business

Bigger than The Beatles. Big opportunity.

(This is an expanded version of my column at the beginning of The Games Issue.)

Normally, Creative COW Magazine is heavily production-oriented. We typically talk about high-end cameras and other cutting-edge hardware. So why a games issue, and why now?

Because while other parts of our business may be cooling down, games are hot. If you've ever tried to pry your kid (or your boss) away from video games long enough to eat supper (or sign your paycheck), then you know how compelling video games are.

Re: hot, here are some numbers. Best opening day for a movie: "The Dark Knight," $67 million. For a console game? "Grand Theft Auto IV," $310 million. This shattered the previous record for first-day sales, Halo 3 and $131 million ??" which was still nearly DOUBLE the all-time best movie opening day! Holy console, Batman!

This year alone, the "World of Warcraft" franchise is expected to pull in well north of $1 billion. Last year, the number was actually $1.1 billion. "World of Warcraft: Wrath of the Lich King" sold 2.8 million new copies in its first 24 hours. Then there were the upgrades. And then the subscriptions for this MMO ??" "massively multiplayer online" game: topping 11.5 million by the end of 2008. That's somewhere around double the population of Ireland, or half the population of Australia.

When people my age say, "Big," we mean The Beatles: 132 million albums in the US. Compare this to Nintendo's Mario franchise at 160 million units! "The Sims" and "Madden Football" are strong too, with 100 million and 75 million respectively.

And don't forget, The Beatles never got to sell you the record player that would only play Beatle albums: Nintendo has sold 100 million DS handhelds! The "other" handheld, the Sony Playstation Portable, is doing fine, thanks, with sales of over 50 million units.

On the console front, Wii is of course stampeding, with 74% growth (can that be right?), and is likely to achieve 50% market share by the end of the year. The most striking thing about console sales is that they're still growing faster than sales of games themselves ??" for now. This says to me that we're still a long way from finished laying the foundation for the growth of the games business as a whole.


A side note on The Beatles: they sold records in other places besides the US, of course, and, especially early in their careers, singles were a critical component in the world-changing impact that these 4 youngsters had. (Youngsters? It's easy to forget that the group was done by the time they reached 30!) It's impossible to overstate the effect of singles including "I Want to Hold Your Hand," "She Loves You," and my favorite, the double A-side single of "Strawberry Fields Forever/Penny Lane." Add them all to the mix, and The Beatles sold well north of 1 billion records worldwide. Nobody else is close.

(While the "nobody is close" observation is clear through every lens, it was harder than I thought to quantify Beatle album sales. There were many different versions, including some US-only releases like "Yesterday and Today." There are also a number of sales certifications vying for ultimate authority, but I feel very, very comfortable with the number 132 million US sales. If you want to dig deeper into the world of album sales ??" and why wouldn't you? ??" you need to go here.

All of that said, The Beatles agree that games are Beatle-sized big. Starting 09/09/09, they'll offer digital downloads of their music exclusively through "Rock Band," a video game where many artists are finding far more sales, and far more money, than anywhere else. Yep, games are becoming bigger than iTunes for music, too.

(Of course, this issue of The COW Magazine also includes a fantastic article on cutting-edge game development for the iTunes App Store.)

The Beatles Rock Band story is well worth a closer look for any fan of music, games, Rock Band, The Beatles and any combination of the above. Rolling Stone has a wonderful overview of the variety of packages that will be available, including a limited edition that will include both game software and a combination of instruments for actually doing the Rock Band thing.

So what does the growth of games mean for you? Jobs. Here at COW East in Boston, Massachusetts Governor Deval Patrick made the rounds of west-coast game developers like EA and Microsoft, , pitching the same tax breaks offered to filmmakers who create jobs here. He also noted the 60+ game development companies already in the state, including our pals at Harmonix, the developers of Rock Band. After its success with "Lord of the Rings Online," $40 million in venture capital has helped once-tiny Turbine expand to 250 employees. MIT is even partnering with the government of Singapore to develop new games technologies and new jobs.

As you'll see in this issue, not all game jobs are going to fast-twitch 3D animators. Many of them look like traditional post jobs - video is integrated into games, promos are cut - along with quite a few traditional production jobs, like greenscreen shooting and motion capture. Add the stampede of interactive developers- Flash, online gaming, iTunes games and more - into the COW, here for the same reasons that film and video producers have been coming to our communities for 14 years, and watch convergence explode before your eyes.

No story this big can be told in a single issue. We'll keep digging in deeper at magazine.creativecow.net: more jobs information, interviews with industry leaders, and more of the games-related hardcore production (not just post) stories that you've come to expect from The COW Magazine.

From there, we'll also be exploring the ways that games are changing the landscape of technology. The demands of gamers for beefier processors, higher resolution monitors with faster redraws, surround sound, social networking, and, increasingly, stereoscopic 3D immersive experience, are all making their way into a world even bigger than the world of gaming itself. That's BIG.

