Thursday, June 28, 2012

Less Is ALWAYS More

This goes out to everyone in advertising, marketing, and copywriting: if you can remove a word, do it. If you can remove a sentence, even better. A whole paragraph? You're work sucked to begin with, start over.

I specifically mention copywriters because they so frequently load advertisments and marketing materials up with words. I can scarcely describe how stupid that is. Words should be reduced to an absolute minimum. The art of copywriting manifests in carefully choosing impactful words that can have many layers of meaning. The art of copywriting does not manifest in writing a mini Wikipedia entry for your product.

Perhaps this predilection is because copywriters think that they need to produce LOTS of words to justify their paycheck. No. Anyone can produce tons of words. Good copywriters can produce almost none.

You can see the effects of this problem in companies that seem desperate to have slogans, and tag lines, and mottos, and other such crap. I mocked Panasonic's "Ideas For Life" slogan in an earlier post. What the hell does that even mean? It communicates nothing. Panasonic doesn't sell ideas. It sells freaking televisions.

Or Subaru: they have two slogans. They have "Confidence In Motion," which is matched in blandness only by LG's "Life's Good" slogan. They also have "Love... It's what makes a Subaru, a Subaru." That's not bland, but it's long, ridiculous, and doesn't have anything to do with the Subaru brand. They attach this formless slogan that could apply to any company on Earth to commercials featuring... everything. Hipsters getting married, old people letting young people drive, assholes wandering around the woods to stare in dumbstruck awe at deer or trees or waterfalls or something.

There is no surprise that the majority of advertisements are forgotten the instant that they go off the air. There is nothing about the average ad that couldn't apply to any product. There are no unique elements. There is nothing to remember.

Go watch an average ad for a dish detergent. Replace that detergent with anything that is used for around the house. The commercial is identical. There is nothing bold or outstanding about any of the commercials. It's the same damned woman doing the same damned dance around the same damned house. Marketers seem to want to compensate for this complete lack of invention by just slapping on more marketing, more words.

Everything about a marketing presense should have as few words as possible. It can have lots of other things, though: images, sounds, concepts; these are all fine. Your marketing can be awash in these. It must still be focused, and your message must be tightly, finely tuned, and explicitly known and understood, but non-verbal impressions are a great way to draw people into the emotions of an ad.

Again, I look to Panasonic. "Ideas For Life" is a formless tangle of words that mean nothing. They communicate nothing about Panasonic, its products, or what the company actually does. It is awful. They need to get rid of it. But the images in their recent Eluga ad were fantastic. If only they had used nothing but those images, the ad may have had an impression. Instead, the ending communicates nothing more than corporate blah.



Considering the speed with which great advertisements rise to fame, one would assume that more ads would try to hew closely to this ideal. One would expect everyone to try to be the next Old Spice Guy or Apple 1984. But no. Instead they go in the opposite direction. They add layer upon layer of marketing, branding, and advertising until the core message is lost. They reduce the product to an inconsequentiality. They kill the product. It's no wonder that most people don't care about the products that they buy and instead rely on price as the primary determinant for purchasing.

Sunday, June 3, 2012

AMD Should Make A Video Game System

AMD is a manufacturer of processors. They're having a hard go of it. In most ways, Intel is absolutely dominating its smaller competitor. Not since the days of the Athlon FX line of processors (way back in 2006) has AMD managed to produce a chip that was truly competitive in comparison to the best that Intel had to offer.1 AMD is trying its best, and it's just not good enough. I have an idea, though, that may help.

One of the biggest issues facing AMD has been the stagnancy of the CPU market. There has been very little development on the overall model since the formation of the x86 standard way back in 1763. When no true innovation is taking place, it's very hard to unseat the dominant company, unless they do something exceedingly stupid. And unfortunately for AMD, Intel hasn't done anything exceedingly stupid.

AMD can compete in many other ways, though. They've demonstrated this with their recent so-called APU's, Fusion and Trinity, which are a CPU and graphics system integrated onto a single chip. These are proving both popular and extremely powerful, with graphics and battery performance easily exceeding anything that Intel is producing (although, the CPU performance is lagging Intel pretty badly). They innovated their way to success by avoiding direct competition with Intel.

There is another area that Intel is not only just ignoring, but ignoring like a champion: gaming. Intel's graphics chipsets have always been poor, and just as they produced the not-bad HD 4000 chipset, AMD's Fusion and Trinity chipsets raised the bar. AMD may be lagging Intel in general-purpose processors, but in graphics technology, AMD is, very seriously, multiple generations ahead of Intel. This is the obvious springboard from which they can innovate past Intel.

