3G support for unnamed game company(s)

According to this article, some unspecified game companies are looking for 3G support from NTT DoCoMo, a major wireless carrier.  This really demonstrates how much the media is converging.

This would be a big leap from the wifi connections currently accessed by the likes of the Nintendo DS and the PS3!  So are there any hints as to who's going to adopt this technology?  

While Nintendo didn't say anything about it at the latest E3 convention, a hint may be taken from their pricing, which they're planning to raise by $50.00, and doesn't plan to make it higher for fear of limiting their market.  Does this mean that the wireless will be included for sure?  How much would it cost to include it?

Sony also has its reasons to go after 3G, being that its portable "Go" player is entirely reliant on wireless downloads, as opposed to offering the option of disks.

Another thing to consider is the service... will connection be included in the initial device price?  That's what Amazon did with the Kindle, as opposed to monthly fees.  Satoru Iwata, President of Nintendo, supposedly expressed interest in this approach...

No matter what happens though, it's good to know there will be some more overlap between the two industries.

Ratings up... but does it matter to consumers?

According to this article, quality is up and sales are down.  Not the greatest combination, so is it just the economy in play?
Already, by midyear, 4 titles have outscored even the top game of last year!  True, this area is a little subjective, but sites like metacritic are more quantitative and aggregate, and therefore (hopefully) reflect consumer opinion.

Part of this may be the trend towards bigger budgets each year per game.  Companies would rather put more eggs into fewer baskets to up their chances against a relatively small pool of other "big" releases.  This has been called the Hollywood Model.  Kind of like the "monopolistic competition" I remember learning...

But then again, the "bigger budget" approach is ultimately sabotaging the industry according to Slate.

But to go back to the score-to-sale relationship, does it really matter that much?  An earlier article discusses this.  It describes review scores as "least important" to conumers, with genre as the most important determining factor.  (This is may be one of the reasons why many mainstream games seem to be cut in thematic ruts.)  The second factor also describes this trend:  whether customers enjoyed a previous version of the game. This is probably ultimately driving the sequels.  Many companies are like Ubisoft in this regard.

But this doesn't stop the fact that sales are still down.  Maybe we should take the easy route and just blame the economy?

Activision and PC-to-TV Gaming over Xbox Live

Activision wants to get a bigger share of the revenue generated by subscription-based service, and believes it has greater room for growth if they develop a direct PC link to the internet instead of through a console.

They do have a point:  Activision's "Call of Duty 2" is the reason why 60% are on Xbox live in the first place!  And last year they played over 1.7 billion hours.  And while the revenue from the retail part of the game did go to Activision, the massive subscription base is currently all going to Microsoft instead.

The CEO of Activision, Bobby Kotick, doesn't like the walled nature of Live, and has announced that his company is actively pursuing an "open" platform with the likes of Dell ad HP.  This had initially surprised me, as I'd assumed Activision had a close relationship with the consoles.  

But, to quote him:

"We have always been platform-agnostic... [Consoles] do a very good job of supporting the gamer. If we are going to broaden our audiences, we are going to need to have other devices."

I like this idea.  I think it would also benefit the casual gamer (like myself) if pay could better scale with play, and developers/publishers can be better rewarded for making successful products.

More stringent online protections for minors?

Online gaming doesn't just mean getting on the computer anymore.  When the term "online gaming" comes up, most would probably think about MMORPG's.  However, much more than the PC can now connect to the internet and allow players to communicate and compete with strangers.  For example, the main consoles such as the PS3 also connect to the internet.  And how about mobile games?  iPhone games?

A newly-released article about the FTC's concerns can be found here.

There is already an act in effect called the "Children's Online Privacy Protection Act" (COPPA) from 1998, but many children's advocacy groups think it's out of date.  I am inclined to agree with this, as so much has changed since then. 

To directly quote their report:
"Recent developments in technology and marketing practices require that the COPPA rules be updated and clarified. When Congress passed COPPA in 1998, computers provided the only means of accessing websites and online services. Today, adults and children have many other ways to access the Internet and online services including mobile phones, gaming consoles, and interactive television. In addition, marketers have developed very sophisticated methods of collecting data and are using that data to target individuals with personalized marketing messages. These developments have increased the risks to children's privacy."
(The full article can be found here.)

Some other groups are talking about fixing this problem through requiring children to enter credit card numbers just to verify their age, or even going as far as to issue.  They also want to redefine what constitutes a "children's" website, and re-define what's considered to be "personal information" (such as IP address, zip code, and gender).

The group acknowledges that there are already parental protection devices in place, but apparently they don't believe parents can keep up with the rapidly changing technology.  

