As the industry moves rapidly towards online-based business models like cloud gaming, digital distribution and social gaming, game designers and executives need to adapt or die.
That's the takeaway message from a GDC Online panel today featuring four game executives closely monitoring and pushing emerging online business models. Among other topics, the panelists debated whether some social games are "evil" and predicted a mixed fate for brick-and-mortar retail.
Although emerging online models are growing and evolving rapidly, physical retail will still remain relevant for years to come, according to game industry David Perry, CEO of cloud-based gaming service Gaikai.
"Everybody really needs to start to embrace that retailers can help them find customers, to do everything in their power to work with the stores," Perry said. "There are moments in time where [the stores] have a lot of leverage."
But the industry won't stay that way for long. While Perry said , packaged goods remain "super-important" in the near-term, he also thinks that "long-term, they're gonna be toast," he said.
Sean Ryan, EVP and general manager of News Corp. Digital, which plans to release its first game soon, agrees that while physical retail will remain a force for another five years, it will eventually undergo a rapid decline.
Physical retail will "still be important for big-budget games," Ryan said, but growth for indie and social games will continue to accelerate online.
Even with the advantages that online distribution grants game makers, there are still issues that need to be worked out, particularly with full-game downloads and digital storefronts, Ryan said.
"You spend $20 million to make a game and all you get is a little static image [on a digital storefront] to sell the game," Perry observed. On top of that, he said, the major storefronts -- Xbox Live Arcade, PlayStation Network and the Wii Shop Channel -- are owned by console makers, who release their own games that compete with third-party games.
"It's like if GameStop made games," said Perry, who added that the big breakthrough will be when someone finds out new and better ways for players to share and discover games.
The burgeoning social game market has its own set of challenges, such as increasing virality, monetizing users and engaging players who just happen to come across a game during a Facebook session.
But one of the touchier debates in the space is whether social games like FarmVille are more about fun and deep design or simply focused on extracting revenues from players through psychological manipulation and exploitation.
"I think as an industry we have a financial obligation to be more profitable, but ethically we should make games that treat people like human beings [and not] cattle" being herded through a marketing system, said Susan Wu, CEO of City of Eternals creator Ohai.
She not so subtly implied that social game leader and FarmVille creator Zynga used techniques akin to a crack cocaine dealer.
News Corp.'s Ryan interjected, "All this babble about cattle. You're not obligated to play the damn game." Ryan said he strongly disagreed with the "weird backlash about how these games are inherently evil ... Either people really like farming, which I doubt ... or the game mechanics really work."
"I feel like we're at the French Socialist meeting. I thought we were in Texas," he said.
Ryan went on to assert that the most successful game companies will be the ones that can meld virality with great game design, and that social games will get deeper as social game makers like Zynga hire on more traditional game designers. "You have to understand that deeply," he said. "This market is evolving at a ferocious rate, and gameplay expectations are going up."
With recent policy changes to Facebook, many developers are concerned about the ability to market their games. "Everybody is saying viral is dead on Facebook," said Wu. "I think that's bullshit." She said that good gameplay will drive virality. "Minecraft is a great example."
Perry called Zynga extremely efficient "human psychology manipulators" –- and that's not an insult, he later told Gamasutra, explaining that knowing what's going on inside players' heads is important for any game designer.
Brandon Beck, CEO of Riot Games, developer of the hit online "freemium" PC game League of Legends, said that, with free-to-play games, the quality needs to be of a particularly high standard if game makers expect players to buy extra items. "If players feel like they're getting value, they will pay for stuff," he said.
As for how to pay for that stuff, the executives agreed that business models like the $60 packaged game or fixed monthly subscription fees limit developers' chances of making money.
"You've got to let people spend as much as they want," said Perry.
Ryan went further, saying, "Subscription is dead as a model," while also admitting that it's certainly working for Blizzard's World of Warcraft.
With all of these new businesses coming up, more traditional game makers should not write off these trends, Perry said. He likened game designers to rock stars –- they need to evolve to stay relevant. "If you can't accept that social gaming is here, I think you'll be done. ... Are you evolving, or aren't you?"
I would take this with a grain of salt seeing as these people's bread and butter are on online channels. There is no counter balancing argument presented.