AMD, since they bought ATI, is the only one with significant experience in graphics architecture and implementation. ATI's chipsets, generation for generation, have been eking out a lead over rival Nvidia for the past couple of years. The Radeon name has a great deal of brand loyalty and recognition. AMD can leverage that experience and capability even more than the APU products. They need to bring significant, broader-market attention to their PC gaming hardware, and the best way to do this is to take control of the implementation of their hardware. They need to produce a complete package of products, and perhaps even the products themselves.

In essence, I think that AMD should make a video game system.

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More precisely, I think that AMD should develop and promulgate a standard for the interconnectivity of peripherals, hardware, and software. AMD should become the steward for a new environment in which development takes place.

A Logo Proposal

I propose calling the new standard Radius. It's similar to the Radeon brand name, giving it a connection. It also uses the circle as a symbol, implying connection, completness, and gestalt. People access the system on the outside of the circle and follow the radius to its center.

While the Radius brand is necessarily close to Radeon, it is also far enough away so as to not scare those who aren't "in" with the video game world. This is critical. Nintendo got this very well with their Wii brand. It was neu-tech. It was Apple in its tech. They created an impression that was more experience-based. It's still very technical, but the wrapping isn't concerned with highlighting the technical aspects. AMD doesn't want the brand to appear to video gamey.

This avoids the connotations of that type of wrapping. Using edgy and extreme words communicate youthful masculinity. That's great for 17-year-old boys, but awful for absolutely everyone else, who, not being 17-year-old boys, realize that extreme stuff is incredibly lame.

That is perhaps one of Microsoft's biggest problems with getting the Xbox accepted by a larger hunk of the population: its name. It's just so damned childish. It has a goddamn X in it. Casting your market as badass because they use your product pushes away the bulk of the market. Using Radius makes the device and system more accessible to more people.

Radius is, by and large, a project of marketing and packaging. All that is needed is to take extant products and repackage them into innovative products. This is exactly what the Wii was. It was nothing more than a Gamecube with some extra bits attached and a new controller. AMD doesn't need to butt technological heads with Intel to win.

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Now is the time to do this. We have more regular gamers than ever before. The Wii expanded the video game market to casual players, while the emergence of tablets and cell phones have put any-time gaming in the hands of millions of people who would otherwise have not thought about games. The massive success of games like Fruit Ninja, Cut The Rope, and Angry Birds represent the discovery of computer gaming by a massive, previously untapped market: a market that had been hitherto served only by crap like Bejeweled.2

Moreover, concomitantly with this rise in gaming, there has been a significant drop in innovation. Many people in the industry want to call social gaming like Farmville innovative, but this relies on a pretty broad usage of the term. What Farmville is had been around for well over a decade, and its only truly innovative elements were how it made money. It was semi-innovative on the business end, but total crap on the consumer end. That is not true innovation, since true innovation strives to give customers something new, not simply find ways to squeeze more money from them.3

This is not news. Many companies and people have been quite aware of this dearth of innovation in the technical sector.4 In the computer industry, they began a race to the bottom, lead by Dell, to commoditize the hell out of computers. This dropped the price, a good thing, but they lost sight on innovation and actual product development. They increased their value almost exclusively through price drops, just as we are seeing in new markets today.

In video games, companies have been following the exact same model for nearly forty years. The only innovation was Xbox Live, which isn't as groundbreaking as it seems. Computer games had been performing the same tasks for over a decade. Xbox Live simply applied that to the traditional system model. And even there, Microsoft wasn't first. Sega beat them to the punch with online connectivity with the Dreamcast's SegaNet, and pre-dated Xbox Live Arcade by nearly thirteen years with Sega Channel, and even that was predated by The PlayCable for the Intellivision in 1981.



Obviously, as illustrated by the Sega examples, innovation is only part of the equation. The more important part is the implementation of those innovative concepts. As such, the failed ideas of the past become the complete ideas of today. Xbox Live was predated, but it wasn't predated by success. That said, there must be true innovation at the root of these developments, whether successful or not, and without that innovation, the market will stagnate. We are seeing exactly that.

Even on the strength of the Wii and a resurgent Xbox, the industry is still on a precipitous decline. The major players remain intransigent. Giant publishers like Ubisoft and EA have been calling for new hardware for well over a year because, while the enormous, year-end games still sell $500 million in games in the first week, overall game sales are dropping. Market-wide, people are losing interest in traditional video games.

People still want to buy entertainment, though, so even with costs much higher than traditional video games, we are seeing growth in the PC gaming industry. There is no better time to combine the two into one, supreme gaming paradigm.

