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GameStop head honcho J. Paul Raines is interested in the Ouya console. Apparently, the CEO thinks the platform is “cool” and would very much like to include it as part of GameStop’s ever-growing stock of video games consoles and tablet devices.
“We think Ouya’s cool,” Raines said in a statement to Joystiq. “We love the idea of open-source components. Everything we’ve read is great. There will be games developed for that stuff. So you’re going to see more of these open source type products, and we will be right in the middle of all of it.”
While Raines clarified that GameStop has no official announcement to make regarding the Ouya launch, his enthusiasm couldn’t be any more apparent. He went on to say that GameStop stocks all consoles and plans to “be a part of any console launch in the future.”
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At a panel during GDC Online in Austin, TX, experts addressed the future of the cloud gaming, and how it can change gaming and game development.
Cloud gaming has been a hot topic in the games industry in recent years — cloud gaming companies host games and stream the game data from remote servers to users’ hardware. It eliminates the need for large client downloads and doesn’t require users to have the latest and most expensive CPUs and graphics cards.
“Cloud gaming should be totally invisible to the user,” said David Perry, CEO of cloud gaming company Gaikai (pictured above). To him, accessibility is one of the biggest advantages of cloud gaming.
“[Players] don’t need to know [how cloud gaming works]. Our goal is to be completely invisible,” Perry said. “Today, that’s not the way it is. Games are incredibly high friction… We keep putting barriers in front of people.”
Perry said he asks himself, “What would it take to make video games as accessible as movies or music?… We’ll never get there if we don’t make [games] accessible.”
He said cloud gaming is still a work in progress, but it’s going in the right direction. “It’s a nightmare to build a global server network… but we’ve found people willing to fund this. It’s not a question of can it be done, it’s just a lot of work,” he said.
“There are good reasons to use the cloud, but there are reasons not to use the cloud,” said David Wilson, head of cloud gaming firm Spawn Labs, which major retailer GameStop recently acquired.
He claimed the competing streaming game service from OnLive (which was conspicuously absent from the panel) didn’t resonate with consumers because he believes that the company pitched the system as something that could replace consoles.
“I don’t think OnLive has proven anything yet, except that the technology works,” said Wilson. He admitted that there are still challenges to cloud gaming such as bandwidth caps, maintaining acceptable video quality, and reducing latency.
When asked if he believed whether the next generation of consoles would implement cloud gaming capabilities, Perry replied, “They would be insane not to. You don’t want to be a console that doesn’t.” He added that at a recent cloud gaming convention, there were over a dozen people from Microsoft, a handful from Sony, and one from Nintendo, which he speculated probably represents the level of interest from those companies.
In the past, consoles were all about accessibility — plug in a cartridge, turn on a switch, and start playing. But Perry said somewhere along the way, consoles lost that accessibility. “Fundamentally, we have to get back to that — how easy can we make [gaming],” he said.
But that’s going to take time. Wilson criticized the hype that surrounded OnLive, which some people said would marginalize traditional kinds of delivery services. Streaming technology is on course, however. “Cloud gaming got over-hyped… but it’s happening. There’s no overnight success, you don’t overturn an industry in six months,” said Wilson.
He added that at this stage, game developers don’t need to do much different on their end to have their games work on the cloud. But in the future, developers will want to fine tune their games to take advantage of what is essentially unlimited computing power.
“Long term, there will be more considerations, because people will be building for the cloud. Right now [developers] don’t really need to do anything,” he said.
Perry also stressed that cloud gaming makes PC game development as important as ever. “You would be nuts [not to have a PC build],” he said. If you’re not, you’re “just throwing money away.” Gaikai’s service currently lets users jump right into a PC game demo from a web ad. “This future is coming, trust me. We’re well-funded. This is going to happen. OnLive is already making it happen. You need to be prepared for that.”
If you want to make a hardcore gamer roll their eyes in exasperation, tell them that the PC gaming industry is dead and/or dying. Variations on this well-worn statement have been circulating for years, and it’s never been particularly true. In 2011, it’s less true than ever: thanks to digital distribution, more people are buying and playing PC games, so it’s no surprise that developers and publishers continue to invest heavily in the space. Their efforts don’t necessarily have the goal of extracting gamers’ wallets from pockets, either: the burgeoning ‘free to play’ model is being taken seriously by publishers like EA and Activision. And though the hardcore among you might be loath to admit it, those who choose to while away their hours playing Facebook games are technically PC gamers, too.
