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Thursday 1 March 2012

Increase engagement with social analytics

By Osma on Thursday 1 March 2012, 14:26

Last week I discussed segmentation as a method for identifying and differentiating customers for their specific service needs. Whether used for young cohort's introductory period service, high-value segments special treatment, or to identify the group on a transitionary path to high value and help accelerate that process, segmentation is a very versatile tool for business and product optimization. It can be approached with many techniques and I'll go on to more implementation details on those. But first, an introduction to the next topic after segmentation: social metrics.

While social behavior is not historically strongly featured by many products in either the gaming space or in the wider scope of freemium products, your customers and users are people, and thus they will have social interaction with others you can benefit from. If you can capture any of that activity in your product measurement, it can serve as a very valuable basis for in-depth analytics. Today, I will focus on those products and services in which their audience can interact among each other - that is, there is some sort of easily measured, directly connected community.

Any such product will probably have user segments such as:

  • new users who would benefit from seeing good examples of effective use of the product, guidance on the first steps, or some other introduction beyond what the product can do automatically or what your sales or support staff can scale to
  • enthusiasts who would like nothing better than to help the first group
  • direct revenue contributors who either have a lot of disposable income, or otherwise find your service so valuable to them that they'll be happy to buy a lot of premium features or content
  • people who, though they're not top customers themselves, find innovative ways to use premium features for extra value
  • people who are widely appreciated by the community for their contributions, "have good karma"
  • people whose influence within the community is on the whole negative due to disruptive behavior

and many, many others. Two of these groups are easy to identify simply based on their own history, I'm sure you'll recognize which two. The other four are determined largely by their interaction with the rest of the community and other users' reaction to their activities. How do you find them? This is a rapidly evolving field of analytics with constantly growing pool of theoretical approaches and practical tools, and can look daunting at first. The good news, there are many practical tools already, and while theoretical background helps, the first steps aren't too hard to make.

You'll need to develop some simple way to identify interaction. The traditional way to begin is to define a "buddy list" of some sort similar to Facebook friends network, Twitter following, or a simple email address book. However, I find a more "casual" approach of quantifying interactions works better for analytics. Enumerate comments, time in the same "space", exposure to the same content, common play time, or whatever works for your product. At the simplest level, this will be a list of "user A, user B, scale of interaction" stored somewhere in your logs or a metrics database. This is already a very good baseline. With the addition of time/calendar, you'll be able to measure the ebb and flow of social activities, but even that isn't strictly necessary.

Up to data set of about 100k users and half a million connections or so, you'll be able to do a lot of analysis just on your laptop. Grab such a data dump and a tool called Gephi and you're just minutes away from fun stuff like visualizing whether connections are uniformly defined or clustered into smaller, relatively separate groups (I bet you'll find the latter - social networks are practically always have this "small world" property). This alone, even though it isn't an ongoing, easily comparable metric, will be very informative for your product design and community interaction.

In terms of metrics and connected actions, here's a high-level overview of some of the more simple-to-implement things:

  • highly connected users are a great seed for new features or content, because they can spread messages fast and giving them early access will make them more engaged. While in theory you'd want to reach people "in between" clusters, the top connected people are an easy, surprisingly well functioning substitute.
  • those same people with a large number of connections are also critical hubs in the community, and you should protect them well, jumping in fast if they have problems. This is independent of their individual LTV, because they may well be the connection between high-value customers.
  • high clustering coefficient will indicate a robust network, so you should aim to build one and increase that metric. Try introducing less-connected (including new) people to existing clusters, not simply to random other users. A cluster, of course, is a set of people who all have connections to most others in the cluster (i.e., a high local clustering coefficient).
  • Once someone already has a reasonable number of semi-stable relationships (such as, 4-8 people they've interacted with more than once or twice), it's time to start introducing more variance, such as connecting them to someone who's distant in the existing graph. Most of these introductions are unlikely to stick, but the ones that do will improve the entire community a great deal.
  • if you can quantify the importance of the connections, e.g. by measuring the time or number of interactions, you can further identify the top influencers apart from the overall most connected people.
  • finally, when you combine these basic social graph metrics to the other user lifetime data I discussed previously, you'll get a whole new view into how to find crucial user segments and predict their future behavior. This merged analysis will give you measurable improvement far faster than burying yourself into advanced theories of social models, so take the low-hanging fruits first.

That's it for yet another introductory post. Time for feedback: what other analytics areas would you like to see high-level explanations about, or would you rather see this series dive into the implementation details on some particular area? Do let me know, either via comments here, or by a tweet.

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Tuesday 21 February 2012

There's no such thing as an average free-to-player

By Osma on Tuesday 21 February 2012, 15:54

A quick recap: in part 1 of this series, I outlined a couple of basic ways to define a customer acquisition funnel and explained how it falls short when measuring freemium products, in particularly free-to-play. In part 2, I continued to explain two alternative measurement models for free-to-play and focused on Lifetime Value (LTV) as a key metric. A core feature emerged: the spread of possible LTV through the audience is immense, ranging from 0 to, depending on product, hundreds, perhaps even thousands of euros. 

