Thursday, May 03, 2007

Virtual World Revenues, $6 Billion by 2012

from GigaOM by Wagner James Au David Cole of DFC Intelligence, a game industry expert for years, has been a guiding source for me for years, and he just revealed some astonishing numbers about the MMOG market: “I can let you be the first person we tell that we forecast the worldwide MMOG market going from $2.2 billion in 2006 to $5.9 billion in 2012,” he e-mails me. These figures are part of an upcoming DFC report, and they are bullish in the extreme. For proportion’s sake, bear in mind that the entire computer/videogame industry is currently a $7.4 billion business. “In terms of overall growth,” Cole continues, “the market in both North America and Europe is expected to triple.” Furthermore, over $2.3 billion of that revenue is expected to come from advertising and digital distribution of virtual items/characters etc, not subscriptions.” This would be quite a reversal, for most Western MMOs still rely on a monthly subscription model. The DFC forecast, it’s worth noting, is pinned to online games, with some ambiguity on how to count revenue from the numerous virtual worlds on the market or about to be launched; many are social hangouts or user-created collaborative spaces, and not games in the strict sense of having pre-defined goals, levels of success, and so on. “Does MySpace count?” Cole asks rhetorically. “Every free site that has an avatar?” (Many online worlds are free to the user, and depend on external advertising deals for revenue.) DFC’s solution for virtual worlds, he goes on, was to only count user-to-company payments. “If you can get them to pay a subscription fee or get them to buy items in a virtual world… for those consumers that starts to become a game.” With those services, he says, “[W]e would count the subscription and virtual item revenue, but not any ad revenue they generate.”

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Swapper, for faster file transfers via caching

While the application’s key features - swapping music, photo and videos with trusted friends - are on tap from any of the dozens of start-ups, what is different about Swapper is that it combines a P2P distributed file system with upload caching, which gives application some speed oomph.

Classic caching (reverse proxies, CDNs) saves bandwidth only where downloads of popular content is concerned. This helps boost the download speeds. Swapper is the exact opposite - aka upload caching. Given that most broadband connections are asymmetrical (at least in the US), the upload speeds are the biggest issue with P2P apps.

Personal peer-to-peer (p2p) and personal file sharing services are dime a dozen. Not a day passes when some new start-up shows up with a new offering, with a slightly different twist.

Wambo (previously known as Perenety), is throwing its hat in the ring, with Swapper, a new software-service that promises to address the biggest pain of file transfers: upload speeds.

Wambo was started by co-founders Arnaud Tellier (CTO), Guillaume Thonier (Chief Architect), and Xavier Casanova (CEO) and company’s first product, Shooter had launched almost a year ago in beta. It tried to do too much, and had a difficult interface.

The trio and their distributed work force (India, Estonia and California) went back to the drawing board and came up with a simpler and easy to use application called Swapper. For now it is a Windows only application. “Shooter was the early prototype and we used it get users and build a small P2P network of a few hundred nodes, for development and testing,” says Casanova.

While the application’s key features - swapping music, photo and videos with trusted friends - are on tap from any of the dozens of start-ups, what is different about Swapper is that it combines a P2P distributed file system with upload caching, which gives application some speed oomph.

Classic caching (reverse proxies, CDNs) saves bandwidth only where downloads of popular content is concerned. This helps boost the download speeds. Swapper is the exact opposite - aka upload caching. Given that most broadband connections are asymmetrical (at least in the US), the upload speeds are the biggest issue with P2P apps.

Here’s how it works: when you are sending a friend a song (legal of course), Swapper checks with its servers to see if that file has already been uploaded by you or someone else. This check is anonymous an fast.

For instance, you upload a photo album and sent it to a cousin. A week later you send it to your cousin - the system checks for a special file signature, and sees if there is something matching that signature on the servers. If there is a match, your uncle gets the photos you already sent to your cousin with Swapper, since they are cached on the servers. No need to upload again.

“The entire process is anonymous and doesn’t ever expose any of your content,” says Casanova. “Most MP3s, personal photos, and mini-videos are less than 20-25MB. We compress, cache, and pre-fetch to make these fly. That’s our market. Not the large gigabyte sized files.”

Wambo hopes to make money two ways: by delivering promotional content delivered in Swapper (similar to email newsletters) for a fee and offering a pro-version of the service for small and medium sized businesses.

There are two big concerns I have about the product - first and foremost, the legal issues could cause major migraines for the company, even though Casanova points out that their EULA makes it pretty clear that illegal uses are prohibited. I am not sure the RIAA and MPAA gun-men who who shoot first, ask questions later, will appreciate the nuance of an EULA.

The overcrowded nature of the market should be a nagging worry for Casanova and his co-founders. Despite have a seemingly good technology, they would have to fight for mind share and grow subscribers. And that’s not easy.

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Secret AACS numbers, the photoshopped edition

from Boing Boing by Wired News has a gallery of the lovely photoshops of the notorious AACS "secret key," a 16-digit number that is illegal to possess and disseminate. AACS is the anti-copying system built into HD-DVDs (and you're out of your mind if you buy one of these boxes -- their future is apparently so fragile that it can be unmade with a 16-digit number!) and controlled by the AACS Licensing Authority. The AACS LA shot itself in the head this week by sending legal threats to sites that contained the number, sparking a user revolt on Digg and many other outraged blogs, pages and posts. Right now, 368,000 pages contain the number, up from 3,600 yesterday. Good luck getting the food coloring out of the swimming pool!

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