All told, PC game sales accounted for $16 billion in revenue worldwide last year, according to research conducted by DFC Intelligence on behalf of Nvidia. If DFC’s forecasts are to be believed, PC games will eclipse console game sales in 2014, and incur a sense of deja vu among those gamers old enough to remember a pre-console period where the PC ruled the emerging market for home video games.
In this two-part feature, GameSpy will examine the health of the PC gaming industry across two fronts – retail and digital – in an effort to dispel those pesky death rumours once and for all.
The PC should surpass consoles in 2014.
Bricks and Mortar
When compared to the reams of laudatory material that have been dedicated to praising the virtues of digital distribution platforms, it’s easy to overlook the roots of PC gaming: the humble bricks-and-mortar retailer, a place where chunky, colourful cardboard boxes containing CD-ROMs once received pride of place on shelves a few short years ago. Though the cardboard boxes have been downsized and the CD-ROM technologically superseded, Steve Nix counters that there’s still a significant market for over-the-counter sales of PC titles.
As general manager of digital distribution at GameStop, the world’s largest video game retailer – who employ some 17,000 full-time staff, and whose annual earnings in 2010 were $9.47 billion – Nix is well-placed to survey the PC gaming landscape. It also helps that he spent four and a half years at id Software, as director of business development and later, director of digital platforms. He’s been with GameStop since February 2011. “Many years ago, PC games were the largest category for GameStop,” he says. “But PC retail sales didn’t look good over the last ten years. There’s been a steady decline. As a PC gamer first and foremost, that always was very concerning. In the early 2000s, I was wondering, ‘What’s going to happen to the PC? Is it going to become completely extinct at some point, as a gaming platform?’”
We now know that the answer to this question is a firm ‘no’. At the time, Nix reflects, “my strong belief was that we were seeing a user experience problem with PC games in a retail box, versus console games. Really, if you think about the fastest, easiest way for people to get a game and start enjoying it, it’s the consoles. They offer a really nice experience: you get your game disc, you pop it in, and you’re playing in under a minute. Whereas, by the mid-2000s, for PC gamers, games had gotten quite a bit larger. Before the DVD, you’d have nine CDs for some games. And then you might have to search the web for the latest patches. If you’d done everything correctly, maybe a couple of hours later, you’d actually be playing the game after all this work. Really, I think that a lot of customers who were PC gamers started transferring to the consoles just because the user experience on the PC was poorer at that point,” he reflects.
Digital distribution has revolutionized the PC.
According to Nix, all GameStop saw at that point was “the decline of the physical PC box sales, so they decided to focus on the console business. But fortunately, in the last few years, some of the leaders in the PC digital space have been more public about going out with their numbers. They’re seeing amazing growth. That information started to get back to GameStop, who did some extensive research and said, ‘the PC market is thriving, but it’s just shifted online. It makes sense for us to be a major player in the PC digital space’.” The company will invest $100 million in digital initiatives in 2011, according to a report in March. We’ll return to Nix and GameStop’s recent forays into the online marketplace in the second part of this feature, which focuses on the digital market.
RL vs Virtual
For many game studios, the decision to develop for the PC is revised on a project-by-project basis. Roswell, Georgia-based Tripwire Interactive – best known for Red Orchestra 2 and Killing Floor – are no different, as vice president Alan Wilson explains. “We look at it game-by-game, and review that decision on an annual strategy basis as well,” he says. “But we aren’t likely to stop developing for the PC. It’s a question of which other platforms we will add, and ‘when’, not ‘if’.”
What about the all-important question of retail versus digital? “We do both, although there is more and more debate about the point of doing retail,” Wilson replies. “In the PC world, as far as we can tell, most of the games – especially for those of us with small marketing budgets – get sold through digital. There is a vicious – and self-destructive – cycle going on: few PC games get sold at retail, so the retailers reduce the available shelf space. This means low revenue for the retailers, so they demand higher margins from the publishers, which means fewer games make it to retail. All of this means that few games get sold. And round it goes. Go look for the PC shelf-space in your local store, and compare it to five years ago.”
Doug Lombardi of Valve Software points out that the company’s roots lie in PC game development. “That’s where Valve started and exclusively spent the first eight years of the company’s 15-year history. We’ve stuck with it because we’ve found it to be a great platform for our games and our business,” he says. “I can’t really think of a time when not developing for the PC was ever discussed. It has always been central to what we’re doing.” Since launching in 2002, Valve’s games platform Steam has become an integral part of the industry for developers, publishers and gamers alike.
