Zynga recently commented during a conference call with investors the strong future they see for social games that appeal to core gamers as the social game audience grows. 

The news certainly indicates an exciting new core gamespace that could quickly be competing with XBLA and PSN titles. 

Like anyone in technology who doesn’t own VIACOM, we’re against SOPA.  For more information on exactly what this is here are some great resources.

Stanford Law Review’s Article on SOPA Entitled “Don’t Break The Internet”

Gamasutra has a Nice Analysis by a game industry attorney on SOPA and its effect on Digital Distribution.

Last but not least, a handy tool to update your twitter or Facebook image with a STOP SOPA banner we highly recommend. http://www.blackoutsopa.org/

In what could be a case study for independent development for the next few years or so, HourBlast Games will release “Dueling Blades” for Facebok, iOS and Android in March.  The title is built on the Unity3D game engine and the studio has plans for a Kickstarter campaign to raise funds to (supposedly) game through release. 

The Unity3D engine allows the team to rather easily port the Facebook game to iOS and Android later in the year and HourBlast Games says that kickstarter supporters will get some cool in-game benefits for supporting the project.

 The screen captures look interesting enough (who doesn’t want to beat each other with thick wooden sticks now and then?) and one can only hope this becomes another drop in what will soon become a torrent of core titles on Facebook.  

The fundraising method is particularly interesting though one has to wonder how long this type of development will be sustainable.  While Facebook games currently can be bootstrapped, as the technology races forward and the platform expands one can reasonable expect that the technological and creative resources required or a marketable game will only increase.

As a result, it’s a bit of an anxious irony for core gamers like ourselves who see so much promise in Facebook games.   It’s probably only a matter of time until the development costs creep above the point of bootstrapping, crowd funding or even angel investment (typically up to $1,000,000) and we’re back to huge teams and begging publishers for 8 figure budgets. 

In the meantime, we'll be keeping close tabs on Facebook games like Dueling Blades and seeing how they navigate the waters of this huge, but crowded market as an independent developer. 

Facebook games is certainly still very casual centric.  The market is only going to get bigger though and as a result bigger and better core games are sure to arrive.  Which leads me to wonder, what happens when you can start blowing stuff up and bleeding out on Facebook?

Blaming media for people being crazy or crappy is a time honored tradition.  It was only a few hundred years ago that legions of English people were being tortured and killed because they just want to translate the bible into English.  Our parent’s parents freaked out because of comic books.  Unfortunately even our own peers still propagate the ‘dangers’ of media usually via image problems or violent video games.  Apparently they miss the ironic of positing that ‘other people’ can’t handle the media without being under the influence to make bad or dangerous decisions while at the same time being influenced by something they learned of from the media, not peer reviewed studies.

The point of this post isn’t to rehash all that madness, just to try and predict when it will happen with Facebook games when core titles start arriving on the platform.   I’m willing to bet when it does happen, it will arrive with extra vitriol and vigor because of the ubiquity of the platform and the tendency for young kids to simply lie about their age in order to access the service.   I can see ‘family’ activis’s website now about the tens of millions of underage kids ‘only a click away from gore, violence and suggested sexual perversion.’ 

Facebook has already been taking plenty of hyperbolic heat for kids using the platform. Though Facebook’s rules say you have to be 13, apparently kids have figured out you don’t really have to tell the truth.  (Pay no mind to my decades long internet record of being over 18 almost as long as my father). 

The good news is that no matter what the public’s reaction to violent video games on Facebook the constitution remains a firewall for the far majority of the reactionary mob’s proposals.   It’s almost to the point where I would say that the game industry really doesn’t need to worry about it, because the courts will take care of it for us.  That’s not entirely true, but I’ll go as far as saying that any activist calling for legislation regulating video games is so far away from anything that is constitutional it can reasonably said the only reason they are doing so is self-promotion.

Facebook’s use by practically every kid in the US will give these activists a juicy new target though and I wonder if Facebook will, can or even maybe should embrace a few controls to prevent kids from playing violent video games.  I don’t really see how it would be possible though, because at the end of the day everything is just a fake over 18 profile away.

