This week I'm out in Las Vegas with Patrick covering the grand-daddy of all industry trade shows -- the Consumer Electronics Show (CES). It's an amazing spectacle to behold and it's impossible to even begin to summarize all the great gadgets I'm seeing and issue panels that I'm covering. But over the next few days I'll try to share a few highlights.
Although things really don't get into full swing until Monday morning of the event, Sunday featured several panel discussions about the future of the gaming industry. Faithful readers will recall my love of video games and my many columns on gaming issues.
I attended 5 different panel discussions. The first two proved the most interesting to me. They were entitled "Broadband Games Expand: From Casual to the Networked PC Universe" and "Entertainment as Franchise: Games Cross over into Music, TV, Cable, Movies, Mobile, Advertainment & Custom Branded Experience." The other panels were on massive, multiplayer online games, mobile gaming, and cross-platform branding / advertsing. Here are few highlights:
- We all know that video games have engendered a great deal of controversy, especially those featuring violent content. But both Steve Parkis of Disney and Tommy Tallarico a video game music composer and co-founder of the "Video Games Live" concert event noted that we are rapidly getting to the point where today's parents are gamers too. Thirty-something parents (like me!) were part of the first major generation of gamers ("the Atari 2600" generation") and now are raising third generation gamers (XBOX, PS3, Wii, etc). As a result, Parkis and Tallarico believed that games are becoming more mainstream and may become the dominant entertainment medium of choice for our generation. This, of course, could alter the nature and intensity of public policy debates over the impact of games on society.
- The second panel featured a "predict the future" discussion and several panelists agreed that 2007 would see a massive explosion of online gaming. Panelists disagreed about which platform would dominate this online growth with some saying Xbox 360 would lead while others thought Nintendo would take over the top spot. Chris DiCesare of the Microsoft gaming division and a leader in of Xbox Live Marketplace development, argued that consumers want to download high-definition content of all sorts directly to living room via their gaming consoles. He noted that Microsoft is currently the #1 distributor of high-def content via their Xbox Live Marketplace. MS already has 6 million subscribers who download movies, TV shows and games in high-def. (I am one of them and I love it! I've found the quality of high-def movie downloads via my Xbox to be on par with the 360's HD-DVD player and the Blu-Ray player on my PS3).
- Matt Ringel, who runs the "World Series of Video Games" noted that video games are becoming a spectator sport. He said that the gaming events he hosts around the country average 13,000 attendees and noted more people tuning into gaming competitions when they are broadcast on TV. (Incidentally, the World Series of Video Games was taking place at the same time in the Convention Center and I was terribly tempted to just go hang out over there all day!) Ringel also predicted that video games will be part of the 2008 Olympics, at least as an exhibition sport! Chris DiCesare of Microsoft agreed that gaming could become a popular spectator sport in the future. He noted that five years ago no one would have thought poker would become the wildly successful television spectacle, but it's now all over cable TV. Personally, I'm a bit skeptical that games will become a spectator sport because many of them are just not going to be understood by a mass audience. While I can see many people watching and enjoying a "Madden 07" competition or "Gran Turismo" racing tournament, I doubt the same could be said of a Qwake or Halo tournament. But you never know.
- There was also a lot of discussion about future advertising business models for the gaming industry and the pros-and-cons of in-game advertising in particular. Several panelists noted that gaming models were still evolving and that there is no single secret to success (other that making really great games, of course!) Some expressed concern about the increasing use of in-game product placement advertising models, but Jamie Berger [not sure who he was with] pointed out that it's unlikely that in-game advertising will get totally out of control because game developers know they will lose too many customers if that happens. He and others also pointed out that gaming product placement advertising models will likely be modeled after real-world product placement strategies. For example, sports games -- like their real-world counterparts -- are more likely to feature a lot of ads on billboards around a stadium, race track or boxing ring. In fact, if you don't have ads on a race car or boxing ring in a video game, it just doesn't look like the real thing. But others argued that as major media companies enter the gaming space, in-game advertising might increase and change, especially for massive, multiplayer online environments.
- Both panels (and one that followed later in the day) featured a great deal of discussion about the increasing intersection of games and movies and wondered what the future holds. Several panelists noted that a good movie title will not guarantee a successful video game title; you need good gameplay as well. Tommy Tallarico argued that movie studio and game developer cooperation is key to successful movie-to-game or game-to-movie crossovers. But Jamie Berger noted that often doesn't work because movie studio guys don't trust the game guys and the game guys don't trust the studio guys. Regardless, Berger and several other panelists said we are likely to see more studio-developer partnerships in coming years because developing products is increasingly expensive. Berger said it costs at least $10 million plus to develop a good game and other said it often costs much more than that. Steven Canepa, the moderator of the panel on massive, multiplayer online gaming, noted that gamers are now more dependent upon generating revenues from a few big hits to make up for many clunkers they also producers. In this sense, the game industry is following in the footsteps of the movie, television and record industry, who all rely on a "big hits" revenue generation model. This is likely to drive greater video game industry consolidation, some suggested. But others said it was still very much a "mom-and-pop" industry and that entry was still relatively easy (even is success was not).
- Cross-platform gaming and gaming portability was a major theme heard on all the panels. Chris Early of Microsoft noted that many developers are trying to spread their products across multiple platforms and allow users to port their online identities across platforms as well. But Early pointed out that this is sometimes difficult because not all platforms are interoperable and international differences (both cultural and technical) also create problems. But Doug Geiger of IBM argued that, despite these problems, platforms will continue to converge and become more interoperable since gamers want to play wherever they are, whenever they want, however they want.
- Interestingly, in the panel on massive, multiplayer online gaming, most of the panelists agreed that, despite all the attention is has been receiving, "Second Life" is "no big deal" or was "just a nice story" because the game (a) does not have nearly as many users as other online games and (b) it doesn't generate as much revenue for its parent company as other online games do. With all the talk about Second Life in the press these days, I expected the panelists would think it was a bigger deal. Of course, all these panelists work for competing companies, so perhaps they were a bit jealous SL getting all the good press!
- During this online gaming panel, there was an interesting question from the audience about who owns the intellectual property within online worlds. The panelists seemed to agree that everything that happens within the online games they create was their intellectual property. I wondered about that in light of some of the recent debates taking place in the Second Life world, but I didn't get chance to ask the panel a follow-up question on this point.
(Stay tuned, more CES dispatches to come. Bill Gates speaks tonight. I'm sure Patrick or I will have something to say about his remarks.)