Microsoft Continues To Lag Behind

It’s been a while since I even bothered thinking about Microsoft.  For the last couple of years, my brain has been solidly occupied with mobile, free-to-play, and games-as-a-service, categories in which Microsoft’s presence is neither competitive nor noteworthy.  I was aware of it when the Xbox One launched, but I didn’t care because there were no must-play games, no new experiences on offer that weren’t available before at slightly lower resolution with faster loads.  Instead, of spending hundreds of dollars on a new box to replace the box in my television cabinet, I bought a brand new iPad and upgraded to cellular service so that I could play online games no matter where I happened to be.  That is the world we live in now: always connected, portable, social.  The smartphone may not be the dominant medium for games, in terms of pure dollars, but it is the dominating metaphor of culture today.

However, I am (and always have been) a huge fan of the Rock Band franchise, and Harmonix as a company.  Going back to the original Guitar Hero, the fantasy of being able to play the music I heard and loved on the radio and getting to pretend to be a rock star was a joyous experience.  The novelty of the controllers provided challenge; learning the songs provided gradual mastery; and, the increasing complexity of play-patterns kept firing that learning center of my brain, my favorite part.  Plus, I could play with friends, particularly my wife, and while there was some competition, everyone was starting from zero and quite bad at playing, so the competition was good-natured and cooperative rather than cutthroat.

So, when Rock Band 4 came out, I finally had a reason to buy a new console.  Because I had invested so much in peripherals for Rock Band 3, I went with the Microsoft version, which meant a brand new Xbox One, and of course some add-ons like extra controllers, plug-and-charge packs, and the like.  All told, I probably spent over $500 so that I could play a $60 game.  I’m fine with that.  As someone who makes a living in this industry, I don’t begrudge the companies the money it takes to pay their people.  Setting up the new box took a certain amount of effort – running cables, connecting power supplies, synching controllers, etc.; it’s a lot more than what it takes to get up and running on a new tablet, but again, as someone who used to manually manage memory to get games to run, nothing unexpectedly arduous.

Rock Band 4 came with a box to enable legacy controllers, so I plugged that in to the one USB connection towards the front of the box, figuring I didn’t really need much else.  I went to synch up my Microsoft-brand microphones from the 360 and hit my first roadblock.  Even though the legacy box enables use of the older frequencies, these microphones refused to synch up.  This was confusing.  I grabbed one of my third-party guitar peripherals, and synched it up, no problem.  Hmm.  I wasn’t really interested in jumping into playing fake guitar; my wife really enjoys singing, so I wanted to get a microphone working.  So, I grabbed one of my gaming headsets, plugged it into the USB slot, and tried to use that as a microphone.  Of course, that didn’t work.  That’s not entirely surprising; after all, Microsoft sells its own gaming headsets, so I went to plug in my old Microsoft headset to the new controller, except that didn’t work because the plug is the wrong size.

By this point, I have spent over an hour trying to get this box set up to run the game, I have exhausted every type of microphone I have in the house, and nothing is working.  Resigning myself to having to go out and buy some extra peripherals to sing with the game, I gave up on vocals and focused on my favorite part: fake drumming.  One of the big improvements in Rock Band 3 was Pro mode, where you could actually pretend to play both cymbals and pads, so I had (over the course of several birthdays and Christmases) acquired an extensive fake drum kit.  I plugged it into the USB port, and I knew something was wrong when it didn’t light up.

That’s when I noticed that the controller for the drum kit was Xbox branded, just like the wireless microphones I had tried to use earlier.  I looked more closely at the standard Xbox One controller; while it had exactly the same number of buttons, and almost the same distribution, they had changed the icons on two of the buttons.  On a hunch, I grabbed one of my 360 controllers and plugged it in; sure enough, no luck.  Microsoft had obsoleted all of their previous peripherals.

