The Puck Stops Here!

Post-GDC San Francisco

2009-03-30T11:35:00.000-07:00

So now you're back in freezing Canada after attending GDC in beautiful San Francisco. How did it go? Do you have any "success stories"? Anything that surprised you about this year's conference? Recommendations for how things could be done differently next year? Blog about your experience via the comments section below!

GDC

2009-03-26T12:06:00.000-07:00

Guitar Hero World Tour...the guy on the drums was pretty good. The second pic is of OptiTrack a hip and upcoming company that manipulates people motion and interfaces it with games.

<a href ="http://maps.BlackBerry.com?lat=37.78381&lon=-122.40221&z=2&label=Guitar+Hero+World+Tour...the+guy+on+the+drums+was+pretty+good.+++The+second+pic+is+of+OptiTrack+a+hip+and+upcomig+company+that+manipulates+people+motion+and+interfaces+it+with+games."> Blackberry Map </a>

<a href = "http://maps.google.ca/maps?q=Guitar+Hero+World+Tour...the+guy+on+the+drums+was+pretty+good.+++The+second+pic+is+of+OptiTrack+a+hip+and+upcomig+company+that+manipulates+people+motion+and+interfaces+it+with+games.@37.78381%2C-122.40221"> Google Map </a>

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GDC

2009-03-26T10:50:00.000-07:00

I am standing at the Nintendo's booth. The two people in this picture are trying out the soon to be released EXCITE BOTS. Very cool Wii game. I think I will give it a try!!

<a href ="http://maps.BlackBerry.com?lat=37.78381&lon=-122.40221&z=2&label=I+am+standing+at+the+Nintendo%27s+booth.+The+two+people+in+this+picture+are+trying+out+the+soon+to+be+released+EXCITE+BOTS.+Very+cool+Wii+game.+I+think+I+will+give+it+a+try%21%21"> Blackberry Map </a>

<a href = "http://maps.google.ca/maps?q=I+am+standing+at+the+Nintendo%27s+booth.+The+two+people+in+this+picture+are+trying+out+the+soon+to+be+released+EXCITE+BOTS.+Very+cool+Wii+game.+I+think+I+will+give+it+a+try%21%21@37.78381%2C-122.40221"> Google Map </a>

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GDC. Day 2

2009-03-26T10:14:00.000-07:00

Day 2 at GDC very cool technology coming out of this event. N Gage has come out with some games for the high end phones. Worth stopping by the booth.

<a href ="http://maps.BlackBerry.com?lat=37.78381&lon=-122.40221&z=2&label=Day+2+at+GDC+very+cool+technology+coming+out+of+this+event.+N+Gage+has+come+out+with+some+games+for+the+high+end+phones.+Worth+stopping+by+the+booth."> Blackberry Map </a>

<a href = "http://maps.google.ca/maps?q=Day+2+at+GDC+very+cool+technology+coming+out+of+this+event.+N+Gage+has+come+out+with+some+games+for+the+high+end+phones.+Worth+stopping+by+the+booth.@37.78381%2C-122.40221"> Google Map </a>

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GDC

2009-03-25T10:28:00.000-07:00

GDC 2009 Canadian Booth. There is a very cool home theatre and gaming car racing game. The company that produces this game is D-Box.

The audio is the VP sales from Southpaw from Canada. They project manage digital content - very cool. www.southpawtech.com

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New study from ESAC to be released Wednesday

2009-03-23T17:05:00.000-07:00

Next Wednesday, March 25, the Entertainment Software Association of Canada (ESAC) will be releasing it's new national study of the Canadian video game industry and hosting a small gathering to review a few of the highlights. We would like to invite you all to attend, so if you can squeeze it in to your busy schedule, we'd love to see you!

Please find the details below:
-----

The Entertainment Software Association of Canada (ESAC) invites you to join us for the launch of:

"Canada's Entertainment Software Industry: The Opportunities and Challenges of a Growing Industry"

This first of its kind national study of the Canadian industry is based on original research, interviews and surveys of Canada's industry leaders.

Some of the interesting facts and figures the study highlights include:

* $1.7 billion in direct economic activity
* 247 companies within the entertainment software industry in Canada
* 14,000 Canadians directly employed
* Current and projected growth rates
* Industry concentration
* The impact of government policy and support on the continued growth of the industry

Please join us on March 25th at 5:30pm in the Canada Lounge @ GDC (Booth 5120 NH) for a brief presentation.

We hope to see you there!

Blog about your GDC Experience with Vayyoo's vPost!

2009-03-23T09:17:00.000-07:00

GDC has finally arrived, and all week we will be making our blog available for you to post about your conference experience directly via your Blackberry using Vayyoo's vPost. All blog participants and Canadian companies should have received instructions by e-mail to download a free trial of vPost. Good luck @ GDC, and we look forward to reading about your experiences!

2009-03-19T15:36:00.000-07:00

THE PITCH

2009-03-18T09:28:00.000-07:00

Our inaugural blogger Scarberia returns to The Puck Stops Here! to share key points on making an effective pitch at GDC. Scarberia has been an executive in and around the games business for almost 20 years, both in publishing and product development. "The reason for the pen-name is to protect plausible deniability in case I piss anyone too important off, since I still rely on them for deals, good gossip and expensive dinners...."

With GDC coming up, some of us are still trying to lock down our meeting schedules, reading about which sessions to attend, or working the phones to scam the best party invites. But more than a few of us are likely in crunch right now, trying to get a pitch build together. For these unfortunates, GDC means both hope and dread. As the economy keeps heading down the seemingly endless Sonic slides (the one’s with the loops and the long, slightly sickening flying jumps), you may have to be in possession of quite a large pair of audacities to still have much hope left.

And yet, the games business clearly isn’t going away. In fact, some numbers still show it growing. This might allow a lucky few developers to join a very small club, along with foreclosure attorneys and 99 cent stores, where there’s still a chance to turn things around in 2009. And GDC might indeed be the place to make it happen. That is, if you’ve got the right pitch.

Over the years, I have done my share of pitching; but more frequently, I have had the opportunity and misfortune to be on the other side of countless pitches. As a result, I was asked to write down some recommendations. Many of these will sound like homilies, or common sense platitudes, but if you haven’t had the experience of sitting on the receiving end of four long days of GDC developer pitches, then read this as either valuable insight, or the vengeful mumblings of a spiteful crank.

Know to whom you’re pitching:

It is impossible to exaggerate how little research developers generally do on the publishers (and their representatives) they’re pitching. For your own sake, do some homework before going to that meeting. A rule of thumb should be a minimum of twice as much research time as the meeting will likely take (one hour of research for a 30 minute slot). But in reality, you should be spending at least a day per meeting combing through the publisher’s latest products, strategy statements, quarterly conference calls, upcoming product buzz, etc. If you are asking for money, regardless of the amount, have some understanding for the strategy and issues facing that business before extending your open hand. There’s so much information on the net now that there is no longer an excuse for lack of preparation. And if you have an inside source at the target company, do not hesitate to find out the latest discussions, decisions or just general tone that’s going on over there. This is particularly important now, since last year’s strategy will not be a good predictor for what’s going on today.

Know thyself

Don’t assume you’re a good presenter, or the best representative of your company, or the only person who knows the product you’re pitching. Just because you’re president, or the producer, or the creative genius, doesn’t make you a good presenter. You wouldn’t have a junior artist lead the programming team just because they once took a course in Basic. Have respect for the fact that selling well is a rare combination of talent and skill. If selling does not come naturally to you, it doesn’t make you a lesser human being. Thoroughly check your ego before going to these meetings. Let the person who can present with the most authentic, well-spoken enthusiasm take the lead. This is good for your product, for your company and for the people having to listen. To whit:

Don’t be boring

You likely believe, and should, that your product is endlessly fascinating. But remember, no one outside the team is as interested in what you’re doing as you are. Many game pitches combine the same level of duration and self-indulgence to that of a slide show of someone else’s family reunion.

Try out your presentation first on outsiders who don’t have a stake in loving you. If they comment that the content or the personalities allow things to lag for any more than one to two minutes at a time, then tighten it up and/or get someone else to talk. This is not about hyperventilated speaking styles or bombastic visuals. It’s about being informative, engaging, polite and professional. Even if the publisher doesn’t like your product, you will have passed on a good memory. You never know when that may pay off.

The Demo

Take care of all technical problems before the meeting starts. Every Business Development person has barroom tales of how a team couldn’t get their demo to work. Watching people fiddle with monitors, cables and settings is both dull and insulting. Admittedly, we’ve all been there when things have gone technically wrong, which is why the person who can fix these things should never be the person presenting or driving the demo. In fact, the best number of people to bring to a meeting is usually three: the talker, the driver and the tech. The talker should be engaging the listener(s) right from beginning to end, filling in gaps with interesting information or answering questions while the demo is booting up, or getting fixed or just seeming to drag during the presentation. The driver should be focused solely on the visuals, showing game play or level variety or something that reinforces the talker’s points. He should not under any circumstance be trying to beat the level to show off his macho skill (this inexplicably happens ALL the time). And really, we all know that games sound good these days, so do not crank the volume just because you’re proud of the mix that just got in the build the night before. Keep the listeners engaged with what they’re seeing and what you’re saying, not pinned against the wall trying to evade the decibels.

The PowerPoint

There are two types of PowerPoint presentations: those that you speak to, and those that you leave behind to be passed around. During pitch meetings, you should be focused on the former, which should contain only key bullet points and as little text as possible. All of the embellishments to these points should be spoken, not written. There is nothing more turgid that having to listen to someone reading word-for-word what’s on their screen

Allow the viewer to burn an image in their minds of only the most important bits, while also keeping them engaged in a conversation with you. And if you can, have a second presentation as a leave-behind that includes the written details. But even in that doc, try to keep it brief. It will be passed around and read if it’s informative, entertaining and visually thought through. Big, fat decks are correctly looked upon with horror as indulgent, wasteful and unreadable by nearly everyone back at the publisher.

