VR in 2014 = Mobile Games in 2002?

The first VRLA Meetup last week was awesome.  The performance capture studio at Digital Domain in Marina Del Rey hosted a series of impressive demos as well as live presentations on the current state and future of VR applications.  The venue could only hold 100 people, but 300 registered.  Mobs of interested VR consumers, developers, and producers had to be turned away at the door.

VRLA winding down. (Photo via John Root)

VRLA winding down. (Photo via John Root)

After this event, it struck me that VR in 2014 is reminiscent of mobile in the early 2000s.  Back in 2002 I attended the first GDC Mobile Gaming Summit.  It was at a jam-packed lecture hall in San Jose where presenters demoed the latest in technology and gave their thoughts on where the industry was heading.

At that point, mobile phone hardware was clunky and primitive.  Most phones were still sporting 80×50 monochrome screens with maybe 100k of RAM available for programs to run.  Even if you were ‘lucky’ enough to have one of these devices, it was nearly impossible to figure out how to download games.

In 2002 almost nobody knew how to monetize mobile games.  The hardware could barely run games anyway.  Yet, these people knew it was going to be a big deal.  The room was filled with excitement and anything could happen.

Since then, mobile gaming has created a huge new audience for games that has disrupted the traditional game industry, forcing a shift in how console games are designed and delivered.  Now mobile gaming is obvious, but back in 2002 there were many naysayers–despite the fact that in Japan iMode had been successfully delivering mobile games since the late ‘90s.

To me, VR in its current state feels the same way.  The hardware is huge and clumsy.  There is some precedent for VR applications stretching way back to the 1990s with Virtuality and Battletech Centers.  And there’s a lot of consumer interest–evidenced by all the successful VR and AR hardware kickstarters in addition to the attendance of VRLA this month.

The top question on everyone’s mind is “how do I make money in VR?”  This was the same question asked by many about mobile in 2002.  Back then, the path was more obvious.  Qualcomm’s BREW and Japan’s iMode already had established billing models for mobile content.  Right now, it’s unknown who will pay for VR experiences and what form they will take. A lot of this is a hardware question. Nobody really knows what the iPhone of wearable gaming will be like–but when it arrives, it will be revolutionary.

These definitely are uncertain and exciting times for this new medium–which makes it much more fun to develop for than established platforms.

Towerfall: The Re-Return of Social Gaming

Social gaming was hot.  Then it ‘died’.  And now it’s hot?  The fact is, video games have always been social.  In the earliest era of computer games there weren’t enough CPU cycles (or CPUs at all!) for AI.  Players had to move everything themselves–Steve Russell’s Spacewar being the earliest example.  But just look classic coin-ops like Pong, Warlords, Sprint, etc.  Same-screen multiplayer was just how things were done.  Arcades in the ‘80s weren’t solely the domain of nerds–a broad spectrum of people showed up and played games together.  Imagine that!

Towerfall

Local multiplayer ruled well into the ‘90s.  Games like GoldenEye, Mario Party, and Bomberman ensured there was always something to do when you had people over your place.  Yet, once Internet multiplayer hit in the early ‘00s, console games became strangely anti-social.  Today when someone comes over my house and wants to play a game with me–well, it’s complicated.  There really aren’t many games people can play together on the market.

That’s why Towerfall Ascension is so interesting to me.  At first I thought it was yet another pixel-art indie game over promoted by Ouya due to a lack of content.  After playing it with others its significance dawned on me.  Finally there’s something to play with other people!  It had been so long since I’d had a local multiplayer experience that it took actually playing it for me to recognize this one fact:  the local multiplayer brawler may very well be where the MOBA was when DOTA was merely a Warcraft III mod.

At GDC I noticed the beginning of this trend.  There were a few Towerfall clones already in progress or on the market.  In fact, some similar games even shortly preceded Towerfall.  Not to mention Towerfall’s release on the PS4 and Steam has been highly successful.  I really think a new (old) genre is born.

 

Unity3D vs. Unreal 4 vs. Crytek: GDC 2014 Engine Wars

GDC 2014 is over, and one thing is clear:  The engine wars are ON!

Morpheus

For at least a few years, Unity has clearly dominated the game engine field.  Starting with browser and mobile games, then gobbling up the entire ecosystem Innovator’s Dilemma style, Unity has become the engine of choice for startups, mobile game companies, and downloadable console titles.

Until now, Unreal seemed unphased.  The creation of an entire generation of studios based on Unity technology seemed to completely pass Epic by as Unreal continued to be licensed out for high fees and revenue share by AAA studios cranking out $50 million blockbusters.

