Game Power: Welcome to My World Sucka!

“Either we’re moving real fast or not at all” – Johnny Storm (Chris Evans) – Fantastic Four (2005)

Parents and critics around the globe complained vigorously about the lack of any redeeming qualities when GTA (Grand Theft Auto) IV would damage our kids psyche or open the door to them to unleash more violence in the real world.

Figure 1 - Pointless Violence – There weren’t a lot of good vs evil plots in GTA IV but that didn’t seem to bother the 10s of thousands of people who ran to stores and shopped online to grab their copy of the long-awaited sequel. Reviewers said they wouldn’t be disappointed. Shareholders certainly weren’t – Photo Source – IGN

We watched over our kid’s shoulder as he played the game on his PS3 and seemed pretty similar to what he’d run into in a week of watching TV – sex, drugs, mayhem, rock ‘n roll – yep pretty normal.

We sorta think after a period of game play he’s going to agree with Ben…“You know, living through something like this you really appreciate having the right woman in your life.”

Things have changed a lot from the “good old days” before the game industry crash in the mid ‘80’s when JT (Jack Tramiel) kicked off the first 7800 System and a little later the hand-held Lynx to take on the audacious Nintendo.

Figure 2 - Good Ol Reliable – Sure you can play your fancy PS3 or aging Xbox but don’t forget it was the Atari 7800 (and 2600) that set the stage. Actually a lot of those early players have graduated up to today’s power games.

Sure the graphics are light years better but then programs are bloated compared to epics like Ms. Pac-Man or Gates of Zendocon. Heck if programmers back then had more to work with than 128 – 640K they would have produced blockbusters too.

Maybe not.

Rockstar dropped about $100M on GTA IV and had 150 developers working for a couple of years creating their sandbox (follow the plot or not).

And in less than a week they racked up $500 M in sales? SHEESS!

JT told a couple of guys in the back they had a few weeks to knock out the game and he’d give them all the Twinkies and Ho-Hos they could eat.

Don’t even ask what he’d do for sales numbers like that…for the year!

Maybe the lack of financial support “hurt” the development and marketing a little but JT figured anyone who wanted to make/play video games didn’t need much anyway. Except for the infamous Custer’s Revenge there wasn’t much to those early games.

Who Is Out There?
Who knew those kids would grow up and still play games?

Who knew there were as many girls as guys playing?

No one realized that early exposure to video games would carry over into adulthood. Or as Reed said, “The cloud has fundamentally altered our DNA.”

Must have because today online/console/mobile gaming is a multi-billion dollar business. And it’s the strongest segment of the online commerce arena.

Figure 3 - Number 1 Sport – The biggest sport for men/women, young/old are video games. Online or casual the video game industry is a big profit center for a lot of software producers, retailers and online sites. Source – Parks Assoc

Online games are more popular than watching videos online or cruising social networking sites. As they say, online no one knows if you’re a dog (or a boomer+ player).

Figure 4 - Online Entertainment -- There are thousands of VC funded business models around the globe that will make room for indie developed video content and provide a place online where folks can meet, chat, have fun. But even more of the folks go online every evening to play videogames. Source – Parks Assoc

Like many “casual” gamers we’re more inclined to PC games than consoles.

Figure 5 - PC vs Console – While industry analysts closely watch the sales and market share shift of the key console firms – Nintendo, Sony, Microsoft – the market for online games from your computer continues to grow. After all you already have a high def screen with the monitor so you’re ahead of the game (pardon the pun). Source – NPD

Interactive Online
The robust expansion of the Internet has made it possible for more interactive games, more exciting games and more international participation:

• Broadband penetration in the twenty leading online game countries is expected to increase 48% from 2006 to 2012
  
• The total overall number of online gamers in the twenty leading online game countries is expected to increase 51% from 2006 to 2012
  
• East Asia, which includes the leading markets of China and South Korea, is currently the leading region for online games, accounting for nearly half of revenue in 2006. However, Europe and Japan are showing strong market share growth
  
• Worldwide online game revenue is expected to increase from $4.5 billion in 2006 to $13.1 billion in 2012, a 192% increase. The PC is the leading platform for online game revenue, but revenue from console online games is expected to show significant growth between now and 2012
  
• In 2006, subscriptions were the leading revenue source for online games. However, the fastest growing segment of the market was digital distribution and virtual item sales
  
• By 2012, revenue from advertising and digital distribution/virtual items are expected to equal revenue from subscriptions
  
• The two leading categories for online games are MMOGs and casual games. On a worldwide basis, MMOGs accounted for over half of online game revenue in 2006. However, in terms of market share growth between 2006 and 2012 the fastest growing game segments are expected to be First Person-Shooters (FPS/Action) and Sports/Racing
  
