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LAGC: The State Of Online, Mobile Console Markets
by Vincent Diamante [PC, Console/PC]
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November 9, 2006
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The LA Games Conference session on 'The State Of The Games Industry' saw speakers from CNet, Frank N. Magid Associates, and Interpret discuss the state of the MMO market, mobile gaming, and console specifics, including plenty of exclusively researched stats and data.
However, a few minutes after the scheduled starting time of the first "The State of the Games Industry" it was announced that one of the speakers, David Higley, would not be able to give his presentation. Unfortunately, the need for facilitation of a merger called him away from his presentation on mergers and acquisitions. The audience took some small pleasure in this: those who do can also teach... just not at the same time.
The Online Gaming Explosion
The first lecture of LA Games Conference began with John Broady, Director of Business Intelligence at CNet Networks Entertainment, and his presentation on online games. He started by presenting three questions: Will the new generation of connected consoles succeed in fueling demand for online gaming? Just how big will MMORPGs get? What new directions will online gaming take?
On that first question, things are not so clear. Broady presented a slide from Jupiter Research that showed interest in playing online console games remaining static from 2003 to 2005; in that time period, 71-72% of gamers reportedly are not interested while 5-6% are already playing their consoles online.
However, this last year should mark a significant change over previous years, Broady noted, as the Xbox 360 and the coming PS3 and Wii consoles will be making strong online pushes with some disparate approaches to online content. Microsoft's video download service and Nintendo and Sony's contrasting approaches will mark a turning point for consumers' online options and their acceptance of them.
On MMORPGs, there is plenty of space for game developers and publishers to grow. Revenues from massively multiplayer online games are expected to grow 112% by 2011. While it's easy to look at World of Warcraft as having the whole marketplace to itself, there are currently 12 MMORPGs with an active subscriber base of over 120,000. Besides the obvious differences of the financial business model of MMOs, Broady noted how the consumer buzz surrounding MMOs remains consistently high well after the initial release.
Rather than answers to the third question, Broady offered the audience a few more questions to chew on: Just how much of our life can be spent online? How much consumerism and marketing can one take away from the real world? There is a lot of uncertainty, but also a lot of potential for growth.
Mobile Gaming Growth?
Mike Vorhaus, Managing Director of Frank N. Magid Associates, Inc., followed with a rapid-fire run-through of a presentation on mobile games. Here, he talked about many of the popularly known figures cited in games industry news (such as the well cited 55% of gamers are women") and dug a bit into them for a little bit more truth.
Gaming in general is everywhere, especially among teens, young adult males, and older women from 55 to 64, with a very broad base relative to other mainstream entertainment like concert going and DVD purchasing. However, looking specifically at gaming on CD/DVD media the picture is dominated by males in their teens, followed by adult males from 18 to 34. The typical balancing factor is the free webgame space, where older women dominate.
In the mobile game space, however, women again have greater presence; between 39% and 46% of females from 12 to 44 play games preloaded onto their mobiles. Among males 18-24 44% have played preloaded mobile games, and the numbers in other age groups fall off sharply. When it comes to actually purchasing mobile games, females 18-24 lead all with 23% having done so compared to 19% for their male counterparts.
Vorhaus concluded his presentation noting that the mobile game space will remain strong, but will not be the overwhelming space that the free webgame space is.
How Console Purchases Are Made
Michael Dowling of Interpret, LLC rounded out this morning session with a presentation on the console market, using data from Interpret's GaMeasure gamer profiling study fielded in 2006. As expected, trends are shifting as more recent technology has more of a presence among consumers, and these trends are being pushed by males and females aged 13-24. Besides console gaming, other trends on the move are video clips on the internet and on mobile devices, downloading music, and TiVo.
With regards to the specific consoles, the previous generation featured Sony's PS2 as a clear leader with the Xbox as a strong #2 player. The coming consoles will arrive in a more uncertain marketplace, as the Xbox 360 has a strong year-long headstart on the competition but not the same buzz as either the PS3 or the Wii. In Interpret's data, 36% plan on buying the PS3, 21.4% the Wii, and 19.6% the Xbox 360. When it comes to buying the console at full price, however, those numbers are reduced to 8.9% for the PS3, 5.7% for the Wii, and 0.8% for the Xbox 360.
Another factor that Dowling cites is the consumer propensity to using technology in unintended ways, noting that a third of iTunes users do not own an iPod. Also, when one looks at data specifically from Xbox gamers, media consumption numbers go up drastically.
Considering both Microsoft's video initiative and the next-gen consoles' HD media and web capabilities, there is increasing potential for the console to evolve into the long-sought center of the digitally enabled living room. Consumers want more options rather than less for their media consumption formats and the powers that be are seemingly prepared to offer that sooner rather than later.
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