Games publisher EA believes things will turn around for the company next year. This year has been pretty unpleasant for the company after its trusted DRM sunk its flagship SimCity release.
But Electronic Arts seems to think that is all behind it and has forecast fiscal 2014 earnings above Wall Street’s expectations. EA has been cutting staff and reorganizing studios in recent months to embrace new game platforms. It is preparing a new batch of games including the latest installment of its “Battlefield” shooter game franchise.
Digital revenue, from mobile games, online offerings and other newer sales channels, rose 45 percent year-over-year to $618 million, larger than EA’s packaged goods business in the fourth quarter ended on March 31. It thinks that consumers have held back from buying hardware and software as they await new versions of Sony’s PlayStation and Microsoft Xbox expected later this year.
The video game maker forecast revenue of $4 billion, in line with Wall Street’s expectations. Weakness in the packaged games market dented revenue, but EA recognized $120 million of deferred payments from its “Battlefield Premium” service in the fourth quarter.
For the latest quarter, total revenue declined to $1.2 billion from $1.37 billion a year ago. Adjusted revenue rose 6.4 percent to $1.04 billion over the same period, barely beating analysts’ average estimate of $1.03 billion.
Net income fell to $323 million from $400 million last year.
The Pentagon has cleared BlackBerry and Samsung mobile devices for use on Defense Department networks, a step toward broadening the military’s variety of technology equipment makers while still ensuring communications security.
Lieutenant Colonel Damien Pickart, a Pentagon spokesman, said the department cleared the use of BlackBerry 10 smart phones and BlackBerry PlayBook tablets using its Enterprise Service 10 system, as well as Samsung’s Android Knox.
“This is a significant step towards establishing a multi-vendor environment that supports a variety of state-of-the-art devices and operating systems,” Pickart said in a statement.
The Pentagon said last Wednesday it also expected to clear Apple mobile devices using the iOS 6 system at some point in early May.
The move to open up Defense Department networks is expected to set the stage for an intensified struggle for Pentagon customers among BlackBerry devices, Apple’s iPhones or iPads and units using Google’s Android platform such as Samsung Electronics’ phones.
The Pentagon currently has some 600,000 users of smart phones, computer tablets and other mobile devices. The department has 470,000 BlackBerry users, 41,000 Apple users and 8,700 people with Android devices. Most Apple and Android systems are in pilot or test programs.
The move to open up the networks to a broader array of mobile devices is part of a Pentagon effort to ensure the military has access to the latest communications technology without locking itself in to a particular equipment vendor.
To ensure security, mobile devices and operating systems go through a security review process approved by the Defense Information Systems Agency. Once their Security Technical Implementation Guide – or STIG – is reviewed and approved, the devices can be used on the network.
Six years after the sale of the first iPhone and 14 years after the first BlackBerry email pager was debuted, smartphone shipments have outnumbered sales of other types of mobile phones, according to IDC.
IDC said 216.2 million smartphones were shipped globally in the first quarter of 2013. The smartphone total accounted for 51.6% of all mobile phones shipped.
Shipments of other mobile phones, which IDC calls feature phones, totaled 202.4 million in the quarter. Total shipments of all mobile phones was 418.6 million, IDC said.
“The balance of smartphone power has shifted,” said IDC analyst Kevin Restivo in a statement. “Phone users want computers in their pockets. The days when phones were used primarily to make phone calls and send text messages are quickly fading away.”
IDC also noted the emergence of China-based companies, including Huawei, ZTE, Coolpad and Lenovo, among the leading smartphone vendors, .
Those newcomers and others have displaced longtime mobile phone leaders Nokia from Finland, BlackBerry from Canada, and HTC from Taiwan, in the list of top five smartphone makers, IDC said.
BlackBerry was producing what was essentially a smartphone before Apple introduced the iPhone in June 2007.
The first BlackBerry device was an email pager, introduced in 1999. Those devices were subsequently combined with voice calling.
Nokia has long been a top producer of mobile phones, though it slipped off the top five list for the first quarter.
A year ago, it was common to see previous market leaders Nokia, BlackBerry and HTC among the top five, said Ramon Llamas, an analyst at IDC.
IDC ranked the top five smartphone vendors in the first quarter as: Samsung (70.7%); Apple (37.4); LG (10.3%); Huawei (9.9%); ZTE (9.1%). The rest made up 36.4% of the market.
