Wednesday, December 12, 2012
More evidence of weakness in the F2P space
As the numbers dribble out, we are seeing what a few of us already understood in our gut-- that squeezing blood from a stone is a lousy way to try to make money.
Saturday, November 24, 2012
The Myth of the Generous Rich
The latest myth the right wing is trying to spread is the justification that, far from being selfish-bastards, the rich are wonderful benefactors of humanity. Their favorite statistic they like to pull out is this one:
http://www.cafonline.org/
See, they say? We give a higher percentage of our GDP in charity then anyone else. We're generous!
Furthermore, those countries with higher taxes give less, therefor we'd be less generous if we had higher taxes!
Mark Twain said that there are three kinds of lies, "Lies, damn lies and statistics" and this argument certainly qualifies as a statistical lie.
Imagine for a moment, that there are two people in the economy. Joe Richer and Jay Poorer. It takes 30% of the total pie for Joe Richer or Jay Poorer to have everything they need or want. How much is available to give away without feeling the effects if they each have 50%. The answer is 40%, right? each has 20% surplus.
Now, lets suppose Joe has 90% and Jay has 10%? How much can Jay give away? Obviously nothing, he's below the poverty line. But Joe can give away 60% without feeling it. Thats more then the 40% above. A lot more.
The fact of the matter is, the more uneven the distribution of wealth, the more surplus the rich have to give away. But they get that surplus at the expense of the poor. If this analysis is correct, you would expect the US to also have a very high poverty rate to go along with that charitable giving number above, and we do. The worst in the developed world.
The Poor in Developed Countries - The United States(libraryindex.com)
If the rich were really generous, they would do something about this. Instead, they and their representatives fight for an ever increasing part of the pie in terms of lower taxes. A few do fight that trend, the true patriots who want to help their fellow Americans in a meaningful way. But alas the Bill Gates' and Warren Buffet's of the world are few and far between.
The final part of this lie of course is the statistic that those developed countries with higher taxes have lower charitable giving. What it does not do is correlate that to the actual *need* in those countries. They all have far lower poverty levels and far lower need for charity.
When we were kids, if we bought a candy bar with a friend, and he said "give me the whole bar so I can be generous and give you back what I don't want" we wouldn't take that deal. Its amazing how easy it is to confuse many people into exactly that deal once they have grown up.
http://www.cafonline.org/
See, they say? We give a higher percentage of our GDP in charity then anyone else. We're generous!
Furthermore, those countries with higher taxes give less, therefor we'd be less generous if we had higher taxes!
Mark Twain said that there are three kinds of lies, "Lies, damn lies and statistics" and this argument certainly qualifies as a statistical lie.
Imagine for a moment, that there are two people in the economy. Joe Richer and Jay Poorer. It takes 30% of the total pie for Joe Richer or Jay Poorer to have everything they need or want. How much is available to give away without feeling the effects if they each have 50%. The answer is 40%, right? each has 20% surplus.
Now, lets suppose Joe has 90% and Jay has 10%? How much can Jay give away? Obviously nothing, he's below the poverty line. But Joe can give away 60% without feeling it. Thats more then the 40% above. A lot more.
The fact of the matter is, the more uneven the distribution of wealth, the more surplus the rich have to give away. But they get that surplus at the expense of the poor. If this analysis is correct, you would expect the US to also have a very high poverty rate to go along with that charitable giving number above, and we do. The worst in the developed world.
The Poor in Developed Countries - The United States(libraryindex.com)
If the rich were really generous, they would do something about this. Instead, they and their representatives fight for an ever increasing part of the pie in terms of lower taxes. A few do fight that trend, the true patriots who want to help their fellow Americans in a meaningful way. But alas the Bill Gates' and Warren Buffet's of the world are few and far between.
The final part of this lie of course is the statistic that those developed countries with higher taxes have lower charitable giving. What it does not do is correlate that to the actual *need* in those countries. They all have far lower poverty levels and far lower need for charity.
When we were kids, if we bought a candy bar with a friend, and he said "give me the whole bar so I can be generous and give you back what I don't want" we wouldn't take that deal. Its amazing how easy it is to confuse many people into exactly that deal once they have grown up.
Tuesday, November 13, 2012
Queue the theme from Exodus
Hidden in an article about Ubisoft possibly buying THQ and their Wii U play, I found this nugget from the head of Ubi...
