Mstation Games Review Valid RSS

Sat, 28 Feb 2009

Games and Recession ... and Creativity

On the face of it, you wouldn't expect the next couple of years to be very good for innovation and creativity in videogames. Admittedly, widespread fears over the effects of recession are somewhat overblown - right now, there's simply no evidence that economic woes are impacting on videogame sales and 2009 still looks set to be a growth year for the market.

However, the recession - and perhaps more importantly, the slow-down of commercial lending from banks - creates a certain mindset among businesspeople, even those whose sectors are still in rude health. EA's John Riccitiello summed up the mood at the DICE Summit earlier this month, where he told the audience that EA - which has recently cut 1,100 jobs in its worldwide operations - had become "too fat, too reliant on where things were."

Of course, that would have been true even if the recession had never happened - in fact, people including some of EA's own executives have been suggesting that the company is bloated and inefficient for years, a fact underlined by years of rising costs and relatively stagnant revenues.

As Riccitiello admitted, however, to firms in this position (and it's certainly not just EA that finds itself staring at the consequences of uncontrolled cost rises), the recession has been a "blessing in disguise". Suddenly, macro-economic conditions allow them to slash their costs without anyone batting an eyelid, while the same moves twelve months ago would have caused serious concerns about the company's status.

So even for those companies whose products will continue to see sales growth for the next couple of years, the atmosphere is one of frugality. Drought in the credit markets doesn't help, naturally, but for the most part this sense of belt-tightening is more to do with companies taking the opportunity to scale back costs than it is to do with any real financial necessity.

Sadly, when companies scale back costs, they often do so at the expense of throwing out a whole creche full of babies along with the bathwater. If you look at the operations of a big first-party studio, for instance, much of the wasted resource comes from big-name titles, especially those on 12 or 18 month franchise schedules. Money and man-hours are thrown away on bloated, mismanaged teams, the legacy of years of ill-advised "throw more people at the problem" solutions to problematic deadlines.

However, trimming the fat from those teams is hard work. Everyone on the team will fight their corner, claiming their intrinsic worth to the profitable project. Each middle-manager will act like a minor feudal lord, jealously guarding his painstakingly accumulated collection of vassals and subjects. Team sizes, all too often, end up being more to do with office politics and power-grabs than to do with the actual requirements of making a game, and extricating a small, lean, efficient team from this quagmire requires a huge amount of work and some very tough decisions.

Meanwhile, most studios also boast a handful of nascent projects - ideas which are floating around in the pre-production stages, championed by a handful of developers and designers who are working on the concept. On a slightly larger scale are the original game projects, games in production but lacking a big franchise or IP license behind them.

These projects are risky. They're not guaranteed any level of commercial success, and while critics all profess to love original IP, that doesn't mean that original projects are guaranteed a high Metacritic rating either. Compared with the risks associated with trying to trim back costs on high-profile franchise projects, the decision to instead cut back on new ideas and teams working on unproven IP will look extremely tempting to many studios. The same logic, too, will apply at the publishing level, with risky ideas likely to find far less warm receptions at publishers in the coming years.

Both from a creative perspective and from a more long-term business perspective, this is bad news. Creativity has always demanded some risk taking behaviour from publishers - more specifically, a willingness to balance out the risk of some original projects against the guaranteed returns of some blockbuster franchises. The industry's business model, meanwhile, demands that creativity to survive. Without the risk-taking that allows original IP to emerge, the games industry would soon find itself feeding off scraps from the table of the movie, TV and sports licensing industries.

However, not all publishers are quite as willing to clamp down on risk as they used to be. EA is a perfect example; since Riccitiello returned to the company, the firm has been making increasingly encouraging noises and now seems to understand that risk is an essential part of the business of making entertainment, rather than being an unfortunate side-effect which must be controlled and reduced. Some other publishers are slowly but surely getting the message; the platform holders, too, are learning. Whatever else it may have done wrong of late, Sony deserves special praise for its recent willingness to try out new ideas and champion creativity through its first-party releases.

Even these bright spots in the gloom, however, don't change the fact that many publishers are going to become more risk-averse and less friendly to innovative ideas in the coming years. However, there's a further variable to be reckoned with in this equation - the slow but increasingly assured rise of independent games as a commercial force in the market.

We've all been talking about independent games for years, of course. Created outside the studio system by passionate, talented enthusiasts, independent games have been celebrated by the media and even recognised by the industry (thanks to the fantastic Independent Games Festival which runs alongside GDC each year). Rarely, however, have they made any significant impact on the commerce of the industry.

This is changing. It is changing because millions of new consumers who have never played games before are now active in the market, and looking for new experiences which traditional firms simply don't know how to provide. It is changing because the tools which allow the creation of superb games are no longer out of the reach of small teams and even individuals. It is changing because word of mouth has become more powerful than any marketing campaign could ever be. More than anything, it is changing because every major console on the planet now has a digital distribution system allowing consumers to download games at a wide range of price points.

No longer are independent games confined to the PC platform. No longer do they have to be given away for free, as they have been in many cases. No longer are they kept away from the marketplace simply by the high walls which surround retail, isolated from consumers by an industry which has traditionally only understood the concept of selling monolithic units of entertainment at a fixed £30 price point.

The explosion of creativity which will be created by this change is only beginning. Certainly, barriers to entry still exist, but they are slowly coming down - and I anticipate that it won't be long before services like PlayStation Store and Xbox Live Arcade start to offer developers the same level of easy access to market that something like Apple's iPhone App Store does.

This revolution will give us a new wave of developers who see games through very different eyes to those of their studio-bound compatriots. Forced to consider the financial bottom line, the technological bleeding edge and the whims of Metacritic at each turn, big studio development is by no means uncreative, but certainly has to follow certain set patterns. With few such concerns, independent game developers can follow their hearts and their instincts to a far greater extent.

The studio system couldn't have created a game like Flower, the utterly beautiful PSN title which came out earlier this month; but more than that, it couldn't have created a persona like Jenova Chen, the mind behind Flower, who happily talks in interviews about evoking emotions, moving past primal feelings and "maturing" the industry in ways that don't involve sex, blood and swearing. He talks about making games that don't empower gamers, but instead make them experience other things, other emotions. It's spine-tingling stuff. It's also commercial suicide - or would be, to a studio working in the traditional development context.

Others like him are emerging, or have emerged, from this scene. Let's not beat around the bush - many of them will build games which will be terrible. Many will try so hard to depart from the way games are traditionally made that they'll fail to notice that some of those things stem from hard-learned lessons, not constrictive rules. Others will make games which are fascinating, or extraordinary, or immensely entertaining, but which simply fail to find a market.

But from among them, there will come a select few who will make games that tick all of the boxes. They will be new, and fresh, and daring - and hugely, vastly commercially successful. Developed for a handful of notes, they will make millions, and they will fuel the careers of new auteurs and the passion of new generations of creators.

The studio blockbuster system won't go away any time soon - and nobody should want it to, any more than any serious movie fan should genuinely wish for the demise of Hollywood. However, the studio system is no longer alone, and its role in creating commercial success will soon no longer be a monopoly. Creativity will face tough times in recession - but no financial downturn will stop it from blooming, even if it's not in the places we might expect.


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Fri, 30 Jan 2009

Games: What about retail?

The decline of traditional retail is a topic which has been discussed, on and off, for around a decade now. It's a conversation which is particularly relevant to videogames and other digital media, where direct online distribution is possible, but online shopping has affected almost every retail sector - even clothes and food, the backbone of the high street.

In spite of this lengthy discussion, it's still something of a shock to see two large retail chains, both of them very active in the videogames sector, shutting down in the space of a couple of months. Woolworths has been a fixture of towns around the UK for a century, and in recent years has been a key outlet for videogames, especially at the casual and family-oriented end of the market. Zavvi, the new name of the Virgin Megastores chain, occupies some of the best retail property in the UK and was determined to focus the core of its business around videogames.

Now they're both gone, or are on the way out. With no buyers in sight for either chain, both have suffered the fate of stock liquidations, massive job losses and the sale of their individual retail locations.

After years of discussion and dire predictions regarding the future of high street retail, should these closures be seen as support for those arguments? Is this, as much of the commentary has indicated, a clear sign that the high street is entering its latter days?

Too much weight can be placed on those conclusions, and it's important to consider that there are special circumstances surrounding the collapse of both Woolworths and Zavvi. In the case of Woolworths, the company has been facing trouble for many years, and found little succour in the buoyant economic conditions of the past decade. Ironically, its low-cost, "cheap and cheerful" approach (many would debate the use of the word "cheerful", in fact) might have resonated better with consumers in a recession. It'll never have a chance to find out, however.

Zavvi, meanwhile, has slid out of view protesting all the while that it's a victim of circumstance. Its sales through 2008, the company says, were healthy - but when Woolworths went down, it also spelled the end for Entertainment UK, a distribution outfit which supplied Zavvi with much of its stock. With tens of millions of pounds of debt suddenly being called in and deep concerns over how to keep key items (especially games) in stock over Christmas, Zavvi promptly ended up being dragged down by the Woolworths disaster.

Just unlucky, then? Woolworths, caught short by the timing of the economic cycle; Zavvi, a victim of pure circumstance, mere collateral damage in Woolworths' implosion?

That's one interpretation, and it's one to which many in the high street retail business have flocked. There's certainly an element of truth here - but in dismissing these dramatic collapses as mere circumstance, we risk blindly ignoring the important lessons and indicators which they provide.

The fact is that very few corporate collapses are marked by graceful, textbook descents as sales slide, profits fall, and the whole operation is wound down by administrators. As managers (and eventually administrators) attempt to rescue businesses facing difficulties, they often take gambles which result in far more dramatic collapses. Weakened businesses are also easy prey for hiccups in the economy of any description, which can result in a seemingly sudden demise rather than a slow decline.

In other words, yes - the collapses of Woolworths and Zavvi are definitely the product of circumstance. However, there is an important argument here which says that those circumstances could only sink these large companies because there are bigger, underlying problems in play.

The harsh reality is that high street retailers are increasingly being burned by trying to play in the same markets as successful online stores. Online retail has squeezed profit margins significantly, even to the extent that many online stores such as Amazon and Play can make a profit at prices which would drive bricks-and-mortar stores into the red. It's extremely telling that even in the depths of Zavvi's closing down sale, the store had few bargains on offer which weren't already cheaper online.

Moreover, with those profit margins so tightly reined in, bricks and mortar enterprises find themselves more vulnerable than ever to the kind of bumps in the road I mentioned a moment ago. They become heavily reliant on day to day cashflow, which can be seriously impacted by supply problems. In order to paper over those cracks, they need a healthy credit relationship with the banks - and right now, one doesn't utter the phrase "healthy credit relationship" within a mile of the City of London without eliciting bitter laughter and angry stares.

