Month: November 2008

Categories
games design

Micro-micro-payments via electricity bill

A new startup has appeared that essentially charges people a per-second subscription to play games that is added to their electricity bill.

On the one hand, I am personally against this kind of “invisible” charging because it can be – and indeed is being – mis-represented as “free”, when in fact every single user is being charged. I also feel it sets a set of very bad incentives for the lower-end game developers – essentially encouraging them to make lower-quality games. But that isn’t really a problem for me, it’s a problem for them, so … shrug.

So bear in mind my latent antipathy :) which I’ll try to keep quiet about – but for me the really interesting part is the use of this as an alternative payment system.

The Premise

On the face of it, they started with some assumptions like this:

Computer games don’t use much processing power, and yet game-players have really powerful PCs – just go look at the market for buying new PC’s: those marketed at video games players are the only part of the PC hardware market to have preserved and grown some decent profit margins on hardware, and very high prices.

Meanwhile, game developers have large amounts of extra content for their games that they don’t charge for and which they don’t allow the players to experience – it’s all there, but they can’t be bothered to let people play it. I mean, why would you? You’ve paid to create it, therefore you want to keep it secret.

Also, casual game developers, those making all those Flash and Java games you see on Miniclip, are all awesome experts when it comes to hardcore programming optimization. They might be a bit lazy, not bothering to do it a lot of the time, but despite this total lack of practice, they are all latent geniuses if you give them enough incentive.

…although actually I think they didn’t really think any of that, they just came from a compute-farm background and jumped on Games as an easy first target market.

Plura Processing is embedding an app in browser-based games that uses local CPU to run remote processor-intensive tasks – and then they charge the remote task-owner for the “rented CPU time”, and give a percentage of that back to the game developer in whose game the app was embedded. You can see a bit more on it on GigaOM, including a brief response from the company. Their VC backer, Creeris Ventures, appears to have an exec on the board who came up with this in defence of the product:

“At the end of the play session, the game sees how much compute time the player provided and rewards him with an in-game item (e.g., +1 longsword).

So what you get is something that the user loves (because he’s being directly rewarded) and a model for computing power that does work (because it’s using the PC as efficiently as possible). Both sides win. :)”

Yep. They are actually encouraging you to reward people for leaving their computers logged-in and churning up electricity by gifting them in-game items. I’m all in favour of making computer-games unfair, but I don’t see this as a sensible way to do it (from a design perspective).

A quick perusal of my LinkedIn network suggests that the company founders aren’t from a games industry background, so I guess that they thought of charging people for CPU time (an old business model from the late 1990’s that never took off, despite many tries), and then spotted games as just a good market they could take advantage of.

Something fishy

Plura is lightweight and secure

Plura applets use minimal resources on most computers. Our system is secure and each application’s integrity is verified before it can use Plura.

If you’d like to see Plura first-hand, just click here. We think you’ll see how harmless Plura really is.

…given that your business model is to use as much resources as possible, the above statement is surely only true via sophistry? (they’ll be going for “minimial resources” when it comes to RAM usage, clearly, but maximal *CPU* usage, which is what most people care about given how cheap and abundant RAM is today). Am I missing something here?

Anyway, that’s not what this is really about, IMHO, because:

Business Analysis

Finally, because Plura is an enabling technology, it allows other people to create new sites and web applications that previously could not be financially supported. Plura does this in two ways. First, it offers a completely new revenue stream to new and existing sites.

How much money?

Well, according to their website, they’ll give the developer $2.60 for each computer that spends a month devoting all its CPU power to their processing. Is that a lot?

Let’s put this into perspective.

The ratio between “users online” and “users” is around 1:100 for a free game, 1:20 for a free MMO, and around 1:6 for a subscription MMO.

So, with Plura, in a subs MMO you would be earning at the rate of around 40 cents per month per user.
At the opposite end of the scale, in a free web game, you’d be earning at the rate of around 2.6 cents per month per user.

