Turbine’s D&D Online is generating 500% more revenue since adopting a complementary free-to-play model. Interestingly, the revenue spike is driven in part by a doubling of paying subscribers — a nice demonstration of how blended revenue models for online games can be particularly profitable.

Facebook will be taking a 30% cut from developers who use its Credits virtual currency, claiming that “early testing has shown that users paying with Facebook Credits are significantly more likely to complete a purchase than the average Facebook user.” 30% is an unsurprising percentage for Facebook to begin with because the bar has been set there by so many other digital platforms; most developers are unlikely to object as a result. I, on the other hand, would rather not forsake 30% of my revenue if I don’t have to (but then, I wouldn’t be surprised if Facebook eventually forces everyone’s hand by proactively merchandising titles that use Credits…)

Apple has banned thousands of apps containing adult content from the App Store without warning. With each passing day, this platform feels more like the “worst of both worlds” — i.e., all the disadvantages of an open platform (like too much competition, piracy, etc) and all the disadvantages of many closed platforms (remorseless management, poor merchandising, etc.) The emergence of successful F2P games in the App Store may be exciting, but it strikes me as a silver lining.

Wiiware reportedly generated $59m in 2009 (30% growth of 2008)… which doesn’t make me much more excited about the platform. Note that only one original WiiWare game apparently earned more than $2m in revenue in 2009, and that’s the incomparable World of Goo. And the next runner up may actually be well below $2m — it isn’t clear from the report.

Nice Gamasutra editorial on crunch. I liked this line: “In film and television, if an early treatment was suddenly plunged into full production, it would be considered a catastrophic failure of the development process. In the game industry, when a fledgling creative vision is suddenly staffed with talent, it’s considered ensuring success. This is a fundamental fallacy in our thinking.” I agree with the author on vertical slices: nice risk management in theory, but in practice an amazingly fun but crude-looking prototype is more valuable.

Offerpal and Amazon (via Mechanical Turk) have joined forces to essentially turn every single F2P game into a crowdsourcing game.

There’s more to life than games:

Brilliant satire: if the practice of journalism were like the practice of medicine in the United States

Regarding the iPad:

• Common complaints about the device include: no Flash support, the screen’s “boxy” 4:3 aspect ratio, no user-facing camera (present even in cheap netbooks), and no multitasking. It is, in the words of many, “a big iPod Touch.”
• RE: Kindle vs. iPad, a succinct argument by Paid Content: “Total cost of owning an iPad (assuming a $30 monthly data plan and 3 yr product life) is roughly 6x-7x the cost of a Kindle 2 (priced at $269 and likely going lower). Also, with an E-Ink screen, smaller form factor, lower weight, and better battery life, the Kindle may appeal more to serious book readers.” [I'll add: these are solid arguments, but it's worth mentioning that until we know the average price of apps in the Kindle App store, it's very hard to estimate the "total cost" of ownership for a future Kindle owner.]
• Penny Arcade elegantly captures the average enthusiast’s reaction to the iPad
• Bottom line: I’d never bet against Apple, but that doesn’t mean I’d necessarily bet *on* Apple in this particular case. The prospects for v1 of the iPad are questionable enough (and the app store crowded enough) that I’m inclined to wait and see how things shape up post-launch. The Kindle App Store, on the other hand, intrigues me. There are supposedly a few million Kindle v2’s out there, and the App Store shouldn’t feel crowded at launch. The audience for the Kindle is older but generally tech-savvy. Seems like a nice potential opportunity for small, agile indies.

Wal-Mart and Best Buy have ended the sale of used games in their stores, forcing E-Play (the kiosk startup they were partnered with) to shut down.

A former Microsoft VP wrote an op-ed for the New York Times which slammed the company for fostering an organizational culture that actively thwarts innovation. His complaints mostly pointed to intense and destructive internal politics. IMO, the same complaint can be leveled against *most* large companies, so it’s unclear how much there is to blame here. That said, I have to admit that the politicking (plus strategic indecision) at MS really could be dizzying… especially when it resulted — as it frequently did — in major reorganizations! Three to four reorgs *a year* were not uncommon in my experience.

A large research study found that managers generally believe “recognition for good work” is the most important driver of positive morale and motivation for knowledge workers. The same managers considered “making progress in their jobs” to be the *least* important driver of morale and motivation. But when knowledge workers themselves were studied, the researchers determined that making progress was, in fact, the *most* important driver of morale! This won’t come as much of a surprise to anyone who has worked on a game that was ultimately canceled, or on a project that was undone by corporate politics (see the previous note on MS for added irony.)

