Video Game Market

 

 

Market Size:

 

With a community that is currently 364 million strong (with an estimated 80 million moderate to hardcore gamers), there is clearly a sizable market.

 

In dollar terms: in the first 1/2 of 2008...In the first five months, U.S. retail sales of games software for consoles and handheld game machines grew 45 percent over the same period last year to $3.42 billion. Overall, the industry's retail sales swelled 32 percent to $6.58 billion during the period.  "No industry in media is growing as fast" as the games business, said Mike Gallagher, chief executive of the Entertainment Software Association.

 

Table of Contents:

Video Game Market Market Size: Important Events (tradeshows) Market Research Firms: Social networks for Gamers: Blogs about games market: Virtual Gaming Gaming Business Models Games with social impact: Google enters video game advertising market: European Many Gaming sites: Fantasy Games Social network games Games on Facebook, others Games for Cell Phones Companies About mobile Gaming Hurdles to overcome advertising to overcome barriers of cost Future of the market: Why Mobile games? Potential Partners Interesting Innovations: Poker Industry Television changes the equation. Big winners draws in crowds The Poker economy Marketing Poker to the mainstream Global expansion US regulation Fighting the regulations & global competition Apart of US heritage and tradition Opportunities for side-businesses and cross promotions Teenagers in America are drawn to the game Traditional Video Games Market: Market Share news Video Game related companies Video Game related concepts External links & sources

 

 

Important Events (tradeshows)

 

The game industry's annual E3 - officially billed as "E3 Media & Business Summit"...the convention is a chance for game hardware and software makers to show off what they've got in the works, especially for the all-important holiday season.

 

Market Research Firms:

NPD Group, a market research firm focused on video games

 

 

Social networks for Gamers:

http://www.ugame.net/

 

Other major players (pun intended) in this space include Shawn Fanning’s Rupture (acquired by EA Games in May), Raptr (social network with a client-side app for online games), Curse (includes portals for World of WarCraft, StarCraft and Age of Conan), and GamerDNA.

 

see article from TechCrunch:  UGame’s Community Gamer Site Opens Up Public Beta

 

Blogs about games market:

• http://www.gamesondeck.com/

 

Virtual Gaming

 

Second Life

 

 

 

 

 

 

Gaming Business Models

 

Games with social impact:

 

• Tabula Digita raises round for educational games

• Lumos Labs and Vivity Labs

   

 

 

Google enters video game advertising market:

see:  http://venturebeat.com/2008/07/30/google-testing-adsense-for-games-in-bid-to-shake-up-in-game-advertising/

 

If the company enters the market, it should stir up the competition the way it has in other ad markets. Companies such as Double Fusion, IGA Worldwide, Microsoft’s Massive, MochiMedia and NeoEdge Networks have been carving out niches with in-game or wrap-around ads for some time.

 

 

Greystripe Monetizing iPhone Games With Ad Platform

 

The current iPhone App Store revenue share model - a 70/30 split for the sale of apps, generally in the $0.99-$9.99 range - doesn’t exactly reward developers for producing addictive games. Greystripe, an advertising network for mobile games, has stepped in to compensate developers for every time their games are played, not just for when those games are initially sold....read more by clicking on the above link.

 

 

Other iPhone ad networks include: AppLoop, a recently launched location-based iPhone ad network; AdMob, a browser-based ad network with iPhone-specific advertisements that has served almost 250 million ads; and new-comer Medialets.

 

 

Outspark, a rapidly growing community games publisher with one million users in just five months, is out to change the online game market.

Based in both San Fransisco and Seoul, Korea, Outspark wants to challenge the subscription-based model of Massive Multiplayer Online (MMO) games that’s predominant in the U.S. by offering games for free and getting revenue from the sale of virtual goods instead of subscriptions.

 

It’s a model borrowed from the highly successful Korean and Chinese online gaming markets. Users trade real money for virtual money (in this case “sparkcash,” the Outspark currency) and purchase virtual goods related to the games they play.  

