Over the last few decades, gaming has evolved into a respectable medium. The gaming industry has long been considered illegitimate compared with the music, cinema, and other media industries. However, with a projected global market revenue of $65 billion for 2011, the medium has matured into a booming industry. While the history of gaming has been tumultuous, it is the future of the industry that is most exciting. In the years to come, the profitable industry will continue to harness some of the most sophisticated technology available to consumers for the sake of entertainment. And with billions of dollars at stake, competition is sure to drive creative innovation and development throughout the industry in the following ways.
The category that ordinarily accompanies the phrase video game is the traditional, “hardcore” game. “Hardcore” gamers typically play games that require commitment and a high degree of skill. They are normally played on either a video game console or PC. In reality these individuals represent only a fraction of all video game consumers. However, though casual gaming has become increasingly profitable and recently garnered a great deal of media attention, “hardcore” gaming is here to stay. But while formulaic blockbuster hits such as Halo and Call of Duty are sure to continue selling millions of copies around the world, there will certainly be some evolution in this department.
“Hardcore” gaming as a medium has seen a variety of developing trends throughout its history. One of the most significant modern shifts is towards online multiplayer. Every major game console contains technology allowing the user to interact with other gamers over the Internet. And while this isn’t necessarily a new development, it has become an essential component of any successful game. In the past, games that featured only a single player mode were considered completely adequate and would not receive any penalty when it came to critic reviews. At present, if a game does not feature some form of online multiplayer mode, the game suffers at the hands of the reviewers. Online multiplayer has become something that is expected out of all games, and rarely is a title released that is both praised and lacking multiplayer. In the future, as broadband Internet permeates into more homes, this trend is sure to progress to its logical conclusion. Right now, online multiplayer clients such as Xbox Live are still considered an exclusive service and charge users a monthly subscription fee. In the future online multiplayer will become even more commonplace, with advents such as cross-compatibility. Unless online multiplayer clients begin providing some unique incentive, services like Xbox Live will have to become free in order to stay competitive.
Historically, the most consistent development in the “hardcore” gaming field has been the progression of technology. Game graphics and performance have continually improved over the years and they are certain to continue to advance in the future.
Consumers in the 21st century are plagued with fees for services such as TiVo, Netflix and smart phone data plans. Considering the state of the economy, in the coming years it will be increasingly difficult for these consumers to justify spending hundreds of dollars on a dedicated gaming console despite the sophistication of the technology and graphics. As a result, gaming consoles will have to begin incorporating other enticing mediums and products. Consoles will evolve into full entertainment hubs. Some of this has already transpired with the inclusion of a DVD player in older consoles such as the Playstation and more recently, a Blu-Ray player in the Playstation 3. But in a world where social networking and video streaming are commonplace, these devices will be expected to go beyond merely being entertainment hubs. As a result, consoles have begun incorporating more intriguing products such as Netflix, web browsers, Twitter, and Facebook. The next generation of consoles will adopt even more functionality and products, making the new hardware a justifiable purchase and a necessity in modern homes.
Motion sensing functionality can be found in most current generation consoles. The accelerometer-powered technology was pivotal in making the Nintendo Wii the best selling console. It was later embraced by Microsoft with the Xbox Kinect and by Sony with the Playstation Move. But while all three have been successful, motion sensing is on its way out, at least in its current form. The media industries revel in gimmicky technologies that enable them to charge consumers a premium. Whether it is Cinerama or 3D movies, these passing fads force audiences to pay extra for an exciting new experience. Motion sensing is no different. Companies such as Microsoft and Sony make significantly higher profits from peripheral hardware sales over software. However, after several years the novelty of motion sensing games has worn off and the technology is on its way out. It is definitely possible that it will reemerge in the future through a more legitimate means, but certainly not again as a gimmick. What exactly the next gimmick will be is harder to predict. However, if the Nintendo 3DS proves to be popular, other companies will attempt to emulate it’s success.
