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Flash in the Datacenter? March 31, 2009

Posted by Barry Eggers in flash, Uncategorized.
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Lightspeed portfolio company Pliant secured $15M in Series C funding earlier this month to bring its Enterprise Flash SSDs (EFDs) to Datacenter markets. While Pliant’s solution offers enterprise users the performance, reliability, and durability they can only dream of, there will need to be additional enabling technologies in order to propel SSDs into the datacenter mainstream.

The first wave of Flash SSDs solve performance problems – any IT administrator will tell you there are alot of these “hotspots” to fix, albeit they are regarded collectively as a fast-growing niche market.

The second wave is where SSDs will make their mark against rotating disks (the last bag o’ parts in the datacenter). This is the cost/performance wave. In this wave, Flash SSDs combined with cheap rotating storage will provide the capacity and performance of premium rotating storage solutions – at a fraction of the price. These “hybrid” systems represent a huge new opportunity in the datacenter (as discussed in our 2009 Enterprise IT predictions), and the large storage OEMs all know it.

But in order for this wave to happen, new file systems – ones that intelligently move data between performance resources and capacity resources – will need to be developed and deployed – more on that later…

What’s the real world analogue of Twitter and Facebook? March 30, 2009

Posted by jeremyliew in facebook, twitter.

Last September the NY Times did a terrific job of explaining microblogging, including the key elements of Facebook and Twitter. However, one thing has always bothered me about Twitter and Facebook status updates.

I believe that there is nothing new under the sun. Consumer behavior is typically consistent, and usually when you find a very fast growing online phenomena, you can find a popular real world analogue to that behavior. I think that there needs to be a familiar cognitive “hook” for any new online activity to really grab consumer mindshare. If the online activity parallels a familiar offline activity, or a familiar activity in another online medium, then you can see very rapid growth. Examples include MySpace’s profile customization (analogous to buddy icons in instant messaging, .sig files in email and even stickers on highschool lockers), Stardolls (analogous to real world dolls) and Digg (analogous to forwarding viral emails).

I’ve never been able to pinpoint a real world analogue to microblogging. However, I think I may have thought of a candidate – Holiday letters.

Sending holiday cards is very widespread. Almost every family sends them. Many people include a letter with their holiday cards that tells the recipients what they have been doing all year. Holiday mailing lists are often fairly broad and include close friends, business associates, and people who were once close friends that have since faded into the background. In particular, old classmates, colleagues from past jobs, friends from cities you once lived in but don’t any more are all prominent categories of holiday card recipient.

A holiday letter’s primary purpose is to share what is going on in your life, and through that to maintain closeness. These days, the cards often include family photos. The letter is part bragging, part travelogue, but always carefully constructed to show the writer in the best light. A good holiday letter is a little bit funny, a little bit personal, but it manages to catalogue achievements. We vacationed in Hawaii. Little Timmy made the football team. Dad got a promotion. Jane got into lawschool. You’ve read them before.

Twitterers and Facebook status junkies, does this sound familiar? Similar audience, similar objectives, just smaller scale. It isn’t getting into lawschool that you tweet, it’s eating at French Laundry , or being at SXSW. It still burnishes your image. Microblogging is a more continuous, lighter weight online version of holiday letters.

What do readers think? Can they think of a better real world analogy? I’m all ears.

Myspace suspending some categories of performance advertising? March 29, 2009

Posted by jeremyliew in advertising, myspace, performance.
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PlentyOfFish claims that MySpace is suspending all dating and diet campaigns:

Apparently they got an email saying:

I have a bit of news about your campaign. Rupert Murdoch has decided to put all dating & dieting campaigns on MySpace on hold for a few days. They are discussing about dating creatives currently and planning to come up with a set of standards for them. I wanted to notify you and let you know that the campaign will be halted today and I will keep you updated as soon as I hear some news. I apologize for the inconvenience

Dating, Diet and Mobile comprise the three biggest categories of performance based advertising on social networks, so two of the big three are affected. If this suspension continues it will likely have a measurable impact on MySpace’s revenues.

Erik Bethke on game balance in free to play games March 28, 2009

Posted by jeremyliew in game design, game mechanics, games, games 2.0, virtual goods.
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Interesting quote from Massively‘s GDC coverage about how to design for Real Money Trading:

Bethke imparts some advice on how the common mistakes can be fixed in terms of balancing. You can charge for things that are defensive in nature and the less skilled players with more money can buy them, while offensive items remain free of charge. The more skillful, more time-rich players won’t resent the advantages the other type of players has, as it won’t really stop them from doing what they want. Some companies have buyback programs for overpowered items, but this can set a bad precedent.

