More and more rumours emerge about the videogame console from Valve. Famous about their online game store Steam, Valve is a some time investing in emerging technologies and ideas. But is a new videogame console needed? There are already three players now with major investments in hardware and the dispute is famous for being very, very hard. Sega, Panasonic and even Apple tried and can tell you more about it.

Valve has being preparing it’s terrain for some time now. It recently launched (which means that they were already working internally long before) the Bigpicture feature. It transforms the classical Steam interface in a more Television fashion. It is also designed to be controlled via a remote control. But they have never satisfactorily answered the question: who would put a giant PC case in the living room, right next to the TV, just to be able to play?

According to these news, the machine will feature a Linux. It is aligned with recent declarations of the Valve president, Gabe Newell, saying bad things about the new Microsoft Windows. Linux is free and flexible and recently is gaining an unprecedented track with Android phones. Also, Gabe knows that Microsoft plans to launch a service very similar to his Steam, selling software in a centralized way. Survival measures.

Valve has also working with Linux. They recently announced that Steam itself will work on Linux and accept Linux games. A beta is in progress. But except for indies, there are no relevant games for the system. Valve must itself to port some own games (Left 4 Dead, Team Fortress, Half Life and DOTA franchises) to show the path and prove the market viability. Once they do this, many other developers might be encouraged to follow. But it will take a while though. Unlike Windows and closed console systems, Linux on a broadly used machine is yet a niche.

Game engines and middlewares must be prepared also. Valve probably is working on porting it’s Source engine to Linux. Rumours say that a second version of their famous middleware is being cooked. Another demonstration of commitment of this strategy. Epic’s Unreal engine, Unity, Id and other middleware players are announcing compatibility with Linux. They noticed the movement, lead by Valve’s Steam but not exclusively attached to it.

But how a traditional software company will enter in the computer market? Well, Microsoft already followed this path creating a whole hardware division to actually manufacture Xbox. It is a very risky and difficult movement. Electronic manufacturers like Samsung or Nvidia have much more expertise and would have much more success doing this path. Rather, I predict that Valve would follow a similar strategy adopted by Google and its Nexus brand: designed done in house but the actual machine is done by third parties. Valve would just set partnerships with pc manufacturers to create stylish mini PCs with top notch pieces like graphic card and processor. We would see several versions of Steambox shipped in waves, like smartphones and tablets, experimenting new features on each iteration.

PC should finally be considered a first class console.

The gaming industry is a very risky business, just like any other entertainment industry. Generally, players have to bet on a very narrow set of products, which demand high volumes of investments. If we think it through from a project manager perspective, we have a very, very, very risky business to invest in. These companies invest mountains of money in very few products that narrow correlations between quality/sales.

Big investments

The latest graphics, motion capture, and Hollywood actors for voice-overs all cost money. Trucks of money. Like films, AAA titles consume millions of dollars to be built.

Small portfolios

Because the volume of money required to create a game is very bulk, the companies that want to create a portfolio (publishers) have to choose the projects with care and criteria. Even that, they can only concurrently create a very narrow range of games. Essentially they have to bet on very few horses to generate a very large amount of money to finance another cycle. The problem relies on the worst scenario: the current bet does not pay out. The whole company puts itself in a very dangerous financial position.

Game is Art

But the final analysis must consider games as art products. You cannot follow a formula to make people fall in love with your product.

Now always they pay off. The recent cases of THQ and 38 Studios illustrate this.

38 studios, the makers of the excelent Kingdoms of Amalur: Reckoning, recently bankrupted. The company took around 100 million from the government to create an AAA title, but the game, while selling well, didn’t sell the amount needed to stay afloat.

THQ invested in a few AAA titles that demanded loads of money. When the failure rate rises a bit, the whole operation starts to be financially compromised.

Homefront, unfortunately, will be remembered as the milestone for THQ’s potential fall. Unfortunately, because it was a critically acclaimed game (at least it receive good greats), due to external reasons it didn’t sell well to the point that compromised the THQ cash flow. Homefront was being considered the cash cow internally, the new IP that would generate loads of money, and safety. But the forecasts were nothing but dust.

