American Independence Day: Redux Edition

As we move into the Independence Day weekend here in America, I felt it was worthwhile to point back to last year's post about a small corner of what our fore fathers fought for.

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Hollywood in Games 2.0: They're Baaaaack Edition

It's been a while since my last game related post. Every time I sat down to write something it felt like groundhog day. Another developer shut down, take a look at these. Governor Schwarzennegger is trying to get the Supreme Court to review his video game bill even though his movies are worse than the game he is trying to block, look here. It just felt like I had written all the way through the news cycle and I would just be re writing myself in a new flavor. Then I saw this article in the LA Times http://www.latimes.com/business/la-fi-ct-games-moguls1-2009jun01,0,4429125,full.story around E3 and it led me to like it was 1993 all over again:

THE HOT TICKET two weeks ago was to Francis Ford Coppola's hacienda in Napa. Fred Fuchs, head of Coppola's American Zoetrope, pulled 50 people to the 1,600 -acre estate for a weekend summit on multimedia, complete with five meals and a tour of the vineyard.

After Saturday morning intros, the afternoon was taken up with demos from companies like Virgin Games and Spectrum HoloByte.

"We're interested in getting into this in a big way," Fuchs said. "We met a lot of fantastic people."

The future isn't in licensing and adapting feature films, it's creating new characters and stories for the interactive marketplace. That's what we're interested in. The time has come." — Variety, May 13, 1993.

I remember when this ran the first time ("I've actually used it a lot more too"). It was shortly after the launch of The Journeyman Project, the first photo realistic CD ROM game and a few months before Myst. The handful of people involved in building the games were able to create photo realistic cg on home computers and stitch it together into an interactive story. The increased memory capacity and graphic capabilities open the door for story to carry enhanced significance in games. Since stories are what Hollywood does, I was sure entry into the game business was going to put my clients out of business. Especially when I saw things like Strauss Zelnick leaving Fox to run Crystal Dynamics, a game publisher, and Time Warner, Fox and Viacom all launching game divisions. I called Michel Kripalani, founder of Presto Studios, creator of Journeyman, and asked how he was going to survive. He told me not to worry, they didn't know what they were doing. He was right. Presto outlasted all of them.

Fast forward to 2009 and we are enjoying the same flurry of announcements. Once again the financial model and significant advance in technology are getting Hollywood excited. Paramount and Universal announced re entry into the business, Warner is well into a re launch of interactive and Fox is making rumblings suggesting a move beyond simple licensing. The parallels do not end there. While it is not Francis Ford Coppola this time, new announcements are being made by Gore Verbinski, Jerry Bruckheimer and Legendary Pictures, among others, regarding their involvement in development and production. My suggestion of a parallel is not to say these efforts are doomed to failure. Quite the contrary. I am hoping lessons learned from the past, advances in technology and a new breed of Hollywoody take the industry to new heights.

Part of the failure last time was attributable to their conviction to ignore everything we were doing as an industry. They jammed Hollywood budgets and sensibility into the traditional game business. I've been told Time Warner Interactive spent over two million dollars on their mildly intriguing puzzler, Endorfun , an amount which probably would have covered the aggregate budgets of the top 10 games which included classics like Twisted Metal, Earthworm Jim and Full Throttle – an noticeably not 9: The Last Resort, produced by Robert De Niro’s Tribeca Interactive and starring Jim Belushi.

But they were not alone. Game publishers were just as much to blame. Virgin reached for the brass ring with Toonstruck, starring Christopher Lloyd, and I don’t even want to mention the equity and salary numbers circulating about Activision’s payments to Bruce Willis on Armageddon. Until this console generation, games were limited to single hooks and there was just not much room for story. The original GTA, released just after this wave was an isometric driving and car stealing kind of thing. The GTA we know today would have been at least four games at the time. Even Halo would have been a shooter and a driver in separate games. Storage and hardware advances not only allowed, but called for consolidation of genres. Publishers soon realized the stories were time consuming, expensive and the public just didn’t care. They were right, but the “public” was included enough consumers to generate a profit on PS2 budgets. It doesn't anymore. Moreover, we don't have the "we can't do that" excuse anymore.

I was confident we are headed for a wall again. Silly Hollywood, don’t you guys ever learn? But since I started writing this post a few weeks ago, I reconsidered an fundamental belief. I always argued games were not bigger than film, we just cheat when we talk about the numbers. We sell fewer units at 5 times the price. Well, I thought about it and did the math, and we really don’t charge more. Anyone who has recently taken a family to the movies knows, you can’t get through the experience for less than the USD 60 cost of a game. If you don’t take the kids and you add up baby sitter, gas, popcorn, etc, you are looking at more. I started thinking about and realized, Paramount and Michael Bay just got twenty million people to leave their homes, pay 50 to 100 USD and walk away with nothing more than an experience. We, on the other hand, will do cartwheels if we get 2 million people to spend 60 USD over the life of a game. What are they doing that we are not and how can we grab some of it?

The film business approach to launching a franchise is not exactly rocket science. They make the product and then they make sure everyone on the planet knows the product is out. Sure there is increased focus on a target demographic, but it doesn’t come at the expense of a network television ad, or talk show appearance. The point is, unlike the game business they don’t expect the audience to find it and tell their friends.

Let's take a quick look at the product part. We don’t make products 40 million people will really care about. People like Raph Koster explain it better, but I just want to hit on it for a second. When compared to film, games just are not accessible to masses. Admittedly, film has had 100 years to develop the language it shares with the audience. As I’ve heard Ed del Castillo say a hundred times, game makers completely ignore the common language of story telling and ask the audience to learn a new language. When was the last time you went to a film with a 45 minute tutorial level? In case this is not enough of a barrier, we put a foreign object in their hands and expect them to play the kind of pretend they did when they were a kid –“Ok, the joystick is a gun, now it’s a steering wheel, now it’s a fishing rod, yeah, the buttons do different things on every level and sometimes you move the whole thing, but not always” - figure out how to establish a connection to pixels on screen, and move it through an unfamiliar environment. It is kind of liking going to a movie theater and being handed a blue book so you can do a bit of non-Euclidian geometry to see a bit of story. If your answer is wrong, you have to go back to the beginning of the film. Oh yeah, and once you the story plays, it is in Esparanto with Klingon subtitles. The rabid Klingon speaking fans will love it and tell all their friends, but how many of them out there.

