|
|
|
The Growing Customization of Games Could Expand Revenue Opportunities April 28, 2005 With a new generation of console systems on the horizon, a competitive portable market and growing online connectivity, the interactive entertainment industry is getting ready to reinvent the way consumers buy and consume games. Historically, games have been shoehorned into a fairly limited business model, a consumer goes to a retail store and buys a game for a price generally between $20 and $50. This basic model is likely to remain for sometime, however, consumers will soon have a broad range of entirely new ways to enjoy interactive entertainment. This month we thought we would take a look at some of the ways games are evolving and how this evolution in gameplay is tailor-made for new business models. Games are dynamic and some of the best games allow users to build, create and modify their individual experience. This is a very different form of usage then with other types of media (movies, TV shows, books etc) where the content provider creates a product and the consumer passively enjoys the product. Of course, this would seem obvious and is why games are called “interactive entertainment.” However, it is important to understand the broad range in levels of interactivity. The game industry is clearly leading a broader media industry trend towards the ability of the consumer to create a completely customized experience. One way of looking at a number of individual trends in game development is what we call the rise of “play spaces”. In many ways it represents the culmination of the game value chain comprised of end-user technology, middleware, development experience, and general technologies. For the consumer, the play space concept means a widely different experience for each individual user. Games that fall into this category generally allow a user to play a game in a fairly straightforward A to Z experience. However, other users can branch off from the main game into a variety of optional experiences and increasingly products allow users to create their own experience in a way far different then what the designers intended. No longer are developers building games with a set genre, style of play, rules, or even narrative. Instead, we’re seeing a trend toward games that combine many genres, and wide-open play to create new hybrids where the player is embedded in an interactive “world” or “space” which houses within it a game or specific set of goals and outcomes that comprise a game like atmosphere. These spaces are enabled by the creation of highly defined 3D environments, a combination of gameplay mechanics, and if done right, incredibly sophisticated design and engineering. This is not a new trend and open-ended play has in fact been behind some of the most popular games of all-time. Furthermore, this is a trend that is spreading across all platforms and genres. The two most popular PSOne games of all-time, Final Fantasy VII and Gran Turismo, can be considered early examples of games that started to utilize the play space concept. FFVII was a fairly straightforward RPG, but it had an entire optional universe of arcade style mini-games and optional items that could be collected. Later Final Fantasy games added such features as optional tradable card collecting games. The Gran Turismo series is of course all about racing, but one of its primary features was the ability to establish a career and collect and customize a huge number of cars. Of course, the users that just wanted to get in and race could do so without any trouble. Sports games have followed a similar pattern where users that desire to do so now have increasing options to create and customize their own teams and leagues. The play space concept has not been limited simply to Sony products. Top Nintendo games like the Zelda and Pokemon series offer users the choice of either a straightforward adventure or the ability to extend that adventure by engaging in a wide variety of optional sidequests, many of which involve collecting a certain item that is otherwise completely useless in the game. Zelda games have increasingly added sidequests and mini-games within a game, while Pokemon titles are all about collecting and customizing ones own unique Pokemon collection. Other examples of titles that have utilized the play space concept to great success include the Grand Theft Auto series, The Sims, Neverwinter Nights, Half-Life, Shenmue for the Dreamcast and some of the top Xbox titles like Star Wars: Knights of the Old Republic and Fable. Breaking down these types of games and reinforcing them with some specific examples sheds more light on how the “play space” movement is reshaping gaming. However, the main theme is that games that utilize what we call play spaces tend to try and transcend or blend established genres. Grand Theft Auto is an adventure game, racing title, and third-person shooter. The user can go straight through a specific-mission based quest or spend time on optional activities like rampages, unique jumps, finding hidden packages, collecting cars etc. Star Wars: Knights of the Old Republic is primarily role-playing, but there are arcade sequences, a card game, and a shooter mini-game that are blended into the product. Furthermore, like another Xbox hit, Fable, users can choose to play the game as a good or bad character (dark or light side). Shemue was a story title first but there were games of chance, free-style fighting, timing games, and even racing as well. While NeverWinter Nights and Half-Life are easily classified as specific genres (RPG and FPS respectively) their engines can and have been applied to a number of different genres. The original Half-Life game has been turned into sports titles, racing games, fighting titles and more. Even Half-Life itself was praised for mixing first-person action with a compelling adventure style storyline. Going forward, a growing trend is likely to be play spaces that are increasingly