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Gaming Trends 2014

P1describe current market trends in the games industry with some appropriate use of subject terminology  M1explain current market trends in the games industry with reference to detailed illustrative examples and generally correct use of subject terminology D1comprehensively explain current market trends in the games industry with reference to elucidated examples and consistently using subject terminology correctly

Learning Objectives:

To be able to…

Market trends:

products and services

vision of organisation

objectives and plans of organisation

competitors

customers

organisation’s attitude to risk

international and national market trends

Industry trends:

franchised intellectual property (IP)

original IP

sequels

discount sales

comparison with film industry

outsourcing

mergers and acquisitions

A basic but broad overview of the most obvious current trends (P2)

A good overview of current trends, explaining how or why the issues mentioned have importance and use examples to illustrate this (M2)

A specific and insightful look at current trends, where well-researched and complex examples will illustrate developed comments exactly (D2)

‘Sequels are one of the most profitable elements in game retail so when developers find

an idea that works they will want to continue it so as to make as much money as possible.

However, after a few sequels it is hard to keep reinventing the same concept again and

again with new storylines to keep the audience happy. Studio A was responsible for the

Name series of Game X but since July 2008, Studio B has been responsible for the further

development of the Game X series. Their new sequel will be released in April 2010. This

keeps the concept fresh and is why it’s handy having multiple studios owned by the

publishing house.’

‘While it is normal for there to be more demand than supply for any launch, the amount of

Console A made available at launch was disappointing. Between the release date and

Christmas approx 500,000 consoles (worldwide) were sold. This sent Christmas sales down

even further; dropping 9 per cent from November 2008 and consequently software sales

fell 18 per cent. How this less than perfect launch will affect the next-gen battle when the

Console B and Console C are finally released remains to be seen. However, it is obvious

that an early launch was a huge advantage to Company X.’

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Our specialists forecast an average 11% annual growth over the next four years, driving the global gaming market from €54 billion in 2013 to €82 billion in 2017.IDATE predicts that the global video game market will continue to enjoy steady growth, for two reasons in particular:• start of the life cycles of the latest generations of handheld and

home consoles,• remarkable growth of the games on mobile devices and online

games segments.

Source: idate.org

It’s all about next gen consoles

The introduction of new consoles will always fuel growth in the gaming sector. Now that both the Playstation 4 and Xbox One have had time to embed, the development of gaming on these new generation of machines will only grow. As developers get more experience with each system, games are bound to get better.

This deployment of new generation consoles will see their market share of the gaming industry increase.

Market trends: products and services

It’s all about next gen consolesMarket trends: products and services, organisation’s attitude to risk

…and indie game developersBoth Microsoft and Sony have taken big measures to cut red tape and give indie developers better access to major consoles, and have created console exclusives with indie darlings to counter-program big name titles released in stores.

Independent games like Hotline Miami 2: Wrong Number, Everybody’s Gone to the Rapture, Nuclear Throne and Cobalt have been claimed by either Microsoft or Sony, a key strategy that has the potential to bust through the early-console doldrums that easily set in when there are no new major titles for gamers. Both companies are relying on these exclusives to keep users engaged while their big-name developers product the high-budget content that flexes each console’s muscles.

But online and mobile platforms will give them a run for their money

An average annual growth of 11.4% for online gaming and 12.2% for mobile gaming for the period of 2013-2017 against 11.1% for the entire video games market shows just how popular this sector will become.

The ease of playing games online and on mobile devices means that this growth is guaranteed. No longer will non-dedicated gamers have to shell out for expensive hardware or have to trudge down to their local gaming shop to fork out for a new game.

The simplicity and playability of smaller, mobile games means that the market is ever expanding, bringing in a new demographic of gamers, who are lured in by free-to-play, addictive titles. The success of games like Candy Crush and Angry Birds is testament to this.

Candy Crush earns $850,000 per day. Source: ThinkGaming.com

Market trends: products and services

But online and mobile platforms will give them a run for their money

Nearly two thirds of the income of the video games market comes from the dematerialisation of distribution and online payment practices.

Source: idate.org

Traditionally games main revenue has been from the sale of hard copies of games, originally sold in specialist gaming shops, they moved into the mainstream, with gamers being able to pick them up in supermarkets. With the age of online shopping, consumers had even more options and more competitive pricing. With the advent of online gaming and downloads, developers and distributors can forgo the expensive production costs of hard copies of the games and supporting materials, and focus on a more streamlined profit margin where games are made available through the internet.

The advent of MMORPG games such as World of Warcraft have seen a huge rise in the share online gaming has over the more traditional sectors. This looks set to grow even further as online gaming becomes even more popular.