IDC ranked the top five vendors of feature phones and smartphones combined as: Samsung (27.5%); Nokia (14.8%); Apple (8.9%); LG (3.7%) and ZTE (3.2%). All others combined to hold 41.9% of the market.
The subscription-based GoToWebcast allows users to broadcast unlimited audio and video presentations to live and on-demand audiences that can access them using mobile devices such as Apple’s iPhones and iPads, or Android-based smartphones and tablets.
To simplify administration, GoToWebcast has a five-step wizard that walks users through setting up their event. Users are first asked to schedule the event, including deciding audience size and if the web cast should be available on-demand or live with an archive. Users are then asked to select registration alternatives, multimedia options, choose what content to upload and finally decide on security and email settings.
In addition to audio and video, users can upload presentation documents, chat with attendees, conduct polls and link to social media channels. Citrix didn’t announce any pricing for the new service, only saying that users pay a fixed monthly fee.
The company also released a beta version of GoToWebinar with HDFaces for the 500- and 1,000-attendee plans. HDFaces is a video conferencing technology that lets up to six presenters lead interactive Q&A sessions, host panel discussions, or do demonstrations in high-definition.
The announcement comes after the recently announced availability of HDFaces for up to 100 participants in GoToWebinar and GoToTraining sessions, as Citrix adds high-definition video across its GoTo portfolio.
The company reported first-quarter sales of US$7.63 billion, down 20 percent year-on-year, and a net loss of $272 million, smaller than the year-earlier loss of $928 million.
Nokia sold a total of 61.9 million mobile phones during the first quarter, of which 6.1 million were smartphones (including 5.6 million Lumia devices). A year earlier, it sold 82.7 million phones, of which 11.9 million smartphones, and more than 2 million of those were Lumia devices. (Nokia does not categorize phones in its Asha range, even the touch-screen models, as smartphones.)
Since then, Lumia’s fortunes have gone up and down: Nokia sold 4 million in the second quarter; 2.9 million in the third quarter and 4.4 million in the fourth.But the increase seen during the first quarter is good news, according to Blaber.
“This is undoubtedly a sign that its moving in the right direction,” Blaber said.
The timing of this sales boost is critical because of the pressure Nokia’s mobile phones have come under, as overall unit sales dropped by 25 percent. It is clear that Series 40-based phones, and the Asha range in particular, are coming under pressure from Android, according to Blaber.
“This is the first quarter in a very long time where the smartphone business is showing more positive signs than the mobile phone business,” Blaber said.
The Mega 5.8 and the Mega 6.3 both run Android 4.2 and will ship globally, starting in Europe and Russia in May, Samsung said in a statement. Pricing and wireless carriers have not been announced.
The trend toward bigger screens is already well-established with Samsung and other Android phone makers. Samsung’s Galaxy Note II smartphone-tablet features a 5.5-in. display, while its upcoming Galaxy S4 will have a 5-in. HD Super AMOLED display.
By comparison, the popular iPhone 5 has a 4-in.display, the first in the iPhone line with a screen of more than 3.5 inches.
Samsung also has a penchant for offering devices in a variety of sizes and form factors. Its four basic Galaxy Tabs have displays ranging from 7 to 10.1 inches.
Samsung manufactures many of its own device components, making the cost of rolling out different sizes of devices more manageable than if it relied only on third-party suppliers.
Still, the increasing sizes of the smartphones has given some analysts pause.
“How many more sizes will we have?” asked Gartner analyst Carolina Milanesi. The ideal size for one-hand usage is 4.3-in., she said, well short of what Samsung has been promoting in the past year.
She said a small person can use a smartphone with a 6-in. display, but mainly as a phone “and anything more is a push.”
Milanesi suggested that Samsung may be offering the Mega as an experiment to see what customers prefer.
“I am not sure Mega is anything other than an experiment to see what consumers like, but that can be an expensive experiment,” she said.
It may be an experiment that Samsung can afford. The Seoul-based company sells half of all the Android phones globally, and phones running Android make up nearly 70% of the entire smartphone market globally, according to Gartner and IDC.
As anyone who has accidentally walked into a room full of children can tell you, they’re good at asking the kinds of questions that just keep drilling down. “Why is the sky blue? So why does blue light get scattered more? Then why is the sky red at sunset? Where are you going?”
