TriplePoints of Interest – Week of April 6

Welcome to a new weekly feature here on the TriplePoint blog: TriplePoints of Interest, where we recap the biggest news from around the games and tech industry, plus subjects we just can’t stop talking about around the office!

Fixing the image of free-to-play

The image of free-to-play games has been a hot topic as of late. Steve Peterson of GamesIndustry International describes why free-to-play games have built a bad reputation and how it can be fixed. He first cites how quickly widespread the business model has become as reason for the extreme divide on opinions from within the games industry.

He then suggests that in-game merchandise must improve on the game, not be required to play the game, and that players shouldn’t have to feel they must make microtransactions to remove “annoyances” in the game or get to the fun. Developers and marketers also must be clear about the ways to spend money in the game. If a developer does not feel it is beneficial to “celebrate” the microtransactions, then the microtransactions are probably not ones that should be built in in the first place and will likely anger players.

The YouTubers versus Nintendo: the saga continues

Nintendo’s controversial YouTube policies have caused another YouTuber to cease reviewing Nintendo games. Joe Vargas of the Angry Joe Show stated in a video, according to Polygon, that he will no longer make videos relating to Nintendo games after his Mario Party 10 video was flagged for copyrighted material, keeping him from making ad revenue. Mr. Vargas has also been a staunch opponent of Nintendo’s Creators Program.

Heroes of the Storm collegiate league needs a GPA boost

The rise of collegiate competitive gaming, while growing exponentially, has not been without its share of snags. Blizzard’s Heroes of the Storm collegiate tournament, “Heroes of the Dorm,” has been marred with no-shows and website bugs, leading to a host of scheduling difficulties, according to Daily Dot. The $450,000 prize pool, and involvement of Blizzard and TeSPA (high-profile collegiate eSports organization) meant very high expectations for the tournament from fans and participants alike, begging the question of the effectiveness of allowing over 800 teams to participate.

Ads and Kids, like water and electricity, do not go together

Consumer advocacy groups are asking the FTC to investigate Google’s YouTube Kids app due to concerns that it aims advertising at young children on smartphone and tablets, according to San Jose Mercury News. The concerns cite laws on broadcast TV that prohibit TV stations from placing products around kids’ programming due to children having not developed cognitive skills to resist advertising.

An old dog returns to the doghouse: Mark Pincus is back!

Zynga announced that Don Mattrick, their CEO of less than 2 years, is leaving and will be replaced with former CEO, Mark Pincus. GamesIndustry International believes that the company’s great losses under his leadership caused the change, but credited Zynga’s sharp rise in mobile profits–from 27% to 60% of the company’s worth–over the last 2 years to Mr. Mattrick’s work.

Check back again next week for more of the top news from games and tech!
Featured image from Geek.com

The Fault in VR: Oculus Widens the Rift Between Gamers

"Huh, did you say something?"

Oculus Rift has already won the hearts and minds of geeks everywhere, without a finished product on shelves. At trade shows like CES and E3, the chance to get even a brief demo of the virtual reality headset has spawned endless, snaking lines of near-Disneyland proportions. There’s no doubt that the Rift has the potential to change entertainment as we know it, but it’s a step in the wrong direction that will further divide gamers from the mainstream.

Continue reading The Fault in VR: Oculus Widens the Rift Between Gamers

Making a Case for the Smartwatch With a Look Into the Future

There’s no doubt that wearable technology has gained widespread acceptance among fitness and health enthusiasts. The simple bracelets track our movement and encourage us to live a more fit lifestyle, a goal most of us aspire to but struggle with when it comes to ongoing engagement. Companies like Nike and Fitbit are making major headway into this category, while other technology giants jump in to tackle the next evolution of wearable tech with the smartwatch.

Yet, skepticism remains about the viability of such devices and their impact on our lives. Is it a necessity? What form will it take before gaining mainstream acceptance? When will form meet function and design before we’re all genuinely excited about it?

I believe that there’s a massive opportunity with wearables, particularly the smartwatch, as devices that will become just as ubiquitous as the smartphone, if not outright replacements. Let’s take a look at some of the players and trends pointing the way.

Apple
I recognize it’s strange to lead off with a company that has yet to reveal a smartwatch. Yet, the rumor mill continues to swirl about the company’s plan. The most interesting rumors involve a secret army of engineers working on a “special project” (the TV could be another), and motion sensor “system on chip” manufacturer Invensense tripling its company size to accommodate orders from Apple.

We should also recognize that Apple does a fantastic job of incorporating accessibility and assistive technology into its devices, many features of which will overlap with an advanced UI necessary for tackling problems with smartwatch usability.

The market is also still ripe for innovation when it comes to both form and function. Nailing the look and usability of such a technology is no easy feat, but that’s a challenge that Apple has repeatedly shown to excel at with the personal computer, MP3 player, smartphone, tablet, etc.

Here are a few interesting concepts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additionally, Tim Cook sits on the board of Nike and can often be seen wearing a Nike+ FuelBand. He’s a strong and vocal proponent of the FuelBand. You can count Cook among those who believe in the future of wearables, with Nike as the perfect testing ground for his own company’s aspirations and fueling speculation of Apple’s plans in this category even further.

Google
Probably one of the more exciting news in wearable technology of late is Google’s announcement of the Android Wear OS.

Not only are the initial Motorola 360 and other designs revealed with the announcement a great step in the right direction to making an attractive product, but the attention to solving UI challenges should add fuel to the race. With Android continuing to build momentum in the smartphone and tablet space, Wear is a testament to Google’s commitment in the smartwatch category and an important sign that this isn’t going away.

And in case you’re wondering, no, I don’t believe in the future viability of Google Glass, primarily because of its intrusive nature that will never gain social acceptance.

