Cards Against Humanity: Giffen good?

It's rare, but sometimes the demand curve slopes up, the so-called Giffen Paradox. On Black Friday, the creators of the hilarious game Cards Against Humanity decided to raise their price by $5 from $25 to $30. On his Tumblr, creator Max Temkin recapped what happened:

We called our contact at Amazon and explained the idea for the sale to them. They thought it was funny but were also pretty annoyed - apparently monkeying with pricing on the biggest sales day of the year isn’t as funny to Amazon as it is to us.

Reception

The sale made people laugh, it was widely shared on Twitter and Tumblr, and it was the top post on Reddit. The press picked it up, and it was reported in The Guardian, USA Today, Polygon, BuzzFeed, All Things D, Chicagoist, and AdWeek. It was even the top comment onThe Wirecutter’s front page AMA, which had nothing to do with us.

I was pretty sure that our fans would be into the “$5 more” sale, but I had no idea that it would turn a day where we’d normally be totally overlooked into a huge press hit for the game.

Sales

So how did we do? A little better than last year. We kept our position as the best-selling toy or game on Amazon. My guess is that peoples’ buying decisions just weren’t that affected by $5.

The interesting thing to note is that we got a nice lift in our sales the day after Black Friday (“Regret Saturday”). That might be from people who were waiting to buy the game until it came back down in price, or, more likely, those are sales from people who heard about the game after our Black Friday press. Not bad for an ad that paid us to run it.

When they say any PR is good PR, what they mean is that sometimes it's good to just break through the noise, regardless of why, especially if you're a smaller player. In those cases, the economic benefits from increased awareness outweigh any downward sales pressure from the negative PR since not enough people know about you anyhow.

In this case, it worked even better because Cards Against Humanity is already a subversive brand. It's not for nothing their tagline is “a party game for horrible people.” While I don't think this would hold in the long run, it was a fun one-day stunt on a day that was otherwise a torrent of deal spam and indignant tweets complaining about the commercialization of all that is sacred.

The addictive power of first-person shooters

What is it that has made this type of game such a success? It’s not simply the first-person perspective, the three-dimensionality, the violence, or the escape. These are features of many video games today. But the first-person shooter combines them in a distinct way: a virtual environment that maximizes a player’s potential to attain a state that the psychologist Mihaly Csikszentmihalyi calls “flow”—a condition of absolute presence and happiness.

“Flow,” writes Csikszentmihalyi, “is the kind of feeling after which one nostalgically says: ‘that was fun,’ or ‘that was enjoyable.’ ” Put another way, it’s when the rest of the world simply falls away. According to Csikszentmihalyi, flow is mostly likely to occur during play, whether it’s a gambling bout, a chess match, or a hike in the mountains. Attaining it requires a good match between someone’s skills and the challenges that she faces, an environment where personal identity becomes subsumed in the game and the player attains a strong feeling of control. Flow eventually becomes self-reinforcing: the feeling itself inspires you to keep returning to the activity that caused it.

As it turns out, first-person shooters create precisely this type of absorbing experience. “Video games are essentially about decision-making,” Lennart Nacke, the director of the Games and Media Entertainment Research Laboratory at the University of Ontario Institute of Technology, told me. “First-person shooters put these tasks on speed. What might be a very simple decision if you have all the time in the world becomes much more attractive and complex when you have to do it split second.” The more realistic the game becomes—technological advances have made the original Doom seem quaint compared with newer war simulators, like the Call of Duty and the Battlefield series—the easier it is to lose your own identity in it.

It isn’t just the first-person experience that helps to create flow; it’s also the shooting. “This deviation from our regular life, the visceral situations we don’t normally have,” Nacke says, “make first-person shooters particularly compelling.” It’s not that we necessarily want to be violent in real life; rather, it’s that we have pent-up emotions and impulses that need to be vented. “If you look at it in terms of our evolution, most of us have office jobs. We’re in front of the computer all day. We don’t have to go out and fight a tiger or a bear to find our dinner. But it’s still hardwired in humans. Our brain craves this kind of interaction, our brain wants to be stimulated. We miss this adrenaline-generating decision-making.”

Maria Konnikova in The New Yorker on the potent grip of first-person shooters. More than casual games which are about problem solving, first-person shooters generate an engagement flow that act on the mind like a drug. That sense of complete control over your environment grants the player a feeling of God-like ability, and damn does it feel good.

More than that, it might be good for you.

