Sunday, September 30, 2012

Why I am cautiously optimistic about the Wii U

So now we know all about the Wii U. Nintendo announced the price, launch date and other details. And, last Friday, I had my third and longest hands-on session with the console yet. Here is a little video clip I produced at the event (in German), if you are interested. And here is a German podcast about the Wii U which had invited me. At first, I was fairly skeptical about the Wii U. After last week’s event, though, I feel a little more confident with a few reservations remaining. Here’s why.

Gameplay > graphics, a winning formula?

When I played the console first at a post-E3 event in Cologne, the graphics were clearly underwhelming and, to a large extent, they still are. I can promise that you will not see a game that will immediately convince you that this is a step up from the current generation, graphically. While the next Xbox and the next PlayStation may have a similar problem, this is a real concern for Nintendo. Obviously, titles coming out after the launch window will look better. But a title like ´Super Mario Bros.´ with its simplistic design style is hardly the best vehicle to show off HD graphics. And Nintendo made the big mistake of developing all first party titles for the launch window in 720p resolution only, for whatever reason.



Some third party games, like ´Skylanders: Giants´, do not look much better than their Wii predecessors. And others, like ´ZombiU´, are a mix of great graphics (when the player is using the tablet like a torch) to some plain awful textures that would have been an insult on the Gamecube (take a closer look at a piano inside a big lobby when you play the game).

Of course, some games look great. My absolute favourite is ´Rayman Legends´, which is a stunner with wonderfully layered two-dimensional backgrounds scrolling fast at a rock-solid framerate, dozens and dozens of enemies on-screen and beautifully rendered particle effects. But, in general, the first wave of games will not wow anyone. Nintendo has clearly invested as little in the graphics hardware as possible to keep the price down without having to subsidise. But, Nintendo would have you believe once again, graphics are not everything.

What is only the more convincing, is the idea of asymmetrical gameplay. There are plenty of mini-games in NintendoLand, where one player has a bird’s eye view of a map and is on the run, with other players having only a third person’s view chasing him. Asymmetrical gameplay can just as well relate to mature games. ´ZombiU´ also makes innovative use of this feature, where one player becomes the Zombiemaster and can spawn various types of zombies on a map and another is the survivor who has to defeat them and capture the flag. This aspect of the Wii U is clearly the strongest argument to buy one and I expect Nintendo to market the console accordingly.

The idea of one privileged player within a group is reminiscent of a number of board and family games as well as pen and paper roleplaying games and the Wii U might enable those ideas to finally be incorporated into console gaming. This strength only relates to local multiplayer, of course. But it was local multiplayer that became the Wii’s killer app. The bottom line is that Nintendo is clearly making the point with the Wii U that gameplay outweighs graphics power.

Pricing and SKU strategy

Discussions about gameplay and graphics aside, I consider pricing the most important issue. A great console with great games can easily be priced out of the market and become a flop. Vice versa, a mediocre console can sell well at a budget price. Remember that the original GameBoy won against two far superior competitors, the Atari Lynx and the Sega GameGear, only on account of being cheaper and having a longer battery life. At any rate, the Wii U is fairly competitive in terms of its price tag. In 2006, the Wii launched at €250 / $250. The Wii U adds 50 bucks to that for the basic model and twice that for the premium bundle. It is more than I would have hoped for and a cheaper price tag would have practically guaranteed success, but neither the next PlayStation nor the next Xbox will be able to match that, for sure.

What I consider a huge mistake, though, is the strategy of selling two different models, so-called Stock Keeping Units or SKUs. Nintendo has never before opted for such a strategy and even frowned upon Microsoft and Sony for doing so, if I remember correctly, calling such a move confusing to consumers. The PlayStation3 launched with two SKUs in each territory which added up to at least five distinct models being available worldwide at the same time. From launching in 2006 up until now, Sony apparently released six different SKUs in North America alone.