Sadly, this is not surprising.  Everyone knows that Microsoft and Sony sell consoles as loss-leaders; they make up for it in licensing and peripherals (unlike Nintendo, which makes a profit on each console sold as well as licensing and peripherals).  No doubt, there was a spreadsheet somewhere that showed how much revenue they would generate based on a completely new generation of peripherals vs. implementing backwards compatibility, and sure enough, it must have shown that you get more money from selling things than from allowing users to use old equipment.

This is the old logic, the last-century thinking that is why Microsoft continues to trail the rest of the industry.  Yes, in the short term, you make more money by selling new peripherals.  However, you also make the cost of switching platforms more equal.  Instead of being tied to the hundreds of dollars I had previously invested, I now have no incentive not to return the Xbox One and all of its peripherals.  In fact, there is a cost advantage to switching to the PS4, because I can buy used and 3rd-party peripherals cheaper than new ones.  In today’s world, where everything is social, connected, portable, I have fallen out of Microsoft’s network because of this decision.  Not only do they not make any money out of me now, they won’t make any money out of me in the future.  I won’t advertise for their platform by posting social messages about the games I’m playing or my achievements within them; there will be no Twitch streams of me playing on my Xbox One or YouTube videos of me doing hilariously stupid things using their hardware.

Let’s be clear: this is not a hardware issue.  It’s not about hardware, and Microsoft understood that once (and used it to grab market share away from Apple).  The controllers have the exact same numbers of buttons.  The connections are USB (Universal Serial Bus).  Microsoft could patch backwards compatibility into their system through software updates.  They are intentionally forcing returning users to pay a premium for the privilege, and this is why they are losing ground.

Successful companies today know that the real value is not in hardware or software.  It’s not about content or format.  It’s about the network.  Having the user within your network means you have an opportunity to sell to them, to advertise to them, to mine their use patterns for valuable data.  Users outside of your network are dead to you.  Acquiring high-value users is going up in price every week, literally.  Facebook, Google, Tencent, these companies are growing their networks by buying entire sub-networks of users (Instagram, YouTube, Activision/Blizzard).  They are opening up their networks to more and more users, and developers, and content providers, because they understand that open networks grow and thrive at a completely different scale than closed networks.  Even Apple, the poster child for closed networks, relies on the open dynamic of the App Store to keep its users engaged.

Microsoft is trying to move from product to service – shifting their monetization model from one-time to recurring transactions – but they are missing the forest for the trees.  It’s not about boxed products on shelves.  It’s about connectivity, sociality, the dynamics of how people connect and communicate with each other.  Microsoft is losing the war of generational change.  Whereas they once benefited from kids growing up with computers (a whole new market of consumers), they are now fundamentally missing the generation that is growing up with Snapchat and Twitter.  Time is now their enemy.  They had a good run, but those who fail to evolve will lose to those who do.


RPG Dynamics and the Freemium Revolution

Josh Bycer just said publicly on Gamasutra something that I’ve been thinking for a while: RPG dynamics are spreading to all kinds of other games.  While I disagree with a number of his arguments about the specifics of this trend, it’s clear that it is happening.  RPG elements and dynamics are making their way into everything these days, from shooters (randomized loot in Borderlands, character progression in Call of Duty), to puzzle games (quests are now ubiquitous in online casual games), to action games (skill trees as a core character development dynamic), and even builders (quests, randomized loot, and stat progression).  The question is, “Why?”

[Aside:  I noticed a similar trend recently with AAA action games now including stealth: Assassin’s Creed always had some stealth in its DNA, but The Last of Us, and even GTA V had significant stealth components.  Stealth is not easy; to do it right takes a lot of polish on the AI, character controls, animations, and UI.  The reason why developers/publishers are making this investment?  My guess is that needing larger sales numbers, they’re trying to broaden their appeal by giving players multiple play-styles through which to experience their content.]

