A BROWSER MANIFESTO – PART 12

Apple began a revolution when they launched the iPhone and their App Store.  The user experience was indeed revolutionary but in truth the app store was invented by NTT DoCoMo over a decade ago.  DoCoMo also had the good sense to give 91% of content fees back to the developers and to launch the mobile web and make it browser-based.  Today NTT DoCoMo is worth $74 billion.

But the Western media hadn’t seen or used i-mode in Japan.  They were comparing the Apple App Store to a feature phone using a 2G WAP deck that had not been created by a great technology company.  Thus Apple’s App Store looked new, great and the start of something big that might last for eternity.  Then again, so is the World Wide Web and they’re on a collision course that Apple cannot win.  The same thing happened to the PC desktop metaphor on its way to the web.  Instead of the web merely becoming a desktop app, it became the fundamental new way that people organize their use of computers.

Meanwhile, just like Microsoft with Windows, Google rapidly cloned the iPhone UI and began to give it away in the form of Android licenses.  There are a hundred equipment manufacturers that will turn to Android because Apple refuses to license their wonderful ecosystem to anyone.  It’s déjà vu as Apple’s smartphone market share has plummeted and an even faster decline lies just ahead with tablets.  You know this is bad for Apple when the biographer of Steve Jobs says his biggest betrayal, anger, and regret revolve around Android.

And anywhere that Android goes a good browser is sure to follow.  With the browser comes the real killer app, the World Wide Web.  We are now beginning to see hardware OEMs that make TVs, DVD players and tablets begin to use the Internet. More of them over time will realize there is more value in offering buttons to major browser services like Facebook and Google search than a button to a comparatively limited collection of apps.

This opens up new business model opportunities for OEMs that are better than licensing, or paying for, an ecosystem that in the end is inferior to Apple and identical to many rivals.  Every browser service button that an OEM puts on the landing page of their device could generate revenue for the OEM.  Instead of being stuck with wafer-thin manufacturing profit margins, they could take a bounty from each web software service provider.  They could also collaborate and partner with new services in which they get a share of new customer revenue that is generated.  The services would benefit because it would bring them new traffic on new devices and be cheaper than app stores.

All of this is now beginning to happen.  It will take a few years, because native apps do offer higher performance, just as desktop apps can outperform a cloud-based enterprise app (even Apple is now embracing the cloud).  Browser performance needs to migrate intact to mobile devices and stabilize; the migration of more customers from performance to convenience needs to be completed.

Also, the media is still caught up in their high opinion of app stores.  I’ve noticed how media reviews of new tablet devices in the last year are always comparing app stores and often forget to talk about the browser.  This will change rapidly before your eyes in the coming year.  Smart game developers are already cloud-based, and in the short-term will cover both the browser and native apps on the client side.  Over time the scale will tilt to the browser.

A BROWSER MANIFESTO – PART 11

Historically most films have been live action shot by independent production teams, while most video games have been made by independent third-party developers under a similar kind of contract with a publisher. Pixar is radically different because they are a technology company that systematically leverages tools. We do something similar and like Pixar, have found that it is easier to implement under your own roof with your own staff. Just for starters this eliminates questions about direction, ownership and sharing. But there is much more to it.

To create a systematic competitive advantage a game developer needs to be building a system, not a game. The organization must become part of this system. It begins with corporate culture and values and you want people that have the desire and confidence to innovate and collaborate. Strategically you are going to be better off if your people believe they can make a great, new original game because you’ll get less market share in a clone war and less revenue share if you are always licensing other people’s brands. It will also make an enormous difference if you can convince everyone to use the same tools and to collaborate on a technology roadmap and the sharing of Best Practices. This way everyone can learn from internal experts about how to use tools and metrics to make games that drive traffic, retain customers and monetize better.

These kinds of things beg for a centralized organization with everyone in the same building to improve communications and management. However, I will instead argue for a global organization with several medium-sized offices. The market is global and if your employees aren’t global you’ll remain too foreign for many potential customers. Our office in Finland is an interesting melting pot all by itself because people born in 35 different countries have worked there. They have a good idea of global tastes because it is in the building. Costs are also much more competitive when you are global, as compared to only being in an expensive city like San Francisco or London. In many of our seven locations the turnover rate and organizational churn are also lower because we’re the best game company in town – simply because there are fewer competitors of note.

