Is the video game software industry in trouble?

Newspapers these days are choc-a-bloc with articles hyping video games and their impact on pop culture; and the global hardware, software and accessories sales for video games reached $10.5 Billion in 2005. It is then somewhat surprising to note that video game makers such as Electronic Arts, Activision and Atari have all recently missed their earnings and announced layoffs. What exactly ails the video game industry? Mike Musgrove through this article in the Washington Post posits that the video game console upgrade cycle has much to do with these woes.
The three major video game console makers are in the process of upgrading their hardware and this has disrupted the industry through uncertainty. While Microsoft has already launched their next-generation Xbox 360 console, shortages have depressed video game sales. The complements for video games (high definition TVs, consoles) keep getting more expensive leaving little value for game makers to appropriate. To make matters worse, while the cost of game development doubles with every iteration of consoles, the consumer willingness to pay hasn’t move beyond the $50 price point. The video game industry also relies on a few blockbuster titles to make up the development costs of all the duds and this need for blockbusters has driven the proliferation of branded (Tiger Woods, Star Wars, Tony Hawk) games. The video game makers are hoping that increased scale in the form of new buyers worldwide will bail them out though even that will do little to address the other structural issues.

Full stops and new beginnings

When the Ross class of 2008 gets to Ann Arbor, they will catch a campus in metamorphosis. The Davidson and Paton buildings, and the Assembly hall will be demolished to make way for the new buildings that will come in their place. Already, faculty and staff offices in Davidson have moved to the Executive Residences and I just took what is probably one of the last finals in Davidson hall. MBA students will not be affected too much and will get to take classes in the plush Executive Education facilities. I’m glad that Ross is moving full steam ahead on its plans to revamp the facilities but I’m a little sad that the classrooms where I spent most of my first year will soon be gone forever. Since I’ll be sticking around Ann Arbor till the end of June, I plan to catch the demolition in action and who knows, even blog about it?

New research on quantifying brand equity

While looking up the brand value of J&J for a class project, I came across this article in the Stanford GSB Knowledgebase about a newly developed model for quantifying brand equity. Prof. Srinivasan and his two collaborators have developed a mathematical model and a market research method that enables managers to calculate how much the company will earn if they invest in different kinds of branding activities.

Prof. Srinivasan and his collaborators first developed an operational definition for brand equity and identified its three sources – 1. Brand awareness, 2. Consumer perception, and 3. Cachet of owning a particular brand. The researchers then applied their model to the cellphone market in Korea and calculated that Samsung had earned $127MM per year from brand equity. Models such as these might finally help reveal what half of advertising really adds value.

Real estate brokers face new threat from banks

Looks like real-estate brokers just can’t catch a break these days. This article from Marketwatch details how in addition to facing competition from online and discount brokerage firms (my earlier post here), real-estate brokers are now facing a new threat in the form of banks entering their profitable realm. The debate centres around the interpretation of the Gramm-Leach-Bliley act that was passed in 1999 and pits the National Association of Realtors (NAR) against the American Bankers Association (ABA). The ABA contends that opening up the real-estate market to banks will lead to lower consumer costs while the NAR counters that doing so would represent an irreconcilable conflict of interest for the banks and would violate the original act. This promises to be a lobbying battle royale as both groups have many friends in Congress. Interestingly, the two adversaries in this battle are on the same side when it comes to fighting Wal-Mart’s application for a loan-company charter.

Lessons from Japan in energy conservation

I came across this fascinating and thought-provoking article in the Washington Post about efforts underway in Japan to reduce its energy consumption. The efforts were born from pure economic need as Japan doesn’t have any significant domestic sources of fuel and also from a deep sense of national duty and pride.
The following statistics from the article just blew me away:

1. The ‘Warm Biz’ campaign saved 70 million kilowatts of power from June through August of 2005. That is enough to power a small city for a month.

2. Japan now imports 16% less oil than it did in 1973 even though the economy has since more than doubled.

3. Japan accounts for 48% of the world solar power generation.

4. Nippon steel has reduced its dependency on oil by 85% since 1974 and oil now accounts for only 10% of the energy used for its furnaces.
The article shows you how well a populace responds when a national problem is framed in an appropriate manner. Also, if Japan has done so well in reducing its energy utilization, one has to believe that more can be done here in the US.

As far as energy efficient appliances go, is the consumer willingness to pay in the US as high as it is in Japan? The success of the Prius leads me to believe that there is definitely a section of the US market that is interested in these appliances and peripherals. Though again since appliances don’t make as much of a public statement as cars, they may not prove to be as popular. I can’t imagine Cameron Diaz walking around with an energy efficient blender for the paparazzi to go crazy over.

Overwhelmed by a long blog reading list

Adam Green brings up the point of whether there is such a thing as too long a reading list on blogs. I struggled with this when I put up my blog and ended up paring down my original favorite blog list to 6 blogs that I visit on a daily basis. I also have links to Michigan and the BIT 742 bloggers and I worry that I have so many blog links that the average visitor ends up ignoring all of them; as seems to be the case after looking at traffic heading out of my blog. Any comments from the visitors?

I have a much longer personal blog reading list at bloglines in case anyone is interested. Of these blogs, I read some on a daily basis but most on a weekly or sometimes even monthly basis.

Cocomment is now ready for its close-up

Just a quick note; Cocomment is now out of beta and at your disposal. Enjoy!

Newsmap: Bringing news to life via Flash

Newsmap is a fantastic Flash based application that visualizes Google News based on coverage after breaking stories out by category and region. I came across this app on Coolhunting and it now occupies prime real estate on my start page. You can also track a related Slashdot conversation here.

Beating the odds and becoming an A-list blogger: The 7 tips

Robert Scoble posts some tips on becoming an A-lister in a post here. Some of his tips were also covered by Prof. Gibson in class last week and I’ve slowly begun to adopt them. Here’s the crux:

1. Make the post headline colorful along with being informative.

2. Post pictures and videos.

3. Keep the layout clean and use graphics and screenshots. Sort of a corollary to #2.

4.  Make sure the blog tagline has personality and says something about you.

5. Use tons of tags for each post and tag with context.

6.  Engage other bloggers and link to them.

7. Post frequently and on topic.

Does Ross really need more blogs?

The Go Ross! blogging team has been kicking around ideas about applications for blogs at Ross. Our target audience in these considerations has included current and prospective students. For prospective students, Ross blogs offer a unique, immediate and unvarnished window to the MBA experience and could help the school differentiate itself better. As Ankita pointed out, this could be especially true for prospective interested in the several dual-degree programs that Michigan offers. Any current Erb, Public Policy, Public Health or JD dual-degrees up for the challenge?

For current students, blogs could be utilized as a knowledge portal, a medium for conversations or a device for community building. It would be cool if we had Professors at Ross blogging like Dan Drezner or the Becker-Posner combo at Chicago. As Greg and Calista suggested, having a blog for a conference such as Futurtech or the Go Blue Rendevouz weekend would be a great medium to disseminate information and drum up interest. The various clubs could also potentially have a blogger(s). The Healthcare and Lifesciences Club Librarian for example could post links to interesting articles on a blog as opposed to sending it out by email. The SGA and the UMBSA could have blogs about the various events that they put up and add pictures later to close the loop on the experience. On a personal note, I’ve put up a blog for Follies pictures at http://follies06.blogspot.com. On the blog, I’ve posted my own pictures and shared write access with other students to post their pictures. I’m also working on a blog for a charity event that some MBA2’s are putting together. Expect to see a link to that blog in the next couple of days.

In short then, the answer to the headline is yes.