Accessibility can be addressed through technology, but so far, we largely ignored it. Rather than incorporating more intuitive controls or compelling characters, most games use technological advances for better graphics and explosions. Like the transition from VCRs to TiVos, the Wii mote showed us how audiences expand when technology becomes transparent. Nintendo took the first step by replacing he foreign thing with a remote control pointer -door open – but with the significant exception of Wii Sports, no one took the second step and made intuitive games – the room is still dark. Should we be surprised the tie ratio sucks and the only mass games people are playing are Wii Sports and Wii Fit? There is hope with looming introductions of Sony’s motion controller and Microsoft’s Natal, but the hope must be met with supporting software.

I am confident game designers will use their experience to create compelling designs for the new controllers. I am not so confident about the story side. A game hook is great for a few hours, but how long is a cover button going to hold on to the mainstream if they don’t care about the guy ducking or where he is going? We even see this in the core. The games with the most longevity, Halo, Gears of War and Call of Duty, are kept alive through multiplayer, which is really just a fancy way of saying people make up new stories for each other. I am not going all Wii Fit only on you, but I am also saying deep combos on a fungible burly guy who swears while he blows shit up is not going to hold a consumers attention. Broken down analytically, those games are really not a lot different than playing GI Joes in your backyard. Rather than a tool, game hooks developed into a crutch to get the core gamer to stick with the game. If we want to get the other ninety percent of the Dark Knight audience to buy a game, we need to tell them a story. They’ve been doing it successfully in Hollywood for years.

The good news about the new entrants is they played games long enough to know they can’t make them. This comes across in the Verbinski sidebar interview, but also in the staffing of the new entities. Rather than getting the guy who did web shit, mobile, or plays a lot of games, the companies are staffing themselves with pedigreed game builders. It sounds kind of obvious, but it is not what happened the first time around {brain surgeon cite]. At the same time, game technology advanced to a point where there really is something they can do. Sure, facial motion capture still has not gotten to the point where characters can convey emotion – thank Polar Express and Beowulf for teaching us that in film before it got to games – but there is a ton of stuff we can learn about story development, blocking, on screen composition, camera placement and even dialogue. Give us a character we care about and have him or her do something we understand. I wrote a lot more about the role of writers, here.

You may think this is an unfair characterization and obscures reality in light of multimillion selling games, but multi million is not mass. Talk to me when we hit Daredevil numbers, not even Dark Knight. Sure we have a loyal audience, but so do the single camera black and white shaky camera one legged pregnant lesbian with cancer films. Our budgets must be commensurate with our appeal. Twenty million people went to see Transformers 2 over the first five days of its release, and tens of millions more will see the film over its life. Seventy thousand people went to see Whatever It Takes, the new Woody Allen film starring Larry David. Both will generate profit, but their budgets were dramatically different. We can and should keep making games for the core gamer, but we must also be children of reality and accept the limitations of the audience size. Hit games are selling in the three to five million unit range and top selling games are selling in the 12 to 15 million unit range, these are pretty consistent numbers. We can continue to fight to be the few titles selling in this range, or we can do something to push more titles into this range and a handful into the rarified air. Wouldn’t it be great if we kept making these, but also doubled or tripled the sales volume of the breakouts? We can get a long way down the road just by doing a better job of telling people what it is we do. This is where marketing comes in.

I've addressed marketing before, and this post actually stands on it's own, but I didn't want to make you look somewhere else, and there are some new thoughts.

Games are luxury goods but we pretend our consumers can’t live without them. We are the most expensive piece of media consumed by a family. We expect them to research them in game magazines and find them on store shelves. No one really needs one and when the economy gets tight, consumers cut back on their entertainment spending. We are priced near the top of the category, but we compete head to head for consumer time and dollars with film, television, amusement parks, music and a ton of other stuff, but you would never know it from our marketing. With the significant exception of Actard, we just don’t tell people our product is on the shelf and when someone tells us how to do it, we don’t care. Robin Kaminsky stood up at in front of industry leaders and told us in painstaking detail, how and why they were successful with the launch of Call of Duty Modern Warfare. She displayed their research results as well as the plan. She also talked about what didn’t work. In case enough people didn’t see it, she let the DICE folks post it online. Then, to make sure everyone noticed, they implemented the strategy to launch Guitar Hero: World Tour and outsold Rock Band by a wide margin. But even Actard fails to apply its strategy across the board. While Actard, is spending coop with Wal-Mart to tag network television spots, the rest of the business is fighting the cold war in Gamestop to get one more standee or games displayed behind the counter.

Greg Furman, the founder and head of the Luxury Council says:

[Consumers are] More value driven. Meaning they have to better understand the equation of price and value. More interested in experience. More interested in telling a story about what constitutes the best of the best or a great or unique experience.

The statement can easily explain why Monsters and Aliens was one of the best performing films of the year, was also one of the worst performing games. The Wal-Mart/Target/Best Buy buyer understood what they were getting for the 60 USD expenditure for the family to go to they film, but with Actard saving their marketing mojo for their company owned titles, consumers did not know what was in the game box. Most of my peers in the business will passionately argue the richness of a game experience, the immersion, the focus required, the addictive nature and the imprinting of brands in the game, but no one hears about it when the game is sitting, locked behind glass in a cabinet at the back of Wal-Mart. Even if I look at a comparably priced box containing season 1 of Bewitched, I know what it is. Consumers are forced to investigate on their own and convince themselves the experience is worth their dollars. Coming home from lunch today I saw this billboard. If you were not enough of a gamer to read this blog, would you know what it is. I am a gamer and I barely know what it is. Put Megan Fox on a billboard and I know what I am getting for USD 10.
Put this on a billboard and unless I am a Tekken fan, I don’t even know how to get it or whether I want it. If I am a Tekken fan, you could have sent me an email and it would have been cheaper.

