The World Of Digital - Key Shifts In The Distribution Of Video Games - Julius Chen


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Tracking key shifts in digital trends that are shaping the way content distribution and business innovation is taking place across video games industry - Year 2013.

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  • According to the 2012 Games Market Dynamics: U.S.* report from global information company, The NPD Group, in addition to the $7.09 billion spent in the U.S. by consumers on new physical video and PC game software during 2012, the total consumer spend on other physical forms of content (used and rental) reached $1.79 billion, and content in digital format (full game and add-on content downloads, subscriptions, mobile games and social network games) generated $5.92 billion.
  • 1. Consumerization and the TabletTablets can be used in many ways by businesses to augment office space and tedious processes. Companies also often receive pressure from the top-down to accommodate for whatever devices consumers are using—Gartner calls this "the cool factor." To prepare properly for implementing tablet operations, companies need to determine security guidelines and use profiles, build integration timelines (the critical timeframe for tablets being 2012 through 2014) and shop around for critical vendor support if needed4. MobilityA mobile focus requires a change in mindset, which Gartner dubs the "seamless shift between computing and communicating." The report emphasizes that mobile devices are not PCs, and though security remains a challenge, the variety of devices users demand platforms on makes building portals more difficult, personal clouds and shrinking data centers are making it easier to meet the needs of consumers5. Hybrid CloudsWhile, through 2013, more than 60 percent of IT adoption of the cloud will be to redeploy current applications, a shift will take place beyond that to exploit private and hybrid cloud techniques. For this, Gartner advises companies to develop only after public services have been integrated with private delivery. The report also emphasizes results, as even at an enterprise-wide level, peer pressure can move projects forward without valid business reason to do so.9. The End of Service DesksAs users expect service in real time and crowdsourcing support is becoming more prevalent, the effectiveness of reactive processes of service desks is dwindling. Gartner suggests companies build transition strategies that enable a proactive business productivity team
  • The World Of Digital - Key Shifts In The Distribution Of Video Games - Julius Chen

    2. 2. DIGITAL’S TIME IS HERE30 billion pieces Worldwide 32 billion More than 2 The averageof content were IP traffic searches were billion videos teenager sends added to will performed last were watched on 4,762 text Facebook this quadruple month... on YouTube... messages per past month by 2015 Twitter yesterday month 2
    3. 3. DIGITAL’S TIME IS HERENPD Group: Digital Business grows 16%, Physical down 21%“In addition to the $7.09 billion spent in the U.S. by consumers on new physical videoand PC game software during 2012, the total consumer spend on other physical formsof content (used and rental) reached $1.79 billion, and content in digital format (fullgame and add-on content downloads, subscriptions, mobile games and social networkgames) generated $5.92 billion.” According to the 2012 Games Market Dynamics: U.S.* report from global information company, The NPD Group
    4. 4. DIGITAL LANDSCAPE EVOLUTION  1) Increased broadband penetration • Increased internet penetration o 1.034B Internet users in Asia versus 2.3B Global total. • Real strategic opportunity to hit a critical mass. • Average connection speed optimum in core markets. o South Korea: 15.7 MBPS , Japan: 10.9 MBPS o Global average 2.6 MBPS  2) Technology Convergence • Increasingly overlapping technology devices – between the Computer, Mobile Phone, Tablet, Mobile Console Devices. o By 2015 media tablet shipments will reach around 50% of laptop shipments and Windows 8 will likely be in third place behind Android and Apple. o Devices will contain faster two and four-core processors, and with bigger, brighter, higher- resolution screens. 4
    5. 5. DIGITAL LANDSCAPE EVOLUTION 3) Evolution and Ease of Digital Payment Methods • Mobile payments • Virtual Wallets • Virtual Currencies • Pay per usage models/Time cards • Subscription models 4) Online activity is increasingly social • Crowd-sourced opinions become more prevalent. • People are increasingly sharing and connecting with each other which Gartner suggests is a “seamless shift between computing and communicating”. 5