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What do I mean by a new paradigm? I'll get to that. First, let's talk about profit. Basically, the profit models of both PC games and video games are at risk. Currently, both PC gaming and video gaming rely on the sale of data, which is a dying profit vector. Whether it is from piracy, digital distribution, cheap cell phone apps, or free games on the Internet, it is undeniable that profits available from direct sale of software are shrinking.

PC games are doubly problematic because they rely on players to spend a great deal of money on a computer with hardware that is good for nothing more than gaming, and this hardware can run well into the hundreds of dollars every couple of years. They then sell games to this small segment of the population for high prices.

The video game industry is even more unstable because it relies on what's called a razors and razor blades model. Basically, they sell the video game system at a loss and recoup those losses on games. This is no longer tenable since the razor blades in the modern world are now infinitely replicable, valueless "things" called games.

AMD isn't the only company out there that is trying to forge a new path. Services such as Gaikai and Steam are taking advantage, at least somewhat, of the possibilities inherent in large-bandwidth Internet access. They are still fundamentally the same as the current model, though, in that profit is had from the sale of software. Those are dying profits. That is a dying model.

AMD's new paradigm integrates both the video game model and the PC model. Like the PC model, players must pay full price for the hardware. Like the video game model, loss-leaders are produced to increase the value of other elements. But in the new model, the things that are given away are the games. AMD would become increasingly involved with game development, with both internal and externally sourced studios.

AMD would sell the games for small amounts of money to recoup costs, and then after the game has broken even, 100% of the revenue is plowed back into game development. This would provide ever-increasing value to the hardware, and as long as development is continuous and progressive, it would also provide constant value to new hardware.

Essentially, what AMD is doing is what Apple does with their products. They provide software and services for cheap, and make money on the hardware. That's why Apple fights so hard to keep music and app prices down. Apple doesn't care about the developers and record labels. Cheap software increases the value of the hardware, and that is what AMD will be selling.

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AMD's package cannot simply be innovation in hardware. That will be the easiest part, certainly, but less than half of the equation. It's the software and services that will tie it all together, and these will be immensely difficult to implement well. Here, just as with the hardware, AMD stands a good chance at simply innovating past its competitors.

Companies like Nvidia are only beginning to understand the importance of the software that runs on, and increases the value of, their hardware.5 These services are all in their infancy, but they stand to completely revolutionize electronic gaming. We are seeing some threads of this revolution in streaming game services like the aforementioned Gaikai. In this model, the game is rendered by servers and then streamed to users over a broadband connection, kind of like an interactive video stream.

This isn't the direction that AMD wants to take since it's not a symbiotic model. It is not a combination of software and hardware, where the software increases the value of the hardware. If anything, the underlying sales model of this service is identical to current models in that a game is still sold.

Gaikai is indeed a significant development for the players, since they can play many games, any time, on many different devices. But the production end remains unchanged. The game is still rendered, on a desktop, somewhere. The end player only changes location.

Without denying the many possiblities in this new service, AMD can foster an even larger revolution by changing the cost and nature of the actual production. Because currently, playing cutting edge games requires a large expenditure by someone. If AMD can shift this reality into something cheaper and more diverse, they can rule the gaming world.

Similarly, moving the same model to different platforms doesn't count as innovation. Just because the iPad does away with physical media like CD's and DVD's, doesn't mean that it's anything more than a cheap computer. The end user still buys applications, installs them, and plays. Even the interface hasn't much advanced, with the finger more or less taking the place of the mouse.

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People want to play games. The problem for many is that they don't want to have to tinker. They want to buy something and simply have it work. It's for a good reason that we have the long-running joke about stereo instructions. After awhile, many may want greater freedom, and the PC gaming world is ideal for that. Start in the safe harbor of the standard system, then sail out to wilder waters. And even for those who enter already liking to tinker, a standard will be of great value. It gives a central framework around which people and companies can operate, which is something the smaller, community-started projects simply can't do.

The conflict that AMD must avoid that other video game companies have not is that, in the creation of their standard, they lock out other products. Nintendo had reason to do this back in the 1980's with the creation of the NES, since one of the causes of the video game crash of 1983 was a glut of awful, buggy games. This also saw the creation of the "Nintendo Seal of Quality" in the North American market.

But even there, Nintendo's choice had as much to do with trying to control a mini-fiefdom as it did with actual quality control. Neither Japan nor Europe had seen a video game crash on the level of North America, and yet everyone was locked.

AMD must create structure, and that alone is enough.  They do not need to lock out others, since by virtue of their status as creator, they have power. They get to control the direction, tone, and dialog of the framework. Anyone can make stuff for the Radius framework, but to be a true member of the party, they need to go through AMD.

