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.

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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.

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.

My Week with the XBOX One

A mere week after the outstanding launch of the PlayStation 4 comes Microsoft’s XBOX One with a similar success story. Hey–time for some bulletized observations:

Quick!  Where's the games??

Quick! Where’s the games??

The interface is hideous. I’m not a huge fan of Windows 8, but I do think Windows Mobile is pretty snazzy. Yet, Microsoft’s implementation of the “Metro” tile interface on XBOX One is bewildering. You’re constantly getting lost in a sea of scrolling tiles with no context. Especially considering the sheer number of panels on the screen at once, navigating with the controller is a pain. The XBOX One main shell seems designed to be used with a mouse or touch instead of a control pad.

Voice control is a neat trick, but not quite ready. I have to speak in hushed tones around my console because if I dare mention its name, I’m not sure what will happen. In my house, “XBOX” is a killing word.

TV Integration is probably awesome–if I watched TV. I don’t watch much TV, and I certainly don’t watch live TV. So, all of these DVR features on the XBOX One are lost on me. Still, the ability to hook in your TV’s HDMI feed and use the XBOX One as a DVR and cable box is pretty cool–especially when using voice control to search for content. It’s the dream of Google TV realized. I guess. This really isn’t a feature I care much about. I do love the universal IR blaster feature–shouting “XBOX On” to turn on all my equipment is a neat trick!

The actual box is ugly. It’s nowhere near as bad as the original XBOX, but can’t touch the beauty of the gleaming white original XBOX 360. That’s still among my favorite consumer electronics industrial designs. The XBOX One is huge and seems to resemble a 1980’s VCR.

The launch title lineup is strong. By far, Dead Rising 3 is my favorite next generation exclusive. Granted, I’m a huge fan of the series. I’m not a big racing game player, but friends of mine who are love the new Forza–especially with individual button feedback. Even the free2play Killer Instinct has defied expectations. Unlike the PlayStation 4, there aren’t many smaller indie digital exclusives–likely due to Microsoft’s recent reversal of their self-publishing policy. Regardless, the XBOX One currently has better games–the most important point!

Overall I’m quite pleased with the XBOX One. The hardware specs are a bit lower than the PS4 and it’s a little more expensive, but so far the games are strong and the platform shows a lot of promise for growth. Microsoft has also swerved a bit to avoid total disruption, but the verdict is still out. You can’t go wrong making either choice, but if you were to evaluate both the PS4 and XBOX One purely on games alone–I’d have to give the edge to XBOX.

My Week with the PlayStation 4

The next generation has arrived with Sony’s triumphant release of the PlayStation 4. The reviews have all been written–there’s no need to post a huge essay about it. However, it is time for my obligatory quick hardware review.

It’s a nice looking box. The PS4 continues Sony’s legacy of sleek industrial design with a surprisingly tiny and strangely slanted device. It’s small, light, and silent (well, mostly).

The DualShock 4 is the GREATEST CONTROLLER OF ALL TIME! I thought the DualShock 3 was perfect, but Sony has done the impossible and topped it with the DS4–it’s light and fits my hands perfectly. Also, the PS4 can charge the controller while switched off–something the PS3 never managed to do. Now if they can only find a way to turn off the annoying huge LED light while watching Netflix.

The redesigned PS4 dashboard is simple and concise. You’ll learn to appreciate this when you try the XBOX One (review incoming!) It’s easy to navigate–and most importantly, it’s very simple to find, purchase, and play GAMES!

Share Button!

The Share button is genius. With the rise of eSports and Twitch.tv, The PS4 has its finger on the pulse of hardcore gaming with the ability to instantly stream live game video or post screenshots to social networks. I kind of can’t stand watching other people play video games–but I’m sure this will be popular with the vast majority of hardcore gamers that aren’t me. Although–uh, other, uses of the PS4 camera on Twitch may become even more popular.

What about the games? Killzone is gorgeous and has the best campaign of the series–which isn’t saying much. I mention Killzone because there aren’t many interesting PS4 exclusives at the moment. There’s heavy focus on “indie” and downloadable games which are an increasingly important part of the console ecosystem. The harsh development climate over the past few years has left few studios standing that can successfully ship a $75+ million game on a disc.

It’s nice, but rather mundane technology. The PS4 has the hardware edge over the XBOX One–but if you parse the stats, it seems not much more powerful than a mid-range PC. The previous generation shipped with GPUs a little ahead of cutting edge desktop computers, but were also much more expensive. Sony and Microsoft can’t afford to take a big loss on hardware this generation.

I really dig the PS4. Sony’s focus on “indie” and self-published games as well controlling costs is the best move they could have made given the circumstances. With two prominent free2play FPSes launching with the system, it’s clear Sony has adapted to the current market. They made sweeping changes to their business model and hardware strategy that may have successfully fended off disruption from mobile and tablets. The true effects of disruption may be felt later in the cycle when casual consumers fail to show up in the same numbers as before. Regardless, I’m relieved to have another platform to publish games on–as mobile is getting truly apocalyptic.

Quick Notes: E3 2013 Edition

WAR!