Far from isolating us in a virtual world of violence and gore, first-person shooters can create a sense of community and solidarity that some people may be unable to find in their day-to-day lives—and a sense of effectiveness and control that may, in turn, spill over into non-virtual life. In 2009, the psychologist Leonard Reinecke discovered that video games were a surprisingly effective way to combat stress, fatigue, and depression—this proved true for many of the same titles that critics once worried would be isolating, and would negative impact on individual well-being and on society as a whole. In other words, the success of Doom and the games that have followed in its footsteps haven’t sentenced us to a world of violence. On the contrary: for all of their virtual gore, they may, ironically, hold one possible road map for a happier, more fulfilling and more engaged way of life.

I've felt flow most powerfully in a few situations. One is playing videogames, and now that I think about it, they all were first-person shooters. Another is playing non-video games, like poker or blackjack or mah joong, regardless of whether at a casino or at home. Lots of frequent decisions, very immediate feedback on the results. And lastly, it's when I'm editing either video or photos, but especially video as you close in on that final cut that just works. Closing in on final cut feels like you're racing towards solving a mystery, it must be what Sherlock Holmes feels as a mystery unravels into a coherent narrative in his mind.

When I'm in flow, I don't feel tired, I lose all track of time, and I feel as if I could continue indefinitely. Usually it's only the physical discomfort of sitting for such a long period of time that ultimately forces a stop. Is it possible to harness flow in more parts of our life, or are those too devoid of that constant stream of decisions which we fully control?

What is Cicada 3301?

Sleepily – it was late, and he had work in the morning – Eriksson thought he’d try his luck decoding the message from "3301”. After only a few minutes work he’d got somewhere: a reference to "Tiberius Claudius Caesar” and a line of meaningless letters. Joel deduced it might be an embedded "Caesar cipher” – an encryption technique named after Julius Caesar, who used it in private correspondence. It replaces characters by a letter a certain number of positions down the alphabet. As Claudius was the fourth emperor, it suggested "four” might be important – and lo, within minutes, Eriksson found another web address buried in the image’s code.

Feeling satisfied, he clicked the link.

It was a picture of a duck with the message: "Woops! Just decoys this way. Looks like you can’t guess how to get the message out.”

"If something is too easy or too routine, I quickly lose interest,” says Eriksson. "But it seemed like the challenge was a bit harder than a Caesar cipher after all. I was hooked.”

Eriksson didn’t realise it then, but he was embarking on one of the internet’s most enduring puzzles; a scavenger hunt that has led thousands of competitors across the web, down telephone lines, out to several physical locations around the globe, and into unchartered areas of the "darknet”. So far, the hunt has required a knowledge of number theory, philosophy and classical music. An interest in both cyberpunk literature and the Victorian occult has also come in handy as has an understanding of Mayan numerology.

A gripping tale of a mysterious puzzle posted online. By whom? And for those who solve the puzzles, what awaits?

Let's hope this isn't a promotion for the next Dan Brown novel.

Adventures in teaching self-driving cars

For complicated moves like that, Thrun’s team often started with machine learning, then reinforced it with rule-based programming—a superego to control the id. They had the car teach itself to read street signs, for instance, but they underscored that knowledge with specific instructions: “stop” means stop. If the car still had trouble, they’d download the sensor data, replay it on the computer, and fine-tune the response. Other times, they’d run simulations based on accidents documented by the National Highway Traffic Safety Administration. A mattress falls from the back of a truck. Should the car swerve to avoid it or plow ahead? How much advance warning does it need? What if a cat runs into the road? A deer? A child? These were moral questions as well as mechanical ones, and engineers had never had to answer them before. The darpa cars didn’t even bother to distinguish between road signs and pedestrians—or “organics,” as engineers sometimes call them. They still thought like machines.

Four-way stops were a good example. Most drivers don’t just sit and wait their turn. They nose into the intersection, nudging ahead while the previous car is still passing through. The Google car didn’t do that. Being a law-abiding robot, it waited until the crossing was completely clear—and promptly lost its place in line. “The nudging is a kind of communication,” Thrun told me. “It tells people that it’s your turn. The same thing with lane changes: if you start to pull into a gap and the driver in that lane moves forward, he’s giving you a clear no. If he pulls back, it’s a yes. The car has to learn that language.”

From Burkhard Bilger's New Yorker piece on Google's self-driving car. The engineering issues they've had to deal with are fascinating.

As many have noted, legal or regulatory risk may be the largest obstacle to seeing self-driving cars on our roads in volume. To counter that, I hypothesize that all self-driving will ship with a black box, like airplanes, and that all the cameras will record a continuous feed of video, that keeps overwriting itself, maybe a loop of the most recent 30 minutes of driving at all times, along with key sensor readings. That way if someone sees the self-driving sensor on a car they can't just back into the self-driving car or hurtle themselves across a windshield just to get a big settlement from Google.

