best business opportunities.

A great example of this effect just came to my attention. It turns out that Turbine has been trying to introduce new non-competes. Now, I haven't actually seen the agreements but apparently they have some clauses saying you are not to work for a gaming company within 100 miles (or something like that). Many of the professions in game development are industry specific (level designer anyone?) which essentially means that once an employee has worked at Turbine he is almost guaranteed to move away from Boston for his next job.

This is particularly ridiculous in Turbine's case, since just recently an employee left for Harmonix then thought better of it after a few months and returned to Turbine. With their new non-compete agreement this would never happen, as the person would have likely left Boston altogether and simply taken a different job wherever they had moved. Turbine is poisoning their own pond out of fear instead of building the company from strength.

What makes a Social Game, a social game?

It's been a little frustrating to watch as the term Social Gaming is being applied to practically everything on a social network - so much so that even single player games on Facebook are now "social games." The folks at GigaOm have been pinging me about writing an editorial for a while, and this topic seemed worth starting a wider dialog about, so here it is:

What makes games social? (GigaOm)

Are online games going to kill themselves at retail?

Yesterday Raph Koster posted the photo on the right of a full rack of Target gift cards for online games, from Puzzle Pirates to Zwinky. That led Jeremy Liew to talk about the power of gift cards to allow young players who do not have credit cards to pay for virtual goods. And while I share Jeremy's enthusiasm that gift cards are an excellent monetization method, I am also worried about what it means for the next wave of online gaming startups.

It's no secret that monetization is one of the areas where virtual worlds and gaming can teach a thing or two to the web folks. From Maplestory gift cards to Rock Band tracks, consumers have shown they are willing and able to pay for digital gaming content. Even if the techniques are unique, including everything from virtual goods, gifting, dual-currency (time & cash) based economies, and level-based subscriptions, the culture is one of paying for playing. Which is good for those of us trying to keep the lights on.

Despite this willingness, virtual goods still have the penny gap. It is never easy to get someone, especially a teenager, to type in a credit card online. Which is why walking down a Target or CVS nowadays means easily finding cards hawking virtual 8bit furniture from Habbo, virtual DKNY gear from Stardoll, or a new sword for Nexon's Maple Story.

RE-INTRODUCING THE RETAIL PROBLEM

In all, there are now over 25 digital content cards being sold at retail. I've been tracking this and that's over double what it was six months ago. That means that at least a dozen online communities, and probably a dozen more in the next six months, are going to be submitting themselves to the vagaries of the retail shelf-space business. That's a business the online web folks have little to no experience in, and one that a lot of traditional gaming vets were excited to get out of.

This is creating a funnel problem that every creator or player should be a little worried about. It means that anyone can create an online game, but there is going to be scarcity around who can make money at it. Big media companies, communities that are already at critical mass, and big-hype start-ups get shelf space - while the next big thing in a garage doesn't get a shot in hell at monetizing.

In was a long hard slog at Ambient Devices getting our products into everywhere from Radioshack to the Museum of Modern Art store. It was even harder keeping them there despite strong sales as the hot new thing came out. That background will serve Conduit well when the time comes, but I'm still worried about what it will do the overall market. The last thing any of us wants to see is for monetization to be only held to the precious few so that everyone else is forced to go to completely free. That could collapse the market for everyone.

THE TARGET: THE ONLINE GIFT CARD?

How do you allow for monetization through retail to help with the credit card problem, but without introducing the shelf space problem that could hurt everyone? Perhaps there needs to be a standard

Innovation Economy's Cool Companies

As a writer for the Globe, Wired, Fast Company, etc, Scott Kirsner gets asked what the "cool" companies around these parts are quite often. It's a common question I get as well, and I'm glad he took the time to give his off the cuff list based on the simple criteria:

- Is the company working on something important, or at least fun?
- If you worked there, would you put people to sleep explaining what you do?

Tim Rowe notes that 16% of the companies have been located at CIC, five are game companies, at least five has strong ties to the MIT Media Lab, and probably a bunch are somehow linked to Lotus. I note a distinct lack of wireless companies.

See the list here.

Real life, what would Metacritic say?

Game design is being applied to all manner of online life these days, from former game designers Catarina Fake and Stewart Butterfield designing Flickr, to Amy Jo Kim's talk on bringing the mechanics to the web, to Eric Marcoullier's MyBlogLog, to Jane McGonigal's great keynote at SXSW this year about how games are better than real life.

So with that in mind, and tongue firmly in cheek, Boing Boing tagged a piece from Metafilter that reviewed real life as a MMORPG. Remember being told to put down mario bros and go play Outside?