Either way I can’t wait.  Facebook is a promising platform and core games will take social games only towards more awesomeness.  Plus most of the activists are so self-promoting they are more entertaining than effective, so it makes for good Daily Show fodder.  Let’s just hope we don’t have to endure too many ‘villes’ before it happens. 

It’s hardly news that the economy is a mess at home and abroad.   Almost ironically, the private market in the US and the public market in Europe have turned on their respective champions.  We’re not the first to say big problems require big solutions or to doubt political leaders offering plenty of well branded, though suspiciously too easy, solutions.  However, we do believe that for small, technology driven firms who offer their products online there is a political palatable solution that can drive growth and job creation: freeing the American investor. 

We propose that states, such as our home state of New Jersey, should petition the Federal government for exemption from the regulations that prevent average Americans from directly investing, i.e. buying shares, in small businesses.  This rule is known as the accredited investor rule as part of the 1933 Securities Act.

We believe that doing so on a state by state basis will not only be more political feasible but result in a sounder regulatory structure.  States willing to take the aggressive step can take different approaches, with the market determining the best system for both protecting individual investors and freeing up the investment dollars small businesses need to grow.

This proposal has to the potential to have a particularly strong impact on the video game industry where projects in the early or seed stages are very difficult for a traditional investor to value.  Independent game studios will surely benefit from added competition between investors in a broadened field and a day when large publishers or private investors are no longer the only source of development dollars.  

Our Admittedly Self-Interested Proposal
At first glance one can be forgiven for thinking the video game business is a great one. The recession has hardly held back growth. Expanding internet access in emerging markets and the fact that 9 out of 10 kids born in households with a compueter will be gamers for life foretell of a very rosy future.

Nevertheless, even game studios stocked with experienced veterans face a daunting process when raising funds for development.  This isn’t a story of evil corporations or finicky artists (as it’s often told), just a rough business environment.  From an investor’s standpoint, it’s almost impossible to value a video game asset until it’s been at least partially created. From a developer’s stand point it’s almost impossible to create a marketable video game without investment funds.  This is perhaps why few developers love the deals they get with publishers.  

The rules that prevent independent game developers from raising funds from average Americans were put in place with good intentions. The stock market run up to the Great Depression was rife with fraud and manipulation, indeed supposedly FDR remarked that he choose Jack Kennedy (JFK’s father) as the first head of the SEC because ‘it takes a thief to catch a thief.’ 

As a result if a company wants to raise funds by selling shares they are required to register the shares with the SEC, a very expensive and onerous process few companies can afford.  The only significant exceptions to this rule is if the firm has less than 500 shareholders or only sells shares to so-called accredited investors.  Accredited investors are either established investment firms, experienced investors, large pension funds, large companies or charities, a large trust fund, or individuals that meet certain net worth or income requirements. Loosely speaking one can even consider this the ‘1%’ in today’s parlance.

The rule is intended to protected inexperienced investors from being taken advantage of.   We believe this protection is no longer necessary and people can be made well aware of the significant risks of investing in small seed or early stage firms (if for some reason they aren’t already).

Changing this rule is not a new idea.  Given the pace, breadth and meekness of federal policy making, however, we believe it’s not likely the Federal government will get around to doing anything about it anytime soon.  So we propose for states to apply for waivers for the accredited investor rule to allow for crowd-funding small business and for the Federal government to grant acceptable proposals on a case by case basis.  

Doing so will fundamentally change the relationship between risk and reward for entrepreneurs and investors alike. Perhaps most interesting from a small business owner’s perspective is how the increased competition in the investment market will impact the large multinationals and investment firms when they ‘aren't the only show in town.’  In theory, as the result of the investment market being flooded with new participants these established investors will have to reduce their fees and/or increase their value added services to remain competitive.

As Politically Tenable as Reform Gets
Let’s be honest though: it has to be more than just a good idea.  Politics is the art of the possible, someone clever said once.  There are three political considerations that lead us to believe in the potential for this proposal to be enacted.