And although I don’t recommend it, if you were to sit one of these little buggers down with a quarterly earnings reports from EA or Activision, they might soon start asking “Why are violent video games so much more popular than other games?” It’s a tricky question to answer without falling down the why hole. Because shooting stuff is fun. Why is it fun? Because people like military themes where they can be the hero. Okay, but why is that? Because players like feeling ridiculously powerful and enormous guns let them do that. But why is that appealing? Why, why, why?
Well, some psychologists are trying to tease apart the reasons why violence sells without throwing their hands up and shouting “Just because! And I’m not even your real dad!” Researchers Scott Rigby and Richard Ryan describe how they think that the design of violent games – especially shooters – naturally does a pretty good job of satisfying some very basic psychological needs. But not in the way you may be thinking.
In their book, Glued to Games: How Video Games Draw Us In and Hold Us Spellbound, Rigby and Ryan describe “self-determination theory,” a fairly well established framework that aims to describe why people pursue certain voluntary activities. In part, self-determination theory says that people are motivated to engage in activities to the extent that they satisfy three psychological needs:
- 1. Competence – progressing in skill and power.
- 2. Autonomy – being able to choose from multiple, meaningful options.
- 3. Relatedness – feeling important to others.
What does this have to do with violent shooters? Rigby, Ryan, and their colleagues argue that many of the design principles of good shooters also happen to follow well worn paths to satisfying these three psychological needs. Let’s take a closer look.
Competence is communicated by immediate and unambiguous positive feedback in response to your actions – you see opponents stagger, see blood fly off them, and ultimately see them collapse. The beloved headshot is particularly effective in this regard. Scott Rigby notes, “I’ll often put up a slide with a great screenshot of a headshot, and it always elicits smiles. The smiles here aren’t because everyone is sadistic – they are because this is a moment of mastery satisfaction that all gamers can relate to. The blood may not be the value component, but really is just a traditional way dense informational feedback on mastery is provided.” Information about competence in shooters is also thrown at you in the form of scoreboards, rankings, weapon unlocks, and eventually the outcome of every (relatively short) match.
Autonomy, the second motivator in self-determination theory, is also well served by the design of most popular shooters. Having the option to choose many different paths through a level satisfies autonomy, as does choosing between different classes, different loadouts, or different tactics. In a lot of games you can even choose between different modes, modifiers, or maps, allowing you to satisfy the need to play a game how you please. And if that’s not enough, custom character or weapon skins or models also fit in here.
Finally, relatedness is most obviously important in multiplayer games where you can feel like part of a successful (or, perhaps more likely of pickup games, incompetent) team bound together by opposition to a common foe. To the extent that shooters communicate your contributions in the forms of scores, points, server-wide notifications, or MVP awards, relatedness will be satisfied – to say nothing of what you can get out of text and voice chat. But even most modern shooters have single player campaigns that somewhat mimic this and put you in the role of someone important to those around you.
Of course, none of these motivators is unique to shooters. They show up in good game design across all genres and themes. But violent shooters usually hit on all three, and Rigby and Ryan believe that’s there’s a big overlap between what makes an effective shooter and what satisfies multiple facets of all three of these psychological needs. So while RPGs might nail autonomy, platformers may demand competence, and MMOs may allow the most relatedness, violent shooters fire on all three cylinders.
“[Violent games] are fun not because of the blood and gore,” write Rigby and Ryan, “but because games of war and combat offer so many opportunities to feel autonomy, competence, and the relatedness of camaraderie rolled up into an epic heroic experience.” But, that all said, do shooters satisfy all these motivators so well because they’re violent?
It’s an important question, and Ryan, Rigby, and their colleague Andrew Przybylski published a 2009 study in the Personality and Social Psychology Bulletin that addresses it. Part of their research involved a clever experiment where they modified Half-Life 2 to create a high-violence version of the game’s multiplayer and a low-violence version. The high violence version is pretty much what you’d expect. The low violence one, though, was created by changing the bullet-spewing guns into “tag” tools that players would use to zap opponents. Once tagged, foes would freeze and float up into the air for a second before being harmlessly teleported to a “penalty box” where they would wait to respawn into the game. So the main difference – arguably the only difference – between the two groups was how much violence there was in the game. Everything else was the same: the level layouts, the controls, and all the other stuff that satisfied competence and autonomy (unfortunately they didn’t examine relatedness). Only the violence was teased out of the equation
What did they find? Well, a lot of things. But one interesting finding was that the games in either condition were found enjoyable and both games satisfied the basic psychological needs of competence and autonomy. Even whether or not a person was naturally aggressive and normally enjoyed violent games didn’t matter once you accounted for competence and autonomy.