I find myself siding more with the Progress and Freedom Foundation, however, who believe these regulations are unrealistic, especially if 17-year-olds are put under the same restrictions as 7 year olds!  (I played WoW when I was 17, and had the common sense to keep personal information to myself.  If anyone else of that age gives out such information, it's because they WANT to, and no "restriction" is going to keep them from divulging it directly through the game's chat circuits.  And forcing them not to give out that information would also be a violation of freedom of speech.)

So what does this mean for the business?  Will government regulation on "children's data" hamper the industry?  What concerns me is that many websites stay afloat by gathering data to customize advertising.  Because this information runs through automated systems (usually, anyway), then is the child's privacy truly compromised?  Provided that no 3rd party user has access to this information, I would hope that children wouldn't be "blocked from access".

Location, Location, Location: The politics of tax incentives when development is global...

Making headlines in several locations is the UK's decision to discontinue its plan to provide tax breaks for game developers, making locations like Canada, Singapore, and eastern Europe more appealing.  This is a shame for the industry as a whole, as the UK is known to be a big talent hotspot for the industry.

Here's one of the articles.  Apparently, Activision Blizzard, the biggest game publisher (and one of my stocks) is not going to invest in the UK after this decision, as well as other companies with large pools of developers such as Sony.  (Sony will carry out its existing plans, but will likely not open anything new.)

After a little digging, I found this article from a year ago, addressing Britain's praise and encouragement for the industry.  You can then see when the labour party announced tax incentives here.  So what SHOULD it have done?  Was the government right to repeal the tax breaks?  Personally, I'm not for governments making decisions on what "deserves" to be encouraged by providing artificial incentives, so I can see the appeal of repealing the tax break, despite the game industry lobbies in the country.  How do they really determine value that warrants millions of dollars in tax incentives?  Who can truly judge this fairly?  I think where perhaps they went wrong was promising the incentives in the first place.

Perhaps the UK government was thinking along the lines of bait-and-switch:  attract foreign investors, then pull out support once they're already tied up in the industry?  It was also political:  The labour party wants to provide the incentives, and the conservative does not.  But it's a little more fluid than that.

I think this article is important because it has bearing in how this business does business in the 21st century.  It's becoming fluid and global like so many other spheres.  (True, it's not the same as a factory job, where the challenges lie more in facilities than specific education.)  Moving and investing in cheaper areas is relatively easy, causing governments to proactively try to keep certain things they deem valuable.

Sounds like a familiar pattern...

Xbox 360 is over the hill

So right after the previous news about the PS3 breaking even, we see that the Xbox is now on the "downside of its life cycle."  And this is after the analysis that it's a better performer than the PS3 (though I know this is a controversial opinion).

So what exactly determines the "life cycle" of a console?  I'd be guessing that it's pretty simple:  software capabilities always seem to be out-pacing hardware, and Moore's Law applies just as much to consoles as to PC's.  So the goal of these companies is to return the initial investment, and make enough to develop the next generation, all the while

What I surmised from the article was that Microsoft is trying to use the kinect system (as I wrote about earlier) as a proxy to "extend the life" of the 360, especially to appeal to casual and social gamers (virtual pets, parties, fitness games).

According to DFC (a game industry researcher), this is going to be difficult for Microsoft, as they're not an "entertainment company" by nature.  This confused me though, because it HAS gotten this far.

For the "Big 3" as a whole, the target is to "push them through" for a couple more years to and make up on the investment for their initial development (and as we know, the PS3 has only just started breaking even), and to mwork kon the next big thing.  So I'd predict that the Xbox (as well as the Wii and PS3) have maybe... 3 years left at the most?

Again, all the console talk makes me think that it would definitely be better to be a 3rd party developer.

PS3 Hardware FINALLY breaks even

Shuhei Yoshida, head of Sony Computer Entertainment Worldwide Studios

Check out this article.  Yoshida says they're finally breaking even on hardware sales (but he said nothing about net gains, just current ones.  I'm guessing they've still "lost" money as a whole.

Many claimed that the PS3 was NOT ready to enter the market, but was released anyway to compete with the Wii and new Xbox.  (I remember internet communities making fun of the initial $599 pricetag to no end during the time.

People also knew it would sell at a loss back in 2005.  Part of the culprit for this pricetag was for Blu-ray support (disc drive category), and processor.

So was this extra investment worth it?  A lead programmer for both platforms says the following:

"Performance: On paper, the PS3 is more powerful. In reality, it's quite inferior to the 360. Without getting into too many details, the three general-purpose CPU's thexbox360 has are currently FAR easier to take advantage of than the SPU's on the PS3. I suspect a few years down the road some high budget, first party PS3 exclusive titles will come out that really take advantage of the SPU's and do things the XBOX 360 can't, but I don't think the console is worth buying based on this speculation (for some it will be though, we'll have to wait and see how these games turn out)."

