New Gaming Console Being Delayed

It appears that the Ouya is going to be a bit delayed.

This is good news though, as it is being delayed because the console developers have more cash to spend on it, $15m more to be precise.

Ouya already raised around $7m on Kickstarter, and now, when it should be taking its last steps towards completion, it has had almost twice as much more injected into it by lovely venture capitalists.

We were expecting the console in early June, but that has slid back to 25 June. The time and money will in part be used to solve an issue with sticky buttons, something that usually only happens once consumers have taken some hardware home with them.

The money comes from venture capital firms and other companies including Kleiner Perkins Caufield & Byers (KPCB), Nvidia, Shasta Ventures, and Occam Partners. KPCB’s general partner Bing Gordon will join the Ouya board of directors as a result.

“We want Ouya to be here for a long time to come,” said Julie Uhrman, Ouya founder and CEO.

“The message is clear: people want Ouya. We first heard this from Kickstarter backers who provided more than $8 million to help us build Ouya, then from over 12,000 developers who have registered to make an Ouya game, next from retailers who are carrying Ouya online and soon on store shelves, and now from top pioneering investors.”

Gordon is in charge of digital investments at KPCB and is a veteran of the games industry, having started at Electronic Arts in 1982.

“Ouya’s open source platform creates a new world of opportunity for established and emerging independent game creators and gamers alike,” he said.

“There are some types of games that can only be experienced on a TV, and Ouya is squarely focused on bringing back the living room gaming experience. Ouya will allow game developers to unleash their most creative ideas and satisfy gamers craving a new kind of experience.”

Ouya consoles should start arriving in living rooms on 25 June. If you want one, you are going to have to come up with around $100 dollars, plus another $50 dollars if you want two controllers.

Courtesy-TheInq

 

Mobile Growth Is Facebook’s Sweet Spot

Facebook posted revenue gains  of 38% in the first quarter that was bolstered by broad engagement across the site, the company reported on Wednesday.

Revenue for the social networking company increased to $1.46 billion for the quarter ended March 31, up 38% from $1.06 billion from the same period last year.

The company’s advertising revenue was $1.25 billion, representing 85% of Facebook’s total sales and a 43% increase from 2012′s first quarter, the company said. Mobile advertising revenue constituted 30% of the company’s total ad revenue.

Facebook posted net income of $219 million for the quarter, up 7% from the year-ago quarter. The company’s net earnings per share were 9 cents, less than the consensus expectations of 13 cents in a poll of analysts by Thomson Financial.

“We’ve made a lot of progress in the first few months of the year,” Facebook CEO Mark Zuckerberg said in an earnings announcement, also citing “strong growth and engagement across our community.”

Facebook’s daily active users were 665 million for the quarter, 26% more than last year. Monthly active users increased by 23% to 1.11 billion, the company said.

On mobile, monthly active users increased by 54% to 751 million. Facebook did not disclose numbers for mobile daily active users.

The mobile ad revenue gains Facebook reported Wednesday were on par with the gains it reported in 2012′s fourth quarter, when its mobile ad revenue as a percentage of total ad revenue jumped from 14% in the third quarter to 23% in the fourth quarter.

Monetizing its services on mobile devices as more users migrate away from the desktop and onto their smartphone and tablets is one of Facebook’s biggest challenges today.

 

 

 

 

Will Zynga’s Turnaround Be Successful?

Nobody expected Zynga’s results for this quarter to be great, so nobody was exactly surprised when the company announced a decline in almost every number that matters. It turned a small profit, but that’s a bright spot in an otherwise deeply unimpressive set of results. The really important figures – the number of people playing and, crucially, the number of people paying – are all down. Zynga’s business may not be hemorrhaging money, but it’s losing audience, and in a business so heavily focused on scale, that’s a really bad thing.

The company likes to present itself as being on the cusp of a turnaround, or perhaps already embarked upon a slow but steady turn. If so, it’s the oddest turnaround imaginable. The firm’s MAUs – Monthly Active Users – dropped from 292 million to 253 million year on year, so nearly 40 million people have simply stopped logging in to a Zynga game even once a month. Worse still, though, is the disproportionate fall in the number of Monthly Unique Payers – those who make at least one transaction during a month-long period. This number fell from 3.5 million to 2.5 million, a precipitous year-on-year drop of almost 30%.

It bears emphasising just how bad that actually is. For a social gaming business, MUPs are the real customers. There is huge value to having a large audience (MAUs), of course, and companies need to be very careful about not trying to force players into becoming paying customers before they’re good and ready – but ultimately, non-paying users are like footfall in a store. They’re not customers, in a strict business sense. Zynga’s not-quite-so-bad loss of 13% of its players (MAUs) is a side-show compared to the fact that it’s lost 30% of its paying customers (MUPs). Imagine, by comparison, a shop loudly announcing that the number of people walking past its window had fallen 13%, distracting from the fact that the number who came in and bought something had fallen 30%.

