The Game Bizness Blog and Other Personal Sh*t

Ate a great meal tonight at Cafe Juanita, went to sleep with my 6-yr old because she asked, then woken up by my wife at 2 a.m. on her way to bed after playing WOW.  So of course I'm up, can't sleep, and feeling somewhat introspective.  I would best describe my mood tonight as very murakami. i'm neither here nor not here, comfortably numb and scared shitless, nostalgic and bursting with a desire to capture this in words. random web surfing while i write this - listening to a local band The Liquid Now which has a very Oasis feel but goes down a tad smoother with little droplets of japan lost inside.  Very much recommend the song "Gone Away" by the way.  Also simultaneously reading some of my poetry on lit.org. which is the equivalent of rereading entries in one's diary. If that doesn't make you nostalgic then nothing can. This year, I am determined to publish a collection, I need to just will it and hopefully my friend can help me in getting it organized. I also need a few great photos that capture the spirit of the writing - actually the tallest order here probably. my photographer friends please take note.

 

should i linger by my bookshelf in further melancholy? shall i play call of duty 4? call up wow and grind till sunup? see what's on the idiot box? hot tub? ah hot tub.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

rhys 

 

 

Anyone who knows much about me knows that I used to run the video game rental business for Hollywood Video nationwide.  I'll say this outright, when it comes to the niche of understanding video game rental as a business, I'm probably one of the few people you could call for advice.  Old habits die hard so today I found myself wandering in to a Hollywood video store out of morbid curiousity as to what they were merchandising lately. 

 

I found 10 bays dedicated to Xbox 360, 6 bays dedicated to wii, and 2 bays dedicated to PS3.  Doesn't that tell you all you need to know right there?  PS3 is in a deep deep hole.  Even the 2 bays of PS3 that I saw had both their bottom rows blocked off because they didn't have enough inventory to fill it up completely.  It was sad really.

 

The store was also clearly in the middle of selling off nearly half of its PS2, Xbox, and Gamecube inventory as used.  Pricing was a mess and all over the place.

 

The accessories endcap business I started was still up and apparently going fine judging from the stock-out situation among those nine high-turning skus.

 

At a quick glance it appears that THQ, Take-Two, and Midway are all rev-sharing.  EA still doesn't seem to be.  It's too bad, clearly titles like Smarty-Pants or Boogie need to be rev-shared at rental if they even want to dream about selling it eventually at Walmart.  Can't remember seeing much evidence of Ubi and Activision though I would expect that they would be rev-sharing today - their smart enough and have the right product.  Predictably didn't see any Japanese publishers rev-sharing - intellectually too hard for them to grasp the argument (no offense guys but when it comes to rental, the Japanese companies do not approach it from a logical place).

 

On another note went to both Fred Meyer's and Target today looking for my charity santa present and once again dropped by the video game section to see if Scene-it: Lights, Camera, Action was available.  Sure enough, sold out in both stores.  So far the only place I have ever found the game in stock is EB Gamestop and even there it was selling.  Awesomeness.  Another game I highly recommend for playing with your younger kids - Viva Pinata Party Animals.  Heck of a lot of fun (not to mention easy achievements).

 

 

When I was down in Georgia after my mother's accident, I was given the terrible task of going to the car yard where my mother's totalled car lay waiting for the scrap heap.  On the way there I stopped by the lcoal post office to put a hold on my mother's mail.  The post office was a single clerk affair, the clerk was also the postmaster. She was a very nice older woman with young grandchildren.  We got to talking about what I do for Microsoft and about video games.  She explained that she would never buy a video game ordinarily but the wii seems fun because it is simple and looks like it gets you off the couch.  Then no later than an hour later, I went to the car yard where the owner was a man in his mid-thirties wearing cowboy boots and a baseball cap.  He was as it turns out a hard core gamer.  The guy that loves Halo for the story, the guy that buys the flightstick peripheral to go along with Ace Combat, and who loves to play Project Gotham Racing.  Neither one of them were rich, you would probably best describe them as loosely in the middle class by income and yet both of them were planning to spend a chunk of their money on video games this holiday.

 

The difference being that our favorite postmaster (let's call her Auntie Bee) was going to buy the wii which comes bundled with wiisports and maybe one more title like Mario Party while our favorite car yard owner (let's call him Cooter) was already 7 or 8 games deep into building out his Xbox 360 library with titles like Halo, Ace Combat, Mass Effect, PGR, Gears of War, Oblivion, and Orange Box.  Across their lifetime on these consoles, it is clear that Auntie Bee was only going to pony up to buy another couple of games at best on special occasions like Christmas and Birthdays.  Meanwhile Cooter is probably going to end up with 20 games on the shelf if not more buying maybe 4 or 5 games a year on average.  Neither of them rich as I say, but Cooter clearly represents a higher value video game consumer and the Xbox 360 has them in spades. 

