JESSE SCHELL: I'm supposed to be over here, so
I'll be over here.
Today I'm going to talk about "Beyond
Facebook," beyond Facebook.
And I thought this was important to talk about
because everyone has just been talking Facebook,
So many of the people in this room have called
me up and said: Can you help me make a Farmville
It's hard for any of us to see beyond it. I
figure, if we can't talk about the future here at
D.I.C.E., when are we going to be able to talk
Why have I been thinking about the future? I
do a number of things -- in case you don't know
me -- I run a studio, Schell Games. We have about
60 people; we do a lot of unusual projects from
interactive theme park rides to MMOs for kids to
interactive toys, a lot of different types of
things. We are always trying to think of what's
I teach at the Carnegie Mellon University at
the Entertainment Technology Center, and we're
trying to prepare the students for the future, so
we're always kind of thinking about it there.
I used to be a Disney Imagineer, and when I was
there, I was always thinking about that, and I
still do a lot of things for Disney.
And I wrote a book that's ostensibly supposed
to help prepare people for the future.
Okay. So all this thinking about the future.
There's one thing I've been thinking about a lot
this past year, that's Facebook. And I will start
with not a prediction, but an observation:
Facebook kind of knocked us on our collective ass
this year. I don't think a lot of us saw it
coming. And saw the success of Facebook games as
something that we would take seriously. And it
sort of threw a lot of people into a panic.
I know some people in this room are experts,
absolutely world class, the absolute experts on
Facebook games. Other people know almost nothing
about it. So I want to talk a little bit about
the present before we get to talking about ideas
about the future.
If Facebook is something you don't know a lot
about, I'm going to give you some Facebook math,
because its understanding the Facebook math that
you can understand what is going on with Facebook.
So here is a useful Facebook equation: FV is
greater than T. What I mean by that is: There
are more Farmville players than there are Twitter
So Facebook is very big, in case you didn't
know that it was big. It's actually quite large,
Okay. So here is another equation: LG --
standing for lead generation -- and you might say,
What the heck is lead generation? And we will get
to it in a minute -- is greater than DP, direct
So what does that mean?
So, if you haven't played one of these Facebook
games, one of the things that may surprise you is
you play them for free, but if you want to get
money, you can earn it slowly or you can pay cash
money, that's a direct payment, in order to get
more virtual money.
Or you can go sign up for credit cards and
stuff and get all kinds of virtual money.
One thing a lot of people don't realize and
it's sort of disputed and debated and kept secret,
it's very possible that lead generation -- this
"sign up for a credit card and we will give you
virtual money "-- actually generates more money
than direct payment.
Direct payments are weird enough, because
they're microtransactions, and that's even
So Facebook is strange. It's not like what we
know from the retail model at all. It is upside
down and backwards and different and just very,
very strange that way.
And -- oh, now, I'm going to make a side note.
I'm going to address this to someone personally,
which is a little strange to do. So Brian
Reynolds, I'm just going to say this. Hey, Brian.
Brian, if you guys do not make a Farmville slot
machine where every time you win, you get cash
money and every time you lose you get virtual
money, then you are stupid!
Because that would make you the richest person
in the world!
Okay. Back to the Facebook math.
All right. So now here is another equation
that is a little more complicated, you have to
bear with me:
EA minus 1500 full-time employees plus Playfish
minus $300 million in the same day equals ...
What in the world is going on?
The world has gone crazy, apparently!
So Facebook is terrifying. I'm not necessarily
saying EA made this move out of panic or terror, I
don't know. But I know that, when I heard about
it I was terrified personally, and I think a lot
of other people were too.
Anyway, there is Facebook for you, Facebook in
a nutshell. It is big! It is strange! It is
Okay. But is it really so terrifying? Maybe
"terrifying" is the wrong word. It's more
unexpected. We didn't see it coming -- at least
most of us didn't see it coming. Otherwise, we
would be very rich.
But you know, Facebook is not the only thing
that's been unexpected lately. We've had a lot of
unexpected things in the gaming industry in the
past few years. Sure, we've had Mafia Wars and
Farmville and the other successful Facebook games.
Those are unexpected.
But, Club Penguin? An inexpensive Flash game
for kids suddenly is pulling down millions of
dollars a month, and suddenly gets purchased for
$350 million by the Walt Disney Company? That was
The Wii. I don't think -- I don't know. Raise
your hand if, when you heard about the Wii, you
were thinking: That's going to be the winning
Okay. There was a few people.
Most of us: What?
And then the Wii Fit. That's kind of a cool
idea. It pulled down a billion dollars all by
A billion dollars!
