Call of Duty Terror: Activision's Contribution too Little, Too Late Edition

I am proud to be an American. While it is not the most popular thing to say in some parts of the world and we often joke about being the "ugly American." I am proud and Activision's choice to involve players in a terrorist act is neither who we are or who we want to be. We are a country of ideals. When our government falls short of our ideals, and it does, we can freely challenge their actions and ultimately vote them out of office. At our best, we challenge ourselves to achieve goals which appear insurmountable at the outset.

Challenges like John F. Kennedy's challenge to go to moon:

We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

Ronald Reagan's challenge "Mr. Gorbachev, Tear down this wall."



Al Michael's commentary when the young, inexperienced US Hockey team beat the Russians in a particularly tense time politically:

"Do you believe in Miracles"



These are just a few that came to mind and I can't think of these events without getting emotional. They are American dreams turned to reality. They draw on Thomas Jefferson vision of "life, liberty and the pursuit of happiness," He knew these rights come at great cost "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it's natural manure" and the cost should be respected. Men and women put themselves in harms way and gave their lives for Americans to have these choices. By placing a CIA terrorist mission in Call of Duty Modern Warfare 2, Activision is making the choice to dishonor the very people who provided the company with the ability to make the game.

From time to time our resolve and our commitment to our ideals are challenged and we rise the occasion by answering the challenge and leading by example. We, along with that of the rest of the world, faced a challenge during World War II. After the attack on Pearl Harbor our President Roosevelt called upon the nation to support an effort against a very real threat to our liberty as a nation and to free nations around the world. He recognized the challenged and called for a unified response, not terrorism.

No matter how long it may take us to overcome this premeditated invasion, the American people in their righteous might will win through to absolute victory.

I believe I interpret the will of the Congress and of the people when I assert that we will not only defend ourselves to the uttermost, but will make very certain that this form of treachery shall never endanger us again.

Two and a half years later when he sent our soldiers onto the shores of Omaha Beach on D Day, he described very real boys in a very horrible situation.

They will be sore tried, by night and by day, without rest -- until the victory is won. The darkness will be rent by noise and flame. Men's souls will be shaken with the violences of war.

For these men are lately drawn from the ways of peace. They fight not for the lust of conquest. They fight to end conquest. They fight to liberate. They fight to let justice arise, and tolerance and goodwill among all Thy people. They yearn but for the end of battle, for their return to the haven of home.

Some will never return. Embrace these, Father, and receive them, Thy heroic servants, into Thy kingdom.

The soldiers did not want to be there. They answered the Call of Duty. Hence the name of the game. The first Call of Duty game was created to tell the story of real people stepping into harm's way to answer their nation's call. Young kids were risking their lives to save the world. They were not trained killers with a bloodlust or pretending to be terrorists. They were scared young men who should have been at home playing baseball and drinking too much beer at the fraternity party. Instead they fought for our freedom. The freedom to practice the religion of our choice, the freedom to set and pursue our own goals, and the freedom of speech. Within that freedom of speech is our right to put whatever we want into a video game. Activision chose to include a level where Americans engage in a terrorist exercise in an airport. But just because they can, does not mean they should. There decision dishonors the people who fought for their rights and puts our country in a bad light. Is this really who we want to be?

The latest installment of Call of Duty allows you to play a character who infiltrates a Russian terrorist organization and engages in a mission in which you kill civilians. Activision issued a statement trying to explain their position.

“Yes it is. The scene establishes the depth of evil and the cold bloodedness of a rogue Russian villain and his unit. By establishing that evil, it adds to the urgency of the player’s mission to stop them.

“Players have the option of skipping over the scene. At the beginning of the game, there are two ‘checkpoints’ where the player is advised that some people may find an upcoming segment disturbing. These checkpoints can’t be disabled.

“Modern Warfare 2 is a fantasy action game designed for intense, realistic game play that mirrors real life conflicts, much like epic, action movies. It is appropriately rated 18 for violent scenes, which means it is intended for those who are 18 and older.”

But the explanation falls far short. These types of portrayals do happen in movies and there are scores of the Government is dirty plots in other linear media. But there is an increased level of responsibility when it comes to a game. There is something different when you ask someone to pursue a terrorist mission in a game and give them a reward for completion. It is condoning the behavior and telling the world we do it. The player is driving the action, not observing. The player is being forced to actively participate rather than observe and react. I remember sitting in the audience at the E3 when the 360 was being introduced. The graphics were something we never saw from a console. When Call of Duty was shown, it looked like we were killing people and when a person was shown being hit by a car, the audience gasped. Not the "way cool" gasp associated with video games, but the "ooooh" gasp of watching Faces of Death. This console generation added unprecedented realism and it is being abused.

Activision's responded you did not have to play the mission, but that is not enough. Rather than a reward for avoiding, or a consequence for pursuing, you just skip it. The atrocity is there, but you can choose to ignore it and move on. Isn't this the very thing we are accused of as a nation? If the goal was to show the depth of evil, and the company feels compelled to show it, let it be played out in front of the player so the player can see the evil, rather than forcing the player to participate and try to rationalize his or her behavior after the fact.

