5 Video Game Stories to Make You Smart - and 1 to Make You Dumb

Here's Friday's run down of 5 video game news stories to make you smart - and one to make you dumb. 

1. First it was Dungeons and Dragons Online, now Lord of the Rings Online has embraced the free-to-play model. 

Why game developers should  care: not long ago, monthly subscriptions were the only game in town for MMOs but with WOW continuing to crush the competitors, under-performing online games can be resuscitated with a shift in business models. Being online gives you a second time at bat (maybe).

5 Game Industry Stories to Make You Smart and 1 to Make You Dumb

Here's your Friday recap of 5 stories to make you a smarter game developer - and 1 to make you dumber.

1. Red Dead Redemption looks to be a big hit for Take Two. They moved 250K copies on the 1st weekend in just the United Kingdom. This is a win for Rock Star and Take Two, for while the company has GTA, those do take a bit of time to develop. Wall Street likes it when a company makes a profit every year.

Facebook demands a piece of the Social Gaming action

Social game developers have been getting a free viral marketing ride on the Facebook gravy train - but this ride is about to come to a grinding halt.

Alongside the explosive growth of Facebook has come the amazing rise of social or viral gaming - a billion dollar virtual market of black sheep and mob gombas. People are crazy to spend a dollar here and there to acquire cute dresses or the right to play for just a few more minutes, something that's been pretty obvious in Asia for a while now. But there's been a looming cloud on the social gaming horizon - what happens when Facebook requires all the social games to use it's currency system for purchasing virtual goods?

Now it's being reported that Facebook's virtual currency system is imminent. "Imminent" in the sense that if this was your pregnant wife, you'd be barreling through red lights as she screams in your ear that if you tell her to breath one more time, she's giving you a vasectomy with a spork.

So all the social game designers are girding their loins in preparation for the bad news - and it's grim indeed. According to the reports, FB is taking a 30% piece of the action.

Tony Soprano would be proud. Or Steve Jobs, for that matter.

Clearly, the iPhone App Store is the model being watched closely. Since the iPhone debuted, developers have been complaining - quite loudly - about the 30% license fee Apple charges. That hefty slice of revenue greatly cuts into the profit margin of any small - or large for that matter - game developer who thinks they've got the baddest iPhone app in the room. It's the kind of fee that can strangle developers and shut them out of the market. To hear the naysayers, a percentage that large dooms the iPhone store to oblivion.

At last count, there just under 400 bazillion iPhone apps available.

So apparently the market has spoken on the viability of 30%.

What it highlights is the simple power of being in complete control of a platform with no significant competitors. In the console world, there's at least a semblance of competition between Sony, Microsoft and Nintendo.

But looking at the social games on Facebook - what options does a game designer really have? Even the mighty Zynga is beholden to the platform Facebook provides. Zynga is trying to test the waters with Farmville.com to see if they can ditch Facebook someday. But the initial results are sobering. 74 million users on Facebook versus 250,000 on their website.

For all intents and purposes, developers of social games are dependent on Facebook. When faced with the option of either migrating to something like MySpace - which is in decline (which is as good as dead in the business world) - or trying to build your own web presence and drive traffic to it, most developers will grumble and complain - and in the end, pay Facebook it's piece of the action.

So for the social gaming world, it's time to send big Marko his piece of the action. But cheer up, at least he's not breaking legs - yet.

- Sean Dugan really hopes he doesn't wake up with the head of Marc Pincus in his bed. 

Image by Alberto P. Viega under Creative Commons License

Electronic Arts: At what price innovation?

Gamers tend to loudly demand better and more innovative video games. They throw down the guantlet for the industry - give us better quality video games. In recent years, industry giant Electronic Arts has responded to the challenge and picked up the guantlet - and it's about to cost the CEO his job.

Our story starts when exec John Riccitiello left Electronic Arts to form a game VC firm with Bono (yes, really). Then, he merged BioWare and Pandemic, got that company bought by EA and returned to head the whole she-bang. Since returning to EA, he’s been banging the drum of developing new IP. This is a concept the company paid lip service to for years – and then continued to churn out dubious licensed games.

And then, strangely, Riccitiello actually started doing something about it.

Army of Two, Mirror’s Edge, Deadspace, Dragon Age – these are all original IP that have various degrees of innovation. They may not be Bioshock or Assassin's Creed II but they're better than a lot of EA offerings. He’s rightly observed that licensed intellectual property doesn't build new businesses – to do that, a company needs to invest in new IP.

And the response from Wall Street? To hammer the company.

EA's stock value has dropped more than 70% since he took over. (And yes, I still retain some stock from tenure there - sadly!) The company’s games may get better metacritic scores – but they aren’t selling as well. Now, the economy plays a role in this. But there’s considerable pressure to just going back to sloughing second-rate Madden, Harry Potter and movie tie-in games onto the shelves. And to further complicate the situation, there’s fundamental changes happening in gaming landscape. Console development is plagued by skyrocketing budgets while attachment rates drop and online redefines the gaming space (whether it’s Zynga style games or massive multiplayer efforts like WoW). The company has made moves to adapt to these realities – but not fast enough in the opinion of many.

So now, it's a horse race to see whether EA has a break-out new IP smash - or Riccitiello is ousted and the company goes back to unremarkable shovelware.