This finding isn't limited to just money spending, but is seen over all kinds of behavior, and is well documented for social participation as the 90-9-1 rule. From a measurement point of view, one of the most overlooked aspects is how it destroys averages as a representative tool. At the risk of stating the obvious, an example below.

When 90% of a freemium product players choose the free version and 10% choose to pay, the average LTV is obviously just 1/10th of the average spending of the paid customers. However, when there's not just a variety of price points, but in fact a scale of spending connected to consumption (or if we're valuing something else than spending, such as time), the top 1% is likely to spend 10x or more than the next 9%. Simple math will show you that the top 1% would be more valuable than the rest of the audience in total, as illustrated here:

The average? 0.19. Now, can you identify the group that is represented by "average spending of 0.19" in the above example? Of course you can't - there is no such group. Averages work fine when what you're measuring follows some approximation of a standard distribution (e.g., heights of people), but they break down with other kinds of quantities. Very crucially, they break down on behavioral and social metrics. Philip Ball's book Critical Mass goes to some length on the history of these measurements, if you're interested in that.

Instead of measuring an average, you should identify your critical threshold levels. Those might be the actions or value separating the 90% and 9% value players, and equally, 9% and 1%. Alternatively, you might already have a good idea of your per-user costs and how much a customer needs to spend to be profitable. Measure how many of your audience are above that level. Identify and name them, if you can. Certainly try to remember them over time to address them individually. This goes deeper than simply "managing whales", to use the casino term. Yes, the top 1% are valuable and important to special case, but it's equally if not more important to determine what are the right strategies for developing more paying customers from the 90% majority.

This is why it's important to measure everything. If you only measure payment, the 90% majority will be invisible to your metrics, and it's usually very hard to identify ahead of time which other measurements are important for identifying the activities that lead to spending. Instrumenting your systems to collect events on all kinds of activities on a per-user basis (rather than just system-level aggregates) enables a data mining approach to the problem. Collect the events, aggregate them across time for each player (computing additional metrics, when appropriate), and then identify which pre-purchase activities separate those players who convert to paying from those in the same cohort who do not. There are several strategies for this, from decision trees to Bayesian filtering to all kinds of dimensionality reduction algorithms. The tools are already pretty approachable, even in open source, whether as GUIs like Weka, in R, or with Big Data solutions like Apache Mahout, which works on top of Hadoop.

Essentially, this approach will surface a customer acquisition funnel akin to what I described earlier, but using the raw measurement data. It will probably reveal things about your product and its audience you would not have identified otherwise, and allow you to optimize the product for higher conversions. The next step in this direction is to replace the "is a customer" criteria above with the measured per-player LTV value. Now, instead of a funnel, you will reveal a number of correlations between types of engagement and purchase behavior, and will be able to further optimize for high LTV. Good results depend on having a rich profile of players across their lifetimes. A daily summary of all the various activities in a wide table with a column for each activity, and a row per player per day is a great source for this analysis.

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Friday 17 February 2012

A personal note on past, present and future..

By Osma on Friday 17 February 2012, 15:38

Before I continue the series on metrics for free-to-play, I want to take an opportunity to comment on this week. I promise, I'll get back to the lessons soon.

I was finally able to announce this Wednesday that my well over 8 years at Sulake and Habbo Hotel are over. It's a time I will always remember fondly, for many reasons. By far the longest period I've ever worked with one business, it's been challenging, educational, fun, exciting - and, yes, at times also exhausting. I've been lucky to enjoy great workplaces, excellent colleagues and wonderful businesses since starting my professional career in the latter half of the 90s, but Sulake has been by far the most interesting of them yet. Indeed, most times it didn't feel like work.

Still, I'm itching for something different. I'm not quite sure what yet, but I couldn't focus on figuring that out while inside Sulake, with all the questions to explore and day-to-day problems to solve any business has being a distraction from this personal exploration. Nor would it have been fair for the team there if I hadn't given my energy to those things. Finally, this means our whole family is suddenly free of attachments and we can now consider opportunities anywhere in the world.

It turned out that the day after I handed in the office keys and revoked my passwords, some rumors started flying about regarding Sulake. While I don't know the content of the internal discussion any better than anyone else, what it looks like is that the company is doubling down on putting its focus on product development. That's absolutely the right thing to do - the teen market deserves to be served with great products, and the core creativity values of Sulake and Habbo can be explored in ways Habbo Hotel has not yet done. We have not seen in public yet what precisely is the plan, but I expect to see both changes to the existing products, as well as something new, probably combining online and mobile platforms in interesting ways. My leaving the company is completely unrelated to this development. Lets wait for the dust to settle and try not to jump to conclusions on behalf of the team.