It is too easy to look at it and say "it is just a game," but even setting aside the higher goals of the original game, in the world in which we live, we cannot afford the lack of self respect which drives an American company to portray our citizens in this light. Terrorism's presence is a horrible evil in our world. While we do not have to ignore it, our role as purveyors of medias for world wide consumption should be to condemn it. The messages portrayed in our media inform the world of who we are. Messages cross culture through film, television, books, magazines, the web and with the migration into mainstream, games. What we launch on the world stage is interpreted by people who have no other access to our country as a reflection of who we are. When people who do not like our country or want to do harm to our country use this piece of media in support of their argument, they will not say it is a just a game. They will say it is American. I am not talking about a propaganda spin aimed at gaining "hearts and minds." It is not Activision's responsibility to rebuild America's status in the world. But it is a poor decision to proactively decide to include this level in the game. Given the opportunity, should we choose to portray ourselves as terrorists? The choice to portray our soldiers in this type of mission not only dishonors the franchise, but dishonors the soldiers who fought and those who gave their lives for us to have the freedom to make a game like Modern Warfare. It is only worsened by putting the Call of Duty name on the package. Activision tried to address the issue through statements and more recently a contribution to the Call of Duty Endowment, but it is not enough. The level should not ship. In this case, it is not just a "fantasy action game" and it is not social commentary. There is enough fodder out in the world, that we really don't need to provide more? Why do that, when you can do this?

Do not confuse my position with censorship. Censorship is a government action taken to suppress content. Our Constitution protects us against such an action. My position is a reflection of my voice from a country where I am aloud to use it. They are free to do what they want and I am free to express how I feel.

I tried to do it, but I really cannot say it better than Ronald Reagan in his farewell speech to our nation. I hope Activision is listening.

An informed patriotism is what we want. And are we doing a good enough job teaching our children what America is and what she represents in the long history of the world? Those of us who are over 35 or so years of age grew up in a different America. We were taught, very directly, what it means to be an American. And we absorbed, almost in the air, a love of country and an appreciation of its institutions. If you didn't get these things from your family, you got them from the neighborhood, from the father down the street who fought in Korea or the family who lost someone at Anzio. Or you could get a sense of patriotism from school. And if all else failed, you could get a sense of patriotism from popular culture. The movies celebrated democratic values and implicitly reinforced the idea that America was special. TV was like that, too, through the mid-'60s

But now, we're about to enter the '90s, and some things have changed. Younger parents aren't sure that an unambivalent appreciation of America is the right thing to teach modern children. And as for those who create the popular culture, well-grounded patriotism is no longer the style. Our spirit is back, but we haven't reinstitutionalized it. We've got to do a better job of getting across that America is freedom — freedom of speech, freedom of religion, freedom of enterprise. And freedom is special and rare. It's fragile; it needs protection.

So, we've got to teach history based not on what's in fashion but what's important: Why the Pilgrims came here, who Jimmy Doolittle was, and what those 30 seconds over Tokyo meant. You know, four years ago on the 40th anniversary of D-Day, I read a letter from a young woman writing of her late father, who'd fought on Omaha Beach. Her name was Lisa Zanatta Henn, and she said, "We will always remember, we will never forget what the boys of Normandy did." Well, let's help her keep her word. If we forget what we did, we won't know who we are. I'm warning of an eradication of the American memory that could result, ultimately, in an erosion of the American spirit. Let's start with some basics: more attention to American history and a greater emphasis on civic ritual. And let me offer lesson No. 1 about America: All great change in America begins at the dinner table. So, tomorrow night in the kitchen I hope the talking begins. And children, if your parents haven't been teaching you what it means to be an American, let 'em know and nail 'em on it. That would be a very American thing to do.

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Zynga Gets No Respect: Welcome to the Club Edition

The great American hero is the entrepreneur who can grow a big business from nothing. The great American pass time is tearing down the great American heroes. We should all feel sorry for the hero who builds a game company. The most painful truism of being in the game business is how easily and often we are attacked. No one admits to playing games and the mainstream perception is of a bunch of geeks, sitting in our mother's basements, playing with ourselves in front of a bunch of glowing screens. While the growing audience and mainstream migration belies the stereotype, the attacks continue. It is just too easy to look at games as a vice and tar the entire industry, or in this case, a segment, as bad, because no one really cares. But really, "If you prick us do we not bleed? If you tickle us do we not laugh? If you poison us do we not die? And if you wrong us, shall we not revenge?"

Most recently, Michael Arrington of Tech Crunch decided to take a very common fraud and frame it as a core component of one of the most successful game companies in recent memory. He cutely referred to the games as "Scamville" and called the category a bubble. It is one thing for him to write this type of thing for his techy audience on Tech Crunch, but it is another thing entirely when it gets picked up in the mainstream on the Washington Post. The Post readers believe him. They think he speaks with authority and knows what he is talking about. I feel for them - and us.

In reality Arrington discovered there are bad people in the world who will take advantage of others for their own benefit. These people will trick people into providing a method of payment and continue to bill the shill until the affirmatively cancelled. The scam is not new, and depending on the size of the fine print, it is not even a scam. It's called a continuity program and it is employed by everyone from Girls Gone Wild to Proactive Skin Care. When the programs take the form of a subscription they range from difficult to terminate - try finding how to end your World of Warcraft account - to nearly impossible - try terminating an AOL account. Mr. Arrington points to some unscrupulous lead gen companies who feed the continuity programs by hiding the continuing commitment. Yes they are unscrupulous and certainly insidious, but they are no more enabled by Zynga than they are by email. Nor does their relationship with Zynga constitute an ecosystem. They are merely parasites.