To me, this is vastly interesting and argues for alternatives to the go-to trope of violence and gore if you’re looking to draw people to games. It’s not the bloodshed as much as it is feeling like you’re able to make what you want happen on-screen. It’s not fetishising guns and explosions as much as it is the ability to use tactics and choose among meaningful options on the road to victory. It’s not the military themes as much as it is feeling like you’re an important part of a team.
Sure, war and military heroism are themes and experiences worthy of exploration, but there are other options that can be just as effective. Gamers may be happy to just keep buying the same game over and over again without understanding a thing about self determination theory, and publishers may only want to greenlight games that look like smash hits from the past without caring about mechanisms for satisfying psychological needs, but developers who think about these things and play around with them can definitely do something both great and different.
Facebook Thursday unveiled Home, a home screen, along with family of apps all for Android smartphones.
Facebook CEO and co-founder Mark Zuckerberg stressed during the unveiling that Home is not an operating system, it simply sits on top of Android so the first thing users see when they boot their phone is Facebook.
Zuckerberg described the home screen as ”the soul” of a smartphone, and added that Facebook is looking to focus more on people than on apps.
“We’re putting people first in your phone,” he said.
That statement seems to have got under Microsoft’s craw.
“I tuned into the coverage of the Facebook Home event yesterday and actually had to check my calendar a few times,” said Microsoft spokeman Frank X. Shaw in a blog post. “Not to see if it was still April Fools Day, but to see if it was somehow still 2011. Because the content of the presentation was remarkably similar to the launch event we did for Windows Phone two years ago.”
Shaw explained that when Microsoft started to design the Windows Phone OS, which was launched in 2011, its engineers began their work with the idea that people should be the focus. “Put people first,” he said.
“People are more important than apps, so phones should be designed around you and the people you care about, not the apps you might use to reach them,” Shaw said. “Millions of Windows Phone owners have already discovered how great a phone can be when it’s designed this way.”
Shaw also took a swipe at the Android mobile OS, calling it “complicated.”
With the post, Microsoft was obviously trying to dim the glow of Facebook’s Home announcement, and to capitalize on the buzz surrounding it.
Zeus Kerravala, an analyst with ZK Research, said Microsoft may be a bit jealous of the facebook move.
“Microsoft may have started with the idea, and may have tried to build a community around it [from scratch],” he said.
Meanwhile, he said that Facebook is working on the same theory, but is starting with “a community of 800 billion. The idea just doesn’t work without a community.”
According to Internet tracker comScore, Apple iOS- and Google Android-based devices accounted for 89.7% of smartphones used in the U.S. during the last quarter of 2012. Microsoft’s Windows Phone-based smartphones accounted for a distant 2.9% of the market.
“BlackBerry has gone through a major and exciting transition this year,” CEO Thorsten Heins told analysts on a conference call, without making much reference to the subscriber declines. The profit of $94 million came on revenues of $2.7 billion for the quarter that ended March 2.
The 1 million new Z10 smartphones were sold mainly in Canada and the U.K. before the quarter ended, well before sales even started in the U.S. last Friday at AT&T.
Heins told analysts that sales of the Z10 and Q10 qwerty device would be helped by an infusion of 50% more marketing dollars globally in the current quarter, although he didn’t provide a dollar amount.
Later in the year, BlackBerry plans to launch midpriced and low-end BlackBerry 10 devices around the globe, he said.
“BlackBerry seems to have effectively slowed down the bleeding to a trickle,” said Jack Gold, an analyst at J. Gold Associates. “The loss of subscribers is troubling of course, especially in a key market like the U.S.”
BlackBerry said its fourth-quarter revenues from the U.S. were 14% of the total, a decline from the previous quarter of 19%. For all of North America, revenues declined to 22% in the fourth quarter from 24% in the previous quarters, while the areas of Europe, the Middle East and Africa surged to 46% of the total revenues in the fourth quarter, up from 43% for the prior quarter.
Heins also said that 55% of the sales of the Z10 were from customers moving from other platforms than BlackBerry. He predicted that Q10 qwerty devices, which will go on sale in the next three months, will do well with traditional qwerty users in corporate and government jobs.
Mobile Google+ users should expect to see more prominent features such as +1, a display for your current location and photo enhancements, according to Amar Gandhi, director of product management for Google+, in a blog post.