First, there is our Federal political system itself which grants states broad powers to create their own laws and policies so different solutions can be tried, tested and evaluated and the natural competitiveness between different state governments.

Second, there is the grass roots popularity to throw out the accredited investor rule and allow for crowded sourced funding in the technology sector, a relatively Democratic cohort.  

Third, reducing financial regulation to make it easier for businesses to grow is a core tenant of conservative and Tea Party politics.  

Of all the potential policy ‘game changers,’ we can’t think of one with a better chance of being implemented.

Next Steps
The next step is for business owners to get involved and work with state government officials to dig deeper and find out what can be done and how.  The solution is certainly far more complex and difficult than summarized here and even considering the proposal will require significant resources.  Hopefully a few bold and brave executive and legislative leaders in state government will consider this proposal though. As small business owners we are certain it would have a dramatic impact on growth and job creation.  

Great, great post in Gamasutra entitled “No one cares about your cool game idea.” I'd like to expand the thesis from just game design ideas to marketing ideas (if not all ideas).

If there is anything I wish had been pounded into my head while I was young, it is that "your idea is worthless."  For whatever reason, so many of us grow up with the concept of success as a ‘killer idea’ that is so powerful and awesome it destroys all the lessor notions in its path.  Then reality smacks you in the face. 

So even though I'm not a designer, I loved the post because after ~8 years of working in sales and marketing it summed up everything I've ever wanted to scream from the rooftops. Indeed I've come to believe that individuals who don't 'get this' can be the most destructive force on your marketing team.*  

In the marketing world, they tend to come in these two forms: 

Engineering Success
I use the term ‘engineering’ metaphorically here to describe a situation when someone fiddles with the details (typically incentives) of a program, usually before the program actually launches. In my experience this manifests in the conception or development phase, when a marketer thinks if they can just hit the right econ harmonics the program will be a rousing success.  A key indicator of someone trying to engineer success is how hard they fight and argue for the specific scheme they have dreamed up long before there is any actual data on how the users are interacting with it.

The problem with engineering successes is anyone who has actually conceived, developed and released a product knows (or should know) that your initial scheme is really just a ‘best guess’ or more kindly a starting point. It’s all going to (and damn well better) change later when you know more. 


The pros know this.  They do their best before release and quickly move on to more important stuff. You know, like, actually attracting customers.  Once you have a stream of people giving your a look you can rather easily and methodically test your incentives, call to action text, pitch or homepage design to capture ever higher levels of revenue from those eyeballs. 

In some ways a classic ‘cart before the horse’ problem, but I think it warrants deeper mention because of the conviction and veracity of the ‘success engineer’s arguments.  To them, success is something that can be engineered with some create idea.  

These people are a drag on a marketing team. You end up endless debating the best way to present a portion of it to them without much regard for how you're going to get them to give you a chance int he first place. 

Sustainability is for Sissies
Recently one of my favorite blogs, Copyranter- authored by a advertising copywriter ranting about horrible (and sometimes, great) advertising, actually posted something I don’t agree with for a change by saying this ad for an awards show was one of the worth he had ever seen.  

If you didn’t watch it, the spot is for an advertising awards show and features an advertising pitch man droning on about buzzwords and typical marketing bullshit in a pitch to a potential client. The potential client’s team quickly gets tired of it though. So with a nod from the boss, they first shoot him with a handgun, then a shotgun and finally beat him far beyond death with a golf club.

Copyranter hated it, but god I loved it and smiled with glee when I saw the spot.  I think anyone who has sat through more than a couple pitches from advertising agencies probably loved it as well.  For all the true talent out there, it's sometimes shocking how ad agencies are able to collect and collate complete hacks. 

The problem with 'idea's people' is even if their super creative idea is really something that can generate results in terms of pure profit/loss, the results are rarely sustainable.  You can research success stories for nearly every pithy line the ad man throws out in the spot (think ‘viral’), but regardless of the individual success of the campaigns the direct result was never a sustainable business.  At most all you can hope for is a nice bump, Colbert style. 

Sustainable ideas are inherently not very sexy, because something  sexy has an inherent half-life.  The thrill 'goes,' so to speak. 