"We've had more difficulty with Facebook in the past couple of years," he says. "It was a good business, but it has shrunk a bit. And it became a more complex and expensive business to run. We had opportunities with other areas, so we said we should concentrate on those that are growing faster."
http://www.gamesindustry.biz/articles/2012-11-13-ubisofts-guillemot-on-evolving-audiences-and-the-wii-u#justposted
"We've had more difficulty with Facebook in the past couple of years," he says. "It was a good business, but it has shrunk a bit. And it became a more complex and expensive business to run. We had opportunities with other areas, so we said we should concentrate on those that are growing faster."
http://www.gamesindustry.biz/articles/2012-11-13-ubisofts-guillemot-on-evolving-audiences-and-the-wii-u#justposted
Mark Ubisoft as the first major publisher to formally announce a retreat from the Facebook/F2P model now that the true revenues are becoming apparent. I am sure they won't be the last.
Monday, November 5, 2012
What's wrong with Bush/Romney economics
Less then hours before the polls open, I want to take a moment to address the most prevalent myth in American politics today: that cutting government deficit spending is somehow good for job creation and the average American's wallet.
The fallacy generally employed in this argument is the seeming common sense rule,"we as a society are hurting so we as a society must tighten our belts." If there is one thing I have seen in life it is that common sense, while often common, is seldom actually sensical. This is no exception.
The problem with this logic is that it confuses two totally opposite sides of the economic system; the private sector and the public sector. The private sector includes all the money you and I spend. The public sector is government spending. And they aren't the same, not unless you force a balanced governmental budget, which is precisely the wrong thing to do because it eliminates all the power of the public sector to help the private sector.
The clearest explanation I have seen is this:
Imagine for a moment an economy of just two people-- Joe Public and Jane Private. Joe Public takes money from Jane Private and spends money on Jane Private.
What happens, then, if Joe Public takes more money from Jane Private then he spends on her? Jane has less money to spend on herself. Thats pretty obvious right? Thats what our government does to us when it taxes more then it spends, it takes money out of our pockets.
What about the reverse? What happens when Joe Public takes less money from Jane Private then he spends on her? The answer should also be plain and obvious, Jane has more money to spend then before. Thats what our government does when it deficit spends, it puts money into our pockets. Its effectively a large interest-free loan from the government directly to the private sector in the form of government jobs and purchased goods and services.
Now, the government cannot deficit spend forever. It must make that money up eventually, but the time to do that is when the people can afford to have some extra money come out of their pockets-- not when they can't.
Deficit spending does have one other effect-- it stimulates inflation. Inflation however, is not necessarily a bad thing for the American people. Inflation is only bad for the working class when it rises faster then income, and the whole point of this exercise is that it will create job growth and raise income.
Inflation IS bad for people who are sitting on piles of cash doing nothing-- which currently describes major corporations and the so called 1%. This is one of the big reasons they are against anything that might be inflationary. But, again, that inflation is actually good for the working and middle class because it forces those large money reserve holders to put their reserves back to work into the general money supply creating jobs and again raising salaries.
So, when you go to the polls, ask yourself how more massive cutting of government spending will really help any of us? Its not like there isn't already a practical example. We've seen how much it has "helped" Greece...
The fallacy generally employed in this argument is the seeming common sense rule,"we as a society are hurting so we as a society must tighten our belts." If there is one thing I have seen in life it is that common sense, while often common, is seldom actually sensical. This is no exception.
The problem with this logic is that it confuses two totally opposite sides of the economic system; the private sector and the public sector. The private sector includes all the money you and I spend. The public sector is government spending. And they aren't the same, not unless you force a balanced governmental budget, which is precisely the wrong thing to do because it eliminates all the power of the public sector to help the private sector.
The clearest explanation I have seen is this:
Imagine for a moment an economy of just two people-- Joe Public and Jane Private. Joe Public takes money from Jane Private and spends money on Jane Private.
What happens, then, if Joe Public takes more money from Jane Private then he spends on her? Jane has less money to spend on herself. Thats pretty obvious right? Thats what our government does to us when it taxes more then it spends, it takes money out of our pockets.