DOTA2 will intially be PC only.
“Reviewing when and where to take our games and Steam – or Steamworks features – to other platforms is something we always consider,” says Lombardi. “Since 2005, we’ve gone from PC-only to PC, Mac, Xbox, and PS3. For some games, such as Portal, we’ve gone multiplatform and brought Steamworks features to as many of those platforms as possible. With Dota 2, we’re initially planning PC & Mac only.” More on Steam in part two of this feature.
When asked to name a few benefits for developing for the PC gaming market, Lombardi offers: “It’s an open platform. There are billions of people using PCs around the world. And most game development is done on PCs.” He declines to name any drawbacks, and instead replies that the platform has “worked well over our 15 years of making games.”
Wargaming.net, a strategy game developer with a similar tenure in the industry, are more vocal on this topic. The company currently specialise in war-based MMORPGs such as World Of Tanks and the upcoming World Of Warplanes; they’ve been headquartered in London since 1998, and have a development centre in Belarus.
The PC’s problems
Jeremy Monroe, general manager of Wargaming.net’s North American arm, replies that “of course” there are drawbacks to developing for the PC gaming market. “Box game development is facing huge problems at the moment due to PC market specificity and growth of piracy,” he replies, using ‘box’ as a synonym for traditionally-retailed titles. “These conditions make it almost impossible for box game publishers to keep the high level of profitability. The only thing that can save you is a world-known brand or franchise. But we have the internet that forced players to move online from single-player games to a much more captivating multiplayer format. We were lucky enough to foresee that shift and switch to the MMO platform.”
World of Tanks got it very right.
Monroe comments that, “after a year of World of Tanks being on the market, we are confident that we made the right choice.” Unsurprising given that, on January 23, 2011, that title gained a Guinness World Record for ‘Most Players Online Simultaneously on One MMO Server’ when they hosted 91,311 players on World Of Tanks’ Russian server. “The main advantage of PCs is that they are not specialised machines like, for example, consoles, but very comprehensive and all-purpose instruments. Their versatility allows us to try out a bunch of innovative solutions.” Monroe cites examples such as different types of server architecture and data transferring. “PCs possess their strong points and we constantly strive on using them,” he says.
In this belief, Wargaming.net are far from alone. A profile of Valve founder Gabe Newell published in Forbes earlier this year asserted that, in 2010, “unit sales of PC games via download outstripped sales of boxed games in stores for the first time”, according to research from NPD Group. With that startling – yet probably inevitable – factoid in mind, keep an eye out for part two of this article, where we’ll take a magnifying glass to the digital distribution side of the PC gaming industry. Death rattle not included.
GameStop, the world’s biggest game retailer, announced today it has begun working on a GameStop branded gaming tablet. And last week, the company said it had begun a closed beta test for its cloud-like online gaming and digital download service.
The moves show that the world’s biggest game retailer is getting ready for an era in which digital gaming is just as important as buying packaged disks in retail stores.
GameStop president Tony Bartel told GI.biz that the tablet will use Google’s Android operating system and can come with games preloaded on it. Bartel said that gamers in Dallas, Texas, started using the hardware a couple of weeks ago. GameStop plans to stream games to the new device with the technology it acquired with the purchase of Spawn Labs. GameStop will also release a dedicated controller for the device.
And last week, Bartel said in a speech that the game streaming service is in a closed beta test. With one part of the streaming service (pictured above), you can instantly play demos of games on GameStop’s web site, without downloading anything. If you buy the game, it begins to download to your PC. While you wait, you can continue with the instant-play, and your progress is saved to the final game upon completion of the download. That kind of service is dubbed progressive download. Once the download is complete, the game executes on the user’s own machine.
Bartel talked about the service in a demo at the Cloud Gaming USA conference in San Jose, Calif. It’s a “try before you buy” service where you can see what the game looks and plays like before you buy it. Gamers can play for something like 15 minutes.
By contrast, rivals such as OnLive and Gaikai offer game streaming where the game is executed in servers in web-connected data centers, or the cloud. Video of the game is then sent to users, who can log in from anywhere and play high-end games on low-end computers. Bartel said that you can also use the GameStop service for “streaming to a new screen.”
GameStop picked up its digital distribution technology when it acquired game-streaming service Spawn Labs and online storefront Impulse earlier this year. A full rollout of the GameStop service is not expected until next year.
