(Credit:
Activision)
In the last year, consumers spent more money on video games in Britain than on films, including both trips to movie theaters and films on DVD, new figures compiled for U.K.'s Daily Telegraph indicate.
In the 12 months leading up to the end of September, 1.73 billion British pounds (about $2.8 billion) were spent on video games, according to data-monitoring company GFK Chart-Track. The U.K. Film Council said 1 billion British pounds ($1.6 billion) were spent at the British box office during the same period, with an additional 198 million British pounds ($320 million) spent on films released on DVD and Blu-ray.
- U.K. video games: 1.73 billion pounds ($2.8 billion)
- U.K. film: 1.198 billion pounds ($1.93 billion)
This means that approximately 532 million pounds ($860 million) more was spent on video games in 2009, roughly 30 percent more than on films. And while 1.73 billion pounds is impressive, it's still well shy of the $20 billion predicted for U.S. game sales in 2009. In fact, the U.S. spent $2.7 billion on games in November 2009 alone.
Video games, by no means a niche in the U.K, or most other parts of the world, are obviously big business and these statistics clearly show that the growth in new forms of digital entertainment specifically available via a computer or game console is having a major impact on more traditional forms of entertainment.
Contributing to the success of gaming in the U.K. were price cuts to jump-start sales, as well as tie-ins to supermarkets, greatly expanding the potential number of buyers and targeting gamers at the check-out stand, according to The Daily Telegraph. Further, Amazon.co.uk reported that Call of Duty: Modern Warfare 2 was the No. 1 seller for 2009, beating out DVDs of "Harry Potter" and "Twilight."
The industry data compiled by GFK Chart-Track also shows that the number of games consoles being used in Britain nearly doubled in 2009 to 25 million which means there are enough consoles for nine out of every ten households in the country to have one.
According to the report, only television--including DVDs of television shows, along with the cost of the license and satellite subscriptions--and music are bigger forms of entertainment.
Late last week it was reported that following Venezuela's lead in attempting to reduce "violent tendencies" in South American children, Brazilian Sen. Valdir Raupp has authored a bill that would make it a crime to make, import, or distribute "offensive" video games.
The goal of the bill is to "curb the manufacture, distribution, importation, distribution, trading, and custody, [and] storage of, the video games that affect the customs, traditions of the people, their worship, creeds, religions and symbols."
Where this ban, like many others, falls short is in assigning blame for societal ills to video games instead of dealing with larger social issues, including a lack of parental oversight. There are, no doubt, influences in Brazil that are different from the U.S., but video game ratings have proven to be an excellent example of an industry-wide standard that could easily be adopted internationally.
In a recent report, the Federal Trade Commission (FTC) praised the video game industry for continuing "to have the strongest self-regulatory code" of all the entertainment sectors.
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I received a note from Andy Gilbertson, one of the developers behind Parallel Kingdom, a location-based mobile massively multiplayer (or MMO) game that uses your GPS location to place you in a virtual world atop the real world. The game seems like an obvious winner for the iPhone, but the team has been struggling to get it past Apple's app review policies.
Gilbertson's travails with the iPhone application acceptance process illustrates why Apple's gating of applications is a troubling reality for developers--and for consumers. And while it's understandable to have a gating mechanism in place, if Apple wants to remain at the top of the mobile application space, it so heavily dominates, the company needs to commit more resources to not just the application review process, but in communicating with developers. As of my last e-mail exchange with Gilbertson, Apple had not responded for more than six days. My call to App Store PR has gone unreturned for about 18 hours as of this post.
Apple's acceptance policies can be shockingly difficult to navigate, so much so that some have marveled at the fact that an ecosystem could build up at all.The fact that iPhone applications are written in Objective C, a previously uncommon programming language, is in and of itself a show-stopper for many developers, but that obviously hasn't stopped development.
Earlier today Ars Technica wrote about several prominent developer including Facebook's Joe Hewitt, Second Gear's Justin Williams, and longtime Mac software developer Rogue Amoeba, all of whom recently "decided that enough is enough" and that they would abandon iPhone development efforts. And while each cites different reasons, the underlying thread is that they've had enough of waiting for Apple to distribute their apps, an instantaneous effort on the Internet.
While restrictive or complex policies are unlikely to stop the iPhone juggernaut, they can be very painful reminders of what would happen if we regress 15 years to the unfortunate walled gardens of AOL. Tim O'Reilly reminded us of the risk of the closed Web recently, commenting that "anyone can put up a Web site, or launch a new Windows or Mac OS X or Linux application, without anyone's permission. But put an app onto the iPhone? That requires Apple's blessing."
It's unlikely that a few developers falling off of the iPhone train will have a dramatic effect on the growth of the market, but this kind of unhappiness can easily lead to a backlash. The big question is if another mobile platform can take the place of the iPhone.
Android has arguably the best chance, but it currently struggles due to immaturity of its own application ecosystem. Nonetheless, there is a huge revenue opportunity for an open-Web approach to mobile applications. It remains to be seen if Android can live up to the hype and not fall into the same trappings as the App Store. For all of Apple's sins in how they run that business, it's undeniable that it remains hugely successful.