Arrington's argument is pretty simple. The press is lauding companies like Zynga for building a very profitable company very quickly but Zynga deserves no praise. A portion of Zynga's revenue is generated from abuse of lead gen clients by bad lead gen companies and the money paid by these companies goes into more lead gen opportunities to further defraud consumers. Therefore the social game industry is built on a bubble and should go away. But the argument is flawed on many levels. The first, is the implied significance of lead gen revenue. Zynga has repeatedly broken down their revenue as one third virtual goods, one third traditional advertising, and one third lead gen. With annual revenue estimated between 150 million USD and 250 million USD, complete removal of lead gen revenue would still leave a company with 100 to 170 million USD in revenue - still quite impressive and not really bubbly. He doesn't stop there though. The major flaw is ascribing culpability to Zynga for actions of its sponsors or clients. Granted, the combination of the lead gen and continuity markets is an ugly marriage, but counter to Arrington's argument, Zynga is not the bastard child of the union. It is merely the parasite's host. The logical extension of this argument is magazines should be shut down for running continuity program advertising, network television should be shut down for selling infomercial time, ISP's should be shut down for allowing all those viagra and ringtone emails and of course, don't forget Google who gets paid to entice you to click on sponsored links.

Just look at it in his words:

The reason why I call this an ecosystem is that it's a self-reinforcing downward cycle. Users are tricked into these lead gen scams. The games get paid, and they plow that money back into Facebook and MySpace in advertising, getting more users. Who are then monetized via lead gen scams. That money is then plowed back into Facebook and MySpace in advertising to get more users.

Here's the really insidious part: game developers who monetize the best (and that's Zynga) make the most money and can spend the most on advertising. Those that won't touch this stuff (Slide and others) fall further and further behind. Other game developers have to either get in on the monetization or fall behind as well. Companies like Playdom and Playfish seem to be struggling with their conscience and are constantly shifting their policies on lead gen.

The games that scam the most, win.

He is blending the lead gen revenue with the ability to spend dollars on marketing. This is simply not the case. As I said, lead gen is only a portion of the revenue, but more significantly, the viral nature of the games means the bigger games get bigger more quickly than the smaller games. Like every other industry, the number one player is bigger than the rest of the top 10. Remember Lycos and Excite? Moreover, Mr. Arrington is only describing what we in the real world like to call "marketing" not an "ecosystem." The only ecosystem is the lead gen company and the shill. Nothing about the relationship is unique to Zynga. I challenge Mr. Arrington to spend a day without being approached by a similar lead gen opportunity - even if he turns off the computer. Check your mailbox on the way out the door. There is most likely a credit card offer in the form of a check or balance transfer opportunity. Endorse the check and you now have a credit card. Transfer the balance at 0 interest and you will be looking at increased fees down the pike. Put that one down and the next piece of mail is a refinance offer. Sign this agreement and we will lower your interest rate - the fine print tells you it is only for a few months. Now go to a store to pick up some clothes. At checkout the kind sales person asks "Would you care to sign up for the GAP, Neiman Marcus, J Crew or wherever credit card today and save 10% on your purchase?" Sure. You just signed up for a high interest rate credit card which will at least temporarily impact your credit score and possibly carry an annual fee. My guess is Mr. Arrington doesn't fall for these things because he is not a dipshit - just like the majority of the people playing the Zynga games.

The people playing the games are sophisticated enough to sign up for facebook and have an email account, which pretty much means, they've seen their share of fraudulent viagra offers. Sure some Zynga players may still be trying to collect the money on behalf of the dead African leader, but if those people fall for it, they deserve it. For the most part, these offers burn themselves out. You can't cheat an honest man. Mr. Arrington acknowledges as much:

And some users aren't dumb, either. For every user who gets tricked into some fake mobile subscription, there's another who can beat the system. That's where the legitimate advertisers, like Netflix and Blockbuster, get hit. Users sign up for a free trial with a credit card, get their game currency, then cancel the membership and start over. Netflix has a policy of only paying for a user once. But game developers use a complex set of partner chains to launder these leads and try to get them through for payment. Netflix sees an overall lowering of quality and pays less for leads. Game developers, desperate to monetize, then search for ever more questionable offers to make up the difference. In the end, the decent advertisers are out, and only the worst of the worst remain.

This is exactly the point. The perfect flow of information on line allows the Web 2.0 companies to self right very quickly. If Netflix and Blockbuster find they are getting gamed - pun not entirely unintentional - they will stop paying Zynga bounties. Therefore, being complicit in the alleged scam is against Zynga's interest. If the offers migrate to the less desirable scam type offers he suggests, the consumers will no longer participate. The value of the object gained is less than cost of the commitment to the continuity program. It is just that simple.

Arrington waits until the end of his post to address the real issue. He points to his public attack of a company he characterizes as unscrupulous. Sadly, he did not put their name in the title, he did not write most of the article about them, and he only mentions them as the actors with mal intent in a single paragraph. Why? Probably because Mr. Arrington generates revenue through attention. A headline snappy enough to draw a reader to his page, or the Washington Post to reprint it. I guess that makes it a lead gen device designed to capture folks so he can generate revenue through traffic, which he will invest in more content, advertising and events, which generate more hyperbolic headlines, which generate more readers going to his site. . . . . .

