Which games will go the way of Pinball machines? November 27, 2009
Posted by jeremyliew in economics, game design, game mechanics.add a comment
It is interesting to note that while MMOGs, time management games and real time strategy games have made the jump to social games, First person shooters have not. Why not? I find the current generation of FPS very hard to pick up, and that may be part of the problem.
The Cheaptalk blog has an interesting post on an economists view about why pinball peaked and died out. He blames it on the transferability of skill from one pinball machine to another, combined with adaptive technology. This caused the market for pinball machines to bifurcate to experts and newbies, with most effort going towards building games for experts.
Pinball attracted a different crowd than video games like Defender (my new pal designed Defender and Stargate too,) and this is the fundamental theorem of pinball economics. Pinball skill is transferrable. If you can pass, stall, nudge, and aim on one machine you can do it on any machine. This is both a blessing and a curse for pinball developers. The blessing is that pinball players were a captive market. The curse was that to keep the pinball players interested the games had to get more and more intricate and challenging.
Pinball developers struggled with this problem as pinball was slowly losing to video games. Video games competed by adding levels of play with increasing difficulty. Any new player could quickly get chops on a new game because the low levels were easy. This ensured that new players were drawn in easily, but still they were continually challenged because the higher levels got harder and harder. By contrast, the physical nature of pinball, its main attraction to hardcore players, meant that there was no way to have it both ways.
Eventually, to keep the pinballers playing, the games became so advanced that entry-level players faced an impossible barrier. High-schoolers in 1986 were either dropouts or professionals in 1992 and without inflow of new players that year essentially marked the end of pinball.
What game genres have similar characteristics? First Person Shooters come to mind. This challenge is magnified in a mutliplayer environment – it’s not fun to get fragged within seconds of starting a game. It’s the same experience that a new paintball player gets if they wander onto an average paintball course today – most players are now experts.
I highly recommend reading the article if you’re involved in the games and social games industry. I suspect that there is a risk that the competition for players in some popular social games genres may take us in a similar direction if we are not careful.
What other genres of games do readers think may be at risk in the same way?
Lessons from leaders in virtual goods October 30, 2009
Posted by jeremyliew in digital goods, virtual goods.add a comment
Worlds In Motion has a good summary of my panel today from the Virtual Goods Summit, where leaders in Asian and Western virtual goods social networks shared what lessons they had learned.
Speaking at Virtual Goods Summit – 15% off code October 8, 2009
Posted by jeremyliew in conferences, virtual goods.add a comment
I’m speaking at the Virtual Goods Summit on Oct 29-30th. I’m moderating an all star panel including Min Kim from Nexon, David Wallerstein from Tencent, Bill Wang from Perfect World and Dai Watanabe from DeNa. Between them, these four companies generate around $1bn in annual revenues through virtual goods sales. So we should be able to learn something from the discussion!
The full program is here.
If you’d like to join me at the summit use the code “LSVP” to get a 15% discount
Birthday greetings as a proxy for how communication is becoming more public 3.0 September 29, 2009
Posted by jeremyliew in communication, email, facebook, social networks, twitter.2 comments
This is the third year that I’ve tracked my birthday greetings as they have moved from private channels to public channels, primarily facebook. As I noted previously, in 2007 and 2008;
Social networks have changed the dynamic – it isn’t enough to wish someone a happy birthday, but it is also important to be SEEN to wish someone a happy birthday. Equally, it is important to be SEEN to have a lot of people wish you a happy birthday too!
This year the shift continued but was much less pronounced, as the graph below shows:
It’s somewhat notable that despite the huge increase of Twitter usage there were no happy birthday tweets. The use case is off. The tweeter would be sending a birthday greeting to the wrong audience – to their followers, not to mine.
The other notable point is that there is an overall increase in the number of birthday greetings over 2007. This is consistent with the obvervation in a recent edition of the Economist’s Intelligent Life magazine, that we are all writers now:
Go back 20, 30 years and you will find all of us doing more talking than writing. We rued literacy levels and worried over whether all this phone-yakking and television-watching spelled the end of writing.
