Sunday, March 02, 2008

Game Developers Conference 2008 Review

The Game Developers Conference in San Francisco traditionally has been about equipping developers with the tools to make better video games. But this week, less than a year after the E3 video game conference scaled back its show substantially, the developers conference has grown beyond its original mission. It's become a showcase for games and a chance to make some news.

And news it was; RealNetworks (RNWK) has acquired Macrovision's (MVSN) games DRM unit, Trymedia, for USD4m. Macrovision, which develops DRM technology, announced it was selling its loss-making games business Feb 21, without disclosing the name of the buyer. The company acquired Trymedia for USD34m in 2005 from Intel Capital. This is Macrovision's second divestment this year. Last month, it sold its software arm for USD200m. The unit, which licenses programs such as InstallShield, was acquired by private equity firm Thoma Cressey Bravo in a deal due to close in April. Macrovision says that its games and software units suffered combined losses of nearly last year. Overall, the company's net income fell to USD9.2m in 2007 from USD16.6m the year before.

Nintendo (NTDOY.PK) announced that it will ship a new exercise product on May 19 in the U.S. called Wii Fit that comes with a weight-and-motion sensing device called the Wii Balance Board. WildTangent unveiled its own program, the WildTangent Orb, for distributing games over the Internet to computers with Microsoft (MSFT) Windows. WildTangent for years has delivered simple "casual" games to PCs through a program that comes installed on more than 25 million new PCs sold each year by Dell (DELL), Hewlett-Packard (HPQ) and others. Alex St. John, CEO of WildTangent, says its new software will enable users to play more sophisticated console games on PCs, and the company has deals to distribute console titles from publishers THQ Inc. and Sierra Online, owned by the games unit of Vivendi SA (VIVEF.PK).

And then the internet got loaded with stories, some real basic reports and other stories very interesting, like GDC 2008: The Future of MMOs; Portal: 'A Mean Storytelling Machine' (FUN!); MTV blog; GDC roundup 2008; GDC Mobile 2008: Tetris - Best Or Worst Mobile Game Ever?

Among the notable developments and updates from the show: Nokia (NOK) trumpets mobile gaming: The world's largest cell phone manufacturer used the conference to talk up its new mobile gaming platform, N-Gage, which is set to get rolling in the coming weeks. Nokia Executive Vice President Anssi Vanjoki delivered a speech touting the future of mobile games. The company also provided an early look at the First Access online service, a new gaming store and community feature on N-Gage-enabled phones that will allow players to purchase titles, rate them and get game reviews. About 30,000 people have downloaded the First Access beta since it became available to N81 uses on Feb. 4. The N-Gage platform will allow developers to write a game once that will appear on a number of handsets, eliminating the need for porting the game. Combined with the powerful N-series phones, Nokia is betting it can propel mobile gaming beyond simple puzzles and primitive games. Nokia showed a bunch of cool mobile games at its booth from partners like Gameloft, Glu, THQ Wireless and others. One title to watch: fighting game One from Digital Legends.

World Gaming lets console players play for money: World Gaming, a Toronto outfit, is bringing together video games, online betting and social networking into one site. Members of Worldgaming.com will be able to find matches and create cash games with other console players online. There are a few other web sites doing something similar, but World Gaming is the first, they say, to incorporate automated scoring so participants won't be able to weasel out of bets by reporting conflicting results. World Gaming receives the live results from game servers supporting Sony's (SNE) PlayStation 3 and Xbox 360 titles like Madden NFL, Halo and Resistance: Fall of Man. Players will be able to play for $5 and up, with World Gaming getting a 10 percent cut capped at $25 per match. The site also offers social-networking tools so gamers can meet up, check each other's profiles out and lay down challenges. The community also will help police members who cheat or don't behave themselves online. The service goes live in April.

Electronic Arts (ERTS) announced an invitation to participate in a special closed beta at The Sims Carnival[TM], a new online community and gaming experience from The Sims[TM] studio. An innovative online destination, TheSimsCarnival.com empowers members to play, create and share casual games within an online community. With the launch of TheSimsCarnival.com, hundreds of games will be available to play and as members create and contribute games this number will grow. The online community is made to be collaborative, so that designing games becomes a fun and shared creative process. To design games, TheSimsCarnival.com provides game creation tools for a range of user skill sets so that millions of players can become game designers with no prior programming abilities necessary. TheSimsCarnival.com will be available to the public online in spring 2008.

Nokia and PopCap Games will bring connected mobile Java games to the SNAP Mobile platform. The award winning Chuzzle is the first game to be re-developed by PopCap under a multi-game agreement. The multiplayer version of Chuzzle will feature community offerings, including chat, leader boards, and more. The original single player version of Chuzzle, which was named ‘Casual Game of the Year’ in 2005 by Billboard’s Digital Entertainment & Media Excellence Awards, is expected to be available on a variety of mobile devices powered by SNAP Mobile by the end of 2008.

