Social and Connected Entertainment – Online and On-Demand
Got game? Millions do. Gaming is clearly one of the trend stories of the decade. It is making an impact on our lives no matter where we are — in our living rooms in front of the TV, on our cell phones, working at our PC, and coming to a portable media player near you. The next level of gaming is here, and it is being driven by three converging trends: high-definition gaming; on-demand, online gaming; and social entertainment. So hold on, and get ready for a screaming fast, gaming experience. One that dominates with breakneck performance, captivates with stunning visuals and heart-pounding, even breathtaking audio tracks, and goes deep into virtual worlds. And remember PacMan? It and other classic arcade games are making a big comeback. In fact, PacMan is a featured game on Xbox Live Arcade. So what’s up with gaming? What are the trends, and how do they benefit startups, and, most important, what are the must-have games for the holiday season? Sit back, sip some eggnog, invite a friend or two over, and let’s jump into gaming.
Ho Ho Ho. Microsoft Gets Social — Our Game Plan for a Connected Entertainment Experience
Party of one? Rarely happens. Entertainment is becoming a shared, connected experience. A social experience. In fact, we envision a time when all gaming and entertainment services will be connected. Imagine this scenario: A gamer starts a connected game on her Xbox at home, continues it on the cell phone in the cab on the way to the airport, and finishes it up on the plane by plugging into the armrest. It’s increasingly about a social experience — and it’s not just male-dominated anymore.
Ultimately, our vision is to move toward more connected entertainment everywhere, and get everyone involved in the action. Women. Young kids. Older adults.
Beyond gaming, Microsoft TV software platforms are also an integral part of Microsoft’s overall connected entertainment strategy — one that will enable rich TV experiences and new forms of TV-based entertainment and information services. Through Windows Vista, Xbox 360, new mobile devices, and an emerging wave of software-based services, we are delivering more connected and richly personalized experiences for consumers. With all of these converging elements, Microsoft is enabling a platform, and the underlying architecture and tools, for this new world of high-definition gaming and this social entertainment experience. And it all starts with game development.
From Processors to Platforms: The New Game Development Paradigm
The industry is experiencing a big shift in game development today — from a focus on processors to platforms. Three decades ago, game development was dominated by hackers cranking out games over a few days and pushing the limits of a Z80. The focus was on processing power, speed, muscle. Today, an entire team of developers, writers, designers and artists as the stars of the studio, working with game budgets of anywhere from $20 million to $50 million and pushing the capabilities of advanced gaming chips such as the Xbox 360’s powerful three-core processor, built by IBM. Clearly, developing a video game today is very different from even 10 years ago; budgets, profits, team sizes, and risk have all increased.
While console companies like Microsoft used to think in terms of hardware only, we are now spending as much time on software, tools, and services. In fact, Microsoft and others are driving a lot of these investments, all designed to make it easier and faster for developers to create new worlds and new characters for their games.
Democratizing Game Tools — Next Generation Gaming
XNA is our next-generation software development platform. It empowers developers to deliver breakthrough games while combating rising production costs and ever-increasing hardware complexity. In fact, tools and technologies from the XNA development platform will unleash games for future iterations of all Microsoft game platforms, including Windows, Xbox and Windows Mobile-based devices.
In fact, our hope is that XNA will be the catalyst for a new ecosystem of interchangeable, interoperable software tools and technologies from Microsoft, and from middleware and game development companies. Here’s our strategy: by integrating software innovations across Microsoft platforms and across the industry, XNA forms a common environment that liberates developers from spending too much time writing mundane, repetitive boilerplate code. Instead, XNA frees game creators to spend their time where it matters most — on the creativity that differentiates their games.
Bill Gates has said that software will be the single most important force in digital entertainment over the next decade and that XNA underscores Microsoft’s commitment to the game industry and desire to work with partners to take the industry to the next level.
Why the need for XNA? Microsoft’s Robbie Bach, Senior VP of the Home and Entertainment Division, says it best: "Silicon advancements and new features like high-definition and pervasive broadband will send game development costs skyrocketing. The video game industry must band together to find a solution that ensures vitality and sustainability for years to come, while responding to consumer desires for bigger, better games.”
