Social Games Turn Consoles Upside Down

Social Games Turn Consoles Upside Down

From the first time you beat your sister’s high score in Tetris to that noob you totally pwned in WoW last week, your gaming life has likely been “social” long before FarmVille was anything but a small town in North Carolina.

Like most industries, gaming has been shaken up by the web and its new platforms for entertainment. The games that once required a substantial investment in console, cartridge and TV can now be downloaded to your mobile for $0.99, or played for free with a browser and a Facebook account.

That’s not to say there isn’t still a line in the virtual sand between “casual gamer” and “hardcore gamer.” You might be pressed to find a devoted fan of both Call of Duty and FarmVille. But there’s no denying that elements of social and casual games have spilled over into the console world, and ignoring the success of a developer like Zynga — a money-making juggernaut that offers its wares up for free — would likely spell “Game Over” for any interactive company hoping to do business in 2011 and beyond.

We connected with Scott Steinberg, the CEO and lead analyst for video game consulting firm TechSavvy, and host of the industry insider video series Game Theory, to talk about the influence of social upstarts on the console establishment.

Q: Many social games are free to play, but make their money from purchasable in-game content. We’ve seen this model creep into console games with downloadable map packs for Modern Warfare and Halo, and additional content for games like Guitar Hero that have been highly profitable. When do you think we’ll start seeing console games that are both free to play and profitable?

A: Possibly within the next two to three years, as the number of players enjoying online connected games through console systems begins to reach critical mass. Keep in mind though that there’s also a financial component to consider. Manufacturers like Microsoft, Nintendo and Sony do considerable business off licensing fees for every disc-based game published on their systems, and game makers know they can sell and recoup investment dollars on at least some fraction of physical goods they make. [This] presents a complex problem: To begin with, you’ll need a proven publisher willing to commit millions up-front without any guaranteed return on investment towards backing a marquee title that’s strong enough to convince platform makers (e.g. MS, Sony, Nintendo, etc.) that there’s money to be made outside of retail channels and up-front licensing fees.

Alternately, you’ll need a platform maker that’s forward-thinking enough to embrace this model, or think outside the typical royalty structure and partner with savvier studios who can make smaller, more innovative titles that make financial sense for everyone on a scale that a giant multinational corporation would care about. Ultimately, these hurdles will be overcome, as all the technical elements and audience numbers are quickly falling into place. It’s just a question of how soon deal makers can get it together.

Q: If the barrier to entry for social console games is removed (i.e. they become free to play), will this finally bring the social web into the living room, from a gamer’s point of view?

A: Undoubtedly. What gamers look for most is quality, convenience and value, and gaming is an inherently social activity that speaks to one of the world’s most tech-savvy and connected audiences. Drop the price, tear down the walls that make interaction between platforms cumbersome, and offer a selection of top-quality, must-see titles with strong social components that add to the core play experience, and gamers will quickly take to social play in their living room, or anywhere else it can be conveniently and cost-effectively enjoyed.

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About Scott Steinberg
Scott Steinberg is CEO of strategic consulting and product testing firm TechSavvy Global, and a noted keynote speaker and business expert. Hailed as a top tech expert and parenting guru by critics from USA Today to NPR, he’s also an on-air analyst for ABC, CBS and CNN.

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