And Animoca couldn’t be happier about that.

Co-founder Yat Siu calls them “fast food apps.” His 150-person company, a conglomerate of 12 smaller studios, has developed and published more than 350 apps, he said, currently at the rate of about four every week. Its goal is to one day crank out a new app every day as it expands its reach further into Asia and beyond.

Siu, who is also the CEO of Animoca’s parent company, Outblaze Ventures, said as much in a recent interview with AllThingsD. But he also had a lot more to say about the advantages of working outside of Silicon Valley, the maturation of Google’s Android ecosystem and why quantity is sometimes better than quality.

AllThingsD: What’s the difference between being based in Hong Kong and being based in Silicon Valley?

Yat Siu: In terms of our [Android] ecosystem, it is the dominant marketplace, whereas in the Valley, there’s a lot of focus on Apple. We don’t have that much venture capital available to us, so we have to focus on profitability and the bottom line very, very quickly. Our games aren’t all profitable, but our business is. And we’re just a small island city, so we do not have a domestic market. It’s go global or die.

How do your games fare in different regions?

When we first started [in 2011], the U.S. was our biggest market, but just because it had a larger ecosystem. That’s changing today. North America as a continent is now in second place to Asia because Japan and Korea are driving a lot of the revenues. … The people who are buying iPhones or Android phones in the U.S. today are not the first movers, whereas in Asia, a lot of the marketplace still has way under 50 percent smartphone penetration rates. In Japan, at the start of this year, it was under 30 percent.

Is Android fragmentation a problem for you? Putting most of your eggs in that basket means you’re dealing with phones that range from the very low end to the very high end, right?

Two years ago, we had a testing rack of 600 devices. Now, Samsung is outselling basically everyone else, except in China and Japan. The second thing that’s different now is that “low end” is no longer really “low end.” You used to have really poor devices with poor resolution and processing power. Even the so-called “cheap” devices that are sold in China today are quad-core or dual-core devices; they just cost $100, is all. And they’re all standardizing around Jelly Bean (the most recent version of the Android OS). The whole Android philosophy was, “Here, take the operating system. Do what you want. Good luck!” We had weird memory issues because people would be coding stuff on top. Now, with Jelly Bean, most of the stuff that’s going on in the operating system is going on in the application side.

Pretty Pet Salon is one of the more popular games Animoca has published, and started a “Pretty Pet” franchise.

Tell me about your games and how they perform. How do you evaluate success?

We look at every product as a gateway to another product. The key driver is popularity. Monetization will come, we think, once people are in there, but the ability to cross-promote to other games becomes important. We want to make sure that the user always has at least a few of our games to play, because we don’t believe that there is such a thing as a person who can play a game for years and years and years. It’s “fast-food apps.” People just want to consume quickly, move quickly and go on to the next thing. It doesn’t mean that they won’t come back to it, but they’re not prepared to invest console-style, sitting down and playing for four hours.

And if you spent $60 on a game, you’re probably going to invest a lot more time than if you spent nothing or spent 99 cents.

That’s true, too, definitely. But also, with mobile, whether it’s in trains or one-handed game time, sometimes it’s just when you’re lying in bed, the behavior that we’re seeing now is that a person is playing a game, and then after five minutes, he wants to move on to another game. He’s not necessarily playing the same game for an hour. He’s like, “I feel like something else.” It’s no different than people switching TV channels every once in a while, except they’re switching games.

So it’s not as much of a “hits-driven” business for you as it might be for others?

It’s all relative. What is a hit? Because it’s a global audience, a niche segment is pretty large. And yet, if you have a five-million-user niche, is that a hit? It’s probably a hit for an indie studio, but it’s not a hit for us because of the scale we operate in. Typically, we call anything a hit if it has over 15 million downloads, but as a franchise, as a series. We might have one app, and then if it does well and has a few million downloads and reasonable revenues, then we put sequels and additions on top of it. Out of the series, we may wind up having something like 20 or 25 apps.

For those games that aren’t sequels to existing games, how do your studios come up with new things to publish?

We have studios that are as small as six people. The producer is empowered to have his own budget and his own creative vision. There’s a weekly meeting where all the producers come together and talk about what they’re doing, and then go off and do their own thing. The advantage for the business is, if you start off with a studio of six people and it bombs, who cares? It’s not great for them, but the business can afford to do it. If they do well, they have a platform.

The independence of our studio is also attractive to our staff. They have the chance to be a startup without the startup risk. They don’t have to worry about payroll or finance, they can focus on the product and build their own team. The additional unintended advantage is that, in Hong Kong, we’re unique. So, if you want to do games and you want to publish your games, then, frankly, there’s nowhere else to go. People come to us because the other option is banking or finance — which is a good career, just not if you don’t like it. If we were in the Valley, we might end up getting slaughtered by the amount of recruitment and loss of staff. Who knows?

But it’s worth noting that you do also maintain an office here in San Francisco for non-game development roles like partnerships and PR.

In the past, the meccas of the global gaming space used to be different. They used to be Sony, Nintendo and, at one point, Sega. But it was never centered around Silicon Valley. That changed with the smartphone. Now the new mecca is the Bay Area, because Google Play is here and Apple is here. We have an office here because we have to pay homage to the new temples. Even though we’re not in the Valley, it’s absolutely required for us to go in. Every other app company that’s international that wants to succeed must do the same.

