The document discusses current market trends in the gaming industry. Some of the key trends highlighted include the introduction of new gaming consoles fueling growth, the increasing popularity of online and mobile gaming, the rise of free-to-play and cloud gaming models, the success of franchises and sequels, and growing investment in virtual and augmented reality technologies. Independent games and exclusives are also strategies being used by companies to keep users engaged during periods between major releases.

1. What do you think the
most popular things in
the gaming industry are
right now?

2. Gaming Trends 2014

3. To be able to…
P1
describe current market trends in the games industry with some appropriate use of
subject terminology
M1
explain current market trends in the games industry with reference to detailed
illustrative examples and generally correct use of subject terminology
D1
comprehensively explain current market trends in the games industry with
reference to elucidated examples and consistently using subject terminology
correctly

4. Market trends:
 products and services
 vision of organisation
 objectives and plans of organisation
 competitors
 customers
 organisation’s attitude to risk
 international and national market trends
Industry trends:
 franchised intellectual property (IP)
 original IP
 sequels
 discount sales
 comparison with film industry
 outsourcing
 mergers and acquisitions

5.  A basic but broad overview of the most obvious current trends (P2)
 A good overview of current trends, explaining how or why the issues mentioned
have importance and use examples to illustrate this (M2)
 A specific and insightful look at current trends, where well-researched and
complex examples will illustrate developed comments exactly (D2)
‘Sequels are one of the most profitable elements in game retail so when developers find an
idea that works they will want to continue it so as to make as much money as possible.
However, after a few sequels it is hard to keep reinventing the same concept again and again
with new storylines to keep the audience happy. Studio A was responsible for the Name series
of Game X but since July 2008, Studio B has been responsible for the further development of
the Game X series. Their new sequel will be released in April 2010. This keeps the concept fresh
and is why it’s handy having multiple studios owned by the publishing house.’
‘While it is normal for there to be more demand than supply for any launch, the amount of
Console A made available at launch was disappointing. Between the release date and
Christmas approx 500,000 consoles (worldwide) were sold. This sent Christmas sales down
even further; dropping 9 per cent from November 2008 and consequently software sales fell
18 per cent. How this less than perfect launch will affect the next-gen battle when the Console
B and Console C are finally released remains to be seen. However, it is obvious that an early
launch was a huge advantage to Company X.’

6. Our specialists forecast an average 11% annual growth over the next four years,
driving the global gaming market from €54 billion in 2013 to €82 billion in 2017.
IDATE predicts that the global video game market will continue to enjoy steady
growth, for two reasons in particular:
• start of the life cycles of the latest generations of handheld and home consoles,
• remarkable growth of the games on mobile devices and online games segments.
Source: idate.org

7. Market trends: products and services
The introduction of new consoles will always fuel growth in the gaming sector.
Now that both the Playstation 4 and Xbox One have had time to embed, the
development of gaming on these new generation of machines will only grow. As
developers get more experience with each system, games are bound to get
better.
This deployment of new generation consoles will see their market share of the
gaming industry increase.

8. Market trends: products and services, organisation’s attitude to risk
Both Microsoft and Sony have taken big measures to cut red tape and give indie
developers better access to major consoles, and have created console exclusives
with indie darlings to counter-program big name titles released in stores.
Independent games like Hotline Miami 2: Wrong Number, Everybody’s Gone to the
Rapture, Nuclear Throne and Cobalt have been claimed by either Microsoft or Sony,
a key strategy that has the potential to bust through the early-console doldrums
that easily set in when there are no new major titles for gamers. Both companies are
relying on these exclusives to keep users engaged while their big-name developers
product the high-budget content that flexes each console’s muscles.

9. Market trends: products and services
An average annual growth of 11.4% for online gaming and 12.2% for mobile gaming
for the period of 2013-2017 against 11.1% for the entire video games market shows
just how popular this sector will become.
The ease of playing games online and on mobile devices means that this growth is
guaranteed. No longer will non-dedicated gamers have to shell out for expensive
hardware or have to trudge down to their local gaming shop to fork out for a new
game.
The simplicity and playability of smaller, mobile games means that the market is
ever expanding, bringing in a new demographic of gamers, who are lured in by free-to-
play, addictive titles. The success of games like Candy Crush and Angry Birds is
testament to this.
Candy Crush earns $850,000 per day. Source: ThinkGaming.com

10. Nearly two thirds of the income of the video games market comes from the
dematerialisation of distribution and online payment practices.
Source: idate.org
Traditionally games main revenue has been from the sale of hard copies of games,
originally sold in specialist gaming shops, they moved into the mainstream, with
gamers being able to pick them up in supermarkets. With the age of online
shopping, consumers had even more options and more competitive pricing. With
the advent of online gaming and downloads, developers and distributors can forgo
the expensive production costs of hard copies of the games and supporting
materials, and focus on a more streamlined profit margin where games are made
available through the internet.
The advent of MMORPG games such as World of Warcraft have seen a huge rise in
the share online gaming has over the more traditional sectors. This looks set to
grow even further as online gaming becomes even more popular.

