Ross Mayfield's Weblog

The New Definition of Fun

I'm at Kellogg Technology Conference today, listening to Jeff Bell, Corporate Vice President of Global Marketing at Microsoft, talk about interactive entertainment.  What I found interesting is the business model considerations and big launch marketing insights.  Here's an impressionary transcript.

Specifically with Xbox. 41.1% of households own at least one gaming console, with an 18.5% increase in the last two years.  Largest genre Action and Adventure, was surpassed this year by family and social games.  The primary demographic driver is no longer young white males, the average age is moving into the mid thirties and a balancing of genders (now 60/40, and in teens its 50/50).  As the hardware evolves, so does the software and usage.

$18 billion industry in 2007.  Looking to not just be a market share leader, but a wallet share leader.  Like Windows, Xbox 360 looks to be an ecosystem leader, with the most partners of this generation.  By the end of this year we will have 300 games for $3-5 that you can download and play from the Arcade.  We don't have as many first party or exclusive titles as our competitors, so when we win everyone wins.

The average Xbox household has 7 games attached to it, with 4 accessories (controllers, etc.).  Rock Band and Guitar Hero are exciting because they are evergreen franchises, because you can download additional content over time.  3 million songs downloaded for Guitar Hero 3.  Packs like the Brady Bunch.  In the future you bring any content, including what you generate, onto the Xbox and it suddenly becomes more fun. 

What if you were the person to generate dance steps or riffs and upload them into the community and gain monetization?  Games for Change says gaming is where film was in the 1920s and 30s, it is just coming into its own for a diversity of content  Games for Change has 5k teams trying to develop the best game about global warming.

I came to Microsoft to develop some consumer marketing muscle.  Xbox Live has 10 million members globally.  We get community. 60-70% of users connect to it.  Just launched movie downloads in Canada and Europe.  Fundamentally a great brand has to be an external and outrageous promise.  The New Definition of Fun is a committment to continual newness. Promises let us segment our customer targets, which have regional differences and lets us go after them with different messages:

• Xbox 360 has more fun for your friends and family.  Parental controls with all rating systems as a proof point, and then going after games that matter.
• Xbox 360 has the biggest blockbusters. Taking control of the Grand Theft Auto IV launch to also help explain the value of our platform. 
• Xbox 360 has the most Choice and Value.  We didn't put BlueRay or HD DVD in, but instead DVD because it is a global standard.  I thank the Wii for broadening people's minds.  Rock Band is the new Twister, we need to bring this kind of family entertainment back.
  
• Xbox 360 owns Sports.  Fell over the last year from 25% to 20% of the market, and needs new innovation.

Three years ago these four statements had not been realized.  Applying good business and marketing principles, partnered and focused, and seizing pricing and customer segmentation opportunities has realized two quarters of profit for what had been previously unprofitable. 

We are the largest distributor of downloadable HD content.  The only online distributor of Movies and TV in High Def (huh? Apple?), with 3k hours of movie and television content.  Twice the hours of the leading cable provider.

On the launch of Halo 3, the largest consumer entertainment launch in history.  They asked Peter Jackson about LotR 3 and he said, "You don't have to see the first two movies to enjoy the third, and the third time is a charm."  Primary target was halo purchases, focus on the engaged.  Secondary target was Next Gen Inenders, focus on PS swings and fence sitters, migrate Xbox v.1 owners.  Broad target: Entertainment Enthusiasts, male gamers age 17-35, tuned in to entertainment hits.  Grew the core with real world puzzles that were hacked in less than four hours.  Shows a commercial, "Believe," for the masses that is about a hero, with the classic struggles -- man vs. man, man vs. self and man vs. environment.  Reused the diorama in the commercial in different creative, one version viewed over 27 million times on YouTube.  Launched the game without showing it.    New definition of reach and frequency is showing a commercial once on tv and gaining 40 million online views.  Biggest opening day in entertainment history with $170 million in day one sales, and over 10k retailers worldwide hosing midnight madness events. 

