3G support for unnamed game company(s)

According to this article, some unspecified game companies are looking for 3G support from NTT DoCoMo, a major wireless carrier.  This really demonstrates how much the media is converging.

This would be a big leap from the wifi connections currently accessed by the likes of the Nintendo DS and the PS3!  So are there any hints as to who's going to adopt this technology?  

While Nintendo didn't say anything about it at the latest E3 convention, a hint may be taken from their pricing, which they're planning to raise by $50.00, and doesn't plan to make it higher for fear of limiting their market.  Does this mean that the wireless will be included for sure?  How much would it cost to include it?

Sony also has its reasons to go after 3G, being that its portable "Go" player is entirely reliant on wireless downloads, as opposed to offering the option of disks.

Another thing to consider is the service... will connection be included in the initial device price?  That's what Amazon did with the Kindle, as opposed to monthly fees.  Satoru Iwata, President of Nintendo, supposedly expressed interest in this approach...

No matter what happens though, it's good to know there will be some more overlap between the two industries.

Ratings up... but does it matter to consumers?

According to this article, quality is up and sales are down.  Not the greatest combination, so is it just the economy in play?
Already, by midyear, 4 titles have outscored even the top game of last year!  True, this area is a little subjective, but sites like metacritic are more quantitative and aggregate, and therefore (hopefully) reflect consumer opinion.

Part of this may be the trend towards bigger budgets each year per game.  Companies would rather put more eggs into fewer baskets to up their chances against a relatively small pool of other "big" releases.  This has been called the Hollywood Model.  Kind of like the "monopolistic competition" I remember learning...

But then again, the "bigger budget" approach is ultimately sabotaging the industry according to Slate.

But to go back to the score-to-sale relationship, does it really matter that much?  An earlier article discusses this.  It describes review scores as "least important" to conumers, with genre as the most important determining factor.  (This is may be one of the reasons why many mainstream games seem to be cut in thematic ruts.)  The second factor also describes this trend:  whether customers enjoyed a previous version of the game. This is probably ultimately driving the sequels.  Many companies are like Ubisoft in this regard.

But this doesn't stop the fact that sales are still down.  Maybe we should take the easy route and just blame the economy?

Activision and PC-to-TV Gaming over Xbox Live

Activision wants to get a bigger share of the revenue generated by subscription-based service, and believes it has greater room for growth if they develop a direct PC link to the internet instead of through a console.

They do have a point:  Activision's "Call of Duty 2" is the reason why 60% are on Xbox live in the first place!  And last year they played over 1.7 billion hours.  And while the revenue from the retail part of the game did go to Activision, the massive subscription base is currently all going to Microsoft instead.

The CEO of Activision, Bobby Kotick, doesn't like the walled nature of Live, and has announced that his company is actively pursuing an "open" platform with the likes of Dell ad HP.  This had initially surprised me, as I'd assumed Activision had a close relationship with the consoles.  

But, to quote him:

"We have always been platform-agnostic... [Consoles] do a very good job of supporting the gamer. If we are going to broaden our audiences, we are going to need to have other devices."

I like this idea.  I think it would also benefit the casual gamer (like myself) if pay could better scale with play, and developers/publishers can be better rewarded for making successful products.

More stringent online protections for minors?

Online gaming doesn't just mean getting on the computer anymore.  When the term "online gaming" comes up, most would probably think about MMORPG's.  However, much more than the PC can now connect to the internet and allow players to communicate and compete with strangers.  For example, the main consoles such as the PS3 also connect to the internet.  And how about mobile games?  iPhone games?

A newly-released article about the FTC's concerns can be found here.

There is already an act in effect called the "Children's Online Privacy Protection Act" (COPPA) from 1998, but many children's advocacy groups think it's out of date.  I am inclined to agree with this, as so much has changed since then. 

To directly quote their report:
"Recent developments in technology and marketing practices require that the COPPA rules be updated and clarified. When Congress passed COPPA in 1998, computers provided the only means of accessing websites and online services. Today, adults and children have many other ways to access the Internet and online services including mobile phones, gaming consoles, and interactive television. In addition, marketers have developed very sophisticated methods of collecting data and are using that data to target individuals with personalized marketing messages. These developments have increased the risks to children's privacy."
(The full article can be found here.)

Some other groups are talking about fixing this problem through requiring children to enter credit card numbers just to verify their age, or even going as far as to issue.  They also want to redefine what constitutes a "children's" website, and re-define what's considered to be "personal information" (such as IP address, zip code, and gender).

The group acknowledges that there are already parental protection devices in place, but apparently they don't believe parents can keep up with the rapidly changing technology.  

I find myself siding more with the Progress and Freedom Foundation, however, who believe these regulations are unrealistic, especially if 17-year-olds are put under the same restrictions as 7 year olds!  (I played WoW when I was 17, and had the common sense to keep personal information to myself.  If anyone else of that age gives out such information, it's because they WANT to, and no "restriction" is going to keep them from divulging it directly through the game's chat circuits.  And forcing them not to give out that information would also be a violation of freedom of speech.)