"You spend $20 million to make a game and all you get is a little static image [on a digital storefront] to sell the game," - David Perry
This statement completely ignores the wildly successful Steam platform. You get more than a "static image". You get screenshots, video trailers, bullet points, synopsis, game mode options, system requirements, developer/publisher details, and more. His quotations in this article outline a blatant ignorance of the market landscape. They seem to think that a successful game needs to be a blockbuster hit like farmville. Perry, in particular, seems to be of the mind that games are about milking the customer by any means possible.
"Everybody really needs to start to embrace that retailers can help them find customers, to do everything in their power to work with the stores," Perry said. "There are moments in time where [the stores] have a lot of leverage." - David Perry
This is also ignores reality. The brick and mortar retail model is a remnant of a bygone era. This very quotation emphasizes the fear the industry has of loosing control over content distribution that is leaving their hands and going to the public. It is the power they hold over distribution that gives them the leverage to dictate to people where, when, and how they get the content they want. Retail sale of physical discs is an imposition upon the players because it tries to force on them a physicality of property on something that never was property to begin with.
The internet renders both the concept of IP and the necessity of physical media for sale of a game inert. Retail sales of games is not unlike the gas station restroom key. It's bulky and cumbersome with the intent to limit your ability to do with it that which the owner wishes to not be able to do with it. Who wants to burn gas to drive to a store, go through the checkout counter, drive home, install the game, jump through the hoops to verify that you paid for it, and then finally play the game you paid for, assuming that the DRM doesn't break it? Digital distribution streamlines this all immensely. You buy the game, download it, install, and play.
"If players feel like they're getting value, they will pay for stuff," - Brandon Beck
This looks on its surface as a genuine truth, but in reality it's bad business philosophy. Just because people value something, doesn't mean that they will pay for it. People value a great many things they would never pay a penny for. Some might, but I'd venture to guess that even though people value air, they wouldn't pay for it.
The same goes for games. The laws of economics rule here and they say that if the supply is infinite (as information is intangible and an unlimited number of copies can be made), the demand will fall until the price drops to a level where the supply and demand meet. Since the supply can meet 100% of the demand, the resulting price is zero. This is the difference between value and price. This is why publishers hold so tightly to copyright, because they could never survive in a truly competitive market because their business model depends solely on monopolies. Their ability to make a profit requires the ability to limit and control what you can do with the media you buy.
"If you can't accept that social gaming is here, I think you'll be done. ... Are you evolving, or aren't you?"
The so-called "social gaming" phenomenon has been going on ever since games first became a part of all animal culture. Humans use games as a method to connect to others in ways of attachment, learn skills, and competition to determine social order. "Social gaming" isn't anything new. The term is really nothing more than a marketing buzzword that is used to differentiate and label a particular group of games and use that label to draw the attention of potential customers. Farmville is no more "social" of a game than Counter-Strike or World of Warcraft.
"This statement completely ignores the wildly successful Steam platform. You get more than a "static image". You get screenshots, video trailers, bullet points, synopsis, game mode options, system requirements, developer/publisher details, and more. "
I think he is referring to if a person is browsing through the available titles, the "icon" or at best "icon and blurb" are all the developer has to entice the potential buyer to click through and look at all the other stuff you mention.
"The laws of economics rule here and they say that if the supply is infinite (as information is intangible and an unlimited number of copies can be made), the demand will fall until the price drops to a level where the supply and demand meet. Since the supply can meet 100% of the demand, the resulting price is zero"
You are using an incorrect economic model here. This would only apply if the fixed overheads were zero. In the case of a game the fixed over heads are larger than in most industries so your model does not apply. Price point would be calculated as:
maximum of (fixedcosts/demand(P)) + (supply component equals zero as you suggest)
"Farmville is no more "social" of a game than Counter-Strike or World of Warcraft."
The term social game does not refer to whether people are social when playing a game it refers to the specific gameplay trait that you have to ask your friends to do something in order for you to progress. This is still not "new" but it certainly doesn't apply to every game and not nearly as explicitly as games like Farmville.
An interesting misnomer, isn't it? Farmville is called a social game, and it's a game about exploiting your "friends" (at its best, it's a mutual exploitation, i.e. a kind of trade).