It's also extremely telling that nobody actually wanted to step in and buy Zavvi, let alone Woolworths. HMV has picked up a handful of stores in order to extend its network around the UK, but even at that, some of Zavvi's choicest retail locations - such as its enormous London store on Oxford Street and the hugely prestigious Piccadilly Circus store, formerly occupied by Tower Records - look set to leave the media retail sector entirely. They're most likely to end up selling budget clothing for the next few years.

If Zavvi's sales were growing and the company had a good plan going forward, why didn't anyone buy them? In part, of course, it's down to the fact that with the banks sitting in the corner sulking and refusing to play, it's rather hard for the mergers and acquisitions game to continue.

It doesn't help, however, that sentiment about the future of Zavvi's entire market sector is almost entirely negative. It's not just that you can buy CDs, DVDs and games more cheaply online - many in the industry are still reeling from just how quickly digital distribution is replacing CDs. Five years ago it was expected to take decades to move consumers away from physical products; today, we're already past the tipping point in some markets. Who can blame the business world for looking nervously at the boxed movie and videogame markets and wondering how long they'll be around for?

All of which, of course, causes us to cast a questioning eye in the direction of the remaining retail giants of this sector - which in the UK means Game and HMV. They're likely to enjoy something of an upwards push from the demise of Woolworths and Zavvi, since there'll be less high street competition - and it helps that their sector, the relatively low-cost home entertainment market, is also likely to thrive in an economic depression.

In the medium term, however, what future is there for these businesses? If consumers increasingly go online - either for mail order or digitally distributed product - what justification can there be for the massive overheads involved in maintaining their enormous store networks? Perhaps its telling that both firms are committing themselves to second hand sales, much to the annoyance of the game publishing industry - this, after all, is a USP which online simply can't replicate.

In itself, that's a sobering vision of the future for the high street - media stores simply filled with second hand product that was originally bought online. Yet the bleak choices facing high street media retailers in the next five years may be to resign themselves to being second hand thrift stores, or to go the way of Zavvi. This recession won't kill them - but the march of consumer buying habits and preferences will leave them behind.


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Tue, 28 Oct 2008

Tokyo Games Show Thoughts

The Tokyo Games Show is, arguably, one of the videogame industry's most unusual fixtures. The innate peculiarity of the Japanese market as seen by western eyes aside, the mere timing of the event makes it distinctly odd.

By the time TGS rolls around, in late September or early October, the release schedule for Christmas has already been firmly locked into place in the USA and Europe. By and large, E3 is the show where we find out what'll appear in October and November. Europe's Game Convention is where the schedule is tweaked and polished. TGS makes a running leap off the end of the pier and misses the boat entirely.

There are a couple of key reasons for this. Firstly, the Japanese market itself isn't remotely as Christmas-focused as the rest of the world. The New Year celebrations do help to get the Yen pouring into the tills, but the country's really big spending (on interactive entertainment, at least) is reserved for Golden Week - a series of national holidays at the beginning of May. As such, TGS is a good opportunity to show the domestic market what's upcoming for that key period.

Secondly, there's the simple fact that TGS is a consumer show. Given the heavy focus on keynotes and new unveilings in western press coverage of the event, it's easy to forget that the show's raison d'etre is showing off upcoming games to consumers. Admittedly, once you've made the error of being stuck in the immense crowds who descend on Makuhari Messe for the consumer days of the show, this knowledge is liable to be permanently stamped on your memory.

From a local perspective, then, TGS makes perfect sense. Looking at it internationally, however, it's obviously tough for games companies and media alike to know how to treat the event. Unlike other regional shows, TGS is unquestionably a global event for the industry (look at South Korea's intriguing but distinctly parochial G-Star show by comparison). This is partially because Japanese games continue to hold both fascination and commercial value for the global market, but also because TGS has become another front in the ongoing console battle.

In recent years, the event has seen a rising tide both of western media, and of western publishers and game titles. Microsoft's entry into the console market - and its renewed assault on Japanese hearts, minds and wallets with the Xbox 360 - is largely the root cause of this. Combined with the prominence of European-developed titles in Sony's line-up, it's led to the unusual situation where journalists from Europe and the United States travel to Japan in order to see games developed in their home countries, often presented by executives from their home countries.

More often than not, these games aren't even that relevant to the Japanese market - and are greeted distinctly coldly by the Japanese media and consumers in attendance. Companies bringing titles to TGS also walk a tightrope - do they show off titles due to launch after Christmas, and risk being buried in the rush of new games in October? Or do they show off their Christmas line-up, and risk the media wondering why on earth they're looking at the same games they saw last month, but eight time zones from home?

The oddly ill-defined nature of TGS is hugely relevant to how this year's show will play out. Watched closely by "hardcore" gamers (an unpleasant term I'm going to have to continue using until someone coins a better one), there is one main thing they're looking for.

This week, once again, Sony is on trial. Whatever the firm's views on TGS and its relevance to the western market may be, the company simply can't afford a weak showing in Tokyo. TGS is home turf for Sony's Japanese studios and partners, and it's from those studios that gamers are expecting to see growing evidence of the PlayStation 3's relevance as a gaming platform.

It's been becoming increasingly obvious over the past year that whatever about Nintendo fans who feel deserted by the company's strategy with the Wii, there is also a growing band of Sony consumers who feel that the PS3 simply isn't the platform for them any more. In conversations in recent months, I've heard the same sentiment expressed over and over again - that the PS3 seems to be engaged in a "race to the bottom" with the Xbox 360, pumping out action games and racing games rather than building the strong, diverse catalogue which made the PlayStation 2 appealing to such a wide audience.

Much of that diversity came from Sony's Japanese studios, strongly augmented by contributions (especially in the social gaming space) from Europe. Yet in this generation thus far, Sony's console has failed to even deliver on key genres which were the PS2's core strength, like J-RPGs - let alone creating a broad church of games that brought in minorities and niches from all around the population, from the colourful lunacy of Keita Takahashi's Katamari Damacy to the solemn majesty of Fumito Ueda's Shadow of the Colossus. Individually, games like those didn't sell many PlayStations. Taken as a whole, the vast collection of niche interests and unusual tastes catered to by the PS2 secured its place as the most popular console in the history of the business.

Nobody expects Sony to break out a whole range of software this week and finally reclaim that strange, diverse market it has tapped for the past decade - served by a myriad of titles, none of them blockbuster hits but every one of them dearly loved by its own faithful. What's being sought, however, is an inkling that they might be on the way; that the PS3, like the PS2 and the PlayStation before it, might be the right place to look for creativity and entertainment that's a bit off the beaten track.

LittleBigPlanet is an excellent start, sterling proof that Sony understands a world beyond guns and tyres. If TGS can deliver even a handful of games that have the potential to captivate even a handful of players apiece, stuffed somewhere into the cracks between the inevitable soi-disant AAA titles, it will offer a solid ray of hope for the PS3 to continue building a strong market in 2009.

Microsoft, meanwhile, is also on trial - but this is a far less crucial trial. In fact, it's really just curiosity on the part of the media and gamers alike. After weeks of resurgent Xbox 360 sales in Japan, people want to know if Microsoft really can succeed in a country which has traditionally been utterly nonplussed about the Xbox and its successor.

Despite some deeply uninformed conventional wisdom that's passed around the industry in recent years, Japan isn't inherently resistant to American- or European-developed electronics or entertainment products. Just ask Apple, whose iPods have done great business in Japan just as they have everywhere else, and whose iPhone is making an unexpectedly significant dent in the "closed shop" of the Japanese mobile phone business.

The problem with the Xbox and the 360 was that they just didn't appeal to Japanese consumers. The industrial design seemed ugly (a problem for Europeans too, it should be noted), the game line-up was heavily tailored for American tastes, and previous forays into Japanese developer relationships were fleeting enough to leave consumers worried that they could buy an Xbox for one or two games, and then watch it gather dust.

Now, however, there's evidence that a corner could have been turned - a vital tipping point where consumers see enough software and enough evidence of future software development to be willing to invest in the console hardware. Barriers remain, of course. The Xbox 360 is still (arguably) ugly and (provably) noisy as hell, factors which don't go down terribly well with those who live in homes with small living spaces - a problem, it's worth pointing out again, which applies in Europe too.

That won't be solved at TGS - but what we will get to see is whether Japanese consumers are really taking an interest in what Microsoft is doing. The calibre of locally developed software on display, and the size of the queues for the Xbox 360 displays on the show floor, will give industry analysts plenty to think about. As Sony struggles to convince the broad market it won with PS2 that PS3 is really the right upgrade for them, Microsoft could finally be about to become Big In Japan - and for once, that won't involve a photoshop of a giant Xbox looming over Mount Fuji.


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Mon, 01 Sep 2008

Secondhand games annoy publishers

During an otherwise excellent and optimistic talk at the Develop conference in Brighton yesterday, industry stalwart David Braben embarked on a brief but heated tangent from his speech topic to attack videogames retailers - specifically, those videogames retailers who engage in the second-hand goods market.

This is, of course, a bone of long-standing contention between retailers and the rest of the industry. Braben added fuel to the fire by presenting photographs of retailers whose shop windows, he pointed out, consisted entirely of second-hand goods ("the only new thing is the A4 piece of paper advertising Wii Fit") and making the anecdotal claim that some games pass through the used re-sale process ten times or more.

I can't dispute the scale of the second-hand (or even tenth-hand) market since, like Braben, I don't actually have any figures on the size or prevalence of this market. One area where I agree with him is that more research into the scale of the market (and, crucially, into the price points at which it operates) would be extremely helpful.

So for now, let's accept his assertion that second-hand sales represent a large enough percentage of overall sales to seriously sting the industry. That's probably true, although for a proper business case to be made, real figures are needed.

The industry is, of course, within its rights if it wants to weigh down more heavily on the retailers who engage in this trade. Many of them are retailers with whom the industry does business - supplying new hardware and software, paying for point-of-sale promotions, and so on. That puts the industry in a position of some power, assuming, of course, that it's willing to risk cutting off its own nose to spite its face by further reducing the appeal of new software at these outlets.

Where the industry's rights - and more importantly, the sanity of its actions - come into question is in some of Braben's more outlandish proposals to tackle what he emotively, incorrectly and utterly unhelpfully described as retail "piracy". (He did, in fairness, subsequently soften his tone and start describing it as "rental", which is equally inaccurate but not quite so deliberately emotive.)

He talked in terms of unique codes which could be printed on discs to activate them, or even taking the step of making a DRM-protected download into the primary product, with the disc full of game data being an "optional" add-on for those who don't wish to download a DVD or Blu-Ray sized chunk of data. Essentially, Braben wants to find a way to strip consumers of their rights over the game they buy. He wants a way to ensure that you can't sell it, can't lend it, can't pass it on. And let's be clear here - there was a lot of nodding in the industry-heavy audience as he laid out this draconian stuff. He's hardly a lone, Quixotian figure bashing away at windmills in the dusk.