Almost all of your revenue, about 95 percent, comes from in-app purchases. Are you looking at other business models?

Advertising will come, but it is not dominant yet. Primarily, the buyers for that now are other app companies, and we’ve got our own network. If we focus more on our cross-promotion, we get more out of that than necessarily opening up inventory to everyone else. Right now, ads are generally low-quality, and they’re also spammy, so it’s a bad user experience. But that will change. The experience is there already — think about how much time you’re spending on mobile versus PC — but [ads] have to deliver value to the user. Facebook has the right idea. People who like casual games, you should really only show them other casual games. Today, the targeting doesn’t exist.

What does your conversion rate of non-paying to paying players look like? The typical curve has a lot of people at the bottom paying nothing or almost nothing, then a long tail with a bump at the end, composed of a small number of players who pay a lot.

That is the hardcore type of model, where basically you have a very low conversion rate, something like 2 percent, and a very high consumable model where people can spend thousands of dollars. That’s not our model. If you look at games like Pretty Pet Salon, you’d be hard pressed to spend more than 20 bucks, just because of the game play. We are expecting to have more volume of titles with a larger frequency of players coming in from outside. So, for instance, Pretty Pet Salon has an 8 percent conversion rate. Now, when we start working with Forgame (Animoca recently accepted a “strategic minority investment” from the Chinese hard-core game maker), that is different. We will listen to their suggestions, and it does appear that that will be the strategy, because people are prepared to spend that kind of money. It’ll be a learning experience for us.

The report, obtained in advance by AllThingsD, shows just how different the new generation of mobile games is from the gaming-only devices that previously reigned supreme. For context, back in Q4 2012, total consumer spending on games for iOS and Android devices surpassed spending on “gaming-optimized handhelds” (that is, Sony’s PSP and Vita, and Nintendo’s DS, DSi and 3DS).

But the real bombshell is in the new report, which covers Q1 2013: In that quarter, consumer spending on Sony’s and Nintendo’s handhelds declined significantly, while iOS and Google Play spending both increased, also significantly. Combined, the phone and tablet crowd spent nearly three times as much on games as handheld device owners.

(And bear in mind, of course, that a new 3DS or PS Vita game costs about $40, while even brand-new mobile games are typically free or 99 cents to download, with many offering optional in-game purchases.)

But wait, you say. This is the first quarter of the year, being compared to the lucrative holiday-driven fourth quarter. How is that fair to Sony and Nintendo?

Exactly. It’s not. With slower game production schedules and much lower device turnover, the holiday quarter matters a great deal to Nintendo and Sony. But for consumers with a steady stream of new games and newer, better devices on which to play those games, seasonality is mostly irrelevant.

IDC and App Annie’s numbers, then, amount to a double whammy: At both the best of times and the worst of times, new-school mobile games beat out their older counterparts.

A few other points of interest from the new report:

• The global install base for those “gaming-optimized handhelds” was about 200 million in Q1 2013. To put that in perspective, Gartner estimates that more than 2 billion phones and tablets are being/will be shipped this year alone. In other words, it’s through volume that mobile devices have closed and blown past the revenue-per-user gap.
• Although the total amount consumers spent on mobile games was far greater on iOS than on Android, gaming amounted to about 80 percent of all consumer spending on Android, vs. about 70 percent on iOS.
• The report splits consumers into four geographic zones: North America, Western Europe, Asia-Pacific and the rest of the world. For both Android and gaming-optimized handhelds, the Asia-Pacific share of total spending increased by more than 10 points (see the chart embedded below).

This report is the second such collaboration between IDC, which tracks videogame and entertainment hardware, and App Annie, which tracks mobile software and in-app revenue.

Photo courtesy NeuroGaming Conference & Expo

In San Francisco this week, a nonprofit group dedicated to neurogaming — the intersection of brain science and videogame playing — is taking its turn at bat in predicting the next wave of game-changing technology.

The conclusion of the NeuroGaming Conference and Expo’s organizers, unsurprisingly, is that hardware and software that monitor and respond to your body’s electrical and chemical signals will do for games what synchronized sound did for movies. Zack Lynch, CEO of the neurotech industry’s trade group, said the end goal is to create a new, deeper category of games.

Speakers and expositioners all had their own takes on how to reach that goal, including (just to name a few):

• “Mind-reading” headsets with sensors that attach to the ear and forehead
• Smooth, unassuming touchscreens that provide haptic (touch) feedback
• Headphones that convert low-frequency bass sounds — think explosions in an action game — into physical vibrations
• Neurotech integrations with much-discussed emerging wearable technologies like Google Glass and the Oculus Rift
• Experimental sensors that could estimate a player’s emotional state by, for instance, calculating the pH of their sweat.

But questions about the technology’s future abounded throughout the first day of the conference on Wednesday. At the root of all their caveats was a single point of potential failure: those pesky consumers.

“Most consumers are not going to put down their hard-earned money” for experimental one-time-use gadgets, NeuroSky CEO Stanley Yang said. “There has to be lasting value.”

(Yang should know: his company’s first consumer product, the Star Wars Force Trainer, was a $130 ping pong ball-levitating device … batteries not included.)

