A very short post about F2P

Read Daniel Cook’s post about the “Free 2 Play” misnomer. My thinking has been along the lines of GAAS, but the question is: will creating the kind of hobby/service Daniel talks about require procedural generated content?   Minecraft is obviously a hobby and a GAAS (with a single payment).  An MMO like World of Warcraft is obviously a service.  However, Mojang got lucky and MMO’s are very expensive to make.  What is the minimum viable content volume for GAAS?  And how do small game companies put out the content needed to be a service?

Or is my basic assumption, that GAAS means content updates, faulty?

Can a small company crank out enough, say puzzle games, to form a service?  Would it have to be some kind of open world?  At what point is there a critical mass of games to move from a ‘Fremium’/’Free to play’ model to a service model?  It would be interesting to find out.

Games As A Service

So really who wants to title something GAAS?  I’m sure the SAAS people had enough fun with that acronym.  Then again a company called Valve created a service called Steam.  So I suppose GAAS fits oddly well in this system of tubes we call the internet.

Valve predicts big things for GAAS…  But so what?  Not only does it seem inevitable in the future, it seems that way now.  But there may be a bump in the road.  With cloud computing services from Amazon failing on Monday, it seems like there is still work to be done on this cloud idea.

I’ve talked about the minecraft business model before, and it looks like some folks have been putting that into the ‘GAAS’ category.  This is something that I had not previously considered and seems like a correct categorization to me.  But I’m a still little hesitant.  What do you think?  Is Minecraft a GAAS?


…Oh yeah.  SimCity.  I remember playing that as a kid.  RCI, Roads, and water pumps and electricity.  I remember all that, it was very enjoyable.  My brother (the political communications major) LOVED that game.

Reddit brought this video to my attention last week.  Over many versions SimCity became more and more complex.  It looks like they have finally started reducing complexity.  Especially when it comes to power, water, and roads.  They are all simplified into one system.  Instead of forcing you to lock yourself on to a preexisting grid, the system zones automatically based on the weird roads you draw.  Looks awesome.

Good thinking EA or Maxxis or whoever’s making this game.  Now, will it be on Steam?  #wishfullthinking

Diablo 3: RMAH. Are there Buyers?

Personal stuff

Diablo 3 RMAH fact and speculation after the jump!

Having passed series 6 and series 63 the Commonwealth of Massachusetts says that I can sell people investments in mutual funds.  However, over the past 6 months I’ve learned that working on comission is not for me.  So I’m looking to work for New York Life Investment Management in Customer Service.  Fortunately that job requires series 6 and series 63 licensing.  My future and the future of this blog is unknown.  At this point it’s a waiting game until NYLIM goes through the interview process.  Until then I have a few clients that need some financial goods and services to tide me over.

From a game design point of view, a small Ma game development company likes one of my game concepts, and wants to work on it.  This is a loose deal, but means actually making a real game prototype with someone who knows what they’re doing.  I expect no profit from this, but look forward to starting a real game and giving it a go.  (Well another go).

So in the past year I’ve started two businesses, and two businesses have failed.  This is encouraging.  At this rate I’ll be a successful entrepreneur in 2 years (or 4 more failed businesses, which ever one comes first)!  What better way to celebrate then with some speculating in Digital Goods!  Maybe D3 can be business #3.  That brings me to Diablo III!

Diablo 3

The real money auction house went live yesterday, and I jumped right in.  Having been fortunate enough to find a legendary item, Devil Tongue, there was something worthwhile to sell.

Here is my particular version of the Legendary.

Here is a shot of the auction house itself (click on the image to open a larger version if you cant read it):