And whether it was about performance, price, or something else, Xbox HAS sold more consoles this far.

So did Sony make a mistake in stuffing its console and selling at loss?

Supposedly the approach of getting an early foothold at the expense of profit isn't new.

I think there's something smart about this move though.  The people scrambling to purchase a console when it first came out in late 2006 were likely the types who were willing to pay more than the average "casual" gamer.  It also gave Sony a good deal of leverage/wiggle room to make future, lower priced hardware releases seem like a really good deal.

So what does it mean for investing in this market?  My gut would say it's better to invest in software companies, instead of the oens that make the hardware AND software, as the 3rd party ones don't have to worry about offsetting the cost of selling at a loss.  OR is there a tactical advantage for developing software as part of the same company making the hardware?  Does this put Sony of Microsoft programmers in a better position to take advantage of their console than third party ones?  Perhaps it all balances out...

Virtual items can be big business!

Why am I posting about real-to-virtual money exchange?  It's not necessarily a new concept by the standards of online multiplayer games.

While all multiplayer online role playing games have virtual economies (more info here), where players generate virtual coinage and spend it on virtual items, not all of them have an exchange for "real" money.  Some subscription-based games forbid players from selling in-game assets for real life money.  Others have what I would call a one way transfer: they sell a set amount of game currency for real world money, at whatever exchange rate they choose.

The game "Entropia Universe" takes this a step further by:

1.   Allowing a 2 way conversion.  This is huge in that it allows players to convert the money they make in-game into real-life cash.  They can set up their own businesses within the game to actually profit within real life.

2.  Keeps the conversion at a fixed rate.  Most other games offer "packages" that offer better discounts for bulk game currency purchases.  1 PED = 10 USD.

3.  Providing platforms (the software/server infrastructure) that allow 3rd-party companies to set up their own "worlds" in the universe.

It's an expandable business model that could be likened to international trade, only players can "import", "export", and "invest" across realities instead of physical barriers.

Entropia players having a party.

So what's the "news" here?

While a fascinating thing to discuss, the idea of alternate game worlds with real cash economies isn't necessarily breaking news.  Relatively recently, though, a new record was set for "highest virtual transaction" (most expensive item purchased in this real cash economy), exceeding the previous one by far.

Check out this article.  

The space station "Crystal Palace" was purchased for $330,000.00 (that's real life money, the station is worth 3.3 million of the game's currency).  This was not a stupid, frivolous purchase from an eccentric millionaire.  It was an investment.  He plans to collect a percentage of all transactions on the station and provide pay-to-use services onboard.

And money CAN be made.  One of Entropia's competitors, Second Life, also provides opportunites to make money, though those happen player-to player, not using the platform as a mediator.  A woman is known to make an annual salary of $150,000.00 as a real estate tycoon in SL, for example.

The Crystal Palace Space Station

How "safe" is this type of system for customers?  At least, to my knowledge, they can't go into debt to the game.  In it's terms, the least you can have is zero PED.  But what if the company that hosts the game goes under?  What happens for someone with a hard-earned fortune of PED who didn't have enough time to convert it to US dollars?  Wouldn't every player trying to make a "draw" at once be just like making a run on a bank?  How much can MindArk cover?

(Perhaps it's more stable than it seems.  After all, the game has a "sink" system that essentially ensures that, on average, people will put more into it than they will ever draw out.  [Casino, anyone?])

A bigger picture...

So what does this mean for the future of the game industry?  For one thing, I think this could mean some good growth opportunity for Shanda, one of the stocks I'm following, if this trend was to catch on.  (Since they are deeply in the Chinese MMORPG market, it's hard to tell though.  China has some strange rules about MMO play, and I'm not sure how much the government would approve of its citizens spending on virtual goods when they could be attaining real ones.)

This trend could also be seen as an opportunity to incorporate ads and product placement into the game realm.  While not unheard of in similar online games (like Second Life), it could get a lot bigger.  There's nothing stopping, say, a car company from putting its newest models into the game for example.

What about government policy?  Could it ever charge a sales tax on these items?  Tariffs if the creator of an item was bought from a foreign player?  (Am I taking this too far?)

And how about the impact a trend like this could have on the WHOLE economy?  

As these "alternate worlds" become even more realistic and enticing, will "real life" consumers divert their ambition for material goods and instead spend on cheaper versions of their dream products in-game?  Everyone knows that the "high" of buying a luxury car or any high-end widget tends to wear off rather quickly, so perhaps it would be better to get one's spending fix for 1/10th of the price ingame...

