The Sinking of the ESA and the Future of the ESRB...

[Cross Posted from IStC]

For those not in the know, the ESA, or Entertainment Software Association is a U.S. based lobbying and representative group with membership largely compromised of videogame companies. They have done quite a bit of research related to market demographics of gamers in the U.S. More recently they have turned to "educational" programs aimed at school children to teach them the dangers of copyright violation and piracy. Their educational programs contain no mention of "fair use," however.

The ESA is also the parent organization of the ESRB or Entertainment Software Ratings Board. The ESRB is the organization which all console manufacturers require licensees to acquire ratings through prior to distribution. Most computer game software goes through this process as well, primarily because most distributors (WalMart) will not distributed un-rated entertainment software.

Recently, numerous large organizations have begun pulling their ESA memberships. This means that they will not be paying their rather large membership dues which keep the ESA in operations.

Here is a sample of those who have officially dropped their support from the ESA:

• LucasArts (Going to E3, but no longer ESA member)
• Ativision/Blizzard
• Vivendi

Other companies though not dropping out of the ESA entirely have said that they will not be attending E3, the ESA's major industry expo. These companies include those above and:

• Id Software
• NCSoft
• D3Publisher
• Her Interactive
• Majesco
• Bethesda

Perhaps more tellingly, Gamecock (a videogame publishing company) recently released the following video clip:

And EA, or Electronic Arts, has said that this massive set of departures shows a "lack of leadership" at the companies who are leaving, but I think that doesn't quite capture what's going on here.

What this seems to indicate is growing industry dissatisfaction with the ESA. Ultimately, I wonder what ramifications this will have on ratings, because the ESA and ESRB are closely related entities. Have these publishing companies made further decisions about the future of game ratings as well?

Casey O'Donnell

How to Make an Industry Researcher Laugh out Loud

GameSetWatch - Game Developer's Top 20 Publishers - The Sassy Version!

"Activision - Solid - if unimaginative
Atari - First the good news. Bruno's gone. Now the bad news. Bruno's gone.
Codemasters - Plucky, intelligent senior management willing to take a risk.
Disney Interactive - Does what it says on the tin - and no more.
Eidos/SCi - Could yet grab defeat from the jaws of victory.
Electronic Arts - Currently in therapy.
Konami - Trying to be less Japanese. Currently failing.
LucasArts - Looking increasingly rudderless - the industry's biggest vanity publisher
Majesco - Two words - New. Jersey. 'Nuff said.
Microsoft - Succeeding in spite of itself. Will miss Peter Moore more than they know.
Midway - Sumner Redstone's folly. Spectacularly, almost entertainingly bad.
NCSoft - Playing the long game - and has the cash to do it.
Nintendo - It's their ball - and we can all play with it - on their terms.
Sega - One to watch - clever, nimble leadership who know how to succeed.
Sony Computer Entertainment - Sadly lacking leadership skills at the highest level - expect changes in 2008.
Take-Two - GTA 4 better be good.........
THQ - Looking a bit lost - despite some good work, does anyone know what is THQ for?
Ubisoft - The amazing Guillemots and their dedicated senior team run rings around slower, bigger competitors.
Vivendi Games - World class - in parts."

[Disclaimer: GameSetWatch doesn't necessarily think this arch wit is right. And fortunately, most responders to the survey were a little less flippant. We do think he's pretty amusing, though, whoever he is.]

Emulators, the Virtual Console, and Opening up the Wii

It is always to see how the pile of news I didn't read over the weekend piles up and then ends up overlapping in odd/interesting ways.

One in particular was an article in the NY Times about Nintendo courting developers more-so than they previously had in the past, and this other bit about a Wii/Gamecube homebrew competition.

First of all, I really hope that the developers that put their time and effort into making games for the Wii and Gamecube spend more time on actual games than on emulators. Sure you can perhaps have a game up and running faster (?) if you're porting an emulator to the Wii or Gamecube, but I'm beginning to believe more and more that emulators on consoles tends to hurt homebrew efforts rather than help them.

Of course when I saw the Wii News article linked from Slashdot (/.), the emulation aspect was for-fronted. If you think about it, emulators are the very thing that most companies fear when it comes to homebrew. Why? Because it dilutes their brand, and prevents them from being able to re-sell you old content.

