Back from San Francisco

I’m back from the conference at San Francisco! It was totally worth the time and resources to go out there. We made a lot of solid connections to the west coast venture capital crowd, as well as some other companies that are worth talking to in the future for strategic relationships.

While the overall conference was awesome, I must confess that a few things surprised or disappointed me. For starters, there weren’t very many presenters that were exciting and only a handful qualified as “interesting”. I’ve said before that I think that, as a country, we have lost our taste for innovation. More than a few of the presenters felt like the same types of companies getting funding during the dot com boom. By that I mean I said “huh?” more than a few times…weak business models, “innovative” concepts that were half-baked, and “new” ideas that were simply a rehash or a “me too” version of something else. At the end of each day there was a panel of venture capitalists that talked about what they had seen during the day and what they thought. More than a few of these guys said they saw some interesting things, but not much that was exciting or felt like a home run. Sure, many of the presenters had companies or ideas that can and probably will be profitable, but nothing mind-blowing.

We did get a fair amount of attention and more than a little interest, but it will remain to be seen how many people really want to take things to the next step beyond “interest”. All that aside, I can’t stress enough that we met some great people and some seriously smart individuals.

One of the highlights for me was getting the chance to meet Travis and Adam face to face for the first time. I still find it amazing how much you can do and accomplish online these days without meeting people face to face. Ten years ago people would think it was impossible to work from home and be productive or even manage teams remotely, but today, we have people in several states and a few countries and we get stuff done just fine. It actually works to our advantage in many aspects.

You know, one of the things we heard repeatedly was that funds are only interested in technology plays…content seemed to be a bad word. Sure, content is king, but there is a perception that content is way too risky. Technology is good, platforms are good, but content is an automatic “business plan goes to trash can”. The same people that would say this would also say they would invest in another Habbo Hotel or Club Penguin in a second…but aren’t these content plays? Can you really define these as social platforms and ignore the obvious content? What if people hated penguins? Wasn’t that a possible risk factor in the early days of development? How does this different from the content of a MMORPG? Maybe hindsight is 20/20…how many of these “content = bad” venture funds would say they wish they would have invested in Blizzard for World of Warcraft, knowing now how successful it was?

I have two more complaints before I sign off…

The first was a comment that a senior level exec from EA said (I may have misheard, but the look of shock on several other people at the table I was sitting at makes me think I didn’t). He said (and I am paraphrasing here because my memory sucks) something like “online games and distribution is nothing more than a rounding error as far as EA is concerned”. Yeah. I did a double take too. He was asked by a moderator (or was it from the audience?) what EA thought about online distribution methods and the future of the market. While I generally think that EA survives and makes money simply by luck, brute force, and momentum, I am one of the people that thinks that the EA house of cards is due to fall over pretty soon. I’m still shocked they had the nerve to blow $800M to acquire Bioware and Pandemic and then turn around and lay off people with the excuse that they need to cut back on expenses…well duh, you just added close to 800 people to payroll. How long before they destroy those studios too?

The second was the interview with Curt Schilling from 38 Studios. I’m still amazed he was invited to a recent harvard panel thingy with other “MMORPG veterens” (he is most definitely not a veteren). Most of the questions he was asked were totally softball questions and relatively useless. Total waste of time. I mean, I’ve knocked 38 Studios before, but after the interview I felt like Curt was a really nice guy with a total passion for online games. I’ll give him some kudos and respect for that…I would work with him given the chance. However, the whole thing felt like a total ass-kissing episode where Curt and 38 Studios was getting a lot of attention and credibility because of who Curt is (and to a lesser degree because McFarlane and Salvatore are involved). Neither of the three have any real background in MMORPGs beyond playing them. Sure, Curt is a great baseball player and he has leveraged that for some exposure in the game industry (never as a developer or designer, more like a brand). Todd McFarlane is a brilliant artist (I’ll fight anyone that says he didn’t do the best spider man artwork EVER), and of course Salvatore is extremely well known for his fantasy writing. Ok, so what? Good storylines and concept art does not make a great MMORPG. Maybe they will get lucky with the rest of the people they have brought on to the team to make the game…I’ll have to reserve judgement until I actually see something.