Of course, the two figures are related, and the disproportionately large drop in MUPs figures into that relationship to some degree. The process of encouraging players of a social game to spend money is focused around a number of principles, but the key temptation lies in buying items or currency that will give you the ability to match or overtake your friends’ progress, or to create a fantastic character, farm, castle or whatever which will “impress” the many friends who are also playing the same game.

For that psychology to work, of course, you actually need to have lots of friends playing the game. Most social games, as the name suggests, don’t work terribly well if you don’t have friends active in the game. “Active” is a key aspect here too – if you see that your friends are losing interest, logging in less often or spending less time tending to their farm, castle, town or whatever, then you also tend to lose interest rapidly. Hence, a game that gives the impression of being “in decline” – with players losing interest in some visible manner – will likely experience a precipitous decline in revenue, because even though lots of people are still playing, the sense of decline removes the key psychological drive to spend money on the game. (It doesn’t help, of course, that social game operators have established a pattern of shutting down unsuccessful games rapidly, which creates a feedback loop in which players are unwilling to spend money on a game they think might be in commercial trouble.)

The psychology of what Zynga is experiencing is clear enough, then, but the figures on the bottom line are still pretty dreadful. Whatever the reasons or the mechanism, the company is losing paying customers, and that kind of damage is extremely hard to recover from.

A stark contrast to Zynga’s woes can be found on the other side of the Pacific, where mobile developer GungHo this week topped a $9 billion valuation on the Osaka Stock Exchange, making it into a larger mobile gaming company than even fellow Japanese giants GREE and DeNA. GungHo’s valuation is ridiculous, a bubble that will inevitably pop in relatively short order, but there’s a genuine success driving the excitement – a single game, Puzzle and Dragons, which is the most successful mobile game in Japan (and is launching in other territories as well). Puzzle and Dragons reportedly makes about $2 million a day; it certainly makes enough to justify prime-time adverts in evening slots on Japanese TV.

GungHo is an extreme example of a phenomenon which is completely unavoidable in the social and casual game sphere. Mobile utterly dominates this sphere. Facebook, it turns out, was a flash in the pan in gaming terms. Smartphones, and to some extent tablets (though they’re arguably more “midcore”), are the social gaming platforms of today. Zynga, for all its cash (the company still has plenty of liquid assets), its clout and its former dominance, still hasn’t made a successful transition to being a mobile-first company. Clinging to the wreckage of the Facebook social gaming model which it so successful exploited (in doing so, perhaps hastening the downfall), Zynga is being overtaken time and again by smaller companies who have mobile gaming in their DNA from the outset. With this week’s results came a fresh claim that the company will be focusing more heavily on mobile, but a good, nimble firm would have accomplished that focus shift 12 months ago, at least. Zynga right now feels like it’s plodding along in everyone else’s wake.

The other great white hope for the company, of course, is gambling. It has cautiously launched gambling services – what it calls “real money gaming” – in the UK, and wants to expand into other territories. Plenty of pundits like to tap their noses sagely and suggest that Zynga will become a gambling giant down the line – although in doing so, they’re just following in the well-worn footsteps of a large number of video games industry pundits, executives and even developers who have regarded the gambling industry with something like the avaricious wonder of wannabe prospectors hearing about a new gold rush.

I don’t see any gold rush for Zynga in “real money gaming”. Investors and executives consistently overstate the allure and possibilities of this kind of gaming, because by dint of being investors and executives, they tend to be exactly the sort of person who is very attracted to gambling risks (you wouldn’t have an investment, or a career, anywhere within spitting distance of tech stocks otherwise). Moreover, by moving into the online gambling arena, Zynga is entering a market that’s already incredibly crowded with companies who are deeply, deeply expert in this field – not just in the customer-facing psychology of the casino, but also in the legal and regulatory minefield of operating a gambling enterprise online. Many major markets simply aren’t open to this kind of business; most others require you to jump through all manner of hoops simply in order to set up shop. The notion of Zynga having an open goal in “real money gaming” is born either from complete naivety or utter desperation – it could make money in the gambling business, but it has its work cut out for it.

It’s worth highlighting, all the same, that Zynga did make a small profit this quarter – it may only be one bright spot, but it’s bright all the same. The company’s scale still also arguably works in its favour, allowing it to buy talent and IP that smaller firms could never afford. Yet after several grim quarters, it’s also worth highlighting that talk of a “turnaround” is optimistic at best. Something about Zynga – its culture, its leadership or a combination of both – is blocking this company from moving in the agile, intelligent way a firm in its position desperately needs. Inventing fairy stories about the magical potential of gambling games or constantly reassuring the world that a pivot to mobile is definitely happening any day now won’t cover up the cracks for much longer. If Zynga wants the world to buy the “turnaround” story, it needs to start showing evidence; if not, it needs to start making big changes, starting right at the top.