In the meantime, there are indeed some production stories for this issue: Oscar-winner James Moll's new documentary "Running the Sahara," is about three guys who, well, yeah - and James has great stories about the shoot. And Bob Zelin will once again blow your mind, this time with Blackmagic's Broadcast Videohub, a distribution revolution. An upcoming expanded edition of Dustin Lau's article on advanced media management with FCP, using workflows he developed for a games review TV show in Singapore, will also include more production angles than our decidedly post-oriented print version. (Links to follow.)

Our detour into Games is an opportunity to remember that, whatever your field of endeavor, we're all playing for keeps, every day. Thanks, too, for helping us play to win at CreativeCOW.net, as over 1.3 million monthly visitors help each other get to the next level of the game! In the meantime, have fun with this issue. We sure did.

I'll be honest, I thought Steve Jobs was blowing smoke when he encouraged the end of DRM. I still think the timing around the unfair business practices investigations in the EU is way, way too convenient to be a coincidence. It really did have all the hallmarks of a diversion and little more. So I'll give him all the credit in the world for actually making it happen.

You've heard the news by now of course, but I have to tell you, reading the transcript from the press conference with Steve and the guy from EMI is a gas.

Some highlights that I haven't seen mentioned widely yet:

• The DRM-free tunes will be at twice the data rate.
• Your current EMI downloads from the iTMS can be upgraded to higher-quality, DRM-free for the difference in price. (This is a no-brainer purchase, IMO.)
• EMI is making their DRM-free music available to any music store to sell. And why not? They want the money, and more stores offers the potential of more money.

Anyway, you definitely want to check it out.

In the meantime, Microsoft followed this up with their own story about working on DRM-free music themselves. I still kinda like Microsoft. But this is just sad.

OTOH, the article I cite above is riddled with errors, starting with four of the first five words. It calls Apple a "digital music pioneer." What?!? Apple came late to the game, and aren't even close to the first to offer DRM-free music. They've also offered among the lowest bandwidth music for a long time, so stop with the pioneer chatter. There are other errors, too. You could make looking for them a drinking game...as if you don't have enough of those already.

Now here's the thing. None of this is even close to the "death knell" for DRM, which will surely be around even longer than cockroaches.

It's also easy to forget that there's a large-ish industry that makes money selling DRM technologies, and they're not about to give up their livelihoods without a fight. And since their customers are almost all much, much bigger than EMI, well, the cockroach thing.

DRM Watch sounds like it would be keeping their eye on DRM mongers. Nope, it's keeping an eye on DRM foes. You'll want to take a shower after reading this, but you should read it anyway.

The headline says the story's about Microsoft jumping on the DRM bandwagon, but it's actually an overwrought screed. Here's one of several money quotes: "As far as EMI is concerned, the deal was shortsighted, risky, and possibly irresponsible to the company's shareholders."

Here's another: "A more effective arrangement would have been with a major multinational retailer, like Amazon or Target, that has no current digital music strategy."

Actually, not quite true. I know for a fact that Amazon has a digital music strategy...or the beginnings of one. One of the coolest recuitment pitches I ever got was from Amazon, who asked me to head up their digital music strategy and create their online music store. We had several phone conversations where they put the full court press on me. Ridiculous money and benefits, in a good way. It was pretty overwhelming. But I think when they got my resume, they realized they were looking for another Tim Wilson.

Last one: "Apple...stands to benefit most from any additional unauthorized copying resulting from the lack of DRM." Maybe, but only to the extent that they sell the most music players. As Steve J. points out, the vast majority of iTunes owners have never purchased a thing from iTMS. Their iPods are filled with the legal, DRM-free rips of their own disks. I think he's absolutely right.

No, here's the last one: "we believe that the number of consumers who would truly benefit from "interoperability" is small." Riiiiiiight.

Choose what you drink carefully when you read this, because you'll surely be shooting it through your nose with laughter.

 

Okay, after raining on DRM Watch's parade, the article makes some interesting observations.

One is that EMI is getting a cash advance of $5 million from Apple. He says that, combined with the new sales of online tracks, we're talking about 3% of EMI's annual digital sales of $290 Million from digital revenue (really? that sounds high to me), and a tiny fraction of the company's overall revenue of about $3.4 Billion. He's not at all clear if this is simply music revenue or includes publishing, etc. -- but that's to be expected. His goal isn't clarity as much as it is to protect his own DRM business.

That said, this squares with my own impression of the impact of online music store downloads relative to hard-copy sales -- in the low single-digit percentage range.

He also has some interesting speculation that the real intent of EMI's move was to drive up the price of Warner's attempt to acquire them. I'm not buying it, but it's still interesting.

Anyway, I have to agree with him that DRM is far from dead.

Yet.