Casual & Mobile Gaming
Casual games are simple and designed to be played in short bursts. They don’t require nearly as much of a commitment as “hardcore” games and they ordinarily target the masses. In addition, casual games are traditionally played on web browsers and PCs, adding to their affordability. Casual game players might not even think of themselves as gamers. Throughout the development of the gaming industry, casual gaming has been looked down upon as the inferior, watered-down iteration of the medium. However, casual gaming is on the rise and shows no sign of slowing.
Casual gaming is not a new development, it has always existed as the “soccer mom’s pastime”. But despite usually appearing on PCs and web browsers, lately casual gaming has expanded to mobile devices and even gaming consoles. The public’s embracement of the iPod and the smart phone has allowed casual gaming to explode into a mainstream, lucrative market. Notable games such asAngry Birds and Words with Friends have captured the masses with addictive, straightforward gameplay. As more iOS and Android devices make their way into the hands of customers, and as more money pours into the space, casual gaming will only get bigger.
Traditional, “hardcore” video game companies have taken notice and many are now scrambling to incorporate casual gaming into their repertoires. Microsoft introduced the Kinect and continues to update the Xbox Live Arcade with simple games featuring learning curves so gentle that the whole family can play with ease. In a world where every “hardcore” game has players execute complicated manipulations of joysticks and buttons, social games are going to thrive. Strangely enough though, Nintendo in particular is resisting the surge of casual games. Nintendo, itself a fairly casual gaming company, has repeatedly stated that it does not see the iPhone as competition. Regardless, the casual gaming onslaught as begun and can not be stopped.
As an industry develops, different business models evolve. The gaming industry is no exception. Recently, the free-to-play model has risen in popularity and is sure to gain more traction in the future. The free-to-play model usually makes money through micro-transactions and virtual goods. Micro-transactions are small purchases a player can choose to make for virtual products such as in-game items or extra features. These virtual goods are not necessary to play the game. Hundreds of these micro-transactions can amount to large revenues with more popular games. And because these games are completely free, players have few reasons not to play.
Many games have switched from traditional business models to a free-to-play approach. Team Fortress 2, a “hardcore” shooter recently went free-to-play and now charges only for exclusive hats and weapons. Similarly, Lord of the Rings Online switched to free-to-play and charges for in-game items and extras. Far more people have been began choosing to play these games since the change. And ultimately, many of those players have no problem occasionally treating themselves to a few $1 virtual hats to wear on the battlefield. Other games like World of Warcraft have adopted a try-before-you-buy version of the model, allowing users to play up until level 30 before they have to begin paying. Allowing players to use a strong product for free before they have to spend money on it has been proving far more lucrative than the classic pay wall approach. This trend is one that is expected to become more widespread in the coming years.
Social Gaming is a phenomenon that has arisen with the popularity of social networks. Essentially, a social game is a casual game built into a social network such as Facebook. Games such asFarmVille, The Sims Social, and CityVille have rapidly risen to become some of the most played games in the world. Their popularity stems from the basic design of social games. The casual game elements allow players to pick up the game and play in bursts of time, regardless of prior experience. The social network aspect makes the games easily accessible, and it allows users to play with their real-world friends. This relatively new platform has been growing at an explosive rate and is definitely here to stay.
Social games fully embrace the free-to-play micro-transaction model by allowing players to play through entire games without paying for anything at all. However, games like FarmVille offer virtual items, features, and other goodies for very low-end prices. When players inevitably end up with a quest where they must either work to gather items from their friends or simply skip that step by paying $.50, many farmers will eventually take the paid route. In addition, most social games lack a real objective, and instead have a long-term “virtual doll house” display element. In that sense,FarmVille players take pride in showing off their accomplishments and having nicer farms than their neighbors. For many players it is worth the few dollars to bolster their farm or farmer with some special item or feature.
To clear any remaining uncertainty, over the past year almost all the major social game developers have been bought up. Playfish was bought by the massive game producer, Electronic Arts. Playdom was bought by Disney. And the most popular developer, Zynga, is planning a $9 billion initial public offering this winter. The top three games feature at least 29 million players apiece. As long as the social networks retain popularity, social gaming will only grow.