Game companies avoid this situation because, primarily, they are stupid, but also because this arrangement requires constant work and value development on the part of the lead company, to wit, AMD. If the lead company fails to provide the development and advancement demanded of a system that is following free-market drives, they will simply be replaced.

Unlike a traditional video game system, where a king simply rules by right, the system AMD would enter is more like a democracy. Fuck up, and they throw the bums out.

This requires more work, but it doesn't require a fight. As with every monarchy throughout history, a king must fight to maintain his crown. It's a sucky life. Just look at the endless wars with system modifications, emulators, piracy, and reverse engineering that Microsoft, Nintendo, and Sony are facing. Anyone who looks at the situation with fresh eyes realizes that it is a fruitless quest. AMD at least has the possibility for success, while the other three can never win.

AMD would also have a huge advantage in the fact that what they would be selling, while packaged and branded with games and entertainment, is still an ordinary computer. There is no risk in buying one from the consumer perspective. Contrast this with a video game system or a camera. If a consumer doesn't get ongoing support from the founding company, they're left in the lurch.6

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The biggest problem with PC gaming is not cost, but the fact that there is no standard. There is no "Xbox brand" accessories, games, badges, and communities. There is no unifying framework, except for the operating system. People still need to understand certain technical things. Granted, many of these concepts aren't overly mysterious to people who grew up immersed in computers, but it still requires more knowledge than putting in a disk and pressing start.

Importantly, even though PC gaming costs more, it doesn't need to cost much more. Once the primary problem of no framework is eliminated, cheaper, lower-power computers will be more acceptable to large numbers of people and companies. AMD can repackage what they have and sell it at larger volumes for smaller margins.

For example, World of Warcraft is operating on an eight-year-old engine, and no one seems to care. Truly, its popularity is likely helped by the fact that it will work just fine on older systems.7 WoW's graphics are certainly far from contemporary, but the strength of the game and the massive user base, overcomes this issue.

This also overcomes the most salient issues from a producer's standpoint. A fragmented hardware base is a serious problem for game producers, just ask those who try to make games for Android phones and tablets. The fact that there is a large group of consumers with the same hardware, who have also been primed to think about gaming because of the branding, makes it a very tasty opportunity. That's why the App Store exploded in popularity with both consumers and producers in such a short time: standardized hardware.

With a standard, AMD wouldn't need to produce a gaming PC with cutting edge specs. The power isn't what's important, the knowledge that a large group of customers are operating with known specs is what's important for game developers. And even these lower-powered systems need not be horribly low-powered. As long as the hardware is specifically designed with games in mind, they can cut costs in many areas. This gives game developers much greater freedom than the admittedly large limitations on mobile gaming.

AMD can produce video cards that comply with the standard and then offer deeper levels of programming ability to give game developers the ability to "squeeze" more from the processors, just as they do in real gaming hardware. Many PC game developers want freedom from DirectX and OpenGL, and AMD can give it to them while also promising a large market to make the extra investment worth it.

Nvidia and ATi half-heartedly did this with their "The Way It's Meant To Be Played" and "ATi Certified" series of games, where some of the development costs were shouldered by the companies, netting them optimized titles that perform somewhat better on their hardware. While there were minor performance differences, these efforts were primarily marketing clap-trap that provided little actual value. They were all wrapping and no package.

While I am arguing that AMD can repackage what they have, that package must provide actual value.

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The quality, integrity, and breadth of this new product/package/standard must be carefully planned and maintained from day-one. The size of AMD will immediately give credibility to the endeavor, which means that if AMD screws up at the outset, they risk losing control of their own standard. I think that they could always regain control, but it's best to not lose it at all.

To achieve this end, AMD will need these things accounted for at launch. NONE can be overlooked. Every hole in a popular, well-constructed system will be filled quickly by free-market forces. AMD does not want to leave any holes.
  1. Multiple types of graphics hardware conforming to the standard: cards, full systems, and APU's.
  2. Branded peripherals like controllers, joysticks, headsets, mice, and keyboards.
  3. An online ranking and social service similar to Xbox Live.
  4. An online store similar to the Apple App Store and Xbox Live Arcade.
  5. Development kits that allow even novice programmers to take full advantage of the processing power of AMD products.
  6. At least a dozen games that are optimized for the standard.
  7. At least three games that are exclusive to the standard.
  8. A desktop "client" application that turns any computer into a system, allowing connection of devices, services, and software. This will allow games that are not optimized for Radeon hardware to to be played on Nvidia hardware, increasing uptake of the overall standard.
  9. A large team of engineers working on optimizing games and software, even old software.
  10. A partnership with Gamestop.
  11. A primary website that centralizes and integrates all of these disparate elements.
1: The graphics hardware will be AMD's bread-and-butter profit generator. Graphics hardware goes through annual cycles, which means that an enormous profit reservoir can be built by wrapping that graphics hardware up in valuable games and services. Millions of people are already willing to spend hundreds of dollars on the graphics hardware today, imagine the sales potential in the future.