Studios promote the hell out of a movie to tell the world it is coming out and show you why you will like it. If a film is not tracking well and it looks like it will not open well, they market it even more. Nine out of ten people on the street can tell you the names of this summer’s blockbuster film releases as well as the the lead actor. How many can tell you Prototype or Red Faction were released last month – or even what they are. We can argue studios spend more money on marketing because more people attend the films, but maybe more people attend the films because they spend more money on marketing. What would happen if more people knew about games? Moreover, the studios don’t just spend dollars. They get a ton of marketing for free.

The Actor/Writer

Let’s dispel another core publisher belief. “’A’ list actors and writers have no value in games.” Most people agree good voice actors make a game better, but few will tell you it is worth paying the premium to put “A” list talent in a game. They are right. Brad Pitt will not make your game better or any more fun to play, and it will certainly not move units of a bad game. But, his presence will let a ton more people know the game is on the shelf than any other game has done to date. He will do nothing for you on the production side, but a hell of a lot in marketing.

When I was at ICM I placed one of the most successful film writers in history on a game with a major publisher. His fee was a fraction of what he received for writing the first draft of a script and was less than the publishers’ annual window washing bill for one building. The game was a success and the writer loved the experience, but he was not invited back for the sequel. When I spoke with the publisher, they told me:

“we are trying to quantify his contribution”
“But he did interviews with Newsweek, Entertainment Weekly, Entertainment Tonight”
“I know”
“You guys never got that coverage before. It’s worth millions”
“It is, but it doesn’t come from my budget, so I don’t care.”

Studios cast actors who they believe the consumers want to see on screen as well as in the media. Actors do press junkets, talk shows and media to promote their films. Consumers know the film is in theaters because they saw the lead actor on talk shows read about them on blogs and heard it on the radio. Their friends are sending pictures on facebook and booking tickets together. None of these outlets will interview Will Wright at the launch of The Sims, Alex Rigopoulos at the launch of Rock Band or whoever it is that is in charge of Call of Duty, but dress Sasha Barron Cohen in a body suit with a knit floppy pecker, and Bruno is instantly promoted to tens of millions of people around the world. Once the consumer goes to the store because they saw Brad Pitt on TV, they will look in the glass case, see has face, and know a lot more about the game with his face on the cover than Prototype. I know we are used to promoting features to consumers, but we are not selling games in ziplock bags anymore. Features description are great in Gamestop where consumers who are going to a store to buy a game can pick up the game and read the box. Box covers are good to people who walk through Wal-Mart and Best Buy and are choosing between a game and a DVD. It is all about the box art. Publishers agree it is great promotion, because the money for the talent comes out of the production budget and is really only valuable for marketing, it does not get spent.

Finally, we have to think about price. Films got larger as downstream revenue windows developed. Games go larger because technology advanced. Films do not have to get all their dollars at a single release. Games do. There is a strong argument for lowing the price to increase sales volume, but frankly, you’ve read an awful lot to get to this point, and I’m kind of tired, so I’ll save it for another post.

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Misquoted Again - Hollywood Style: Bullshit Edition

I started this blog when I was grossly misquoted as announcing a game based on the film "Juno." While it is a great film, there is really not a lot of content lending itself to a game, and I have never represented a property controlled by Fox or anyone involved with the film. I figured the best way to do it was to write my own stuff.

Well, consistent with my new theme of "everything old is new again" the blog is coming full circle. I am returning to the original purpose and providing a platform for correction. If Ashton Kutcher is more powerful than CNN, I must at least be a speed bump relative to the Hollywood Reporter, the most recent proponent of the brutal marriage of free speech and truthiness. Sometimes misquotes are by ommission, some are by commission and in very special cases, like last week when I was quoted in an article of games based on film licenses, they are both. My quote said:

Keith Boesky, a principal at Boesky & Co., says that studios are creating most of their own big games now, both out of a desire to control different incarnations of their franchises and because game publishers are increasingly gunshy about film-based games that aren't proven franchises.

"The biggest problem for Hollywood right now is that publishers aren't nearly as receptive to licenses as they used to be," Boesky says, citing such recent disappointments as "The Chronicles of Riddick: Assault on Dark Athena" and "The Godfather II."

"The only thing a game publisher is really going to want is a film that has two-plus years to release, with a guaranteed release date, with a guaranteed sequel and a guaranteed film marketing budget in excess of $80 million," he adds. "And right now there aren't a lot of those." . . .

"I think the studios are thinking more smartly because they're not looking at games as lunch boxes and T-shirts anymore," Boesky says, citing the hire of such game-industry veterans as John Kavanaugh at Paramount Digital Entertainment and Bill Kispert at Universal Pictures Digital Platforms. "By having people who actually make games involved in the process, they're getting better at how they do it."

The omission happens in the third paragraph and is the more egregious liberty taken with what are presented as my words. But in a rare effort at clarity, I am starting with the first and ignoring the very clear fact the collection of words surrounding my name read like they were assembled by a young child of a far away country using English words for the first time - "more smartly" "getting better at how they do it."

The first paragraph is an act of commission as I NEVER SAID IT. What kind of asshole who makes his living at the nexus of Hollywood and games would continue to work in this market if he believed publishers and consumers do not want to buy games from films? Not this one. I sold more game into film, films into games and developers to make games based on films than anyone in the world. I planted my stake here because I believe it is a good market. When the question was asked, the subject was fresh on my mind because one week earlier I was asked to provide a written response to the claims of a May 18th LA Times Blog Post entitled, "Movies may be booming, but video games based on them are not." I was sent the post and asked for my perspective.

Here is the original post.

A big year at the box office isn't doing much for video games based on them.

