The swell of content

By Razib Khan | June 11, 2011 2:09 pm

In the 1980s my family went and visited friends in Queens for a week in August. Down the street from the house there was a small shop with an arcade machine with Legendary Wings. Every day I’d start out with a fistful of quarters and pop them into the machine to get round after round. Eventually I purchased a version of the game for the original NES, and got so proficient at it that I could win basically on mental autopilot.

I thought of that when listening to a story on the radio about the decline of the home video gaming industry as a revenue generator. Here’s the relevant section of the transcript:

HENN: It’s in a state of flux. Sales and revenue for the big gaming consoles — like Nintendo and Xbox — actually fell last year something like 13 percent. It’s still a $10 billion industry, but that was a big drop.

VIGELAND: It is indeed. What’s going on?

HENN: Some of the smartest people in the industry say the price of what people are willing to pay for an hour of entertainment, for a video game, is dropping like a rock. Bing Gordon was the creative director for EA, Electronic Arts, for years. He’s now a venture capitalist in Silicon Valley and on the board of Zynga, the company behind FarmVille. In the early ’80s, Gordon actually helped set the prices for video games. He says back then people were willing to pay like $1 an hour for entertainment. Today that’s fallen to something like $0.15 or a nickel.

Before the NES the gap between video arcades and the older home gaming systems in terms of quality of play was huge. With the NES the gap closed enough that unless there was serious value-add I didn’t see the point of going to a mall arcade to play video games (here’s an example of value-add, a mall which installed a massive screen to display Mortal Kombat). Clearly on a per-unit basis I wasn’t willing to pay as much for video games as time passed. The emergence cheap and high quality home gaming systems flooded the market with so many “hours” of “free” comparable game play that the arcade lost its comparative advantage. Of course you still had to pay for the games and the hardware to run the games, but once that was out of the way the only limit was your marginal time.

Today there are so many different electronic entertainment options. The video game industry as it is today is structured for the production and consumption channels and expectations of the 1980s. The old video rental store store model is from the same era, and its decay and collapse is much more far gone. A local family owned video store where I live which once had a huge floor space just relocated to a much smaller storefront. In a newspaper story they admit that Netflix and other services have eaten away much of their core business, so they were downsizing and focusing on customer service. There’s no way that they could compete with new distributions channels on selection, so they were marketing themselves as a curation and consultation service. A lot like the music shops which carry vinyl. In a way they gave up on competing with Netflix and Redbox on breadth of choice, and are going head-to-head with Netflix’s recommendation algorithm.

We live in an age when content is king, but the king carries very little price. There are no fusion power plants or flying cars, but I have more access to information on my phone than I did going to the public library as a kid. In the early 1990s I used to buy slick NFL “pre-season” preview magazines, and would slowly flip page by page as the information unfolded. I was focused mostly on the Pittsburgh Steelers, but I’m sure I read every single page at least twice. I guess I’m old enough to understand what Jon Bon Jovi is saying below:

“Kids today have missed the whole experience of putting the headphones on, turning it up to 10, holding the jacket, closing their eyes and getting lost in an album,” he reflects. There was also “the beauty of taking your allowance money and making a decision based on the jacket, not knowing what the record sounded like, and looking at a couple of still pictures and imagining it. God, it was a magical, magical time.”

But I still think he’s crazy. Jon Bon Jovi is also a very wealthy man compared to the typical American, and the marginal value of money for him is probably not what it is for the typical person. I really have an issue today in terms of my content purchases with not knowing what I’m buying. In a world of nearly infinite content, at least from a human perspective, shelling out $5.00 for a paper magazine or subscription service where I might read only 1/3 of it doesn’t seem satisfying anymore.

More and more what I’ve been thinking is that I wish there was way to purchase and pay for content in a very fine-grained manner. For example, if I could be charged per page of a magazine or book I purchased. After all, there are magazines and books where you read a few pages, and lose interest. For example, consider a $30 book which is 300 pages. That would work out to 10 cents per page. Of course you can preview 10-15 pages in the bookstore pretty easily, but I’d be willing to save the time if I could pay in such a continuous and graduated fashion, instead of the lump sum for the content.