A varied selection of hardware is also important. Yes, millions of people are willing to spend hundreds of dollars on graphics cards, but millions more aren't. AMD needs to engage those who have smaller budgets or simply value computer gaming less than the gamers. There will be limitations, since a certain amount of processing power is required to achieve the experience that AMD will be selling, but it is mission critical to get the hardware that is capable of delivering that experience to as low a price as possible.

2: The accessories are necessary for providing a tactile reality to the standard. People will interface with the software with these devices, and the devices must be branded to provide a sense of connection. People don't just go out and buy a controller, they buy a Radius controller. People don't just buy a keyboard, they buy a Radius keyboard. Accessory makers would undoubtedly be excited about getting on board with a project like this and would be willing to invest significant resources into the creation and marketing of products.8

3: While Radius will be marketed as a general entertainment device, the hard core gamers need to be won over. Xbox Live has shown that these gamers absolutely demand services attached to their games to allow them shoot each other. Similarly, the Radius Line service will give game developers the option to offload their server requirements to AMD, just as they do with Microsoft. But unlike Microsoft, AMD will not force the game developer to use their servers. This increases value both for the player and the programmer.

4: The Radius Store will be another profit generator since it will be integrated in with all Radius boxes. Much like the App Store, it will provide a large platform on which developers can sell their software and AMD can distribute their cheap games.

5: Perhaps this is obvious, but AMD will need to provide a robust development kit. To engage the community, the kit itself will not be sold. Services such as support, troubleshooting, and testing will be sold, but the kit will be free. This will engage the public and encourage small-time developers to become involved with Radius.

6: It's a game system, so games are pretty critical. There will be two types of games. The first type are those that have been optimized for Radius hardware. The developers made the game, it will play on any computer, but they have availed themselves of the Radius development kit to maximize the game performance and to take advantage of Radius hardware.

7: The second type of game are those designed to work exclusively with Radius hardware. These have been built with Radeon graphics and the control schemes are designed around Radius peripherals. These require Radius.

8: The desktop client allows any computer to turn into a Radius system. The client will come with Radius systems, and can be downloaded for free to other systems. If available, it will take advantage of Radeon hardware, and will allow users to connect Radius accessories to their extant computer.

9: Even though the community will be doing a lot of work to make games compatible and optimized, there must be a seed of activity. AMD will provide that seed in the form of programmers and community managers who are constantly releasing updates to the Radius client that allow older games to operate in an optimized state.

10: The biggest hurdle will be to get the market to look at Radius as a game system and to treat it as such. This can be helped along with a partnership with the largest game retailer in the country, Gamestop. With displays, games, and accessories all framed like it's meant for gaming, retail partnerships in general will go a long way toward speeding uptake.

11: The Internet is still going to be the primary marketing channel. This makes the website an important hub. A complete integration at launch is necessary to provide the seamless user experience that will make this project successful where other, more half-hearted projects failed.

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Obviously, being a game system, it will need games. For this, AMD will become a major producer of cheap entertainment.

There are two types of games that AMD will produce, A- and B-Games. The A-Games are the flagships. They are the larger, multi-year, big-budget games in the same vein as Grand Theft Auto or Call of Duty. Another term for these would be tentpole releases.

This term originated in Hollywood to describe a movie that "props up" a studio's other releases, thus the term tentpole. It propped up the other movies by being attached to those movies via contracts with the theaters. Basically, if a theater wanted the tentpole release, it had to buy the smaller movies as well. Thus, the tentpole movie would actually sell tickets to other movies.

The term is still used, but it no longer really means what it once did. Now, tentpole releases prop up a studio's finances, providing the bulk of its profit for a fiscal period. AMD will resurrect the original meaning of the term.

In the AMD system, the tentpole release will be the big game that everyone wants, but will only be available on Radius. It will get the marketing, it will get the media coverage, it will attract the attention. As it sucks people into the Radius system, it will foster the size of the market and the sales of other, smaller games, namely, the B-Games. The A-Game tentpole would thus prop up the other games and the system on the whole.

An A-Game would not be available at the launch of Radius. Quantity is more important than magnitude. These are the B-Games.