In Conclusion

The clichéd advice about any kind of speech or presentation is: First, be yourself. But unless you have gotten objective reactions to your speaking abilities, don’t believe it. Nearly everyone speaks too much or too little. To prove the point, just watch most politicians who actually speak for a living. But you don’t have to be perfect either. If you honestly go into a pitch wanting to entertain and inform your audience about your product in the best way possible for them, then that authenticity will allow you to adjust with whatever winds up happening. Some may prefer just to sit back and listen to you. Others may derail your pitch plan altogether to get to their agenda. So what? The goal is not the presentation itself, but the transference of your excitement and dreams about your game to someone who can help bring it to market. If you’ve done that, then everyone wins.

Some Quick Non-Obvious Tips for GDC

2009-03-17T08:51:00.000-07:00

The Game Developers Conference is a big crazy event! There are so many people and so much going on, you really need to prepare in order to maximize your investment in attending.
You can likely google up plenty of articles and guides for GDC, or even conferences in general, so I thought I’d share some non-obvious tips.

1 – Wear comfortable shoes: You are going to be walking a lot. A lot. Don’t worry so much about being stylish, focus more so on survival! While flip-flops may not be appropriate for meetings, do balance looking nice with being able to locomote.

2- Biz cards, not biz plans: During casual networking and other social encounters, don’t overwhelm people with your business plan and/or game demo. Most folks just want to chat, meet interesting people and have a drink to unwind. Also, most folks are totally NOT in a position or mode to accept pitches, etc. So, instead, focus on making connections, swapping biz cards, and just generally build up your professional network. The pitch can come later, when your new buddy introduces you to his biz dev friend at a publisher.

3- Party!: Go to parties and social functions. Not to get drunk and dance like a maniac, but because it is the most efficient way to meet new people and make connections. That said, don’t kill yourself to get into the “cool” parties. If you don’t have an invite, just move on. There’s over 15,000 people at GDC, the vast majority of them do not get invited…

4- No Swag: Don’t waste your time chasing down free t-shirts and other giveaways. Sure, if someone just hands it to you as you walk past, take it! But, in most cases, you have to stand in line, or complete some kind of quiz, etc. Is a $10 t-shirt really worth your precious at-GDC time?
5- Divide and conquer: If you are attending with your co-workers, don’t stick together like a big Katamari blob! Split up and spread out to gain more coverage. This is true at parties, or during lunch breaks (i.e., sit a different tables), and choosing which sessions to attend, etc. You all know each other already.

6- Do some learning: There’s a ton of awesome sessions at GDC. Content you wouldn’t get anywhere else. Take the time to review the program and pick a few choice sessions, even if it means you have to black out that time for meetings. A well picked session could provide that aha! moment you’ve been needing. This doesn’t mean you just pop into the big name keynotes… Really take the time to review the program for stuff that is specific to your current needs.
Most importantly, have fun!

A Heads-Up from Scott!

2009-03-16T12:51:00.000-07:00

Note: Today's featured post comes from veteran blogger Scott Warner, who returns to us to share an important update about what's going on at the U.S. Federal Communications Commission, and what Canadian companies should be looking out for...

Buried in the FCC's 22 page Notice of Inquiry on implementation of the Child Safe View Act of 2007 last week, is the following very scary paragraph:

"11. Finally, we invite comment on whether we should examine blocking technology for video game players and/or video games. Video game players are not included among the devices specifically identified in Section 2(b)(2), and video games are not mentioned in the Senate Report and were not discussed in the Senate hearing on the Act.22 However, in light of the popularity of video games among children and concerns expressed regarding their content,23 we seek comment on whether we should examine methods of controlling access to video games in this proceeding.

22 We note that a bill currently being considered by the House Committee on Energy and Commerce would require warning labels on video games containing violent content. See http://www.thomas.gov/cgibin/query/z?c111:H.R.231.

23 Fifty percent of households with children ages 0 to 6 have a video game console, and 83 percent of households with children 8 to 18 have a video game console. See Roberts and Foehr, Trends in Media Use, supra n. 7."

Where is this headed? Who knows, but it could be the tip of the iceberg. Think, game producers having to label games for content similar to TV and hardware manufactures having to install content blocking technology similar to the "V Chip" . For more information on how the FCC has regulated both television content and TV manufacturers, visit http://www.fcc.gov/vchip/.

For more information contact Scott (sgwarner@gsblaw.com) or James Dunstan (jdunstan@gsblaw.com). See you guys at GDC!!

Effective Media Relations During An Economic Crisis

2009-03-13T10:36:00.000-07:00

How well is your company making use of today's marketing opportunities being offered through journalists and press outlets? Does your company excel at 'getting the word out' or does it wait for the press to come knocking on the front door? What messages are you sending to your buying public - or to those who may wish to enter the talent pipeline in a few years?

Almost one year ago, I launched my small news site whose purpose was (and still is) to publicize all of the innovative digital media, peripheral and software products which are developed in Canada. In part, I launched this site because Canadian digital media news seemed very hard to come by on the larger, international news sites, and I envisioned a site which would create a focal news point for Canadian digital media companies. Since launching the site, I have found that tracking down Canadian news to share with the rest of the internet world is often like searching for Bigfoot in the BC Interior.

Why are we so hesitant to shout our news to the world? The nature of our industry is very social - many of us know each other, and as we all enjoy attending events, we are a networking-savvy and educated group. Many in our industry enjoy sharing news and knowledge as speakers at seminars and expos. We just don't seem to like telling the rest of the world about all of the great things that are going on in Canada, and in this, I believe we are doing ourselves and our industry a disservice - especially in the face of current economic challenges.

People around the world are interested in what we as Canadians are doing. Visitor stats for my own site support this, with an average of 7 page views and an average 20 minute visit, and the number of site visits grow each day - even on days when I've posted nothing new. This is not bad for a site which to date only has about 500 news articles on it. So what then, are the barriers to putting our companies into the forefront of the news media? Is it a lack of person-power in our offices? A lack of knowledge about how to develop a mutually beneficial relationship with the press? Or is it a fear of less than 100% favourable publicity and returns?

The purpose of the media is to inform and engage the public in events which are occurring throughout the day. This is done by the sharing of information and opinions. The public responds with either a desire for further information or an opinion of their own. These forms of communication are part of what our society is built upon - and part of what a company's success can be built upon. Certainly as an industry we are all mature enough to know that not everyone is going to be as excited or approving as all of our products as we may be. However, we also have to deal with being of the creative ilk that produces these dynamic products, and that creativity often comes with the fragile ego of the artist. Is that what is holding us back? Or is it just that Canadian psyche of belonging to "proper society" where one must hope to be recognized by others simply by our actions? Well - in this day and age, how is the world at large to recognize you for your actions (products), if you don't tell them?

As I began my search for Canadian studios, manufacturers, associations, schools, events and related entities, I found myself battling a growing feeling of discouragement. Site after site, while actively engaged in product development, had extremely outdated, neglected and poorly designed sites. Studios which are developing current titles hadn't posted a single news item in months - in some cases, years. On other sites, not a shred of news was to be found. Some companies make use of news wire or PR agencies to get their news out, and I regularly visit all of those press sites; unfortunately, I find myself back in the same boat I was in at the start - reading through massive amounts of press releases on completely unrelated topics in order to find those which fit into my very specialized niche.

I could easily go the route of all of the big digital media news sites and publish every story that comes out on the global wires, but I don't want to be like every other site. I am Canadian, my site is Canadian, and as a Canadian I am very proud of our digital media industry and all that it has accomplished. Our studios employ some incredibly talented people who have a passion for creating the best entertainment, the best gear, and the best software - and in many cases are on the cutting edge of innovation. We have shown through the quality of our products that Canada is one of the best development countries in the world for a reason. Why then, are we so silent about it? Why are we not engaging in this global conversation? Is it that we aren't sure about what is newsworthy and what is not?

The primary question that many should be asking themselves is this - "Is our company taking full advantage of the internet as an effective marketing tool?" This then leads into further territory and a broader scope - "Do we have information in place which lets people know not only what we've done, but what we are doing right now?" Going even further, "Does our company have a person who can deal with press inquiries, and make sure that our sites stay current?" Not all news agencies will run your story - that is a given. Sometimes it depends on the timing and the subject matter - then again, your press release could spur an idea for a major article, one which your company may be featured in. Let the press know that your company is full of experts who may be approached for opinion pieces - a good journalist will recognize from whence their experts came - and this is again beneficial for your corporate profile.

For those who are governed by international corporations - and I know there are more than just a handful of these across Canada - is your parent corporation helping your franchise or hindering it? For example, if you are developing a title for any of the big international publishers, when those dev updates, product announcements and release notices go out, are those in the head office telling your potential clients and fans that your company was involved? While NDAs and other agreements may come into play, is your studio taking advantage of whatever leeway is possible to get out news about what your company has produced? Some parent companies are very good about recognizing their satellite studios - others fail miserably. It can be very disheartening to go to the site of a well-known game dev company, only to find that the news on their site has not been updated since 2006! That company is seemingly oblivious to the fact that people want to know what they are up to - even if it is mention of awards won, events participated in - let your public know that you are still publicly active, not simply hiding away in studios and offices plotting your next move.

Some companies have embraced the value of RSS feeds and newsletters - but if they aren't updated, what real value do they offer? Others post to Twitter, LinkedIn or Facebook - all great marketing tools, certainly - but they should not be depended upon for a primary source of publicity. They are meant to be incorporated into your brand, to get people excited about what you are working on, to bring traffic - and the buying public, to your site. What are they going to see once they get there? An outdated site with no information related to the tweet they just read? How are you going to convert the general public into a happy end-user if they don't know who you are and what you do?

Making use of social media is not a bad thing - in fact it's a great way to draw in your audience, but as I said earlier, it should not be your only option. Other avenues which offer excellent returns for publicity include getting involved with events - either as exhibitors, speakers or sponsors. These give exposure to your company, and they don't always cost a bundle to get involved in. While sponsorship and involvement is important for the success of "industry only" events, and while involvement in them will get your company some publicity, think outside the industry as well. Community events, schools, fundraisers, charitable activities - they are facing challenges in this economic climate as well - and many of them provide services to those who are truly in need of assistance.

