Looking Forward: Interactive Entertainment’s Next Generation?

gaming futuresThere is a transformation underway in the world of video games.  Fueled by changing technology and the opportunity to evolve outdated business models everything from who plays, to what they play, to how they play it, are in states of transition.

For the analyst, the executive, entrepreneurs or for simply curious fans, this begs the question: Where are we headed?   What will come next? Where will things differ and where will they stay the same?

Every answer is a tea-leaf reading game.  But dot by connected dot, piece by piece, from the patterns and trends showing today?

Chances are we’re heading slowly toward a new marketplace.  A place with different cost structures and different hardware archetypes.  A place where traditional hardware cycles elongate and where software delivery methods change. We’re probably looking at a gaming industry future where some consoles become truly multi-purpose home entertainment platforms – music, movie, digital video recording (DVR) and gaming enabled devices in one – where direct delivery (streamed digital content or real-time streamed game play) become the dominant reality.

It’s a likely future where interfaces and user experiences will mix and match – from 2D to 3D, from traditional joystick inputs to full figured motion control and voice automation.   It’s a future where mobile games will likely take off in new directions, a place where boundaries from one medium to the next (console, PC, portable, cellular etc) become less defined.   It’s a place where a game’s play will be capable of crossing over between different devices.  It’s a place where “non-puzzle” or non-“head to head” games won’t have to be linear, where game storytelling is able to explore new forms.

We’re heading toward an environment where streams and subscriptions stand to surpass “shrink wrap” software sales.  A place where business models evolve.

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Venture Report: OnLive Closes Large Series C

Twitter is not the only company drawing massive investor speculation.   Gaming startup OnLive announced Tuesday (9/29) that investors including Warner Brothers, Autodesk and AT&T Media Holdings had all jumped in to fund a substantial Series C financing.

Details weren’t disclosed but CEO Steve Perlman said on the company’s blog that the round was the company’s largest to date.  It was "much larger than our previous rounds and gives us a serious jolt of rocket fuel as our beta progresses," he wrote.

Some speculation in the market is that the valuation may have been in excess of $500m. (via Venture Beat) No telling if that’s accurate.

OnLive is looking to deliver a “cloud computing” competitor to the traditional game console environment.    More than seven years in the making, the company is currently beta testing its offering and looking to build out server farms necessary for their eventual commercial launch.

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Disney Adds Gaming Talent with Purchase of Wideload

disney wideload games buy

Mickey is looking for some new ideas and the talent to develop them.  He’s not scared to pay to get either.

Just about a week after shelling out $4b to buy Marvel Entertainment, Disney’s dug into its acquisition coffers again, this time to snag little known game developer Wideload Games.

In a press release, the companies announced the deal Tuesday morning. 

In contrast to the Marvel purchase, the Wideload buy seems almost singularly about the people.  Wideload won’t be bringing a cache of known brands or readily saleable products to the Disney family.  There won’t be any super heroes or arch villains to pepper story arcs or cross the media boundaries of Disney’s empire.   Since being founded in 2003, Wideload has developed only a handful of games. 

The real characters Wideload will bring to Disney are its staff, particularly, its founder, game industry veteran, Alex Seropian.

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Japan Earnings Watch: Nintendo and Sony Falter

Sony and Nintendo have generally been moving in different directions, one finding success while the other floundered and restructured.   Heading into the current quarter, with consumer spending weak and a strong Yen threatening margins, there were hints that might be changing (at least for the very near term).

Earnings results in, it has.  Both Sony and Nintendo reported Thursday and both struggled. 

At Nintendo, revenue fell 40% to 253b Yen.  Earnings plunged 61%.     Unit sales of Nintendo’s otherwise infallible Wii fell 57% globally compared to the same period last year. 

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THQ Fights to Strong First Quarter

THQ earnsTHQ is a company still at work turning itself around but the waypoints along the trail show its clearly making progress and moving in the right direction.   A day after winning an arbitration ruling over Jakks Pacific, the Agoura Hills game developer reported a record setting first quarter.

For the three months ended June 30th, revenue soared 77% to $243.5m.   Net income was $6.4m, or 9 cents a share, compared to a loss of $27.2m, or 41 cents a share, last year.  Less one time charges for restructuring and stock compensation, THQ earned $6.9m, or 10 cents a share (compared to a loss of 38 cents last year).

Analysts were expecting a loss of 8 cents a share on revenue of $203.5.

The consensus-topping result directly contrasts weak earnings at some rivals and also appears to temper questions about the interactive gaming industry’s current health.    In this climate, the message seems to be: consumers are buying but they’re buying selectively.  Quality content is essential. 

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Ubisoft Q1 Misses the Mark

game earnsAmidst solid annual earnings last April, French game publisher Ubisoft waved a caution flag and warned its year over year sales results would likely slip for the quarter ended June 30th .   Maybe they should have grabbed a megaphone to broadcast the revenue warning too.

Today, the company reported first quarter sales 12.6% below guidance. (release (PDF))

For Q1 2009-10, Ubisoft’s sales came in at EUR 83m, down 50.6%.

The company blamed a combination of market conditions and surprise sales trends for the result. Casual games for the DS were among those singled out

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World of Warcraft the Movie?

Electronic Arts has an agent, movie project and deals with Steven Spielberg and Zack Snyder.  MTV Games is tied up with Jerry Bruckheimer.   James Cameron is working with Ubisoft.  Activision Blizzard now has Sam Raimi, well, sort of.  Activision announced Wednesday the Spiderman director signed on to produce and direct a film based on the company’s hugely popular World of Warcraft online fantasy games.

Raimi’s deal is not a game development deal like some of the other Hollywood heavies have, it’s a traditionally movie contract.  Still,  the agreement is another demonstration of the increasingly frequent crossover between film and interactive games.

Legendary Pictures, which produced Batman Begins, 300 and Watchmen, will co produce the movie along with Charles Roven’s Atlas Entertainment (Batman Begins, The Dark Knight and The International).

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