That’s assuming 100% CPU usage devoted to Plura. In practice, an MMO would be sparing around 1% CPU (assuming this app is correctly configured), and even for a free web game, you’d have IM running, probably Outlook, etc, and you’d expect with a *well-written* flash game on a Single-Core sysem to be seeing at most 30% of the CPU going to Plura, probably more like 5% realistically (pure guess, based on the CPU usages I’ve typically seen of Flash apps on the few occasions they’ve been tuned for minimal CPU). NB: this WILL change as adoption of Flash 10/11 increases, assuming that the rendering engine efficiencies come in as expected (flash prior to 10 uses the CPU for graphics).

What about dual-core systems? So long as flash games are single-threaded, Plura could get 50% CPU to itself (well … fighting off Outlook, IM, etc – so perhaps more like 40% to itself). I’m not about to try it on my Core2Duo here, though, since this is on a laptop and anything that maxes both cores will usually overheat and crash the laptop (a problem with the Macbook Air and it’s Intel CPU. Sigh)

So, my guess is that a typical casual game developer will see around $1-$5 per thousand users, whilst taking away their users’ CPU power. At the bottom end, that really does NOT compare favourably with advertising revenues. At the top end, it starts to look worthwhile; all depends how much CPU power you give up, I guess.

Risks

As a developer, you are merely replacing one agency-based fluctuating-value revenue model (advertising) for another (compute-farming).

Even with the many agencies and advertisers and healthy industry behind advertising, rates soar and plummet unpredictably, which is enough to put game developers out of business all on its own.

It’s going to be a lot worse working within what is by comparison a tiny niche marketplace, and where you are so heavily disengaged from the purchasers.

I’m sure plenty of people will try it out since it’s simple to attempt, but it doesn’t currently appear viable as a source of revenue for any game studio that wants to remain in business long-term.

Cost of Goods Sold … to the user

How much is this costing in electricity? Interesting question…

For a modern PC, with an Intel Core Duo, the difference between 0% CPU and 100% CPU is around 60 watts, which works out to a little over 40kWh per month.

At the moment you pay around $0.2-$0.5 per kWh for electricity. So, the electricity used by each home user will cost them from 80 cents (cheap power, efficient CPU) up to $4 (expensive power, inefficient CPU – e.g. the Pentium 4 uses almost twice the watts!).

i.e. as a game developer, you are being paid at just around the cost of the electricity used. That’s how this could be seen as a somewhat odd (but nevertheless interesting) indirect form of payment-system for users without credit-cards etc.

Growth potential?

But it’s capped at very very very low ARPU. Ridiculously low. This is a poor business model for anything except lowest-common-denominator games. Strangely, the company advertises it on their own website as a “replacement” for advertising, although they also run testimonials from a game developer who tried it and said the opposite.

(that developer, by the way, was Paul Preece, famous for making just one game (Desktop Tower Defence), and I suspect he’s getting a much better rate than $2.60 per month given the huge marketing value to Plura of having DTD as a “client”).

Market: gamers with powerful computers?

  • Generally, gamers who have spent vast amounts of cash on powerful computers are playing powerful games – not casual web games
  • All games, everywhere, use 100% CPU. The basic, fundamental model of game development mandates this: it is far too expensive to faff about on optimization that is not absolutely necessary
  • A game that does NOT use 100% CPU does poorly in the market, because the players will condemn the noticeably poorer graphics, framerate, AI, sound quality, reactiveness (of controls), etc.

Market: casual gamers?

  • Typically have weak and crappy PCs
  • If you’re playing games in a browser, that almost always means you have other apps open at once
  • Generally speaking, you don’t want the rest of your PC slowing down because a low-quality game is killing it
  • Flash is already phenomenonally bad on some platforms, and will steal 100% CPU at the drop of a hat; this causes lots of problems in the game-playing community of casual gamers who don’t understand it, but condemn games for it and refuse to play them. If you played much on popular casual games sites, you’d notice this uncommon but not rare problem
  • Flash game programmers generally know little about how to write good code (this is why Flash is great – it opens up the market to more programmers, rather than requiring everyone to be a highly experienced, highly trained expert), they certainly don’t write efficient code; if you want them to start learning how, expect a long long uphill struggle to re-educate the entire worldwide base of Flash programmers

So, I don’t think this is particularly exciting as a revenue model itself.

