Clay Shirky’s latest column proposes an interesting idea: That not leaving behind the big, dumb business models could be catastrophic.

It comes out of a theory that discusses how civilizations collapse:

Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.

The ‘and them some’ is what causes the trouble. Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn’t these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.

In such systems, there is no way to make things a little bit simpler – the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn’t regard the sudden decoherence of these societies as either a tragedy or a mistake—”[U]nder a situation of declining marginal returns collapse may be the most appropriate response”, to use his pitiless phrase. Furthermore, even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites.

The system needs change to survive.

While it’s not always useful to try and fit large scale models over smaller ones, in this case I think there are some useful lessons to be drawn from the idea that our current inefficiencies and rapid shifts may actually be fundamental to the survival of media.

Here’s the money quote:

To pick a couple of examples more or less at random, last year Barry Diller of IAC said, of content available on the web, “It is not free, and is not going to be,” Steve Brill of Journalism Online said that users “just need to get back into the habit of doing so [paying for content] online”, and Rupert Murdoch of News Corp said “Web users will have to pay for what they watch and use.”

Diller, Brill, and Murdoch seem be stating a simple fact—we will have to pay them—but this fact is not in fact a fact. Instead, it is a choice, one its proponents often decline to spell out in full, because, spelled out in full, it would read something like this:

“Web users will have to pay for what they watch and use, or else we will have to stop making content in the costly and complex way we have grown accustomed to making it. And we don’t know how to do that.”

But it the more turbulent and fluid environment of games, we do know how to do it. And the ones who accept that are the ones who are going to thrive.

Last year he created a special focused on Video Games called “GamesWipe”. It has the same snarky attitude as his regular show, and featured this bit of commentary on game content by British comedian Dara O’Brien.

The first few minutes are as cogent an argument as I could ever make about why the idea of “Great Game Narrative” is most often a fool’s errand. That’s not to say it isn’t possible, but it also isn’t what, at the core, makes a game “good”.

The relevant content begins at 2:15
(and contains some NSFW words)

Apple has, in the past, always built their consumer products around a need that has either been unaddressed, or closes an obvious “hole” in the marketplace, even if most people didn’t realize how obvious it was until someone built a shiny-white plastic a bridge across it.

CLOSING A GAP

Before the iPod released there were dozens of different mp3 players appearing on the marketplace. With wonky interfaces and minute amounts of *expensive* flash-ram (16-64mb) these overpriced music players had terrible interfaces, and integrated with your computer in often bizarre ways.

The release of Apple’s music device that all changed in a moment. With a hard drive and a clear, visual interface, it let people play music they way they wanted, but they hadn’t realized it until Steve Jobs held it up for them to see.

The gap in utility before the iPhone was wide and deep. After spending years struggling through a variety of poor interfaces and hacked together half-assed features, the average phone user was ready for a “smart phone” that actually worked. They also wanted something that could act asa a replacement for the growing forest of devices that had been cluttering up the average nerd’s pockets, backpacks, and man-purses. While it took a while for the full feature set to come into place, it was clear from the get-go that Apple had seen the problem, and the Phone satisfied it.

THE KILLER APP

When the iPod launched everyone had been so focused on complaining about piracy, nobody had bothered to offer look at the user’s experience of pirated music and offer a viable digital alternative for legally owning songs in a way that actually came close to giving the customer the kind of utility and flexibility that made having a digital music collection so much fun. That was, until Apple launched iTunes. While it wasn’t the perfect program, it was slick, smooth, useful, and fun.

The App Store, while not quite as gee-whiz as the music store was, realized that if you could develop a way for customers to customize the experience of the device in their pocket they would love you for it. Instead of being a single swiss-army knife for everybody, you could choose the different blades you need, creating a device that fit your style perfectly.

WHAT ABOUT THE iPAD?

You can see in this first slide from the presentation that the iPad is basically about answering a question that nobody had really asked: What would you get if you hacked and iPhone together with a laptop? While the answer is kind of cool, it doesn’t tug at our desires. There is no hole.

And that’s why I think the iPad is kind of a dud. I doubt it will be a failure, but as far as I can tell the iPad doesn’t really solve a problem, or offer a killer App. Instead it relies on a maneuver I’ll call the “iPod Shuffle”: flowing out on a river of hype, it promises to build a bridge to nowhere, satisfying nothing more than a vague need to be a part of the world of Apple, and give us an echo of that oh-so-satisfying response we get when Apple has closed an actual loop.

Over on the Wired Gaming Blog, Chris Kohler has some interesting points on a Christmas that seemed to have once again shown that the big N plays by its own rules.

While it’s all interesting I thought this particular chunk of the analysis was particularly relevant to the social gaming space:

Ubisoft, saying on Wednesday that it would scale back its casual-game production for DS and focus more on Xbox 360 and PlayStation 3, pointed out that it was actually experiencing “robust” sales of its Wii casual games.

So it’s possible. How the hell do you do it?

Analyst Jesse Divnich of EEDAR, in a note on Thursday, made what I think is the most cogent, cohesive argument about this situation that I’ve seen yet:

All too often the economy is blamed for the recent industry contraction. In reality, decreased sales in 2009 had more to do with a lack of innovation than economic recession. The growth of our industry now rests more on innovation than it ever has before, especially since non-traditional and casual markets consist of a larger share than in previous years. No longer can developers update a few maps, design some new weapons, add a few new characters, then throw a roman numeral at the end of the box and call it a “sequel”. That may work for core targeted games (Action, Shooters, and RPGs), but this strategy is not ideal for non-traditional and casual gamers.