In a closing recruiting pitch he talks about how Microsoft has changed, and how if you see them in the Silicon Valley they are open and constructive partners, not "we're going to beat you or buy you" -- and jokes, "except if you are Yahoo."

Castles Made of Sand

Jonas Luster blogs his own points on how Second Life is Not a Game, from a panel the future of gaming at Le Web 3:

• Second Life is not a game in that it does not have environmental challenges and progress within its ecosystem. All progress is measured outside the ecosystem and mostly social (whom you met) and commercial (how much you sold).

• which follows - Second Life can not and won’t have the retention and draw games like Halo2, World of Warcraft, DaoC, and others have, even though Linden loves to cite those numbers when outlining the future of their baby. Frankly, I believe for a glorified 3D chat system with build-your-own backend, SL isn’t all that bad. For anything people come back into, I might not be suitable, at the moment.

• Second Life lacks internal rules and controls which will come back to bite Linden and its users in the hiney. Already we see issues of disappearing (expensive) virtual property and Linden Labs disclaiming any and all responsibility to preserve or restore such property, citing the “we just run the servers” excuse.

• which introduces a host of legal issues with regards to property, ownership (DMCA claims are a good way to calm down investors, they’re useless in disputes between a Swede and a Japanese player), and liability.

And if SL isn't a game, pay particular mind to Clay Shirky's post where he questions the user numbers, infatuation of ordinary stories (or stores, without measuring return) by a press ignorant of history and questioning the castle made of sand.  Perhaps Clay is coming around to Jonas' point about an ecosystem without challenges from a different angle, that from the numbers SL isn't so sticky/engaging, nor different:

...virtual reality is conceptually simple. Unlike ordinary network communications tools, which require a degree of subtlety in thinking about them ― as danah notes, there is no perfect metaphor for a weblog, or indeed most social software ― Second Life’s metaphor is simplicity itself: you are a person, in a space. It’s like real life.

One interesting thing about this simple model was shared by Steven Farrell of IBM on our panel at >play.  He noted that after a business meeting in Second Life, participants don't just hang up, but wander a bit into subgroups and informally continue the conversation.  This is a lot like real life, and the side conversations in the hallway can be where stuff really gets done. 

This isn't that new either, it is as old as, well, meetings.

The World Wide World

Part of the future is being prototyped in gaming.  As it always has been, play is always innovation at some level.  But at the massive level, part of the future is playing itself out today.

My last post took an unexplored tangent off of Raph Koster's insight into Second Life's Copybot, exploring the arbitrage opportunity when content production costs are increasing, but it was too generic.  See Raph's comment and his deeper thoughts on the future of content.  He clarifies that he thought rising production costs applies to the content industry, not end users.  I'd say that platforms will emerge for end users to have their day.

Second Life is actually the closest to this, which makes it interesting.  Can you imagine an end user demanding a VCR that doesn't copy, but only plays?  Or wanting a CDROM that doesn't burn?  Perhaps when the tools of production are evenly distributed, but the culture doesn't follow.

Part of what I guess is happening in SL is distorted rates of change.  See, I remember when I first met Raph at Supernova and he said something to the effect of, "we gamers are evolving faster than you n00bs." People believed intellectual property rule of law was established, and then the game changed.  Only the Marxists would be happy with this.

Or the people, like Raph, that realize that the physics have changed.  Better yet, that there are no closed systems.

Joi first for me and most naturally realized that MMORGs don't adapt to the real world enough.  The business is still perceived as a content business with a captive audience.  Where users are not content generators, but accumulators.  SL, to Philip Rosendale's credit, breaks this mold where content is pre-dominantly generated by users.  It also breaks the mold of embracing an open economy with other economies.  But how much of the mold is broken?

The former could be broken more.  Where is the standard that allows me to create a 3D representation of a character or object that is portable across worlds, even if rendered and with different attributes?  Where is the accessible scripting language, the HTML of worlds? 
A long time coming.  While I believe Virtual Worlds will eventually be part of the web, not just the internet, the walled gardens are profitable and defensible in absence of alternatives.

