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Game Industry Legends: Bing Gordon

Game Industry Legends: Bing Gordon

Mon 23 Jul 2012 8:14am GMT / 4:14am EDT / 1:14am PDT
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On transition, Nintendo as a software company, funding vs. 'cool' and a three-part formula for killer apps

Bing Gordon has seen the entire sweep of electronic gaming as a consumer market, beginning in Electronic Arts in 1982, where he ran the marketing department. Gordon later became EA's Chief Creative Officer in 1998, and along the way developed EA's pricing strategy, created EA's studio organization, and contributed to the design and marketing of key EA brands such as John Madden Football, the Sims, and Need for Speed.

Gordon left EA in 2008 to join leading venture capital firm Kleiner Perkins as a partner, leading investments into companies such as ngmoco and Zynga. Gordon serves on the board of directors of companies such as Amazon and Zynga among several others, and in 2011 he was awarded the Academy of Interactive Arts & Sciences' Lifetime Achievement Award.

Bing Gordon spoke with GamesIndustry Intenrnational while on his way to a board meeting at Zynga, and shared his thoughts on the state of the industry, what's ahead for console games, and his three-part formula for creating killer apps.

Disclosure: I worked for Bing Gordon at Electronic Arts back in the 1980s as a product marketer.

Q: You said at GamesBeat it's a golden age for games, but not a golden age for game businesses. Why do you feel that way?

Bing Gordon: For games, because there's cool stuff and a lot of people are playing. Gamification is now so taken for granted it's a cliché; it's a cliché that's already getting backlash. The highest number of people are playing games since maybe chess was invented. Then there's cool stuff; I think game design is the new MBA. I think it's hard to work in an organization or create mass products without thinking like a game. We live in a golden age, and cool stuff keeps getting invented. But it's a transition, and transitions are usually good for creativity and bad for money.

Q: Especially when business models change.

Bing Gordon: Yeah. It was in the early '80s when the retail chain model got invented. It got reinvented a little bit going from places like Babbages and Software Etc. to Wal-Mart where you had to ship in bulk and focus more on television. The first stage was magazines and chains, the second stage was Wal-Mart and consoles, then came online and subscription, and now freemium, with technology changing every time. We're in an age right now where software is a platform instead of coprocessors as a platform. Distribution models are probably undergoing the most fundamental change.

When I started out in games, games were sold by publishers to distributors in small numbers and then resold; there were no direct sales forces. I remember when there were no second-run game sales, when there was no rental, and I remember when there was no subscriptions, and there were Doubting Thomases at every stage. I remember when there were no expansion packs. People who haven't lived through changes tend to believe that business models are static. After you've seen a couple of changes, then you realize that business models, like marriages, are not static.

"I think game design is the new MBA"

Bing Gordon

Q: Do you think the next generation of consoles can bring back the level of sales we saw in 2008?

Bing Gordon: I think it's possible. One of the things that we saw from '95 to '08 was that a high percentage of console gamers owned two. If you were a family with young kids you only owned Nintendo. Other than that, Nintendo always had a great game so real gamers felt liked they had to own a Nintendo no matter what. Maybe PlayStation and Xbox you only had to have one of them. For a while there you owned Xbox for shooters and Halo, and Sony for sports and cars.

We may have now reached a point where a lot of gamers are back to feeling like they only have to have one. Back in the days of Nintendo versus Sega most gamers felt they only needed one TV system, and then of course everybody kind of needed a Game Boy. We may have the same number of households, and the same tie ratio of systems, but fewer systems per house. I think handhelds are going to come under pressure from phones, and TV's going to come under pressure from tablets. I think what's going to happen is increasingly consoles are going to be primarily 3D systems rather than all, and handhelds will be primarily puzzles rather than all. Just as we saw back in the day with PCs, PC games began losing categories. I think we're kind of beginning, like PCs - PCs lost categories over a decade - we're probably starting to see the beginning of attrition of categories on console. That said, Xbox Live is a consumer miracle.

Q: What do you think of the Wii U's chances this Christmas and beyond, especially facing tablets like the Nexus 7 for $199 that are pretty good game devices? Is that going to make it tough for the Wii U?

Bing Gordon: I think Nintendo's already on track to become primarily a software company. We saw that with Sega back in the day; Sega made some missteps and became primarily a software company. Nintendo hasn't really made missteps, Nintendo probably has better creative talent and better leadership now than Sega did. It's got the most robust business model, the best creative talent; Miyamoto's still the best in the business. Apple's most directly competitive with Nintendo. So far, when Miyamoto makes a perfect game, in his career he makes games worth $200 - it's worth buying a system for. I think the handheld is going to be under a lot of pressure. I can imagine a day when Nintendo wonders - and maybe it's generational change - when Nintendo wonders if they ought to take some of their best games and make them apps.