To make such a structure work we ask everyone to communicate in English, we make extensive use of tools like email, IM and Skype and we gratefully get people to participate in conference calls that have to span a lot of time zones. We are respectful and courteous about the demands and it works because everyone is learning much faster and advancing in their career. It seems like every office has some big brother offices that they aspire to follow, and some little brother offices that they are training and managing on some projects. This process allows the most advanced people to take on exciting new work by enabling them to hand down mastered categories to a new owner for whom it is a chance to advance and grow. Pixar continues to be a great role model for us. Harvard Business School was sufficiently fascinated by how we do it that they wrote a case study about Digital Chocolate: http://hbr.org/product/digital-chocolate/an/410049-PDF-ENG.

A BROWSER MANIFESTO – PART 10

After doubling European farming output with the potato, there was a further tripling of value from another South American import: the bird droppings known as guano. Let’s apply the fertilizer metaphor to how we can make games better with a new technical discipline that I’ll call Discovery Engineering. In short, how do we start with the same game but add engineering and technology that brings in much more new daily traffic as well as more frequent return visits?

Our gaming guano starts with my very old concept that great games must be Simple, Hot and Deep. I’ve been saying this since I founded Electronic Arts in 1982 and it remains true nearly 30 years later. Consider the ocean, which is simple enough in concept and access that everyone likes to go to the beach. The babies are playing in the sand and puddles while the kids that can walk are getting wet and letting the lapping waves chase them. It’s hot and the graphics and sound are fantastic; everyone is enthralled by the spectacle and can’t get enough. And no matter how far you go it just keeps getting deeper until you need a surfboard or scuba gear and have to worry about sharks. The analogy I used earlier was how the depth satisfies the whales, also known as wolves, who generate your revenue. The wolves need to conquer the sheep that are represented by the casual players. Hence the game must appeal to everyone like the ocean. You cannot even begin to make this work if the game is not Simple, Hot and Deep.

There are additional things that can now be embodied in the game itself that will drive more traffic and return visits. Game mechanics that are very satisfying to play by yourself are of less value than mechanics that engage you in competition and contact with other players, which provokes both viral spread and higher return rates. Repeatable game mechanics that are driven more by algebra and stats, like Fantasy Sports, are not only more efficient to build than a content treadmill, but they provoke endless competitive comparisons leading to higher return rates and more spending.

Independent of the game, additional technology layers can be wrapped around it to generate more free traffic. The APIs of an SNS like Facebook are one great example. Apple makes it easy to send an email invitation but any of these ideas is going to be more effective if the game is not limited to one platform. Everyone that is looking at email or Facebook is but one click away from the browser, regardless of his or her preferred game platform. If your game runs in the browser without requiring any plug-ins, installs or memberships you have a better chance of getting the recipient of an invitation to try it right now. If they like a short trial session, they may later become a Facebook member or buy an iPhone but even if they don’t they can play your game in any case.

My favorite example of Discovery Engineering is how we do cross-promotion. Many people dislike this idea because they don’t understand it and are clinging to the past. Old School thinking says that customers go to destinations and that you would be crazy to distract them or let them exit prematurely once you have gone to all the trouble to bring them to your game. But if your game is in the browser, the player only invested in one simple click to get to you. Not only was the “investment” nothing, he’s busy right now, possibly at work or at school, and he’s going to be leaving your website within seconds regardless of how you treat him.

The principle of cross-promotion is to get something of value when, inevitably, he leaves. Hence we show a display ad banner offering a few other games to try. If the current game is no longer holding his attention, he’s a goner anyway. But if he clicks on a game in the banner, he goes to a competitor’s game for a free trial, and that competitor now owes our company a return click from one of their customers that we don’t already have. If your product is lousy this will only make you fail faster. But if you make a superior game you will double your customers this way, because your game is good enough that your departing player will remember to come back to your game again. And your competitor is giving you a new customer who will also like your game, so you’ll have two good customers instead of just one. Voila, your eCPA just dropped in half, which dramatically increases the chance that the game’s lifetime value will be profitable.

