Thoughts on: Revolutionaries at Sony – Asakura

 

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April 30, 2000

 

 

I’ll take a wild guess and assume you are interested in the history of PlayStation. If you are either a geek for gaming consoles, entrepreneurship, Japanese management, or interested in the massive impact of Sony’s PlayStation had on western markets and culture, then you are in for a treat.  This book takes a close look at the great personalities behind the PSX and the conflicts they overcome to make the magic happen. Reiji lets you walk through the story from the underdogs like Ken Kutaragi, business and engineering visionary, and big bosses as Norio Ohga, CEO of Sony at the time. There is a unique focus on how this two sides competed and cooperated under the distinctive culture of the Japanese video game industry. The tales within this book go from business model to technological aspects, developing every facet into a comprehensive view on how this revolutionary product came to be. It is fair to say that beyond an entertaining and concise profile of the PlayStation business history, Asakura’s work is a great contribution towards understanding Japanese game industry during the 90’s. Reiji’s portrayal is particularly interesting in how he puts the spotlight on the ‘revolutionaries’, allowing to understand the innovators’ mentality and the conformed culture that surrounded them.

The book gives light to what they prioritized towards consumers (reputation, trends, awareness of segments (core and mass, ages, etc), education on how to use hardware), other competitors (minding relationships with Sega and Nintendo was critical for a newcomer like Sony), and internal organizational relationships (struggles between Kutaragi and top management for starters, then the mixture to develiopo SCEI as a Sony Music driven unit, struggles with Sony of America, or even decisions that didn’t get everyboy on board like the riskful decision to drop PSX’s price). The portrayal of this mindsets and actors helps to understand the historical context of the late 16bit into the 32bit era, showing the key properties of the business (distribution, hardware advantage, innovate and respect political protocols) they looked upon and the social conditions that restrained actions.

It is difficult to assess how much they knew about platform business (regarding platform or multi-sided markets economic theory), especially considering they recognize themselves as newbies that made several mistakes (like not knowing about the retailers share on stock sales). Still, they faced many challenges of the platform model straight on. One example is how they focused on getting on board third-party developers as the main element. Although they probably didn’t have much choice. They were a respected brand and had an advantage on that point, so asking for others to develop there looked more promising that invest in in-house devs. Interesting enough the top-end software houses knew about the risks involved in platform ventures, and they wouldn’t risk licensing if they were not sure that the platform would establish. It is important to consider that Nintendo had a hard and menacing attitude around licensing, getting to a bully-like position when publishers didn’t play along. So beginning negotiations with a newcomer and outsider would not play along Nintendo’s license minefield.

The whole deal on Nintendo’s rejection of the PlayStation project is very interesting. Asakura provides a lot of insight and anecdotical evidence that would suggest a more definitive scenario for the big N. Yamauchi’s decision to drop the project is usually explained by the slowness of the CD-ROM, I need to check the specifics here, and it is probably something that he said. But as many other Japanese statements, this seems only to provide a face of respectful denial on a superficial property of the new hardware. Although very important if you prioritize consumer experience, the CD-ROM loading time wasn’t a big deal compared with the advantages. First of all, PSX way of dealing with 3D rendering and CD-ROM loading was far superior to the competition, they just loaded once and then had 3D rendering without the need for data reading. Most importantly, the CD-ROM format entailed an advantage in one of the most costly aspects of running the game business, demand volatility! With the CD-ROM, against the standard format mask ROM, the manufacturing costs and speed would decrease considerably. Although this is a face-on advantage, the real underlying benefit was the flexibility provided by this process. They could adjust to demand and prevent over or under stocking.

Overall, I guess I wouldn’t be the only one to be suspicious about what really happened when we revisit personality-driven histories. As it is common to have antagonizing aftermath tales, it is difficult to assess. Even more, the natural glamour that we seek and create around these personalities is usually another trap. Romanticizing their personas and actions is something that comes naturally. I believe that Asakura’s profile intentionally provides and restrains from this type of storytelling. When present, it feels that is there for the merit of entertainment; when it’s not there, Reiji leaves an open window to facts and personal stories. Even with embellishments or building around personalities that could obfuscate what was happening around other teammates or companies, this book is (especially for western aficionados) a lighthouse in the black seas of Japa

 

 

 


If you’ve read so far, and you still feel captivated by what this book has to offer, I would recommend to go and grab a copy. It’s fast-paced and concise, you will go through many different situations and facets of the PSX history.

