Game Developers Service Consumers. Hollywood? Lawyers.

There has to be some illegal copying in the video game industry - it's pervasive throughout the software industry and costs firms billions each year - but they still pump out and push stand-alone and community games. They are already into high def and broadband/wireless connectivity.

We're equally certain they go after pirates here and abroad. Difference is you don't see the raids and lawsuits spread across the front page of your paper/websites. You don't see them running to Congress with bags of money to buy a solution to their problem.

But these content developers and providers also have something Hollywood lacks…a strong connection with their customer community. As a result there is a high level of self-policing that goes on. The sharing that takes place is done to improve the quality of play - the user experience.

That connection is one of the things that has kept the Atari name and game play alive.

How else can you account for teams of designers at the Parsons School of Design in Greenwich Village working round the clock over a weekend in late March to develop "super hot" games for the Atari 2600.

2600? Yes…the game system that started it all! And surprise…there is an underground that still buys/sells systems, repairs them, develops/sells software.

Today's Xbox, PS2, PSP and Nintendo systems have the potential of being more than just ways for people - young and old - to develop and improve eye/hand coordination, learn and enjoy the joys of winning and the agony of defeat. They could very well become the servers for home and on-the-go entertainment.

IDC and other analysts see game hardware/software showing the way for complete home and personal entertainment solutions (see right).

Or to put it more crassly…they can become the big winners (see bar chart)

On the other hand, rather than focusing on the user/viewer experience and really connecting with their customers we have the MPAA (Hollywood) and RIAA (record industry). To them it is better to invest in congressional contributions and lawyers. They are suing everyone (some already dead, some slightly above the poverty line, some outright thieves). We'll have to wait and see how the Supreme Court rules in the Grokster trial.

Not that it matters because if they lose they will probably just "withhold" their content.

You'd think they would have learned from the past that technology was good for them. But the obvious sometimes escapes lawyers and accountants.

There are precedents (that's a legal word) for our optimism.

In 1908 the Supreme Court said that people who sold player piano rolls weren't violating copyright laws as long as they paid fee to the artist for each roll. They "encouraged" Congress to set write such a copyright law. It was never about banning technology advances…just serving up fair compensation!

Next there were similar issues with records, audiotapes and CDs. With each technology advance, sales volume increased and so did the fees artists earned.

The MPAA luddites say the 1984 Sony decision - which said there were "substantial noninfringing uses" -- doesn't apply in the case of Grokster and in fact the Supreme Court really didn't get it right. All of this despite the fact that the spread of VCRs enabled Hollywood to sell billions of dollars worth of movie videos. They even dismiss the other revenues they received from rentals as not relevant and that the VCR really was "the devil's machine."

Fact is though that as with game systems, content helped sell more hardware. The more content people buy…the more hardware they purchase!

They also don't talk about the money they are making from their DVD releases in the form of payments for rentals and sales. The fact is that DVD players wouldn't have taken off like a rocketship if it weren't for the availability of these better-to-view movies.

MPAA and the RIAA contend that music downloads are stealing directly from copyright owners even though downloads (free and paid) represent only about 2% of the formats people prefer (see pie graph). The more intelligent approach would seem to be to focus on bulk pirates, help develop reasonably secure solutions and - silly boy - price the content fairly!

Game Developers Service Consumers. Hollywood? Lawyers. - page 2

Every time we've taken on a new technology (see the figures below) everyone has enjoyed an increase in financial rewards.

That's why TV production libraries scrounge through the dusty stacks. They have discovered there is money to be made their old content. People actually want to buy stuff like The Thin Man, Johnny Carson Show, Petticoat Junction, Beverly Hillbillies and a treasure trove of intellectual and mindless series.

But why think you "might be wrong? Lawyers and lobbyists need to be gainfully employed too!

If they would examine the technology successes closely they will see that RealNetworks, iTunes, SonicWallpaper and other sites do meet the consumer's needs…when the prices are right.

More importantly, they would find that their distribution costs go down…dramatically!!!!

Are Discs Dead?

Speaking of buying discs, we found Robert Capps' article in the April issue of Wired magazine to be "interesting." Ignoring the bipolar position of the content owners, his contention is that discs - of any flavor - are dead and everything will simply come to us over the network. The conclusion comes from the fact that new, more efficient codecs are being developed. These will pack and unpack our Hi-Def video. In addition, bandwidth will shortly be everywhere.

Similar statements were made more than 10 years ago when PCs and networks became ubiquitous in business. Viola…the concept of the paperless office was born.

Just don't tell that to HP or Epson because they make truckloads of money on inkjet cartridges.

It's interesting to note a few facts that Mr. Capps overlooked:

• Last year more than 2 billion floppies were sold worldwide and this at a time when nothing fits on a floppy
• Even in the U.S. the predominant download speed is 52K and it is worse in most of the world
• Much to Comcast's and Times-Warner's chagrin only about 60% of the homes in the U.S. have cable
• While color TV sets are ubiquitous, HDTV still has a way to go and in most instances sets are HD-ready, not HD-enabled (see graph at right)

Even though less than 50% of the U.S. homes have Internet connectivity (of any capacity) IPTV is just trying to get off the ground but content owners are throwing up roadblocks that could cause it to take 10+ years before it is widely available MPAA and RIAA have a begrudging acceptance of disc-based content but they have made it abundantly clear that they have no intention of allowing through-the-air access to their "stuff" until they can be 100% certain all of us pirates won't be able to rip off "their" content

Japan which sells almost nothing but Hi-Def TVs and hundreds of thousands of expensive Blue-ray recorders still sells millions of content CDs and DVDs each year because they are inexpensive. Korea, which has cable and IPTV available, does the same. Worldwide more than 100 million DVD burners and recorders are in use and those numbers are projected to continue to increase faster than Blue technology recorders well into 2015 (see graph at right).

Why?

First is obviously the cost and the fact that you have to replace perfectly good and inexpensive hardware/media with very expensive hardware/media.

Second is human nature. Drive down any street on a weekend and peek into the garages that have open doors. Often they are filled with so much "stuff" the car won't fit. Look at your PC's hard drive. You're probably about ready for one of those Hitachi 1GB "upgrades." Look at your VHS, CD, DVD, CD-RW and DVDRW libraries.

The minute we set down roots, we accumulate "stuff."

The final arrow in Mr. Capp's balloon is that it will be a helluva long time before MPAA members and other content providers are convinced they can trust you with "their" content.

Once they do, they will probably find out that it is much like the paperless office…you'll buy more of their stuff and make it your stuff! Somehow we don't see Verbatim, the world's leading writable CD and DVD producer, the other disc makers and the hardware folks disappearing even in the distant future.