The rights which Braben wants to take away from his customers are called, in the United States, Right of First Sale. In Europe, it's called Exhaustion of Rights. Both describe a similar thing - the fact that once you sell a piece of media to a consumer, you automatically give up certain rights in the process. You stop being able to enforce a trademark action against the consumer for selling your product, for instance; in essence, you drop all rights which could otherwise prevent the consumer from re-selling the item they've bought. It is this right which allows the existence of second-hand book stores, second-hand record stores, and so on.

What Braben and others in the industry want to do is to usurp this right, not through legal means but through technical restrictions. There's something very questionable about the basic morality of using technical instruments unthought-of when such laws came into force to circumvent the law and rob consumers of basic rights. Exhaustion of Rights and Right of First Sale aren't some grubby legal loophole that consumers are using to rob hard-working developers of their money - they're a fundamental part of the covenant between nation and creator which gives us the copyright laws and allows creators to make money in the first place.

More important than the moral and legal arguments, however, are the practical ones. On a simple level, boiled and reduced, measures like these don't just rob consumers of their rights - they also treat paying customers like criminals. This is one of the most simple and potent arguments against DRM and the majority of "anti-piracy" measures - what they come down to is placing restrictions on legitimate customers which pirates will not face.

Legitimate customers potentially wouldn't be able to lend games to friends, bring them to someone else's house and play on their console, or perhaps even pass them on to a younger sibling or cousin when they're done. Pirates, of course, would continue to be able to do anything they bloody well liked. On the scale of business own-goals, vastly increasing the appeal of piracy to your consumers has to rate pretty highly. Just ask the music business, assuming you can get an answer in between the spluttering and wheezing as they recover from the ferocious beating they've taken in recent years due to policies such as this.

In Braben's defence, however - and I should reiterate that the vast bulk of his talk was enlightening, entertaining and wonderfully optimistic - he did also make some really positive suggestions about how the second-hand market could actually be leveraged as a force for good within the industry.

He talked about optional downloadable content, player subscriptions and in-game advertising as ways to extract revenue even from copies of games which don't return any initial revenue to your company. This is, quite obviously, the approach the industry needs to take. If a copy of a game passes through the re-sale process ten times, don't treat that as ten instances of lost revenue - treat it as ten chances to sell DLC to a consumer, or ten more sets of eyeballs looking at in-game ads.

Look at the positives of second-hand gaming, rather than grousing over retail "piracy" or other such nonsense. By providing a market-generated lower price point, it's giving more and more people access to games. Quite simply, it's a total fallacy to think that the 35 to 40 pound price point is the standard for games; if you want to know what consumers are actually paying, try adding the second-hand and discounted prices, and even the revenue returned to them for trading in old games, and then reaching an average figure.

Chances are most games are being sold for well under 15 pounds, or even under 10 pounds - around the cost of a DVD. Kick the stool out from under the retail mechanisms that provide those price points, and you'll lose thousands - possibly millions - of consumers, and risk alienating an entire generation of teenagers from the industry. Find a way to capitalise on all those extra eyeballs and players instead.

The second hand market isn't a problem for your business unless your thinking is inflexible, traditional and rapidly becoming outdated. For those with fresh ideas and the will to implement them, the second-hand market is great news - and frankly, the day is coming when we'll say the same thing about piracy and file-sharing. In the not too distant future, businesses will wake up to the idea that if a million people are downloading your game over BitTorrent, it should be the best thing that's ever happened to your company, not the worst. My fear, however, is that we're going to have to do the same agonising birthing process that the music industry just went through before this kind of thinking starts really making itself known.


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Tue, 03 Jun 2008

New Generation Consoles: and the score is ..

57 million. That, at a rough estimate, is the number of new-gen
consoles - Xbox 360, PS3 and Wii - that have been shipped worldwide to
date. Thanks to this week's flurry of financial results, we have the
first reasonably accurate breakdown of sales in ages, informing us that
the Xbox 360 has hit 19 million units, the PS3 is within shouting
distance of 13 million, and the Wii, leading the field by an impressive
margin, is sailing around the 25 million mark.

57 million. It's an impressive combined figure - but even if we assume
a neutral scenario, where this generation of hardware only reaches the
same installed base that the last generation did, we're still only a
third of the way through the sales curve of the systems. In the more
likely eventuality that this generation sells significantly better than
its predecessor, that proportion is even smaller.

It's worth taking a moment out here to consider the fact that the last
generation isn't doing so badly itself - nearly 14 million people last
year decided that they need a PlayStation 2 in their lives, giving it
healthier sales than either the Xbox 360 or the PS3. 

That's not bad for a console that celebrated its 8th birthday back at
the start of March. Even allowing for the continuing slowdown in its
sales, it seems likely that the PS2 is going to gasp past the 150
million unit milestone before it breathes its last - the first console
ever to do so, just as its predecessor, the PlayStation, was the first
to break the 100 million mark.

Such figures put our 57 million number in perspective, to a large
degree. They illustrate just how new to the market the new-gen consoles
are, and how far they have to go to emulate the sales success of their

The figures also illustrate very effectively the enormous change that
the games market has undergone from the last generation to this one.
Some would argue that the biggest change has been high-definition, or
online. Some would argue that it's the rise of "casual" gaming. Those
are valid viewpoints, but I think that from a business standpoint, the
single most important change in the gaming market is fragmentation -
the diversification of the industry's output, and the accompanying
fragmentation of consumer spending.

In the last generational cycle, if you were a consumer who was keen on
videogames, you essentially had two choices - you could buy a gaming
PC, or you could invest in a PlayStation 2. With a single, incredibly
dominant console on the market, the alternatives (the Xbox and
GameCube, and handheld gaming in the form of the GBA) were essentially
niche interest devices, platforms which cultivated vocal and
enthusiastic userbases but whose broad commercial relevance was minor.

This was the pattern which had persisted for several years in the
games market. The PlayStation dominated its generation in a similar
fashion, and even in the era of famous rivalry between Nintendo and
SEGA, Nintendo's systems were the undisputed commercial champions. Over
20 years of gaming history, there have consistently been no more than
two realistic options for consumers with money to spend on videogames.

That has changed dramatically in the current generation. The PC, of
course, remains a viable and even healthy platform for many game
genres, producing million-sellers fairly regularly despite issues with
piracy and hardware expense, and the new generation of hi-def consoles,
the PS3 and 360, are locked in a proper battle for sales supremacy for
the first time in decades.

That's only the tip of the iceberg, however. The choice for consumers
is no longer simply between PC gaming and one or two high-end console
systems - instead, there's a whole fragmented universe of choice out
there, each sector exerting a pull on the finite (but growing)
collective wallet of the gaming public.

Take handheld gaming, for example. Despite the success of the GameBoy
and GBA, this was always previously a side-salad, with console or PC
gaming as the main course. The DS and PSP have changed that -
dramatically. 70 million DS consoles are in the hands of gamers, along
with close to 35 million PSPs. Even allowing for a lower software
attach rate than the home consoles enjoy, that's still a hell of a lot
of Pounds, Euro, Dollars and Yen accounted for.

Then there's the Wii - a console which arguably sits outside the
new-gen race, since its hardware specification belongs with the
previous generation of consoles. At the very least, it's indisputably a
very different beast, and it's got the most impressive sales curve of
any console in the history of the industry. 25 million today (more than
the GameCube sold in its lifetime), and 50 million projected by the end
of the year - that's way more than the N64 sold, and astonishingly, if
Nintendo hits that target it'll also pip the lifetime sales of the
legendary SNES. Again, more consumer bucks disappearing into a bucket
that isn't marked "new-gen consoles".

Of course, there's the PS2 - as I already mentioned, it's still doing
handsomely for itself. More than handsomely, in fact. Never mind the
hardware sales, check out the software - 154 million units of PS2
software sold in the last financial year, another big fragment of
"wallet-share". Hell, there are even individual games biting big chunks
out of the pie. Blizzard's World of Warcraft eats up over a billion
dollars a year of "videogame money". (That's even before you consider
how many games WoW players would potentially buy if they weren't
spending all their gaming time grinding virtual gold to pay their
repair bills from Serpentshrine Cavern raids. Or whatever.)

In many respects, this picture is positive. The fact that high-end
consoles and PCs aren't the be-all and end-all of the market any more
suggests a newfound diversity which will help to grow the demographic
reach of the whole medium. Moreover, it puts the brakes on the headlong
rush to more and more powerful systems which characterised the past
decade of progress. That rush will continue, but it no longer
constitutes the entire games business - and the existence and
commercial success of lower powered platforms, both handheld and home,
means that the barrier to entry for new developers is lowered
significantly. That's a good thing.

On the other hand, for publishers, the newly fragmented games market
does bring new opportunities - but it's largely just a massive,
thumping headache. For twenty years, they've been able to base their
business on supporting the PC, a dominant console platform - and maybe
a niche console platform if they were feeling charitable (or if a
platform holder greased the right palms).

Now, that's no longer the case. The 360 is leading the hi-def race,
but the slowly shrinking margin isn't large enough to justify doing
anything other than supporting the PS3 to an equal degree. However,
even those two consoles, for all the headlines they make and shelf
space they occupy, don't actually account for even half of the market.
The active handheld installed base is huge. The Wii is huge. The PS2 is
huge. Weird niche markets like MMOs are gradually getting around to
being huge. 

With all these huge areas crowding for space (and more importantly,
cash), will any console hit the 100 million, or 150 million, figures we
saw last generation? Possibly, yes - but not because of genuine
dominance. Nobody is going to dominate this generation like the
PlayStation and PS2 dominated the previous generations - in fact, not
even the PS3 and 360 combined will have that kind of dominance.
Fragmentation is going to be tough, expensive and difficult for
publishers - but it's also laden with opportunity. The success stories
of the coming years will be those who learn to stop worrying and love
the diversity.


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Mon, 24 Mar 2008

Tabloid Emotions: UK Games Censorship

The Soft Target

After almost a decade of watching with thinly-concealed smugness as America's conservatives tore into the videogames industry, confident that Britain's more liberal society would protect the medium on these shores, the worm has finally turned. The alarm bells are ringing, and an unpleasant awakening is upon us - Britain now faces exactly the same kind of backlash against games that has blighted the United States for years.

It is not, as yet, at the kind of fever pitch which anti-videogames sentiments have reached on occasion in the USA. Britain fundamentally lacks the sort of high profile youth crimes, such as school shootings, which have focused attention in the United States - and when high profile cases do come along, the UK seems more willing to condemn the failures in society which have caused them, rather than trying to pin everything on an easy scapegoat like videogames.