Now, that isn't to say that old content is all bad (because sometimes they make it look better), but as far as Microsoft is concerned, running your old NES games on the Xbox 360 isn't going to help them. Nintendo doesn't want you running Sony PS1 titles on the Wii or Gamecube because it dilutes their brand.

What I see as the interesting overlap here is that Nintendo really is pushing developers to think about these new platforms in new and interesting ways. What they haven't done is engage with home brew-ers, hobbyists or open sourcers. The other thing is that they haven't provided a way to get around the uber-conservative publishing companies, especially here in the US.

It is also interesting that Nintendo, of all the current console manufacturers, has yet to release an original title for their Virtual Console. What a great new medium which would circumvent timid publishers. Heck, it might even push them in such a way that they would HAVE TO publish some new interesting titles. In the mean time Nintendo would likely reap higher margins on those titles.

But, you know, it's easier to keep things closed and snuggle up with your existing developers, than to take a chance on all those people just itching to get a chance to develop for your system. If only the number of people playing with their Wii-motes on their PC's gives you an idea of the number, it's a lot. Not to mention even at RPI's game symposium this spring, several games used the Wii-mote as a control mechanism.

NY Times - Technology - Putting the We Back in Wii

"The relationship is warmer and more active than before," said Jeff Brown, the spokesman for Electronic Arts, the giant game developer based in Redwood City, Calif. The push appears to be bringing results. Analysts say one reason for Wii’s popularity has been its larger number of available game titles. At present, there are 58 games on sale in the United States for Wii, versus 46 for PlayStation 3, according to the Sony and Nintendo Web sites. That is a huge contrast with the previous generation of game consoles: to date, PlayStation 2 has 1,467 titles, overwhelming GameCube’s 271 titles.
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The Wii’s simplicity is also the selling point for software makers. Mr. Wada said developers had been slower to write games for PlayStation 3 because of the greater complexity of the console’s main processor, the high-speed multi-core Cell Chip. He said PlayStation 3’s production delays had also made Sony slow to provide developers with the basic codes and software needed to write games for the new console.

At Namco Bandai, Mr. Unozawa said PlayStation 3 was so complex, with its faster speeds and more advanced graphics, that it might take 100 programmers a year to create a single game, at a cost of about $10 million. Creating a game for Wii costs only a third as much and requires only a third as many writers, he said.

Wii News - Coding Contest

DCEmu via its Wii-News and Gamecube Emulation Sites are proud to present the first Dual Nintendo Wii and Nintendo Gamecube Coding Competition. This Coding Competition will hopefully ignite a mass of interest for creating homebrew and emulators on the Nintendo Wii and Nintendo Gamecube.
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Entries for the competition must work on either Nintendo Wii or Nintendo Gamecube or both via SD Load.

All entrys must work with SD Load or with an as yet Unreleased Exploit for Nintendo Wii. Modchip Versions of any releases must have a corresponding SD Load Version.

Entries can be Emulators, Homebrew Games, Demos or Applications that work directly on the Gamecube/Nintendo Wii.

Is this BAD or GOOD for the Industry?

It's interesting that Todd Mitchell's analysis of Nintendo's success is labeled broadly as "bad or good" for the industry. I think the answer is probably more likely that it's good for the industry and bad for publishers. But really that "bad" for the publishers is good in the long run, because it's going to force them to think differently than they've been thinking for quite a while.

Of course the current generation of DS and Wii games coming out of Nintendo is going to sell well. It's some of the more innovative stuff showing up out there. Just like Little Big Planet is going to sell like hot-cakes or why Katamari or Shadow of the Colossus sold well. New and interesting.

Selling a derivative title on a system like the DS or Wii with all of it's available resources isn't going to entice consumers.

While this might "bode poorly for the publishers" right now, perhaps it will force them out of the current rut that they've fallen into lately. And of course Nintendo is going to have some lead time on everyone else. Isn't that why they keep it internal? It gives them some time to milk their product while everyone else catches up.

I'm not necessarily a fan of that model, but I understand why they're doing it. And long term, hopefully publishers internalize this new idea that thinking outside the box is good.

In the mean time Nintendo needs to do a better job of courting independents, getting them to bring new and innovative titles directly to them, because right now the big publishers just don't know how to handle this newfangled stuff.

Analyst: Are Wii And DS Good For The Market?

As reported, Nintendo's fiscal 2007 report showed 23.56 million DS units and 5.84 million Wiis sold, with 123.55 million units of DS software, and 23.84 million units of Wii software -- all far above original expectations from the company and analysts alike.