It is for the same reason that auto dealerships cluster together on the same street. But many game developers are too paranoid and distrusting to do this kind of cross-promotion. They’re afraid to help a competitor or they’re insecure or overly protective about their game. But we know this works for us; it’s the best guano we’ve got.

A BROWSER MANIFESTO – PART 9

Game developers today need to disrupt themselves to control their destiny. This begins with thinking outside the box. Don’t be skeptical about the browser. Be humble and study new platforms and games. Regardless of your background, give new priority to the browser, Facebook, Flash, JavaScript, HTML5, iPad and Android. And consider potatoes, or if you prefer we can call it product engineering.

But first, potatoes! In medieval Europe the primary crop was wheat and a field could only be used every other year. In the even years it had to lie fallow so the nutrients could recover. The population of Europe was constrained until explorers returned from America with the spuds. It had taken 2,000 years for the population to reach 100 million but with the leverage of the potato it doubled again in one-tenth the time. Potatoes could grow underground in a fallow field, thereby doubling the value and productivity of a field. Good product engineering can do at least as well. Instead of building a game from scratch and reinventing the wheel for only one platform, the right tools and platform services will reduce cost of development while also reaching more platforms and customers.

Going cross-platform means you can reach more customers in more regions and keep your customers with you as they roam across different access points and screen sizes. It’s also less risky because you cover all the ground and don’t paint yourself into a corner. But you can’t do it all by hand, you need technology leverage. Develop game engines, code libraries and components that can be pulled off the shelf and used again and improved each time. With the right tools you can be assured of stability, reliability and audience scalability on the server backend. Tools can automate language localization and deployment of payment options. If you build a solid system for Business Intelligence (BI) then you can leverage that tool to give you customer behavioral metrics and analytics across all screens and platforms. We call ours the Magic Box. Without it you would need experienced magicians that are always in short supply. With the Magic Box, everyone can have the wisdom and become a magician.

The toughest boundary to cross is from PC browser to mobile app store, or vice versa. While the browser will end up on every screen and device, many of our client-server architected games can be even better if the client is a native app. The goal again is to not always be starting over, but instead to build on top of the shoulders of your technology to reach higher. Think Pixar. Rather than doing everything from scratch we try to automate code translation with a system we call the Black Box. We have tools and translators for the client side and for the server side. To make great quality you will always need to be an expert about each platform or device and how it is used by customers. The “last mile” will require some hand-crafting, particularly regarding the User Experience. Just don’t reinvent the wheel. The Incas did pretty well even though they never invented the wheel in the first place. But they discovered and pioneered the potato.

A BROWSER MANIFESTO – PART 8

Game developers are optimists. Thank God for that. But it is no longer an acceptable business strategy to simply believe that you are the only one that is going to make a superior game. Sure, we can all look down from our gaming Olympus and find fault with FarmVille and Angry Birds, believing we can do better. In reality, we all have our hits and misses and we all make better and better games as the bar is raised higher. Yet we all regress to the mean. In today’s market we should make the best game we can, but that’s not a strategy, it’s a faith.

The life of a developer was simpler when they made the game and left it up to their publisher to pay their expenses, dictate the platform choice and get the customers. The first radical change was when Apple, Facebook and Android all offered to embrace developers directly and took both retailers and publishers out of the equation. There was quite a honeymoon period and it gave birth to Zynga and others and brought venture capital to many new game development companies. But the honeymoon is over. Now what?

The browser is the right platform focus. It is comprised of industry standards; is free, open and ubiquitous; and there are already nearly 3 billion computers that have browsers. Second, the browser is going to spread from PCs to tablets like wildfire, and there will be 1 billion tablets in the market within four years. The Apple iPad got the tablet market started and Apple always emphasizes their App Store and cripples the browser. If you read a review of a tablet in the last year you would therefore see a content focus on comparisons of apps and app stores. Within a year you will see the media focus shift to the far more important browser. After all, a tablet is a big screen experience that can and should run all World Wide Web content in its current form. And there will always be more content on the web than in any one app store. The browser will also blossom on Android smartphones because Google services need a good browser. Like water, we will see the browser find a way to show up on TVs and other boxes in the digital living room. One reason this is obvious is that nobody other than Apple can get their App Store because they won’t license it. This either leaves the remaining 100 global manufacturers all offering the same second-rate licensed app store and letting someone else control it, or it results in these companies realizing that they can get more content and more profit from using the open browser to provide the World Wide Web as their app store.