Or am I overestimating the power of fantasy over reality?  I suppose time will tell...

The Second-Hand market: A drain to publishers?

Something I've wondered is that role the used game industry played to publishers:  did it help them by "hooking" consumers into getting certain games?  Could this offset the lower sales?

I came across this article today that described the drain as "significant".

It discussed possible ways to combat the drain, such as adding special bonuses ONLY to bought games (an idea I fairly like) or blocking off certain areas of games.  I'd be guessing that, much like current PC games, the game would read a signature unique to reach machine, and shut down

(I remember reading somewhere that buying games used could save the avid gamer over 500 dollars per year, which is nothing to shrug at in this economy.  And where consumers save, publishers tend to lose-- or do they?)

I have my own proposed solution for game publishers:  to follow up on my previous post about online purchase of games, how about an online rental service, where players might be able to have their Xbox account charged per day of play.  The prices could even be higher, because there's no overhead, and also increased security for renters in knowing that they won't get a scratched or defective disk, and that it would be impossible to lose or return late!
An additional benefit would be that it would help publishers gain direct and exact statistics on which games are rented most, and what their rent/buy ratio is (if they don't have that already).  This could be valuable for measuring players' perceived "value" (or addictiveness!) of a game.

It's true that this would be more of a "if you can't beat 'em, join 'em" approach, but I think adding DRM is treading on thin ice, because PC gamers HATE it.  I can even see some gamers renting just to spite publishers if they're not careful!

However, as mentioned in the article, this approach would hurt retails, who, as a whole, have a synergistic relationship with publishers.  While other retailers could technically follow gamestop's new practice of selling digital keys to unlock game downloads, they would probably still be hurt as a whole.

Small, Independent game studios: a force to reckon with?

I've picked up from classmates and professionals I've talked to that working for a smaller game studio can often be a better experience, where employees can wear many hats and developers as a whole exercise greater creative freedom.

But do these really make a big dent in the large console industry?  Can they steal the thunder from the large publishers' sequel franchises?
And can they actually be profitable and grow while still remaining "independent"?
Will the increased usage of mobile devices for gaming increase demand for smaller, quirkier games?

I was encouraged from this Seattle Times article (Seattle is a known hotspot for game development).  The article reflected bits and pieces of what I've heard about "indie" game publishers, tied them together, and made me rethink how much power they could have in the industry.

The article spotlights Torpex Games. 

I liked how the article pointed out the problem with large, leading video game publishers erring on the side of caution, with huge budgets at stake and tight deadlines to contend with.  It's just easier to work with tried-and-true formulas.  (Currently the top sellers are sequels!  Not that I don't think there's any room for sequels in the market, but I think an asset of the game is the surreal creativity that developers can pull off.)

Many of the video games of the early 1990's were full of innovative forms, likely because of limited resources.  Lately, many of the leading games have become more like cinema that players have some control over.  Is there still room among customer demand for smaller developers who make up in good ideas what they lack in limited resources? 

According to the article, the key is in online downloads and purchases through consoles.  All of a sudden, this opened up the possibility for smaller, more offbeat games (>$50.00 anyone?).  Customers don't mind taking a risk on a new approach to games if it only costs 10 (or even 5) dollars!  Mobile gaming apps also contribute to this incentive for small, low-risk games, with lower overhead because they're downloaded digitally.

On top of this, Microsoft has even opened up an app to allow amateurs to develop for Xbox live.  Though Sony and Nintendo haven't jumped on the bandwagon yet, I think this still a sign of a trend towards a more "pure capitalistic" system.

However, the bottom line is that this trend probably won't overtake the larger console games as the staple of the industry, but could establish itself as a healthy supplement with many business opportunities.

Harnessing the female gamer market

As I said I would, I'm now making a post on some of the current news and (mis) information about female gamers and current trends regarding the subject.

Here are a couple of articles to read first:
Designing and marketing games for female players
and Why is this such a challenge?

Here's an article about some titles that have been developed so far in attempt to tackle the challenge.

Quick fix:  Pinkify it?

The Stats:

First, let's start out with some statistics.  According to the interesting and oft-surprising 2010 essential facts about the computer and video game industry, 40% of video game players are female (42% for online), as well as 46% of video game BUYERS.  That's a pretty huge market that supposedly most developers are currently ignoring or misjudging.  Of frequent (hardcore?) gamers, males have been playing for 13 years, while females have for 10.  A supplementary stat are parents:  48% of parents play video and computer games with their children at least weekly.  I would be guessing that a higher percentage of this amount would be women as well.

