Computer games


Welcome to Global Business
part of the Peter Day’s world of business
podcast, this week
Peter looks into a fairly new industry which is
sucking up huge amounts of people’s time
and money
hello and welcome to Global Business
and let’s play a game
lots of games actually
computer games on consoles, laptops
desktops, tablets, mobile phones
for years the video games industry has
been
bigger than Hollywood
at first it seemed as though that might
just be a passing fad
but as the internet worms its way into
every aspect of everyday life
that’s when phones find a way into
millions of pockets
computer games seem to be growing
in power
and influence
I’ve been finding out how
and why
the sound of just two of the biggest
hits of recent years Farmville
from San Francisco and Angry Birds from
Finland
and music from a much less well-known
campaigning game … it won an award from
a journalism foundation
we’ll hear from the people behind those
eye-catching games
but why is all this activity
happening now
Adrian Hon is a British game developer
at the company Six to Start
hundreds of millions of people now have
devices in their pockets all the time
of which they can play quite
sophisticated games and previously
a lot of people may or may not have
wanted to play games but they didn’t
have the
technology to do so
computer games companies seem to be able
to come from nowhere at the speed of
light
and one who success is remarkable even in
this fast changing world
is Rovio based in Finland the home of
the mobile phone giant Nokia
Finns seem to have a special affinity
with mobile phones and their uses
and Rovio makes Angry Birds … it’s a
runaway mobile phones success with more
than one billion
downloads … think about that number for a
moment
Rovio’s chief executive is Mikael Hed
and I met him at the Ernst and Young Entrepreneur of the Year Awards in Monte
Carlo
he was last year’s Finnish winner
I wanted to know whether Mikael Hed was
much of a gamer
I’ve been playing games for pretty much all
my life
some of the game’s companies I know have been formed by games’ players in their teens
who go straight into it, they stay in
the bedroom and
go on to build
businesses straight from that
you weren’t like that, you got
degrees and things … I have one
business degree actually and I also do
have work experience from other things
than games as well
I’ve had companies in Finland doing
book publishing, comic books
I also have a construction company
(mobile) things, also my experience with my
father’s software company was very
important … how did you come
how did you go full-circle, to go back to
the computer gaming you did when you
were much younger
my cousin Nicklaus was a student
at Helsinki University of Technology and he
participated in a competition to make a
game
he won the competition and started a
company and then
right at that time I was coming back to
Finland
I was looking for work opportunities and
the chance to work …
in the games business was just such
fascinating thought that I wanted to go
there even though
prospects of making a profitable business
were a bit bleak, we were in
the mobile gaming sector and it was
back in 2000, early 2004
it wasn’t an easy business to make
money
essentially the sales channels were the
uh… telephone operators and they
decided
which games would go on to their sales
desk and what the top ten list would look
like
and it was hard to support all the
handsets that customers had
and so it was expensive to be in
the business and the revenues were a
bit meagre because the the sales volumes
were low as well
So the last ten years is
essentially the development of a new
medium
this is
the thing that’s happened is it?