In terms of the traditional target age content metrics, Outside is remarkably high in sex, violence and challenges to traditional values, despite the strong child-focussed marketing it receives. Many would go so far as to say that for a child to develop the ability to cope with Outside is essential, as long as the harm incurred is not too debilitating. Children injured playing Outside are usually comforted by parents, and soon encouraged to go Outside again; this leads to the conclusion that somehow Outside has escaped any and all of the usual moralizing that surrounds the videogaming industry. One might say that Outside gets a free pass from the Jack Thompsons of this world...

Other players choose to focus on accumulation of personal abilities, the variety of which greatly exceeds the capacity of any individual to accumulate; again, the game requires players to engage in years of grinding to achieve any notable standard with a skill or ability. Players are issued abilities and characteristics largely at random, and it is entirely possible for a player to be nerfed beyond any reasonable expectation of being able to play the game, or to be buffed to the point where anything he or she does is markedly easier. Unfortunately over time, player abilities tend to degrade, unless significant effort is made to keep skills up. This reviewer cannot emphasise this enough: Outside requires a huge time investment to build up player abilities, exceeding any other massively multiplayer game on the market by some three orders of magnitude.

Players are encouraged to focus on social interaction, which can be engaged in in a variety of ways. In fact it's extraordinarily difficult to solo anything whatsoever in Outside, apart from basic skill and knowledge accumulation quests. One of the major forms of social interaction in the game is based largely around the addition of new players to Outside, and is both complex and, in comparison to the storyline-driven romance quests of, say, Baldur's Gate or Mass Effect, they are immensely difficult. Dedicated players of Outside, however, report that the romance quests are among the most rewarding the game has to offer.

(from Boing Boing)

 

Rock Band music sales close to early iPod music sales

If you care about music, and therefore whether that business will survive, there was some pretty amazing news from Rock Band this week that didn't get the attention it deserved. MTV mentioned that Rock Band had sold 6 million downloadable tracks in its first four months of sales. And while that roughly $10-20m in additional revenue is nothing that will alter parent company Viacom's stock, the finer numbers compare favorably to the early days of iPod.

First, let's keep in mind the state of the music business. People are pirating music like crazy, and consumers that were screaming about .99 cent DRM'd tracks six months ago are screaming about the high price of .89 cent non-DRM'd tracks today. If you want evidence at how much the music industry has changed in the last 24 months, just look at Rcrd Lbl, or the deals that Last.Fm and iMeem struck with the labels. The labels expect most of their money from those deals to come from a split of ad revenue. Which is to say they expect the incremental revenue of each track to hit zero pretty soon.

So on that backdrop, Rock Band is selling totally DRM'd tracks, locked to a single platform, at between $.99 and $2.99 each. And their attach rate considering all that is amazing. For comparison:

Five years ago on April 23rd, 2003 the iTunes Music Store launched:

• 200,000 songs in catalog (source)
• 977,000 iPods in market (source)
• 3.5m songs/Mo avg sales in first year (source, etc)

Four months (or so) ago Rock Band was released:

• 70 songs in catalog
• 1.1m Rock Band games' in market (as of January) (source)
• 1.5m/Mo avg sales in first four months (source)

The data isn't perfect: the Rock Band sales numbers are not up to date, we're not even talking Guitar Hero DLC, and the iPod had been on sale for over a year before the Music Store came online, giving it a big advantage. However, even with those caveats it is clear that people are willing to pay for more depth in their music experience, the same way they have shown a willingness to still pay for concerts. No, Rock Band isn't likely to be the next iPod, the early numbers are still off substantially from the iPod (see below). But selling active music experiences shows signs of being the growth opportunity for the industry. Which led one industry analyst to say:

"In 10 years people are going to look at idly listening to music the same way as we look at watching a TV show in black and white," said Geoff Keighley, co-chair of the Game Critics Awards that named Rock Band the best game of the industry's annual trade show in July.

Snapshots of GDC '08 & the presentation on social gaming

Facebook/Social gaming talk was packed.. bubbleicious.

After the jump is the presentation from the packed Social Gaming panel at the Game Developers Summit. It's full of good stats thanks to working with a great set of panelists. I also spoke on a panel on Friday, and Adam was nice enough to liveblog, Raising Venture Financing for your Startup.

And lastly, just as I've done previously, some of the memorably moments from the past week: 

Joking about their success in selling Reindeer poop last holiday season.

"If people say shit don't sell, then just make a virtual version." -- Sulka Haro (Sulake/Habbo)

On creating new MMOs.

