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Archive for January, 2012

Weekly News Roundup (29 January 2012)

Sunday, January 29th, 2012

Welcome to another edition of the WNR. I hope you’ve had a good week, that the FBI hasn’t stormed your home, seized your prized car collection and that you haven’t had bail denied by a judge. Me? I’ve somehow talked myself into getting a (admittedly cheap) copy of Skyrim (on the PC, of course), despite knowing that I really don’t have the time to play a game that has managed to destroy millions of hours of productivity since it was released. But curious as to what the hype was all about, I talked myself into playing “just a few minutes”. 20 hours of Skyrim later …

Quite a bit to get through, and with the steel ingots and leather strips not making themselves into armor and requiring my urgent attention, let’s get started!

The fallout from the Mega story last week continues, as file hosting websites scramble this week to “clean up” their services, or simply to shut up shop.

This is probably what federal prosecutors, and the content holders urging them to take action, had been hoping for. With thousands of illegal download links now put out of commission, some permanently, it does seem like a major victory in the war against web piracy. Although whether this actually leads to any revenue increases, the whole point behind stopping piracy, time will tell.

For the music industry, this is the second major breakthrough against web piracy in just over a year, along with October 2010’s closure of LimeWire. But it appears that despite what the NPD calculated to be a 46% decline in the number of downloaders shortly after the LimeWire closure, and with less songs downloaded per individual when comparing to the same period a year ago, music revenue for 2011 hasn’t actually increased much at all. In fact, it remains 3% down compared to 2010, when LimeWire (up until October at least) was fully operational. The rate of decline has slowed, but you would think that with such a dramatic decline in piracy rates (nearly half of the people downloading pirated music were using LimeWire to do it just before it was closed down), and the RIAA’s warning of billions upon billions of damage caused by piracy, that it would have at least helped the industry get back into growth. So it will be interesting to see, now that piracy through file hosting services has decreased, what effect it actually has on revenue.

Apparently, only $23 out of every $1000 made on music sales actually goes to the musician, on average (source)

This is of course assuming the main aim behind the targeting of Megaupload was in fact to do with piracy, as it was noted this week that Megaupload was already making plans to take on the music industry head on, in plans that could cause the major labels more damage than piracy ever could. The plan involves a new website called Megabox, which allowed unsigned artists to completely bypass music publishers, and market directly to music fans, with 90% of the revenue going back towards the artist. Even free (ie. pirated) downloads would generate money for the artists, as Megaupload promised to share the very income, earned from downloads, that got them into trouble last week. And if Megabox works, then it would have been a big blow to the majors, and would have seriously questioned their relevance in the age of the Internet, when “naturally” generated hype is more valuable than any kind of promotion that labels could come up with. And with technology enabling artists to sell directly, without having to invest a lot in infrastructure (or they can leave it to tech companies to handle that side of things), artists no longer have to see a majority share of their revenue going to record labels. If there’s one thing the labels fear more than web piracy, it’s this, and while it might require one to be wearing a “tin-foil-hat” to think that this was the only reason behind the Mega take-down, it’s probably a nice little bonus the record industry got out of the whole thing. But while the likes of the RIAA can stop Megabox, they can’t stop innovation and progress, not forever, and a major shift in the way content is packaged, sold and distributed is on its way, if it isn’t here already.

While the Mega stories were very much dominating the headlines, the temporary demise of SOPA was still on people’s minds. One of those minds was EMI’s VP of Urban Promotions, Craig Davis. In a Q&A session with the Reddit horde, Davis expressed largely personal views that seemed to differ quite a bit from the general line of thinking coming out of the music industry these days, in that legislation is the only way forward to deal with the web piracy problem. Perhaps highlighting the internal divisions within the music industry on how to handle the web piracy problem (something we don’t usually get to see, with the RIAA’s loudspeakers drowning out all other opinions), Davis personally opposes SOPA, and says that piracy is more of a service issue, than a pricing one, mirroring what Valve’s Gabe Newell said a few months ago. In fact, Davis specifically mentions Newell as having the right idea when it comes to fighting web piracy. By focusing too much on the pricing issues behind piracy, major content holders often come to the conclusion that there is no real way to “compete” with pirated downloads, as they could not offer their content for free (although I would argue that piracy itself carries a cost, in terms of legal risk, technical and safety issues, and a moral cost, and so for legal content to compete, it does not have to be free, it only needs to be seen as good value). But by concentrating on service, innovation, basically by making legal options more attractive in more ways than just on price, then “legit” could compete with “free”. And perhaps Newell’s Steam could offer guidance to the music, and movie industries as to how to best leverage the positive aspects of the Internet, and how to compete with piracy – Steam’s legendary sales, it’s active community of gamers, and value added features, all help it not only compete effectively with pirated downloads, but also traditional retailers.