11. Free-to-play has become an essential
and popular distribution method for
new games. The mobile and PC market
is full of examples of successful free-to-play
games, from Angry Birds to
Warframe. It has proven invaluable in
the success of several franchises on the
market and it will only continue to get
bigger and more popular now that it s
becoming a staple for home consoles as
well as PC and mobile devices. As games
such as Warframe and World of Tanks
become available on consoles, this is
one trend that is definitely going to
grow over the coming year, with new
free-to-play games being tailor made for
the console experience.
Market trends: products and services

12. Market trends: products and services, vision of organisation, objectives and plans of organisation
Sony has unveiled PlayStation Now, a service that allows players
to experience older games on PlayStation 4, PS Vita, Bravia TVs
and could expand to include other smart TVs and mobile phones in
the future.
Microsoft also claims to have over 300,000 servers waiting to be
used and it would be shocking if they don't launch a similar service
later in the year.
Industry analysts have predicted cloud gaming for years now, but
it seems that 2014 may well be the year it goes big.
‘Microsoft could be close to releasing a consumer version of its internally tested cloud
games service, according to one report, which would allow Xbox games to be played in
web browsers.’
Source: www.gamespot.com

13. Market trends: products and services, vision of organisation, objectives and plans of organisation
Steam really has been a revolution for PC gaming, changing the way gamers interact
with and buy their games. Steam eclipsed Xbox Live and the PlayStation Network in
terms of active users.
The service is going to be expanding even
further in 2014, tackling the one place that it
hasn't been able to compete with consoles
thus far: the living room. While Steam is
massive with 'core' gamers, it hasn't ever
quite been able to crack the casual market
because of its dependence on the more
'complex' PC platform. This year, with
multiple Steam Machines hitting the market,
they are hoping to challenge the console
space in your living room. While the
confusing variety of Steam Machines may still
be a barrier for the most casual of
consumers, these new consoles, along with
Steam's new OS, will at least push the reach
of Steam further.

14. Market trends: products and services, vision of organisation, objectives and plans of
organisation, competitors, customers
What was a massive gamble for Valve paid
off. This prompted other publishers like EA
and Ubisoft to launch Origin and Uplay
services respectively. Now both
developers titles are available on both of
these services.
“We’re trying to make it as open as possible,” Newell said. “If EA
wants to put Origin on it, that would be fine, etc…”
Gabe Newell – Forbes.com
This means that there is no intention for direct competition between Valve and
Origin. It does however amp up the competition between Steam Machines and
Microsoft, Nintendo and Sony. Does the advent of Steam Machines herald just a
gaming PC in your lounge or a replacement for consoles?

15. Market trends: products and services, customers,
Games traditionally feature both single player and multiplayer as separate entities.
With the rise to prominence of PSN and Xbox Live, the two modes have been
competing with each other. Underwhelming multiplayer in strong single player
experiences and lacking single player gameplay in exciting multiplayer focused
games were all too common in recent years.
Destiny tries to blend some elements of a
traditional MMO with a first-person shooter.
Bungie has called it a ‘shared-world shooter’.
It remains to be seen whether this merge of
single and multiplayer will succeed.

16. Market trends: products and services, vision of organisation, objectives and plans of organization,
competitors
Since the Oculus Rift became a crowdfunded success in 2012, developers have been
experimenting with new kinds of interactive experiences. Games like Eve: Valkyrie
are being designed for VR specifically while there is already a library of existing
games like Skyrim and Mirror's Edge that are getting retrofitted for VR by those
who bought developer kits early.
It's not just Oculus Rift which is developing
VR technology. Sony is ‘85% finished’ on its
Project Morpheus. There are also a number of
other VR alternatives set to hit the market
over the next year or two, so gamers will
more than likely be spoiled for choice when it
comes to a total immersion headset.
Microsoft’s latest version of the Kinect, which shipped with the Xbox One, has the
potential to make serious waves in motion-sense technology.

17. Market trends: vision of organisation, objectives and plans of organisation, organisation’s attitude
to risk
The release of Nintendo’s Wii U was a risk – one that didn’t pay off. While
they had the jump on both Microsoft and Sony, the sales for the Wii U were
poor and still do not look like changing.
This prompted some developers, such as EA and Bethesda, to stop
developing games for the console. There are some manufacturers who still
have faith and are willing to take risks. Activision are very open about the
support they have for Nintendo and continued releasing titles, such as Call of
Duty: Ghosts.
A risky release doesn’t mean that Nintendo are at risk though…
"The company is far from being at risk or in any type of trouble of having to
transition to becoming a software-only company," says Jesse Divnich, VP of
insights and analysis at EEDAR. "They can and will thrive off of the success of
the 3DS and reinvest the gained resources to improve their home console
strategy going forward.“
Source: theverge.com