And then Guitar Hero.
$70 for a plastic guitar, and it's going to be
one of the top games for the year, with many
sequels and on and -- that was unexpected.
Really? Like ... really?
And even little things like the Achievements,
the Xbox Achievements. I mean -- oh, that's cute,
this Achievements thing. But then it's huge and
people are insane about it!
I think a lot of us didn't see that coming. I
suspect if Microsoft had seen it coming, they
would have done a little more.
So we had a lot of unexpected things lately.
And so, when you have a lot of things at once,
it's useful to look at: What do these things have
What are the commonalties that are so
unexpected, maybe we won't be tricked anymore.
One of the things these things have in common
is they involve psychological tricks of different
kinds. Let's talk about a few of those.
Club Penguin, for example. A lot of people may
not have played Club Penguin. They may not
comprehend the way it works. The very, very
clever thing, the very clever psychological trick
that the Club Penguin guys came up with is this.
It's very simple. Free to play. Everything in
the game. Go around, play everything. Play all
the games. Then you'll get virtual money.
That's cool, and it's all free.
But then you go to the store.
Oh, well, if you want to spend your virtual
money, you've got to be a paid member.
Oh. "Mom, can I have 6 bucks so I can be a
The mom says, "No way, forget it, kid."
So the kid keeps playing. Six weeks later,
"Mom, how about now? I'm still playing. Look at
all this virtual money. Look at all the things I
Then mom says: "Wow, it's been six weeks, and
they're sticking with it. All right. It's only
Of course, it's a $6 recurring payment. Right?
$72 a year, for that.
So we call this the elastic velvet rope. So a
velvet rope plus elasticity equals $350 million.
There's some more math for you.
Webkinz. A little more math.
We all know about stuffed animals. We've seen
that forever. We all know about that.
But did you know that every stuffed animal
contains a magical imaginary stuffed animal?
This is an understanding about the psychology
of children that most people did not appreciate.
As grownups, we think of a stuffed animal and
there it is, just a lump of stuff. But for a kid,
there's that, but then there's also this magic one
that lives inside, one that like laughs and cries
and sings and dances. And all the children know
But we as adults don't think about it.
The Webkinz people said, "We're going to take
that little guy and put him on the screen so you
can see him!"
And the children were thrilled, because it's
the first time they've been ever able to see that.
And there is a second psychological part of it
for the parents, that $12 is equal to $20 in the
minds of most parents. They can't tell the
difference between these two numbers. So normally
a $12 stuffed animal that costs $20, they say
that's about the same. And they pay it, and you
can fund a giant MMO with that.
Mafia Wars. Definitely a lot of psychology
here, because if someone had said: "Hey, we're
going to make a text-based mafia game that's going
to make over $100 million," you'd say, "I don't
think you'll do that." Right?
But then they went ahead and didn't care and
they did it anyway. Right?
So what's the psychology here?
Well, the psychology is it's Facebook, right?
It uses your real friends. It's not just a
virtual world anymore; it's your real friends.
And you're playing, and that's kind of cool, it's
my real friends.
But then: Hey, hey, my real friend is better
How can I remedy that? Well, I can play a long
time, or I can just put 20 bucks in. Ah-hah!
And it's even better if that 20 bucks I put in
validates something that I know is true, that I am
greater than my college roommate Steve from back
in the day, and then I can verify that.
And then you combine that with the
psychological idea of rationalization:
Anything you spend time on, you start to
believe this must be worthwhile. Why? Because I
spent time on it.
And therefore, it must be worth me kicking in
20 bucks because look at the time I spent on it.
And now that I kicked in 20 bucks, it must be
valuable, because only an idiot would kick in 20
bucks if it wasn't.
So there's a lot of psychological cleverness
going on with these things.
It's interesting to think about, we all talk
about finding the fun and we find fun ideas and we
thought of clever game ideas.
But who does brainstorming for new
psychological locks and keys? Not very many
people do that, and that's something worth
Are there new psychological angles that you can
Because every single one of these has succeeded
off a clever psychological angle.
But there's more than that. There's something
else these have in common, not just these
What these all have in common is they are all
busting through to reality. We're used to, in the
old days of gaming, it being all about fantasy.
It's all about fantasy.
Ben Gordon used to say, "We don't care about
realism in games because people come to our games
to escape from reality."
So we have this strong belief that fantasy is
the thing, but every single one of these is
breaking through into reality in some interesting
And we don't feel good about reality, as game
designers. We're a little uncomfortable about
We talk about "realism." We know realism can
make your game better sometimes if it's the right
kind of realism. Normally, it's visual realism.
