Monday, June 27, 2011

It's Not Personal, It's Business...Part I

There's nothing wrong with somebody wanting to make money. All motive or context aside, there's nothing wrong with it. There's nothing wrong for a game maker wanting to make money on the game(s) he/she makes. The problem, I have observed, is with the consumer.

I've been thinking a lot lately, a lot more than writing, given that I've been unemployed for seven months now barely making rent. Some of you who may know my history of back trouble and my insurance company's absolute refusal to approve my much needed treatment (because, according to them, I don't match the criteria 100% that would merit the kind of treatment I seek...i.e. "It's a business decision, we need to save money where we can by enforcing our policies's nothing against you personally"). Anyway, where was I. Oh yes, so knowing my issues with my insurance company it may seem odd when I stand by a businesses right to, yes, make money and place that as priority.

I've witnessed and observed a lot, from childhood until now. I've gone to college and have many, many years as a financial professional under my belt, so I believe I'm quite quailified to speak on something such as business. Of course, even the college kid who took a Bus 101 course and 20 political science courses by a professor extolling the virtues of communism can also have an opinion, it's just that I think we'll disagree on some points.

Getting back on topic, I have noticed a general tone throughout the blogging community over the past year growing sentiments against game makers for not producing better gaming experiences due to their lust for money and wealth and power and money and more money. I actually have mixed feelings over the issue, for one I am a fairly new online gamer. I have a console game but don't even have it connected to the net because I refuse to buy a longer chord. So, generally speaking I can both understand the cry and hope of gamers for an experience more to their liking, but at the same time I can simpathize with game makers who wish to actually make game making

Where did you grow up? Was it hot in the summer? I grew up some in Utah (6 years from 2-8) but before and after that it was all New England all the time, both Maine and New Hampshire. I still consider myself a true New Englander. Anyway, it could get hot in both places, and in both places I took the opportunity with my brother and friends to capitalize on the heat and those who worked outside by establishing a lemondade stand. And yes, I sold lemonade to people, I did not give it away.


Because there was this cool arcade down the road, and by pulling in 5 bucks I was set for an entire weekend of arcade gaming. It was beautiful. I was also quite unaware of anyone in the local community or even nationally who protested against my lemonade stand and the fact that I sold it in exchange for real american coins.

There was another trend in my childhood that I would like to point out. The Playground. Now, if you wish to deny what I am about to tell you, be my guest. I can only assume it will be becuase you were a sheltered child that had no friends. So, here I go with my observation: Often while playing some game, whether it was made up or more well known and traditional, I often found myself on the losing end of a "new rule" that some other child made up in order to gain an advantage over me. Let's say I was make believe sword fighting, somebody would suddenly claim to be Darth Vader with a light saber and proceed to cut my sword in half, gain the advantage, kill me and claim victory. I hated that.

Of course I was free to change my mind and the rules of any game I wanted to if that's that choice I wished to make, but that wasn't my style...most of the time. I was a stick-in-the-mud-follow-the-rules type kid, so it would take somebody really pissing me off and taking advantage of me to push me to change the rules right back on them. But that usually led to both parties just getting pissed off and quit playing with each other. So what I'm saying is that I, and I would bet my life that you too, and many experiences where somebody changed or added a rule in a game you were playing that lessened the joy of your playtime, annoyed or frustrated you, or perhaps just pissed you off. Or maybe you were the kid who always changed the rules on others, and if that's the case then let me say now that I'll get you someday, so watch your back!!!

So how does childhood apply to what I'm beginning to talk about? Well I've observed that people don't change that much from childhood, and businesses both change the rules and have the rules changed on them continuously. Added to that the continually changing desires and expectations of gamers, I'm surprised that game developers can make anything worth playing. Well, no I'm not really surprised, but hyperbole seemed appropriate in the moment.

Governments change laws constantly that affect the business decisions of a company. Here are a few decisions that a business must consider depending on the law changes:

1) Business Structure
2) Personnel
3) Tax strategies
4) Location
5) In-House vs Outscourcing
6) Overall Strategy
7) Revenue markets/Opportunities
8) Threaths (including but not limited to Competition)
9) The list could go on and on but I'll stop here for now

New laws require a business to conform to new rules (Sarbanes-Oxley), but sometimes a business will be so innovative that they will create the new rules themselves. The automobile assembly line was an innovation that changed how car companies made cars. It effectively changed the rules of car-making to a level never before seen in the industry. Both the PC and gaming consoles changed how people played games, or what type of games people played. True, people still play board games today, I know there are quite a few I still love to play, but as Atari and others early in the industry discovered, the rules of what, when and how to play a game changed in what the world would consider a very short amount of time.

Expectations are a force in rule making. But notice, expectations are not as strong a factor, and as a result, I believe, the consumer is left to complain that progress isn't progressing as fast as they like. To make it worse, younger generations, meaning those 10-15 or more years younger than me, were not alive to experience the growth from Apple II games to today's incredibly detailed console games and MMO's. Their view on the pace of growth and advancement is far different than mine or those older than me. It feels that their expectations grow faster than an industry is capable of growing.