Samsung, Pebble, and others

Pebble is the most notable company to enter this space with a splash, setting the tone for how smartwatch design married with tech can get tech enthusiasts excited. Its move to deploy an SDK and a discovery portal (an Android app containing a library of compatible Pebble apps) is a smart one, which should accelerate developer adoption of the platform as it continues to expand its install base.

Samsung is another major player taking this space seriously, coming out with its own Galaxy Smartwatch line. Most recently, the company revealed a whole slew of new designs at Mobile World Congress in Barcelona, the Gear Fit receiving the most recognition of the bunch due to its curved screen and attractive look. While Samsung continues to contribute great effort to this space, it’s still not quite enough to solidify the smartwatch as a must-have gadget.

So what’s needed to cross the chasm from tech enthusiasts to mainstream acceptance? What can we expect?

We need to completely change the notion of a smartwatch as an accessory to the smartphone, but a piece of technology that is convenient to use and solves common problems in our everyday lives. We once thought that feature phones were an amazing piece of technology that couldn’t possibly get any better, until color screens with web browsing capabilities, improved data bandwidth, and eventually the iPhone came along to change our perception of cellular phones and becoming a necessity, not a “want.”

I’m personally not satisfied with having to carry an $800 electronic brick in my pocket, and I imagine my 3 year old daughter growing up and wondering in disbelief that we’d use it as the central communications tool. Let’s look at three key areas that have yet to truly materialize — areas of focus that will drive the future of smartwatch adoption and utility.

  • Design: Let’s face it; it needs to look good. A curved and/or flexible screen will help makers achieve the perfect balance of form, function, and style, which is no easy feat. While not quite “wearables”, we’re seeing this marriage of technology and design take form in making old and ubiquitous tools “smarter”. Only Nest could really nail it with the thermostat to result in a $3.2 billion acquisition by Google. The Livescribe 3 smartpen (a TriplePoint client) achieves a slimmer form factor and mirrors the style of luxury ink pens, making it a best-selling product for the company. Technology can no longer just work, it also has to look beautiful for today’s consumer.
  • Technology: The Android Wear OS will hopefully optimize power consumption, a big challenge facing smartwatches available on the market today. Meanwhile, battery technology continues to advance, and will one day give us a device that can run on a single charge for days. Additionally, improved voice recognition will be necessary to allow for hands-free control of the device strapped to our wrist, something that both Google and Apple continue to work on. Finally, other features are sure to improve the overall utility of a smartwatch, such as the ability to project the screen onto a tabletop or wall for larger visibility, such as maps and websites.
  • Cellular chip: All of these things will lead to the integration of a cellular chip directly into the smartwatch, which will be the ultimate driver of adoption, as long as all other challenges are addressed first. The need for us to continue using a smartphone as the gateway to voice and data connectivity is a problem and the reason why I’ve yet to buy a smartwatch. To become truly functional, it needs to operate independently. Surely we’ll continue to use smartphones or tablets for expanded applications that require a larger screen, but they will become the accessory that displays data transmitted via the smartwatch over direct WiFi, not acting as the cellular gateway itself.

Many events and meetups are sprouting up around the world to discuss topics in wearable technology, which speaks to the real momentum behind the technological movement. I believe it’s going to be just as big, if not more important than, the advent of smartphones and impact our lives in nearly every way imaginable, from fitness to health and just everyday utility.

One such event is being put on by ReadWrite, coming up in San Francisco on April 9th – ReadWriteMix: Grappling With the Future of Wearable Technology with Pebble’s Eric Migicovsky.

View more information about the event and RSVP for free here: https://www.eventbrite.com/e/readwritemix-grappling-with-the-future-of-wearable-technology-with-pebbles-eric-migicovsky-tickets-10981442791

It’s sure to provide more insight on this hot topic, and I’m looking forward to participating in the discussion. Look out for me there, or reach out in advance to make sure we connect!

Smartphone Game Controllers – More of a Game Changer Than You Think

Ask any game developer on iOS and Android today about the challenges they face in succeeding (i.e. turning a profit, making a sustainable living), and chances are there will be expressions of frustration and negativity. Save for companies that have already established themselves in the mobile marketplace and can afford to build and sustain a customer base, an overwhelming majority will never see a penny of profit.

At the same time, the mobile game market is at a crossroads. On one hand, you have casual experiences being churned out that can be monetized through growth hacking, a.k.a. the ability to target, but and convert players into paying customers. On the other hand, unique game experiences with deep and engaging levels of gameplay that can appeal to true “gamers” are finding it incredibly challenging to succeed, experiences that might command an upfront payment for a quality experience, one that such gamers are willing to pay.

Yet, the touchscreen experience doesn’t match the deep level of gameplay that sufficiently satisfies the needs of the average gamer. A few hours of playing a serious shooter, and you’re left with finger burn and a crooked wrist. This is why I adamantly support Nintendo’s strategy to continue building out their own platform with dedicated portable consoles, but that’s best left said in another blog post that I previously wrote.

While these challenges will persist in the near future, there is a bright spot in the mobile industry, steadily growing to help push development of high quality, deep gaming experiences that consumers might be willing to pay for – Bluetooth game controllers. Yes, multiple companies exist that provide such solutions, such as Green Throttle, Nyko, MOGA and others, but the tipping point will come with native integration of controller support by Apple and Google.

We already know about Apple’s controller API released with iOS 7, one that any developer can integrate into their game to support any wireless Bluetooth game controller. Google can’t be far behind, and we can be confident that we’ll see the support in the next year, at the most.

Free-to-play games rule the roost, and likely will for some time to come, if not permanently. This has allowed companies with the most capital to execute “growth hacking” techniques weighed heavily on user acquisition to build and sustain a player base. This has unfortunately led to an incredibly difficult marketplace for less capable developers to navigate and get discovered, especially the indie tier where the best ideas are generated and the least analytical capabilities lie. And we certainly can’t count on a quality game to succeed based on a one-time payment model. Free-to-play becomes even more challenging for the serious gamers, an incredibly difficult balance to manage in avoidance of pay-to-win perceptions.

