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Mass Culture for Profit

Do You Play Video Games or Do They Play You?

by THIBAULT HENNETON

Since the spread of smart mobile devices — smartphones and tablets — the video games industry has learned a lesson in economic Darwinism: develop your mobile business or face extinction. The growth of gaming on the move means a new global division of labour, and the industry is revising its profit margins.

The French games publisher Ubisoft’s next sure success, Watch_Dogs, is designed for the new consoles (Xbox One, PlayStation 4). In this open-world game a player’s avatar can roam through a virtual city based on Chicago; its leading character is a computer hacker and former mob fixer, whose main advantage is an ability to hack the city’s information infrastructure to open security barriers or take control of traffic lights and cameras, and elude the surveillance network. The Watch_Dogs marketing team has come up with a free mobile app, Hide, for release alongside the game, which will allow users to “disappear from the network” — ironic, given that mobile gamers generate huge volumes of data, which developers analyse in minute detail to help optimise the game and maximise revenues.

There are also plans for a companion app to allow players to stay in contact with the game even after they put down their games console and switch off the television set; they will be able to use a phone or tablet to undertake missions in cooperative multiplayer mode. This app will be synchronised, so missions accomplished on mobile screens will transfer to their main screens when they resume play there. Some big publishers are taking advantage of improved connectivity to combine technologies, both to increase returns on the long, costly development of blockbusters, and to create new “franchises”, brands that can be divided into episodes and released for a range of platforms. Besides Hide and the companion app, there could be a third app, if Watch_Dogs is then released in original versions for Apple’s iOS, Google’s Android, Windows Phone, Blackberry and Nintendo DS. Adapting games for other platforms is known as “porting” (1); porting to mobile devices is an assembly line-like process, and traditional development studios often outsource it to subsidiaries or outside contractors in countries with lower costs.

France has a porting company, Playsoft, which works with major publishers (Electronic Arts, Disney, Sega, Konami), but will not specify who and what because of confidentiality agreements. The headquarters in Paris signs the contracts, then the apps are developed by a Polish subsidiary, which employs about 100, though this is not mentioned in the credits. The traditional studios are trying to adapt to changing patterns of gaming (2) and cut costs (see Minions of the game). They aim to reach more casual gamers, who don’t track the latest releases on news sites, but download an occasional game if it’s free.

Pyramid of a business model

Ubisoft has recently acquired Futures Games of London, developer of the Hungry Shark franchise, and Digital Chocolate, in Barcelona, a publisher of social and mobile games. Ubisoft continues to invest in Quebec, which yields an excellent return (see Canada’s games industry success,),but Electronic Arts (FIFA, Battlefield) has cut two-thirds of its local workforce, claiming the cost of labour is too high when its games sell for 99 US cents. In 2011 Electronic Arts acquired free online games creator PopCap Games (Plants vs Zombies) for $850m, signalling a change of direction. This summer the Vivendi group gave up its holding in Activision Blizzard, which is number one in the sector, claiming its business was “too cyclical and uncertain”.

Nomadic players of Watch_Dogs may look down on gamers playing Candy Crush Saga on their mobile screens. The mobile and social network version of this game, launched in 2012, attracts 200 million players every month and generates more than $860,000 of revenue a day, according to Think Gaming. But rearranging virtual sweets on a grid, lining up shapes and colours, is a hackneyed theme, reminiscent of Tetris or fruit machines, and loses appeal when you realise that, like other F2P (free-to-play) games, it is calculated to exploit your frustration.

That calculation is shaped like a pyramid if you are looking at the game itself, or a funnel if you are looking at the business model (3). The first stage is acquisition — attracting gamers. The game is usually a loop: one or more levels are always available. Movement is often automated: your avatar advances of its own accord, and all you do is touch the screen or tilt the device to guide it around obstacles. The game is free: it’s included in your network subscription fee (though online stores often ask customers to supply a bank card number). So it attracts lots of players, through word of mouth and player rankings.

Value of virtual currency

At the second stage — retention — the player is encouraged to come back for more, through frequent updates, rewards and personalisation. In Candy Crush Saga, the player has a finite number of lives. When these are used up, he can either wait for them to regenerate, or beg one from a fellow gamer on Facebook, which means he has every interest in recruiting gamers as “friends”. There will be a “currency” for use within the game — it doesn’t matter what form this takes, as long as players quickly get used to it. Robert Weber, co-creator of mobile advertising platform NativeX, says: “The sooner users recognise the virtual currency’s value to their gameplay experience, the sooner they’ll be willing to buy more” (4).

The third stage is monetisation. A small core of players attached to the brand will be ready to pay for new lives. They will make up fewer than 2% of all players, but yield considerable profits for the publishers. The business model for “freemium” or free-to-play games seems to have been developed in South Korea in 2001, and is based on micro-transactions; it is becoming dominant in the sector, overtaking premium games (paid games without in-game stores) and “paymium” games (medium-priced games with in-game stores) (5). This has led to many games with life spans as short as a few months, and continually modified. The model depends on constant tracking of user behaviour, and often carries advertising, which generates around 20% of freemium game revenue. However, there may be trouble ahead: in September 2013 the UK Office of Fair Trading was concerned about the “blurring [of] the distinction between spending in-game currency and real money”, confusing for younger children (6).