Photo courtesy NeuroGaming Conference & Expo

“Regardless of how we define it, keep the consumers in mind,” Petrovic said in a venture capital-focused panel about investing in the technology. “Don’t call this ‘the next great neurogaming platform’ or ‘neurogaming device,’ because it won’t sell.”

Those terms, he explained, connote an invasion of one’s body and may seem scary to those unfamiliar with the technology — that is, almost everyone.

A few of the speakers and numerous attendees (Lynch said about 300 registered for the conference online) suggested that the best immediate hope for brain-powered technology is not consumer gaming at all, but rather improvements in the places where it has already succeeded, like clinical therapy for those with limited mobility or as a teaching aide for children with mental disorders like ADHD.

The problem is that most brain-training games are just, well, boring, said Petrovic’s fellow panelist Roger Quy, a general partner at Technology Partners. A popular refrain throughout the day was that without great content, all attempts at neurogaming would be doomed to the same fate as 3-D TV, which fizzled despite enormous hype and investment.

Union Square associate Nate Hennings added that games targeted at a niche of enthusiasts may prove to be a testing ground for the mass viability of neurotech, just as the Tesla Roadster laid the groundwork for cheaper versions of the electric cars.

The dream, though, is that one of the companies represented at the conference will come up with a device that immediately “clicks” with consumers, as the Wiimote did starting back in 2006. To that end, perhaps the most important axiom to measure future brain gaming products’ success came out of Yang’s appearance earlier in the day.

“What happens to the consumer when they open up the box?” Yang asked. “Are they able to plug it in and start having fun instantly? If you can’t deliver that, nobody will jump in.”

The Kyoto-based company reported on Wednesday that its net profit of 7.10 billion yen ($71.7 million) for the year ended in March, from a loss of ¥43.20 billion in the previous year. The result missed a consensus forecast for a ¥14.05 billion profit by 15 analysts polled by Thomson Reuters. The creator of Super Mario reported an operating loss of ¥36.41 billion for the 12 months, compared with a loss of ¥37.32 billion a year earlier, on revenue of ¥635.42 billion, down 1.9 percent.

Read the rest of this post on the original site »

The Japanese videogame company said Wednesday that it is preparing new installments in its popular Legend of Zelda, Super Mario Bros. and Donkey Kong franchises. Each of those games, which have long been exclusive titles produced for Nintendo’s devices, should help its products stand out during the holidays, the company said.

Read the rest of this post on the original site »

Reporting first-quarter earnings, Hon Hai said revenue fell 19.2 percent from the year prior, to NT$809 billion. That’s well below the NT$895 billion analysts were expecting, and the largest drop in revenue the company has suffered since 2000.

The reason for the precipitous decline? Hon Hai won’t say. But it’s likely to have something to do with Apple. Between 60 percent and 70 percent of Hon Hai’s revenue is believed to stem from the company’s partnership with Apple. So when it posts ugly earnings like these, the quick and easy explanation for them is a slowing in demand for the iPhones and iPads it manufactures. As KGI Securities analyst Ming-chi Kuo told Reuters today, “This shows that Hon Hai’s revenue depends too much on Apple, and iPhone orders corrected more than expected.”

That may be true. But it’s important to remember that Hon Hai’s customer list stretches well beyond Apple, and boasts a number of big names, Hewlett-Packard, Dell, Nokia and Nintendo among them. Given the decline in the PC market, and continuing struggles at Dell, Nintendo and Nokia, it’s entirely possible that there are some other factors at work here, as well.

But that’s just speculation until Apple next reports earnings on April 23.

Hon Hai and Apple both declined comment.

When you go down a pit in Super Mario Bros., you don’t feel like, ‘Aah! I’m going to die!’

– Oculus VR founder Palmer Luckey, on the immersive quality of virtual reality over traditional videogame interfaces

AllThingsD will be there keeping an eye on two questions in particular: How is the business of mobile games changing, and how are the makers of consoles and other physical media responding to mobile’s ascendance?

This year’s conference also promises to at least touch on the growing relevance of women in the gaming community, and will also highlight the gap between small independent games studios and the larger legacy companies that are finding different degrees of success in staying relevant as their industry continues to expand and fracture.

If you only read one gaming statistic this week, let it be this one: In a pre-conference survey, GDC 2013’s organizers found that 58 percent of gaming professionals attending either last year’s conference or this one plan to release their next game on smartphones or tablets. That’s a tad greater than commitments to the Xbox 360, Microsoft’s next console, PlayStation 3, PlayStation 4, Wii U and Wii combined, which together garnered “next game” pledges from 56.5 percent of developers.

Nevertheless, interest in gaming hardware is still strong, particularly for established consoles and for the Android-based consoles Ouya and GameStick, both of which bested the next Xbox and the PlayStation 4 when those same survey respondents were asked what platforms most excited or interested them.

Stay tuned for more!

Fast forward to today: The battle for the living room is already over, and the overall war for the consumer is on. Key players in this big war? Google, Amazon, Apple, Microsoft, Facebook, Samsung and LG. Sony, Panasonic, Sharp and Nintendo? By and large on the outside looking in, wondering how the vision for living room dominance blew up.

When do we stop calling them phones or tablets or TVs?
Thanks to Moore’s Law, the advancements in storage, battery life, screen display, processing power and improved networks in the past 10 years have allowed numerous “screens” to become pervasive in a consumer’s daily life. These screens are ubiquitous, and not typically locked to a location, except TVs. Consumers spend time on phones, tablets and notebooks both in the home and while mobile.

