The business of gaming

The console-makers are well aware of this. Nintendo helped to pioneer the idea that games could appeal to a much wider audience. Its Wii console has sold 89m units over the half-decade since its launch, outdoing both Sony’s PlayStation 3 (56m) and Microsoft’s Xbox 360 (58m), largely thanks to a games catalogue aimed at casual fans. It features titles like “Wii Fit” (a fitness game) and “Wii Sports”, a version of sports like golf, tennis and ten-pin bowling. The Xbox, PlayStation3 and Wii all have their own online shops that allow consumers to download games directly to their consoles, and all three are encouraging developers to make casual games for them. Mr Merel thinks the console business will remain a smaller though mostly profitable niche within a games industry that will range over a wide variety of platforms and attract a much more mainstream audience.

Categories such as “casual” or “online” games are not always neat and tidy. Not all online games are aimed at casual users. “Minecraft”, developed by Mojang, a tiny Swedish firm, is an online adventure game that mixes the building qualities of Lego with the social appeal of “World of Warcraft”. Despite its basic graphics and intricate gameplay it has sold over 4m copies. Conversely, some recent smartphone games have almost console-quality graphics and involving storylines. Development costs are already ticking up. The only safe bet about the future is that it will be more fragmented and more diverse than the past.

Thinking out of the box

Consoles are no longer the only game in town

THE IDEA BEHIND video games used to be simple. Nintendo, Microsoft, Sony, Sega and others sold consoles at a loss and made their money from the boxed games they produced for them. The punters, mostly young technophile men, bought the games from a shop, played them for a few weeks and then put them away.

Those customers are still around, but they have been joined by a plethora of others. New, more casual sorts of games are being picked up by a mass audience that would previously not have played at all. “In the past few years two things have changed,” says Mr Moore of Electronic Arts. “The first is the proliferation of platforms [on which to play games], and the second is that it’s become so much easier to call yourself a gamer.”

So the industry has branched out into a bewildering variety of sub-sectors and niches. At one extreme, companies in the traditional sector are still charging $50 or $60 for high-end console games with ultra-realistic graphics and cinematic game play. At the other, a shoal of smaller firms is developing simpler, more casual games aimed at a much larger and more diverse group of customers. In between, a mix of established firms and start-ups are testing new ways to develop games and new business models for selling them.

One of the biggest changes has been the rise of the mobile phone as a gaming device. Games specifically designed to be played on mobile phones already account for $8 billion of the $56 billion global games market, even though they typically sell at less than a tenth the price of a traditional console game. Such mobile games are simpler to play and require less time and dedication than the console titles. Their relatively low development costs and the fact that they can be downloaded over mobile networks bring them into impulse-buy territory, says Mr Harding-Rolls at Screen Digest.

Playing on the move

The potential market is huge. The number of mobile-phone subscriptions worldwide is over 5 billion. Last year 1.6 billion handsets were sold, a 31% rise on 2009. That is attracting attention from big, established firms such as THQ, an American publisher and developer of video games, and Square Enix, a Japanese publisher and developer that has a dedicated mobile division.

But many games for mobile phones are made by small start-ups, attracted by low entry costs. The best-known example is “Angry Birds”, released in 2009 by Rovio Mobile, a Finnish firm with just 55 employees. It is a light-hearted affair in which vengeful player-controlled birds hurl themselves at fortifications built by a group of egg-snatching green pigs. In terms of sales, it is among the most popular games ever made, with total downloads of more than 500m (the game is available in a free but limited edition as well as in a standard, paid-for version). By contrast, a console game is reckoned to have done well if it sells a couple of million copies.

Games are proving a popular application for mobile phones, and especially for the latest generation of smartphones such as Apple’s iPhone. PwC expects the market for such apps to grow from around $7 billion last year to $35 billion in 2015, and much of that growth is likely to be driven by games. They accounted for more than half of the 100 most popular apps for the iPhone in 2010 and make up a large chunk of the software market for other brands of smartphone too (see chart 1).

Online orcs

Thanks to the spread of high-speed internet connections, the web has emerged as a games platform in its own right. Blizzard Entertainment’s “World of Warcraft”, an intricate online fantasy world filled with orcs and dragons, attracts around 9m regular users, each of whom pays a monthly subscription fee of around $10 to play.

As with mobile games, much of the interest in online gaming revolves around attracting a new, more casual kind of player. Again, the potential market is vast. Companies such as PopCap, a Seattle-based games studio, specialise in easy-going games that run in ordinary web browsers. PopCap’s most successful game to date is “Bejeweled”, an abstract puzzle game in which users have to create patterns in a grid of coloured gems. It is easy to pick up but difficult to master, and can be played for a few minutes at a time. In 2010 sales of the full version, which sells for about $20, passed 50m. Leer más “The business of gaming”