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Peering At The Future: Jesse Schell Speaks
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# Peering At The Future: Jesse Schell Speaks

December 3, 2010 Page 5 of 6

Your company can't necessarily afford the kind of R&D that Microsoft could. At the end of MIGS, they had a panel of Montreal studio heads, and there was a question about "Can these big studios innovate?" And the answer the big studios came back with, and I may be oversimplifying here, was "No, we can't. Indies have to do that." Do you think that like when we get these collaborative tools, such as Unity's new asset store, we can actually sort of speed up the evolution process?

JS: I think it will speed up the evolution process. I don't know if you know the book The Rational Optimist. It's a magnificent book. It's sort of mind-blowing because mostly when people talk about the future, they talk about doom and gloom and how bad everything will be.

And this book's about "No, nothing has ever gotten worse. Everything has always gotten better forever and ever." Poverty has continued to go down. Crime has continued to go down. Standard of living has gotten better. Pollution has dropped.

On and on and on, everything gets better and better, and he draws all the lines about how everything gets better, and that's exciting.

But then he goes deeper, like "Why is this?" And his answer is that human beings do one thing that none of the animals have figured out how to do, and that's to trade stuff. No other animal will even try it. And because of that, it means that one person can specialize in something and become great at it, and it benefits all of us, right?

And the more people there are, the better everything gets for everybody, because more people are specializing in everything. Anyway, blah, take that, bring it to the Unity store, and now everyone can specialize and easily share their stuff for everybody. Everything gets better for everybody.

I guess this all comes back to money, though. How can people make a living in these environments?

JS: That is really hard. I mean, when you’re talking about race to the bottom economics, which is what we got... I mean, I remember when the iPhone came out, people were like, "Oh, it's awesome. You should quit your job and do this and sell it for $9.99. I mean$7.99. I mean $4.99. I mean, it's actually$2.99. Well, okay, it's 99 cents and everyone wants me to give it away for free."

And, yeah, so, like you've got that race to the bottom economics, which is scary. What it means is the only way you can succeed is by doing something dramatically unique and different. A lot of people are going to lose money, but some people aren't, and it sure is good for the consumer.

Well, that goes back to the 12-year-old girl who doesn't want her DS anymore, right?

JS: Right. But, you know, honestly, look at the DS. I mean, cost of manufacture. If you're a developer and you want to make a DS cartridge, you've got to drop between $4 and$12 to Nintendo -- "Here, Nintendo" -- just to manufacture a cartridge. If you don't sell it, that's too bad. You don't get that money back, right?

So, there's that. Then there's the money that goes to the retailer, and then there's the money that, you know, goes for endcaps and all of that. And by the end of it, you're really talking about like a $7, if you're lucky. Like, there's$7 or $5 that you might get a shot at, but it's probably going to get eaten up because you made too many or you didn't make enough. And then, so from an indie dev point of view, a$30 game maps to something like an $8 game, and it's the same from the dev point. Now, the bitch of it is the marketing. The marketing is the part that no one understands yet the right way to market in these spaces. That's what makes it hard for indies, the marketing. It's like buying a lottery ticket. Like "Well, I hope everybody finds out about my game." I mean, Bigpoint's come out in public and said, "You know, in general, we spend seven times on marketing what we do in development," which like for most indies is like "What? I'm sorry, what? I'm lucky if I can spend one seventh on marketing that I did on development." [Ed. note: Bigpoint is the publisher of Schell Games The Mummy Online.] There's been a lot of debate over whether the sort of core games market -- what we thought of as the games market, up until very recently -- is going to become a narrower piece of the overall gaming pie, right, because of market expansion. Do you think that it's actually going to shrink as time goes on? Or is it just going to look smaller in comparison to the broad and expanding world? JS: I have a suspicion, and I don't know. This is a hard thing to think about. Sometimes I think the revenues will shrink, because with all this other stuff happening, it's going to pull some people who were core gamers, who were like "You know what? I played core games because I kind of like these games, but once I see these other ones, actually, I'm not as core as I thought." And so I think there may be a little bit of drifting out. And then secondly, the$60 price point starts to come down.

But on the flip side of that, if you're hardcore, you'll spend a lot of money. I mean, Bigpoint tells stories of individuals who drop \$10,000 on one game... So, you have to kind of scratch your head and say, "Which one makes the more money?" It's hard to know.

But I don't think it will go up there, that's what I'll say. I don't think it will go up. It may stay the same-ish. It may diminish. I don't think it's going away. I think it's going to end up somewhere between, if I had to guess, somewhere between 60 to 90 percent of where it is, if I look at it five to 10 years down.

Page 5 of 6

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