Mass Effect 3 short review

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I spent the weekend rushing through Mass Effect 3. The game is quite well polished from a production stand-point, though I was irked that one side quest was buggy. The ending generated massive player backlash, for very good reasons – I won’t go into details here as there are already excellent analyses elsewhere. In short, the production quality dropped off a cliff during the last 15 minutes of the game – it felt very tacked on and had numerous plot holes.

The remainder 99% of the game was satisfying. From a narrative point of view it felt closer to the original than the sequel – it was “epic” in thematic dimensions and there was constant tension (my main objection against the sequel was that the narrative of building out a team of diverse personalities – while all the characters were very interesting individually – felt like a cheap plot device to add 15 hours of gameplay). The entire universe was in peril; even against this backdrop, different civilizations were pursuing selfish goals and there were multiple conflicts across galaxies; you, as the central character, could choose to defuse these conflicts and unite the species against a common enemy (and you may succeed or fail depending on your choices).

The most interesting take-away I have about the game, is the unique immersive experience a video-game can provide, as opposed to other forms of media (such as film), and how it could leverage and expand on narrative techniques commonly found in films. There are a couple of really powerful moments in Mass Effect 3 – spoilers ahead – that demonstrate fully the power of the medium.

My favorite scene from the game is involving a side character, Mordin. Mordin is an alien (Salarian, to be precise) scientist introduced in Mass Effect 2, who speaks in a rapid fire monotone voice. He represents a strict utilitarian world-view, and is responsible for causing a disease called the “genophage” which made another hostile species, the Krogan, largely infertile – he sees this as an elegant solution to solving a complex problem. Over the course of the narrative of Mass Effect 2, his character development involves a side story where he discovers research that could cure the genophage, and it was up to the player’s choice how that data was used. Regardless, during this side story Mordin’s character evolves as he sees the damage that the genophage has done to the Krogan civilization, and he begins to feel remorse (while not necessarily changing his utilitarian view on the goals).

Mordin also serves as a source of comic relief within Mass Effect 2. His intentionally monotone machine-gun speech is always funny to listen to, and players could also unlock the following if diligent with engaging the character in dialogue:

In Mass Effect 3, the player is rewarded with a very dramatic scene that builds on top of these previous player investments. One mission provides closure to the genophage side-story, allowing Mordin (if the player chooses to do so) to cure the genophage and give the Krogans a renewed future. However, in doing so Mordin has to make a personal sacrifice, and during the climactic scene he quietly hums the song uncovered in the previous video:

Many a player have been quoted as crying when they first witnessed this scene. The beauty of the narrative here is that it is not only strong from a passive, cinematic point of view (the cutscene is well edited and can rival similar scenes in films and TV); but it is all the more stronger because the player’s interactions with the game led up to this point. The player interacted with Mordin, and got to know the character; there is stronger emotional investment than what is ever possible in film (which is all passive).

And of course, it is all the more intriguing that the player could, through a different set of choices, avoid this scene from happening. This to me was one of the best demonstrations of the power of the interactive medium, and the highlight of the game.

“Open” vs. “Closed”, another example

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One of the beauties about the world of high tech strategy is the complex relationship between contrasting business models. In business school, I learnt about two such pairs of core strategy choices: “open” vs. “closed”, and horizontal vs. vertical integration.

What is truly interesting about these contrasting choices is how they propagate (or not) throughout the value chain. In abstract terms, how does your suppliers’ decision to be more “open” or “closed” affect your decisions? How does it impact the strategic choices of the entire value chain? The answer is not always obvious.

The example our professor gave in school was ARM. ARM pursued a strategy that was both extremely “open” (any chip manufacturer could license it) and horizontal (ARM itself only offered architectural designs, it didn’t produce any implementations). ARM has incredibly high market-share at its stage of the value chain; Intel has a negligible presence in mobile to date. If we believe that “open” and horizontal can and will propagate through the value chain, then the mobile value chain should look exactly like the PC value chain – any consumer should be able to go to a hardware store, pick up a bunch of spare parts, and assemble his/her own phone. Instead, the most powerful player downstream in the mobile value chain is Apple, which many people would eagerly slap on the words “closed” and vertically integrated.

Without delving into why this is the case (that would be too long an effort in writing – essentially a review of the entire mobile value chain and analysis of the power dynamics among industry participants), we can perhaps summarize a law – “open” can be used to the benefit of “closed”, and vice versa. The same can be said of “horizontal” and “vertical”.