However, the atmosphere around games is shifting slowly and unpleasantly, and nowhere is that to be seen more clearly than in Westminster, the administrative heart of the United Kingdom. Here, there's a certain measure of desperation in the air. Gordon Brown has transpired to be a deeply unlikeable and unpopular Prime Minister, and his Labour government faces the possibility of a humiliating defeat in the next general election if a slide in popularity cannot be halted promptly. Every straw in sight is being grasped at, and videogames, it seems, are well within arms reach.

A "hard line" on videogames certainly seems to be one of the options on the table for Brown's strategists, who know that the government needs some kind of answer to questions of law and order, and especially regarding youth crime.

The government's problem is that telling the truth - that Britain's crime figures have been falling steadily for some time, and that we're safer now than we've been for a long, long time - doesn't seem to work. A vicious campaign of lies, half-truths and insinuations on the part of the UK's vile tabloid newspapers (and, shamefully, some of our broadsheets too) has convinced the population that UK society is in meltdown. Faced with a population who believe that they're in danger of being stabbed by a feral youth at any minute, the government can't simply tell them to stop being so bloody stupid; it is forced into a position of Being Seen To Do Something.

The something in question, I increasingly fear, will be the imposition of restrictions, regulations and censures on the videogames industry. This will come as part of a wider package of measures against the creative industries. The BBFC, which has moved with the times and now reflects Britain's largely liberal views on media, has also been slammed in the right-wing press in recent weeks for allowing the release of movies formerly classed as "video nasties" in the 1980s, and it seems eminently likely that government will move to grant itself a veto over the BBFC's decisions.

Admittedly, thus far much of the noise in Parliament on this front has been made by Keith Vaz, an MP whose contributions to the videogames debate are so frequent and so consistently ignorant and uninformed that even his fellow parliamentarians have become sick of him. His shocking and utterly false assertion this week that games are available in which the player can rape women was challenged by Ed Vaizey MP, while his ongoing promotion of the tragic Stefan Pakeerah murder case as an example of videogame inspired violence (both the police and the court system having ruled out any possible link) has been dismissed by the minister responsible, Margaret Hodge.

Vaz' one-man quest against the videogames industry continues, however - and indeed, it seems that it's not entirely a one-man quest any more. While the headlines were stolen by Vaz' statements to the House, it transpires today that Gordon Brown himself is to meet Stefan Pakeerah's mother to discuss the question of violent videogames.

A triumph for Vaz, then, and a sad defeat for any modicum of common sense. While Giselle Pakeerah's loss is truly tragic and saddening, her claim that her son's murder was inspired by Rockstar's Manhunt is patently and provably false. It was her son, not his killer, who owned the game. The game doesn't even feature the type of murder weapon used in the killing - and moreover, the killer was clearly inspired not by playing a game, but by the debt he owed to a drug-related gang.

Giselle Pakeerah, in her grief, has been coldly and cruelly manipulated, becoming a tragic champion in the battle against a medium that had nothing whatsoever to do with her son's murder. Who, after all, is going to argue with a grieving mother? What possible response can Gordon Brown have to her statements - however ill-informed they may be - than to nod sympathetically?

Moreover, I suspect that Brown - and those who have set up this meeting, Keith Vaz himself undoubtedly among them - knows this perfectly well. Gordon Brown doesn't want to be advised on his media policy by Giselle Pakeerah. He wants to meet her so that when he announces his already well-laid plans in this regard, he appears to have consulted the grieving mother - which will play well for the tabloid press who are hounding him to Do Something about the country's allegedly rising crime levels.

It's a desperately worrying time for anyone with an interest in freedom of expression, but more so for anyone involved in the creative industries in the United Kingdom. One point of light at the end of the tunnel may be the Byron Report, which is due out in the coming weeks. I suspect that the report's author, Tanya Byron, is not likely to be a willing patsy for the Labour government's preferred policies. This report, with any luck, will actually set the facts straight. Whether that will be enough to get videogames off the hook as Labour desperately seeks to rebuild its public image, however, remains to be seen.


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Fri, 29 Feb 2008

That blu-ray thing

No Hollow Victory

It's been a long time since any industry pundit was willing to bet on the success of Toshiba's HD-DVD, but the protracted war over the future of high-definition content delivery continued regardless. Staggering and limping its way through a litany of awful sales figures and high-profile studio defections, HD-DVD was the zombie format - struck with lethal blows from all sides, but refusing to fall down and stop twitching all the same.

This week brought merciful respite, and the end, when it came, was swift. Months of horrible news for HD-DVD snowballed into an unstoppable force after its studio support crumbled just before January's Consumer Entertainment Show. A month and a half later, Toshiba has finally pulled the plug - cutting the format's life support off and consigning it to history's gallery of noble technological failures.

The reason for HD-DVD's continued staggering across the battlefield, mortal wounds notwithstanding, has been well aired by now. Although ostensibly a Toshiba-backed format, HD-DVD's most staunch ally in the past year has been Microsoft. Its HD-DVD add-on for the Xbox 360 accounts for around a third of total sales of HD-DVD players, and there have been credible reports that the format's studio support was being propped up by co-marketing deals funded from Microsoft's expansive purse.

Microsoft's objective in all of this was simply to prolong the agony of the high-definition format war. Divide and conquer has been a strategy that has served Microsoft well over the years, and its ambitions with regard to high definition content are very clear. Although it sells technology used by both the Blu-Ray and HD-DVD formats, Microsoft's hope is that consumers will ultimately spurn both formats in favour of downloading HD content - preferably through Microsoft's own services, like Xbox Live. If achieving that means fermenting a format war that damages consumer confidence in both sides, so be it.

So just how much damage has HD-DVD's zombie act done to the prospects for high definition disc formats? Has it bought enough time for HD downloads to become a realistic prospect for consumers, or even for the concept to start to take root in their imaginations?

I'm not convinced that it has. Blu-Ray's victory comes early enough not to be a pyrrhic one - and there are strong signs to suggest that although downloads are beginning to earn their place in the HD content market, there will be at least another healthy generation of disc-based distribution before the world is ready to go entirely digital.

The problem which HD downloads face is simply that the market is not yet ready for them. Broadband connections even in relatively developed countries like the United Kingdom simply aren't up to the speeds required for multi-gigabyte downloads of movie content. Although speeds of 25 and even 50 megabits are advertised by some providers, the reality for UK consumers is that their broadband probably runs at somewhere between 2 and 5 megabits - and much, much lower in certain areas. With some notable exceptions, much of the rest of the world is in the same boat; the reality of broadband lags behind its promise.

Consumers, too, aren't quite ready for download content. I don't doubt that they will be, and sooner than many pundits believe - the attachment to physical products is not remotely as strong as some high street retailers and content publishers would like to think, as the incredibly fast transition from CD to music downloads is proving. However, we're simply not quite there yet, and it certainly doesn't help that few consumers are sporting home networks and properly configured media servers, replete with large hard drives, in their living rooms. Equally, it doesn't help that while consumers may be prepared to shed their attachment to physical products, they're still not going to give much ground on the question of ownership - and rental models where movies "time out" after a certain period, or can only be watched a certain number of times, are likely to prove to have very narrow appeal.

This isn't to say that HD downloads won't form a part of the video content market going forward - indeed, I suspect that the landscape of the next ten years will be much more varied than the DVD-dominated market of the last decade. Downloads, existing DVDs and Blu-Ray will all have roles to play in this market - but the important news for Sony, and arguably for the games industry as a whole, is that Blu-Ray certainly does have a role in this landscape, and a very important one at that.

Challenges remain, of course; Blu-Ray's prices need to come down, both for hardware and software, before it can seriously start challenging sales of DVDs, but already figures for the uptake of key Blu-Ray titles are encouraging. Most of all, it's clear that Sony's "trojan horse" strategy has worked. With over ten million PS3s sold through, Blu-Ray's installed base from that console alone was more than ten times the total HD-DVD installed base - and even if many of those users don't buy too many Blu-Ray films, it still represents a very healthy potential market for the format.

It's not fair, perhaps, to say that Microsoft's gambit has failed. If Blu-Ray had become established a year earlier, it would have been a serious blow to the Xbox 360, and to Microsoft's ambitions both in downloads and in videogames. On the other hand, Sony can heave a sigh of relief that the damage done has been fairly limited - and can undoubtedly expect a major boost both for PS3 sales and for its share price off the back of Toshiba's capitulation.

It's also worth noting that for the media market as a whole - from consumer electronics through movies to games - the final end of HD-DVD means the end of a major source of confusion over high definition. Spurred on by strong sales of HD television, 2008 can at last become what every year since 2005 has been predicted to be by various analysts and commentators; the long-delayed year when high definition finally takes its place at the head of the table.


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Tue, 05 Feb 2008

Behind the biz curtain

A Question of Size

It's not terribly long since THQ looked like one of the best growth prospects in the publishing sector. With a new commitment to quality, a determination to build new IP and a strong pool of publishing and management talent, the company's stock was cautiously tipped as a grower - and it's certainly not an assessment I'd have disagreed with. The acrimonious divisions that developed between the publisher and the WWE wrestling body from whom many of its successful franchises had been licensed seemed to have been a wake-up call for THQ regarding its reliance on externally owned IP, and the future looked bright.

Now, I remain a firm believer in THQ's abilities as a publisher - and I think that games like STALKER and Company of Heroes have done a great deal to boost the value of the brand among gamers. By no means is it time to start writing obituaries for the firm. However, it's tough to spin this week's news in a positive light.

THQ has been forced to can a pair of racing franchises - Juiced and Stuntman, both of which the firm acquired from other publishers with a view to expanding its market share in racing - alongside a pair of unannounced titles, the PS3 SKU of the upcoming Frontlines title, and the PS2 SKU of the new Destroy All Humans game. In total, the firm expects to suck in around $27 million in charges related to the cancellations - and to close an entire studio, Concrete Games, which was working on an unannounced title.

It's tempting to see this as a crisis for THQ, which has also just downgraded its Q4 expectations due to game delays, and reported the underperformance of licensed titles Ratatouille and Conan. However, a wider view reveals that it's not just THQ that's facing trouble. This malaise extends to almost every mid-range publisher in the market.

Tomb Raider publisher Eidos is perhaps the most high profile victim in recent weeks. Talks with a takeover suitor collapsed, and with it the firm's value on the stock market - followed promptly by the resignation of the company's top management. It's worth noting that the management themselves only arrived at Eidos after a takeover, having manoeuvred plucky British publisher SCi into position to take over its larger rival only a few years ago.

One company regularly mentioned as a potential Eidos suitor is Midway - another mid-level publisher, big enough to run franchises like Unreal Tournament and John Woo's Stranglehold, but unlikely to give the big boys of the market any headaches in the near future. Midway, too, is struggling to some extent; it hasn't posted a profit since 1999, and has had to rethink its publishing strategy for 2008 in the face of the weak reception for its titles this year.