But innovation always carries a risk, a risk that, historically, the music and movie industries havn’t been willing to accept. Whenever something new hits the block, whether it’s home audio taping, or VCRs, these industries have resisted change and has tried to sue their way out of the problem. Eventually though, they did accept that change was inevitable, embraced innovation, and has come out better for it. But what’s different this time though is the incredible power lobbyists now hold over elected officials and the systemic corruption in D.C., and this now offers entrenched major content holders another “solution” – to legislate their way out of trouble. Most in D.C. have gotten so used to using money to buy policies, that they no longer sees anything wrong with it. Which is probably why former US Senator, and current MPAA head, Chris Dodd was so transparent in his attack against political opponents of SOPA, literally threatening to stop writing checks for them come election time. That he simply didn’t see any problem with the head of a lobby group threatening to stop paying politicians if a favourable law wasn’t passed, shows just how “comfortable” the Washington crowd has gotten with the way things are done over there (or it may just be because Dodd is stupid). But while Dodd may not have felt that there was anything wrong with his statement, others did, and using the same tactic that has already worked against SOPA, people are signing a new petition on the White House’s “We the People” petition website to ask for a full investigation of Dodd for bribery. With 25,000 signatures required within 30 days for the White House to officially issue a statement on the petition, 30,000 signatures were promptly recorded in just a week (that’s the Internet for ya). The fact that the White House will now have to issue on statement of Dodd’s alleged improprieties, regardless of what the statement actually says, should be hugely embarrassing for the MPAA Chairman. Or it could be much much more serious.

Anno 2070 looks great, but just pray that you don't need to change your GPU, or the game's DRM could lock you out

With so many big issues being discussed, trust Ubisoft to still somehow steal the headlines via yet another incident with one of their controversial DRM choices. When review site Guru3D went about using Ubi’s Anno 2070 in a hardware benchmark test, they found that the 3 PC activation limit also applied when the GPU was changed, and so having barely started their test, they had used up all of their activations. Having calculated that they would need 7 copies, or 21 activations, to finish their testing, Guru3D contacted Ubisoft about this potential “bug” with their DRM, but Guru3D were promptly told that not only was this normal and intentional, Ubisoft wouldn’t be providing the 7 copies needed to finish their testing. So Guru3D did what any self respecting website would have done – they published the entire detail of their ordeal for the Net public to judge, and the expected public backlash eventually forced Ubisoft to back down and allow for GPU changes. Ubisoft came out with the usual statement saying that very few people were affected by this particular problem with their DRM, which is probably true considering the game only came out in November, and I don’t think many would have changed their GPUs twice during this period. But the problem with DRM is that it’s forever, so were Ubisoft really expecting PC gamers, of all people, to not frequently change their GPU or other parts of their hardware? Or maybe they just didn’t think their games were that good for people to be still playing it for more than a couple of month. For now though, while GPU changes are exempt from requiring new activations, other hardware are still being included, and so don’t be surprised if this problem pops up again at a later date.

And on that note, we move to gaming. For some reason, all the Xbox 720 rumours decided to out themselves this week.

Of course, there cannot be an Xbox rumour without mentioning Blu-ray, and the next Xbox (which I hope will be more imaginatively named than “Xbox 720”) will apparently have a Blu-ray drive. Whether it plays Blu-ray movies or not, remains to be seen though, since the Wii U will have a “Blu-ray like” drive, that won’t play movies.

Just one of the many Xbox 720 mock-ups floating around the net

On the GPU front, a Radeon 6000 series chip might be used. This actually feels too “new” of a chip for a console that’s supposed to be released next year, since the Wii U is only using a Radeon 4000 series. The reason why console manufacturers use older chips, other than the maturity of the product line, is due to the time it takes to engineer an existing off the shelve solution for a game console, the cost involved in using the state-of-the-art GPU, and the fact that optimizations mean console GPUs don’t need to be as powerful as their PC counterparts.

The most controversial rumour involves Kotaku’s reveal that the next Xbox could ban the playing of second hand games. Publishers have long complained that second hand games are cannibalising sales, as gamers can “share” the same copy and game stores profit from each transaction – only one payment from these transactions is made to publishers, right at the start. Publishers have come up with various ways to solve this problem, for example, a voucher system (but that don’t really works for limiting the multiplayer component of games). So if Microsoft really wanted to please publishers, and get them to release more exclusives for the platform, then having a system that ensures second hand games won’t work will do the job. Although I think this will backfire and hurt sales, and the platform, in the long run.

Nothing much more happening this week, at least no in the real non-Skyrim world, so we come to the end of another WNR. See you next week.

Posted in Copyright, News Roundup, Xbox 360, Xbox One | Comments Off on Weekly News Roundup (29 January 2012)

Weekly News Roundup (22 January 2012)

Sunday, January 22nd, 2012

Welcome to this Chinese New Year(‘s eve) edition of the Weekly News Roundup – the CNY(e) ed. of WNR, if you will. The alphabet soup continues, with more news on SOPA, PIPA, and a big one about MU, so with little time left in the year of the Rabbit, let’s get started.

In another week in which the copyright related headlines dominated the news, we start with reaction to last week’s White House statement on SOPA. The reaction from none other than media mogul Rupert Murdoch.

The controversial media owner wasn’t afraid to be controversial when it came to talking about the SOPA/PIPA controversy, accusing Obama of being beholden to his “Silicon Valley paymasters”, and calling Google a “piracy leader”. But for many, the fact that Murdoch is supporting SOPA/PIPA, is probably enough to push them to the other side of the debate.

