Saving video games from publishers

There’s big money in video games. No one can deny that, especially now that the definition of casual gaming has changed from Wii type games, to games on your phone that mimic some really old school type flash games (bejeweled for example). One of the largest game publisher is EA, they have been notorious for making both amazing games (BF4), amazingly bad games, amazing games with poor execution (SimCity), and amazing cash grabs (Dungeon Keeper iPhone). However, it’s not alone in trying to destroy gaming.

Zynga made a pretty big run at the title and likely helped shape the current state of our gaming industry. They were the original most successful company in facebook for gaming coming up with Mobwars and Farmville. They’ve been replaced with King.com (Candy Crush) now though and have nearly gone out of business. At one point they had a higher valuation than Facebook.

The point of these games is similar to a casino. Keep you coming back and keep you putting money into the machine. They design games to be addicting and put frustrating blockers in your way to entice you to pay money to overcome those obstacles. They technically are “Free-to-play” but they certainly aren’t “free-to-have-fun”. For example, about a year ago Real Racing 3 came out and to unlock everything with cash, it would cost $503!

The article that got me thinking about this topic highlights a 1997 game called Dungeon Keeper which has been released on mobile platforms. In the game you build a dungeon and try to kill heroes that come through and kill your monsters. One of the things you do is dig out spaces for your dungeon, this used to just take a minute or two in game time. Well, EA did it’s little cash grab option with it and now that same space will take roughly 30 hours to mine out unless you pay them money to speed that up! Here’s a video with a nice little summary of the topic.

Now, we know that this hasn’t been limited to mobile games for some time. It’d hit the hardcore gamers in the form of Downloadable content (DLC) and in many cases would be a $15 or so charge to make the game functional on top of the $50-$60 you already paid for the game. In some cases they’ll also charge you for other visual upgrades and stuff like that.

In some cases the companies are doing it because it’s a beloved franchise and they know people will fork over the money for it even if they’ve vowed to never buy from that company again (BF4 after SimCity debacle for instance). This is because they are able to charge monopoly prices being the only game in town.

In other cases, they are able to charge this behavior because of the addictiveness of the game and the pressure of your peers playing the same game. It’s a casino mixed with keeping up with the Joneses mentality. The worst of the worst and company are pulling in as much money as they can on it. In many cases those games are straight up copies from other companies – or at least the game mechanics are the same.

This has made some people discouraged over the future of the gaming business model. I believe that we have some of the most generous people in the world in gaming. You have the Extra-Life fund raising event, HumbleBundle, and a ton of other things like that. There are also really honest folks out there trying to break into the industry, just look at Steam Green Light, Kickstarter Games (check out KBMOD’s Crowdsourced corner), and just the sheer number of new games and apps that have a single price and are honest about their pricing (this link will take you to a list of games that are pay upfront or honest free to play).

Which makes me think that we have two different type of people running gaming companies. We clearly have psychopaths at the head of the company and normal regular people trying to do right by their customers. I think the hardest thing is, we have honest people working for those psychopaths, which is unfortunate.

What can we do as gamers and employees? Well, if you think your CEO is a psychopath leave; it’s going to be an unhealthy work environment in general. Secondly, if we want to see those business models die, educate your friends on how horrible this movement is for gaming in general and point them to cheaper alternatives that aren’t cash grabs. Help inform your friends that aren’t savvy about this. Send them links to games that are better, more fun, and less vile in their pricing schemes.

If you have any recommendations for honest, safe gaming, let me know in the comments!

Startups are going to save us, relax everybody

In typical Silicon Valley Breathlessness Forbes published an article by Victor W. Hwang arguing the fact the Startup movement isn’t about startups. He argues that it’s actually a movement to free people from the chains of our current economic system. I definitely don’t buy this. Most people start a company for one of two reasons, they find a problem that they have a better solution for than anything provided (or a novel solution) or to make money. Typically it’s a combination of the two. No company in existence is out there not to make money. Companies that aren’t profitable cannot stay in business for long unless you’re lucky and funded by people that thing you will eventually make them a lot of money.

An opinion piece in the NY Times from 1/2/2014 pretty much sums this fact up. You’re replaceable at a startup and likely even more so than any time in the  future of the company. It’s really easy to fire people when you have no money, especially if you are open and honest about how you go about letting people go.

Furthermore, if the startup movement was in fact about bettering the plight of people we wouldn’t be seeing the social stratification that we’re seeing in cities like San Francisco, ground zero for the startup movement. In SF some of the neo-techno-libertarian-elite are upset that they even see the poor people on their streets rather than out of the way like in cities like NYC (he issued an apology not unlike Tiger Wood’s for being a sex addict). Not only are these the people that are involved in the startup movement, but they are funding it. Yes, I know that this is only one person and on the other side you can point to Alexis Ohanian of Reddit fame, which really is doing a lot of social good.