No game today is built with one tool, and no game tomorrow will be either. XNA gives game developers a choice … in fact, we think it could potentially close the gap between what gamers want and what developers dream.
Announced in August, XNA Game Studio Express is Microsoft’s new game development solution aimed at students, hobbyists, and independent game developers. It includes XNA Framework, a set of managed code development libraries that make it possible for game developers to create games for both Windows and Xbox 360, and more easily incorporate 3D content and more into games. This is just the beginning. We will be releasing XNA Game Studio Professional next year that will allow developers to create commercial games for Xbox in addition to Windows. It is our way of democratizing or leveling the playing field for game development.
See It, Feel It, Experience It — The Magic of High-Definition Gaming
Everyone is talking about High-Definition Television (HDTV). It is transforming the television industry and changing the dynamics of the gaming industry as well. The Xbox 360™ gaming and entertainment console and the PlayStation 3 are optimized for high definition. That translates into new levels of detail, greater image quality, and more vivid, more realistic game playing. Game worlds are becoming more immersive, and ever more believable, and the experience is only going to improve. A new generation of “extreme fun,” we like to say.
Just as high definition changes the gaming experience, how we interact with machines could be completely different in the future as well. So much so that fast-twitch gaming may soon seem outdated.
As an example, consider Emotiv, an Australian company that is targeting the electronic games industry. Its product is an independent headset with a built-in Emotiv Engine that wirelessly communicates with game consoles and PCs. By involving the gamers’ emotions, the user experience with current games will be significantly enhanced, making them more realistic and exciting. It could also create a whole new category of games that does not exist at the moment – games with emotion content – and appeal to a broader audience, including the largely untapped women’s gaming market. The company believes this approach will drive the next revolution in electronic games.
Online, On-demand — Creating the “Social Ecosystem”
As we said in the beginning, we are getting very social, and naturally, it’s all taking place online.
Online gaming is a key driver of the gaming experience today, and Microsoft carries a lead in this space, both in terms of the Xbox Live network and MSN online gaming — where at last count some 25 million casual gamers are playing games on MSN Messenger and MSN Games.
Xbox Live is capturing just as much attention. Dubbed “live anywhere,” Xbox Live is one of our key initiatives. We want to put gamers at the center of a ubiquitous always-on world where their digital identities, friends and digital entertainment are always accessible through the familiar Xbox Live interface, regardless of location or devices. This plan also paves the way for cross-platform game play scenarios, with participants using Windows-based PCs, mobile phones, and Xbox consoles simultaneously.
Since it was introduced in 2003, the Xbox Live network has become the largest social network in the living room. It currently connects gamers with more than 4 million connected members across more than 24 countries. Think FaceBook for games.
With Xbox Live, we’re connecting people together through a unified, on-demand, high-definition network that lets people build friends lists, share their achievements, talk, and now even see each other as they play games, thanks to the Xbox Live vision camera. This network is serving up all kinds of content the gamers don’t have locally — enhancing social interaction and the thrill of the gaming experience. Currently, the Xbox Live network serves up 2,000 pieces of content or context-specific interactive content in the form of interactive games, TV, music, and movie content — all designed to provide more and more ways for members to meet, interact, and stay engaged with each other. That’s the social aspect I was talking about.
As part of Xbox Live, we have a one-stop digital download center (Xbox Live Marketplace) that provides additional game-related and entertainment content (TV shows, movies, etc.). And through another Live service fully integrated into the Xbox 360 console, gamers can find classic games such as PacMan and retro classics that are true to the original arcade titles, originally designed for coin-operated machines. We’re also focused on what we call “bite-size” casual games that can be played in minutes, instead of hours, and can be purchased online and downloaded for play. We think these types of games will help broaden and grow the gaming audience beyond the 18- to 34-year-old male demographic to women, younger kids, and older adults. Interestingly enough, while male video gamers still outnumber women 2 to 1, women have an edge in online games, according to a survey by Nielsen Entertainment.
So you may ask, have gamers been attracted to these social networking capabilities that allow for better multiplayer game action? You bet. There have been more than 70 million Xbox Live Marketplace downloads and 12 million Xbox Live Arcade downloads.