Lots of other interesting perspectives came from the panel – worth reading the whole thing.

Congratulations to Jon Miller and Newscorp March 28, 2009

Posted by jeremyliew in Internet, jon miller.
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Numerous reports last night that Jon Miller is going to be taking over as digital head at Newscorp:

Once he does sign, which seems likely, Miller will become News Corp.’s chief digital officer, reporting directly to the media giant’s head, Rupert Murdoch. Based in New York, he will also be chairman and CEO of the newly created News Digital Media group.

Sources noted that this is a a different and larger platform for Miller, bigger than just the Fox Interactive Media job that Levinsohn held. It will go across all properties held by News Corp. across the globe.

“The idea is to mainstream the digital initiatives, which have been all over the company,” said one source close to the situation.

I worked for and with Jon for seven years, both at IAC and at AOL. He is terrific; a premier strategist and thinker about the online world. AOL did terrifically well under his leadership, and took a marked and immediate turn for the worse when he left. He has a huge palette to paint with with the Newscorp digital assets.

Congrats to both Jon and Newscorp.

Interesting factoids out of latest Morgan Stanley “Economy and Internet Trends” research report March 26, 2009

Posted by jeremyliew in Internet.

Mary Meeker’s latest omnibus research report goes deep on the economy and it’s implications for the internet. Some interesting tidbits:

1. Only 5 of “top 20” US Advertisers spent more than the industry average of 8% of their ad budgets online. P&G (#1) spent 2%, AT&T (#2) spent 6%, Time Warner (#5) spent 6%, Glaxo Smith Kline (#7) spent 2%, J&J (#8) spent 3% and Unilever (#10) spent 5%.

2. 18-41 year olds spent more time on the internet (25%) than TV (22%)

3. Top countries for social networking penetration: Brazil & South Korea. Top country for e-commerce penetration: Germany. Top country for online gaming penetration: China. Top country for mobile payments penetration: Japan. Top country for microtransactions via SMS penetration: Philippines. Top country for online advertising penetration: UK. Top country for broadband penetration: South Korea. US has headroom in all of these areas based on other countries experiences.

Notes from VC panel at Gamesbeat March 25, 2009

Posted by jeremyliew in games, games 2.0, gaming, Venture Capital.
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Jussi Laakkonen live blogged the panel and has his mindmap here.

Social gaming is a tactic not a category March 25, 2009

Posted by jeremyliew in business models, games, games 2.0, gaming, social games, social gaming, viral, viral marketing, virtual goods.

I’ve been blogging a lot about social games over the past couple of years and have been a big proponent of the space. However, over the last few months I’ve started to question whether social gaming is a separate category at all. I now believe that the true category is free to play gaming, and that social gaming is simply a tactic (albeit a very important and differentiating tactic) within this category. Although I’ve been saying this in private a fair bit recently, I brought it up at the VC panel at Gamesbeat yesterday and I hear that it caused a bit of a stir. Rather than being quoted out of context in 140 characters, I thought it would be helpful to explain how I came to this view.

At the most basic level, free to play games (with a digital goods or subscription upsell model) need to focus on only two metrics, Lifetime Player Value (LPV) and Player Acquisition Cost (PAC). If LPV > PAC then you’ve got a business. If not, you don’t. This applies to flash MMOs, virtual worlds, facebook games, asynchronous text based MMOs, client downloadable games, myspace games and a whole host of other games, with the key unifying element being the business model, and the importance of those two statistics, LPV and PAC.

The term “social gaming” has been used in two main, and related, ways. I think that both of these definitions are potentially limiting. The first has been to describe games that are played (and spread) on social networks. The second has been to describe games that spread virally, with a PAC of zero because current players invite new players with a K factor above 1.

Let’s start with games played on social networks. This is a terrific distribution tactic as open platforms and distribution are opposite sides of the same coin, and as I’ve said in the past, in the early stages of a new category distribution is the key driver of success. Free to play gaming is certainly in it’s early stages, with many games having to create demand versus simply fulfilling demand. But there is no reason why these games have to be limited to only social networks, and indeed companies like SGN and Zynga have already started to port their games to other platforms including the iPhone and the open web. Social networks offer an easy starting point for new free to play games because of the large concentration of potential players, but there is no reason for free to play games to stop at social networks.

