A Response to 'What Games Are: Consoles Are Sinking. Get To The Lifeboats!'

Tadhg Kelly wrote an opinion piece for TechCrunch that requires a response due to just how awful​ it is. The premise for Kelly's article is that traditional video game consoles are stuck in the past, with a questionable future ahead. He uses the recent PlayStation 4 announcement event as the lens by which he examines this premise.

“Sony’s PS4 is DOA. Microsoft has won.” So said a friend of mine on Facebook moments after the PS4 event broadcast all around the Internet on Wednesday.

It's entertaining to know that there are some out there who think what Sony announced, while flawed, was somehow so devastatingly bad as to signal defeat before the other competitor has even announced its entry in the competition​. Kelly's post just gets worse from here, folks.

​Later in the post, Kelly talks about the sharing capabilities described at the PS4 announcement and compares them to the Sega Dreamcast:

When Sega tried to strike back at Sony’s original PlayStation (and the Nintendo 64) with a machine that was meant to connect every player in the world, every player in the world responded with profound apathy.

In that statement, Kelly shows a profound misunderstanding of the many reasons why the Dreamcast failed in the market.​ Previous missteps (Sega CD, 32X, Saturn), lack of third party developer support, and the marketing hype behind Sony's PlayStation 2 (with its vaunted Emotion Engine) caused the Dreamcast to fail. Not one bit of the failure had anything at all to do with the Dreamcast's connectivity feature.

Kelly next tackles the topic of the features offered by modern games consoles in the form of streaming video, social networking, and web browsing.​

Sometimes a whole class of a technology just doesn’t make sense any more. In an age of smartphones, for example, nobody needs a Discman. In an age of tablets and laptops, nobody needs a home hub under their TV for browsing and IM-ing, and arguably not even for Netflix.

This is an interesting take. It's mistakenly conflating the obsoleting of a product by a superior product (the Discman and smartphone) with competition between products that meet different, if somewhat overlapping needs (consoles and tablets/laptops).

The entire console business is built on being able to sell games at $50, and it fundamentally doesn’t work in a $5 app world, but this leads to all manner of over-managed and controlled deadweight.

Kelly is making an argument that has become quite popular in the tech media. It is also incorrect. This argument fails to take notice of the fact that while smartphones and tablets have greatly expanded the ​overall video game playing market, it is a mistake to call each one of those users a gamer​. ​​​​​​Not every person who plays a Facebook game or an iOS/Android game is what would traditionally be called a gamer (just as not every driver is a car enthusiast). Based on the fact that this mistake keeps being made in the media, it seems as though we need a new term to distinguish the two different markets.  Perhaps we could refer to the two as casual video game player​ and video game enthusiast​. The needs of the video game enthusiast are not satisfied by the $5 app world. Angry Birds, for all its appeal to casual video game players around the world, does not provide the same kind of experience that the video game enthusiast is seeking when they play a game like Skyrim or Super Mario Bros.

Kelly finally covers the topic of "microconsoles", such as the OUYA, and their potential impact on the traditional game console.

The reason microconsoles are so appealing is all down to price and choice. The Ouya, for example, is aiming to be $99. Its games are likely to be $5, or free-to-play, or something equally straightforward. And you’ll play them with a joypad on your television, just like any gaming machine. Even better, the relatively lightweight process of developing and distributing on microconsole virtually guarantees that they will play host to interesting content.

​While the Apple App Store and Google Play store have allowed for the rise of "interesting content" such as the aforementioned Angry Birds, they also have allowed for a deluge of rubbish in the video game world. Of course, there have always been stinkers in the console world (Atari's E.T., for example) but the lower barrier to entry in the mobile app stores (as compared to console development) makes it far more difficult to find good games. Try picking a few random games from a retailer's store shelf and a few random games from the app store, and see how that turns out for you.

In short, Kelly's premise doesn't stand up to scrutiny. By focusing on certain ancillary aspects of the traditional game console as compared to similar aspects of smartphones and tablets, Kelly has shown a remarkable misunderstanding of the video game market.