In the case of the Xbox360, the original Core bundle was only ever meant to establish a low starting price for marketing purposes. It made no sense to buy it, since it came with no hard drive and no memory card, the latter cost at least $35, reducing the price gap to the premium bundle by more than a third. The basic Wii U bundle makes a little more sense, but only a little. No game is included which is a cost of around $70 / €70, which already exceeds the price difference between the basic and premium bundles. So, here too, Nintendo simply wanted to tout the Wii starting at 299, even though the vast majority will be opting for the premium bundle. Consumers which are less tech-savvy may even be confused. They cannot simply buy THE Wii U, but will have to choose which one they want. This, I am sure, is a question that can only put some of these people off.

Excuse me, which gen is this?

The media reception has been pretty good, though. With the Wii U, Nintendo received some fairly positive reception in the mainstream press. And it is clear that Nintendo insisted on the Wii U being the first next-gen console, since this crops up in many articles. Of course, some critics have already denied the Wii U the next-gen status. But it all boils down to definition. Remember that both Will Wright and American McGee called the Wii the only next-gen system for its innovation.

I personally define the generations the only way that makes sense, by mere count. Completely irrespective of what the console has to offer, this will be Nintendo’s sixth home console and it ushers in the eighth console generation. They could choose to bring no more than a calculator to maket. If they call it a home console, it is a successor to the current model and constitutes the next generation. It really is as simple as that. Who would have considered calling the PlayStation2 last-gen because it lacked the power of GameCube and Xbox?

Late to the party: competition not before 2014

And as far as competition within this new generation is concerned, Nintendo will not have any before late 2014. I am sure that Microsoft or Sony both cannot bring a console to market in 2013. Nor do they want to. They have lost billions with their current consoles. They will not want to burn any more money, before the current consoles have even started to earn them any profit, for a change. So the timing might play out well for Nintendo. The Wii U might not get any new competitors for two years, giving them a solid headstart. Being first worked for Microsoft this generation, at least for a few years. It might work for Nintendo now. In terms of pre-orders, the console was sold out in the US at Toys R Us, Best Buy and Target, only days after becoming available, according to Joystiq.



These figures are a pretty good sign, albeit an early one. The only downside to this strategy is that when the competitors do come out, they can be expected to be far more powerful, creating a similar situation as in this generation. The Wii U will not get any cross-platform titles, because it will not have the power to compete with the new PlayStation and new Xbox. It will have to get exclusives or nothing. By then, Nintendo hopes, the Wii U will already be a huge success, though.

Software: great third party support and Nintendo on a buying spree

The Wii U will have 23 launch titles in North America, which is a decent amount. And the third party support for Wii U is phenomenal in Nintendo terms. With ´ZombiU´, ´Rayman Legends´, ´Bayonetta 2´ and the new ´Monster Hunter´, there are some pretty nifty second and third party exclusives. But the Wii U gets also multi-platform titles like ´Darksiders 2´, ´Assassin’s Creed 3´, ´Call of Duty: Black Ops 2´ and ´Mass Effect 3´ at launch or within a launch window. However, I foresee a possible problem related to that. With the Wii, precisely those games never made it, for lack of hardware power. And that may have been an asset rather than a liability. Now that any PS3 and 360 game can be ported over, will the Wii U get enough third party exclusives? The Wii didn’t get ´Resident Evil 5´, but it got two exclusive rail-shooters in the series that were both great fun and made fill use of the unique hardware. Will the Wii U realy flourish as a console that will also have the next Resident Evil, like the other consoles, but will most likely go without an exclusive installment in the franchise? I have my doubts. With such original hardware, the Wii U relies on exclusives making good use of it. If there are not enough of these titles, there simply is no reason to buy a Wii U over a PS3 or 360. ´ZombiU´ is an extremely clever idea, because it incorporates the tablet screen distracting from the television into its gameplay and thus vindicates this hardware setup. But with cross-platform games, the tablet functionality may only have been hastily tacked on and offer a real distraction from the main screen. Then, the tablet would turn back from an asset into a liability.

While that is a valid concern for third party relations, Forbes is noting that Nintendo has changed its strategy and is widening its portfolio of first and second party studios. After recent acquisitions, both the ´Xenosaga´ and ´Fatal Frame´ franchises (the latter also being known as ´Project Zero´) now belong to Nintendo. Also, the ´Dragon Quest´ series is now, apparently, exclusive to Nintendo consoles.