Rights so a couple of things have happened,
with the iPhone
the device itself is very
very powerful and a good
portable, entertainment, device
but I think the biggest change with the
iPhone was the change of the business model
now suddenly it’s possible for any
developer to submit their game to the
store and have an immediate global
distribution of their game
and the rankings of the games are
decided
by the popularity
and so it’s a totally different model
from what it used to be

the irritating catchy theme tune of Angry Birds
a runaway success due mostly to the
Apple iPhone
and the App Store
until Angry Birds was sold on the
application store in 2010
Rovio
was a game’s company
without apparently much of a future and
then things changed fast
Angry Birds came about as a mix of
really questioning everything we knew
about making games and what a good game
feels and looks like
we have done already
more than fifty games before we did Angry Birds
so we had that science
part of it
but really the art of making games came
when we saw these bird characters
designed by our game designer Jaakko Iisalo
you were kind of
building on the potential
that was
innate in the
the drawing he’d made all the uh… I mean
they were
amusing, engaging
even on the page, even on the
screen were they? Just seeing one image of
those birds was enough to make us feel we want to know more
about these birds
we want to know what they’re like and
why they’re angry and that’s really
was a great inspirational
moment for all of us

this was a starting point, these birds
with potential
and that’s the reason
that this is so sticky because most
applications sold on the App Store or given
away
have a half life of about three weeks or
something don’t they? We recognise this
when we released Angry Birds and we
doing our best to
create the conditions that would
allow it to stay on top of the charts for
longer than the average game
and also we wanted to find ways to keep
the brand
fresh and new for a long as possible and really be ambition from
very early on was to create an evergreen
brand … it’s eye grabbing and
experience grabbing to start off with
but keeping it going, do you keep adding
features all the time so there’s always
something new to come back … more than
adding features, it’s about what features
you leave out
in Angry Birds we’ve succeeded quite well
and keeping it very, very simple, there are
millions things we could have done with
it
we worked very hard to keep the game super
approachable
we do add content, we have seasonal
content, we did a space version
where we collaborated with NASA, also
it is very important that we do have the
animations
comics and the merchandise to support
the brand
Angry Birds sells for 99 US cents
that’s if you buy it
there’s also a free version that the
company gives away, this is the economics
of the Internet
you can find both paid
versions of the game and advertising
funded versions of the game, even free
versions that are kind of trial versions of
the game … a billion downloads means you are
an example of a software company that
starting from
quite a simple and straightforward base
has a global ordinance from almost day
one
it’s true and and that’s really what’s
what’s changing the whole media industry
it’s remarkable how far you can go
with so little to start with, in our case
we have created one of the most popular
entertainment brands in the world
starting with twelve people and almost
no capital
last year we had revenues of some
$106 million
we have some four hundred employees
now
if you look at the statistics I would
say Angry Birds has far surpassed our
expectations that we had in early 2009
five years time
Angry Birds will presumably be just one
part of the portfolio, but we don’t know
do we, we don’t know how this
platform
is going to develop, gaming could go
off in a completely new direction
Yes, yes, and
that’s also why
we’re not only in gaming, we have built an
entertainment company besides many other
things, besides gaming and
we believe that there’s no reason why
Angry Birds wouldn’t be very popular for
decades
Mikael Hed of the Finnish company Rovio
now let’s go to another significant
games producing country, Britain, where
the developers Six to Start adopted a
name harking back to the number that
board game players have to roll on the
dice before they’re able to begin the
game
like Rovio in Finland
this is also something of a family
business
two brothers initially making games
based on popular TV programmes for
television companies to sell under their
own label, now Six to Start is
branching out into its own titles
I heard from the founder Adrian Hon
along with one of the company’s games writers, Naomi Alderman, Adrian Hon
speaks first
we were uh… founded about five
years ago between myself and my brother
before that
I worked at a company called Mind Candy
which many people will know for making a
game called Moshi Monsters a kid’s game …
we’re now seeing a migration to different

machines
and
a migration of the ideas and the concepts