Google Glass Could Be a Real Winner

Amar Toor, in a post for The Verge:

Excitement has been building around the project ever since Google first announced it last summer, and will no doubt swell going forward, now that the company has given a fuller idea of its augmented reality future. According to Google, today's video "actually shows how Glass works."

It's easy to see why people would be excited about what was recently shown for the Google Glass project. The product is the latest example of the trend towards wearable computing. It will provide its users with some interesting features.​

First up is media capture and sharing. Google Glass supports taking pictures, recording videos, live video conferencing via Google Hangout, and sharing all of that media with others. This is, of course, functionality that could be done via existing mobile devices, yet the ability to do these things hands-free opens up new possibilities for sharing information. The video in the source link shows quite a few examples of the devices being used while performing other activities such as flying an airplane, swinging on the trapeze, or engaging in a Kendo duel.

Next is the ability to get contextual information such as navigation directions, airport and flight details, weather information, and Google search. In my opinion, this is the true 'meat' of the video. While the media capture capabilities are sexier, the contextual information is what the typical user will get the most value out of on a daily basis. Navigation, in particular, is quite useful when offered hands-free (for example, while walking).

Folks, this very well could be The Next Big Thing.​

Sony is Being Strangely Coy with the PlayStation 4

Sam Byford, writing for The Verge:

Sony just took the wrappers off the PlayStation 4 at a blowout event — but something was missing. Bizarrely, the company elected not to show any glimpse of the console hardware itself, instead focusing on internal details and a showreel of upcoming games.

​Not only did Sony fail to reveal the actual hardware design for the console, they also didn't announce a price or release date. The lack of pricing and release date information makes sense at some level since they want to be able to react to Microsoft's next Xbox announcement, but not showing the console's hardware (beyond the new controller) is downright odd.

To be fair, Sony did show some interesting stuff. Of course, it all starts with games, and Killzone: Shadow Fall looks beautiful.​ The integration of Gaikai's game streaming technology seems like it will open up some interesting possibilities. Likewise, the integration with mobile devices (e.g. smartphones, tablets) is something that just makes sense.

Overall, Sony did okay with its PlayStation 4 announcement. Not great, but not bad.​

Will Traditional Video Game Consoles Thrive in the Future?

Tricia Duryee, in a post for AllThingsD.com:

In January, Nintendo slashed its sales outlook after holiday sales of the Wii U failed to hit expectations. The poor turnout does not provide a lot of support for the theory that consumers were just holding back spending for the release of the new hardware. The Japanese game company was hoping to rekindle consumer excitement by launching the Wii U with a controller that had a six-inch touchscreen display and acted much like Apple’s iPad. It also enabled consumers to interact with their TVs, by allowing owners to comment on programming within a closed social network. But the console was mostly trying to extend the life of the traditional videogame business, which relies on selling packaged software at $60 apiece.

There has been quite a bit written about the supposed impending demise of the traditional video game console typified by the products available from Nintendo, Sony, and Microsoft. There are pundits that point to the rise of mobile gaming on smartphones and tablets and the freemium culture as the major culprits in accelerating this demise. Likewise, there are other pundits pointing to new console competitors such as the OUYA that will be encroaching on the incumbents' retail space. To the pundits, Nintendo, Sony, and Microsoft are dinosaurs that have not kept up with the changes in the market. Does this analysis hold up? In a word, no.

Let's start with the premise that consoles are declining. The problem with that view of the world is that it fails to take into account the fact that this console generation has gotten long in the tooth. Very, very, very long in the tooth. The fact of the matter is that Nintendo, Sony, and Microsoft have let this console generation extend beyond the traditional 5 years of life before introducing successor consoles. Gamers eventually want to see something new, no matter how much they love their current console. Some have pointed to the Nintendo WiiU's struggles as portending a rough future for new consoles from Sony and Microsoft. The WiiU should not be seen as the standard bearer for the next console generation. According to those who have analyzed the hardware, including a developer for a WiiU launch title, the WiiU is a system that is underpowered compared to what should be expected for a new console. Remember, the Wii/PS3/Xbox 360 group are six years old in terms of technology. Nintendo made a terrible mistake in making the WiiU only 'somewhat better' than current consoles. The technological leap just isn't there. Nintendo also exacerbated the problem by releasing the console without ensuring that a premier title such as a new Mario game accompanied the launch. New Super Mario Bros. U, which could have been released on the Nintendo 3DS, just doesn't cut it as a launch title.