Wikipedia, and thousands of other websites, blacked out their content for most of January 18 - a protest that got the attention of DC politicians

Which is probably why so many joined in on the January 18th day of action, which saw websites, including this one, black out their content to protest the votes on the controversial bills scheduled for 24 January. Even the newly obtained Righthaven.com, obtained via court appoint receiver auction last week, joined in the fun with a hilariously redacted letter to the MPAA (still not quite sure what the squid is all about). While thousands of websites joined in, the website that had the most influence on proceedings was probably Wikipedia. The website took the unprecedented step of blacking out all of their English language pages for 24 hours. When it was all over, and with everyone realising just how important Wikipedia has become in their lives, many also found out just exactly what SOPA was and what it could do. Some have criticized Wikipedia for participating in online activism, when the online encyclopaedia is supposed to be position neutral. This may be true, but when the very environment under which Wikipedia exists, and its own existence comes under threat, then there may be a need for a bit of activism. With people flooding elected official’s websites, emails, phone lines, calling on them to not support SOPA/PIPA, the power of the Internet was on full show.

And the protest seems to have had an almost instant effect, with key supporters of both SOPA and PIPA pulling out, and it became apparent pretty aoon that both bills were, in effect, dead in the water. With the 24 January deadline coming ever closer, the two sponsors of the bills, Rep Lamar Smith (R-Texas) and the senior senator for Vermont, Patrick Leahy, decided to postpone both bills, indefinitely. It was a political necessity, as they would say, for now at least. Chances are, the same bills with only minor changes, and very likely with different names, will be reintroduced at some later point when the heat dies down, but for now, this was still a major political victory for the Internet. The tech sector, who have largely stayed out of the political arena, may have also realised the power of lobbying – whether this is a good thing or a bad thing, that remains to be seen. It’s an unfortunate reality in today’s political environment that political lobbying is so effective, but for too long, politicians have only been hearing one side of the story, and perhaps this will help even things up a bit.

Of course, the MPAA was fairly incensed at both the blackout, and the fact that their bill, and I’m using “their” correctly and intentionally, was sunk. Chris Dodd, who has had a difficult learning period as the new Chairman of the MPAA, came out attacking the blackout as a “dangerous gimmick … designed to punish elected and administration officials who are working diligently to protect American jobs from foreign criminals”, obvious inferring that politicians against SOPA/PIPA are negligent in their duties in stopping criminals, and playing to the xenophobic crowd, added the quantifier “foreign” just in case. Dodd also attacked the decision to pull the bills, again using all the right keywords, describing the entire Internet as a “safe haven for foreign thieves”. And showing his experience as a Washington player, Dodd warned his former colleagues not to “ask me to write a check for you when you think your job is at risk”, demonstrating in one sentence the undue influence of money in US politics, and the entertainment lobby’s masterful manipulation of democracy through it.

MegaUpload's domain has been seized on order of Federal prosecutors, who say the website engaged in racketeering and money laundering

But before the champagne bottles had emptied, an even bigger story broke, as it was revealed that Megaupload, one of the web’s largest properties, had been shut down. In a simultaneous, multi-national, law enforcement action, involving FBI agents in the US, and law enforcement in the Netherlands, Canada and New Zealand, servers were seized, offices raided, an the founder of Megaupload and some of his employees were also arrested. In the court documents filed so far, incriminating emails (that were obtained, somehow) showed that the people running Megaupload were well aware of the nature of their service, in that it was being used by pirates, and sought to continue to profit from the activities. But then, only an idiot, or maybe a DC politician, won’t have known what Megaupload was all about just by searching for a few MU links on Google.

I’ve not had a look at all the emails, only some of the more serious ones being posted here and there, but to me, this whole MU case strikes me as a civil matter, not a criminal one. For example, what makes MU different enough to the ongoing MPAA vs Hotfile trial – if anything, Hotfile appears to be even more “guilty”, as they were paying pirates directly based on the popularity of their uploads. And as for incriminating emails, we’ve seen it all before in the Viacom vs YouTube case – despite the existence of these so called “smoking gun” evidence, as Viacom liked to call them, Google/YouTube eventually won the case on DMCA Safe Harbor grounds. So for those that are saying the government’s case against MU is rock solid, I think it might be a bit too early to judge, as the legal documents revealed at this stage only shows one side of the story, the government’s side. When MU provides their version of events, things might no longer be as black and white, and their lawyers might just cloud the issue enough to make the most serious criminal charges (like the racketeering and money laundering charges) go away.

And their version of events might just include testimony from the many that used MU’s service legitimately, and most are pretty angry at the excessive amount of force and haste the government seems to have used in taking down MU. You cannot deny that MU had substantial non-infringing uses, and that could provide MU protection under the Betamax verdict, but it all depends if the infringing aspects are enough to negate MU’s legitimate uses, and how complicit the owners and operators of MU were.

I also think part of the strategy here is to scare the rest of the online storage industry into taking copyright enforcement more seriously, even if the government doesn’t ultimately win the case against MU. With SOPA/PIPA on hold for now, online storage services will need to take a good look at the DMCA, and make sure their compliance is genuine. That should be enough to keep the FBI away, for now, while most likely, tons of pirated content would still exist on these sites.

So a lot happening, and perhaps too much to digest in such a short period, but I’m sure both SOPA/PIPA, and MU, will be occupying the headlines for a while yet.

And on that note, we come to the end of this rather short WNR. Nothing left to say except, Xin Nian Kuai Le, Gong Xi Fa Cai (Happy New Year , Congratulations and be prosperous).