1

Q: That will be an interesting evolution to watch.

Bing Gordon: That will be stunning. Neither Apple or Nintendo - both those companies like control - is likely to want a partnership, but a partnership would be stunningly cool. I think if you're Nintendo, as long as Miyamoto's coming to work, you can sustain a proprietary platform. He's that good.

Q: Shifting gears, we seem to have reached "peak Facebook" in the US; what does this mean for social games?

Bing Gordon: Facebook's reached everybody in the United States. A couple of things. We've always wondered, is everybody going to be on one social network, or is everybody going to be on multiple social networks? I think we're heading toward everybody being on multiple social networks. In the early days of the personal computer, visionaries said 'Someday everybody will own one.' Now we've gotten to the point where everybody owns multiple PCs, just like with televisions. First it was 'Someday everybody will own one, then it was 'Everybody will own a color TV,' then next thing you know households have 2.7 TVs. I think we're going to head to a point where users are active in the metaphorical equivalent of 2.7 TVs.

Facebook is still the granddaddy, it's like the Yellow Pages of social networks. It's the most broad-based social network, it's easiest to instantiate an identity, easiest to see other people. It's still a work in progress, whether it becomes a platform for many kinds of businesses. As for the rest of us, trying to go from web to mobile. You've still got that almost ubiquitous network layer, that seems enormously valuable. The miracle of Facebook was when it was growing, we were all growing out our personal networks and wanting to touch past our first 100 friends, all these new people instantiated as friends, we wanted to figure out something to do with them, so that was a really good time for growing the app economy when the friend network was growing. When the friend network was growing there was a different emotional contract with users about what they wanted to do with friends. Just as in the early days of the web, you had people who would just plain crawl the web looking for stuff as a form of entertainment.

In the early days of YouTube we all knew people who just went around YouTube looking for interesting stuff. That kind of novelty after a couple of years has worn off on other things on the web, and I think it's worn off on iPad and it's worn off on iPhone, once you get a critical mass of stuff to do. And it wore off on games back in '80s. Once you get it fully established as a use case you narrow your focus instead of trying a little bit of everything.

Q: Speaking of mobile, there seems to be a lot of startups in the mobile space, and acquisition costs are rising. Is there too much venture money chasing too few opportunities?

"I think if you're Nintendo, as long as Miyamoto's coming to work, you can sustain a proprietary platform. He's that good."

Bing Gordon

Bing Gordon: In games? It's cool but astonishing that in four short years investors started thinking games was a good category. When Electronic Arts went public, the valuation suffered and it wasn't until Electronic Arts took off that made it possible for other game companies to go public. It's not normal for media companies to be considered good investments. Investors usually mistrust any business that requires hits until the hits are created. It is kind of cool, and I hope that early stage funding ability leads to more cool games.

I'm not sure there's any correlation yet between the amount of new cool games and the amount of funding, because most of the cool games you've heard of weren't venture funded. They were talent based, and later they got money, which is more normal in media; you get money after you're successful and not before. Electronic Arts was the other way around; it raised money before it had any titles and became a publisher. ngmoco was like this. There are very few companies that have started this way.

Q: What platform would you recommend that a game developer aim for these days?

Bing Gordon: To be a publisher, I think there's an opportunity on Android. It kind of depends on pace. If you want to start out on iOS, you've got to get to market with a hit in a hurry because it's a tough market to wander around in on a million downloads. With Android, nobody's systematically doing good stuff there; it's kind of disorganized. I might try to team up with Amazon and do to Android what ngmoco did to iPhone, get really focused and try to make a serious killer app. Console game types are eventually going to be big download, free-to-play freemium; there might be something to do there, but it's scary investment costs. There's a Minecraft model, but it's not really a model for investors, it's a model for great technical developers. I think location-based, sensor-based gaming; you think of Foursquare as a platform, the major thing they did is just an app, I think there's an opening there.

In general, in my history it seems like there's a three-part formula for creating killer apps. One aspect is what new technology is available; the second aspect is what new use behaviors are arising, and the third is, what's the marketing ecosystem, what brands are going to spend money to try and change behaviors? The new behaviors are ubiquitous phones with sensors, infinite texting, decentralized e-commerce, the list goes on and on and on. One need only look at 15-year-olds and see what their habits are that are different habits than today's 30-year-olds when they were 15, and then you can lean into almost any one of those.

Then for the marketing, it looks like Xbox has a somewhat predictable game plan from here. It looks like Nintendo is going to stay in the toy business for a while. No telling what Sony's gonna try to make happen. I think Apple's pretty predictable right now. I think Amazon is less predictable. I think Android and Sony are even less predictable. I think some of the Asian manufacturers will try and make a move. The education oligopoly is pretty predictable, but innovation there is not predictable.

"Game makers are more valuable than ever"

Bing Gordon

Q: Do you see more mergers and acquisitions ahead for the game industry?