 

Kim says the company’s ”cross-cultural” relationship with Korean game developers will enable them to publish games for the U.S. market that are novel and innovative. They also expect to release constant updates and upgrades, where console game companies don’t upgrade after a game has shipped.

 

That innovation has attracted the attention of media companies like Time Warner, who were interested in having Outspark create a virtual world on an outsourced basis. But Choe says the company’s real strength will be its open APIs, on which game developers and gamers can develop their own Outspark games. She says the company also plans to offer APIs, games and communities in other languages.  read more from venturebeat.com...

 

 

 

European

 

European Space Agency’s spin-off, iOpener, has received €4.1 million to start up operations. The funding is from Triangle Venture Capital Group. iOpener has developed a technology to map real-world competitions such as Formula 1 to an artificial world, allowing gamers to participate in the race virtually and in real time, www.triangle-venture.com

 

 

 

Many Gaming sites:

 

game trail... http://trailfire.com/Archbob/trails/59949  follow it to see many gaming sites

(download the side bar if you want)

 

Fantasy Games

 

• Sequoia Capital Gets Serious About Fantasy

 

 

Social network games

 

Games on Facebook, others

 

1. Playfish nabs $1M for social gaming

 

2.   Fake Scrabble onFacebook:  Will someone please start a Facebook group to save Scrabulous?  —  I can't tell if Hasbro (HAS), the maker of Scrabble, is the smartest company in the world or the dumbest.  Over 100 million sets of the game have been sold in 121 countries, in 29 different languages, according to everyone's favorite source.

 

3.  Zynga:  poker, scrabble, and much more...

• http://www.zynga.com/index.php
• http://www.zynga.com/developer.php  (for developers open source software)
• see facebook...applications...games....then look up who was the developer (link to name)

 

4.  SGN:  many games

• http://www.socialgn.com/
• open sourcs softare:  The SGN Developer Platform provides an API for social games that allows developers to plug their games into the SGN Gaming Hub and gain the benefits of mass distribution across our network, up-to-date statistics for all users, and greater user loyalty.
• he SGN Developer Application is where you can add your games to The Gaming Hub. After you add your game, it will go into an approval process.
• read more:  http://blog.socialgn.com/

 

 

 

Games for Cell Phones

 

Companies

http://www.gameloft.com/

 

EA mobile

• http://www.eamobile.com/Web/

 

 

HOVR

• http://www.hovr.com/site/index.asp
• ad-supported consumer based mobile content provider spearheading the evolution of a free mobile content based social network across Mobile platforms. Hovr provides loads of titles from a dozen world class mobile game publishers, all available to users at no cost. The ability to embed advertising into games and applications allows Hovr to deliver free content without compromising your user experience.
• Ad-supported Mobile Gaming, which successfully combines the benefits of advertising and Wireless gaming.
• There are good reasons to be bullish about mobile. Unlike any other channel, mobile allows advertisers to get close to the end-user and profoundly influence the customer relationship. What's more, mobile is the foundation of targeted and relevant advertising campaigns that build on the clues users leave such as the sites they visit, the content they view and the purchases they make.
• Hovr�s AdLogic Platform allows for the delivery of dynamic, targeted and interactive advertisements into mobile content and gives advertisers an important way to efficiently target ads based on demographic and personal profile information.
• Hovr�s AdLogic Platform enables advertisers to reach their target audience in a highly engaging and interactive mobile environment.
• For other Publishers of games:  Game publishers and developers can ad-enable their mobile games with Hovr's AdLogic platform within minutes. Hovr's adLogic Platform for Publishers is the fastest and easiest way to deliver ads through mobile games and to start earning ad-supported revenue. Now you can discover the full revenue potential of your mobile games.   Now, you finally have a way to both monetize and freely distribute your mobile content. Our technology platform - AdLogic enables advertising to be inserted dynamically within games and then delivered in a highly targeted and interactive fashion. Hovr�s network brings together publishers, developers, advertisers and gamers, who all benefit from the realism that advertising brings to mobile games across mobile platforms.
• Hovr Inc. (www.hovr.com) begins service with more than 100 titles from over a dozen world-class mobile game publishers, all subsidized via advertising and available to users at no cost. In addition to downloading free games users can join Hovr MobileSpace, a social network in which players interact and compete against each other.
• “Ad-supported content is absolutely necessary if there is to be mass adoption of mobile phones as  a content delivery platform,” said Christine Arrington, senior analyst with Acacia Research Group. “After years of attempts, interactive advertising finally has a chance to succeed because of companies like Hovr, which is solving two critical problems. They address creating a seamless user experience by eliminating extra steps to download and view content, and they are offering far more precise demographic targeting, making their whole solution attractive to both users and advertisers.”
• On other gaming sites users can typically expect to pay between $5 and $15 – even as much as,$50 – to download a single game. By contrast, at Hovr all games are free. Users merely view a,quick commercial before the game begins, and may see product placements embedded within the game. Profile information, not shared with entities outside Hovr, allow Hovr’s AdLogic platform to dynamically place relevant advertisements in front of people most likely to be interested in that content.
• Hovr MobileSpace membership now spans over 100 countries.

