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Gaming for Emerging Markets? Meet Zeebo

zeeboBrazil, Russia, India and China (collectively “BRIC”) are the world’s leading emerging market countries.  As a whole, they represent 40% of the world’s population. Their middle classes presently spend well above a trillion dollars a year, and counting (according to the World Bank).    Goldman Sach’s has predicted the BRIC middle class will cross the threshold of a billion people by 2015.

No matter how you dissect it, BRIC represents a huge market for consumer product companies.  The video game industry has barely touched it.  With consumer income levels still relatively low, hardware makers have stayed away.  With piracy threats a serious concern, multi-national software developers have avoided developing localized content or pushing the issue.

That could soon change.  In one of the more interesting announcements to come out of this week’s Game Developer’s Conference in San Francisco, San Diego based Zeebo announced that it’s found what, it believes, could be the key to opening the door to gaming fortune in emerging market countries.

The company’s hopes are tied to a new console built around a secure, wireless content distribution platform.   Instead of discs or cartridges, Zeebo will deliver games over-air via 3G cell networks. 

The promise of Zeebo’s cell-enabled console is on-demand gaming in markets where gaming has so far been inconvenient, expensive, or unavailable.

To insure affordability, the company’s relying on less powerful processors than today’s current generation platforms. The downside of that is games won’t compare to an Xbox 360 or a PS3, they’ll be the equivalent of a few generations back in graphic rendering and motion, but Zeebo believes that will still be more than enough to hook uninitiated gamers around the world. 

Explained Zeebo’s CEO John Rizzo, “[Zeebo’s] focus is frankly not at the top of the pyramid….We’re aimed solidly at the middle class…..Most people in these emerging markets haven’t played Quake…. Maybe it doesn’t hold up against the newest games” …but to someone who hasn’t played any of them? That, Zeebo believes is a different story.

Zeebo also believes it’s a formula that will get publishers excited too.  The Zeebo platform will be able to deliver not just newer titles but also, otherwise antiquated back-catalog as a refreshed revenue stream.  It’s a way of recapturing gaming’s long tail.  Moreover, as digitally delivered content, there’s no costs resulting from packaged goods, shipping, or inventory management. That means the margin is higher from the start line.

Already, a host of major publishers have signed up to give it a try.  Some will port games specifically built for mobile environments while other publishers will deliver older console or PC titles.    EA Mobile is poised to offer Need for Speed Carbon and FIFA ’09 (dubbed to Portuguese for the Brazilian market).  Capcom will deliver a version of its Street Fighter franchise.   Zeebo says the rest of its partner roster includes THQ Wireless, Digital Chocolate, Glu, Id Software, Namco Networks America and Machineworks Northwest.

Qualcomm, which invested in the company alongside Brazil’s Tectoy S.A., is providing Zeebo with some of its key wireless technology:  Zeebo’s platform is built around Qualcomm’s chips and BREW (Binary Runtime Environment for Wireless) application development platform.  (For more on BREW see here).

If Zeebo’s test marketing proves accurate, the potential for the company is substantial.  Interestingly, it could expand beyond gaming too.  Today, in emerging markets like BRIC, the availability of broadband home Internet access can be limited in some places because of national  infrastructure issues, or cost.  A Zeebo console could, in theory, remedy that by serving as a household’s internet gateway.   It may not be as fast as DSL or Cable but it’s a lot better than dial-up.

The Zeebo console is expected to begin shipping in Brazil by May.  It will hit Mexico by the third quarter, then India and Russia in 2010 and China by 2011.

The launch price in Brazil is being set at $199 (which the company says is a fraction of what gray market current generation consoles are selling for there).  For $199 customers will get the console and four bundled games.  

With time, Zeebo expects the price will drop to $149, and then lower, as manufacturing scale is achieved.  Games will be sold for $10 to $15 a piece.  

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