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Overview of the Overview of the Interactive Entertainment IndustryInteractive Entertainment Industry

Ernest W. AdamsErnest W. Adams

ewadams@designersnotebook.comewadams@designersnotebook.com

http://www.designersnotebook.comhttp://www.designersnotebook.com

+44-1483-237599+44-1483-237599

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First, A Little HistoryFirst, A Little History The game industry grew out of two branchesThe game industry grew out of two branches

Personal computer gamesPersonal computer games Arcade gamesArcade games

Other branches arrived laterOther branches arrived later Home consolesHome consoles Online gamesOnline games Gambling machinesGambling machines Location-based entertainmentLocation-based entertainment

1960s

1970s

1980s

1990s

2000s

First timesharing systems

BASIC programming language

Microprocessor invented, 1971

Arcadevideo

games

Personalcomputer

games

2010s

Apple II

Commodore 64

Onlinegames

IBM PC

SoundBlaster

VGA card

CD-ROM

CompuServe

America Online

Internet gaming

Mainframe computer games

Homegame

consoles

Odyssey

Atari 2600

CRASH!

Nintendo

Genesis

SNES

"Multimediamachines"

GamblingMachines

CD-I

Bally

3DOPlayStation

Nintendo 64

PlayStation 2

Dreamcast

GameCube

LargeLBE

devices

MMORPGs

ADSL/Cable

Fiber to the home

?

Interactive Television?

3Dgraphicshardware

DVD

Grand merge of home gaming?

Xbox

?

Hand-helds

CellPhoneGames

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Segments of the Game IndustrySegments of the Game Industry Arcade (coin-operated) gamesArcade (coin-operated) games

Home console video games (Nintendo, etc.)Home console video games (Nintendo, etc.)

Personal computer gamesPersonal computer games (And on-line games)(And on-line games)

Smaller segments:Smaller segments: Gambling machines, handheld games, cell-Gambling machines, handheld games, cell-

phone games, ride simulators (LBE)phone games, ride simulators (LBE)

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Arcade (Coin-op) MachinesArcade (Coin-op) Machines

Entirely closed systemsEntirely closed systems Game designs limited by timeGame designs limited by time Possible to have specialized hardwarePossible to have specialized hardware Expense of manufacture limits entry to marketExpense of manufacture limits entry to market Not exactly a retail productNot exactly a retail product

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The Home Console SystemThe Home Console System AdvantagesAdvantages

Enables hardware to be sold very cheaplyEnables hardware to be sold very cheaply No matter who builds the software, the hardware No matter who builds the software, the hardware

manufacturer gets a royaltymanufacturer gets a royalty Guarantees product qualityGuarantees product quality

DisadvantagesDisadvantages Limits creativityLimits creativity Limits entrepreneurship and competitionLimits entrepreneurship and competition Potential conflict of interest when hardware Potential conflict of interest when hardware

manufacturer also sells softwaremanufacturer also sells software

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The Personal ComputerThe Personal Computer Powerful processors for better gamesPowerful processors for better games Excellent video resolution & color depthExcellent video resolution & color depth Excellent sound reproductionExcellent sound reproduction Keyboard permits complex gamesKeyboard permits complex games Multipurpose deviceMultipurpose device

Education; home office; reference; on-line Education; home office; reference; on-line Still an open system!Still an open system! (But also much more expensive)(But also much more expensive)

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On-Line GamesOn-Line Games Many early problemsMany early problems

Complexity of setting up a modemComplexity of setting up a modem Low transmission speedsLow transmission speeds High hourly chargesHigh hourly charges

Large growth potentialLarge growth potential Most problems above addressedMost problems above addressed Internet standardizes transmission protocolsInternet standardizes transmission protocols Multi-player play offers a richer experienceMulti-player play offers a richer experience Customer service is still a problemCustomer service is still a problem

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Interactive TelevisionInteractive Television Family-orientedFamily-oriented TV as output deviceTV as output device Education + entertainmentEducation + entertainment Unproven concept Unproven concept

TV a poor device for textTV a poor device for text Is this an activity families want?Is this an activity families want?