As noted in my previous AoI, DS title sales appear to be softening. Michael Pachter is blaming it on piracy in Europe and cannibalization by iPod Touch games. How about rising consumer apathy towards the platform? I’ve used my DS just once in the past year, to play Scribblenauts.

There’s more to life than games:

Kristof on eastern Congo: “Sometimes I wish eastern Congo could suffer an earthquake or a tsunami, so that it might finally get the attention it needs. The barbaric civil war being waged here is the most lethal conflict since World War II and has claimed at least 30 times as many lives as the Haiti earthquake…. Human Rights Watch estimates that for every Hutu fighter sent back to Rwanda last year, at least seven women were raped and 900 people forced to flee for their lives.”

BoingBoing shows how incredibly adept criminals have become at using “skimmers” to steal ATM card information and rob banking customers. “The U.S. Secret Service estimates that annual losses from ATM fraud totaled about $1 billion in 2008, or about $350,000 each day. Card skimming, where the fraudster affixes a bogus card reader on top of the real reader, accounts for more than 80 percent of ATM fraud.”

Might as well post this tonight; I’m sure the Apple tablet is going to demand a whole post of its own.

(An illicit?) review of OnLive’s beta service. Summary: as rumored, the service works OK for games that aren’t “too twitchy,” like FPS. Avid PC gamers will likely be “very disappointed by the experience,” but then again, OnLive probably isn’t targeting avid PC gamers… it’s probably targeting the much larger number of people who aren’t willing to buy an expensive PC and deal with driver conflicts, inexplicable crashes, etc. I should add that the comparison videos in this writeup were interesting… OnLive is definitely scaling back the graphical fidelity of the games it hosts.

Exciting news about the Kindle Development Kit (KDK), which rolls out next month in limited beta and will permit for games on the Kindle. Should prove lucrative for the early adopters who position themselves correctly and make it into the launch portfolio.

Snackable Media generated *$170m* from SMS-based gaming content in 2009?? That managed to slip right under my radar until now. (Snackable’s most popular title is a celebrity & pop culture txt trivia game offering $50k in prize money — it has a million monthly active users paying $10 bucks a month.)

Pocket God and Flight Control both hit 2m units sold on the iPhone. And speaking of iPhone; here’s an article highlighting the effectiveness of in-app purchases.

Microsoft just unveiled Ribbon Hero, a game that teaches you how to use MS Office. Danc advised the team that built it, and rightly labels the fact that it even exists a minor miracle. ;-)

Looks like the market for 3rd party DS games is collapsing, according to Ubisoft.

More than half the most popular e-books on the Kindle are available at no charge. Publishers are offering free versions of digital books in hopes of hooking readers on longer series by relatively unknown writers.

Top Xbox Live Indie Games are estimated to earn between $21k and $130k, according to Kotaku. (I assume that “top” probably means the top 1% of the catalog, give or take.)

An in-depth look at the reasons Duke Nukem Forever never shipped. This is one of the better articles I’ve read in Wired.

I appreciate time/date and season-specific functionality in games, such as the Christmas-linked “Pure White” mode in Demon’s Souls. Why don’t more games do stuff like this on a larger scale? Make it server-based and you’ve just reduced player incentive to resell games (i.e. you might miss out on cool functionality that only gets unlocked on certain days of the year.)

The free version of Shazam for the iPhone was recently limited to five uses a month, while a new $4.99 version supports unlimited uses. The $4.99 version is supposedly selling well, which should be encouraging to all iPhone developers. (It ain’t easy to convince people to pay for something that was previously free.) Also notable: Shazam has apparently been adding 500k new users every week for an entire year.

Steve Perlman demos OnLive and discusses everything – the technology, the business model, etc. I’m still in “believe it when I see it” mode… but I’m definitely eager to see it. :-)

Things that retail game publishers worry about: 2009 saw 1,099 retail game releases across all major platforms, increasing the total games available to consumers by 55%. At least 50 games (i.e. Call of Duty and GTA) are permanent fixtures on the retail shelf. What’s all this translate to? Less available shelf space, and less average shelf-time per game.

Google’s answer to the iPhone was finally unveiled. Looks slick, but my main reason for being interested in it has less to do with the phone, and more to do with abandoning the train wreck that is AT&T’s overburdened network.

There’s more to life than games:

A remarkably well-written essay about the death penalty; it exposes the flaws in arson investigation practices and tackles Texas’ criminal justice system, in general. Fair warning: it’s a very long essay, but one worth reading regardless of whether or not you support the death penalty.