What then, of the rise of mobile gaming? To those who say the console is in trouble, the success of devices like the iPhone and iPad as well as the success of titles such as Angry Birds point to a future where consoles aren't relevant. This is a narrow view of the world that doesn't take into account what is happening in the industry. Mobile gaming isn't taking gamers away from traditional consoles...it is expanding the term 'gamer' beyond its traditional form. Just as the Nintendo Wii helped to bring games into the mainstream by making games more accessible to non-traditional gamers (e.g. the elderly), mobile games have further expanded the gaming market. And that's what it is, an expansion of the overall gaming market, not a reduction of the market for consoles.

How will non-traditional consoles such as the OUYA impact traditional consoles? Probably not much, in all honesty. Despite what some are saying about consoles needing to provide an inexpensive outlet for indie game devs (including, famously, one of the founders of the Xbox project), it doesn't seem at all as though this is an issue holding back traditional consoles. As a developer and a gamer, I am of course interested in the possibilities that more 'open' consoles such as the OUYA offer. I'm just not deluding myself into believing that this is going to take over the industry. Gamers don't really care if those games come from major dev shops or indie dev shops, they want good games, period. The challenge for indie devs will be for them to push Nintendo, Sony, and Microsoft into understanding that there is enough benefit to be gained by offering an outlet for indie games.

In short, we should expect that the release of new consoles from Sony and Microsoft will stir interest from gamers. Assuming that they hold up their end of the bargain by releasing much more powerful consoles with decent launch title lineups, Sony and Microsoft will revitalize the sagging console industry.

Mobile Rewards Apps for Brick-and-Mortar Stores

Lauren Goode, writing forAllThingsD.com:

What would it take for you to shop in stores these days, rather than buy from the comfort of your couch? Some companies are betting that smartphones can help lure you back to the mall by offering rewards, coupons and other incentives that can only be earned when you’re physically in a store.

This is an interesting article on mobile rewards apps for brick-and-mortar stores. Goode covers the basics of two apps (ShopKick and Kapture) that encourage users to visit stores, scan items, or share product and business-related posts on their social networks in order to earn rewards such as discounts and freebies.

This is an area of increasing interest for traditional retailers. Every business, of course, wants to find new ways to increase customer engagement (and thus increase revenue). This type of rewards-based engagement is another way that physical stores can help combat the effects of lower-priced Internet-based competition such as Amazon.com. This is also intended to reduce the amount of 'showrooming' that is plaguing the brick-and-mortar industry.

The idea is to get customers to not just simply visit the store to see a product first-hand (and later make their purchase online), but instead to see the other products available at the retailer's location that can be added to their shopping cart. The addition of rewards and perks helps to not only minimize the cost advantages of Internet-based shopping, but also helps sway consumers to choose the immediate gratification offered by purchasing a product in a physical store.

It's worth noting that there have been some troubling developments in a similar space online. Lockerz.com, for example, was once the high-flying darling of the social engagement and rewards industry but recently laid off roughly 30 percent of its staff in its Seattle office and closed an office in San Diego. However, this is still a nascent and rapidly maturing industry. It will be interesting to see how this plays out.

Airbus Switching Batteries to Avoid 787 Battery Issue

Andrea Rothman, in a post for Bloomberg:

“It suggests that Airbus thinks that the Li-ion problems could be intractable or at least take too long to fix to avoid the risk of inducing delays in A350’s entry into service in late 2014, so that suggests what everyone probably already realizes: this is a difficult problem and could take some months to resolve,” said Nick Cunningham, managing partner at Agency Partners LLP in London.

Airbus is making a smart move here. It remains to be seen how Boeing's issue with lithium-ion batteries on the 787 will be resolved. Switching to the more typical cadmium batteries is a sensible way to ensure that the behind-schedule A350 will not be further delayed by regulatory approval concerns surrounding lithium-ion batteries.