We are rapidly iterating devices to simply be powerful screens connected to the Internet, connected to clouds. The main question for a consumer will soon be, “Which size screen will I use in the car? On the train? In rooms in my house?” That answer will be driven by which hardware vendors have aggregated the best services for consumers, coupled with a compelling user interface (UI), frictionless commerce opportunities and social and communications layers built in.
The reality today is that consumers can do nearly the exact same things on a device with a 4-inch, 8-inch, 12-inch, 15-inch or 20-inch screen. There will naturally be some functions that will be more appropriate on one screen size over another, but interchangeability is already here.

So who is leading in the war to control the consumer?
The single biggest key to everything? Control the UI on the connected screens. Companies who control the UI will then dictate how software is accessed, and which software. Making a compelling, fun, friendly UI is considered to be a very special sauce — rarely made and hard to do.

As shown in the chart above, most of the leading companies for controlling consumer interactions have at least a decent UI. Apple clearly leads the way, but Amazon and Google have made strides with improved UI. Microsoft took a big step forward with the Windows 8 UI, and Facebook has worked on improving its UI on both laptops and mobile.

If you take the same chart and substitute the companies for the countries of origin as shown in the second chart, the subtle trend of UI success becomes clear — companies based in Silicon Valley and in the greater Seattle area are dominating, and Japan-based companies are seriously lagging. While the hardware manufacturing base may still be in Japan and Korea, UI and software development are still based in the U.S.

To this point, efforts have been made by both Japanese and Korean companies to build a presence in Silicon Valley. Nintendo moved many of its operations from Redmond, Wash., down to Silicon Valley in an effort to become more in touch with connected companies and potential partners. Earlier in February, Samsung announced plans to open up a research and development (R&D) center in Silicon Valley as well, largely focused on software — with an assumption for UI development, too. For all Samsung’s dominance in phones, memory, TVs and appliances, UI has not been a strength.

While much of the focus today is on phones, tablets, laptop and TV screens, part of the connected consumer idea will soon include connected appliances. Remote management of the oven, inventory management for food in the refrigerator, or remote management of home security or heating systems are going to become more mainstream. It’s not quite a Star Trek-type leap of faith, but software solutions will have to be built for the TV and the fridge. Samsung, given its pole position in many hardware solutions, would have great potential in these expanded connected devices, but it is still early. Hence, the investment in a Silicon Valley lab could prove hugely strategic over the next 10 years.

How do TV manufacturers change to stay competitive? How does Japan stay relevant in a connected world?
Partnerships are going to be more critical than ever because software development and UI are not core strengths for many Japanese-based consumer electronics companies. However, partnerships with non-Japan based companies are rare, and a huge challenge is to change the corporate culture of many Japanese companies. Many of these companies are engineering-driven cultures with long-standing histories of making successful products over the past 50 years. Unfortunately, the analog age of standalone devices is over, and the connected, digital world awaits. For many companies, it’ll mean partner or perish.

P.J. McNealy is founder of consulting firm Digital World Research and has conducted research in the technology and gaming sectors for 15 years. He authored “Early Days: The Market for Social Gaming and Facebook’s Potential Achilles’ Heel,” in May 2013; it is available on Amazon.com.

The market researcher said Friday that Wii U shipments rose over 40 percent month over month in February — encouraging news were it not for the poor shipment number from which they rose. Wii U shipments are believed to be as low as 57,000 units during January. In other words, Nintendo’s Wii U shipments for the month of February were somewhere in the mid-60,000s. For a console that debuted just a few months ago, that’s just plain lousy. Consider this: Microsoft shipped 302,000 Xbox consoles during the same period.

Suffice to say, Wii U is vastly underperforming expectations. So much so that you’ve got to wonder if Nintendo will meet its already lowered projections for the console. Back in January, the company slashed its sales forecast for the Wii U to four million consoles by the end of March from a prelaunch estimate of 5.5 million. If NPD’s latest numbers are a reasonable indication, even that number may be too high for the company to reach.

Ugly news for Nintendo. If the company’s brand-new Wii U can’t hold its own against Sony’s PlayStation 3 and Microsoft’s Xbox 360 — both of which are more than five years old — how will it fare against the forthcoming PlayStation 4 and Microsoft’s next-generation Xbox?

Time for a price cut? Maybe, but the company has previously ruled that out.

“With Wii U, we have taken a rather resolute stance in pricing it below its manufacturing cost, so we are not planning to perform a markdown,” Nintendo president Satoru Iwata said in January. “I would like to make this point absolutely clear. We are putting our lessons from Nintendo 3DS to good use, as I have already publicly stated. However, given that it has now become clear that we have not yet fully communicated the value of our product, we will try to do so before the software lineup is enhanced and at the same time work to enrich the software lineup which could make consumers understand the appeal of Wii U.”

Looks like Nintendo still has a lot of work to do communicating that value.

What Mike Mika did was come up with an awesome hack.

His 3-year-old daughter was perplexed at why she couldn’t play Donkey Kong as a female character and rescue Mario. So Mika hacked the game so she could do just that.