“We’re adding some of Snapseed’s award-winning photo enhancements to the Google+ iPhone app,” Gandhi wrote. He noted that with Snapseed, when users are sharing a photo, they can do basic edits like rotate and crop, and select filters like Drama and Retrolux. They also can adjust contrast and brightness in photos by sliding their fingers up-and-down or left-and-right.
“Of course: you can always download Snapseed for more advanced features, like control points,” Gandhi wrote. “Today’s release just brings the Snapseed basics inside the Google+ iPhone app.”
Google+ also is trying to enable users to do and see more, with their posts.
In the updated apps, posts show more text from the original message, as well as from comments. And actions like +1, reshare and comment are displayed more prominently, according to Gandhi.
As for profiles, Google+ has made it easier for users to share, or not to share, their current location.
The updated apps are available on Google Play, as well as on the Apple App Store
The carrier already disclosed last fall and again at International CES in January that it plans to offer unsubsidized smartphones with no contract requirement to its customers.
Probably, T-Mobile will formalize those no-contract plans and might even show off an iPhone as one of the unsubsidized products it will sell, according to various tech bloggers and analysts. Updates on its emerging LTE service could also be part of the day’s news.
T-Mobile would say nothing more about the event other than what was on its invitation to journalists: “We’re still a wireless company. We’re just not going to act like one anymore.”
Whether T-Mobile announces anything truly revolutionary that stimulates a major change in the wireless carrier industry will depend on how it performs and whether its no-subsidy approach is matched by quality service, including fast LTE. All the components — LTE, no subsidies, high-performance phones like the iPhone — are required to make T-Mobile a success, analysts believe.
The carrier said in December that it would carry Apple devices in 2013.
At CES, T-Mobile CEO John Legere introduced a $70 a month unlimited plan with no annual contract and strongly suggested that customers might be shocked at paying $700 for an unsubsidized smartphone like the iPhone, but would do so as long as they could get unlimited service at an affordable price.
Walmart’s “Scan & Go” program will soon be in more than 200 stores, up from about 70. The pilot began near its home office in Bentonville, Arkansas in late 2012, then expanded to Atlanta.
While the program is tripling in size, for now it will be in only a small fraction of Walmart’s more than 4,000 U.S. stores.
“We want our customer feedback to dictate the experience,” Gibu Thomas, senior vice president of mobile and digital at Walmart Global eCommerce, said this week. “You’ll see this roll out to more markets.”
For now, “Scan & Go” only works on Apple Inc devices. An Android version should be out soon, Walmart said.
With more than half of its shoppers using smartphones, Walmart is trying to make shopping more convenient for shoppers who embrace mobile technology. More than half of the customers who have tried the “Scan & Go” feature have used it more than once, Thomas said.
Shoppers scan bar codes on items they want to buy, using the Walmart app on their iPhone, iPod touch or iPad to keep track of the planned purchases and the total cost. Then they pay at a self-checkout screen, bypassing the typical registers.
As it expands the pilot test of “Scan & Go,” Walmart is also adding self-checkout lanes to many more stores. Right now, about 1,500 stores have self-checkout lanes, and another 1,000 to 1,500 stores should get them this year, said Jeff McAllister, senior vice president of Walmart U.S. Innovations.
DIGITAL COUPONS MAY BE COMING
Walmart is bringing “Scan & Go” into a dozen more markets: Denver, Colorado; Phoenix, Arizona; Omaha, Nebraska; Dallas and Austin, Texas; Oklahoma City and Tulsa, Oklahoma; Wyoming; Bozeman, Montana; Seattle, Washington; San Jose, California; and Portland, Oregon.
Users can get an electronic receipt along with a paper one. Walmart has hinted digital coupons may be coming soon.
Scan & Go users pay in the traditional way, not via apps on their devices. The company declined to comment further on mobile payment possibilities.
Last year, Wal-Mart and other retailers joined together to develop Merchant Customer Exchange, a mobile payment network to try to match similar services from Google Inc and eBay Inc, among others. No details have emerged on the project.
U.S. carriers artificially dampen demand for lower-cost smartphones by disconnecting calling and data plan prices from the hardware. The result: No matter which smartphone the customer buys, the total cost of a two-year data plan is nearly the same, said Sameer Singh of Tech-Thoughts.
