Multiple platforms are 'holy grail' of gaming
David George-Cosh
The National Post
(Canada)
January 21, 2008
Making it big in the video game industry isn't exactly a
cakewalk. Only a fraction of the thousands of games
released each year, are rewarded with the majority of
the profits. When investors look for a video game they
consider to be worth their money and energy, they are
not looking for the next Halo or Guitar Hero. The games
are now considered to be secondary to the overall user
experience.
"I'm looking now for games that are more of a feature of
the product," said Randy Thompson, a Calgary-based
general partner of Argon Venture Partners. "The holy
grail of the tech product, not just video games
themselves anymore, is to get it seen by as many
customers as possible."
With video game consoles such as Microsoft Corp.'s Xbox
360 and Sony Corp.'s PlayStation keeping video game
addicts glued to their televisions, and the emergence of
the casual gamer with the release of Nintendo's Wii
system, 2007 was a record-breaking year for the industry
with more than $17.9-billion in sales, according to
research firm NPD Group.
With dollar signs in their eyes, independent game
developers converged last week on a downtown Toronto
hotel for the Game On Finance conference, aiming to
learn more about alternative ways of packaging video
game experiences and how to level the playing field
against the Electronic Arts of the world.
"Investors are now migrating to games that can be
offered on as many platforms as possible," said Mr.
Thompson, who rejects about 97% of developers that
approach him for capital funding. "There's so much less
physical shelf space where you can sell your games now
that you need to incorporate services like social
networks and Web services into your entire product
lineup."
A major trend investors are beginning to open their eyes
to is taking burgeoning online social networks that are
geared to a specific demographic and adding a physical,
retail component to it, says Kim Pallister, a director
of content strategy with Intel Corp.
"Kids get hooked on something like Club Penguin or
Webkinz, but since they're anywhere from three to 10,
they don't have a credit card," Mr. Pallister said.
"But when their parents go into a store and can buy a
Webkinz or Build-A-Bear for $10, $12, that's when they
get some return on their investment."
The strategy seems to be paying off. Last year, Club
Penguin's Vancouver-based development team sold the Web
site to Disney for US$350-million, while Ganz
Interactive's Webkinz now gets about US$45-million in
retail sales from its popular plush dolls.
"You can't go to bed with Club Pengiun, but you can with
Webkinz," Mr. Pallister said. "And you're going to see
that happen a lot more with traditional companies that
are looking to broader their customer base with more
innovative ideas."
Another example showcased at the Game On conference was
Groove Media's skill-based golf and driving simulation
video games. Although gamers can pay an initial
transaction fee to compete head-to-head for cash prizes,
the real money, says chief executive Jon Walsh, is in
the lucrative in-game advertising business model.
Companies including BMW have lined up to advertise in
Groove's golf simulation, which Mr. Walsh says gives the
game a more realistic feel, as if you're actually
playing in a PGA Tour tournament.
"And with more than three-million ad impressions in the
first eight weeks of game play at 25¢ per impression,
that adds up significantly," he said.