So while it’s a lot more fun to conceive, develop and green light those exciting creative ideas, few (if any) will be helping you build a sustainable business.  This isn’t to say there isn’t room for fun and exciting campaigns, by all means you have to mix it up sometimes. If someone on your team is only working on those parts of marketing though, perhaps they are better suited  at a [crappy] ad agency. 

  *Please note that while it’s certainly the job of marketing to get this and if you are a marketer who does not get it, I will never hire you, we can’t hold non-markers to the same standard.  If only because we hope they don’t think less of us whenever we say/offer some truly stupid technical or design thoughts.  

TechCrunch brings a much needed new angle to looking at Zynga’s running away success with the Facebook games market, by comparing the company to a similar sized Japanese social games developer GREE.  In short, their Japanese counterpart is turning a bigger profit on slightly less MAU (monthly average users). Why might you ask? Well the post posits it’s because of GREE penetration into the mobile market.

I have to wonder though if that’s all there is to it.

Of course, any attempt to draw parallels between the Facebook games market and the social games market in Japan is going to be fraught with caveats.  Facebook games and social games in general are driven not only by cold hard cash, but the value of acquiring ‘free’ new customers through sharing. One has to wonder academically if and how the two cultures approach that kind of behavior and what the end value difference is, if any. 

Unfortunately I have never played any of GREE’s games (though please if you have, tell us everything), but I wonder if it’s more than position and GREE’s success is also driven by a variety of game types and designs. Perhaps even, in a bit better quality and more, well- fun.  

Closing note: Zynga is not an evil company. They are a successful company and they are very good at what they do.  I pick on them out of admiration, mostly, though of course there are times we have given out some heavy criticism.  Let’s not also forget, as the Russians say: о вкусах не спорят-  or about tastes don’t argue.  This is just one dude’s ‘fun’ meter.

IGN reported recently that in the month of November Mafia Wars 2, the follow up to the Zynga smash hit Mafia Wars that was one of the first games to nearly beat our Facebook wall into submission, lost 900,000 daily active users.  More significantly, only 10% of users are playing the game daily, half of Zynga’s average of 20%.

An incident is not a trend, a very wise boss once told me.  Of course, one can’t help but think (as the IGN article mentions) that perhaps this is either an indication of general market saturation, Zynga’s aggressive release schedule (and seemingly monolithic design palate), or both.  Facebook game haters, no doubt, are rejoicing at the news as an indication that they have been right all along.

Well Zynga is still headed towards an IPO with a $10 billion valuation.  That will not change. Nor will the tendency for plenty of people to throw down serious money for playing their Facebook games. 

Perhaps it is indeed an indication of market saturation, however.  More interesting from our perspective at CLE though, is if the demand is waning- where is it going?

We can’t help but think, hope (and maybe even pray) that much like we all grew tired of the thousands of NES titles that were pumped out, gamers have lost their giddy excitement about the experience and are now hunting for quality. In that case, I think we can see this as another indication that Coray’s design tenants for Facebook games may be an outline for what Facebook gamers are demanding. 

It’s so easy to hate on Zynga and their quest to seemingly take over the world, one slightly-consented-to-wall-post at a time.  They’re rich, they're successful, and like so many rich, successful companies they can’t help doing some things that are creatively annoying (really, another resource management game?) or just downright dickish (demanding back stock options from long time employees).  

(On the flip side, it’s also easy to hate on the haters, who are playing a Facebook game for FREE after all…)

The New York Times excellent blog “DealBook” has a great story about the culture at Zynga, driven by the MBA and former Wall Streeter at the top, Mark Pinkus,* that made me reflect on my own exotic business experience and how that’s helped me make business decisions in games and technology.

The Times post features some strong criticism of Mark for the hard-edged meritocracy that Zynga seems to have.  The article suggests the meritocracy that has helped drive Zynga’s leadership of the Facebook game market may also be its undoing. Mr. Pinkus seems to love his spreadsheets and it appears he applies them to his employees just as much as his products.