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Our Governor at Work: Schwarzenegger Speaks his Mind Edition

They say it was an accident, but when Arnold Schwarzenegger gave legislators his response, he also told them what he really thought in the first letter of each sentence in the body of his cover letter.

Here it is:



It kind of makes me like him again

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Yeah! Developers Can Sell Into iPhone Apps: Apple's Unbiased Indifference Edition

I was on my way to the airport for another business trip in a month where I spent more days on the road then at home, and I saw another of the ubiquitous billboards for the PSP Go. My first thought was “I have to get one.” I mean come on, it is not just gadget porn. They are dangling a slick new drug in front of a junkie. It is small and electronic and it lights up and makes noises. It even has a slidy thing with buttons. It doesn’t do anything the old one doesn’t do and in fact, with is smaller screen and inability to use my UMD games, it does less. But Sony’s blatant pandering to my addiction didn’t bother me. I am used to it and accept it, as well as my inevitable succumbing to temptation followed by the post purchase depression as a fact of life. It was the next thought that bothered me. After I looked at it I thought I would not buy one because I could just get games for less money on my iPhone. The abuser is not Sony, it’s Apple, and not just because they are bumming my high.

I wrote about Apple’s attempt to reinvent the game business. They saw consumers spending more than they ever did before for content, just not to the content owners. The money was going to a disparate group of companies making PCs, storage devices, MP3 players and broadband and consolidated all of those dollars under one roof. By doing so, they are able to commoditize the content. As I said a couple weeks ago, they did it to music, and now they have their sights set on games. The point hit home when my sleep deprived mind wandered to the bad place and I realized my support for the game device would be out of loyalty to the business model that paid for my house, and not basic logic. Sure the games on the PSP may be better, but better doesn’t always win - especially in the face of a great price disparity.

Apple is different from Gamestop or Gamefly who simply need interventions, because Apple is indifferent. Where Gamestop and Gamefly are only harming themselves by capturing revenue from the companies who feed them, in the long run, they know their survival is inexorably tied to content. Apple, on the other bears the same indifference toward developers as Godzilla to Tokyo. They don’t really want to hurt us, but they also don’t really care if they do. We are simply collateral damage resulting from the attack on the market or killer kaiju, as the case may be. Apple is attacking the game industry stalwarts by regressively taxing the disenfranchised developers by offering the false hope of lottery riches. In the beginning, I thought it was a good idea, but that was when I thought the platform would be protected and people wouldn't just be collecting free apps. Developers can see the big gooey pile of apps, but every one of them is confident they are creating the next tetris. No filmmaker sets out to make Howard the Duck and no game maker sets out to make E.T. – the game that is.

Developers are investing their own money because Apple told them they have an outlet. Sure, Apple is not telling the developers to do this, but no one is telling the poorest segment of society to buy the lion's share of lottery tickets either. The campaigns are tailored to the most susceptible. Apple tells developers they have an opportunity to reach the market and their return is only limited by the scope of their imagination and the quality of the offering. What Apple doesn't say is Apple will continue to make money on the hardware while the app store will continue to be managed for volume. Sure you can make the really cool app to tell the temperature on the moon and we’ll let you charge USD 5.99, but nothing is stopping us from approving the other guy’s moon temperature app for free. Even worse, while Apple zealously guards the ceiling price on media, it certainly won’t protect the floor. Apple would love for you to charge USD 9.99 or 29.99 for a game, but it really doesn’t care. So long as developers provide content, Apple is happy. So far it’s working – for Apple and with a recent change it may be working for developers.

On October 15 Apple changed the rules for in-app sales. It not only allows developers to quickly convert a free demo to a paid version – rather than the current Lite and Full versions – but it allows developers to join the social gaming revolution and start selling objects into games, additional content and subscriptions. The concept is a much closer alignment of interests between Apple and the developers at no additional cost to Apple. Developers are incented to keep prices of apps low, driving more downloads and more appeal for Apple. If trends from freemium content on other platforms prevail, consumers will pay more money over time for in game purchases than they would have paid for the game. So Apple gets more free content and developers, in theory get more money. This is crucial to the future of the platform. I won’t say it is a threat to Nintendo and Sony because their dedicated consoles have allowed for this content all along. A lot of DSi owners have yet to purchase a single game, continuing to play only downloaded content. However, I will say it is a huge benefit the community of iPhone developers and shows us Apple doesn’t really hate developers, they just remain indifferent.

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Zynga's Doing it Old School: Showing Us How It's Done Edition

So remember when making games was fun. Schedules were measured on single year's calendar, budgets had fewer than US phone numbers and revenue had more? Zynga does and they are bringing those days back - with a vengeance. There is certainly no formula for finding success in ultra low budget games, it is even more amazing to hear of a game company which is churning out low budget cash cow games like jelly beans down a conveyor belt. Sure, it is "only a game company," but this game company, which is rumored to be preparing for an IPO, went from zero to well into the 9 figures in revenue - rumors place revenue between 150 and 250 million dollars - in two years and operates on margins - rumored to be 60% EBITDA - that would make any media executive cry.