As for “quality” games following the paid download model, $1.99 is unfortunately the maximum a majority of smartphone gamers will pay, with $9.99 and $19.99 being special price points for console ports – generally not optimal experiences built from the ground up for the touchscreen.

With universal game controller support built into iOS and Android, we can count on gamers playing for longer periods of time. With such higher engagements, developers can build deeper experiences with flexible game mechanics and backstories that have gamers investing tens of hours of time. Such game experiences are why 35 million gamers around the globe own a 3DS, and games that sell for $40 each sell in the millions within several days of release. These are the games, like Grand Theft Auto V and Call of Duty, that smash entertainment sales records, surpassing movies and music. Many of these games just wouldn’t work on a free-to-play model.

We’ve witnessed a variety of companies enter the market to disrupt the console business, most of which have been categorized as “microconsoles”, dedicated set-top box hardware usually build on top of Linux/Android. Yet, I can’t help but think that the last thing developers need to worry about right now is another platform, particularly one with little install base to justify the additional resource investment.

Why the need for a microconsole, when we all already own one, sitting right in our pocket? The smartphone and tablet, both iOS and Android, will quickly displace the need for dedicated microconsoles that offer the same value. Connectivity to the TV an issue? Tap and stream, enabled by Apple TV and, soon, the likes of Chromecast, will eliminate this hurdle for mainstream consumers. Don’t worry about the gamers – they’re savvy enough to make it happen now, as long as they have a reason to.

 

To summarize why I’m optimistic about the smartphone and tablet gaming space for the future of gaming:

1.) Native integration of controllers accelerating developer adoption into games.

2.) Games built from the ground up with controller support can lean on deeper experiences that please core gamers.

3.) High quality game experiences that can be played for hours (and avoid finger burn) can command premium price points and not rely on free-to-play access and conversion.

4.) Smartphone and tablets significantly increasing in power and capabilities can offer an experience that pleases the core gamer.

5.) One-tap streaming from smartphones/tablets to TV will all but eliminate the need for dedicated consoles tethered to the TV.

6.) More freedom and flexibility for gamers – one game file and experience no matter where you are, whether played on the road or on your living room TV.

 

I truly believe that there’s still a bright future ahead for experiences that gamers can enjoy and would be willing to pay a premium price point for on mobile devices. The hurdles that face development and adoption of such titles is a technology challenge already being solved in the form of native controller support and mobile-to-TV streaming. This is an exciting opportunity for developers to harness and create rich game experiences that meets the behaviors and consumption habits of gamers both casual and core. For all the gamers out there, we get to enjoy great games using the hardware that we own coupled with an affordable controller, anytime, anywhere.

The Rise of Valve – Capitalizing on Digital Distribution Domination

Recently, we had some big news from one of the largest, and well respected, companies in the gaming industry: Valve announced that they were officially entering the console market with “Steam Machines,” gaming consoles that aim to bring the PC gaming experience to the living room. I’m pretty excited to see Valve enter a hardware industry that is currently dominated by only three competitors. They’re bringing a lot of new ideas to the table, such as a haptic-based controller, which may shape the future of the console landscape. Yet, what fascinates me the most is looking back and realizing that Valve has been leaving bread crumb trails all along, even during the inception of Steam.

Steam Client: Digital Domination

When Valve debuted Steam in 2003, it was an absolute pain. The amount of time it took me to patch and boot up Half Life 2 was tedious, and if it weren’t for the fact Valve’s flagship title was absolutely one of the best games of all time, I think it would’ve been dead on arrival. Still, Steam eventually became a pioneer for digital distribution. Many third-party publishers including Eidos, iD Software, Take Two and many others joined in to reap the profit margins from selling their titles online. The acceptance of digital distribution paved the way for consoles to develop a similar model on their platforms; if it wasn’t for Valve playing the role of the innovator in the gaming industry, I doubt the Xbox Marketplace or PlayStation Store would be what they are today.

Digital distribution is the foundation of Valve’s Steam Machines, and without proper dominance on that front, there was no way they could move onto building hardware.

Are You Starting to see the Big Picture?

It was made clear that Valve wanted to move in this direction at Sony’s 2010 E3 Press Conference. Valve’s Co-founder and PC enthusiasts’ most beloved figurehead, Gabe Newell, came onto the stage and stated, “As an industry we’re going through a transition. As an entertainment as a product to an entertainment as a service… it’s about giving gamers a complete connected social experience.”

This foreshadowed Valve’s motives. They wanted to grow their platform into something bigger, encapsulating not only the PC Market, but also console gamers. But the PC developer/distributor needed to create something that would make it easier for console gamers to embrace their platform… and that’s where Big Picture comes in – a new way to experience Steam.

Everything about Big Picture was designed to take advantage of the living room experience and bring console gamers one step closer to the PC world. It was a digital platform with an online user interface any console gamer could jump in and understand. Best of all, with over 2500+ store titles already available at launch, Valve was already one step ahead.

The Final Stretch into New Familiar Territory 

But they faced one final problem — most console gamers couldn’t afford a powerful PC rig to take Valve’s offering.

Valve needed to find a way to bring down the cost, and that’s where Steam Machines make their entrance. With multiple models, Valve’s approach to the Steam Machines hardware allows anyone to pick up a console at their own personal price point. Best of all, it’s customizable, making the idea of owning a Steam Machine much cheaper in the long run since you won’t need to buy a brand new console every year. It’s a win-win situation for Valve, its partners, developers, and gamers everywhere.