Courtesy-GI.biz

 

Does The Gaming Industry Have Room For The Ouya?

Ouya, the open Android-based console designed by Yves Behar, is being shipped to its Kickstarter backers today, and the company officially announced this week at GDC that it will hit retailers in the US, UK and Canada on June 4. Ouya is promising “hundreds” of titles for the June 4 release and the $99 console will be available at Amazon, Best Buy, GAME, GameStop, Target, and the store on OUYA.tv. Additional controllers will be sold for $49.99. And for digital purchases, consumers will be able to get pre-paid cards with redeemable codes at retail if they wish.

The company said that over 8,000 game developers worldwide are currently developing games, including both up-and-comers and more well known game makers like Square Enix, Double Fine Productions, Tripwire Interactive, Vlambeer, Phil Fish’s Polytron Corporation, and Kim Swift’s Airtight Games. “The majority of devs so far are experienced devs who’ve never built an Android game before. About 1 out of 5 have never even built a game before,” Ouya CEO Julie Uhrman said that at the GDC unveiling. She boasted that Ouya “already has more titles a couple months before launch than any console has ever launched with.”

The Ouya hardware itself is even smaller than we had previously thought (think Rubik’s Cube or smaller), and its sleek design and brushed aluminum is pleasing to the eye. Uhrman, however, stressed the controller more than anything else. “What we spent the most amount of time on is the controller. We really want this to be our love letter to gamers,” she said, adding that Ouya focused on the ergonomics, the weight, the feel, and wanted it to be a precise, accurate controller. “This is one of the pieces of Ouya that evolved a lot based on early supporter feedback,” she continued.

Apparently, the feedback led to numerous changes on the controller in terms of button placement, and the style of d-pad. The team found out that many preferred a cross-style d-pad than a disc because it’s superior for fighting games. Also, the engineers retooled the tension of the analogs and the design of shoulder buttons. And Ouya even made the responsiveness and speed of the center touch pad customizable. In this journalist’s hands, it felt comfortable and familiar while playing a few titles.

After showing off the hardware, Uhrman dived into the user interface of Ouya. The whole UI is incredibly streamlined, with four categories and an apps-like layout. The four categories are Play, Discover, Make, and Manage (which is for settings). Play is simply where anything you’ve downloaded – games or music or video apps – will be placed. Discover is the store, and it’s been designed to encourage people to “find the best games.” For example, sub-selections in Discover include featured channels like Go Retro, Hear Me, Genres, and Sandbox. The plan is to offer more descriptive names for games within genres.

“The way games get exposed in the genre list is based on what we call the O-rank, which is our fun algorithm. It’s how we rank great games. A lot of app platforms today use downloads as a metric or they use revenue as a metric and we don’t think that’s a good way to say if it’s a good game,” Uhrman said. “You could download a game and never play it again. And with the free-to-try model, revenue isn’t necessarily the best model either. What is [a good metric] is what proves that the game is fun, and that’s engagement. So things like how long you have played a game, how many times you’ve played that game over a certain period of time. How quickly from the time you boot up Ouya, which is an always-on device, do you play that game… It’s those types of engagement metrics that we think prove it’s a fun game.”

Another interesting area within Discover is Sandbox, which offers developers an opportunity to put builds up and ask people to thumb it up. The idea is for great games to get out of the Sandbox and be searchable and merchandized. It encourages developers to market their games and promote them to fans. Once you get out of Sandbox you know the people next to you have great quality games, Uhrman explained.

The Make channel is an area that appears to still be in flux. Uhrman said the goal is to serve two audiences, gamers and developers, equally. While Make is a place where a developer can upload early builds, over time it’ll be a place for devs to communicate with fans. “We also can grow it to be, what if you want to make a game, here’s how to market a game, etc. We’ll look to devs and gamers for feedback on how to evolve the section,” Uhrman said.

A console that’s as open as Ouya should have a fairly simple submission process for developers right? Uhrman confirmed that it’s not overly complicated and should be something most can complete within an hour. “It’s something we thought a lot about given that we’re an open platform… but we wanted to make sure that there are good quality games, at least to the extent that it was optimized to the television and for the controller. So the guidelines isn’t necessarily a quality review, but it checks if there’s malware, does it break or freeze often, does it use our controller schema in the right way, we need to make sure there’s no IP infringement, no pornography, does it elicit real-world violence, you are who you say you are kind of thing – that’s the review. We try to keep it under an hour. Developers can choose to go live immediately or they can choose a certain time,” she detailed.

