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Thoughts on the future of gaming from the LBS Tech Media Summit

I was lucky enough to be asked to facilitate the gaming panel at the London Business School’s Tech Media Summit on Friday. I say lucky, as the panellists were an excellent group with a lot of strong opinions about the future of the gaming industry. Since the discussion was so rich, I thought I’d share my three biggest takeaways from the session*

HD gaming is the new console gaming... but it’s going to remain a (profitable) niche

Basically, console gaming is here to stay, but it will remain a relatively niche activity, compared to casual games. I found it interesting that EA now refer to the console as “HD” gaming. This makes total sense. The way I like to think about the industry is analogous to the moving picture industries. Console games are like movies (PC games are like arthouse movies) and social games are more like TV shows.

In more detail, although movies have the massive budgets and huge total audience draw, there are very few made in a year and they actually make up only a small amount of people’s consumption. Something like 5%, I believe. On the flip side, there’s a huge amount of TV made and the market is worth far more than movies in aggregate, but each individual programme is comparatively cheap to make and only occupies the audiences’ attention for a matter of an hour (or a few hours for a series). This says to me that the gaming industry should consider the lessons of TV and set itself up for cost-controlled, efficient processes at the outset rather than repent that huge cost base at leisure. For “HD”, the lesson is to act like a venture firm, not like a creator. Place your bets...

Freemium is the winning business model in casual gaming

It should come as no surprise that the panel thought that freemium was the best model, even for big budget titles. There are many examples of people spending more than the $60 purchase price of a game on in-game purchasing. My personal view is that the TV/ movie example probably also works here though – people are willing to pay $15 for a ticket once in a while but wouldn’t tolerate adverts in their big screen experience. On the other side of that market, it must be said that many movies monetise themselves principally through merchandising. Which is why Hasbro is now a movie maker (or, more accurately, a movie financer).

There wasn’t a lot of love for the “Spotify for games” models espoused by OnLive, nor for the idea of playing HD games through social networks like Facebook. I heartily agree with both of these views. Ultimately, an on-premise console strapped to a massive HD screen is relatively low cost and delivers by far the best experience. Deloitte’s Media Democracy Survey shows that HD remains a killer feature for content consumption, so why compromise on it?

Just like movies and TV: I want to be selfishly immersed in the former, but I’m willing to have the latter interrupted by adverts/ sponsorship/ social media because frankly I consume it for a cheap and transient thrill.

Audio and acceptance - the next killer gaming features

This was one of those moments of insight that only comes from a top quality group. The panelists’ view was that audio was the next killer feature for mobile games. By which they meant both spoken controls and games that only use audio to generate the user experience. This makes so much sense as it would enable games makers to access other moments in people’s lives, be that walking down the street or sitting in traffic. Also, by isolating just one sense the games makers can create some fascinating sensory experiences – being chased by zombies being just one.

A second feature I picked up that’s perhaps a little more esoteric was the idea that gaming was now socially acceptable. Having grown up being labelled a nerd for liking Duck Hunt, Street Fighter and Golden Eye, I find it gratifying that games are both conversation materials and, through Words With Friends and its competitors, conversation starters. Going back to the TV analogy, although some people are described as “film buffs”, similar names are rarely used for TV audiences... because they’re the most massy of mass markets. Namely: everyone.

Those were the bits of the discussion I found most enlightening. Hopefully I’m doing the session justice because it really was fascinating! Plenty for me to think about.

*: in addition to the rather swanky LBS Moleskine notebook that we were given as a little gift. Thanks LBS!

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