However, there is a price to be paid for this change. The primary reason that Boeing chose lithium-ion batteries is the fact that they pack a lot of power into a very small and lightweight space when compared to cadmium batteries. By switching to cadmium batteries, Airbus is adding over 200 pounds of extra weight to the A350 design. A big selling point for modern aircraft such as the 787 and A350 is fuel efficiency, which is partly obtained by lower weight than previous aircraft designs. In this case, every pound of weight savings is necessary. Adding that much extra weight will not make it easy for Airbus to meet its efficiency guarantees.

Why Nike's FuelBand Won't Have an Android App

Chris Velazco, writing for TechCrunch:

Exactly why the app has been shuttered isn’t yet clear, but that hasn’t stopped we members of the press from ruminating a bit. Consider Business Insider’s take, courtesy of Steve Kovach. He posits that a close relationship between Apple and Nike (Tim Cook sits on Nike’s board, in addition to running Apple) may have ultimately stymied development. For what it’s worth, I suspect the real reason isn’t quite as intriguing — ensuring a smooth syncing experience for a handful of supported iDevices seems like a much simpler proposition than doing the same for a veritable galaxy of Android devices, and it wouldn’t surprise me if the company just got sick of the process.

This story caused quite a bit of consternation in the Android community. It must be a huge disappointment for Android fans that use the FuelBand.  The comments in the linked article (and many others on the web) are filled with questions about this move. Let's analyze the most popular hypotheses.

1. Tim Cook Killed It

As noted in the quote above, Tim Cook is on Nike's board so the idea behind this hypothesis is that he killed the Android app to hurt Android (and by extension, Google). While this certainly sounds juicy, it doesn't necessarily ring true. The potential backlash from making this kind of move is not worth the payoff. At best, this would eliminate a single application for a single device. At worst, this could potentially incur anti-trust allegations. Either way, not worth it.

2. Nike Doesn't Realize That the Android Market is Larger Than the iOS Market

This idea is actually sort of funny. The folks saying this are essentially arguing that Nike, for all its marketing analysis prowess, is somehow unaware that Android has roughly twice as much of an installed user base than iOS. That just doesn't make sense. It's far more likely that Nike realized that the time, money, and effort spent on the Android side may not be worth the investment. The revenue numbers for the App Store versus Google Play as well as the web usage numbers tell an interesting story of how the Android market, despite being considerably larger than the iOS market, is somehow considerably less lucrative.

3. Android Fragmentation is the Issue

This makes sense. The myriad devices coupled with the fact that many devices on the market run a very old version of Android (i.e. Gingerbread) stymies certain types of app development. In this case, device integration via the Bluetooth stack isn't straight-forward when looking at different devices.

What is the most likely reason for Nike dropping Android support for the FuelBand? It is probably the combination of higher development and testing costs (due to platform fragmentation) with the decreased revenue return expectations when developing for Android.

It's not all gloom and doom, though. The fact of the matter is that companies can change their mind at any time. It's not as if Nike committed to never developing for Android. As well, the combined market share for the excellent Ice Cream Sandwich and Jelly Bean versions of Android is finally starting to eclipse the market share for Gingerbread. This means that it'll be much easier and less expensive for developers to create apps for Android.

Patience, folks.

Microsoft's Terrible Surface Commercials

Microsoft recently released a commercial for the Surface Pro. This commercial is in the same vein as the Surface RT commercial released last year.

The commercial is also rubbish.

Why is this? It's because in an attempt to look 'cool', 'hip', and 'edgy', Microsoft has failed to inform the public what its product actually does. This is an especially terrible idea when you are clearly lagging behind the market leaders. What are the market leaders doing right with their commercials that Microsoft is doing wrong?

Apple's iPad Mini commercial takes half as much time (roughly 30 seconds) as the Surface Pro commercial (roughly 60 seconds) to explain twice as much to the user in a more easily digestible format. This particular commercial shows that the iPad A) can let you communicate in real-time via voice and video, and B) comes in different sizes (standard iPad and Mini).