Although the exclusivity deal on ´Bayonetta 2´ caused quite a negative backlash, people may hopefully realise that Nintendo saved the game from being cancelled and in doing so probably saved the developer Platinum Games in the process. The game will not become a huge seller for Nintendo, but they still chose to step in and save what undoubtedly is a hardcore game. This sends a clear signal to the industry and to gamers where this company is heading.

On top of that, Ubisoft, Capcom and Namco Bandai are “gravitating towards Nintendo”, the Forbes article notes and mentions the rumours of Nintendo wanting to buy back Rare in order to gain access to the ´Banjo Kazooie´ franchise. And let us not forget that Nintendo still owns the two best-selling videogame series of all time. So, software-wise, Nintendo is certainly doing well.

Don’t call it a gaming console: Meet Nintendo’s multimedia home entertainment system

Funnily enough, the Wii U seems to have the potential to become a better multimedia hub than Xbox360 and PS3. While Nintendo has always remained focused on their consoles being gaming devices first and foremost, the Wii U could beat Sony’s Microsoft’s efforts in multimedia functionality hands-down. The main reason is the TVii service, announced for North America. With it, users can compile all the different television content sources they have access to, ranging from their cable provider to services like Hulu, Netflix or YouTube.

Coupled with the built-in second screen, which is the biggest buzzword in television right now and a market still almost completely untapped, this may become the hottest feature of the console. If this feature will be available in other territories including similar deals with local content providers, the Wii U will definitely be a success. This is the killer app your television and computer have been waiting for. And while the content deals may not be exclusive, the competition will not be able to offer a similar service until 2014, if I am right.

Final thoughts

The media reception has been largely positive, both in the general and special interest magazines. And the week after the launch announcements, Nintendo shares rose five percent in one day. Within days, online preorders for both models were sold out with most retailers in the US. But all this is no guarantee of success. The biggest problems Nintendo might face is that of communicating the Wii U’s appeal. With the Wii, it was simple: Here is the controller. It looks like a television remote, so it is familiar. Here is Wii Sports and here is tennis. You know what to do. The Wii U, with its emphasis on asymmetric gameplay, is far more complicated and, as such, the gameplay experience nowhere near as self-explanatory. So, more than ever, good marketing will be the key to making the Wii U a success. Here, Nintendo needs to invest some, before they can earn some.

There are many aspects about the Wii U that make me quite optimistic. There are some that are highly questionable. But, all in all, I will say that I am cautiously optimistic about the console’s ability to become a hit and win the race for market domination once again. I am very interested in what you think, though, so please share your thoughts in the comments.

Friday, August 10, 2012

The beginning of the end: id, Bigpoint, THQ close mobile divisions

Renowned developing studio id Software (´Doom´, ´Quake´) is shuttering its mobile development, as are the publishers Bigpoint and THQ. The hype surrounding mobile games on smartphones and tablets seems to be coming to an end.

With only a few sentences, John Carmack revealed rather important news in his keynote speech at Quakecon a few days ago, namely that id Software was shuttering its mobile development division. Carmack said:




We did make the decision to close up our mobile development, which saddened me a lot, in that I love doing the mobile work — taking that time, spending a month, a year or something working on a mobile project, but we had some developers on there that we wanted to bring onto the Doom 4 project.

And it was looked at as something that; yes, this is fun, this is fun for the company and it's entertaining, it makes money, but it's not a grand slam sort of thing on there. The Bethesda family really is about swinging for the fences. I hope we do get back to mobile in various ways in the future, but the big real aim is blockbuster, AAA titles, and for id that means Doom 4, it means that we get the whole company behind that after we get Doom 3 the BFG Edition out the door, essentially everybody will be focussed on Doom 4 as a project.


Carmack was the first big name developer to pledge support to mobile platforms like iOS and perhaps the most vocal supporter of mobile development, first assigning a team of people to iOS development in 2007 and praising Apple for both iOS and their App Store.

Back in 2007, Carmack had noted:




We are operating on the assumption that mobile gaming has a potential for huge growth. (...) It's at a tipping point. Everybody has a phone, and almost every phone is powerful enough to do good games on it. (...)

The whole reason we are in the mobile arena now is I was just really appalled at how bad [mobile games] were. (...) We're already making profit on 2 million units of games sold, but we are kind of holding out this hope there might be a breakout moment when the industry gets five to 10 times larger.