Sometimes something as simple as donating a swag package to a local school or organization for a door prize provides an excellent return on investment. Sometimes all your company's participation in an events requires is a donation of time. Volunteering to help at a local event can sometimes be just as effective as donating cash or a prize - a donation of time sincerely given is often worth far more to the recipient than any product you may offer. Involvement in these types of events broaden public awareness of your name and your brand - especially if it is more than just a token effort. Provide your corporate volunteer team with shirts or caps to wear with your logo, and start taking part in the community outside your office door. People unfamiliar with who you are and what you do will engage your representatives in conversation at the event - and now you are full circle again - you've gotten their attention, will your new visitors be let down at the door? News is what you make it to be - you alone can choose to make your company a leader or a follower in the global market. Be proud to tell the world you are Canadian!

2009 – The Year of the Entrepreneur and Casual Games The State of Washington State’s Game Industry

2009-03-12T11:34:00.000-07:00

The New Year rang in with the usual thoughts of new beginnings and hope. However, this year those positive thoughts were tinged by the downturn of the US and global economies. Mental preparation was needed for what was bound to be a slower 2009. To my surprise, the New Year began with a flood of new entrepreneurs looking to start their own businesses. Many studies show that entrepreneurism thrives in a downward economy, but I have to say, I would not have believed it if it weren’t happening today. The question is, why?
Some will say it is because folks have more time on their hands from project slowdown or a recent layoff. My belief is this industry is entrepreneurial by nature and is passionate about what they do – making games. Recently, enterpriseSeattle conducted an economic impact study of the video game business in the state of Washington to document what this industry means to our local economy in terms of jobs and dollars. In the course of one year: 150 companies or divisions wholly involved in games; over 15,000 jobs; and contributed over $4.2 Billion to the local economy. These numbers were fantastic, of course, but what the cluster analysis revealed was even more intriguing.
Our local industry’s past, present, and future lie with our three anchors: Microsoft, Nintendo, and Real Networks. The big three are our major employers of course, but they also are the foundation of our local game development community. Most of our local game development companies have founders or executives who have had early roots with at least one of these companies. Following the paths of the many spin-offs, it became clear that the video game industry is very entrepreneurial – more so than most industries. The more established companies give our local workforce the skills to make a game, but it is the passion for play and the entrepreneurial spirit that inspires individuals to begin their own venture.
Last year, the Washington Interactive Network began a series of eight workshops designed to help these entrepreneurs, Game Industry Start Up 101. These workshops cover a variety of topics from “Building Your Business Plan” to “Financing Fundamentals” to “Exit Strategies. This series brought in many new faces, new companies, and new ideas in 2009. Throughout these workshops, we learned quite a bit about the state of the local industry.
As most of you already know, funding from publishers has slowed down significantly and that affects our independent game companies. These folks are taking this opportunity to be entrepreneurial and to diversify their projects. Since finance entities are holding back on the purse strings, we’re finding many folks looking to self-finance their next project. This of course limits the size of the projects our indie developers can take on this year. We’re expecting casual and iphone games to be the bread and butter for the independent community in the next year.
Our larger independent game companies are doing fairly well, despite the US economy. We are finding that although growth plans are being scaled back, there will still be growth in 2009. Online subscriptions will see some disruption with defaulting credit cards, but games will continue to be a popular “stay-cation” activity. Consumers find value in that they get more bang for their buck when you spend $10 on a video game rather than on a single visit to the movie theater. As history shows us, and as we are seeing today, the entertainment industries continue to thrive despite the challenging economy. The video game industry is no exception.
My thoughts of trepidation for 2009 have turned to looking forward to what opportunities 2009 will bring.
For more information about the Washington Interactive Network go to http://www.washingtoninteractivenetwork.org/ or email at khudson@enterpriseSeattle.org.

Meet the Dutch!

2009-03-04T09:48:00.000-08:00

Of course we can start this Dutch week at The Puck Stops Here! with all the boring facts and figures about our rapidly growing games industry, the highly-educated population in the Netherlands and that 72% of the Dutch population on average spend 4.9 hours per week on playing games. But we’re sure you can Wiki that yourself. (or take the fast lane and check out our factsheet http://www.gamepioneers.com/ )

In this introduction we like to focus on one hardly ever mentioned demographic fact, which explains nearly every stereotype you hear about the Dutch: We are one of the most densely populated countries in the western World!

So what does this mean, living shoulder to shoulder with your next-door neighbour?

Practically it means we have a great infrastructure for everything but physical transport. Traffic is awful when all the working bees are on the move. Great connectivity and sewerage system though! And it means we are unchallenged in reclaiming land so we can peacefully fulfil our need for Lebensraum.

If we really can’t take it any longer we pack our bags and pioneer overseas opportunities like we will be doing at the GDC, or take our extremely long annual holiday.

On a more spiritual level we are free thinkers. Too free by some standards, but if there’s no freedom in space you have to create freedom within. Hence our successful creative minds in design and business. We already live in the box, so we are trained to mesmerize outside of it.

And last but not least, people find us bluntly honest. Forgive us that little shortcoming. We can’t afford to let tension build in our society, our way is to immediately speak our mind, have a little scuffle if necessary and live happily ever after…

So are you curious to meet some exploring, free-thinking and bluntly honest Dutch Game Pioneers? Stop by the Holland Pavilion, during one of the Dutch-Canadian events or drop a line and we will connect you…

The Vibe from DICE, as seen by Jason Della Rocca

2009-03-03T12:02:00.000-08:00

I had the privilege of attending the DICE Summit in late February in Las Vegas. It is a somewhat exclusive event for game industry high-rollers hosted by the Academy of Interactive Arts & Sciences (AIAS). I was curious as to what the vibe was going to be like, and to gage it is as a quick temperature read as to how GDC may turn out in a few weeks.

Surprisingly, folks were quite upbeat. One agent, repping AAA titles/developers, said that they are still insanely busy meeting the demands of the publishers. Hinting that there will always be a demand for top quality games and talent. Nice.

Though, EA’s CEO John Riccitiello gave a somewhat sobering talk on tactics for tough times. Wow, he looked tired up on stage…

In fact, it seemed like it was business as usual for most attendees. Doing deals, lining up content, etc. Several stated that the current tough economy was serving as a good excuse for companies to trim fat/waste. Others noted that the massive profits from past years mainly just hid all the inefficient processes and bad decisions of the past. Meaning, business is still good, but we need to be a lot smarter about it now.

Despite the overall business as usual vibe, there were a few heretics discussing new models and approaches to the business. Gabe Newell’s opening keynote on Valve’s move to a service model of entertainment was particularly enlightening and inspiring. Gabe easily demonstrated the benefit of taking a more proactive –and direct – role in engaging with your customers instead of relying on intermediaries. Industry veteran/guru David Perry also had a lot to say about the move away from single-player games as the norm and the future of the free-2-play model.

Gamasutra has a nice round-up of the sessions.

The Paradox of Success

2009-02-23T09:37:00.000-08:00

Scarberia brings up a lot of interesting points in his(?) analysis of the current state of the game business, but first reaction I have is, “Who’s business are we talking about exactly?”

Thinking of the game industry as a complex ecosystem is a good one, but often the lions of business neglect to recognize the full spectrum of cohabitants within the same environment. To say that many of the big companies in the game industry are hurting right now is a no brainer. However, that’s a limited point of view that fails to recognize that games, as a medium, are more vibrant and interesting and broader than they have ever been – and, in fact, there are tremendous business opportunities for those willing and able to grab at them.

Scarberia seems to lament over how the business was so easy back in the day. Well sure, the good old days are over and now we’ve got to really earn it. Sticking with the ecosystem metaphor, it is indeed survival of the fittest. And, in the fast changing game industry, fitness is more directly correlated to the ability to adapt than corporate might per se.

A recent analysis from DFC looked at the profitability of publishers across the West, Japan and the rest of Asia. In summary, the Western publishers are growing revenue, but profitability has been taking a nose dive. Conversely, publishers in Asia (Korea in particular) who are more service oriented may not be grossing as much, but are maintaining decent profitability. In part, this is due to their abandonment of the old ways of doing business. Or more precisely, they never bothered to adopt the old ways to begin with.

Korean publishers, as we all know, were quick to exploit online subscription models and leverage game café play, largely as a way to jump over the piracy hurdle. Now they are pioneering the micro-transaction model (aka “free-2-play”). And, it is through these innovations in business and distribution models that tremendous new value has been created. (No disrespect to Korean developers, but from a design/content point of view, they’ve essentially been cloning the West.) As game biz veteran Mitch Lasky recently echoed at the Game Business Law Summit, Western publishers have not given innovation in business/distribution models much attention.

And why would they? The EAs of the world are the entrenched players – the lions at the top of the food chain – that are now trapped by their own success. This dilemma is not unique the game industry, but is one that is faced by all successful businesses in a changing marketplace. In order to embrace new ideas fully, they must abandon their current revenue streams (e.g., selling discs in boxes at retail, or selling shooters to young males, etc). Thus, a dilemma between what works today and what will work tomorrow is created, along with the ensuing aversion to the risk of switching. To reiterate, it is the very success that got EA (and the other big publishers) to where it is, that is now holding it back. In short, it is a species that is overly optimized for the old ecosystem, and is now struggling to adapt.

And so, it is often left to the new players – or the existing ones that are most adaptable – to dive into the chaos and succeed. Again, largely by pioneering the business and distribution side of things.

Bigger is not always better, and blindly following the tech curve for tech’s sake is not the answer anymore (refer to the anemic horsepower of the Wii or the dominance of Flash online). True talent will always find a market – not because they deserve to, but because they’ve earned it.

Much like the failings of the music business to hold onto their monopoly of pressing CDs and pushing them to retailers, I’m not much interested in maintaining the status quo within the game “business”. The music “business” (i.e., selling CDs at retail) may be on its last gasps, but music on the whole is booming and exploding with countless opportunities for talented artists. If the current economic climate forces the game ecosystem to evolve a little more rapidly than some would hope for, well too bad. On the whole, I see that as a good thing for the evolution of games.

Uh-Oh, we lost the data

2009-02-20T11:08:00.000-08:00

Continuing with the theme of my last two posts, I want to touch on an issue facing more and more companies doing business in the U.S. That is, the loss, theft or other unauthorized access to the customer data you collect. And, more specifically, your obligations under various state laws when it happens.