To interpret the numbers, midway through the report is a list of the top 20 selling video (console) games of 2009.  I'm seeing Call of Duty: Modern Warfare 2 at number 1, New Super Mario Bros, Wii Sports, another Call of Duty, Halo 3, Madden NFL, Assassin's Creed, Left 4 Dead, UFC 2009, Resident Evil 5, other mario franchises, Pokemon.  All of these titles, to those familiar, are obviously marketed towards males.  But somehow, the number of female buyers is still 46%.

(I'm sure this isn't the whole picture.  Mature rated games tend to be lower in selection, with just a few titles dominating the niche and generating large sales, while there are a wider variety of "e" rated games.  And we don't know what portion of the 46% of women buyers are mothers getting games for their kids.)

Before proceeding though, what may lower the credibility of these statistics is the huge discrepancy in that data, and that provided by Nintendo here. According to these statistics, female gamers make up only 25% of the market (1:3)?  And here I'd thought the wii was more popular among women than other consoles because of the exercise opportunities it offered...

Marketing:

A lot has been written on what video game publishers (including all whose stocks I'm following: ATVI, ERTS, and SNDA) should do to reach more women.

For kids:  The setup below makes me cringe...  I suspect the majority of designers/developers for these games were NOT women. (I just had to laugh at the top part.)

(Aside from trying to "separate" girls out and/or pit them against boys, what bothers me about this rack is what in my opinion is less creativity.  If you look closely at the titles, they all appear to be rehashed from movies and television.  I'm seeing "Raven," "Hillary duff," "the Little mermaid," the word "cooking", some other girl band, and Bratz.  My problem with these types of games is that none of them really provide alternative and immersive worlds.  The beauty of games in my opinion is that they allow you to often explore other planets and other realities, but these games appear to be stuck on earth, albeit a very pink and "popish" one.)

To quote one of my articles:  "Don't develop a video game version of The Devil Wears Prada and then complain when it doesn't sell".

I personally think younger girls want their own strange and "exotic" worlds to explore as much as boys.  Perhaps not as dirty and gritty, perhaps not even as violent, but just as CREATIVE and IMMERSIVE.  I don't think rehashing the pop culture they're already bombarded with will attract any more players.

Have I overestimated the female desire for fantasy, or is the current market missing the mark?

Content:

I've heard a game concept artist Jason Chan say that creating female characters for teen/adult games is a challenging balance.  They have to be strong and aggressive enough to appeal to female gamers, but have to be sexy enough to appeal to males.  And clearly the latter seems to be a higher priority in many games.

And for teens/adults:  Who is Lara really being marketed to?

Not to be forgotten is the percentage of female game artists and designers, which is 5%-10% (though growing), less than many better-known professions with high gender gaps.  This, however, has been attributed to less interest.

So this turns into a chicken or the egg question:  What's coming first:  Will an increasing amount of female game designers bring new ideas and perspective to the table and make games more appealing to female players, or will growing female consumer interest drive more women to work as game designers?

I think it's obvious what the conclusion is though.  Whoever gets this balance right stands to gain a LOT.

Child of Eden and the future of "eye candy" games

A friend showed me a trailer the other day of a new "rhythm action" type of game by Q Entertainment.  (You wouldn't believe it to be a "shooter" by the preview!)























Definitely mezmerizing!  I'm thinking that this type of experience may draw more sensitive, artistic types to video game consumership, perhaps even more females as well (I think I'll make a post about what the female market means for the games industry).

Will this type of thing become the next fad?  We've seen lackluster sales in niche music games like guitar hero.  Perhaps this type of music-interactive genre is temporary by default, just as your average pop star?  This is all I can say for the average consumer, though I don't think I'd be able to get tired of a game like Child of Eden, despite never playing it before.  It's just right up my alley!

 This type of game, in a way, strengthens the long standing analogy to addictive drugs (though that's not the reason it appeals to me).  From some of the Youtube comments I saw, I'm not the only one who sees this connection.  Will people in the future use video games to legally simulate a psychedelic trip, or as a companion to a chemical substance?  Whether either or both happens, I can only see it resulting in sales increases.

Activision Blizzard teaming with Bungie for 10 years

(Note:  I'm counting this as Monday's entry.)

+

A friend brought this to my attention so I thought I'd report on it.

This is big news, because Bungie not only owns the famous "Halo" franchise, but is in general esteemed through the industry.

Here's the first article I found.  It states that Bungie will maintain the rights to its intellectual property, and Activision Blizzard will PUBLISH it. To be honest, I wasn't exactly sure what a video game publisher DID exactly.  I was pretty sure they were like a book publisher, both manufacturing and marketing the material.  I turned out to be mostly right:  http://en.wikipedia.org/wiki/Video_game_publisher

Anyway, a more detailed article on the sale can be found here.