What makes it even better is Valve isn’t directly competing with the big three (yet). Their focus has been to dominate the digital distribution space; they already have the upper hand due to how much they’ve invested in the market.

Steam Machines are going to be Big

What we do know is this: Valve’s offering and entrance to the hardware industry is giving momentum to PC gamers and console gamers alike. There is something here for any type of gamer here, and the amount of flexibility will be a key strategy they will capitalize on. We’re one step closer in bridging the gap between both console and PC gamers, and I for one, cannot wait.

 

 

Can Console Gamers Ever Embrace an All-Digital Future? Not Without Help From the Big Three

When Xbox One was revealed in May, it was touted as a living room centerpiece and the quintessential go-to for sports and set box interactivity on a scale of integration not yet seen before. In reaction to the inaugural reveal, the gaming masses all cried out in a cynicism that shook the world. “Where are the games?!” the gamers cried. “We don’t care about enhanced TV!” they lamented. One particular provision for the next-gen console was most loathed though—the requirement for the Xbox One to be connected to the internet once a day.

While consoles have seen their own versions of DRM before, such as online pass requirements for used games, Xbox One’s (now deceased) requisite to connect to the internet would have been the first true form of DRM to ever grace consoleboxes and their users. The outcry rocked Microsoft so heavily that the Redmond-based behemoth did a complete one-eighty after E3 and reversed many of its previously announced policies, including that scorned daily online check-in. With Microsoft’s concession, it was a triumphant moment for the everyday consumer, but it also proved something else substantial: console gamers are not ready for a future where digital distribution is the de facto method for purchasing and playing games.

While the notion of not being able to lend out games, or to not even have a lovely retail box adorn your shelf, seems absolutely preposterous to console fanatics, this same concept of digital distribution is one that is cherished—and even preferred—by PC gamers around the globe. How is it that two groups of consumers can be so headstrong and passionate about gaming and yet have two radically different opinions on the subject of how they purchase their games?

Years ago, PC gaming was much like the console: you went to a store, you purchased a box with a disc in it, and you put it into your computer to install and play. One caveat was that often a serial code would have to be entered, something that console users didn’t see until this current generation, but other than that the two platforms were near identical. Same humble beginnings yet two starkly different audiences, so what gave?

You could posit that Valve, and its own platform Steam, have played a large part in swaying consumers to embrace digital distribution, but it wasn’t always this friendly between Steam and its users. Anyone who remembers the launch of Half-Life 2 in 2004, with its then novel idea of connecting to the internet to activate the product as a requirement, will recall just how bad Valve botched the launch with servers not working and how furious consumers were because they couldn’t play the game they purchased. Since that time, Steam has proven to be a viable platform because Valve has consistently shown consumers that they have the infrastructure and bandwidth to make this work and, in exchange for an all-digital storefront, Steam is able to discount its titles significantly when warranted. These two factors are key to understanding why a PC gamer has no problem with not owning a disc.

But whereas PC gamers have Steam, GOG.com and countless other digital distribution platforms, which invites competition, console gamers only have three: PlayStation Network, Xbox Live, and Nintendo’s digital storefronts across its platforms. Unless one of the big three goes full throttle into digital, it will be a long time before the console gamer can be convinced that their hard-earned cashola is worth spending on zeroes & ones instead of a multi-layered plastic circle purchased at GameStop.

You see Microsoft’s Games on Demand sale going on right now and think, “that looks a lot like what Steam does” so clearly Microsoft knows the power of digital distribution. Sony has been known to have sales of its own on PlayStation Network. However, Microsoft, Sony, and Nintendo also have strong ties to retail, and as such may be reluctant to move forward with a larger digital presence. Microsoft almost took the plunge with its DRM policy, but withdrew it, and without the support of the big three it will be much harder to change the culture and attitude of the current console gamer.

An all-digital future could flourish on console, and PC gaming has proven that it’s an existence consumers have come to love, but it’s a long way off. Console gamers are reluctant to give up their physical copies, but it may not be because of the prestige of holding onto something (though for a smaller percentage, that could be the case) but rather because no company on the console side has proven to them that there is a significant benefit to utilizing digital distribution.

Valve took a chance on digital distribution and it paid off in spades, the first one of the big three to follow suit will be the winner of the next generation.

Nintendo’s Battle for a Dedicated Gaming Platform: Throw In the Towel for Mobile?

Nintendo has been facing an incredible amount of pressure from existing and new entrants to the gaming space that has led to a decline of its market share. With only so much time in one day to consume media, consumers have a choice between “core” gaming, by way of consoles and PCs, and a more casual experience via browser and on mobile devices; Nintendo has found itself at the service of neither audience.

With the impending launch of Wii U, the company has taken a public stance in support of the core gamer, but is faced with overcoming the challenge of offering a superior online experience to the established leader in the space, Microsoft and its Xbox 360. Its track record with Wii Shop leaves many of us doubtful that it can rebound in this sense. Meanwhile, the mainstream audience that helped propel Nintendo to success in the last decade with the Wii is being abandoned in favor of more costly hardware and complicated controls of the Wii U.

Clearly, Nintendo’s platform is at risk of failure, and investors and Mario fans alike are clamoring for a shift in strategy. Most notable among the call for action lies with the leader and renowned innovator in software and hardware – Apple.  Prior to iOS, we had terrible interfaces that were counterintuitive to driving engagement of content and considered a 5% market penetration of games as a success. Since the debut of iOS and the App Store, we’ve seen the market expand to over 600,000 applications and indie developers rising to fame, claiming thousands in revenue, and in some cases millions. Google Play trails closely behind with over 500,000 applications available, although the platform faces piracy issues that leave it second to iOS in terms of developer support.