It is, of course, quite common for companies to collect and retain information about the identities and buying habits of their customers. Various state and federal laws address what can be collected and the steps companies must take to restrict access to that information. As noted earlier, in the U.S., these rules generally apply only to specific types of protected information – financial, health, and information about children – and particular methods of collection. But, the fact that you may not collect information that is subject to these laws and regulations does not mean you are home free. To the contrary, even if the information you collect is not protected information, you may have obligations if the information falls into the wrong hands.[1] And, in some instances (as under Minnesota’s law), you may have financial liability for losses that result from a security breach.

The newspapers in recent months have been filled with stories of data breaches – accidental and intentional. This runs the gamut from selling a computer without removing the hard drive to a major hack of a company’s security system. If this happens to you and you have customers in the U.S., it is quite likely you will be subject to one (likely more) of the state laws governing data security and breach. Indeed, at this point more than 44 states have enacted data breach laws. Several have adopted or proposed laws that, in addition to requiring customer notification in the event of breach, go further and impose criminal penalties for failure to notify customers of a data breach and civil liability to banks for breaches of payment card data.

So, what is covered here and what are your obligations if it happens to you? As you might expect, the various state laws are not identical. As a result, if you are the victim of a data breach you will need to examine where your customers reside and examine/comply with the laws for each implicated jurisdiction.[2] Fortunately, however, these laws do have some common features:

First, most of these laws cover only personally identifiable information. That is, information from which a person might be able to identify the customer. This would include the customer’s name, social security number, date or place of birth, mother’s maiden name, identification card or credit card number in combination with a password or access code. Most, but not all, of the state laws provide a safe harbor for information that is encrypted.

Second, most states require you to give notice regardless of the potential risk that the information will be misused.

Third, the statutes define how you must deliver the notice and when. Typically, notice may be delivered in writing, electronically (with the customer’s consent) or by publication (web site or newspaper, etc.) if other methods are not likely to result in notice to the customer or the cost of notice would exceed a specified dollar amount, usually $250,000. Although some laws specific time periods within notice is required to be given (10- 45 days), others require notice “in the most expedient time possible and without unreasonable delay”.

Fourth, some state laws also require you to make arrangements for consumers to obtain a credit freeze to prevent disclosure of a credit report to a credit bureau.
Finally, many of the state laws provide forms for the notices you must use.

The bottom line here is that if you collect information from customers located in the U.S. you need to be aware not only of the rules governing the collection and security of such information, but your obligations if your security efforts fail. And, as part of this process, you should adopt policies regarding the collection and access to such information, with regular audits to confirm compliance with these policies. Of course, these policies also need to address who within your company will be responsible for determining if a breach has occurred and if notice or more aggressive steps are required to comply with applicable laws.

Be sure to tune back in a couple of weeks. We will look at user generated content and other ip issues. And, for questions about various privacy and data breach requirements, contact Scott Warner (sgwarner@gsblaw.com) or James Dunstan (jdunstan@gsblaw.com).
[1] This would be in addition to any contract liability you may have to your customer if you fail to comply with the terms of your privacy policy. And, remember, that in some states failure to comply with your privacy policy may be a violation of state law. See, for example, California Bus. and Prof. Code section 22575-22579.
[2] These laws are not limited to customer information; they apply to anyone about whom you collect information. And most impose obligations regardless of where you are located; the obligations are triggered based on where the customer resides.

More Thoughts from Scott: Personal Information Collection Laws and Children

2009-02-19T10:11:00.000-08:00

Continuing on the theme of issues relating to information collection and use (I will have another installment tomorrow on data breach obligations), my colleague in Washington, D.C., has put together a little something on COPPA and the CAN-SPAM Act. I know, these sound like the fixings for a sandwich. But truly, these are laws that can actually get you into real trouble if you don’t pay close attention. And, that’s not always easy. COPPA was well intentioned, but is not a model of clarity and the hoops you have to jump through to comply, well let’s just say, it is probably not the most efficient use of resources. Anyway, check out Jim’s report below and tune in tomorrow for a brief guide on your obligations if any of the information you collect gets into the wrong hands. Scott G. Warner (sgwarner@gsblaw.com) .

Hey Sony! Leave Those Kids Alone!: How Sony Managed to Run Afoul of the U.S.’s COPPA regulations to the tune of $1 million
Canadian game companies wanting to do business in the United States, whether it be offering games and gaming services to U.S. customers, or providing software or development services to U.S. publishers, need to be aware of several sets of U.S. laws related to privacy, and especially the private information related to children under the age of 13. Two of these, the Children’s Online Privacy and Protection Act of 1998 (COPPA), and the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), have been in the news lately. What gets real interesting, which I’ll discuss below, is what happens when COPPA and CAN-SPAM run into each other headlong – think alphabet pea soup (or your own least favorite soup with random letters floating in it).
First, if you’re having problems wrapping your head around the concept of hashing e-mail addresses and building multiple layers of security systems into your website flow to make sure you don’t collect information you are not supposed to, take heart, even the giants stumble, and stumble badly.
Demonstrating that even the biggest companies can run afoul of privacy protection laws, Sony BMG Music has agreed in January, 2009, to pay the largest fine ever levied COPPA. The case makes clear that COPPA applies not only to Web sites that specifically cater to children under the age of 13, but also to Web sites that knowingly collect personal identifiable information (PII) from children under 13.
The United States Federal Trade Commission (FTC), delegated the authority to enforce COPPA in the United States, filed both a Complaint and a Consent Decree in the U.S. District Court in New York on December 11, 2008, charging that Sony operated some 1,100 Web sites promoting its music and recording artists, and of those websites, close to 200 collected visitors’ e-mail addresses, date of birth, gender, zip code, country, user names, and in some cases, street addresses (examples of PII). The FTC determined that over 30,000 children under the age of 13 registered on the Web sites, and Sony had actual knowledge that it had collected PII, without first obtaining parental consent as required by COPPA. Sony’s own Privacy Policy warned children under 13 not to provide such PII, but the offending Web sites required a visitor to enter the information in order to gain access to the Web site. Sony also allowed children under 13 to create their own fan pages, including posting their age and picture, without first receiving parental consent. The FTC summarized its charges as follows:
In at least 30,000 instances, Sony Music collected, used, and/or disclosed personal information from children without first providing their parents with notice of its information practices, either on the defendant’s Web sites or directly, without obtaining verifiable consent from the parents prior to the collection, use, or disclosure and without providing parents with reasonable procedures to access their children’s information and to refuse to permit its further use or maintenance.
Rather than fight the FTC, Sony entered into a Consent Decree agreeing to abide by COPPA and paying a $1 million fine.
Meanwhile, the Children’s Advertising Review Unit (CARU), has recommended that AOL modify its websites http://www.aol.com/ and http://www.kids.aol.com/ because, according to CARU, they may not comply with COPPA. It seems that when registering for an AOL e-mail address, potential registrants are asked to provide various forms of PII, including their first and last name and desired e-mail address. They are also asked for their date of birth. If a prospective member enters a birthday corresponding to an age below 13, a message appears stating, “You must be over 13 years of age to register for this service.” The registrant is then able to change the previously entered birthday to one indicating an age above 13 in the same window and complete the registration. There is no session cookie in place to prevent users from circumventing the age screening. As Homer Simpson would say: “D’OH!” Prohibiting kids from changing their ages to above 13, or backing out so they can reregister as a 12-plus are fundamental to COPPA compliance.

There’s even a wonderful website out there that collects up COPPA stories, and specifically the excuses people give to try and argue that they’re 13 or older. A few are listed below, but visit http://www.coppakids.com/ for a good laugh:

“i am 15 years old,DUH!,if you don’t let me sign up, i am going to make a big fuss about it.”

“I cannot sign up. I was 13 yesterday and just got into the habbit of smoking. Hope that does not effect the was I sigh up.”

“hey [company name] people can you erase the thing on my computer that says you are under the age of 13 because im 20. p.s. you are all bitch for doing that.”

“i cant register :) i have 14 years but this web show tat i have only 12 or under! i need a Girl Friend”

The fact that COPPA was enacted more than ten (10) years ago, and large companies still can’t seem to get it right should make smaller game developers shudder (or better yet, run to engage competent counsel who can help navigate the COPPA waters).

So, in a nutshell, here is what you need to do to be COPPA-compliant for all websites and online communities (including game communities):

You can’t collect “Personally Identifiable Information” (“PII”) of children under 13 years old unless you get prior parental consent. “PII” equals any information that can be used to identify and contact a child. This includes first and last name, street address, e-mail address, AND IM screen name if identified with a particular IM service

COPPA applies where: You host a site that can reasonably expect to be visited by a large number of children under 13, or you have actual knowledge, however acquired, that a particular visitor/subscriber is under 13. Special attention needs to be paid if you’ve got a game or website that’s got chat rooms where kids can blab PII around, especially if you (according to your Privacy Policy and Terms of Service) say that you are monitoring the chat.

In signing up subscribers you must be careful not to set up your site to allow under 13 visitors to lie about their age by asking questions that encourage a child to lie, or that allow a child to back out of a sign up process and then reenter an older age when it is clear that they can’t sign up if they are under 13 (see the discussion of American Online above).

In addition, COPPA requires that you:
Post a privacy policy on the homepage of the website and link to the privacy policy everywhere personal information is collected
Give parents the choice to consent to the collection and use of a child's personal information for internal use by the website, and give them the chance to choose not to have that personal information disclosed to third parties.
Provide parents with access to their child's information, and the opportunity to delete the information and opt out of the future collection or use of the information.
Not condition a child's participation in an activity on the disclosure of more personal information than is reasonably necessary for the activity.
Maintain the confidentiality, security and integrity of the personal information collected from children.

We’ll visit CAN-SPAM in more depth in a future blog, but there is an interesting conflict brewing between COPPA and CAN-SPAM. CAN-SPAM requires that any advertising e-mail clearly identify itself as being advertising, contain a valid e-mail return address, contain a real world “snail mail” address, clearly identify the sender of the e-mail, and provide the recipient an opportunity to opt out of future advertising.