Anyone that focuses on the browser will therefore reach every screen in every room. The approach will be cloud-based on the server side and if app store client apps are desired they can be added as additional SKUs. Apps are important now but will decline versus the browser. I believe app stores will peak in the next few years and then decline gradually as the browser takes center stage on more platforms and screen sizes and with more and better games.

For certain, games need to be interoperable across screen sizes, locations, networks and platforms. This is strongly in the public interest, as every social medium in history got more than 100 times larger after it became interoperable. Two public habits change when this happens. First, we begin to get more social communication from a wider network and we realize that we can now communicate with everyone. Second, as we see and hear more people doing it, we recognize that it has become fashionable and we jump in and help it become pervasive.

On the marketing and distribution side, developers need to take charge of how they get traffic and make sure customers have a good first trial experience. Much of this can now be embodied within the game itself, including social game mechanics, viral features, shrewd tutorial design and metrics. Those are essentials but getting even more traffic requires business partners. Anyone who relies entirely on a destination like the Apple App Store, Amazon, GameStop, Steam or Android Market is continuing to engage in distribution thinking and it’s less efficient than if you stick to Discovery principles.

Developers should also think twice before throwing their support to anyone operating a closed platform with a license agreement that is subject to change. You’re not standing on solid ground, you’re a serf in a feudal system. To the extent that you gain an advantage in the value chain, they can take it away for themselves, or just kill it any time they like. While it is at least tempting to support a closed platform that already has hundreds of millions of customers, think three times before helping a smaller one get larger. These small ones are often charming and entrepreneurial and offer false freedom and special deals, because they still need to lure you in. Your pet baby crocodile may be very cute but after its first birthday it will see you only as food. The nascent platform may seem quite harmless, like a coordinated leaderboard community, but by providing games you are investing in them, becoming pregnant and helping them take control of your value chain. Furthermore, developers cannot continue to be ignorant or uncaring about how to acquire traffic, it is a fundamental need that the developer must learn to master and control.

So we are left with the question of how developers go cross-platform to all screens and make interoperable games, and how they take control of and get more traffic to their browser-based games. To answer these questions, developers need to disrupt themselves with something like potatoes and guano.

IT’S NOT A PREDICTION, IT’S ALREADY HAPPENING IN ASIA

Asia has led the world in digital disruption of the game industry.

Only 12 years ago, Japan’s NTT DoCoMo gave birth to the data phone, the app store and the mobile web. Sony was still the global leader in games and just ten years ago had a corporate market value of $131 billion. But Japan has being transformed by the convenience and social value of mobile devices and the shift to digital media and the browser. Sony has since faced many difficult challenges and is now worth $18 billion, a decline of $113 billion. Where did the value go? NTT DoCoMo and KDDI have built new wireless digital networks and their combined corporate value is more than $100 billion. New social and mobile game services have been created by Gree, DeNA and Mixi, three public companies that together are now worth more than $10 billion. Remarkably, these three companies collectively have 70 million members – more than half the population of the country – and most of them are using the service through the browser on a feature phone. It’s the ultimate combination of casual media and convenience and proves how massive global markets can become in the future.

Korea, meanwhile, was never a strong market for the Japanese game consoles, but they did copy many of the NTT DoCoMo mobile innovations. They also gave birth to the PC Internet Café, which quickly established the popularity of MMOs (Massively Multiplayer Online games). This evolved rapidly into early leadership in “freemium” or F2P (“free to play”) games with virtual goods micro-transactions. Korea then invested in broadband and more PCs went into homes, expanding the MMO market, which then spread into China. Korea continued to match Japan in advanced mobile network penetration and digital social games with micro-transactions. These two countries lead the world by having a majority of their populations not just playing video games, but playing them in the browser over the Internet.

China is best known today as the world’s largest virtual goods market, now in the neighborhood of a $10 billion per year business. Most of that business is in MMOs that require an enormous native PC client download, which can then only be accessed and played on one PC that is not portable or wireless. You have to make an appointment with the room where the PC is located, so it is not very convenient.