“She’s played as Princess Toadstool in Super Mario Bros. 2 and naturally just assumed she could do the same in Donkey Kong,” Mika wrote on YouTube, where he posted a video of his exploits. “I told her we couldn’t in that particular Mario game, she seemed really bummed out by that. So what else am I supposed to do?”

So, grab a copy of the game, redraw some frames and, presto, now the princess in Donkey Kong is the rescuer.

Here’s the video he posted of his effort:

“We’re fortunate enough that we got dealt an amazing card, and it’s called Cut the Rope,” Lyalin said of ZeptoLab’s hit series. “But we still have to build up everything else. With one card, you go into the game, and everybody has a hand, and you have nothing.”

That “everything else” includes two other games, Parachute Ninja and Pudding Monsters, which combined with Cut the Rope’s three titles have generated more than 300 million downloads across all platforms since 2010. The company also licenses enough merchandise to choke even Cut the Rope’s voracious star, Om Nom: Toys, apparel, food, board games, a digital comic book and an ongoing animated Web series.

And that list is growing. In an interview with AllThingsD, Lyalin said ZeptoLab is planning four new games for this year: Two new Cut the Rope games and two completely original titles. The company is also working with Sony Pictures Television to develop a TV show, to start airing in 2014.

(Also coming soon to a TV near you: A half-hour animated TV series based on Zynga’s social game FarmVille, not to mention Rovio’s Angry Birds TV shorts, a few of which have already aired on Nickelodeon. Whether the new generation of videogame-related shows can live up to the artistic excellence of the “Super Mario Bros. Super Show” remains to be seen.)

The CEO declined to go into detail about the TV show, other than to say that it would be Cut the Rope-themed.

Lyalin said these sorts of licensed products are now a part of the expected path for game companies that have a hit on their hands.

And that’s telling. Once, the iconic games that were able to command extensive lines of merchandise were only available on a few devices approved by their publishers (think Mario on Nintendo’s consoles or Sonic on Sega’s). Now, stuffed Om Noms are both an extra revenue stream and a form of advertising for the Cut the Rope brand, which freely follows users across different devices and different operating systems.

However, Lyalin stressed the need to keep releasing new games above all else.

“We’re a gaming company, first and foremost,” he said. “That is where our strength is from.”

So, where are those games headed? With its fans primarily on mobile devices, ZeptoLab hasn’t yet tried to break into the troubled home-console market, but Lyalin said he hasn’t ruled it out. In particular, he said, Android-based game consoles (such as the forthcoming Ouya) are “a given,” since the company’s games are already on the Android OS.

His bigger philosophy, though, is refreshingly frank, if not terribly complex: A lot of platforms where ZeptoLab might go won’t survive. But, Lyalin said, if they can attract an audience in the short term and potentially expand Om Nom’s reach, then that’s enough.

There’s no doubt about it’s strength in the U.S., but internationally, it’s not so clear how the seven-year old game console is faring, especially in comparison to Sony’s PlayStation. 

Microsoft sold 281,000 Xbox 360 units in January, up 4.1 percent from 270,000 a year ago, according to the NPD Group, which tracks sales of video-game software, hardware and accessories in the U.S. that occur at retail.

Earlier this week at D: Dive Into Media, Yusuf Mehdi, who leads Microsoft’s interactive entertainment business, also provided an update based on internal data.

He said the overall Xbox installed base is now at 76 million, up from 70 million at the end of September of last year. Also, 24 million Kinects have been sold, up from 20 million last year, and there are 46 million Xbox Live accounts, up from 40 million.

Sales continue to be brisk because the company has been successful at moving beyond a hard-core gaming audience to serve members of the family who like other forms of entertainment, such as streaming video or music.

But the rivalry between the different console makers is particularly intense right now as the industry waits for the next-generation devices to launch.

The Nintendo Wii U was the first to launch this holiday season, but has had a relatively lackluster performance. Next week, Sony is planning to unveil its new home videogame console at an event in New York. But Microsoft has remained mum on its plans for any potential Xbox 720. Earlier this week, Mehdi refused to budge on the subject. “I’ll politely decline any comment,” he said.

So, the question is, will Sony’s PlayStation 4 be well received?

If global trends are any indication, it’s possible. Based on numbers culled from the three company’s earnings reports, Geekwire was able to determine that the PlayStation 3 was the best-selling home console worldwide during the holidays.

Sales of the PS2 and PS3 totaled 6.8 million units for the December quarter to beat the number of Nintendo Wii and Wii U units sold (5.3 million), and the number of units reported by Microsoft for the Xbox 360 (5.9 million).

For the full year, the two PlayStation devices together sold 15.6 million units worldwide, compared with 8 million for Nintendo and about 11 million for the Xbox 360.

In other words, Sony continues to have a very strong worldwide presence for the PlayStation, compared to the Xbox which seems to dominate in the U.S.

Overall, however, the hardware sector remains fairly weak. Most executives in the videogame industry believe a new wave of hardware is needed to spur consumer interest again, while others believe that gamers are less attached to the living room than they were before and prefer gaming wherever they are from their phone or tablet.

NPD reported that sales of hardware in January were down 17 percent year over year when taking into account that the month had five weeks instead of four.

The revised sales view is the latest dose of bad news for Nintendo, coming off its first annual loss in more than three decades, after a sluggish start to its previous hardware launch, the Nintendo 3DS hand-held, pushed the company into an early price cut.