Curiously, there’s been no partnership reached with the ESRB to rate the games in North America. Right now, the games will be self-rated by devs and community reviewed. Given that Ouya is being sold in mainstream retail, however, we do have to wonder if this will pose potential problems for the company in an atmosphere where some people are still pointing fingers at violent video games. “We’ll take it as it comes; right now we want to expose great content from any type of developer and we do have the thumbs-up/like feature or the report if this is abuse on the system,” responded Uhrman, adding that “We basically say that we can change the rules at any time and we can reject the game for any reason that doesn’t fit our content guidelines – we want everybody on Ouya to have a great experience.”

Ratings aside, one of the big questions surrounding Ouya is whether or not it can truly carve out a market for itself in the console space as industry veterans Sony and Microsoft prepare to launch their respective next-generation systems. The games we saw on Ouya are not graphically intense and are very indie in nature. Can Ouya handle high fidelity triple-A releases? Or does it even need to in order to get noticed?

Ouya does has a partnership with OnLive, so that’s one way to get triple-A games. “That’s one solution. We also support 1080p, hi-def… and we have a USB port so someone can add an external hard drive, so for games that are heavy you could absolutely use that. We have a max download size of 1.2GB for the first download, but as a developer if you want to add and send additional content from your servers you can,” Uhrman said.

“Traditional games take longer to develop, and we have some of those in development that we’re really excited about. Ouya is not about the number of polygons on the screen,” Uhrman acknowledged. “That’s not where we went. We wanted to have innovative and creative exclusive content, and we’re already starting to see that.”

Exclusive content plus a very appealing $99 price point is what could make the system an easy impulse buy for many gamers Uhrman believes. Moreover, Uhrman noted that most core gamers tend to purchase more than one console, so Ouya is likely to be something they’ll want to buy even if they are getting a PS4.

“Ouya offers something different; every gamer has a different expectation depending upon the platform and we believe we’re going to have innovative, creative games and exclusive games to Ouya… And the barrier to entry at just $99 where every game is free-to-try, I think opens up the opportunity for a number of gamers, even core gamers. Core gamers on average own more than one console. We don’t really think it’s an either/or situation. We’re offering something different – I think they’re going to want Ouya too,” she said.

A number of traditional consoles in the past have launched selling at a loss. Since Ouya is built with off the shelf components, it may be easier to contain costs, but Uhrman wouldn’t confirm that each unit is sold at a profit. “We’re really comfortable with our business model,” is all she would say.

That said, if things go the way Uhrman would like, this is only the beginning. Ouya will continue to evolve its software and hardware, and the hardware is likely to get refreshed quickly.

“We’re like any other software platform that iterates and grows over time, and we’ll have a hardware refresh rate more similar to a mobile refresh rate than a console refresh rate because we want to take advantage of the best chips out there and falling commodity prices. We will certainly make sure that there’s enough content that’s optimized for that chip and we don’t push on higher prices to the consumer,” she said.

Does that mean some Ouyas in future will not be compatible with certain games? Uhrman is looking to avoid that scenario. “We have a plan where all content will be compatible with future Ouya systems; we don’t want to fragment our own market for developers, and we always want gamers to have a great experience,” she commented.

Ouya will be interesting to watch. It’s a bold move for the industry and everything we’ve seen so far is completely unconventional. Whether or not that will pay dividends in the long-run is hard to judge at this point in time. “The market is calling us the ‘un-console’ and we like doing things the ‘un-way’,” Uhrman remarked.

Courtesy-GI.biz

Facebook Opts For Flash Instead of DRAM

Facebook has come up with a data cache which runs on flash memory instead of DRAM. Dubbed McDipper it saves money while still delivering higher performance than disk.

The system is a Facebook-built implementation of the popular memcached key-value store the only difference is that runs on flash memory rather than pricier DRAM. Memcached is the open-source key-value store that caches frequently accessed data in memory so applications can access and serve it faster than if it were stored on hard disks.

Facebook runs thousands of memcached servers to power its various applications. The only downside is that it is expensive. McDipper can handle working sets that had very large footprints but moderate to low request rates. It provides up to 20 times the capacity per server and still supports tens of thousands of operations per second.

According to Gigaom, Facebook has deployed McDipper for a handful of these workloads. This has reduced the total number of deployed servers in some pools by as much as 90 per cent while still delivering more than 90 per cent of get responses with sub-millisecond latencies.

Nevada First State To Legalize Interstate Online Poker

Nevada has become the first U.S. state to interstate online poker legal and allow state-to-state gaming agreements, beating New Jersey to the punch and putting in place a potential nationwide framework for Internet wagering.

Republican Governor Brian Sandoval signed the landmark bipartisan bill into law last Thursday, authorizing his office to enter into agreements with other states that will in effect allow Nevada-based companies to host interactive gambling for residents of other states.

A number of companies have already been granted Nevada licenses for online poker, but were prepared to be limited to serving Nevada residents. Applicants include social gaming leader Zynga Inc. Shares in Zynga leapt as much as 7.4 percent on Friday.

