Wednesday, July 25, 2012

Chick-fil-a Cow comes out

In a surprise announcement today, Morris, the Chick-fil-a spokescow came out.   "As part of the LGBT community, I felt I could no longer keep silent."  Says Morris, who is a pre-operative transexual and prefers to be called Molly.

"I still consider myself a good christian," says Molly, "who god just made a bit differently.  I still love Chick-fil-a and my employers unconditionally as a good christian should and it is my hope that will continue, but I could no longer live a lie."

Sunday, July 15, 2012

Bust of the Kickstarter bubble and a better way to publish

I've been expecting an article like this for awhile. I am willing to lay money its only the first of many as people dig into the actual rate of return on Kickstarter projects...,2817,2407046,00.asp

The sad thing is, Kickstarter *does* point the way to a new and better way to do business in the entertainment industry in general, and video-games in particular.  Its just that Kickstarter isn't the right formula.

One of the big reasons videogames have gotten so expensive is that its a hits driven business.  Games that succeed do so handsomely, but many more fail swallowing up tens of millions of dollars in lost investment.  That money has to be made up somehow and you, the consumer,  pay for those losers every time you buy a game.  If we could lower risk, we could also lower price.

Now, game development is inherently a risky proposition in  of itself, but most game failures don't fail to ship, they just fail to be big enough hits to cover their expenses.  If the market could be pre-established, the game development could be tailored to fit the known return and risk could be drastically reduced.

Kickstarter is interesting because it shows that people are willing to commit upfront for a product they want.  Kickstarter's problem, as the link above discusses,  is that there is no guarantee in their model product pre-paid for is eventually delivered.  This is the achilles heal that is going to kill Kickstarter, or at least burst the momentary bubble its had.

i have worked for game  publishers and seen how the real game industry works from the inside,  So, here is my idea for a new publishing model that incorporates the best of what Kickstarter and traditional game publishing do.  Call it Electronic Arts II, but EA as it was intended to be-- a games version of United Artists, not the monolithic monster of traditional publishing the business-people turned it into.

(1) Publisher takes in proposals like any game publisher.  The publisher vettes them as they do today, looking with a well educated eye at the project's features, scope and the proposing team's track record.  Based on this the publisher assigns a risk %.  This percentage will be used further in the process.

(2) Assuming the proposal seems feasible, the publishers does not commit  millions as they do today.  Rather, then invest between $5,000 and $10,000 on a marketing campaign selling to pre-purchasers.  The money brought in this way is not spent, but placed in an escrow account as guaranteed sales when the project completes. If the project fails to complete, the pre-buyers all get their money back.  (This is the key difference from Kickstarter who washes their hands of the whole process as soon as the money comes in.)

(3) The publisher lends the developer a % of the money that has come in to develop with, based on the risk profile ascertained  in step 1.  The rest as held back as a form of self-insurance completion bond.  Should the developer fail to complete, the publisher has that money to complete the project on.  (This might be as much as 50% with a new unproven developer.) If the developer ships on budget, they get half the held back portion as a completion bonus.

(4) Publisher releases the game through electronic distribution and splits any further sales with the developer  at 50% of net.

I'd call this publisher "Player Made Games" and stress that part of the deal is that the developer involves the pre-buyers  in the development process with updates, feedback requests, and so forth.  All we would need to start this is some initial seed funding. If any Angels are our there who might want to try this, contact me as  I'd love to make it real.

Saturday, July 14, 2012

In a world without workers.... of what value is work?

A friend of a friend recently posted this discussion of what Google's experimental driverless car could mean to the future of the United States.  In general its a very rosy picture of the future, but the implications of one line jumped out at me...

Taxi services will rapidly adopt these cars as they can slash their labor costs.

Add taxi drivers as one more out of-work population in the US that will be displaced by automation.

We are fast approaching a society where work as we knew it will be gone.   Everyone (even conservatives) agree that our entire system is predicated on "a days wage for a day's work."
Remove that and our entire system collapses like a line of dominos.

Without work, there cannot be wages.  Without wages there cannot be consumers.  Without consuerms, there is no demand.  Without demand there is no business.  Without business there is no GNP. Without a GNP, we all have nothing.

Karl Marx's revenge has come full circle.  As an economist his vision was unparalleled and he saw this day coming a long time ago, though not exactly in this form.  The only way out of our inevitable economic demise is to come up with a new way to apportion society's products.  A way that ensures that everyone is consuming enough to keep the whole system in motion.

The worker's paradise may, ironically,  be our only answer to a robust society in a world without workers.  It could be a golden age, where each man and woman is freed to pursue that which they wont to do rather then that which they have to.  But only if we have the political will to grab it.  The line between that and a totally bankrupted economy is very scary and thin.

Wednesday, July 11, 2012

The only market for cloud gaming

In my previous blog i gave a short but I think solid analysis of why  so called "cloud gamin' cannot succeed in the markets  OnLive has been pursuing.  Interestingly enough, there is one market that OnLive's solution *might* just fit.  I blogged on this quite a long time ago, but I think it deserves some new attention.

The issues with OnLive is that, fundamentally, its a  more expensive way to get games to customers then digital download and produces inferior quality gameplay.  The expense is because it requires as much hardware at the data-center end to run a game as it would if it was local to the player PLUS it also requires the player's receiver hardware and the bandwidth charges for game data.  The impact on gameplay quality is due to the compression they must use to both control bandwidth costs and cross the last mile to the user's home, as well as the inherent latencies of internet communication.

