Thursday, June 28, 2012

Futures (notes)

First off, Matt Solomon sent in a link to a story from 2010 titled The Future Of Music Business Models (And Those Who Are Already There). The basic premise is that you give the music away for free, and if you think that sounds crazy, you need to read the article, because it's excellent and provocative.

Next, someone in the industry who wishes to remain anonymous sent in this:
As you know, I get to talk to some interesting people in the industry periodically and just happened to be talking to a few execs at an unnamed highly-regarded developer recently. We were reminiscing about the PS2 era when there were so many fun, risky 2nd tier games that many of us liked to play. Long story short, the execs told me a big reason those games don’t get made any more is because retail refuses to buy them. Namely, Gamestop. The biggest buyers in gaming aren’t the “core” gamers or the “casual” gamers. It’s Gamestop, and they’ve grown extremely reluctant to stock anything but guaranteed hits.

I hadn't thought about it before, but that makes sense. Gamestop is probably much more profitable if they sell more units of fewer games. Less SKUs to manage, a more liquid market in the games they do carry, and lower chances of getting stuck with excess inventory (because of liquidity).

Jack Palevich sent in this clarification:
For what it's worth the stock price being flat (or even declining) isn't as much of a disincentive as you might think.

That's because most post-IPO tech companies hand out stock grants rather than stock options. A stock grant is like an option with a strike price of $0. A stock grant is worth something no matter how low the stock price is.

I work in the tech industry, and I remember this switch happened roughly when the accounting rules changed such that option grants had to be accounted for as an expense. I don't know if that is related or not. It also happened about the time the bull market ended, so maybe that's a more direct reason for the change.

That's a good point, but if you were granted shares at $20 with a vesting period of say, two years, and the stock is worth $5 after those two years, it's still a problem. But Jack's right about the compensation method, and he's also right that the revised accounting rules drove the changes.

One last note: Julian Dasgupta wrote in to mention that there are FIVE studios working on the Call of Duty series, not four: Treyarch, Infinity Ward, Sledgehammer, Raven Software, and Neversoft.

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