The current view is due to capital costs, in a hit or miss business that harkens to Hollywood, content production is in the hands of vendors.  I hope SL gets through this successfully, because at the level editing level, they enable a user-generated alternative.  In fact, they have their first SL Millionaire.  Wonder how she would play with inevitable erosion of digital property rights.  Is she creating experiences, or just playing a spot market amidst DRM countermeasures?

If you want to see the future of content creation, a controversial glimpse of it is in this documentary.  In it, the entrepreneur who manages a gold farming venture that resembles a college dorm (until his PayPal account connection is terminated) provides the insight that it is simply a service business that transcends distance and privilege.

Warcraft makes user-generated content globally accessible.  And despite efforts to the contrary, the result is a service industry in support of the game.  Second Life affords a role, but favors a different kind of player that relates to other players.

These are only two datapoints that could make up a rich ecology.  But today the ecology is not there.  There is an ecology of shared experiences with gaming, and a far greater potential with non-gamers.  And most game design provides negative incentives for what is outside worlds. 

Sometimes I wonder if anything like the Web will happen again.  It was a glorious triumph that such interop and culture happened before it was taken disruptively.  Today almost every game acts as though it has its own monopoly in its own world.  But I have to think that users have had a taste of how things should work, even if not rich in experience, and even with the limitations of how portable identity, relationships and content are in the web today.  And the next disruption could force worlds to collide.

Human CopyBots

Raph Koster applies the impact of CopyBot on SecondLife's intellectual property economy as a broad lesson for the industry.

In the last decades, we have seen the content business have to adapt to a frightening new reality: The cost to create a minute of content has risen exponentially, but the fair market value of a minute of content has plummeted. In our brave new world of digital assets and user contributions, we tend to forget that this will be hitting not just media companies in the pocketbook, but also all those Web users who are merrily uploading their creations to platforms that by their very nature are fundamentally defenseless against copying.

While I believe this is generally true, there are notable exceptions for more open systems.  And all systems trend towards open.  The gaming industry is bifurcating into content creation and game engines.  A split driven both by the cost of content creation, but mostly the complexity and cost of creating the game engines that power it.  SecondLife is one of the most open virtual worlds, but the tools for creating content within it are still limited.  Especially when compared with the diversity and accessibility of our standards-based web.

In some areas of the media sector, the cost for creating content is plummeting.  It may still be expensive for a single user to create quality content, be it amateur or professional.  But it is getting cheaper:

• create crappy content
• sift through said crap to discover gems

How?  Well, its made of people, silly.

In more closed virtual worlds, such as World of Warcraft, content creation is largely the burden of the toolmaker.  And copying is expressly forbidden.  So what happens?  The arbitrage condition is so strong that people are applied to the problem.  Chinese gold farmers are human CopyBots.

Press Conference in World of Warcraft

UPDATE: GAME ON

TechCrunch reports the big new trend is for companies like Sun and Dell to hold their press conferences in SecondLife.  To further advance the state of the art, the next Socialtext press conference will be held in World of Warcraft.

• Time: December 1st, 5pm server time
• Location: Goldshire, Elwynn Forrest, Eitrigg Server
• Rules of Order:
  
  • No ninjas.
  • Questions will only be taken from journalists in PvP mode   
    
  • We have developed means of determining if you are a Chinese Gold Farmer, so do not outsource your participation
  • Safe passage will be provided to Horde characters, but your questions may be lost in translation 
  • Keep your armor on, do not /dance unless you are an orc, use of other emotes are encouraged
  • If the spokesperson is not forthcoming, you may duel for information
  • Those that survive the experience will gain 1 gold piece and a Socialtext tabard

Warcraft is the New Cult of the CEO

Dan Farber on something kinda funny:

Video: Socialtext CEO, blogger and level 60 human Paladin (called Kalevipoeg) Ross Mayfield (below) explains his fascination with World of Warcraft. Ross says he plays the massive multiplayer game about 5 hours a week, but surely he is undercounting. He is part of a WOW guild that includes Joi Ito, an investor in his company and the WOW fan who described the game as the "new golf." It's the social experience and collaboration that makes WOW more than a game, Ross says. He even found a new customer for Socialtext while playing WOW. Business and pleasure combined…just like golf.  Also Jonas Luster, of Socialtext and a man with a doctorate in Social Psychology and Criminology, explains his WOW addiction.

