INTERACTIVE GAMING SEMINAR, HELSINKI, 13. 06. 2007
Future visions on interactive gaming
Risto Linturi, www.linturi.fi
Distinguished audience,
I have done my best to learn the language you gaming operators use. I noticed that many of you say “online games” when cashier uses automated order entry. To typical consumer online means that they themselves are online. What I usually call solitaire or self service, you call interaction. What most people call interaction, you may call recreation. What the physical world calls recreation, only physical gaming sites provide. It is not usually supplied with your interaction. But I try to learn. It is nice to be an insider with a secret code – as long as you know what you are talking about.
I will address the future of internet and mobile games. But I will start from my own past. It was early sixties behind my kindergarten when I first gambled. We threw small coins towards a square by the wall. Whoever got one of his coins closest to the wall got all the coins that fell outside the square and half of the coins inside. It was a sin worse than smoking. As my mother had earned her teenage pocket money playing cards, I was not too much afraid; I just continued the family tradition. Marjapussi, a Finnish trick taking card game was her favourite and later also mine. Luck does not factor much in Marjapussi but beginners are slow to notice it. A great game if you need to take other peoples money. You can find the rules in Wikipedia.
Mechanical games were common in 70’s. I rented a flipper to our school and against the teachers wishes I was able to operate it there a whole year. I claimed that the contract could not be breached. Digital gaming experiences started also in early seventies, when the first programmable calculators arrived. In 1979 I made my fist gaming invention. I worked in the research lab of Helsinki Telephone. I purchased a speech synthesizer, connected my microcomputer to it and the telephone network. I programmed a simple game. Soon my game was calling random numbers in Helsinki asking: “Do you want to play a game? Press one if you want to play.” This was three years before a similar idea was popularized in the movie War Games.
The world has changed. There are over one billion personal computers now and about three billion mobile phones. Even mobile phones are thousands of times faster and more versatile than my first computers. Their many features could be used for novel games – gps-systems, cameras and other multimedia accessories just as examples.
People interact globally. Games, food, culture and sex draw people together in the physical world. Often they are all combined to a mixed experience. Sexual exhibits are widely available also in the net both solitaire and interactive. Food does not yet work well over the internet and intellectual property laws restrict most collective cultural experiences but we know that kids continuously try to overcome these obstacles. Internet gaming is spreading quickly even without these sidekicks.
Various national regulations restrict cross boarder gambling. In Finland you are not allowed to advertise foreign gambling sites. Any popular joke or rumour reaches active users through peer to peer networks and internet discussion sites. How can you censor those? Google sells individually targeted global advertisements. How can any government stop this information flow and still hope to gain from global trade. No – it is inevitable that people interact and gamble globally.
International money transfers are easier than ever. SEPA unites EU. Paypal, Neteller and other global internet wallets spread quickly. Gambling sites promise to pay the winnings even through Visa as a form of return payment. A commonly used and trusted method will change attitudes quickly. I called a number of people to ask if this return payment method is in banking regulators control. How can they separate return payments from wages or winnings or money laundering? I got no answers.
Do not rely that your monopolies are safe because free international gambling would cause severe problems. Internet has caused all kinds of problems already and very little can be done about it. If one loophole is fixed globally, ten new emerge.
Each of you will face increasing international competition. Your global competitor can supply skill games, betting, recreational games and lottery. They can utilize people’s learning curves and international audiences. Their growth will be exponential due to learning curves, competitiveness and awareness each contributing.
So much about competition – you must be competitive to survive. Increasing number of the networked population will bypass current monopolies. We should now turn to another question – what new possibilities this globalized internet opens up?
Cost reduction is the easy answer. There are still a number of state lotteries that operate manually. Internet reduces your own work and your customers work. But let us go to a more fundamental level.
What do you actually sell? Many of your studies talk about hope for a better life, enjoyment, excitement. I admit Maslow is outdated. I would still rather use his categories than yours. We have cognitive needs, we need to belong to social groups, we need recognition and we wish to pursue things we are best at. Evolutionary psychology has recently opened many new explanations on our behaviour. Sometimes we are irrational just as Kahneman and Tversky proved. You have certainly pondered how human tendency towards risk aversion relates to gambling.
It is useful sometimes to assume that human beings are rational even when gambling. Let us see one example. Mister Looser just lost his job. He knows he will get a new job within three months. But now he has a problem. Unless he can pay eight thousand euros interest to the bank, they will recall his loan. His house will go to auction and he will most probably loose 50.000 euros due to bad timing of the auction. He has only seven thousand and he is unable to convince the bank. What would you do? Mister Looser gambles. He knows he has bad odds. The operator gives only 25% odds to double and 75% to loose each bet. His first bet is one thousand, next two thousand and last possibility is four thousand. He has almost 60% probability to win one and gain enough to pay the interest and save 50 thousand. There is only 40% probability of losing seven thousand. Gambling in this case is extremely rational.
Economists assume that the value of money is linear. To a great bank it clearly is. But individuals experience money as a stepwise function. If it is not enough to change your life, you can as well gamble it. If it is really necessary to maintain your existing lifestyle, you keep it yourself. And most people behave rationally. Wrong or partial explanations do not lead to optimal products.
You can study a similar phenomenon in the insurance business. It is a form of negative gambling. Operator takes 20% on the average. We know it is rational to take insurance against major events that could ruin us. Many people insure their travel luggage. That seems irrational. Perhaps they pay to maintain their peace of mind.