CATEGORIZED UNDER: Technology
  • http://lablemming.blogspot.com/ Lab Lemming

    The scientific literature charges on a per-article basis. And if you compare prices from articles published in the days of our youth, they have gone up by more than an order of magnitude.

  • Markk

    Well that is the old Xanadu idea of Ted Nelson right? Micro payments on everything. It would be ok for me if I were actually -buying- the content and then owned it and could resell it. What seems to have happened is that it is being treated as a rental, every time I want to use it.

  • http://blogs.discovermagazine.com/gnxp Razib Khan

    #1, the scientific stuff though is a weird market. most people don’t purchase per article, they pay tuition or have a job at a university/institution, which buys those on a bulk basis. i assume it’s just like health insurance; there’s a public sticker price, but a real price for big buyers.

  • http://ecophysio.fieldofscience.com/ EcoPhysioMichelle

    What I really want to know is why would a kid from way out west be a Steelers fan?

  • juan

    The video game industry also faces an interesting new form of competition in the form of the free games available for the iPhone or at sites like Kongregate.

    I find that when I’m jonesing for a gaming fix — I can satisfy that remarkably well with a free puzzle game or physics game or “freemium” style RPG. And there are a surprisingly large # of good ones out there, and a seemingly unlimited # of horrible to average ones.

    In contrast to that, amateur attempts at TV and movies tend to be uniformly horrible, and are no substitute at all for high quality TV or Hollywood movies.

    Of course, I consume TV and movies not just to be entertained, but also to have a shared cultural experience with family and friends and, to a certain extent, the broader public culture as a whole. But I consume gaming content primarily to get that fix, that feeling of mastery and focused concentration. I only rarely discuss gaming with other people in real life, while talking about the latest movies and TV shows and sports is a daily topic of conversation.

  • Linda Seebach

    I would hate it if “I could pay in such a continuous and graduated fashion” (that is, “had to”) because I have to think every time I turn a page that it is costing me money at the margin — very little, but it is still one more thing I have to think about. I don’t ever come close to using the minutes on my cell phone (and if I did, I’d change the plan rather than have to fret about whether I needed to talk a few minutes longer).

  • http://Crumblingsanctuary.blogspot.com Vogie

    We’re seeing more & more high-quality, professional-level videos hitting the web. Things like the self-funded Dr. Horrible, the Microsoft-sponsored “the Guild,” the Onion News Network, Freddy Wong videos, etc. While not really on par with your typical Michael Bay flick, we’re getting closer and closer to the “big studios” becoming less & less relevant. As Cory Doctorow tends to repeat, the amount of content Hollywood gives us in a year (if you include teasers & background footage) is roughly a quarter as much footage that Youtube gets in a day. Sure there’s a small quality disparity, but as we’re seeing with things like the Guild or even the pop star (dispite personal opinions) Justin Bieber, there’s a future in it.

    The main thing that is hurting the spread of content out of hollywood or game studios is how much funding matters. We’re seeing some semblence of change with the Riot games model for League of Legends, a freemium game where the gameplay is free, and the aesthetics you can pay for. But unlike repeating & replayable games, movies and TV shows are usually fixed points in space & time (quoth the Doctor), so they either exist or they don’t, and new producers without deep pockets only have things like Kickstarter to fund them. And then what? Most Premium shows use subscription fees, and regular shows use advertising to pay the bills, but what do online shows have?

    They haven’t figured that out yet. Sure, you can put ads in, but if there are too many, then people will subvert the system with one of the others. There’s a possibility of In-content product placement, similar to all the cars in Heros were Nissan or all the phones in 24 were Motorola. But unless we get to a Truman-Show-esque saturation, that probably won’t pay much. Hulu Plus & Netflix are already stretching their arms at the production business, because they are, in essence, Premium channel.

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This blog is about evolution, genetics, genomics and their interstices. Please beware that comments are aggressively moderated. Uncivil or churlish comments will likely get you banned immediately, so make any contribution count!

About Razib Khan

I have degrees in biology and biochemistry, a passion for genetics, history, and philosophy, and shrimp is my favorite food. In relation to nationality I'm a American Northwesterner, in politics I'm a reactionary, and as for religion I have none (I'm an atheist). If you want to know more, see the links at http://www.razib.com

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