If you have a Facebook account, you probably played, or received a post from a friend who plays Mafia Wars, Farmville or Zynga Poker. If you are not on Facebook, you probably never heard of the company. Which is odd, considering there are over 125 million people registered in the Zynga community. This is not just one of those dot com "ooh, look at all the eyeballs" companies with no revenue. They started cashing on on three revenue streams right from the beginning. Like a television show, Zynga makes money from advertising - about two thirds of its revenue. Unlike a television show, the other third of its money from selling digital objects through a direct relationship with its consumers. Ad dollars are earned through advertiser sponsored offers in which users can get virtual currency to buy virtual goods as well as traditional advertising. Digital objects on the other hand are pretty out there. People pay real money to buy objects that don't really exist. They vary from game to game, but purchases can be anything from poker chips, to carrot seeds, to cash, to tractors. Speaking at the Web 2.0 Summit last week, CEO Mark Pincus jokingly pointed to larger tractor sales than John Deere. As you may guess, it does not cost Zynga a lot to make more digital objects and there are no inventory or fulfillment issues. 99.99999999% margins on incremental units is nice. While the concept is old hat in Asia, and common in the world of massively multiplayer games, Zynga is the first company to really bring the "free to pay microtransaction," or "freemium" model to the United States in scale. Looking at one game provides an idea of the scale.

One of the Zynga's most popular games, Farmville, grew from 354 users on June 20 of this year to 56 million users today, 20 million of whom are daily active users. Each of the 20 million daily users logs on for an average of three minutes a day. While 3 minutes may not seem like a lot in a world where 20 million viewers watch American Idol on any given night, we have to realize it is kind of like Zynga broadcasts only the three interesting minutes of the show, every day. This is the part when American Idol makes money on the voting. It's a little better than that because there are no capacity issues, so everyone who wants to participate can, and pays money, and even better still because all the ad inventory for the show is compressed into three minutes. Sure it costs less to run an ad in Farmville, but it also costs orders of magnitude less to reach the consumer. In case that's not enough, the production cost of a game is purported to be low to mid six figures and the incremental cost of creating and releasing a new game object is close to zero. Players don't even have to wait for water cooler talk the next morning. As soon as your or one of your friends achieves a new level of success in the game - which is often - a message is sent to all connections telling how much fun you are having. Finally, we can't forget, Zynga makes advertising very attractive as they know the identity, demographic and regional information of every person who plays every day. Unlike American Idol or any form of broadcast entertainment, if the company wanted to, it could send an email to everyone who plays the game. Unlike Blair Witch, Paranormal or American Idol, this is not a one off. They pop out game after game and the growth curves are getting steeper. The community is so connected, and so rabid, it took only one week, for one of the newest games, Cafe World, to reach 10 million users.

Zynga is also joining the growing list of companies working to do well while doing good. The company ran a small test in Farmville to see if users could be encouraged to donate to important causes. In their "Sweet Seeds for Haiti" program, users purchased special sweet potato seeds, with 50 percent of the purchase going to Fatem.org and Fonkoze.org. Within three weeks the campaign generated a contribution of $487,500 to the organizations. The net cost to Zynga, was not even measurable and the profit and contribution were significant enough to feed over 500 families for a year.

Gamers look at what they are doing, and say they are not games or if they are, they suck. In reality, they are not games. They are social lubricants that give you a means and a mechanism to stay in touch with your the deepest of your contacts. And as games, they will certainly not generate the same type of "wow" as Uncharted 2, but, if they really do suck, I would like to be involved with something that sucks even only a portion as much as they do.

The company's ability to make money is obviously significant, the ability to clone success from game to game is enviable and the size of the audience generated without any type of license or boost from outside media is downright scary. They are the first company to really show us how to provide lucrative, entertaining content within a social network - and that they can do so very well without anything from traditional media.

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Talking About a Revolution: Bizzaro EA Edition

I don't think this idea rises quite to the level of heresy of this one, but it could definitely fall into the category of "Wow, that is nuts . . . hmmm now that I think of it, it may not be so crazy." You see, I got this email from Gamestop with an amazing offer on a great game:



As a Tim Schaefer fan since Full Throttle, I was already counting the days to release, but Gamestop nows sweetens the deal by offering the game for one ATM unit, or as some of us might say the right price for a game? Sure, it would be tremendously hypocritical for me to cash in games to Gamestop, but if I put on just a bit of a disguise and went somewhere other than my regular Gamestop. . . . Inspired by Pete Townshend's one man crusade, and like him, solely in the interest of research, I looked at the list of games:



I wouldn't give back Arkham, still hours to go in The Beatles - and it is one of the only games my wife will play with my son and I - do they really want G.I. Joe or G-Force? Fallout 3 will create shelf fulls of a great free alternative to the new GOTY version Bethesda is trying to sell creating the question - is it better for the publishers to squeeze more dollars out of their hard core consumers or have Gamestop sell a very similar thing to new consumers without paying Bethesda? FIFA 09 for those newbies who don't realize games are dated like magazines. WET to guaranty a reduction in re orders and all the rest of the games necessary to make sure the stores are well stocked for 40% margin product for the holidays. Sure, a lot of these are gathering dust on my shelf, and even if I intended to buy DLC, I could just repurchase the game when the DLC comes out. My console will still have my game saves. A very cluttered closet is a clear testament to my never turning in an old game, but when they spell it out this clearly, grabbing the third rail is oddly attractive.