There is one, and only one, market I know of where these negatives can be mitigated and where OnLive might offer a compelling offset to all these negatives.  That is over cable TV service,

There are a prefect-storm of reasons why this market makes sense.  The cable operators own the connection from their data center to their customers.  That means they can allocate as much bandwidth as they feel they can afford to give to this service. They can also prioritize the packet communication and give preference to the game packets thereby minimizing latencies.

The customers for this service are not those users that have a game PC at home.  It will always be better for them to play locally.  But it is a service they could offer through the cable box to those without such a computer.  Cable boxes are built to "throw away" and be as cheap as possible.  The cable companies assumption has to be that they wont get many of them back and so their cost has to be amortized rapidly in the service cost.  A more expensive box means more expensive service which is bad for business.  For this reason the cable companies attempt to hold as  much of the smarts as they can of the system back at the data center.  Data center equipment can be used and reused until it is obsolete.

In this environment it COULD make sense to operate an Onlive back-end in their local data center (what they tellingly call the "head-end").  It still means a much faster obsolescence curve then the cable TV companies like for head-end equipment, but if they could get enough monthly for the game service it just might pay off.

Tuesday, July 10, 2012

Why everyone is wrong about Sony and GaiKai

There has been much trumpeting of the Sony purchase of GaiKai as the great coming of remote game playing (called "cloud gaming" among the over-hyped press.)

The thing is,  GaiKai isn't a "cloud gaming service."  Why did Sony buy GaiKai and not OnLive?  I want to suggest to you that it is because they don't want a could gaming service.  They want something else, something GaiKai very cleverly foresaw.

Onlive is a cloud gaming service.  Their value proposition is to compete head on with local gameplay.

The problem is, they really cant.  All the economics are against it.  You still need the computer that used to be on the player's desk, they just moved it to the machine room.  No expense saved there.  Add to that you still need a thin client at the user's end and you have additional hardware expense plus the cost of the bandwidth to transmit the data.

So, OnLive is inherently a more expensive way to play a game. Is it at least a better experience.  The answer is no.  Serious lag is a reality of any remote play over the internet.  MMORPGs and other games designed for that environment use a variety of techniques to hide most of the lag, but these techniques have to be built into the game.  This is why MMORPGs are played differently then local twitch games.  Onlive is trying to run vanilla games designed for local play remotely and thus can do none of this.  Because of bandwidth costs and constraints, the visual quality of an onlive game is also seriously impacted.

(For some good real world measurements, take a look at this article.  Keep in mind though that latency is very dependent on your location on the net relative to the host computer.

So, in the end, the value proposition for this "cloud gaming" is more expensive gameplay in inferior quality.  It is no wonder it has failed to take off.

But, I started this article by saying GaiKai is not a cloud gaming play, and its not.  From the beginning GaiKai positioned themselves not as a replacement for local gaming, but as a way to do live game demos over the internet.  The use case of GaiKai is for digital publishers to drive digital sales by solving the one problem with the digital download store-- that you can't touch the product before you buy it.

Microsoft, with XboxLive, and Valve, with Steam, have shown that there is big money in digital distribution.  So much so that the biggest traditional publisher  in the industry, EA, has launched their own online store and has stated publicly that they expect the business to go all digital eventually.

Sony's entries in this space have been lack-luster.  But GaiKai gives them a key differentiator for their next run at it, likely with the PS4.

And this is most likely why Sony bought GaiKai.

Monday, July 2, 2012

Lies my politicians tell me...

Myths are an interesting thing.  They play off the "familiarity bias" in psychology.  Hear something repeated often enough and you tend to accept it without thinking very critically about it.  Some myths occur deliberately through advertising and other directed media.  Some occur spontaneously through "meemes".

Modern politicians and lobbyists have tuned this to a fine art and do their best to exploit all of the myth-makign opportunities at their disposal.  The thing is, myths are most often false or incomplete.  They survive because people hear them and repeat them without ever really questioning them.

Even the most skeptical of us can fall prey to the power of the myth.  All it takes is a moment's sloppiness in thinking and it is through our barriers and into our mental body of 'facts'.

I'd like to take a moment in this campaign season to stop and explore two prevalent myths today.  I ask you to consider them under the light of real critical reasoning.

Myth 1: Insurance companies exist to pay your medical bills

This is total nonsense.  Insurance companies are companies.  The exist to make profits for their owners.  The greater the profits, the better the business.  Paying your bills reduces those profits.  

The fact of the matter is that the entire system of medical reimbursement exists to give the insurance companies as many reasons as possible to not pay your bills and still remain in business.

This is a myth that i have been aware is false for some time.  When we met,  wife worked in the insurance industry and I have had a direct exposure to what it does and why.

Myth 2: Business create jobs

This is one honestly caught me off guard.  It seems reasonable, right?  Business employee people, so they must create jobs.  So give them more money and they will hire more people.

But its also nonsense, or at least incomplete.  Business, as we said above, are in business to make money.  Hiring someone costs money.  The only time  business hires anyone is when they can make more money from that person's work then they cost to hire.  So when is that true?

It is true when there is more demand for a product then they can satisfy with their current work-force.  It is demand that creates the job, and demand is created not by concentrating money in the hands of business but by getting it into the hands of consumers.

Furthermore, a business will not hire more people just because they make more money on each employee (ie through paying less taxes or other incentives.)  It doesn't matter if they make 20% profit on that person or 40% profit on that person. If they can make ANY profit on that person they will hire them.  if not, they won't.

A good rule of thumb is that any time you hear two people say the same thing with the same language, it probably means they are just repeating the words, not thinking deeply about their truth.

Which is to say, they are repeating a myth.