Much of that software success, however, came from Nintendo itself, with New Super Mario Bros. moving 9.5 million copies, Brain Age selling 8.1 million copies and Nintendogs pushing 7.0 million, with newcomers Pokemon Diamond and Pearl already selling 5.2 million in Japan alone. Wii software, too, was similarly first party dominated by The Legend of Zelda: Twilight Princess and unbundled versions of Wii Sports.

All of this, says Mitchell, leads him to believe that "Nintendo's success with the DS and Wii bodes poorly for the publishers."

"Both [the Wii and DS] appear to be bringing new gamers into the market. However, this may not be a positive dynamic for the major video game publishers. Nintendo has not only increased the size of the market, but it has also re-segmented it in its own favor, in our view," he said.

"Nintendo is dominating software sales on its popular hardware platforms, leaving the publishers with a smaller slice of an only somewhat incrementally larger pie," added Mitchell, "Moreover, we feel that the likely shorter product cycles of Nintendo's platforms puts the publishers in a permanent catch-up mode."

Despite the ramp up of various third party publishers turning more development efforts to both the DS and Wii platforms, Mitchell concludes that Nintendo's domination of the software landscape isn't a trend due to end anytime soon, adding, "the upcoming releases of Super Mario Galaxy and Metroid Prime 3: Corruption will highlight this phenomena this holiday season."

User Generated "CONTENT" (?)

So, there has been a whole lot going on recently about Game 3.0 (apparently Web 2.0 meets Video Games) (And it's really Game 1.0 = Games on Carts/CD's, Game 2.0 = Game 1.0 + Networking, Game 3.0 = Game 2.0 + User Content). As much as I am a fan of thinking about games as media, in particular because console video game systems dominate the game world so much, this isn't quite the same.

So, let's take YouTube for example. You have the ability (perhaps against other media corporations desires otherwise) to take their content and mash it your own way. Perhaps it's just a simple Anime + Music = AMV (Anime Music Video). Perhaps it's your own custom shot or computer generated material set to music. The point is that you have the ability to pull that content from somewhere else and put it at your disposal.

It's not quite the same for video games. It's especially not so much the same for video games. So, I'd like to remix that last Spidey level and redistribute on YouGame. ... ... Ummm... where do I start? Not quite the same.

Now, Little Big Planet "empowers" users by providing them with a world which they can do these things. But what if I want to change a basic mechanic to customize it a bit more? What if I want to make Little Big Nudie Planet? Not to sleight the guys making Little Big Planet, they're doing a phenomenal job, we just have to realize that it's not the same as YouTube.

This is also complicated by the fact that Web 2.0 is founded on a whole lot of things that Game 3.0 just hasn't done. Open API's, Open Protocols, things like XML, and a whole bunch of other things that really empowers users. In the case of console video games you have none of this foundational material.

In many ways I see XNA as having a greater YouTube potential, because though you end up having to do more work, as people develop tools and pieces, you'll see more (and more different) examples of this.

Nintendo and Sony (though Sony seems to be talking a lot) haven't really figured out that they're going to have to open up more than they have to really embrace this idea, and really, if they don't, MS is the one who is going to win.

What publishers are really worried about is:

Making the Social Connection: How Small Developers and Publishers Can Take On Game Industry Giants

But... Even these comments fail to really engage with the barriers of access to the technologies that really offer the most opportunity for companies to make money and build sustainable work environments.

Making the Social Connection: How Small Developers and Publishers Can Take On Game Industry Giants

According to the NPD Group, total computer and video game industry sales hit $13.5 billion in 2006, almost a 20 percent increase from the year before. The vast majority of those sales came from titles released by major publishers and distributors, not from smaller, independent developers. While we depend on the likes of EA and Ubisoft to deliver blockbusters like The Sims and Rainbow Six, we often don't recognize the importance of indie developers in fueling the creative engine of game design and production.
...
Remaining independent means taking on all the costs of creating, producing, marketing and distributing a title. These costs are high, and a crowded marketplace makes it even more challenging for independent developers to make their presence known. In addition, many smaller firms are made up of just a few employees, whose skills skew toward programming or animation rather than sales or business development.
...
Not necessarily. Since the late 1990s, some small companies have gone the direct route, selling their games online or making their titles open source as a means by which to generate a player base. For example, Positech Games, based in the U.K., was recently highlighted on the popular developers' forum GameDeveloper.net, for its claims to have reached the $100,000 mark purely through online sales.
...
Social networking sites like MySpace and Facebook have transformed the way that independent filmmakers and musicians reach new audiences and sell their work. The next wave of social networking, a trend Sony Computer Entertainment calls "Game 3.0," will change the way independent game creators take their games to market.
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But these sites lack a crucial element – game developer participation. FairShare, a new technology my company announced at the Game Developers Conference (GDC) this year, is, amongst other things, designed to connect developers with players through game-related social networking. An engine that runs underneath gaming portals, FairShare lets players sample new games through a try-before-you-buy option. It offers incentives for players to share, recommend and give feedback on new games, and it gives developers a chance to sell games, gain visibility and build their reputations among the game aficionado community.

