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GAMING
UPDATE
London Games Conference 2010
GAMING UPDATE // LONDON GAMES CONFERENCE 2010
// 1
LGC 2010 UPDATE
// 2
On November 4th, Advance_Gaming took a seat at the British
Academy of Film and Television Arts, a stones throw away
from London’s Piccadilly Circus. The cream of the European
gaming world were all there to discuss where the industry is
going. In this Gaming Update, we will give you an overview of
what these gaming masterminds predict for the future. So
grab yourself a cuppa (English Breakfast of course) and a
biscuit, and enjoy our London Games Conference special.
GAMING UPDATE // LONDON GAMES CONFERENCE 2010
// 3
THE KEYS TO INTERNATIONAL
SUCCESS WITH ONLINE GAMES
//HEIKO HUBERTZ, CEO, BIGPOINT
Heiko is the CEO and founder of BigPoint, the world’s largest portal
for browser-based games with over 150 million registered users.
What makes a succesful game? Well, that was the question Heiko
tackled at LGC2010 and not an easy one to answer. A glance at the
numbers shows that online games take up 46% of internet traffic
worldwide. There are 270 million online gamers in Europe and the
United States alone. Keep in mind that China and Japan are even
bigger markets, add India’s potential to the mix and you know where
this is heading.
So what to do if you want a piece of that cake (with a virtual cherry on
top)? Simple, build a game in English for the American market. One
language and one currency makes the American market a better
place to be than Europe with its different laws and languages. Look at
Zynga (Farmville), the company is now estimated to be worth over 5
billion dollars; its European competitors don’t even reach its knees.
Heiko also explained his two 10% rules. The first one simply states
that 10% of his players generate 80% of the revenue (micro-
transactions). The second one is a very interesting exercise to predict
the profitability of your online game:
GAMING UPDATE // LONDON GAMES CONFERENCE 2010
Counting all views, 10% will register.
Of all registered users, 10% are active users.
Of all active users, 10% will pay (micro-transactions)
Of all paying users, 10% can be categorized as ’heavy payers’
A good reality-check for every game-developer in town. With this in
mind, Heiko’s obvious second key to success is customer lifetime, in
other words, keeping that tiny percentage of paying players happy.
His third and last point was one that recurred a few times at the London
Games Conference. Quality cross-platform games will be king. Young
people these days are used to having multi-functional devices in their
pockets, so developing games for single-function devices is an uncertain
business in the future. Speaking for his own business of course, he
believes it’s better to build browser-based games that can be played on
multiple devices such as iPads, smartphones and other connectable
toys.
Overview:
. one language, one currency
. customer lifetime most important
. quality cross-platform games will be king
// 4
EVOLUTION OF RETAIL ALONGSIDE DIGITAL
DISTRIBUTION AND ONLINE GAMING
//BEN KEEN, CHIEF ANALYST, SCREEN DIGEST
 
A decline in packaged games, a small market for downloaded games and a huge
potential for online games. That was the basis of the keynote by Screen Digest’s
chief analyst, Ben Keen.
Right now, we’re at a low point for packaged console games. The consoles we
have are getting a bit old and people are looking forward to the next Playstation,
Xbox or Wii. But will this hardware pull us out of the slump in the packaged games
market? Probably not.
According to Ben Keen, the gaming industry is facing some structural challenges.
Packaged games sales have been down and without the success of online and
social games, the total gaming picture would be as grey as London on a chilly
November afternoon.
The future according to Ben is in ’connected’ games, where analytics-driven
developers can adapt quickly to customer demand. The only thing gamers are
asking for is content when and wherever they want. Shouldn’t be so hard to deliver,
right?
GAMING UPDATE // LONDON GAMES CONFERENCE 2010
// 5
THE SHAPES OF CLOUDS TO COME
//SHUJI UTSUMI, CEO, Q ENTERTAINMENT
//BEN COUSINS, GM, EASY (EA)
//JOHN EARNER, GM, PLAYFISH STUDIOS EUROPE
//FLORIS JAN CUYPERS, BUSINESS DEVELOPMENT DIRECTOR, SPIL GAMES
 
What is the online games industry today? What are the shifts that are taking place and where should we look in the future?