Then I started to wonder why Gamestop had to have all the fun. Why are they the only ones who get to sell product over and over again? We should be able to get us some of that too. I thought about how much money I pay EA every year. In the past year, I purchased Dead Space, Mirror's Edge, Need for Speed:Shift and Brutal Legend. That's probably about average for a core gamer. Sports oriented players probably bought Madden and either a FIFA or NBA title and PC gamers bought whatever it is people do on a PC. Regardless, it is pretty safe to say that if their core buyer purchases between four and six games a year, they are very happy. Even though we pay USD 59.95 on average for a game, by the time it filters through the intermediaries and manufacturers, EA will receive about half of that money. Add in marketing, and you are probably between USD 25 and 30 per unit sold. So guesstimating on the high side, I paid EA USD 120 last year. But what would happen, if EA decided it was tired of my "renting" games from everyone else (isn't a Gamestop purchase with an intent to turn it on just a rental by another name) and chose to capture the revenue? It really would not have to reinvent the wheel. Disruptive models requiring changes to human behavior are expensive, but EA wouldn't have to do that. The model has already been created. EA need only act a bit more like gamefly, or better yet, with the combination of physical media and instant viewing, Netflix.

While the rest of the world is looking to advertising subsidies, or swallowing Chris Anderson's (the bald Wired editing one, not the saving world TED one with the full head of hair who used to publish game magazines) "look at me I discovered the free sample" manifesto, companies from Blizzard to HBO understand subscription is a good model. Sure it's hard. You have to offer compelling content and listen to your consumer, but if you do, they keep paying you money every month. In fact, they will do it until you do something really, really bad. And curiously, the customers subsidize themselves. Your costs increase with consumer base growth, but so does your revenue. What would happen if EA switched to a subscription model?

Gamefly charges USD 16.95 a month and seems to be growing its base. For this price, a subscriber can hold on to one game at a time and if they choose, exercise a purchase option on the game they have. If EA charged me the same thing, rather than USD 120 last year, I would have paid them at least 203.40 - assuming I did not choose to keep any of the games they sent. If I chose to keep them or wanted more games at once, they would have received more - and so would I. Exclusive catalogue titles available only on line to subscribers would allow me to introduce my son to some of the things I used to play. Even though EA can't justify putting the Road Rash series in a box, it would cost nothing to stick it on a server and give me access. Interest may even revitalize the title ala Ghostbusters. I would also tick the order box for titles I may not choose to buy at full retail and become a convert. Even if I don't EA captured the consumer rather than Blockbuster or Gamestop.

You are going to jump in and say "but EA does not have all the games on the market and I want to purchase from other publishers." I had a law professor who used to answer questions like this with "true, but trivial." Does Blizzard offer anything other and WOW to the 12 million folks who pay USD 14.95 a month? Does your membership in the Girls Gone Wild continuity program stop you from buying other porn? Subscriptions are a funny beast. Once a consumers signs up and go on auto bill, the money is no longer considered part of the budget. It just happens. Subscriptions and new game purchases are not mutually exclusive. My EA subscription will just keep giving me new gaming goodness and when Borderlands or Assassins Creed hits the shelves, I'll go buy them. The difference is, EA's titles get returned to them, reducing their cost of goods and letting them capture the used game margin while ensuring a consistent, predictable revenue stream from me, while Take 2 and Ubisoft will see reorders decrease proportionately to increases in sell in.

Of course the channel will be pissed. Wal-Mart, Target, Best Buy and Gamestop - especially Gamestop because they deal with the hardest core who are most likely to subscribe - but the scene will look more like a John Woo each guy has a gun to the other's head than a blindfolded EA standing in front of a firing squad. Games will sell on discs just like CD's are still sold at retail in spite of iTunes and subscription music services and retailers want their games. It would be hard for Take 2 to make this move because retail only cares about one product every four years. But EA puts out a Madden, FIFA and NBA product they care about every year. EA will still sell games at retail and none of those stores want EA to be exclusive anywhere else, so EA has leverage. They will just sell less product at lower margins and it may even encourage retail to invest in promotion the way they have in the music sector.

I don't know, maybe I am nuts.

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Apple's Attempt to Reinvent the Game Business: Selling the Razors Edition

I read this article a while ago about the entire game business fearing Apple, and I thought it was kind of silly. Then the next day I saw this one proclaiming Apple's dominance over all others and started to think I was wrong when I said Steve Jobs' reality distortion field would not extend into the game business. Then I closed my macbook, took a deep breadth of fresh open air and realized, as tempting as it is to say Apple figured it out and is going to save the day, just like they did for music. But the articles are falsely equating the music business with the game business, and they are really wrong – and we should be happy.