As movie studios and media conglomerates get increasingly involved in the video games based on their film and TV properties, some to the point of investing hundreds of millions of their own dollars, April U.S. sales data from the NPD Group provides some sobering news. All five of the most recent video games based on movies have sold poorly or moderately:

"Wanted: Weapons of Fate" is the first video game for high end consoles such as the Xbox 360 and Playstation 3 financed by Universal (in a slightly ironic twist, it was distributed by Warner Bros.). From its March 24 debut to the end of April, "Wanted" sold only 100,000 units, generating less than $6 million in gross sales. While its performance was hurt by production delays that pushed the game nearly four months beyond "Wanted's" DVD launch in December (it never had a chance of coming out with the film's theatrical debut last June), Universal still undoubtedly had higher hopes given that top-tier titles for the 360 and PS3 typically cost more than $20 million to produce before any marketing.

"Hannah Montana: the Movie," which was published by Disney Interactive Studios, a sibling unit to the film studio within the Walt Disney Co., certainly cost less to make. But 65,000 games sold in the first three-plus weeks is a bad sales figure for any budget and evidence that inexpensive video games aimed at girls, traditionally the foundation of Disney Interactive's strategy, aren't consistently hits.

Electronic Arts' first video game based on "The Godfather," released in 2006, sold a solid 4 million units worldwide. But gamers have proved willing to refuse "The Godfather II" (pictured above). It sold a modest but not disastrous 241,000 units out of the gate, giving it gross sales of under $15 million, and received so-so reviews (in part because of how significantly it deviates from the movie's plot). That means Electronic Arts likely won't pour resources into a third "Godfather" game, a decision that would cause the rights to revert back to Paramount.

"The Chronicles of Riddick" is a dead franchise on the big screen. But the game based on Universal's 2004 film is revered by many fans and critics as the best interactive adaptation of a movie. So Atari, which bought the video game sequel after former publisher Vivendi Games merged with Activision, had every reason to be excited about "The Chronicles of Riddick: Assault on Dark Athena," which featured the digital likeness and voice of Vin Diesel in the lead role. Since its March 17 debut, however, gamers have bought only 100,000 copies.

Games based on hit kids' movies are usually as safe a bet as they come. But Activision's adaptation of DreamWorks Animations' "Monsters vs. Aliens" has sold just 161,000 units since it came out on March 27.

(Sales figures don't include the PC versions, though that rarely makes a significant difference.)

In response to the sales question, I wrote (I apologize for the poor grammar and underdeveloped thoughts):

Looking at the movie games you mentioned, Wanted, Riddick and Godfather did not come out with movies. This makes a huge difference. The film game consumer is a completely different consumer than the core gamer. They buy games based on films they like and know the games are on the shelf when the film is out. Remember, Wal Mart is the largest game retailer in the US, and the 110 million per week who walk through the store find out about those games from the movie marketing campaign. If there is no campaign, they don't look. If they happen to stumble upon it, they assume it is old. Their performance is not at all indicative of film based game performance over all. If I had to guess on Monsters vs. Aliens and Hannah Montana - which is what you are asking me to do - I would say they are victims of the economy. After taking the family to somewhere between 50 to 100 dollars worth of movie night, there was probably just not enough left over to buy a 60 dollar game.

You should also be somewhat suspect of the numbers. They are US only, and NPD does not cover all retailers. Depending on the of game, the numbers may be off significantly.

I stand by what I wrote. The three games cited in the article are not indicative of performance of film based games and, while I am not a publisher, I do not believe they are making the publishers any more gun shy of a film based game than the poor performance of the highly anticipated series, Kings, on NBC, as they bear just about as much relevance. The number of licensed games in a publishers portfolio are a percentage of the total output. Because license fees are paid out, the margins are lower than on a wholly owned franchise. In many cases, the decreased margin is made up on higher sales, so licensed properties are a vital part of a portfolio. Like the studios, for the past few years, most publishers have been operating under the "fewer, bigger, better" credo and reducing the total number of games in production. As a result even if the percentage of licensed games remains constant, the absolute number of licensed game slots is reduced, making it more difficult for studios to place anything other than sequels to blockbusters, or the most expensive, hyped films of the year. But the percentage of licensed properties is not constant at every publisher.

The reduced number of slots is further exacerbated by the increased cost of the games. In the last console cycle, games cost 1/4 what they cost to produce today. Publishers were willing to take chances on films without guaranteed sequels because they could earn out on one game. Today, publishers are more reluctant to take in film games today because game budgets are very large, and they can not always realize the return they would like on a single game. They must amortize the budget over a number of games. If there is no film release or marketing campaign, game sequels need additional publisher marketing and still may underperform relative to the initial game. If a publisher has to invest in marketing a game like an original title, they may as well build something they own, rather than something owned by someone else.

While producers, writers and directors do not often understand, the people responsible for gams at studios recognize the publishers license games for the built in marketing. Game publishers have more internal stories than they know what to do with, and if they run out of ideas, they can dig into another pile at the developer level. Except in the rarest of cases, publishers really don't care how unique or special your movie about the potential apocalypse thwarted by missile farting penguins is. If there is no big marketing campaign, fixed release date and a sequel, you will not sell it. If you do, it will be on materially different terms than those received by Marvel or Fox for Avatar or Paramount for Tin Tin. Studios spend more money around the launch of a film than many publishers spend the whole year. This effort lets the Wal-Mart shopper know what is in the box by looking at the cover. If you don't believe me, hold up Bioshock next to a Bond game.

This leads to the third paragraph. I did say the studios are smarter because they are being pro active. They realize the licensing market is shrinking and they using different methods to initiate game production. I mentioned Bill and John because I have known both for a number of years and both are very good at what they do. Bill Kispert actually made games for Universal. He built games for a number of films and in an exercise foreign to most within the studio system, he put his ass on the line and took responsibility for the production before anyone knew whether or not it would work. I know John as one of the best game production people I ever met His hiring is signal Paramount is serious about actually building games. My mention of these guys does not mean production is ramping to the exclusion of licensing, and therein lies the omission. Production is a compliment to licensing.