B-Games would be built by a dozen or more small teams of 20-30 developers, all creating distinct B-Games. These games would be fun, bright, playful, and deliver all of the action, adventure, romance, and novel thrills that are missing in the current video game world.9 Development time on games would no more than 18 months. Freed from concerns about a failed game, teams would always be toying around with new ideas. Innovation would be job-one.

A good, recent example of what these games would be is embodied in Torchlight II.



I use that game only because it is new. The number of games in the past that fulfill the requirements are numerous: Katamari Damacy, Guardian Heroes, Rock n' Roll Racing, Ooga Booga, Jet Grind Radio, Crazy Taxi, Braid, Oddworld, Rayman, The Sims... the list goes on.

The ultimate game that AMD will produce, likely requiring an outside developer, will be an MMO. This will be AMD's flagship. It will be built from the ground up to be expandable, updatable, and will receive constant attention. Every year, the game will receive graphic updates that will be available to those with the hardware that is capable of displaying them. Every year will see massive expansions to the world. Every year will see smaller games that tie in with the MMO.

Since AMD will be using this game primarily as a force to drive sales of its hardware, the Radius MMO will be the cheapest MMO on the market. Its price will be determined by server costs.

AMD can fully engage the community in this by preparing demo shows of possible games and having players vote on which games get made. AMD would integrate market research, player engagement, and sales all into one. Everyone in the development teams can present game ideas and display them to the public in AMD Developer community message boards. By keeping the dialog open, even during times where few games are being released, anticipation will remain high.

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Since AMD will be selling a multi-use box, the processing power contained therein can be used for any task that the community wants. This is the real value of what AMD will be doing. By changing the nature, cost, and structure of processing hardware, AMD can create opportunities for new frontiers, many of which we haven't even imagined yet.

Most salient of these frontiers is the legendary set-top box. This is a concept that's been around for a hella' long time and has evolved from basic cable decoders in the 1980's, to integrated media computers in the 1990's and 2000's.

I describe the set-top box as legendary because it has never existed. Everyone who has tried has failed. None of these things worked because they all have tried to make money the same way that they always have. Thus, they started their businesses fighting the business model that is readily apparent based on the realities of the hardware, software, and data connections. The potential of the Xbox 360, Playstation 3, and Wii was blunted by this inherent problem. In fact, one of the most popular pieces of set-top box software out there is one that actively tricks the Xbox 360 and Playstation 3 to get Internet content on them that should have been available in the first place.

This cognitive dissonance has been holding back these companies for nearly two decades. The most recent victim was Google TV, but that's only a single example. There are more, with many on sale today. Take a look at every other television-oriented computer product. All of them have been limited, filtered, blocked, and restricted.10 YouTube has videos of music, movies, and television blocked. Hulu isn't accessible. And Comcast is trying to get people to simply stop using the Internet. These companies are, with fingers in their ears, screaming "lalalala" as hard as they can in the desperate hope that this evil bugbear that is the Internet will go away.

It's not going away, and as the strict master death bids them dance, wanting them to hold hands, and to tread the dance in a long line, what the industry ignores is a valuable gold mine for a company willing to simply work around them. Microsoft could have done so with Windows Media Center edition and Home Theater PC's, but along with exorbitant costs, the system was fragmented and difficult to use. No surprise, they didn't exactly set the market on fire. But that doesn't mean that people don't want these products and services.

The closest that anyone has come to a successful set-top box is Apple with its Apple TV.11 This is of particular interest for this discussion since Apple follows a similar business model as I am proposing: cheap software, profit on the hardware. Apple has repeatedly referred to the Apple TV as a "hobby," indicating that it is of low importance. I suspect that this is because of a problem that many companies have, namely, if you make the perfect product, no one needs to buy another. And since Apple makes its money selling more hardware every year, a perfect product is a disaster.

Since the primary reason for this new system is video games, AMD doesn't have to worry about the possibility of accidentally creating a perfect product. Yes, the Radius will be the perfect media center from day-1, but it will immediately start to become obsolete for video games, and that will continue to drive sales.

Likewise, since AMD has no fears about trying to lock their products down, they are free to embrace everything that they can to increase the value of the hardware. The truly difficult part will be bringing these disparate products and services together under an easy-to-use banner. No one has yet done this, and with media companies making it very difficult, they have created a massive, multi-billion-dollar hole which AMD can exploit.

When the media companies realize how stupid they are being, this hole will close up quickly. But here, AMD will have a significant competitive advantage, being the only major player in the space with significant brand presence. Even though "piracy" will always be around, most people will want to get their media through easy-to-use, official channels, and they will be willing to pay for this. AMD will be able to sign a number of contracts for all of this content and ride its name recognition into a major stake in the market.