Here you have some personal notes while I was reading the book:

Chapter by Chapter

Chapter 1: Ken Kutaragi.

Display R+D, LCD. Kutaragi’s passion for consumer tech products. 3.5 vs 2-Inch Floppy! Ken’s ability to maneuver within org, politics, and bureaucracy.  Digital tech: Despised within Sony. Dig. Engineers lowest rank. Found a R+D on digital, was transferred and deployed/learned skills there. Finally, he would grow in a dual business/engineer talent looking for a new consumer market hit. System G would look forward to a decade later, mid 90’s as a target for massive consumption. He would later find a successful merge of his tech and his son’s inspiration on the Famicom.Opinion/thoughts: Sony shows to be a great success, not a “traditional” Japanese company. It seems that not being part of a “social welfare” activity it looked as undesirable/lower reputation. It is a consumer goods (luxury?) for profit. It is remarkable that this was also the same company that amassed japan’s reputation abroad and connected with consumers worldwide. Part of the Japanese success in the world that was not related to its culture, but its tech capability.

Chapter 2: DO IT, the decision-making process.

CD/I vs CD-ROM: Phillips/Nintendo/Sony triad. 1991 Kutaragi Tokyo station gets the news. Nintendo going to Phillips (CDi). Nintendo was afraid Sony would take over after game-machines. Phillips and Nintendo had a common enemy.  Nintendo didn’t back from SNES, they agreed on a CD-ROM add-on for the Super Famicom and a separate game machine for Sony. The threat of a standalone console is clearly bigger. Supposedly, higher ranks in Sony knew about Nintendo’s plotting before Kutaragi. Ken gets pissed off, possibly more energy imbued into the dev of the PS machine. They also pissed Norio Ohga (President) and his rage was focused on pursuing this business no matter what. Negotiations were kept into 1992 (Ends May 6).  Kutaragi was hated for the messed he drag Sony into. Americans only knew about this on the CES reveal (LOL). Supposedly Kutaragi uses Ohga rage for Nintendo to pursue the dev of 1million gates LSI chip. With such a chip they could integrate the 3d rendering machine and defeat Nintendo. Ohga supported and respected Kutaragi, but many didn’t approve Sony’s entry into the game industry. Epic Sony, Maruyama. Team up! They struggled with failed games for Nintendo. He supported proprietary development as it game control of information and management. Maruyama was founding member of CBS Sony with Ohga so Kutaragi could interact with Ohga through him. To develop this “startup within Sony” he already had Maruyama, he needed credibility and with daily interaction in the top level: Teruhisa Tokunaka. They mention ‘simulations’ and the consideration of A, B, C scenarios. The release was a success in 1994. Ohga remarks that it would’ve been terrible if it wasn’t.

Having a separate machine by Sony would be a big threat. Not developing a unique PlayStation together would be a terrible decision. Let’s remember that Nintendo already had only one console, a console they sold until late 90’s. They were reluctant to changing platform generations, as they were with the Super Famicom in response to Sega’s threat. Once SFC was on the market they would probably want to stick with the add-on business model that worked with the Disk System on the FC. Overall, it seems an incapacity to control/negotiate/manage the situation of Sony’s technological superiority and being too rigid with their own culture/business plan. Adopting a conjunct standalone Nintendo/Sony PlayStation could’ve been a short-term solution with a great impact, but in the long term, Sony’s capacity and infrastructure could become a clear internal threat as they could follow on with their own machines. Probably delaying Sony’s

Chapter 3: Appealing to the Software Developers.

Many stories on prominent Soft-devs that were pursued to get into third-party development for the PSX. The main strategy to overcome the market as usurpers were to get third-party collaboration. Most asked for 3 million units sold to include their participation. Most events denied the possibility of having the retail consumer-ready 3D technology. Virtua Fighter opened the doors for this idea but the hardware of the kind was only believed to appear at arcades. After revealing demos to all these high tier developers they decided that with proper adjustments (marketing strategies, or X selling price) they would hop in. Namco was one of the biggest and most symbolic participants. As a big arcade machines / 3D specialized company they found a great opening in home console opening for a 3D game that allowed for low-cost software. Tekken was the leading success after this alliance was made. They also mention the relevance of middlewares for soft-devs provided by Sony. Although controversial and with several complications the operation persisted and allowed many developers to focus on creative decisions. Developers didn’t appreciate these libraries as they didn’t trust the code. But it is also mentioned that high-tier developers thought a complicated 3d machine would be an advantage for them as average developers wouldn’t be able to work on it. The library platform opened the doors for many developers. This support service was new in the industry.