But back to me. Getting involved in a small way in the emerging Helsinki start-up scene through AaltoVG, Startup Sauna and advisory work has strengthened my feel that while all sizes and stages of business are interesting to optimize, there's something uniquely exhilarating about the beginning. I love teams small enough that the members can really take the time understand each other - even when they're not in agreement. Still, I thrive in change, be it early or later. It takes a special kind of courage to keep changing things even after pieces start to work, but losing that ability kills any business. So, I'm looking first of all for that exciting team to be part of and the awesome vision for a different world to create, never mind whether . the current idea of how to get there really works or not. I have some ideas I'm brewing, but few great things happen alone, so the team takes priority.

That's the future. For the present, I'm happy to get an opportunity to spend more time with my 14 month old daughter (she's being her usual bubbly self here as I write this), catch up on reading, meet people, exchange thoughts and hopefully also do more writing here. I want to thank everyone who has already reached out, whether with best wishes or with ideas or even offers of help. It's been great to hear from all of you, and I'm looking forward to all the conversations I'm sure will follow. My calendar is filling up with more meetings than I'm used to! The requests for help have also been welcome - while I'm not ready to make any long-term commitments yet, I'd be happy to try to help out in the short term with any problems you have my expertise might be applicable for. Do let me know. You'll find various ways of contacting me on this blog, if you already don't have my info.

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Friday 10 February 2012

Developing metrics for free-to-play products

By Osma on Friday 10 February 2012, 13:25

In my previous post, I outlined a few ways in which a "sales funnel" KPI model changes between different businesses, and argued that it really doesn't serve a free-to-play business well. Today, I'll summarize a few ways in which a free-to-play model can be measured effectively.

Free-to-play is a games industry term, but the model is a bit more general. In effect, this model is one where a free product or service exists not only as a trial step on the way to converting a paying customer, but can serve both the user as well as the business without a direct customer relationship, for example by increasing the scale of the service, making more content available. From a revenue standpoint, a free-to-play service is structured to sell small add-ons or premium services to the users on repeat basis - in the games space, typically in individual transactions ranging from a few cents to a couple of dollars in value.

As I wrote in the previous article, it's this repeated small transaction feature which makes conversion funnels of limited value to free-to-play models. Profitable business depends on building customer value over a longer lifetime (LTV), and thus retention and repeat purchase become more important attributes and measurements. Here is where things become interesting, and common methodologies diverge between platforms.

Facebook games have standardized on measuring number and growth of daily active users (DAU), engagement rate (measured as % of monthly users on average day, ie DAU/MAU), and the average daily revenue per user (ARPDAU). These are good metrics, primarily because they are very simple to define, measure and compare. However, they also have significant weaknesses. DAU/MAU is hard to interpret as it pushed up by high retention but down by high growth, yet both are desirable. Digital Chocolate's Trip Hawkins has written numerous posts about this, I recommend reading them. ARPDAU, on the other hand, hides a very subtle, but crucially important fact regarding the business - because there is no standard price point, LTV will range from zero to possibly very high values, and an average value will bear no reflection on either the median nor the mode value. This is, of course, the Long Tail like Pareto distribution in action. Why does this matter? Well, because without understanding the impact of the extreme ends of the LTV range to the total, investments will be impossible to target, implications of changes impossible to predict, as Soren Johnson describes in an anecdote about Battlefield Heroes ("Trust the Community?").

Another way of structuring the metrics is to look at measured cohort lifetimes, sizes and lifetime values. Typically, cohorts will be defined by their registration/install/join date. This practice is very instructive and permits in-depth analysis and conclusions on performance improvement: are the people who first joined our service or installed our product last week more or less likely to stay active and turn into paying users than the people four weeks ago? Did our changes to the product help? Assuming you trust that later cohorts will behave similarly to earlier ones, you can also use the earlier cohorts' overall and long term performance to predict future performance of currently new users. The weakness of this model relates to the rapidly increasing number of metrics, as every performance indicator is repeated for every cohort. Aggregation becomes crucial. Should you aggregate data older than a few months all-in-one? Does your business exhibit seasonality, so that you should compare this New Year cohort to the one last year, rather than to the one from December? In addition, we have not yet done anything here to address the fallacy of averages.

The average problem can be tackled to some degree by further increasing the number of cohorts over some other feature than the join date, such as the source by which they arrived, their geographic location, or some demographic data we may have of them. This will let us understand that French gamers will spend more money than those from Mexico, or that Facebook users are less likely to buy business services than those from LinkedIn. This information comes at a further cost in ballooning the number of metrics, and will ultimately require automating significant parts of the comparison analysis, sorting data to top-and-bottom percentiles, and highlighting changes in cohort behavior.