But I do like this idea of the consumer’s electricity bill being converted into per-millisecond subscription to the game they are playing; in a world where you are not able to get direct payment from your consumers, or are somehow prevented, this could *in theory* (I think the lack of established marketplace invalidates this in practice) be a good poor-man’s replacement for micropayments

Categories
community

Community outreach: Going back in time, to an era before IM

In case you hadn’t noticed, there’s been a recent disturbance in the force for the inhabitants of the place they call Second Life, and it’s all about money.

But that’s not what this post is about (I’m not that interested in the internal politics of a single VW/MMO/whatever, until/unless they have wider general meaning / effect).

No, this post is about Linden Lab’s actions following the uproar, where (among other initiatives) they held an open meeting within SL to discuss the issue, with the company CEO present to do a big Q&A session. Since LL has been touting SL as a great place to hold meetings – better than real life – and someone conveniently posted a transcript, I thought it would be interesting to see what an LL-run meeting looked like, under pressure.

The simple answer (if you glance at that transcript, about 50% of which is noise), is: chaotic.

Continue reading “Community outreach: Going back in time, to an era before IM”
Categories
computer games entrepreneurship games design

Reality Distortion and Entrepreneurship

I was looking through presentation slides the other day, and saw this:

“As children develop, they make greater and greater efforts to adapt to reality, rather than distorting reality, as in make-believe play.”

The implication, contextually, was that ultimately as a child becomes an adult, their reality becomes fully adapted, and no longer distorted. That might not be the intended implication, but it’s interesting: I’ve been fighting against this since, well, since forever, really. And spending your life constantly distorting reality it seems to me is neither a bad thing nor a limiting thing.

Because it trains you to be good at two things: seeing how you might change reality, and believing that you CAN change it.

At one end of the spectrum, distorted realities make it much easier for you to visualize what is “possible” instead of what is merely “probable”, and that’s the essence of spotting opportunities.

Entrepreneurship and Seeing Change

(good) Entrepreneurs are constantly seeing new ways to “change the world” in ways both small and large. Often the change is small, but the effects are large, or vice versa. It’s often said that “you cannot teach Entrepreneurship”, and while I beg to differ, I have experience of actually trying it, and huge experience of arguing the concept with people. Mostly, the argument against the teachability of entrepreneurship is rooted in the inability to “make” people “become able to” see Opportunities.

I think one of the primary differentiators for having/not having that ability (irrespective of whether it can be taught) is the extent to which you see:

The world as it is

as opposed to

The world as it could be

and even

The world as I would like it

Looking at the Entrepreneurs themselves:

  • Good entrepreneurs, in my personal experience, see the world always as It Could Be.
  • Bad ones usually see it as They Would Like It To Be.
  • Great ones ALSO see it as They Would Like It To Be
  • Non-entrepreneurs see it As It Is

…with the difference between Great Entrepeneurs and Bad Entrepreneurs being mainly that the former *also* see the world As It Is, and hold the two visions in their head at all times, simultaneously.

Because the Great Entrepeneurs, while constantly (many times a week) spotting things that They Would Like It To Be, also – constantly – imagine how they might transform the world As It Is, usually by a series of steps, into that target. The Bad ones simply employ the tried-and-tested Hope plan:

  1. Have Idea
  2. ?
  3. Profit

…which – let’s be honest here – occasionally works (usually if you simply get massively lucky with timing / outside events).

Entrepreneurship and Effecting Change

Why are some people better able to see how to make their desired changes come true?

I believe it’s largely driven by two skills. Firstly, the obvious one highlighted above – that the more practice you have of thinking about how you might change reality to fit what you want it to be, the better you will be at that process.

“Better” here means that you will

  • have more ideas for each transform in the chain
  • be better at recognising “good” and “bad” transforms
  • process suggested transforms – and transform-chains – more rapidly (quick accept/reject)

The second skill is believing in yourself and your ability to change the world. Often, the successful changes that Entrepeneurs effect are surprising to most people – they question how that could even be possible – while *in practice* not being so difficult to achieve. Usually, this is because normal people see only the beginning and end of a sequence of changes.