Israel will become the first country in the world to give people who sign their organ donor cards “points”; these points push your name higher up on the transplant waiting list in the event that you personally require an organ donation. Seems like the only fair system, to me.

Amazing, amazing anti-aging related research! Let the vampire jokes begin…

Zynga has raised an additional $180m in funding from Digital Sky Technologies (DST), the same group that put $200m in Facebook.

Ubisoft is developing almost double the games for Natal as for Sony’s motion wand — 10 vs. 4 to 5. Interesting vote of confidence in Natal, or just a vote of confidence in the Xbox, in general?

Some interesting observations about things that annoy consumers in microtransaction-supported games, and possible solutions. One example: “I find it kind of annoying that when you rent items it is in real time, not in-game. So if you rent an item for a week and then only play twice a week then you only have the item for four or eight hours.” Solution: a durability system could give the player a sense of controlling his investment, since the inevitable deterioration of the item is the player’s responsibility rather than an arbitrary game rule.

According to a recent study of the US gaming market, mobile phones account for 3% of total games spending, traditional PC games account for 20%, consoles for 57%, MMOs for 9%, and game portals for 11%. European consumers, on average, spend less on portals & MMOs and more on traditional PC gaming.

November console game sales: 37% of sales were for the Xbox 360, 29% for the Wii and 19% for the PS3. Xbox is up from just 28% in 2008. All of that growth can apparently be credited to Call of Duty.

As expected, many Facebook users are initially responding with wariness or outright hostility to developer requests for their email address. (For those that haven’t heard: Facebook applications will no longer be able to send notifications to users, per a recent change in the platform’s policy.) This was well-put: “Much like any other web app developer, Facebook app developers are going to have to really engage and earn the trust of their users in order to get a significant number of user emails.”

There’s more to life than games:

Henry Mintzberg on executive bonuses: “The problem isn’t that they are poorly designed. The problem is that they exist.” Amen!

Inside Social Games estimates that offers are generating 30% of social game revenues in 2009 in the US.

Gameloft is de-emphasizing Android development. Their rationale: “We are selling 400 times more games on iPhone than on Android.”

While its well known that Valve goes to exceptional lengths to keep its game communities alive and growing, did you know that Team Fortress 2 has been updated 97 times since it was released two years ago? Almost once a week, on average.

And speaking of Valve, I love how organic their writing process seems to be. Writers are involved from the beginning of a game’s development (as they should be), but it’s understood that the narrative may change significantly — just like the gameplay — if a good-enough reason to make a change presents itself during development or playtesting. Bottom line: at Valve, narrative, like gameplay, is something that benefits from time and polish.

Rumor: Facebook may require developers to accept Facebook Credits alongside other payment options in their games and applications. Facebook’s cut? An “Apple-like cut of 30%.” I’d expect Facebook to go about this more subtly (for example, by doing more to expose quality games and applications, but leaving out those that fail to embrace Credits. If you don’t want the extra exposure, you can leave Credits, but you’ll likely just pay for the exposure in other ways…)

The Economist has published an excellent article, “A world of hits“, that echoes much of what I’ve been arguing about the Long Tail on this blog, and offers some interesting new data to boot. Worth a read!

There’s more to life than games:

Nice ABC video on Zappos’ service mentality, compensation and corporate culture. Interesting aspect of the hiring process: new employees are offered $2k with no strings attached if they’d like to quit at the end of their orientation/training period. I’m guessing that’s not really enough cash to make most people even seriously consider quitting, but it sends a signal (“if you’re just here for money, just take this check and leave now”) that in and of itself probably has some value.

On picking the co-founder of your startup: “The ideal founding team is two individuals, with a history of working together, of similar age and financial standing, with mutual respect. One is good at building products and the other is good at selling them.”

Nintendo finally acknowledges the possibility that demos “might” help stimulate Wiiware sales; now if they just fix their most basic merchandising and UI issues, they’ll… still be way behind the 360 in the downloadable arena. But on the positive front, I love the (admittedly noncommittal) remarks Iwata made about his potential interest in a Nintendo handheld sporting free 3G connectivity like the Kindle.

China’s General Administration of Press and Publication (GAPP) has attempted to shut down World of Warcraft again; the Ministry of Culture claims the GAPP doesn’t have the authority to do that. Regardless of the outcome, this situation (plus the events of mid-October) should make any foreign game company quite nervous about investing in China. Unrelatedly, Blizzard has finally introduced in-game content available exclusively for cash purchase to WoW. It’s clearly a mild test designed to gauge potential profitability and user backlash… but I bet this eventually leads to more microtransactions in WoW and/or other Blizzard premium MMOs.