and how you play it and what it’s about
games are obviously becoming much more
social now
but I think one of the biggest changes is
simply that
hundreds of millions of people now have
devices in their pockets all the time
of which they can play quite
sophisticated games and previously
a lot of people may or may not have
wanted to play games but they didn’t
have the
technology to do so … and you’ve got a lot of
computer power now Naomi haven’t you … well we certainly do
I mean
we’re talking about games that you remember playing in the early nineties, you’re carrying
around so much more processing power than that …that’s basically a sort of
noughts and crosses, or somebody jumping
over barriers and smashing into a wall or
something and it was black and white too wasn’t it
the kind of thing that was cutting edge fifteen
years ago
you can play right now on whatever smart phone you have … this was just part
of a much longer conversations so next
week on the program Adrian Hon and Naomi
Alderman
will be back to talk about how they
created a game
that combines zombies and
physical exercise, yes physical exercise
about the current state of the games and
publishing industries
and quite a lot more
this is Global Business from the BBC,
I’m Peter Day
this week trying to get to grips with
something I don’t understand at all
computer games, a huge industry
and if like me you’re missing the games gene,
you might think computer games are all
about shooting or smashing bricks
activities the early games seemed to
concentrate on years ago
those are things that don’t hold much
interest for
Paolo Pedercini
originally from Italy, he’s now a lecturer
at Carnegie Mellon University in
Pittsburgh in the USA
he’s also the founder of the games
developer Molle Industria
using his games designing skills
in a politically aware way … when I started in 2003, 2004 in Italy
I was into politics and media activism
and at that point video games were the only cultural field missing
any alternative voices, in other fields
you have underground comics, you have
socially engaged films, but
games only reflected basically the
dominant values … then you started
building games that were what
they were basically games dealing with social issues
ranging from labour issues to religion to economics and environment
one of the I guess strategies that I use is I generally tend to put the player in
unusual roles and situations
so there are like players get to
play like very awkward or problematic
ah… roles
the opening scene of the game ‘Unmanned’
in which the hero, or anti-hero
wakes up from a nightmare to go to his job
on an American base piloting a drone above
the skies of Afghanistan
this isn’t however, a shoot them up game
the character is put through such mundane tasks as shaving
singing along to the radio
and chatting to a co-worker
seemingly boring but also
strangely compelling ‘Unmanned’ won a
prize sponsored by the Light Foundation
for Journalism
at the recent Games for Change Awards
the judges said the game
subtlety confronts players with
21st century warfare
I think games are particularly good at
portraying complex systems, games themselves are systems of rules
to my most popular game ‘sexually’
uh… put you in the shoes of a CEO
of corporations
your goal is to
maximise profits obviously, but in order
to do so you might choose some
unethical practices and you’re
confronted with all the
negative externalities of your
industrial process … you started a mobile
phone game
what’s it called
it’s called ‘phone story’ which is basically an anti-smart phone game for
smartphones
I just realised that even in my own field, the field of digital games which is
you know supposedly material
uh… we are dealing with information
we’re dealing with zeros and ones
but it actually has a very material side
because it relies on uh… cheap
hardware basically
the game basically starts to tell you the story of the very device you are
holding
where does it come from, so in the
first level you have this kind of like
scene
set in Congo where uh… those uh… minerals ‘coltan’
that is present in all electronic devices, that’s where most of the
coltan is mined from and have prisoners of war which are enslaved,
often children and they are mining this
material which gets into our mobile phone
and the second level you have our
representation of the
issue with Foxconn, that big a
assembly factory in China where there
was a wave of suicides and so you are
trying to prevent
frustrated, burned out workers from
jumping out of the window, and then in
the final scene you have to deal with
the end of the cycle, so you have to deal
with
electronic waste
hello consumer
thank you for joining us
let me tell you the story of this phone
while I provide you with quality
entertainment … you produce this game and then
you want to uh… make it available to
sell it so you get it in the App Store … Yes we put it in the Apple Store
and strangely it passed because it was functional, there
was nothing
so outrageous
but a few hours after it was approved
