A special treat today, I actually liveblogged (kinda) the Level Up: What's Next for Gaming? session at the >Play conference on Saturday. It's not word for word, because frankly some discussion points weren't interesting enough for me to write down. You'll notice that Mitch Lasky is quoted a lot. It's basically because I developed a mancrush on him as the session went on. You'll see why. What follows is a best-of. Enjoy.
Moderator: Dean Takahashi - Lead Writer on Digital Media, Venturebeat
Rajat Paharia - Bunchball - Founder, CEO
Frederic Deschamp - Trion - Marketing Guy
Mitch Lasky - Benchmark Capital - General Partner
Manuel Bronstein - Microsoft Interactive Entertainment Business - Director, Xbox LIVE Primetime
Kevin Bruner - Telltale Games - CTO, Co-founder
Q: Where is innovation happening in games?
Bronstein - integration between media, i.e. game show on TV but contestants can play along via Xbox.
Lasky. Distribution. Retail model decline. Service likes Steam from Valve.
Paharia. Gameification - applying game mechanics to other types of online experiences.
Note: Paharia did not use the term gameification. It's a term I coined to describe what he was speaking about.
Deschamp. Dynamic content. Rather than static content like in World of Warcraft. Imagine an online world that changed while the player was present.
Bruner. Distribution. Internet makes it possible for small teams to thrive.
Q. Why is there so much investment in game right now?
Lasky. Because the internet has changed distribution. Games can now scale like a web service.
Bruner. Internet allows experiments impossible in retail.
Lasky. Also, because VCs are lemmings. World of Warcraft proved you can make a billion dollar business. VCs making me-too investments to be next Warcraft. Further example: $200 million was invested in mobile games between 1999-2004. In the six months after JAMDAT (Lasky's mobile content company) filed to go public, $250 million was invested in the space.
Lasky. Casual games is an overfunded space.
Q. Should VCs invest in content businesses?
Bronstein. Better tools will make content cheaper to make and less risky. At some point, 50,000 units sold will be a viable business. (My note: but not one VC's would be interested in investing in.)
Q. UGC games. Will they be big or not?
Lasky. Making a game is hard. Making a video is easy. Anyone will a camcorder can make a video or their dog rolling over. Games will not be democratized like video. Games are a fascist business. You need millions of Paul Preece (creator of Desktop Tower Defense - best Flash game ever) to have a Youtube of games.
(Note: I couldn't agree more. Companies focused on UGC tools are barking up the wrong tree.)
Bronstein. UGC doesn't have to be full games. Can be avatars, levels, recordings of gameplay, i.e. Halo videos.
Takahashi. It's interesting to me that XNA toolkit (to create games for xbox live arcade) has been downloaded over a million times.
Takahashi. 22,000 questions answered voluntarily by one user on dell's support site so he could earn a badge. (BT: the power of gameification, baby!)
Q.Why does innovation come from startups rather than big companies?
Lasky: When the budget for a game hit around $10-15 million, publishers require that developers either use existing game engines (same gameplay) or existing franchise (with new gameplay).
Bronstein. Big companies do innovate. Some bets too expensive for small comapnies. Example: only Nintendo could have created a system based around the Wii mote.
Lasky. Historically, most money lost in the games industry on failed peripherals. Exceptions: steering wheels, yokes (for flight simulators). Only succeed when tied to specific content.
Lasky: 16% of console games sales from Rockband or Guitar Hero.
Bruner: Establishment can't react to paradign shifts. Example. Broadcast TV lost to cable.
Lasky: EA and Activision will become little more than hedge funds.
Lasky: EA and Activision do not innovate. I worked at EA as an executive. EA does not innovate.
Bruner: NPD sales report only show one side of the games industry.
Q. Games: Silicon Valley vs. the World?
Lasky. Gaming is a monoculture. Terminator poster and heavy metal in game dev studio whether in Palo Alto or Vietnam. (BT: perhaps that's why traditional game are so focused on teenage boys. It's made by men in prolonged adolescence.)
Takahashi. Good November for games sale will lead to more investment.
Lasky. Xmas will be terrible. Talked to retailers. Cutting games orders by 30-40%.
Deschamp. Free 2 play biz model will be good fro Europe and Asia.
Audience Question: Mobile games. How do you get through the noise to the consumer?
Lasky. Needs to be free.
Takahashi. Don't rating solve the problem of finding good content?
Bronstein. Quality matters. Most expensive XBLA games often sell most units. Lack of price sensitivity.