In the New York Times article, Yoichi Wada, CEO of Square Enix was called for a new business model. “The next breakthrough in gaming is not going to be in hardware,” Yoichi Wada, president of a top Japanese game maker, Square Enix, told Game Show participants. “It’s going to be in how to create a successful business model.” The implication is Apple's golden touch is addressing the need. If Apple has its way, this statement is poetic foreshadowing of our industry’s doom. Sure, being afraid of the iPod only to see it save the day would be pretty consistent patterns established in the past. Every new media was feared by existing media and ultimately expanded the content market. Film studios feared television, videotape and DVD's. All expanded the market. Television feared videotape and DVRs, but they turned out to be a pretty useful. Now we are even seeing potential for Hulu and other on line distribution teeing up to expand the market. With Apple spamming mainstream media with game ads, it should only be a good thing. The iPod simply joins the handheld market, which has been around for years, and introduces a new point of monetization, expanding amortization opportunities of production costs and giving publishers an opportunity to make more money and larger games . . . right? Not if the plan succeeds. We only have to look to the music and video businesses to realize Apple is walking us to the precipice of a slippery slope.

Apple’s business model threatens content creators. You know, the one that allows creators and publishers to make money. For years, our business, like scores of others, has operated under the razor/razorblade model pioneered by King Gillette at the turn of the 20th century. Give away the razors, and sell the blades. We are blade makers. We in the game business benefit from the sale our games into allegedly subsidized consoles. The console manufactures make their own games and receive their vig on the manufacturer of each game, and we were all happy. Until Apple, no one ever thought to turn the model on its head. Apple knows content is very risky and wants to be free, so it avoided the content model fray in video and music by charging for the razor and commoditizing the blades.

Before Apple, hardware pioneers made sure the content was a available by creating, or subsidizing it. RCA supported television and phonographs with NBC and Victor, Sony owned record labels and studios and game console manufacturers publish first party games. In the music businss, Apple found a chaotic market loaded with pre existing popular content, and under attack by piracy. By simplifying access, securing delivery, aggregating popular content and setting the price at a break even level, Apple was able to leveraged the long tail – the phenomenon defined as creators make a little money over a long period of time and aggregators make a lot in a short time- without spending any risk capital on content creation. By creating a safe harbor in a world of rampant uncontrollable piracy arising from the failure of the gatekeeper model, Apple got the labels to jump on board before they realized the content was commoditized. As the company grew to the largest music store on the planet, the labels lost leverage over promotion, pricing, distribution and just about everything that makes them a label, except the requirement to spend risk capital for new music. When Universal said they didn’t like the pricing, Apple said “too bad, leave”. They didn't. After Apple did the same thing in the video business and NBC didn’t like the pricing, Apple said “too bad, leave,” and they did . . . only to come back. There is no profit in the content, but Apple doesn’t care, they make their money on the razors, not the blades. No single content creator has power - and none of them make as much money as Apple either. Now, Apple is setting its sights on games.

Apple is promoting games in the largest marketing campaign to ever hit the game business, but consistent with the attack on the other industries, consumers don't know which games they are. I saw the cool three way soccer thingy and the roller coaster stuff, the racing with the bumping was neat, but I don't know any of their names. If I wanted to find them, I have to dig through the app store, which someone in a meeting described as "Wal-Mart, all in a single aisle, ten miles long." This plan worked for music and made Apple the number one store, but it is not going to work in games. They just don’t get the market.

The first hint of Apple’s misunderstanding of the business comes in the uncharacteristically tone deaf advertising tag line “Next level fun.” It sounds like it should be bundled with a Brady Bunch Box set. It breaks the cardinal rule of not sounding like something your mom would think of and makes Sony’s weird baby ads and goat sacrifice look ingenious. Apple app store is doing a bang up business on the mainstream side and perhaps even attracting some of the 30 million Farmville subscribers, but they are promoting games for the hardcore and they aren't buying. Madden launched at number 1, but within a month fell to 38, while Bejewled has been in the top 20 for over a year and there are only three games in the top 100 selling for more than USD 3. The number of potential Madden buyers will always be smaller on the iPod than Nintendo or Sony devices. Every single one of the 110 million people who bought a DSi or dozen who bought a PSP - I am kidding there are about 40 million - bought it to play games. Only a subset of iPhone and iPod buyers purchased the hardware for games. Even though Apple doesn’t care about how much people pay for games game makers care deeply.

Music and video do not have to be ported to the iPod. The same music file plays on your stereo in your car, in your living room and over the PA at a stadium. While a film may feel different in a theater, no design or technical adaptation is required to digitally deliver it to the iPod. So even though the owners of this other media are marginalized, they did not make any specific investments in content for the iPod. It is simply another release window. Games are a very different animal. Madden cannot just be just delivered to an iPod. The game had to be redesigned and built specifically for the device. Even if it is a port from a handheld device, it still requires investment. In fact, games are the only entertainment application tailored specifically for the device. Because content sells hardware, the investment mean something. As we saw when Bobby Kotick threatened to pull Actard off the PS3, if publishers fail to see an adequate return, they will not support a platform.

Rather than creating a new window, as it did in the music and video business, Apple created a new market in which overhead laden publishers are forced to compete on an equal footing with the garage creator of iFart. If they have not already, EA will soon realize, that the subset of app consumers who move beyond downloading the free games are downloading a ton of USD .99 games rather than USD 6.99 and USD 9.99 costly builds. Sure iFart man will make some money and a few creators will make quite a profit, but putting a roof over iFart man’s head is very different from moving the revenue needle for EA. Is it better for EA to focus on trying to figure it out and end up losing money, or waiting until a profitable winner emerges, the market rationalizes, and buy the creator at a premium? Once publishers understand they realize a better return by investing a bit more on an XBL game for delivery into a hardcore base on a platform with higher barriers of entry as well as an ability to leverage existing technology, they will relegate iPhone development to their mobile, casual, family, value or other similarly situated ancillary division of the company. In other words, the divisions only heard from at annual retreats.