Connected Platforms — Gaming for Windows Vista
PCs gamers have been around for what seems like forever. And many are also now Xbox users. So we thought, why not give Windows gamers a way to jack into the Xbox Live world from their PCs? That would give them a consistent, online game experience — with one identity, one friends list, one set of achievements, and voice communications across all games on the network. With the consumer launch of Windows Vista (late January 2007), we will debut Shadowrun from FASA Studio as the first game to integrate all of the above. (Many more are planned.)
In fact, our vision is to connect millions of Xbox gamers with hundreds of millions of Windows-based PCs and mobile gamers from around the world through our Xbox Live online entertainment network.
Beyond high definition, incredible new development tools, new social gaming experiences that are online, and on-demand, and connected platforms, take a look inside your next game for some interesting new surprises.
Gamers Play, Advertisers Pay — In-Game Advertising in Real Time
Picture soft drink cans and pizza boxes, billboards, posters, and images on TV screens. All are used today by advertisers to get their brands within the game, where gamers expect to see them in real life, adding realism to the overall gaming experience. This in-game advertising is the latest trend in advertising. It not only can help game publishers offset some of the high costs of developing today’s next-generation titles, it can also help potential advertisers reach the elusive, and lucrative, 18 to 34-year-old male demographic. Consider these stats: Gamers account for more than 70 percent of the 18 to 34-year-old male demographic (according to the NPD Group), and play 12.5 hours of video games a week, versus 9.8 hours watching TV, according to Nielsen Entertainment. A number of startups are going after this market opportunity, with two ways to play. One is advertising in real-time, and the other is downloaded, offline advertising.
As an example, we purchased Massive in May 2006, a startup whose ad-insertion technology makes it possible to put advertisements in video games. We saw Massive as a way for us to deliver dynamic, relevant ads across Microsoft’s online services, starting with Xbox Live and MSN Games. We’ll also explore using Massive technology for other online environments such as Windows Live and MSN.
With its network of publisher and developer partnerships, Massive aggregates the gaming audience to deliver advertising across a network of premier video game titles and provide measured results on consumer interaction with the advertising.
Here’s how it works: The Massive Network enables publishers to capture previously unavailable incremental profit from their games of $1 to $2 per unit by drawing upon the benefits of a network. This aggregated audience can be more effectively marketed to by advertisers, resulting in the highest yield possible for each title. Currently, Massive’s network consists of 52 games with in-game advertising today; they expect to have more than 100 next year. They have agreements with more than 40 publishers and on the ad side, have more than 70 advertisers buying on the network day in and day out, everything from Hollywood studios to packaged goods to insurance. Even TV stations, including MTV and Comedy Central, are buying the network.
Electronic Arts plans to offer Massive’s in-game advertising on select EA franchises on the Xbox 360 video game and entertainment system — the in-game advertising will be updated and changed in real time, keeping the advertising fresh and relevant for gamers, a key requirement if this style of advertising is to take hold.
Another example of innovation within this advertising model is Lirix, Inc. Imagine downloaded radio stations. This startup has developed the technology of on-device dynamic ad insertion with recorded or downloaded music. Delivered through the Lirix Media System, this technology makes ad-supported recorded or downloaded music possible. Digital music is caught in a “pay or piracy” trap. But with Lirix’s patented technology, it offers a third way for consumers to download music—the tried-and-true value proposition of receiving free content in exchange for exposure to advertising. With its solution, consumers can download free music to an MP3 player, cell phone or PC. When played back, the listener hears updateable, dynamically inserted ads at unpredictable times. Think of it as a downloaded radio station that you program yourself.
Let the Games Begin
So those are some of the trends, as we see them. As Microsoft’s “Connected Entertainment” vision unfolds, we believe it will enable a huge ecosystem of startups to develop and support the products and services needed for such a seamless gaming/music/movie experience. The only “gotcha” in the picture is the battle over formats. Which one will win out, Blue Ray or HD DVD? Microsoft? Sony? Nintendo? Does it really matter? In my opinion, no one will win. Because by the time it matters, the fight for gaming dominance will have moved on — online that is.
Click here are some holiday game picks from MSN.
Let the holidays begin!