Lately, the AAA market has been contracting–leaving only a handful of high-budget tent pole games in development every year.  Many of those mega studios have started to use their own internal engine tech, avoiding Epic’s licensing fees altogether.  Surely this trend was a big wakeup call.

This year Epic strikes back with a new business model aimed at the small mammals scurrying underfoot the AAA dinosaurs.  Offering Unreal 4 on desktop and mobile platforms for a mere $19 a month and a 5% revenue cut seems like a breakthrough, but it really isn’t.

One of Unity’s biggest obstacles for new teams is its $1500 per-seat platform fee.  When you need to buy 20 licenses of Unity for 3 platforms, things get costly.  Unity’s monthly plan can help lower initial costs, but over time this can be far more expensive than just paying for the license up front.  Even when you add up all the monthly costs for each platform license subscription, it’s still a better deal than Unreal.

Giving up 5% of your revenue to Epic when profit margins are razor-thin is a non starter for me.  Unreal’s AAA feature set creates unparalleled results, even with Unity 5’s upgrades, but it’s that 5% revenue cut that still makes it an unattractive choice to me.

Epic is also aping Unity’s Asset Store with their Unreal Marketplace.  This is absolutely critical.  The Asset Store is Unity’s trojan horse–allowing developers to add to the engine’s functionality as well as provide pre-made graphics and other items invaluable for rapid prototyping or full production.  While Unreal’s Marketplace is starting out rather empty, this is a big move for the survival of the engine.

Unreal 4 throws a lot of tried and true Unreal technologies out the window, starting with UnrealScript.  The reason why Unreal comes with the source is that you have to write your game code in native C++, not a scripting language.  The new Blueprints feature is intended to somewhat replace UnrealScript for designers, but this is completely new territory.  Unreal advertises full source as a benefit over Unity, but source-level access for Unity is almost always unnecessary.  Although, it is possible now that Unreal 4 source is on Github that the community can patch bugs in the engine before Epic does.  Unity developers have to wait until Unity performs updates themselves.

Unreal 4 is so radically different from previous versions, that a lot of Unreal developers may have very good reasons for escaping to Unity or other competing engines.  For some, learning Unreal 4’s new features may not be any easier than switching to a new engine altogether.

Oh, and Crytek is basically giving their stuff away.  At $10 a month and no revenue share, I’m not sure why they are charging for this at all.  That can’t possibly cover even the marketing costs.  I’m not very familiar with Crytek, but my biggest issue with the current offering is Crytek for mobile is a completely different engine.  The mobile engine Crytek built their iOS games with is not yet publicly available to developers.

Which brings me to the latest version of Unity.  I’m sure it’s getting harder to come up with new stuff that justifies a point release.  Still, I need almost none of the features announced in Unity 5.  This is irrelevant as Unity has won the war for developers.  Which is why Unity is moving on to the next problem:  making money for developers.

Unity Cloud is Unity’s new service that is starting as a referral network for Unity games.  Developers can trade traffic between games within a huge network of Unity apps on both Android and iOS.  Unity’s purchase of Applifier shows they are dead serious about solving monetization and discovery–two of the biggest problems in mobile right now.

While other engines are still focused on surpassing Unity’s features or business model, Unity have moved into an entirely different space.  Ad networks and app traffic services may start to worry if what happened to Epic and Crytek is about to happen to them.

Anyone who reads this blog knows I’m a huge Unity fanboy.  But having one insanely dominant engine is not healthy for anyone.  I’m glad to see the other engine providers finally make a move.  I still don’t think any of them have quite got it right yet.

Oh–and in other news, YoYo Game’s GameMaker announcement at GDC, as well as some more recent examples of its capabilities make me wonder why I even bothered to get a computer science degree in the first place!

Why Consoles Didn’t Die

Yeah I was wrong. But hey, so were a lot of people. The PS4 barrels ahead with the fastest selling console ever. Microsoft is making a lot of similar but highly qualified statements about the XBOX One which leads me to believe it’s lagging behind significantly. Still, the recent European price cut and upcoming tent pole releases may perk things up.

photo (39)

Regardless, most console doom predictions haven’t come true. This is because Microsoft, and primarily Sony, changed their business models in response to the looming threat from mobile and tablets. If consoles kept going the direction they were in 2008, we would see a totally different story.

What changed?

No more loss leaders.

Consoles historically launched as high-end hardware sold at a loss–but still quite expensive. This peaked last generation with the ‘aspirational’ PS3 debuting at nearly $600 in 2006. The idea behind this business model was that they’d make it up in software sales and eventually cost reduce the hardware.