It answers the question several gamers make: why do game makers keep building sequels? Now you know…

Chris Anderson got the world’s attention by writing the bestseller The Long Tail: Why the Future of Business Is Selling Less of More, where he describes the economic logic behind some eCommerce sites that sell an immense variety of goods instead of focusing on just a few.

In his next book, Free: The Future of a Radical Price, he discusses the free (as beer): why people are so moved by free stuff, and how offering something for free might be a great deal. He gives you a brief and interesting history of the free merchandise, gives several theories (which is the main focus of the book), and several examples that happened in real life.

It has some common aspects with the first book: economies of scale and marginal cost/revenue. He shows that if an item’s cost is too small, you might consider it zero. Imagine HD space: since the price is constantly dropping, a company might consider it irrelevant and gives their clients unlimited space for free. It is not free for the company, but the actual cost is so low that it will not affect your profits in a relevant matter, but will generate an enormous impression for the clients.

Not Too Small to Matter, but Too Small to Meter

The author is prudent enough to not advocate free as a messiah. He believes, in fact, in the idea of Freemium, in which the product is offered as free for most users and a small fraction will pay for a premium offer.

Anderson eats his dogfooding by releasing the book for free as a pdf while the physical is paid for. The audiobook can also be found in a free version and is very curious: the full version, which is the complete book, is free while the compact version is paid. Time is money and the compact version saves you time but not money.

Nintendo just presented to the world the new console, which, by the way, several details were already known.

Wii U. Is the name of the new console. The name is a reference to We and You. In the paper, the idea is nice but after a basic field test, it reveals to be a terrible choice. The president of Nintendo of America, Reggie, said that Nintendo is now going to pay attention to individuality after so many years dedicated to generating the gaming culture for a multitude of the public.

The main attraction of the new console has an embeded controller. It has a big tablet-like screen that receives a video stream from the console (it does not process anything). This means that one cannot play games during trips or even in the backyard. It must be close to the main machine.

A curious feature of this controller is that it can project a different camera of the game on TV from what the player sees in the console. It will bring interesting dynamics to in-loco multiplayer games for sure.

Note: the golf wiimote+wii u controller demonstration is embarrassing. I imagine someone putting the screen on the floor to see the ball from above. OMG

Despite the obvious excitement of all Nintendo staff, the whole product is should be considered more as a Wii HD (it will finally output HD video and have more competitive processing power). I doubt that major games will support the new controller as WE MUST. The rationale is simple: it’s too costly to design a product with a so limited scope.

Games are expensive to make. And spreading your product to the wind, and selling to all video games, and computers digitally and physically would reduce the risk. But if you can only sell to Wii U due to the exclusive controller, it would quite risky. It is not a coincidence that Wii exclusives are generally small companies or small products. Unless developer companies start to develop similar functionalities using alternative tablet/phone/computer combinations.

I am particularly skeptical about this move. I always wondered about Wii and DS merged gameplay, but betting it will be the future is quite strange. Well, Nintendo has a great pedigree about gimmickry.

The new version of the Unity 3D engine was just released and I’m super excited.

All the previous features continue there: great asset integration (several 3D, 2D, and sound file formats), programming scripts, and a great IDE. But now the visual performance is better, even with the new features enabled.

Pre-baked lightning is now included by default. It allows the creation of amazing scenes that most of the lights pre-rendered. It allows the video card to work on other stuff, like shaders. Speed is also better than the inclusion Ambient occlusion package. It analyses the scene/map previously and checked what parts of it will not appear depending on where the camera is and saves the information to be used in real-time. The performance gain is huge.

The animation manager is also a great plus. It seems very much like video editing, with curves and keyframes. It is now very nice to program animations, especially for designers.

UDK (Unreal Development kit) is also gaining a lot of attention from the media, but with a feature set somewhat similar (again, 99% of the game makers are not even capable of using the engine fully), it is quite an irresponsibility to accept the license that makes you give 25% of the profits to Epic (and after paying your distributor, marketing, etc…).