In countries where contract plans prices are dependent on the smartphone’s cost, Apple’s share of the market is weaker, Singh maintained.
“The scale of the difference between the iPhone’s presence in the U.S. versus Europe suggests that [data plan] pricing plays a significant role,” said Singh in an email Tuesday.
In a blog post, Singh analyzed plan pricing in the U.S., the U.K. and Australia
According to Singh, since late 2011, when Apple released the less-expensive iPhone 3GS and iPhone 4 globally, the iPhone’s share of the U.S. market has been between 10 and 15 percentage points higher than in the U.K. and Australia.
He attributed that to the pricing structure of U.S. calling and data plans, which don’t gibe with smartphone costs. While the highest unsubsidized price of seven handsets from Apple, HTC and Samsung was a whopping 71% more than the lowest-priced model, the difference between plan costs over 24 months was a measly 14%.
“This gives high-end smartphones, including the iPhone, an unnaturally high share of the smartphone market,” Singh said.
Video game research firm EEDAR, which already has a proprietary database of over 100 million internally researched data points from more than 90,000 physical, digital, mobile, and social game products, is gearing up for the launch of a new service to assist mobile and social developers. EEDAR said that its new suite of mobile. Tablet and social products will aim “to improve sales potential and game quality for titles utilizing in-app monetization.”
EEDAR said that one of the most important things a developer can do is to optimize a game before launch. “EEDAR is able to provide an assessment at any point during the development cycle and accurately project key performance measurements of the final product, in addition to a qualitative assessment that provides feedback from the perspective of a professional game critic and consumers,” the company said about its new product suite.
Jesse Divnich, VP of Insights at EEDAR, to get an overview of the key takeaways from the firm’s research on the mobile and social markets. Divnich stressed that developers must be prepared with their in-game monetization strategy for retention and boosting conversion rates before a title is released into an app store.
“When the mobile game market was emerging, developers could optimize key monetization features after a game’s launch. The onboarding acquisition process had a long tail. Today, due to competition and larger consumer awareness, the time to peak engagement is rapidly shortening,” he noted.
“Facebook/Social games are a perfect example. Games like Farmville took nearly a year before they reached their peak users. It gave Zynga ample enough time to adjust game features to increase engagement monetization rates. Now, Social games are peaking within weeks and this idea of always being in ‘beta’ quickly shows its weaknesses when you are onboarding the majority of your lifetime users in only a few weeks,” he continued. “The mobile market is beginning to reach that point. Mobile games are making more headlines, consumers are becoming aware of hit titles faster. Simply put, consumers are engaging mobile games closer to a game’s release date and sleeper hits are becoming less prevalent.”
Even getting highlighted by Apple doesn’t mean what it used to. Developers can squander a great opportunity if they don’t make an effort to optimize. “Being featured by Apple no longer means weeks or months on the top charts. At most you have seven days and if your title is not fully optimized, you will leave money on the table,” Divnich added. “Going forward, developers must ensure they’re launching with maximum optimization, both from an artistic and scientific perspective. This means dedicating more resources to pre-launch analytics and qualitative testing.”
So what are some other notable mistakes developers are making? Well, mimicry certainly isn’t helping. Just because something works in one game doesn’t mean it can be successfully “borrowed” for a different game.
“There are still a large chunk of developers that are still too short-sighted. Clash of Clans has been a top seller for a few months and nearly 50 percent of the concepts and vertical slices that come across my desk in some way or another have an 80 percent overlap of Clash of Clans’ engagement loop. After we perform our assessments, some developers are disappointed to learn their retention, conversion, and monetization rates potential are a fraction of the results Clash of Clans has produced,” observed Divnich.
Even if your game is successful at the start, retention is a real problem, as it’s hard to create a game that has legs. “Competition within the mobile markets is at its fiercest, and every week there are at least seven high-quality releases trying to fight for our attention. The increase in competition, media coverage, and consumer awareness has driven down retention rates, for some genres, to dangerously low levels,” Divnich explained.
The key, he said, is to drive connectivity with a very attractive multiplayer component. “Right now, the tried and true method for improving retention has been multiplayer and social features. The correlation between retention rates and the inclusion of multiplayer and social features is ridiculously high,” Divnich noted. “We do issue caution, however. Just because games with strong multiplayer and social support sell well doesn’t mean slapping on a multiplayer component will automatically make your game a success.”