This time, Sony took a page out of Nintendo’s book and built lower cost hardware that can at least be sold close to breakeven at launch. The downside being that the tech specs are somewhat mundane. Price sensitivity wins over performance.

Dropping the gates.

The tightly gated ecosystem that dominated consoles for decades would have been absolutely disastrous if left to stand. Sony has largely obliterated their gate and gone for a more authoritarian version of Apple’s curated model. Surely the most significant evidence of mobile’s influence on console to date. Microsoft has also adopted this posture with their ID program. The indie revolution is heavily influencing games, and allowing this movement to continue on consoles is a smart move. Especially when fewer and fewer studios can execute at a AAA level.

Users didn’t move.

A lot of analysts mistook stagnant console numbers for lagging demand. It turns out, there really was just nothing else to buy. Despite hype about core games on mobile–that transition has yet to happen. Most titles console players would recognize as ‘core’ games have utterly failed to gain traction on tablets. Core gamers want core games exclusively on console or desktop while reserving mobile for a completely different experience.

Eventually we’ll see a major disruption in how and where games are consumed. It’s going to take longer than one console generation to transform core gamer habits. It also may be too early to tell. After all, we’re only a few months into this generation.

The fact is, the AAA economy isn’t sustainable. Massive layoffs, even while Sony is basking in post-hardware launch success, shows not all is well with the AAA end of the spectrum.

$100: The New Alternative to Free

I was listening to the Combat Jack podcast over the holidays where his guest was Nipsey Hussle: A Compton rapper famous for successfully releasing a $100 mixtape. Considering mixtapes are used as a free giveaway to promote an artist, selling 1,000 copies at $100 a pop is kind of incredible. Nipsey didn’t just set the price, he turned paying for it into a movement.

Oh, and the mixtape is good, but I prefer the “Chop not Slop” remix version.

Nipsey_Hussle_Crenshaw-front-large

During the interview, Nispey said he got the idea of the $100 mixtape from the book, Contagious. The first chapter is about a restaurant that created a $100 Philly Cheesesteak in an attempt to start some buzz. The rest of the book is a typical hand-wavey marketing tome using non-scientific anecdotal evidence to prove the author’s premise about why ideas catch on. Nispey is now working on a book with the author based on his experience selling Crenshaw. Maybe I’ll dig that one.

Still, this got me thinking about a similar trend in games. As we’ve discussed before, in this era of free everything, early access and alpha funding are new ways games are financing development long before completion. In some cases, you pay more for early access than the released game. Take Planetary Annihilation as an example. Early access runs you $90–nearly the price of Nipsey’s mixtape.

In other interviews, Nipsey stated that he wants to be less of a record label and more of the “urban Sanrio.” Essentially selling physical product and using music to promote it. This is a similar model that streetwear brands have used and somewhat reflective of a growing trend in gaming where physical products are starting to become a significant engine of monetization.

In the era of free, the relationship between your players and their wallets is evolving in surprising ways. It turns out, those who want to pay REALLY want to pay. The one-size-fits-all model of $60 games may be dead, but simply making everything a f2p hamster wheel isn’t a blanket solution either.

How to survive the mobile gaming apocalypse

I was listening to the latest Walled Garden podcast and towards the end they stopped just short of stating what many developers I talk to have been saying–mobile gaming is dead.

Ok, not actually dead. After all, mobile gaming revenue is higher than it’s ever been, and mobile consumption of everything is eating the planet. However, mobile gaming is completely dead as a business model for independent developers and undercapitalized startups.

IAP has become so dominant that there’s really only one somewhat reproducible way to make money in the AppStore: make a hamster wheel f2p game in a handful of established genres and spend tens of thousands of dollars a day on user acquisition to drive traffic to it. Despite many bold experiments, the charts increasingly bear this out.

Republique

This means that some companies with top charting mobile games aren’t actually making a profit as UA costs can eat up most of the revenue. Surely this will produce a shakeout and consolidation in 2014. This is similar to what happened to Facebook games circa 2010 causing a mass exodus to mobile.

Now that mobile is dead, where should you escape to? There are several options.

PC

The PC, and more specifically Steam, remains the platform of choice for those who actually want to charge money for content. There’s a large market for premium games and Steam has loosened their gate with the advent of Greenlight. Some prominent developers have been abandoning mobile for PC with their new projects. Despite PC sales declining in the face of tablets, it makes sense. This is where the paying customers are.