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Gambling MachinesGambling Machines Very different design issuesVery different design issues Not a retail industryNot a retail industry Heavily regulatedHeavily regulated Adults onlyAdults only Included because it IS interactive Included because it IS interactive

entertainmententertainment

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Culture - Video Game DevelopmentCulture - Video Game Development Founded by business peopleFounded by business people

Expensive development systemsExpensive development systems Expensive manufacturing: cartridges or special CDsExpensive manufacturing: cartridges or special CDs

Risk-averse; little design experimentationRisk-averse; little design experimentation Difficult for newcomers to enterDifficult for newcomers to enter

Hard to learn the toolsHard to learn the tools SecretiveSecretive

MuchMuch larger market larger market

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Culture - Computer Game Culture - Computer Game DevelopmentDevelopment

Grew out of homebrew clubs and user groupsGrew out of homebrew clubs and user groups Anyone can do it without a licenseAnyone can do it without a license

Shareware!Shareware! No expensive development stations neededNo expensive development stations needed More experimentation, unusual gamesMore experimentation, unusual games Friendly, open, many resources to helpFriendly, open, many resources to help

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The Marketing IssuesThe Marketing IssuesWhat makes people want to buy interactive What makes people want to buy interactive entertainment?entertainment?What determines if they will or not?What determines if they will or not?

Risk AnalysisRisk Analysis Comparable Prices of Other EquipmentComparable Prices of Other Equipment ““Household Use” TheoryHousehold Use” Theory

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Risk AnalysisRisk Analysis

Initial (equipment) costsInitial (equipment) costs

Price per hour of playPrice per hour of play

The purchase decision is based on the amount of The purchase decision is based on the amount of money lost if the consumer does not like the money lost if the consumer does not like the product. This amount of money consists of:product. This amount of money consists of:

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Risk AnalysisRisk AnalysisCost to Buy/Play Up-front cost Cost per Unit Play Life Cost/HourPlaying cards $2 $0 $0Board game $25 $0 $0Broadcast TV $250 (TV) $0 $0MMORPG $40 (install) $10/month 120/month $0.08(assume PC) (4 hours a day)Cable TV $0 $40/month 120/month $0.33(assume TV) (4 hours a day)Paperback book $5 $0 5 $1.00Video game $250 (console) $40 40 $1.00Computer game $700 (PC) $40 40 $1.00Movie rental $250 (VCR) $2 2 $1.00Movie at cinema $0 $8.50/ticket 2 $4.25Baseball game $0 $20/ticket 3 $6.67Arcade game $0 $0.50/play 0.05/play $10.00

(3 minutes)Live theater $0 $20/ticket 2 $10.00Slot machine $0 $0.01/play 0.0008 $12.50(adjusted for winnings) (3 seconds)Pro football game $0 $50/ticket 3 $16.67Opera $0 $100/ticket 3 $33.33

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““Comparable Price” TheoryComparable Price” TheoryThe purchase decision may be affected by the The purchase decision may be affected by the price relative to other household equipment.price relative to other household equipment.

Washing machine: $350Washing machine: $350 Microwave oven: $300Microwave oven: $300 Vacuum cleaner: $200Vacuum cleaner: $200 VCR: $250VCR: $250 Video game console: $200Video game console: $200 3DO Multiplayer at release: $799?3DO Multiplayer at release: $799?

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““Household Use” TheoryHousehold Use” TheoryThe location of the device in the house The location of the device in the house determines who will use it, when, and how.determines who will use it, when, and how.

Personal ComputerPersonal Computer The family office; Adults and older children; Generally The family office; Adults and older children; Generally

alone. Optimized for single-player use.alone. Optimized for single-player use. Video Game ConsoleVideo Game Console

Living room or child’s room; Attached to a TV; Young Living room or child’s room; Attached to a TV; Young adults and children; Generally in groupsadults and children; Generally in groups

Interactive Television/Set-Top BoxesInteractive Television/Set-Top Boxes The living room, attached to the family TV; Adults and The living room, attached to the family TV; Adults and

children; Family group, togetherchildren; Family group, together

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How Games are Built and SoldHow Games are Built and Sold The Publishing CompanyThe Publishing Company

Pays for games to be developedPays for games to be developed

(Sometimes develops the game itself “in-house”)(Sometimes develops the game itself “in-house”)

Owns the completed gameOwns the completed game

Advertises the game to the publicAdvertises the game to the public

Sells the game to retailers (or through distributors)Sells the game to retailers (or through distributors)

