The market is in a curious, contradictory state.Going by Chart-Track numbers, the UK boxed market has just had its highest-grossing weekend ever, but not by selling the most games. More games were sold in the comparable 2010 week than the last.
So what’s going on? Games are doing better than ever – big brands are real money spinners – but there’s a deep contradiction in a market in the throes of a digital transition.
That uncertainty was prevalent at LGC last week, which invited thoughtful speakers from across the spectrum – retailer to developer, publisher to analyst – to step up and discuss the continued evolution of downloaded content in a hugely physical video games industry.
Now, a disclaimer of sorts: I’m a mite partial as I co-programmed LGC, so have an editorial view into the event. But giving someone a platform is only part of the job – it’s what they say on stage that matters most. And all speakers were preoccupied with one question: when will digital revenues outstrip boxed games?
Everyone had an opinion on when this will hit – it was a point of reference in talks from GameStop’s Mike Mauler and Sega’s John Clark, plus an analysis from Nick Parker. But while everyone is agreed broadly that it’s due in the next three or four years, when it comes to specific dates agreement is less consistent.
Even when we put the question to the audience and asked them to vote, answers varied wildly (14 per cent said 2013, 26 per cent said 2014, 19 per cent said 2015, 24 per cent said 2016, and 13 per cent said 2017 – just four per cent said 2012).
But the digital preoccupation created some misconceptions in the industry. Retail and hardware, for one, aren’t going to immediately evaporate as things like cloud gaming drift in – something EA Origin’s David DeMartini, a last-minute addition the bill, was quick to point out. Instead, DeMartini said the future for games lies in really understanding how to keep gamers engaged across devices: When designers can make games that truly cross platforms, customers will really warm to that.”
The opening keynote from Mauler was most plain about how some of the core parts of the trade aren’t going away: The old retail model is more important than ever. In the digital environment the model is the same: our job is to offer experience, excitement and recommendations. I’ve purchased scores of iPhone apps and deleted them 10 minutes later.”
Elsewhere, two audience-driven sessions provided genuine gasps and guffaws. These both used attendee voting on bold predictions.
The first was a list of eight companies caught in the digital transition – four winners, four losers, picked by commentator Nicholas Lovell, with a yes or no delegate vote after each. A majority of the verdicts were uniform between speaker and audience: thumbs up for Amazon, Gaikai and agile iPhone developers like Nimblebit, creator of Tiny Tower – and agreed scorn for Zynga.
Certain results make uncomfortable reading for some firms. Lovell said that games-only handhelds were set for extinction, and 82 per cent of the audience agreed. A similar vote predicted doom for THQ.The second voting session saw industry legend Ian Livingstone make bold predictions about ‘gaming in 2015′ and asked the audience to vote in agreement or disagreement. It was this lighthearted session (recapped in full belowt), which actually revealed the real contradictions going on in the games industry.
One example: Hardware is a mug’s game,” joked Livingstone, during a prediction that said companies like Nintendo will deploy protected IP like Mario onto iPhone eventually. But then he and the audience agreed Apple will probably launch its own video games home console.
So amongst it all perhaps the biggest lesson for the games industry, as it gets to grips with new digital models and works out which ones can and can’t be plugged into bricks and mortar, is this: the same rules still apply to video games – it’s just that there’s also a whole bunch of extra ones, too.
Revealing quotes from LGC’s top speakers
We are very bullish on the rapid growth of digital gaming and believe it is complementary to console. We see retail playing a key role in driving awareness and sales of digital gaming.”
Mike Mauler, GameStop
Launching a subscription MMO is statistically likely to fail. But the people who love what you do will spend a lot of money. The amount of money customers will spend with you is hugely encouraging.”
Nicholas Lovell, GamesBrief
We are moving from a linear industry. There are new business models. And every time a new content delivery method appears, a new business model appears. The more questions that you ask, the more questions that you get.”
John Clark, Sega
Only one part of this industry has got everything right, and that’s piracy. You should see piracy as competition. Piracy has made access to games very easy.”
Guillaume Rambourg, Good Old Games
We know already that users are resonating with the fact that the games console now goes beyond its usual remit.”
Robin Burrowes, Xbox Live
LIVINGSTONE PREDICTIONS SHOW INDUSTRY’S WEARINESS AND WONDER
One of the most popular sessions was a quick-fire audience voting slot hosted by Ian Livingstone.He put forward 16 predictions about gaming in 2015 and asked attendees to vote for or against them.Not all were serious but the answers reveal the mood amongst execs – the industry will never lose its cynicism about the media or politicans, but always has ambitions to grow.
By 2015 Ian predicted:
1. Entrepreneurs are too independent and strong-willed to respond well to central planning, so Peter Molyneux will leave Microsoft to set up a digital studio.” 83% AGREED
2. Android will beat iOS. Apple are fantastic at innovation but won’t win long term due to their commitment to a walled garden.” 55% AGREED
3. Education will embrace video gaming as an incredibly powerful and immersive form of empirical developmental learning. Games will be used in classrooms by 2015.” 51% AGREED
4. Mobile will become the biggest gaming platform. No video game release will be released without a strong mobile component.” 68% AGREED
5. Investors and financial institutions finally realise the economic value of the games industry, and banks will finally lend to games creators without asking for their houses as security.” 82% DISAGREED
6. The recommendations in the Next Gen report I co-authored will be implemented and computer science will be included in the National Curriculum.” 60% AGREED
7. Format holders will re-invent themselves to build generic entertainment devices streaming games and movies. Mario will appear on the iPad and Android devices.” 57% AGREED
8. HTML 5 will lead to truly platform agnostic, persistent service-based gaming, and games will need to be designed with a common UI.” 54% AGREED
9. There will be one single trade body for games.” 69% AGREED
10. The UK will have upgraded from 2MB to 2GB internet download speeds as standard.” 82% DISAGREED
11. Chinese publisher Ten Cent – which has a market cap bigger than all Western publishers put together – will buy Activision Blizzard.” 52% DISAGREED
12. Steve Jobs’ legacy will continue and Jonathan Ives will be asked to design a Apple iGames console.” 57% AGREED
13. Through investment and brand extension, Angry Birds will become a religion.”