But there's all these other kinds of realism that
can come into the game. That's what all of these
had in common here. All of them are coming
through into reality in some way.
You know, Guitar Hero, you're playing a real
guitar; Webkinz with a real stuffed animal.
Even the Xbox Achievements, outside the reality
of the game, there is a higher level scoring
But it's not just us that were kind of snuck up
on by this reality thing, and it's not just
happening to us. Go look at TV. The people on
TV, their heads are spinning! Everything has
turned into reality TV.
Go to the grocery store. It's not just
groceries anymore, it's organic groceries, the
more genuine, more real groceries. You go to
McDonald's, you could get a Big Mac or you could
get "the real burger," the angus burger, made with
real this and that and whatever. Everything is
suddenly about reality.
Now, what's going on?
Is this just how it's always been?
I found this interesting book called
It's by the guys that wrote "The Experience
Economy," for people who know that book.
And Gilmore and Pine put forth this interesting
concept, that the most valuable thing in products
today is are they real? Are they authentic?
Which is a bold hypothesis.
And then they go further and say, Why is it?
Why now? It didn't used to be that way.
Certainly, that's not what sold stuff in the '80s;
it wasn't reality and authenticity.
Why is it now that people are demanding
reality, demanding authenticity?
They are arguing that all this virtual stuff
creeping up on us in the last 20 years has really
cut us off from nature. We are cut off from
nature, we are cut off from self-sufficiency. We
couldn't be self-sufficient if we wanted to. We
don't know how to do it. We live in a bubble of
fake bullshit, and we have this hunger to get to
anything that's real. Even if the best we can do
is a Starbucks mocha with real Swiss chocolate.
We'll take it.
"Oh, it's real. Look how real that seems to
me, relatively to what I'm used to."
So there's this idea that maybe there's this
hunger for reality. And you might believe that;
you might not.
But once I read this "Authenticity" book, I
started seeing it everywhere. Everywhere I
looked, every ad was about their product being
"the real one."
I go to see the movie "Avatar." You might say,
"Oh, 'Avatar,' that was cool special effects, and
it was really a lot of fluff."
But it's the movie that's made the most money
of all movies of all time. It's got a good shot
at Best Picture. And what's this movie about?
This movie is about the question of, we know
technology cuts us off from the real world. And
the movie addresses the question of, can we then
use that technology in order to penetrate back
into reality and back into something genuine?
So it may be that this movie is not just fluff,
and maybe it really is resonating with something
important for people.
So back to these things. Now, you might say:
Well, now, wait a minute. I'm not sure I'm buying
all that authenticity stuff.
It may very well be that technology is actually
going to fix this through unification, because we
all know technologies converge.
There's a bunch of crazy things going on.
Convergence is happening. Facebook is coming to
the Xbox. Pretty soon, set top boxes and game
consoles are going to merge. There's going to be
one happy box. Ahhhh, just like we used to have
it in the old days.
Remember when there was one happy box that we
made games for and that's how it was? And
technological convergence will take us there. All
this stuff right now is just a temporary blip and
we will have technological convergence.
And I am here to tell you that the
technological convergence is total bullshit.
That's not how the world works. Technologies do
the opposite. Technologies diverge, they do not
They diverge like species in the Galapagos
They branch out and branch out and branch out.
Your VCR wasn't able to record radio programs, and
your Tivo can't record something off the Internet.
I just got a Flip video thing. I'm like, "How
do I take pictures?"
They're like, "No, no, video only."
That's what technologies do. They diverge,
they diverge, diverge. So we have all this
divergence, more and more technologies diverging.
You might say: Wait, wait, wait a minute.
That's not true. I have an iPhone.
I have an iPhone and it's convergence all over
the place. It's a phone! It's a camera! It's
got a zillion little aps! It's a game thing!
I will say: "Okay. You got me. You got me,
but only because of the pocket exception."
Pockets turn the law of divergence inside out.
Not the pocket, but the law.
And the -- this is not the first time, right?
Remember the Swiss Army knife. Right?
All the iPhone is is a modern, digital Swiss
Army knife. And a Swiss Army knife is really
useful in your pocket. Look at that stuff
converged in there. But if I got you one for your
kitchen, you would think that was the stupidest
thing ever, because it doesn't fit in your pocket.
This is why everyone hates the iPad.
It's a giant digital Swiss Army knife, which is
So beyond technology, there's all these other
ways that games are creeping into places we didn't
think about. Fantasy football has been around
forever. It used to be a nerdly game for nerdly
Now, everyone plays it. Your grandmother
probably plays fantasy football. Like, everybody
is playing it. It's just everywhere. It's a game
that leeches off a game.