So what does this collaboration mean?  ATVI has a pretty far reach and a strong hold on online markets, so I'm guessing it plans to distribute Bungie's games to a far wider audience.  To speculate even further, perhaps it plans to harness Bungie talent in its mysterious upcoming new MMORPG.  That could be pretty awesome if executed right.

Critics of this deal are concerned that Activision Blizzard will eventually try to take over Bungie, and this deal is just the foothold.  They also point towards the "infinity ward situation", a mess of lawsuits resulting from ATVI firing two heads of one of its subsidiaries, Infinity Ward, before they received any royalties.

Anyhow, I'm hoping for the best.

Project Natal: Kinetic Motion Sensing System Unveiled!

Turns out the whole industry could ripple with Microsoft's new motion-sensing technology.  I presume it was created to compete with the Wii, as it was initially developed to attach to the Xbox.

The author of the article didn't once compare it to the Wii though, which I find odd.  Perhaps the technology is different than I'd thought?

Turns out the first article wasn't very informative, because it didn't say anything about why Microsoft's technology is leaps ahead of the Wii:  it requires NOTHING to operate!  That's right, absolutely no hand held electronic controller of any kind.

According to this article, Project Natal has facial and voice recognition, can react to audio commands, and, most importantly, various kinds of movement recognition.  For example, players can grip an imaginary steering wheel for racing games.

Even better for consumers, this is an addon for the current 360 system, so they don't have to go out and buy anything totally new.  This makes me speculate about PC games as well... with the right adapter, could people one day mount this device on their laptop and play this way anywhere?  (Granted, using such large movements for such a small screen might be awkward, but who knows?)

I think it might be safe to say that console-based game companies who develop for the Xbox platform may enjoy a boost over PC games (like Shanda and to some extent Activision Blizzard).

HOWEVER, I dug to find out that Shanda is dissatisfied with its current "EZ" platform and is looking to mirror the Xbox.   (This is supposedly due to China's restrictions on the Xbox, and rampant piracy.)  I find it just as likely then that they will also seek to develop their own version of Project Natal.  (Reference here.)

I wish I knew the timeframe this would happen.  The Fox article called it a potential homerun of the decade, which makes me guess it will be out before the end of 2010!

Market Capitalization analysis

I was checking out Yahoo's multimedia/graphics software Industry Center page, and saw my stock picks in the top 5 in Market Capitalization.  (Though it's probably important to note that the majority of video game companies listed here are NOT publicly traded in the US [as I learned from NCsoft].  Most of them are quite small compared to these biggies  though.)  There are 24 publicly traded companies in this industry, and it's interesting to see how they stack up against the top 5.

Market Capitalization is a form of measuring a business size through multiplying the number of shares outstanding by the value per share.  Pretty simple!  (I know there are other ways to measure business size though.)

I was very surprised at how much larger Activision Blizzard was than any of the others, especially electronic arts.  (Nearly 3 times the size!)  To me, EA is a much more prominent brand name.  I think perhaps Activision Blizzard prefers to brand its products with the names of its subsidiaries instead of its overall identity, but I could be off base about that.

I was also interested to see how relatively little TOTAL market share that games really had.

I'll admit I don't fully understand yet is that top chart, and why the Interday Price Performance and why the market caps are so much higher there than in the market capitalization chart.

Putting things into perspective...

Being exposed to game marketing and culture more than the average citizen, I'm starting to think I've overestimated the total market share that this industry has.  So I decided to compare the top industry performers of various sectors with my own.

TOTAL leaders and laggards:

Multimedia & Graphics Software leaders and laggards:

My addition and estimates therefore put the entire M&G sector at 40 Billion at the MOST, keeping in mind that the amount attributed to video games alone is less.  (We'll say about 30 billion).  

I'll admit that, somewhat to my disappointment, this is chump change compared to some other industries.  It's like 3% of oil and gas, about 0.4% of telecom services.  True, I'm not sure I would want to live in a world where as much as spent on games as is on energy, communication, and life support.  

But it really does show how this sector is a tiny island that can be greatly affected by even small shifts in these mammoths.

Wall Street Survivor

I've been thinking about trying out a no-commitment stock market simulation game, and will hopefully be giving it a try tomorrow morning.  I will apply my three stocks and perhaps a few more as well, to see how I can play it out.

The top result on Google is Wall Street Survivor, which I presume to have mirrored updates of the market.  It was a sponsored link, yet claims to be free... I shall be wary.  Perhaps I should shop around a little more first.