Check out this wonderful (and unfortunately rare) example of one game developer’s efforts to attempt a little jujitsu on PC game piracy. The developer is RedLynx, creator of the massively-successful XBLA game Trials HD, and their “jujitsu” was leaking their own game to Bittorrent — with minor adjustments of course.

Techcrunch finds more offer-related problems in Zynga’s FishVille which causes Facebook to pull down the entire game. Now Zynga is suspending its use of offers until a better way to police them is identified. This is a good thing — it will (hopefully) result in a very rapid cleansing of the offer business (at least in the social gaming space.)

There’s more to life than games:

More on health care: “A recent report by the Robert Wood Johnson Foundation and the Urban Institute, looked at how well 19 developed countries succeeded in avoiding ‘preventable deaths,’ such as those where a disease could be cured or forestalled. [The United States] ranked in last place… The figures are even worse for members of minority groups. An African-American in New Orleans has a shorter life expectancy than the average person in Vietnam or Honduras.” Well, here’s some cause for celebration (and surprise): both the American Medical Association (AMA) and the AARP endorsed the health care legislation recently passed by House Democrats, just prior to its passing.

Foreign game companies have been prohibited from investing in Chinese game operators as sole owners, joint venture partners or cooperative partners.

The U.S. virtual goods market is estimated to exceed $1B in 2009, more than doubling from 2008.
For comparison, the virtual goods market in Asia is currently estimated at $7B. (I haven’t had time to personally drill into this… if you think these are gross overestimates, feel free to chime in!)

Yet another prominent iPhone developer has spoken up about piracy; this time, it’s Ngmoco complaining about 50%-90% piracy rates in the first week a game is released. As I’ve said myself, Ngmoco now speculates that free (presumably cross-platform) games supported by microtransactions may be the best way for established developers to succeed on the iPhone. The latter was only permitted by Apple very recently.

Kudos to the IGDA for doing something unambiguously helpful and positive for its members: providing access to group health insurance.

Retailer Game Crazy shares that, for those between the ages of 10 and 19, the four most desired games this holiday are: Guitar Hero 5 (48%), Wii Sports Resort (44%), New Super Mario Bros Wii (41%) and Mario & Sonic at the Olympic Winter Games (33%). Looks like rumors of the Wii’s death are greatly exaggerated…

Apple grew its PC market share to a 15-year high last quarter; macs made up somewhere between 8.8% and 9.4% of PC shipments. iPhone sales climbed 7% to a record 7.4m.

Nabeel Hyatt suggests that for social games, the ratio of “daily active users” to “monthly active users” (DAU/MAU) is often sufficient to predict the success of a game (higher is better.) In other words, and unsurprisingly, games that keep players coming back frequently tend to grow bigger.

Interesting anecdote about indie developer Unknown Worlds Entertainment, which has directly pre-sold $220k units-worth of its game to consumers (vs $500k raised via investors.) More interestingly, Unknown Worlds offers a $20 standard version, and a $40 version with nothing more than cosmetic in-game additions, but 95% of preorders have been for the $40 version. If you’re loyal enough to pre-order, it seems that you’re loyal enough to pay double (as long as you’re offered something small in return.)

For those who appreciated my recent post on Lucidity, check out this useful Gamasutra article which broadly address the subject of how to make games less unforgiving and frustrating.

A Chinese developer’s perspective on success in the F2P space. Lots of interesting, blunt quotes in there:

• “Keep the gamers for at least two weeks, they will stay, and if they’ll stay, they’ll stay for years.”
• “It’s impossible to create content for a year or two years of gameplay; you have to create an environment or a setting in which a lot of people can interact with each other. Ultimately it’s not the content that keeps the people playing, but the people.”
• “A lot of game designers believe fairness is not a goal, just a means — the goal is to create a highly dynamic environment and community where a lot of conflict and drama can happen; if it helps to create conflict, fairness and unfairness can be used as tools to create those conflicts and add tension to the game world.”
• “If you think about who [rich players] were in the real world, they were business owners, used to managing hundreds of people… we let rich people fight with rich people with the help of poor people.”
• “There’s an item in one social game that is a gift — of flowers. No simple bouquet, when the item is given, flowers fall from the sky and everyone can see them. Just as importantly, the game rewards the girl who gets the most flowers with a unique dress that can’t be bought, and it will give her a special user title for chat. [Girls] want to feel important, and being spoiled.”