Geo-caching. Because it's cooler to go for a
walk in the woods when there's a treasure chest at
The Simpsons had their 20th anniversary and Fox
said, "We're going to do a scavenger hunt. In
each of the shows we have this week, we're going
to hide a Simpsons reference in every show. Watch
all the shows, find the references and we will
give you a prize."
Watching television became a game.
DARPA wanted to figure out what are people able
to figure out through crowdsourcing, so they made
a game. They put these red balloons all over the
country and said, "Let's see who can find them
Then everybody raced to find the red balloons
and did DARPA's research for them.
Weight Watchers. They have this whole point
system, which is very much like a game.
And if anybody has the new Ford hybrid car --
okay, I got it -- it's got a speedometer and it's
got a gas gauge, and what are those leaves?
What the hell is that?
The more gas you save, the more the plant
grows. They put a virtual pet in your car, and it
changes the way people drive.
Games have crept out and they're going
Oh, and so -- but here is a question I'm going
to put to you.
Who do you think is designing these games,
skilled game designers?
No, not really. Whoever is there is doing it.
Imagine if skilled game designers get ahold of
Lee Sheldon is a great example. He's
teaching -- he's a game designer I'm sure some of
you know. He's teaching at the University of
Indiana now. One of the first things he did was,
you know what? This grading system kind of sucks.
Because school is a game, right? You go, you
get scores, you pay, you come out, there is a
leader board, you know.
And he said: I'm going to do this better. He
doesn't give out grades for each assignment; he
gives out experience points.
And you level up through the class.
And so class attendance is up, class
participation is up, homework is turned in often
better because it's a better structure; it's a
Imagine when the game designers get ahold of
all this garbage, the gas points and the shopping
points and your coffee points and your airline
points. All these points and points and points.
Imagine when they're all designed, and then
when they can be sensed and these things start to
come together a little bit. Because sensors are
what is happening now. That's what is changing
Natal is going to come out, and it's got
cameras, it's going to sense every joint of your
body. The DSI is out and it's got cameras, and no
one knows what they're for, but someone is going
to figure it out!
Technology is getting cheaper and cheaper and
cheaper, and there's going to be sensors
everywhere detecting so many things in your life,
and these things are going to be able to be used
for game play.
So we're moving on a road towards disposable
If anyone here ever bought a Furby, right, the
Furby costs $20, $30. It has more technology in
it than they used to put a man on the moon.
People have now thrown out their Furbies because
it's kind of dumb, and they throw it out.
It's disposable technology.
We're, before too long, going to get to the
point where every soda can, every cereal box is
going to have a CPU, a screen and a camera on
board it, and a wi-fi connector so that it can be
connected to the Internet.
And what will that world be like?
Well, I think it will be like this.
You'll get up in the morning to brush your
teeth and the toothbrush can sense that you're
brushing your teeth. So hey, good job for you, 10
points for brushing your teeth.
And it can measure how long, and you're
supposed to brush your teeth for 3 minutes. You
did! Good job! You brushed your teeth for 3
minutes. So you get a bonus for that.
And hey, you brushed your teeth every day this
week, another bonus!
And who cares? The toothpaste company. The
toothbrush company. The more you brush, the more
toothpaste you use. They have a vested financial
You go to breakfast, there's the corn flakes.
The on back, there is a little web game that you
can play while you eat, instead of reading the
back, you play a game while you eat your corn
flakes, and you get that and you get ten points
just for eating the corn flakes.
Then it turns out you can see your list of
friends who also have corn flakes and the scores
they got because you're wi-fi and Facebook
connected and everything. And so you get 5 bonus
points because you just beat out one of your
friends at the corn flakes game.
Then you go and get on the bus. The bus? Why
am I taking the bus?
You're taking the bus because the government
has started giving out all kinds of bonus points
to people who use public transportation, and you
can use these points for tax incentives.
While you're sitting on the bus riding to work
and you're playing your Tetris and getting a few
points here and there, you suddenly remember, I
had this dream last night. I had a dream that my
mother was dancing with this giant Pepsi can.
Then you realize: Oh, yeah, the
REM-tertainment system, which is this thing that
you put in your ear and it can sense when you
enter REM sleep, and then it starts putting little
advertisements out there to try and influence your
And then you can fill out a little form -- it's
a test to see if those things came through into
your dreams. And if they did, then big points for
You can use these points at the grocery store,
And you get to work on time. Good job!
Excellent! You get to work on time.
And you get a special bonus -- I don't know,
for something else, maybe because you've been
there on time all week.