Up until now, all the metrics discussed have been simple aggregations of per-user data into predefined break-down segments. While I've introduced a few metrics which can take some practice to learn to read, the implementations of these measurements are relatively trivial - only the comparison automation and highlight summaries might require non-trivial development work. Engineering investments may already be fairly substantial, depending on the traffic numbers and the amount of collected data, but the work is fairly straightforward. In the next installation, I will discuss what happens when we start to break the aggregates down using something else than pre-determined cohort features.

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Tuesday 7 February 2012

Metrics, funnels, KPIs - a comparative introduction

By Osma on Tuesday 7 February 2012, 17:10

I know, I know - startup metrics have been preached about for years by luminaries like Mark Suster, Dave McClure, Eric Ries and many, many others. The field is full of great companies and tools like KISSmetrics, ChartBeat, Google Analytics, to name but three (and do a great disservice to many others). Companies like Facebook and Zynga collect and analyze oodles (that's a technical term) of data on their traffic, customers and products, and have built multi-billion dollar business on metrics. Surely everything is done already, and everyone not only knows that metrics matter, but also how to select the right metrics and implement a robust metrics process? There's nothing to see here, move along... or is there?

Metrics depend on your business as much as your business depends on them. No, more, in fact. It is possible (though hard) to build a decent, if not awesome business purely on intuition, but it is not possible to define metrics without understanding the business. Applying the wrong metrics is a disaster waiting to happen. In fact, in some ways this makes building a robust metrics platform more difficult than building the product it's supposed to measure. Metrics can't exist ahead of the product, but are needed from the beginning. Sure, with experience you will learn to pick plausible candidates for KPIs, and may even have tools ready for applying them to new products, but details change, and sometimes, with those details, the quality of the metrics changes dramatically. This is obviously true between industries like retail vs entertainment, but it's also true between companies working in the same industry.

This is a big part of why metrics aren't a solution to lack of direction. They can be a part of a solution in that well-chosen metrics will make progress or lack of it obvious, and may even provide clear, actionable targets for developing the business. Someone still needs to have an idea of what to do, and that insight feeds back into all parts: product, operations, measurement. I've never liked the phrase "metrics driven business" for this reason. Metrics don't do any driving. They're the instrumentation to tell you whether you're still on a road or what your speed is. You still have to decide whether that's the right road to be on, and whether you should be moving faster, or perhaps at times slower.

What to do, then? Well, understanding the differences helps. Lets start with a commonly applied metrics model, the sales funnel.

In a business-to-business, face to face sales driven business, a traditional funnel may begin with identifying potential customer opportunity, then measuring the number of contacts, leads, proposals, negotiations, orders, deliveries and invoices. A well managed business will focus on qualified customers and look for repeat transactions, as the cost per opportunity will likely be lower, and the revenue per order may be higher, leading to greater profitability. They will also look at the success rate between the steps of the funnel, trying to improve the probability of developing an opportunity into a first order.

This model is often adapted to retail: advertising, foot traffic, product presentation, purchase decision. For some businesses that's it - others will need to manage the delivery of the product, and may see further opportunities in service, cross-sales, or otherwise. Online retail businesses measure every step in much greater detail, simply because it is easier to do so. Large retail chains emulate that measurement with very sophisticated foot traffic measurement systems. But even in its simplest form, while the shape is similar, the steps of the funnel are very different.

Online businesses have developed a variety of business models, among which two large categories are very common: advertising and freemium.

The advertising-funded two sided market model is two different funnels: a visibility - traffic - engaged traffic - repeat traffic page view model, and a more traditional sales funnel for the advertisers, though even that one has been, through automation, turned to look more like an online retail model than what advertising industry is used to. This model is further enhanced by traffic segmentation and intent analysis, allowing targeted advertising and a real-time direct marketing product, the sales funnel of which is even less familiar to the sales funnel I described at the beginning.

Freemium isn't even one business model: a B2B service with a tiered product offering and a free time- or feature-limited trial product may ultimately use the traditional sales model, only so that the opportunity to prospect part of the model is fully automated. Often it's entirely automated to the point a customer never needs to (or perhaps even wants to, assuming a simple enough product) talk to a sales rep. Still, the basic structure holds: some of the prospective leads turn into customers, and carry the business forward. Free service, be it for trial only or for the starter-level segment, is a marketing cost and a leads-qualifier, enabling a smaller sales force.

On the other hand, the free-plus-microtransactions model, one which we pioneered with Habbo Hotel, and has since been used to great success by many, including Zynga, can certainly be described as a funnel, but to measure it with one requires significant violence to many details. The most important of these is that because individual transactions are typically of very low value, building a profitable business on top of a model which aims for, and measures one sale per customer is practically impossible. This class of business doesn't just benefit from repeat customers, it requires them. Hence, a free-plus (or, as it is called in the games industry, free-to-play) business model must replace counting a "new customer" metric or measuring individual transaction value with the measurement of customer lifetime value. Not just measuring it on average, but trying to predict it individually - both to try to develop 0- or low-value users (oh, how I hate the word) to higher value by giving them better value or experience, and by identifying the high value customers to serve and pamper them to the best of the company's ability (within reason and profitability, of course). And once you switch the way you value revenue, you really need to switch the way you measure things pre-revenue.