 

 

Jamster

• http://www.jamster.com/jcw/goto/games/mobile

 

About mobile Gaming

 

 

More than one-third of the world’s population carries a cell phone. Youth internationally are being given their first mobiles at astonishingly young ages, and it seems no demographic is safe from the idea that everyone, from a 3-year-old to a senior citizen, has an absolute need for a mobile phone.

 

Today, people are thinking more about the types of phones they can get and what those phones can do for them beyond talking

 

While web surfing, taking photos and checking email rank high on the list of mobile media usage, mobile gaming is making a steady climb among consumers, according to principal analyst Windsor Holden of Juniper Research. Second only to text messaging in use among the youth demographic, mobile games are slated to create $10 billion in revenue by 2009, according to a recent Juniper study.   “Playing mobile games is the most popular mobile entertainment activity, hands down, with one in every three mobile subscribers interested in or already playing mobile games,” Gupta explains. “For most of us, our phone is the only media entertainment device we carry around. More and more people are taking advantage of idle time, while they wait in line or enjoy a break from the day, to play a casual game or two on their phone.”  “Almost 60 percent of people under 25 are interested in and have played mobile games.” “Mobile games have a wide appeal, and a significant portion of users are over the age of 25,” he says. “The appeal of easy to access entertainment from wherever you might be is incredibly broad—from the stay-at-home mom waiting to pick her kids up from school, to the business executive with 30 minutes to spare at the airport.”  Readers might also be surprised to learn that females purchase close to 50 percent of all mobile games, a figure that has often been ignored by the mobile games market says Holden.  Geographically, China and the Far East will remain the principal markets for mobile gaming in 2008, with an expected increase of nearly 100 percent, Holden explains in the Juniper report. Western Europe won't be too far behind with mobile game downloads expected to surpass ringtones in many European markets in 2008.    “Overall, the puzzle games genre is the most popular. Casual games have wide appeal and games such as solitaire, Sudoku, Minesweeper, Tetris, Brick Breaker and poker remain those with the highest adoption rates,” Gupta says. “We see that younger demographics also enjoy playing the action and sports games.”   Variety is key to consumers who are trying out mobile games for the first time. Services like Hovr offer consumers a myriad of game choices in categories like casino, puzzle and sports. 