Chapter 4: Distribution revolution.

Sato tells the story of buying a used game as new. Problem with mask ROM was a two to three months manufacturing process, predicting/forecasting precise units was near impossible and the uneven performance/demand/popularity of titles presented a high-risk situation for game manufacturers. Either keeping stock or losing sales opportunities. Mask ROM also had perverse practices on retail and distribution with second-hand sales, selling under MSRP for recapture and resale. Pag 99-100: A lot of distribution costs and practices. Talk about decisions regarding mask ROM sales. Appeal and revolution of CD-ROM. Pag 101 (bottom): price/cost production for software houses. Sony made a 35$ price to the wholesaler (Nintendo’s mask ROM had 61$). CD-ROM also allowed flexible production volumes! “CD repeat production”. Adaptability to variability in demand! Key first weeks are even more capitalizable.

Mind this! “Common knowledge”: SEGA SATURN’S FAILURE CAUSED BY DEPENDENCE ON SHOSHINKAI ORGANIZATION.

Gotta research more on Sato. Sato is amazing: he figured that old customs on mask ROM business distribution model would possibly truncate the new model. He decided to make SCEI the distributor and take control of production volumes. This way they could protect the model and educate about it.  He also valued accurate information on sales (and the dependent relationship between hardware and software). There was a bad reception from big software houses, they wanted control on their titles. Particularly on big titles that would prefer a larger stock initially.  They would compete only with 5.000 stores (Shoshinkai had 25.000), record stores worked with 7-8 thousand. Maintain credit is one of the key roles of a wholesaler, Sony had a better reputation in that regard. Konami was a hard opposition. They didn’t like Shoshinkai but wanted control. They finally accept for short period 1.5 years. They were also integrating distribution. Kitagami (Konami) complained against SCEI performance. Under warning, they still missed the 3 days of production on out of stock retailers. Weird, only until June 1997 they loosed on developers input for initial volume.

1 store every 30-40 thousand population!! Yamauchi teased them xD. They achieved 2 million sales focusing on core players. Then moved to the general public (10million domestic, 1998) Page 142: mature price structure on software. Motivated multi-CD games Parappa the Rapper is a software attempt to broaden the segments.Opinion/thoughts: There are relevant insights regarding rationality and information in the 32bit beginning stage. PlayStation had to learn a lot and the team engaged in several innovations that secured a good release of the platform. They got people on board and offered different new services that would reduce costs and create flexibility for software developers. Distribution management and retail accuracy would be a great sales point in the consolidation of the new platform. Support in dev also created this, while CD-ROM was a huge point in favor of flexible production and reduced costs. It also provided more space for innovative games (not even mention 3D) that would be encouraged by the support libraries. Sato, Kutaragi, and many others were aware of these business strategies (even if they missed some basic aspects of retail profit shares on hardware sales). The resistance from software developers is also critical. They show that an integrated (probably  There are many shady stories about how things came to be, very particular of Japanese social customs. Yamauchi’s decision on not adopting PlayStation is one of them, stories about not taking the PSX because of CD-ROM and pursuing the mask ROM model with the Nintendo 64 looks weird (they finally changed to cd on the Game Cube, which should’ve been in development among the nineties (so they did got into it right away). There are too many factors to simplify this decision like that. He should’ve known they had the upper hand and decided to trump their development with the last minute swap towards Phillips. The values of CD-ROM as a business go beyond the costs of users, this seems very contradictory considering the relevance to organizational and operational aspects of the business. It is known Nintendo has overvalued users experience, but overlooking the major shift of a CD- ROM based production seems unlikely (was it?).

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HG Gundam Revive RX-78-2 – Unboxing and Assembly Review

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Greetings! This is my first post for Gunpla review so I’ll just make it trough as a test run. If you are interested in a fresh view on the new HG model of the RX-78-2, I invite you to keep reading! I’ll go through the Unboxing and a review on the model’s assembly straight out of the box. I’ve recently started Gunpla as a hobby so I consider myself a complete amateur. I’ll keep posting my endeavors in Instagram (gggaijin). If you want to keep up on Twitter with the #gunpla community activity and news, I invite you to follow the bot account I manage @GunplaGaijin. My plan is to keep posting about new models I build as a way to share what I learn, reviews of the model themselves and the Gunpla love!

