Notes From The Leading Edge

Our columnist Robert Spears attended the Leading Edge conference over the weekend, and send over some of his notes:

Keynote from Jerry Sanders, AMD:

“The world works because of underlying human traits that make it work”. The human spirit wants to achieve, to have the opportunity to do something and receive rewards for its success. A greater-pie vs. zero-sum is a much better growth model. “CEO’s are suppose to change reality…People are looking to leadership for direction – to create the next boom…If someone repeatedly fails, give someone else a chance”.

A parallel message to publishers of both free and premium content: In 1969, when AMD introduced an employee stock program (revolutionary at the time), Sanders overheard the reason why an incredulous employee chose not to participate: ‘If they were worth anything they would not have given us any!’. Sanders realized that they had a communications problem.

Another important concept mentioned was “when market forces do not matter”. Sanders refers to this as practices and laws that obstruct fair competitive landscapes and hinder meritocracy from prevailing. Examples
include subsidizes and protectionist tariffs. It would be interesting to hear Sanders’ perspective towards Open Source software and ubiquitous free content in the online space. Are they healthy competitive forces or are they preventing a more robust market from developing?

From the gaming panel: A key difference between the music and video game industry is that the music has an irate customer base. They are really pissed to having had to pay $20 for a CD with one good song. They are angry and feel they have NOT received a good value (e.g. they have been ripped off). The gaming panel also mentioned that the cell phone industry has created a similar “rip-off” climate: e.g. $1.50 for directory service, extra fees for data bandwidth, etc. Wireless providers have a great opportunity if they price things more fairly.

On the other hand, video game customers have historical perceived that they have received a good value for their money. A purchaser of a $50 video game is satisfied. A purchaser of a $20 music CD is ripped off.

The rep from Yahoo! Games said that their “casual” games genre is doing well. They are also seeing more females playing the games. They still have plenty of free games, but they are finding consumers willing to pay for social benefits (head-to-head, etc.). Yahoo! Games is doing well with both downloads sales (typically in the $20-25 range) AND subscriptions — not sure the price. Yahoo! also has faith people will pay, but they will want flexibility.

On a related topic, a someone at a panel mentioned that people will gladly pay to prevent bad things from happening (e.g. no ads, no viruses, no crashes, higher reliability, ease-of-use, etc.).

Game developers feel that Microsoft will need to subsidize game development to take advantage of the next generation platforms or applications. (It is too risky expensive to do alone).

All game panelists think convergence is interesting to pursue — the ability to continued to experience a game across multiple platforms (perhaps literally continuing a game or just being able to stay in touch with your favorite in many ways and places). Everyone agreed this will entail technical hurdles/complexity.

As far as purchasing games in the future, everyone agreed that the PC-game-market will continue to sell a lot more in the Internet channel (downloads). This concerns their retail channels — they will want a piece of this distribution somehow someway. Consumers are growing to prefer the download channel.

The gaming panel also felt micropayments was still complicated. They cited Korea has having a really easy way to do micropayments. (Several members felt the cell-phone is as an easy way to make small purchases and that phone companies have the expertise in complicated billing).

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