Last year, the FTC revised its CAN-SPAM rules to specifically say that “forward to a friend” promotional e-mails had to abide by both CAN-SPAM and COPPA. Here’s an example. Suppose hypothetical toy manufacturer WikiDolls has an online community that consists of children under 13. It runs a promotion whereby it invites its subscribers to send an e-mail to their friends inviting them to join. Little Janie is registered and her parents have agreed to WikiDolls collecting PII from her. Little Janie now enters her under-13 BFFL Suzy’s e-mail address in the forward to a friend e-mail form provided by WikiDolls. According to the FTC’s interpretation of CAN-SPAM and COPPA, WikiDolls can’t save Suzy’s e-mail address, because her parents have not consented to the retention of the PII. Further, the disclosure of Janie’s e-mail address to Suzy, even if wrapped in a CAN-SPAM proper wrapper, might itself violate WikiDoll’s Privacy Policy. The end result – WikiDolls is going to have a difficult time marketing its site in this manner. Again, quiver in terror, or get a good lawyer who can help you with this and understands all the nuances of hashing e-mail addresses.

I’ll close with one final anecdote. I had a client recently who complained bitterly that I was being too conservative in my approach to CAN-SPAM and COPPA, finally saying IN ALL CAPS in an e-mail, “Well XXXXXXXX doesn’t do it that way!” As it turns out, XXXXXXX was a Canadian company. When I pointed that out to the client, their response (in the moral equivalent of a very small font) was “never mind.” Funny thing is that the Canadian company sold out to a U.S. company that continues to fail to comply with CAN-SPAM and COPPA. But given the stories above, I guess that shouldn’t surprise anyone.
If you have any other questions about COPPA or CAN-SPAM compliance, please contact Jim Dunstan at (202) 298-2534 or jdunstan@gsblaw.com.

Response to Scarberia

2009-02-18T11:48:00.000-08:00

Make sure to check out the new comment to Scarberia's post! This response comes from Jason Della Rocca, the long-time executive director of the International Game Developers Association (IGDA), though he recently surprised the community by announcing his forthcoming departure from the role. We asked Jason to comment on the business of games, specifically in reaction to Scarberia’s penalty box post from last month. (Note, these are his personal thoughts, and do not represent those of the IGDA.) Jason himself will be in the penalty box next week, updating us on the vibe from this year's D.I.C.E (Design, Innovate, Communicate, Entertain) Summit in between his travels.

Legal Issues in the Gaming Industry

2009-02-17T09:54:00.000-08:00

I am really pleased to participate in “The Puck Stops Here”. It is great to see the Canadian Consulate supporting the Canadian game community.

My plan is to identify/discuss some of the familiar (and not so familiar) issues facing game companies (and others) doing business in the U.S. Over the next few weeks I will touch on various topics including:

COPPA and CAN-SPAM compliance;
Using music in games;
Integrating voice communications in games and avoiding potential liability under CALEA;
Do’s (mostly don’ts) re on-line gambling;
Protecting intellectual property and reducing exposure in publishing and license agreements;
Managing user generated content;
Compliance with safe harbors for copyright infringement and defamation;
Crafting and enforcing EULAs;
Reverse engineering and anti-circumvention rules under the Copyright Act;
Compliance with laws governing contests, coupons, lotteries, and prepaid cards;
Immigration issues in cross-border transactions; and
Rules for protecting against and responding to data breaches.

With any luck, these posts will generate questions and comments which will provide additional food for thought and topics for discussion. Of course, this is too much to cover in one bite or for one person, so I hope to cover these and other issues over several posts and with the help of several of my colleagues including Benjamin Lambiotte, James Dunstan, John Crigler, and Gregg Rodgers. You can view their bios at http://www.gsblaw.com/.

First things first. Today is a holiday in the U.S.: Presidents Day. For those unfamiliar with it, until 1971 this holiday was celebrated to honor George Washington’s birthday; February 22. But, from 1971 until the mid-80’s the party for George’s birthday was moved to the 3rd Monday of February. After that, it was a short step to bundling several other observances into a single holiday: Abraham Lincoln’s birthday (February 12) and, depending on which state you happen to be in, various other presidents. Just keep that in mind the next time you read a service agreement that excludes federal holidays. Now, to business.

As a start, I want take a look at a recent development in the area of personal privacy. This is topic that gets a lot of press and generates quite a lot controversy/confusion in the U.S. The fact that information about personal behavior and preferences can now be so easily and quickly collected/disseminated and, with increasing frequency, lost, has made the topic all the more controversial. To some, the fact that privacy is such a hot button in the U.S. may come as a surprise. After all, there are likely few places on earth with more rules and regulations than the U.S. But, the fact is that unlike Canada, the U.S. does not really have a centralized/uniform privacy regime. Instead, privacy in the U.S. is generally a matter of common law and legislation on state-by-state basis. I say generally, because there are exceptions.[1] Specifically, health care information, financial and credit information, and information about children. But, rather than legislating an overall policy on privacy, the U.S. generally deals with the issue in the context of specific types of information and how that information may/may not be used.[2] The mechanism to implement these policies is typically – but not exclusively – legislation. In some cases the federal government provides voluntary guidelines which are used by government agencies and courts to measure compliance with other laws. For example, while the Federal Trade Commission certainly promulgates regulations to carry out its mandates, it also develops guidelines and principles for use in evaluating compliance with laws it is charged with enforcing, such as Section 5 of the FTC Act which applies to unfair and deceptive acts or practices.

A recent development (released last week) on the voluntary side of things (we will talk about COPPA and data breach legislation, etc., later in the week) is the FTC Staff Report entitled: “Self-Regulatory Principles for Online Behavioral Advertising” (http://www.internetnews.com/ec-news/article.php/3802806/Advocates+Blast+FTC+Guidelines+on+Web+Privacy.htm). The Report follows up on previous work and public hearings by the FTC on the subject, which began in 1995. The Report sets forth 4 principles to govern “behavioral advertising – the practice of tracking an individual’s online activities in order to deliver advertising tailored to the individual’s interests”:

Web sites should provide a clear, concise, and prominent statement about their behavioral advertising practices. These notifications are to be separate from general privacy policies and should give consumers an easy-to-use method of opting out. Companies that collect information through mobile devices should ensure they have sufficient disclosure mechanisms.
Companies are encouraged to maintain reasonable security and retention practices with respect to the data they collect.
Companies are also encouraged to inform consumers of retroactive material changes to their data collection policies.
Companies are encouraged to receive express consent from consumers before collecting "sensitive data," such as information about children, health information, and Social Security numbers.

But, don’t let the title fool you. While these principles are not mandatory, there are likely consequences for failing to comply. Indeed, as the Report notes, these principles do not displace existing laws and companies engaged in this practice “should be mindful of the federal and state laws that may apply to their operations”. On this point, the FTC took pains to point out that it has been very active in conducting investigations and bringing law enforcement actions challenging deceptive privacy claims and improper disclosure of consumer data, noting that since 2001 the FTC has brought 23 such actions.

Still, the principles may not go far enough and the FTC has come under quite a bit of criticism for opting for “self-regulation”, rather than recommending Congress enact legislation on the subject. Bottom line: this is likely not the last you will hear on the topic of behavioral advertising.

So, if you are a game company in Canada selling products to consumers in the U.S. and collecting information about their buying and surfing behaviors, should you care what the FTC has recommended? The answer is clearly, yes. After all, the U.S. is a big market (1.33 Billion in January 2009). And, activities that violate these principles may be prosecuted in the U.S., even if you are located in Canada. But, don’t despair, you are probably a lot closer to compliance than many of your U.S. counterparts, since PIPEDA reflects many of the same principles and, unlike the FTC principles is mandatory. So, if you comply with PIPEDA, it is likely you will satisfy most, if not all of the principles announced in the Report. Note however, that the FTC principles apply to more than just “personal information” as defined in PIPEDA. As a result, if you are engaged in behavioral or contextual data collection (and most game companies are) you may need to adjust your practices to extend beyond personal information, to include any information that “could be associated” with a particular consumer or device.

Couple of other interesting tidbits (unrelated) to keep in mind:
Epilepsy Warnings – Continuing an effort he first began in 2001, Assemblyman Steven Englebright (D-Setauket), has introduced A4004 in the New York Assembly. This bill would require any person who sells or rents video games to display a warning sign with respect to the relationship between playing video games and epileptic seizures and establishes penalties for a violation of such provisions.

Games and Cigarettes – Rep Joe Baca (D-CA) has introduced H.R. 231, “The Video Game Health Labeling Act of 2009”. If enacted the bill would require developers to affix a warning label on any vide game rated T (teen) or higher by the ESRB similar to that required for cigarette packaging: “WARNING: Excessive exposure to violent video games and other violent media has been linked to aggressive behavior.”

Safe Harbor – 17 USC Section 512(c) (Copyright) and 47 USC 230 (Communications Decency Act) contain safe harbors for service providers against claims of copyright infringement and defamation. Several cases addressed these provisions in 2008, with differing results. At the extreme, the 9th Circuit ruled against the 230 defense in Fair Housing Council v. Roomates.com, 2008 WL 879293 (9th Cir. April 3, 2008) in an opinion that is both difficult to follow and reconcile with the plain language of the statute. A more reasoned opinion going the other direction is Goddard v. Google 2008 WL 5245490 (N.D. Cal. Dec. 17, 2008). On the copyright side, see Io v. Veoh 5:2006cv03926 (N.D. Cal. Aug. 27, 2008). This case involved claims for copyright infringement stemming from infringing videos uploaded to Veoh’s site by users. Veoh successfully defended the claim, relying on 512(c). The reason it succeeded, was that it followed the requirements of the safe-harbor to the letter and more: it responded to compliant DMCA takedown notices promptly, it notified users of its policies against copyright infringement, it registered a Copyright Agent with the Copyright Office, it terminated users who were repeat infringers and blocked new registrations from the same email addresses, and it used hashes to stop the same infringing videos from being uploaded by other users.
Bottom line here: If you are a service provider get familiar with the safe-harbors; they are your friends.