Posted in Copyright, News Roundup | Comments Off on Weekly News Roundup (22 January 2012)

Weekly News Roundup (15 January 2012)

Sunday, January 15th, 2012

Just as I predicted, this last week turned out to be quite a busy one. On top of the CES announcements, SOPA developments, there was also the latest NPD figures, for video game sales in the United States for the month of December. I wrote up the analysis of it yesterday, and the consensus seems to be that the video game industry is in trouble. Sure, December sales were quite disappointing, notably for Nintendo, but if you add up sales for both November and December for the other two companies, sales were actually up compared to a year ago. The Wii’s decline is not totally unexpected though, an innovative control system aside (which is no longer unique, or the most innovative), the other parts of the system, particularly the online and multimedia parts, are just not good enough any more. People now expect game console to do more, thanks to the healthy competition between the Xbox 360 and the PS3, and the Wii simply no longer delivers.

There’s plenty more to through though, so let’s not waste more time.

In copyright news, we start with an update to last week’s story about Reddit’s campaign to dislodge Rep. Paul Ryan for his SOPA support. With the campaign only just starting, it’s already had an immediate effect, with Ryan this week coming out with a definitive statement on SOPA, and promising to vote against the bill if it comes up in the house.

But the Pull Ryan campaign is not about to unveil a “Mission Accomplished” banner on an aircraft carrier, not just yet, as the movement seeks to expand its goals to force other legislators to take the same stance.

Recent developments may mean Ryan’s new stance may change once more, now that the backers of the bill, Rep Lamar Smith (who, this week, has been caught in his own copyright scandal, as his website may have committed a copyright violation in regards to the use of an image), and his Senate counterpart, Sen. Patrick Leahy, have signalled their intention to remove the DNS filtering provision of SOPA (and PIPA). There’s no denying this is a victory in the ongoing fight against SOPA, but it’s also a wise political move by Smith and Leahy, by removing the most controversial section of SOPA, the one area in which there seems to be universal opposition to (apart from the likes of the MPAA, of course, which came out defending DNS filtering). And in typical Washington fashion, the door was left open for DNS filtering to be put back in, at some later time when people might not be as worked up about SOPA as they are now.

In other words, the fight against SOPA continues, because as bad and dangerous as DNS filtering is, the other parts of SOPA (and PIPA) aren’t much better either. Even with DNS filtering removing, the bill would still give the government, and the entertainment industry, way too much power to take down websites, block IP addresses, sue website owners, financially assault websites, and force search engines to censor the Internet. Don’t be fooled by this latest back down – the fight must continue!

The White House replies to petition calling for opposition to SOPA, with vague messages of support for the anti-SOPA movement

In late breaking news, which I’ll cover in more detail next week after some more careful analysis (hah!), remember that petition that more than 50,000 people signed on the White House website asking for SOPA to be opposed? The way the White House’s petition website worked is that, if a certain number of signatures were recorded, the White House promised they would release an official statement on the petition topic. And just today, the White House did just that. Some sections of the media have already reported this as a big win for the anti-SOPA movement, but having quickly read the response, it’s not exactly an overwhelming rejection of SOPA, nor is it a promise to veto the bill by the President’s office (and to be fair, neither of these responses was likely to be forthcoming from a White House that has been pro-copyright from day one). The only part of SOPA that the White House clearly comes out against is ironically the part that has just been removed – the DNS filter provisions. The direct quote from the response on DNS filtering is as follows:

Our analysis of the DNS filtering provisions in some proposed legislation suggests that they pose a real risk to cybersecurity and yet leave contraband goods and services accessible online. We must avoid legislation that drives users to dangerous, unreliable DNS servers and puts next-generation security policies, such as the deployment of DNSSEC, at risk.

The rest of the response provides only vague clues about the White House’s official position on SOPA, with promises to continue “vigorously defending an open Internet based on the values of free expression, privacy, security and innovation”, but also containing phrases like “existing tools are not strong enough to root out the worst online pirates beyond our borders”. For what it’s worth, the organizer of the petition and random signers are being invited to a conference to discuss the issue further, a bit of good PR, but the cynic in me still believes one or both of SOPA and PIPA will get passed, with most of it intact, and once the storm blows over, the rest will get added back in.

But if the SOPA impasse continues, Sega may have found a new way to solve the problem: do a hard reset! That was the answer given to a gamer via email when he asked Sega what their position on SOPA was, you know the generic tech support answer for solving an unknown problem: reboot. It’s unfortunate that Congress and the Senate can’t be rebooted, not until November anyway.

This is the mysterious image that now appears on the home page of righthaven.com, after it was sold at auction to pay off the firm's debts

In the latest Righthaven development, the firm’s domain name has been sold for $3,300 by the court appointed receiver to the Switzerland based Stefan Thalberg. The domain name now points to a website with the intriguing title “Take Back the Right(Haven)”, and with the even more tantalising hint (which can be viewed via the HTML source code) of “Does your current provider possess a spine?”. Time will tell what it all means. Meanwhile, more of Righthaven’s assets will be put up for auction soon, as the appeals court rejects the firm’s last minute pleas for mercy.

