From business models to platforms, games keep on evolving!
We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction. — Bill Gates
With these insightful words from Bill Gates echoing in my mind, I wanted to indulge into thinking about the next two years regarding gaming in its many forms. The following list stems from early work on Game Futures, my research and consulting initiative into forecasting how fun in video games, and beyond, will evolve on a 2 to 5-year timescale.
The specific focus of Game Futures will be on the ‘fun’ part, i.e. how the substance, design, and content creation is evolving, hand in hand with the evolution of gaming technologies and business models. This article mostly focuses on the latter developments.
Let’s be clear, the items on the list are not predictions about the future — rather, they are trends, some established, some emerging, that I see factoring into the development of the field in the next two years. It is obviously debatable which trends the most significant ones, but that is exactly the discussion I am hoping to generate.
To give the analysis a pragmatic edge, I have included action points with each trend: in case the trend is relevant to your studio’s strategic focus and skill set, these could be potential courses of action that your studio should consider.
Also, if you think that an important trend is missing, let me and the readers know with a comment!
Before we go into detail into each, here is the tl; dr list:
VR device adoption rate, eSports, Platform thinking and Perpetual Downloadable Content, Evolution of business models, Streaming, Indie outliers, Messaging, Wearables, Multicultural audiences, and AR second comers.
1. VR device adoption rate
At the time of writing, the mobile Samsung Gear VR has just come out on retail and reportedly the first batch sold out. There is no doubt in my mind that Virtual Reality headsets will find consumers by 2017 and thus have an impact, but other than the mobile peripherals, the magnitude of the impact will be dependent largely on price points.
SuperData Research recently reported that one-third of console gamers ‘say they will purchase a PlayStation VR’. What this research tidbit does not tell us is what price point in mind for the peripheral did the respondents voice their intention for the purchase — cue the recent outcry of the Oculus retail price — and Sony has indicated that it might be close to a new console retail price. This will be significant. As a counterpoint, similarly significant is the fact that the Gear VR’s 99$ price point is very attractive (given one has a compatible Samsung phone). Regarding Oculus, it is supposedly Facebook’s backing that will eventually enable a feasible price point for the mass audience even before the tech matures to the point of broad affordability.
I do believe that VR’s impact for the next couple of years will come down to adoption rate, and thus the price point note. I.e. I do not believe that the impact will suffer from less-than-engaging content. As with any marketplace with creative input, there will be crappy VR experiences but to counter that, there will also be ‘system sellers’ — and with those, it comes down to how much one is willing to dig up to jump on the VR train.
Action point: If you are not already developing for VR, the first wave of visibility that a launch window would give you has already gone. There will eventually be a discoverability challenge, much like on mobile today, even if the sheer number of VR apps will not be quite as overwhelming. You need to think how to differentiate and incrementally improve on the first-comers to gain a second-comer advantage. You need to also consider the platform (mobile or PC/console) and how that shapes the game concepts you are thinking about. As with any new tech, you need to assess whether your studio has the DNA to properly execute on it.
I have to admit, personally eSports is my old man thing. As a fan of traditional sports, I just don’t get the attraction, even as a life-long gamer. However, professionally, I simply can not close my eyes from this phenomenon that is obviously huge. SuperData Research has estimated the market to reach $1.9B by end of 2018, which would mean approximately one billion by the end of 2017. Viewership is expected to be counted in hundreds of millions, growing from the two to three hundred unique viewers reported at the end of 2015.
These numbers predict quite convincingly that eSports will continue to grow, but what will happen, substance-wise? Will it stay confined for quite specific, team-based games that facilitate league and tournament structures? What else could there be? Indeed, analysts have indicated that the field is still waiting for that moment ‘where a new entrant figures out how to build a truly eSports-first game and takes significant market share.’
The business environment will continue to expand along paths familiar to traditional sports: star players will ink endorsement deals (albeit more niche ones than the Lebrons of this world), arena projects dedicated to eSports will kick off (and already have), broadcasting networks will jump in to get their share of the attention (as ESPN just did), while game publishers will continue to invest into the field, but they also will want to measure and optimise their investments, simultaneosly shaping the field.
Action point: If you are developing a competitive multiplayer game, you need to start building the community and facilitate broadcasting gameplay from early on. Consider partnerships and/or integrating third-party solutions which leverage the growing interest in the field. No doubt this area also has opportunities for yet undiscovered services catering for both the community of viewers and aspiring players.
3. Platform thinking and Perpetual Downloadable Content
Analyst Michael Pachter has talked about how AAA games like Destiny are likely to offer DLC for years to come. The takeaway from this is both to acknowledge the ‘software as service’ in operation, but also realise how publisher’s are willing to make significant investments up front provided that the game under development will function as a platform for diverse content (with lesser investment) and, consequently, a long tail of monetization.