I'm hoping that, by trying it out now, I'll be able to make blunders while I'm still in my exploring business class, and ask my professor some questions about it!

Checking out Gamasutra

 I found a good site that provides latest news about the game industry from more of a business angle than art.

Gamasutra has a vital news center that might be valuable in staying current with the industry and perhaps even helping to predict my stock.

It seems that 3D gaming is on the horizon, following the successes of the technology in the film market.  Even casual gamers would be willing to jump on the bandwagon, according to the consumer electronics association.
http://www.gamasutra.com/view/news/28951/Study_Casual_Gamers_Interested_In_3D_Too.php

I have an interest in what Sony is into, especially because two of my stocks are heavily invested in it.  The push for 3D gaming is also in my article.  There seems to be confidence that Sony will hold the lion's share of the platform market over Microsoft.  It makes me wonder whether it would be a good time to invest in Sony's hardware...
http://www.gamasutra.com/view/news/29001/E3_Sonys_Steinberg_On_Move_3D_And_What_PlayStation_Means.php

Something of direct interest to me is of cloud computing which seems to be the buzzword these days in a variety of fields (such as office document editing).  I just saw an arcticle from my businessweek subscription here.  A partner of EA, Gaikai, specializes in allowing players to stream games on their computers without downloads.  This is a step ahead of many online MMORPG games, which still require users to download a client.
http://www.gamasutra.com/view/news/29007/E3_Gaikai_EA_Partner_For_Streaming_PC_Games.php
Due to the success of games such as Runescape (which also run entirely in the browser), it is clear that cloud gaming will broaden the consumer base, especially casual gamers.
I had thought of EA to be my "conservative, control-variable" stock.  Perhaps they will innovate more than I'd thought...

Choosing my 3 stocks

Note to Professor Blundell:  This post is still in progress!

There are many different video game companies out there.  What helped to narrow my search down, however, was that most of them are NOT publicly traded.  In fact, most of the companies I had an interest in working for were private subsidiaries of a diversified blanket company.

I want to follow the software development industry as opposed to hardware.  Some of the most well-known companies distribute both (such as Nintendo).  Why software?  I think it's more valuable; liquid, adaptable to change.  (Perhaps I'm wrong in assuming this?  I will have to find out!).  I'm also interested in working for markets that deal almost solely with intellectual property, and am concerned with its future amid threats such as much easier file sharing.

So one of my stocks was Electronic Arts.  They haven't been doing so well lately, partially as a result of being too conservative with their platform support, and narrowing their possible user base because of it.  So I would consider this almost a "control" stock, one that I'll use to reference the (hopeful) growth of the others.
Their company description is:
"Electronic Arts Inc. develops, markets, publishes, and distributes video game software and content. The company’s games include a range of categories, including action-adventure, casual, sports, family, fantasy, racing, music, massively-multiplayer online role-playing, simulation, and strategy. Its portfolio of properties includes various brands, such as Need for Speed, The Sims, Spore, Dead Space, Mass Effect, and Battlefield; and EA SPORTS Active, Dragon Age, Origins, and Dante’s Inferno. The company’s portfolio of games based on licensed intellectual property includes sports-based titles, such as Madden NFL Football, FIFA Soccer, and Tiger Woods PGA Tour, as well as titles based on brands, such as Harry Potter and Hasbro. It also co-develops, co-publishes, and/or distributes video games that are developed and published by other companies, including the MTV Games/Harmonix series Rock Band and the Crytek series Crysis. The company’s games are played on various platforms, including video game consoles, personal computers, handheld game players, and mobile devices. It offers its products for videogame consoles, PCs, and handhelds on physical media, such as disks and cartridges that are sold at retailers; and game content and services online. The company provides its products through mass market retailers, electronics specialty stores, game software specialty stores, and online stores. It has operations in North America, Europe, Australia, Asia, and Latin America. Electronic Arts Inc. was founded in 1982 and is headquartered in Redwood City, California."

My next stock is Activision Blizzard Inc. [ATVI], and has been doing quite well.  I initially was interested because Blizzard entertainment, the creator of the very successful "World of Warcraft"

Here is the company description:
"Activision Blizzard, Inc., through its subsidiaries, publishes online, personal computer (PC), console, and handheld games worldwide. The company develops and publishes PC-based computer games and maintains its proprietary online-game related service, Battle.net. It publishes interactive software products and peripherals. Its products cover various game categories, such as action/adventure, action sports, racing, role-playing, simulation, first-person action, music, and strategy. Activision’s products comprise Monsters vs. Aliens, Guitar Hero, X-Men Origins, PROTOTYPE, Transformers, Ice Age, Wolfenstein, Marvel Ultimate Alliance, Bakugan Battle Brawlers, DJ Hero, Band Hero, Call of Duty, Tony Hawk, Guitar Hero, Three map packs for Call of Duty, True Crime, Spider-Man, Bakugan, Blur, and Singularity. Its customers include retail outlets and distributors, including mass-market retailers, consumer electronics stores, discount warehouses, and game specialty stores. Activision Blizzard, Inc. is based in Santa Monica, California."