I want to stress that this is a bonus business on top of the gaming business. While the Wii, Xbox, and Boxee aren't the best devices possible, they are getting better as time goes on. Eventually, the market will be saturated with small, cheap, single-use boxes intended primarily for media consumption. AMD's Radius will be much more expensive than these boxes.

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There will be two levels of hardware, and while this may be confusing to some customers, it is necessary because there are two distinct markets. The first level is the one that we have been hitherto discussing. This is oriented around delivering a package of value, but is mainly focused on delivering a gaming experience that can't be had elsewhere to a general demographic at an affordable price. This means that will necessarily be concessions in design, materials, and specifications.

This high-end, called S-Spec, will be based on AMD's newest hardware and will release annually with AMD's big graphics chip release. This will also be an opportunity to try out new motherboard chip designs, pipeline layouts, and anything else experimental that AMD would like to push out to market. The price point on this can be much higher than the standard Radius spec.

Having these two markets is not only important to avoid alienating high-end gamers, but also because those high-end gamers are critical to the evolution of the entire industry. The gaming world has been the genesis of many huge leaps in computer power over the past ten years. High end graphics hardware of today has the same processing power as multi-million-dollar supercomputers from the mid-1990's. Many of today's supercomputers, including the soon-to-be king, are powered by graphics processors.

AMD does not want its large, price-oriented market to have a negative effect on development and advancement in the niche market. Because work on the vanguard will sooner-or-later trickle down to the standard Radius spec, acting both as a halo product and also making sure that Radeon hardware is always competitive and cutting edge.

The S-Spec will not be advertised outside of serious "gamer" circles so as to avoid confusion in the general market. Outside of this small niche, AMD wants Radius to simply be Radius. S-Spec accessories will also be more expensive and more gamer-oriented. Controllers will be carbon fiber, keyboards will be in the vein of the Optimus Keyboard, and displays will be optimized for gaming.

The S-Spec community will also be where AMD will actively foster other companies and invest in the development of dedicated gaming gear. For example, multiple displays are common among extreme gamers and arcade machines.12 AMD can push the home experience further than it ever has on the strength of its name, and while it would be difficult to market this expensive equipment to the general market, the niche S-Spec market would be more receptive.

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How would AMD earn money on this?
  • The entire system generates value around AMD's hardware. Profit would be had by simply selling more of their hardware and by being able to sell new hardware on the strength of the system.
  • AMD would control the software environment and platform. While anyone can develop an application and anyone can install them, to gain access to the AMD "store" would require buying access via a percentage of profit, similar to the App Store.
  • AMD would sell services to game developers in the form of quality control, testing, and access to the hardware developers and engineers for advanced optimization. AMD would become a part in the development of all major games.
  • AMD would control the online community and be able to sell access to particular elements of it that cost a significant amount to maintain.
  • The loss-leader games would be sold for small amounts of money. No more than $5. At costs that low, sales would be monstrous and even games with large budgets, greater than $25 million, would likely break even.
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There is no other company on the market as ideal to push this new paradigm as AMD. They provide the graphics muscle for both the Xbox 360 and the Wii; they provided it for the Gamecube; and they are rumored to be the graphics of choice for the upcoming Wii U and Xbox 720 and Playstation 4. AMD has know-how that only Nvidia matches. But unlike AMD, Nvidia does not have the knowledge necessary to power everything in the system (the CPU, GPU, memory, chipset) and then push all of that with a massive marketing deployment. AMD is absolutely unique in this regard.

The companies that are currently clogging up this frontier are intransigent and stupid. They can be eliminated by a company that is willing to invest and work against them. Companies like Microsoft, Amazon, Tivo, and Apple try to work with them. Sometimes this works, as with Amazon Kindle and Apple iTunes, but most of the time, it doesn't. Instead of trying to coercively maneuver the existing companies into strategic positions, AMD can simply pummel them into submission.

The potential profits from this are immense. AMD would be truly foolish to pass up this opportunity. Moreover, AMD better movie quickly, otherwise Apple may just beat them to it.

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1: It was a time of massive frustration for AMD fans, and just fans of balanced competition in the market. Instead of selling their chips at the discount that AMD had been using to equalize the cost-per-performance-unit on their previous generations of chips, they sold their Athlon FX at a premium. Instead of being both cheaper and faster than Intel, and thus increasing their value to an extreme point, they instead got greedy for ephemeral profits. After their peak in 2006, where they still lagged Intel, their market share has plunged to new annual lows. AMD also missed the mobile revolution, but that's not as awful as it seems, since Intel did the same. No, the problem was that AMD was, and is, losing in a direct battle with Intel. http://www.cpubenchmark.net/market_share.html

2: Bejeweled has been on the market since 2001, over a decade. Angry Birds has been on the market for slightly over two years. Bejeweled has been downloaded 500 million times and sold 75 million copies. Angry Birds has been downloaded over one billion times and sold over 200 million copies. Numbers of that magnitude have nothing to do with quality; that is the unlocking of a new market.