These companies are the publishing B-list - they sit somewhere behind Electronic Arts, Ubisoft and their ilk, but have well-established sales, distribution and marketing operations, strong relationships with buyers and media, and enough muscle to sign promising titles from top developers. So what's going wrong?

Well, in each instance, there's a rather different set of factors contributing to the individual problems of that publisher - but I think those problems may, to some extent, be symptomatic of a change which is being forced into the industry by the next generation transition. Put simply, as games get more expensive for developers, publishers and consumers alike, the challenges of managing huge teams and huge budgets mount up - and it gets increasingly hard for a mid-level company to compete with the industry's giants on a level playing field.

This happens to every media sector at some point in their history. How many big film distributors are there? Break it down by removing the child companies (such as Columbia Tristar and MGM, both of which belong to Sony Pictures) and you end up with about five or six corporations controlling the lion's share of the market. Music is even more centralised - what was once a thriving market of small publishers has been centralised into four major corporations.

The cost and risk of being involved in the games business took a huge step up when the Xbox 360 and PS3 arrived, and the problems faced by mid-level publishers could be the early symptoms of a major storm that will only be weathered by firms with sufficient scale to survive.

Big companies face problems with being nimble and able to react, and they often have difficulty controlling their costs - just ask EA, whose development costs have grown at a rate far faster than its revenues in recent years. However, they can also offer better deals for developers, better incentives for distributors and retailers, and more lavish PR to attract media coverage. They can better afford to take risks, can more readily absorb losses from unsuccessful products, and their promise of higher salaries, better benefits and more job security often attracts the cream of the crop in terms of staff.

Such advantages spell problems for mid-level companies - and they certainly make it foolhardy to try and compete on a level playing field against them. Witness how badly Take Two was stung when it tried to challenge EA's dominance of sports titles a couple of years ago. THQ's attempt to hurl its racing franchises against the might of Burnout and Need for Speed hasn't resulted in such a public defeat, but it's unlikely to sting any less for that.

What can smaller firms do, faced with this situation? They have, I suspect, two options in front of them. They can do what small companies in music and movies do, and focus their efforts on original IP and niche markets - taking risks on artistic products that could win a discerning audience, or focusing on titles with a proven market that's too small for EA to bother with.

The second option is, perhaps, more attractive - but might be even harder to implement. That option is to get bigger, and the only way to do that quickly is through mergers and acquisitions. Activision Blizzard isn't the first merged firm to be created to try and achieve scale in this market, and we doubt it'll be the last - and for the likes of THQ, Midway and Eidos, deals like that could be crucial to their future survival.

It's unlikely that any of the people who run mid-range publishers are unaware of these pressures. Backroom discussions about mergers or direction changes are undoubtedly ongoing at most of them right now. The questions I'm wondering about is whether 2008 will be the year of industry mergers and acquisitions; and if not, whether 2009 will be too little, too late.


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Mon, 03 Dec 2007

Games at Christmas

Six of One...

Retailers across Britain have been piling up tinsel, trees and selection boxes in their stores since late September - earlier, I'm told by complaining Scrooges, than any other year before, and certainly early enough that many of us have tried stoically to ignore them for over a month now. However, we've reached the point where even the most festive-averse among us can't deny it. Christmas is, indubitably, coming.

Oxford Street and Regent Street, the prime shopping streets of London and hence of the British Isles, told the tale last weekend. Not yet December, and already the streets were packed like sardines on a Sunday afternoon, as hapless consumers ventured out in the mistaken belief that they'd be early enough to avoid the crowds. Christmas is coming - and while I can only take the word of the old nursery rhyme that the geese are getting fat, the loud ringing of tills up and down the country provides assurance that the pockets of retailers, distributors and publishers alike are certainly piling on the pounds.

In the last half-decade, there has been a welcome rebalancing of the games industry's financial years, which have finally stopped being quite so ludicrously heavily focused on the October to December quarter at the expense of long, barren months around summer time. Despite this, the Christmas season is still a vitally important time. The incredible pace of weekly releases since late September is evidence of this; the long waiting lists for Wii hardware, and dwindling stocks of other consoles such as the PSP, are further proof.

Therefore this is a timely moment to look through the releases of the present quarter and consider just what impact they're going to have on the marketplace - be that on the success of retail sales in the coming weeks, or simply on the bottom lines of their publishers.

As such, has created a shortlist of the most important titles on retail shelves in Britain this holiday season. Over the space of two columns, I'll be talking through a dozen of those titles - starting today with the first six, the more hardcore titles which will be pulling in the key gaming demographic between now and Christmas Eve.

Crossing the Divide

It won't come as a surprise to anyone that this shortlist is dominated by cross-platform titles. While the last generation was a clear victory for Sony's PlayStation 2, the emergence of cross-platform releases as the industry's default was one of the most important trends to come out of that era. It was always certain that this would be the case in the present generation as well; it's only Sony's laggardly movement out of the starting blocks which has slightly delayed the re-establishment of cross-platform releases.

As such, there are only two platform exclusives in the six core audience titles identified for this Christmas. Crysis, of course, is a PC exclusive - and while its high system requirements will certainly damage the overall sales potential of the game, that's not the whole story here. Many PC gamers will see Crysis as a reason to upgrade their hardware, and the amount of revenue it generates for specialist retailers will be enormous as a result - with graphics cards, memory, and even processors and full systems being sold off the back of the title. After Vista's lacklustre showing on the gaming front, this will be a welcome boost for retailers who stock hardware components alongside software.

The other exclusive on the schedule is the Xbox 360 title Mass Effect, which has had a positive critical reception and looks set to be the 360's last huge title of the year. It ends a stunning run of software for Microsoft's machine which has cemented its place as the console of choice for the core gaming audience. Carrying that reputation into a second Christmas will be a major boon for Microsoft, and Mass Effect's sales certainly won't suffer from coming in the wake of huge titles such as Bioshock and Halo 3 which have helped to drive adoption of, and interest in, the 360 platform.

Actually, there is a third exclusive on our list, albeit not one which is exclusive out of choice. Epic's Unreal Tournament 3 will not be launching on the PS3 in Europe this side of Christmas, leaving it to be released only on the PC in that timeframe. Like Crysis, it may well help to drive adoption of PC hardware upgrades; however, it is not as high profile as Crysis in the PC market, not least because it has been so heavily promoted as a PS3 title. Its delay is disappointing; however, its appearance on Sony's console next year will probably be popular with those who have picked up a PS3 over the Christmas season and are keen for new games.

That leaves three huge, third-party, cross-platform titles which will appeal to the core gaming audience - each of which seems set to be a major hit in the extremely tough, but vastly rewarding, pre-Christmas market. Activision's Call of Duty 4 has attracted rave reviews, and is picking up extremely good word of mouth recommendations - the only concern over its performance being the possibility of "first person shooter fatigue" in the market after Bioshock, Halo 3 and Valve's Half Life 2: Orange Box.

Ubisoft's Assassin's Creed, however, hasn't fared quite so well critically. There have been mixed responses to the game among reviewers - and its major audience, core gamers in their twenties, is the audience arguably most likely to pay attention to specialist press coverage. However, it's tough to see Assassin's Creed suffering terribly from reviewing poorly in the coming weeks - not least because Ubisoft's extremely high profile advertising campaign for the title is certain to drive high sales.

Finally, it's perhaps the dark horse of this list - but Eidos' Kane and Lynch: Dead Men, which arrives this week alongside Mass Effect, could be the other core gamer title that really flies off the shelves in the next four weeks. Developers IO have shown their ability to create enduring franchises in the past, and Kane and Lynch's mature, cinematic style - backed up, undoubtedly, with a strong marketing campaign - could press all the right buttons. It will help, of course, that this Christmas is unexpectedly lacking Grand Theft Auto IV - a title which should have appeared last month, and whose pent-up demand Kane and Lynch is perfectly positioned to tap into.


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Thu, 01 Nov 2007

The Education of Games

Teach Those Who Can't

Anyone who has ever wasted a significant amount of time on the Internet - and this being the games industry, it's a safe bet that most if not all of our readers are well within that demographic - has probably encountered a simple quiz called the Political Compass.

It's a popular web application which poses a number of key political statements, and asks you to mark whether you agree or disagree with them. Your answers are then plotted on a two-axis graph, which in theory tells you whether you're more Mahatma Ghandi or Margaret Thatcher in your thinking.

One aspect of the quiz which has struck me on a number of occasions is the following, presumably contentious, statement: "There is now a worrying fusion of information and entertainment."

The statement is presumably there because it represents a point on which opinions diverge significantly - but from the point of view of those embroiled with the videogames industry and its products, it's tough to see how anyone could see the union of information and entertainment as a negative, worrying thing.

However, that proposition came back to me upon reading comments from esteemed film producer and politician Lord Puttnam to the Virtual Worlds Forum this week. Speaking about the potential for developers to successfully lobby the government for state aid, Puttnam highlighted educational and cultural value as being key to this campaign.

"Build education capacity into the function of your games and you might get state aids," he told the Forum. "Otherwise you don't stand a snowball's chance in hell."

His comments aren't hugely controversial, for the most part. After all, one of the key things which has separated television and film (both relatively heavily state-aided) from videogames over the years is the fact that Westminster is sold on the concept that TV and movies can be educational. The debate over the cultural value of those media is long-over; art, expression and common sense won a resounding victory.

Videogames are still halfway through that struggle - if even that. The medium is still fighting a rearguard action against ill-informed, sensationalist attempts to turn it into a scapegoat for crime and violence. That's a battle which will probably only be won when Rupert Murdoch finally bites the bullet and buys a game publisher, a move which will undoubtedly silence the shrill hackery of outlets such as Sky News, Fox News and The Sun on this topic.

Only once that particular battle has been consigned to the graveyard of history will the industry be able to start the process of convincing government - and, indeed, society at large - of the educational and cultural value of its products.

That process in itself may be a slow one. This goes back to the Political Compass statement I mentioned earlier; the idea that the fusion of information and entertainment is seen as "worrying" by many people. Indeed, I'd go somewhat further than that - I believe that there are a great many people who simply don't believe that information (and by extension, education) and entertainment make for good bedfellows at all.

Much of this is down to a simple misunderstanding. To address Lord Puttnam's comments directly, I'd argue that many virtual worlds and massively multiplayer environments are actually very educational - just not in a straightforward manner which is easily presented to committees of people who have never experienced this kind of environment.

Be it a world overtly focused on creativity and commerce like Second Life, or one ostensibly focused on role-playing and combat like World of Warcraft, virtual worlds offer their players an opportunity to interact socially and commercially in a relatively safe, enclosed space.

These worlds feature intricate economic models in which players buy, sell and trade, where markets fluctuate and investment values can fall as well as rise.

They demand that players develop and demonstrate the ability to interact socially to accomplish goals with large groups of others, building the kind of diplomacy, leadership and teamwork skills that corporations pour countless millions into paintball venues to nurture later in life.