There’s more to life than games:

In New York City, it takes years of legal maneuvering and costs nearly half a million dollars to dismiss a teacher for incompetence. Consequently, out of the city’s 80,000 teachers, only two have been dismissed in the past couple years. That’s 0.0025% of the total.

Research shows that praising children for their intelligence can make them less likely to persist in the face of challenges, while praising children for their effort has the opposite effect.

Advertising via the common fly. Whoever came up with this is incredibly creative and incredibly bizarre. :-)

I’ve just returned from a lovely three week trip to Australia, thus the downtime for Game Tycoon. Melbourne has earned my vote for “nicest botanical garden” and Sydney for “best large-animal aquarium exhibit,” while Cairns nets “loveliest man-made pseudo-lagoon.” :-) Now, onto some long delayed links!

Excellent overview of the social RPG space, by Steve Meretzky and Dave Rohrl, with insights into monetization, game design, and more. Must-read for anyone not already well-versed in social gaming trends.

PhotoSketch is not positioned as a game, but it easily could be one. It automatically transforms stick-figure drawings into a richly-detailed photograph. Watch the video — it’s amazing and wonderful!

Basic but useful reminders about proper marketing and positioning for iPhone games, specifically. And here are some more general community marketing tips.

An explosion of news from the social gaming market:

• It’s now believed that Zynga is earning $500k revenue per day, and spends approximately $50m annually on Facebook advertising.
• By comparison, Playdom is generating just $50m in annual revenue but is managing to do so with 1/5th the number of Facebook users. How? More MySpace users (who apparently tend to be more lucrative than Facebook users, owing to a greater proportion living in the US.)
• Zynga’s FarmVille now has over 50m monthly active users. The enormity of this achievement cannot be understated. Also interesting to note that Chinese developers are becoming some of the most prominent faces on the Facebook Top-20 games chart.
• Zynga’s Restaurant City clone, Café World, grew from zero to 9m users in a single week! Another example of Zynga’s brutally efficient methodology — let other companies prove out a concept, copy it almost verbatim (save for minor improvements) then out-market the competition with intense ad spending and cross-promotion.
• Sign of the times: PopCap, which has always been boot-strapped, just raised $22.5m… why? To enable it to compete in the social gaming space. Guess they (wisely) don’t want to turn into Playfish, aka “Zynga’s unofficial R&D department.”
• …and the big, traditional publishers are where exactly?

Insight into how Twisted Pixel was able to develop the very polished XBLA hit ‘Splosion Man in just half a year. The key: rapid iteration and focusing on the core of the gameplay experience.

From AGDC: interesting insights into important customer support tools for online games.

Later this year, Adobe will enable developers to cross-compile Flash applications directly into iPhone-compatible stand-alone apps. As Raph aptly puts it: “This s a huge game-changer. Expect the App Store to get overwhelmed with Flash apps within days of this becoming available as every good Flash app is ported over. It’s another solid step on Adobe’s part towards making Flash a common rendering and development platform across multiple devices.”

There’s more to life than games:

Andrew Chen with some good advice on hiring the first few employees for your startup.

Seth Godin on business development: “The thing that makes business development fascinating is that the best deals have never been done before. There’s no template, no cookie cutter grind it out approach to making it work. This is why most organizations are so astonishingly bad at it. They don’t have the confidence to make decisions or believe they have the ability to make mistakes.” Some good tips in there on “how to make it work” despite the assertion quoted above. :-)

A list of the various problems that can emerge when you employ the 3rd party offer revenue mechanisms that are becoming increasingly popular in F2P games.

Nexon’s revenues were up 35% year-over-year — looks like their international expansion is going well.

The Economist writes up Quest to Learn, the new school that will be based on a curriculum of games designed by Katie Salen. The article includes some interesting example games: “pupils take on the role of an ancient Spartan who has to assess Athenian strengths and recommend a course of action. In doing so, they learn bits of history, geography and public policy.” Also: “imagine they are pyramid-builders in ancient Egypt. This means learning about maths and engineering, and something about the country’s religion and geography.”

Ad Age: “In 1999, EA Sports, publisher of the Tiger games, ramped up ads and PR for about six weeks before the game launched and for a few weeks after… today EA Sports develops a marketing plan for each platform and type of content and runs it all year… The fire and fanning mentality just won’t work anymore.”

If you happened to see my IGDA or GDC lecture on “MBA Lessons” and liked what I said about motivating employees, here’s a more in-depth TED talk devoted to the same themes and research that I mentioned. The talk is by the author of Drive: The Surprising Truth About What Motivates Us.

There’s more to life than games:

This Slate piece is easily the most informative article I’ve read about US healthcare.