LONDON GAMES CONFERENCE NEWS ROUND-UP
“Microtransactions are the next big thing in online gaming,” he said. Virtual item sales in free-to-play games are much better than subscriptions. Subscriptions, he said, cap total revenue by excluding those unwilling to commit to regular payments – whereas microtransactions are discretional. But the big challenge in that model is converting users from paying for the cheaper items and only spending $10 a month, to buying expensive items so they are spending around $100 a month. And he pointed out that although they are a growth area, online games are potentially just as risky as console games. He dismissed the notion that all the big established games publishers will successfully enter the online space. “Are online games really the future? In the traditional market there are still some big bets there. These companies are in real trouble in the future,” he said, singling out the upcoming Star Wars: The Old Republicfrom EA, BioWare and LucasArts. He branded it ‘the next big gamble’ and the perfect example of why the big-budget philosophy doesn’t match with the online world. Given the game’s purported $100m budget, “I don’t think BioWare or EA will be profitable with this game. Ever,” he told attendees. Contrast that with Zynga’s
Facebook game FarmVillewhich cost less than $100k to make, has 100m users, and generates $100m in revenue. That said, cheaper Facebook games “continue to lose players”, he said, describing the social network as too crowded a market, full of clones and cut-throat. “You have to spend a lot of money on advertising to get the users.” (Hubertz isn’t a fan of Facebook’s virtual currency Credits either. “If you have to pay 30 per cent of your revenue to Facebook you are in trouble – I don’t know anyone with margins that high,” he remarked.) But ultimately, his advocacy of low budget doesn’t mean low quality, he added: “It’s not about budget. You can make good games for up to $300,000.”
THE CHALLENGE AHEAD FOR THE TRADITIONAL MARKET
EA’s Ben Cousins (second from left) said format-holders must wise up to free-to-play gaming during a panel chaired by Phil Harrison (far right)
BUT WHILE the free-to-play and microtransaction model advocated by Hubertz is important to the games business’ future, what does it mean for those making games? That’s what Phil Harrison asked as chairman of his panel following the opening keynote.
“Many believe the long-term future of our industry is in hosted services in the cloud – a transition from the old economy of publishing and retail to the new economy of games as a service,” he said. “Once you go digital you don’t go back. But what does this mean for the creativity in the industry?” The best answers came from Ben
Cousins, head of EA’s Easy game studio, HQ’d out of DICE in Stockholm and responsible for the free-to-play variants of Battlefield. He said that today the industry has moved to the ‘TV and film’ model – and the ‘TV side’, online games, is
fast disrupting the habits of those who once only played the games equivalent of blockbuster movies. And while the $50bn triple-A business isn’t going away, it faces more shrinkage. Fellow panelist John Earner, GM at sister EA division Playfish remarked: “This is an ever changing business – you can’t fall asleep at the wheel.”
Both said that EA had been very forward-thinking about online, whereas other publishers, Cousins said “have been very slow”. However, the key question even
the likes of EA face is taking the potential energy in the switch from the console and retail business to the online one, and keeping consumers spending money. “At what point do the hardcore gamers switch over from spending $60
“
www.mcvuk.com
When will hardcore gamers switch from paying $60 a month on PS3 to spending that much a month on an online title?
Ben Cousins, EA Easy
November 5th 2010
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