18. Market trends: vision of organisation, objectives and plans of organisation, organisation’s attitude
to risk
Through June 30 of this year, Wii U has sold 6.68 million hardware units and nearly
37 million games. Both of those totals are under what Nintendo had at one point
projected it would sell in a single fiscal year.
Earlier this year, “Mario Kart 8″ helped jolt sales, becoming just the second Wii U
game to sell more than one million units in the U.S.
Through the first seven months of 2014, total sales of Wii U hardware and software
jumped 60% and 135%, respectively, over the same period in 2013, according to NPD
Group.
Source: fortune.com

19. Industry trends
Intellectual property (IP) rights are the legally recognized exclusive rights to
creations of the mind. In gaming an original IP game means that the concept is
unique and wholly owned by the developer.
Destiny sold over $500 million into retail on
day one, making it the best-selling new video
game IP of all time according to publisher
Activision Blizzard.
Earlier this year Ubisoft revealed Watch Dogs
was the "best-selling new IP in video game
history" after it managed to move four
million copies in a week.

20. Industry trends
A franchise is the licensing of intellectual property (IP) from an original work (in this
case a video game), to other parties or partners for commercial exploitation.
Bungie Software joined Microsoft in 2000, a year before releasing the first in its
blockbuster Halo series. The developer created five Halo games until the relationship
became untenable. Microsoft agreed in 2007 to spin off Bungie into an independent
company, without Halo. Microsoft established its own development team devoted
to Halo, and that group is creating a new version of Halo every year. Each one has
been selling well. Meanwhile, Bungie teamed up with Activision to release Destiny
on Sept. 9. That's already on track to be a massive franchise, generating $500 million
in revenue in its first day available.
Gears of War will continue to turn, as Microsoft has acquired the sci-fi shooter
franchise from Epic Games. Microsoft Studios head Phil Spencer confirmed the news
to GamesIndustry International, saying the deal covers the intellectual property, all
existing games and assets, and the rights to continue the franchise in the future.
Source: gamesindustry.biz

21. Industry trends
There will always be a constant debate over the merit of sequels. From an industry
point of view, it is a safer bet as the publishers are working with an already
established market and fan base. If the first game was successful companies are
always keen to build on that achievement. From a consumer vantage, if gamers
loved the first one, they are often only too happy to see the next in a line of games.
The list of successful sequels is long, although some would be quick to point out that
it is often hard to better the first. Some would also argue that sequels is an poor
option which stops the development of more creative and innovative ideas from
emerging.
At E3 2014, Microsoft and 343 Industries announced Halo: The Master Chief
Collection, set to be released November 11, 2014. There was also much hype for their
new Lara Croft instalment, Rise of the Tomb Raider.
Meanwhile 2k’s Borderlands: The Pre-Sequel also received a lot of attention at E3.

22. Industry trends
It’s been a few years now that game sales ($24 billion) have outpaced movie box
office sales (just $10 billion per year), but now games are a serious competitor to the
entire tv/film industry with game play now eating into even mainstays like television
viewing.
About 59% of Americans play video games, according to estimates from the ESA (the
gaming industry’s major trade and lobbying group). Some quick math says that in a
country of about 315 million, that’s just shy of 186 million players. That’s compared to
about 68% of Americans (214m) see movies in the theatre.
Source: consumerist.com

23. Industry trends
In the games industry, outsourcing is the practice of employing other companies or
individuals to complete development tasks, such as 2D/3D art design . Outsourcing
helps keep costs down and spreads the work among more people.
Outsourcing is becoming more and more popular as the industry tires to come to
terms with a rise in revenue not being evenly distributed across the sector. The
downturn for some companies can be blamed on the global recession, the sudden
collapse of the Wii-game market, and the rising number of alternative platforms
where games can be had for little or no cost.
By far the most commonly
outsourced job, however,
concerns so-called “asset
dumps,” the thousands and
thousands of static, three-dimensional
objects needed to
populate a massive three-dimensional
world.

24. Industry trends
Streamline, an art-outsourcing company, has made art for everything from the
popular Saints Row series to BioShock Infinite.
Streamline employs thirty-six full-time employees in its Malaysian office and expects
to double that by the end of 2014. Most of its artists are based in Kuala Lumpur,
which allows the company to pay lower wages while taking advantage of a relatively
well-educated population that is also well-versed in American popular culture.
According to its C.E.O. and co-founder, Alexander Fernandez, Streamline had twenty
artists working full-time for thirteen months to help create BioShock Infinite’s lushly
detailed city in the sky.
These days, many developers have an internal art team of about five people, who
hire dozens of short-term contract artists to help add detail to the game’s world
while also coördinating with outsourcing companies to make whatever can’t be
done internally, Fernandez told me. “Seventy-five per cent of the manpower
required to produce these games is visual,” he said. “So outsourcing art is always the
first thing you’re going to look at.”