License vs. Sale – Whether a transaction is characterized as a license or sale is a big deal under U.S. law. Consider for example, the case of Vernor v. Autodesk, 87 USPQ2d 1501 (W.D.Wash. 2008), in which the court held that the unauthorized sale of used software on an internet auction site was permissible under the first-sale doctrine. This, despite the fact that the agreement under which the software was originally transferred was expressly characterized as a license and included language reserving all rights to Autodesk. Critical to the court’s determination that the transaction at issue was a sale (and not a license) was the fact that the agreement permitted the licensee to retain possession of the software in exchange for a single up-front payment. According to the court, this turned the license into a sale with the result that Autodesk exhausted its exclusive right to re-distribution under the copyright act when it sold the software.
As you might expect, Vernor is not the last (or the first) word on this subject. Following Vernor, several courts have held to the contrary. For example, in Blizzard v. MDY, CV-06-2555 (D. Ariz. 2008), the court examined the issue in the context of Section 117 of the Copyright Act (Vernor involved Section 109), which permits the owner of a software program to make multiple copies of the program. The court, evaluating the Blizzard EULA (which contained license language not dissimilar to that in Vernor) held that the users of a program created by MDY known as WowGlider, were not owners of the WoW program, but licensees subject the limitations on use set forth in the license. As a result, neither the WowGilder users nor MDY could take advantage of the Section 117 defense and MDY and its founder were held liable for contributory and vicarious copyright infringement. The key here (ignored by the court in Vernor) was that the agreement giving the user rights in WoW (a) made clear that the rights granted were as a licensee and did not include unlimited rights to copy or distribute the game and (b) imposed “significant” restrictions on the transfer of the game by requiring the user to transfer the original media and the packaging and documentation.

Bottom line here: Pay close attention to the terms of your EULA. One other note, the Blizzard case is also significant because a recent ruling in the case addressed the anti-circumvention provisions of Section 1201 of the DMCA. That will be the subject of a later post.

[1] Indeed, Justice Brandeis found the “freedom to be let alone” to be one of the most basic freedoms protected by the U.S. Constitution. So, it is not as though privacy is a foreign concept on the federal scene. It is just that, in the U.S., it is handled very differently.

[2] This all seems quite odd to folks who have been following the privacy debate for any length of time. Many of the basic principles incorporated into the EU Privacy Directive and PIPEDA were actually developed by the U.S. Dept. of Health Education and Welfare in 1971 as part of the “Code of Fair Information Practices”, which included five clauses: openness, disclosure, secondary use, correction, and security. Although these principles were adopted later by the OECD and others, they were only adopted in the U.S. on a limited basis.

Untold Entertainment's GDC Survival Guide

2009-02-10T10:00:00.000-08:00

I've been intently following and commenting on the Puck Stops Here blog since its launch a few weeks ago. Now that it's my turn, I wanted to write about a topic so shocking, so outrageously incendiary that I would light the site on fire and generate a intensely passionate debate. Then we could all meet up at GDC have a good old fashioned gang brawl. I'm talking chains and brass knuckles. And maybe some fancy jazz hands, West Side Story-style.

The topic I had planned was so damning that I've decided to shelve it until I can afford personal bodyguard detail. So instead, as we find ourselves on the road to GDC (though I personally prefer to fly there), let me share some tips I've learned from my past two visits. I'll also share a few pearls of wisdom from my experiences at E3, the Game Developers Conference's coked-out train wreck of an older sibling.

Untold Entertainment's GDC Survival Guide

The Conference

register before the conference starts, and take your swag bag back to your hotel. Go through it and toss out all the advertising. You've just shed five pounds. The most useful bits are the notepad and the pen – the normal pen, not the one that transforms into a rocket.

conference tees go quickly. If you want a wearable keepsake, find out which convoluted hoops you have to jump through (wristbands, lottery systems, secret T-shirt kiosks in the sub-basement), and get you some swag

try to ask a question at the mic after every panel, slyly introducing yourself and your company first. When the panel ends, all kinds of people who want to meet you or contract your services will come out of the woodwork. It's the next best thing to carrying around a megaphone (which is actually not allowed at GDC, I discovered. Read that fine print.)

the roundtable discussions are a great place to gather candid intel in an intimate setting. Confidentiality is betrayed, and NDAs fly out the window, as folks divulge all their business secrets in the name of contributing to the discussion. It's like being in a self-help group packed with game industry insiders.

don't miss the keynotes. This rule was conveyed to me by a wide-eyed delegate with all the gravity of a crucial life lesson, like “don't cross the streams”. He told me it was because Microsoft had once divided the delegates into four teams at their keynote, and gave a quarter of the attendees a free HDTV. The story is legendary. With GDC as big as it is, I doubt we'll see a repeat, but the “what if?” factor is enough to pack people in their seats at every keynote. Arrive early.

Food and Drink

there's a yankee-fried Mexican restaurant near the Moscone Center called Chili's. Don't eat there. The food isn't authentic, but they've somehow managed to import all the Mexican water to the restaurant, if you get my drift.

unless you have a group of high-powered execs to impress, don't buy dinner. It's a breeze to stumble across a party every single night, so you can subsist on horse doovers all week. One mini-hamburger may not tide you over, but pack away forty-seven of the little bastards and you'll be good to go.

Culture

if you get a chance to meet one of your game design heroes at the conference, don't play it cool. You're in the game industry. Get your geek on. I had a total nerdgasm when I shook hands with Cyan's Rand Miller, the designer of MYST. And when I met Tim Schafer of LucasArts fame, I didn't wash my hand for two years. It became gangrenous and they had to amputate, but come on – Tim Schafer.

every year, there's at least one outrageous party that everyone talks about, like the debaucherous spectacle at the Three Rings headquarters, or the CCP Games' whips-and-chains bacchanal last year at a San Francisco fetish club. But the parties I enjoyed most had music that was quiet enough to faciliate conversation, and comfy couch seats to kick back on. Autodesk's swank disco-era fete last year, replete with bean bag chairs and Atari 2600 consoles on every teevee tops my list of favourite parties.

San Francisco

the city has TWO giant bridges: the Golden Gate Bridge, and the Other One. The conference center is closest to the Other One. Try not to look silly by extolling the virtues of the Other One, thinking it's the Golden Gate Bridge the whole time. People remember that type of thing. And then they blog about you years later in their GDC Survival Guides.

the city hosts a lot of professional panhandlers. In contrast to Toronto's palm pilots, the fellas who prey on San Francisco's tourists put a lot more oomph into their pitch. Instead of a half-hearted “spare change?” muttered under someone's breath, I had three restaurant recommendations, a brief history of my hotel, and a bawdy joke. I rarely toss coins at our local folks, but the effort the Californians give it deserves a few greenbacks.

don't bother visiting Alcatraz. If you've played the Alcatraz level in Tony Hawk's Pro Skater 3, you get the gist.

Travel

if you're flying back to Ontario or parts East, the best flight is the Friday night red-eye. Sleep on the plane. When you wake up, it's morning in Montreal, and the risk of jet lag plummets. Sure, you'll miss out on that little packet of pretzels they offer on a six hour flight, but keep in mind that you just ate forty-seven mini-hamburgers.

We're not guilty of this ourselves, but here's a hot tip: if your company received public funding for a project, and it's widely known that you blew your deadline and failed to launch the project with its original scope, don't fly first class. It's tacky.

See you all at GDC in March!

More Thoughts from Rob: The Provinces

2009-02-05T10:28:00.001-08:00

I separate the provinces like the new Canadian Football League. The differences between West and East start at the Saskatchewan and Manitoba border. The Western provinces (Saskatchewan, Alberta and BC) have some programs but not the tax credit incentives (other than SR&ED incentives) like the Eastern provinces (Manitoba, Ontario, Quebec, PEI and Nova Scotia). Ok so it doesn’t work so well when you take into account New Brunswick and Newfoundland and Labrador. Here is my quick synopsis heading West to East. Please chime in and comment on experiences and other programs I may have missed.

British Columbia

British Columbia is at the forefront of the video game industry in Canada. The creative games cluster in the lower mainland is one of the oldest and largest in Canada. The province has invested in programs such as the Masters in Digital Media. BC has also provided incentives with investments in the BC Renaissance Fund.

BC has taken a different approach and created the BC New Media Venture Capital Program Tax Credit. This program provides tax credits to those who invest in small new media companies such as game developers. It should be noted that BC has various tax credits for film and television productions but has yet to see the light on doing the same for video game developers.
http://www.investbc.com/businessincentives.htm

BC as well has a 10% tax credit which is refundable for Canadian-controlled private corporations (“CCPCs”) for scientific research and experimental development expenses. http://www.sbr.gov.bc.ca/business/Income_Taxes/Corporation_Income_Tax/tax_credits/scientific_research.htm

Alberta
I guess the leading incentive in Alberta is low taxes. I haven’t been able to find any programs or tax credits specifically related to the video game industry. There are some government funds geared towards the Information Technology sector such as the Alberta Ingenuity Fund that which may be relevant to a game developer in the province. http://www.albertaingenuity.ca/
Saskatchewan

The Saskatchewan government has created the Saskatchewan Film and Video Development Corporation. It appears its programs are mostly aimed towards film and television projects however they do mention interactive projects in some of their documents. There appears to be some minor funding available for travel and marketing. Again Saskatchewan has a tax credit for film and television but no mention of game developers. http://www.saskfilm.com/docs/assets5/SaskFilm_Program_Guidelines_May2008.pdf

Saskatchewan has a 15% SR&ED non-refundable tax credit as well that would be available to those who meet the criteria http://www.finance.gov.sk.ca/Default.aspx?DN=7210d60f-4263-4bf8-9f59-dbbbd8d64f7a

Manitoba

The Manitoba government has created a refundable Interactive Digital Media Tax Credit which provides a tax credit on 40% of eligible labour expenses up to a maximum tax credit of $500,000.
http://www.gov.mb.ca/stem/knowledge/idm_taxcredit.html

The province also has some small granting funds available for such things as market research, prototyping, product development and marketing assistance through the Manitoba Interactive Digital Media Fund as well as several other programs providing some assistance for technology commercialization or export market development.