Then there's your officemate. He's, like:
Check out, I got the new digital tattoo. It's a
tattoo that you can change the image. It's got,
like, E-ink in it, in your arm. So you can change
the image all the time to whatever you want. A
lot of people are using "Tattoogle" ad sense.
Right? So he's got the ads up, and you're
thinking, "You're really dumb because Tattoogle ad
sense has light sensors in it. So that when your
arm is covered, you're not going to get any money
from people seeing the ads."
And you show him how yours is lower on the arm
so it's more exposed so you get more points for
it. And just then you realize that the two of you
have your ads suddenly synchronized just by
chance. So you say, "Link sync!" So you get 30
points for noticing a link sync, that the two of
us have that. And he says, "Pop Tarts!" because
they are both Pop Tart ads. And the system is
listening, and it can tell that we said "Pop
Tarts," and then we do high five because the body
electricity sensors can tell when you do a high
five, and that's the rule. That's how the game
works. That when the ads line up -- because it
makes you pay more attention to the ads, because
that's how the games will work. The games will be
tricking you to pay more attention to ads.
Then you go to lunch and you had Dr. Peppers
all week. So you know of you've got to have
another Dr. Pepper because you have 10 points, 10
points, 10 points.
And then you have another one and then another
one, but you know there is a special with
Dr. Pepper this week if you have five Dr. Peppers
in a week, 500 bonus points. So you definitely
have to take advantage of that.
And then you've got a meeting at another
building that's a half a mile away. And you could
take the shuttle over, but you thought, "I'm going
to walk" because the health insurance plan that
you're on gives you bonus points if you walk,
like, more than a mile each day, and we can sense
that easily, you know, through your digital shoes.
And if you get your heart rate up over a
certain amount, then you get more bonus points
from your health insurance company.
So then you're going shopping on the way home,
and -- man, this is like a place you can get a lot
of points and it's really complicated. So you
don't figure it out. You let, like, your app
figure it out. It looks at all the point systems
you have; it looks at what you want and then it
tells you which ones to buy in order to get --
ooh, wow, a lot of points, just because I made
good choices shopping.
Then you get home and your daughter is, like,
"Oh, I got my report card!"
You're like, "Good job! You're getting 2,000
points from the State for getting such good
And you're getting 5,000 as a parent from the
Obama bonus for the good parenting bonus, which
you're excited because you can use that as tax
Then you say, "Hey, wait a minute. Wait a
minute. Did you practice your piano?"
She's like, "Yeah, I practiced my piano."
"Well, what score did you get?"
"Oh, well, I got 150,000."
"150,000! That's the best you've ever had on
that particular sonata. That's 9,000 points given
by the Arts Council for your scholarship fund, so,
you now, go you." Right?
And then you go and watch television, and I
don't even want to talk about this. Bonus points
points points points points. Because there is the
eye sensors that can tell when you're watching the
ads, certain ads, especially, because you're going
to get points for them.
And your remote has a little screen on it and a
little camera so you can be on live chat with
other people you know are watching this show and
play these games and get all these points while
you watch television. That will be a very natural
thing to do.
Then, finally ... oh, the day is over. You're
going to bed. You sit down with your new Kindle
3.0, which, of course, has the eye-tracking sensor
in it that can tell what you've read and how much
you've read of the book.
And it's important to read the whole book
because, then, if you leave a review on Amazon,
you'll get super bonus points if it knows you read
the whole book through.
As you finish the book, you're very
surprised -- oh, did I mention that Microsoft
acquired Amazon a couple years back? Because they
And you get an achievement unlocked. This
thing has been tracking you for 20 Years. You
finished 500 novels, this is like a big
achievement. You are thinking, I'm really
embarrassed that my 500th novel was this dumb Star
Trek novel that I'm reading, because, like, I'm
going to remember that forever.
And then you start thinking about all these
achievements and points and things and realizing
that, you know, you have no idea what books your
grandparents read or where they went on their
daily basis. But these sensors that we're going
to have on us and all around us and everywhere are
going to be tracking, watching what we're doing
Our grandchildren will know every book that we
read. That legacy will be there, will be
And you get to thinking about how, wow, is it
possible maybe that -- since all this stuff is
being watched and measured and judged, that maybe
I should change my behavior a little bit and be a
little better than I would have been?
So it could be that these systems are all crass
commercialization and it's terrible. But it's
possible that they will inspire us to be better
people, if the game systems are designed right.
Anyway, I'm not sure about all that, but I do
know this stuff is coming. Man, it's got to come!
What's going to stop it?
And the only question I care about right now is
who, in this room, is going to lead us to get