The last 7 years have been a roller coaster for the games industry. The annual growth rate has stayed above 10%, outpacing U.S. economic growth by 8%. Nintendo holds a commanding lead in console sales, leaving Sony and Microsoft to fight for second and third place. The introduction of DLC has extended product life cycles past launch. Apple threw everyone a curveball and redefined both the mobile market and consumer expectations on price and format. Zynga expounded the social space while IPOing at a higher valuation than Electronic Arts after only 4 years. Call of Duty exploded past Halo and Grand Theft Auto to become the largest brand in gaming. Unreal Engine 3 and Unity have become the dominant forces in engine tech. Cloud gaming blipped onto the radar with Gaikai and Onlive. The crowd sourcing revolution is in full swing thanks to Kickstarter and IndieGoGo. We were validated in the Smithsonian’s American Art Museum! It’s been anything but boring. What do the next 3 years hold?
Today, the console market has become a battle for the living room. Nintendo might have held a commanding early lead, but the lack of a solid online infrastructure and heavy competition in the motion space is forcing an early entrance into Gen4 consoles with the WiiU. Sony’s Blu-Ray positioning has become less relevant as consumers flock to Netflix, Hulu Plus and other online streaming services. PlayStation’s non-game offerings have grown with brand consolidation into the Sony Entertainment Network and third party streaming options like Amazon Prime VOD, MLBtv, DirectTV NFL Sunday Ticket, Netflix and Hulu Plus. PlayStation Plus finally gives Sony a competitor to Xbox Live with an alternative value proposition in discounted software, but there’s plenty of room for growth. Microsoft has pivoted brilliantly at the right time, and arguably rebooted the Xbox brand with Kinect. The Xbox 360 has become a powerhouse in this new environment, with three complete dashboard overhauls, timed exclusive software / downloadable content, and a strong push into streaming media, music, apps and more.
Apple changed mobile computing with the iPhone in 2007. The App Store, a model that’s now being duped on everything from smart televisions to cars, made self publishing viable. Its low barrier to entry (Apple’s annual $99 developer seat and industry standard 30% cut of sales) compared to expensive dev kits and obscure publishing deals, gave would be game developers a cost effective outlet and a large install base. Over saturation has become a huge issue as the number of gaming apps for iOS crosses 111k. Apple’s recent acquisition of Chomp signals an impending booster shot of much needed discoverability on their platform.
A side effect of the increased competition has been the collapse of mobile software pricing. Budgets are tight for mobile products that now typically launch for 99 cents. Free to play, a model that had been popular in Asian markets where piracy is rampant, has made the jump to mobile, desktop and social platforms in a big way. ‘In game’ currency and microtransactions have dominated the headlines after runaway successes like Imangi Studios’ Temple Run. The mass market has been conditioned to pay less for their non-console games and have come to expect cross platform ecosystems, causing a shift away from dedicated mobile game consoles like the 3DS and PS Vita towards next generation iOS and Android devices.
What does the future hold for our gaming lives at home and on the go?
I advise you to take the following predictions with a massive grain of salt. Something disruptive will probably shake the landscape up again, rendering my crystal ball useless! That being said…
Technology in 2015
Some of today’s innovative trends will cross the early adopter threshold and enter the early majority.
3D Printing is going mainstream in 2015. Yes, we’ll deal with expensive material cartridge costs, but we’ll start to see these machines subsidized and locked by brand, similar to the ink-jet printers of today. Marketplaces of digital printable goods, currently in their infancy, will evolve into vibrant open source communities for simple objects. From sculptures, to data visualizations, to silverware, we’ll have access to rapid prototyping tools by our desks. For objects and tools over 5″ x 5″ x 5″, franchised large format production houses will be available locally in major cities. Look out for branded free to download objects and object piracy networks.
