Sony has launched Sony Home, their virtual world enabling their community of users to interact with each other in a “game like” setting.  Apple is now toying with opening a store in Second Life (speculation).  Will this mean that ultimately, they will acquire Second Life and roll it out as their communications platform for their computers?  Will it be the next iteration of iChat?

One thing that we have learned is that people do not have have time to manage identities in multiple virtual worlds at the same time. If you are engaged in Habbo Hotel, then chances are, you don’t have time for Second Life.  If you’re playing World of Warcraft, then you may not have time to utilize IMVU.  Also, many of the previous brands who have released their wares into Second Life have all abandoned them after it being all the hype (front page of NY Times, etc).

I’m curious to see how this plays out.   What are your thoughts?

I took an 8 hour flight from JFK to Zurich, Switzerland to participate in a conference at the GDI Institute on digital media and my portion:  the role of video games in culture and business.  While I have history in the in-game advertising industry, I didn’t focus the presentation on this.  I tried to talk about the macro-trends in the video game industry, some of which I posted in early October on this blog.

I spoke solely on in-game advertising at the GDI Institute in 2005 and the crowd really got into it.  Lots of great questions and insights that were shared amongst the few hundred in attendance.  As I noted above, maybe 10% of the presentation this time around talked about in-game advertising but the real time was spent with trends.  In-game advertising is part of a larger trend, which is finding ways to monetize games through the use of everpresent connectivity.  With broadband connectivity being harnessed by consoles, a new ecosystem of monetization opens up (skill based wagering, in-game advertising, virtual goods, subscriptions, RMT, etc).

One of the othe rmain topics I spoke about was about video game culture.  Look at what Guitar Hero and Rockstar are doing for fans.  The Nintendo Wii as well.  Toyota’s commercial utilizing World of Warcraft like content.  Games are finally being socially accepted which is opening up a whole creative market.

We had a fantastic discussion about this last night (as I was trying not to fall asleep due to timezone differences) and really enjoyed meeting a lot of new people.  Had lunch today with a gentleman I met last night and we discussed the presentation further.

For those of you who want to see some pictures of Zurich, I posted some in my Flickr gallery.

This image was pulled from the Flickr gallery of LynetteR. My friend Greg pointed me in her direction when I was reading through my RSS feeds last night.

There are two companies that I’ve been watching closely, GameStop (GME) and NetFlix (NFLX) because their current business model has about 3-5 years before they begin seeing significant decreases in their revenue.  Currently, the two of them account for over $10.58billion worth of market cap so as investors and consumers, we certainly like them.

Their current business model needs to change.  Digital distribution of files (games or movies) are not “if” but “when” and as long as it’s easy for the consumer to download.  GameStop sells video games and peripherals in their retail stores but as games become distributed on the Xbox Live, Sony PS3, and Wii platforms, the need to walk down the street to a retail store will become less and less.

NetFlix is experiencing business model disruption because I can access movies on-demand from my cable carrier and watch whatever I’d like, on demand.  It’s only a matter of time until my cable carrier has enough movie inventory available for me to watch that NetFlix becomes extinct.

In October 2006, GameStop publicly recognized this issue and announced the opening of their digital distribution service.   In January 2007, NetFlix made their respective announcement about digital distribution.

I’d like to see one mega-store that has everything online that can be downloaded.  Why seperate out music from movies and games?  Why not all together?  Is it going to come down to rights?  Will Sony go in one direction and EA go in another?  If so, the market is going to be fragmented and you’ll have bidders trying to “buy” inventory from these respective rights holders.

Also, keep your eye on the ecosystem of digital distribution.   Who provides the infrastructure to enable the distribution of digital downloads to happen?  The storage? Bandwidth?  Payments?  Rights? 

I’m curious to see how it plays out.

If you’re one of the millions of Warcraft fans (video game) out there, then this Toyota commercial makes you smile. In the background, you hear “there are no trucks in World of Warcraft” which adds validity to the commercial and protects the game. I’m sure the Creative Director on the account is a fan of Leeroy Jenkins, where the inspiration of this video is derived.