Evidentally, this expected growth did not materialise. And other big companies are abandoning mobile development, too. Bigpoint is at the other end of the core-casual spectrum, but they are following id Software's example. Bigpoint CEO Heiko Hubertz told GamesIndustry.biz:



I'm a big believer in mobile, it's going to change many things in the games industry. But I also think it's not the right time at the moment to be in this market because to generate revenues in this market is very tough. (...)

For that reason we decided also to close our internal mobile games development. We will not continue to create mobile games internally. (...) We had around ten games in development, some of them are finished and will launch in the next few weeks but most of them will be completely closed and shut down.


Finally, financially troubled publisher THQ can no longer afford to be developing mobile games. In their most recent earnings conference call, the company's president Jason Rubin says (at around 16 minutes into the call):



We have (...) stopped develoment in certain areas that are not productive for our new strategy. Consistent with this vision, THQ has made a few changes to previously announced projects.

First, we made the determination not to pursue any future casual Facebook games. Second, we will not be publishing casual mobile games, including those with Innovative Leisure. (...)

By cancelling these explorations outside of our core business, we feel we can improve focus on our core game portfolio, which remains unchanged.


So publishers in financial trouble jettison mobile development because it is not profitable enough. But with id and Bigpoint, affluent developers are getting out of mobile development, too, both casual and core.

In my last post, I already rounded up some facts about developing for Android and iOS, which revealed how unprofitable it is for the majority of developers. Let me repeat the key facts.

It takes pot luck to have your game found in a sea of hundreds of thousand apps with extremely poor filter options on all mobile platforms. Most apps are never downloaded and studies claim that 29% of downloaded apps are only used once. 72% of apps are either free or just $0.99 (Apple's 30% take in the case of iOS not factored in).

Being successful in either the App Store or Google Play has been likened to a lottery, with more than half of developers not even breaking even (this figure is suspected to be perhaps as high as 90 percent). Even developers themselves are out to destroy some common myths about app success. For example, havin an app in the top 100 charts might mean you are making no more than $4 a day.

Some developers have already turned their back on platforms like Android because it simply is not profitable anymore. And with Trip Hawkins, the first industry veteran has left a previously hyped-up mobile games developer he founded himself.

So has the hype surrounding game development for smartphones and tablets given way to the realisation that these platforms really are not all too profitable? Undoubtedly, if you ask me.

Thursday, July 05, 2012

´Ouya´ - a new game console and why it will fail

Details emerged yesterday about a new videogame console that may be in the works. The console called Ouya will apparently run Android and offer free games. It was discovered by The Verge through an entry on AngelList, a portal connecting start-ups to potential investors. The entry has since been removed, but the Google cache still exists.


The page notes a number of industry veterans as attached to the project. Founder and CEO is Julie Uhrman, "former IGN head of digital distribution." Peter Pham, co-founder/partner at Science” and of Photobucket and Color fame is an advisor. As is Yves Behar, ”founder chief designer fuseproject, CCO Jawbone”, who will design the console. Most prominently, Ed Fries, ”VP of Microsoft, Retired - co-founder of Xbox project”, is on board.

The project website’s Google cache outlines the Ouya console in surprisingly few words:


Open, accessible game console for the biggest market in games: TV.

Any developer can publish games, just like mobile or social games today (but like no other console game platform). Orders of magnitude less expensive to develop.

Inexpensive enough for every consumer to buy, $99, and all the games are free to play. Every console is a dev kit; build peripherals, root the system -- built to be hacked.

Designed by Yves Behar and fuseproject, creators of Jambox. Built with Android as embedded OS.



Apart from two product renders and an interface mockup, that is all the information there is. There is a dedicated product website at www.ouya.tv, but the anonymously registered site redirects to the Wikipedia entry on disruptive innovation.


Now, this all sounds pretty good at face value. But I believe such a project is sure to fail. First of all, industry veterans are no guarantee for success. It may sound impressive to have Ed Fries behind the Ouya. But many of you may still remember the ill-fated Phantom gaming console, which also had a former Xbox founder behind it, Kevin Bachus. The device never even came close to being sold.