In some ways the startup movement has made it easier for people to be cogs in the wheel. They work long hard hours, large companies like Facebook and Google push and push to get more for less. In many cases this can cause depression and the exact opposite of what the Startup movement is striving for. In fact, the goal of the Lean Startup is to make it extremely easy to ramp up new employees and ensure full coverage if something goes wrong. These companies and products are designed around the idea of building in quality rather than testing or patching it in. Of course, there’s a benefit to the employee in these cases too – they’re free to really explore new problems and create new things without needing to worry about reoccurring problems.

I do believe there are many startup founders are genuinely trying to change our society for the better, but it hasn’t been a frictionless process and will likely only get worse as we move forward. The Sharing Economy, for example, has come under fire from traditional companies, neighbors, politicians, and even members of the sharing economy. While in other cases, such as Zynga, we see companies that are essentially parasites that thrive through creating addicting games and clogging a platform with their notifications (those notifications stopped and Zynga basically died).

It’s important to be skeptical of statements that glorify any portion of our culture. The article that spurred me to write this has a similar tone as many of Thomas Freeman’s, of the NYTimes, articles, fully optimistic, but missing a broader portion of the population and the long term impact. We should be wary of these articles because we’ll end up believing that it’s more complicated to calculate a median value than an average. The startup movement is to help people start companies, some founders are dreamers, some truly try to change how work is done, but they most aren’t truly changing the world in amazing ways. We’ll be fine if reddit, AirBnB, or some other services vanishes. We were when Digg, Google Reader, Palm and any other influential company vanished.

Tracking the right metric

Last week I wrote about the Facebook IPO and how I felt that for the company the shift to stock price metric tracking was a big deal. I said that there has been a shift from what Facebook was and could be to the broader public to how all of its actions impact the stock price for the company. Today, in an article on Forbes they published an article about the impact of what you measure and how it impacts later choices. One of the things they didn’t mention was how frequently this measure or metric is reported. These all matter.

Looking at Facebook, I think it’s rather clear why Zuckerberg has publicly stated that he doesn’t care about the stock price of the company. Stock price is continually reported and when major milestones are passed, either in the positive or negative, everyone is talking about it. Apparently, Facebook dipped below $30/share today. Is this the end of the world? No, but it does mean that a lot of people have lost a lot of money.

Let’s look at stocks. Do they truly reflect the value of a company? I, personally, don’t think so. There are so many factors that shift the price of a given stock in a week, that it’s impossible for the value of the company to fluctuate in such a manner. However, the price of a stock does impact what a business is able to do. Companies are able to leverage their stock values for loans and interest rates, which means that a company can suddenly gain or lose market capital if the stock market swings for something completely unrelated to them and investors sell of their stock.

Despite the fact that, at best, there’s a loose correlation between the actual value of a company and the price of its stock, CEOs are held accountable to this metric by investors. Now, maybe some CEOs do ignore the value like Zuckerberg plans on doing (I’ve heard Jeff Bezos from Amazon does), however, when it’s continually reported and discussed it likely will change some behavior even if the CEO does their best to ignore the stock price. Even if the CEO does ignore it, in many cases the board or the investors will not. They may take serious action if the CEO does not work to ensure that their metric, stock value, continues to increase.

However, this may drive the wrong behavior. Tracking the wrong metric may be answering the wrong question. What increases our stock price may not be the same answer to what keeps our company competitive. A company that reduces work force to cut expenses for the end of the year, may seriously be hampering their ability to compete over the next few years. The change will likely bolster the performance of the stock in the near term but will likely lead to greater drops in the medium or long term.

Company management should not solely be measured on stock price alone and neither should a company. As much as I dislike Facebook and Mark Zuckerberg, Facebook is a company that actually has more value than simply its bottom line. It is able to create new networks and new places for activists to work. Now is this likely to continue? I don’t know. Could another company come along and beat them at it? Definitely. That’s why Facebook bought Instagram and will likely buy other companies that could threaten their market space.

Facebook, IPO and valuing a company

This week we’ve been hearing about the debacle that was the Facebook IPO.Which has revealed that some of the underwriters for the IPO were doing shady things. Matt Taibbi believes that this indicates that there are essentially two markets. One for the insiders and one for the schumcks, the every day investors.

Why is this important? Well, based on the discussions I’ve read online, there’s a lot of concern of the validity of the whole IPO process, the valuation methods of companies and how investors think of companies. The valuation of Facebook had a great deal of discussion before the final IPO price of $38/share, this was partially driven by two articles that came out. In the first one it was mentioned that GM was pulling it’s account because “Facebook ads don’t work.” The other article of note relates that researchers found that 44% of Facebook users will NEVER click an ad. This research is important because some of the valuation is based on the conversion rates of ad views to ad clicks. On average Facebook was only able to earn around $4.34 per user. The valuation of $100 billion puts the life time earning potential per user at $100 (at 1 billion users). This is pretty low, but at the same time, if only 560 million users ever click ad, that pushes means the people that do click ads need to be earning Facebook roughly $200.