    7. 7. 1. FROM DAY 1 TO HOUR 1 Digital distribution removes the traditional barrier to buying games — having to drive or BioShock Infinite’s Pre- walk to a brick-and-mortar retail store and order on Steam came with exclusive BioShock purchase it. Infinite Team Fortress Characters, Free Stores like Steam, a digital distribution front run by BioShock and Free XCOM: Valve, capitalize on impulse buying habits of gamers Enemy Unknown! by making it extremely easy to purchase and All for US$ 59.99! immediately begin playing games. Creative pre-ordering packages makes it extremely attractive to purchase and download online. Instant Play within first hour of launch: Game files are pre-loaded and users can pre-download a few days before the game is able to activate. Fanatic gamers are no longer appeased by just getting a game within day one of release. It is now about playing within the first hour. 7
    8. 8. 2. FROM PACKAGED GOOD TO CUSTOMIZABLE OWNERSHIP Digital distribution allows unlimited number of variations of each title to be NBA 2K13 launched mini virtual store allowing users created and sold, expanding its potential to purchase items for their audience. MyPlayer profile. Coupled with DLC add-ons, there • Single player, multiplayer, downloadable was a large component of content packs, starter editions, complete customizable ownership. editions, free-to-play bonus levels, virtual currencies for in-game items. • Allows consumers to self-determine how much commitment they want to make to a title/franchise. • Offer a better value to those who just want to purchase a segment of play or at a windowed period. Blizzard took a different direction with its Catacyclsm expansion by catering to newer and lower level players with new content. Traditionally, expansion packs for online games focus on new content for players that have already reached the end of the game. 8
    9. 9. 3. FROM ONE EXPERIENCE TO EXTENDED EXPERIENCES Many game developers adding downloadable digital content (DLC) to their gaming titles, in order to enhance the gaming experience and add additional revenue sources. For the past few years, we’ve seen the AAA publishers take fewer risks on new titles and place bigger bets on those they release. With this increased focus on the big releases, DLC content becomes increasingly important as a risk management strategy and to drive revenue for an IP. Publishers are also moving to “season pass-like” structures, providing ongoing access to the latest game content at one bulk price. Did You know? Since release in Fall 2012, Borderlands 2 launched with 22 DLC Packs. 9
    10. 10. 4. FROM OFFLINE GAMING TO ALWAYS ON GAMING The term ‘always on’ refers to the connected online nature of gaming. Leading gaming experiences transition from the typical launch- focused strategy to an evergreen state that remains fresh through regular content updates and incremental platform introductions. • The key reasons for this shift is to fight piracy, drive in- game trading economies, ease single-player gamers into Games like D3 and Simcity were multiplayer modes for higher/longer player retention. released to be ―always online‖ games. • We will also see more collaborative development of game- play and associated assets. Games like Little Big • Developers (big and small) will work alongside consumers Planet started to to produce game titles and create a vested sense of show deeper commitment with their players. engagement with players by allowing them to collaborate in level creation for other players. 10
    11. 11. 5. FROM SINGLE-PLAYER EXPERIENCES TO SOCIAL CONNECTEDNESS With increased connectivity, more gamers are going for socially engaging experiences. Multiplayer gaming helps extend the product lifecycle and reduces used-product market by making consumers hold on to their physical box set. Social leaderboards and hierarchies become key features in platforms/games. In Korea, multiplayer gaming is a prevalent form of gaming – where Online games lead the market and few PC products become Steam Achievements, Mobile Game Center Leaderboard, huge hits unless they contain very strong XBOX Live Leaderboard, PSN Leaderboard have all become multiplayer components. a central part of one’s gaming experience. 11
