The news we saw from Electronic Arts today is glimpse at the inevitable future of the games market. The company made two very large announcements today, each pointing to a new direction for its business moving forward, but most tellingly we saw it put a foot on a new path that will see fewer packaged titles, more focus on a service-oriented business, and new ways of charging for games.
For many enthusiast or "hardcore" gamers, EA's acquisition of Playfish today no doubt caused much rolling of eyes, and there are already complaints all over the Internet about it diluting its brand and turning its back on "real" gamers. In truth, the Playfish acquisition was an indication that the company's management understands that it's no longer enough to simply compete for our dollars, or to go head-to-head against it's rival Activision - now it needs to compete for our time. With so many entertainment choices available to us all, it's not enough to expect us to seek out specific content - the real winners will come to us. When it comes to online experiences, that means a greater emphasis on digital distribution, and it means that we'll see social platforms like Facebook become a more important distribution vehicle. Importantly, it will also see a shift in the way that we pay for games. As EA Interactive senior vice president and general manager Barry Cottle said today, "people play games, and people pay for games, but instead of paying upfront they'll pay along the way."
"Paying along the way" is gaining traction fast. Apple's recent move allowing for in-app purchases on the iPhone and iPod Touch has seen a rapid expansion of the "freemium" model for games on the platform. Some of these are direct ports of titles that previously appeared on Facebook and made use of the payment system, but there are plenty of new titles too. Possibly the highest profile is ngmoco's online first person shooter Eliminate which launched last week and immediately shot to the number one spot on the store's download chart. "In Eliminate you earn credits and level up when you play in matches," explained ngmoco CEO Neil Young. "Credits can be spent on weapons, new armor, items and upgrades that have level locking requirements. Players receive a certain allotment of 'charges' for free each day, but if they want to play more than this allotment, they can buy additional 'power cells' to charge their suit." The game is completely free to download from the iTunes App store, and the only content that you pay for are these power cells. "Freemium games have definitely inspired us," Young explained. "From Kart Rider, Maple Story, Epic Pet Wars (we actually own Miraphonic, the team that made Epic Pet Wars, we just announced that recently, but it has been the case since earlier in the summer) and social games. Each of these games have their strengths and weaknesses and for us it's been about trying to figure out how to build the type of games we know that gamers have come to expect, but combine them with these new payment models."
Browser based play and mobile play are certainly beginning to show signs of being the way the games industry is evolving. As Mark Spenner, the vice president of product development at EA's new browser focused business unit EA 2D said when we interviewed him about Dragon Age: Journeys, "we think the browser is the future of gaming. We are not stopping at reaching 5 million players through a boxed product. Our aspiration is to reach 100 million players through high quality, accessible games available in the browser." At around the same time, Electronic Arts CEO John Riccitiello stated in an interview that "there are probably more people enjoying games on mobile devices than all the consoles put together. That is the future."
In late 2007 noted games developer Dennis Dyack prompted a great deal of debate on gaming message boards for comments regarding a future that wasn't carved up by different hardware platforms. "Imagine a unified platform," he said. "One console for all gamers - that would bring a massive paradigm shift to the games industry, where games would become better in quality, cheaper, and more widely available." While his vision of a single "console" specifically may not have been accurate, we do seem to be slowly moving towards a unified platform; the browser. By processing game code based on the device on which the browser is running, we're very quickly approaching a time where games will adapt to the environment they're running in. Full 3D experiences running in advanced browsers on laptops, PCs and set-top boxes - or yes, even our Xbox 360, PlayStation 3s and Wiis, and scaled down versions served to mobile handsets and smartphones.
"Games are becoming services and even the most scripted experiences will evolve towards this model," Young told us. "I don't think subscription based games represent the long term solution, but I do think that ?freemium' gaming is something that will be as pervasive tomorrow as packaged goods sales are today."
While the shift will not happen overnight, the move toward what is essentially "cloud" gaming where all the code sits on a server and is sucked into your device through an Internet connection is accelerating hard. As Dyack said back in 2007, "the market is currently split in an unhealthy way between the three major manufacturers ... The economics of the proprietary models seem to point toward spending more money and receiving fewer returns with each generation, with no clear winner." Triple-A games are increasingly expensive to make, and at $60 (or more than $100, as is increasingly the case for special editions or titles with peripherals) they are expensive for consumers to buy. Meanwhile there are increasingly easy ways for savvy consumers to connect with their friends and share entertainment experiences online, and let's face it - tolerance for bad games is lower than its ever been. We gamers have always been a pretty discerning bunch, and always voted very smartly with our purchasing dollars, but with so much content available to us, we've all become experts at calculating the time-based return on investment for a $60 game. It's no surprise then that as part of its restructuring efforts Electronic Arts is looking to drastically reduce the number of games it publishes next year from 60 titles to 40. "We're cutting projects and the support activities that don't make economic sense and freeing up more resources to push our key titles even harder," said the company's chief financial officer today.
The future of the games business is starting to be defined right in front of us this holiday season. The shift is entirely out of necessity, and is a direct result of the behavior of those of us that like to play games. Our tastes are broad, but our time and our money is limited, so we'll see fewer big budget titles like this week's Modern Warfare 2, but (potentially) an explosion of smaller, more focused experiences appearing in our browsers and on our phones. Revolution Software's Charles Cecil, who recently reissued his seminal 1994 adventure game Beneath a Steel Sky for the iPhone thinks the future is very bright. "What is emerging is the opportunity for an indie scene in gaming that won't ever need to try and go mainstream," he told us. "There's a renaissance going on creatively. What I put it down to is that come the PlayStation One and the move to 3D games back in the 90s, Sony did an exceptional job of drawing in a new audience. It was an audience of younger males, predominantly, and it grew very, very rapidly. What we didn't notice at the time though was that we were alienating the traditional gamers who didn't want such a visceral experience, and weren't as impressed with the move to 3D. We lost these people, but as an industry we were gaining people into these new experiences faster than we were losing traditional fans. So nobody really noticed. The renaissance has come now because we're seeing platforms that don't necessarily do 3D as well. 2D is the best solution for a lot of games [on mobile or in the browser] and all those older gamers are starting to come back - which is absolutely brilliant. What's interesting with doing these smaller projects is that we can go back to the days of small teams, or indeed individuals producing games again. We can do it in the way that we did it in the 80s. What we liked so much about those days was that you could pull together a small group of people that shared a vision. We've not been able to work like that for a long time - but we can do it again now."