MIT Technology Review discusses how this is an unsustainable growth model for Facebook. Essentially, Facebook will begin to drive down the cost per view for their advertisers to try to increase their total revenue. This falls into the race to the bottom mentality that crushes industries. Advertisers will be able to say to any website, why should we pay you x amount per ad when we only pay Facebook y there is no way that you can get me more views than Facebook. The only way that a site could get more revenue if they can show data for a higher click through and conversion rates than Facebook. That might be tough. The Review article argues that this will eventually kill Facebook and a lot of the ad driven website business models.

The other aspect of the IPO is a difference in the way that business and technology media are reporting on Facebook. Things have shifted from all the non-business related activities to focusing solely on this aspect of Facebook. This will likely shift over time, but I believe that these considerations will be discussed in any article related to Facebook. If Facebook wants to remain a haven for activists it will be difficult if there are potential suits over people being activists. There will be an increase of risk aversion within the “owners” of the company as there will be influence from investors.

Zuckerberg has said that he plans on doing what is best for the long term and try to ignore the demands of investors. He might be able to do that because he still owns 57% of the voting rights for the company. However, it will be difficult for him to avoid the influence of the discourse of media outlets. Even if he gets all his news from his friends on Facebook, there will likely be articles posted that will give him news about the company and things that he probably won’t want to read.

Essentially, discussions will shift from being about the risk of privacy for users to how changes to Facebook will impact investors bottom line. I don’t think this is healthy for businesses, consumers of Facebook or the general public. There are other things companies do that are unrelated to investors that are important for society as a whole. The Facebook coverage really indicates that we don’t look at businesses in a long term sustainable manner. We need to change this if we want to save capitalism.

A bit remiss

Sorry dear readrs, I’ve been very bad about writing any blogs lately. I’ve had some pretty big changes in the past two months as you all know. I’ve moved back from the Netherlands to the US, did some consulting work and I just started a job at AMD. Consequently, I’ve not been able to post as much as I have in the past. Big changes have been happening in my life.

Because of these changes I wasn’t able to pay enough attention to the CISPA fiasco that just occurred in the US. This law is a terrible step in the direction of data tyranny. I’m even being hyperbolic about this either. I wrote about the risks of having a voluntary data sharing program and in my review of Consent of the Networked I discussed the different data and Government regimes out in the “wild.” These concerns are valid. We need to be aware of what’s going on. Now, I have to say we pretty much blew our collective internet protest load with the SOPA/PIPA protests. Which is actually a problem. I would hazard that in many ways CISPA is as bad or worse than SOPA, however I didn’t see as much chatter about CISPA on reddit, twitter, Google+ or Facebook about CISPA as I did about SOPA.

I think there are a few reasons for this actually. First, the majority of the people were able to clearly understand the risks associated with SOPA. These risks are pretty straight forward and understandable. These risks affect us tomorrow not in some future time period. In many ways SOPA like acts can already happen today. This makes it extremely obvious why SOPA/PIPA are terrible laws and should be opposed at many levels. Second, with CISPA coming so quickly after the SOPA/PIPA protests there was likely something of a protest overload or disbelief that another law could come through so quickly that is as bad or worse than SOPA. Especially with the language that was being used at the time of SOPA. It would have broken the Internet, how could anything be worse than that? Third, there was more support by large companies for this law than for SOPA. Apparently that actually matters more than we realized. We were able to push Wikipedia, Facebook, and other large companies to protest this law. However in this case Facebook and Microsoft supported the law while Google sat on the sideline saying nothing about the law.

I think from this stand point, people that weren’t happy with CISPA but didn’t understand the importance likely didn’t do anything about it. However, whenever a fantastic website like Wikipedia blacks out in protest for a law it will get people who are only on the fence about the law to actually do something about the law.

CISPA and SOPA are both bad but in very different ways. CISPA is something of an abstraction of risk. Losing your privacy when so many people already voluntarily give up so much information about themselves on Facebook and Twitter might not seem like as big of a deal. The secondary abstraction is a lack of understanding of the impact of the data sharing. It’s unclear of what exactly the Feds would do with the data once they have it. It’s unclear how data sharing would occur within the government. However, it is likely that the data would be shared throughout the government including the military. Which many privacy experts are say essentially legalizes military spying on US civilians. The third problem is that many people also feel that if you aren’t doing something wrong you don’t have anything to worry about. However, this is a fallacy as even people who are doing things that aren’t wrong can get in trouble. I’ve discussed the cases where people are fired for posting drunken pictures on Facebook. Additionally, this type of law represents the biggest of the big government that we can imagine. There’s no reason why the government needs to know what we’re doing in this level of detail.

It’s going to be a long and difficult fight to keep our internet free. However, it’s something that we must do and I believe we can do it. We will just need to keep vigilant and work together to ensure that our internet stays our internet.