What about the reverse? What happens when Joe Public takes less money from Jane Private then he spends on her? The answer should also be plain and obvious, Jane has more money to spend then before. Thats what our government does when it deficit spends, it puts money into our pockets. Its effectively a large interest-free loan from the government directly to the private sector in the form of government jobs and purchased goods and services.
Now, the government cannot deficit spend forever. It must make that money up eventually, but the time to do that is when the people can afford to have some extra money come out of their pockets-- not when they can't.
Deficit spending does have one other effect-- it stimulates inflation. Inflation however, is not necessarily a bad thing for the American people. Inflation is only bad for the working class when it rises faster then income, and the whole point of this exercise is that it will create job growth and raise income.
Inflation IS bad for people who are sitting on piles of cash doing nothing-- which currently describes major corporations and the so called 1%. This is one of the big reasons they are against anything that might be inflationary. But, again, that inflation is actually good for the working and middle class because it forces those large money reserve holders to put their reserves back to work into the general money supply creating jobs and again raising salaries.
So, when you go to the polls, ask yourself how more massive cutting of government spending will really help any of us? Its not like there isn't already a practical example. We've seen how much it has "helped" Greece...
Wednesday, October 31, 2012
GW2 Update
Well, I hit level 70 last night. It was my goal to hit before hurricane Sandy cut power on us (which ended up happening only for about a minute.)
Within 10 levels of end-game, I have to say, I'm enjoying GW2 a lot. It has broken a few of my prejudices/experiences of the past.
Whereas most pay-to-play MMORPGs have really had a sudden drop in average user base maturity and intelligence when they go F2P I am actually finding a stronger game community in general and Roleplay community in specific in GW2. GW2 is not without its bozos, but as in any other MMROPG liberal use of /ignore pretty much fixes that issue. (They really Do need to add an option to have /ignore also block emotes and emote animations however as I've already seen examples of emote greifing. )
The game is interesting in that it has both casual and hardcore elements. Many (though not all) of the story encounters are almost effortlessly beatable, particularly at the later levels. The dungeon crawls however are all very tough and require teamwork and persistence. The "world quests" are really well thought through and developed and may be some of the most fun parts of the game.
The barbieing support is probably the most limited part of the game right now, but maybe that will be filled out in the later expansions.
All in all, im having as much fun as I have in any pay-to-play MMORPG. That may or may not be a good thing, but I already covered that concern in my last blog.
Within 10 levels of end-game, I have to say, I'm enjoying GW2 a lot. It has broken a few of my prejudices/experiences of the past.
Whereas most pay-to-play MMORPGs have really had a sudden drop in average user base maturity and intelligence when they go F2P I am actually finding a stronger game community in general and Roleplay community in specific in GW2. GW2 is not without its bozos, but as in any other MMROPG liberal use of /ignore pretty much fixes that issue. (They really Do need to add an option to have /ignore also block emotes and emote animations however as I've already seen examples of emote greifing. )
The game is interesting in that it has both casual and hardcore elements. Many (though not all) of the story encounters are almost effortlessly beatable, particularly at the later levels. The dungeon crawls however are all very tough and require teamwork and persistence. The "world quests" are really well thought through and developed and may be some of the most fun parts of the game.
The barbieing support is probably the most limited part of the game right now, but maybe that will be filled out in the later expansions.
All in all, im having as much fun as I have in any pay-to-play MMORPG. That may or may not be a good thing, but I already covered that concern in my last blog.
Friday, October 26, 2012
A current fear...
or "where has all the money gone."
I just did a very interesting and enjoyable phone interview with ArenaNet, the makers of Guild Wars. I can't talk about the details because they are confidential. I do think they are both very smart and very capable game developers and they really want whats best for the consumer.
They have convinced me that their "no monthly fee" model for GW2 can work.
My ongoing concern however is "how well"? ArenaNet themselves admit it isn't the cash cow that a monthly fee is. Now your first reaction might be "Good, if they can operate with less of my money then its good I don't have to pay them more." Thats a natural consumer reaction. We bristle at the idea that others are making a lot more money from us then it costs for them to do what they do.
However, my concern is this. Games are not utility monopolies like the power company. The power company can run a thin margin because they know, with absolute certainty, that in a given area X number of people will be their customers. There is low risk and thus they can survive on a thin margin stream because they know they will always be getting it.
