Wednesday, April 23, 2008

Serious Games Large Scale Buy-In Requires New Revenue Models

Serious Games and the changing economics of mass media

Sources: Serious Games Source - NASA Learning Technologies Cuts Educational MMO Budget
Keynote Speech by Adam Singer at The London Games Festival: on Tuesday 23 October 2007 - The Changing Economics Of Mass Media

Good Cash Flows – At the Early Stages…

At the early stages of the movement, Serious Games development, sponsored almost exclusively by the military and other government agencies, tended to have good cash flows: the government pays up front and easy DRM (Digital Rights Management), as the government usually lets the developer keep all rights.

NASA announcement this week has made me revisit this assumption.

After issuing a Request for Information (RFI) in January to evaluate development for a well-funded educational MMO (please find my previous post
MMOGs: Serious Games Creating A Model For Collaborative Learning Worldwide), NASA Learning Technologies has now sent out a Request for Proposals (RFP) indicating that partnering developers will not be paid for their efforts.

NASA Learning Technologies originally budgeted "$1 million a year for fiscal years 2007, 2008 and 2009" for the project, an MMO aiming to teach science, technology, engineering, and mathematics (STEM) to students in middle school through college. This latest RFP, however, now reveals that the group seeks to establish "a non-reimbursable Space Act Agreement."

Exploring New Revenue Models

Essentially asking developers to create and maintain the proposed MMO for free, NASA Learning Technologies is considering alternative forms of compensation: "In exchange for a collaborator's investment to create and manage a NASA-based MMO game for fun and to enhance STEM, NASA will consider negotiating brand placement, limited exclusivity and other opportunities."

Futuring The Impact Of Discontinuity In the Education System On Serious Games Revenue Models

As Clark Aldrich states on his today’s post
Serious Games vs. the Industrial Education Complex: “Serious Games can transform the entire education system, aligning it with the rest of the world.”

To effect this sort of discontinuous change, we need massive buy-in and the potential of Massively Multiplayer Online Game space for the proliferation of advanced learning communities is exponential.

As MMOs may be largely affected by the changing economics of mass media, we're all going to have to deal with this. People who benefit from the current model will need to embrace a new revenue model, or wait for others to disrupt.

The below extracts from the Keynote Speech by Adam Singer at the TIGA conference as part of The London Games Festival, on 23 October 2007, anticipate some of the upcoming challenges.

The Changing Economics Of Mass Media

The economics of mass media are changing: CD sales have fallen, DVD sales have plateaued. Hits are smaller than they were; individual music albums and TV shows are consumed by fewer people. Digital audiences are fragmented by hundreds of TV channels and the top viewed shows, top selling records, and top box office movies all happened twenty years ago.

The price of music is no longer set by record companies and record stores, but by iTunes, and piracy is nature's way of saying your pricing model is wrong. The hope is that the countervailing volumes of the Internet will make up for a fall in price, but the increased volume of the Internet merely fragments audiences and spreads the revenues over a much wider base of material. The dark truth at the heart of the digital revolution is that cheap distribution and low cost storage means 'there is no scarcity in a recording'.

No scarcity means no value. All those things that made a recording scarce and maintained values, i.e. the cost of retail space, the frictions of the distribution chain, the imperfections of copying, manufacturing costs, rationed bandwidth, have gone. Recordings are a commodity.

As the value of recordings falls, so does the value of those dependants on it. This will not happen instantly, as television and radio will have value for a long time: old media never dies it just loses is primacy.

I love frippery and escapism but where is the 'serious' in games? Now I know full well there is a large, important, Serious Games movement, and there may well be Serious Games that are on the shelves that have mass appeal, but I am not aware of them. That is partially to do with my ignorance, and partially with the fact that if they exist they have failed to attract broad awareness.

In my view, the destiny of games is to be a medium capable of doing anything; the destiny of games should be to eclipse current forms of story-telling. The lack of redemptive seriousness detracts from what games could be, and that is a serious medium, and a serious medium touches everybody.

The joy of games is that they can teach, pass knowledge, without the dictatorial pedagogy of the literati. In plain English they allow all of us - be it the young, unengaged male at odds with school, or the dyslexic - who get thrown out, tossed aside by traditional academic curricula back into the game! Games challenge old ideas about literacy: they allow us to absorb ideas in a non-literate manner and that is a good thing.

I believe that games are pretty much where Hollywood was in about 1915 and the great age of games is about to come. The reason why I believe this is not because of the games industry but because of a tectonic shift in media economics. We are moving from the era of transmit to the triumph of the return path - something that games were born to exploit.

So if the values are not in traditional recorded media, where are they? They are moving from recorded to live. In television ITV has outbid Sky and the BBC to get rights to the scarcity that is live football. On the net, mammoth multi-player role-playing games like World of War Craft, with its 8 million plus paying subscribers does well because it is non-recordable: if you were not online when you and your companions raided the 'Molten Core' then you missed it.

But what is the difference between new media and old media? Traditionally new media has been defined by the latest platform - TV, cable, satellite, Internet - but now the split between old and new media is not platform defined but that old media is that which is recorded and transmitted and the audience makes no difference to it; and new media is about the return path, where the audience is an integral part of the program. Where their reactions and responses create the moment, and the values are in scarce experience, or in the immediacy of community, and games are naturally poised to take advantage of this.

In an on-demand world, 'pay us what you think it's worth' becomes the rallying cry. As transistors become free, all that rides upon them becomes free, but games will do just fine, as you are selling the scarcity of unrepeatable moments, but none the less, 'pay us what you think it's worth' will also become a subversive cry in gaming.