Funnels change. There are business models where funnels really can't provide the most instructive KPIs, even though they still may be conceptually helpful in describing the business. As this post is getting long, more on the details of KPIs of free-to-play in the next episode.

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Sunday 1 January 2012

Dusting off the looking glass

By Osma on Sunday 1 January 2012, 14:16

It's that time again... to make a few statements I can feel ridiculous about later on. I did take an advance position back in October regarding Internet platforms, so no need to touch that topic again just yet (especially after the additional HTML5/Flash comments in November). As before though, let's take a look at what my hit rate is.

#1 Oracle's jostling on Java patents will hurt Java as a platform: yeah, although it's hard to notice, what with the chatter on cloud platforms instead. Still, you've got to write that cloud-hosted application in some language, and though evidence is sparse, it seems to me that more devs are picking other tools. Somewhat insanely, PHP still ranks well in those selections, which proves that these things don't follow any observable logic, though.

#2 Amazing natural motion control applications during 2011: well, not really, yet. XBox Kinect has supposedly continued to sell well, though Microsoft hasn't given any sales data since last March (when they announced 10 million units sold), but applications are rather lame. Some pretty amazing research stuff going on though, which will ultimately enable computers to truly augment live views into the real world.

#3 Flash and new computing devices: see the other posts, linked above. Progress is steady but impact will take several years. As for the long-term view; while my daughter already understands that tablets and phones are for looking at stuff and playing, and keyboards are for banging, I maintain hope that in the next couple of years, she will be able to interact with computers by speech as well as gestures. We'll still need to invent the new human-computer interface best practices for that age, though.

Facebook/Timeline did finally launch before end of 2011. What do you think of it? I haven't seen a reason to change my view since October, although the "social reader" apps like Washington Post's or Guardian's certainly are annoying. Don't know if I should expect media companies to learn how to interact with people, though.

Now, the predictions. This one's gonna be difficult. Not because the world would be ending this year, but because it seems like quite a few macro trends are converging. Lots to feel optimistic about: locally, the interest in growth entrepreneurship and globally, new forms of peaceful citizen democracy, and the ever-continuing development of technology (gene therapy and data-driven, preventative medical treatments are exciting). A few that I hope will turn out well, though it's going to be a bumpy road: the ongoing Arab Spring as well as the Russian pro-democracy movement, the Euro crisis, which could still lead to yet another banking collapse. And finally, some political and regulatory changes that are quite worrying, even if I've tried to avoid a position on politics, and especially politics outside the EU. Still, these bother me for both their privacy as well as anti-competitive aspects and lack of due process: ACTA, SOPA, NDAA. Still, these are hardly going to bring the Singularity around quite yet, dystopian though they seem.

However, I don't want to pretend I care about or follow politics closely enough to understand why these things always come years behind and over-reach, so I'd rather focus on something more tractable. In terms of professional interests, the trend toward hosted, multiplayer gaming is, by now, quite unstoppable. We're moving on from the Social Games 1.0 of Facebook Canvas, though, and the future is more for games where the players' actions impact each other. The challenge is, we need to learn to design these games so that while they truly have group interaction in their core, they still remains games; that is, masterable, repeatable and somewhat predictable experiences people can continue to enjoy, and a source of richness their lives might otherwise be lacking.

As always, comments welcome. This year this post was quite hard to focus on anything in particular, and maybe you have better insight. Let me know. In any case, Happy New Year! Whatever you do, make 2012 matter.

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Friday 9 December 2011

Driverless cars, and a complete rethink of in-city traffic management

By Osma on Friday 9 December 2011, 15:17

Diverging slightly from my usual topics, Koushik Dutta's post prompted me to put into writing what I've been thinking for a while about the future of both public and private transportation. People reading this blog have probably all heard by now that driverless cars are coming along nicely, and that Google has already demonstrated a vehicle capable of autonomous road traffic, at least while being supervised by a human. This was announced a year ago.

Now, the technology certainly isn't perfect yet. It's debatable how perfect it needs to be, in order to be better and safer than a human driver, but we can probably agree it's not quite there yet. It's also quite clear that communities and regulation will have a hard time swallowing the idea of 2-ton lump of metal going about without a driver in a city at deadly-to-pedestrians speeds (anywhere 40km/h upwards would qualify), let alone perhaps while carrying children. This is not happening in the near term.

At the same time, there are problems the technology already is capable of solving, and I'm not talking about reducing highway inter-car braking distances or autonomous warehouse navigation, both of which are already in place for some high-end models, and factory automation, respectively. No, I mean daily problems on the streets of every metropolitan area.