HBO GO will become the new standard in distribution for content producers. Initially, static mediums like music, television and film will be the first to transition. Large production houses, smaller independents, and anyone with a camera, will have the tools available to go direct to market on the platform of their choice. By 2015, a 3rd party white label publishing platform, emulating everything from interactive features to audio imprinting, will be available for content producers. Blip.tv, Brightcove and other CDNs will pivot in that direction. YouTube will start to roll this out to partner channels sooner rather than later, within the YouTube ecosystem; don’t hold your breath for a white label solution out of Mountain View.
Gesture, touch and voice are coming to everything. Technologies like Nuance, Touché and to be announced gesture and sentiment analysis breakthroughs will usher in a new wave of human – computer interaction. Minority Report isn’t so far off, and it’s going to change the way we interact with computers in our daily lives.
Some of those interactions are going to be with projected low latency video streams. AirPlay is the beginning of something big, and soon you won’t need beefy hardware to have a screen anywhere. As solid state laser technology becomes cheap, powerful and ubiquitous, expect to see lightbulbs combo as projectors for key surfaces in the home. Central home computing hubs are going to stream all the contextual information you need to cook dinner at the kitchen counter, learn something new at the dining room table, save energy in the garage, etc.
To carry higher resolution video signals like 4K, there will be another advance in consumer Wireless I/O. By 2015 high speed LED data transfer (Li-Fi) will begin to play a significant role in achieving this goal.
Mass market devices that track and shape our behavior will have made an impact by 2015. The Quantified Self movement will help us fill voids in routine and course correct our lives based on activity. Data will be translated to encourage weight loss, healthy eating, interaction with family, good work habits, recreation, travel, style, and much more. Nike, leading with the Fuel Band, will be dominant in the fitness sector, making these products company priority.
Recorded information will initially be siloed to the manufacturer of the device, but developer APIs and connected accounts will smooth over the potential lost opportunity. A standardized data format, secure personal hub, and consumer protection legislation will emerge as companies collect more sensitive information. The U.S. Census will evolve by 2020 to accept anonymized quantified self data to make smarter legislation decisions.
Wearable computing, while ridiculous looking today, might not be so outlandish in 3 years. Google’s Project Glass gave a glimpse of our augmented futures, but expect to see movement towards accessories you might actually want to wear. We’ll see a twist on the classic Apple vs Microsoft solution. Option A has a company releasing a product which they wholly own as a one size fits all, closed platform approach. Option B has a competitor licensing a base platform to the fashion world, bringing a standardized functionality and core tech to shells made by designer brands. I don’t think we’ll have AR contacts by then, and I’m unsure they would do well in the market, given that many people find contacts uncomfortable.
Gaming in 2015
As the HBO GO model expands in static mediums, we’ll see a comprable package emerge in interactive. All the major 3rd party publishers have started to move in this direction with services like EA’s Origin, Activision’s Call of Duty Elite, Ubisoft’s UPlay, and Rockstar’s Social Club. Subscription features like cloud play powered by technology partners like OnLive or Gaikai, multiplayer, early beta and DLC access will complete the package. Gaming personalities on YouTube channels like Machinima will flesh out the supplemental static content.
Social games are going to grow up and out of the browser. We’ll see deeper Facebook Open Graph integration on the major console platforms going forward. As they evolve, many of the tropes we’re used to now will carry over. Next generation social products will look past leaderboards, and introduce place shifted collaborative play in the living room. Think Noby Noby Boy’s global challenge to reach the outer planets, but exclusively between your friends. Games will be free to play with microtransactions or have up front cost and brand subscription.
In browser social titles are going to get a huge visual overhaul. Unity will be the platform of choice to bring rich 3D environments and traditional gameplay to Facebook.
A new class of competitive and collaborative games, foregoing a single player mode, will become increasingly popular. A distributed networking breakthrough will scale multiplayer to more players than ever before, with latency that rivals the local co-op experience. Startups offering this networking tech as middleware will severely offset dedicated server costs and will go on to power some of the largest brands and latest entries into the multiplayer only arena.