But I would like to draw up another comparison, the Indrema L600. Not heard of it? I do not blame you. Indrema was meant to be a Linux console with the idea of nurturing a vibrant developer community, which would supply its own free games, alongside some boxed games which were to be sold. The project was spearheaded by John Gildred. Here is a kind of obituary:


Gildred founded Indrema in January 2000, when funding was easy to come by, and had a staff of 50 until recently. The first Indrema model, code-named the L600, was scheduled to ship this summer [article written in April 2001], months before Microsoft's Xbox. However, venture capitalists didn't like its chances against Xbox or Sony's PlayStation 2, even though Gildred's plan was to slowly roll out a grass roots campaign and grow from there.

Hundreds of independent developers were developing games for the platform, which was to launch with 30 games. The open-sourced system allowed for anyone with a computer to get the development kit for free online and create games for Indrema. Games were to have been distributed online and at retail.


So why did it all go under? Gildred spoke frankly about why the Indrema L600 failed.

A final decision has been made to terminate Indrema. This is the result of a long and thorough search for subsequent round funding, which has proven unsuccessfull. (...) There were many technical obstacles. We had a tough time with heat management, latency between processes, and of course, cost to build. (...) I can't discuss the money specifics, but we needed upwards of 10mil. (...)

Timing [is essential]. The capital markets are very difficult, and it takes money to build the box. I wish there was some work around to that problem, but not yet. I do see that more and more, it is becoming easier and cheaper to build an embedded prototype in your basement. I foresee much more activity that way. It will be interesting to see the progress over the next year.

Back then, there were also rumours that the big console manufacturers had done their part to discourage potential Indrema investors. Gildred officially denied this (”I don't think there was an agenda by the competition to kill interest in funding Indrema.”), but Microsoft, Sony and Nintendo certainly have some leverage over their third parties. Most importantly, Gildred had some advice for similar projects.

If I do a game console project in the future, I will make sure that the capital will be there for 3yrs. (…) My suggestion to the next startup, finish product before talking about it.

The people behind the Ouya console have certainly ignored this advice. What we have are a few sentences describing the product and some product renders.

Of course, these are different times. Back in 2000, investors would have reacted much more skeptical to the concept of free games. And while it is unclear from the sketchy details whether the Ouya will actually offer access to Google Play, Android has attracted a huge developer community and there are some casual titles worth our albeit brief attention. Also, a $99 price point for the hardware sounds rather attractive.

But why invest even that? What benefit would people get from buying the Ouya when they already have an Android smartphone running the same or similar games? What benefit would there be for developers to support the platform? What business model would be in place?

The incentives for developers to throw their weight behind a platform such as Android or iOS have been grossly overstated. Bear in mind that it is already a one-in-a-million shot to have your game found in a sea of hundreds of thousands with extremely poor filter options on all mobile platforms. Blogger and entrepeneur Hector Rodriguez rounded up a number of facts regarding app development.


The app stores are somewhat of a junkyard, already Apple’s app store and android market boast well north of 500,000 apps each. Most apps are never downloaded or ever used. Studies claim 29% of downloaded apps are only used once (I am anecdotal evidence of that).

There are over 200,000 developers in the app stores, way too many, a fertile campground for techie newbies and citizen developers. Not a market for the ‘respectable’ enterprise or application development (AD) teams.

+72% apps are either free or just $0.99, with an average price for non game-related apps of $2.22. On top, take off the “expensive” (sic) 30% take for apple and there is no self-respectable business that could grow beyond the anomaly of Zynga. App stores can not simply compete in dollar size with enterprise markets.

Being successful in either the App Store or Google Play has been likened to a lottery, with more than half of developers not even breaking even (this figure is suspected to be perhaps as high as 90 percent). Even developers themselves are out to destroy some common myths about app success. For example, havin an app in the top 100 charts might mean you are making no more than $4 a day.

Some developers have already turned their back on platforms like Android because it simply is not profitable anymore. And with Trip Hawkins, the first industry veteran has left a previously hyped-up mobile games developer he founded himself.

