The “Incest Map” and Other Interesting Things

1. The Seattle Times brings us a hefty PDF (12MB) of the “Incest Map”, a diagram showing the relations between scores of Seattle bands.

2. It’s official: Dead Space 2! The original was one of my favorite games of 2008.

3. Also from The Seattle Times, the infuriating story of how the IRS spent tens of thousands of dollars to audit an impoverished single mother of two in order to squeeze her for $1,400 in (questionable) unpaid taxes:

4. The Federal Trade Commission has issued its annual report on Marketing Violent Entertainment to Children:

“The Commission finds that the video game industry has made great strides in restricting the marketing of violent M-rated games to children. Although there remains room for improvement – particularly in the area of Internet advertising – the video game industry outpaces the movie and music industries in the three key areas that the Commission has been studying for the past decade.” (Hat tip to Dubious Quality)

5. Finally, here’s today’s examination of the Amazon Top 100 sellers in video games. Yet again, New Super Mario Bros. Wii took the top spot. Wii titles accounted for 34 spots on the list, up from 30 for most of last week. Xbox 360 had 11 titles while the PlayStation 3 had just seven. Interestingly, of the Wii games, eight of them, or nearly one-quarter, were music or rhythm games.

As for the hardware, the Wii was still the top-seller, coming in at No. 2, while the low-end PS3 was No. 18. However, the Xbox 360 Elite bundle saw a big jump, to No. 30, while the Modern Warfare 2-themed ”Super Elite” system was No. 84. At No. 91 was the 250-gigabyte PS3.

Xbox 360 Returns to Amazon Top 100

Yesterday I was surprised to see that the Top 100 items on Amazon’s video-game store did not include any model of the Xbox 360 console. Today, Microsoft’s gaming machine makes not one, but two appearances. The top game is still New Super Mario Bros. Wii, with the Wii console holding it’s sales position at No. 2. The lower-end model of the PlayStation 3 moved up a few slots to No. 14, though the higher-end version with a 250GB hard-drive fell a few to No. 85. At No. 90 is the Xbox 360 Elite bundle, and the Modern Warfare 2 “Super Elite” bundle registers at No. 95. Wii games dominated the list with 30, followed by PS3 titles with 11 and then Xbox 360 with nine.

Are Publishers Really Selling More on PS3 Than Xbox 360? No.

Last week, one of the biggest video-game publishers, Electronic Arts, reported quarterly results. In its reports, the company always gives a breakdown of revenue by gaming platform. Several enthusiast outlets, such as MCV, reported that EA’s revenue from PlayStation 3 games was bigger than that from Xbox 360 games. This would be unusual since the Xbox 360 installed base is substantially bigger than the PS3 installed base. In fact, Xbox 360 game sales continue to outpace those for PS3. Here’s why.

(Full disclosure: I work for Microsoft’s Xbox division and have no formal training in accounting or financial analysis. What follows is my understanding of the situation based on my 12 years as a business, technology and economics reporter for Reuters, and on recent informal conversations with financial analysts who cover the video game industry. This is also my personal opinion and does not reflect the view of my employer.)

Publishers report two sets of numbers in their quarterly reports: GAAP and non-GAAP. GAAP stands for Generally Accepted Accounting Principles, the set of rules that U.S. companies must follow when reporting financial information. The intent is to give investors and regulators a set of consistent, objective data that is comparable across companies and industries. But due to the circumstances of each industry, GAAP numbers often obscure, rather than illuminate, what is happening with an underlying business.

First, let’s look at EA’s GAAP revenue numbers for each platform (A side point: these are revenue or sales figures, not profits. Some reports have confused the two terms. Profit is what is left after a business deducts operational, marketing, administrative and other costs from its sales).

Wii: $161 million
PS3: $121 million
Xbox 360: $73 million

Sure enough, it looks like PS3 games are outselling Xbox 360 games. But here’s the twist. Because so many games now include a substantial online component that is maintained for several years, GAAP rules require a portion of revenue from the initial sale be booked over the life of the online service. So, in a purely hypothetical example, let’s say a $60 game is deemed to have half of its value come from online play. The company will then book $30 over a period of, say, two years, or $3.75 per quarter.

Game companies aren’t the only ones who do this. Apple does it with the iPhone because it delivers ongoing updates and services to the device. So of the $200 you pay for an iPhone, Apple records $25 of that each quarter for two years.

The thing is, this all happens purely on paper. In reality, EA gets that entire $60 all at once, and your $200 for an iPhone goes straight into Apple’s cash pile. Analysts pretty much ignore these GAAP numbers because they want to know what total unit sales were and what total revenue was. Indeed, here’s a line from The LA Times’ coverage: “Most Wall Street analysts say they pay attention to EA’s non-GAAP accounting as a measure of its financial performance.”

So let’s revisit EA’s numbers and look at the non-GAAP statement, which takes out the effects of the deferred online revenue.

Wii:  $184 million
PS3: $99 million
Xbox 360: $136 million

So non-GAAP, the number Wall Street actually cares about, shows Xbox 360 sales still leading PS3 sales. I’m guessing, speculating really, that given that Xbox 360 has the more robust and active online network, that EA is forced to record a larger chunk of deferred revenue, revenue that will be recorded over the next couple quarters.