 

 

Hurdles to overcome

• Kumar lays most of the blame on carriers for the obstacles facing consumers in the mobile games industry.
• “Purchasing or getting mobile games is irritating to say the least,” he says. “Distribution sucks. It would be really nice to see more uniform technology between handsets, at least for gaming, but I don't see it happening.”
• “There is a difficulty in discovering content in the first place, in accessing that content, in navigating that content (game play) and in using multiple applications simultaneously,” he says. “Network speed and coverage is still an issue.”
• “The reality is, the type of gamer that is playing on their mobile phone is more interested in convenience and entertainment, and doesn't expect phenomenal graphics from their phone. It’s important to keep in mind that mobile games were not created to displace consoles, only to supplement them.”
• The very structure and function of the cell phone is also being leveraged to counteract complications.   “There have been some games incorporating the camera phone and other native mobile functionalities,” Gupta says. “There are also more multi-player games now than ever before, and we have had great feedback from our users that the social networking capabilities of our service are important to them and keep them coming back to play and socialize more.”
• In addition to the carrier and handset limitations, other important barriers to the adoption of mobile gaming include the high cost of browsing and downloading services, along with unclear price plans, Juniper reports.
• Cost:  “Most consumers are hesitant to pay $5 to $10 for a mobile game, as they are unsure what to expect,” Gupta agrees. “Despite wide-spread interest, less than 3 percent of mobile subscribers end up purchasing a mobile game from their carrier in any given month.”

 

advertising to overcome barriers of cost

• To overcome the cost barrier, especially important with the increasingly hard-to-reach youth demographic, game developers have responded with advertising subsidized or ad-supported mobile content.
• “The industry is seeing that consumers have a strong preference for free or subsidized mobile games,” Gupta explains. “Almost 78 percent of consumers said they would be open to viewing advertising messages on their mobile phone, if they are relevant, pull-based and opt-in and as long as they get something of value such as free mobile games in return.”
• “Consumers find our value statement highly attractive, and users around the world have already downloaded and played tens of millions of mobile games from Hovr,” he says. “The youth market has especially taken to this idea, because they are typically more technology savvy while also being more price sensitive.” Holden explains the mobile advertising model.
• consumers Doubt value if free:  “Essentially, what makes mobile advertising is that it provides the consumer with something for nothing, a concept which simultaneously provokes interest and suspicion,” Holden says. “Interest, because it means that they do not have to pay for a download. Suspicion, because they will wonder whether that content is of any value if it is being given away free of charge.”

 

Future of the market:

• “This year I expect we will see increased development around games that leverage the native capabilities of a mobile phone,” says Gupta. “For example, better use of the phone’s camera, games that detect hand motion and social games that use mobile phones’ communication and interactivity capabilities. In addition, graphics and audio will enhance significantly and interest in playing multi-player games will increase.”
• “I expect that we will see a marked increase in the proportion of ad-funded downloads,” adds Holden. “2008 will be the year when real-time multi-player gaming takes off and we will see the proportion of titles targeting the casual gamer rise significantly.”
• More titles, enhanced games, and the chance to play with and against your friends from wherever you are—sounds like the future of mobile gaming has something for everyone.
• Soon, even grandma will be playing spider solitaire at the doctor’s office,” Gupta says.

 

 

Why Mobile games?

• Large base and growing: 2.1+ Billion (2006) to 4+ Billion (2011)
• Mobile is the only medium for advertisers to reach 4+ Billion consumers
• Active user spends 17 hrs/wk : 13 talking; 4 data services

 

Potential Partners

• Third Screen Media
• SAT Method
• GetJar
• Kiloo
• Ozura
• Kallisto
• Cornershop
• Aqua Java
• XING Mobile
• Robotube Games
• GyRox
• Arcadia Design
• Tiny Solutions
• Stone Age Entertainment
• MobileRated
• Mobango
• Free Mobile Themes
• Astute Systems Technology
• MobiTrail
• George Williams International

 

 

Interesting Innovations:

1.  Play vs other people near you on big screens:  http://www.wired.com/techbiz/people/magazine/16-06/st_alphageek

 

 

 

 

Poker Industry

 

Popular websites such as Full Tilt Poker and Poker Stars have peak traffic of 10's of 1000's of unique visitors at any given time, occasionally with over 100,000 visitors at a time.  Many of these sites pay professional players to play along, with pay scales depending upon the relative fame of the player.  The more well known they are, the more the sites pay them to play.  Poker websites offer many innovations online in ways of blogs, forums, and community debates.  It is often said that poker has done more to develop the internet than any other industry outside of pornography.