In my home town of Helsinki, traffic isn't really a problem. There are a few places where, for 25 minutes in the mornings and 30 minutes in the afternoons, traffic slows to an average of 15km/h rather than 30. However, downtown parking IS a problem. I've long conjectured that if only 10% less people wanted or needed to park in downtown, there would be no parking problem. Where you now have to drive around a couple of blocks to find a space, there would be 5 free spaces in every block. That's more than enough. This is the nature of bottlenecking issues - you don't have any, until you do, and then it's bad immediately.

Public transportation will not fix parking, because public transportation will go from every place to every other place, and allow people to conveniently transport more than they can carry themselves. People need cars for these purposes, as well as for many conveniences. Yet every private car spends an overwhelming majority of its lifetime parked. This is why parking is such an issue. In a city like Helsinki, we don't really need less cars, we need less parked cars, and that can also be solved by having more of them on the road. The bottleneck would obviously move toward traffic conditions, but there will be a sweet spot.

What if you could have a car of the size you needed, at the time you need it, at costs much lower than constant taxicab use? If you are an in-city occupant, as I am, would you care to own a car, with all the associated worries of insurance, maintenance and so forth, even if parking was no longer a problem? I would not. Well, I don't own a car as it is, so I don't qualify for the question, but what about you?

Collective car services have sprung about in the recent years in many municipalities. We have City Car Club, Zipcar is known across USA, and so forth. Yet a problem with these services is that the parking spots the cars are at are not immediately adjacent to most people, and the companies need relatively complicated logistics for making sure cars are available in all places. This means that the customers need to often reserve a car ahead of time.

But what if cars could take themselves from where there are too many, to areas where there are fewer, and to customers who need one immediately? You could have exactly the kind of car you need at a couple of minutes of notice, just like you can have a taxicab in most places where there are enough of those.

And what does all of this have to do with community acceptance? Well.. Lets accept as a given that it'll take a while before we'll be ready for automated cars carrying passengers around on streets where people are driving, moving at regular traffic speeds. But what about having empty cars move themselves through preassigned routes, on specific lanes, at lower speeds, yielding to all human traffic? How many municipalities suffer from too many cars around bad enough to consider arranging for those special routes? I'm guessing there are a few.

This is a disruptive thing, and to many different industries at once. Car companies will need more service capability and less manufacturing capacity, if more and more of private cars resemble taxicabs in their replacement and maintenance schedules. Taxis will be challenged by automated cars, but only when the passenger is willing to do some driving themselves - and many taxi customers are specifically looking for not just a car, but also a driver. But public transportation will also be challenged, because for many, the choice between a car and public transport is a balance between the inconveniences of longer pedestrian distances and indirect routes versus finding a parking spot.

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Monday 14 November 2011

Flash is dead? What changed?

By Osma on Monday 14 November 2011, 13:10

So, Adobe finally did the inevitable, and announced that they've given up trying to make Flash relevant on mobile devices. Plenty has been written already about what lead to this situation, and the "tech" blogosphere certainly has proved their lack of insight in matters of development again, so maybe I won't go there. Flash plugin has a bad rap, and HTML5 will share that status as soon as adware crap starts to be made with it. It's not the tech, but its application.

So, lets focus on the developer angle. Richard Davey of Aardman and PhotonStorm is offering a developer-focused review into the alternatives. TL;DR; Flash is what's there now, but learn HTML5 too. Yeah, for web, I would agree.

However, that misses the big picture as well. Choosing any tech today for the purpose of building games for Web is deciding a future course by the back-view mirror. Web, as it is today, is about a 500M connected, actively used devices market. Sure, more PCs have been sold, and about that many are sold both this and next year, but the total number of devices sold doesn't matter - the number of people using them for anything resembling your product (here, games) does. So, I'll put a stake in the ground at 500M.

In comparison - iPad and other tablets reach about 100M devices this year, and projections look like about as much more next year. I would argue that most of them will be used for casual entertainment, at least some of their active time. That makes tablet-class devices (large touchscreen, no keyboard, used on a couch or other gaming-friendly situations) a significant fraction of the Web market already, and that will only be growing going forward.

Mobiles are a class of their own. Several billion devices already, maybe about a billion of them smart phones, some projections claim another billion smart phone-class devices to be sold next year. Just by limiting the market to only those devices which sport installable apps, touch screens, significant processing power (think iPhone and Android devices, possibly excluding lowest-end Android and the iPhone 1.0 and 3G), you're still looking at a potential market of 1 billion devices or so. Now, phones are not in my book very gaming-friendly - the screen is small, touch controls obscure parts of it, play sessions are very short, the device spends most time in a pocket and rarely gets focused attention, and play can be interrupted by many, many things. Still, as we've seen, great games and great commercial success can be created on the platform.