As virtual worlds develop and evolve, they will continue to add vastly more such opportunities to the mix. Worlds set in historical environments will educate users as they play; worlds with more advanced economic models will allow people to experiment with businesses and entrepreneurial ventures in a low-risk environment.

We will even see worlds with advanced enough content tools to allow creators to build art of many different forms in virtual environments.

None of this is blue-sky, far-future thinking. All of these things exist in forms that are far from rudimentary already, and will continue to evolve at a rapid pace in the coming years. Will this be recognised as educational, though? Will the immense cultural and social value of such progress be identified by those who make such judgements on behalf of the nation's purse-string holders?

Perhaps they will - but I confess to a degree of pessimism here. The breakneck pace of progress has smashed information, education and entertainment together, and the shape of things to come is only now emerging from the wreckage - held together with high technology, networked environments and advanced interactivity.

Given how long it has taken to convince the world that comparatively simple, linear gaming experiences are not a tool of Satan, can we really expect that virtual, networked worlds will be embraced with open arms without a massive fuss?

In other words, I think Lord Puttnam's comments, perhaps, make more sense the other way around. MMOG and virtual world creators should not be scrambling to make their games more "educational"; they are doing a fine job of that already, without even knowing it. However, they should not count too heavily on the idea of state support, either.

The state is a conservative and slow-moving beast - the job the market faces is not to make their products more educational or culturally valuable, but to demonstrate that value to people to whom these ideas might as well be in a science fiction novel.

I feel fairly strongly that the idea of state aid for a sector such as this is a bit of a white elephant. Cutting edge online and games technology is a front that moves far faster than the public sector can keep up; the focus now, as ever, must be on the pace of progress, rather than on trying to bring the mandarins of Westminster along for the ride.


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Sat, 29 Sep 2007

The Halo Effect

There's almost a sense of festival around the launch of Bungie's long-awaited Xbox 360 iteration of the Halo franchise. We won't see official sales figures for the UK (or, indeed, most other territories) until next week, but Microsoft's Shane Kim already seems on the verge of exploding with joy over $170 million first day sales in the USA, with various retailers also being rolled out to express how ecstatic they are over the figures.

Suffice it to say, then, that Halo 3 has done really rather well - critically, it has scored over 90% from almost every specialist publication in the Western world, and commercially, it seems certain that its launch day is the biggest ever recorded by a videogame.

Consequentially, it may well be the biggest launch day for any media product in history - although the caveat here is that this applies only to the dollar figure. Halo 3's comparisons with other videogame products are eminently valid, but the success of the game in comparison with products in other mediums is inflated by the high price-tag of videogames.

Bring it back to actual unit sales, or the basic number of people who engage with the product on day one, and the figures don't hold up. It's wonderful that so many people are willing to go out and pay a large amount of money for a great game - but while back-slapping is certainly in order, let's not kid ourselves that this represents a "mass-market" phenomenon on the same scale as a huge movie or music release.

This is where the Halo message gets slightly confused. The game sits on a peculiar middle ground between Microsoft's two key ambitions for the Xbox platform. On one hand, the game itself is quite clearly a hardcore gamer's dream - wonderfully polished, crafted and presented it may be, but at heart it is still a heavily multiplayer focused first-person shooter where you play a space marine taking on an alien invasion. For the core audience of Xbox 360 owners, there couldn't be a finer product.

On the other hand, the "media event" status which Microsoft has carefully crafted for Halo 3 speaks volumes about the firm's desperation to break out to a more mainstream audience. Months of forward planning by the company's PR and marketing divisions has seen Halo 3 being widely reported upon in the mainstream press, with television, radio and newspaper reports focusing on launch events around the world.

In London and elsewhere, launch parties were arranged with a coterie of "celebrities" for the tabloid papers to take pictures of. The queues outside retailers were the subject of news reports, and major news outlets cast the net far and wide to try and find anyone who could explain something about the game on air. My own Halo 3 launch day started at 5am with an interview on the BBC's World Business Report - which ended with the rather bemused presenter asking earnestly (and, frankly, somewhat hopefully) whether videogames were "just a fad".

That, in a nutshell, is where the cracks start to show in the Halo 3 phenomenon. This is not a game for the mass market; it's not the kind of game that will encourage casual players or non-gamers to engage with the Xbox 360 or even with gaming in general. In fact, fantastic though it may be, it's not even really a game that will appeal to anyone who doesn't specifically enjoy the first-person shooter genre.

It is annoying, certainly, the much of the mass media has approached the launch of such an anticipated game with a "look at the crazy gamers!" tone in its coverage. It is frustrating to see features on the London launch which focus on the fact that Pharrell Williams looked "bored" rather than on the excitement of the gamers who turned up, referring to them only in condescending terms.

However, it's not surprising to see this reaction. Unlike last year's media frenzy around the Wii, the Halo 3 launch isn't something that can be easily expressed to the non-gamers who cover this subject for the mass media. The Wii is a genuinely mass-appeal product, simply because its appeal can be summed up in simple anecdotes that easily sell the features of the system to a wide audience. Halo 3, however, is a gamers' game; a refinement of a genre whose appeal is almost exclusively to existing players.

We fully understand Microsoft's desire to push the Xbox 360 into the mainstream - after all, this very column has been advocating for years the idea that the firm needs to broaden its appeal if the 360 is to break out of the market segment which the original Xbox carved. However, Halo 3 is the wrong product for the job. It is a game which will bring core gamers more firmly onto Microsoft's side than ever, but whose vast public exposure risks painting the 360 further into the "hardcore only need apply" corner.

What Microsoft needs is not more widespread exposure for an established, core gamer franchise like Halo 3. It needs a wider range of gaming experiences to engage with a wider audience - the kind of breadth and depth of software library which ultimately drove the PlayStation 2 to its immense sales in the last generation. On a positive note, we're seeing mounting evidence that this kind of software is on the way - but it remains to be seen how Microsoft plans to inform the public of this fact. Much will hinge on its ability to project a PR message effectively beyond its core audience.

In the meanwhile, none of this should detract from the undoubted enjoyment that hundreds of thousands of gamers will be experiencing this week from Halo 3. Whatever about the mixed media response or the Xbox 360's place in the market, the game itself is a triumph for Bungie, for Microsoft and for the core gaming public.

Anecdotally, we've never seen so many of our friends on Xbox Live at the same time, and all playing the same game (bar the occasional weird refusenik, of course). Gamers' enthusiasm for the franchise may leave the mainstream media cold - but that won't stop us from taking great pleasure in Finishing the Fight.


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Fri, 31 Aug 2007

The Confusion

We've discussed Sony's next-gen strategy at some length in this column before, but with each press conference, it seems that the firm's attitude to the market becomes more confusing. In the wake of yesterday's conference in Leipzig, for instance, it's as obvious as ever that Sony's main focus at present remains firmly on the PS2 and the PSP - profitable platforms with healthy installed bases and thriving software sales. This isn't surprising - indeed, we've previously attributed many of Sony's more unusual decisions with the PS3 (such as the ludicrous dance it played around the "value proposition" at E3) to a desperate need to avoid rolling over and crushing the PS2 by pushing consumers to next-gen too quickly. As such, it wasn't a surprise to see SCEE boss David Reeves devoting a fair bit of time to talking up the PS2 in Germany - and noting along the way that the venerable console continues to outsell the Xbox 360 by a large margin. That's an uncharitable stab at a rival, certainly, but also an important and sobering factor to consider in any discussion about the next-gen battle. Like the current spat between HD-DVD and Blu-ray, it's still a format war which has no relevance to the vast, vast majority of consumers, as they remain perfectly satisfied with their existing platforms. Equally, plenty of time was devoted to the PlayStation Portable, a system whose sales have been rather eclipsed by Nintendo's DS, but which has been reasonably successful in its own right - and is almost certainly very profitable for Sony. The big deal for the PSP in Leipzig, however, wasn't new games - or even the new PSP Slim And Lite hardware, which launches here in a few weeks' time. Instead, the likes of God of War, WipEout Pulse and Pursuit Force were given short shrift in favour of new "services" for the system - non-games software which Sony hopes will push the console out into new markets. So now you'll be able to use instant messenger and voice chat over wireless networks using Go! Messenger, work out travel plans and find local services on the GPS-enabled Go! Explore, and view television content from Sky on the move using yet another Go! branded service. None of this is in any way a Bad Thing, but it's an unusually scattergun approach to take with a product. Sony's strategy here, it seems, is to add functionality until a tipping point is reached where the device has enough desirable elements that consumers can use to justify the purchase to themselves. That's logical enough, but leaves very unsettled feelings about the future of the platform. The concern is that the PlayStation brand is becoming very diluted by Sony's determination to focus on things that aren't, well, Play. A similar issue exists with the PlayStation 3, and it's here that there's real confusion about Sony's intent in the market. The addition of a digital tuner and Freeview function to the console is a logical step, which allows it to act as a hard disc recorder for television - not exactly earth-shattering, since such devices can be bought for under a hundred pounds, but certainly a nice addition to the console's value. However, the focus in Leipzig zoomed in tightly on this announcement - and, curiously, on social gaming, with strong focus on next-gen iterations of Singstar and Buzz. Both of those are fantastic franchises, but it's not apparent where Sony thinks they're going on the PlayStation 3. That area of social gaming, pioneered by SCEE over the last few years, has largely been enabled by the enormous market penetration and low price point of the PlayStation 2. On the PS3, with a small installed base that hasn't even reached most of the "hardcore" market yet, such products just look out of place - and it's downright confusing as to why Sony would even want casual game fans to switch to the (loss-making) PS3 right now, ditching the (profitable) PS2 in the process. The problem here, then, isn't a million miles away from the issue perceived with the PSP. Both platforms find themselves being advertised as something that isn't a videogames console; instead, they're being pushed harder than ever as multi-function entertainment and media devices, systems which have "something for everyone" regardless of whether you're into games or not. Because of this, there's a very real risk that Sony's message will find itself trapped between a rock and a hard place. On one side, you have the traditional early adopters of PlayStation hardware - the millions of gamers who formed the core audience for the PS2, and whose influence and advocacy should not be underestimated when considering the reasons for the success of that console. If not actually neglected, those people certainly feel unloved right now, and worse, they feel that they're being asked to pay above the odds for non-gaming functions when they just want a games console. On the other side, you have the more casual, mainstream audience who adopted the PS2 late in its life - or who haven't previously owned a games console. This is a rich vein indeed, as Nintendo could attest - but Sony's mistake here is that it is attempting to leap straight into this market without first winning over the early adopters. By doing so, it is missing out on the crucial word of mouth and advocacy which it gained from the early adopter market in the last couple of generations - indeed, it is actually generating negative word of mouth, which is damaging its prospects immensely. Without that positive advocacy at a grass-roots level, the firm's products face a daunting prospect - trying to sell a hugely expensive PlayStation to people who don't want a PlayStation, and aren't even sure if they want an integrated, all-singing, all-dancing media centre. With the battle between HD-DVD and Blu-ray taking another awkward twist this week as Paramount and Dreamworks hopped back on the HD-DVD wagon (assisted ably by around USD 150 million of inducement from Microsoft, if industry scuttlebutt is considered trustworthy), Sony cannot rely on an early victory in the next-gen DVD battle to lift it out of its sales slump. Instead, it needs to focus its efforts on retaking what it foolishly assumed was its home territory - the core market of gamers who make up the bulk of sales for any console (except, perhaps, the Wii) in its first two years on the market. This week saw Microsoft drop its price points and begin the first of the massive software launches which will carry it through to Christmas. Certainly, there is a question mark over Microsoft's ability to continue the momentum of the Xbox 360 past the hardcore market. But ironically, while Sony demonstrates a great understanding of how to break out from hardcore adulation to mass-market success, right now the firm seems to have forgotten how to accomplish Step One. The software and services are, arguably, on the way - but the message needs to be fixed. It's time for Sony to get back to basics, and sell us again on what the PlayStation does best - Play. (

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Tue, 03 Jul 2007

Games Murder

There has been quite a commotion in the UK about Rock Star's Manhunt 2 being banned - the first computer game to be so. Mstation's stance is simple - let adults make their own choices. In other words, we don't like censorship. We also believe kids should be protected against what feral adults might like, and so there needs to be a classification system and there need to be responsible adults.