 

 

Television changes the equation.

 

The major force behind all of the money in poker these days is the movement to television, and innovations such as miniature cameras that show viewers the cards in the players hands, so you can see who is bluffing (lying), and you can feel the agony along with the participants. 

 

Today, poker is the 3rd most watched "sport" in the USA, just behind football and NASCAR car racing (ahead of both basketball and baseball).  You can regularly find a poker tournament on ESPN or on the Travel Channel.  Britain has its own poker channel.  The world series of Poker (WSOP) may draw over 1 million viewers.

 

Big winners draws in crowds

 

In some tournaments, the money is getting massive.  For example, Jerry Yang, a psychologist recently won $8.25 million in just two weeks playing poker (in one tournament!).   These kind of massive pots are amazing, and are largely drawn from television advertising money.   The recent winner of the WSOP tournament was Anette Obrestad who won the first ever WSOP outside of the USA, and went home with over $2 million USD.  She is only 19 years old, and is from Norway (not Nevada), and is quickly putting a new face on global poker tournaments.  She came up through the internet ranks and goes by "annette_15". 

 

Younger people are flocking to poker.  They are drawn in by stories such as Chris Moneymaker, who won the WSOP in 2003 after qualifying online in a satellite tournament with only a $40 qualifying fee, and ended up walking home with over $2.5 million USD. 

 

In no other "sport" can an average Joe walk in off the street and beat the pros and walk home with all of the money.  This is drawing in a mass of new players eager to try their luck, and their skill at poker.

 

The Poker economy

 

There are an estimated 60-80 million regular players in the USA, and another 80-100 million elsewhere.  (it is still far and away and American game,but that is changing fast). 

 

Poker is by far the largest part of online gaming industry.  Poker has annual revenues of approximately $15 billion in 2006, and close to $20 billion in 2007.  Its become reality for poker to pump out new millionares almost daily.

 

A game on TV called "High Stakes Poker" runs with contestants putting in $500,000 a piece, and with the winner taking home over $5 million USD.

 

Marketing Poker to the mainstream

 

Poker has moved from a game played by only the high-rollers and low-life's, and is now quickly being accepted by mainstream America as the game of choice.

 

Behind the marketing of the world series of Poker (WSOP) , there are executives such as Jeffrey Pollack, a former NASCAR exec whose role it is to smooth the image of poker, and to bring in corporate money.   He has been a driving force behind such innovations as putting poker on the radio (a surprising success), and bringing in such big name sponsors as Hershey's chocolate, Milwaukee's Best Light beer, and Planters peanuts. 

 

Running the WSOP as a 38 year old "start up"... innovating, and moving quickly into new markets.

 

Global expansion

 

Moving into less developed markets, such as Europe, Asia and Latin America. 

 

An annual tournament in Macau will be the likely next move for WSOP, putting them in direct global competition with the new "Asia Pacific Poker Tour", which is sponsored by Poker Stars, a website. 

 

Poker is illegal in Thailand.

 

But, China is potentially a huge market, and expect intense competition as sites try to crack the Chinese market, and convert millions into potential customers. 

 

Australia is large and growing market, with 100's of thousands joining online sites since an Australian won a major international tournament. 

 

 

US regulation

 

Last year, the US congress slipped a bill limiting online poker into a bill of "port security".  The new legislation blocked Americans access to accounts that can be used to gamble online.  The ban included all games that are "predominately" subject to chance, and included poker, but excluded horse racing, fantasy sports and lotteries (strange line in the sand drawn here!).   This discrepancy resulted in a lawsuit from the island nation of Antigua (home to several online gaming sites), and is due to be settled by the World Trade Organization (WTO).  