The proper name of the model is the RX-78-2 GUNDAM E.F.S.F. Prototype Close-Combat Mobile Suit. It is a 1/144 scale of the original RX-78-2 from the Mobile Suit Gundam series (1979) by Yoshiyuki Tomino. Released in July 2015, this kit is a blast to the past that is mostly revealed on its simplicity. The kit has 3 runners besides the joints PC and the clear plastic for the laser sword.

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Unboxing.-

If you are interested in more detail on the unboxing please click the YouTube video below to check it out. This will give you a better idea of the runners’ details and manual.

As you may see in the video my first impression was that the kit is very straightforward and simple. My major concern was about the direction I would like to take with painting and detailing. The colors of the runners would be enough for clear coats (either flat or gloss) to make it look finished, but even going for a toy-ish retro look this would still be too simple and I think it would look a bit boring and dull. I don’t want to go for a rusty weathering so I’m still undecided on how to get my finished look with this kit. This is an issue that RG and MG models overcome by the details provided by decals and parts design. Just compare my HG with the RG at Amazon.com.

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Bandai #01 RX-78-2 Gundam 1/144, Real Grade (Picture not mine)

Cutting out and Assembly.

The simplicity makes it way through. You will find the model is easy to snap out and start putting the parts together. The whole process took me about 2-3 hours in a very relaxed session (watching Netflix). My only objective was to build the kit and cut out the rough parts without sanding, only using the hobby knife. There were only a couple of parts that will need sanding before any paint coat but in general Bandai’s plastic quality cuts you through fixing these imperfections.

The kit has two major seam lines’ parts that would need to be cared of. The kit’s simplicity makes it great for a beginner or someone who just to bring that icon from the past without getting too involved in Gunpla. If you are picky or obsessive, the head and legs seam lines are going to be notorious. Without getting into painting or detailing yet, I would say that the helmet fix would be the most challenging part for this model so far. Once I get that done, I hope to post my results and the seam line technique I used.

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As you can see in the pictures above the model really begins to get shape in a dull but straightforward manner. I didn’t go through with the decals as I intend to disable it for painting and sanding, so the model looks even duller than it should be. The final assembly below gives you an idea of how it would look if you just put it together out of the box.

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Overall I’d say this is a great kit for beginners besides being a great popular culture icon you may be proud to build yourself. If you are new to Gunpla I would strongly recommend it, if that is not the case then you may consider going with the RG. I haven’t put my hands on it but I do have the RG Gundam Mk-II A.E.U.G (very similar to the RX-78-2). The difference in price is a bit much but it may be worth it for you. At Amazon, you can find the HG at 10.99 USD and the RG priced now at 27.99 USD. If you want the bigger challenge, then the MG at 43.00 USD may be your thing. Take a look and decide based on your modeling purposes! After all, the HG is a great kit for a retro look or as a learning kit for beginners or new techniques!

I’ll be looking forward to posting my future results on this kit. If you have any comments for a newcomer Gunpla fellow please let me know!

Again, I’ve recently started Gunpla as a hobby so I consider myself a complete amateur. I’ll keep posting my endeavors in Instagram (gggaijin). If you want to keep up on Twitter with the #gunpla community activity and news, I invite you to follow the bot account I manage @GunplaGaijin. My plan is to keep posting about new models I build as a way to share what I learn, reviews of the model themselves and the Gunpla love! Cheers and GG.

A glance at a Week’s Top Sales

Putting some perspective into a ‘Successful Game’.

Before any talk about games lets put things into perspective. As we all know any software requires a hardware to run. When this particular hardware is open to multiple developers and multiple users we basically are talking about a Platform (a topic which I’ll keep on talking, specifically towards theory of platform economics). These platforms don’t only give ground to aspects such as software computational performance regarding speed, visual renders or inputs; they open a social system where inter-actor feedback could be the difference between glory or defeat. The classical structural aspects of a platform have been a clear influence on its success, specially when they provide particular competitive advantages such as for example using Compact Discs for games on the original PlayStation. But the fundamental dynamic that thrives the impact of a platform is network effects (or how the adoption of the platform generates positive or negative effects to other related actors). In the console video game industry we see three basic actors: platform providers, game developers and customers. To make a platform system rise and succeed the most important thing is to attract customers and good developers for positive feedback loop: good developers come and supply the platform with quality products and so new customers hop in giving more incentives to other developers get into the platform. This process also works backwards with the entry of customers giving incentives to new developers which in turn make other customers to get interested. As you may suspect, the chicken-or-egg dilemma appears at its glory. The following post will delve into game sales and try to keep this notion of social and economic effects when we analyze them.