Consoles

A lot has been written here about the impending demise of consoles, but Sony and Microsoft managed to change up their business model and product strategy enough to have early success with both the PS4 and XBOX One. One of the big changes has been the thawing of the gated ecosystem and allowing independent developers to self-publish. Oh yeah, and on the Wii U also.

Next generation console owners are starved for content. There will be many independent successes over the next few years before the channel becomes completely saturated.

VR

On one hand VR is merely a peripheral for existing games, on the other it’s part of an entirely new category of wearable computing and an emerging platform. Oculus Rift is the clear leader with a huge round of investment and development kits widespread. However a glut of VR headsets is on the horizon.

Oculus is building an ecosystem out of their device, but VR content can be distributed through any PC gaming channel. Although, supporting every single headset may be a nightmare for developers–isn’t it time for some kind of standard VR API?

Board games

Board games are a cottage industry yet a hot category on Kickstarter. As an example, Sandy Peteresen’s Cuthulu World Combat iOS game Kickstarter failed miserably, but when re-pitched as a board game, it blew past its funding goal. Going from digital to physical presents a lot of new challenges for developers, but does have a dedicated fan base of paying customers. Plus, you can’t pirate a board game!

Facebook / Web

Facebook games ‘died’ in 2010, but are ironically becoming an increasingly common alternative platform for mobile developers. Especially if you have a working web client already, why not put it on Facebook? The problem is the audience is decidedly non-hardcore. Facebook games can still make some money, but for a very specific audience. However, for hardcore games, the open web still remains a viable place to find an audience of paying gamers. Kongregate proves this.

What needs to change in mobile?

The supremacy of f2p and the very few options for user acquisition make the momentum towards free and the companies with enough money to compete in the mobile UA wars insurmountable. Apple could make some changes to the App Store to help support premium games and other alternative business models, however there really isn’t any incentive to do so–Either way, Apple sells phones. It’s difficult to foresee anything but the continuing dominance of f2p and mega-publishers on mobile in 2014. If you have a ton of cash and resources, solving this problem is hard, and thus very lucrative. For the rest of us, plan your strategy accordingly.

How to go to a Conference

With my GDC Taipei Summit talk, I wrapped up a year of touring the world public speaking. It started with my GDC Online talk on iOS and Android development with Unity3D and concluded with a few trips to Asian GDCs with an expanded version of that talk. In between I did a few other presentations, including co-hosting the awards at Casual Connect SF.

Live from GDC Taipei Summit!

I figured I’d share my tips on how to effectively go to a conference as an entrepreneur.

Conferences are about networking, not information

You rarely learn anything at a conference. This is because the vast majority of speakers are shamelessly promoting themselves or their companies. Most lectures are thinly veiled advertisements. Also, absolutely never go to a panel. You’ll hear better conversations in the hotel bar afterwards. Never listen to sober panelists.

Conferences are about who you meet and the connections you can make. The best way to do this is to make yourself highly visible. Which leads to my second point.

Only attend conferences you are speaking at

If you have fears about public speaking, you’re just going to have to get over it. If other people are merely promoting themselves or their companies, why shouldn’t you? Naturally, an effective speaker shouldn’t shill–and if you are obviously self-pimping, you’ll never get invited back to speak. It’s a delicate balance.

Speaking is a great networking opportunity because you also get access to exclusive events such as speaker dinners that allow you to network with others who may be able to unlock some opportunities for you.

Target your audience

Speaking is all about attracting the right audience with the types of people you want to network with. You need to cater your talk to these people. For instance, this year my talk was highly technical. Technical talks are useless for business development purposes as the only people who attend are engineers–the so-called ‘losers’ of the proverbial Gervais pyramid.

If you’re trying to generate revenue for your business, speaking about the “why” and not the “how” of your subject is a better idea. Discussing why something should be done may attract more decision makers and less actual productive people.

On the other hand, technical talks are great for recruiting talent. I know many technical founders that give in-depth engineering presentations so they can recruit candidates from the audience afterwards. But please–don’t end with a “we’re hiring” slide.

Don’t have meetings

Don’t have meetings at a conference. Most gatekeepers and decision makers are merely going to conferences as a paid vacation. (See one of my earliest posts) They’re hovering within a gradient of two states: drunk or hungover–and if not, are intensely focused on getting laid before the end of the show and thus won’t remember anything you discussed. Try to get the commitment to meet them at their workplace after the conference–when they are presumably sober and have no choice but to listen to you.

Those are just some quick tips from years of attending conferences. Have an objective when you go. When someone asks you what you are doing, have a story to tell. If you just aimlessly wander trying to make serendipity happen, it never will. Self promote, and have a mission.