The other reason, and perhaps more significantly, the game business has alternatives. When Apple extended the helping hand and offered a safe harbor, the music business was under attack. Napster turned into Gnutella and more, making it impossible to protect value let alone recoup investment in new artists and there was Apple with a way to fix it. We don’t have the same problem. While many publishers are losing money and piracy is an issue, installed base growth creates a light at the end of the tunnel. There is a profitable, protectable console business, an exciting new PC transactional business and the innuendo of direct distribution on the horizon. Other than a new console with similar economics to what we have, Apple is really offering nothing new.

While this is great news for independent developers, in the near term, it should illicit no more than a yawn from Nintendo and Sony. Maybe the next Jordan Mechner is building his Karateka for iPhone and will take the business to a new level and make him rich along they way. But it will be many years before anyone can wrap a business around it to compete with console publishers and before that happens, they will be an attractive acquisition target. The iPod is a great platform and the technology is great, but when we consider our leverage on the existing platforms relative to where the music business sits today, I think it is an offer we can refuse.

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Metacritic is all WET: Just Sayin' Edition

Last week I bought WET because it looked like fun and I wanted to play the game. After playing half way through the game I found it didn't only look like fun, but it delivered on its promise. It was what I wanted Stranglehold to be and what Gungrave never delivered. Lot's of mindless, shooting fun. Sometimes that's just what I want in a game. But apparently, most critics did not share my view. When I first looked on metacritic the score was in the deadly sixties, but has since moved up into the safe haven of mediocrity found in the seventies. Not quite green banded goodness, but not bearing the red mark of humiliation. I wish metacritic didn't matter, but unfortunately, developers' livelihood is based on this hopelessly useless, conflicted, arbitrary measurement system even though more and more and more people are realizing marketing and word of mouth are more significant factors in the purchasing decision than a Metacritic score. If you really want to compare apples to apples in admittedly anecdotal but still compelling example, Rock Band 2 for the 360 scored a 92 to Guitar Hero World Tour's 85 last year. But Guitar Hero, with a 40% larger marketing spend, outsold Rock Band 2, the placebo, by a wide margin. Publishers still use these numbers as gating to signing developers and not only are they useless, they are shoddily calculated numbers based on arbitrarily assembled numbers.

Out of curiosity, I decided to see who was responsible for raising the score and what they had to say about the game. They were courageously disagreeing with gaming stalwarts like IGN at 66, Gametrailers at 63 and sponsor and influence free Giant Bomb at 60. It looked like it was Armchairempire.com. I say looked like because they were noted as giving the highest score the game:



But when I clicked through to the review, I saw they didn't:



Now, I am sure this is a careless error, but how dare you be so careless when developers' livelihoods are at stake. Didn't anyone at metacritic feel the need to confirm the numbers posted on the site, or is the move from 75 to 88, part of metacritic's "weighted average" calculation, described as:

The METASCORE is considered a weighted average because we assign more significance, or weight, to some critics and publications than we do to others, based on the overall stature and quality of those critics and publications. In addition, for music and movies, we also normalize the resulting scores (akin to "grading on a curve" in college), which prevents scores from clumping together.

Metacritic does acknowledge scores are misreported and suggests a solution:

Q: Hey, I AM Manohla Dargis, and you said I gave the movie an 80, when really I gave it a 90. What gives?
A: Now, if you are indeed the critic who wrote the review, and disagree with one of our scores, please let us know and we'll change it.

This does happen from time to time, and many of the critics included on this site (such as Ms. Dargis) do indeed check their reviews (as well as those of their colleagues) on metacritic.com.

Are you serious? You can't be bothered to confirm you are accurately transcribing numbers and it is up to the critics to fact check?

But shoddy journalism is not my only concern. It is the sites' holding itself out as objective when it is really a conflict laden subjective aggregation of a limited set of already subjective market data. Now, of course the fact that CBS owns of Metacritic and Les Moonves, President and CEO of CBS Corporation is on the board of Zenimax, parent company of WET's publisher wouldn't influence metacritic to hunt for some favorable reviews and maybe fudge some of the weighting or even a number, but a purportedly objective site should not be in a position where it must explain why not. When I was in law school, they taught us to avoid impropriety, but the appearance of impropriety. Avoidance is simple. You disclose. In this regard, I renew my suggestion from an earlier post and I offer a disclaimer:

We are affiliated with a studio, record company, television networks and game companies, in fact we are better connected in entertainment than CAA and WME combined. We can probably get Les Moonves on a conference call. To give you a better idea, here is a partial list of our family members:

- CBS Television
- CBS Records
- MTV
- MTV Games
- Harmonix
- VH1
- Nickelodeon
- Paramount Pictures
- Paramount Television
- Paramount Digital Entertainment
- Dreamworks Animation
- BET
- Spike

and of course our distant cousin, Bethesda Softworks. We do our best to avoid influence from our parent and siblings, but the significant subjective component in our scores makes it kind of hard.
This has been a public service message. Thank you and goodnight.

Oh, and by the way, pick up WET. It really is a good game.

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