Source of all sales data analyzed here comes from VGChartz.

Having this in mind we may approach platform and game sales and take a look at their performance. First of all a glimpse into today’s total platform sales within the current generation should put attention towards Wii U, PS4 and Xbox One (I added 3DS as several games still appear in the top sales and clearly hints Nintendo’s control over handheld console market).

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Platform units sold, y-axis scale in 10 million units.

With an advantage of several years Nintendo 3DS is today the most widespread video game console with software on weekly top hits. Seconded by PlayStation 4 that positions itself as the most spread home console platform. As usual Microsoft’s Xbox One is trying to keep up and as you’ll see it is achieving its goal of market share expansion. Nintendo’s home console seems to be struggling in this fight of dominance but only in market reach.

Let’s get into last week’s sales. The high-end consoles are running the lead but with a huge gap among them. PlayStation 4 gets up to 17 games in the top hits as Xbox One only follows with 7. This gap could be taken as a sign of network effects, as Sony’s platform has more hardware units it is a bigger pool to fish for developers and that drives more releases for PS4. In addition to this comes more purchases at the high end as a well structured platform may provide space for “top-quality” developers and thus increasing the chance of game hits.

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Considering top hits as a key parameter of platform control over the market we could clearly asses Sony’s success in this period of the current generation with a 56.7% market share. Xbox One is the contender with half it’s market share. PC games seem to be out of top hits in VGChartz data, it is difficult to address this platform as it considers piracy, digital distribution or MMO persistent games. For now lets keep an eye on the home console sector.

Minding the platform context we addressed at the beginning we should ask about the relative ‘hit’ of these top game sales according to their infrastructure. In other words what is the ratio between top chart games and the amount of platform units available in the market? For example, we say that Tom Clancy’s The Division for PS4 leads the charts on March 26th with almost 450.000 units in total. On the 7th place in the same week we have Pokken Tournament for Wii U with barely 150.000 units. Both are clearly good sales, but in context of the reach of their respective consoles (PS4 = 40 million, WiiU = 13 million) we could say that The Division behaves relatively similar to Pokken Tournament. The Division relative impact would be 1.125% (450.000/40.000.000) and Pokken Tournament relative impact is 1.153% totatpie(150.000/13.000.000). It looks that Nintendo is reaching as effectively as Sony within their own platform community. Better yet, Nintendo is doing so with their own IP’s. If we consider games and their platforms a new pie chart emerges, with the relative market share. Comparing with the former chart we can see that Microsoft and Nintendo are getting more from their platforms than PS4, but that is reasonable given that Sony has built such a massive platform.

 

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Top Sales by Week

Looking at the weekly charts we may see two properties: sales distribution have cross sectional long tails and longitudinal long tails. In other words, weekly sales have clear long tails in a ‘winner-takes-all’ fashion. Huge sales for the top tier and small or unsatisfactory sales for most of the games in the market. This long tailed distribution is the graphic representation of the risk inherent to the video game market. A ‘longitudinal’ long tail appears among a sequence of weeks. Historically most home console games performance (different for persistent or digital games) considers its highlight on the first two weeks or even the first weekend. From here is usually downhill with an exponential/power-law distribution decay. Blue bars show the cross sectional distribution of March 26th week , orange bars are the sum of this longitudinal long tail up to this point. As you know games like Grand Theft Auto V or Call of Duty  Black Ops 3 had a huge impact on release and its effect carries on showcasing on the top sales chart. Please mind that the following charts have double y-axis (orange bars being on millions of units).

March 26th

If you fool around the chart (just click it, and apologies for not mastering Plot.ly-Wordpress relationships yet) you can explore where are some games of interest and other fun facts. I guess that overstating whats already said should be avoided so, lets just put some remarks while looking at these charts. First, 5 out of 20 games are showing an impact of older AAA games, that gives an important hint of how video games carry a ‘winner-takes-all’ dynamic. Another key aspect is our 2nd place, the relevance of Japan’s market as an isolated system is remarkable. Dragon Quest Monsters Joker for the 3DS didn’t have a release for the Americas and still generated a huge impact in a global scale. With the rise of a whole new gaming culture in China (check this post: Analyzing Global Game Interest) it is important to respect these sectors and maybe begin to look deeper into its particular features. Japan led the home console development during the late 80’s and we basically fell in love with undercover Japanese culture. Now we see that Japan has one of the most fruitful mobile gaming industries (and watch out as some of them are again looking towards global impact: maybe I should write a post about this new gaming Rise from the East).