The complete story would mention people like Mark Caplan at Sony, who along with licensing games for blockbuster features, pulled Ghostbusters out of the archives for a frontline AAA game, introducing the property to a whole new audience; or Sandi Isaacs, who among other things, licensed The Godfather game to EA and while the May 18 blog may question the first week sales of the sequel launched in the off season, it also references sales of the first title which probably accounted for more revenue in 2006 than the aggregate of the previous 37 years since launch or the high margin revenue from the Tin Tin deal announced by Ubisoft at E3 - on a side note, revenue from sales to date actually exceed the opening box office for each of the Godfather films and when coupled with the first game's revenue exceed the total box office revenue of the theatrical franchise; and of course no licensing story would be complete without reference to Rob Sebastian's annus mirabilis, when he had the good fortune to license Harry Potter, AI and Superman in a single year, closing in on USD 100 million no risk dollars for Warner.

So please, I think it is wonderful for you to reach out to perceived experts rather than guessing about how a business works. But if you would like me to be one of them, listen to the words I say rather than hunting for the right ones to support your story.

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I Ran Two Marathons Today: Idiot Edition

I realize I have not written in a long time, and I am working on a real post. But, in the mean time, I want to create a permanent record of the pain created by a repeated act of hubris which I like to consider my second and last marathon. Last year I wrote an overly romantic recollection of my first marathon. I say overly romantic because I forgot to mention the pain. Now, as I walk about my house with the gait of my 93 year old grandmother, I remember being told human beings have no recollection of pain. I'm told it is an evolutionary thing. If women remembered the pain of child birth, they wouldn't do it again. Having seen child birth first hand, I can confidently say my pain is nothing like it and there is no part of the marathon that involved anything big coming out of a not so big place, but my calves hurt a lot. You see, marathons are like surgery, you feel great going in and like shit coming out. Had I written this last year, I could have read it and avoided this pain.

Last year I wanted to finish in less than four hours. Had I done it, I would have had a quite Memorial Day and perhaps enjoyed a barbeque with friends. Instead, I convinced myself my 4 hour 30 minute time last year was the result of my wrong adjustment of my ankle brace and I had to run again to get my time down below 4 hours. Once I did it, I would never have to do it again. This line of reasoning is how I can proudly say I am a scratch golfer. When I was in college I took some golf lessons. After a few weeks on the driving range the pro took me on the course. The first hole was a downhill par 3 and I shot par. Having done that, I put the clubs down and never picked them up again. I had nothing left to prove and I am a scratch golfer. If my first marathon was sub 4 hours, I could have said I was a sub 4 hour marathoner and quit.

Even though I ran it in 3 hours 57 minutes today, unless I run another 30 marathons - not going to happen - my average will remain above 4 hours. I will have to settle on a slightly sub 4 hour personal best. I was on course to getting my average pretty close to 4, but it just didn't happen. When I got to the starting line noticed signs sticking up with different finish times on them. These people were assisting everyone in keeping a pace. They started at 3 hours and worked their way up in 20 minute increments through 5 hours. I wanted to be sub 4, so I lined up at 3:40 thinking this would give me plenty of room to fall behind in case I had pee, or slow down.

The race horn sounded and we started to move like cattle down the too narrow street to the starting line. The pace people were there so people would be able to line up based on their capabilities, creating a clear path everyone. Unfortunately, many of the runners did not get the memo. I tried to pick up to a run as I crossed the start line, but instead I found myself in an uncanny simulation of the 1982 Stanford/Berkely football game when the band ran on the field. People were everywhere. Big ones, little ones, smelly ones - coming from all angles. My pacing man was getting away and I hardly even started.

After the first mile the road widened and I closed the gap. I was running right behind the 3:40 pace guy and started to bond with him. He was great - not that I talked with him or anything - but he was there for me. He held up his sign and ran and a steady pace. The right pace. At each mile marker he would signal water and and gatorade on the sides and run over himself to grab some. Turning his head sideways, he was able to squish the cup just right to drink without losing the pace. He knew he couldn't lose the pace - he had a responsibility to us, his minions. Sure, others were trying to suck up to him, running along side and talking to him, and one woman ran directly behind - even to the water holders - with the tenacity of a bulldog. I chose to keep my distance. Let him be - until the end of the race.

I didn't think I was going to keep up with him, but the miles seemed to go by much easier than last year. With each passing mile, my appreciation grew. At mile 3 I was thinking about a heartfelt thank you and a hand shake. By mile 14 I was ready to invite him over for a passover seder. Then, he betrayed me. This year's revised course was mostly flat for the first 14 miles, and then mostly uphill for the last 14. You would think Mr. Pace Setter Pants would take this into consideration - slow down for us. Especially after the bond we built over the last 14 miles. But, no. Shortly after mile 14, this asshole yelled "big hill after the turn," turned left and ran uphill at exactly the same pace. No consideration whatsoever for those of us who don't run a marathon every weekend. I probably don't have to tell you, not only did he abandon me at the intersection, but he increased the distance between us for the balance of the race.

Sure this was a great disappointment, but I was able to get over it and complete the race. Each mile marker was a welcome pat on the back for trudging, rudderless, through the race. Around mile 19 the 3:50 pace setter came up behind me and I picked it up a bit to hang with them. The pace was good - he was much more considerate than Mr. 3:40 - but I really had to pee. I ducked into an outhouse at mile 20, and when I came out, Mr. 3:50 and his minions were gone. Once again, I was on my own. As I approached the mile 25 marker, the race clock read 3:49:30. I was perilously close to not making the last 1.2 miles in time and wasting this opportunity to beat 4 hours. As I crossed mile 25 I kicked on my power song, this year was Matisyahu, King Without a Crown - try it, it works - and dug in. There was no way I was going to let this get away, and I was certainly not going to do it again. I looked down at the iPod and say was moving at about an 8:30 mile. This would get me there, but not with a great margin. As the song moved into the guitar riff, I looked down again and saw myself running at a 7:21 pace. Then, the song ended and the race did not. After using Freebird as a power song last year, I miscalculated the button push I was in front of the Staples center, and I had half a mile to go. I pressed firmly on the center button, kicked the song in again and dug down to move my ass. I turned the corner and saw the 26th mile marker and the finish line just after that. I looked at the stop watch I started at the beginning of the race and it was rolling over 3:57. I had to make it. I did not spend the last four hours running to miss it by seconds. The guitar riff kicked in again, the crowd started to cheer, and my legs started to move. I crossed the mile marker and had 2 tenths of a mile to go and the official race clock next the finish line was reading 3:58 and change. Just enough time. I crossed the line at a clock time of 3:59.17 and a chip time of 3:57:39. After spending over a year with a finish photo bearing a clock time of 4:32:54, the 43 seconds came is a welcome relief. No 4's this time, and no more marathons.