E3 2013 is over! This was the most exciting E3 in years. GAMES ARE BACK! Sony and Microsoft are putting up a vigorous defense against the cow clickers and hamster wheels that have taken over gaming in the mobile and social era. It was so refreshing to see such a variety of new IPs that are actual games–games based on fun, mechanics, and experience instead of pure compulsion. I’m psyched for the PlayStation 4 and XBOX One. I pre-ordered both during their respective press conferences. A few notes:

Microsoft needs to fire their entire marketing department. Everyone was talking about Microsoft’s DRM strategy and not the games. Microsoft has completely lost control of the narrative and it’s hurting their ability to promote the XBOX One as an actual games platform.

Microsoft’s strategy of promoting the XBOX One as some kind of media center hub is the wrong one this early in the cycle. They need to engage early adopters for a console launch–people such as myself. All we want to hear about are games. Sony smartly focused on games–even if most of them were multi-platform.

The new Sony is poised for victory. Roles seem to have switched this generation, with Microsoft’s XBOX 360 success creating an attitude of arrogance that has led them to a tone-deaf press conference and hostility to so-called “indie” developers. This is the same attitude Sony had when the PS3 launched that caused a huge decline in market share.

Sony has learned from their mistakes and have radically changed their publishing model. They have embraced indie developers and flexible business models as evidenced by two prominent f2p PS4 titles on the show floor. I talked to many talented developers who had PS4 kits but were refused by Microsoft for XBOX One developer access.

Where was mobile? Compared to last year, mobile had a much reduced presence. Many publishers showed mobile titles along with their console slate, but gone were huge booths from GREE and other Asian mobile powerhouses. It was interesting to see tablet and mobile elements blended in to console games, such as in Ubisoft’s awesome demo for The Division. As discussed here before, companion apps have a long way to go–but this was probably the best example to date.

Hardware on the fringe. Lots of niche hardware made noise at E3. Not the least of which was Oculus Rift. With the show floor abuzz with news of the HD version, it seems at least Sony may be investigating supporting it. Microconsoles such as NVidia’s Project Shield (not so micro at $349) and the Oyua made big splashes too. I’m skeptical of the long-term viability of these platforms–although TowerFall convinced me to pre-order my Ouya.

Nintendo? Where was Nintendo? Their decision to broadcast their press conference on Nintendo Direct may have been an error–but perhaps a good strategy since they really had nothing to show that could counteract the massive PS4 and XBOX One announcements. Their booth was heavily attended, but Nintendo was seemingly out of the running. Luckily, they have enough cash to hunker down and weather the storm this generation.

Favorite games at the show. I never really spend much time waiting in line to watch demos or play games at E3, but I did have a few favorites upon cursory examination. Killer is Dead is a spiritual successor to Killer 7 from Grasshopper Manufacture, and looks fantastic. Dragon’s Crown is a gorgeous 2D side scrolling RPG by Vanillaware in the same vein as Capcom’s old D&D coin-ops. Keep your eye on The Order: 1886 for the PlayStation 4. This will be one of THE exclusive PS4 titles to watch.

Anyway, this was a GREAT show. I’m really excited for the next generation consoles. GAMEPLAY IS BACK.

A Few Quick Notes: GDC2013 Edition

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GDC 2013 Rundown

GDC has become increasingly irrelevant over the past 5 years or so as influence has moved away from the realm of cloistered AAA console game teams and to so-called “indie” developers and the disruptive platforms of mobile and social. Because of this, you can get much better information having conversations with other developers. I spent most of GDC talking to people–you can always watch the good presentations on the GDC Vault.

The trend for 2013 is an industry wide panic over free2play. Presentations and panels worried over whether f2p games are ethical and how the game industry is supposed to survive through this disruption. Considering this is a conversation game developers have been having since 2009, it just goes to show how long it takes for GDC to catch on to major trends.

“Indie” developers were the big celebrities this year. So much so that formerly closed platforms from Nintendo and Sony bent over backwards to encourage garage developers to create content. Nintendo greatly loosened requirements for their development program and even revealed HTML5 support for the Wii U. Sony eliminated concept approval. This shows there are some radical changes ahead for the next generation–Changes I suggested years ago on this blog.

The biggest star of the show was Oculus VR. The wait time to try the Oculus Rift headset grew to over 2 and a half hours by the final day of GDC. I got in to see it and came away hopeful, but unimpressed. The current prototype headset is uncomfortable, but I didn’t spent much time adjusting it. The display resolution is low, causing a screen door effect. When I turned my head, the screen smeared to the point where I couldn’t see anything.

These problems are being addressed. They showed me the physical part for the new screen–the retail version of Oculus will fix the resolution and latency issues. The current kit is strictly for developers and mega-nerdy early adopters. It’s pretty neat for a $300 prototype, but far from a finished product.

I was more impressed with Infinite Z’s zSpace virtual holography system that was on display at Unity3D’s booth. It costs over 10X what Oculus does for no apparent reason. Still, being able to draw 3D splines in thin air and look around them was really cool.

Overall, GDC had a lot of opportunity on display as far as new devices, markets, and tools–but a lot of uncertainty on how to actually make money producing games.

Favorite Quotes of GDC

  • “Cokeheads are better than publishers.”

  • “They said they’d publish my game if I turn it into a Skinner-box.”

  • “The reason why you won’t close the deal is because you’re too competent.”