"No IPs, they saddle a company down. We look at our company as being perfect for creating new products. We don't want to saddle ourselves with up to five+ years with someone else's ideas." -- Min Ho Kim (Nexon).

On why sharded communities may never get proper economies.

"Our free-market economy only worked when we went over approximately 50,000 players." -- Eyjolfur Gudmundsson (CCP/Eve Online)

On how to simultaneously reduce flaming and monetize it.

"We charge $1 for a shout that everyone, on every server, can see what you say. Then we charge $2 to reply back, and $4 to reply again. It becomes one big game of revenge." -- Alex Xu (Giant) for their Chinese MMO, ZT Online. Yeah.. the guys that are IPOing.

(Presentation from Monday's talk is after the jump.)

GDC: Facebook and the new web of Social Gaming

All the recent Techcrunch-infused battles between social gaming leaders Zynga and the Social Gaming Network (SGN) happened in realtime yesterday at the Worlds in Motion Summit at GDC. It was the first conference event on social gaming, and it showed, with a totally overflow crowd and a room that got fairly heated by the end of it. There is no doubt this a great new opportunity for game developers. It didn't hurt that in the past week both Zynga and SGN announced their platforms, EA announced they're entering the space, and MySpace is getting ready to open up as well.

Since so many people couldn't get in, we'll be posting up the slides soon, but in the meantime there is coverage of the panel at Sashinka, Virtual Worlds News, and Massively.

What's wrong with Facebook games?

Matt Mihaly has a good post up talking about whether casual or hardcore games are more successful on Facebook. And while he took a stab at what types of games are going to work, I thought I'd step back a bit and just see how games are fairing on Facebook overall. Even with the limited stats provided by Facebook, we can start to get a picture of what works and doesn't work on Facebook.

I'll have to admit that the first pass on statistics surprised me. Of the top 100 most active Facebook applications, games do not do statistically better than the average application. Games only have a marginally higher percentage of active daily users (8.57%) than the overall average (8.01%). And if you expand the criteria to include all apps that use game-like mechanics, (such as Superpoke), the average is still in the same range (7.71%). It's a wash.

 

These numbers do not jive with the incredible popularity of games on the general Internet (as I have talked about before), so what's going on here?

Well, digging a little deeper, many of the Facebook games are simple single-player games whose only social mechanic is that they post your score for your friends to see. Jetman and Tower Blox are two such examples. What happens if we just count the games that are specifically multiplayer, and therefore fit the social nature of Facebook better?

Ahh, that's more like it. Multiplayer social games such as Warbook and Scrabulous average 11.4% active daily users, a good 30% higher than the average top Facebook app (8.01%).  I'm sure if we could actually get engagement, attention, and retention metrics we'd see the same trend. This combined with the relatively high percentage of games represented in the top 25 applications (7 games) would suggest that there is simply a lack of quality, socially-focused games on Facebook.

With an average install base of 2.7m users for top Facebook games, this is a massive new distribution channel that makes the curated Xbox Live Arcade look like a backwater. I'll be chatting a bunch more on the topic at GDC in February where I'll be leading a panel discussion on Facebook and the new web of Social Gaming. I've grabbed  TJ Murphy (Warbook/SGN) and Mark Pincus (Texas Hold'Em) and it should be a one stop shop of what works, what doesn't, and the size of the opportunity presented by social online gaming. Should be fun.

Oh, and while you're at it, on Monday we publicly released our first Facebook app (more of a toy than a game really) -- Make Me.

 

 

Big Fish Games steps into Casual MMOs big time

Congrats! The news is out that Seattle-based casual MMO Thinglefin has been acquired by casual games publisher Big Fish Games. Thinglefin was founded early this year by Asheron's Call Lead Designer Toby Ragaini, Jeremy Friesen and Ryan O’Rourke. Big Fish is a casual games publisher, and their President Jeremy Lewis runs it as one of those quiet companies that kicks ass month after month without having to scream about it at every conference.

They are still in stealth mode, but are working on a web-based casual MMO that obviously Big Fish thought highly of. With the huge number of casual MMOs in development right now, getting distribution is key to rise above the noise. With combination of the development team at Thinglefin, and the distribution muscle of casual games publisher Big Fish, they should be someone to closely watch.

I met Toby about a year ago as he was starting up Thinglefin, and he was nice enough to give me a couple-hour headstart in announcing their VC funding to the blogosphere. I will claim my very insignificant part in all of this, as I introduced Toby and Jeremy a few months back. Clearly, they got along. :)