Mine is the highest DPS Devil Tongue in the auction house (116.8 DPS $60 min $75 Buyout)!  Which is rather lucky.  You can see that others have lower DPS but have buyout prices as high as $200 (they were there first).  It was tempting to price it as such.  That would be a nice payout, but my pricing strategy was to severely undercut those prices, to make my auction more liquid than the others.  On the first day a lot of people are asking for a lot of money…  But it hasn’t sold yet.  So we have no confirmation that people are willing to pay that much money.  We don’t yet know what the market is willing to bear.
Secondly I paid $60 for the game.  My realistic goal is to pay for the purchase of the game.  So I am happy with anything over $60.  Besides I have a second legendary item ready if this one sells!  So no reason to be greedy.  I plan on putting every legendary found up on the RMAH, and everything else on the gold AH.  So far searching the Gold AH for more items to sell has not yielded any results, but at the end of Day 1, it’s too soon to really tell.
/r/diablo has comments stating they are willing to pay real money now for good gear.  It would be great to see some proof of this.  However, that list hasn’t really moved much.  There has not been a lot of churn…  Which most likely means a flat market (few buyers).  If this is the case, items may need to be re-posted for a while until buyers get the cash together to step up.
The Diablo RMAH or Gold AH will in the end function like the WOW economy, while resources are scarce (before people play for 12 months) goods will fetch the highest prices.  Ultimately the value of digital goods is a function of the number of people mining and the number of people willing to buy.  Right now $200 bucks for a level 42 sword is most likely not in the realm of possibility for the average player.
It would be super hard for the Diablo 3 player base to increase over time.  It would be even harder to convince the player base to pay more for digital goods.  Therefore now is the best time to be asking high prices for things.  There will never be a better time then today (the day after it opens) on the D3 AH (of any kind).  The WOW AH taught us that digital goods always get cheaper over time, until there is a change in value based on game updates.  In this respect game updates are like earnings expectations in the real world.  You have to pay attention to them.  Even though they are dense, and technical and hard to figure out how they change things.
There may be other factors as well.  For example, people may not have saved enough money yet to want to buy stuff in game.  They may be trying to sell smaller items and save up to buy larger ones.  Maybe the market needs to grow a little before buyers step up?


So what do you think of my strategy?  Was it foolish to ask for so little?  Was it foolish to ask for so much? (It was. Click the link for day 2 of my RMAH experiment)  Should I get my series 7 and then reevaluate these as speculative stocks?

Valuation in Empire Avenue. Or How to make money in Empire Avenue.

In case you haven’t seen it yet Empire Avenue is a game, played like a stock market.  Check out my first impressions of the game.  Each stocks value is derived from two things.  The number of your shares other people purchased, which I mention first because in this post I’m paying less attention to.  Second the activity of the social media accounts attached to your ticker symbol.  When you sign up you tie your twitter account, Facebook account, YouTube account, and other social media into your EA account.  The game measures your activity on those accounts, and bases your stocks value on that activity.

This game is a neat tool which has been helping me get better at social media.  It just so happens that I’m a bit new to twitter (see below), and am not in the habit of tweeting regularly.  But I have real world goals that I want to meet, and being better at social media helps me reach those goals.  For example getting people to read this blog and click on ads.

A real world company derives its value from the Balance Sheet Equation.  It’s really way more complicated then that, but this is a generalization for folks who are not Business Majors, or Chief Financial Officers.  A ticker symbol on Empire Avenue however is valued by the sum activity of the various accounts you attach to it.  Here we have a pretty picture of my Twitter activity.  You can clearly see how my twitter activity adds into my overall valuation.  You can also clearly see that I do not have many followers on twitter.  😉

Retweets btw are other people retweeting my stuff.  Not me retweeting other peoples tweets.  Took me a good week to figure that out, during which I was doing a lot of retweeting.

I use a Twitter account as a starting point for determining the value for one very important reason.  EA tracks twitter activity for people who have not joined the game yet.  It does not track information for Youtube, Facebook, Flicker, etc unless the owner of those accounts joins the game, and attachs them to their EA account.  This represents a tremendous advantage to twitter accounts.  As well as a huge opportunity.

The calculation seen above is run on every twitter account Empire Avenue see’s.  Which appears to be all of them.  Once you join the game EA displays a list of all your followed twitter feeds.  At the moment far more of them are going to state they they are not playing EA, then are playing EA.  The game ranks and values the twitter accounts.

With one exception that I just discovered.  If you use the Facebook Empire Avenue app, you can purchase shares in Facebook accounts before they start playing Empire Avenue.

