But just 3 in 10 games recover their costs, so devs ‘must explore new models to survive’
In the opening talk kicking off this week’s Edinburgh Interactive Festival, former Sony CEO Chris Deering offered a glimpse into the immediate future of the games market, predicting a global market of 2.5bn potential gamers by 2011.
Traditional games platforms like DS, Wii and PS3 will hit a total installed base of 500m by 2011, Deering predicted – citing sources like Screen Digest and other industry sources – with alternative mobile platforms and gaming PCs accounting for a billion users each.
Of that games market, his predictions said the DS market will have ballooned to 150m users, with the Wii at 80m, PS3 at 70m and 360 or its successor at 40m and PSP (and/or its successors) at 70m. PS2 still played a part with 90m active users still in 2011.
But even with the support of two billion potential players through more fractured and non-traditional platforms, Deering warned that “traditional revenue sources will not be sufficient to fund games development” as the market grows, and studios should explore new business models.
Deering said that currently only 3 in 10 games recoup their development budgets. And that trend will continue in a future where an array of companies, such as mobile networking operators, cable, satellite and DSL operators plus TV networks and many others “will be in the competitive array”. So developers will have to turn to new revenue sources to cover their losses.
“Something is going to have to be there to make up the difference,” he said, citing a “creative use of hybrid online/offline advertising revenue models” as one key way to succeed. “These business models must be explored.”
Deering also ran through the qualities and trends he thinks will sustain a market of 2.5bn potential games players. These included the rise of WiFi and new technology such as lighting and voice recognition; massive game worlds, plus cinema-real thinking and speaking characters; micro-payment and advertising; user-generated and user-enhanced games; and games for niche communities.
Also, another new revenue stream will emerge for developers: “Gambling will become a source of development funding,” said Deering. “Perhaps not directly, but this area can provide some sources of income which eventually be directed back to the developer.”
He also urged the games industry to start thinking about ways to harness the changing entertainment landscape, and ‘make a game of’ things like the growth of internet use by a magnitude of almost five million (according to Cisco figures), thanks to the rise of online video, and the expanse of mobile networks in ‘massive mobile social networks’ plus technologies like GPS.