I feel like a teenager again. I’m not bouncing with hormones of course, but am rattled by uncertainty as to what the future will bring. As a consultant it would be sensible to feign deep knowledge of the road ahead, but I’d be lying if I said I could quantify the future shape of revenue sources with any certainty.
First of all, there are outside forces impacting on the way gamers play. Anything portable which provides multimedia – such as mobile phones, laptops and pads – has disrupted the traditional hardware eco-system.
These devices provide a flirty casual gaming experience, but not the traditional core game.
Worse still, they offer services which are eating into core gaming time such as MSN, Facebook, Twitter and SMS, so unlike consoles, they are not so much destination gaming event services, but offer games to kill time when not absorbed in their other functionality. More tweens and teenagers are on MSN and Facebook playing social games than they are playing core games, which they would have been five years ago – or even up to the golden year of gaming in 2008.
In the future, these new avenues are likely to change our free time habits and present opportunities to make revenues. But as fast as they came along, they could be threatened by other new entrants.
SWINGS AND ROUNDABOUTS
We have learned that waves of popularity can rise and recede within one year, rather than five for traditional console lifecycles. Developers have to be quick to respond to new online platforms like XBLA or social networks before they become jammed with content.
So what is the next wave and how do I know when it’s coming? Well, there’s a whole list of potential out there. Location based gaming, portable social network gaming, 3D, digital distribution, TV STB and virtual world all trip off the tongue but there’s always going to be someone who gets there before you, whenever ‘there’ arrives.
Notice I haven’t mentioned packaged goods. Two reasons: one, because external, non-publisher investment in this cost heavy value chain is in single figures as a percentage of all new games investment.
Secondly, new developers who are fleet of foot can access the gamer more efficiently with the direct-to-market model.
Thus we have two separate gene pools working in parallel but not crossing over, apart from a few exceptions. The stars in the packaged goods sector are often unknown and irrelevant to the community within the online sector, while most European publishers avoid even discussing a new world of games without a box.
THE FUTURE OF THE BOX
Is there any certainty in packaged goods? PSP2 dev kits are out there and 3DS is on the horizon, but long-term console strategies of the three major manufacturers are still unclear. We shall never return to the heights of 2008, but 2014 and 2015 could see new growth spurts for the High Street. By then, however, there could be a new platform to turn everything upside down in another ‘iTunes moment’.
In cash terms, the packaged goods sector is still the most important, and will be in the short to medium term as core gamers need heavyweight, immersive games.
It’s casual gamers who are in the donut surrounding the core gamers, and these are deserting to new, cheaper or free experiences and are starting to take core gamers with them.
You see – it’s not so easy divining the future of gaming on any format. There are developments still to come. The signposts at these crossroads we find ourselves have not been written for a number of the roads we can take. At this stage, I can at least define the shape of the sales curves – if not always their exact size – and take a pretty considered shot at what will provide longer term wealth for us all.
* Nick Parker is the founding partner of Parker Consulting, the industry’s foremost advisor in strategic planning, business intelligence and research. Contact firstname.lastname@example.org