This isn’t the first time that we’re seeing a brand using World of Warcraft as inspiration for a commercial. Check out the Coke commercial that appeared in Japan:

The commercials aren’t just viewed on television. According to YouTube, there have been over 1.5M views of these commercials. Totally opt-in. Impressive.

The video game industry is going through some monumental changes and I thought I’d shed some light on them from the inside. With that said, I decided to whip up a presentation that looks at many of the different areas of the industry including many of the trends that are occuring.

The presentation is geared towards the following:

• If you work at a media co. looking to acquire in this sector
• If you work at an ad agency or brand trying to make sense of the video game space
• If you’re a game publisher and looking to expand your product line and features
• If you’re a game publisher trying to make sense of the macro industry trends
• If you’re an investor, trying to figure out which are of the industry is hot

Please note that I purposely left out IGA Worldwide, a company that I co-founded a few years back. The reason why I left the company out of the presentation is that some readers would think that I made the presentation solely to hype the company. I tried to be as company-agnostic as possible, to give readers a non-biased view on the games industry.

I welcome all commentary and criticism. Please leave a comment on the blog or shoot me an email. I promise to respond to each comment individually.

I think we’re in an extremely exciting time with Halo 3 bringing in $170M on the first day, Areae launching Metaplace, and Habbo & Tencent proving out the virtual goods model. Who said games aren’t fun?

The presentation is below, and hosted on slideshare (if you’d like to view it there):

I’m a huge fan of sports and happen to like game shows… so when Electronic Arts announced their upcoming game, GameShow, for whatever reason, I didn’t take notice. Not many people did. However, lets look at it as it’s pretty unique and cool.

First off, IGN reviews GameShow here. It’s a free to play, downloadable PC game, that a live moderator asks trivia questions in the form of streaming video, audio, and text. You get points for right/wrong questions and can win prizes and schwag from advertisers/sponsors. Initially, it’s sports themed and may have sports celebrities partaking as moderators, but I do not see why they can’t extend the product line into other areas.

There is a game that we like to play when visiting Peabody’s Bar in Saratoga Springs… NTN Trivia. I’m going to assume it’s similar in the questions area, but different as there is no social networking component to NTN. I’m sure GameShow will take advantage of avatars, social networks, etc.

I’m predicting that this title will do fairly well. Not sure how EA is going to provide a live moderator 24/7, but I’m sure they’ll figure something out.

We all remember this headline from a few years back:

‘Halo 2′ sales top ‘Grand Theft Auto’
24 hour sales of Xbox title exceed what GTA earned in its first six days.
November 11, 2004: 5:40 PM EST

By Chris Morris, CNN/Money staff writer

NEW YORK (CNN/Money ) – “Halo 2″ has claimed early bragging rights in the 2004 video game battle.

In its first 24 hours of retail availability, the flagship title for Microsoft’s Xbox gaming system sold approximately 340,000 copies more than “Grand Theft Auto: San Andreas” did in its first six days on shelves.

Microsoft announced late Wednesday that retailers sold 2.4 million copies of “Halo 2″ on Tuesday, racking up sales of $125 million — 25 percent higher than what Peter Moore, vice president of Microsoft’s games division, predicted at a Harris Nesbitt investment conference Tuesday.

The alleged video game of the year has been released about 8 hours ago now (midnight last night) and the industry is awaiting the numbers. Imagine selling 2.4M units in one day racking up sales of $125M. That’s incredible. Spiderman-3 sold $151M in the first weekend (box office#) and some are predicting that Halo 3 could beat that number…

Microsoft remains coy about sales predictions, but many are calling this the biggest game launch ever. Outside New York City, a reported 10,000 U.S. stores held “midnight madness” sales, and special launch events took place in Los Angeles, Seattle and Miami. In London, authorities fearing mob scenes banned “midnight madness” events, according to The New York Times.