 

Watch the video

For the record, I don't play WoW in the office.

Learning Overlay Virtual Environment

At the MSR Social Computing Symposium, a good part of the conversation was massively multiplayer online games such as World of Warcraft.  Researchers have issues accessing data and setting up proper control and test environments require $10M.  Because of the high level of user adoption and engagement, there seems to be great promise for game engines to support learning.  Most approaches suggest developing new content on top of game engines.  In effect, creating new games.

But when discussing this it dawned on me there are not only prohibitive costs, but risks for adoption.  Meanwhile, there are platforms like WoW that have sunk cost and proven adoption.  Perhaps someone can build a learning environment on top of WoW? 

For example, WoW is all about gold and leveling.  You know, math.  AddOns like Auctioneer give you an advantage in the game by helping you price auction items.  Other interface AddOns help display statistics to coordinate attacks across players.  What if someone leveraged the simple scripting language to create an Auction add on that gradually introduced mathematical concepts towards building full fledged arbitrage models?  Or a UI mod that presented problems that, if solved, provided you an in-game advantage?

Judith Donath pointed out to me the need to frame and relate such in-game experiences to that of the everday world.  This seems to be the key -- explaining not only how solving a problem or building a model gives you advantage in a virtual world -- but the real world. 

I would LOVE to see some prototypes in this direction.

WoW 60

Last night my character on World of Warcraft (a Paladin called Kalevipoeg), reached level 60 -- the highest in the game.  So far, it's a "research" project gone awry, and something that explains why blogging dropped off over the last six months.  When you start the game you believe it ends at 60, but it turns out there is much more (large scale raids, epic gear).  The game, as designers intended, has become more interesting.  Coordinating 40 people to take down a big bad guy, when some are strangers and all with different skills and capabilities, is a very different experience.

But the most fascinating part of the game to me lately is what designers never intended.  In WoW, you have to cooperate to advance.  Most of the activity is in adhoc groups acheiving goals to receive loot, some of it very rare.  So when a rare drop happens, norms that transcend the loot rules encoded.  A manual dialog on who is a fit for the loot ensues, with ties broken by roll.  Large scale raids have a handful of drops to divy up, so whole systems are invented by groups.  With DKP points assigned by convention, a manual auction takes place that rewards participation over time.  Users that break these rules are labeled Ninjas and face banishment from the guild.

The gaming industry has realized the value of user generated features for some time now (AddOns, Level Editors, etc.), but I find fascinating the areas designers choose not to code.  For users, they are perhaps the most important, the Point of Reward, but they are left to their own devices.  A large scale raid loot distribution system is not supported by their Auction House platform, but instead is left to users to create their own market through conversations.

I still have issues with WoW's disconnection with real life, failure to augment it, let alone provide incentives to live it better.  I believe it provides good simulation-based training, have made connections there as happens with all social software, but it still comes at a cost great enough that I am unsure of it's return.

Ah, hell, it beats TV.

Attention Arbitrage

My first corporate job was testing video games at Activision.  Every now and then I would be caught playing games that were already tested.  Now I find that both the gig and hobby have been outsourced to China, and with the time I've put into WoW, I've thought of tapping into this hidden economy.

"It's unimaginable how big this is," says Chen Yu, 27, who employs 20 full-time gamers here in Fuzhou. "They say that in some of these popular games, 40 or 50 percent of the players are actually Chinese farmers."

I'm suprised Steve Gillmor isn't sniffing out that the future of attention is being played out in these economies.  As Edward Castronova says: "The cost of someone's time is much bigger in America than in China."  Now I'm thinking of outsourcing my email time to an offshore administrative assistant.

Disturbing trend, yes.  Fun stuff, indeed.

Kid Camp

Had a wonderful weekend helping my daughter celebrate her birthday with a backyard camp-out party. Far more exhausting than the preceding camps. The other reason I haven't been blogging is I got her World of Warcraft and am doing, uh, research.