Taking this law, we can try applying it to a piece of very recent news. At the Mobile World Congress 2012 in Barcelona, Mozilla, one of the champions of Open on the web, announced a partnership with mobile operator Telefonica. The announcement is essentially the reveal of another mobile OS, one that is completely based on web technology (an analogy could be the Chrome OS for laptops). This announcement is interesting partly because of the open web standards angle, but also partly because of the direct R&D involvement of Telefonica (and other mobile operators). The second part is a hint for analysts trying to read the news – if mobile operators are not only supporting it but actually developing it, then there must be something for them in it?

This is where our newly discovered law comes in. No doubt some tech enthusiasts will jump at the words “open” and “web standards”. However we can safely predict that the mobile operators fully intend to use this web-standards based OS to strengthen their position in the value chain (whether they achieve that is down to execution). At a shallow level, any market share gained by this OS will counter the influence of Android and iOS; at a deeper level, direct ownership of the OS (as core contributors to the project) in theory allows operators to regain some control over the end-device and therefore the consumer – this could be related to system processes that relate to billing, as well as operator control over the app store. Let’s wait and see.

The other interesting thing, that just struck my mind, is how this impacts Android. Remember, Android is pursuing the horizontal strategy (a la Microsoft Windows), so any new OS that fragments market share is in general bad news. Not only that – Mozilla is going with a my “open” is more “open” than your “open” strategy here, which again brings in the topic of asymmetrical competition: Google theoretically is pushing Android to help grow its advertising business, but Mozilla is not in the business of making any money, period. So Mozilla could be pursuing exactly the same strategy as Android, without any hints of potential self-interest of bias. In that sense, it might not actually hurt Google as a whole, but it will be directly competing with Android. Now that’s another interesting thought… But I’ll stop here, since it’s getting late and I’m starting to go in circles…

Mass Effect 1 & 2: a design review

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Mass Effect is BioWare’s critically acclaimed space opera RPG series. It features original IP in terms of narrative, and in terms of core gameplay it also has made some very interesting design decisions.

Narrative

The series is much praised for its excellent writing. I’m not a huge sci-fi buff so I won’t dwell on this too much, but the series’ positioning of mankind as up-and-comers fighting for its rights in a mult-racial galaxy (its struggle to get acceptance into the powerful Council) is fairly refreshing. In this regard most of the praise belongs to the original Mass Effect. Another point of praise is the emphasis on player choice and consequence – players literally choose which characters live and die, making the narrative much more impactful and thought-provoking (do you save your loved one, or your loyal friend?).

In the sequel, from a narrative point-of-view the game takes a somewhat lazy approach. By setting the bulk of the story as a series of recruiting missions to build up your team, the narrative becomes a series of origin / character background stories. These are effective, and the characters are admittedly distinctive, but the overall story definitely pales compared to Mass Effect 1. There’s no sense of epic-ness in 2, compared to the historic struggle in the original, especially the climatical battle at the end of Mass Effect 1.

Gameplay

Mass Effect 1 is more conventional in terms of RPG elements. It is strictly single-player. It has a familiar inventory system, based on the characters’ various weapons classes, tools and armor systems. Players manage a team of 6 characters at max, and any given time the player can field 3 characters. Interestingly, characters that are not active are not punished; they level up along with the active members. This means there is less emphasis on prioritizing which team-members to develop (or make a choice early on regarding which characters will be used primarily). There is a class system in place, with unique skill-trees per class. This adds a lot of replayability to the game.

Combat is in real-time with a pause function to allow the player to setup complex tactics. It is in a 3rd person shooter perspective, and utilize cover mechanics. The game does not feature mana or any type of energy resource; there isn’t even the concept of ammo. Instead, special abilities rely on cool-down timers, while weapons can overheat if the player is too trigger happy. Another type of combat utilizes a moon buggy type of vehicle, which has two types of ammo and unfortunately has fairly awful controls.

Besides combat, there is major emphasis on dialogs, with players being presented various dialog options that affect the narrative. There is a moral system in place – performing heroic and just actions accumulate “Paragon” points, while cold-blooded acts that mainly focus on the outcome (the end justifies the means) accumulate “Renegade” points. Both Paragon and Renegade points unlock hidden dialog options, so while players could accumulate both (one does not offset the other), from a practical point of view the player should be consistent in one type of action. Thus the moral system also adds a layer of replayability to the game.

Besides combat, leveling up and collecting items, the game also offers character interaction in the form of romance. Romance is purely dialog driven – i.e. it doesn’t include a game mechanic where you increase the chances of romance by making a character active in duty.

