A long time ago, a mentor encouraged me to wake up earlier each day and spend some quiet time thinking about what’s going on in my life. While my job responsibilities and family were growing, my attention span was shrinking. I was becoming someone that life just “happened to.” I didn’t like it and he was tired of hearing me complain about it. So now I slow down a little each morning to thoughtfully consider my priorities and the bigger picture of life. It’s really helped me to prioritize my time (as well as remember all my kids’ names).
It’s harder to do this kind of thing at a business level, in high-tech. Outside of our traditional planning process, we have to purposefully build in moments to reflect. It’s even more intense in the gaming and graphics industry. Recently, I was talking with Chris Taylor and his team at Gas Powered Games, and we got onto the topic of how quickly, and dramatically, the industry has changed.
“It’s like one of those movies where the character wakes up and the whole world is different!” said Chris. It was a great analogy. I thought about Cillian Murphy’s character in the horror movie 28 Days Later, where he wakes up in a hospital to discover that a lab-created, zombie pandemic has been accidentally released on the world. His world “just happened” to him, and he didn’t have much “quiet time” to formulate a survival plan. It didn’t help that they were really fast zombies, unlike the lumbering kind I grew up watching. It was a worst-case-scenario of someone being surprised by changes in his environment. Not very fun.
While zombies aren’t chasing us (unless you are playing Left 4 Dead or Plants vs Zombies), a lot of things have been “unleashed” in the $60 billion gaming industry over the past few years. Each of the big three gaming consoles are now promoting gesture-control. Smartphones are becoming more computer-like and are now serious gaming platforms, with the majority of apps sold being games. In fact, the top ten bestselling apps on the iPhone in 2010 were ALL games. Pretty phenomenal when you consider that less than four years ago Apple was not considered a significant “player” in the games industry.
Meanwhile, the PC gaming platform is quickly evolving. Notebooks now out-ship desktop PCs, and game-capable PCs on the market outnumber the install-base of the PS2, PS3, Xbox 360 and Wii combined. As they become more affordable – and equipped with significantly improved, graphics capabilities built into the processor – this user-base lead will increase, driven by growth in new markets and geographies. PCs in general are morphing into different form factors, including netbooks, tablets, and media-centric designs. Developers are starting to riff on platform technologies -- like stereoscopic 3D, touch-screens, facial recognition, solid state drives, z-cameras, and wireless display connections -- to make games more immersive and fun. Soon it may be the norm for integrated cameras to map your face to your in-game character, mimicking your expressions in real-time, and games may not just sense and translate your motions, but also your emotions.
The gaming habits of young people has been a hot topic over the years, and one in which I am very interested. I have sons, and they all love videogames, so we are very mindful of the games they play (like most parents, we stick to ESRB guidelines) and how long they play them. But what I find equally interesting is the gaming habits of grown-ups. Based on a recent U.S.-based study done by the Entertainment Software Association, the average age of a gamer is thirty-four and 26% of people over the age of fifty play games. Additionally, 40% of gamers are female. Some of this demographics shift could be attributed to the explosion of casual and social network gaming. Facebook is now a legitimate gaming platform, with IGN estimating that Facebook games make more money than traditional videogames. Most of these games are very accessible to the mainstream and playable in “bite-sized” periods of time.
Digital distribution has surpassed retail as a viable channel to sell PC games, which has lowered barriers to entry in the market. A few of the traditional “big-budget” developers I’ve spoken with are shrinking development budgets for individual games, in favor of more nimble and creative projects to seek new markets. They are also targeting the PC so they can iterate quickly, hit a broad customer base, minimize costs, and more easily deliver content they – or their customers – can grow over time. A broad range of business models is playing out in the ~$13B PC gaming software industry, where developers can better monetize their games via subscriptions, in-game transactions, episodic purchases, free-to-play-then-upgrade/purchase, or direct sales from developers’ own sites to hundreds of millions of PC users worldwide. Minecraftis a great example. Developed by Markus Perrson, Minecraft has almost four million users with no publisher backing or advertising, and is sold directly from Markus’ site. That’s cool.
In a nutshell, it seems that the players, the games, the business models, the game delivery mechanisms, the platforms, the market size, and the way players interact with games have all changed. And through it all, the PC -- the most open and innovative of all the gaming platforms – is experiencing a renaissance. For imaginative companies who take the time to digest these changes, and apply the right ideas and business models, the games industry should be a playground of profitability. Those who don’t slow down to scan the environment, and adjust their strategies accordingly, may eventually feel like they woke up and the whole world has changed.
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