Timed exclusives will be major platform holders’ bread and butter. If this console cycle has taught us anything, the age where console exclusives defined who won or lost the race is over. Sony has far outpaced its competitors in producing AAA exclusive content for the PS3, but Microsoft’s cost effective strategy of timed exclusivity on major brands like Call of Duty, Grand Theft Auto and Skyrim registers a huge response on the 360. Gamers associate the best brand experience among timed exclusive titles on the platform with early access.
AAA games are going to become prohibitively expensive to produce. As development ramps up, assets triple in detail and we chug towards real time photorealism, the associated costs are going to skyrocket, resulting in fewer blockbuster titles. In tentpole franchises, episodic content and DLC will be rebranded as a continuation of universe, much like modern day MMOs. Requiring the aforementioned subscription model, these titles will launch at retail price and offer more content and new campaigns within the same engine over time.
A byproduct of fewer AAA blockbusters will be a renaissance of indie game development. Self publishing solutions will emerge on the major platforms to stem losses of dev talent to iOS, Android, PC & Mac development. Investment in discoverability among the major platform holders will be heavy. Emphasis will be placed on tastemakers who evangelize product early. Curated personalities and friends will funnel content into its target audience.
Gen4 consoles will be the final bridge between traditional game consoles and home computing hubs. Companion apps for mobile, desktop and web will let players manage and extend the experience while away from the living room. Hooks into existing desktop platforms like Windows and Mac OSX will enable consoles to stream and reformat app data from a desktop for the 6ft experience.
Microsoft in 2015
Windows will transition into the platform for the home. Xbox will become an extension of Windows 8 to the living room, with apps being publishable to both Windows App Store and the Xbox platform. A Microsoft branded wireless streaming protocol will also join the fray, so experiences can be beamed from mobile, tablets and laptops to your television. Apps will be released for competing mobile platforms like iOS and Android to trojan horse the Xbox as the streaming intermediary for your living room. Pass through boxes or downloadable apps on new smart televisions will let you beam content from a Gen4 Xbox to multiple televisions and devices in the home.
Microsoft made a large targeted investment in Facebook in 2007. After acquiring Skype for 8.5 Billion in early 2011, we saw Skype partner with Facebook for video chat in July of that year. As the relationship develops, I expect to see deep Facebook integration on major Microsoft products, including the Xbox. Social results will help fuel game and app discovery, and activity on the console will sync across to Facebook’s Timeline. Skype will join the Xbox’s roster of apps at E3 2012.
Kinect hardware will shrink, go HD and be embedded across consumer electronics. Microsoft will double down on the technology in an attempt to own gesture and voice control outside of the Xbox. Speech recognition and computer voice tech will be amplified to compete with Siri in near real time. We’ll see the first early demos with natural language processing and conversations with virtual characters.
Apple in 2015
Wearable computing and companion devices will be Apple’s next market. I don’t expect a Google Glass equivalent to come with a dedicated flavor of iOS on board and exist as a fully functioning standalone device. It will sit as a Bluetooth 4.0 or other Wireless I/O companion to your iPhone, iPod Touch or iPad. The success of watchbands like the kickstarted LunaTik will push a wireless module to the iPod Nano line, to bring heads up notifications and mini app experiences to new devices. Developers will flock to these new widgetized experiences, which can be unlocked via in app purchase on your companion device.
TVs are big investment for a family. Prices have definitely gotten easier to stomach, but even as the economy rebounds, most people will be fine with the 1080p screens they have. Apple TV will live on in two flavors: a set top box and an HDTV modeled after the refreshed Cinema Displays. Both devices will support 1080p streaming via Air Play, and as future iterations of iDevices feature mirroring, the console manufacturers will feel the pressure. Apple TV as a platform wont take off until app development opens in 2013. By 2015, Apple will have a broad lead against competitors like Google TV, but might face pressure from Microsoft as they expand the role of the Xbox 360 and Gen4 Xbox.