Now lets address viral growth for games. Obviously, this is a wonderful characteristic. It is the cheapest possible channel for player acquisition as with a PAC of zero, you can make money at any level of LPV. However, once again, there is no reason to limit your player acquisition channels to viral growth. You should acquire new players through any channel where your PAC < LPV. For some game developers this is a religious issue; viral is best and nothing else is acceptable. I disagree with such a fundamentalist approach. If your LPV is high enough to allow you to buy users through advertising, distribution deals, search marketing or any other channel, then you should. Mark Pincus, the CEO of Zynga, has been preaching this approach since early 2008. Here is an excerpt from my blog post from the social games panel that I moderated at the Graphing Social Patterns conference in March 2008:

We next talked about how social games can grow. Viral growth has obviously been the key driver of growth up to this point for all the panelists. Shervin noted that they had seen a strong positive correlation between App Rating and rate of viral growth – high quality games spread faster. Mark talked about the importance of supporting a game with advertising, especially at launch.

One reason that Zynga is the largest social gaming company today is that they have been able to afford to promote their games on both Facebook and Myspace, and have done so aggressively.

Obviously, building social factors into games is increasingly important. Multiplayer is the “user generated content” of games, and social interaction is a key part of that. Furthermore, even if your K factor is less than one, it can be a very important force multiplier on your player acquisition. Buying one player if your K factor is 0.8 means that you will generate 5 new players, and this can dramatically average down your PAC, even if it doesn’t take it all the way down to zero.

In conclusion then, I find the term “social gaming” to be limiting. The best publishers and developers of free to play games will make frequent use of social gaming tactics, but they will not refuse to go beyond social networks and viral channels to grow to their full potential.

I’d be interested to hear what you think.

Tips on designing layouts for games and virtual worlds March 23, 2009

Posted by jeremyliew in game design, game mechanics, mmorpg, virtual worlds.
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Raph Koster has some useful tips on laying out maps; some of these are probably not too different from urban design planning best practices in the real world. I’m repeating them here (aggregating and paraphrasing some of his points)

1. Always make sure users can tell which way to go.

Starting a newbie at a dead end and giving them only one way to go is a classic way to deal with early confusion. Large landmarks that can be seen from a distance can serve a similar purpose.

2. Don’t use invisible barriers. (Form should give an indication of function)

3. Mazes suck.

4. Make zones that have a sense of place

– Create characteristic qualities to a linked zone so that it is easy to recognize that these areas are related to each other
– Enclose these zones
– Create “gates” between places that visually convey a transition from one place to another

…moving from one pocket to another should feel dramatic: a tight passage revealing a wide vista, coming over the crest of a mountain and revealing a valley, discovering a door behind a waterfall, a big bold gate with guards. You want to signal that the user is entering a space with its own framework and rules. There are a lot of visual cues that are used, but most of them carry some sense of “gate” to them, even if it is as simple as a path that winds between two hills: a passage between two tall things.

– Build in modules. Connections to neighboring zones should be few and obvious.
– Have a defining activity.

ure, every city has to have the same amenities, and every zone must have monsters. But get creative. This wilderness zone has the pool you can swim in that is perfect for picnics. This other one has the great layout for ranged combat. This inn has the trivia game; that one has the chess board. Users will self-select into the spaces which feel culturally comfortable to them.

5. Watch where people want to walk, and put roads (and important places) along the well worn paths.

6. Social spaces point inwards. Keep the center empty to avoid a “ring” instead of a “plaza”

7. Adventure spaces point outwards.

In general, if you are exploring you want a horizon (or more than one) to head towards. Where social spaces create a sense of security, adventure spaces should create a sense of uncertainty and the unknown to prompt users to keep going.It isn’t about endless vistas; it’s about interest.

8. All this is fractal. Apply the same rules at each level of map layout.

As always, read the whole thing.

Prepaid cards continue to drive online game revenue March 20, 2009

Posted by jeremyliew in freemium, games, games 2.0, gaming, payments.
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Two interesting announcments on prepaid cards this week.

Venturebeat reports:

Game currency cards — gift cards players can use to pay for subscriptions or virtual goods in online games — are getting traction. Coming on the heels of a similar report from GMG Entertainment, InComm said today that its game currency card business grew 200 percent in 2008.

Incomm is one of the two leaders in prepaid cards broadly (e.g. for Bed Bath & Beyond, Red Lobster etc) and has been making a concerted push into online game cards over the last couple of years.

Virtual Worlds News also reports on some useful stats from Playspan’s Ultimate Game Card:

21% of customers receive an Ultimate Game Card as a gift; 79% bought it for their own use
48% of customers between 14-18
36% of customers have bought 4 or more cards

The infrastructure of prepaid cards is one of the key elements that is unlocking the growth of free to play games in the west today.