Once a player joins EA, then others can buy and sell shares of the twitter account, plus other social media.  This brings the irrationality of humans attempting to buy good deals and sell bad deals.  In other words their share price is no longer a measurement of how active they are on social media.  It becomes subject to the whims of humans.  Which brings volatility.  There are many people on EA who are making Eaves by capitalizing on this volatility.  Or using buy back strategies.  Which are both good strategies, just not one that I want to add to the conversation.  I want to add another tactic to the arsenal.

I’m going to use the term “Fundamental Value” in future blog posts to refer to the portion of someone share price which comes from just their social media activity.  Your “Total Value” is the Fundamental Value plus every share bought by your shareholders on EA.  The Total Value is going to be subject to the whims of the market (ie the opinions of the people out there) while your Fundamental Value is not.  Hence the neat sounding name I have coined for it.

When making your first purchases on Empire Avenue I recommend finding the twitter accounts of people that you know who are not playing EA.  You are buying them for the fundamental value of their twitter activity.  If they happen to start playing, their share price will go up simply by adding additional accounts to the game.  Initially you should buy those twitter accounts who you know have a vested interest in continuing to tweet.  Those who rely on social media, or have built their own business on it, for example.  Avoid purchasing those people who just lurk on twitter.

This should give you a solid base of dividends with which to branch out into people whos’ behavior is riskier.  If you give this strategy a try, let me know how it work for you!  I would love the feedback especially if we can put some numbers on this idea.  See you on EA!

Zynga needs more friends in its social network.

Some interesting news today about Zynga, just after yesterdays post about Friendster becoming a social games platform.  Apparently they are completely dependent on Facebook.  Not only has Zynga won Facebook, but they have been captured by FB.  This is exactly the kind of thing that I would worry about as an investor.  Single platform dependence is a big problem.  Anything from a temporary interruption to a permanent change in policy on the part of FB could effect Zynga’s ability to provide it’s games.  That dependence should worry investors even if they feel that FB is 100% reliable.

If I were looking to invest in Zynga I would want to see a comprehensive plan that explains how they are going to get themselves off a Facebook dependency ASAP.  Just because Facebook has become my main personal social network does not mean that making it the sole foundation of a companies future is a good idea.  (Only because I don’t have a Google+ invite yet)  Diversification is important to investors.

This does shed light onto yesterdays post.  Zynga has huge incentive to ‘play nice’ with Friendster.  And Viximo for that matter.  This can act as a test of Friendster…  Managing a relationship with Zynga could really provide a lot of information about how smart the folks at Friendster are.  Knowing that Zynga has no other social networks under it’s belt shifts the balance of power to the networks.

Zynga has an incentive to love and support (and maybe even provide money to) anyone that can help them break dependence on Facebook…  Er…  “Grow the user base” (That sounds much more friendly).  Does Zynga work with Viximo?  Hmm.  Maybe they should get in contact.  Zynga needs to add Friendster, Google+, and Viximo to it’s ‘social network’.

Friendster = Social gaming platform? Wha?

This is interesting news.  Friendster is relaunching as a social gaming platform.  They have quite the challenge ahead of them.  Ultimately any ‘social media game’ has to compete with users of Zynga’s products (Cityville, Farmville, etc).  Tadhg over at whatgamesare.com made the point that Zynga won Facebook, and they did this by being a really smart company.  To compete Friendster would need to bring something to the table that Zynga can’t provide.

Or maybe Freindster isn’t trying to compete with Zynga.  Maybe they are trying to provide a new platform to Zynga and get some cash by putting new faces in front of Z’s games.  This puts them into the old position as trying to provide something new that Facebook can’t.  Viximo already plays in that space and is capitalizing on putting games everywhere that Facebook ins’t.  We Americans tend to forget that there are some really big social networks out there which are not run by Zuckerberg. And Viximo has a big head start on taping that market over Friendster.

All this just as Google+ is happening?  We have no idea what the impact of Google+ will be on social gaming.

In any event, it seems Friendster has a real challenge ahead of them.  They are trying to solve their own problems by playing in a highly competitive space and just may be positioning themselves between a good number of rocks and a couple hard places.  The mantra of any company that wants to make money is “Find out where customer pain is, and remove it”.  I’m not sure there is pain that Freindster can remove, or at least I don’t see it yet.  Maybe you smarter folks can point out to me what I’m missing in the comments.