Gaming's Last Hurrah
The world of technology is in a transitional phase. The impact of the key drivers of the original tech boom are either slowing or becoming less relevant.
The demands of media are now overpowering the abilities of hardware--a situation reminiscent of the early 1980s, before Moore’s Law delivered computing power, which left creators of media scrambling to exploit the situation.
Anyone making media will be delighted at the power of the current generation of computers but, nonetheless, will quickly max out a machine’s capacity, be it in CPU, memory or hard disk. Dual core, gigs of RAM and terabytes of disk space still barely stretch to do the job if you want to simulate an orchestra or make funky effects.
The extreme difficulty of protecting intellectual property in the new networked media environment is conjoined with the fast approach of what looks like a set of computing ceilings.
It seems unlikely that any legal boot is going to stomp piracy out, and there seems no possibility of a practical technical fix. People simply won’t buy media en masse if they can steal it.
What’s more, if the market is driven by "zero-cost-theft" then to provide content in that market, publishers have to give their material away and find other ways to make a crust; for example, advertising. The only option for publishing is a real-time environment, because you cannot easily steal and distribute the "now."
These two pieces of apparently bad news are going to combine to make one big piece of good news for one particular industry: the computer game publishers. This might seem like a perverse suggestion, but under the hood of the massive computer game industry, the hardware platform owners hold the industry in a vice-like death grip.
Because of pestilential piracy on the PC platform, the only viable systems to make big bucks on publishing are Sony's (nyse: SNE - news - people ) PlayStation, Nintendo (other-otc: NTDOY.PK - news - people ) and Microsoft's (nasdaq: MSFT - news - people ) Xbox, which are developed at huge cost by their owners.
To actually write and publish a game for these machines, a software house must run a gauntlet of costs and controls to get the thumbs up from the platform holders who control, in effect, private computer fiefdoms. The overall bill is compounded by squeezed publishing margins and the platform holder extorting a massive toll for each game made.
All in all, this makes the console market a high risk, cutthroat business with very few companies able to afford to play. A plethora of corporate casualties along the way have demonstrated what a harsh industry it is.
Yet all this is about to change. First, the new platforms are now all available on the market, marking the bottom of the industry cycle, which experiences a slump period in advance of the old formats being replaced. There is then a "time of plenty" as new game console owners want new games and there are few to quench the demand and no cut-price mountain of old products to dilute it.
This corporate computer game spring starts now and will last at least a couple of years. The really good news for publishers, however, has much great importance and longevity.
The console games business is going to die and be replaced by something better. It might not be because making game consoles is now so expensive that they will break the platform companies themselves; it will also probably not be because you will be able to pirate console games on the net like any other piece of static media, and it is certainly not because computer games are a fad.
Simply put, massively multiplayer games will take over and they will be subscription-based, and available on a PC or whatever that platform morphs into.
The hardware monopoly wielded by Sony, Microsoft and Nintendo becomes irrelevant when you can play an unstealable real-time game on the family PC over the net. One game, $1 billion in sales: Warcraft is the writing on the wall for the console makers.
With the platform owners’ death grip on the games industry about to be broken, software publishers old and new will be able to compete unfettered on the net, with an unstealable client/server game available to a global market. This is like shifting from the Encyclopaedia Britannica model to Google.
The big computer games companies will have an obvious advantage; Warcraft is, after all, an offshoot of Vivendi Universal (nyse: V - news - people ). The big global names will thereby flourish, with a boom in new console publishing replaced later with a huge wave of multiplayer game activity.
Electronic Arts (nasdaq: ERTS - news - people ), Activision (nasdaq: ATVI - news - people ), THQ (nasdaq: THQI - news - people ), British Eidos/SCi, French Ubisoft and the big Japanese firms should all be operating in a benign--potentially boom--environment for many years.
The canny investor should also look out for newcomers, because a new breed of games companies will appear to fill an inevitable conceptual vacuum that will take a few years to close.