Few make that claim today. I would hazard that, with more than 200m people on Facebook and even more with home internet access, we are all writing more than we would have ten years ago. Those who would never write letters (too slow and anachronistic) or postcards (too twee) now send missives with abandon, from long thoughtful memos to brief and clever quips about evening plans. And if we subscribe to the theory that the most effective way to improve one’s writing is by practicing—by writing more, and ideally for an audience—then our writing skills must be getting better…
True, much of what is written online is quotidian, informational, ephemeral. But writing has always been so: traditional newspapers line bird-cages a day later; lab reports describe methodology in tedious detail; the founding fathers wrote what they ate for lunch. And the quality of many blogs is high, indistinguishable in eloquence and intellect from many traditionally published works.
Our new forms of writing—blogs, Facebook, Twitter—all have precedents, analogue analogues: a notebook, a postcard, a jotting on the back of an envelope. They are exceedingly accessible. That it is easier to cultivate a wide audience for tossed off thoughts has meant a superfluity of mundane musings, to be sure. But it has also generated a democracy of ideas and quite a few rising stars, whose work we might never have been exposed to were we limited to conventional publishing channels.
So thanks for the birthday wishes, and be thankful that we’re all writing more!
Awesome stats on social game purchasing September 23, 2009
Posted by jeremyliew in virtual goods.add a comment
Andrew Chen has a guest post from Gambit that breaks down who is buying virtual goods and how much they are buying.
The summary is that while teens spend substantially less per capita than people older than 20, they more than make up for it in volume. Read the whole thing and see the pretty charts here.
Notes from my keynote at Engage Expo Virtual Goods conference today September 23, 2009
Posted by jeremyliew in games 2.0, virtual goods.1 comment so far
Virtual World News has some notes from my keynote today at the Engage Expo Virtual Goods conference
You know it’s a recession when porn sales are down September 14, 2009
Posted by jeremyliew in porn, recession.7 comments
The Economist notes that the pornography industry is going through hard times:
Most of the industry consists of small private production companies whose numbers are secret, but Mark Kernes, an editor at Adult Video News, a trade magazine, estimates that the American industry had some $6 billion in revenues in 2007, before the recession, mostly in DVD sales and rentals and some in internet subscriptions. Diane Duke, the director of the Free Speech Coalition, the adult industry’s trade group, thinks that revenues have fallen 30-50% during the past year. “One producer told me his revenue was down 80%,” she says.
It’s not just the recession though. Pornography is going through the same structural shifts that are putting music, video print and other content companies under pressure:
Piracy is the main problem. And the internet, with its copious free clips, is an increasingly viable alternative to the paid stuff. Pornography in general has become “like potato chips, everywhere and cheap, to be consumed and tossed,” says Ms Hartley. It’s not the same as in the golden age when she joined. “The industry will shrink and stay shrunken,” she reckons.
Not to mention the threat of user generated content…
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Simplicity is always a disruptive innovation September 10, 2009
Posted by jeremyliew in economics, games, startups.6 comments
Clayton Christensen introduced the concept of disruptive innovation in his book The Innovator’s Dilemma. Summarizes Wikipedia:
Disruptive technology and disruptive innovation are terms used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers.
Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption (i.e., consumers who would not have used the products already on the market), whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.
Disruptive technologies are particularly threatening to the leaders of an existing market, because they are competition coming from an unexpected direction. A disruptive technology can come to dominate an existing market by either filling a role in a new market that the older technology could not fill (as cheaper, lower capacity but smaller-sized flash memory is doing for personal data storage in the 2000s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has largely replaced film photography).
I was recently talking to Trip Hawkins, CEO of Digital Chocolate, and he made the claim that simplicity and ease of use aimed at non-consumption is always a disruptive innovation that threatens incumbents. I think he is right. Some examples include the Flip, which disrupted consumer video cameras, and blogging which disrupted content management systems. Trip was talking about the rise of social and iphone gaming as the equivalent disruptive innovation that was causing non gamers to play games. Definitely something that incumbents need to watch.