With Electronic Arts' recent $400 million purchase of Playfish, social games are all the rage in today's tech industry. That's no surprise: lightweight games on social networks (which people usually play while they're goofing off at work) and social games have attracted huge player numbers with the biggest titles boasting 20 million to 60 million regular players.
City of Eternals.
(Credit: Ohai)But here's the worst kept secret about the genre: most social games aren't very, well, fun. They offer limited interactivity, game play challenge, and graphics. Consequently, players aren't invested enough to spend much money on them, especially compared to "hard-core" massively multiplayer-online (MMO) games. Even with the better social games, average revenue per users is less than a $1 per person.
By contrast, millions of World of Warcraft players willingly pay $15 a month in subscription fees alone. But, what MMOs like WoW have in revenue, they lack in growth due to the high technical hurdles and subject matter. WoW seems to have tapped out at around 12 million players, far less than the largest social games. And while the sustained revenue is great, attracting new players remains a challenge.
Enter City of Eternals, a Web-based MMO with a modern vampire theme from a new start-up called Ohai. After a long conversation with company CEO Susan Wu, a pioneer in the online gaming and virtual goods space, there are a number of reasons I think Ohai has the potential to succeed in the sweet spot between social games and hard-core gamer MMOs, and why the shift to social connection could become gaming's next big thing.
Ease of play
The biggest game platform isn't the Nintendo Wii or the iPhone, it's Flash, a browser plug-in installed on more than 99 percent of the world's PCs. An estimated 200 million people already play casual Flash-based games.
And while most MMOs require a huge client install, Ohai CTO and game industry veteran Don Neufeld (Everquest II, PlanetSide), and his development team (Free Realms, Lord of the Rings Online, Star Wars Galaxies, Dungeons and Dragons Online) have re-engineered Flash into an MMO platform that pretty much anyone can play, without having to install additional software or hardware upgrades. As Wu put it, this means Ohai can build "Games for your aunt who plays FarmVille on Facebook and your cousin who can't play World of Warcraft on his school PC."
Deep social network integration
City of Eternals is fully integrated with Facebook and soon Twitter, but that doesn't mean the game is only playable within the social network. Players' Facebook profiles follow them into the vampire world, so whenever you're curious, you can click on a fellow vampire, and check their Facebook profile. This is the first time I've seen this feature in any MMO, and it brings in some new possibilities--making it much easier to socialize (and of course flirt) within the game. Wu told me City of Eternals' gender spread is 50-50 (extremely rare, compared with male-dominated MMOs), so I wouldn't be surprised if it became a major online hotspot for socializing. Especially since the game isn't about geeky elves and orcs, but far more popular vampires--see below.
Subject matter
The Twilight book series has sold more than 85 million copies worldwide; the Underworld movie franchise has brought in more than $300 million in theatrical sales; and TV's True Blood and Vampire Diaries both have huge cult followings. Vampires are obviously pervasive throughout popular culture, but there's yet to be a full-fledged vampire MMO.
Still in Alpha stage, Wu told me that players average 12 logins per day in the game, with an average session length of 5 to 6 minutes, fulfilling one of the company's goals of making a "bite-sized MMO."
City of Eternals is Ohai's first of many of what they call "MMOs for everyone." Of course, there's still a lot of unknown variables. The vampire craze may wane too soon, and as the Electronic Arts purchase suggests, the competition is huge. Maybe I'm crazy, but by next year, I think there's a good chance the most popular MMO on the market won't be World of Warcraft, but City of Eternals, or another game that crosses the boundaries between MMO and socialized gaming.
Gamers are not just making purchases to enhance their gaming experience but also selling virtual assets to other players, according to new research from video game market research firm VGMarket.
Sales of virtual goods are expected to reach $1 billion this year and already generate near $4 billion annually in China. But there are some challenges, primarily the fact that once you convert your real money to virtual cash you can't readily get the dough back out.
The research revealed that in-game currency is the most frequently sold digital good from player to player and that two out of three sellers sold in-game currency in the last 12 months, earning a median of $22. PlaySpan, a provider of monetization and payment solutions for games and virtual worlds and sponsor of the research, considers that to be good news as its platform enables game developers to provide player to player marketplaces for their players. In addition, the PlaySpan Marketplace currently provides a secondary market for IMVU players to buy and sell goods as well.
One out of two sellers made a sale in a social network game over the last 12 months and earned a median of $50, while one out of four sellers made a sale in a free-to-play game over the last 12 months, with their median earning being $98, or nearly double that on social networks.
Eric Hartness, chief marketing officer at PlaySpan, told me that the secondary market is a boon for games, adding value, real and perceived, to all players by associating a real world dollar value on their playing time, game accounts, and digital items.
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Online gaming, like many other markets tends to have a few big winners, in the case of China's major game sites, three companies enjoy up more than 50 percent of the market share.