Read the rest of this post on the original site »

While being able to play classic games for a small fee will be a definite crowd-pleaser, an overlooked aspect of the announcements had to do with Nintendo’s plans for launching apps for smartphones.

The creation of any software for non-Nintendo hardware is groundbreaking for the company, which has been dead set against sharing its well-loved brands with any other device manufacturer.

But yesterday, Nintendo said that the Wii U’s social network, called Miiverse, will be expanding to smartphones this spring. And while initially gamers will be able to connect to the network from a smartphone browser, in the future Nintendo plans to create dedicated Miiverse apps.

Currently, Miiverse appears on the Wii U’s start-up screen as a virtual hangout, where avatars walk around a virtual “plaza.” Game players will be able to post their thoughts in “speech bubbles” that appear over their heads with text or drawings — sort of like status updates on Twitter or Facebook.

Over the past two years, Nintendo has made it abundantly clear that it is not interested in developing games like Zelda or Super Mario Bros. for any other platform. While the company still is not saying that its policy has changed on that front, a good experience with the Miiverse could help change its mind.

In what could be another sign of changing philosophy, the company confirmed last week that it is planning to bring together its console and handheld gaming teams in recognition of the trend toward the popularity of gaming on portable devices. The two groups will work under one roof in a $340 million facility in Japan.

But otherwise, Nintendo has been very clear about its aversion to other platforms.

A year and a half ago, Nintendo’s shares jumped on word that Pokemon was coming to the iPhone. But as it turned out, Nintendo, as a minority owner, had no influence on the decision, and it shot down speculation about its strategy, saying it “hasn’t changed and won’t change.”

Most of the opposition in developing for other platforms has to do with the business model.

For instance, the company is comfortable developing its own tablet-shaped controller for the Wii U, and it has its own mobile devices, like the 3DS, but it draws the line at free-to-play games.

“I’m not interested in offering software for free of charge,” Nintendo’s Global President Satoru Iwata told AllThingsD in June. “That’s because I myself am one of the game developers, who in the future wants to make efforts so the value of the software will be appreciated by the consumers.”

Iwata said the revenue that Zynga — and platform-makers like Facebook and Apple — is generating would not change his mind.

“If we are going to destroy the value of the game software — once we have done so, it’s a difficult job to recover from that situation,” he argued.

Nintendo did not disclose pricing for the Miiverse app.

Responding to consumer requests, Nintendo will provide two significant system updates that will help speed up the time it takes to launch software and return to the Wii U menu. The updates will be delivered in two stages: One in spring, and the next in summer.

Shortly after the spring update, Nintendo will launch a Virtual Console for the Wii U that will allow users to play classic Nintendo Entertainment System (NES) and Super NES games.

Only a select number of NES and Super NES games will be available at first. Iwata said the games are being rewritten for the Wii U system, so it’s not possible to offer the entire collection at launch. Eventually, the game selection will include Game Boy Advance titles, and users will be able to save game progress and play right on the Wii U GamePad.

NES games will cost between $4.99 and $5.99, while Super NES games will fall in the $7.99 to $8.99 range. Discounted rates ($1 for NES titles and $1.50 for Super NES games) will be available for those who already purchased the Wii versions of the Virtual Console games.

Nintendo will also offer one game for 30 cents each month through July to celebrate the launch the Virtual Console for Wii U and the 30th anniversary of Nintendo’s Family Computer. Games include Balloon Fight, Kirby’s Adventure, Super Metroid and Donkey Kong.

As for new games for the Wii U, Iwata revealed that an HD remake of The Legend of Zelda: The Wind Waker is scheduled for this fall, along with a new Zelda game. A 3-D Mario and a Mario Kart racing game are also on tap, with more details coming at the E3 trade show in June. Other games on the schedule include one centering on the Yoshi character, Wii Party and a role-playing game from Monolith Soft.

In his presentation, Iwata apologized for the absence of any new Wii U titles for the months of January and February, but said that offering high-quality games was more important.

“Nintendo takes seriously its responsibility to offer a steady stream of new titles in the very early days of a new platform to establish a good lineup of software,” Iwata said. “On the other hand, we also firmly believe we have to offer quality experiences when we release new titles. Based on our software development schedules at the end of last year, we concluded we should spend a little more time to satisfy to our Nintendo standard of quality.”

The Nintendo Wii U launched in November, and the company has sold more than 890,000 units, according to NPD. Despite this, older competing consoles like Microsoft’s Xbox and Sony’s PlayStation are still doing well, so game selection will be key for Nintendo.

Here’s its latest attempt to break through: Disney Infinity, a series of games aimed at console game players.

That is: People who play games on Microsoft’s Xbox 360, Sony’s PS3 and the Nintendo Wii.

Short version: Infinity is a series of games linked together via a virtual “toy box,” so players can swap and modify characters from one game and bring them into another. Which means Sully from “Monsters University” can jump into a “Pirates of the Caribbean” game, etc.

The games also incorporate real-world collectible toys, which players use to unlock characters, games, etc. And you can also buy “power up” packs and other modules to boost/alter your games.

Or, for those of you who know kids of a certain age: This is a lot like Skylanders, except with Disney/Pixar characters that you can mash up. For the rest of you: Skylanders is a super-successful franchise from Activision that has generated $500 million in retail sales in a couple years.

