Jesse Schell- DICE 2010: Design Outside the Box

Realtime Transcription 02/18/10

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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, Facebook, Facebook. So many of the people in this room have called me up and said: Can you help me make a Farmville knockoff? 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 about it? 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 next. 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 accounts. Okay? So Facebook is very big, in case you didn't know that it was big. It's actually quite large, indeed. 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 payment. 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 stranger. 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! 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 terrifying! 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 unexpected. 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 console. 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 itself! 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. Webkinz. What? 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 in common? 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 paid member?" 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 could buy." Then mom says: "Wow, it's been six weeks, and they're sticking with it. All right. It's only $6." 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? Okay? 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 this. 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 than me. 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. Okay. 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 thinking about. Are there new psychological angles that you can find? 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 psychological tricks. 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 way. And we don't feel good about reality, as game designers. We're a little uncomfortable about reality. 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 system. 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 "Authenticity." 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. Anyway ... 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 converge. They diverge like species in the Galapagos Islands. 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." Okay. 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 just stupid! Okay. Anyway... 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 nerds. 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 end. 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 first." 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 everywhere. Right? 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 these things. 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 better system. 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 things. 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 technology. 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 interest. 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 dreams. 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! Right? You can use these points at the grocery store, or whatever. 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 grades." 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 relief. 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 did. 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 forever. Our grandchildren will know every book that we read. That legacy will be there, will be remembered. 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 there? Thank you.
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Jesse Schell speaks at DICE 2010 Las Vegas "Beyond Facebook"