Just over a year ago I was talking on here about netbooks and how big they would be. And so it happened, in 2009 their market share in portable computing went from 5% to 25%. And quite right too. Offering just the power you need and outstanding portability, netbooks are a very effective tool for a huge array of tasks.
But I also warned that netbooks were an interim technology. They are held back by the need to adhere to the old Intel/Windows hegemony. Mainly because there were no viable alternatives. Also they arrived just as we were on a cusp of display technology. LCDs are not very good for displays, whatever way you look at it. Power hungry, fragile, over complicated, expensive to make and giving a poor image quality they are only used because of the lack of alternatives. Now OLED is making its presence felt all those disadvantages are being swept away.
OLED displays bring a massive power saving, but so does dumping Intel processors for the far more elegant ARM based computing. The big problem here is that the Intel processors have the heritage of over 30 years of software and ARM has a lot of catching up to do. This is especially felt in the areas of operating systems, browsers and all those utilities you take for granted like Flash, media players, email, pdfs and so on. No matter how good the machine you have to be able to use it.
This brings us to the ongoing war between Google and Microsoft that we are all benefiting from. Microsoft rescued Windows XP from the ashes to become the OS of choice for netbooks, but it is still bloatware. Google saw the opportunity and with amazing overkill decided to give us two new operating systems. Android is intended for smartphones and is rocketing in popularity, however it is already working very happily on far larger devices and runs on Intel, ARM and other processors. The Chrome operating system is a development of the Chrome browser and is available for both Intel and ARM processors.
So now, increasingly, manufacturers of portable devices can choose between processors without putting users at a software advantage. And increasingly they are choosing ARM. These ARM processors are made by a variety of chip manufacturers competing against each other so there is a huge pressure to get them into devices. Their biggest advantage is their immensely energy efficienty as their heritage includes a lot of mobile phone applications, this makes them ideal for Slate computing.
With all the above information you can see where we are going, there will be a whole new generation of devices (over 30 product launches in the next three months) that are some way between a laptop computer and a mobile phone. They will use OLED displays and mainly ARM processors, this will give them such low power consumption that they will always be switched on, like a mobile phone. Some will use keyboards, some touch screens, again just like mobile phones. These devices are so new that they don’t even have a name, some are calling them tablets, some smartbooks and some slates. And prices will start at below $200.
And the highest profile launch will be from Apple. On January 27 Steve Jobs will announce the iSlate at the Yerba Buena Centre for the Arts in San Francisco. The air is thick with rumours. That there will be two models with a 7 inch and a 10 inch display. That it will incorporate some elements of 3D. That its inbuild camera will be supported with powerful image recognition software. And that it will be a strong media player and that deals with major content providers such as TV companies have already been signed up. We are all sitting on the edges of our seats for this one.
But we need to put this whole market into context. Smartphones will very soon become the most common computing devices on earth. Over a billion a year will go into use. These slates/tablets/smartbooks will just be a subset of this market for people who need bigger screens and enhanced capabilities.
Which brings us to gaming. As the iPhone has already proven this will be one of the main uses for all these devices. We are entering a stage where the dedicated gaming machine is being abandoned in favour of general purpose devices that also happen to play games.
If you haven’t seen Avatar yet then you owe it to yourself to correct this omission as soon as possible. Avatar is a hugely significant jump in what constitutes human culture and its ramifications will impact heavily on the future of all entertainment media worldwide. Gaming will be influenced enormously.
Obviously Avatar is a global release. If you are not global then you will be out performed by competitors that are. Only global sales can bring in the returns necessary to fund the huge investments.
Avatar is a technical tour de force. Real film footage seamlessly integrates with motion capture, CGI (Computer Generated Imagery) and, my favourite, true facial expressions on the CGI characters. Humans communicate emotion using an array of facial muscles which are in continual movement. Previous CGI attempts (Gollum, Jar Jar Binks) to replicate this have been less than convincing, making a mouth wider is not a realistic smile. Avatar got round this by continuously recording the actors’ faces during motion capture and then merging the footage of the expressions into the CGI. There are lessons here for the game industry as we continually strive towards realistic representation.
Another lesson of Avatar is that it is new and original IP. This is not Jaws 47, or whatever. Avatar is part one of a planned trilogy. The second and third parts will obviously be easier to make as all the groundwork is done. However as old IPs become tired we need a constant pipeline of new IPs to serve to the public. Whilst some, like Hornblower, Biggles and Poirot are strong enough to survive many iterations, most reach their sell by date much earlier. Console gaming has been very weak for new IP, especially from third party publishers. We really do need to allow creativity and imagination to flower and Avatar can be held up as a superb example of how successful this can be.