That last sentence helps clarify what Disney is trying to do here. But if you’re wondering why Disney is focused on big, expensive (a “starter pack” for Infinity, which includes three games, will go for $75) console games, when the big trend in gaming is toward cheap/free casual/mobile games like Angry Birds, then Disney gaming chief John Pleasants wants to reassure you: They’re not.

“We’ve been fairly clear in our communications with folks that we have made a fairly big shift into online, mobile and social,” he says. And Infinity won’t change that.

But since people are still spending an awful lot of time on console games — and Sony et al are prepping the next generation of those machines — there’s no reason to abandon the market.

The outcome of the case could make it easier for companies to take their patent complaints to the United States International Trade Commission, a powerful administrative body that’s become a central staging ground for the high-tech patent wars.

Read the rest of this post on the original site »

Nintendo’s Wii U has managed to outperform the launch of its original Wii, at least in terms of revenue, but only because it costs more.

In the U.S., Nintendo sold 460,000 Wii U devices in December and more than 890,000 since it launched in mid-November, according to NPD, which tracks monthly sales figures for the videogame industry.

As a result, Nintendo said it recorded $300 million in revenue, which is more than the $270 million that the original Wii made at the same point in its life cycle.

But the original Wii, which launched in 2006, cost only $250, and today’s Wii U is setting players back between $300 and $350 apiece. So, the only reason it was able to exceed prior sales is because it upped the price — not because it sold more units.

That didn’t stop Nintendo of America’s EVP of Sales & Marketing Scott Moffitt from singing the company’s praises: “While the Wii launch established new benchmarks in the United States, Wii U has surpassed its predecessor in perhaps the most important category: revenue generation.”

Moffitt, however, did not comment on profits.

The Wii U has two editions: The deluxe offering that costs $350 and the basic offering for $300. The deluxe edition sold out at retail this holiday, and both editions were difficult to find after the Nov. 18 launch. But it was nothing like the launch of the Wii, which experienced shortages for months. Nintendo did run into a few hiccups at launch with customers experiencing long waits for mandatory software updates. Additionally, some of the device’s most notable features, like its TVii service, did not launch until later in the month.

Microsoft also reported strong revenue for the Xbox. The company holds the envious position of having the top-selling piece of hardware for the past 17 months straight. It sold 1.4 million units in December, or three times the number of Wii U’s sold. (When you add up all the hardware Nintendo sold, it totals more than 2.65 million units).

In all, Microsoft said, consumers spent more than $1.27 billion on the Xbox 360, including games, consoles and accessories.

Following the release of the NPD data, Sony did not immediately break out the PlayStation’s performance for the month of December.

Even so, the numbers are staggering, especially given the amount of pressure that smartphones and tablets are putting on the game console industry. But some impact can be seen. The amount of money being generated by mobile games and online gaming still has not been enough to offset the declines that the traditional console gaming market is seeing — at least that’s NPD Group’s position.

Historically, the research firm has monitored sales through purchases made at physical retail locations. In recent years, it has expanded its methodologies as more content is sold digitally over services like Valve’s Steam on the PC or as expansion packs inside of console games.

Overall, it reported for December that new physical retail sales of hardware, software and accessories totaled $3.2 billion, falling 22 percent year over year. It calculates that the physical channel accounts for nearly 50 percent of the total consumer spend on games.

When NPD considers revenue from other channels, such as used and rentals, and digital formats, like full games, micro-transactions, mobile apps and social gaming, its preliminary estimate is that consumer spending in December hit $4.1 billion in all. A final analysis of non-physical spending however, is expected to be released in February.

Nvidia, the company responsible for much of the guts inside modern smartphones, tablets and desktop PCs, unveiled “Project Shield” at International CES in Las Vegas on Sunday evening, a prototype portable gaming system built atop the Android platform.

It’s something of a multimedia mish-mash. Imagine tossing an Xbox controller, a five5-inch 720p display, the guts of a powerful quad-core tablet and a wireless speaker box into a blender, then cranking it up to “frappe.” The result is Nvidia’s foray into creating an out-of-the-box consumer-facing product, Project Shield.

The device casts a wide net. It runs media like HD movies and music, while also running apps like Hulu, Netflix and Internet radio services. It can play PC games. It will run any Android games in the Google Play store.

In other words, it’s competing with smartphones, tablets, handheld systems like the Wii U — everyone.

Consider this: It’s hard enough for an industry player to do well in just one of these spaces. Apple and Samsung are duking it out for smartphone dominance, while Apple continues to clean up in the tablet arena. Consoles and dedicated gaming hardware is still a battlefield split among giants like Nintendo, Microsoft and Sony, yet console sales are declining in recent years, and the dominant players are beginning to experiment to fight for share.

So where does Project Shield fit in? Does Nvidia focus on marketing it toward one of these verticals, or all of them? Or is this something new entirely?

For now, at least, Nvidia can focus on one thing: Finishing it. After all, it’s still a just a prototype.