All the panelists seemed to agree that gaming today is at the same point that television was in movie and cinema’s heyday; on the brink of
exhilarating change. An incredible consumer potential, accessible-to-all technology and most importantly free-to-experience. This is the
shifting landscape and potential of gaming.
Everyone is getting into online gaming these days; grandma’s playing Farmville on her iPad while her grandson is playing the newest Call of
Duty multiplayer on his Xbox upstairs. The gaming world will have to adapt to this broader audience by making consumer behaviour a leading
factor. Such a rapidly growing audience also means that you can be profitable with a niche game, and that storytelling will get more and more
important in a very competitive landscape. Consumers expect to be taken to another world on a daily basis, and for that we need great
storylines.
And all this without losing the core-gamers who are used to paying for gaming content and who will form the base of high-paying players
every game will be looking for (again, micro-transactions). In Asia, your typical online gamer spends considerably more money gaming every
month than his or her western buddies. The €100 per month average gamer is already a reality in Japan, but still a distant vision for the
European and American markets.
So what until then? Can in-game advertising fill these income gaps? Wasn’t that the next big thing? The reality is different; online games like
Farmville make 300 times more money when using in-game advertising space for their own in-game purchasable features, than if they sold
that space to advertisers. Wow!
GAMING UPDATE // LONDON GAMES CONFERENCE 2010
// 6
DIFFERENT WAYS TO PLAY, DIFFERENT WAYS TO PAY
//CHRIS PETROVIC, SENIOR VP & GM, GAMESTOP
//ROD COUSINS, CEO, CODEMASTERS
//IAN CHAMBERS, INTERNATIONAL VP, IGN
//SIMON OSGOOD, EUROPEAN PRODUCT DEVELOPMENT DIRECTOR, INCOMM
 
As we’ve already said, gaming is opening up to a much broader audience these days. But does this bigger market automatically mean a good
deal for retailers too? Or will online distribution prevail and bring doom and gloom to that side of the gaming universe? The answer is likely to
be somewhere in between.
Chris Petrovic from GameStop sees great opportunities ahead for his business. Retail will certainly remain a place to go for personal help and
advice. While the internet overloads you with information, store employees can provide a much better and more personal view on what you
may like, even for games that don’t come in a box. They can point you to games and add-ons you might otherwise have missed. Its getting
tough to get attention on the web, so retail could be a much better arena for game developers. With so much competition, strong brands will
prevail and marketing costs will go up.
On the other side of the spectrum are high quality browser-based games. And these will inevitably become free to play. Imagine a Formula 1
game where you don’t have to pay a penny at the start of the race, but if you would like those new fancy rain tires, you’ll have to cough up.
Market transactions are where the money’s at. And we have proof; after Lord of the Rings Online went free-to-play, the game doubled its
revenue. Others are now following. Electronic Arts has just announced its Battlefield Play4Free, where you can battle online with up to 32
other players. The launch is expected in the spring of 2011, and many more games will to follow the lead.
But a market of free browser-based games will put the onus on the first 10 minutes of user experience. Consumers won’t have the patience to
continue if the first steps in the game don’t blow them away. Skipping to another free game will only take them a couple of seconds. No
running to the store for a new box, and no investment from their side. Life is simple… when you’re the consumer.