To take a simple example that illustrates the kind of “impossible” being “possible” given some clever changes that I’m talking about, look at Freeserve. (NB: this is based on my memory of events more than 10 years ago, much of which I found out 2nd or 3rd hand, when trying to understand how Freeserve had achieved something that had eluded all the other ISPs – so take this as an example in theory, it may not be accurate in practice! Incidentally, there seems to be VERY little public history on Freeserve, how it started, and how massively it changed ISP / internet access in the UK – I’d be interested if any readers have seen any articles / interviews about the details of its inception?)

Freeserve … the first “free” ISP in the UK

When Freeserve was created in the UK providing “free internet access” in the 1990’s, it seemed impossible. They even provided a cheap local phone number that could be used anywhere in the country – so it was cheaper on your phone bills than calls to your subscription ISP!

Ahem. Except, it wasn’t the cheapEST kind of local phone call, it was partway between an “ultra-local” call (very cheap) and a “national” call (expensive).

And, in an unprecedented move, Freeserve had managed to get the telephone company to give them a share of the revenue from that particular phone number. For reference, at the time, if you wanted to get revenue from the telco for running a phone number, you had to get a number on the “very expensive” plan, where the telco would charge the consumer as much as 10 times the cost of an already expensive national-call.

Of course, given the huge volume of calls that then went through to that number, the telco made a huge profit out of the scheme – so it worked out in their best interests, and everyone profited. (although I have no idea how this was negotiated, or whose idea it was – and “persuading a telco to change their revenue model” is itself a problem I’d usually classify as “impossible”, so I’m guessing there was another, similar, chain of small changes that lead to this being acheived).

About two years before this all happened, I was working on a project to create a new ISP, and I’d got as far in breaking down the steps as to see that you HAD, somehow, to find a way to remove the “dual-billing” model from consumers (pay once for internet access, pay twice for the per-minute, uncapped (!) phone call too). I didn’t have the confidence to believe it was possible, and after running through some fairly crazy ideas (including looking into internet access via broadcast radio for downstream, and home modem for upstream), I gave up and moved on. With hindsight, at the time, I realised that I’d have hit upon the change-the-telco idea within another couple of months, and that I’d have had a clear year to find a way to ACTUALLY get a telco to change, and still be able to launch before Freeserve.

(for the record, that event finally kicked me into realising that the world-changing ideas I had all the time, and thought through as often as multiple times a day, were actually all realisable (potentially). Many people I know, potentially good entrepreneurs both older and younger than me, still don’t believe the world can be changed to their tune, they can only see the world As It Is)

How to … Influence People

This is a big topic; whole books have been written on it! (OMG!!1!!!!0).

But just to select ONE of the most powerful weapons: imposing a personal view of reality onto the reality you find, and living and acting as though your view of reality is the real one, and keeping at it until everyone else gives in. The real beauty of this being that if the only differences between your reality and the real reality are the beliefs of people, then it becomes a self-fulfilling dream.

This is basic sales-technique: it’s usually more effective to sell people on a shared belief than it is to sell them merely on a bunch of facts and leave them to guess for themselves whether those facts are real or not. But it takes a particular kind of personality to be good at imposing their desired reality (if that’s all you do, it tends to come across as mere bullying), and also at making it stick.

IMHO, people who spend more of their time adapting reality are much better at the “making it stick” part.

Conclusion

So, ultimately, one of the things that makes a great Entrepreneur is huge practice with very much NOT adapting to reality, but instead adapting reality to their own ends. And it helps in ways beyond the obvious (spotting new opportunities).

If you want to be a great entrepreneur, I’d recommend you start dreaming more, and make your dreams more vivid and concrete, and try to change the world to fit them, rather than the other way around.

PS: from reading this post, all of which has been written between going from that slide of the presentation to the next, you may come to think that it can take me a long time to read a presentation. You’d be right. This is partly why I’ve taken to transcripting in real time every conference talk I attend (and usually publishing them on this blog) – the smallest comment can spark off so many thoughts that I miss the rest of the talk, and it’s a way of giving me a chance to hear the whole talk.