One thing that I find extremely interesting about the Halo franchise is that women play it. Of course women play video games but you do not tend to find them in action/first person shooter games. When talking with friends and even visiting colleagues in ad agencies, women certainly know about Halo and have been exposed to the game.

There is more to Halo than just the game. There is an entire ecosystem around the game. As you can see above, approximately 10,000 stores held midnight madness parties. Not many games can substantiate that. When EA released its lastest iteration of it’s top football game (Madden), it called it a Madden Holiday. Remember seeing all the television commercials around that?

Just like we eagerly awaited Aquaman’s opening night numbers in Entourage, we await the figues over the next 18 hours for Halo 3. Should be interesting. Spidey, watch out.

Here is a good analysis of Halo 3 that just came out

Maybe I’m listening to the likes of Howard Lindzon, Pip Coburn too much or Sherri is rubbing off on me (her career), but I’ve been watching the equities market much more in-depth lately.  Am I ready to become a trader?  No.  Would I ever want to be?  Probably not.  However, I think I have a neat idea for a game/business that I would love to see done.

The game would be simply titled:  Short or Long.  Much like Hot or Not, [where you are shown an image and you’re told to rate it 1-10], here, you would see the financial performance of a company (Google Finance snapshot), and would either click “Short” or “Long.”

After you click your answer (Short or Long), you would see aggregate information for each particular company, and if the companies name were withheld (just showing financial performance), it would show the actual company.

If you allow users to register accounts, you can chart their performance and benchmark them against their peers.  If you have a certain peer group (a high school class studying the stock market, your office, your buddies, etc), you can compete against each other.  If you really wanted to get tricky, you can short/long over time and specify a date.  Maybe even throw options into this (my uncle Bob has been showing me this tricky world) mix.

Revenue?  Oh yes, it’s a business.  Charge $10 for 100 trades ($0.10/trade) or more.  By doing this, it disables spammers to hype stocks as it becomes costly to do so.  I would love to see some sort of virtual goods model mixed into this as well, though I need to put some more thought into this.

Just my two cents – I like the idea and it’s less than half baked at this point, but would love to hear feedback.

I read a fascinating analysis of IAC (InterActiveCorp) this evening and wanted to share my view.  First, please read the article written by Sramana Mitra entitled Web 3.0 & IAC.

IAC holds more than 60 online properties and someone could easily mistake it for a VC with a well-diversified portfolio of Internet properties. When some of these properties start “exiting” the portfolio, they seem to be able to get much better visibility and valuation. We have already seen how Expedia has performed over the past one year after being spun off from IAC. The question is, should IAC club together more of its synergistic properties and take them public separately, while maintaining a holding company status? As it stands, IAC seems to be losing focus as well as operational efficiency, and in trying to do so many things at once, it is not doing any of them very well.

The profitability of the company is remarkably low, and that is reflected in its relatively low market cap of $8 Billion, against a 2006 revenue of $6.2 Billion.

One area where IAC can innovate within is the video game arena.  I believe that IAC can grab a leadership position by working independently of any one particular video game publisher but doing business with all of them.  There are different ways to play within the games industry including both long tail and hit-driven models, subscription, virtual goods, and retail sales models.  IAC certainly has the resource to get behind such an initiative and they are currently on their way into venturing into the market.

InstantAction was setup by IAC and has been underway/underwraps for months.  They are buying their way into the games market by acquiring Torque (GarageGames) recently and looks like they are enabling game developers to use their engine to monetize their games (give out the tools and monetization assets to anyone and let IAC monetize their games…. and take a % of the action).  Should be interesting to see what IAC does here… and if the above is correct, InstantAction will probably be a solid standalone company.

Just remember:  subscriptions, virtual goods, in-game advertising, are all emerging ways of monetizing games.  Some do much better than others depending on the type of game/environment/gamer, but if used correctly, could do extremely well for the game publisher/developer.  I am assuming IAC understands this and is building for the future.