With the bill, Nevada – home to Las Vegas, the world’s second-largest gambling hub – wants to pave the way for national Internet wagering even though efforts at federal regulation have stalled. Established companies including MGM Resorts and Wynn Resorts hope they can add new customers and pitch online players to come to Vegas.

“This bill is critical to our state’s economy and ensures that we will continue to be the gold standard for gaming regulation,” Sandoval said in a statement after signing the bill on Thursday.

The bill removes a provision requiring federal legislation or Department of Justice approval before online gaming licenses are made active, according to Nevada’s statement.

Nevada’s legislation comes as New Jersey – home to Atlantic City – considers a similar move to legalize online gambling. Republican Governor Chris Christie rejected a measure earlier this month that would have allowed Internet gambling, but has said he would consider approving such a law if it was framed properly.

 

Is It Game Over For Activision?

It was a better than expected quarter that capped off a record year for Activision. The fourth quarter brought in $2.6 billion in revenue, compared to analyst estimates of $2.44 billion. The company came within spitting distance of $5 billion in revenue for the year ($4.987 billion, to be precise), which is amazing for a company that’s not manufacturing console hardware. The downside of this performance: Activision is already telling us it won’t happen again in 2013, with the company projecting results substantially lower for this year (at $4.175 billion). Will the company see growth again, or was 2012 the highest point it will ever reach?

CEO Bobby Kotick praised the company’s performance: “We achieved record fourth quarter and annual results. And in 2012, on a non-GAAP basis, we generated approximately $5 billion in revenues, a 34 per cent operating margin and EPS growth of 27 per cent over the prior year. We increased our operating cash flow by 41 percent.” It’s extremely impressive; Activision continues to manage its properties well in a horrible retail environment.

Kotick also provided some other info to show Activision’s dominance. “In the US and Europe, we were the #1 video game publisher at retail, we’re the #1 title overall, the #1 console title and the #1 PC title.” Kotick also threw in the following: “We’re also the #1 independent Western Digital game publisher and had the #1 subscription-based MMORPG.”

Notice the exceptionally careful phrasing here, to conveniently exclude Chinese, Korean and Japanese publishers, as well as Russia’s Wargaming.net. And being the #1 subscription-based MMORPG isn’t saying much, given that almost every other MMORPG these days is free-to-play. The lily is already pretty damn impressive; there’s really no need to add gilding.

The rapid growth of Skylanders was given some special attention. “Skylanders, our newest franchise, which is both toys and video games, has life-to-date sold in excess of $100 million toys and generated revenues of approximately $1 billion. This week, Activision Publishing revealed the third game in the Skylanders franchise for holiday 2013. And while there are new entrants in the category and challenges from slower than expected adoption of the Wii U, we remain enthusiastic about Skylanders’ future prospects.”

First we had EA’s CEO saying the Wii U wasn’t a next-generation console, and now Activision’s CEO is calling out the Wii U for slow sales. Nintendo doesn’t appear to be getting much love from third-party publishers in the West.

Kotick then sounded a cautionary note: “We recognized that 2013 is a transition year, as we enter the ninth year of the current generation of console video game systems. We encounter new threats from unproven business models, and we compete against new category entrants. We aren’t immune to unfavorable market dynamics, but we have navigated through the transitions many times before, and we are well prepared to do so again.”

If a business model is unproven, how is it a threat exactly? Isn’t it a threat if it’s doing really well, which in some sense proves that it (or at least that instantiation) works, doesn’t it? Perhaps what Kotick is saying is that there are business models (like free-to-play) which are working damnably well, but unfortunately Activision hasn’t used those models, so they (to Activision’s experience) are unproven. Let’s simplify this: If it’s working well enough to be a threat, shouldn’t Activision at least be experimenting with it?

CFO Dennis Durkin looked ahead to this year’s prospects: “Our product lineup is expected to be anchored by 4 of our top franchises: Call of Duty, Skylanders, World of Warcraft and StarCraft. It will also be a year of significant continued investment in several new properties with long-term potential that are not factored into our 2013 financial outlook, including Activision Publishing’s new Bungie universe, Call of Duty Online for China and the new Blizzard MMO.” That could mean none of those new titles will ship this year. Or perhaps one or more might ship, but Activision isn’t sure, and doesn’t want to count revenue that may not materialize.

Durkin went on to say: “For the full year 2012, Diablo III contributed more than $0.20 of EPS on a standalone basis. This year, our outlook for Blizzard includes the release of the StarCraft II expansion pack, Heart of the Swarm, in March and one additional title. For Call of Duty, consistent with our past practices, we are planning for the mainline release in Q4 to be down versus 2012.”

Activision reached peak sales of Call of Duty two years ago, and expects this year to be lower once again than last year. When you’re coming out with a new version of the game every year, it’s hard to keep posting record numbers. New consoles might help, but they will probably be too late in the year to matter much even if Activision does have a version of Call of Duty ready for them.