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Onlive: Apple Acquisition Edition

Last week, we heard the news of Onlive. The view of the company's potential really depends on the perspective of the viewer. The mainstream media, the rapture is upon us. The game industry is in a state of turmoil and publishers are fighting a losing battle here on earth while those who signed with Onlive are ascending to heaven, only to return in the 4th quarter when all other publishers died on the swords of their own hubris. The gaming press is looking at it the way a cat paws at a dead rat hoping it will jump up and start to play, all the time saying "so tell me again why this is better than Steam?" Either way, I just wish I had a piece of it because these guys are going to make a lot of money.

With Mike McGarvey involved, it is no surprise the company is a press juggernaut. In a former life, Mike, Dave Cox, Paul Baldwin, Sutton Trout and a handful of others launched Tomb Raider from a then two month old Eidos, generating a ton of press and instantly turning the company into the second largest publisher in the world. He is a smart guy who knows how to use the press to his advantage. It is also no surprise that the press sparked debates. GDC discussions and subsequent news reports were filled with debates over whether the thing would work. I am not smart enough to understand the tech or the arguments, but based on the folks involved, I believe it does what they say. Steve Perlman is a very smart guy with a track record of delivering on technology promises, and after years of working on this thing, he would not make an announcement if he could not back it up. The only question in my mind is whether there really is a problem to fit this solution.

Assuming the technology is solid, I still have concerns about the market. The service provides high quality PC games on demand to consumers. They lined up nine publishers and a ton of games, but are the people who don't have game consoles or access to Steam or Direct2drive on their PC's really clamoring to play Crysis. I mean, it is almost a tautology. If you want to play Crysis and have 5 megs down, you have a high end PC, a broadband connection and a game console or two. If you don't have that stuff, you probably don't even know what Crysis is. I know, I know, they have a lot of games and they only focused on Crysis to get our attention, but the games they have are all PC games. While the company is promoting the games as playable on a TV, most PC games don't translate well to TVs and most people don't play games on their PC. When it comes to the type of games being delivered by Onlove, the console game market dwarfs the PC. And again, is the person who is inclined to subscribe to a dedicated game service and has broadband next to their television really someone who does not already have a game console? You know, those things with a ton of downloadable content made for consoles and a ton more on the way. If I own a PC, why wouldn't I buy games through a progressive download service so I can use my VOIP phone or someone else can watch video while I am playing games in the other room?

But you see dear reader, thoughts like this come from the simple mind of a guy in the game business trying to figure out whether the service will be a success. This is the wrong way to look at the operation. This isn't about games. It is about high finance. The kind of stuff that makes Richard Garriott look like a pauper. When viewed from the correct perspective, it becomes obvious the service has achieved its first milestone and this Jesus Box is well on its way to spewing money from the heavens for the equity holders.

There is an old joke about a shipment of sardines. The story describes this single case of sardines moving from buyer to seller with a consistently escalating price. Finally, after a number of turns of the same case a potential buyer cracks open one of the packages and tastes one of the sardines.

"These taste like shit." the potential buyer says.
"Yeah, so." says the seller.
"Well why would I buy bad sardines."
"Idiot" says the seller. "These sardines aren't for eating, they are for buying and selling."

This Jesus Box is for buying and selling. When Steve Perlman created WebTv, he created a working technology, a patent portfolio and a set of strong strategic partners. He also created a news story which would give a lift to anyone who acquired it. The buyer was putting the internet in people's living rooms. Before anyone could tell whether consumers would buy in, Microsoft acquired the company for a big number. We saw the same thing with Massive Media. Anyone in the business who looked at the company saw the guys hand coding behind the facade of the great and powerful Oz. But for Microsoft, it told a story. The company had a pile of hard to get contracts with publishers, a semblance of technology, and a very nice story to tell about the growing world of in game advertising. The pattern isn't Microsoft, similar stories can be told about Yahoo's acquisition of Broadcast.com, Google's acquisition of Youtube, and hundreds of other mergers and strategic alliances. The pattern is buying into a story.

If we look at Onlive from the perspective of the game industry, it is a big question mark. If we look at it from the perspective of the rest of world, it looks pretty cool. There are no bandwidth, viability, consumer adoption or game quality concerns. Where we see another game box, they, like Newman looking at Kramer in the Butter Shave Episode, see a big tasty turkey dinner. The story is simple. This purchase puts a company in the hottest business on earth. To a cable company, hardware company, bandwidth provider or studio the company looks like a big stack of hard to get content deals wrapped with a bunch of blocking patents which could keep their competitors not only out of this space, but other spaces in which they operate. If they are a media company in anything other than games, their industry is down while the world is saying games are white hot. This thing is a story to shareholders waiting to be told.

When Apple was launching the iMac the company aggressively pursued publishers to commit to day and date release of their games on the Mac. They found out games were an important application and they had to have them for consumers. But with a market share of only 2% it didn't make sense to make sense for publishers to make the investment. You may remember, Steve Jobs responded to this issue in 1998 by announcing Connectix virtual game console. Sony sued and the thing was pulled from the market, but before that happened, Jobs was able to announce the arrival of over 350 games to the Mac platform. The entire PlayStation catalog was now available. Consumers who never intended to buy a game were more inclined to buy the iMac because they could buy games if they wanted to.

