CES 2010 and the rise of portable DRM

One of the less discussed news of CES 2010 is the new DRM system that Microsoft is about to launch on Xbox, PC, Zune and Windows Phone. It wasn’t presented directly but the feature was stressed over and over during the long opening keynote. Basically when you buy something out of Live! or other services, your content isn’t locked to one machine or to a single platform but it can be used as you wish in any device you own.

Microsoft is also powering DLCs with this technology. Microsoft Game Room will be the first casual game to get advantage of a portable licensing system: any game you buy for your game room on Xbox Live can be accessed from a PC, via Games for Windows Live and vice-versa. This means that, for a change, when you buy a content on a platform, you get the other one version for free. A sharp move, since laptop gaming is becoming the “mobile” alternative to Console gaming for many people, especially during the working weeks.

In the past I already talked about the holy grail of game developers: an unified development platform (or, at least, an universal API). Publishers seems very wary to enforce the concept to platform vendors, even they talk about it from time to time, especially in this generation. Several technologies are emerging that allows unified development. Aside XNA, Unity 3D is a very portable alternative that allows you to build games for Wii, PC, Mac, iPhone, and Xbox seamlessy.

Microsoft, being also a software developer, seems eager to anticipate the inevitable, starting from the other side of the spectrum: licensing for dowloadable content. If licenses go anywhere people will expect to have the content available anywhere. For casual games (which are multi-platform by design) the adoption of a multi-platform licensing will be less dramatic than for triple A titles. Casual games are multiplatform by nature (and are the early adopters of multiplatform APIs and tools) and their gradual shift to in-game advertising will likely benefit from the greater exposition of a multiplatform licensing system.

The next decade will be the most challenging for the media and games industry. PC digital distribution is highly fragmented (to a point it will start to hurt itself soon, if somebody doesn’t start to buy out someone else), console gaming isn’t a monopoly anymore and casual games are everywhere (even if, as in the early 2000s, the highly fragmented and everchanging mobile gaming scenario is turning less and less profitable as months pass, at least for start-ups). This scenario means entering barriers for end-users and naturally, less money spent.

AppStore hints, by the numbers

Apple did a very great result this trimester, and I’m pretty happy, too (read: stock trading was good).

The iTunes store performed pretty well, reaching $1Billion (gross profit). This allows me to disclose some confidential numbers without breaking any NDA from other analysts and consulting firms.

We’ll try to quantify the average income of an AppStore application to see if it’s convenient or not. It’s not a fair way to quantify things but at least helps to see things in perspective.

We start with a great simplification: music and other medias has no influence in the iTunes store. That’s not true, music and other medias are a big deal on iTunes, but let’s consider a very best case: everything they sell are Apps.

The AppStore has 91.000 active applications as now.

We can further simplify things, saying that every application can earn about $1.000.000.000 / 91.000 a year. That’s about $11.000 a year, rounded up. Those are gross incomes and still includes the 30% Apple takes for itself due to their uselesess priceless marketing. So you will end up with an average expectancy of circa $7.700 a year. That’s a gross profit, man!

Now we’ll think about how much time you have to invest to make an application.

In average, an application takes about a month to build for a professional, full-time staff of about 3 people. A game usually takes about 3 to 6 months for a team of the same size.

The estimate doesn’t count the approval waiting time, that can be very long. Since the approval process almost always asks you to fix stuff and resubmit, you should keep some the staff around. Outsourcing development to a sweatshop may seem smart but it’s a bad way to lose expertise and to candidate your app to be swamped by clones. A smarter way should be to start to develop another application. The smartest is to have at least three titles in the pipeline, for multiple platforms. It will help in case one of them busts or is lost in the quirks of Apple (or everyone else) approvals.

Another wrong assumption is that your app will be able to net $7.700 a year. AppStore doesn’t know honor the long tail rule typical of shareware and indie sales, it honors a special and very interesting sales model that sees spikes of about one or two days every time your app is updated. Chance and sheer luck play a fundamental role in this model. Being the last published title between a pause of several hours can be better of any paid advertisement! Be realist and consider that you can’t support every application you launch indefinitely. The approval is still time-consuming, so supporting an app will be costly. It’s up to you to invest in new titles or promote the older ones. Remember that newer titles can advertise older “hits”. Another nice way to keep your Apps fresh is to hire a marketing firm to keep the buzz going. They are not cheap, though. They come in the hundreds of thousands.

Believing that your app will stay afloat due to pure quality is naive, there’s simply too much noise to hope your app will be profitable because it’s good. Nobody will brave the backlog of AppStore to reach your App: chances are that he will find something similar before reaching your six-months old title. And it will be probably free!

Don’t be influenced by iPhone success stories. Despite the huge quantity of applications, individual success stories are almost always confined to the early days of AppStore. Just remember that, more than often, success stories are marketing stunts to attract customers and investors. Even when they happen in respectable newspapers and website. You aren’t iFart.

Be wary of the Apple (or other publishers) success: it’s not yours. Success stories of publishers with hundreds of titles under their belt aren’t necessarily encouraging for developers. That’s called shotgun strategy: produce and promote a lot of different stuff, since every copy sold is an earning and the development risks are taken by someone else (YOU, in this case). To be more clear: an application that sells only one copy is a catastrophe for you but it’s just another 30% gross income for Apple, strong of thousands of other titles. You can’t win this war.

My evaluation is, of course, purely instrumental to quantify how big the AppStore is and how difficult is for anyone to emerge. Despite music there’s no way a start-up can promote something sold only in AppStore outside AppStore. That’s why most indie games are coming to AppStore after they reached success in more accessible marketplaces, like Steam, WiiWare or Xbox Live and AppStore game developers pretty much stay and die inside the platform.

Just look at the weekly iPhone top tens: estabilished brands pushed by strong publishers sell well. But they’ll sell pretty much everywhere! 🙂

My First Impressions on the New Xbox Experience

It was time for Microsoft to improve the XBox Dashboard to a more usable and Next-Gen experience.

I’m very positive about NXE and the cleaner in-game Dashboard, the new contextual actions (expecially while you’re gaming) are a nice feature. It’s easier to chat via MSN when you can just respond with a single click, instead of navigating through the conversation window.

I really liked the new Avatars and Gamecard features, the new Gamecards are cleaner and much better looking than the older ones.

A more complete assortment of screenshots is here (sorry but the gallery system of WordPress is mental!).

I’m in the New XBox Experience (it’s good to be italian)

Well, sometimes being Italian is good. Since my conationals are everything but cosmopolitans (and most of the time that’s embarassing compared to other national online communities), so when I applied for the NXE I was almost certain that I won’t have so much competition.

And here’s the mail:

Congratulations on your acceptance into the Xbox 360 Fall Flash Preview Program. As a member of this program you will be receiving the New Xbox Experience (NXE) System Update.

The update will be made available to you on or before November 1^st. In order to receive the update, log in to Xbox LIVE with the Preview Program registered console.

In participation with this program, you should not move your storage device (hard drive, or memory unit if you do not have a hard drive) to any other console as it will also update that console. If an unregistered console is updated with the NXE update, that console will not be able to connect to Xbox LIVE until the NXE has been officially released on November 19th.

Please remember that your participation in the Public Preview Program is subject to the Xbox LIVE Terms of Use.

We thank you for your participation and hope that you enjoy the New Xbox Experience.

See you online,

The Xbox 360 team

The update is installing as I write, I will post more details this evening, after work.