Why won’t new consoles matter much for 2013? Let’s look at the numbers. Assuming a new console ships in November, it’s unlikely to sell more than a couple of million units by the end of the year; let’s say it’s an amazing success and sells 5 million. Selling a game to half of those buyers would be incredible; that would be 2.5 million units. When a Call of Duty title can sell nearly ten times that amount, you can see why it’s not reasonable to expect new consoles to help Activision’s numbers significantly. Sure, they might, if absolutely everything goes well. But companies like to be a little conservative on their projections to give themselves a good chance to beat the numbers. Investors like it when companies beat their numbers.

Blizzard CEO Mike Morhaime then gave some color on his products: “World of Warcraft added more than 9.6 million players, down slightly from the previous quarter. The majority of the decline came from China, while subscribership in the West was relatively more stable.” Later, Morhaime added: “With respect to China, in spite of the decline in subscribership, it is important to note that the engagement levels of the core items did increase with the launch of the expansions and I think that, that suggests increased engagement by our core players.”

So WoW subscriber numbers are shrinking, but the remaining players are more engaged. To some extent, this is acceptable if overall revenue can remain constant or even rise if virtual goods sales are high enough among the remaining players, and they stay subscribed longer. At some point, though, if subscriber numbers keep falling overall revenue will drop. The key information here is that World of Warcraft has apparently already burned through the boost it got from Mists of Pandaria, and is back to losing subscribers (at least in China), but the rate of erosion isn’t too alarming. Yet.

One of the analysts asked whether development costs will rise for titles destined for next-gen consoles. Kotick was straightforward: “This is my 22nd year doing this, and in every single console transition, we’ve seen an increase in development costs.” Margin improvement for next-gen titles is going to depend on selling more DLC, not on reducing development costs. Until next-gen consoles are in tens of millions of households, revenue from next-gen titles will be lower than current-gen titles – and development costs will be higher. That’s not a good combination.

Activision’s stock has mostly hovered between $10.50 and $12.50 for the past several years, though after yesterday’s report it’s shot up to $13.41, a gain of over 11 per cent. Wedbush analyst Michael Pachter has a long-term target of $19 for Activision stock, which is above the stock’s high point five years ago. It’s difficult to see how the stock gets there unless gaming stocks in general become more well-received by investors. Perhaps if new consoles launch strongly, and Bungie’s new game is a smash hit, and everything goes well…

Meanwhile the general message of this earnings report is that Activision is being careful with major strategy moves. Activision is still merely dabbling in mobile games, and doesn’t expect them to be a significant contribution to the company in the coming year. So far, the company is resisting moving World of Warcraft over to a free-to-play model; that may be wise given that such a changeover doesn’t always work well. Where’s the chance for major growth? Bungie’s new title, the new Blizzard MMO, and Call of Duty in China, that’s where. There are questions about all of them, of course. Will Bungie’s title pull in a significantly different audience than Call of Duty, or will it cannibalize that game’s players? Will Blizzard’s MMO merely move players over from World of Warcraft, or will it attract a significant new audience? Will Chinese players really turn out in big numbers for Call of Duty Online?

Looming over all of these questions is the long-term viability of the console market, and whether the new consoles coming from Sony and Microsoft will revive the console game business to the heights of 2008. Activision is in great shape right now, with billions of dollars in cash and four great brands that generate amazing sales. Of those four brands, three are getting pretty long in the tooth; can they perform at their current levels, or will they continue to decline slowly? The success of new consoles may be critical to Activision’s future. The company may choose to diversify with acquisitions, or it may keep the cash tucked away for a rainy day or a larger strategic acqusition.

Activision’s had a great 2012, and 2013 looks pretty good. The company’s longer-term picture depends mostly on how the console market continues, and how the MMOG market evolves along with Activision’s products in that area. Mobile doesn’t appear to have big potential for Activision yet. The other potential big mover for Activision is a major acquisition, like, say, Take-Two. Activision has enough cash to make such a purchase, or some other large strategic move. We’ll have to keep watching to see how that strategy game might play out.

For now, at least, Activision expects to have sales lower than last year’s level. Growth is only going to happen in 2014 and beyond if Activision’s new projects can do well, and new consoles do well, and existing brands don’t fade too quickly. When you’re at the top of the mountain, climbing higher is difficult. Perhaps the Skylands offer a path higher…

Courtesy-GI.biz

 

More Users Taking A ‘Facebook Vacation’

Facebook makes connecting with people online easy, but some of its users say they got burned out on the site or grew tired of their friends’ “drama,” a new survey shows.

More than a quarter, or 28 percent, of those quizzed in a recent Pew Internet Project survey said Facebook has become less important to them than it was a year ago, with about the same proportion saying they expect to spend less time on the social network in 2013. More than a third of users said the amount of time they spend on the site has decreased over the past year.