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Click on the graph for interactive plot at Plot.ly!

April 2nd

Again a game from Japan hits the top 3 (Yokai Sangokushi). As you’ll see below this game has almost no impact in Twitter, it is obvious that a game without release may have little impact on our communities but when we are talking about such titles we put on evidence how idiosyncratic the digital entertainment world may be. An interesting thing on this week’s sale distribution is how the tail flattens and gives more relevance to the top 3. Yokai is explained by the huge demand of the Japanese market, The Division follows it’s momentum from last week and the other new contender MLB 16 comes to put attention to another huge aspect of our industry: the role of sport games (mental note for another post, check).

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Click on the graph for interactive plot at Plot.ly!

 

April 9th

Mind your y-axis! Only a bit more than 250.000 units mark the lead of April 9th’s sales distribution. With a more skewed long tailed we see how the new Quantum Break took most of our gamer’s weekly wallet. An overall poor performance comes evident as out ceiling dropped to the 250k and old AAA games gained ranks in our Top 20 (CoD BO3 rised to top 3).

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Click on the graph for interactive plot at Plot.ly!

 

A Ranking Story

This post is going for a bit too long so lets cut to some other interesting points. It is clear that sales in units are highly volatile, keeping track of unit sales should always be hand in hand with competition performance in other hit games, amount of total games in the market, relative market share of the platform and of course other substitute products or platforms such as mobile gaming. To simplify our review of top home console games lets rank them by order. This should provide a good insight of the variability but keeping it simple to understand this sector’s software composition. The clear downside of such a figure is that we are not considering the overall performance of the week (as wee saw earlier with our last week). Here you have a rank order of game hits to show how unstable is this relational process.

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Narrowed to the Top 10 we see three different patterns here: short, medium and long hit wonders. Short ones are usually represented by a niche product that is well informed and goes out the first week to get it’s prize, these games usually don’t perform as well on the subsequent weeks leaving the top ranks. Medium range are basically normal AAA games. Highly marketed games that appeal to a broad audience within the platform. Games such as The Division or Quantum Break move around this patterns. The most rare one are the ‘must have’s of the industry, usually games that drive platform purchase in the first place. In this case we see how two of them (that are both actually bundled to PS4 consoles at retail) appear in all three weeks, showing an increase on the ranks on the third week where total sales were relatively lower.

Keeping an eye on the community

Last thing. I guess that looking only at sales data is a bit narrowed so I’m taking the liberty to check communities (on the future Twitch, Reddit, etc.) and get a proxy of their attitude towards these top games! So I went to last weeks tweets and did a sentiment analysis of these games. Here are some results! Y-axis marks polarity being 1 = Positive Attitude towards the game and -1 = Negative Attitude towards the game. Enjoy!

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Yokai Sangokushi had very few tweets in English, that makes it highly variable and thus the polarity values presented are not reliable. On the other hand a swift negative move of Quantum Break’s polarity may indicate some discomfort of the new users (something relatively common on new releases and its closest user community). Make the conclusion you prefer. I’ll just put some emphasis on FIFA 16 and GTA V, two games/brands that have clearly positioned on the top of mind in the gaming industry seem to be more robust and keep a consolidated positive perspective from the community.

Hopefully I’ll be posting more often. I think a more detailed view about the relevance of sales data and community impact should be put into some perspective.

Here you have the most popular tweets about your hit games! Good game!
MLB The Show 16.

  Quantum Break

Yokai Sangokushi

  Far Cry Primal

Call of Duty: Black Ops 3

Hints on International Game Interest .

Among all the apparently constant success of the Video-game industry we’ve seen several stages from a market crash in the early 80’s to several ‘booms’ concerning dedicated home consoles (Atari 2600) or mobile games (iOS and Android). But a global view may always be biased due aggregated factors. Although I don’t have international historical data I would like to offer a view of last year’s results among the top 200 game-adopter nations, all thanks to Newzoo. Cutting straight to the point the next figure shows the rank-size distribution of revenue among these countries; please click the picture for interactive plots (I’m still working on the embedded Plotly).

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With a clear domination of China, U.S. and Japan, the industry is somewhat similar to what we all had in mind. Except maybe for a mild neglected consideration of China’s growth. The map now considers an important new contender having China as the fourth major region after the traditional standout of North America, Europe and Japan.