But why are they out raising funds? All three of the founders are pretty damn wealthy (I’d be stunned if they weren’t). I suspect that they hired too many people at a premium rate too soon and their burn rate is probably shocking. Maybe it is time to use other people’s money. Anyway, I digress. The bulk of Curt’s responses to the questions usually came back to “I have a passion for games and I have a great team”. I think the conference would have been better served with any of a half a dozen other MMORPG CEO’s out there that could talk about the industry, innovation, technology, business models, global markets, trends, or whatever. Sure it was nice hearing from someone famous like Curt Schilling, but this was a consumer technology innovations conference loaded with VC’s. While the interview didn’t do much to hurt the industry or people like us out raising funds, it didn’t do us any favors.

So, summary! The conference was great, and I would totally do it again next year. To the organizers I would say if you are going to have any emphasis on online games, social networking, virtual worlds, and simulations, do some homework and find some companies/presenters/speakers that have something valuable to add beyond “I love games and we have a great team!”. 

EA does it *again*...layoffs at Mythic?

Uhm, wow.

Ok, so EA recently acquired Bioware and Pandemic from Elevation Venture Partners for about $800M. The currentCEO of EA (John Riccitiello) was one of the founders of Elevation Venture Partners, and formerly the EA President/COO.

EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. (Elevation Venture Partners) and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp.

Now, this obviously raised a lot of eyebrows for several reasons (wonder who really cashed out on this deal eh?).

EA has a terrible reputation of destroying studios after acquiring them, and an equally bad reputation in the MMORPG space. There were some doubts when EA acquired Mythic, but promises were made and the world generally had happy thoughts that EA/Mythic would deliver Warhammer Online and have a nice success.

Oddly enough, after the acquisition, EA tasked Mythic with giving good ole’ Ultima Online (over ten years old now!) a cosmetic facelift. Ok fine, but aren’t these guys already busy with a MMORPG project?

So, EA picks up two extremely well respected studios, and more promises are made…they won’t be dismantled, EA is looking for hot new original content, Bioware is rumored to be working on a sweet Star Wars MMORPG (even though Sony already slaughtered that franchise and Lucasarts annoyed lots of people with the crappy last three movies), etc. etc.

Ok, fine, maybe EA has turned over a new leaf since Riccitiello returned earlier this year. But oh no! Rumors are flying about EA laying off a lot of staff (many of them from Mythic), and relocating the Mythic team to Virginia. What the hell?

If they can’t afford to be paying staff and need to cut costs, why the hell did they just blow $620M in cash to acquire two studios (800 employees) and take on the long term financial burden of all that staff? Is EA losing confidence in Mythic/Warhammer? Is this in any way related to the recent beta delays for Warhammer?

What is going on at EA? Are they going to use the acquisition for some accounting trickery for the end of the quarter? I dunno…

I do know that if I was an employee at EA, I’d be damn nervous and I’d start farming my resume out. That company has been a house of cards for too long now, and it wouldn’t surprise me if their stock starts tanking relatively soon. Sure, maybe acquiring Bioware and Pandemic will inject enough new blood to influence and catalyze some change, but EA (and all of their studios) are notorious for burning out talent quickly and replacing it with inexperienced college grads they just farm out of “game design” programs at various Universities.

It seems that EA has been playing the “increase valuation through acquisition” game for a long studios in multiple other countries (including China) have been launched in the last 24 months, and there is even a brand spanking new one here in Raleigh that will be working on a NASCAR title (cause, you know, North Carolina = NASCAR, so developers here would naturally be better at design…it’s a southern thing).

I’m giving EA a big thumbs down. Booo.