The keynote at today's Game Developers Conference London is being given by Jamie MacDonald, Vice President of Sony Computer Entertainment Worldwide Studios, on 'Developing for a Networked Experience' with relation to the PlayStation 3, and Gamasutra has full coverage.
9.06am GMT - The room is rapidly filling, with proceedings likely to get under the way in the next few minutes.
9.14am - Jamil Moledina, the Executive Director of the Game Developers Conference, is now introducing Jamie MacDonald, noting the Sony exec's background at both Criterion and at Sony's London Studio, where he worked on the EyeToy, SingStar, and The Getaway franchises. MacDonald takes the stage.
9.15am - MacDonald's intro discusses the next-gen problems common to all - the increasing cost of production, a shift from package-centric to network centric gaming and development, and strategies for success. He cues up a trailer movie from Ninja Theory's extremely impressive-looking PlayStation 3 exclusive Heavenly Sword.
9.18am - MacDonald notes - "the richness of the experience... is quite staggering" for Heavenly Sword, referencing the Andy Serkis motion capturing for the title. He comments: "It takes more people, more time to create the next generation experience." But MacDonald notes the "many new revenue streams" now coming online.
He points to in-game advertising having an annual growth of 75% up to 2009, rising to $562 million for the U.S. market. Wireless games are also growing around 50% yearly, and online games are growing around 40% annually in addition.
But he expresses concern that small or medium developers will have a "quite stark" future in some ways - it's "unlikely that small or medium developers will be able to fund whole... projects", and will find it "increasingly difficult" to find third parties to fund games in a traditional way.
9.21am - MacDonald comments that small or medium developers are "no longer able to be a vertically integrated operation" - it won't be possible to make projects from scratch with the kind of scale of conventional console games.
But how about larger publishers? He notes that the "current model is for most development to be done in-house", but if you continue this model, it becomes difficult to sustain this model over a platform lifecycle - you're "betting the farm" on specific projects. MacDonald comments: "It will be very difficult to sustain this model" for traditional gaming when production teams are getting so much larger.
9.23am - MacDonald highlights the move to "a network-centric world", naming MySpace, digital purchasing via iTunes, and IPTV - referencing that music downloads are forecast to be 27% of the market by 2009. Broadband penetration is forecast to be 60% in the U.S. and 55% in Europe by 2009. Of course: "PlayStation 3 is network enabled out of the box."
In creating and servicing "a network of game communities", MacDonald chuckles as he references his boss Phil Harrison's quote that there need to be "the biggest fundamental change" to game development ever in order to service this new networked market.
9.27am - The Sony exec calls this change "a double whammy", referencing both the increasing cost of production alongside the "need for a fundamental ship in our business model" to cope with the new network-centric world. He believes that "all developers will need to change" to meet these challenges - but how?
Firstly, he references the example of "a larger developer/prime contractor/IP holder", the bigger fish out there, who will "work with multiple outsourcers - large, small, and individuals" - but the key is that "it's not a monolithic group of people" who just shift from one project to another. They will also need to diversify their revenue streams, he suggests.
The organization also changes significantly, he suggests - structurally, there will be business affairs, QA, and legal departments among others - needing to manage relationships with multiple external companies, rather than just having all these things monolithically held in-house.
9.32am - As a smaller developer, what's to be done? MacDonald notes that it's important to have insource relationships with larger developers, sharing technology and tools, sharing production pipelines, or working on smaller network-only projects - for example, Sony's E-Distribution Initiative (EDI) for the PlayStation 3, the Xbox Live Arcade equivalent for the PS3.
He then specifies the objectives of EDI - "to drive the direct delivery of content to consumers through PS3 and PSP's Network Platform", and targeting new developers through lower barriers to entry. "We're talking about shortform works of content, and we really want to encourage innovation." EDI was devised to allow developers "...to work on those great ideas that they've had but have been told will never work as a AAA 20-hour game."
9.35am - What are the implications for smaller developers? MacDonald notes that they may be able to form symbiotic relationship with larger developers or publishers, reconfigure their teams to match the new reality, and adjust their talent profile.
He also commented: "When you watch a major movie, and see the credits roll... just watch the number of small companies which have contributed to the making of that movie", clearly seeing the game industry as diversifying in a similar way.
9.37am - How about diverse revenue streams? MacDonald comments that the package-centric revenue model is well-known and straightforward, but it's a one-off relationship with the consumer. However, with a network-centric model is more diverse, because there are "more opportunities for interacting" and therefore more opportunities for revenue.
MacDonald brings up the 'Wheel Of Fortune', an on-screen diagram, including many factors feeding into a central revenue section, as well as 'Packaged Media' - including 'Game Object Sales', 'Mobile Gaming', 'Subscriptions', 'Network Sales', 'Episodic Content', 'Merchandising', and 'In-Game Advertising'.
He briefly commented on the 'Game Object Sales' question, referencing: "If you're playing Gran Turismo, and you want some new wheels - or if you're playing a soccer game, and you want a new stadium", then these virtual assets can be sold online - it's unclear whether the latter example is also something Sony is considering for a PS3 title.
9.42am - MacDonald is discussing the impact of a network-centric model on the game development timeline, noting that there's a new paradigm including new feedback, QA, and update releases, as opposed to just finishing a game and then starting a new one - constant updates will be needed.
He comments: "We haven't had much experience of providing services to our consumers" - for example, organizing tournaments or competitions, and notes the need for a "more entrepreneurial mindset" in game developers' everyday lives.
9.44am - The Sony exec states: "The overall pool of talent needs to increase" - overall, we need more good developers. But "we also need to diversify the profile of the talent that we use" - we need to look at people who can focus on service provision, account management, those who "can bring a level of sophistication which perhaps we haven't had" from the film and TV industries.
Another conclusion? "Resource allocation needs to be more flexible" - instead of just having 100 people to make a game, the industry needs to work more with specialist companies to create a final product - ending up with "a more diverse ecosystem".
What does this ecosystem look like? Another wheel, this time of resources, including large development organizations in the center, bordered by freelancers, service companies, specialist production shops, technology providers, small development houses, within both local and international boundaries.
9.48am - But what is Sony doing about this? MacDonald explains that Sony Worldwide Studios is "reaching out to the film and TV industries" to identify the best talent to work with Sony's game titles. He comments: "Is a [movie] director of photography appropriate to work on a game, and how much do they earn?" The answer is that they earn far more than Sony normally pays, but they don't want a full-time job. But they've worked it out, and it has proven successful.
Sony also has "long established external development relationships", and also notes that Sony has been "outsourcing complete titles and parts of titles" - referencing both Kuju and Relentless as companies that have developed parts of the SingStar, Buzz, and EyeToy franchises.
He finally references the Electronic Distribution Initiative again, commenting that it's "early days yet" for the service, but Sony has great hopes of "being able to encourage new talent and innovative ways of creating games" with it.
9.52am - MacDonald wraps up, noting that the development community is entering a period of profound change - "It's not going to be easy, but I for one am relishing the prospects" of developing high-end titles like Heavenly Sword. We move on to the Q&A session.
There were a couple of questions, the only notable one of which is a pointed one about whether Heavenly Sword uses the networked method of development - using multiple external companies, film-style.
MacDonald seems a little disconcerted by the accusatory tone, but comment of Heavenly Sword's development method: "I would say it expresses [networked development] quite deeply". He also adds: "The things I have been talking about today are a call to action as much as anything else."