Beyond this overwhelmingly settled dispute of who is ‘relevant’ in the industry (or at least who stands as a ‘big fish’) we may want to check for more indicators of actual emphasis on playing and total positive attitude toward gaming. For this, an initial description into a more sensible analysis of game adoption may be presented in how much people spent (on average) per capita. In this specific case we deal with the total revenue per capita among the same top 200 countries. Again, for an interactive plot please click on the image.

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The landscape changes dramatically compared with gross revenues. Japan takes the lead with almost 100 USD per person in the country’s Videogame revenue. An exponential distribution seems to appear showing that although most countries don’t contribute to the general revenues the individual contribution is not as extrapolated. A fat tail shows that almost 75% spends up to 20 dollars and more than 50% spend more than 10 dollars, on average. A remarkable aspect is that China drops from number 1 to rank 30 with just 16.15 dollars per capita. This means that although China has a huge mass market their game-adoption is still growing (considering that their economic development sustains its current growth and allowing to increase their discretionary income).

Although interesting as comparison this does not reflect properly how invested are these societies into Videogame consumption today. A more fair ratio would consider each countries’ GDPs and thus allowing to assess a proxy of how much individuals are willing to spend in digital games, or in other words, a proxy of digital game attitude and adoption. Such a ratio is given as Videogame Revenue per capita over Gross Domestic Product per capita. The following figure illustrates the distribution (click for interactive chart).

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This results are clearly not a statement of game attitude in general, as other factors such as specialized labor or media culture may reveal other facets of digital gaming adoption and attitudes. That aside, we clearly see that the rise of East Asia (specifically China) reveals these countries are putting and extra emphasis on Videogames; these societies are showing high interest for digital gaming and are they are -in relative terms- willing to proportionally spend more of their personal budgets in this activity.

One last thing, as I’m interested in spatial aspects of the gaming industry and I don’t like aggregated data I would just fresh up the post with some maps that give an idea of how Revenue per capita shows geographically and how does the ratio Revenue/GDP(PPP) displays.

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Click image for interactive world map.

The first interactive map shows somewhat the current mental model of Videogame Industry. Strong Japan and North America seconded by Europe and other relevant markets such as Australia. Nothing new. A contrasting point of view appears in the next interactive map where we look at Revenue over GDP (PPP) and the already mentioned rising China shows its colors as a new emergent consumer market.

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Click image for interactive world map.

I hope this was somewhat fun and/or a bit enlightening. I’ll keep up the work to analyse more macro and micro aspects of the Videogame Industry throughout its history.

Good Game.

Anatomy of Videogame Market Segments

       Since the appearance of the debatable first “mass market” digital game PONG the population of digital players has been constantly increasing, with a remarkable growth in the last decade. The current population of individuals that have played video games is estimated to be around 1.77 billions, this means that almost 23.91% of the world population has played a digital game in some way or another. This ratio comes to a 49% when we focus only on the U.S. market, having then an almost 50-50 chance to find someone with video game experience in a random crowd (Statista Dossier – VG Market). But facing such a huge audience the pertinent questions arise: how much do these people play? what do they play, when and how? Clearly the answers are still vague. Although it is somewhat evident that these players are not the stereotypical intense mono-thematic video game enthusiast. With a crowd so diverse as it could be the video game industry adopters show that people are finding some way or another to try and have fun in the digital realms of play. The usual way to understand how these ways have unraveled through history is looking at specific qualities of products being either hardware or software. Thus a general understanding of key segments has turned into a product-related framework. The limitations of such an approach arise when we try to understand the demand of digital play in a more integrated fashion and adopting the inherent complexity of our gamer habits. Understanding how a gamer spends thousands of dollars on console games while she or he still spends a lot of time in casual games may be addressed by playtime polls discriminating between hardware, but the underlying explanation of why they adopt new platforms, leave old ones or maintain an habit of multiple platforms is still missing. The following post displays some ideas of how we could integrate not only an explanation of how the market behaves in terms of sales but also giving lights about how digital players address the issue of digital entertainment.

 

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AVOID MISSING BALL FOR HIGH SCORE           “…something so simple that any drunk in any bar could play…” N. Bushnell

 

Industry segments: defining game evolution by product.

       Digital entertainment has taken several forms through the years from the coin operated arcades to smartphone’s mobile gaming. The different ways to play them have been divided by what we call platforms. Among them we find arcade machines, home consoles, personal computers, dedicated handheld consoles, tablets and phones. With an increasing population of gamers or digital players our capability to understand who is playing what or basically how we describe the ‘average’ player becomes and evasive subject. Not only is difficult to asses consumers’ habits but its also difficult to understand major drives and social behaviors behind the evolution of hardware.