they basically kind of realised that it was
uh… kind of uh… media stunt
and uh… they pulled it from the market
what do you make of that
well banning resulted in a kind of widespread
controversy in the scandal like uh… a
lot of people started to discuss
people are like looking for more
information like what was this game that
was so outrageous to be banned
I’d rather have it available in the Apple Store but
in a way, it kind of expanded the
discourse, it’s not just about the
production process but also about what
runs into these devices and so it
became more about kind of like market
censorship or what you can run, and you cannot
run on your device … it still
available the game isn’t it I can still buy it

it’s available on android, they have a looser policy
for android devices it’s still available
and actually quite successful
it’s available online but yes, it’s not
available on Apple devices
the issue of editorial control going on
here
a big corporation
with an
App Store, which has
become quite an important
dynamic in the formation of little new
businesses hasn’t it, also uses its power
to say yes and no to the things that on sale there … the main problem for me is
that
Apple, in their own guidelines
are basically dismissing their concept of an
App as a cultural product
so they’re basically saying, this is not
like music, this is not like uh… books
apps are meant to be more like
screwdrivers
and that’s kind of (idiotic) when you come to games, games can be
much more than screwdrivers
Paul Pedercini, developer of phone story and other politically charged games
and we asked Apple abut phone story, but the
company didn’t want to comment
now they almost instant success of some
computer games to make them a roller
coaster ride of a business
Zinger based in San Francisco is a good
example, last year Zinger devising games
mostly running on the huge social
network website facebook
was valued at US$1 billion
after it sold some of its stock in an
initial public offering
but now Zinger’s share prices has tumbled to
lessen half its floatation value
and it fell sharply again only the other
day when the company warned about
falling profits
shares in facebook have also been under
pressure as investors worry about the
sustainability of these virally
popular social business models
Zinger’s Vice President of Product is
Sean Kelly … we certainly had a great deal
of success on facebook and the idea
of having games within facebook that
you could use as another way of
connecting to people that you were
adding to your list of friends was
really a fantastic way of proving out
our philosophy that play is really a form
a connection between people, it doesn’t
have to be a solo experience, it doesn’t
just have to be about my interest in
play, it’s my interest in having a
relationship
with somebody that I care about, and
games are terrific way to do that
tell me about ‘farmville’ because that’s the one
that a lot of people know about
it started in 2009
with a game that we really
thought
would allow people to
have an investment in something that was
totally unlike a traditional game and
a farm obviously
is not what would jump into your head when you
first hear about a video game
but what it allowed you to do is to
create something that was unique to you
you could plant your crops and put
your animals in your buildings so run your
farm anywhere you wanted
and we
had this concept that people would
visit each other’s farms, and in so doing
you’d be able to provide gifts, I could
give you
animals you could raise, I could even
help you grow your crops
that experience of playing around a
shared game board was what really made it
a spectacular experience and caused it
to grow an incredible amount so at one
point I think 30 million people
everyday were growing crops on farms and
raising animals and connecting to each
other
a sort of virtual reconstruction of
19th century America
well I think it does hearken back to
sort of a simpler time and because the
game was in trying to be high tech or
futuristic
it really
felt very warm and inviting to a whole
audience of people who were not the
traditional games audience
our
way of combining both the traditional
techniques of video games and the high
degree of social that we bring to every
game was really the magic formula for us

That formula spawned a number of
spinoffs as Zinger has games like cityville
and frontierville, variations on
the theme
but it’s not necessarily easy to turn yesterday’s facebook game on a fairly big
computer screen
into tomorrow’s game on the mobile phone
with a tiny display … people don’t really
consider this
when they look at their phone but your
phones screen is usually about the size
of a business card compared to a
monitor that you use or a laptop
computer that’s a tiny amount of
screen real estate with which to show an
experience so the design of the game has

to take that into account, it’s really
differentiated from anything that you
would see on a larger screen … and you want to do games that swap between all of
the mediums, don’t you?