Low priced competitors like the Kindle Fire will provide some fresh competition in the phone and tablet space as they gain functionality, but the iPhone, iPad and iPod Touch lines will outperform across the board. Apple will expand its in store app experience to new vendors, opening the door for geo fenced phone payments using your iTunes account.
Sony in 2015
To combat poor sales of the PS Vita, Sony will pivot the device and add the Android kernel. They will launch a ‘Sony App Store’, featuring the Sony Entertainment Network, across the Android ecosystem to open a new revenue stream. The PlayStation Suite will live under the App Store branding to bring premium games to Android devices. Benchmarking software embedded in the store will automate compatibility testing for each device. Sony will see significant sales in premium content, and make headway into owning the traditional gaming market on Android. Android OEMs looking to differentiate their product offering can license the PlayStation Certified brand, guaranteeing would be buyers 2 years of content support. PlayStation Certified headsets will have the Sony App Store preinstalled. The PS Vita, at a price point of $150, becomes the de facto alternative to the iPod Touch. Sony will consolidate its offerings to stop cannibalizing its own products and deliver on “it does everything.” As one example, the music player on Vita will be rebranded as Walkman and production of the traditional Walkman device line ends. Sony will also deliver the functionality of the WiiU by streaming content to PlayStation Certified Android devices and the Vita from the PS4.
As the Bravia HDTV business winds down and the PlayStation brand lags behind, Sony will invest heavily in R&D to leapfrog competitors and infuse innovation back into the company. They will be the first to market with consumer virtual reality technology, launching a device similar to the HMZ-T1 as Gen4 Playstation’s mid life cycle booster shot. An AirPlay equivalent will power the video stream to the head mounted display, which will feature an accelerometer, gyro, surround sound and an array of cameras to scan the environment. Embedded technology like Touché, a Kinect like gesture tracker, EEG sensor, and voice control will allow immersion like never before.
Nintendo in 2015
Nintendo is as valuable as its stable of iconic characters. New IP will bolster the classic cast with fresh faces culminating in a new Super Smash Bros title. They will introduce a Pokémon tier franchise built from the ground up for Gen Y, taking advantage of online distribution, NFC toys and cards, augmented reality and apps. This could be a reboot of the Pokémon brand.
The WiiU will face harsh competition from Microsoft, Sony and Apple, who can all duplicate the core functionality with existing mobile devices.
Catering to the audience it grew in 2006, Nintendo will launch a lifestyle brand in partnership with major celebrities. Nintendo won’t deviate from their own platforms, but with a family friendly, kid safe message, paired with exclusive downloads and accessories from well known names, the brand will regain some traction after the Kinect launch.
Development in 2015
Unity popularity will explode as the tech evolves to support the next generation of mobile and living room platforms. Overall visual fidelity will remain behind Unreal Engine, but the benefit of simple cross platform support and a low cost structure will keep them ahead. In the face of Adobe’s stance on Flash content, Unity will invest heavily in OpenGL standards and work with browser developers to push an HTML5 compliant web player.
Unreal Engine will remain the next gen standard. Pipelines for existing 3rd party developers will stay familiar, alleviating the transition to more horsepower and pixels. To compete with Unity’s pricing and ubiquity, Epic will prioritize cross platform support and embedded AirPlay streaming to teams publishing high quality content in mobile. Innovations in real time lighting will make Unreal Engine 4 popular in the film industry for on set “live CG”.
AAA teams will double in size to accomodate the new assets required, causing a large internal shift at the major publishers. Studios will close and personnel will move into larger teams at a few key developers building tentpole franchises. Those that don’t move onto the large AAA teams will be placed on either social products or mobile and new IP. A large constituency of developers will go indie using new funding opportunities to provide unique experiences to niche audiences.
The next three years are going to be some of the most disruptive on record in technology and games. The path looks clear for Apple and Microsoft, but Sony, Nintendo, Google and Valve are major wildcards. I couldn’t be more excited for what comes next. See you at E3!