It’s easy to hate on that.  I’ll even go so far as to say a great deal of the ‘hate’ is well-grounded. But I have to let you in on a secret, I’m a (mostly) reformed Meritocrat so I totally understand where he is coming from.  As a manager, there is something beautifully liberating about just following the data. The data allows you to talk past much of the, well, bullshit and complaints that staff can and totally do bring up all the time.   

The first time I ran a company, instilling a meritocracy was a life (if not company) saver.  Of course,  it’s too easy to rely on the beauty of theory and miss what makes a company special, not just profitable.

The first company I ever ran was a small tourism outfit in Prague that had some success but was stagnate with no growth. The company was completely reliant on a few key partners to send nearly all our customers.  It was a party business and fit for a reality TV show, so the staff of the tired company were predictably drug addicted, lazy, illegally employed and completely bereft of incentive to do anything other than show up, more or less on time, every day to get trashed, high and/or naked with our customers.**

I was given responsibility for the company and the first thing I wanted to do was fire everyone.  I wanted the owner and myself to start over and build it up from scratch, right, as a pure sales organization.  The owner was hardly interested in putting in hours though (after all, that’s why paid me enough to leave technology for a year and sponsor my work visa). He also didn’t want to deal with the backlash from the staff and Prague tourism community.  I got to fire a few people but many had to stay.  I was just going to have to deal with them.

I had to find a way to make the old staff work with the new staff, and ensure the new guys didn’t end up like the old. The golden solution was a meritocracy.  Compared to other jobs in the Czech Republic we paid our staff very, very well and I decided that only people who earned it would be on our schedule.  I created a pretty simple system with the new team’s input and it worked like a charm. 

The business tripled in size in only a few months and lots of other great KPI’s grew, but let me focus on perhaps a different metric: what I called my ‘daily dose of bullshit.’  I’m not talking about random events that come up (we had those in spades), I mean the stuff that happens every day. The stuff that you can’t help but become convinced will never, ever go away no matter what you do.

1. Entitled idiots asking for work because they have a friend
   An ‘English teacher’ (90% of the time) friend of someone, would call me asking for ‘a couple shifts.’  No, they can’t or won’t promote. No, they aren’t interested in really doing any work, but yes, they will hang out and hand out a few beers if we pay them 4x the rate of Starbucks baristas. Of course, they’re a friend of someone, so if you treat them the way they should be treated, you’ll have yet more bullshit to deal with.
2. Crappy Staff asking for more shifts
   It was never the people who deserved it who asked.  It was always well-timed though, after their one good day in a month.  Often included was a diatribe about why the managers and/or bartenders at the places we work with love them so much, as if that had an impact on our bottom line.  Often, they would add something about some meeting (with no result or follow up of course) they had with some potential partner that would, of course, be a game changer. 
3. I’m too smart to work
   'I have 2 degrees from top-30 schools (or I’m a high school drop out with ‘real life’ experience). I have 15 letters of recommendation (some of which are real) dating from back when I was in high school.  I can’t sell anything or promote your business, but I have lots of great ideas and I even took an accounting course once.  You should hire me, but no of course I’m not going to stand in the square and hand out flyers like everyone else has to do, I’m too valuable for that kind of work.'

You know what solved all of that? No, not a baseball bat and a long, rusty metal staircase.  A meritocracy.  You sell, you get shifts. You don’t sell, you don’t get shifts. It wasn't that simple. I gave people plenty of room to have their ups and downs, but the message was clear: this is a team of people who get shit done.  

Now mind you, those calls and requests never stopped.  I was still peppered with the requests, if not downright demands, on a daily basis from people inside and outside the organization for work they didn’t deserve. Now though, instead of having to address all their petty bullshit, I would just point at the policy and say ‘participate like everyone else, or I’m sorry, I can’t take work away from people who have a clear record of growing our business.’

It was fair. It was simple. It was beautiful.  It required some balance in implementation (grilling people on having a bad day is just being a dick) and a slight fix to allow people to still work on commission if their numbers dropped too low for too long, but it totally worked, and the business still uses the same system to this day.   