Gamification is a recent trend that introduces game elements to other products, making them even more enticing to users. Usually this is accomplished using progress bars and achievements, creating a goal for the user to work towards. A popular mechanism is awarding stamps or badges for completing various tasks. In FourSquare, users can check-in to locations and post updates on their social networks. Check-in to the same place enough times and the user will earn Mayorship of that location. Collectible badges are also awarded for checking-in to specific venues or by accomplishing certain tasks. In Turntable.fm, a social music and DJing site, users playing music can unlock new avatars by accumulating favorable votes from the crowd. At their core, both FarmVilleand FourSquare are not fun; the two could easily be considered chores or work. But with powerful elements of gamification, checking-in to locations, harvesting crops, and tending your neighbors animals becomes a form of entertainment. In this way, strategic implementation of game elements into otherwise mundane tasks can improve efficiency. Gamification is spreading.Soon game elements will appear in all kinds of professions with every implementation imaginable.
As gaming continues to legitimize as a profitable and popular medium, advertisers will become increasingly interested in the industry. Advertisers are always looking for new ways to reach out to the ideal, young, malleable target demographic. Obviously video game consoles provide a great means to target niche audiences in dynamic ways. But while regular video ads during the loading screen of a casual game are somewhat effective, they don’t take advantage of the powerful advertising opportunity that video games present.
When a user plays a game, they are usually forced to give it their undivided attention. If you insert brands and products tastefully into games, then users remain one hundred percent focused on the advertisement, engaging with it in a meaningful way. Burnout: Paradise, an Xbox and Playstation game, populates its in-game billboards with real advertisements. Users don’t mind this sensible implementation and actually think it adds to the immersion. Similarly, on the social games side, farmers in FarmVille were able to visit a special Frito Lay farm for a few days. Accomplishing quests on this branded farm would unlock special items for the player to put on their own farms.
Video games provide a unique medium where audiences can interact dynamically and attentively with products. Consoles and PCs provide the means for very specific metrics concerning the demographic make up of an audience. And the nature of video games allows for the user to experience an advertisement on a level no other media industry can offer. In the future, advertisers will continue to flee from the dying print mediums and continue to find search for viable ways to advertise on the web. Eventualy, the agencies will realize that this is a largely untapped medium full of ideal, target-able consumers. Not only that, but these target audiences are even willing to accept tasteful ads into their game worlds. It won’t be long before advertisers begin bidding competitively for video game ad space.
Building on both the notion of gamification and marketing, is the idea of the advergame. These are typically short, simple, low-quality games that serve primarily as advertisements. Advergames are not a new concept, but they have historically been considered trivial. As technology becomes more sophisticated, and gaming continues to grow in popularity, more effort could easily be put into these games until they form a strong and valuable means of promotion. For example, recently the “hardcore” console and PC game, Dragon Age II was promoted with a free-to-play Facebook game before its release. Players who performed well in the Facebook game would unlock unique items in the full length game. Though this isn’t technically an example of a traditional advergame, this type of social companion promotional game offers a viable way to advertise a product and will be used more in the future.
A area of gaming that fluctuates in and out of popularity is eSports. Electronic sports are competitive video games presented in a sports-like format. Organizations such as Dreamhack andMajor League Gaming provide large-scale tournaments inviting sponsors, news organizations, endorsed players and fans from all around the world to spectate and compete. Unfortunately, the organizations are largely susceptible to the changing popularity of the games that are played in their tournaments, accounting for some of the fluctuation. However, with strong titles such asStarcraft II presently on the scene, eSports is on track to becoming a mature and legitimate medium. With Major League Gaming already getting better viewership data than popular cable channels such as MTV and Comedy Central, it’s possible that eSports will evolve into a serious business.
Of course the gaming trends and predictions discussed here are only a few of the notable changes that will occur within the industry. Obviously, with Steam and now Origin, digital distribution has become extremely significant in the PC gaming space. But otherwise, the evolution of business models, gaming platforms, multiplayer gaming, and external business interests in gaming, are some of the more influential developments that are poised to seize the video gaming industry. Obviously, whether or not these predictions occur is still up in the air; only time can tell what the future has in store for the gaming. But if current trends are a sign of what is to come, then the gaming industry has an exciting road ahead.