Video Game Consoles and Downloadable Content

The PS3 and XBox 360 from gamingbolt.com

As promised here is my post about what video game consoles are doing to combat the shift that is happening in the video game industry. ThePlayStation 3 and XBox 360 will be 5 and 6 years old this year respectively. At this time neither of the companies are talking about new systems.

According to the US Today article "Social media, mobile devices help video games grow", the PlayStation 3 and XBox 360 have added functionality to their consoles. For example you can stream Netflix videos over the internet. Both the PlayStation and XBox have added new motion controllers to the systems. The PlayStation introduced the PlayStation Move and XBox introduced the Kinect. Both of these additions have helped to increase user interactivity in these two consoles.

Alan Miller, the co-founder of Activision, had this to say about the video game industry;

 is undergoing its greatest rate of change in the last 25 years, fundamentally generated by this transition from retail distribution to electronic distribution.

Last year Activision released a map pack for the very popular Call of Duty Modern Warfare 2. The map pack sold for $15 and gave players 5 new maps for online game play. In 2010 Activision made $1.5 billion in revenue from the map packs and digital sales of World of Warcraft. Even though Activision is made a lot of money from down-loadable content they have had to cut ties with some games, Guitar Hero and Tony Hawk, two big name games.

This video explains everything about the new map pack for Call of Duty Black Ops.

Activison is not the only big name company reaping the benefits of down-loadable content. EA is also getting in on the action by making down-loadable content for games such as Mass Effect. EA has also started to convert their heavy hitters, Madden NFL and FIFA, into Facebook games. Many of the top iPhone games are created by EA and as a result EA made more than $700 million in digital sales last year.

According to EA CEO John Riccitiello,

 I don't think it replaces console gaming, he says. Big blockbusters are still part of the movie industry. At the same time, you can watch a cat video on YouTube. I guarantee you, a decade from now, there will be blockbuster games, and there will be our equivalent of cat videos. We are going to run the full spectrum. The more interesting thing is that all games are social from this point.

 I believe that video game consoles will be around for a long time. I think that down-loadable content makes video games much better. I play Call of Duty online and just recently bought the map pack that Activison came out with and the new maps make the game more fun and keep the game changing. The addition of down-loadable content is great for video game companies because it is a great way for these companies to take advantage of a very digital move in technology in general, video games included.

Growth of Social Media = Growth of Video Games

Facebook has made it possible for a
new generation of gamer.

We have all been on Facebook getting our fix for the day (or the hour) and seen that one our friends need our help on their farm in Farmville. Chances are after we see this news pop up on our news feed we will bring up the game and help our friend out. The new trend in video games is not only on Facebook, but also smartphones and other mobile devices.

More people are playing more games on more platforms than ever before. This may seem like a good thing, but sales of the Nintendo Wii declined from $21.4 billion in 2008 to $18.7 billion in 2010. Another scary trend that is emerging in the video game industry is new and strictly social-game based publishers quickly becoming worth more than well established video game publishers. For example Zynga the company behind many of the games on Facebook is worth an estimated $9.3 billion which is more than the value of Electronic Arts (EA) publisher of Madden NFL and The Sims.

This image shows the expected growth
of video games in the next 3 years.

According to Meggan Scavio event director of Game Developers Conference (GDC); 

"What smartphones and social games is showing us is that you don't need a year or two-year development cycle anymore to make a profitable game, but those consoles are not going to go away."

According to the THE NDP Group, a market researcher, as many as two thirds of Americans play games and as many as a half of American households have a video game counsel. Meanwhile one out of five Americans age 6 and up have played games on social networks such as Facebook. To me this fact from The NDP shows that people are still playing games on traditional counsels, such as the Wii or the Play Station 3, but there is a shift in mobile gaming because almost everyone has access to mobile games.

Steve Jobs with the newest and
greatest iPhone4.

 The shift to mobile gaming can be accredited to Apple's introduction of the iPhone in 2007. In the same year Zynga launched Texas Hold'em Poker on Facebook. Since 2007 Apple has sold over 73 million iPhones and sold over 10 billion apps, as many as half of those being games. Facebook and smartphone games have done what the industry had not been able to do for seven or eight years before that, and that is to bring millions of new people into the gaming world.  Dave Roberts CEO of PopCap Games gives the example; If one were to ask a 50 year-old women 10 years ago if she played video games she would have looked at you like you were from another planet. Now she is likely to play Farmville or Bejewled on her iPhone.

The video above shows an iPod Touch, but it is powered by the same app store as the iPhone and shows a few different games you can play on an iPod or iPhone.  

This video shows all of the new and interesting changes Apple made on the iPhone4. This video does not have much to do with games on the iPhone but I found it very interesting. Watch if you have some time to spare.

Stay tuned for next week when I look at what producers of the major counsels are doing to combat this move to mobile gaming.