Meanwhile, Counter-Strike, which is denied the label, is a game that, over the course of three years, caused me to make several dozen new acquaintances, including a few new real life friends. I was actually invited to a wedding of a couple whom I had only known as my clanmates. And I mean a real wedding, like in a church. Attending our clan server was the closest I ever came to becoming a pub patron. But no, Counter-Strike is not a social game, because it lets me socialize, but it does not let me use people.
Of course there is never a fixed cost equal to zero. They do need to make the game to begin with, which costs money. Nevertheless, once the initial copy is created, there is no additional overhead on the creator's part to make more copies because the internet community serves as a distribution system. If everyone whom receives a copy shares with one or more people, then the creator is freed of the variable cost of distribution. The issue is, that information is an abundant good and as such never incurs an increase in demand because the supply never diminishes. The initial cost of production is irrelevant when dealing with abundant goods.
"maximum of (fixedcosts/demand(P)) + (supply component equals zero as you suggest)"
As I said, demand would be zero because the supply does not diminish. What happens when you divide by zero? Your equation fails to work because you cannot divide by zero, that's impossible. ($50 million/0(P))+(0) = error
What developers fail to realize is, that they aren't in the business of selling plastic discs, but selling their services to create something people value. Time and effort is a scarce good that they can sell. As such, they should be getting payment for the initial creation of the game and not looking to make revenue after the fact. The irony is, the developers already to follow this model. They get paid to make the game, it's the publishers that try to sell the individual copies. In my opinion, the people that deserve to get paid already have and the publishers are trying to sell something that doesn't actually have any price in the market.
"it refers to the specific gameplay trait that you have to ask your friends to do something in order for you to progress."
I would argue that this is an inherent trait of any game that requires multiple persons to participate. Monopoly would not function as the game was intended without participation of another player. What games like Farmville do is utilize the social network to find other people to collaborate in order to satisfy the requirements of the game mechanics. The only unique portion of that model is that the internet is used to recruit collaborators as opposed to legacy methods of social networking (e.g. face to face communication).
I'm not sure brick and mortar stores will ever die per say. I think there are many people that are still hesitant as to just purchase digital materials---its a gamble, at least for me, to just pay for a game file that will be loaded onto a computer/phone/handheld device--especially with the accountablility from publishers and developers--who generally have awful customer service--if anything at all.
As for Farmville and so called "social gaming"--they all seem to be a form of exploitation and shouldn't really have the right to be given the title "game"---maybe "social exploitation" should be the next buzzword so we can get these "games" out of the market.
I think this is executives telling game designers they better do what they're told, or else... Reducing game design to an exercise in making pulp entertainment or internet ventures, instead of pushing the boundaries of the medium.
Well, of course executives have their own ideas about their business. I think it's more of a "get rich quick" mentality. There are a surprisingly large number of people who think business works a bit like fashion - you always need to get the latest design, or you're going to lose a race or something.
I guess it's a kind of risk aversion. When a new business model emerges, and initial attempts suggest it works fine, but it's still largely a no-man's land, going in there with your money is a safe strategy. There's nearly no competition yet, so you get to make some extra money just because you're first (well, actually, you're second, because someone went in there before you and made the initial attempt). As a market begins to mature, there are more and more people who are doing the same thing, so your actual fitness (eg. quality, development efficiency, marketing strategy) begins to matter. Surviving in a given market becomes a challenge.
But there is always some other, new business model that gives a promise but hasn't been worked to death just yet. Hence people who keep saying premium is the new subscription, just like they said subscription was the new multiplayer, multiplayer was the new singleplayer, casual was the new hardcore, etc. It's a very old pattern. PC gaming has been officially dead for how long now? 20 years?
And then you take a closer look at the market, and you discover small wonders all around you. Like, for instance, I've just found that there is a company not far from my home, that's made about 40 episodic, point and click adventure games in Flash, with varying degrees of hardcoreness, in the last three years or so. Their busines model is triple-dead, according to golddiggers. But it seems to work fine for them, at least in that they keep doing their thing.
I don't mind executives being concerned about business considerations of my work, because it means there's one less thing for me to worry about. And I'm free not to take their money if I don't like their business model, right? But I do wish I lived in a world where companies just tried to do their thing in a sustainable fashion, rather than trying to always grow indefinitely. Good thing I don't live in Texas, I guess.
