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There 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  Fueled by changing technology and the opportunity to evolve outdated business models everything from who plays, to what they play, to how they play it, are in states of transition.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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It’s hard to call the Beatles an opening act.  But if the Paul McCartney and Ringo Starr assisted demonstration of the Beatles Rock Band game was the warm up, than Microsoft’s demonstration of new motion control technology was the headlining main event at the company’s E3 Press Briefing. 

Monday morning, Microsoft showcased what it’s calling Project Natal.  The subject of years of rumors, and longstanding speculation, it’s a technology that takes the unfulfilled dream of Sony’s Eye Toy and makes it real.   It’s cameras and computer interaction in ways we’ve only seen in movies.  It’s nothing short (in potential) of spectacular.  (see video embedded below for demonstration)

To quote Steven Spielberg who was on hand to help with the reveal, “This is a pivotal moment that will carry with it a wave of change, the ripples of which will reach far beyond video games”  

To put it to imagery, picture the gaming interface of Nintendo’s Wii, without the need of a controller.  Picture a user interface that recognizes and responds to a person’s movement and environment.  It’s a computer with sight (and ears).

Want to fight Sugar Ray Leonard or Muhammed Ali in a boxing game? Test your mettle against an Ultimate Fighter without the bruising and bone breaks? Make a fist and swing your hands through the air. Click to Read More

The rumors circulated, the news was deemed imminent, and now it’s official.  This morning, Google, together with T-Mobile and HTC, officially revealed the hyped “Dream” phone, the first mobile phone to be built around Google’s Open Handset Alliance Android operating system.

Bloggers, press and even Google’s founding team of Sergey and Larry were on hand for the Manhattan launch event.

Rebranded from the Dream to the G1, an obvious nod to Google, the phone will be available on October 22nd at T- Mobile stores in twenty one cities.  It will sell for $179 (with a two year contract), plus a $25 or $35 a month data plan subscription.

From the start, the phone will provide Google with gateway access to consumer’s mobile experience. Click to Read More

In politics, or even for the reign of a new CEO, one hundred and eighty days are the usual benchmark for the first measurements of achievement.  In the consumer electronics world, with the instant gratification generation of the Internet driving things, the pace is far quicker.  It’s been only a month since Apple unveiled the iPhone 3G to the world but measurements are flowing.  And like a blockbuster movie touting weekend box office tallies to sustain momentum, Apple too is shrewdly using the press to maintain and build buzz for the phone.

Today, Apple announced that more than 60 million applications have been downloaded at the new “Appstore.”  Click to Read More

Ben Franklin famously said only two things in life are certain: death and taxes. That maxim may be true but in these finicky financial times, another element might fit too:  guidance below expectations sinks stocks.  It doesn’t matter if a company routinely underestimates future performance and then exceeds those expectations.  Conservatism isn’t rewarded.  It doesn’t matter if a company sets new performance records.  The past isn’t rewarded.  What matters, all that seems to matter (at least when it comes to short-term stock performance), is meeting or beating the analyst gold standard and projecting a better than expected future. As Apple proved yet again today, it’s a simple truth: Guide Lower than Analysts and the Stock Price Will Pay.

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Intel kicked off the technology earnings season with positive surprises earlier this week but Thursday, the keg seemed to run dry early at the party and things turned grim.  Google and Microsoft both released earnings and neither company satisfied the appetites of a nervous market.   The initial reaction was to buckle the seat belt and grab on, the ride looked like it was about to get rough; and in fact it did.  Google’s news led to a more than 10% sell off in after-hours trading.  The bright side: Google’s news wasn’t really bad.  The selloff, or at least the rationale for it, appears to have been premature.

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iTunes has long been looked at as the loss leader, the bridge that links Apple’s assorted media products. It drives product sales and helps power iPods, iPhones, Apple TV and Mac multimedia.  But that role of servitude hasn’t stopped it from turning into a significant force. 

Apple announced today, the iTunes store crossed the 5 billion song barrier.  That’s 5 billion songs sold, up a billion from the 4billion announced in January.   

At 99cents a song, that means the store has generated nearly $5billion in music revenue. That’s $3.5billion to artists and labels and $1.5billion to Apple (based on widely estimated revenue sharing splits).  That’s not too shabby for an auxiliary program that helps promote hardware sales.

As this graphic shows, the escalation in pace at which songs are selling isn’t bad either:

Even more impressive, however, might be the story surrounding video sales.  Click to Read More