• North America is the largest market for online game advertising. By 2012, video game console systems are expected to account for 35% of online game advertising revenue in North America
  
• Japan is the fastest growing market for online game subscription revenue
  
• East Asia is the leading market for virtual item sales and is expected to continue to be the leading market for digital distribution in 2012. However, between 2006 and 2012, Europe is expected to be the fastest growing market for digital distribution and virtual item models

While games like GTA IV grab the headlines, the most popular games according to research by Ipsos and others are thinking games:

• casual - card/board games – 29%
  
• strategy – 17%
  
• action – driving, fighting – 16%
• sports – 13%
  
• adventure, role-playing 12%
  
• shooters – 7%
  
• simulation – 4%
  
• other – 2%

Gaming Leaders
Games like GTA IV have helped the console folks - especially Sony’s PS3.

Figure 6 - Console to TV – The one thing all of the console manufacturers are now working on (in addition to more adrenalin pumping games is to devise ways where their devices can also end up being the key component in the video content to the TV. Don’t kid yourself. Each wants to own the living room screen. Source – Ipsos

They also get people together to get together and compete (ok in the virtual world) rather than sit in dimly lit rooms like the good old Atari 7800 days.

GTA IV is the first console multiplayer game. The number of participants is still miniscule compared to MMOGs (massively multiplayer online games) like World of Warcraft (WoW) that has millions of subscribers around the globe.

Of course the top 10 titles can give you a hint as to the age category of the players:

1. Mario and Sonic: Olympic
   
2. COD4 (Call of Duty): Modern Warfare
   
3. Brain Training
4. FIFA (Fédération Internationale de Football Association) ’08
   
5. Wii Play
   
6. Rainbow Six: Vegas 2
   
7. Burnout Paradise
   
8. Pro Evolution Soccer 2008
   
9. The Simpsons Game
   
10. Guitar Hero III
    

Video games obviously to a major part of the PC/CE industry are no game! Hardware and software sales are significant and growing steadily.

Figure 7 - Soft Growth – While intelligent, non-violent games produce long-term, consistent sales results, blockbusters like GTA IV certainly make people throughout the industry sit up and take notice. The $500 M in week one sales didn’t go unnoticed by software developers but the console manufacturers also felt the ripple effect as PS3s flew off the shelves. Source – DFC Intelligence

The prerelease investment of today is equal to the total market in the mid-80s that companies like Nintendo, Sega, Electronic Arts thought was huge!

Rather than wildcatting with their own money, game developers have found that for the right amount of cash they can design in marketing messages (some call them ads) that gamers don’t mind.

Figure 8 - Marketing Opportunities – When the promotion fits in with the game play and plot, players don’t seem to mind the addition of marketing messages. That’s good news for the software firms and they are extremely careful not to alienate their core market. Photo Source – IGN

As Johnny said, “Hey! Look what the marketing guys gave us! Look, check it out, listen, listen.”

There are a lot of good reasons:

• demographics are well defined and broad
  
• even decent games have a long chance for visibility compared to placement in a TV show or bad movie
  
• online creativity enables game developers and marketers to increasingly do a better job of tracking visibility
  
• developers and marketers are concerned about placing the ad messages in appropriate, “natural” settings
  

Contrary to what critics say we don’t believe that games like GTA IV with “absolutely no redeeming social value,” are really detrimental to our kids.

Actually game play could be good for them by releasing some of their frustrations, help them improve their eye/hand coordination, stimulate creative (out of the box) thinking, and simply take a break from reality.

Hey it works for us.

Game Drugs
While there are detractors like Dr. Tanya Bryon, a child psychologist, who did a show on BBC comparing game play on MMOGs like Warcraft (GTA IV hadn’t been released yet) were as addictive to kids as drugs like heroin, coke, pot.

Can people become addicted to their gaming activities?

Sure.

Those who do will justify their activities repeating Reed Richards, “Exposure to a high energy cosmic storm could advance our knowledge of planetary life.”

Of course Dr. Bryon will cite one of his other comments, “Even the slightest miscalculation could cause our symptoms to increase exponentially... or perhaps even kill us.”

Young and old, male or female there’s always some self-restraint involved and common sense.

When that fails read the warning.

Figure 9 - Time Out Or… While parental and watchdog groups like to say that death and mayhem in games like GTA IV only contribute to violence carrying over into the real world all folks have to do is turn the system off, unplug the console/computer, kick in the screen. Or … simply use a little common sense!

That doesn’t work? Take Ben’s advice…“Uh, don't do drugs!”

But $500 M sales in the first week GTA IV for a game with no redeeming values?

Hey…works for us!