Then there is 3D. The temptation is to use 3D to create spectacular effects. The problem with this is that it reduces the audiences’ sense of immersion. Avatar, very cleverly, does the opposite and uses 3D to increase the sense of immersion. It is an immense success and surely sets a benchmark for the future of 3D in screen based entertainment. 3D is set to become the norm for films, television and gaming. A whole new age has just opened up.
Of course the success of Avatar is not just down to artistic merit. As I have pointed out on here marketing is three times more important than game quality. So it will come as no surprise that Murdoch invested $150 million into the marketing of Avatar, for a total spend of $450 million in bringing this film to its public. There is no point in making fabulous IP if you don’t communicate effectively with your potential customers.
The overall effect of this (and very much more that went into Avatar) is to create a must see event. The force of compulsion to see this film is immense, making it a significant collective human experience. Also, like the original Star Wars trilogy, it will support repeated viewings and will enter into the human psyche. Video games are still a long way from doing this.
And it is inevitable, firstly because human nature has us as playful, social animals. Secondly because of the connectivity and interactivity of gaming. And thirdly because of the fundamental game mechanism of being rewarded for using skills or assets to solve a problem.
From a game industry perspective the obvious course of action is to maximise the social networking potential of every game and to ensure that your IP is earning its keep on the big social networking sites. Also you need to stay on the ball, this is an area where changes and progress are rapid.
Smartphones are going to put more processing power in the hands of more people than computers and game consoles put together. And it is going to happen very quickly indeed. A very high percentage of non smartphone owners in the west will upgrade with their next handset change, by which I mean within two years. So in this timeframe hundreds of millions of these phones will be made and brought into use. This will put ARM ahead of Intel in the microprocessor wars. And it will put smartphones well ahead of dedicated portable gaming devices like the Sony PSP and the Nintendo DS.
I favour Android to come out on top. Many already think that it has the best system software and being open source it will get better, faster. Anyone can make an Android handset so most manufacturers are doing that. In fact many are making several different models. The few phones that are available so far are the calm before the storm. Acer alone has 8 to 10 new Android phone models for launch in 2010. Other manufacturers with handsets include HTC, Samsung, Motorola, LG, Sony Ericsson, Garmin-Asus, Dell, even Google themselves.
With so many manufacturers competing with each other on price and features consumers should get a better handset. The only fly in the ointment is Google’s legendary marketing ineptitude, Gameloft has said it’s reducing Android game development. “Google has not been very good to entice customers to actually buy products” according to Gameloft’s FD, Alexandre de Rochefort, Gartner analyst Roberta Cozza says the Android platform has no decent central marketing strategy.
Apple, on the other hand, are a marketing company to their very roots, so they are not going to roll over and let Android have its own way. Apple have a multi threaded strategy to try and maintain their impetus. Firstly they are going to do what they did with iPod and offer multiple products in a range, with differing features and benefits. Amongst these will be a tablet device with an OLED screen. Secondly they are going through far more vendors. Initially they offered 2 year market exclusives to establish the brand, now they are giving it to many retailers including the massive UK retailer, Tescos. Thirdly they are rolling out into more territories. And fourth they are following a marketing strategy that revolves around the apps as they try and entrench the trendy utility of the device.
What is for sure is that if you are in the gaming industry you need to have a very well sorted smartphone strategy. You need to have your brands on these devices. Some will do this as promotional marketing material for their other platforms, others as commercial products. What I can see is a return to the age where a game may have more than one publisher across the different platforms. A publisher of casual PC games, for instance, may allow another specialist publisher to handle the mobile versions and maybe another to handle the online c0nsole versions. This is good for the brand and good for the publishers.
This list is based on facts and methodology. These are companies that: declare their current-liabilities as greater than 20 million UK pounds on their last published accounts, but where their declared profits are less that one million pounds.
And as you can see, the methodology was sound, several of these companies are no longer with us. I wonder if any more of them are due to fail?
On the face of it the Vitality Sensor is a very simple device that reads your pulse. It then sends this information, in a continuous stream, to your Wii console. This is called biofeedback. The console knows what effect it is having on you and can adapt what it does accordingly. The potential applications are infinite, limited only by the imagination of the development community. It is possibly the cleverest video game input device ever.