At Cloud Gaming USA, Bartel said his company is focused primarily on immersive games, not casual or simple games. These games are console-like in quality. The technology is very demanding and latency (interaction speed) is critical. And on average, people play these games for a longer time. In the past, there were significant technological barriers to this kind of immersive game being delivered via the cloud. Those included bandwidth, latency and the ability to scale it to millions of players. There were also costs to adapting games, business model questions, and conflicts with platform companies, Bartel said.
Bartel said that NPD has noted a big gap in awareness and usage on cloud services. Only 22 percent of Americans know what “cloud computing” means. They’re also wary because of scandals like the PlayStation Network outage. IPSOS reported that 40 percent of people do not believe that files stored in the cloud are as secure as private files stored on their own computers.
But gamers do want to try before they buy, try games when they’re thinking about them, and avoid large downloads, according to GameStop’s own research. Bartel said that cloud gaming is a way to enhance the overall consumer experience and is “one of many new gaming options we are pursuing.”
GameStop bought online indie game portal Kongregate, and Bartel said that digital content businesses are on track to generate hundreds of millions of dollars in revenues for GameStop in 2012. That’s still a small percentage of its overall revenue, but it has a very fast growth rate. One of the initiatives producing results on this front is the ability for users to buy digital download content inside stores. Bartel positioned the cloud as a way to extend the console experience, rather than replace it.
You can, for instance, use multiple devices to access your games when you are away from home. As demoed before with the Spawn Labs technology, you can “sling” games. That is, you can log into the Power Up Rewards account on GameStop and play games that you have previously played.
Bartel said the company has the advantage of knowing the playing tastes of 13 million gamers through its rewards program, which tracks 150 million games played by the members. It can thus recommend games that they are more likely to buy.
Android games may be coming to your living room soon. Exent is announcing today that it will provide its games-on-demand service on Android set-top boxes made by Europe’s Vestel.
You could call it Google’s backdoor assault on the game console business. Now, the game consoles will get a run for their money from the casual games available on Exent’s GameTanium subscription service. It is one more sign that the barriers between different sectors of the games business are being knocked down. In a similar type of announcement, the retail chain GameStop said it would carry iPhones and iPads alongside portable gaming gear in its stores. If GameTanium is successful, the result could be disruption, or at least an erosion, of the traditional game console business, and games could spread to still another platform.
Under the deal, Exent’s GameTanium game service will be available under an all-you-can-eat subscription service on TVs powered by Android-based Vestel Smart set-top boxes. The games will be optimized to run on a high-definition screen, but players will be able to control them through the touchscreens on their Android phones, said Zvi Levgoren, chief executive of New York-based Exent, in an interview.
“The point is to let consumers play wherever they want to be entertained,” Levgoren said. “This is the next big domain for gaming entertainment.”
Back in July, Exent launched its mobile game subscription service on Android. Now Exent’s GameTanium service is available on PCs, mobile devices, and TVs. Vestel is one of the world’s largest makers of set-boxes and TVs. Its smart TV boxes are now migrating from Linux to Android-based operating systems, paving the way for games that can run on multiple platforms.
In the past, it was hard to adapt a whole library of games to run on TVs. That’s what TransGaming is doing with its library of casual games for its GameTree TV service, which runs on Intel-based set-top boxes. But the GameTanium games can run on Android smartphones or tablets as well as TVs. If you want to perform an action in a TV game, you can swipe your finger across your Android device’s touchscreen.
“We can take advantage of both the accelerometer and the touchscreen as controls for Android games,” Levgoren said. “It is a very intuitive user experience that maintains the original game play and control.”
Hakan Kutlu, deputy general manager for marketing at Vestel, said that consumers want games alongside video and music services on their TVs. Exent makes its GameTanium service available for partners to offer as a white-label service, where the partner can put their own brand name on the service. That’s what Vestel will do.
GameTanium is demonstrating the service on TVs at the IBC conference in Amsterdam. But the subscription service will be available sometime later for consumers.Levgoren said the company is demonstrating 16 games today and it could have 50 to 100 by launch.
Besides TransGaming, Exent will have other rivals. OnLive has cut deals with TV makers such as Vizio, which will integrate the OnLive games-on-demand service directly into its upcoming TV sets. Other rivals include Valve’s Steam, Big Fish Games, Oberon, Wild Tangent, and Real Networks’ GameHouse. Exent has 170 employees and it was founded in 1992.
Exent’s investors include Intel Capital, Cisco, Time Warner and Venture Capital Firms, such as NEA, Concord Ventures, Magma Venture Partners and Avansis Ventures.