This move towards ever more persistent game worlds across AAA content will become to define their character, in opposition to more fleeting and casual experiences. These games aim to become platforms that yield in revenues for years and years.
Action point: Think about your game(s) under development as long-standing services, with multiple life-cycles, instead of seeing them as standalone products.
4. Evolution of business models
The sustainability of the free-to-play model has been questioned ever since it broke out of the niche titles to mainstream on mobile, around 2012. If one looks carefully, a slight shift towards more transparent monetization mechanics has been spearheaded in the mobile space by popular titles such as Crossy Road and Hearthstone.
The key question for free-to-play is whether a business model where a few percent of the audience funds the fun of the rest is feasible in the long run.
There is not a precedent for this — but, we live in an age of business disruption where companies like Uber emerge out of nothing, and consequently, there is no denying that free-to-play is here to stay. The question is how will it evolve because it will.
A key future factor is what Nintendo, with its upcoming NX platform, actually means by their slightly obscure statements about the ‘free-to-start’ nature of upcoming mobile titles. Recently we have seen hints of what this kind of product strategy could mean, with Pokémon Picross game (on the Nintendo 3DS) designed to cap individual spending at $32, i.e. after the lifetime value of a player has reached that amount, the game basically unlocks all content and there are no more opportunities to spend money.
This kind of ‘soft’ approach, which essentially eliminates whales, is interesting in that how many smaller players than Nintendo can afford to put such a cap in place. The foreseeable consequence of the decision is that the game possibly has shorter lifecycle, and therefore any studio that implements a similar solution, needs to follow up with more titles in relatively quick succession.
Action point: If you are developing for the free-to-play market, you need to consider your approach carefully. Only a deep understanding of the model and how the winning titles are executing it enables one to execute a strategically feasible approach that would, e.g., aim at longer sustainability. Then again, in short term, maybe just going with the flow is the way to go.
Streaming will affect the gaming landscape in both meanings of the word: One, as a distribution method for AAA games (i.e. no physical or even downloadable SKU needed), and second, as players’ means to broadcast their play sessions. Whereas the former is on the cusp of solving the technological issues for good, and consequently on the cusp of mainstream feasibility, with e.g. Sony and EA continuing to invest on their respective services, there seems to be no end to growth for the latter.
I see eSports and the rise of streaming services, such as Twitch, connected to each other in more ways than one. The obvious synergy is the content and coverage they provide to each other, but more interestingly, I see their rise as a result of similar media consumption habits with a certain age demographic; the rise of YouTube celebrities, ‘Let’s Play’ videos, and eSports enthusiasm all speak to similar media consumption motivations and patterns. All this momentum will feed into innovation that is resulting from both trends.
Action point: see the section on eSports above, especially the service angle instead of game development as such.
6. Indie outliers
Much talk was being made of the ‘indieapocalypse’ i.e. how — surprise! — only a fraction of indie game developers is able to build sustainable businesses out of their craft.
Still, indie is where games mostly take their evolutionary steps, and therefore, we will continue to see outlier success stories that emerge virally and due peer recognition through the mass that the generally lower thresholds for developing one’s own game have created.
Companies like Playfield and Itch.io are building services that try to tackle the indie discoverability issue, both for the player community and the developers. Their value proposal to indie game developers by providing support in the aspects that lone or small teams of developers tend to lack, i.e. marketing, PR and data. This kind of support might just prove to be the springboard for ‘triple-I’ titles and studios.
Action point: If you are developing for the indie crowd, think about promotion from day one: define your target audience and identify the key forums where your audience spends time. Integrate analytics tools in order to be able to measure what works in terms of gaining visibility. Your mindset needs to be one where all this is for the good of your game, not against it.
On mobile, messaging finds new forms, e.g., in virtual concierge apps and as distribution methods for game apps. At the same time that VR is eager to captivate all our senses, uses of simple text user interface in attractive ways presents very powerful means of engagement, and it will continue to do so. Up to a point, that we will see games focused around messaging, taking their leaf from social parlour games and the like.
Gaming cannot go unaffected by this movement, and it is an opportunity speaking to the diversity of games and players’ motivations to play on various platforms — not all things are necessarily suitable for VR, for example.
Action point: If your game has a fit for a social component, consider how to gain the most out of messaging and notifications. If you are developing on mobile, consider game concepts entirely based around messaging and start prototyping tomorrow.
This post on the Apple Watch outlines well the challenges wearable devices are having in general: they feel like accessories without providing enough value across multiple use cases (instead of very specific ones, such as exercise tracking).