In Mass Effect 2, BioWare made a number of interesting choices in reworking the gameplay. The inventory system is drastically streamlined, to the point where it is almost completely removed – players still manage different types of weapons, but they are not dropped by enemies nor do they have item quantities; instead, weapons are researched/discovered, and once you unlock one weapon, all characters that could use the weapon can equip it. Classes are also reworked, with condensed skill-trees – the typical character has about 5 spells to use throughout the game, with 1-2 of the spells being ammo modifiers (passive spells). The redesigned skill-trees also introduce a progressive points system – each spell has 4 ranks, and each higher rank costs more upgrade points to unlock. Upon unlocking the highest rank, the player can choose from one of two advanced upgrades – usually a more potent single target nuke vs. an AOE version of the spell. This again seems mainly aimed at increasing replayability, as there are more options for the player to explore.

From a combat perspective, Mass Effect 2 also took some cues from popular straight-up 3rd person shooters such as Gears of War. The cover system is less buggy, and combat in general feels more tense. The game also introduced a significant global cool-down timer, which means players could no longer spam spells in rapid succession. The health bar now auto regenerates if you stop taking damage, which again is taking cue from popular shooters.

Mass Effect 2 removed the moon buggy vehicle, while injecting a few new alternative game modes. There are two mini-games positioned as computer hacking in the game, and both are based on finding patterns. Another mini-game revolves around the collection of resources, which is done by scanning planets for minerals using a radar and collecting minerals when the scanner picks up a strong signal. The resources are used for tech upgrade research, so they are significant, but that also makes this mini-game tedious. In general, these mini-games seem positioned to balance the pace of the game – a small break in a long combat mission, or a break from progressing the story while just scanning unchartered planets for resources.

For die-hard RPG fans, Mass Effect 2 will feel like a hybrid game. It feels more like a 3rd-person shooter with strong storytelling, especially when you run the game at normal difficulty and usually don’t need to pause the game during combat for tactical micro-management.

Criticism

Mass Effect 1 definitely suffered from some bugginess in terms of its combat. Players could get trapped entering / exiting cover. While 2 made some big progress in this regard, the 3rd person shooter angle still meant that in the heat of the battle it was common to lose track of where your AI team-mates were – and since the combat is based on tactical management and team composition matters (e.g. you want to effectively send in your tanky team-mate to soak up damage), this meant combat still is frustrating at times.

Also, in both 1 and 2 the game relies on dialog to progress character interaction (namely, romance and additional backstories). This became fairly mechanical and repetitive as the player learns he needs to visit the support cast scattered around the spaceship after a couple of completed missions if he wants to unlock new dialog. A better way would be to have such major developments embedded in missions.

Another criticism is around UX. This is a minor point, but on the PC I expect to be able to double click in menus; yet the series forces me to click the respective “select” buttons to confirm an action. This becomes increasingly annoying as time progresses.

The Legacy of Steve Jobs

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Like most people interested in technology and business, I picked up a copy of the Steve Jobs biography by Walter Isaacson. It is a good book and will mostly satisfy any outsiders’ curiosity at the man’s life, his idiosyncrasies (there were many), his faults and fallacies, and his achievements. What I want to talk about here is his legacy.

He was not a perfect person

FIrst off, and just to clear the discussion, Steve Jobs was clearly not a perfect person. He had many issues. He was a jerk a lot of the time, to a lot of people. He liberally took credit for other people’s ideas. If you hated him before, the book will not change your opinion of the man.

But he also had many strengths. He was a natural marketer and negotiator. He was diligent, and learnt through his failures to be a great manager. And of course he was a visionary, in the truest sense of the word. This discussion, however, is not about how much I admire him (or not), but what I took away as key lessons from his endeavors.

“Open” and “Closed” are both valid choices

One of the most straightforward take-aways from Jobs’ work in the past 10 years is that vertical integration remains a valid business model. Tech fans like to frame this debate as “Open” versus “Closed”, and associate all kinds of philosophical and ideological meaning with it; and clearly Jobs himself had some ideological bias towards “Closed”, but at the end of the day, they are both perfectly valid business choices.

As my favorite business school professor likes to say, no company is 100% “open”, nor is any company 100% “closed”. “Open” and “closed” are a set of strategic trade-offs, just like any strategic decision is. For Apple, “opening” up their platform, such as allowing other hardware vendors to make Mac clones (or iOS clones), clearly has major pros as well as cons. The question is does the trade-off fit with the broader set of strategic choices the company has made – in Apple’s case, “opening” its software platforms clearly contradicts with its vertical integration strategy, and causes it more harm than benefits.