- Tencent Holdings--20.2 percent of the market and 1.24 billion yuan ($181 million) in revenue
- Shanda Games--20 percent of the market and 1.23 billion yuan ($180 million) in revenue
- NetEase.com--12.7 percent of the market and 780 million yuan ($114 million) in revenue
Tencent makes money from premium instant messaging services, pet penguins (seriously), and page decorations that allow users to customize their game space.
Earlier this year, Pearl Research predicted the Chinese online gaming market would reach $5.5 billion by 2012. At this rate, it's almost guaranteed to go beyond that estimate.
Meanwhile, back in the U.S., the latest Inside Virtual Goods report predicts that trading in online virtual goods will top $1 billion in 2009. We've certainly seen a big uptick in the purchase and interest in virtual goods--especially in the recession where people are looking for more bite-size gifts.
The report cites Zynga as the leader in the U.S. with revenue estimated at $300 million. Who knew you could make that kind of money selling poker chips, mystery crates, home improvements and flame throwers?
As market research firm NPD Group prepares to release sales data data for the U.S. game market next Thursday, other analysts have predicted a return to double-digit growth after six months of decline.
According to Edge Online, Wedbush Morgan Securities analyst Michael Pachter and Electronic Entertainment Design and Research's Jesse Divnich expect monthly software sales of $750 million (up 21 percent year over year) and $715 million (up 16 percent), respectively. And while these are still just estimates, it shows that consumers are still willing to spend on high-quality new games.
EEDAR's top 10 forecast:
Halo 3: ODST (360, Microsoft) - 1,800,000
Wii Sports Resort (Wii, Nintendo) - 500,000
The Beatles: Rock Band (Wii, EA) - 350,000
The Beatles: Rock Band (360, EA) - 325,000
Marvel: Ultimate Alliance 2 (360, Activision) - 300,000
Madden NFL 10 (360, EA) - 275,000
Batman: Arkham Asylum (360, Eidos) - 250,000
Batman: Arkham Asylum (PS3, Eidos) - 250,000
Guitar Hero 5 (360, Activision) - 250,000
Guitar Hero 5 (Wii, Activision) - 200,000
One interesting note on the top 10 list is that it contains only seven titles, which shows the importance of supporting multiple consoles.
While recent research suggests that video game addiction is reaching pandemic levels, the prevalence of such addictions is being disputed widely.
Video games are indeed an easy target for many societal ills, not just addiction. Driving home that point, Neils Clark, co-author of "Game Addiction: The Experience and the Effects," on Saturday described in a blog post what he deems 10 game addiction fallacies.
The list of fallacies includes the fact that games aren't drugs, which means that treatment will vary greatly. In addition, because definitions and methodologies used in studies are varied, criteria by which addiction is measured is inconsistent.
Clark's post highlights a few points related to how addiction is treated behaviorally, as well as how the media has chosen to portray gaming in a negative light.
The consistent challenge in measurement exists not just in statistics gathered but also in the methodology used to understand the data. For example, one study cited by many experts was based on extrapolating data from a survey that asked adults about their gambling habits.
New data released by Gambit, a micro-transaction platform provider, illustrates the complexity of both customer targeting and analyzing micro-transaction buying patterns. The major takeaway: older players seem like a good target market until you dig in to find out that they don't spend a whole lot.
But, it takes a minute to understand the data, as Gambit's Susan Su points out in a blog post on how age impacts social-gaming monetization. While it would appear that older users are a good target market thanks to their high revenue-per-user statistic, they are actually pretty meaningless in terms of revenue.
So what does this mean for game developers looking to monetize users?
First, the older demographic shouldn't be ignored as it offers a very high revenue-per-user ratio. Second, it shows that younger gamers are figuring out ways to pay for things, leading me to believe that alternative noncash payment platforms such as game cards and in-game currency have a strong future.
The other important factor in this data is that game developers (and really any marketers) need reliable data to target the best customer. Even customers with low annual revenue figures can be very meaningful provided you can find enough of them. Think of Paypal or Visa in terms of low-margin high-volume transactional systems that bring in high-quality revenue streams.
(Thanks to Susan Su (@susanfsu)of Gambit Payments for use of the data.)
While certainly not your average 24-year-old, he's clearly in touch with how video games can make us all feel better. He's also apparently a Mac fan.
Well, I view video games as something of an emotional therapy, a mundane level of emotional therapy for me. We all have emotions whether we're Buddhist practitioners or not, all of us have emotions, happy emotions, sad emotions, displeased emotions and we need to figure out a way to deal with them when they arise.
So, for me sometimes it can be a relief, a kind of decompression to just play some video games. If I'm having some negative thoughts or negative feelings, video games are one way in which I can release that energy in the context of the illusion of the game. I feel better afterwards.
The aggression that comes out in the video game satiates whatever desire I might have to express that feeling. For me, that's very skilful because when I do that I don't have to go and hit anyone over the head.
I wonder what games he plays? Maybe I should friend him on Facebook and setup a challenge?