 

This is where the media really falls off the bandwagon with regards to understanding our video game industry and its economics.  Listen up: It isn't just about installed base dummies! Its about how much money you make off of every customer.  It's all good for Nintendo as they can make a good deal of money off the box by itself - but because their customers are so low value there is little money for 3rd party publishers like EA or Ubisoft to make.  For the more hardcore platforms like Xbox 360 and PS3 who lose money selling their consoles and hope to make it all back selling video games - Auntie Bee is just not an attractive proposition - they need Cooter if they want to make money.  When it comes to hardcore gamers like Cooter, he only exists in limited supply and today you can only really find him in large numbers in one place - the Xbox 360.  The PS3 is still too expensive for Cooter to look at.  If I were a publisher, I wouldn't waste my money building an exclusive PS3 game because if you do - congratulations - you've just spent a ton of money with little prospect of making it back. 

Lately there is so much on the plate at work that everything is work in progress and nothing is getting finished at the rate I would like.  This week saw a lot of progress and I am hopeful that what we have of next week will see me catching up on the workload substaintially.  Working on 3 or 4 deals that may or may not happen.  A couple of pieces of "strategery" that may or may not have value.  One deal that must happen quickly.  And lots of P&L modeling work on a very cool prototype project in Japan that is near and dear to my heart.  I have at least 3 messages of "sorry there are no next steps" to deliver.  Possibly a due diligence or even two.  And somewhere in there I got committed into writing up a powerpoint slide for someone about something.  On the positive side, SceneIt? Lights Camera Action came out to very good reviews for the genre.  I finished the 2 deals that enabled this game literally while sitting on the floor this year at D.I.C.E. in Las Vegas.  This was not an easy project given the timeline, the brand new peripheral, and the media licensing issues involved.  A shout out to the wonderful team at MGS, to Xbox Hardware who really delivered fantastic controllers, to our partner Screenlife owner of the SceneIt? brand, and to WXP the developer.  Everyone worked hard to make the game, it wasn't easy, but it was important.  This marks the first time that MGS has put out an adult party game in the trivia genre.  It's getting a very warm reception from core and non-core customers alike and the sell-in to retail is just fantastic.  And may I just say, if you think that this SceneIt? is really great, you ain't Scene nothing yet. 

 

 

Ok it is late and before calling it a day, I felt I had to record the notable news of the day. And this one does not surprise me.  Congrats to our friends at TT. It's a very interesting acquisition.  DC comics / Looney Tunes and Traveller's Tales not to mention Lego and Guinness licenses.  Lego lego everywhere. 12 million units sold are definitely nothing to sneeze at.  Tom Stone, hope you are well.

Did anyone catch this article on Gamedaily BIZ today.

 

Reggie Fils-Aime: Concerns Over Wii Being a Fad 'Overblown'

 

Alright, first of all let's talk about the title of the piece.  Doesn't it imply that concerns over the wii being a fad are partially true? Second what about the total lack of statistics in the piece.  What does "play Wii more now than ever" mean anyway?  I mean I am sure that people are playing more than Wii sports now given that back then there wasn't much else to play.  Now there are several more Ninendo published titles to play.  And that is just the problem.  If you check the NPD data, what is significant is the absence of third party publishers from top of Wii title sales.  Is that a healthy ecosystem I ask you?

 

As for "LittleBigPlanet" and "Halo" - well, sure, everyone likes the look of LittleBigPlanet, I don't think there is any way in hell that one will see it coming to the wii ever.  Besides could wii even handle the back end user generated content sharing of do-it-yourself levels that makes the game so cool anyway?  You have to assume that PS3 can, I know very well that Xbox 360 can.  Same goes for Halo of course, don't think for a minute that that property is ever coming to anything that is not Xbox or Windows. No rumor mongers spreading false hope that Reggie has Halo coming to the wii.  Aha ha ha hahahaha.

 

Today - I'm still in the hospital helping my injured mother.  It sucks.  Things I hate: hospitals, rednecks, rough nurses, hospital food, the shitty red mustang from the rental company.  Things I like: the coffee shop in the hospital, wide parking lots, nurses (the nice ones), wireless in the hospital, cellphones.