Source-Forbes.com
The demands of media are now overpowering the abilities of hardware--a situation reminiscent of the early 1980s, before Moore’s Law delivered computing power, which left creators of media scrambling to exploit the situation.
Anyone making media will be delighted at the power of the current generation of computers but, nonetheless, will quickly max out a machine’s capacity, be it in CPU, memory or hard disk. Dual core, gigs of RAM and terabytes of disk space still barely stretch to do the job if you want to simulate an orchestra or make funky effects.
The extreme difficulty of protecting intellectual property in the new networked media environment is conjoined with the fast approach of what looks like a set of computing ceilings.
It seems unlikely that any legal boot is going to stomp piracy out, and there seems no possibility of a practical technical fix. People simply won’t buy media en masse if they can steal it.
What’s more, if the market is driven by "zero-cost-theft" then to provide content in that market, publishers have to give their material away and find other ways to make a crust; for example, advertising. The only option for publishing is a real-time environment, because you cannot easily steal and distribute the "now."
These two pieces of apparently bad news are going to combine to make one big piece of good news for one particular industry: the computer game publishers. This might seem like a perverse suggestion, but under the hood of the massive computer game industry, the hardware platform owners hold the industry in a vice-like death grip.
Because of pestilential piracy on the PC platform, the only viable systems to make big bucks on publishing are Sony's (nyse: SNE - news - people ) PlayStation, Nintendo (other-otc: NTDOY.PK - news - people ) and Microsoft's (nasdaq: MSFT - news - people ) Xbox, which are developed at huge cost by their owners.
To actually write and publish a game for these machines, a software house must run a gauntlet of costs and controls to get the thumbs up from the platform holders who control, in effect, private computer fiefdoms. The overall bill is compounded by squeezed publishing margins and the platform holder extorting a massive toll for each game made.
All in all, this makes the console market a high risk, cutthroat business with very few companies able to afford to play. A plethora of corporate casualties along the way have demonstrated what a harsh industry it is.
Yet all this is about to change. First, the new platforms are now all available on the market, marking the bottom of the industry cycle, which experiences a slump period in advance of the old formats being replaced. There is then a "time of plenty" as new game console owners want new games and there are few to quench the demand and no cut-price mountain of old products to dilute it.
This corporate computer game spring starts now and will last at least a couple of years. The really good news for publishers, however, has much great importance and longevity.
The console games business is going to die and be replaced by something better. It might not be because making game consoles is now so expensive that they will break the platform companies themselves; it will also probably not be because you will be able to pirate console games on the net like any other piece of static media, and it is certainly not because computer games are a fad.
Simply put, massively multiplayer games will take over and they will be subscription-based, and available on a PC or whatever that platform morphs into.
The hardware monopoly wielded by Sony, Microsoft and Nintendo becomes irrelevant when you can play an unstealable real-time game on the family PC over the net. One game, $1 billion in sales: Warcraft is the writing on the wall for the console makers.
With the platform owners’ death grip on the games industry about to be broken, software publishers old and new will be able to compete unfettered on the net, with an unstealable client/server game available to a global market. This is like shifting from the Encyclopaedia Britannica model to Google.
The big computer games companies will have an obvious advantage; Warcraft is, after all, an offshoot of Vivendi Universal (nyse: V - news - people ). The big global names will thereby flourish, with a boom in new console publishing replaced later with a huge wave of multiplayer game activity.
Electronic Arts (nasdaq: ERTS - news - people ), Activision (nasdaq: ATVI - news - people ), THQ (nasdaq: THQI - news - people ), British Eidos/SCi, French Ubisoft and the big Japanese firms should all be operating in a benign--potentially boom--environment for many years.
The canny investor should also look out for newcomers, because a new breed of games companies will appear to fill an inevitable conceptual vacuum that will take a few years to close.
Source-Forbes.com
Labels: gaming
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