The transformation of the industry by the spread of mobile devices has allowed independent developers to do without publishers as distributors. There are many success stories, including Finnish company Rovio Entertainment, which created Angry Birds, currently licensed to toy manufacturer Hasbro and soon to be a film (7). Plague Inc.,a 99-cent game in which the player creates and controls a pathogen, aiming to destroy Earth’s population, was developed by a team of four in the UK, with a budget of $5,000. A week after its release in May 2012, it topped the download charts in the UK and the US (8). The secret of Plague Inc.’s success is not originality: it is accused of plagiarising Pandemic 2, released in 2008, itself inspired by Contamination, a 1985 game for PC. Plagiarism is a frequent complaint, because of “the gray area between what the law expressly forbids and what ethically feels wrong, where many clones, remakes and ports will reside” (9).

Plague Inc. illustrates the crucial role of intellectual property and platforms in the transformation of the industry. The developers who lead the market for games for mobile connected devices (King, Zynga, Gameloft) have accepted the dominance of the platform over intellectual property. Smaller firms, which often specialise in a single programming language, are unable to compete with these wealthy listed companies. They can distribute their games via online stores, as long as they are willing to accept the terms (10), but few can extend their good ideas across a range of platforms, so the money finds its way into the same pockets (11).

‘The data that glues together’

This seems to contradict the claim of the mobile analytics and monetisation platform, Flurry, that there is a middle class of mobile app developers. Flurry tracks user behaviour (it tracks more phones than Google or Facebook, according to Forbes magazine) and offers its clients a marketplace for the buying and selling of advertising, mostly for other apps. According to CEO Simon Khalaf, Flurry has “the data that glues [supply and demand] together” (12). Seven out of 10 applications on phones contain Flurry code that collects information: number of active users per day, session length, payments. This is useful to developers who want to fine-tune games (if a lot of players have stopped at level 3, you need to make your game less difficult). When linked to very specific categories of consumer, it can be used to target them: those who commission the information-gathering then base ads on it. The platforms, and their software, seem to be offering imaginative pleasure, but they’re really part of an advertising industry.

Are mobile games leading to a new “mass culture”? The advocates of the expression mass culture “use [it] in the hope of making us believe it is a culture that has arisen spontaneously from popular culture,” Theodor W Adorno said in a 1963 talk on the culture industry (Kulturindustrie), a concept he and Max Horkheimer formulated in Dialectic of Enlightenment, published in 1947. They chose the term to describe something that conforms to a “plan for a product intended for mass consumption, and which to a great extent determines that consumption”— which distinguishes it from popular culture.

Though a video game can be a “work” in the true sense, mobile gaming, supported by software platforms, is the ultimate in commodification. There will soon be a potential alternative: Valve (Half-Life, Counter-Strike) will shortly launch SteamOS, a Linux-based system free to download for users and freely licensable for manufacturers. Markus Persson, alias Notch, creator of Minecraft, recently tweeted that Valve is “saving the entire gaming world” (13), but it may not save us from the Kulturindustrie.

Translated by Charles Goulden

Thibault Henneton is a journalist.

Notes.

(1) Porting does not always mean adapting console or PC games for mobile devices; it can also go the other way. Angry Birds was initially created for iOS, and later ported to PlayStation 3.

(2) In 2013, 600m smartphones and 200m tablets were sold worldwide. Around 25% of Android apps and 30% of Apple apps are games. Games account for 50% of the time people spend on their mobile phones.

(3) See Nicholas Lovell, “The Pyramid of Free-to-Play game design”; gamasutra.com

(4) Robert Weber, “The Future of Mobile User Acquisition and Monetization”; nativex.com.

(5) In September 2013, this type of game accounted for 94 of the Apple Store’s 100 highest-grossing iPhone games. See Brooks Barnes, “Disney Struggles to Make Its Free Gaming Apps Pay”, The New York Times, 18 November 2013.

(6) “Games industry should not pressure children to purchase, says OFT”, Office of Fair Trading press release, 26 September 2013.

(7) See Danny Graydon, Angry Birds: Hatching a Universe, Titan Books, 2013.

(8) Ryan Rigney, “How to Get Rich Simulating the Deaths of Billions of People”, Wired, 12 April 2012.

(9) Jonathan Bailey, “Plagiarism in Video Games”, PlagiarismToday, 30 January 2012. A representative example is Order & Chaos Online, Gameloft’s World of Warcraft clone.

(10) Online stores generally charge 30% of sales, and the developer must pay €100 ($135) to Apple for publishing in its online store. A player who buys a game on one of their platforms never really owns it: the day the platform decides to withdraw it from the store, he will no longer be able to download it.

(11) Apple and Google both claim to handle over 700,000 applications. According to a report by US research firm Niko Partners, China’s 80,000 developers release 100 games every day (see “As New Entrants Rush In, China’s Booming Mobile Game Business Faces Consolidation”, Forbes, 6 September 2013). See also Neill McAllister,“Half of all app store revenue goes to just 25 developers”, The Register, 4 December 2012.

(12) Parmy Olson, “Meet The Company That Tracks More Phones Than Google Or Facebook”, Forbes, 18 November 2013.

(13) twitter.com/notch/status/382192790454534144.

This article appears in the excellent Le Monde Diplomatique, whose English language edition can be found at mondediplo.com. This full text appears by agreement with Le Monde Diplomatique. CounterPunch features two or three articles from LMD every month.