The new market opportunity is in mobile gaming, as Apple and Google continue to seed global audiences with smartphone devices that spur user engagement with various forms of content, most notably games. Should Nintendo bow to market pressures and take Mario, Zelda and Metroid to mobile devices? Certainly not now, without sacrificing its entire platform and affecting its remaining grip on the game enthusiast market. Let’s analyze the implications of what can be seen as a rash decision in several ways.

Shifts in Revenue

Nintendo’s revenues have taken a hard hit as a result of our shift to mobile platforms. Wii owners are largely content with Wii Sports, and those mainstream consumers have hardly converted into purchasers of additional software, resulting in decreased developer support. The 3DS launched to a cold welcome, but has since slashed prices and achieved moderate success among a stagnant core gaming audience.

The company recorded its first operating loss of $460 million for fiscal year ending March 31st, much of which can be attributed to the struggling Wii console, DS and 3DS, all falling short of sales expectations and incorporating price cuts in response to increased competitive pressures. We can also assume that much of the capital was allocated to continued support for game developers on each platform and R&D towards Wii U.

Meanwhile, Rovio released its 2011 earnings statement, highlighting $67.6 million in profit on $106.3 million in revenues that can be largely attributed to its Angry Birds property, 30% of which came from merchandising and licensing. Based on these numbers, we can estimate that around $70 million was generated by downloads of Angry Birds. Impressive numbers indeed and deserving of praise for the company’s immense success across the various platforms on which Angry Birds can be found.

Yet, Angry Birds is at the top of the food chain, and few (if any) can come close to matching the success that Angry Birds has seen. And in comparison to Nintendo’s current business, it fails to match the numbers of its own game platform business.

For fiscal year beginning April 1, 2012, Nintendo is expected to achieve $500 million in operating profit according to a forecast estimate compiled through a survey of 20 analysts by Thomson Reuters I/B/E/S. The company controls its own fully integrated platform specifically tailored to gaming, similar to Apple’s hardware/software strategy that spans personal computers and mobile devices, not to mention the impending launch of the rumored iTV. Nintendo sells the hardware and controls the pipeline of software making its way to consumers, consisting of its own popular IP and an ecosystem of developers from which it generates additional revenues with every game purchase.

Let’s take a look at another example, one that would be on the lower end of Nintendo’s sales figures on a platform that is largely characterized as “struggling” – Mario Kart 7 on the 3DS. The title has so far achieved global sales of nearly 5.5 million units, running at $39.99 a pop. That’s nearly $220 million in revenues, over double Rovio’s business. Now, the margin on packaged goods isn’t really as significant, but even if we’re looking at a 20% profit margin, we’re talking about approximately $44 million in profit from a single title that has been on the market for only 6 months and on hardware that isn’t even considered a mainstream success. Looking forward, it’s not a stretch for Nintendo’s hardware to go strictly digital as industry trends indicate and eliminating the packaged goods channel, increasing margins and generating even greater profits (considering a premium price point maintained through “deeper” gaming experiences of Nintendo hardware). Also, this is just for one title – consider all the other games moving through the 3DS, controlled 100% by Nintendo and generating even greater revenues from both 1st and 3rd party games.

For Nintendo to trash its own closed gaming platform for Apple’s in pursuit of revenues that have not publicly achieved the scale that Nintendo currently maintains just doesn’t add up. It’s also understandable that Nintendo derides the thought of having to pay Apple the 30% cut, which would make it an even greater challenge to achieve success on the scale of its current games business. A counter argument to this is that Nintendo can offer games on each platform, which doesn’t come without merit, but let’s take a look at this audience.

Can Mario Wear Different Hats?

For Nintendo to reach the scale of success on Apple’s platform that it currently achieves within the confines of its own closed platform, let’s assume two scenarios: 1) that the game experience is rich enough to sell on the level of Angry Birds (that’s 1 billion downloads!), or 2) that Nintendo sells at a premium with less market penetration. Both situations would have to involve the creation of new games based on its popular IP, rather than a direct port of old games which would only have a minimal impact on Nintendo’s bottom line, not to mention potential disappointment in the controls for some of our most favorite classics that were built for console controls.

The first scenario would be largely targeted at the expanded mainstream audience, one that Nintendo did a great job of penetrating with the Wii and DS. Yet, we have to ask ourselves if the casual gamer of an older demographic and one that skews female would be willing to purchase a Nintendo device if Mario could be had on an iPhone, iPod touch or iPad. Facing limited time in one’s day, chances are that this gamer would skip the purchase of a game-dedicated device and invest $0.99 on a more casual Mario experience. Asking my wife and her 21 year old sister if they’d purchase a new Mario for Wii if they had Super Mario World on their mobile device, they both confidently answered “no way, the app would be good enough”. This would affect the purchasing decision of millions of consumers and cannibalize Nintendo’s gaming platform at a much more significant loss than what it can possibly recover in $0.99 downloads. This isn’t a risk that Nintendo can afford to make, at least not right now.

The second scenario involves a very challenging balancing act of pricing games at a premium, say $9.99, and selling through enough downloads to generate a return on development costs. This would carry an even greater risk of cannibalizing Nintendo’s own platform as these premium games would also come with a deeper and richer gaming experience that could potentially directly compete with Wii U, DS and 3DS game quality. If I have a great Mario title on my mobile devices at $9.99, chances are that I’ll skip the dedicated hardware and $50 price tag for the game.

Additionally, either decision would send a very negative signal to the remaining developers who still believe in Nintendo’s gaming platform, causing additional speculation about those consoles’ impending demise, an even further loss of support in game development, and all but hammering the final nail in the coffin of Nintendo’s platform.

Finally, do we really want an innovator in the gaming space to drop what it does to hop on the iOS bandwagon and solely rely on a touchscreen interface? Is the future of gaming really only about the touchscreen, perhaps with gesture and voice recognition integrated within? Imagine where gaming would be now if Nintendo bowed down to economic pressures back when the GameCube was being labeled as a failure and the Wii and DS never happened. All those Wine, Cheese and Wii parties would have never happened, and one could fairly assume that the Kinect and Move gaming experiences may not have been inspired into market release, perhaps confined to TV integration and never having impacted the games we play.