 

The key debate:  is poker a game of skill, or a game of luck?  Is it a sport? Or, is it a base game of gambling that needs to be regulated?

 

The "skill" camp claims that poker is a long ways away from basic gambling games such as roulette or lotteries.  The skill is in the betting, and is shown in the fact that 50% + of all hands end without the cards being shown, indicating that understanding of probabilities and skill in bluffing are more important skills in poker than blind luck.  At the highest levels, decisions about betting, bluffing, and folding are based on the complex juggling of probabilities.   Could poker be a tool for educational tools?  Some claim that poker is a useful tool as it forces the player to constantly price and reprice risk, and to learn how to play the odds. 

 

The "risk"/ luck camp believes that poker is essentially a game of liars and cheats and is best won by the lucky (unlike a game of chess where the more skillful will always win). 

 

Fighting the regulations & global competition

 

players, statisticians, law students, lobby groups are all coming together to roll back the federal law, and to smooth out the confusing array of state laws....keep tuned because if laws get changed, there could be real business opportunities in the US, and until then...watch for international growth.   This should put US based companies at a disadvantage in the global competition as foreign firms innovate and move ahead.

 

Apart of US heritage and tradition

 

Rather than focusing on the "educational" merits of poker, the proponents of online poker industry would be wise to appeal the American heritage of the game, and the important role that Poker plays in the American psyche. 

 

Poker was introduced in the USA by the French colonials, as a game called poque, in the Mississippi delta region.  By the mid 19th century, the game had spread and was one of the first nationally played games. 

 

While other games may appeal to other nationals, poker has always had a special appeal to Americans. As Walter Matthau said: "the worst aspects of capitalism that have made our country so great" are exemplified in poker.

 

Poker was played by many presidents of the USA, such as both Roosevelts, Truman, Eisenhower and Nixon.  It is even rumored that Nixon funded most of his first congressional run by playing poker.

 

Famous businessmen such as Bill Gates has been rumord to finance most of the startup costs of Microsoft by playing poker. 

 

 

Opportunities for side-businesses and cross promotions

 

Because poker is a long game and requires that players stay alert, there is potential for cross marketing with energy drinks.   Note that drinking of alcohol decreases the skill of most players as it dulls the mind. 

 

There is an online poker university in Second Life...interesting business model!

 

 

Teenagers in America are drawn to the game

 

And parents are encouraging teenagers to play.  Parents increasingly see poker as a "better" version of a video game...one that actually increases mind skills, rather than mind-numbing like most video games.  Also, since the game does not mix well with alcohol, it is seen as a "clean" game by many parents. 

 

Marketing the game as an educational tool is gaining significant movement in the US.

 

 

 

 

 

 

 

 

Traditional Video Games Market:

 

Market Share

Electronic Arts is the industry's largest revenue generator, beating out domestic competitors ranging from Activision and Take-Two, to international competition such as Vivendi Games and Konami. The potential acquisition of Take-Two Interactive Software (TTWO) and its entertainment properties would do well to add to EA's share.

 

Company	2006 Market Share
Electronic Arts	19.80%
Konami	9.80%
Take 2 Interactive	8.90%
Activision	8.80%
Other	52.70%

 

 

 

 

 

news

 

• games on the iPhone with Sega’s Super Monkey Ball
• Widget-maker RockYou raises $35M, claims larger reach than Slide
• Report: RockYou looks at raising another round, because it can
• AOL launches social games with Cellufun
• much more.... From VentureBeat.com
• Mochi Media Raises $10 Million For Flash Game Tools

 

 

Video Game related companies

 

 

Sony - Sony Corporation (TYO:6758; NYSE:SNE) is an international corporation with major businesses in electronics, video games, movies, and finance. The Japan-based company is one of the... read more 708 views | Related: Advanced Micro Devices (AMD), Apple (AAPL), Allegheny Technologies (ATI)

 

 

 

 

 

 

External links & sources

• http://www.digigonews.com/cgi-bin/display_feature.cgi?number=678367436