Let's take a look again at Apple. AppleTV and Xboxes are both trojan horses - hang in with me and you will see where I am going. The biggest difference is Microsoft put the trojans on the inside and Apple had them riding on the outside. The end goal for both is ownership of the set top and more specifically, the video distribution channel going into the set top. Microsoft got the box pulled in through games, Apple is doing it through video. Microsoft is way ahead - for now. It would cost Apple billions in R&D and years of product development to come close to the 360 on the game side - unless it pulls in a service like Onlive. If Apple acquired Onlive, they would immediately have a portfolio of games deliverable in a quality rivaling the 360. All of a sudden there a hd movies and tv shows delivered through iTunes, streaming video from sites like Hulu through Boxee and a portfolio of games rivaling those on the 360 at a fraction of the price. In one simple acquisition, Apple would get to the same point as Microsoft with a more elegant solution, less legwork on publisher deals and without spending billions of dollars in R&D. Does it work? Who cares. Sure they are still PC games on a television, but this story is being told to people without consoles. The appearance of a large selection of games is more important than the games themselves. It is like computer expandability. Everyone considers it during purchase, very few people actually ever expand a computer. Like all those people who only own Wii Sports, if they feel they have access to more games than a PS3, they will like it, even if they only ever play a handful. It is a great story and Apple is about stories. Was there really anything you could do with an iMac you could not do with any other PC? Can't you see the Apple ad with the continuous background "ca - ching" every time a game title goes up on screen for the 360 and one flat fee on the AppleTV? The system will be elegant, simple and usable. Would it make me throw my 360 away or buy an AppleTV? Hell no. But will it move high margin units of AppleTv and get them a nice rise in the stock price? Hell yes. If you really want to dip your toe into the deep sea of speculation, think about how an acquisition fits with this.

Apple isn't the only one who can benefit from this story. Warner who is already an investor, Comcast, Cisco, Logitech, Viacom and Newscorp are just some of the potential suitors who would benefit from the story. So if you think you would not buy this box, don't worry, they don't care. It's not for you anyways.

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More Irrelevance Warning: Foreshadowing Edition

Sometimes everyone is thinking the same thing as I am and other times, I just notice the references more because I am thinking about it. I don't know which one is happening now, but the New York Times seems to be saying the same thing about Harley Davidson as I wrote about the game business. It just seems like we could substitute Harley with the name of any one of the console publishers and the story would still be accurate. They are just further along the curve. The consensus on Harley is they must change or die.

I added the emphasis. You can read the whole article here.

. . . But Harley persevered by capitalizing on its revered brand, made famous in movies like “Easy Rider,” and more recently by appealing to boomers’ desire to recapture their youth. . . .

By building such a powerful brand with offbeat, behind-the-scenes efforts — little advertising, lots of accessories and minor visible changes to bikes over the decades — Harley has become a case study for academics, marketing gurus and other corporations. But Harley’s longtime strategy of marketing to the boomers, which was a blazing success, is now backfiring.

Its core customers have grayed, and they are buying new bikes less often. The average age of a Harley rider is 49, up from 42 five years ago. But company executives don’t seem outwardly worried by the lackluster growth among those 35 and younger, even as it takes steps to turn them into Harley owners.

They say they’re confident that the baby-boom generation has 15 more years of riding life. “They’re not about to stop riding because they’re getting older,” Mr. Richer says. “It would be dumb to walk away from our core customer, the most lucrative customer.”

As Harley keeps most of its focus on its aging consumers, rivals like BMW, Honda and Yamaha are attracting younger customers who seem less interested in cruising on what their old man rides. United States sales of light sport bikes, intended for the younger crowd, have increased more than 50 percent in the last five years, and the Japanese makers have popular cruisers of their own. Harley has roughly 30 percent of the overall United States motorcycle market, but it accounts for half of the heavyweight bikes sold in America. . . .

“Harley understands the baby-boomer consumer incredibly well, in a holistic sense,” says Gregory Carpenter, a marketing professor at the Kellogg School of Management at Northwestern. “But to grow and thrive, they must create a deep emotional connection with younger consumers.”

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Really?: New Record Traffic Day Edition

Sunday night's post about gaming on the verge of irrelevance drove record traffic to this blog - by orders of magnitude and from 66 countries. Thank you to those who linked and those who visited for the first time and to all of those who chose to comment and email with an opinion. It is fascinating to see what resonates and what doesn't. I guess that one did.

I hope I have something else interesting to say again.

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The Game Business Is A Year From Irrelevance:Where are Our Easy Riders and Raging Bulls Edition

Every time I told people in suits and ties - or my parents - I was in the game business, they started to talk about kids. They viewed our business as the toy business. Games are for children. This was when I pulled out my silver bullet. I had The ESA's (then IDSA) latest report showing the average age of gamers. I started when it was 27. The "average age" went up a year each year, but was still a neat statistic when I could say 30 or 31. Whether it was directed at a school parent or an audience at a conference, It inevitably led to a dropped jaw and a "wow, I didn't know that." The industry instantly became relevant to their business.

I haven't really paid much attention to this number because my proselytizing for the business was taken over by outlets like the Wall Street Journal, Newsweek and USA Today, which all have a larger reach than this blog or my speaking engagements. But this past week I saw some slides for an ESA speech indicating the average age of a gamer has risen to 35, or roughly, the median age of the US population. I suppose reaching this point was inevitable, but in the back of my mind, I always thought the aging would slow down. At some point it would have to reflect the disproportionate number of people under 25 playing games. After all, our consumer used to be younger than the median age of the population, and you would think, like the movie business with an average age a full 3 years younger, our product would appeal disproportionately to the demographic universally recognized as more likely to spend money.

Those of us who have aged out of the 18 to 35 focus of media can appreciate the dwindling selection of interesting product coming from savvy media channels who know how to make laser focused offerings for the most lucrative segment of the market. We are relegated to the "Bye Bye Birdie" lament of "Kids these days" when considering the most popular content in every media but our own. I know its an old reference, that's how our kids feel about our stuff. It would be great to say we are not "our father's games" but when looking at the most recent offerings to my thirteen year old son and the upcoming blockbusters - Street Fighter IV, Resident Evil 5, Tom Clancy's latest kill the foreigners, The Godfather 2, WWE Smackdown 286, Final Fantasy 15 or so, even Guitar Hero with Metallica and other songs that were old when I tried to find a dance partner in junior high, followed by this year's big excitement The Beatles - I realize they ARE his father's games.