Interestingly, Activision’s numbers are somewhat different. Here are the GAAP numbers:

Wii: $118 million
PS3: $152 million
Xbox 360: $231 million

And the non-GAAP, excluding the effect of deferred revenue:

Wii: $74 million
PS3: $105 million
Xbox 360: $140 million

Again, purely speculating here, I wonder if the GAAP is so much higher because Guitar Hero sales have been so high for a couple years, and now we are seeing a huge surge in deferred revenue from those past sales.

Anyone have any insights here?

Is Motion Control a Failure?

Stephen Totilo over at Kotaku makes the case that, yes, it has failed. At least if you judge by the number of blockbuster titles that rely primarily on motion control.

As right as Nintendo was about so many things, maybe it was wrong about this. Or, as is so often the case with Nintendo’s Wii project, the failure here may be one of critical imagination. That happens. Forty years ago on Monday, a human being first stepped on the moon, and what people assumed would happen in the next four decades — trips to Mars, cities in space — have not been built. The guessers often guess wrong.

Great stuff. Of course, motion control was wildly successful when measured by one, easily quantiable metric: Nintendo’s profits. Maybe motion control didn’t transform every single game experience. But it changed the rules for the industry. Wii Sports was so compelling that millions of people, people who would never in a million years call themselves gamers — rushed out and bought a Wii.

And while maybe there haven’t been dozens of epic motion-control games on the market selling millions of copies, that didn’t really matter to Nintendo’s bottom line. They made money on every Wii. And most of those new Wii owners also went out and bought Wii Play. OK, probably many of them did it just to get the extra controller, but they liked Wii Sports enough that a Wii Play pack-in was attractive. And then what did they do after that? They bought Wii Fit in droves.

So even if motion control hasn’t been as broadly successful as Nintendo envisioned, it succeeded wildly in bringing more people into the industry. And now that that trail has been blazed, there’s no going back. The motion-control genie will not go quietly back into his bottle. Microsoft is going big with Natal and “controller-free games and entertainment”. Sony is bringing out its wand.

Only time will tell if these new technologies will have the far-reaching impact that, in Totilo’s analysis, Wii games have fallen short in achieving. But it’s a pretty safe bet that all forms of motion control will be a part of the gaming landscape for a long time to come.

A nod to a blogger, and to “Super Mario Galaxy”

Dubious Quality has quickly become one of my must-read blogs. Written by a fellow in Austin named Bill Harris, his interests and views eerily match mine, as evidenced by this post about why he liked Super Mario Galaxy so much. If someone were to ask me what I liked about the game, this is pretty much exactly what I would have written, even down to the bits about playing it with my 6-year-old son.

Like Bill, I’ve never been a Mario guy. As I wrote in my post about Smash Bros., the whole Nintendo phenom passed me by. I was an Atari gamer as a kid, a PC gamer in high school, and then when I hit college, I dropped games completely for the next decade, the very decade that Nintendo rose as a home gaming powerhouse.

Super Mario Galaxy was a major revelation, to me anyway, as to what a game could be. The game just oozes joy from every pixel. The graphics are low fidelity compared to stuff like Call of Duty 4 or BioShock, but the vibrant color palate and simplicity of the overall art design render the game simply gorgeous. The characters are cute, yet tinged with just enough melancholy to grant them depth and feeling.

And oh, the music! The orchestral soundtrack is as good as that of any movie, and I would consider buying it on CD were it to be made available. There is some fascinating reading on how the music was selected. Here is a nice overview from Wikipedia, and here is a link to a Nintendo pagewhere the company president, Satoru Iwata, interviews the guys who did the game’s audio. It’s incredible the lengths they went through to obtain live orchestral recordings that would not only evoke different atmospheres but that could also be synchronized with Mario’s movements as a player guided him through the game.

For me, it was really the music that unified all the game’s elements and propelled it to that legendary ”next level” sought by so many but achieved by so few. At one point it struck me that what I was experiencing was what someone in 1940 probably felt when they saw Disney’s Fantasia for the first time. Galaxy’s wildly varied levels, challenges, and bosses are an updated version of the different styles, stories and music that made Fantasia such a memorable experience.

Old Walt may have ruled animation on the Silver Screen, but Galaxyproves that Miyamoto is a Grand Master of the ascendant medium of interactive entertainment.

Latest column: “Super Smash Bros. Brawl”

Here’s my column from last week, about Nintendo’s Super Smash Bros. Brawl. I’ve been thinking of it as the Kill Billof video games. Just as Tarantino paid homage to all his cinema favorites in that movie, Nintendo has crammed this game full of references to its past titles and franchises.

Sadly, most of these insider  lost on me since the Golden Age of Nintendo (I mean, prior to this current one) coincided with my decade-long video game interregnum.

So hit the link above or the jump below to get the full skinny on the game.

SAN FRANCISCO (Reuters) – Do you have childhood memories of having G.I. Joe fight Luke Skywalker, or throwing Superman into battle against the Bionic Man?

Nintendo is giving its fans a similar feeling this week with “Super Smash Bros. Brawl”, a fighting game for its Wii console that pits dozens of its cherished characters against each other in frenetic free-for-alls.

Fans have waited more than six years for “Brawl”, the third in the “Smash Bros.” series that began in 1999 and has been the only place where Mario can lay down the hurt on Pikachu.

“This game is the only time Nintendo worlds are allowed to collide,” said Nate Bihldorff, a localization producer for the U.S. version of the game.