Finally, I'm also going to follow Shanda Interactive Entertainment Ltd. (SNDA).  I think this would be an interesting one, because it focuses mainly on online games in the Chinese market, which is supposedly booming!
Here is the company description:
Shanda Interactive Entertainment Limited, an interactive entertainment media company, operates online games in the People’s Republic of China. It offers a portfolio of entertainment content, including massively multi-player online role playing games (MMORPGs), which comprise Latale, Dungeons and Dragons Online, Fengyun Online, and World Hegemony. These MMORPGs are action-adventure based, and draw upon various themes, such as martial arts, combat, fantasy adventure, and historical. The company’s portfolio of entertainment content also includes Kung Fu Kids, Tales Runner, Push Push Online, and Popland casual games; Chinese language original literature portals consisting of Qidian, Jinjiang Literature City, and Hongxiu.com; and online chess and board games. In addition, its portfolio of entertainment content includes a network personal computer (PC) game platform, which allows users of PC games to find and connect through the Internet with other players of the same PC games; and mobile games, including the mobile versions of Woool and Magical Land. The company offers Shanda Online (SDO), a community and an online entertainment content e-commerce service platform, which consists of an online payment and billing system, a distribution network, and a marketing platform, as well as a customer relationship management system, including a customer information management system and customer service center; EZ Center interactive entertainment platform; and EZ Pod hardware product. It markets its games through traditional and online marketing programs and promotional activities comprising in-game events, in-game marketing, peer user recommendation program, open beta testing, and offline efforts, as well as through word-of-mouth. The company has strategic cooperation agreement with Kingsoft Co., Ltd. and collaboration agreement with Zhejiang Satellite Television. Shanda Interactive Entertainment Limited was founded in 1999 and is based in Shanghai, the People’s Republic of China.

I initially had chosen NCsoft [036570.KS] instead of Shanda Interactive.  However, NCsoft is part of the Korean stock exchange, and was not recommended by my professor due to unpredictability of that kind of investment.  Also currency conversion is annoying!

(A stock I'm not going to "officially" follow is eGames, Inc.  (EGAM.PK)  This is a company that makes mild, e-rated games for children.  .  It has become much more socially acceptable to allow young children to play games, probably due mostly to the first gaming generation reaching the early parenthood age.  Perhaps these new parents, who are still gamers themselves according to polls, resent their parents, who didn't understand video games and limited them?  However, I still wouldn't put this in the same category of what I'm looking at.)

Choosing my industry

The official stock sector I chose was under the "Technology" category, and called "Multimedia & Graphics Software".  This is an umbrella for games developers of both software and hardware.

I chose to follow video games industry because I keep hearing mixed opinions about its current health.  On one hand, I hear it's the only sector to show any growth in the past couple years.  That it can't fail, and will only get bigger and bigger and bigger.  That the consumer base will keep growing and diversifying, and now would be a good time to jump in as an employee or investor.  

Then I hear that it's actually struggling, much because larger parent companies (like Sony) have taken a dive. 

 Or that it's just very volatile right now, that some companies are going gangbusters while others have been left in the dust.  

Then, that it's games on mobile platforms, or online games, that are destined to succeed, while traditional consoles are old hat and destined to decline.
Here's a general article that discusses this and about whether the video game industry can "make a comeback".

With all of these differing opinions (mostly from here say, and bite-sized articles intended for the general public, I decided it might be a good idea to follow the industry for my stock project, and dig deeper.  

I'm also interested in finding out more about the film industry, and how it compares to games.  While there are many film companies on the Yahoo list of interest to me, the publicly traded companies seem to be over-generalized, often encompassing the entire distribution process and film networks.  It didn't seem like as good a way to understand the industry.  

not only because I may want to do some work for them in the future, but also out of 

Introduction!

This is a blog for the "Exploring Business" class at Kent State University during the Summer 1 session.  My instructor is Greg Blundell.
I will be digging up industry news each day (with a focus on art development and how that affects the company's value) and will occasionally report on my stocks.
Hopefully I will learn more about stocks and how to watch the market.  I also want to understand both the game and film industries better, and how they compare!