Bing Gordon: There's been tons of them consistently; EA started doing them, I think, in 1990. EA did like 12 of them as we built out international sales and distribution led by David Gardner and Mark Lewis. The studio acquisition has been steady-state forever. If you looked at it I bet EA has had a studio acquisition every 12-18 months since 1990. I think the people big enough to be acquisitive have stayed at it. In social we see Google and Facebook have been pretty acquisitive, Amazon's been consistently acquisitive. I think it's a proven strategy and some are a little better than others.

I think there's going to be a lot of failed startups in the Valley. The web has more acquisitions of little failures than the game business did. The game business, because it had that big requirement for initial development, there was a hump that any company had to get over, so the incumbent had an advantage. On the web now if you have a little failed company the only question is whether you want to go on working with the same team or go out on your own. It's probably easier to get funded by merging.

Q: Any thoughts on the potential Activision sale?

Bing Gordon: I think the minority holder's trying to sell. My prediction is Bobby stays in charge. He's a really high-value leader there; they'll just change around who the owners are. They've got an owner with a really large stake; there are some companies that have 5 or 10 percent owners, and those change all the time and never get mentioned in the press. When you have a huge slug like that you can probably dribble it out bit-by-bit, but it's probably seen as more valuable as a chunk. It's a little like, if you have a 25 acres of land, to some people that's more valuable than 25 1-acre parcels. I don't think that's strategic at all, I think that's just a seller looking for a buyer.

Q: What's the biggest opportunity ahead for the game industry?

Bing Gordon: The opportunity for game makers, game makers are more valuable than ever. Some of the rules of triple-A games, and triple-A game marketing, and triple-A game distribution are going to have to be rewritten. In 1995 game developers had to figure out how to make a game that was TV-commercialable. When you were making the game you had to be thinking about a TV commercial at the same time. In the '80's when you were making a game you had to think about the package at the same time, and the retail presence. Now you need to think about the web presence, and virality and YouTube. But still the primary incentive is the gameplay.

Similarly, musicians need to figure out how to promote on the web. In the '80s and '90s they needed to promote on MTV. Before that, they primarily needed to figure out how to promote on radio. They're still making music, but some of the requirements are different. Once music videos took off, it was more important that musicians were attractive. I think the same thing is going on with game makers. They need to be citizens of the web, and those that don't want to learn that skill are going to be less valuable. In general, in all publishing businesses, it's the middle man who's under pressure, it's not the talent.

"It's cool but astonishing that in four short years investors started thinking games was a good category"

Bing Gordon

Q: What's the biggest threat facing the game industry?

Bing Gordon: It's always about boring customers; a lack of innovation and a lack of quality. As we've seen it in other media businesses, cool stuff makes the market bigger. Then there's an issue of who can get rich. You'd like the riches to go to the Steven Spielbergs of gaming, not to the publishing people. Same in books and music, you'd wish in music the people who made the money were Bruce Springsteen and Justin Timberlake, and not the music execs.

Q: What games are you playing these days?

Bing Gordon: I'm playing CastleVille, The Ville, the Pogo Badge of the Week, and some new games in development. I'm playing Scramble and Words With Friends daily, and playing some Draw Something, and Drop 7 which is a solo puzzle game. In my World of Warcraft days I was probably 25 or 30 hours a week; I'm at least 20 hours a week now. My family probably still thinks I'm playing 30 hours a week.

3 Comments

Why would Nintendo drop hardware? Its still hugely profitable for them, and they wouldn't "save" too much in expenditure by doing so. Until it actually starts costing them money (or their hardware doesn't sell enough units - the same thing really) it won't happen.

Their last generation of both handheld and console units (DS & Wii) were both the biggest selling in the history of the company, and both very profitable (on the hardware side).

Posted:2 years ago

#1

Steve Peterson
West Coast Editor

108 73 0.7
Unfortunately the hardware is no longer profitable; Nintendo sells each 3DS at a loss. The Wii is profitable, but sales are disappearing. Nintendo may be forced to price the Wii U at a level where they lose money on each one (which is typical for most consoles in the past) in order to build up large enough market to generate significant software sales. Their profits are, more and more, generated by software, not hardware. The logical extension of that trend is to focus purely on software at some point.

Posted:2 years ago

#2

Craig Bamford
Writer/Consultant

40 54 1.4
Steve, when exactly has a transition from hardware to software EVER worked?

And, for that matter, at what point has being a gaming software publisher ever been less precarious than being a gaming hardware manufacturer?

People used to say the same thing about Sega. It didn't turn out well. Neither did Atari, Hudson/NEC, 3DO, or Coleco for that matter. Mattel survived the Intellivision, but they aren't game-makers of any particular note. So what is this based on, exactly?

Posted:2 years ago

#3

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