“Tiiiime Is On My Side, Yes It Is”

Mick Jagger’s voice resonates in my head as I read that Nintendo is sitting on a pile of cash amounting to $14 billion. Not only is Nintendo expected to turn a profit for fiscal year 2012/13, but it has a war chest to conceive and define the “next generation of gaming” through a fully integrated hardware and software platform, one that’s made exclusively for gamers and consumers seeking a good time. Even though the new Wii U doesn’t spur much hope with industry analysts and other market players, such efforts would be completely lost if confined solely to the hardware and interface design choices of Apple, a company whose business is far greater than the games sector to justify a focus on giving us new ways to experience video games.

But how much time does Nintendo really have to make a decision? Even with $14 billion to cover years of operating costs, Nintendo can’t afford to sit around forever. A fair guess at the amount of time that Nintendo has to evaluate the marketplace and give a shot at maintaining a unique gaming experience lies perhaps in the 5-10 year range. Most everyone will understandably argue that this is too much time, but Mario, Zelda and Metroid aren’t going anywhere, and if Nintendo’s own platform faces a demise there will always be an audience ready to pounce on these titles when made available on iOS, Android or any other platform outside the company’s own walls.

Atari, who is celebrating its 40th anniversary this year, has hit a milestone of 10 million downloads just a year after releasing a number of classic and new games based on its renowned IP. Even decades after spending my hard earned weekly allowance in the arcades on Missile Command, Asteroids and Super Breakout, I can count myself among the millions that are downloading these games on iOS and Android (disclaimer: Atari is a TriplePoint client). You can bet that team Mario will have a lasting impact on consumers and maintain brand recognition that results in downloads 5-10 years down the road.

Losing Share to Angry Birds

Kids everywhere are wearing Angry Birds shirts and socks, while plushies continue to fill the rooms of children around the world. The ~$30 million merchandising/licensing business around this IP is a strong indicator that the property is capturing the mindshare of consumers, certainly at a loss for Mario. This perhaps is the greatest challenge facing Nintendo the longer it waits to nail down and execute a strategy for distribution on iOS and Android. Yet, the company has a history of bringing fans of its various 1st party IP a reason to buy back into the franchises, and the continued power of those brands will no doubt ensure that it continues to sell hardware and games, and that the expanded audiences take notice as well, even if these casual audiences may no longer be willing to purchase a Nintendo gaming device.

When all is said and done, nothing can sway Nintendo from sitting on its bankroll to continue attempts at innovating gaming fun as we know it, not as long as the market opportunities in mobile fall short of the rewards of maintaining its own closed gaming platform. A company that has over 120 years of history shouldn’t be swayed so easily by market pressures to ditch its game-focused platform for a new market that has been hot during the past 4 years (App Store launched in 2008). A survivor of the turbulent gaming market in the 90s and one that has stood up to Microsoft and Sony, we should be cheering on Nintendo to come up with a fresh gaming experience that takes us beyond a simple touchscreen interface dominated by a company that (understandably) deprioritizes gaming among all forms of digital media. Mario and team may one day land on our mobile devices, but considerations for its existing business should be taken into account, and we’ll always be ready to download Nintendo’s games years down the road.

 

Silicon Valley Roots: Is What the Dormouse Said Still Audible?

Industries in the United States have always defined various geographic regions of the county. In the nineteenth century, indigo and cotton plantations became symbols of the South, while Northern life was literally built around factories. In the early 1900s, Detroit became the Motor City and the Midwest established itself as the Corn Belt. Countless other examples of geographic specialization exist. Even after some of these industries collapsed, their cultural footprints were fossilized in the structure of towns, city architecture, street names, geographic landscape, and, most importantly, the pace of life in these regions.

Silicon Valley is the technology hub of America, but as businesses from the Valley continue to sprout after seed funding, many seem to drift further and further from their cultural roots.

The history of Silicon Valley, predating the well-known stories of Steve Jobs and Bill Gates, is captured in John Markoff’s 2005 What the Dormouse Said: How the Sixties Counterculture Shaped the Personal Computer Industry. Markoff follows the unsung heroes of the computing industry, tracing their personal and professional paths across the mid-twentieth century in Northern California. But mostly, What the Dormouse Said also presents how, in one rare instance of American history, an extraordinary culture birthed an industry.

The founders of the Silicon Valley were in many cases misfits –  gifted minds who fled the stifling culture of East Coast suburbia for the freedom of 1960s counterculture in California. They found passion envisioning a new way of life aided by technology. They lent their time to corporations and the government as they dedicated their minds to projects of personal interest, embracing the freedom espoused by the Free Love movement. This zeal is also present in the histories of some recent companies. Both Facebook and language translation company Transperfect grew out of college dorms.

During the age of the corporate-ladder-climbing crony, the majority of men were buttoned-up in strict hierarchies, often working 30+ years with the same company. Myron Stolaroff, however, prototyped America’s first magnetic reel-to-reel tape recorder and then began guiding Silicon Valley residents down the rabbit hole of group-moderated LSD trips, meant to “open their minds to new creative visions.” Meanwhile, Robert Albrecht was facilitating knowledge flow throughout the Valley with the People’s Computer Company newsletter (named after Janis Joplin’s band, naturally). Fred Moore and Gordon French took Albrecht’s vision a step further, holding meet-ups to foster hobbyist computer passions and encourage idea-sharing among a gifted young crowd, including Steve Jobs and Steve Wozniak, with their now famous Homebrew Computer Club.