The Game 3.0 future for independent developers will be rooted in social networks, where developers can make their games available online, players can try, buy, share, and offer feedback on the games, and developers can respond, making changes or developing new titles based on that feedback.

Just as Facebook and Myspace make every participant an owner of his or her own content on the Web, a Game 3.0 style portal must provide a sense of ownership for both players and developers. For indies, the Game 3.0 trend opens new opportunities for connecting with gamers who want to buy their titles, as well as the chance to build communities with other developers and gamers.

Game publishers threatened by user-generated content

Got an idea for a video, a song, a podcast, a game? Make it, put it online, and people will find it. We all benefit from the mind-bogglingly wide variety of stuff to consume, and the competition increases quality for everyone. The dinosaurs who have become rich off outmoded means of production and distribution are quaking in terror. Some, like SCEA president Phil Harrison, are making attempts to adapt and thrive.

What Do Media Executives Fear?

User-generated content was named by 57 percent of respondents as one of the top three issues they face today. More that 70 percent believed that social media would continue to grow, while only 3 percent said they viewed social media as a fad.
...
"Traditional, established content providers will have to adapt and develop new business and monetization models in order to keep revenue streams flowing. The key to success will be identifying new forms of content that can complement their traditional strengths."

Publishers "Scrambling" to Understand the Wii

This is an interesting article about publishers now figuring out that the Wii is a pretty good idea. Well, that's true, but I think they're going to have a lot harder time figuring out how to market and make games for the Wii. Much like US Publishers have had one hell of a time figuring out how to make games and market them for the DS, the Wii is going to prove just as difficult.

Sure all the basic games ought to make it out for the Wii (I'm holding out for hockey on the Wii), they're going to have to try some new stuff. Much like US publishers "don't get" the DS, they're going to take some time to figure out the Wii as well.

Hell, I consider Guitar Hero a prime example of how backward looking most publishers are. It took a new fringe publishing company to make GH happen. Of course they then get bought up by a company looking to extract maximum profit from the franchise, but it's sad that it takes these small forward looking companies to get gamers (and game developers) a chance to try new things.

Try new things. The Wii and DS are the cheapest platforms you can develop for. The risk has never been lower.

Bloomberg: Publishers 'Scrambling' to Get More Titles on Wii

With Nintendo's Wii having sold 3.56 million units in Japan and the U.S., the unique motion-sensing enabled system is already a bona fide success at this early stage in the console wars. While many anticipated the Wii to do well thanks to its positive E3 showing last year and all the hype generated up to its launch, Nintendo's new console has done probably even better than many expected.

According to Bloomberg.com, publishers were simply taken by surprise, with the exception of a few (like Ubisoft). "Those companies are backtracking," remarked Piper Jaffray analyst Anthony Gikas. "They're going to need to get their best-branded product on that platform. That will take a good nine to 12 months."
...
While supporting any new console is generally a risky proposition, Ubisoft has believed in the Wii from the very beginning. The French publisher released 7 titles for the Nintendo platform in December and has another 6 games in the pipeline to be released by this June. "It's not really a bet anymore," said Ubisoft's Tony Key, head of marketing in the U.S. "It's a viable system that's going to make us money."

Indeed, games on the Wii cost (on average) far less to develop than on Xbox 360 or PS3, potentially saving publishers millions. Furthermore, according to research firm IDC, publishers will continue to be pressured into supporting the Wii as its install base grows. IDC is predicting that Nintendo will ship 16.1 million Wiis this year, outpacing 9.87 Xbox 360s and 9.1 million PlayStation 3s.

MY Games Industry Map?