When it comes to games however, the reverse is true. The risk is very high. They cost a lot to make and the return is not in any way shape or form guaranteed. A lot of games *lose* money. To have a healthy industry the ones that make money must make enough to cover the losses. Ina sense, when you pay $15.00 a month for WOW you are also paying for all the MMORPGs that failed. Without that high profit margin, the first failure kills the game company. Without the potential for a high return, no one sane would take the risks of failure that exist.
ArenaNet is in a blessed position right now. As the only serious hardcore MMORPg with no monthly fee they are dominating the field and making a lot of money still off their lower margin. In the process though they are teaching the audience to expect lower margins, which lowers the total amount of money available for new games in the industry.
When ArenaNet is no longer a monopoly in the "no-fee hardcore MMORPG" space, will they still be able to survive on those margins? And how much room is there really for other players given the reduced total income of the industry under this model?
Only time will tell, but as someone with a love of the industry who wants to see more risks taken, not fewer, it does scare me a bit.
I just did a very interesting and enjoyable phone interview with ArenaNet, the makers of Guild Wars. I can't talk about the details because they are confidential. I do think they are both very smart and very capable game developers and they really want whats best for the consumer.
They have convinced me that their "no monthly fee" model for GW2 can work.
My ongoing concern however is "how well"? ArenaNet themselves admit it isn't the cash cow that a monthly fee is. Now your first reaction might be "Good, if they can operate with less of my money then its good I don't have to pay them more." Thats a natural consumer reaction. We bristle at the idea that others are making a lot more money from us then it costs for them to do what they do.
However, my concern is this. Games are not utility monopolies like the power company. The power company can run a thin margin because they know, with absolute certainty, that in a given area X number of people will be their customers. There is low risk and thus they can survive on a thin margin stream because they know they will always be getting it.
When it comes to games however, the reverse is true. The risk is very high. They cost a lot to make and the return is not in any way shape or form guaranteed. A lot of games *lose* money. To have a healthy industry the ones that make money must make enough to cover the losses. Ina sense, when you pay $15.00 a month for WOW you are also paying for all the MMORPGs that failed. Without that high profit margin, the first failure kills the game company. Without the potential for a high return, no one sane would take the risks of failure that exist.
ArenaNet is in a blessed position right now. As the only serious hardcore MMORPg with no monthly fee they are dominating the field and making a lot of money still off their lower margin. In the process though they are teaching the audience to expect lower margins, which lowers the total amount of money available for new games in the industry.
When ArenaNet is no longer a monopoly in the "no-fee hardcore MMORPG" space, will they still be able to survive on those margins? And how much room is there really for other players given the reduced total income of the industry under this model?
Only time will tell, but as someone with a love of the industry who wants to see more risks taken, not fewer, it does scare me a bit.
Sunday, October 7, 2012
Even Zynga isn't the next Zynga
The inherent weakness of Zynga's micro-transaction based revenue model, that I reported on when they went public, is showing its ugly head in ways even the blindest MT advocates can't ignore:
http://www.nytimes.com/2012/10/05/business/zynga-to-report-a-loss-for-the-third-quarter.html?_r=0
As a recap, I explained the inherent fallacy in Zynga's "squeeze blood from a stone" model here:
http://worldwizards.blogspot.com/2012/09/why-microtransactions-arent-razorblades.html
And noted their inherent financial weakness way back when they released pre-IPO numbers here and here:
http://worldwizards.blogspot.com/2011/07/real-zynga-numbers.html
http://worldwizards.blogspot.com/2011/07/more-zynga-analysis-profit-margin.html
You can expect to hear a lot of sudden back-peddling among the MT faithful who, for a long time, held Zynga up as the shining example of how the model could be successful.
http://www.nytimes.com/2012/10/05/business/zynga-to-report-a-loss-for-the-third-quarter.html?_r=0
As a recap, I explained the inherent fallacy in Zynga's "squeeze blood from a stone" model here:
http://worldwizards.blogspot.com/2012/09/why-microtransactions-arent-razorblades.html
And noted their inherent financial weakness way back when they released pre-IPO numbers here and here:
http://worldwizards.blogspot.com/2011/07/real-zynga-numbers.html
http://worldwizards.blogspot.com/2011/07/more-zynga-analysis-profit-margin.html
You can expect to hear a lot of sudden back-peddling among the MT faithful who, for a long time, held Zynga up as the shining example of how the model could be successful.
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