However, lets not pretend that a Web game could ever have worked on either a tablet or a phone without significant effort, both technical and conceptual. The platforms' underlying assumptions simply are too different.

So, how would you go about choosing a technology for creating a game for the future, instead of the past?

The choices are:

  • Native, writing for iOS only. Decent tools, except when they don't work, one platform, though a relatively large one with customer base proven to be happy to spend on apps.
  • Native, writing for iOS and Android. Perhaps for Windows Phone too, if that takes off. Welcome to niche markets or fragmentation hell.
  • Native, but with a cross-platform middleware that makes porting easier. Still, you're probably dealing with low-level crap on a daily basis.
  • HTML5, if you're willing to endure an unstable, changing platform, more fragmentation, dubious performance, and frankly, bad tools. Things will be different in a couple of year's time, I'm sure, but today, that's what it's really like. I would do HTML5 for apps, but not for games, because that way you'll get to leverage the best parts of web and skip on the hairiest client-side issues. In theory you'll also get Web covered, but in practice, making anything "advanced" work on even one platform is hard work.
  • AIR, if you continue to have faith that Adobe will deliver. In theory, this is great: a very cross-platform tech, you can apply some of the same stuff on Web too, get access to most features on most platforms on almost-native level, performance is not bad at all, and so on. Except in practice HW-accelerated 3D actually isn't available on mobile platforms, its cousin Flash was managed to oblivion, and perhaps most crucially, Adobe's business is serving ad/marketing/content customers, not developers. I keep hoping, but the facts aren't encouraging. For now though, you'd base your tech on a great Web platform with a reasonable conversion path to a mobile application, caveats in mind.
  • Unity, if you're happy with the 3D object-oriented platform and tools. You'll get to create installable games on all platforms, but lets face it: you will give up Web, because Unity's plugin doesn't have a useful reach. Here, the success case makes you almost entirely tables/mobile, with PC distribution (in the form of an installable app, not a Web game) less than a rounding error. This is probably what you'd be looking for in just a few years time anyway, even if today it looks like a painful drawback.
Conclusion: Working on tools? HTML5. Web game for the next 2 years? Flash 11. Mobile game? Unity, if its 3D model fits your concept. AIR if not, though you'll take a risk that Adobe further fumbles with the platform and never gets AIR 3 with Stage3D enabled on mobile devices out the door. Going native is a choice, of course, but one that exceeds my personal taste for masochism.

On the upside, Unity is actively doing something to expand their market, including trying to make Unity games run on top of Flash 11 on PC/Mac, so in theory you might be getting the Web distribution as a bonus. Making code written for Mono (.NET/C#/whatever you want to call it) run on the AS3/AVM Flash runtime is not an easy task though, so consider it a bonus, not a given.

Thursday 13 October 2011

Where the chips fall - platform dominator for 2012

By Osma on Thursday 13 October 2011, 13:50

It's been about a year since I put my prognosis skills on the line and tried to predict where technology and consumer products are heading. Since today is National Fail Day in Finland, perhaps it's time to try again. Lets see how right or wrong I end up being.

Last year I noted a couple of things about mobile platforms and of the software environments best suited for creating apps on them. While this year has seen a lot of development on those fronts, little of it has been in surprising directions. HTML5 is coming, but not here yet. If WebGL and Intel's River Trail project were supported by the Big Three (IE, Firefox and WebKit, ie Safari/Chrome), that'd make an amazing game platform - but at least the latter is research-only at this point, and IE9 isn't going to support either. In the meantime, Adobe finished Flash 11, which now has hardware-accelerated 3D in addition to a pretty good software runtime, and, after only 10 days out, already has 42% reach for consumer browsers (at least judging by stats on habbo.com). Like I've said a long time, Flash gets a lot of undeserved crap due to the adware content created on it. We won't get rid of that by changing tech, and platforms should be judged by their capabilities in the hands of good developers, not by mediocrity. And, as far as mobile goes, the trend continues -- iPhone and Android battle it out, now also in courts as well as in consumer markets, while everything else falls under the wagon. If you're creating an app -- do it either with a cross-platform native toolchain, or with HTML5. If you're doing a game, do it with Unity or Flash, and build a native app out of it for mobile.

The interesting thing, to me, is playing out on the Internet. Google+ came out as a very nice product with well-balanced feature set, but (fairly predicably, though I was rooting for it) failed to catch the early adopter fancy for long enough to displace Facebook in any niche. Facebook, on the other hand, scared (or is going to scare) 40% of their audience by announcing Timeline (eek, privacy invasion!). Brilliant move -- you can't succeed today without taking such leaps that nearly half of your audience will be opposed to them, at least initially. Smaller changes simply aren't meaningful enough.