Even Apple itself provides a great example of why sometimes it might make sense to go the other direction. Jobs strongly resisted porting iTunes to the Windows platform. His argument was that by bundling iPods with Macs via the iTunes software, he could lead to additional sales of Macs. This argument had some merit, but it also was clearly inhibiting the growth of iPods as an individual product category. In the end, Jobs was smart enough to be pragmatic and allow his team to develop iTunes for Windows – “hell froze over,” as he would say.

This pragmatism, and the realization of “open” and “closed” as trade-offs (rather than which is better in an absolute sense), is extremely important, as an organization would otherwise be limiting its own strategic direction. For example, we should not be at all surprised if after the Google-Motorola deal is complete that Android becomes a much more “closed” offering.

The (revised) 80/20 rule – the 20% that makes a product “insanely great” takes 80% of the time[1]

One of my main revelations from the biography was just how hard it was to get something perfect. For example, it was a ridiculous amount of work for Steve Jobs to get the music labels onboard with selling their music on the iTunes store, and this had little direct relationship with the sales of iPod hardware. But Jobs believed, correctly, that making the entire user experience with mp3s as painless as possible would reap great rewards in the long run.

It was certainly eye-opening to me to see how difficult it can be sometimes to make progress on the smallest things. To execute against a simple strategy, such as “get publishers to launch their books and magazines on the iPad,” it took Jobs and his senior team countless pitches and meetings.

As most companies don’t spend the 80% of work it takes to get that last 20% right, they often look at what Apple has been pulling off and see magic while showing disbelief. That was the industry’s reaction when Jobs pulled off the music label deals for iTunes. That was the industry’s reaction when he announced the iPhone. And clearly, almost two years after the iPad was announced, competitors are still “flummoxed” in terms of a response.

Focus is key

A corollary of the previous point is that focus is critical. (Larry Page should take the advice that Steve Jobs offered him very seriously – focus on five products.) From a management theory perspective, this is nothing new, but few organizations are as relentless as Apple is at its execution.

Apple’s entire product portfolio can be laid out on one table. It is only because of this, that Apple’s senior management can have enough time to make each one of those products great as opposed to good.

On the flip side, the inability to focus is also why incumbents give startups opportunities to establish a foothold in the market. For example, from a pure strategy perspective, there are few reasons why Facebook cannot completely own the mobile check-in space (Foursquare), or the daily deal space (Groupon), or any of the other hot social trends. Or, in the case of Google, why they cannot completely shut out Kayak, Yelp, or any other vertical search providers. Yet both Facebook and Google clearly haven’t been able to do so. Leaving aside many other factors, the 80/20 rule above is one major explanation.

If Facebook focused exclusively on check-ins, or if Google focused exclusively on one or two search verticals, there would be little that these hot startups can leverage to compete. But focus is hard because it means saying no to incremental growth opportunities and leaving money on the table. And when a company feels it is invincible it is hard to say no. It took Steve Jobs ten years in the “wilderness” and Apple 90 days from bankruptcy to realize how valuable having a focus is.

The organization is his greatest legacy

The last revelation I had from reading the book is still to be proven, but it could be the most profound. During Jobs’ second stint at Apple, he had a clear vision that went beyond building great products and making Apple the best technology company globally; he wanted to build a lasting organization.

Ironically, one of the biggest criticisms that people have for Apple is that it is a one-man show. And over the years investors have continually undervalued the stock because of this. Steve Jobs certainly didn’t help himself in this regard, due to his inclination to take credit (as the book showed, Jony Ive was at times deeply unhappy about not getting enough credit). But consequentially this may also make it all the more magical when people realize what a lasting organization he has built.

What is magical about Apple is not its products. Its products are the output of a process, and it is that process (and the organization which embodies it) that is magical.

Wait, critics of Apple say, just wait until it has a flop – Apple is so hit-driven that all it takes is one flop. Interestingly, people said the exact same of that other Steve Jobs creation – Pixar. Pixar has defied all conventional wisdom in the film-making industry, by making hit after hit after hit after hit[2]. Pixar’s process of creating its products has already become textbook material.

Apple’s process is just as powerful. It is a process that defies conventional business thinking (“open” trumps “closed”?); it is a process that combines a passion for perfection with a relentless focus; and it is a process that goes beyond the influence of any individual[3].

Obviously, the jury is still out on this one, but I have plenty of confidence that Apple will continue to surprise and delight us, for many years to come. This will be the biggest test of Jobs, and it will be by far his biggest legacy.