GAMING UPDATE // LONDON GAMES CONFERENCE 2010

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Gaming Update London Games Conference

  • 1. GAMING UPDATE London Games Conference 2010 GAMING UPDATE // LONDON GAMES CONFERENCE 2010 // 1
  • 2. LGC 2010 UPDATE // 2 On November 4th, Advance_Gaming took a seat at the British Academy of Film and Television Arts, a stones throw away from London’s Piccadilly Circus. The cream of the European gaming world were all there to discuss where the industry is going. In this Gaming Update, we will give you an overview of what these gaming masterminds predict for the future. So grab yourself a cuppa (English Breakfast of course) and a biscuit, and enjoy our London Games Conference special. GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 3. // 3 THE KEYS TO INTERNATIONAL SUCCESS WITH ONLINE GAMES //HEIKO HUBERTZ, CEO, BIGPOINT Heiko is the CEO and founder of BigPoint, the world’s largest portal for browser-based games with over 150 million registered users. What makes a succesful game? Well, that was the question Heiko tackled at LGC2010 and not an easy one to answer. A glance at the numbers shows that online games take up 46% of internet traffic worldwide. There are 270 million online gamers in Europe and the United States alone. Keep in mind that China and Japan are even bigger markets, add India’s potential to the mix and you know where this is heading. So what to do if you want a piece of that cake (with a virtual cherry on top)? Simple, build a game in English for the American market. One language and one currency makes the American market a better place to be than Europe with its different laws and languages. Look at Zynga (Farmville), the company is now estimated to be worth over 5 billion dollars; its European competitors don’t even reach its knees. Heiko also explained his two 10% rules. The first one simply states that 10% of his players generate 80% of the revenue (micro- transactions). The second one is a very interesting exercise to predict the profitability of your online game: GAMING UPDATE // LONDON GAMES CONFERENCE 2010 Counting all views, 10% will register. Of all registered users, 10% are active users. Of all active users, 10% will pay (micro-transactions) Of all paying users, 10% can be categorized as ’heavy payers’ A good reality-check for every game-developer in town. With this in mind, Heiko’s obvious second key to success is customer lifetime, in other words, keeping that tiny percentage of paying players happy. His third and last point was one that recurred a few times at the London Games Conference. Quality cross-platform games will be king. Young people these days are used to having multi-functional devices in their pockets, so developing games for single-function devices is an uncertain business in the future. Speaking for his own business of course, he believes it’s better to build browser-based games that can be played on multiple devices such as iPads, smartphones and other connectable toys. Overview: . one language, one currency . customer lifetime most important . quality cross-platform games will be king
  • 4. // 4 EVOLUTION OF RETAIL ALONGSIDE DIGITAL DISTRIBUTION AND ONLINE GAMING //BEN KEEN, CHIEF ANALYST, SCREEN DIGEST   A decline in packaged games, a small market for downloaded games and a huge potential for online games. That was the basis of the keynote by Screen Digest’s chief analyst, Ben Keen. Right now, we’re at a low point for packaged console games. The consoles we have are getting a bit old and people are looking forward to the next Playstation, Xbox or Wii. But will this hardware pull us out of the slump in the packaged games market? Probably not. According to Ben Keen, the gaming industry is facing some structural challenges. Packaged games sales have been down and without the success of online and social games, the total gaming picture would be as grey as London on a chilly November afternoon. The future according to Ben is in ’connected’ games, where analytics-driven developers can adapt quickly to customer demand. The only thing gamers are asking for is content when and wherever they want. Shouldn’t be so hard to deliver, right? GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 5. // 5 THE SHAPES OF CLOUDS TO COME //SHUJI UTSUMI, CEO, Q ENTERTAINMENT //BEN COUSINS, GM, EASY (EA) //JOHN EARNER, GM, PLAYFISH STUDIOS EUROPE //FLORIS JAN CUYPERS, BUSINESS DEVELOPMENT DIRECTOR, SPIL GAMES   What is the online games industry today? What are the shifts that are taking place and where should we look in the future? All the panelists seemed to agree that gaming today is at the same point that television was in movie and cinema’s heyday; on the brink of exhilarating change. An incredible consumer potential, accessible-to-all technology and most importantly free-to-experience. This is the shifting landscape and potential of gaming. Everyone is getting into online gaming these days; grandma’s playing Farmville on her iPad while her grandson is playing the newest Call of Duty multiplayer on his Xbox upstairs. The gaming world will have to adapt to this broader audience by making consumer behaviour a leading factor. Such a rapidly growing audience also means that you can be profitable with a niche game, and that storytelling will get more and more important in a very competitive landscape. Consumers expect to be taken to another world on a daily basis, and for that we need great storylines. And all this without losing the