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 Gaming
is fast emerging as the industry to be in and even biggies
have queued up for their share of the pie. Deb Mukherjee
takes a look at the gaming industry and chalks out the course
it will take in the future
Can
you name one entertainment industry that makes more money
than Hollywood? Seems like a tricky question, doesn’t
it? Well, check this out. According to IDC, the movie office
receipts for Y2000 was $7.75 billion, while the interactive
games industry revenue was $8.2 billion!
Astounding, but true. Sony’s Playstation has half the
market share, closely followed by Nintendo, while the latest
entrant Microsoft has just made a scratch. For those of us
associated with software, it must come as a surprise to think
of Microsoft as the new entrant holding the least market share!
But in this new field, Microsoft is indeed a novice. But remember,
when Sony entered the market in the mid 90’s, Sega and
Nintendo were the leaders. Sony soon relegated Nintendo to
second place and Sega had to close down in 2000.
If you are one who has a craving for statistics, here are
some interesting numbers. According to the Interactive Digital
Software Association, about 60 percent of Americans now play
computer or video games, with almost 25 million consoles installed
by 2000 alone. Last year, Microsoft’s Xbox and Nintendo’s
GameCube had 2.5 million installations and Sony’s Playstation
6 million installations. Jupiter Media Metrix says that improved
Internet capabilities and next-generation video-gaming consoles
will lure millions of households into online gaming in the
next few years. Now isn’t that a huge serviceable market?
Why do you think this should interest the software fraternity?
Digest this. While Nintendo expects to have 20 games to be
played on its console, Microsoft has plans for close to 40
and Sony has 280 designated for its Playstation. This suggests
that there is a huge potential for third party game publishers.
Last year, around $6 billion was earned from software alone.
Hollywood’s ‘Tomb Raider’ and ‘Final Fantasy
The Spirits Within’ were based on interactive games.
Next spring, cable company Comcast will launch something called
G4, a 24-hour TV network that provides news and information
for the video-game set, which is equivalent to the channels
that do exclusives on Hollywood actions. A whole stream of
business seems to be coming up based on these games and the
proverbial pie seems to be getting bigger and bigger.
Picking a winner from this pack is currently beyond us. This
will depend on the kind of games that are played on the different
consoles and their popularity. EverQuest by Sony has more
then 4,00,000 players paying a monthly subscription to be
able to play the game. The games latest version called Shadows
of Luclin sold more then 1,20,000 copies in its first day
at stores.
As an added incentive, console vendors are adding more and
more into their gaming consoles. Some of the consoles available
currently double up as DVD players or as Internet appliances
for playing online games, sending e-mail, messages or simply
browsing the Net. The era of convergence has begun. But I
would think that we are some time away before these consoles
can even think of replacing desktops and laptops.
It is easy enough to predict what is going to happen next.
To reduce their risks, third party game makers will be looking
to develop games on all the three platforms. This means that
the vendors need to woo publishers to write games for their
consoles. Microsoft and Nintendo, it is said, are wooing publishers
with co-marketing deals that help limit game publishers’
risk. They must also rely on brisk sales of their consoles
to persuade publishers that it’s worth their while to
develop for the new platforms.
If sales drop off, game publishers could abandon the loser.
Game publishers are going to be interested only where they
get the biggest return and hence will be looking for the largest
installed base. We may also see cash surplus console giants
takeover some of the specialist third party games publishers
based on the rights and programming expertise they hold.
Soon we should be seeing a variety of games coming up. Excitement
and disappointment are some of the emotions that are evident
in today’s games. Going forward we would see a range
of emotions like sadness, empathy, concern and fear in the
games. Online tournaments like the physical tournaments would
also get popular as we go along. Maybe we’ll have avatar
versions of McEnroe, Tiger Woods and Pele. All this would
in turn get more surfers on to these games.
Game addiction as a phenomenon is a reality now and there
are several reports on it. One hears of numerous virtual communities
on the Internet and people spending more time on online gaming
than with their family. There are also community sites that
concentrate on the rehabilitation of hardcore game addicts.
Games carry only entertainment value and are not to be seen
as replacement for the real thing.
In conclusion, this is a huge industry and one that is expected
to grow at a fast clip. The console providers have made their
move. Sony, Nintendo and Microsoft are all set to sell their
wares. But the king-makers will be third party game publishers.
One will see console vendors coming up with more and more
advanced features that will in turn enable third party game
publishers to create more advanced games on their console.
The revenue will come not through the sale of consoles but
from game subscriptions. So we should be seeing the costs
of these consoles falling continuously.
The author is CTO, Cognizant Technology Solutions. He can
be contacted at Deb.mukherjee@cognizant.com
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