Over the course of twenty-five years we got really good at making games for gamers. We taught them how to play and what they should pay and then followed them through the market. Our planning stages focus on what they will buy, and if we can't confirm they will buy it with a high degree of certainty, we don't make the product. The games are so tailor made to the desires and skills of these gamers, they are about as easy for mainstream consumers of entertainment to crack as ancient Mandarin dialect. No one wants to work for their entertainment. There was a time, not so long ago - last cycle - when this audience was enough. A one million seller was extremely profitable. Two million had publishers doing cart wheels. Anything more had them taking money out in wheelbarrows. Today, two million is break even. Before it was nice to tap into a little itty bitty corner of the mainstream with something like GTA, Halo or Tomb Raider. Now it is imperative for our own survival. Our aging consumer, steady tie ratio, and consistent unit sales numbers across generations of console indicates our business is not really growing the way it could, should or has to. The initial ship of this year's Street Fighter IV was the same size as the initial ship of Tomb Raider 2 eleven years ago. In other words, we are not exceeding the patterns established by prior console generations. Like the movie industry touting box office growth when all they do is raise ticket prices, we are enjoying relative unit growth as a function of generation growth in the installed base, rather than growth in the number of game consumers. Worse yet, our audience is aging. An aging audience means less dollars spent. The Wii has the lowest number of consumers in the 18 to 24 demographic, and it also has the lowest tie ratio among the platforms.

A precious few companies float product over a consistent demographic, but not many. Look at the handoff of Nickelodeon to MTV to VH1. They can give a shit less about maintaining their audience after 14 or 24, respectively. If you are my age, you know what I mean. One day every show on the channel is great, and then the next you seem to be enjoying VH1 a lot more. It's like something invaded your brain while you were asleep and made everything on the channel repellant. MTV just doesn't care. We were their first audience, but from my point of view, there is not a single intelligible note left on the channel. If you are under 30 you don't have to believe me. Just wait a few years and you will see what I mean. The result, MTV Networks continue to go great guns and generate revenue.

Unfortunately, we seem to be falling in the category of the majority of industries with loyal consumers. The only open question is whether today's publishers will adapt or die.

When the movie business encountered a similar issue in the late 1960's. This was a time when Clint Eastwood was starring in the musical Paint Your Wagon and Francis Ford Coppola was directing another musical, Finian's Rainbow. The studios completely lost touch with their audience. MGM paved the way to film success with musicals in the fifties. The studios cultivated this audience and continued to provide content to the same audience, as the audience aged and stopped going to movies. The younger audience just didn't care. Films were expensive to make and audience growth was flat. The studios were taking guidance from the past rather than looking to the future. They were recreating the films they grew up on and expecting a new audience. Then, all of a sudden, almost by accident, and outside the system, Easy Rider slipped out. The film cost nothing and made a fortune by attracting a young audience. It gave the studios a much needed kick in the ass. They realized the system was broken and reengineered the pipeline from production through release. The new production process opened the door for an inexperienced crowd fresh out of film school - Steven Spielberg, George Lucas, Jon MIlius, Martin Scorcese to name a few. Their type of movie did not bet the farm on every production, allowing for greater risk with each product. The distribution process, arising from Jaws, created the blockbuster. Rather than rolling a movie slowly across the country and letting the audience find it through word of mouth, they started to market movies aggressively so people would know they were in the theater. As a result of the changes, the audience, number of revenue streams and overall market grew (this is an extremely truncated version of history. If you are interested take a look at this books about Lew Wasserman, Sony and of course Easy Riders, Raging Bulls ). Sure they have their issues today, but we are looking at the end of a single cycle that is longer than the entire life of our industry.

The US auto industry, so far, has not been so lucky. There was a time when Cadillac was the "Cadillac" of cars. From the forties to the seventies it was the epitome of luxury, technology and status. General Motors jealously guarded the jewel in its crown and maintained its status at the top of the GM aspirational hierarchy. But when it came to design, Cadillac was so concerned about alienating its core user base, it maintained styling cues and appointments well beyond their relevance. This strategy maintained their audience for 30 years, but that is all they did. As the group aged, the younger market was wide open for competition from all around the world. Worse yet, as the average age creeped up the older side started to die off, shrinking the market size. Ultimately the company realized it would need to take a risk because their customers were dying. It started selling trucks and jettisoned the old branding to focus on performance. A large portion of the audience ended up staying and the average age of the Cadillac consumer fell from 64 in 2000 to 56 in 2008. Turns out my Grandfather didn't really care about the change from Sedan DeVille to DTS and new buyers like the 600 horsepower CTS. Still a far cry from the 42 year old average consumer of BMW, but a very positive move. The entire industry down and it is still too early to tell whether the strategy save the company, but it certainly moved the 107 year old company in the right direction.

I don't believe either of these examples provide a roadmap for sustaining our industry. However, they do provide effective warnings about complacency and fetishistic attachment to existing consumers. We have to start taking risks again. We are not at the point of drastic Cadillac-like measures, but there should be a risk component in publisher portfolios. The gap between the sub USD one million XBL/PSN downloadable and USD 20 million console game is to great to have nothing in between. Traditional publishers' relevance and the premier creators of interactive entertainment is under attack by movie studios, Miniclips type sites, DVD games, Facebook apps and other social network games and a ton of others. They are using the same game mechanics and the same hooks we abandoned years ago in favor of the pursuit of "advanced technology." The audience is being conditioned to pricing models that don't demand up front investments of USD 60 or monthly subscription fees. It is not just a question of a simple interface change. The Wii mote led the horse to water, but so far they are not drinking. We need end to end revisions. Changes in production, release timing, marketing and pricing. We can continue to believe EA, Actard, Microsoft and Sony will always dominate the market operating business as usual - kind of like MGM and Cadillac - or we can look to new audience segments and determine how we can make the changes needed to remain relevant. If we don't I am afraid my son's generation will view today's games as the new polyester shirt.

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