Of course a counter argument (of many) could be that the game developers today know what is wanted, have the knowledge and technology to make it happen, but simply refuse to out of either greed or fear or whatever. I tend to give them the benefit of the doubt considering the evolution of gaming that I witnessed before my eyes. I'll give them a bit more time to figure things out.

Part I Conclusion
I would like to conclude today's discussion with this thought. Remember that at some time or another we are all or have been rule changers. We know it happens, and sometimes we don't allow for imperfection despite the knowledge that there is a complicated dance happening between the changers of our rules. Governemnts create rules through legislation and politics (be they corrupted or not). Businesses create rules through innovation and even sometimes greed, new thought expands technology, and yet there are some who use these tools for more philanthropic ends and others towards more selfish ends. Expectations changes the rules, although those changes are slower and lead to more dissatisfaction in the consumer.

Part II will focus more on the inner working of a business, the politics, the people, the realities of finance vs what the average person thinks of those finances. I hope you will join me next time, most likely this week, as I continue to wonder whether it's just business, or if it's truly personal.


Nils said...

In a good system businesses make the most money when they produce the best product.

In a competitive market the best product wins. Not the one with the best tax-evasion scheme or the one that pays the highest share of profit back to shareholders/owners.

I still think our system is rather good and thus I doubt the best decision is to copy/paste games for years on end. But if that is so: why is this what the entire MMORPG industry is copy/pasting for almost a decade now?

stubborn said...

I think that the community is probably doing what so many communities do when whatever they support makes it big. Consider punk bands who've "sold out" and lost a lot of their original listeners, or cult TV shows that became popular (Heroes) and were then abandoned.

Most of us are nerds, honestly, and going against the popular grain is part of nerd-dom. With these games' success, we're finding them become more and more mainstream, so it's only logical to assume that Blizzard begin to take on the appearance of "the man" or "the evil megacorp."

That said, I agree that businesses have a right to make money. How they make it, though becomes a discussion of ethics, something sorely lacking in many megacorps nowadays. Just because they have a right to make money doesn't mean they need to yank every penny from our pockets.

Sure, we can vote with our feet, but now we're getting into the idea of addictive personalities and behaviors, and I'm sure you're aware of the behavior psych that many megacorps now use to maximize profits (that looks paranoid, doesn't it? I think I'll leave it at that, then).

Great post (: I look forward to part 2.

Gronthe said...

@ Nils: Yes, in a free market the consumer decides through their purchasing power who is making the best product and who is making inferior ones. By extention, the consumer decides who stays in business and who doesn't.

Corporations actually have fewer ways to "evade" taxes than individuals within the corporation. As an accountant I prefer "reduce tax liability", but we all know what you mean by "tax-evasion", so we'll stick with that. Now I'm actually quite a boy scout when it comes to these tricks and have quit before because I refused to go along with what was asked of me. Let me give you an example.

Deferred Commission: Let's say you work on a commission basis, but you make a lot of money so you're obviously scared that the government will take half of it to spend on the national debt. So being the good citizen you are, you ask your employer to defer a part of your monthly commissions and use them to pay for things like golf course membership fees (@ $25K), automobile leases, vacation packages to France, etc. This is a means for the commissioned worker to pay for his/her luxuries while "reducing" their tax liability; this is because the commission is deferred BEFORE a gross commission is allocated to you, the independent contractor.

BTW, Deferred Commissions are wrong, and any auditor would slap your company accross the face and probably report you. My point is we need to be careful when reading financial statements, because revenue isn't always what we think it is. So if a company says that gross revenues increased the past quarter, it's most likely a combination of actual cash receipts and accounting workmanship. That's why we look at balance sheets and cash flow and investor reports as well.

@ Stubborn: I'm glad you brought up the "ethics" issue, it's something that I'll eventually get into. I'll ask my question here, but will also ask it in my next post:

How much money can a person makes before it becomes too much? For some they may ask "before it becomes unfair or immoral". But HOW a business goes about making money is precisely the reason I've decided to write a series of these posts. So expect more in the next part.

And oh, you're not paranoid, psychology is applied in business strategy and marketing A LOT MORE than you could ever come close to imagining in your conspiracy theory blog you write at 3am each night. :)

@ Nils: Back you you, just one more thing. I have my guesses at why there is a copy/paste mentality in the MMORPG industry, it's probably similar to the mindset of professional sports teams who emulate the most recent championship team by trying to build a team based on similar personal types, strategies, etc. It's probably similar reason why thousands of mortgage companies went out of business in the past 6 years as well, they were all doing the same illegal crap because "that's how money was made at the time."

I only say that give them some time, somebody will change the rules and innovate something that meets, or comes close to meeting, the expectations of the consumer.

Tesh said...

The copy/paste thing is probably also due to the cost in making top notch MMOs. Those beasts are *expensive*, and big money doesn't usually like risks.

Of course, sometimes big profit comes from risks, but in an especially unstable economic climate like we have of late, risk gets pushed even further away.