core-gamers who are used to paying for gaming content and who will form the base of high-paying players every game will be looking for (again, micro-transactions). In Asia, your typical online gamer spends considerably more money gaming every month than his or her western buddies. The €100 per month average gamer is already a reality in Japan, but still a distant vision for the European and American markets. So what until then? Can in-game advertising fill these income gaps? Wasn’t that the next big thing? The reality is different; online games like Farmville make 300 times more money when using in-game advertising space for their own in-game purchasable features, than if they sold that space to advertisers. Wow! GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 6. // 6 DIFFERENT WAYS TO PLAY, DIFFERENT WAYS TO PAY //CHRIS PETROVIC, SENIOR VP & GM, GAMESTOP //ROD COUSINS, CEO, CODEMASTERS //IAN CHAMBERS, INTERNATIONAL VP, IGN //SIMON OSGOOD, EUROPEAN PRODUCT DEVELOPMENT DIRECTOR, INCOMM   As we’ve already said, gaming is opening up to a much broader audience these days. But does this bigger market automatically mean a good deal for retailers too? Or will online distribution prevail and bring doom and gloom to that side of the gaming universe? The answer is likely to be somewhere in between. Chris Petrovic from GameStop sees great opportunities ahead for his business. Retail will certainly remain a place to go for personal help and advice. While the internet overloads you with information, store employees can provide a much better and more personal view on what you may like, even for games that don’t come in a box. They can point you to games and add-ons you might otherwise have missed. Its getting tough to get attention on the web, so retail could be a much better arena for game developers. With so much competition, strong brands will prevail and marketing costs will go up. On the other side of the spectrum are high quality browser-based games. And these will inevitably become free to play. Imagine a Formula 1 game where you don’t have to pay a penny at the start of the race, but if you would like those new fancy rain tires, you’ll have to cough up. Market transactions are where the money’s at. And we have proof; after Lord of the Rings Online went free-to-play, the game doubled its revenue. Others are now following. Electronic Arts has just announced its Battlefield Play4Free, where you can battle online with up to 32 other players. The launch is expected in the spring of 2011, and many more games will to follow the lead. But a market of free browser-based games will put the onus on the first 10 minutes of user experience. Consumers won’t have the patience to continue if the first steps in the game don’t blow them away. Skipping to another free game will only take them a couple of seconds. No running to the store for a new box, and no investment from their side. Life is simple… when you’re the consumer. GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 7. // 7 THE NEW POWER BASE   //DAVID REEVES, COO, CAPCOM EUROPE //DAVE PERRY, CO-FOUNDERS & CEO, GAIKAI //JASPER SMITH, FOUNDER & CEO, PLAYJAM //KIERAN O’NEILL, CO-FOUNDER & CEO, PLAYFIRE   Evolving from games in boxes to games as a service will undoubtedly change the gaming landscape. But how do you get customers for your game? To quote Dave Perry, co-founder of Gaikai: ”I’ve been keeping track of 400 mmo’s of which 390 were doomed to go down. The more money they put in marketing, the faster they often drowned.” So it really is a tricky job to pull off. The demographics have changed from core to casual gamers. And these people are attracted to different things. They want the game to be brought to wherever they are. The future will bring high quality games to your TV for example, using your remote control as some kind of Wii controller, or motion sensors built in to your television set. You could play your Call of Duty on your iPad at breakfast, press the pause button, and continue the game on your TV later that day from wherever you left off. Gaikai, (still in closed beta) is a good example of this evolution, bringing games to the player wherever they are, not vice versa. With full games running on their servers, customers could instantly access every game from whatever device they had. What’s more, a game could be started straight from an online ad. In a matter of seconds. The first levels could then be explored for free, or you would get the full game with a micro- transaction business model. All of this directly within a browser. No fancy hardware needed. GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 8. // 8 CONCLUSION //LGC2010   A pick ’n’ mix of specialists and opinions were in the bag at the London Games Conference, but their views of the future were surprisingly similar: platform-free, from core to casual gamers and everything will be free to play. And these evolutions and revolutions are not in the distant future; they are on our doorstep now. It’s an exciting time to be in this industry as it hovers on the brink of radical change. We here at Advance are looking around carefully because just like you, we believe there are lots of opportunities on the horizon. GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 9. // 9 ADVANCE_GAMING ON TWITTER GAMING UPDATE // LONDON GAMES CONFERENCE 2010
  • 10. // 10 Advance A/S Landemærket 29 DK-1119 København K Phone: +45 33 93 99 20 www.blog.advance.dk GAMING UPDATE // LONDON GAMES CONFERENCE 2010