3: That doesn't create new value, that simply finds ways to increase the monetization of extant value: the last resort of a dying company.

4: The president of Razer, the gaming accessory maker, specifically talks about this in their creation of a new type of laptop. A tiny company, doing the innovation that the big boys won't do. Where have we heard that before? Oh right, everywherehttp://www.youtube.com/watch?v=3sTDMIGqLRU

5: Nvidia has recently launched VDI, their cloud graphics service, cloud gaming in the form of GRID, and specially optimized games for cell phones running Nvidia chips at TegraZone.

6: An excellent, and still salient for many, example is that of the Sega Dreamcast. The system launched to great fanfare, only to be bungled by Sega and shut down in 2001. And instead of opening the system and seeing if the system's legacy could live on, Sega shat all over its fans and simply discontinued everything. It is not at all surprising that Sega fell into the arms of Sammy Inc., and after stumbling along for over eight years, and actually turning some profits in a few of them, posted some stunning losses.

7: I recently installed and ran WoW on a $300, discount laptop. It wasn't terribly pretty, but it ran. I also went to Dell's website to spec out the cheapest computer that I could with discreet graphics hardware, the only requirement for gaming. First, they still make the Celeron processor? I thought those went out with the fauxhawk. My quest was completed with a $369 desktop with a Radeon HD 6450. Even with the crappy Celeron, that's enough to play many new games at medium detail settings. Upping it to a better processor costs $485. Or you could buy a graphics card capable of running almost anything for about $160.

8: Logitech invested tens of millions of dollars into Google TV, and everyone knew from the beginning that it was a terrible idea. In fact, AMD's initiative would manage to side-step much of the problem that Google TV had, since it would be a standard computer running a standard OS. This would prevent various companies like Hulu, Pandora, and YouTube from blocking media streams as they do for set-top boxes, cell phones, and tablets. Truly, AMD can be on the vanguard of forcing the old legacy companies to accept the realities of the Internet.

9: That of course doesn't mean that there aren't some super-inventive games being made. The problems for these are either the lack of marketing and distribution, or, as with so many games, a focus on male players, as with the immensely inventive Catherine. Even here, some games by sheer force of quality, overcome an uninterested publisher and retailer to become a cornerstone of a game publisher's arsenal, as with Katamari Damacy.

10: TiVO's constant battles with content providers have been legendary.

11: Boxee also deserves some recognition, and is doubly interesting for the purposes of this article. Boxee sprang from the development of Xbox Media Center, or XBMC, which was a project made specifically to side-step the limitations that Microsoft had placed on the original Xbox. Bill Gates is famous for having held up XBMC in a meeting and asking "how can we engage this group." Obviously, instead of engaging them, Microsoft ignored them. Here we have the community wanting something so badly, it actually managed to coalesce into a real product.

12: NEC tried this with their CRV43 ultrawide monitor, but it was priced so high as to be beyond the reach of even the hardest-core gamers.

Saturday, June 2, 2012

Skylanders Was Inevitable

In a recent article on Yahoo! and CNBC, the author refers to the game Skylanders as a surprise hit. Not only do I think that is wrong, the fact that the company was surprised only reveals how shockingly out of touch they are.

Skylanders was a guaranteed hit. It is precisely where games need to be going. Games are worthless. Once data is created, it can be copied ad infinitum. To be of value, the game needs to be tied to something necessary for its operation. This can be special controllers, special displays, systems, cards, services like Warcraft: truly, anything that is finite.

Skylanders should have been created years ago, because this wasn't a huge, innovative leap. It is something that anyone in the industry, after spending more than ten minutes thinking "hmmm, how can we be innovative," would have created.

There was precedent. Tons of precedent. The RPG world has shown how to attach value to physical things for years. Magic The Gathering cards sell for obscene amounts of money. Warhammer figures dot the desks of gamers across the country. And if you think there were no examples of a physical/digital crossover, one of the first demos of Microsoft's Surface table was a combination of data and products in Dungeons & Dragons...



And long before that, the Clix system combined intellectual property, a game, and required hardware into figures that were, for all intents and purposes, identical to Skylanders save for the electronic part. Skylanders IS Clix.

Skylanders was no surprise at all. Neither was World of Warcraft. The next game to tie together services or products with software in an entertaining package will also be a monster hit, and that won't be a surprise either. This is where not just games, but all software must inevitably go.