modifiable. There is a direct correlation between the rise in play space style design and game mods. First, in order to truly create a wide-open space, developers must build very open-ended technologies that give them the capability to design such titles. Opening such engines to their user base tends to help sales, and as such allows the independent mod community to extend the play space at no major cost to the developer. Our feeling is that the thirst for larger play spaces will almost require user created content to be a key aspect of future titles. Otherwise the cost to build out large spaces could become too expensive. The play space concept is likely to get its biggest boost from the increasing number of systems that are always connected online. When most people think of large “worlds” or “spaces” in games they may think of large persistent online games like Everquest, World of Warcraft, and Ultima Online. However, as discussed above, the leading titles we see that represent the space are not necessarily massive online games or online at all. Play spaces are defined by their open-ended play and genre blending not by a specific breadth of world, interaction with others, or online play. At the same time MMOGs have unique potential to meld with the play space trend. A casual jaunt through many leading online games including the Sims Online shows that the play of many participants doesn’t always follow the hardcore designs of the game. For example, there is no specific role-playing in the Sims Online yet someone has created an entire mafia in the game world with its own specific culture, rules, and goals. In Ultima Online people have built real-estate empires and produced plays. This emergent style of play comes from the wide-open capability enabled by the interaction of players in the environment. It’s the house rules of the 21st century and it’s shaping design. Second Life, an online world even embraces the play space notion by selling not time, but real-estate to developers in its world. This real-estate can be used to create incredibly sophisticated worlds and games within them. By charging for the real-estate vs. time, Second Life takes on a sort of play space hosting business model, one that if it works could be copied by other online games. In some cases, it is debatable whether these play spaces are even games in the traditional sense. A theme that runs across several DFC Intelligence reports is that the emergence of games that are true play spaces redefines how interactive entertainment is viewed on a wide variety of fronts including development tools and costs, how developers think about design and traditional game genres, community building issues, licensing issues, in-game advertising, add-ons and of course almost all other emerging business models. We are not going to go into all of those issues this month. However, we would like to point out one of the numerous ways that the play space concept will expand the game industry via the “microtransaction” model. The whole idea of the micro-transaction is based on the concept of getting users to pay for individual game components. These could range from entirely new levels, down to unique characters, weapons, outfits, vehicles, music, background colors and so on. Obviously, this assumes an environment where each user is creating their own customized experience. Of course, as mentioned, not all users will want to create their own experience and will instead prefer a traditional A to Z game experience. The best games will accommodate these widely different usage patterns. The micro-transaction model is expected to explode as games systems go online. The leading console manufacturers have specifically said that they think micro-transactions will be a major part of the future console game experience and we agree. As the chart below shows, DFC Intelligence forecasts revenue from micro-transactions to reach $1.8 billion by 2009. As stressed, micro-transactions are just one way that the play space concept is expanding the concept of interactive entertainment. Many games could become more like software services with multiple recurring revenue streams. In short, changing game play habits and emerging distribution opportunities are going to change today’s game business far beyond what we are comfortable with today.
As part of our ongoing research efforts DFC Intelligence is delivering free monthly briefs on hot topics in the interactive entertainment and video game industry. You (or a colleague of yours) have signed up to receive these briefs. DFC Intelligence’s research services provide detailed strategic analysis of the interactive entertainment industry. A sample of reports on the video game and PC game market include: Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry Complete five-year forecasts for all individual console and portable game platforms by region (Asia, Europe, North America, rest of world)) through 2009. Also included are PC game forecasts and historical sales figures. The report has several scenarios for future market growth including an analysis and forecasts for new systems from Sony, Microsoft and Nintendo, as well as new portable game systems. The Business of Computer and Video Games This report includes an historical analysis, overview of individual hardware system, top-selling games, game genres, consumer demographics, business models, retailer profiles, marketing elements and case studies, industry trends. Market Leaders in the Video Game and Interactive Entertainment Industry This 750+ page report profiles major companies in the interactive entertainment industry. Each individual company report is about 25-50 pages and has an historical background, financial overview, product analysis and a frank assessment of the outlook for that company. The Online Game Market This 660 page report contains a comprehensive analysis of the online gaming market. Includes current sales trends, market forecast, and in-depth company profiles.
|
| ||||