In addition, Manitoba has a Research and Development Tax Credit that provides a 20% non-refundable tax credit on eligible expenses. http://www.gov.mb.ca/ctt/invest/busfacts/govt/rd_taxcredit.html

Ontario

The Ontario government has made significant strides over the last few years to make the province attractive to both foreign and domestic developers. The Interactive Digital Media Tax Credit is available to both Canadian-controlled and foreign-controlled Canadian corporations who have a permanent establishment in Ontario. The tax credit is equal to 30% of eligible expenses (mostly labour and some marketing) for qualifying small corporations. In addition larger corporations are eligible for a 25% tax credit and “fee for service” products may qualify for this tax credit as well.
http://www.omdc.on.ca/PageFactory.aspx?PageID=3257

In addition, the Ontario Media Development Corporation has several programs available to assist game developers. The Interactive Digital Media Fund provides funding up to $100,000 for up to 50% of the completion of an interactive digital media project. Other one off programs such as the Video game prototype Fund and the Screen-based Content Initiative have also provided funding for Interactive projects. It is hoped that some of these funds will be continued in future years. The government has also created the Entertainment and Creative Cluster Partnerships Fund which provides funding for collaborations between various partners in the creative cluster which would include interactive media.
http://www.omdc.on.ca/PageFactory.aspx?PageID=3258

Ontario also has an Innovation Tax Credit that provides an additional refundable 10% tax credit on SR&ED eligible expenditures spent in the province.
http://www.rev.gov.on.ca/english/credit/oitc/index.html

Quebec

Quebec with the establishment of many multinational game development studios in the province has become the fastest growing and is recognized as one of the global centres of game development.

The Quebec government established the Multimedia Titles tax credits which provides corporations in Quebec producing multimedia titles (which would include video games) a tax credit of up to 37.5% of eligible labour expenditures.
http://www.revenu.gouv.qc.ca/eng/entreprise/impot/societes/credits/adaptation/titresmultimedias.asp

Quebec also provides loans, loan guarantees and interim financing for tax credits amongst other programs.
http://www.investquebec.com/en/index.aspx?page=1764

Quebec provides further incentives on SR&ED performed in the province.
http://www.revenu.gouv.qc.ca/eng/publications/in/in-109-v.asp

Prince Edward Island

The government of Prince Edward Island provides an Innovation and Development Tax Credit of 35% on 150% of eligible production labour. The extra 50% is given to allow for other overhead in operating a development studio in the province.
http://www.gov.pe.ca/photos/original/ptrp_idtc_guide.pdf

The province also offers reduced personal taxation to employees of the developer and several other tax credits that may be relevant to a game developer as well as subsidized rent to companies wanting to establish in the Atlantic Technology Centre.
http://www.gov.pe.ca/development/ptrp/index.php3
http://www.gameplan.ca/programs.html

New Brunswick

New Brunswick offers a refundable 15% research and development tax credit which may be of use to game developers in the province.
http://www.gnb.ca/0024/tax/randd.asp

Nova Scotia

Nova Scotia offers a refundable tax credit equal to the lesser of 25% of all expenditures in Nova Scotia or 50% on eligible Nova Scotia labour expenditures plus an additional 5% on all expenditures or 10% of labour expenditures if the development takes place outside of the Halifax Regional Municipality.
http://www.gov.ns.ca/finance/en/home/taxation/businesstax/corporateincometax/digitalmediataxcredit.aspx

Nova Scotia also offers a refundable 15% research and development tax credit which may be of use to game developers in the province.
http://www.gov.ns.ca/finance/en/home/taxation/businesstax/corporateincometax/researchanddevelopmenttax.aspx

Newfoundland & Labrador

The province offers a refundable 15% research and development tax credit which may be of use to game developers in the province.
http://www.fin.gov.nl.ca/fin/scientific.html

Financial Reasons to Work with Canadian Developers

2009-02-02T11:16:00.000-08:00

Rob DePetris, Senior Tax Manager, Deloitte (Southern Ontario)Rob DePetris has developed a keen understanding of the interactive media sector through his past work as Vice-President of Silicon Knights and his involvement in creating an action plan for the Ontario video game industry. Rob is currently a senior tax manager in Deloitte's Southwestern Ontario practice has worked with the Interactive Ontario, the Ontario Media Development Corporation, the Ontario Ministry of Economic Development and Trade and the Ontario Ministry of Research and Innovation to create an action plan to create a vibrant video game industry in Ontario. He has also spear-headed the creation of nGen, the Niagara Interactive Media Generator. This organization has started the incubation of small interactive media companies in Niagara. Rob has an Honours Bachelor of Business Administration in Co-op Accounting from Brock University. He is also a graduate of University of Toronto Law School and was called to the Bar in 1994. He has previously worked for PricewaterhouseCoopers LLP in Toronto and articled at Lancaster, Mix and Welch. He is the chair of the Games Committee and Treasurer of Interactive Ontario. He is the chair of the Board of Directors of nGen (Interactive Niagara). He is chair of the Cities of St. Catharines and Thorold Prosperity Council. He is a member of the board of directors of the United Way of St. Catharines & District and is First Vice-President of the St. Catharines-Thorold Chamber of Commerce.

In Canada, we have the some of the most talented and creative game developers in the world. Every company has its own value proposition. Each game developer has his own special skill which helps to make them unique and able to sell their products to the world.

As GDC comes closer, I am sure many of you are scheduling meetings with potential publishers and distributors to pitch, re-pitch or demonstrate the creative ideas that you and your company have developed. Each game developer has a sense of what they can produce and they know the strengths, uniqueness and weaknesses of their ideas.

My background is finance and taxation. I will leave it to the creative voices in each company to develop the pitches of their game ideas for the meetings at GDC. I thought it would be interesting to talk about the advantages of working with Canadian game development companies. I propose to list some of the financial reasons why developing a game in Canada makes sense. I hope that this may provide some further ammunition to Canadian game developers to convince a publisher to choose their project. If this is all old hat to those reading then perhaps others can add their own insights whether it is information about tax credits, or other financial incentives that makes Canada one of the most economical places to make quality games. Today, I thought I would start by outlining the current advantages provided by our dollar and the federal government.

Our Dollar

In the past few years, our dollar has been a disadvantage as it continued to rise above par with the US dollar and then hovered around par for what seemed to be an eternity. But lately, our dollar has fallen back to a more comfortable US $0.80. Given that Canadian game developers expenses (labour and other costs) are in Canadian dollars, over the last few months Canadian Game Developers have become significantly cheaper to US publishers and to many other publishers dealing in other foreign currencies. Will this last? Who knows? But today, we are significantly cheaper and if a game developer has an opportunity to hedge or to convince their publisher to hedge then the dollar advantage today can be extended over the term of a project.

Federal Government

Canadian New Media Fund (“CNMF”)

The Canadian government just released the federal budget last Tuesday (January 27, 2009), and somewhere, buried deep inside, the government committed to provide $28.6 million of funding for the Canadian New Media Fund over the next two years and continually provide funding of $14.3 million for each year thereafter. http://www.budget.gc.ca/2009/plan/bpc3e-eng.asp

Telefilm, the federal agency who administers this fund states that “The Product Assistance component of the Fund provides conditionally repayable advances for the development, production and marketing of Canadian interactive digital cultural content products in both official languages that are intended for the general public.” http://www.telefilm.gc.ca/03/311.asp?lang=en&fond_id=3

The guidelines for the CNMF are not simple and the funding is granted through a competition so not all worthy products receive funding. As well, matching funds must be found and intellectual property rights retained. All that said, the fund provides potential funding to Canadian Controlled corporations of up to $550,000 for each of the development, production and marketing segments of the interactive product.

What would be even better would be for the federal government to increase this fund to a much greater level - similar to the $100 million Canadian Television Fund - and also provide a tax credit similar to the Federal Film Tax Credit. Perhaps the industry can push for this in next year’s budget.

Scientific Research and Experimental Development (“SR&ED”)
Canada Revenue Agency sets out that “The SR&ED program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. The SR&ED program is the largest single source of federal government support for industrial research and development.” A Canadian-controlled private corporation that qualifies can receive a refundable tax credit of up to 35% on eligible expenditures of up to $3 million dollars. This is significant funding on an annual basis. Much of the programming work done by game developers may qualify for this tax credit. That said, I would strongly recommend that game developers not try and prepare this claim themselves. They should hire experienced accountants to prepare the claim to ensure they qualify and they are getting the maximum cash back from the program.
In addition to the benefits received, many of the provinces have additional tax credits and other advantages for SR&ED in the particular province.
National Research Council-Industrial Research Assistance Program (NRC-IRAP)
In addition to SR&ED, the federal government provides non-repayable assistance to small and medium Canadian corporations who are developing commercial uses of technology. http://irap-pari.nrc-cnrc.gc.ca/financialassistance_e.html#rd
There are local advisors in each region in Canada who can be contacted to discuss qualifications and opportunities.

Next Blog - The Provinces
I must admit that I live in Ontario and am very familiar with the various advantages here. That said, I will try to outline in my next post some of the advantages in each province. If I miss some, please chime in and let us know.

A blog on women and games is bound to raise a few eyebrows. Hasn’t this topic been done to death?

2009-01-26T09:25:00.000-08:00

*************************** Update - Jan. 28 *****************************

Thank you for your comments so far! Some reflections from Brenda:

Wow, great comments on the blog. Love the revenge of the nerd argument, and agree that my "guys can't make games for women" was a very broad stroke. Of course, someone who wants to understand how women think and what they enjoy playing can do that work and get the info he needs to deliver. I do want to respond to the last entry, however. I don't agree that the "women in games thing" will "sort itself out". I have a 12 year old who is a math star. She is the best in her class in math, and her mom runs a game studio. You'd think she'd include tech as a possible career path. Nope. She wants to be a fashion model. A Fashion model! I swear, this kid was brought up in a house full of lego, with only a barbie or two, both of which her brothers had severed the head off of in one of their experiments with the rowing machine. All of this to say, please don't underestimate the pressures on girls (and boys, for that matter) to conform to stupid societal conventions - they are loud and strong, and we've got to be vigilant if we want to offer alternatives to our bright kids who deserve a chance at the world outside of those binding stereotypes.

********************************************************************************

A blog on women and games is bound to raise a few eyebrows. Hasn’t this topic been done to death? We can all point to some great female game characters, so what more is needed? Have you played Mirror’s edge?