What strikes me about the social game argument is that we can't deny that the games are fun. It's like saying pop music is rubbish - it might be technically inferior, it might lack style, or originality, or the panache and flair of more specialised music, but what good is music if nobody hears it? I don't enjoy facebook games at all, but the numbers don't lie - people are still playing Cow Clicker, for pete's sake! People like to click on stuff, they like to exploit their connections, they like to feel like they belong to something, and we can't rag on Farmville for finding a way to monetize it.
Now I type that, there's something just a little bit creepy and American-Psycho-ish about the desires and impulses that drive a Farmville player ...
[quote]News Corp.'s Ryan interjected, "All this babble about cattle. You're not obligated to play the damn game." Ryan said he strongly disagreed with the "weird backlash about how these games are inherently evil ... Either people really like farming, which I doubt ... or the game mechanics really work."[/quote]
Drug dealers use a similar defense. "Hey man! I'm not forcing people to inject my poison into their veins!"
Generally speaking, if you produce or market a product that you wouldn't want anyone you really really cared about consuming, you're evil.
Why is there a Dodo representing this article? Dodos became extinct because people killed them to use their feathers as decorations, not because they failed to adapt.
Here's one such counter argument
http://news.mmosite.com/content/2010-09-29/the_cash_shop_a_possible_obstacle_for
_online_games.shtml
This statement completely ignores the wildly successful Steam platform. You get more than a "static image". You get screenshots, video trailers, bullet points, synopsis, game mode options, system requirements, developer/publisher details, and more. His quotations in this article outline a blatant ignorance of the market landscape. They seem to think that a successful game needs to be a blockbuster hit like farmville. Perry, in particular, seems to be of the mind that games are about milking the customer by any means possible.
"Everybody really needs to start to embrace that retailers can help them find customers, to do everything in their power to work with the stores," Perry said. "There are moments in time where [the stores] have a lot of leverage." - David Perry
This is also ignores reality. The brick and mortar retail model is a remnant of a bygone era. This very quotation emphasizes the fear the industry has of loosing control over content distribution that is leaving their hands and going to the public. It is the power they hold over distribution that gives them the leverage to dictate to people where, when, and how they get the content they want. Retail sale of physical discs is an imposition upon the players because it tries to force on them a physicality of property on something that never was property to begin with.
The internet renders both the concept of IP and the necessity of physical media for sale of a game inert. Retail sales of games is not unlike the gas station restroom key. It's bulky and cumbersome with the intent to limit your ability to do with it that which the owner wishes to not be able to do with it. Who wants to burn gas to drive to a store, go through the checkout counter, drive home, install the game, jump through the hoops to verify that you paid for it, and then finally play the game you paid for, assuming that the DRM doesn't break it? Digital distribution streamlines this all immensely. You buy the game, download it, install, and play.
"If players feel like they're getting value, they will pay for stuff," - Brandon Beck
This looks on its surface as a genuine truth, but in reality it's bad business philosophy. Just because people value something, doesn't mean that they will pay for it. People value a great many things they would never pay a penny for. Some might, but I'd venture to guess that even though people value air, they wouldn't pay for it.
The same goes for games. The laws of economics rule here and they say that if the supply is infinite (as information is intangible and an unlimited number of copies can be made), the demand will fall until the price drops to a level where the supply and demand meet. Since the supply can meet 100% of the demand, the resulting price is zero. This is the difference between value and price. This is why publishers hold so tightly to copyright, because they could never survive in a truly competitive market because their business model depends solely on monopolies. Their ability to make a profit requires the ability to limit and control what you can do with the media you buy.
"If you can't accept that social gaming is here, I think you'll be done. ... Are you evolving, or aren't you?"
The so-called "social gaming" phenomenon has been going on ever since games first became a part of all animal culture. Humans use games as a method to connect to others in ways of attachment, learn skills, and competition to determine social order. "Social gaming" isn't anything new. The term is really nothing more than a marketing buzzword that is used to differentiate and label a particular group of games and use that label to draw the attention of potential customers. Farmville is no more "social" of a game than Counter-Strike or World of Warcraft.
Nice said!
I think he is referring to if a person is browsing through the available titles, the "icon" or at best "icon and blurb" are all the developer has to entice the potential buyer to click through and look at all the other stuff you mention.