“We’ve seen this trend occur in the traditional HD gaming space. Call of Duty: Modern Warfare created a multiplayer frenzy and everyone thought by cuffing on a multiplayer component their game, too, would be a success. While it helped for some, those that tacked it on were met with lukewarm or disappointing reception. We still encourage our developers to implement new ways of approaching multiplayer and social features, but how they are implemented is key to improving retention rates,” he continued.
While the mobile/tablet space is getting all the attention these days, and social gaming on Facebook has seen sharp declines, that doesn’t mean developers should automatically ignore the social space. There can be opportunities there as well, especially if developers optimize their titles.
“The social platform is still viable and profitable for many developers,” Divnich remarked. “Two years ago developers were fanatic about releasing on the social platform, but they oversaturated the market. There was too much choice in a market, there were no switching barriers for consumers, and there existed too many rip-offs of the standard Farmville or Bejeweled engagement loop. Additionally, Facebook couldn’t keep up with the demand for innovation. Being a platform where consumers violently resist change (e.g. Timeline), it’s difficult to support new tools and back-end features for developers without changing the whole experience altogether.”
“Developers can still be profitable on social platforms, but we certainly approach that space more cautiously,” he concluded.
I haven’t played any of the Dead Space games, so I can’t comment on the criticisms that Dead Space 3 sold poorly because of game content or the way in which it dumbed down the gameplay experience to appeal to a broader audience. I can talk about how I see the microtransaction and other changes that vocal fans derided fit in with Electronic Arts’ broader strategy.
The games market is polarizing. The big are getting bigger (see Grand Theft Auto and Call of Duty beating first week sales records year after year) while the niche is becoming more viable (see every indie game on Steam) while the middle is getting squeezed (see THQ, Eurocom and dozens of other midsize developers). The emergence of digital distribution has brought along a bigger change than many people realized, driven by two different properties:
- It is cheaper than ever before to distribute content
- It is possible to have unique, personal, one-to-one relationships with every customer
The strategies that EA are putting in place reflect this reality.
The variable demand curve
The past 30 years were about putting games in boxes, shoving them in shops and trying to sell as many as possible. The price was basically fixed at around £30-40, so the only way you could make more money was to do more volume, i.e. sell more copies. You could also try to maintain the price for as long as possible by restricting price reductions and limiting trade-ins. What you couldn’t do was to connect with your fans in any meaningful way.
We no longer live in that world, except perhaps for the very biggest blockbusters. We live in the world where there is a bewildering choice and variety of games available to us. At the same time, development costs for AAA games are enormous and rising, while the market is not getting bigger. In fact, that subset of the market is shrinking as players are distracted by the many different ways, times and devices they can play games on.
There is only one solution. It is to find a way to use the initial launch of AAA game as a starting point in your relationship with fans. It is to start the long process of turning games from one-off purchases to long-term relationships. It is about using games to engage with and retain players, to convert some of those players into fans and to convert some of those fans into superfans. In the process, niche AAA games that are not viable using the blockbuster, fixed-price-massive-volume model can become successful long-term businesses.
Viewed through that lens, everything that EA is doing makes sense. It is trying to use its games as the starting point of the relationship. Sometimes those games are free (as in most of its mobile, tablet and online strategy). Sometimes they are paid (as in its console strategy). What they are trying to achieve is a revenue model which means that those people who love their games, who keep playing, who are vocal and demanding, are given an opportunity to spend lots of money on the products that they love. It is the only way for niche AAA games to survive.
I don’t know why Dead Space 3 didn’t do well. I don’t know if it was about poor design decisions, a change of focus or gamers voting with their wallets and not supporting a game with microtransactions on principle (EA will have data on how many users engaged with microtransactions. Answering the other questions will be harder).
But I don’t think gamers should view any rumored cancellations of blockbuster projects as a victory against microtransactions. Finding a way for the biggest fans to pay lots of money to get things they truly value is the only way to support niche AAA games (and by niche, I mean anything outside the top 4 or 5 games released every year). EA may not have got the exact model right yet, but they are experimenting. The failure of the experiment does not mean that EA will abandon microtransactions: it means that it will abandon anything other than blockbuster games and tablet games.
Is that what you really want?
Nicholas Lovell is director at GAMESbrief, a blog about the business of games. He provides business advice on free-to-play and paymium design. He will be giving a masterclass on how to make money from free-to-play games in San Francisco on Sunday March 24, just before GDC. You can also book one-to-one surgeries.