[1] Indeed, this is perhaps the counter-definition of 80/20, as many companies would make it a strategy to be content with achieving 80% greatness with 20% work, in the name of efficiency.

[2] Granted, Cars 2 looks uninspired, but I will not pass more judgment as I haven’t seen it or the original Cars

Regarding Amazon’s Kindle Fire…

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There’s only a few things I would say.

First, Google, not Apple, should be very, very concerned about this development. Amazon has basically taken Google’s engineering resources / output and said “thank you for your free work, we’ll take it from here.” How many times did Amazon mention Android in the device description? Does the device look at all like an Android device? Does it offer any Google services by default? Will Google have to pay to be the default search on a tablet that was designed using Google software (think about the irony in that)?

Second, this leaves most other tablet vendors still scratching their heads about what to do, and this is the best example of asymmetrical competition. I would elaborate, but John Gruber had this excellent paragraph from his post that sums is nicely already:

Attack from a position of strength. Build on your previous successes. That’s what Apple does. That’s what Amazon is doing here. The other guys — the Samsungs, HTCs, Motorolas, RIMs — can’t match Apple’s hardware design, don’t even try to match Apple in terms of original and differentiated software, and struggle to match Apple’s prices because they don’t have the economy of scale advantages Apple does. Those guys can’t match Amazon either, because they have no content to sell. Amazon can give away the razor because they’re already in the business of selling blades. The other guys don’t even have blades to sell.

Can Chromebook be more than a “noble experiment”?

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David Pogue’s review of the new Google Chromebook hardware by Samsung calls it a “noble experiment”. The question is, can Google’s Chrome OS ever be more than that?

For one thing, if hardware vendors and distribution partners find consumer interest lacking, Google will have to sweeten the incentives for them to keep churning out hardware and pushing it through retail. Pogue’s review does a very good job summarizing the current issues with the offering, which will likely tank sales; the bigger question is whether Google’s philosophy and vision with Chrome can materialize in the broader ecosystem – that is, a browser as the OS paradigm of computing. This seems quaintly a very desktop centric view of the world; with all kinds of mobile devices gaining broad adoption, why should we continue to expect the browser at front and center of how consumers access the Internet?

There is no destined outcome in terms of the “native” versus. “browser” “war”; this is dependent on how the players in each camp fight for ecosystem support and consumer adoption. And that’s where Google’s own hedge against Chrome – Android – is the second major factor against Chromebook’s potential. The managers running Android and Chrome will probably characterize their respective businesses as in a “friendly competition”; however, when they are competing in anything from internal engineering resources, corporate budgets, to external hardware partners and developer support, it shouldn’t be a big surprise that outsiders will see a lot of conflicted messages, and therefore question the strategy.

Count me a skeptic.

What if Apple launched a TV?

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First off, a hat tip to the Apple Finance Board, which if you don’t know already, is home to the best Apple analysts, people whose forecasts routinely beat Wall Street “professional” analysts. A thread on that forum inspired me to think about this topic over the past few days.

The original topic, simply put, is what’s next for Apple? What’s the next product category for Apple that can generate >$10bn revenue a year (like the iPad will easily do this year)? Many people would suggest TVs as a potential category. The living room is at the heart of the digital convergence, and many vendors from different product categories are vying for control of the “smart living room” – TV manufacturers (Sony’s Google TV, Vizio’s Internet TV etc.), cable operators (their set top boxes), game console makers, Internet streaming device vendors (Roku, Boxee, Apple TV), and the niche HTPC makers etc.

Google made big waves last year with Google TV, however their high-profile efforts quickly hit a wall. Of all the current offerings, I think Microsoft is best positioned with its Xbox 360 + Kinect. The Xbox360 already supports many of the features that Google TV boosts, such as Netflix, Facebook and Twitter (the latter two not necessarily that useful, but Netflix is a killer app), and furthermore it has an entrenched install base. The value-add of another box, which offers some overlapping features, is not strong; and from a user experience perspective, adds more complexity for the consumer – another device to hook up to the TV, more cables to sort out etc.

Under such competitive dynamics, it is arguable that to make a big play in the living room, the TV itself is the most strategically valuable product to launch. The TV is the center piece of the living room and the only piece that cannot be displaced (VHS recorders came and left, DVD players came and will leave soon etc.). It is usually the first remote you reach for and the first device you turn on (although in the US it has been hijacked by the cable set top box). The TV offers a strategic point of control on the whole living room – to access your console, your DVD player or your cable, you need the TV remote. Launching a successful smart TV gains you control of the entire living room, and make all other devices your servant.

Strategy-talk aside, what should the features / benefits be for this “real” Apple TV?