"The laws of economics rule here and they say that if the supply is infinite (as information is intangible and an unlimited number of copies can be made), the demand will fall until the price drops to a level where the supply and demand meet. Since the supply can meet 100% of the demand, the resulting price is zero"
You are using an incorrect economic model here. This would only apply if the fixed overheads were zero. In the case of a game the fixed over heads are larger than in most industries so your model does not apply. Price point would be calculated as:
maximum of (fixedcosts/demand(P)) + (supply component equals zero as you suggest)
"Farmville is no more "social" of a game than Counter-Strike or World of Warcraft."
The term social game does not refer to whether people are social when playing a game it refers to the specific gameplay trait that you have to ask your friends to do something in order for you to progress. This is still not "new" but it certainly doesn't apply to every game and not nearly as explicitly as games like Farmville.
Meanwhile, Counter-Strike, which is denied the label, is a game that, over the course of three years, caused me to make several dozen new acquaintances, including a few new real life friends. I was actually invited to a wedding of a couple whom I had only known as my clanmates. And I mean a real wedding, like in a church. Attending our clan server was the closest I ever came to becoming a pub patron. But no, Counter-Strike is not a social game, because it lets me socialize, but it does not let me use people.
"maximum of (fixedcosts/demand(P)) + (supply component equals zero as you suggest)"
As I said, demand would be zero because the supply does not diminish. What happens when you divide by zero? Your equation fails to work because you cannot divide by zero, that's impossible. ($50 million/0(P))+(0) = error
What developers fail to realize is, that they aren't in the business of selling plastic discs, but selling their services to create something people value. Time and effort is a scarce good that they can sell. As such, they should be getting payment for the initial creation of the game and not looking to make revenue after the fact. The irony is, the developers already to follow this model. They get paid to make the game, it's the publishers that try to sell the individual copies. In my opinion, the people that deserve to get paid already have and the publishers are trying to sell something that doesn't actually have any price in the market.
"it refers to the specific gameplay trait that you have to ask your friends to do something in order for you to progress."
I would argue that this is an inherent trait of any game that requires multiple persons to participate. Monopoly would not function as the game was intended without participation of another player. What games like Farmville do is utilize the social network to find other people to collaborate in order to satisfy the requirements of the game mechanics. The only unique portion of that model is that the internet is used to recruit collaborators as opposed to legacy methods of social networking (e.g. face to face communication).
All the models work. More choice, aka, more paths to the cash register is never a bad thing.
As for Farmville and so called "social gaming"--they all seem to be a form of exploitation and shouldn't really have the right to be given the title "game"---maybe "social exploitation" should be the next buzzword so we can get these "games" out of the market.
I guess it's a kind of risk aversion. When a new business model emerges, and initial attempts suggest it works fine, but it's still largely a no-man's land, going in there with your money is a safe strategy. There's nearly no competition yet, so you get to make some extra money just because you're first (well, actually, you're second, because someone went in there before you and made the initial attempt). As a market begins to mature, there are more and more people who are doing the same thing, so your actual fitness (eg. quality, development efficiency, marketing strategy) begins to matter. Surviving in a given market becomes a challenge.
But there is always some other, new business model that gives a promise but hasn't been worked to death just yet. Hence people who keep saying premium is the new subscription, just like they said subscription was the new multiplayer, multiplayer was the new singleplayer, casual was the new hardcore, etc. It's a very old pattern. PC gaming has been officially dead for how long now? 20 years?
And then you take a closer look at the market, and you discover small wonders all around you. Like, for instance, I've just found that there is a company not far from my home, that's made about 40 episodic, point and click adventure games in Flash, with varying degrees of hardcoreness, in the last three years or so. Their busines model is triple-dead, according to golddiggers. But it seems to work fine for them, at least in that they keep doing their thing.
I don't mind executives being concerned about business considerations of my work, because it means there's one less thing for me to worry about. And I'm free not to take their money if I don't like their business model, right? But I do wish I lived in a world where companies just tried to do their thing in a sustainable fashion, rather than trying to always grow indefinitely. Good thing I don't live in Texas, I guess.
Now I type that, there's something just a little bit creepy and American-Psycho-ish about the desires and impulses that drive a Farmville player ...
Drug dealers use a similar defense. "Hey man! I'm not forcing people to inject my poison into their veins!"
Generally speaking, if you produce or market a product that you wouldn't want anyone you really really cared about consuming, you're evil.