RELATED POSTS:

• Things That Make You Go Hmm: CES Gets Weird
• CNET Wanders Into the CBS-Dish Crossfire at CES
• More Wi-Fi Spectrum on the Way, Says Genachowski
• CES Is So Infectious (Comic)
• Beats’ Jimmy Iovine on Steve Jobs, Spotify and Why He Can Make Subscriptions Work
• Beats’ New Music Subscription Service Gets a New Boss: Topspin’s Ian Rogers
• CES Lost and Found: A Hot Spot for Hotspots and Lost Teeth
• At CES, Chipmakers Go All In on Mobile
• Phablets the New Hotness in Mobile Devices? Not So Fast.
• President Clinton at CES: The World Needs More Smartphones (And Fewer Guns)
• Talking TVs With an Imaginary Consumer at CES
• Valve Pledges to Enter Videogame Console Wars With “Steam Box”
• Ballmer’s CES Keynote, Courtesy of Qualcomm (Video)
• Making It to CES on a Kickstarter and a Dream
• Intel: Trust Us! We’ve Got Mobile Devices on Lockdown … Next Year.
• Automakers Open Their In-Car Platforms: First Up, Ford, and Soon, GM
• CES: Fixing Your First-World Problems Since 1967
• Acer President Wong: Consumers Are Still Confused by Windows 8
• Cisco Teams With AT&T on Home Security
• Acer Targets Families, Newbies With Sub-$150 Iconia B1 Tablet
• Roku Adds More TV Partners, Looks Beyond the Set-Top Box
• Game On: Nvidia Previews “Project Shield,” a Handheld Android Console
• At CES, Lenovo Attempts to Go Big With 27-Inch “Table Computer”
• Health-and-Fitness Tech Grows at CES, but Challenges Lie Ahead
• Welcome to CES: A Trade Show, Not a Tastemaker
• CES 2013: The Year the “Connected Home” Becomes a Reality?
• LG Can’t Wait for CES, Spills Beans on New Google TVs
• Yahoo’s Mayer Hoping What Happens With Big Advertisers at CES Doesn’t Stay in Vegas
• Yeah, Don’t Expect Samsung Mobile’s “Next Big Thing” at CES

The research firm, which tracks spending at physical retail stores on a monthly basis, said last month was a particularly strong period for both hardware and software sales. In November, videogame sales totaled $2.6 billion, down 11 percent from the year-ago period, when sales totaled $2.9 billion — the smallest year-over-year decline so far in 2012.

There are two trends that are contributing to the drop off: One has to do with consumers shifting to other platforms, such as tablets and mobile phones, but the other has to do with how NPD tracks its data. It records sales that occur at retail, whereas a lot of consumers have started to purchase games digitally over the Internet. Still, looking at NPD’s data provides a broad picture of trends in the game industry.

Most telling last month was that sales have continued to be strong despite the fact that most of the hardware is six to seven years old, with the exception of Nintendo’s Wii U.

For comparison’s sake, NPD looked at how sales did last month compared to November 2005, which was the last time the industry began to transition between console generations. NPD Group Analyst Liam Callahan said retail game sales are nearly double what they were in November 2005. “This really demonstrates the long-term health of retail sales even as many platforms are quite late in their life cycles,” he said.

In addition, he said last month’s figures provide a very good sign of momentum going into the December holiday period.

Here are some of the findings from NPD’s November report, which tracked spending between Oct. 28 and Nov. 24:

• Nintendo sold more than 1.75 million total hardware units, including nearly 910,000 portable game units and more than 845,000 original Wii and Wii U units. In particular, it sold 425,000 Wii U units during the seven days captured in the data.
• Microsoft sold a jaw-dropping 1.26 million Xbox 360 units during the month, making it the No. 1 console maker for the 23rd consecutive month.
• November was the second-highest month of sales on a unit basis for the PS Vita since it launched, fueled by bundling third-party content with the hardware.
• Videogame software sales, including console and portable, totaled $1.43 billion, down 8 percent from the year ago period, when it totaled $1.6 billion. That represented the smallest unit decline this year, tied with August.
• Half of the software sales in November were for the Xbox 360, which gained 8 percentage points in market share since last November.
• Not surprising, Activision’s Call of Duty: Modern Warfare 3 Black Ops 2 was the top selling game during the month. It reported yesterday that it hit $1 billion in sales in just 15 days.

All combined, in just seven days the three console makers sold a jaw-dropping 1.98 million consoles in the U.S. — an astonishing accomplishment for an industry that is facing enormous pressure from emerging gaming platforms, like the iPad.

Today, Sony reported it sold more than 525,000 PlayStation 3 units over the past week, while Microsoft sold more than 750,000 Xbox 360 consoles to easily beat Wii U first-week sales of 400,000. In total, however, Nintendo sold 700,000 units, including both the Wii U and original Wii.

The week kicked off Sunday, Nov. 18, with the Wii U going on sale and ended Saturday, following Black Friday, one of the biggest shopping days of the year.

Nintendo’s sales of the Wii U were likely limited by the number of units it could manufacturer, with many U.S. retailers running out of inventory. Microsoft and Sony saw a lift from well-priced bundles that cost half as much as what Nintendo was charging for the Wii U, and in general, all three benefited from a trend in which consumers are using their videogame consoles for accessing other types of content through their TVs, including streaming media or music.

Sony said one PlayStation bundle, which cost $199, sold 15 percent more this year compared to 2011. Microsoft was selling similar Xbox bundles for $150. Essentially, the two manufacturers can afford price cuts like these, given that they are six years or more into their hardware lifecycles. In comparison, the brand-new Wii U costs $300 and $350, depending on the package.