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What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
What’s Next with Games - Trip Hawkins: NGDC 2012
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What’s Next with Games - Trip Hawkins: NGDC 2012

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What’s Next with Games - Trip Hawkins: NGDC 2012

What’s Next with Games - Trip Hawkins: NGDC 2012

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  1. What’s Next with Games Trip Hawkins 1
  2. Outline• Trends • Strong long-term macros; but current issues • Social product disruption • Game leadership is open • Convenience and the browser• Big Issues • Discovery cost • Key is LCV (Lifetime Customer Value) • Shift from Distribution to Discovery model• Opportunities 2
  3. Beyond the Issues: Long-Term Upside 1. Billions of gamers 2. Billions of devices 3. Leverage of Social, F2P 4. Upside of virtual goods economies But Big Current Issues 1. Value chain tough on content (+services, tech) 2. Platform tweener recession 3. Struggling leaders (Sony? FB vs FV? EA? ) Confidential 3
  4. Leadership Openings 1. Mobile F2P “Freemium” games 2. Tablet games 3. Browser games (PC, tablet, smartphone, TV) 4. Cross-platform games 5. Interoperable games 6. The science of virtual goods 7. Gamification 8. Global leadershipConfidential 4
  5. Era of Convenience• Disruptive Product Theory• Social = the new benefit• Trading performance for convenience• Film, music, voice, news, software• Games! 5
  6. Cross-Platform Destiny 6
  7. Convenient Games • Gamers are growing up, busy • Short sessions, 24x7 • Multiple access points, screen sizes • Wolves go where the sheep are • “Casual mastery” • Fantasy Sports evidence • Migrating whalesConfidential 7
  8. The Dolphin Market • Dolphins are “streamlined” whales • Curious and intelligent • Love to play, social • Happy to play with friends and strangers • Prefer casual, short sessions • Highly competitive “carnivores” • Echolocation = the first wireless network • Whales are in fact, really big dolphinsConfidential 8
  9. What Form Will it Take? • Free to Play • Social • Virtual Goods • “Trip to Vegas” • Cloud-based • Apps “craze” today • Evolving towards browserConfidential 9
  10. Evercore/Gartner Forecast• Console/PC was $50B in 2007• Global game industry $50B in 2011• Console/PC declines from $35B to $15B• Global game industry $115B in 2017• Social/mobile grows to $100B• Sony, Nintendo, EA, ATVI, Take2 ?Confidential 10
  11. Discovery Disrupts Distribution Ten key principles of distribution business models that become irrelevant with Internet Discovery: 1. Limited physical space 2. Travel required to destination 3. Financial scale 4. Physical scale 5. Volume inventory buying/owing power 6. Brands needed for sell-through conviction 7. Higher cost to bring products to market 8. Consumer’s limited time/space at site 9. Significant infrastructure requirements 10. Must pay/owe in advanceConfidential 11
  12. Why Discovery Beats Distribution • YouTube, newspapers, Pottermore.com • Search beats Shelf • No gatekeepers • Free, open, fair, democratic, competitive • IP relevance wins • Originality beats brand • Very few see this coming!Confidential 12
  13. Software Leadership Requires Systematic Advantages • IP originality and ownership • Culture of innovation • Technology leverage • Examples: Unity; Extreme Reality 3D gesture input • R&D efficiency • Traffic efficiency • Best Practices at scaleConfidential 13
  14. Recent Trends• Facebook changes • Virality down 95%, retention down 50% • FB Credits, Spartan, HTML5• The app/discovery Flood• Shift to mobile app habit• Apple has 400M credit cards• iPad rules; other tablets coming• Browser ubiquity• Value chain dominated by platforms/servicesConfidential 14
  15. Gaming’s New World • Must have Internet Lift > Drag • Reduce eCPA • Increase LCV • Potatoes = market reach • Technology leverage = 2X • Guano = free traffic • Discovery engineering = 3XConfidential 15
  16. Discovery/Traffic • Free in 2009 • Social/Viral design features • Cross-Promotion • Marketing leverageConfidential 16
  17. Types of Virality • Word of mouth • Collaboration • Communication • Social networks • Email • Notifications • Incentivized • MultiplayerConfidential • Competition 17
  18. Monetization • Lifetime Customer Value (LCV) • LCV = RASM • Retention • ARPU • Sessions • Monetization shareConfidential 18
  19. The Science of Game Design • 3D bias for last 20 years (“Art”) • Shift from Action to Strategy (“Science”) • Game today must be Harrod’s, Disneyland • Economics, merchandising, promotion • How Poker is different • Repeatable game mechanic that’s play, not work • Virtual currency and spending model • Not a “content treadmill” • Strategy, Skill, Luck, Dexterity • Study Top Grossing ChartsConfidential 19
  20. What’s Up with Zynga? • Facebook, mobile turbulence • Management character, confidence issues • Draw Something: a humbling picture • Legitimate revenue and growth • Outstanding long-term sector • Investing towards independence, cross-platform • Some good products, developers, best practices • Emerging mobile leader; Zynga.com upside • Enormous scale advantage in sector • Strategic cash position • Stock EV is trading at less than 3x EBITDAConfidential 20
  21. What’s Next With Games • Era of Convenience • Target Dolphins • F2P, High LCV original IP • Apps today, browser tomorrow • Value-added services, Tech + • Master Science of Virtual GoodsConfidential 21
  22. Do or Do Not 22

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