In this tough economy, the fastest growing e-commerce sector is … luxury apparel? September 9, 2009
Posted by jeremyliew in Ecommerce.4 comments
One of the most exciting trends in e-commerce over the last couple of years has been the trend towards “shopping as entertainment”. Traditionally e-commerce has been a chore type activity. Customers know what they are looking for (a digital camera, a new laptop) and are looking for the best product and best price with a very “research” based mindset.
This is quite unlike the real world, where a customer might walk around a mall without any particular purchases in mind, and perhaps opportunistically buy something that caught their eye in their wanderings. There is no real “intent to buy” in a trip to the mall. It is more like entertainment time which may, or may not, lead to a purchase.
We’re starting to see this sort of behavior online as well. Swoopo and Gilt are two companies that are enticing consumers to come and check out “deals” without any particular intent to buy. They are injecting the entertainment factor into e-commerce. The Economist discusses the success of Gilt, Rue-La-La and HauteLook in particular:
THE racks of expensive gowns and shoes sit, serene and mostly untouched, on the floors of Saks Fifth Avenue, Bergdorf Goodman, Bloomingdale’s and almost every fancy department store. In a sign of how consumers’ newfound thrift has hurt luxury retailers, Saks Incorporated, the parent company of Saks Fifth Avenue, recently announced losses of more than $50m in the three months to July. Sales are down more than 20%. The recession, it seems, has spelt an end to Americans’ appetite for luxury—at department-store prices, at any rate.
Yet luxury e-tailers, which sell designer goods online at discounted prices, are flourishing. The slowdown has actually helped them, simultaneously producing seemingly endless supplies of unsold inventory and forcing consumers to tighten their belts. That has let American e-tailers such as Gilt Groupe, HauteLook and Rue La La, and their French rival Vente-privee.com, sell last season’s designer apparel for as much as 80% off the original price.
But low prices are not the websites’ only allure. Their sites are open only to those who have received an e-mail inviting them to join from another member. This lends them an air of exclusivity and creates the sort of buzz marketers crave, says Adam Bernhard, the boss of HauteLook. The sites also put new items on sale at the same time every day for a limited period, usually no more than 24 hours. That makes shopping an urgent and competitive daily activity for many members. (Cleverly, the sites do not say how many items of each size and colour they have, so customers feel even more pressure to buy right away, lest they miss out on the last pair of size 37 hazel Jimmy Choo pumps.)
Designers, for their part, can use the sites to get rid of stock quickly and discreetly, sparing them the disgrace of seeing their heavily discounted products lingering on sale racks in full public view. Most consumers do not even know which designers are available through luxury e-tailers until they become members. The sites shield themselves from search engines, so they do not pop up in response to online searches for the brands they offer. That has encouraged grand firms like Cartier to sell their wares through them.
The Economist notes that RueLaLa started in 2008 and expects revenues this year of around $130m, and that Gilt started in 2007 and expects $400m in revenue next year. That is remarkable growth. Compare this to Zappos which was started in 1999 and took 6-7 years to reach those gross sales levels:
These companies are rapidly growing beyond the US and beyond women’s apparel. The Economist again notes:
Rue La La recently launched an iPhone application to make it easy for members to make purchases while on the move. It has also started selling wine, spa services and travel packages in addition to clothes. Vente-privee.com has even sold yachts and apartments…
E-tailers are also looking to expand geographically. Vente-privee.com has operations in Germany, Britain and Spain as well as France. Gilt recently launched a site in Japan that has over 200,000 members.
This opportunity is not lost on other companies in the value chain. Retailers like Neiman Marcus, financial institutions like American Express and even fashion magazines are all offering limited time deep discount sales to their members and customers now. Companies like Shopittome are re-aggregating sales for consumers.
I’m very interested in watching how this space develops. Do readers know of other interesting trends in entertainment shopping?