that’s true although it doesn’t mean
that we want to have the same game on
every type of screen and I think the
real magic of the kind of smart phones
that we see exploding today
is in the relationship to the phone
through touch
designing for touch and the ability to
sort of tap through the glass and
manipulate your game or your
content through your finger directly on
the glass is really transformed
what kind of games that we can make, and
has resulted in some really really great
experiences that are totally different
than what you see on in the pc
so the brain
and the feelings are engaged in
different ways and it may come back to
a hugely visual experience when we get
spectacles on which the game is
projected in high definition when will
be totally immersed in a
visual world again
that’s right, my background actually
comes from the virtual worlds uh…
industry it was very nascent in the
90s when I started working on
virtual worlds and
I think that that will cycle back around
as the
quality and fidelity of what you can see
on devices, even a small as a pair of eye
glasses increases
although we feel like the phone is
really
right now such enormous opportunity that
fully hasn’t been utilized yet … how does
this work as a money-making business
our games are free to play
and we monetise
in two different ways we
sell virtual currencies which allow you
to accelerate your game play, so the game
is free to play but if you want to go
faster or get a special item
you can do that, in the other way that we
do it is we
provide advertising that our users
will interact with as they’re playing
the game … and that uh… spending to buy
virtual coinage or virtual money
means I can, what
grow my farm bigger or buy more animals
or fertiliser, those sort of
details
that’s right
now to a non-game’s player, this a
great mystery
enough people are compelled to want to
get ahead
that they are compelled to buy
stuff from you are they? It actually works?
yes, and it’s
a really incredible business model
because
the user can experience the full extent
of the game without having to purchase
anything so that decision that you have
to make in a traditional store where
you go in
you look at a shelf full of different
games and decide what you want to spend
your money on
that can be very daunting and our games are
designed to be as completely frictionless
as possible to get you into that
experience and get you connecting with
your friends … in November of last year
Xinga went public
thereby opening itself to the scrutiny
of stock market investors
and it hasn’t so far done very well
for a games company there is one clear
imperative, to develop almost instant
new hits over and over again … I asked Sean Kelly
how the company comes up with new ideas
we’ll look at popular genres and things
that we think can be made social so what
we really look for
is a concept or an idea that
when we say it like farmville or cityville that you have an idea in your head
of what that game might be like and
your interested in it because you know
it’s a broad an appealing theme
but the real magic is in how you take
that theme and actually create game play
around it, and that’s something we do very
carefully … critics say you pinch a lot of
ideas from other people other small game’s developers
we want to go where our players want
us to go and if there’s a genre that
we think is very appealing we will
certainly
not be shy about putting a game in
that genre but we are very respectful
of uh… intellectual property and code,
and artwork and we certainly
see people taking as many ideas from us
says as we might take from the industry
as a whole
Zenger
stocks, the shares, have plunged since they
were floated last, late last year
haven’t they?
because people are worried about how
long-term you are and
follow the figures for
people playing so closely
that must be worrying to the company
I don’t think we focus on that at all in
fact what we’re focused on
is enriching people’s relationships
through games
and every time that I am in front of a
group of people wherever it is I always
ask them how many people play our games
and
typically about half or more of the
hands go up when I say, hey, are you playing
a Zenger game
half of the room is a great business and
the other half of the room is a great
opportunity … even though the medium is
changing so rapidly and the rise of the
mobile phone
is a different experience from the one
that you first had your success with
for example … we have an incredible
network of mobile players already
I think it’s more than 21 people
everyday play a Zenger game on mobile
21 million I think
that’s right and uh… and we we really
feel like that’s just the beginning for
us, the amount of smart phones that
are available in the world is growing
exponentially
and all we see as
the opportunities is growth ahead of
us
these questions from me a little bit in
comprehending because I simply
don’t have a games mentality, I don’t
want to play games, I don’t even want to
do things that are very social
so, I’m slightly baffled by the whole
phenomenon
but I maybe in a very small minority
well you’re you’re a challenging
customer, but we welcome the
opportunity to get you to play one of our
games
Sean Kelly of the Internet games company
Zenger
after the huge successes the company is
now trying to revive its fortunes
games people say they’re one of the hallmarks
of a developing civilization and of
course they go back to primitive times
so next week I’ll be taking a more philosophical view of this huge
new entertainment industry with two of
the British games devisers who are
thinking hard about what they’re doing
and why
Peter Day, the programme was produced by
Mike Wendling

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