So what does this mean for the business?  Will government regulation on "children's data" hamper the industry?  What concerns me is that many websites stay afloat by gathering data to customize advertising.  Because this information runs through automated systems (usually, anyway), then is the child's privacy truly compromised?  Provided that no 3rd party user has access to this information, I would hope that children wouldn't be "blocked from access".

Location, Location, Location: The politics of tax incentives when development is global...

Making headlines in several locations is the UK's decision to discontinue its plan to provide tax breaks for game developers, making locations like Canada, Singapore, and eastern Europe more appealing.  This is a shame for the industry as a whole, as the UK is known to be a big talent hotspot for the industry.

Here's one of the articles.  Apparently, Activision Blizzard, the biggest game publisher (and one of my stocks) is not going to invest in the UK after this decision, as well as other companies with large pools of developers such as Sony.  (Sony will carry out its existing plans, but will likely not open anything new.)

After a little digging, I found this article from a year ago, addressing Britain's praise and encouragement for the industry.  You can then see when the labour party announced tax incentives here.  So what SHOULD it have done?  Was the government right to repeal the tax breaks?  Personally, I'm not for governments making decisions on what "deserves" to be encouraged by providing artificial incentives, so I can see the appeal of repealing the tax break, despite the game industry lobbies in the country.  How do they really determine value that warrants millions of dollars in tax incentives?  Who can truly judge this fairly?  I think where perhaps they went wrong was promising the incentives in the first place.

Perhaps the UK government was thinking along the lines of bait-and-switch:  attract foreign investors, then pull out support once they're already tied up in the industry?  It was also political:  The labour party wants to provide the incentives, and the conservative does not.  But it's a little more fluid than that.

I think this article is important because it has bearing in how this business does business in the 21st century.  It's becoming fluid and global like so many other spheres.  (True, it's not the same as a factory job, where the challenges lie more in facilities than specific education.)  Moving and investing in cheaper areas is relatively easy, causing governments to proactively try to keep certain things they deem valuable.

Sounds like a familiar pattern...

Xbox 360 is over the hill

So right after the previous news about the PS3 breaking even, we see that the Xbox is now on the "downside of its life cycle."  And this is after the analysis that it's a better performer than the PS3 (though I know this is a controversial opinion).

So what exactly determines the "life cycle" of a console?  I'd be guessing that it's pretty simple:  software capabilities always seem to be out-pacing hardware, and Moore's Law applies just as much to consoles as to PC's.  So the goal of these companies is to return the initial investment, and make enough to develop the next generation, all the while

What I surmised from the article was that Microsoft is trying to use the kinect system (as I wrote about earlier) as a proxy to "extend the life" of the 360, especially to appeal to casual and social gamers (virtual pets, parties, fitness games).

According to DFC (a game industry researcher), this is going to be difficult for Microsoft, as they're not an "entertainment company" by nature.  This confused me though, because it HAS gotten this far.

For the "Big 3" as a whole, the target is to "push them through" for a couple more years to and make up on the investment for their initial development (and as we know, the PS3 has only just started breaking even), and to mwork kon the next big thing.  So I'd predict that the Xbox (as well as the Wii and PS3) have maybe... 3 years left at the most?

Again, all the console talk makes me think that it would definitely be better to be a 3rd party developer.

PS3 Hardware FINALLY breaks even

Shuhei Yoshida, head of Sony Computer Entertainment Worldwide Studios

Check out this article.  Yoshida says they're finally breaking even on hardware sales (but he said nothing about net gains, just current ones.  I'm guessing they've still "lost" money as a whole.

Many claimed that the PS3 was NOT ready to enter the market, but was released anyway to compete with the Wii and new Xbox.  (I remember internet communities making fun of the initial $599 pricetag to no end during the time.

People also knew it would sell at a loss back in 2005.  Part of the culprit for this pricetag was for Blu-ray support (disc drive category), and processor.

So was this extra investment worth it?  A lead programmer for both platforms says the following:

"Performance: On paper, the PS3 is more powerful. In reality, it's quite inferior to the 360. Without getting into too many details, the three general-purpose CPU's thexbox360 has are currently FAR easier to take advantage of than the SPU's on the PS3. I suspect a few years down the road some high budget, first party PS3 exclusive titles will come out that really take advantage of the SPU's and do things the XBOX 360 can't, but I don't think the console is worth buying based on this speculation (for some it will be though, we'll have to wait and see how these games turn out)."

And whether it was about performance, price, or something else, Xbox HAS sold more consoles this far.

So did Sony make a mistake in stuffing its console and selling at loss?

Supposedly the approach of getting an early foothold at the expense of profit isn't new.

I think there's something smart about this move though.  The people scrambling to purchase a console when it first came out in late 2006 were likely the types who were willing to pay more than the average "casual" gamer.  It also gave Sony a good deal of leverage/wiggle room to make future, lower priced hardware releases seem like a really good deal.

So what does it mean for investing in this market?  My gut would say it's better to invest in software companies, instead of the oens that make the hardware AND software, as the 3rd party ones don't have to worry about offsetting the cost of selling at a loss.  OR is there a tactical advantage for developing software as part of the same company making the hardware?  Does this put Sony of Microsoft programmers in a better position to take advantage of their console than third party ones?  Perhaps it all balances out...