Free-to-play comes to consolesFree-to-play has become an essential and popular distribution method for new games. The mobile and PC market is full of examples of successful free-to-play games, from Angry Birds to Warframe. It has proven invaluable in the success of several franchises on the market and it will only continue to get bigger and more popular now that it s becoming a staple for home consoles as well as PC and mobile devices. As games such as Warframe and World of Tanks become available on consoles, this is one trend that is definitely going  to grow over the coming year, with new free-to-play games being tailor made for the console experience.

Market trends: products and services

Sony has unveiled PlayStation Now, a service that allows players to experience older games on PlayStation 4, PS Vita, Bravia TVs and could expand to include other smart TVs and mobile phones in the future.

Microsoft also claims to have over 300,000 servers waiting to be used and it would be shocking if they don't launch a similar service later in the year.

Industry analysts have predicted cloud gaming for years now, but it seems that 2014 may well be the year it goes big.

Cloud streaming develops accessMarket trends: products and services, vision of organisation, objectives and plans of organisation

‘Microsoft could be close to releasing a consumer version of its internally tested cloud games service, according to one report, which would allow Xbox games to be played in web browsers.’

Source: www.gamespot.com

Steam really has been a revolution for PC gaming, changing the way gamers interact with and buy their games. Steam eclipsed Xbox Live and the PlayStation Network in terms of active users.

Steam grows even biggerMarket trends: products and services, vision of organisation, objectives and plans of organisation

The service is going to be expanding even further in 2014, tackling the one place that it hasn't been able to compete with consoles thus far: the living room. While Steam is massive with 'core' gamers, it hasn't ever quite been able to crack the casual market because of its dependence on the more 'complex' PC platform. This year, with multiple Steam Machines hitting the market, they are hoping to challenge the console space in your living room. While the confusing variety of Steam Machines may still be a barrier for the most casual of consumers, these new consoles, along with Steam's new OS, will at least push the reach of Steam further.

What was a massive gamble for Valve paid off. This prompted other publishers like EA and Ubisoft to launch Origin and Uplay services respectively. Now both developers titles are available on both of these services.

Market trends: products and services, vision of organisation, objectives and plans of organisation, competitors, customers

“We’re trying to make it as open as possible,” Newell said. “If EA wants to put Origin on it, that would be fine, etc…”

Gabe Newell – Forbes.com

This means that there is no intention for direct competition between Valve and Origin. It does however amp up the competition between Steam Machines and Microsoft, Nintendo and Sony. Does the advent

of Steam Machines herald just a gaming PC in your lounge or a replacement for consoles?

Games traditionally feature both single player and multiplayer as separate entities. With the rise to prominence of PSN and Xbox Live, the two modes have been competing with each other. Underwhelming multiplayer in strong single player experiences and lacking single player gameplay in exciting multiplayer focused games were all too common in recent years.

Merging single and multiplayerMarket trends: products and services, customers,

Destiny tries to blend some elements of a traditional MMO with a first-person shooter. Bungie has called it a ‘shared-world shooter’.It remains to be seen whether this merge of single and multiplayer will succeed.

Since the Oculus Rift became a crowdfunded success in 2012, developers have been experimenting with new kinds of interactive experiences. Games like Eve: Valkyrie are being designed for VR specifically while there is already a library of existing games like Skyrim and Mirror's Edge that are getting retrofitted for VR by those who bought developer kits early.

Virtual reality becomes a reality

Market trends: products and services, vision of organisation, objectives and plans of organization,

competitors

It's not just Oculus Rift which is developing VR technology. Sony is ‘85% finished’ on its Project Morpheus. There are also a number of other VR alternatives set to hit the market over the next year or two, so gamers will more than likely be spoiled for choice when it comes to a total immersion headset.

Microsoft’s latest version of the Kinect, which shipped with the Xbox One, has the potential to make serious waves in motion-sense technology.

Market trends: vision of organisation, objectives and plans of organisation, organisation’s

attitude to risk

The release of Nintendo’s Wii U was a risk – one that didn’t pay off. While they had the jump on both Microsoft and Sony, the sales for the Wii U were poor and still do not look like changing.This prompted some developers, such as EA and Bethesda, to stop developing games for the console. There are some manufacturers who still have faith and are willing to take risks. Activision are very open about the support they have for Nintendo and continued releasing titles, such as Call of Duty: Ghosts.

A risky release doesn’t mean that Nintendo are at risk though…

 "The company is far from being at risk or in any type of trouble of having to transition to becoming a software-only company," says Jesse Divnich, VP of insights and analysis at EEDAR. "They can and will thrive off of the success of the 3DS and reinvest the gained resources to improve their home console strategy going forward.“

Source: theverge.com

The rise of Wii U?

Market trends: vision of organisation, objectives and plans of organisation, organisation’s

attitude to risk

The rise of Wii U?