Nor are MMOs especially social because they are demanding hardcore games that most of the public will not be willing to try. Hence it is not a mass market, not casual and not really social; MMO customers are mostly playing with strangers that share their hobby interest. China also banned Facebook, forced Google to shut down and the iPhone is very expensive. Another way in which the inevitable has been delayed is that China Mobile, the leading mobile operator, has never been an innovator and failed to copy the innovations that blossomed in Japan and Korea. The watched pot is eventually going to boil.

Despite China’s early leadership in proving the value of virtual goods, they will inevitably be disrupted severely by Discovery, by the browser, the smartphone, social networks and convenience. The Chinese MMO companies are already slowing down as customers are beginning this transition. But convenience and social value will expand the market significantly in the long-run, taking virtual goods in games in China above $20 billion and helping the global market reach $100 billion.

A BROWSER MANIFESTO – PART 6

As Discovery replaces distribution business models, the disruption is hardly surprising. Game companies have to learn how to make a different kind of game, on a different platform and using a different business model. Fewer companies will recognize the need, face the challenge and execute well on the massive pivot that is required.

The most vulnerable companies will be those game industry players that currently only add value as channels and that don’t own either relevant technology or game brands and game IP. By analogy, Blockbuster left itself open to disruption by Netflix, and Netflix is disrupting itself as they shift from DVDs to digital streaming. But if movie streaming can easily move to the cloud, there is no reason that the film companies, like J.K. Rowling, cannot operate their own services. They could easily join together in a shared cloud back-end and subscription program – and eliminate Netflix. Similarly, I predicted the demise of RIMM and the Blackberry seven years ago when they had dominant control over mobile enterprise email. At the time they had a barrier to entry advantage in the form of distribution technology. But they did not own or control either email solutions or the email messages themselves.

In the game industry, Valve’s outstanding service, Steam, pioneered digital downloads of PC games and disrupted conventional retailers. Now, Steam is subject to disruption from live streaming services like Gaikai and OnLive.

In each of these examples, technology innovation as applied to distribution is being used as a barrier to entry. But the disruption is more fundamental and far-reaching with free games in the convenience of the browser. Why? Because the browser with a Discovery business model eliminates the need to depend on another company, either for distribution technology or distribution itself.

The necessary and fundamental conclusion from this is that every successful game company in the future will need to be vertically integrated and will need to own a critical mass of their own game IP. This will include new companies like Zynga, where they are building their own technology infrastructure to support original game brands. Traditional companies will have to invest more heavily in new digital game brands that they can own, and will have to acquire others. Anyone that assumes that they can survive only as a distribution middleman will be first commoditized and then made irrelevant and get wiped out. GameStop is particularly exposed at the moment. In trying to avoid becoming Blockbuster, they’ve made three acquisitions that have to do with digital distribution technologies. They don’t yet realize they will need to be a game content owner, too. From this standpoint, despite their recent success it may become an issue for Apple, Facebook and Google since none of them own any games. They’re thinking like distributors. One result of this is that Facebook inadvertently created Zynga, which really worked out well for Zynga. Were I Facebook, I would prefer to own Zynga.

Many prior media industries have faced a related issue. NBC and CBS would have been unable to build national radio and TV networks without also themselves operating studios that produced and owned a lot of their content, beginning with the news. The most profitable period in film history was when most theaters were owned by studios that mostly ran their own movies – until the government made them break it up. Nintendo has always been smart about this issue. They’ve always had the best “first party” games such as Mario, Zelda and Pokemon. They’ve also always offered licenses for third-parties that have been very profitable for Nintendo because the third-parties never had any negotiating leverage – they knew that Nintendo could, and would, succeed with or without them. Similarly, book, music and film companies have always built distribution pipes that they offer to third-parties. But they don’t let the third-parties become the tail wagging the dog – they always fund and produce plenty of their own content and therefore maintain the leverage in third-party negotiations. After I founded EA, I spent a decade building EA brands for this reason. But within three years I was also supplementing with distribution deals to help cover our overhead, and brand licenses were blended in over time.

But the Discovery model is a much more shocking and severe shift because it completely eliminates distribution. Most people are going to find this hard to believe and many companies are going to wait too long before they figure it out. The winners will invest early in browser game technologies, brands and IP and will plan correctly to own enough of their own content.

