A year ago video game sales were soaring, and some people thought it might be a "recession-proof" industry. We can't imagine anyone feels that way today. October 09 unit sales were down 19% according to NPD year over year. And if the industry is lucky, it will get flat to single digit growth by for the year.
Sales down 19% year-over-year Subscription up 7% year-over-year
Electronic Distribution‘free games’ effect # Units $ revenue
The virtual goods market in the U.S. is ready to take off. Right now, the U.S. only has 28% of the total market. By 2013, the U.S. will make up 41% of the market with $2.5 billion in sales, according to research from Piper Jaffray.
Brings New Brands, Resources To Social Gaming REDWOOD CITY, Calif., November 9, 2009 – Electronic Arts Inc. (NASDAQ: ERTS) today announced it has acquired Playfish™, a leading creator of social network games. The acquisition accelerates EA’s position in social entertainment and strengthens its focus on the transition to digital and social gaming. Playfish will operate within EA Interactive, a division of EA focused on the web and on wireless. EA has acquired Playfish for approximately US$275 million in cash and approximately US$25 million in equity retention arrangements. In addition, the sellers are entitled to additional variable cash consideration, up to a maximum of US$100 million, contingent upon the achievement of certain performance milestones through December 31, 2011. “Social gaming, with its emphasis on friends and community, is seeing tremendous growth and this is the right time to invest to strengthen our participation in this space,” said Barry Cottle, Senior Vice President and General Manager of EA Interactive. “EAi has been successfully leading the charge for EA, and with the addition of proven expertise from Playfish, their broad consumer base and strong game brands, we’re moving ahead aggressively in our plans to lead in the category of cross-platform social entertainment.”
Asia’s total annual virtual goods might be >$5 billions 1.8 M users :: Netease’s Fantasy Westward Journey 1.5 M users :: Giant’s Zhengtu Online 1.2 M users :: Tencent’s Dungeon and Fighter 1.0 M users :: Blizzard’s World of Warcarft
Symbiosis Virtual Goods would not exist without Networked Games Networked Games are fuelled by Virtual Goods
Mods and User Generated Content Continuum of Content 1980’s Personal Computers 2000’s Social Networking 1990’s Video game Dark Ages 2010’s Web Centric 2008 Little Big Planet Spore 1997 Doom Open Source 1992 Stunt Island Machinima 1999 Counter-Strike Half-Life mod 2005 facebook 2006 twitter
Major Trends Social Networking Users increasingly use the internet for social networking, both at Home and the Enterprise User Generated Content Users gets more and more sophisticated, from sms to full 3D games Cheap broadband connection Sufficient bandwidth for interactive, online 3D experience Real time 3D graphics GPUs provide HW acceleration in most devices, including mobile phones Virtual Economy Real and Virtual economies connected Virtual Goods cost real money
Obstacles Virtual currencies regulation 3D and Web integration 3D on mobile Content Authoring Virtual goods ownership
80% of gold farmers are based in China and generate between 200M$ - 1B$ annually
Content Authoring DCC tools are targeting professional users. Too expensive and complex for end users Game industry not focused on broader authoring needs Dilemma: improving authoring to pursue innovative uses of games vs. improving authoring to streamline making game content?
Virtual goods ownership Can’t move virtual goods from one application to another Need a standard ! DRM as existing does not work Need to empower end user, not block them Need to understand modding community Mod over mod over mod Most end users want credit, welcome copy
Catalysts CPU and GPU collision Standards Public content repositories Tools for fun
GPU vs. CPU Collision: CPU's add cores to reach GPU's parallelization GPU's add programmability to reach CPU's flexibility
GPU vs. CPU collisionCPUs are moving to serious multi-core architecture and GPUs are being used to do CPU work-CrunchGear August 2008
Standards (3D) Content HW accelerated API Compression Distribution MPEG-4 Part 25: A graphics compression framework for XML-based scene graph formats BlagicaJovanova, Marius Preda and Françoise Preteux