This insular community of techies created a camaraderie unique to the West Coast. This camaraderie gave rise to a dynamic personal computing industry that morphed and progressed parallel to the minds of its members. But as years have distanced the personal computing industry from its roots, a new question has sprouted: is “what the dormouse said” still audible?

Silicon Valley, though still our country’s undeniable tech hub (no offense; keep truckin’ Silicon Alley), seems to have forgone the collaborative growth of times past in favor of reality shows, buzzwords, and Klout scores. Self-proclaimed serial entrepreneurs build businesses for profit, then cash out to start the venture over again.  Even in the 70s gifted minds in the personal computing industry looked to turn their enthusiasm into profits, and Moore’s Homebrew Computer Club generated a variety of companies including Apple and North Star. This isn’t a new or terrible phenomenon; if businesses were started solely out of passion, our shoes would likely lack laces and plastic bags would be a scarce commodity. But it is, in a sense, a perversion of the process. In a complete turn-around from the Silicon Valley of the 1960s, start-ups are driven by the desire to build a financially successful tech business rather than build on a passion for a better tomorrow. The result is a slough of clones — so many iterations of the same product that companies can’t always justify their versions as improvements upon a concept (much less as new original concepts), different brand names notwithstanding.

The scientists of personal computing history approached innovation from multiple angles. IBM set the computing standard with punch card computing. From there, Hewitt Crane pushed magnetic computing. And Doug Engelbart, close friend and colleague of Crane, opted to raise digital computing from its nascent form, creating the framework for the Internet and personal computer, including the mouse, display, and html, and then unveiled them in an epic demo (thought Steve Jobs came up with those moves himself?). Though Engelbart’s concept won out, each took his individual concept as far as possible and then allowed the ideas to coalesce into a more refined product. There were failed companies and mutinies, but throughout the process knowledge was constantly shared at sociopolitical hubs like Kepler’s Books. Today, talk of idea-sharing among companies is usually in reference to patent lawsuits.

There are some companies that are innovating and not creating replications of already successful products. The tablet has long been seen as the only child of the personal computer, but some start-ups are looking past the tablet and furthering the spirit of Silicon Valley, taking the personal computer to extremes. Livescribe smartpens house a computer in the shell of a pen and turn paper into an interactive display. Google, opting to bypass the tablet route, aims to further integrate computing into our lives via Project Glass. And both Microsoft and Burton are attempting to make William Shatner proud by developing 3D holograms. There are also myriad start-ups bringing innovative ideas to an increasingly tired space. As Silicon Valley progresses, the companies that are planting new seeds rather than adding tepid water to saturated soil are those that are paying mind to the flowering culture that bore their industry. What’s left to the rest is to be inspired by the inspirational, but go beyond what exists. And remember what the dormouse said–feed your head.

Livescribe is a TriplePoint client.

Steve Jobs vs. Ezio Auditore: On Leaving Behind What You Started

 

 

 

 

 

I think it is fair to say one of the biggest fears we all share is that we will be unable to finish what we started; that we will die before our dreams can ever come true. I know that fear is always at the back of my mind. When it was announced that Steve Jobs, age 56, passed away last year, I couldn’t help but wonder: in his final moments, was he satisfied with the state of Apple or at least satisfied with Apple’s current path of development as a company? Did he feel like he completed what he set out to do?

Those same thoughts rushed back in my head when I finished Assassin’s Creed: Revelations. For those not familiar with the series, one of the main protagonists, Ezio Auditore da Firenze, joins the Assassin brotherhood and leads it in the fight against the Templars and, of course, avenges the death of his father and brothers who were killed at the hands of the Templars. In Revelations, the last game in the series to feature him, Ezio Auditore, age 52, [SPOILER] moves on with his life and announces that he has done everything he could to leave his legacy:

“I have lived my life as best I could, not knowing its purpose but drawn forward like a moth to a distant moon.

“And here at last I discover a strange truth, that I am only a conduit for a message that eludes my understanding.

“Who are we? We have been so blessed to share our stories like this, to speak across centuries. Maybe you will answer all the questions I have asked. Maybe you will be the one who will make all this suffering worth something in the end.”

(Watch the speech.) [/SPOILER]

I always had immense respect for people who saw through everything they started through to the end, like people who start their own company and run it until the day they die, and friends of mine who started student groups in college and put all the sweat and blood they could into them until they graduated. But when I put Assassin’s Creed: Revelations down for the last time, I realized I have even more respect for people who can accept that seeing something through to the end is not possible, that our biggest fear—being unable to finish what one started—has indeed come true, and the only way around it is to gather all the strength within us to simply move on.

By their 50s, both Steve Jobs and Ezio Auditore da Firenze have left a legacy, one in technology and the other in the survival of freedom. Both gained some degree of a negative reputation by using questionable means towards their goal, one in his apparent treatment of colleagues and the other in the death of many. And both were only conduits for a message—a dream—that might not have been realized in their lifetime.

I believe that we can only take solace in one fact: when one has a dream so large in scope, perhaps there is no way for one individual to reach such a pinnacle, if it exists at all, in their lifetime. Perhaps the only dream or pinnacle one can hope to reach in a lifetime is the lifelong pursuit of it. If we each are already pursuing a dream then perhaps there is nothing left to be afraid of.

GDC 2012: TriplePoint Client Preview

TriplePoint is bringing the heat to this year’s Game Developers Conference (GDC 2012). And by heat, I mean a menagerie of clients with cool games and gear. (Obviously.) People keep asking what we’re up to, and it’s no secret, so… OK, actually,  there are some secrets. If I told you everything in this preview, what would be left for next week? Let’s just call this a sneak peek and get going already.