This particular interview is interesting. I certainly think that yes community is going to play a major component in the future of the game industry. At the same time though there are going to be folks that want a good non-community experience from time to time.

There is also this thing with the release of GameIndustryMap.com in many respects just a flashier version of the long existing GameDevMap.com. I'm puzzled about his possessive use of "my" game industry map in the context of his discussion of community.

Overall he's got a lot of interesting things to say, and the connections that enable someone to actually get stuff done. I'll be curious what a year or two can bring.

David Perry: Publishers' Days Are Numbered

My game industry map has proved that to me; the programmer came to me and asked, "How would you like this done?" and I said the obvious, which is a storage database where you put the pins on the map with a search system, give me a category filtering system, country filtering system, and he goes, "Ok" and he coded it... that's actually a bad design, because in a world where you keep adding more and more pins and every pin has to go through Google and that's a very slow system. The more pins we put in the map, the slower it gets. Coming back from the show, they're going to really slow the site down. It's going to be horrific when people start whacking pins in there together, there's going to be thousands of them.
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I agree with him [Doug Lowenstein] completely. He said, "Anyone that's a member of the Video Game Voters network put your hand up." I'm a member. I promote the site and have written congress twice. So I completely support him and agree with him 100%. Our industry is really sucking when it comes to supporting such measures. You know when the industry is going to start noticing he's gone, when people don't fight that fight we will lose that battle and he took it to them, like he really was fighting very hard for our industry. It's very easy to bash him. People are bashing him now that he's gone and he can't answer for himself, but the fact is that guy took the most un-fun job in the world in politics and he fought and fought and fought to try to keep our freedom in making games, and I believe very strongly in not censoring games.
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No, we need better and better of what's good. We need a fricking killer driving game or a stunning first-person shooter. And if you think of a new genre, you should get a award for the year. You should be the guy standing up at the choice awards. Like, "You just made Guitar Hero and you've made a new genre for us. Thank you very much, that's a fantastic job and you should be applauded for it." It shouldn't be everybody needs to make Guitar Hero or they suck, which is just not cool. We'll end up with a bunch of random junk.

Publishers: DS Could be Best Selling Video Game Platform Ever... Without our help.

So, this piece of news is really interesting. It's interesting to me because it seems so blatantly obvious that there is a goatload of money to be made off of the DS, yet publishers are actually not supporting the platform in any sort of gun-ho fashion. Instead they're being timid with a platform that for all ostensible purposes is one of the cheapest out there to develop for, perhaps save the web. But you know, risk has never been the name of the game for most publishers.

DS Could Be Best Selling Video Game Platform Ever

Naturally video game publishers are going to want a piece of the portable pie. The opportunities are many. "Historically, Nintendo has been able to dominate the portable game market by developing games specifically suited for the unique attributes of the portable platform. However, there is growing opportunity for third party publishers and developers of portable games," DFC said. "... publishers of not only casual games, but even developers of high-end PC games like role-playing (RPG), massively multiplayer online games (MMOGs) and turn-based strategy, could benefit from the rising use of portable platforms among adults. Meanwhile, existing console game publishers have found it is possible to make over $100 million in revenue from a single PSP title based on the right franchise."

Honest Publishers are Neat

There's an interesting article (verging on a rant, which is a good thing as far as I'm concerned) over on GameDaily.BIZ about getting a game signed.

I can't say much about it other than that it's a pretty honest publisher's view of the world of game development.

Getting Your Game Signed

Less talk, more action – that's what publishing partners really want to see. You can trot out the biggest, fattest, coolest sounding design document in the world, but if you want to be the beneficiary of a five-, six- or seven-figure check, hoo boy... Brother, you better be able to put a playable demo where your mouth is. (Especially since we're sure as snot not reading a 50-page essay on the spot, let alone while swamped back at the home office...)
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Don't arrive at the bargaining table unless you're willing to negotiate, and open to seeing things from the publisher's perspective. This doesn't necessarily mean accepting less money than anticipated, but it may mean adjusting royalty figures or expectations in terms of marketing and promotional commitments. Fun fact: Everyone's goal is always to maximize return while passing the most possible risk onto the other party. And so, if you want to have any hope of getting signed, let alone landing a deal whose terms are even close to favorable, you have to leave yourself room to maneuver. Deals are always a subtle process of give and take. Offended easily? Perhaps this isn't the right business to be in – you'd be amazed by the proposals various game-making and –manufacturing entities will attempt to float past one another.