The Development CompanyThe Development Company Has a contract with the publishing companyHas a contract with the publishing company Builds the content: software, pictures, and soundBuilds the content: software, pictures, and sound Earns royalties on the wholesale salesEarns royalties on the wholesale sales

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This Creates 3 Career TracksThis Creates 3 Career Tracks Production TrackProduction Track

At the publisherAt the publisher Mostly administrative, partly creativeMostly administrative, partly creative

Development TrackDevelopment Track At the developerAt the developer Mostly creativeMostly creative

Game Design TrackGame Design Track Can be in either placeCan be in either place Almost entirely creativeAlmost entirely creative

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The Production TrackThe Production Track Function is to assist and oversee theFunction is to assist and oversee the

development process for the publisherdevelopment process for the publisher Primary talent required is “product sense”Primary talent required is “product sense”

Ability to know when a game is goodAbility to know when a game is good(and how to fix it when it is not good!)(and how to fix it when it is not good!)

Don’t have to be a programmer, artist, etc.Don’t have to be a programmer, artist, etc. Can start at the very bottomCan start at the very bottom Can go to the very top!Can go to the very top!

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The Development TrackThe Development Track Function is to build the gameFunction is to build the game Divided into specialties based on skillsDivided into specialties based on skills Programming – the softwareProgramming – the software

Graphics, artificial intelligence, physics, etc.Graphics, artificial intelligence, physics, etc. Art and animation – the picturesArt and animation – the pictures

2D art & animation, 3D modelling and animation2D art & animation, 3D modelling and animation Audio engineering & music – the soundAudio engineering & music – the sound

Recording, editing, music compositionRecording, editing, music composition

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More on the Development TrackMore on the Development Track Can learn skills at universityCan learn skills at university Can start at a good salaryCan start at a good salary Promotion is limited unless you change trackPromotion is limited unless you change track If you are a great programmer...If you are a great programmer... The company will only want you to program!The company will only want you to program!

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The Game Design TrackThe Game Design Track Game design can be at publisher OR Game design can be at publisher OR

developerdeveloper Three levels of designThree levels of design

Lead game designer (only 1 per game)Lead game designer (only 1 per game) Defines the general nature of the game, player’s roleDefines the general nature of the game, player’s role

Game designerGame designer Fills in the details about the gameFills in the details about the game

Level designerLevel designer Creates scenarios (“levels”) that the player will play Creates scenarios (“levels”) that the player will play

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CareerCareerTracksTracks

Warning:Warning:

Job titles are not Job titles are not standardized in standardized in the industry and the industry and vary from vary from company to company to company!company!

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We Aren’t a High-Tech Industry!We Aren’t a High-Tech Industry! Electronics, biotech industries work differentlyElectronics, biotech industries work differently

Very expensive products ($100,000 or more)Very expensive products ($100,000 or more) Direct contact with small numbers of customersDirect contact with small numbers of customers No “shopping season” to dictate scheduleNo “shopping season” to dictate schedule

Games are a consumer productGames are a consumer product Products must cost $60 or lessProducts must cost $60 or less Indirect contact with millions of customersIndirect contact with millions of customers Schedule dictated by Christmas shopping seasonSchedule dictated by Christmas shopping season

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We Aren’t Hollywood!We Aren’t Hollywood! Filmmaking is well-understoodFilmmaking is well-understood

70 years of experience70 years of experience Most people in film are subcontractorsMost people in film are subcontractors Unions define job rolesUnions define job roles

Game development requires engineeringGame development requires engineering You cannot make a game without itYou cannot make a game without it Each game is a unique piece of softwareEach game is a unique piece of software Engineering is problem-solving in new ways, so...Engineering is problem-solving in new ways, so... Engineering is not predictableEngineering is not predictable

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Interactive Entertainment is UniqueInteractive Entertainment is Unique Like high tech industries, we have engineeringLike high tech industries, we have engineering Like movies, we have aesthetic contentLike movies, we have aesthetic content Our audience is active, not passiveOur audience is active, not passive

We must create a living world for the playerWe must create a living world for the player We entertain in many waysWe entertain in many ways

Challenging the player to think and to actChallenging the player to think and to act Pleasing her senses with pictures and soundPleasing her senses with pictures and sound Immersing her in linear and non-linear storiesImmersing her in linear and non-linear stories