Case in point: most sequels targeted to the mainstream and casual markets actually underperform in comparison to the original, which is the opposite to what has traditionally been the case for core targeted games. If you examine the Nintendo Wii and DS platforms (the current primary platform for this audience) Boom Blox outsold Boom Blox 2 (Wii); Brain Age outsold Brain Age 2 (DS); Guitar Hero III bested World Tour (Wii); The Bigs crushed The Bigs 2 (Wii); Mario & Sonic at the Olympics (Wii) is on track to outperform its Winter counterpart; Rayman Raving Rabbids (Wii) (2006) outsold its 2007 release; and lastly the original Cooking Mama(Wii, DS) (2006) has out sold all sequel versions combined.

EEDAR believes Nintendo understands the mindset of its consumers the best, which is why Nintendo rarely releases sequels within the same generation and, if they do, they are years apart. A good example of this is Mario Kart. Instead of releasing an annual Mario Kart title, Nintendo opts to only release one Mario Kart per hardware generation. Traditional thinking would assume that after an initial sales bump Mario Kart would simply just fade away on retail shelves—as so many others do. However, Nintendo realizes that if you can get an initial attachment rate on Mario Kart of 25% in 2008, they should be able to get the same attachment for new Wii purchasers in 2009 without having to release a sequel. To no surprise, the attachment rate for Mario Kart in 2009 was identical to that of 2008. Another example is Wii Fit. Whilst Nintendo did release a sequel to Wii Fit, The Wii Fit Plus (2009), the overwhelming majority of sales did not come from the stand-alone software edition, but rather the hardware/software bundle of the Wii Fit Plus. In other words the release of the expansion, which likely had minimal development costs, spurred sales of a 20 month old game wrapped in new packaging.

Of course this rule is not absolute for all casual and mainstream titles, some sequels do outperform the original, but in the overwhelming majority of cases, sequels on the Wii just cannibalize the potential sales of its predecessor. For reference, if the above examples were not proof enough, Call of Duty: World at War (2008) only outsold Call of Duty 3 by the smallest of margins and the most recent Call of Duty Modern Warfare: Reflex (2009) is currently on track to under-perform against World at War.

With the Wii making up the majority of the current casual and mainstream audience this finding should be carefully observed as Sony and Microsoft attempt to become more competitive in this space in future years.

So all you have to do is not release sequels? Unfortunately, it’s not that easy: All you have to do is nail it the first time. That’s harder. And unfortunately, this is not what many software makers seemed to be doing when they first approached Wii. Instead, the idea seemed to be: spend a little bit of money, make something barely acceptable — because screw ‘em, right, they’re casual gamers, they’ll play any old thing! — then follow up with a more polished sequel if it takes off.

Meanwhile, Nintendo keeps producing what are, by miles and miles, the most highly polished games on Wii. Third parties might not be able to have six million-sellers in a single month, it’s true. And, from where I’m standing, even great games like Boom Blox aren’t racking up the sales they deserve. But Divnich makes a compelling point: If software makers are not following the Nintendo-style model, they have very little room to complain that they’re not seeing Nintendo-style results.

I don’t necessarily agree with his conclusions. I think he’s overly concerned with sexism while glossing over the fact that women (and mainstream gamers in general) may not be interested in the same play patterns, but it’s definitely worth a look.

via Lou Anders

While it’s easy enough to figure out what the most popular games are simply by going over to AppData and looking at the numbers, I thought the end of the year might be a chance to reflect on what were some of the most significant games of 2009, and discuss their impact, for better and for worse.

Some of these games were hits, and others were bombs, but they are all games that will have (or should have) an impact on the way we’ll make our games in 2010.

Amazon reviews never reflect the product, they reflect the passion people have for the product. As Jeff Bezos has pointed out again and again, most great products get 5 star and 1 star reviews. That makes sense… why would you be passionate enough about something that’s sort of ‘meh’ to bother writing a three star review?

A product that inspires intense responses will almost always have more success then those that only inspire a middling reaction.

Ironically, the end was within reach, even if Broussard couldn’t see it. Raphael van Lierop, who was hired in 2007 as a creative director, was given several pieces of the game to play. It took him about five hours. Broussard was stunned; he’d thought those levels would take half that time to get through. “You could see the gears turning, with him thinking, ‘Oh wow — maybe we’ve got more game than we think,’” says van Lierop. Broussard had been staring at the game for so long, he’d lost perspective.

Van Lierop was excited: From what he’d seen of it, Duke Nukem Forever was so well developed — and so graphically superior to any other game in production — that if 3D Realms pushed hard for a year, they could release it and “blow everyone out of the water.” No, no, Broussard replied. It was two years out. Van Lierop was stunned. “I thought, ‘Wow, how many times have you been here, near the finish line, and you thought you were way out?’”

The good stuff starts at about 3 minutes in.

The first generation of digitized media tends to closely relate to our analog experiences, but quickly takes advantage of the flexibility of the virtual medium. Early word processors were much more like a typewriter, for instance, then the advanced editors we have today.

As usual when these huge valuations come around, people tend to question whether or not the company is really worth it, especially when you consider they pulled off this kind of value in only 18 months.

But, as Venture Beat notes, this is all about the size of the audience. And let’s be honest here, games have never been this popular before. Even casual’s attempts to be mainstream meant titles only sold a couple of million at most.

Zynga has changed the game because they have done the single most important thing that you need to do in order to succeed online: They found the audience. Then they followed that up with a business model that works. It’s shown us an effective way to business in a world where the old media is still fighting their own biggest fans through draconian laws and DRM.

These are television numbers, and while there are many things that can (and probably will) go wrong as this business is further defined and consolidated, there is no doubt that things are different now then the were a year ago, and we won’t be going back.