The thing is, we’re still very early on in tackling this issue, and there are so many layers to what needs to be addressed. Last year’s finding in Game Developer Magazine showed that 93% of engineers in the industry are male, around 70% of artists, and importantly, only 10% of studio heads are women. So, no, IMHO, this issue has not been done to death. In fact, this issue is still wet behind the ears, and needs to be on the agenda all the time, throughout the industry. More, not less, attention to this topic is needed.

Most gals working in the industry are in Sales and Marketing, HR, or Art. These are important roles, and I’m not belittling that, but it is also important that women make up part of the other disciplines of the industry as well. Why? Is this a feminist argument for equality? Is 50 / 50 just a rule to be applied, regardless of all else. Well, there might be something to that, but the real reason, to my mind is simple. Until we have great women making games for women, we won’t have great women’s games.

Yah, I just said men can’t make great games for women. This is the point in the argument where someone throws Will Wright at me. True, the Sims is probably the most successful franchise, ever, and a big chuck of their market is double X chormosoners. We all know the story of how guys bought the game, turned their female buddies on to gaming, and the rest is history. I’m grateful for that, don’t get me wrong. And, of course, when Mr. Iwata announced at E3 06 That Nintendo’s “Revolution” was going “disrupt” the market and change the demographic of who games, it wasn’t just your typical PR propaganda. Girls and women are a huge driver for the incredible dominance that continues to be the Nintendo story. I’m grateful for that too.

What’s the grateful thing about? Why does it matter if girls or women game? Sociologically, it’s a question of access to technology and the issue of gender. Futurists have written frightening scenarios that the feminist in me shivers to thing about. Business wise, we want the female entertainment budget to be spent in our segment of the market – on games. Downloadable, in a box at retail, on the cell phone or PC, we want women to spend their buck on our game, rather than on that movie or the latest novel on Oprah’s book list.

The fear is, if guys were first to the keyboard, and drove the tech advancements of the past x decades, and made tech that spoke to their sensibilities and desires, isn’t it a self fullfilling prophesy that they build what they want to use? Women, who, due to social stigma or biological makeup (insert nature vs. nurture arguments here) are late to the party, will continue to be locked out because the tech being created is designed from a male perspective? I think this is pretty likely, and may in fact be the case in gaming.

Seems to me that this is proven out in comparing and contrasting the casual game market to the console market. While the console space is still largely male dominated in terms of developers and consumers, this is not the case in casual games. There seem to be more women creating in that space, and the primary consumer of casual games is female. My observations have been that many of the most innovative and engaging games for gals have been in the casual game space. Interestingly, this is also the gaming segment that employs a higher percentage of women. Wouldn’t it be great to have this be the case throughout the industry? It would not only expand the range of product, I think it would drive further market expansion, which is important if the industry is going to continue the double digit growth we’ve become accustomed to.

I’ve got to run. I’m reading Brenda Laurels “the Utopian Entrepreneur” and it’s hard to put it down for long. Check it out if you are interested in hearing from an industry veteran who is truly plugged in and has amazing stories to tell on the issue of trying to make successful games for the female market. Anyone remember Purple Moon?

Mobile Gaming....move it or lose it debate

2009-01-20T16:38:00.000-08:00

Where is mobile gaming heading in a turbulent 2009? People's Daily Online headlines highlight China's mobile gaming market up by 62% in 2008. In contrast Jaakko Kaidesoja, head of Nokia's gaming operations predicts more gloom for the overall gaming market, referring to hiccups in Western Europe and North America [quoted in Helsinki, Reuters, October 2008].....so where is mobile gaming,....exactly?

Distribution – One of the challenges for mobile developer is how exactly to get your apps out there, how to raise awareness of your apps, how to engage with carriers? What best practices can anyone out there share from their own experience? Are there carriers reading this that are wondering where to find the next generation apps?

Pros & Cons of Application Stores – in the iPhone app store, initial uptake of mobile games was phenomenal. Now, the market is saturated and so many vendors have been undercutting one another that it’s near impossible to get traction unless you sell the game for $0.99 or free. How do you deal with this battle for the bottom? How do you still make quality games when the margins are so small?

According to Gamasutra in the iPast, many games started life at $9.99 but quickly retreated to $0.99 territory. Revenue per unit sold is very low, and this could potentially create a glass ceiling for content quality. What are your thoughts? Can you see any cracks in this ceiling? Another good point raised by Gamasutra is will it be profitable for larger publishers to support the iPlatform at $9.99, or will they need more money to support the iPlatform in addition to the DS and PSP platforms?

Multiple skews and a fractured market – how do you handle making so many different versions of your app for so many different devices running so many different platforms(BlackBerry OS, Palm OS, Palm Pre, Windows Mobile, Android, Symbian, iPhone, etc)? If you’ve got 20 games, supporting 20 devices, and 5 languages, that’s 20 x 20 x 5 = 2000 skews. Yikes??

Cost of development – developing for high definition 3D consoles like Xbox 360 and PS3 is becoming so expensive that many developers are finding it impossible to even enter the marketplace. Mobile gaming presents a nice alternative since mobile devices today are roughly comparable to the consoles of 10 years ago like the PlayStation 1 and Super Nintendo (some of the more advanced mobile devices are about on par with PlayStation 2 and Nintendo 64). The result is that development shops can re-use a lot of the work they’d done 5-10 years ago, giving new life to old games and getting more bang for the buck on those R&D dollars. What's your experience?

Links:

Interview with head of Nokia’s Gaming operations 29 Oct. 2008. Sees no growth in overall gaming market (though certain areas e.g. N-Gage and iPhone will grow):

GamaSutra feature on developing games for the iPhone and iPod Touch.

2009 Predictions for mobile gaming

Scarberia speaks from the penalty box

2009-01-12T19:38:00.000-08:00

Scarberia:Scarberia has been an executive in and around the games business for almost 20 years, both in publishing and product development. "The reason for the pen-name is to protect plausible deniability in case I piss anyone too important off, since I still rely on them for deals, good gossip and expensive dinners...."

“For us in The Business, and of course by The Business, I mean, The Industry…”, Paul Schafer (Canadian), Late Show With David Letterman.

The Games Industry is huge. And despite all the bad economic news, we can still find positive reports about how the Industry is still growing, how it’s one of the only entertainment mediums with a positive future, how it has surpassed film box office receipts, blah, blah. But is this Industry really a Business anymore?

In order to thrive, a Business needs to have an eco-system of companies and contractors with a reasonable expectation that their investments of time and talents can result in profits. Everyone in a Business won’t and even shouldn’t make profits, of course, but most of the good ones will and should. Otherwise, they’ll do something else. And these profits will be the direct result of selling goods and/or services at a higher price than the costs that go into them. All very simple and, admittedly, simplistic.

Throughout the 1990’s, the Games Business was a great business. Lots and lots of people made money, some made obscene amounts. But without running the numbers, I would hazard that a healthy majority of that growing eco-system was making a good living. But this living wasn’t like the dotcom boom, when many people worked in ventures that had no chance of ever making profits, or even real revenue. The Games Business was making and marketing and selling games that people wanted, with costs that allowed good games to be blockbusters, and decent games to make a decent profit.

But with every new generation of hardware, this has gotten harder. The first big increase in costs was the shift from 2D to 3D, which required an expensive retooling and retraining of product development in the mid-90’s. The next was the rising necessity of supporting on-line features, first on the PC and later on the consoles. This was followed by dramatic growth in marketing budgets. And finally, with the arrival of the 360 and PS3, there was the requirement again to retool and retrain expensively for HD.

What this means is that even before the latest economic crisis, the Games Business has been struggling to make profits. In fact, without the sales from games on the previous generation hardware, which are now quickly disappearing, I calculate that hardly any publisher is making anything but losses. Of course we can all point to Nintendo and Blizzard and a couple others, but their exceptionalism proves the thesis. Ten years ago, only the lousy, the unlucky and the corrupt were losing money. Now it’s Microsoft (maybe making a small operating profit now for the first time), Sony, EA, THQ, Eidos, Midway, and nearly everyone else who are losing not just small, but very large amounts of money. This is not because they are all lousy, unlucky and corrupt. It’s because there is practically no Business in the Games Industry anymore.

Let’s look closer at some of the exceptions. Nintendo is the one true aberration and they’ve done it through innovation and a very tight control over their platform. Good for them, but the Wii isn’t helping hardly anyone else in the Games Business. In fact, without the DS, we wouldn’t have a global, profitable platform left for the independent publishers and developers.

How about Activision? With CoD4 in 2007 they had one of the only next gen titles to make lots of money; and with Guitar Hero they had one of the most profitable games in history. This was not an easy feat to repeat, and signs are that it didn’t happen at the same levels in ‘08. But thanks to the Blizzard deal, Activision looks to be the only independent publisher to have a plausible future that looks better than their past. What about Ubi? They’ve done an incredible job with a few quality games, but there’s a good argument to be made that most of their current and recent profits would disappear without the Montreal and Quebec subsidies. In other words, they have more in common with corn and sugar farmers than they do with being in a Business. And they are very, very good at what they do.

So where does that leave us? I’m sure all the publishers will keep hammering away at this generation of hardware, hoping that things will become more like the last cycle. And maybe it will. But if it eventually does, it will not be this year, and probably not even next because of the economy. They will also continue to look for THE NEXT BIG THING: mobile phone, casual, MMO, browser, free-to-play. There are isolated bits of success in all these categories, but little evidence that there’s a near-term, global Business model to make up for the profits disappearing through massive risk-taking on big titles with big marketing budgets that need to be big, big hits in order just to break even.

What this means for the development community, and the entire Games Industry eco-system, is decline. In fact, the Industry was probably already overbuilt three years ago. But it’s only now that those investments are showing that they will not be paying off any time soon. So there’s a long way to go backward before the new equilibrium. And even then, without some new big growth market, I’m not sure there’s enough business to be a “Business” again any time soon. We’ll remain an Industry, big and seemingly powerful, but a much duller, scared and miserly one.

And yet, what has been done is the creation of a medium. One that pound for pound still delivers the best entertainment value for the money. Games are not going away. In fact they’ve only just started. But we as an Industry may have tried to feed it too fast for its own good. Prepare for a rough diet.