Biofeedback is an area of science of some respectability which is currently going through a boom. The Association for Applied Psychophysiology and Biofeedback (AAPB) is the main body in the world advancing this science. Their website says: Biofeedback has evolved from a fascination in the 1960s and 70s to a mainstream methodology today for treating certain medical conditions and improving human performance. This evolution has been driven by years of scientific research demonstrating that the mind and body are connected, and that people can be taught to harness the power of this connection to change physical activity and improve health and function.
If you have any imagination you will be beginning to see the potential now. The Vitality sensor could be used as a pure gaming device, or as a pure health device. Or knowing Nintendo they will find some amazingly innovative way for it to do both.
Biofeedback in gaming goes back a long way. In about 1973 there was the bio-mechanical Will Ball Games from Charles Wehrenberg, which was about competitive relaxation. In 1984 he implemented it on the Apple 2 computer. He even wrote a novel about it which you can still buy at Amazon. In 2001 a company called Journey to Wild Divine created biofeedback hardware and software for the Apple Mac and Microsoft Windows. They are still at it and make a good starting point for anyone in the game industry trying to get up to speed. They say: With just a few minutes of practice each day, Wild Divine’s products can transform your computer into a beautiful and engaging experience of relaxation and balance, helping you to increase your energy level, restore balance and improve your ability to connect to the world around you in profound ways.
And Nintendo themselves have previous. In 1998 they release the N64 biosensor, which clipped onto the game player’s ear and read their pulse. This was used in a game called Bio Tetris which was a game within Tetris 64, which was only available in Japan. IGN reviewed an import copy of the game and they had this to say: When playing in Bio Tetris mode, there are two basic settings for the feedback function. Normal makes the game easier if you get more excited (or nervous), resulting in slower dropping pieces and a more relaxed gamer. Reverse, or maybe they should call it “heart attack” speeds up the pace of the game as your heart accelerates. While this may all sound incredibly exciting, it really isn’t all that great. Truth to be told, the bio sensor is a neat little gimmick for health freaks, but it doesn’t really add much to the whole gameplay experience. It’s a cool extra, but we wouldn’t want to pay extra to get it.
The fundamental of what we are talking about here is how the human animal connects with the electronic gaming machine. The man machine interface. The ultimate aim must be something like Tron, or the Holodeck out of Star Trek. In the meantime the available input and output methods available to us are pretty crude. This is why the gesture interface (also popularised by Nintendo with the Wii) has had such a huge impact on gaming recently. And it is why biofeedback could be of great significance to gaming. Whether it is or not depends solely on the creativity, imagination and vision of those creating the software that uses it.
It is not just the immersiveness of gaming we are talking about here. It is an expansion in the range of possibilities. Video games will be able to do far more things with biofeedback. So it could be a further step on the inevitable road to gaming being the dominant form of popular culture. And because it is Nintendo that is doing it my expectations are very high.
Leonard Riggio is board chairman of GameStop and until recently owned 6.9% of the company. He now owns 5.5% of the company having sold 2.3 million shares for about $60 million. A very smart move. And one which shows us exactly where the video game industry is going.
GameStop and other high street game retailers rely on video games being distributed and sold in cardboard and plastic and there is a lot of reasons to think that this practice is at the start of a very significant decline. In fact physical inventory for content in this industry may well be about to go the way of the Dodo. And all because online distribution is better:
No physical inventory to manufacture and distribute.
No need to give a share of the sale proceeds to distributors and retailers.
Instant global distribution.
Ability to update the game for bugs and to give or sell further content.
Possibilities of more sophisticated business models.
The internet can stock a far bigger inventory and can keep it in stock for ever.
So online distribution wins hands down. But over the last year the market has changed significantly to rapidly accelerate the move away from physical stock.
Retailers have moved hugely and aggressively into the secondhand game market over the last year. It runs at far higher profit margins than selling new stock. Unfortunately it has massively angered the game developers and publishers who receive no revenue from the resale of their content. They are very unhappy and are now highly incentivized to move away from physical product.
All three platform holders, Nintendo, Sony and Microsoft, are seeing uptake of digital distribution on their current generation platforms that massively exceeds their wildest predictions. The customers are voting with their feet. To the point that it is rumoured that the next generation Microsoft home console, the Xbox 720 or Phoenix, will have no disk drive at all. That it will receive content 100% online.
So the process of moving from physical stock to online distibution is speeding up in front of our eyes, every week we see news of the industry moving in this direction. And moving far faster than anyone predicted. A very good time indeed to bail out of share ownership in high street game retail.