In the UK, at least, there seem to be plenty of completely irresponsible adults and, in addition to that, there's plenty of evidence to suggest that the 18+ classification is widely ignored in shops.

It's a problem - a societal problem. Clearly some people need a little more education about looking after their children for one thing. And as for Rockstar, they've been playing this bottom-of-the-barrel game for ages now and deserved the very expensive lesson dished out to them in both USA and the UK.

But wait, there's more! ...

Sick Filth?

You'll have to forgive the British tabloid press for seeming a little bit out of sorts this week. Normally slavering at the mouth at the first sign of a violent videogame being condemned, the low brow red tops have had their noses put out of joint after being utterly pre-empted by the British Board of Film Classification.

After all, "Ban This Sick Filth" makes for a wonderful headline. "Some Sick Filth Has Been Banned", however, looks a touch limp, no matter how big you make the letters.

Tuesday's announcement that the BBFC has denied a rating to Rockstar Games' Manhunt 2 represents a new stage in the debate over violence in videogames. It is the first time that a videogame has been denied a rating since Carmageddon suffered a similar fate ten years ago - although Carmageddon's publisher, SCi, successfully appealed that decision.

I ought to say, at this point, that I am deeply uncomfortable with the fact that the BBFC - an organisation whose very name suggests classification, rather than censorship - should be in a position to make a decision like this.

British consumers and commentators have regularly noted that Germany has a particularly censorious regime surrounding videogames, and that the United States has an astonishing tendency to outrage over even the mildest sexual content. The irony is that neither of those countries actually censor videogames, in the strict sense of the word.

The German authorities can refuse a rating, which prevents a game from being advertised but doesn't stop it from being sold. In the US, an outcry over a game may cause some large retailers, such as Wal-Mart, to withdraw it from shelves. However, in neither country can a game actually be banned.

In the UK, however, despite a generally liberal attitude to media and all forms of artistic expression, free speech does not enjoy the same legal protections which it is afforded across the Atlantic. The result is that the BBFC's refusal to certify Manhunt 2 means that it is now entirely illegal to sell the game in this country.

Concerns over the mechanism of censorship, however, are secondary in this instance. In the US, after all, Manhunt 2 has been "banned" just as effectively by the actions of the videogames industry itself. The ESRB, a voluntary ratings board, has classified the game as Adults Only, and Sony and Nintendo have therefore refused to license it for sale on their systems.

This is a voluntary, internal industry process of self-censorship which is far more laudable than externally imposed censorship - but nonetheless, the effect for consumers is the same. Manhunt 2 is banned, on both sides of the Atlantic.

What's more important, if somewhat less comfortable a topic for discussion, is the question of why this game has been banned. The BBFC, after all, has not exactly been the most censorious of organisations in the last decade.

The organisation has largely kept pace with changing social mores and an increasingly liberal view of art and media in the UK, and has in fact been a staunch supporter of the right of videogames to move into areas of mature, adult content more commonly associated with older mediums like film.

In the case of the Hot Coffee scandal, for example, a ridiculous storm which threatened to shatter teacups across the USA, the BBFC rather sensibly opined that the tame sexual content revealed by the Hot Coffee mod did nothing to change their view that Grand Theft Auto: San Andreas was perfectly fit for consumption with an 18 rating.

Indeed, comparing the BBFC of now with the BBFC which reacted so strongly to Carmageddon in 1997 clearly displays the progress made in attitudes within the organisation. It seems almost certain that were Carmageddon to come before the BBFC censors today, it would pass, uncut, without the blink of an eye. We even suspect that it wouldn't garner an 18 rating in today's vastly more accepting climate.

The point here is this; Manhunt 2 is not merely the first game to be banned by the BBFC in a decade. It is also the only game to be banned by the organisation since its liberalisation.

It is a game which has been judged as being simply too cruel, callous, unpleasant and disgusting to be granted a classification, in an era when films like James Wan's Saw series and Eli Roth's Hostel make it into cinemas without even a ripple of attention - either from censors or from the tabloids.

This isn't a case of knee-jerk reaction to the controversy surrounding the first game; it's well known by now that the links made between Manhunt and the murder of a teenager in Leicestershire were tenuous at best, and weren't supported by police investigating the case.

Besides which, the BBFC doesn't succumb to knee-jerk reactions. Nor is this a case of videogames being discriminated against in classification due to being a "new" medium, and the whipping boy du jour of the conservative media. Time and time again, the BBFC has shown that it understands and respects videogames.

Our discomfort at the fact that the board has the capacity to censor at all has been allayed, for the most part, by the incredibly sparing, informed and judicious use of that capability which it has exercised in recent years.

In other words, with Manhunt 2, Rockstar has crossed the line - and crossed it at a full tilt run, it would seem, since the BBFC was unable to suggest any cuts that would bring the game in line with its guidelines.

"Unremitting bleakness and callousness of tone in an overall game context which constantly encourages visceral killing with exceptionally little alleviation or distancing" is the key reason given for the ban; we would encourage readers to recall that this is judgement of a classification board which has happily classified Hostel and Saw, and indeed, the first Manhunt game.

One commonly heard argument is that being a Wii, PSP and PS2 title, it's impossible that Manhunt 2 could have the same level of realistic gore and violence seen in live-action movies like the aforementioned Hostel. However, this is an excessively simplistic way of looking at the violence contained in games like this.

It's crucial to consider that in gory films like Saw and Hostel, the viewer is placed at best in the role of an outside observer; at worst, they are given the viewpoint of the victim, a technique used by filmmakers to heighten the discomfort and reactions of the audience.

In a game like Manhunt 2, however, the player is in the role not of the hunted, or of the victim (as they are in, for example, survival horror type games); instead, they take on the role of the predator, of the serial killer, of the murderer who enjoys inflicting pain and torture.

There are certain parallels for this in literature, of course - Brett Easton Ellis' American Psycho and Iain Banks' Complicity both deal, in very different ways, with murderers portrayed in the first person.

However, the clear opinion of the BBFC - and presumably of the ESRB - is that Manhunt 2 doesn't represent the sort of insightful commentary represented by those works. This is killing, maiming and torturing for the sake of it; this may, in fact, be the game which lives up to the shrill claims of the conservative wing that games are "murder simulators".

In making such a game Rockstar has been juvenile, shameful and irresponsible. The right of creators to push the boundaries of media and society must be balanced out against a simple sense of social responsibility - something with Rockstar seems to entirely lack.

This will be seen in some quarters as a question of being the enfant terrible of the games industry, a reputation which the firm seems to relish; however, I disagree with that assessment.

At several points along the line, during the development of Manhunt 2, people in management at Rockstar and Take Two have surveyed this product and made a decision, based on pure financial logic, to continue funding its development. This is not a question of art; this is a game which, it was decided, would sell well as a commercial product.

That decision has now backfired spectacularly on Rockstar and its parent company - and while we may be uncomfortable with the way in which the game has been censored in the UK, the rapid and effective self-censorship applied by the industry in the United States is laudable.

Videogames are not murder simulators; the vast, vast bulk of the attacks by the conservative right on the videogame medium have absolutely no merit, and are based simply in a pathetic attempt to find a scapegoat for wider societal problems.

Unfortunately, Rockstar seemed to view the accusations levelled at this industry, and at this medium, as a challenge. With even the mostly liberal minds in the BBFC apparently horrified, the message here should be clear; the videogames industry as a whole doesn't condone the overreactions we've witnessed in the media and among politicians in recent years, but it fully understands where lines must be drawn.

The fact that videogames are not murder simulators is a solid defence against the attacks of the conservative right; it is not an indication of a gap in the market. Perhaps now, with an entire development budget down the drain, Rockstar will be receptive to that lesson.


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Sat, 02 Jun 2007

Microsoft's Xbox 360: seeing red

Rings of Red

Microsoft needs to act now on hardware failures - or risk losing consumer support.

With all the accolades presently being paid to Nintendo for the astonishing success of the DS and the Wii, it's understandable that Microsoft occasionally seems a bit put out by the whole situation. After all, the Xbox 360 sailed through the seemingly ambitious 10 million unit goal which was set for its first year or so on the market, and is outdoing Sony's PS3 in most markets - a situation which few would have dared to predict only a few years ago.

Given the circumstances, it's not hard to see why some more ill-advised comments from Microsoft executives regarding the Wii have seemed... Well, a touch bitter. Right now, Microsoft must feel like the kid who stayed up all night learning all the best combos in Street Fighter, only to arrive in school the next day and discover that everyone else in the class has decided to play marbles instead.

Nintendo's resurgence, however, doesn't really detract from Microsoft's success in real terms. Right now, the Xbox 360 is winning the battle which it set out to win - namely, the battle with Sony's PS3 - and is showing no sign of relinquishing its dominance of the "real" next-gen market.

I have always argued that this fight was Sony's to lose, and that remains the case; what's happened here is that Sony has slipped up badly enough, and fallen hard enough, to give Microsoft a clear shot at goal. The problematic PR, delayed launch and presently weak software line-up for PS3 are all fairly major concerns; the enormous price point, however, is the most serious issue.

Prior to launch, plenty of people questioned whether the market would support that pricing level - Blu-ray drive or not. The answer has returned, loud and clear; no, the market will not support this price point. Every day that Sony leaves the PS3 on the shelves with this unattractive price tag attached gives its rivals more of a head start.