Still, in the next year, the OSs will develop further, extending the native capabilities of the devices, and there are game studios focusing on the devices and attracting funding. Within the next two years, Apple has no doubt iterated its product for at least a couple of times, as have the other players, too.
Therefore, wearable devices will have an impact, and regarding games, they have a chance to carve out viable niches — see also the section on AR below. The breadth of this impact will be helped by the rise of simple yet addictive ‘clicker’ or ‘idle’ games’ which distill simple progression systems to their core. Whether they will break out those niches in the context of games seems improbable at the moment — unless the wearable paradigm is tangibly disrupted by something unexpected.
Action point: One cannot tackle wearable concepts half-heartedly, which makes a strategic decision to focus on them extra difficult. If you decide to take on that leap, identifying relevant trends in wearable use becomes crucial, because it might open your eyes to an opportunity that the competitors have not identified yet. The fact that many mobile game developers seem wary of entering this submarket might turn out to your advantage, but at the end of the day, it is all about execution, both in terms of your game and gaining visibility. Same goes for contemplating a strategic focus towards the Apple TV — monitoring the market is key before making the call to custom-fit or conceive a game concept around the living room and passing that remote around.
9. Multicultural audiences
With reports stating that time spent on mobile games is decreasing in the west, and the market generally being saturated, it is no wonder some developers are gazing especially south-eastward in their hopes to strike it big. India and China are huge markets, even if players’ spending power or willingness is not necessarily on par with their western counterparts. The challenges from developer point of view have to do with establishing local partnerships for distribution and being in tune culturally to what works, in terms of gameplay, social mechanics and themes in the east. Pragmatic problems include, e.g., disabling Facebook related social functionalities in China and catering for the particularities of local social networks, such as Weibo.
The CEO of Superdata Research has observed that in India “there is an absence of a large market for traditional game publishing” and “providing better localized content will prove key.” TechCrunch just posted an interesting piece on the mobile games market in Iran, indicating that it might become as profitable as Turkey. It’s not just the giants — gaming audiences will become increasingly multicultural over the next two years.
However, the size of the Chinese market in particular presents another potential trend relevant for game developers: mergers and acquisitions. Hugely profitable companies, such as Tencent, have gradually started establishing foothold in the west by acquiring studios and establishing offices e.g. in the UK and US. We can expect this trend to continue in 2016.
Action point: Familiarise with the particularities of these markets and evaluate which of your games or game concepts could be feasible for a product-market fit. Look into establishing publishing or distribution partnerships with local providers — the chance is you will not get far without one.
10. AR second comers
The presumably lower development costs (read: not needing to produce top quality 3D art) and accessibility will keep Augmented Reality in game studios’ sights. The game-changing innovation would likely need to be something deceptively simple that attracts audiences above and beyond so-called viable niches.
Yet, if we imagine AR games as something that always acknowledges location and other contextual matters, we could be wrong. The AR killer app might just be a lighter, more accessible take on VR-type, immersive experience — on mobile. It is likely to become a line in the sand between mobile VR and AR, and games will be there to contest it.
Whichever the case, on the heels of early pioneers on the web and on mobile (EA’s Majestic, and titles like Shadow Cities, respectively), the scene will be set for second comers who are able to execute their game in a way that makes a difference.
A key title to follow will be Pokémon Go, Nintendo’s title coming out this year for smartphones. With the backing of such a brand, it will definitely have an impact. It also helps that the developer Niantic has experience from the field through Google’s Ingress and consequently has raised considerable investment.
The general challenge for AR games is that they tend to ask players to complete tasks that are quite lifestyle-sensitive, e.g. if one is a parent whose weekdays are spent on commuting between home, work, and schools/nurseries, it is quite a big ask for any location-based concept to ask them to divert from their routine routes.
Therefore, AR game design can either go the persistent route, i.e. aim to tap into the reality around us and transform it for game purposes, or take an event-based route where specific arrangements (for surroundings, possibly in a specific location, etc) are being made for a limited amount of time to facilitate the game being played.
Before an AR title that truly breaks into mainstream awareness there will remain a definition challenge: what does it take to consider reality ‘augmented’ (consider the ‘transmedial’ promotion campaigns by Nine Inch Nails and others) and which kinds of exact designs and conventions will emerge, e.g., for A powered via wearable devices or smartphones?
Action point: It very well could be that AR is more suitable for satellite-type services and components feeding input back to a ‘mother’ game on another platform — think Nintendo’s Street Pass concept as a type of lo-fi AR implementation. For smaller studios, however, it is difficult to branch out like this — pure focus on AR is likely to more ‘platform-native’ results and thus engaging results. Regarding strategic product focus, much like with wearables, it’s all or nothing.