    12. 12. 6. FROM BUILT-FOR-WW TO BUILD-TO-TERRITORY Traditionally, games were built in one format and for a WW (US market). Now, by releasing games digitally, there is further opportunity to cater to specific territory needs. These include multiple languages, different tastes and appetites, different windows (vs consistent release patterns/dates per country) and different platforms which have differing penetration capability. Language patching post D1 distributed via digital channels help grow products in specific Games can find homes overseas in many markets and windows apart territories. from the mainstream or major US/UK platforms. T2 released GTA III and Civilization Revolution in Korea as Android game – moving into a platform relevant market In Japan, releasing on Sony Japan versus WW release of the iOS versions. PSN drives more than 10x revenue versus XBOX360. 12
    13. 13. 7. FROM PURE DISTRIBUTION DEALS TO HYBRID BUSINESS MODELS  Platforms’ business models are also starting to become more multi-layered to handle different formats, consumer price points, and windows.  Figital – Finished Goods Retailer & Digital Models  Streaming /cloud gaming models  Pay per usage/package models  Connected TV models  B2B Café distribution and Download models Gamestop traditional retailer opened its digital channel Impulse and incorporates sales of DLC content into stores. Gamers can also use any accepted form of OnLive cloud gaming services moves payment — including used gameSony acquires Gaikai for $380M, a hint to GoogleTV letting users play trade-ins, gift cards — tothat consoles may be going to the cloud. console quality games via their TV. purchase brand new titles. 13
    14. 14. 8. FROM PLATFORM SPECIFIC GAMING TO INTEROPERABLE GAMING As technology converges, mobile and gaming Sony will release devices are increasingly becoming alike and are digital versions of all sharing the same space. new games alongside physical copies so gamers can download Whilst viewed as a more spread out competitive and begin playing space, this becomes opportunities for game games immediately on its newest portable companies to create new immersive gaming gaming device, the experiences that are cross-platform. Sony Next Generation Portable (NGP). Game platform owners are taking the competition in stride, creating new devices tailored to a companion relationship that improves the big screen game experience but also offers an on-the-go component too. • The PlayStation Vita and Wii U are the first announced contenders and we may hear of others very soon. In Jan 2013, Disney announced the that it • Developers and IP-holders creating more plans to launch Disney Infinity globally in content across devices to reach new users and June across a suite of consoles (Wii, Wii U, extend the experience for current users. Xbox 360, PS3), with versions for mobile phones and tablets, Nintendos 3DS, and an online PC version to be supported as well. 14
    15. 15. IN SUMMARY Digital has produced a whole new language for distribution and business optimization: • Hour 1 • Customizable ownership • Extended experiences • Always on gaming • Social connectedness • Build-to-territory • Hybrid business models • Interoperable gaming Distribution formats, content delivery methods and business innovations must evolve to keep us relevant to the consumer. 15
    16. 16. ABOUT JULIUSJULIUS CHENRegional Director, Digital Business, Take Two InteractiveP&L holder for T2s Asia digital business portfolio and key strategic business lead in developing and ensuring the execution of T2Asia’s digital business strategy and growth of markets overseeing digital distribution across PC, PS3, 360 and mobile platforms,working closely with T2’s global headquarters Take Two New York to ensure alignment of business objectives and provision ofstrategic in-market advisory for Asia. Multiplied Asias digital revenue eight-fold in 24 months.In charge of deal structuring and business roll-out and optimizations on multiple game digital distribution platforms across Asia -including PC, XBOX, PS3, Mobile (iOS & Android). Key role in driving business development requirements, sales/finance relatedfunctions, provision of technical assistance and project management for all Asia digital accounts. Reporting directly to VPPublishing (Asia) and dotted line to VP Digital (Global). Full supply chain of work includes: financial modelling, deal closing fornew business, budget and forecasting, sales analytics, platform logistics/operations, legal, market localization & game ratingsprocesses, channel marcoms/promotions and partner relations for our digital sales platforms across Asia.Launched in-market digital business portfolio with top consumer portals like Amazon Japan, NHN Korea, JoyMoa Korea, Taiwan, Hong Kong etc. Previously, Business Owner of Julius Truffles, Consumer Marketing/Advertising(WPP Group, P&G) 16