So, I'm betting on Facebook. I'd also guess that once they get Facebook Credits working outside of the Canvas, they're going to demand that any app using Facebook Connect log-ins will accept Credits for payment. I'd hazard a guess they're even going to demand FB Credits exclusivity. They'll fail the latter demand, but that won't stop them from trying it. Having your app's/game's social publishing automatically done by Facebook simply by feeding them events, and not having to think about which ones are useful to publish, is just such a big time saver for a developer, no one will want to miss out on it.

Not even Zynga. They're doing this destination-site, we're-not-gonna-play-inside-Facebook-anymore strategy, but continue to use Facebook Connect for log-ins. That's not because FB Connect is so much more convenient than own username and password (though it is), but because even they can't afford to let go of the "free" access to people's social network. That's the power of Timeline and the new, extended Graph API.

The chips are still in the air. When they fall, I think Facebook will be stronger than ever, but strong enough to displace the "rest of the Internet"? No. As a developer, I want to push Facebook the data for in-game activities, because that saves me time doing the same thing myself. As a publisher, I'm unsure I want Facebook to have all that info, exploiting them for their purposes, risking my own ability to run a business. As a consumer, it makes me uneasy that they have all that info about me, and while I can access and control quite a lot of it, I can't know what they're using it for. I don't think that unease will be enough to stop me or most other consumers from feeding them even more data of our lives, likes and activities. Still, they're only successful doing this as long as they don't try to become a gatekeeper to the net - nor do they need to do that, since they get the data they want without exerting control over my behavior. Trying to fight against that trend is going to be a losing strategy for most of us - possibly even for Google. Apple and Microsoft won't need to fight it, because they're happy enough, for now at least, to simply work with Facebook.

Wednesday 28 September 2011

MVP is about proof of potential

By Osma on Wednesday 28 September 2011, 21:16

Among the people I interact with, and in the places I frequent, a question that comes up a lot is "what exactly is a minimum viable product?". Perhaps that tells you something about me, but let me tell you something more, and offer one answer to the question.

Back at the end of the 90s, between preparing for having a great bash for the Millenium and various other activities of the sort, I was also learning how to apply the software skills I had acquired to some sort of purpose which would pay my bills. I ended up, to a large degree by accident, to spend about four years of the rise and height of the dot-com boom at what I to this day consider the best possible school for creating great Internet apps for end users: the Helsinki offices of Razorfish, then-legendary marketing, technology and management consulting agency, now simply a legend.

In those days, we would at times come across a situation in which a pitch for a project, a client relationship, or a business idea consisted mostly of what we called the "Photoshop application" - a web site consisting of screenshots of something that had not been built. Coming from a developer point of view, and being rather proud of the skills we had collected, like any 20-something developer is, we saw these as something to laugh at. It's just a bunch of screens, it doesn't do anything! Anyone could come up with that!

Now, in some cases that's probably true, anyone could have come up with that. They weren't all great. Some were, and I would grow to respect the skills and effort people who took design seriously would apply to coming up with both great interaction, and beautiful looks for software. These are things not to be underestimated, because impressions matter a great deal, and nothing kills a budding consumer relationship faster than a dead-end transaction flow. There's something more than that to designing applications on the screen level, though, and listening to a recording of Bill Gross (of Idealab) talking at Stanford reminded me of one part of it.

At the end of that talk, he recalls the story of Carsdirect, of giving the founder a small budget and 90 days to prove there's a business. In other words, to find out whether anyone would buy a car from this site, without talking to the dealer. Turns out that once they got the web site up, in the first day four people did just that - buy a car. They would have to go and buy them from local dealers themselves and deliver the cars to their first four customers. However, what was NOT important to proving the business opportunity was whether they would be able to form a dealer relationship with auto makers, figure out the logistics of car delivery up front, and so forth. For the four first customers, it was enough to drive the cars from the dealer's lot up to their driveway one at a time, by the founder!

This is the MVP - the minimum viable proof of business. The front-end of a business is where value is delivered. Sometimes you can prove that with just by showing Photoshop images of the service to prospective customers. Sometimes you need to have a prototype site up that looks and feels like a real business. What you will not need is to figure out the supporting processes, back-end business logic, and a whole partner value network to prove business potential. Sure, those are things that you will need to figure out to turn a profit - but without the front-end facing the customers and acquiring sales, there's no revenue, there's no business, and there's no chance of profit, never mind how wonderful your back-end would be.

Looking back, I'm not sure I knew this back in the days. I was lucky to have people around me who did. Today, I still see a lot of people thinking of future businesses worry about the back-end processes before they've figured out whether there is a front-end business. Tackle the front-end first. Sometimes Eric Ries's "spend $100 on Google AdWords and see if you get any clicks" is enough to do that, sometimes you do need a web site resembling a real service. Do not waste your precious runway building out something to support even the first 10 customers through the entire product delivery before you have one customer, though! If you get even one customer, you're learning a ton about how your next product version is not what you though it would be.

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