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Some Bad NewsSome Bad News Game companies don’t buy ideasGame companies don’t buy ideas

Everyone in the industry already has many ideasEveryone in the industry already has many ideas You cannot patent an idea aloneYou cannot patent an idea alone

Don’t get into the industry for the money!Don’t get into the industry for the money! Game programming pays 25% less than othersGame programming pays 25% less than others

You may not get a chance to make You may not get a chance to make youryour game game It is your job to make the game the company needsIt is your job to make the game the company needs

The work can be very long and very hard!The work can be very long and very hard! Schedules are always unpredictableSchedules are always unpredictable

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Some Game Industry Trends Some Game Industry Trends New hardware is always comingNew hardware is always coming

Game richness and detail is improvingGame richness and detail is improving Development costs are risingDevelopment costs are rising

20-50 times what they were 15 years ago20-50 times what they were 15 years ago

Much competition for space in retail shopsMuch competition for space in retail shops Forces prices downForces prices down Games only stay on shelves a short timeGames only stay on shelves a short time Must sell hundreds of thousands to succeedMust sell hundreds of thousands to succeed

All this produces All this produces publisher conservatism!publisher conservatism!

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Limitations of Retail DistributionLimitations of Retail Distribution Retail distribution is like TV before cableRetail distribution is like TV before cable

Before cable, 3 big TV networks dominated the USABefore cable, 3 big TV networks dominated the USA Amount of content limited by transmission bandwidthAmount of content limited by transmission bandwidth No concept of market nichesNo concept of market niches

All shows had to appeal to all people (all equally stupid!)All shows had to appeal to all people (all equally stupid!)

After cable, many channels, many interestsAfter cable, many channels, many interests History, sport, drama, music, news, etc. etc.History, sport, drama, music, news, etc. etc.

Retail game distribution forces all games throughRetail game distribution forces all games throughthe narrow bandwidth of store shelves!the narrow bandwidth of store shelves!

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Benefits of Electronic DistributionBenefits of Electronic Distribution No goods to manufactureNo goods to manufacture

No shipping, no warehouses, no retailersNo shipping, no warehouses, no retailers Shelf space on the Internet is infinite!Shelf space on the Internet is infinite!

Small publishers can distribute as easily as big onesSmall publishers can distribute as easily as big ones Piracy is less of a problemPiracy is less of a problem

Game can be verified by a secure server each timeGame can be verified by a secure server each time Can sell using many different payment modelsCan sell using many different payment models

Flat fee, monthly subscription, per-hour chargesFlat fee, monthly subscription, per-hour charges

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Problems of Electronic DistributionProblems of Electronic Distribution Don’t yet have enough speedDon’t yet have enough speed

Must be able to download 650 MB in 10 minMust be able to download 650 MB in 10 min Not enough people have broadband yetNot enough people have broadband yet We don’t understand the psychology of theWe don’t understand the psychology of the

game buyergame buyer How important is the “shopping experience”?How important is the “shopping experience”? Do retail stores offer something valuable?Do retail stores offer something valuable? People like to see boxes under the ChristmasPeople like to see boxes under the Christmas

tree, not just a URL!tree, not just a URL!

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A View of the FutureA View of the Future Electronic distribution is inevitableElectronic distribution is inevitable

The cost-reduction benefits will be unanswerable.The cost-reduction benefits will be unanswerable. The bandwidth will permit us to serve niche markets.The bandwidth will permit us to serve niche markets.

Graphics are no longer our primary selling pointGraphics are no longer our primary selling point We need to concentrate on new genres and worlds.We need to concentrate on new genres and worlds.

““Interactive Entertainment” won’t only mean games.Interactive Entertainment” won’t only mean games. Microsoft is already researching non-competitive play.Microsoft is already researching non-competitive play.

Academic research holds great promise.Academic research holds great promise. Will help the interactivity/narrative problem.Will help the interactivity/narrative problem. Will help the artificial intelligence problem.Will help the artificial intelligence problem. Doesn’t have to be commercially viable.Doesn’t have to be commercially viable.

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Overview of the Overview of the Interactive Entertainment IndustryInteractive Entertainment Industry

Ernest W. AdamsErnest W. Adams

ewadams@designersnotebook.comewadams@designersnotebook.com

http://www.designersnotebook.comhttp://www.designersnotebook.com

+44-1483-237599+44-1483-237599