What did we hear a lot? Casual gaming could one day be a BIGGER business than 'hardcore' games, forcing these titles into the niche category (read this).

Personally, I always wonderered when and where, but I admit that casual gaming is on the right track and now we only have to find good business models that will generate as much revenue as the hardcore games do! Having said that, it's important to point out that casual-gaming software already brings in significant revenue. The Casual Games Association [CGA] recently published a report updating its look into the casual market. It used data culled directly from game creators and vendors, as well as Pearl Research and Screen Digest. According to the results, the CGA found that the casual market brings in $2.25 billion a year and is currently growing at a clip of 20 percent annually.

According to Microsoft, the average Xbox online gamer is male and age 28. By contrast, CGA found that the online audience for casual games is nearly evenly split along gender lines (48 percent male and 52 percent female)—and is more than 200 million strong. Surprisingly, the report also found that men are a bit more frugal when it comes to actual purchasing power: The numbers showed that women make up 74 percent of paying casual gamers. According to the report, the most popular casual games are Solitaire, Tetris, Bejeweled, Diner Dash, the QQ Games Collection, and Mystery Case Files.

Various analysts who cover the gaming space say that the overall revenue brought in from computer video games worldwide was just north of $35 billion in 2007, with about $15 billion coming from the U.S. market alone. Many predict that it could grow to become a $50 billion worldwide market by 2011. Also, according to Strategy Analytics, revenue for the online gaming market in 2006 was $3.8 billion, and this is expected to triple by 2011. By comparison, the entire movie industry saw worldwide revenues of around $25 billion in 2007.

As you can see from the numbers above, the casual-gaming market is still a small percentage of the overall video game market. There was a lot of discussion at GDC about the need for programmers who could be tapped to create simpler, less graphics-intensive casual games. It turns out that most of the serious game developers have focused on creating games with sophisticated, intense graphics, and they're not thrilled about the prospect of being "demoted" to casual games. In fact, one game executive told me that the lack of creative programmers who could develop innovative casual games could be the one thing that keeps the casual-gaming space from growing rapidly.

That said, one cannot help but realize that more and more people are getting into games. For the longest time, the computer industry looked at gaming as a niche segment, but they're finally seeing it as more of a mainstream entertainment activity on a par with watching television. That's a big change and one that could, from a sociological standpoint, have an impact on both the TV and movie markets and, to some degree, even sports.

One of Creative Strategies' research projects found that "millennials"--kids and young adults ages 14 to 24--spend 30 percent of their entertainment time playing video games. This age group has already adopted gaming into their free time, which, of course, takes them away from TV, movies, and watching or participating in sports. Gen Xers and even early baby boomers have started playing computer games as well, albeit mostly casual games, and it's likely that their time spent gaming will increase.

If you add casual games to the mobile phone space, the market for casual gaming is set to explode. According to Juniper Research, the global mobile gaming market is poised to grow from $3 billion in 2006 to $17 billion by 2011.

All of this information points to a major shift in gaming, as casual games become more broadly accepted by users of all age demographics. Up until now, most of the gaming market's growth has come from young males who have demanded high-end, realistic, 3D game systems and software. While these systems and games will still be a major part of the industry, it appears that casual gaming is ready to develop into an even more important part of the gaming marketplace, and in the process, become a larger part of people's personal entertainment experience.

I think that Gabe Zichermann did a nice job with his speech, "So who is the casual gamer?" The stereotype is old, retired, middle-to-low-income women – or some combination of the above factors. In fact, statistically, few of these factors even in isolation represent a majority of the audience. By focusing on this narrow demographic range, the industry tends to ignore wide swaths of a potential audience – in particular, under-twelves; youths from 13-24, and men from 18-34. All of these audiences have been poorly served by casual games, with established TV brands “way ahead of where we are” in the children’s market. Read more here.

So that’s it. I hope you enjoyed this and give me some feedback on your thoughts and experiences. Surely, I hope that these kind of conferences will keep in mind that becoming too big means also means less personal. Also remember the “D” in the name; Development. I think GDC is too much about console and TOP stories. The smaller developers, especially the smaller casual game developers, do find themselves in positions where their business is not that significant compared to the more hardcore. Still, I believe in concepts. So that’s why I am ending with the first line of this post.

The Game Developers Conference in San Francisco traditionally has been about equipping developers with the tools to make better video games. But this week, less than a year after the E3 video game conference scaled back its show substantially, the developers conference has grown beyond its original mission. It's become a showcase for games and a chance to make some news.

via Reinout te Brake Seeking Alpha

Jason Kiwaluk

Mower & Shoveller,

Ideation | Ecommerce | Fintech | Innovation | Strategy | Opinionated Agitator RevenueWire,FuturePay+PayMotion

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