Through June 30 of this year, Wii U has sold 6.68 million hardware units and nearly 37 million games. Both of those totals are under what Nintendo had at one point projected it would sell in a single fiscal year.

Earlier this year, “Mario Kart 8″ helped jolt sales, becoming just the second Wii U game to sell more than one million units in the U.S.

Through the first seven months of 2014, total sales of Wii U hardware and software jumped 60% and 135%, respectively, over the same period in 2013, according to NPD Group.

Source: fortune.com

Industry trends

Intellectual Property (IP)Intellectual property (IP) rights are the legally recognized exclusive rights to creations of the mind. In gaming an original IP game means that the concept is unique and wholly owned by the developer.

Destiny sold over $500 million into retail on day one, making it the best-selling new video game IP of all time according to publisher Activision Blizzard.

Earlier this year Ubisoft revealed Watch Dogs was the "best-selling new IP in video game history" after it managed to move four million copies in a week.

Industry trends

Franchised IPA franchise is the licensing of intellectual property (IP) from an original work (in this case a video game), to other parties or partners for commercial exploitation.

Gears of War will continue to turn, as Microsoft has acquired the sci-fi shooter franchise from Epic Games. Microsoft Studios head Phil Spencer confirmed the news to GamesIndustry International, saying the deal covers the intellectual property, all existing games and assets, and the rights to continue the franchise in the future.

Source: gamesindustry.biz

Bungie Software joined Microsoft in 2000, a year before releasing the first in its blockbuster Halo series. The developer created five Halo games until the relationship became untenable. Microsoft agreed in 2007 to spin off Bungie into an independent company, without Halo. Microsoft established its own development team devoted to Halo, and that group is creating a new version of Halo every year. Each one has been selling well. Meanwhile, Bungie teamed up with Activision to release Destiny on Sept. 9. That's already on track to be a massive franchise, generating $500 million in revenue in its first day available.

Industry trends

SequelsThere will always be a constant debate over the merit of sequels. From an industry point of view, it is a safer bet as the publishers are working with an already established market and fan base. If the first game was successful companies are always keen to build on that achievement. From a consumer vantage, if gamers loved the first one, they are often only too happy to see the next in a line of games.

The list of successful sequels is long, although some would be quick to point out that it is often hard to better the first. Some would also argue that sequels is an poor option which stops the development of more creative and innovative ideas from emerging.

At E3 2014, Microsoft and 343 Industries announced Halo: The Master Chief Collection, set to be released November 11, 2014. There was also much hype for their new Lara Croft instalment, Rise of the Tomb Raider.Meanwhile 2k’s Borderlands: The Pre-Sequel also received a lot of attention at E3.

Industry trends

Comparison with the fi lm industryIt’s been a few years now that game sales ($24 billion) have outpaced movie box office sales (just $10 billion per year), but now games are a serious competitor to the entire tv/film industry with game play now eating into even mainstays like television viewing.

About 59% of Americans play video games, according to estimates from the ESA (the gaming industry’s major trade and lobbying group). Some quick math says that in a country of about 315 million, that’s just shy of 186 million players. That’s compared to about 68% of Americans (214m) see movies in the theatre.

Source: consumerist.com

Industry trends

OutsourcingIn the games industry, outsourcing is the practice of employing other companies or individuals to complete development tasks, such as 2D/3D art design . Outsourcing helps keep costs down and spreads the work among more people.

By far the most commonly outsourced job, however, concerns so-called “asset dumps,” the thousands and thousands of static, three-dimensional objects needed to populate a massive three-dimensional world.

Outsourcing is becoming more and more popular as the industry tires to come to terms with a rise in revenue not being evenly distributed across the sector. The downturn for some companies can be blamed on the global recession, the sudden collapse of the Wii-game market, and the rising number of alternative platforms where games can be had for little or no cost.

Industry trends

OutsourcingStreamline, an art-outsourcing company, has made art for everything from the popular Saints Row series to BioShock Infinite.

Streamline employs thirty-six full-time employees in its Malaysian office and expects to double that by the end of 2014. Most of its artists are based in Kuala Lumpur, which allows the company to pay lower wages while taking advantage of a relatively well-educated population that is also well-versed in American popular culture.

According to its C.E.O. and co-founder, Alexander Fernandez, Streamline had twenty artists working full-time for thirteen months to help create BioShock Infinite’s lushly detailed city in the sky.

These days, many developers have an internal art team of about five people, who hire dozens of short-term contract artists to help add detail to the game’s world while also coördinating with outsourcing companies to make whatever can’t be done internally, Fernandez told me. “Seventy-five per cent of the manpower required to produce these games is visual,” he said. “So outsourcing art is always the first thing you’re going to look at.”