A BROWSER MANIFESTO – PART 5

In a distribution business model, the consumer must journey to a destination where the product available to them has been chosen and arranged by the industry titans. In the Discovery Business Model, a consumer creates their own “store” that entirely consists of relevant product choices.

There are four parts of this product relevance. A consumer looking for something now enters a query into a search engine and they see organic results that are relevant to their desires, as well as sponsored results that are competing for their attention based on the interest implied by the query. Both are relevant but in unique ways – organic results are based on intellectual and theoretical relevance and the sponsored results are an auction where you are the winner.

Then there are all the recommendations from your friends. You get them in the form of links that appear in all your social media including Facebook, email, Twitter, Instant Messaging and even text messages. Finally, we now have recommendation engines figuring out what the consumer is actually doing and what they care about. So these four sources fill up a new kind of storefront.

The consumer then scans the headlines, text and images and clicks or taps on the ones that sound closest to what they are seeking. In the Discovery model, the consumer is then given an instant, free opportunity to actually try out the product in the browser, by being redirected to the cloud and to the website controlled by the owner of the content. There’s no distribution middleman or gatekeepers controlling access or shelf space; the consumer links directly to the product’s owner. For the consumer this requires no spending, no credit card on file, no downloads, no plug-ins, no spyware, nor any memberships in any clubs or networks. In fact you don’t even need to own the computer where you are using the browser. Nothing could be more convenient. “Social and Search” beat “Shelf”.

Because there is such a plurality of ways to spread a link socially and get free traffic, there is a tremendous increase in the efficiency of Cost Per Acquisition (effectiveCPA, or eCPA, and also true for improved CPC or CPI). Presuming the trial product experience is free, there is a quantum increase in customers actually having the product experience. Compare all of that to the number of people willing to schlep to the nearest GameStop to buy a $60 PC game. They have to pay and then won’t get to play until after they go home, spend an hour wrestling their graphics card and driver to the ground, and complete the install.

So we have a spectacular increase in efficiency of eCPA, trial completion and viral spread. Consumers are suddenly able to try a whole lot of stuff that they’ve never heard of, not unlike the early days of the World Wide Web and how the public stumbled on Yahoo!, Google, Facebook and other new-fangled services that have since become daily habits.

Just as traditional Hollywood brands have always trailed on the web, in Discovery it is not the brand that matters, it is the relevance of the free trial experience. The good IP (Intellectual Property) will win every time, and it will have been enabled by social media and browser Convenience with a Capital C. That’s how YouTube won and of course in the process they became a brand.

Unlike many channels that feel like the Soviet Union, here we have the truly open, free, fair, democratic and competitive World Wide Web. The playing field is level because scale is not required for success. Anyone that can make something good, something relevant, can win. They can control their own destiny and be free.

Fundamental Internet principles apply. You need to get some traffic somehow, somewhere. They need to like the experience. You need to get them to spread the word to bring your eCPA down. You need to make a form of content that monetizes, so that you have a favorable lift-to-drag ratio between acquisition and lifetime customer value. As soon as you confirm a favorable ratio even with 1,000 visitors, cha-ching, you know you can afford to reinvest your cash flow to drive more traffic and rapidly build up volume. New creations that have relevance will develop brand power at blinding speed. As an illustration, when a great Digital Chocolate game like Tower Bloxx was only available on feature phones through the primitive merchandise systems known as the carrier decks, you could do a Google search for that game and would only get 10,000 page hits. Then we put out a free browser version of the game and later adapted it to Facebook and today it has over 2,900,000 page hits. That’s a brand. We just launched a new game last year called Millionaire City; a Google search for “Millionaire City” + “game” yields almost 9,000,000 page hits. Our new game, Galaxy Life, is only a few days old and it has 270,000 page hits already.

Some platitudes come to mind. Content really is King. Knowledge is power. Power to the people. Power to the Indies. Liberte!

A BROWSER MANIFESTO – PART 4

In The Master Switch, Tim Wu discusses the rapid consolidation of all media on the Internet and wonders if the information industry will again fall prey to monopolists, as it did in the past with radio, telephone, TV and film. Like many other industries that provoked antitrust action in the last century, these cases all involved distribution business models in which the winning factors always turn out to be scale, financial leverage and brands. Even today on the Internet we see many successful companies using distribution models, including Amazon and Apple. They are new gatekeepers that operate a new kind of consumer destination that commands access to a product category. Will these principles of distribution models continue to work and will one of these companies become the next Master Switch? In a word, no.