TriplePoint’s GDC 2012 client catalog:

In alphabetical order, because we love all our clients equally…

Frima (Multiplatform)

Frima Studio is flying in all the way from Quebec City Canada to tease a variety of titles in their original IP lineup including:

  • Lives & Death: A dark, adventure game in development with comic book legend Marv Wolfman for XBLA and PSN. A trailer, screenshots and concept art will be available.
  • Nun Attack: A tower offense game in development for iOS that puts the player in control of an elite squad of attack nuns. Extensive screenshots and character bios will be available.
  • A Space Shooter: A retro arcade style shoot em’ up available now for PSN, iOS, Android and Kindle Fire. Playable iPad demo available.

Frima’s booth will be located at Kiosk #10 inside of GDC Play. Contact zfuller (at) triplepointpr (dot) com for appointments.

Papo & Yo (PSN)

Papo & Yo, the PSN puzzle platformer already getting nods as one of 2012’s most anticipated titles, will be on the GDC show floor in Sony’s PSN section, showing a new gameplay demo. As Quico, a young boy, players travel through the surreal world of Papo & Yo with companions Lula, a robot, and Monster, a monster. Need assistance getting in on all this awesome? Contact joleary (at) triplepointpr (dot) com.

Paradox (PC)

Paradox Interactive is doing 2 cool things at GDC that you should know about. THE FIRST COOL THING: Showing off four indie games at the oh-so comfortable Paradox loft on O’Farrell and Powell, not far from the Moscone. Three titles being shown are unannounced; one of them is the new project from the Magicka development team. And they are:

  • A Game of Dwarves, from acclaimed independent developer Zeal Game Studio
  • Project “JFK” by Arrowhead Game Studios, creators of Magicka
  • Project “Revenge!” by Brazilian dev team Critical Studio
  • Project “Silverado” from Zeal Game Studio

THE SECOND COOL THING: Paradox is hosting a multiplayer event on Tuesday March 6th at 4pm! The game being shown is War of the Roses (from Paradox and Fatshark). It’s basically going to be a kick ass LAN party with beverages and what not. Think: Battlefield meets medieval combat. Want more details? Need some help? Hit up dmartinez (at) triplepointpr (dot) com.

RocketChicken (iOS)

Developers from RocketChicken are flying in from the great white north (or just Vancouver, if you prefer) to demo their new location-based ARG iPhone app at GDC next week. An ARG iOS app? Yup. It’s called CodeRunner and, in it, you get to be a badass spy. You get to interact with OTHER badass spies. You can to leave “dead drops” all around the real world (which can be physical or picture clues left via riddles). AND the game has incredible production value, from voice acting to video.

Furthermore, I think you should check this out because our content manager has been running around San Fran all week setting up geo-locations for the demos. I need him back, and you need this game. CodeRunner details are here. Contact pklugman (at) triplepointpr (dot) com for appointments.

Shadow Government (iOS)

Play the news, rule the world. That’s right, you heard me. Shadow Government is the brain child of Playmatics, one amazing development team and a heap of government data from the Millenium Institute. It’s a little hard to explain, which is why it’s great news that the game’s creators are giving a talk next week to tell YOU all about it. Meantime, read more here.

Shadow Government is a reality-based social game for iPhone, iPad and iPod touch, and is set to enter closed beta next week. In addition to formal GDC talks by one of the Playmatics founders, Nick Fortungo, you can also catch the creators AND THE FIRST EVER PUBLIC DEMO at the Swiss Game Arcade on Tuesday evening. RSVP for that, stat. If you’re a reporter and you want to meet with the development team outside the Swissnex event, please contact kate (at) triplepointpr (dot) com.

Sketch Nation Studio (iOS)

This iPhone app is more than a game – it’s a toolkit that allows you to build your own games, then sell them for REAL MONEY on the ACTUAL APP STORE! Draw your game’s characters and scan them in, or create them using the in-app painting tools. Then create your game, whether it’s a shooter, free-runner, platformer, racing game, the sky is the limit! It’s totally free, and players can earn in-game currency by selling their hand-drawn assets in Sketch Nation Studio. For more info, please contact rjones (at) triplepointpr (dot) com.

SweetLabs (Pokki)

I said SweetLabs, not sweetbreads. This company is sweet nonetheless, and they’ll be showing off their new Pokki platform next week in the Intel booth (#1024 ) during show hours. Oh but THAT’S NOT ALL, friends. SweetLabs will also be hosting a panel on Tuesday as part of the Social & Online Games Summit (with Dan Hsu as moderator and execs from EA, Digital Chocolate and Kabam). During GDC, SweetLabs will also be announcing the winners of their $50K developer challenge, honoring top original game submissions. You can schedule a chat with SweetLabs co-founders by contacting dblackwell (at) triplepointpr (dot) com.

What does Pokki do? It brings awesome apps to your desktop. That’s what.

More, you want more detail? Oh alright. Pokki’s app platform is transforming the “desktop” experience with games from the likes of Kabam, EA and Digital Chocolate, in addition to other multimedia and communications apps. That means better discovery and increased engagement for game publishers through one-click access to content via desktop apps. Pokki enables developers to create full-featured desktop apps for Windows 7 using HTML5, which currently includes apps such as EA’s Madden NFL Superstars, Kabam’s The Godfather: Five Families, Rdio, Gmail, Facebook and Twitter.

Was your favorite TriplePoint client not on the list? It doesn’t mean they won’t be at GDC in some capacity next week. Maybe their stuff was simply TOO secret to talk about yet ;]

Points of Interest – December 2, 2011

Have you had a chance to check out Points of Interest, our company newsletter? Each week, we share a round-up of this week’s essential and entertaining news, as well as a glance at what our clients are doing — and what’s coming up next for us all! The latest issue is right here — and why not consider subscribing, as well?

This week, we check out “Black Eye” Friday, the latest in sinister cell phone innovation, and the handsome men of TriplePoint’s Movember efforts! Read on