  • At the minimum, it should be an iOS-powered device and supports apps. This gives the product great extensibility in terms of function, and killer apps such as Netflix / Youtube should be available (or even preloaded) at launch.
  • In terms of hardware,
    • Built in DVD / Bluray drive, opening on the side (just like the iMac)
    • If feasible, built in cable tuner so consumers can throw away their set top boxes – this is both about strategic control and simplifying the user experience (getting rid of the cable remote)
    • Large storage to record programs / store apps, photos etc.
    • Wi-fi connectivity
    • lots of USB / HDMI slots for connectivity to other devices
    • Optional components could be card readers etc. (similar to iMacs)
    • And obviously a large shiny LCD…
  • In terms of UI,
    • It should support great customization in terms of managing screen real estate. Users should be able to have multiple apps and channels open in a wide range of display setups
    • It can have some simple remote, but users should be able to control it via whatever iOS or Mac device (similar to how you can control you comcast cable using the iPad)
  • In terms of fancy / advanced features,
    • TV streaming to other iOS / Mac devices – iOS / Mac devices can open a “TV” app and use the device just like a regular TV screen
    • Interaction among iOS/Mac devices – you can send whatever app you’re displaying on your iPad onto the TV, and vice versa. This leads to interesting use cases like taking whatever channel / show you’re watching on the TV onto your iPad, and carrying your iPad into the kitchen or other rooms and keep watching
  • Gaming, which may be where the real value add is (disrupt the console business)
    • TV also functions as a capable iOS gaming device (have to evaluate the costs associated)
    • Again, interesting interaction use cases with other iOS devices – use your iPhone / iPod Touch / iPad as the controller; when playing multiplayer games, say Scrabble, the TV serves as the common display while each player sees player specific info (in this case, their letters) on their smaller iOS screen

Obviously I have not evaluated feasibility (would it be prohibitively expensive? How much software development is needed?), but I’d say the above features are not too far-fetched. The really big question, or missing piece, is if and how this TV disrupts the current content value chain (that’s where Google TV stumbled). Figuring out the content piece is the key to unlocking value; the product I listed here is not disruptive in this regard.

I would love to hear any thoughts and feedback.

The flaws to Google’s Android strategy

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Kyle Baxter has written an excellent post dissecting Google’s Android strategy. On the whole I agree with most of his analyses, but I would like to point out what I see to be flaws in the strategy. I don’t claim ownership to all of the following; a lot of it was covered in the “Strategy for IT Firm” MBA course I took last semester at the Haas School of Business, UC Berkeley.

It’s true that Google has a strategy of commoditizing adjacent markets to turn them into ad-based businesses, which falls into its sweet spot. Many of Google’s most successful products besides its core search are of this nature: email, maps etc. GIving away Android for free is certainly commoditizing the mobile handset market: of the 300k daily activation number which Google touts, people speculate a large portion are what analysts traditionally call “unbranded” or “other” phones. In general this conforms to Google’s strategy; however, the flaw here is that in my view Android is disrupting other branded manufacturers like Nokia / Samsung / Motorola far more than it is challenging Apple and iOS devices. In other words, it may appear that Android is mainly a counter to the iPhone, but in reality it is killing Apple’s main branded competitors.

Allow me to expand on this point, because it probably appears counter-intuitive. Before Android powered smartphones hit the market, Apple was certainly in a league of its own with the iPhone. While it was rapidly capturing share of device profits (the famous 5% unit volume – 40% profit share charts), the incumbent device brands – Nokia et al. – still had the comfortable mid to low end market volumes, which would give them time to develop competing OSes. Now along comes Android, which, while it gave them a quick boost in terms of time to market of credible iOS challenger devices, also opened the floodgates to a whole range of unbranded competitors. These new comers – Huawei, ZTE etc. – play the same volume game as Nokia / Samsung et al. And we know so far Samsung / Motorola have not drastically reversed their financial performance thanks to Android – so what’s the next possible scenario? Would it be possible they continue to slip in unit volume, and be weakened further at the onslaught of the Android clones?

At the same time, I think Apple is sufficiently differentiated from the unbranded players  in terms of value propositions (very different consumer segments), so the Android clones do not pose a significant threat to Apple.