Let us take another viewpoint, which is clearly irrational. Ainslie talks about hyperbolic discounting. Very often people rather take half the prize now than full prize one or two years later. With education we overcome this natural behaviour in many situations. We start thinking like bankers and use exponential discounting. A lower goal remains a lower goal continuously even with high discounting rates. But with our natural hyperbolic discounting the value or motivation rises very sharply just when the reward is within reach. We take a piece of cake when offered even though we have decided to be on a diet. If you wish to manipulate people to spend more than they have decided to spend originally, you must have the prize very close within reach. In shops you see the tobacco usually immediately before the cashier. The betting must continue until the last minute. Immediate rewards increase gambling.
It is also true that we enjoy food more if we are hungry. We enjoy rewards more if they were uncertain. This is why people take on risky tasks. This is why it is boring to reach for easy goals. This is why many men enjoy challenging women. This also has clear connection to gambling and other forms of gaming.
Most physical games are a form of social interaction, almost like dancing. It is important to realize that different people may play the same game for very different reasons. There is an ill considered tendency to develop a separate product for each different motive. This way you will not create a socially interesting group. Games that are played for multiple different reasons have more rewarding interactions.
The father of digital cities, Dean Bill Mitchell told me how Hong Kong racetrack used to be famous for the important business deals. All important people attended. Melbourne Cup is still famous for the extravagant ladies hats. How can this kind of exiting multi-motive interaction emerge amongst online gamblers if not supported?
I was recently principal judge on a Finnish multimedia contest. I gave the award to Assembly – it is a yearly event that gathers thousands of teenagers to a great hall full of computers. For three days they play fast paced multi-user games with each other. Gathering to a great hall seems funny nowadays when networks reach everywhere. The tradition started when wide area networks were too slow for action games. But Assembly is going stronger than ever. Active gamers feel the need to meet each other physically even when they are addicted to internet games. Current internet gaming lacks many dimensions. Smell is one; those few thousand kids experience very strongly smells after playing, eating and sleeping for over 60 hours together.
Personally I do not attend internet gaming sites. My last poker game was 20 years ago. It was with my biggest customers. It was good money and a nice watch but I lost that customer. They never bought from me afterwards. I get easily addicted and I cannot stop until I get bored. I played computer adventure games with both of my kids until they were too old for playing. Since then I have tried two strategy games. Both times it took me about three months of hard work to learn how to beat the computer and only then I lost interest. Had it taken any longer, my wife would have lost interest in me. If I start competing with all the world’s best players it may be that I never stop learning and never get bored. Learning is one of the great motivators for novelty seekers. Novelty seeking is related to addiction, gambling and pioneering.
For the past years I have gambled with technology investments. More and more people use the stock market like an interactive game. I do not know if it is a game of luck or a game of skill. Statistically most chimpanzees win and most humans lose. Professionals beat the chimpanzees - it may be a game of skill; most people just have negative skill. Or it may be that the professionals have inside information. Stock market takes a minimal commission and statistically a random long term bet yields more than bank interest. Even lottery could be a game of skill if the commission was lower. Behavioural psychology combined with statistics will show how people select the lottery numbers and you can greatly increase your odds. This may be insider information if it is not available to all. Transparency is important.
In USA a new type of gambling has just been invented by prosper.com. If you need a loan and the banks will not trust you, you just post your life story to prosper.com. Ten thousands members may read your application and offer you a part of the loan. Somehow it resembles betting on horses. Winnings are not as big, but people make more money generally than on the stock market. Some lenders claim to feel addicted.
My basic message here: online gaming and gambling is not a fixed category. Human beings have many different needs. We have structured our physical world so that games and gambling are related to many of those needs. The Online world may find other structures. You create fulfilling online gaming communities only by servicing multiple needs simultaneously and allowing users to add value to each other. Gaming is not a zero sum game. The most successful games are positive sum games.
We may have astonishing potential here. Future computers can analyze our facial expressions; computers can analyze our game and assist us in our game. Simulation games can be great learning experiences. They can supply many interactions that people are used to in the real world. These kinds of games are easily skill games but they can be turned into games of luck with skill matching.
Games used to be a place for boys and girls to meet. First contact happens nowadays quite often in virtual reality, but not so often within a gaming platform. This is one human need that games can support in diverse ways. What if you arrange a game where potential couples get winnings if their physical gsm-coordinates converge? I proposed this mobile phone matching in 90’s to telecom-operators, but it is hard to initiate. Perhaps it would succeed much better when presented as a game.
Peer to peer –ideology is very important in this networked virtual world. People have so much to give to each other. If you think about recent great success stories online, you will find that each one relies heavily on user generated content: Amazon, eBay, Google, Linux, Wikipedia.
A number of Chinese fantasy warriors earn their living by selling heroes swords and other valuable fantasy tools to other gamers. Think about a game that could supply information for some real world needs. Betting is one potential example. Averaged independent guesses are generally better than a single expert guess.
Games of skill could have much to contribute socially. Just imagine people competing; who gives the best advice to fishermen, mushroom collectors or tourists? Gaming operator supplies ranking, betting and prizes. As a game it could draw a much wider user base than any other kind of service duo to multiple motivations. Commissions cannot be the only earning model in this kind of game.
I cannot believe that the division between skill games and games of luck remains. State lotteries get weaker if global competition penetrates their domain they are unable to offer a combination of services. Games of skill can create much stronger social bonding and much greater positive sum game effects if operated responsibly.
This is where I wish to end. In the future, internet gaming will resemble the most memorable and successful physical gaming arenas where different people come for different reasons. Some come to find a spouse, some to study human behaviour. Few come to chat with friends or listen to music and enjoy. Some might come to be seen and some for a round of serious gambling. Billions of people will attend virtual games as they attend the physical games of today. Thank you for your patience.