Things got heated when respondents were asked open-ended questions about their experiences on the site — feelings of exhaustion, frustration and irritation were a theme among some users. Some sample responses: “I was tired of stupid comments.” “It was not getting me anywhere.” “Too much drama.” “I got tired of minding everybody else’s business.”

Those answers represent the views of a certain type of user, said Lee Rainie, director of the Pew Internet Project and a co-author of the report. While people on opposite ends of the social networking spectrum will either love new technologies or hate them, it’s the ones in the middle trying to figure things out who regularly raise questions, he said.

“These are the guys who say ‘It’s not worth it’ for a while. It’s a common story playing out on Facebook today,” he said.

The majority of users, or 59 percent, said Facebook is as important to them today as it was a year ago, and 69 percent said they plan to spend the same amount of time on the site this year as in the past.

But 61 percent of the Facebook users surveyed reported they had at some point taken a break from the site for several weeks or more, citing a lack of interest, irrelevant content or being too busy. About 9 percent of those who took a “Facebook vacation” said there was too much drama, gossip and negativity on the site.

 

Black Ops II Leaked

It appears that Activision, too, is suffering from a leak before its planned release. The Xbox 360 version of Call of Duty: Black Ops 2 has started showing up in all of the usual places in advance of the title’s upcoming official release. The title’s leak onto the Internet is similar to what we saw with Halo 4; and once again, we can expect Microsoft to come down hard on those who are playing the game early.

As with Halo 4, we are also seeing live streams of Black Ops 2. While Activision isn’t talking, sources tell us that the company is actively engaged in seeking out who might have been responsible for the leak. In addition, word of early sales of the game has also been talked about, with consumers saying they have been able to purchase the game ahead of its release in Slovakia.

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Courtesy-Fud

Will IGN Get Bought In Auction?

IGN is going up for auction, according to a Wall Street Journal report. After a year of fruitless talks with potential bidders, parent company News Corp. is working with investment bank Allen & Co. to auction off the group of entertainment and video game websites.

News Corp purchased IGN in 2005 for $650 million. Last year, the company also acquired online gaming network UGO and folded its properties (including 1Up.com) into its one-time rival. IGN has also sold a handful of businesses in recent years, including Rotten Tomatoes, Direct2Drive, and GameSpy Technologies. The Wall Street Journal (another News Corp. publication) reports that IGN is expected to sell for about $100 million now.

The paper reports that a number of companies have expressed “at least some interest” in picking up IGN, including Break Media and SAY Media. Recent turnover in IGN management, including president Roy Bahat and News Corp. chief digital officer Jon Miller, was said to have hampered the sales process.

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Courtesy-GI.biz

Facebook Allowing Users To Pay To Boost Visibility Of Their Posts

Facebook Inc is allowing users in the United States to pay a fee to increase the visibility of their postings on the social network, the company’s latest effort to look beyond advertisers for revenue.

The promoted-posts-for-users feature, which Facebook began offering as a test on Wednesday to a limited number of its U.S. users, ensures that a comment or photo shared by a Facebook member gets prominent billing in their friends’ news feeds.

“When you promote a post – whether it’s wedding photos, a garage sale, or big news – you bump it higher in news feed so your friends and subscribers are more likely to notice it,” Facebook said in an announcement on its official blog on Wednesday.

Facebook is considering a variety of prices. The current test price in the United States is $7, according to a Facebook spokesman.

The move marks Facebook’s latest effort to experiment with new ways to make money beyond advertising, which accounted for roughly 84 percent of the company’s revenue in the second quarter. Facebook also takes a 30 percent cut of purchases of virtual goods by users playing Zynga’s Farmville and other social games on its website.

With Facebook’s revenue growth rate showing a sharp slowdown in recent quarters, many analysts and investors believe the company needs to find new ways to make money.

 

 

AOL Enters Mobile Gaming Market

AOL Inc had decided to make a foray into the mobile gaming market with a social video guessing game available on Apple’s iPhone that uses voice recognition technology to keep players from cheating.

For now, the game, Clucks, can only be played by iPhone users. The Android version of the app will be released by the end of the year, according to Sol Lipman, vice president of AOL’s Mobile First unit which identifies new market opportunities in the mobile space.

The once-dominant internet service provider, envisions its release of Clucks last Thursday as just a first step into the mobile marketplace which it sees as key to revive its brand.

Clucks players use smartphones to record a 12-second video of themselves describing a word, for instance “tree.” Their opponent then receives the video and must guess the word.

“You’re trying to send clues without using the word ‘tree’, or associated words like ‘wood’ or ‘leaves’ or branches,’” Lipman said.

To ensure that none of the banned words are used by players, the Clucks app incorporates voice recognition technology.

“If you use one of those words accidentally or intentionally, it will catch you cheating and take points away,” Lipman said.