The problem is: making a great Facebook Game isn’t promoting a club party.  Inspiring a kid who ran out of his parents’ money while backpacking around Europe is not the same as inspiring a designer or a programmer.  As tempting and alluring a meritocracy can be, there are severe limitations that become quite dangerous the more complex and creative your work gets. 

So Mr. Pinkus, I totally get it. But there’s more than just the data. If only it was that easy. *sigh*

*Mark gets some points for naming the company after his dog.  That’s pretty awesome.    

**Nothing wrong with that sometimes, but it’s the dose that makes the poison. 

I decided to write a response to a rather poignant post on Gamasutra by a developer who is tired of being laid off and is trying to make sense of the business forces behind his constant relocation.  It’s a big question, so my response will sometimes generalize and summarize rather complex systems. I’m going to put aside industry trends (like Facebook games and rising costs of AAA development) and try to focus on the challenges business people face, and how they result in developers' lives sucking. 

Risk
Investing is about one thing: managing risk.  If you want to understand the perspective of your business overlords, it’s seeing how risk management drives the entire chain of money behind games, from institutional investors to the person green lighting projects at a VC fund or Publisher.

First off, that person isn’t just trying to make more cash so they can upgrade the mistress’ Benz.  The people guiding huge investment portfolios have to keep their investments balanced as market conditions change, so they don’t lose all the teachers and firefighters retirement savings in one swoop.  It sounds like a cute summary, but it's true. 

Valuation Nightmare 
Some Russian Mining Tycoon calls you and says, “Here’s access to every piece of research in the world and some crack financial modelers. I need to know the value of three video game projects: a Facebook game prototype, a half finished cloud based RPG, and a core shooter that’s just started their private beta. Pick one to buy and fund.  Pick the right one and set the right budget so the project is profitable, or you and everyone that works for you is fired. Lucky for you, they’ve closed all the gulags, Yankee.”  *click*

Think you know video games? Try putting a dollar figure on a project.  If there is anything I wish creative people understood is how unbelievably difficult it is to make these business decisions.  Imagine being an executive who gets three Facebook game proposals an HOUR. Which projects should you bet your career on?

First the game has to be fun and finished on budget and on time. Then there has to be a way to take the game to market so that people notice it and play it fast enough to build momentum and recoup costs.  How do you value you that, even as late as in Private Beta?

Respect Business Builders
One quick note. I hate to get short, but we’re going to have to stop complaining about the locations and clusters of game companies. It’s really hard to run your own company. If you don’t want to deal with that risk and just work for someone else, be prepared to move to where those people are.

It’s easy to say, “There should be more game studios in North Dakota. Facebook games make so much money. Why aren’t developers here too?” Try throwing your entire life into a company and facing that decision.  The business is risky enough. You want to make it 10x harder to find experienced engineers just so you can help ‘the local game dev scene?’ If you do, that’s awesome, but it’s not really fair to hate on founders who just want to make games.

Will it stay like this? Yes, but it will get better
The good news is that the constantly changing industry is settling into better business models. The inherit risk will NEVER go away, but the business will get better at managing it.  

I think the number one thing a studio can do is have more than one customer.  If you’re a AAA developer with 150 employees working on an Xbox game, you only have one customer - the publisher. All it takes is one bad board meeting for the plug to get pulled.  

The industry is getting better, though, by nature of online games.  Facebook games are cheaper to make, produce persistent revenue streams and have near-zero distribution costs.  Even the online games that are not free-to-play are a step in the right direction, because you’re able to reduce the ‘fun’ risk by easily being able to update the game.

Silver Lining
This may sound like the Oz of econ we all hear about but never really see. The truth is that this situation is really awesome for the fans.   A chaotic market can be hell for those in the business, but fans are always getting new products from new teams on new platforms with new technology.  The chaos on our end means innovation on their end.  

Final Note
Entertainment businesses suck because they all face this problem.  I used to want to be a film producer. Then a friend worked on his first game project and I realized the ocean of difference.  At least the games industry is open and can be attacked by outsiders on a daily basis.  At least we don’t have to break into the industry by fetching coffee or the casting couch.  

All you have to do is make something great.