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82′ Video game arcades persist although home consoles are at their peak.

 

         A traditional overview about games and platforms would consider the aforementioned categories. Among these categories consoles, handhelds, PC and mobile have turned out to be the most relevant nowadays. These four represent the hardware in which almost all published games are played. As presented in the chart below (Platform market share) the industry has moved from an arcade based industry to a home-console during the 70’s. The 80’s where the consolidation of home-console and the rise of the home computer. Around the mid 90’s the industry had a huge shift mostly caused by the CD revolution; not only PC games were more common but PlayStation entered with an unprecedented swift impact that continued with the PS2. A new space was generated around the mid 2000’s when the ‘casual gaming’ approach was revealed by web browsers; the Wii console and non-dedicated technology such as tablets and smartphones. The general approach of platforms gives a clear definition of what is mostly played but it doesn’t allow to provide a theory that explains why or how does these trends emerge.

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Platform market share proxy (Source based on VGG Database)

Using Accessibility as a continuous integrating mechanism.

         A general framework or theory to understand players demand may be addressed following simple traits in our current categorization of platforms. A common property that behaves differently could allow a new categorization of industry segments. As a basic property for any technological device we can refer to accessibility, meaning the degree of ease of access to any given individual. From inputs and outputs to the physical and virtual domains, the way we access and experience games defines how we play, shapes our consuming habits and modifies the markets incentives for production. The accessibility distinction comes evident between all the mentioned platforms. Looking at Pong as a game for drunks, DOS games for computer enthusiasts, Wii for families, Browser games for bored office workers and professional competitions on PC games we are not attempting to generate stereotypes but staring into specific ‘barriers of entry’ that determines the general crowd that any given platform may receive. How we access the game varies significantly among these devices and thus it sets the broad demarcation of who would consume.

          As an initial approach I refer to four main characteristics that would define the accessibility categorization:

  1. Device Proximity:      although spatial proximity is usually a neglected issue it comes an important aspect of how favorable we are to engage on gaming. Having a phone game that play just pulling out of your pocket makes a huge difference compared with a commute to the local arcades. Among all devices we could easily separate among those played on public spaces, household common areas, private rooms and those who usually are carried on every day life.
  2. Digital Connectivity:       access to the physical device is an important issue, but access to the actual digital content is also a remarkably relevant aspect. This characteristic includes the device access (convergence in technology allowing multiple non-dedicated devices to perform as gaming platforms), game distribution (social networks, digital distribution platforms), and social inter-play.
  3. Relative Cost:    monetary cost is an important restriction to video game access, although its relative cost to other types of entertainment as near substitutes (e.g. PS4 and Wii U) or far substitutes (e.g. XBOX One and Netflix) is even more relevant for an industry analysis. Some important segments have -in part- thrived for this property: PC games, Arcades, Mobile gaming.
  4. Relative Simplicity:      how much inputs does the game require or how many implied mechanics does the gameplay has are issues that shut down the entry possibilities for many individuals without digital game or digital technology experience. Bushnell’s intuition about drunk players was a great insight that current console controllers don’t respond to. Even the consideration of that many inputs scares most non-familiarized consumers away.
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AVOID MISSING PIGS FOR HIGH SCORE   –   Popular game Angry Birds as an example of  high proximity, connectivity, simplicity and low relative cost.

The value of this categorization is not addressed only to understand usability from a consumers point of view. Such a categorization also enables a framework to understand video game industry history and its several shifts. The breakthrough of Atari as a home digital play enabler (proximity, simplicity), the shift of consoles and PC gaming through CD technologies (monetary cost) or the massive impact of mobile gaming (relative simplicity) are just some elements that could be addressed with such a framework. The most relevant aspect of this categorization is the possibility to build proxies with continuous time series that may explain the industry’s behavior, instead of an abrupt delimitation of ‘generations’. Parameters such as internet connectivity (digital connectivity, relative cost) or non-dedicated device ownership (device proximity, relative simplicity and cost) could address these aspects. A last remark about an accessibility framework is its advantage to assess the ‘barriers of entry’ of new consumers and the general potential markets that new adopters could pursue.

       I’ll work on this idea and try to develop a quantitative model about these characteristics and their impact on game use. Maybe a general understanding of accessibility crossed with players motivations could provide enough to have a general theory or framework of video game industry evolution and its respective emergent segments.