Last week, I reported on the way the MPAA report piracy losses, and how they may be double or even triple counting losses based on figures that were already exaggerations. The MPAA strikes back this week, by claiming triple counting is a perfectly reasonable way of counting piracy losses, and once again compared piracy to shoplifting. The MPAA also attacked tech blog Ars Technica for ‘Challenging Efforts To Curb Content Theft’, which might just become illegal if SOPA is passed. Of course, blogs like Ars Technica, TorrentFreak, and even this one, do challenge efforts to curb piracy, but only those that are simply unreasonable – whether’s it’s intrusive DRM, or taking away people’s rights to free speech and privacy, or suing individuals for millions of dollars. The MPAA would be wise to not equate opposition to unreasonable copyright protection, to opposition to all copyright protection, because if they come up with a reasonable model to reduce piracy, for example, by making content more available, with less restrictions, and at the more reasonable price, the kind of things that people have been calling for, then we would not oppose them. And it’s exactly this kind of hyperbole, the “you’re either with us or against us” attitude, the “billion dollar” worth of damages that they keep on quoting (despite their rebuttal clearly stating they know exactly what those figures they keep on quoting actually means, that they are used as a measure of change in activity, rather than actual estimated losses), the use of the term “theft” when “potential lost sale” is a much more appropriate term (theft, including car theft and shoplifting, usually doesn’t leave the original item untouched), which makes people dismiss the industry’s attempts to find a solution to the web piracy problem. But maybe the truth is just not as sexy, but rather paints a picture of a well off industry that creates most of its own problems by being too reluctant to embrace change (remember when the MPAA came out comparing VCRs to the Boston Strangler, or when the RIAA said home taping would kill the music industry?).

And ignoring research which doesn’t fit into their agenda isn’t helping either. When NBC Universal hired research firm Envisional to conduct research on the effects and causes of web piracy, the firm came up with some conclusions that did not fit into the usual message about web piracy (in that web pirates are criminals, robbing the poor old struggling entertainment industry of money and jobs). They subsequently chose to cherry pick the parts of the research that they did like, so they could continue on with their Chicken Little “sky is falling” scare campaign, ignoring the most poignant aspects of the research results. What Envisional found was that the industry themselves were to blame for a lot of the problems associated with web piracy, such as the lack of legitimate content, the lack of support for overseas markets, and pricing problems. And at the CES, Envisional’s head of piracy intelligence, David Price, reiterated the fact that the industry has to do a lot more before it can blame everyone else for their woes. Price cites Netflix as the right way to combat piracy, as it’s already had a huge effect on the number of people using BitTorrent networks, but only in the United States where the service has only been available until recently. Netflix, just like iTunes, has come about by not fighting the Internet, but by embracing what it brings, and it’s interesting that neither solutions were industry created solutions, but comes from the same tech sector that the entertainment industry now want to curb via legislations such as SOPA. The industry’s fear of change has only benefited those that dared to innovate, it seems.

Australians are expected to pay $60 more for some games due to greedy publishers

And it’s not just fear, but greed also, that’s contributing to their downfall. Instead of making legitimate content as widely available as possible, for reasonable prices, movie and TV studios have tried using DRM, region controls and other methods to divide up the world into multiple markets, so they can extract as much money from each market as possible. While this brings them more money in the short term via exclusive and timed deals, the real effect is that some consumers no longer have the legal option to obtain new content in timely fashion, and at a price that’s fair. For example, here in Australia, we have to wait months for new episodes of TV shows to get down here, and for games, we have to pay double or sometimes triple the prices people pay in the US or the UK. Before the Internet, people simply just had to put up with this. But there are so many choices now, and the so the real long term effect of their short term policies has been to push people toward these alternatives. VPNs allows Australians to access US content faster and cheaper, while overseas shopping websites allow imports at reasonable prices, taking away business from local retailers. And of course, there’s piracy, illegal as it may be, but still an alternative for many.

And things like DRM, region control, and even legislations like SOPA, have been the industry’s response to people’s acceptance of alternative choices, and the industry continues to hamper the new legal alternatives (such as having release delay windows for Netflix and Redbox) under the guises of fighting piracy. All in an ultimately vain effort to protect their dying business models, by attempting to put the genie back into the bottle, by rolling back innovation.

High Definition

At the end of the day, money talks (as we stealthily move the discussion to the high def section). DEG (The Digital Entertainment Group)’s latest home video figures confirm exactly what I’ve just been talking about, that the Internet has drastically changed the way people consume content, and it’s only going to get “worse” for the industry if they do not adapt. Digital distribution revenue was up 55% for 2011, while physical media sales were down 13% – the industry’s revenue as a whole declined 2%. The revenue now earned by the likes of Netflix and Redbox could have easily been retained by the studios themselves, if only they had the foresight to see the potential of the Internet.

And even when the industry tries to innovate, like with UltraViolet’s cloud based movie storage, their own greed and insecurities are again their biggest enemy. UltraViolet, something that I think almost everyone agrees is a good idea on paper (the ability to buy a movie, as opposed to the media it comes on, and having a cloud stored copy that you can download or stream to your multiple devices), has been crippled by DRM, with each studio greedily attempting to promote their own distribution service, as opposed to working together on a single platform to make it easier for consumers. Just the fact that Disney is going out on their own and coming up with their own digital locker service, as opposed to joining the UV coalition like the other five major studios, shows how insecure and greedy they can be. It’s not exactly Blu-ray vs HD DVD, but it may actually be worse, with each studio preferring their own distribution service for UV (or their own version of UV), whether it’s WB via Flixster, Sony via the PSN (maybe), or the unknown studio that has just teamed up with Amazon – when the sensible solution is to use Netflix (and iTunes, if only Apple could have been convinced to join the UV coalition) or to come up with a new distribution service all UV partners would use. Netflix, sensing the confusion, may actually be withdrawing from the UV coalition, possibly to pursue their own version of the service (which all the studios will probably have to use when they’ve managed to destroy UV due to their own selfish interests).