With flawless execution, Microsoft could sail into the space which is being left by Sony's failures and build an Xbox 360 market share which would be practically unassailable. In some regards, that's exactly what it has done. Nobody can downplay the company's astonishing achievements with regard to software; the Xbox 360 has a compelling line-up of software on shelves, and an even more compelling line-up of exclusive titles in the pipeline.

Games like Halo 3, Bioshock and Mass Effect make Xbox 360 owners feel good about their purchase, and provide compelling reasons for Xbox and PlayStation 2 owners to upgrade. Indeed, in the top ten Most Wanted games chart compiled from user data on's sister site,, seven of the top ten titles are Xbox 360 games. Two Wii titles (Super Mario Galaxy and Super Paper Mario) make it into the ranking; only one PS3 title, Metal Gear Solid 4, appears.

It's obvious, then, that Microsoft is doing more than just making headway with the hardcore audience. Frankly, that battle is all but won, and the onus is now on Sony to demonstrate that it is capable of creating an offering for hardcore gamers that is as attractive as the one Microsoft has crafted.

The obvious criticism - which is no less true for being so obvious - is that there's precious little evidence of Microsoft's software line-up managing to break out of that hardcore market. The company still lacks not only the kind of Singstar, Eye Toy and Buzz titles which drive casual market adoption, but also the Final Fantasies and Tekkens which appeal to the vast mass of "average" gamers who lie outside the hardcore market Xbox 360 has so far exploited.

This is, at least, a well-understood problem, and one which is widely commented upon. It has, of course, done nothing to slow down Microsoft's race to ten million; but it may make the next ten million a lot harder to sell, and the following ten million almost impossible, if the issue is not addressed.

However, there is another problem which Microsoft faces at the moment - one which the company has shown even less sign of understanding, or addressing. It is the problem of hardware reliability and customer service, an area in which the Xbox 360 has a track record that is nothing short of utterly appalling - and an area which Microsoft absolutely must address, or risk handing the goodwill of the market back to its rivals.

Of course, this too is not a new problem. Microsoft has been slammed over the failure rate of Xbox 360 consoles, and its own poor customer service in dealing with that matter, many times before - British readers will undoubtedly recall that the firm was hauled over the coals on the Watchdog programme here only a few months ago.

This problem hasn't gone away; in fact, from a consumer point of view, Microsoft appears to have done precisely nothing to address it. While the attention of the media may have turned to scrutiny of Sony's failings, the vast numbers of Xbox 360 owners who have been let down first by Microsoft's shoddy manufacturing, and subsequently by the company's arrogant and unfair policies with regard to customer service, have increased. Their voices are contributing to a groundswell of unrest and negative buzz which will hurt Microsoft very badly indeed if it is not addressed.

The problem is clear. A large number of Xbox 360 consoles from launch onwards have shipped with manufacturing problems which have manifested themselves in the dreaded "three red lights" - an error code displayed on the front panel which means that the console has died, and needs to be returned to Microsoft for service.

The number of systems which shipped with these problems is a matter of some debate, but it's clear that it is a far, far higher proportion than the company originally admitted. Early claims suggested that Xbox 360 consoles were only failing as often as you would expect from any piece of consumer hardware - a figure generally agreed to be around 3 per cent. However, entire batches of consoles at launch were failing en masse - and the reliability, although it improved, continued to be poor for months afterwards.

Has this been fixed? Who can say - Microsoft has certainly made no promises regarding enhanced reliability for the Xbox 360 Elite console, so it's simply impossible to judge whether new machines rolling off the production line will be any better than their predecessors. Even giving the benefit of the doubt, that still means that millions of machines from the "unreliable" period of the console's manufacturing are sitting under televisions around the world.

This, however, is only half of the problem. For a new piece of consumer hardware to display a high failure rate is damaging, but not seriously so, as long as the company has a good system in place to ensure that customers' systems are being repaired, and goodwill is being maintained.

Unfortunately, Microsoft has made two massive blunders in this regard. Firstly, it has taken to shipping refurbished systems to customers whose consoles have died - not a huge problem in itself, but the reliability of these refurbished machines is also vastly suspect, which results in anecdotal cases where gamers have returned their consoles to Microsoft three or even four times, with each subsequent console suffering the same fault after a few months. These cases make compelling "horror stories" for consumers, and have been widely disseminated.

Secondly, despite its shameful appearance on Watchdog, and being lambasted by the press over its behaviour, Microsoft continues to insist that British consumers whose consoles have failed after its 12 month warranty period must pay GBP 85 (around 125 Euro) to have the system repaired. Its customer service representatives are adamant on this point, refusing to budge even when it is pointed out that these manufacturing flaws are clearly Microsoft's responsibility under consumer law, regardless of the terms of the firm's own warranty.

For Microsoft to rectify these problems will, of course, be painful and expensive for the firm. It is also absolutely essential if its head start over Sony, and the market goodwill it has built around its brand, are to be even remotely meaningful over the coming years.

To hardcore gamers, consoles are "special case" items; they are early adopters, generally have a large disposable income, and are willing to accept all manner of problems and flaws in order to enjoy the games they want to play. However, they are a small - if vocal - market. To everyone else, to the vast ocean of consumers to whom Microsoft must now appeal, if the PlayStation brand is to be unseated, a console is just another piece of consumer electronics, and it is subject to the same standards you would expect from your DVD player, your digital camera or your toaster.

You wouldn't buy a specific DVD player, no matter how nice the feature-set, if a friend had told you that he bought one last year and had to return it to the manufacturer three times. You wouldn't buy a certain digital camera if you heard that they routinely break down after 13 months, and you have to pay around a third of the original purchase cost to have them repaired. You wouldn't buy a toaster if your friend had that model of toaster, said it made lovely toast, but every couple of months it burns the bread and has to be replaced.

Silly examples? Not in the slightest; this is exactly the thought process with which the average consumer, considering a next-gen purchase, is presented. The Xbox 360 may be a magical box of wonders to the hardcore gamers enjoying the likes of Gears of War and Crackdown, but to the rest of the world, it's just another piece of consumer electronics. If they hear horror stories about reliability and customer service, they won't buy it - end of story.

Right now, those horror stories are proliferating; the word of mouth about Xbox 360 is that the games are great, but the hardware is a nightmare. If Microsoft is serious about reaching an audience with Xbox 360 which is bigger than the 20 million units achieved by Xbox, then that simply isn't good enough. It's time for Redmond to stop burying its head in the sand over this problem, and start coming up with solutions - before its unhappy customers become one of Sony's best assets.


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Fri, 04 May 2007

Games DRM: a different world

Do the death throes of music DRM mean anything for games?

It's not exactly been the loudest revolution of all time - in fact, it's been so quiet that you might have missed it - but there has been a genuine revolution in the music industry in the last fortnight. The old order has been overthrown, and it isn't happy; a new, upstart approach, widely lauded by the public and the grass-roots, is taking its place. So far, it's been a bloodless coup, although it's hard to say how long that will last once the financial results start filtering through in the coming quarters.

Actually, it's not entirely true to say that this coup has been bloodless. There's one head rolling in the basket beneath the guillotine blade; it's ugly, unloved, and it's called DRM.

DRM, of course, is something most people in the videogames market will be familiar with at this stage. At its most basic level, DRM is just a concept - it's the idea of using encryption software to control what a user can do with a piece of media they've bought from you.

For companies treading out into the great unknown of downloadable content, DRM is a comforting safety blanket to clutch at; without it, you're giving someone a file which they could easily just pass on to one of their friends.

Needless to say, that scares companies involved in digital downloads witless - and a plethora of DRM solutions have popped up to reassure them that they're not just handing their whole business over to pirates. That's the first problem; none of those DRM solutions actually work with one another properly. You can't download music from the iTunes store and play it on a Microsoft-compatible music player, or vice versa.

That feeds into the second problem - a great, whopping, huge problem with DRM and indeed, with a lot of ham-fisted copyright protection efforts in general. Quite simply, DRM takes rights away from consumers which they are used to having with other products.

A CD has no DRM; you can sell it to someone else, you can copy it to your PC and play it on any media playing software, you can rip it to any portable music device, you can copy tracks from it to make a mix-CD for a friend.

Now, some of those uses aren't legal, and some of them even the courts seem unsure about in some jurisdictions, but that doesn't actually matter. From a real-world, grass-roots user perspective, those are the things you can do, and do easily, with a CD. You can do the same things, of course, with pirate MP3s which you download illegally.

Herein lies the rub - you can't do those things with legal, DRM-protected music. Which means that, in a bizarre twist, legal music has less actual value to consumers than illegal music.

Which is why, to a large extent, this old order had to fall. EMI was the first of the big four music companies to buckle; it's launching its music catalogue, without DRM, on stores like iTunes in the near future. Now Universal looks like it's falling in line, with a deal with Amazon to do likewise. The remaining firms, Sony and Warner, simply cannot resist the trend which their two competitors have started. Music DRM will inevitably collapse like a row of dominoes.

Why? Because eventually, it had to sink in that DRM wasn't just angering geeks with blogs - it was hurting customers, and it was providing them with a clear, logical and genuinely sensible reason not to buy legal music. All of the threats of legal action and cajoling appeals to people's better nature are meaningless if, at the end of the day, your legal product is significantly crippled compared to the illegal (but easily obtainable) alternative.

And as to the relevance of this decision to the videogames market? Well, it's both more and less relevant than it appears at first glance.

A number of commentators - mostly out in the blogosphere - have opined that this decision must, logically, have a knock-on effect on games and movies. That's not necessarily true, because those mediums (and games especially) actually come with very different consumer expectations to music.

The average consumer is very used to the idea of being able to rip his music, listen to it on multiple devices, copy it between formats and even shuffle it around to create personal playlists. Those expectations, however, don't exist for games, and only exist for a very small (but growing) number of movie consumers.

Games, in particular, are seen as products which only work on one device, which cannot be copied and cannot be modified. Under those circumstances, DRM is far less of an issue than it is with music, and the same pressures which have forced the hands of EMI and Universal simply don't exist.

However, the revolution in music DRM still has important lessons for the videogames market. All too often, videogames companies have displayed a willingness to impose copy protection measures on their software which actually seriously disadvantage or inconvenience legitimate purchasers of the product.

On the PC, in particular, copy protection has often been mismanaged to the point where playing a pirate version of a game can sometimes be a better experience - and the advent of networked consoles opens up the potential for similar mistakes to be made.

The core lesson to take away from the failure of music DRM is simple. Copy protection should inconvenience pirates - but never, ever at the expense of also inconveniencing legitimate, paying customers.

Failing at that key test is what drove the groundswell of dislike against music DRM and the companies who imposed it. Their failures should be foremost in the mind of games industry professionals as the market pushes increasingly into digital downloads and concerns over IP protection grow louder than ever. (

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