Lipman said Clucks was inspired by two trends in mobile apps: social video, with apps such as Viddy now having over 40 million users, and turn-based games such as Draw Something.

The company plans to monetize the game through its sponsors. Rather than ads, they aim to incorporate promotional content within the app, such as the ability to play a pre-recorded round of Clucks with an actor or film director providing the clues.

Lipman said the company has other offerings it plans to build on top of the platform.

 

Angry Birds Maker To Launch New Game,Bad Piggies

Angry Birds-maker Rovio Entertainment will be hoping to prove it’s no one-hit wonder when it launches Bad Piggies on Thursday, just as players seem to be tiring of the game they’ve been addicted to for the past three years.

The new game will feature pigs which strike back at the birds who attacked them with slingshots in Angry Birds.

A hit on app stores would give the Finnish company a boost as it looks to a possible stock market flotation next year. Some analysts put its market value at between $6 billion and $9 billion, nearly on a par with another top Finnish tech name, phone maker Nokia Oyj.

Rovio was founded in 2003 and became a global phenomenon after it launched Angry Birds for Apple Inc’s iPhone in late 2009.

The highly-addictive game helped Rovio’s sales jump 10-fold to $100 million last year, a fraction of the 38.7 billion euros ($50.2 billion) which Nokia chalked up.

It has remained at the top of gaming charts, with more than a billion downloads, and had 200 million monthly users at the end of 2011. That compares for instance with the 240 million attracted by offerings from U.S-based Zynga Inc, such as the Facebook-based Farmville.

 

Wii U To Have 8G Internal Storage

The latest rumors on the Wii U making the rounds say that Nintendo has decided to only offer 8GB of internal flash storage. It was thought that Nintendo would be pushing for more digital distribution and because of this the unit would come with more built-in storage.

Nintendo has apparently decided that it will count on SD flash cards up to 2GB and SDHC flash cards up to 32GB, as well as hard drives connected to the system via the USB 2.0 interface, to allow owners to grow the storage capacity based on their needs.

The decision to only go with 8GB could end up being a deal breaker for many, but it does save money that will allow Nintendo to pass the saving on to users. While some wild rumors do suggest that Nintendo has room for an internal hard drive within the unit, we can’t actually final anyone that will confirm or deny this.

We will don’t have long to wait, as Nintendo is expected to pull the curtain back on the Wii U today and we expect that they will confirm both the hardware in the unit as well what the pricing is going to look like for the North American market. The company is also expected to announce their plans for Europe today.

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Courtesy-Fud

Wii U Final Specs Uncovered

While there are NDAs in force, is seems some in the development community have confirmed what Nintendo has yet to confirm: the final specifications for the Wii U. While we expect Nintendo to officially confirm these specs in their upcoming press conference on September 13th, we have the majority of the low-down for those who don’t want to wait.

As we have mostly known all along, the Wii U will be powered by the IBM Power PC using a three-core variety that we are told is similar to the CPU in the Xbox 360, but a bit different. We still do not know at what speed this CPU is operating, but we hear whispers that it is clocked slower than the processor in the Xbox 360 (which we suspect is partly because they wanted to stay away from potential heat issues). The CPU choice is also good for Nintendo because IBM is likely giving them a very good deal on the CPU in this configuration; it is previous generation, only 3 cores, clocked slower than the Xbox 360 CPU, but we do suspect that it is using a reliable process for the die, which will produce good yields as well as low heat.

As we have told you previously, the graphics will be powered by an AMD/ATI 7 series GPU that has some customization done on it for Nintendo. It does feature a significant advantage in architecture over the current competing GPUs in the Xbox 360 and PlayStation 3. We expect a conservative clock speed for the GPU to avoid heat issues, but we hear that it has type 4 shader support with a DirectX 10 feature set that includes embedded eDRAM. The Wii U will sport 1GB of RAM, which is about double what the Xbox 360 has; which is a clear advantage and something developers have been asking for.

So, there you have it. It is pretty much what we told you way back when we first started. The decisions make a lot of sense for Nintendo, as they want performance, but also need to hit a price point. Our crystal ball says the Wii U is still going to be a bit expensive, but that is not a real surprise to anyone at this point because of the second screen and other technology. We think you will see a price point right at $300, or a little less, but those hopeful for a $250 or $200 price tag are going to be disappointed. We would still like to know the actual clock speeds; but it is clear that it will have some graphics performance advantages over the Xbox 360 and PlayStation 3, which means the potential does exist for some titles to look a bit better. We will have to wait and see how it shakes out, because September 13th isn’t that far off.

In a strange twist, Nintendo has still made no announcement about the Japanese launch details for the unit, and as far as we know has yet to schedule a press conference for Japan. The press conference on the 13th will likely only release the launch details for the North American launch of the unit, which could mean that supplies will remain tight till after the 1st of the year.

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Courtesy-Fud

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