Samsung's new Blu-ray player will be able to "convert" discs to digital, on the UltraViolet platform

Still, UltraViolet was a big topic at the CES. The most interesting announcement so far, other than Amazon’s participation, was the Samsung Blu-ray player that would somehow convert discs to digital. People can insert their favourite movie, and through a couple of clicks of the remote, buy or redeem the UltraViolet version, with technology that would be able to tell the difference between a legitimate store bought version, and rental/pirated versions. I don’t think charging people for yet another version of a movie they already own would be that popular, since I think if the best idea behind UltraViolet was the one that allows people to finally buy movies, instead of a version of the movie on a particular media. In my opinion, people who already have a legitimate DVD or Blu-ray should be given a free copy in the UV cloud. This may be hard to achieve though for existing discs, since many lack an unique identifier that can prevent a group of people sharing a single store-bought copy, and then getting the UV version without paying for the content, but surely this should be possible for all future copies pressed. Just add an unique identifier for each disc that can be linked to your single UV account (with each UV account being able to support multiple devices you own/have access to), and once that disc is inserted, the Blu-ray players reads the identifier, automatically registers online with your UV account, and your UV copy is available to use. It shouldn’t be any more difficult that that, really.

Make it easy for the consumer, and the money will come.

And on that note, we come to the end of another WNR. Hope you’ve enjoyed this one, and see you next week.

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Game Consoles – December 2011 NPD Sales Figure Analysis

Saturday, January 14th, 2012

Welcome to the December 2011 edition of our regular NPD US video game sales analysis. In this feature, we look at video game sales, both hardware and software, for the month of December 2011 based on data collected by the NPD. December is traditionally the most important period of the year, where a huge percentage of the entire year’s sales occur. And as a result, there is no month more important than December, and it’s a great way to gauge the general state of the video gaming industry. Last year, the Wii has the holiday time winner, easily beating the Xbox 360, and 12 month is a long time for a game console. Read on the find out if the Wii continued its tradition of holiday success, and whether the industry as a whole had a good holiday period. Or not.

As NPD no longer releases full hardware sales figures, this feature is reliant on the game companies, namely Microsoft, Nintendo and Sony, to release their set of figures and based on “statement math” (that is, arithmetically calculate missing figures based on statements made). For December 2011, these are the statements made by the gaming companies:

Nintendo did not reveal any figures for December 2011
Microsoft revealed “more than” 1.7 million Xbox 360 hardware units sold, with 46% of the home based console market share (source)
Sony did not reveal any figures for December 2011

With only the above information, it becomes impossible to work out the estimated numbers for both the Wii and the PS3. Luckily, analyst Michael Pachter again came to the rescue, via Twitter, stating the Wii sales were in fact 55% down from the same month a year ago. With this piece of crucial information, we are then able to deduce the Wii numbers, and from this and the 46% market share figure quoted by Microsoft, we are then able to estimate the PS3 numbers too.

And so the figures for US sales in December 2011 are below, ranked in order of number of sales (December 2010 figures also shown, including percentage change):

Xbox 360: 1,700,000 (Total: 30.9 million; December 2010: 1,860,000 – down 8.6%)
Wii: 1,060,000 (Total: 37.7 million; December 2010: 2,360,000 – down 55%)
PS3: 936,000 (Total: 18.9 million; December 2010: 1,210,000 – down 22.6%)

NPD December 2011 Game Console US Sales Figures

NPD Game Console Total US Sales Figures (as of December 2011)

My prediction from last month was:

Same hardware ordering, and a software chart that looks very similar to this month’s, so there’s nothing much to add to that really.

While the software chart has a lot of titles that were there in November, the hardware ordering actually changed, with the PS3 dropping back down to third place, after finishing above the Wii last month.

Overall, looking at the figures above, and the “sea of red”, December 2011 has been nothing short of a disastrous month for video game sales, especially compared to last December. As mentioned earlier, a huge percentage of sales occur in December, but this last particular December did not even out do the previous month, when historically, this has almost always been the case. In fact, for hardware sales, the raw numbers were at its lowest since 2005.

Microsoft was probably the “winner”, if you can call it that (more like the smallest loser), with only an 8.6% drop in console sales, and level in sales with November. The NPD pointed to the strength of the Xbox 360 throughout the year, saying that the Xbox 360 platform accounted for nearly 40% of annual physical retail sales, across all categories. Still, if you count November and December together as one period, then 2011 has been good to the Xbox 360, with 3.4 million consoles sold, compared to 3.23 million a year ago. Microsoft probably had hoped the Kinect Star Wars game and console bundle would have made it in time, helping to push the console, and Kinect, to the next level, but the delay to the game means that there were no real A-list Kinect titles for this holiday period (unless you count Kinect Sports 2, and Dance Central 2, as A-list titles).

