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New format video games spur optimism

Dec 29 2010 12:35 Reuters

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Raleigh - Video game makers leave behind a year of slow sales in 2010, but are hopeful that a new generation of games for tablet computers, cellphones and web social networks will spur a return to growth in 2011.

The explosion of mobile games like Infinity Blade on iPhone and Angry Birds on Android smartphones has lured new consumers into playing games.

At the same time, video game company Zynga has turned social network FaceBook into a hugely successful platform with hits like Farmville (55 million monthly players) and CityVille (44 million and counting).

"Before, we were figuring out how to make social games - now we are mastering the art of making social games," said Mark Skaggs, vice-president of product development at Zynga.

He said the next generation of FaceBook games will have "deeper gameplay, more polish, and be much more and better social experiences".

North American sales of video game hardware, software and accessories are expected to reach $20.9bn for 2010 by the time all sales are totalled after the holidays.

That figure is down 4% from 2009, according to Jesse Divnich, vice-president of Electronic Entertainment Design and Research.

Yet despite the economic slump that continues to affect gamers' disposable income, industry players expect 2011 to bring a wave of new revenue from items such as downloadable content, mobile games, and in-game micro-transactions.

No-glasses-needed 3D

Adding the new sources of revenue, Arvind Bhatia, senior research analyst at Sterne Agee, sees US and European game sales up 5% for 2010 and another 5% for 2011.

At January's giant International Consumer Electronics Show in Las Vegas, companies such as Samsung and Verizon will unveil new smartphones and tablet devices to extend the reach of games to more consumers.

Michael Cai, the head of video game research at Interpret, said over half of tablet owners today (52%) are playing games on their devices. Gaming is the second most popular activity on iPads and other tablets, behind surfing the web.

"I think one of the big trends of 2011 is cross-platform gameplay, that is, game experiences that are continuous across mobile, television, PC, social media, console and interactive toys," said Jesse Schell, assistant professor of entertainment technology at Carnegie Mellon University.

"As these technologies get more and more ingrained in our lives, game experiences across them will become more connected and more continuous," he said.

One reason for optimism is the performance of game sales at the end of 2010. "Call of Duty: Black Ops," for example, sold 8.4 million copies in the US alone in November. Last week, its maker Activision Blizzard said the game accounted for more than $1bn in sales.

Black Ops is one of a growing number of titles shown in stereoscopic 3D, which should appeal to buyers of new 3D TVs that will be promoted heavily at the winter Consumer Electronics Show by companies such as Sony, Vizio and Panasonic which cater to gamers.

At the show, Sony will push stereoscopic 3D games like MLB 11: The Show, Killzone 3D, and Motorstorm: Apocalypse.

Nintendo will promote its Nintendo 3DS autostereoscopic (glasses-free 3D) portable device, which will launch at the end of February in Japan and in other territories shortly thereafter.

nintendo  |  zynga  |  apple inc  |  video games
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