So, perhaps, things have not changed all that much since 2000. I am sure that we will next hear about the Ouya when we learn of the project being cancelled. This is sure to go the way of the Phantom and the Indrema L600. And do not get me started on the Pandora handheld. While it is still available on the market, the company hopes to sell 4.000 units in a few months. I suspect the GameBoy Advance outsells the Pandora. But at least they made it to market. I am sure the Ouya never will.

EDIT The Ouya console project has now appeared on Kickstarter with a target of 950.000 US-Dollar already surpassed with just under a months to go. Finally, there is the wealth of information needed to secure funding for such a project. There are details about the business model for developers ("developers can offer a free demo with a full-game upgrade, in-game items or powers, or ask you to subscribe" - essentially the standard ´freemium´ model), notable words of praise by prominent developers, tech specs (the console will feature a Tegra3 quad-core processor, 1GB RAM and 8GB of internal flash storage) and the commitment "to have a finished product ready to ship to you in March."

Here are the details about how far down the road the project is:


We have a functional prototype, and we have almost completed our industrial design (the shape and materials of the product you see here). We know the hardware specifications, and are working with electrical and mechanical engineers to test the performance of the hardware. We have begun work on the user interface and software. We’ll pull all these pieces together and test how they fit, while we finalize the product. (...)

With your help, we need to:

* Convert our prototype to production-ready models and get all the regulatory approvals (yeah, we need these to sell them)

* Deliver developer kits (for early developers so we can have games on day one, though every console will include an SDK once we launch)

* Place our first production orders (we are working with a manufacturing firm with lots of game hardware experience, but we need to know how many to make!)

* Ideally, fund some initial game development (i.e., 1st-party games)

The information provided is thorough, though perhaps not exhaustive. At any rate, above points of criticism and caution remain. Not a single game is promised at this stage ("It’s a little early to share a final roster.") Also, I do not yet see a viable business model for the company (or, indeed, for the investors). As far as the company is concerned, they are mimicking Apple ("We'll share revenue – you get 70 percent."). This will further segment app developers' attention by introducing yet another unreliable market likely based on pothole luck more than anything else (see above).

And as far as hardware is concerned, building a $99 device packing a Tegra3 quad-core chip does not reek of any profit. In fact, it sounds more like a subsidised console. Do not get me wrong, I wish them all the best. But I am still absolutely convinced that this project will be dead in the water by 2013. Just less than a million US-Dollars of funding sounds like a lot. But it is very little in the home console business. Companies like Microsoft, Sony or Nintendo have poured that money into their new consoles more than a hundred times over.

EDIT Former Microsoft executive and Xbox co-founder Ed Fries has responded to my article. Here is his statement and I agree wholeheartedly:


Hey Andreas. You are right that there is no guarantee this will succeed. With technology the hard part is often not the idea, but finding the right time for that idea. Compare ipad to the Apple Newton, for example. Even when the ipad shipped, many critics were very skeptical until it started to sell. Indrema may have had the right idea but they tried to launch it at a very different time. Think how many things have changed in the last dozen years. We now have (more or less) ubiquitous broadband for distribution. We have the cloud for storage. We have cheap commodity parts that can do 1080p at 60 fps. We have a strong and growing independent game development community. We have a "free to play" game design model. And finally we have a customer base that is becoming increasingly used to paying for and valuing digital goods.Whether all of these together will add up to enough to make OUYA successful remains to be seen but it's certainly an exciting new time to try this idea once again.

EDIT Developer American McGee (´Alice´, ´Bad Day L.A.´) has weighed in on the debate about the Ouya. Although the console is by now nearing $5 million in funding on Kickstarter with just over two weeks to go, he is as sceptical as myself, speaking to Game Informer.

Being based on the same chipset the major tablet/phone makers are cramming into their lineup of existing/future mobile devices it would seem the major benefit is the included console controller. But device makers are ramping-up production on “console” controllers for iOS and Android (with OS support for both coming soon). This brings me back to my original question about the long-term viability of traditional consoles – why would I want my gaming content tethered to a TV and stuck in my living room?

Current-gen Tegra-powered tablets can be plugged into a big-screen display/7.1 audio setup via HDMI (and connected to a 360-style bluetooth gaming controller). The difference with Ouya is what? That it doesn’t have a built-in display and can’t be taken on the bus? Not sure I get it, but then again I might be missing something.