When I founded Electronic Arts, I planned and built a distribution pipeline as one of the key strategies. I’d worked through distribution challenges at Apple and was trying to apply Hollywood principles to software. Both Apple and Hollywood had succeeded by going direct to retailers and building control over the distribution pipeline to the consumer. EA built a pillar of strength in the same way using the same principles.

Here are my Top 10 key principles of distribution business models:

1. 1. Limited physical space
2. 2. Travel required to destination
3. 3. Financial scale
4. 4. Physical scale
5. 5. Volume inventory buying/owing power
6. 6. Brands needed for sell-through conviction
7. 7. Higher cost to bring products to market
8. 8. Consumer’s limited time/space at site
9. 9. Significant infrastructure requirements
10. 10. Must pay/owe in advance

To make just one example, after EA shipped some inventory the retailer owed us money. If their sell-through was not good, they wanted a markdown, returns or extended terms. We would then use that leverage to get them to buy even more inventory of yet another game. I use this example to show that even in a form of weakness – if our product was not good enough and was not selling through – we merely used it to further our advantage. Before long, EA could afford to buy brand exclusives such as the NFL. The consumer comes in and they want football and they have to pay $60 for it, and you have the shelf space and the only trusted brand. You get the drift.

To properly drive this model, you need financial leverage, scale and brands. Today, Internet companies like Amazon and Apple use these same principles and have adapted them to the Internet. Physical space is not really limited, but we all know that iTunes and Amazon have a front page and a bottomless back end and that it is highly relevant what is on the screen and above the fold; there is still “shelf space”. In effect, all the usual principles still apply. So does this suggest that companies like Apple will become The Master Switch? That is certainly how the music industry has felt in recent years. Is it really true going forward?

The opposite is true. For media, the distribution business model is in fact on its last legs. It will become obsolete due to a new business model based on the principles of Internet Discovery through the browser. YouTube began with two guys in a garage, no brand power and no scale. They faced numerous larger and stronger competitors. How did they win the online video category? How is it that The Financial Times and other newspapers are now able to bypass app stores? And what about J.K. Rowling? She would have gotten nowhere with the first Harry Potter book without turning the value chain over to a book publisher and book retailers, including Amazon. But what is she doing today with eBooks? She runs her own website, Pottermore.com. It’s in the browser. It’s cloud-based. It’s a Discovery model, like FT and YouTube.

In the Discovery Business Model, my entire Top 10 list of distribution principles go up in smoke. All ten are irrelevant. Because of this scale, financial leverage and even brands don’t control results. Hence The Master Switch cannot be controlled by traditional distribution thinkers. Instead, it is controlled by Google Search, which in turn, is kept honest by the public. This is the most radical change in business models in history because humans have used distribution models for thousands of years and they’re finally toast. We’ve used distribution models for so long that we’ve literally evolved with them and they’re in our DNA. That is why few people today really understand the massive disruption that is being caused by Discovery.

A vibrant universe filled with intriguing planets, strange alien life forms and futuristic technology awaits players in Galaxy Life, Digital Chocolate’s new action-strategy game. Users will be able to play this game on Facebook and on Digital Chocolate, building a Starling colony into a flourishing alien metropolis, buzzing with innovation and excitement. Keep your colony happy by gathering resources and completing tasks.

Minerals and gold allow players to build facilities to replenish resources, amass an unparalleled intergalactic army, develop new technologies, and much, much, more.

But be warned: As colonies grow, so will competition for control of the galaxy.

The key to victory will be not only how well players manage their Starling colony, but also how they lead their Starlings into battle. Train and deploy different unit types like Flamethrowers, Marines, and Kamikaze soldiers to maximize your strategy. These units will come in handy when fighting off the Firebit and Sparragon armies.

Players must choose their allies wisely and can show their loyalty by helping complete tasks on their friends’ colonies. While diplomacy makes friends, battles can yield valuable resources and goods essential to continuing growth and progress. Pick your battles wisely!

Your destiny is in your hands. How you deploy your army, build your colony and defend the city walls will ultimately determine whether you succeed or fail, so choose wisely.