In fact, as sensors and video recording devices come down in cost, it may become law that all cars come with such accessories, self-driving or not, making it much easier to determine fault in car accidents. The same cost/weight improvements in video tech may make it so Amazon drones are also equipped with a continuously recording video camera, the better for determining who may have brought it down with a rock to steal its payload.

Perhaps Google will take the continuous video feeds as a crowd-sourced way to update its street maps. That leads, of course, to the obvious drawback to such a scenario, the privacy concerns over how Google would use the data and video from the cars. That's a cultural issue and seems more tenable than the legal one, however.

The Information's pricing model

Jessica Lessin and her team launched The Information this week, “a subscription publication for professionals who need the inside scoop on technology news and trends”.

All the buzz was about the site's pricing model and not the content. At $39 a month of $399 a year, it's much pricier than other technology news sites, most of which are entirely free and ad-supported. When I first heard the price point I thought it was crazy.

But after hearing more about the service and visiting the site, I realized it wasn't that crazy after all. What Lessin and team faced was a classic pricing problem, when you have one set of customers who will pay a lot for your service and many more who won't pay nearly that much.

The ideal scenario in such cases is to try and charge the customers who are willing to pay more a higher price while charging all the other customers exactly the maximum they're willing to pay also. When you can charge every potential customer the reservation price each of them is willing to pay, you've achieved first degree price discrimination, the holy grail of pricing. You've achieved maximum profit.

In reality, that's nearly impossible. The best most businesses can do is some form of segmentation of their customer base into different payment classes. Airlines are one example of a company that do a decent job of segmentation, and they do so by all sorts of methods. They split their seats into First/Business/Economy classes to try to grab money from price insensitive wealthy travelers (some are just plain rich, others pass through the bill on company expense reports). They also charge different prices depending on whether your trip has a Saturday night layover, or how late in the game you purchase your ticket. All these are methods of trying to segment out business travelers to capture more revenue from them.

Another example is with high end software. To take one example, when I was growing up, Adobe Photoshop cost $1000. While it was very useful software, for most people, including myself as just a student, that's a crazy price, far greater than the software itself was worth to me. But for a select set of customers, graphics professionals who used Photoshop every day in their professional life, $1000 was nothing. Those people probably would have paid more than that, actually, since it was critical to their livelihood.

Adobe was faced with a difficult problem: how could they segment out these groups of customers? They never came up with a perfect solution, so they basically picked a price that was geared more towards professionals. Other users were left to try to borrow a copy from work or a friend, or in many cases to pirate a copy to use. Of course many software companies offer educational discounts to try to segment out cash poor students, but even with an educational discount Photoshop was still over $200, even for an upgrade.

Later on Adobe tried to release a much lesser featured version of Photoshop called Photoshop Elements that they sold for a far lower price, at retail it ran anywhere from $30 to $50, but most often it was just thrown in when you purchased a digital camera or printer. As far as I can remember it never really took off.

Which brings us back to The Information. Lessin and her small team could have tried to support itself with ads, but that would mean bringing on ad sales people and spending time trying to drum up enough eyeballs on a daily basis to make the site an attractive advertising destination. It's not as if the tech coverage cupboard is barren.

Alternatively, they could focus on a much smaller audience, but one that could cover all of their expenses with subscription revenue. I'm guessing that, as with Adobe and Photoshop, The Information didn't feel like they had a much larger audience that they charge a much lower fee, say $5 a month, to be worth trying to segment that group out. Regardless, It's not really clear how a news site can easily segment out its user base the way an airline can.

Usually, if you hear a price point and it sounds crazy, it's not for you. Think $5,000 reports from investment banks or Gartner/Forrester. Netjets subscriptions. Courtside seats to Lakers games. That $8,000 bottle of Screaming Eagle on the restaurant wine list. The $1000 omelette at Norma's. Fine art. It's no different with The Information, albeit at a much lower price point. I haven't read any of their articles yet and have no opinion on whether they'll make it or not, but the math, based on the size of their team, doesn't indicate that they'll need an outlandish number of subscriptions to make it a profitable or at the low end a good lifestyle business.

The bright side, for those who do subscribe, is that since The Information's business model is not built around page views and display ad CPMs, readers shouldn't encounter annoying content packaging like slideshows or articles split across a gazillion pages with ad banners on every page.