The flaw here is that Google did not limit who could use Android – a complete lack of platform control. If Google’s strategy does indeed include undermining Apple, it should have limited Android to a handful of brands, so they could compete effectively with Apple. Furthermore, I would also argue that Apple’s primary issue currently is not Android, but its own supply chain and distribution restrictions (e.g. AT&T exclusivity). The big fanfare of Android activation numbers have done little to stop iPhone stockouts all over the world – in China where the iPhone 4 is obscenely priced, supply is still tight. Admittedly I don’t have conclusive data on iPhone supply constraints – but if we take this assumption as true (and there are certainly indicators and proxies in favor of this), it would show that Android has done very little to halt Apple, and is causing far more headaches to Samsung etc.

The second fundamental flaw is that going back to the original strategy, carriers still stand in the way of Google’s profit realization, if and when the mobile devices are completely commoditized (the death of Apple and RIM). Mobile network operators have far greater influence over consumers than wireline operators – in most cases, people choose a mobile operator first before choosing a handset (Apple being the prime exception / disruption), whereas you choices over which wireline operator and which computer brand to buy are completely separate decisions. Because mobile operators “own” the consumers, market power dynamics dictate that Google cannot expect to extract substantial profits. I know this sounds abstract, but until Google can demonstrate to operators that “I can make your customers leave you for another operator”, operators could and should squeeze mobile advertising profits out of Google. Again, Google’s lack of control expedites this – Verizon can sign up Bing as the default search on its phones etc, but there also are many other ways to play this profit squeezing game.

Of course, Google could hope for a “Wintel”-like end-game, where they dominate the OS space and split the spoils with the operators; but operators can foreclose that outcome by actively playing one OS off another. I’m sure strategists at the operators are already plotting this out, and I wouldn’t be surprised if Nokia, which has long been an outsider to the US market, is called in by the operators to facilitate a bigger and better OS war.

Starcraft 2 and the e-sports eco-system, part 3

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In the third post of this series, I want to discuss how Starcraft 2 is interrelated with web social media.

The original Starcraft was born pre Google, blogs, and of course Youtube and Facebook. Starcraft 2 was developed through the years of the web 2.0 scene. This led to both in-game designs that incorporate web 2.0 (Facebook integration with user accounts), and more broadly, community developments that heavily utilize social media innovations.

Not all the community building is done by Blizzard. There is the obligatory Facebook fan page and Twitter account, but I wouldn’t say Blizzard has done an outstanding job at either (50k followers on Twitter is nothing to boast about, I’d say). What’s really interesting is the self-motivated and extremely enthusiastic gamers who are creating vibrant media content on top of the game.

For example, a number of “shoutcasters” have emerged as celebrities within the community (shoutcasting refers to live commentary on spectator video games, similar to sports announcers). One of the most famous such shoutcasters, Sean “Day[9]” Plott, even hosts a “Day[9] Daily” show, where he does hour-long shows announcing games and teaching strategies. Another shoutcaster, “HuskyStarcraft”, has quietly amassed over 100MM views on his Youtube account and has over 300k Youtube subscribers. He’s even branched off from pure shoutcasting to do the following parody music video, which has 3.5MM views:

Further more, gamers have strongly embraced streaming technology to livecast community competitions, or even just self-casting (where a player – usually a very good one – casts himself playing Starcraft 2). At any given point in time, video games are generally some of the top-viewed content on Justin.tv, ustream.tv and livestream.com. For Starcraft 2 fans, Teamliquid.net (the website of a professional Starcraft team) offers a convenient one-stop shop to see what streams are live at any time. Teamliquid also hosts a wiki site where players can view and document advanced gaming strategies. There have also emerged dedicated gaming streaming sites (own3d.tv), and dedicated Starcraft 2 casting sites (such as ragequit.tv, glhf.tv).

What I find interesting is that for sites such as Justin.tv and ustream.tv, which are usually popularized by pirated content (illegal rebroadcasts of live TV), gaming streams offer an attractive type of fully legal content. (Well, at least until the game studios start banning such gaming streams, which at least currently they are not doing as it’s free promotion for the games.) More importantly, such community media will strongly reinforce the popularity of the game, and help maintain its relevance. If Starcraft could last close to 14 years now and still be played around the world (a dinosaur of a game by video game industry standards), then Starcraft 2 could certainly hope for the same type of longevity with such community building.

Starcraft 2 and the e-sports eco-system, part 2

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In the first post in this series, I gave a very high level summary of professional gaming. In part 2, I will cover in some more detail the Starcraft 2 pro-gaming scene.

The Game

Starcraft 2 officially launched at the end of July this year, but really, gamers have been beta playing starting February of this year. Going further back, development was officially announced in 07, but had been in stealth mode since 2003 – making it a game 7 years in the making. That’s actually quite dangerous territory in video game development, since technology follows Moore’s Law – you may easily end up in vaporware territory like Duke Nukem Forever, the granddaddy of vaporware jokes. But Blizzard is probably in a league of its own, and has always been known for pushing back release dates. And if they think the game is going to flop, they just cancel it, which is why they have a perfect track record of hits.