Despite finishing as the third most popular console, the PS3 was probably in second place overall, when you look at the year-to-year decrease figure, as well as performances across both November and December. Nearly 1.84 million PS3 consoles were sold during November and December, compared to 1.74 million consoles in 2011. So the good news is that, things are not that bad, while the bad news is that, the Xbox 360 appears to be pulling further ahead in the United States, where during the same period, it had almost twice as many sales (and more console sales during the holiday period, means more game sales for the rest of next year, and also means a strengthening multiplayer community, the growth of which relies on people using the same console as their friends).

So the real loser is, once again, Nintendo. The Wii, previously the unstoppable juggernaut during December sales, is no more, and is relegated to a distant second place behind the Xbox 360. For November and December, 1.92 million Wiis were sold, compared to 3.63 million in 2010 – in fact, more Wiis were sold in December of 2010 alone, than November an December of 2011 combined! A 55% year-on-year drop shows that the Wii is no longer the “must-have” video game gift, with some of the sales going to the Xbox 360 (not many, looking at the figures above), and possibly lots of sales going to things like tablets and smartphones, the new home of casual gaming.

And that’s probably the best way to look at things for the video game industry as a whole, for the most recent holiday period. The industry has benefited from the Wii becoming a must-have gift item for the last several holiday periods. Kinect has contributed to the same phenomenon, but it just hasn’t been the same. And with so many other gadgets to distract the holiday shopper, and also the economy, the decline can almost been seen as a return to normal, after a couple of years of extraordinary performance led by the Wii. Maybe the Wii U will bring back the same thing next year, but expectations must be readjusted.

As for software sales, it was also down compared to December 2010. MW3 led the chart again, with Skyrim dropping to third after the resurgence of Just Dance 3. Interestingly, looking at total sales for 2011, the ordering of the top 3 was exactly the same as the December top 3, showing that Call of Duty, and perhaps surprisingly, Just Dance, were the top 2 franchises for 2011. Mario Kart 7 on the 3DS was the only new entry into the top 10 in December. Here’s the full software sales chart for December (new releases for December 2011 in bold):

Call of Duty: Modern Warfare 3 (Activision, Xbox 360, PS3, Wii, PC)
Just Dance 3 (Ubisoft, Wii, Xbox 360)
Elder Scrolls V: Skyrim (Bethesda, Xbox 360, PS3, PC)
Mario Kart 7 (Nintendo, 3DS)
Battlefield 3 (EA, Xbox 360, PS3, PC)
Madden NFL 12 (EA, Xbox 360, PS3, Wii, PS2, PSP)
Assassin’s Creed: Revelations (Ubisoft, Xbox 360, PS3, PC)
NBA 2K12 (Take-Two Interactive, Xbox 360, PS3, PS2, PSP, Wii, PC)
Super Mario 3D Land (Nintendo, 3DS)
Batman: Arkham City (Warner Bros, Xbox 360, PS3)

Predicting January is always difficult, as the post holiday lull will be here, and there would usually be stock issues (although with the low sales this year, maybe this won’t be an issue). I suspect, other than huge drops in console sales figures for all consoles, the PS3 will probably regain 2nd place, with the Xbox 360 still the top selling console. A subdued month as well for software sale.

See you next month.

Posted in Gaming, Nintendo Wii, Wii U, Switch, NPD Analysis, PS3, PS4, Xbox 360, Xbox One | 1 Comment »

Weekly News Roundup (8 January 2012)

Sunday, January 8th, 2012

Welcome to yet another edition of the WNR. It was either still a relatively quiet week, or that I just haven’t gotten back into “work mode” yet. I actually made two new year resolutions this year, one was to work hard, the other was to play hard. A week later, I’ve definitely managed to follow through on at least one of those resolutions.

In any case, we should be able to get through this one rather quickly.

And as all of the news were copyright related, this should make things go even quicker – we’ll start with the SOPA related ones. Having forced a policy change at GoDaddy, albeit one that’s still not 100% convincing, Reddit users have now decided to target politicians that support SOPA as their anti-SOPA next move.

Operation Pull Ryan aims to unseat Republican Paul Ryan for his alleged support of SOPA

There are quite a few politicians to choose from though, considering most of them seem to support SOPA or the senate version, PIPA. But with a few key SOPA backers not facing re-election, Reddit has decided to make an example out of rising Republican star Paul Ryan, even though he may not actually fully support SOPA. Despite Ryan’s spokesperson coming out and clarifying the Congressman’s stance on SOPA, or rather, some expertly crafted political language that implies fence-sitting without actually coming out and saying so, Reddit plans to get Ryan’s opponent, Democrat Rob Zerban, elected at the next election. A fantastic result if they can do it, but the successful completion of Operation Pull Ryan will not be easy. Bigger than the issue of SOPA for the Reddit people taking part is Paul Ryan’s controversial budget plan, as well as his support for the equally controversial National Defense Authorization Act.