Oddly enough, I would argue that the rise of always-online gameplay goes hand-in-hand with the proliferation of RPG elements into other genres.  Sure, there are outliers (Puzzle Quest had a minimal online component and was arguably one of the first to really hybridize RPG dynamics with radically different gameplay), but most of this has happened in the server-driven world of the last few years.  I don’t think this is a coincidence.  As games shifted from shelf-filler to online hobby, they needed to extend the experiences that were available.  PvP has always done this for online shooters and strategy games (other players are endless content), so why did they start dipping into the RPG well?

In part, they needed to incentivize players to create accounts and use accounts that were tied to the always-online world.  Not only could you not reliably make RPG dynamics part of a sometimes-online, sometimes-offline experience (infinitely hackable) and maintain the competitiveness of your online world, it turns out that giving players carrots is a great way to get them to do things.  Again, shooters already had some tools here, with leaderboards and clans, but as games became services, every available way to hook the player and to wrap them up for as long as possible became a key element of competition.  Progressions in general, skill trees more specifically, and especially experience grinds serve the purpose of keeping that carrot dangling in front of the player’s nose – easy to see, but hard to reach.

The advantage of online communities for players is that endless PvP content; the advantage for developers and publishers is that in a server-secured world, every player has to pay.  When we published Titan Quest, we could look at our online usage statistics and spot that out of every 100 players (online only, single-player sessions didn’t get captured), 95 of them were playing with a pirated copy.  When I wrote about that online, it created a minor stir (mostly because someone mis-identified me as the CEO of THQ), but I also got confirmation from a number of other developers and publishers that they were seeing about the same rates.  I don’t think it’s random that the percentage of paying players in the free-to-play, freemium model is quite similar, at around 3-6%.

In fact, there’s very little that’s getting published anymore that isn’t in that server-secured model, and of those models available, freemium is definitely accounting for the greatest mass.  So, when you’ve got players online and you want to keep them engaged for as long as possible, where do you turn?  Why, MMORPG’s have been doing this for years!  RPG systems can be cheap and effective ways to extend content: give players the same gear, but with better stats.  Stick a new color on it, or a different particle effect, and it’s a whole new asset!  Scale up an enemy, give them a new name, and now you have a new enemy!  Give players an endless grind that nets them a 2% competitive advantage, and they’ll do it.  Particularly with freemium, games-as-a-service, if you can maximize player lifetime while minimizing production costs, you’re more likely to break even.

It’s a little more complex than that, of course.  It’s not all about cynical manipulation to extract as much money as possible.  The reality is that all designers are beggars and thieves.  We take things that work from other games and re-deploy them, re-shape them, and hope that they work in our games.  Game developers have been ripping off RPG’s for as long as there have been RPG’s.  If you think System Shock isn’t a shooter/RPG hybrid, you’re fooling yourself.  Let’s not forget that Doom (the granddaddy of all shooters) came from an RPG campaign.

The ubiquity, though, has definitely increased.  Even as we get fewer and fewer actual RPG’s (or even Action RPG’s) – because those things are really hard and expensive to make – we’re getting more and more RPG dynamics in other genres.  Tencent made a version of NBA2K for China that wrapped all kinds of MMORPG dynamics around basketball, of all things.  In fact, the core components of RPG grinding (experience, quests, resources, slot-machine loot, repetition) have become staples of most freemium games out there.  At some level, this is because those dynamics encapsulate the things we want out of a game: we want a goal (quest); we want to be rewarded for accomplishing that goal (loot); we want to get better (stats); and then, we want to do it again so that we can see how much better we are.

What RPG’s do that other genres (action games, particularly, but also shooters and other genres) used to not do is to reward time investment without regard to skill.  Sure, certain levels of skill require time investment, and sure, RPG’s can require skill, but what RPG dynamics offer the freemium space is a way to map time into power.  It’s reliable, testable, and proven.  It can be done (relatively) simply with spreadsheets and graphs.  And, once you monetize time, you’ve got a business.  This is what is at the heart of this spread: RPG dynamics extend play time through simple, procedural progression.  Whether your’e competing in the freemium space or the AAA space, that’s a win, but in the freemium space, it’s essential.