With Diane taking a much deserved break, I took on to write on the regular blog post on what we think are going to be the trends in our space for the coming year. Not to put her to shame, I decided to be even more late in delivering this than she usually is. It is also likely to be a different kind of look at the trends, hopefully, it will be equally interesting. If not, come back in a year.
Last year’s perspective from Diane on trends proved to be true and should continue very much in the same direction:
● PC games are doing better and better, being driven by online games as well as by the surprise phenomenon from last year, crowd funding. While the first ones are driving their growth through Free-to-Play business models and expending the game genres using them; the second ones, for their mast majority Pay-to-Play games have found a new breath with the ability to engage directly with users from the beginning, and monetize them quite early. It is interesting to see that in both cases, there is a dimension of modularity in how much you want to commit financially to the game. There would be much more to say on crowdfunding and where it can go this year, but I will keep it for another time, and for once, discuss more or less everything else.
● Mobile phones and tablets are in a very interesting place at the moment. With Android outgrowing iOS, the opportunities for games are expanding as well. There is still the issue of the fragmentation, but Samsung’s devices are performing well enough to make it a lesser concern for outfits that don’t want to spread themselves too thin. Both in Europe and in Asia, Android is now leading over iOS, making the current attempts at Android “consoles” (Ouya, Gamestick and the Shield are the 3 names I expect to see come up on a regular basis in the coming 6 months on the subject) that much more interesting, even though the success of those is very uncertain and will probably be dependent on a proper support from the retailers to have a chance to succeed. Regardless, this will help grow that part of the market. Most studios still have a very strong “iOS” first when they develop for mobile, still regularly skipping Android entirely. Fragmentation is one reason for this, but, probably more often, the more difficult monetisation is very central in that decision. If the platform keeps its current growth trend, that could well change to see more simultaneous launches or even Android first become more prevalent. There is still a long way to go though. I am very curious to see who is going to win the Social Graph party on mobile though. In Asia, Line and Kakaotalk are really advanced, eating Gree and DeNA’s breakfast on that segment, I haven’t seen a similar contender emerge in Europe (or in the US) at the moment. Whatsapp might be the closed at getting there, but they don’t seem to show any interest in gaming and users can very easily jump from one app social ecosystem to another, much more readily than they would on the web it seems. I would be very surprised that no Social Graph app emerges in the coming 12 months. There might be multiple ones for that matter, with a country per country market dominance, and if games are an excellent way for those to monetize.
● New consoles! Or not… I think I am getting very biased on consoles after years of avoiding them, sometimes actively (irrelevant to the games I am the most involved in), sometimes unconsciously (being a PC player personally). This new generation that is coming is not getting me excited. It will offer a lot more opportunities in the segment that interest us, online games, especially if they start to open a lot more to Free-to-Play business models. There are a few games already there, and they don’t hint at at a great experience for the studios. If only just for the total lack of control of components of the funnel, it is not going to be attractive to many existing providers of online games. What has been said so far (or seen if you include the Wii U) shows the manufacturer are aware of the trends of the market and are trying to integrate them in their offers (arguably, the video streaming on PS3 is less gimmicky than the touch screen of the Wii U controller), but fundamentally I feel like they will just cater to the audience the current-gen is targeting and a good chunk of that audience is satisfied by their existing consoles. It will offer games with better graphics and all, new iterations of key franchises, and they will do well for a while, but they won’t bring anything new and they won’t be able to integrate what they need to renew themselves. It will take a big change to the current plan for this to change.
● New hardware! This is *a lot* more exciting to me. The growth of the Android ecosystem, the greater access to funds and attention through crowd funding is creating opportunities for new hardware and experimentation in a segment that has been for a long time too complicated for an independent approach. Independent might be a stretch, but still the OUYA is basically a startup. Gamestick and nVidia Shield are coming from established companies, but going beyond what they have ever done before (or so it seems to me). The Occulus is mightily intriguing (I am obviously keeping a close eye on this one as Strike Suit Zero will be supporting it) and I feel that the opportunities of this kind are now a lot more accessible and they can easily create the surprise this year. Is someone going to finally crack the formula for a good game using NFC? Is Augmented Reality good for games? 3D printing anyone? What is cooking in some crazy minds that can totally change the deal? Software offers an infinite number of opportunities, opening to options to integrate some form of hardware more easily, it demultiplies what can be considered… In many ways, that was what made Activision successful with Guitar Hero and more recently with Skylanders, except now, you don’t necessarly need to be a large publisher.
● After spending a good time looking at the state of MMORPGs for our report on them, it is obvious to us that the market saturation is slowing the growth of that segment. The year has already started to see some consolidation with Gala Net Europe and North America being acquired by Webzen. There are still opportunities, but they won’t lie in extending a portfolio very quickly but rather by expanding on the genres, increasing the production value but also the game experience. The critical mass required along with the costs to make those games will still make said opportunities limited to a few studios and publishers.
● There is a lot of growth at the moment for session-online games. They offer a wider variety of game experiences, expanding the market and not competing so much with each other. They also tend to reach profitability quicker, sustaining the companies business over a long period of time. This said, some genres are busier than other, with FPS leading the charge and games from a wide range of quality level. Crytek and Trion will enter the fray this year with Warface, Splash Damage with Dirty Bomb, and I am very keen to see how they perform and how the landscape will change (or not) with an even bigger selection of games coming. At the end of the day, this has not much change from last year: more genres will emerge and will find their way to build sustainable businesses. They won’t all become block busters the way League of Legends and World of Tanks did for sure, but they don’t need to to be successful.
● eSport has been growing so fast this year, it seems like the industry is still playing catch up on this. It is definitely a difficult exercise to integrate eSport inside your project, people with experience are not that common and the complexity ecosystem of eSport itself, where you need to align the interests of the studio/publisher, the teams, the sponsors, the event organizers, the streaming solutions, the casters,this is not making it any easier. But it also means that the opportunities are equally numerous, on all levels. eSport will keep growing this year for sure, and hopefully we should witness a few breakthrough in terms of scale and how it gets structured, especially as the West is playing catch-up on Asian countries on this.
Of Other Things
● Well, mostly my mind is going toward merchandising as path for growth for the industry this year. It has very often been a monetization path that has been badly managed, even by some fairly major brands. However, two things are changing the situation. The first one is quite impressive examples of licensing done well: Rovio (worldwide); Moshi Monsters (UK); Dofus (France). They prove that it can be a profitable activity in itself (and honestly, if you are just breaking even, you are still doing very well considering the extra exposure it grants you). The second one is Kickstarter… again. After avoiding for years to get in the complexity to manufacture and distribute merchandising, studios of all sizes going to crowd funding are getting their hands dirty in order to raise the stakes and get the most money possible for their projects. And I am pretty sure the experience is not leaving them unmoved. Those two elements together are contributing to break down the passivity that the industry had toward merchandising while every other entertainment industries were properly tapping into it.
There are many other things I am probably not seeing (and Diane would be pointing at half a dozen others for sure), please share what you feel are the new directions the industry is going to take this year.