But the truth is that Ryan’s fence-sitting wouldn’t have been needed just a few month ago, when SOPA was widely supported by politicians on both sides of the aisle. And that’s progress, I suppose. The popular uprising on SOPA shows that people can affect political change, and while SOPA may still get passed, those in the US still retain the right to punish those who openly supports SOPA at the next election. But as expected, it’s perhaps the industry and monied interests that are having the most effect on the weakening political support for SOPA. We already know that most tech companies are against it, but this week, it was revealed that the major gaming companies, who have long complained about web piracy, are also withdrawing support for the controversial bill. Microsoft have already distanced themselves from SOPA (and may have even been secretly working behind the scenes to get others to come out again SOPA), but now, Nintendo, Electronic Arts, and even Sony Electronics, have apparently withdrawn themselves from the official list of supporters for SOPA as well (Sony music is still very much a supporter). Now, the cynical side of me says they’re only doing it to avoid the negative attention SOPA is receiving, perhaps very much the same reasons behind GoDaddy’s change of heart, but maybe that’s the best we can expect from companies like them. Not supporting SOPA is not as good as being all out against SOPA, but at least it’s better than supporting SOPA. And if there’s one positive to come out of this whole mess, it’s probably the realization by many of the real power of the Internet, how it can empowered anyone to make a stand on issues that affect them. And that’s even more reason to fight SOPA and help protect the valuable tool that is the Internet.

MPAA using questionable calculations methods to derive losses due to piracy, and may be triple counting non existent losses

At the heart of the argument *for* SOPA is the economic damage caused by web piracy, but it’s been common knowledge that the entertainment industry frequently stretches the truths when it comes to publishing “losses” figures. So when the MPAA made the statement that they estimate there to be $20.5 billion in losses due to piracy every year, it came as no surprise to people that what most likely happened was that the MPAA simple multiplied the number of illegal downloads by the full retail cost of each piece of content. But what most didn’t know was that the MPAA’s figure manipulation went even further, by double and sometimes even triple counting the already exaggerated figures. If you have a $10 DVD, in which $2 goes to the manufacturer, $2 goes to the transportation company, and another $2 goes to the retailer, then the MPAA (or rather, the group the MPAA tasks with making the calculations, the Institute for Policy Innovation) calculates the loss by a clever bit of maths: $10 + $2 + $2 + $2 = $16. This is an absurd way to calculate losses (that people downloading a $10 DVD costs the economy $16), as this kind of methodology is usually reserved for calculating changes in output and employment.

The MPAA also fails to take into account that SOPA doesn’t affect non US visitors visiting non US websites, and most importantly, it fails to realise (or deliberately ignores) the fact that just because people save money by illegally downloading movies, it doesn’t mean they don’t spend the same money on other parts of the economy. In fact, with the economy so bad and so many families struggling, perhaps the most simple explanation for piracy is that people just don’t have the money to buy movies, preferring to spend all their money on things like food and rent instead (which means they still contribute 100% of the earnings back to the general economy) . In the past, they simply stopped watching movies, now, they don’t have to make that sacrifice as long as they can still afford a cheap-ish Internet plan. But even if the bad economy isn’t to blame, then there are so many different (and some would argue, better) entertainment choices out there, such as video games, that people may simply be shifting their resources towards other parts of the economy. Regardless, the net effect of web piracy might be zero for the overall economy if people have not been hoarding money or throwing it away, although the loss for the affected entertainment companies is still very real.

But that’s what’s actually most wrong about SOPA. It will cost tax payers 10 million dollars a year to maintain the bureaucracy for handling SOPA, and to provide pro bono legal services for billion dollars companies, courtesy of the Department of Justice. And even after all that, it may not help the overall economy at all, even if it worked to stop piracy (which it won’t). And that’s also if we don’t count the cost of damaging the Internet, innovation and other industries. It ends up being corporate welfare for the music and movie industry, and in the end, it will benefit nobody, not even the very same industries that will be better served in the long term by embracing innovation.

The Hobbit: An Unexpected Journey Poster

The Hobbit: An Unexpected Journey, just one of major releases for 2012, which will probably help Hollywood have another record year

And the industry should also take a long hard look at itself and see if there are any reasons within for their current problems. With box office receipts down in 2011 compared to the record breaking 2010, it would be easy to blame piracy. But piracy is very likely not the cause of the relatively small 3.5% decline, at least not according to film expert Roger Ebert. Ebert’s opinion is that the decline in revenue is largely due to the lack of a blockbuster the likes of The Dark Knight or Avatar, the high cost of going to the movies (3D and refreshments), and the greater choice people have these days when it comes to watching movies (whether it’s at home with Blu-ray on their big screen TV, or via Internet services such as Netflix). The MPAA always seem to believe they “deserve” ongoing revenue increases, but it’s only sensible to accept that this will most likely not be the case, given how much choice people have these days. Although with that said, I think 2012 will be another record breaking year for Hollywood (assuming the world doesn’t end) – what with The Hobbit, the Alien prequel Prometheus, a new Bond film and The Dark Knight Rises. And the music industry should stop conning people about its losses, which are almost 100% to do with the shifting buying habits of music lovers, from CD albums to digital tracks (the industry used to derive almost 90% of its revenue from album sales), and also the improving indie scene (thanks in some degree to the Internet).

That’s all the news I have this week unfortunately, I apologise if you were expecting more. I think there will be much more next week, not just because CES 2012 starts either, but due to everyone waking up from their holiday hibernations. See you next week.

Posted in Copyright, Movies, News Roundup | Comments Off on Weekly News Roundup (8 January 2012)

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Archive for January, 2012

Weekly News Roundup (29 January 2012)

Weekly News Roundup (22 January 2012)

Weekly News Roundup (15 January 2012)

Game Consoles – December 2011 NPD Sales Figure Analysis

Weekly News Roundup (8 January 2012)

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