Amazon's Kindle Fire HD commercial has a narrator discussing the various features that the device has, overlaid to video showing people using the device in real-world scenarios. In 30 seconds, the video shows us that you can read books, play games, watch movies, play music, and communicate in real-time via voice and video.

Google's Nexus 7 commercial, at 60 seconds, is the same length as the Surface commercials yet is so much more informative. The commercial shows us a little girl reading a book with her mother, using a drawing app, communicating in real-time via voice and video with her grandmother, playing a video game, and using Google voice search to find out how far away the Earth is from the moon.

What could someone possibly learn about the Surface Pro from the commercial? If they are paying very close attention, they might possibly see that it has a stylus, connectable keyboard, and kickstand. Everything else gets lost in the blur of song and motion. Microsoft's competitors communicate the value of their respective devices in a very efficient manner by crafting short stories that resonate with the viewer. We already know why we want to communicate with our loved ones. We already know that we would enjoy playing games, watching movies, or listening to music. It's unclear why we would want to have a stylus, connectable keyboard, or kickstand.

Ultimately, Microsoft fails to inform the viewer why they should care.

Thoughts on 'Four Reasons Why Apple Should Buy Nokia'

Leo Sun, in a post for The Motley Fool:

At most it would cost Apple $30 billion to acquire Nokia and cover its outstanding debt. That’s a mere 22% of its cash hoard to invest in a future beyond the confines of iOS devices. Acquiring Nokia would expand Apple’s defensive moat, destroy Microsoft’s mobile business, and give it valuable leverage over its Android-based competitors.

Sun's four reasons that he thinks Apple should buy Nokia range from very good to nonsensical. The sheer amount of cash that Apple has in reserve, though, makes this an interesting thought exercise.

The best reason is also the first one cited by Sun. The patents that Nokia maintains related to the mobile industry would be quite valuable. That, of course, was the primary reason that Google purchased Motorola Mobility. The patents provide excellent protection or offensive capability in today's legal environment. A bonus is that Apple would no longer be required to pay a royalty to Nokia based on a previous patent settlement.

Sun's second reason, offering a wider variety of handsets, doesn't make as much sense. Sun notes that analysts have been clamoring for a cheaper handset to grow Apple's market share. Sun is astute in pointing out that Apple could potentially offer the cheaper phones under the Nokia brand in order to avoid devaluing the Apple brand. However, overall it doesn't make sense to bring on all the headaches of maintaining a separate brand just to produce cheap phones with low margins.

The third reason that Sun lists is downright bizarre. I'm quite sure that Microsoft would be displeased to see its largest Windows Phone manufacturer in the hands of a rival, especially if that rival was Apple. However, it just doesn't make any sense whatsoever to spend so much cash to knock a competitor out of the market when that competitor has struggled to gain market share despite years of heavy spending.

Sun's final reason is a very good one. Apple's switch from Google as the source of mapping data to its own solution resulted in a very public 'black eye' for Apple's reputation. Integrating an excellent data source would be a boon for Apple's maps.

What should Apple do? Should they buy Nokia? Certainly not at the $30 billion mentioned by Sun, but at a more agreeable price (let's say $20 billion) it makes a lot of sense.

Creating an App Is Not Necessarily the Path to Riches

Tim Worstall, in an article for Forbes:

Another number we can gain from this is that the average app, over its lifetime, earns around $9,000. That’s the mean though: the median would be much much lower. For we’ve very much got a power law going on here. A few apps are making tens of millions, one or two over $100 million, and most make nothing at all (obviously so for the free ones) or close to it even if they’re trying to charge.

The era of creating an app and instantly striking it rich is largely over. There will of course be exceptions, but it will be increasingly difficult to create an app that rises above the hundreds of thousands of apps available on the App Store. Likewise, the 'race to the bottom' for app prices makes it more difficult to make money.

It's not all gloom and doom, however. The proliferation of better tools, a plethora of open source components, and plenty of backend service providers means that it is easier and quicker than ever to create an app. The key, of course, is to come up with that next great idea and execute on it.