Anyhow, the most interesting thing about Starcraft 2, from a content perspective, is in terms of the learning curve. For any Starcraft: Brood War veteran, the sequel is immediately approachable. I would say roughly speaking about 50% of the game is the same as before, in terms of buildings, units and spells, and even the hotkeys have not changed that much. So a Starcraft veteran can start playing instantly and feel very comfortable. But that’s deceptive, because the other 50% of the game which is new completely throws off the competitive play. Few battle-tested Brood War tactics still work in the sequel, and a lot more thinking has gone into the dynamics among units – which units counter which, which work well together. It feels familiar but it really is a new game – very well designed learning curve.

In terms of sales, Blizzard announced 3 million copies sold in the first month, which is a cool ~$200MM in terms of retail value. However, Starcraft 2 is not going to be beating video game sales (except for its own RTS category), since its tied to the PC platform (PC+Mac), whereas the mega box office hits (like Call of Duty Modern Warfare) are really cross platform on the Xbox 360 and PS3 consoles. Back in the day, RTS games have been ported to consoles, but they never really work out well in user experience – perhaps you really do need a mouse sometimes. It will be interesting to see how the new generation of input devices (Kinect etc.) inspires game development – can we see an RTS using a Minority Report type of input any day soon?

The Korean Pro Scene, and Blizzard vs. KeSPA

As said before, the biggest pro gaming scene is to be found in Korea, especially for RTS games. Interestingly, Blizzard used Starcraft 2 as an opportunity to regain control of the Starcraft “platform”. What had happened previously was that KeSPA (the Korean eSPorts Association) had been a driving force in pushing the commercialization of Starcraft in Korea, e.g. establishing the pro-leagues and handing out the TV distribution rights. Meanwhile Blizzard seemed to had taken a passive stance (it didn’t co-invest, but it didn’t charge licensing fees / royalties – it allowed KeSPA to use the game for commercial purposes, including TV broadcasting).

The growth of the sport in Korea probably surprised / delighted Blizzard, except for one thing – they weren’t getting any direct revenue from it. KeSPA had established such a strong control, to the point that pro-gamers needed licenses from KeSPA to compete in KeSPA competitions, and these licenses included some very restrictive terms (e.g.what types of commercial activities and matches the players could participate in, see this recent controversy over an exhibition match in Germany) – essentially, KeSPA was monopolizing the talent and therefore the entire market.

Blizzard saw Starcraft 2 as a chance to negotiate with KeSPA over royalties / licensing. Apparently the talks fell apart, and Starcraft 2 at one point got a “mature – 18+” rating in Korea by authorities (which people speculate as a retaliation move from KeSPA). Blizzard eventually struck a deal with GomTV, which seems to have had clashes with KeSPA before (the enemy of my enemy is my friend). One big implication, though, is that the best Brood War players will probably stick with KeSPA for a while, since that’s where the real money still is – although we have seen legendary players such as “Boxer” and “Nada” join the Starcraft 2 scene.

GomTV launched Season 1 of the GSL (Global SC2 League) in late August, and Season 2 is currently in full swing. Each season has a series of pre-season qualifiers, while the main season is a straight 64-player tournament. The total prize money for the 3 seasons planned this year is about $500,000. As expected, the tournament is dominated by Koreans, with non-Korean players collectively referred to as “Foreigners” – in Season 2, I think a total of 3 “Foreigners” qualified for the main tournament.

The Pro-Scene Outside of Korea

There are many semi-pro competitions organized via Battle.net globally, and players compete in the comfort of their own homes. The pro-scene has and probably always will be about big offline events (however Blizzard hampered that with the decision to remove LAN gaming from the game, which means even “offline” events are now actually battle.net gaming). In the US, the MLG (Major League Gaming) promotes a range of games (e.g. Halo3, Tekken 6) and has incorporated Starcraft 2 as of their Raleigh event in late August. In the recent MLG DC event, the top Starcraft 2 player walked away with $2,500, which indeed is exponentially lower than prize money of the Korean scene (and anyone can register, for $60, so not really a strong pro-scene). In Europe, ESL (Electronic Sports League) has incorporated Starcraft 2 into the Intel Extreme Masters competition.

To be continued…

In the next post, I’ll (finally) talk about the community and the social media related to Starcraft 2. Stay tuned!