 

Things I did today from the hospital - redesigned the business model of a potential game, discussed a due diligence, sent out a redline draft of an agreement, sent out a rejection of a pitch. 

 

OK - time to eat dinner.  Coming up in next episode - pictures of the cars in the accident.

 

I was in the middle of a due diligence on a developer today when I got the call that my mother had been in a car accident and was in the hospital.  That pretty much put a kink in my day as I scrambled around to figure out flights to Savannah, Georgia where my mom lives and cancelled my flight back home to Redmond.  Thus I end up here at LAX at midnight.  I came to the check-in counter only to find out that the travel service had booked me on tomorrow's redeye flight.  Ended up having to buy first class to get on an already sold out redeye flight to Atlanta that leaves tonight?!!?!?! Then the gate announces that the pilot misread the flight schedule and was driving to the airport now from San Diego setting our departure time back by 2 hours.  One of those days that nothing seems to go right.

 

But in between all the chaos, I was still paying attention to the due diligence. It is always a pleasure to meet a studio full of talented and passionate people hell-bent on creating the game their way, the way the vision lives in their heads.  A great developer marries vision with an incredible ability to execute and do so relatively on time and budget.  Maybe this is what the average reader might expect from any game developer but sadly it is not so.  Many developers are houses of ambition and little else.  And the studios that lack even ambition are sad places to see indeed.  You know them when you see them. 

 

I know that game development is supposed to be glamorous but when you are on the publisher's side, being an independent developer looks far from glamorous.  The only exception is when you see a great developer having fun doing what they do the way they want to do.  Seeing this, even the publisher drones like myself, take strength, envy and long for something greater.

 

Remember boys and girls who write in everyday with hopes to sell that great RPG or FPS concept that lives in your heads that game ideas are like poetry.  No one will buy them from you and almost no one is interested.  Ideas are cheap and execution is everything.

Anyone read this article in GameDaily?

 

 

Uh, right.  Sometimes I have doubts about N'Gai Croal's knowledge of the game industry.  His analysis sometimes seem to lack depth and I find it dissapointing because I expect better.  For example, is it meaningful to portray an MGS in trouble without seeking out the answer to the most fundamental question: does MGS own the IP rights to Halo, PGR, and Mass Effect?  And FASA, was dissolving FASA a mark against MGS or a prudent management decision?  If MGS owns and thereby controls the IP to Halo and Bungie is still committed to making Halo titles (a sure multimillion dollar paycheck must be hard to walk away from) is there any real change at all in the status quo for Xboxland?  Is Halo 4 coming to the wii?  Do you really think so? If MGS controls the IP to PGR and Mass Effect and those studios are unable to work on those titles going forward, it strikes me that the only issue MGS faces is choosing a great developer to line up against such great IP. 

 

And I think there is a suspicious lack of balance in that N'Gai blogs about MGS' doom without even mentioning that MGS purchased Lionhead and as a result clearly controls the future of the Fable franchise with Fable 2 being a highly anticipated Xbox 360 release. What about Turn10 Studios that MGS owns and uses to develop the multi-million selling exclusive Forza racing franchise?  What about yet another JRPG Lost Odyssey by Sakaguchi that is coming to Xbox 360 courtesy of MGS?

 

Yes publishers undeniably are on a bit of an developer acqusition extravaganza these days.  Certainly the Bioware/Pandemic acquisition by EA for $860M raised more than a few eyebrows. Inside MGS we couldn't stop talking about it when it happened.  It caused as much fuss as the day Nintendo announced the real name of "The Revolution" would be "The Wii".  Anyway, $860m - those kinds of numbers always seemed to belong to companies outside the video game industry.  It was both a shock and a pleasant surprise to see such a high value deal get transacted.  Like your little baby was suddenly all growed up. 

 

Personally, I'm very happy about all these changes in our competitive landscape.  It keeps me on my toes looking for one more elusive and beautiful multi-million seller title for MGS to sign.

 

 

Lately I've started to see reports out of Japan that confirm what I have been thinking about the wii.  According to some reports, up to 60% of wii owners are just letting them collect dust.  They bought them as a novelty and haven't used them since playing wii sports.  This would explain the low attach rate of 2 per box relative to Xbox's attach rate which is more than 3x that.

 

The wii is a fun box, but is it the kind of fun you can't put down?  This is not a knock on the DS.  That is totally NOT a fad.  Is the wii the next EyeToy?