Vision - March 2009 - (Page 28) CEAnewsline in the ce spotlight The Multi-Billion Dollar Game Industry I n case you haven’t noticed revolutionary change is sweeping through the media landscape. The aristocracy of old media— the media moguls, studio heads and record label executives—have seen their power and influence challenged by wiz kids in their dorm rooms and a new class of savvy executives and entrepreneurs focused on games and online entertainment. While revenues from DVD sales continued to fall in 2008 (a year that saw the entire home video market decline in value by 5.5 percent to $22.4 billion according to data from market research firm Digital Entertainment Group), U.S. video game sales rose to $21.33 billion, bolstered by a record-breaking $5 billion month of December (according to sales data compiled by market research firm NPD Group). At Digital Media Wire’s upcoming LA Games Conference (www.lagamesconference.com), presented in association with CEA, hundreds of top media and games executives will gather to take a closer look at the sometimes troubled relationship between “old media” and “new media,” and will examine how these two groups can best work together to create compelling and profitable entertainment enterprises for the future. Here are five trends that will be front and center at the event: 1. The Battle for the Digital Living Room: When it comes to hardware, the battle for the digital living room is expected to shift into high gear in 2009. Game hardware sales for 2008 came in at $7.81 billion, an 11 percent increase from 2007 and accessories rose 14 percent to $2.57 billion. At the same time, the CE industry saw Blu-ray spending increase threefold, to $750 million, in the wake of Sony Blu-ray’s victory in the format war. Now the question on many people’s minds is, with consumers clearly spending more money on game hardware, will they use their Xbox or PS3 to gain access to other forms of entertainment than games? Microsoft is placing a big bet they will. Xbox Live now lets you stream movies from Netflix directly to your TV and chat with your friends, putting Microsoft in direct competition with cable companies and telco providers. 2. Hollywood and Games: As games companies have grown more powerful, they have started to question the value of paying high license fees to Hollywood to use characters and themes from popular movies and music to develop video games. Instead, they are creating their own narratives like the Xbox game Halo or Grand Theft Auto IV and even starting their own record labels like Electronic Arts has done with its ArtWerk Music Group. The studios are responding by starting their own games divisions and even looking at making their movies and TV series seem more like video games like The Dark Knight. But, is there enough money to go around? These issues will be discussed during a special “Game Convergence” track. 3. Madison Avenue and Games: As games have grown in popularity, Madison Avenue’s fascination with the industry has increased, spurring new opportunities for advertisers and brands to reach consumers through games, virtual worlds and social networks. Even Barack Obama used advertising in video games as one of the ways he reached out to Americans in what was considered by many to be an almost flawless presidential campaign. What advertising campaigns work in games and online communities? How are advertising executives working with game developers? What are the opportunities and challenges in incorporating advertising and brands into games and online communities? On the other side of the coin, how can game companies generate revenue and free mass advertising by incorporating digital game content into brand advertising? These are central issues as marketers begin to shift marketing budgets from traditional media to new media. 4. Power to the Third Screen: Another interesting development is mobile games, already a multi-million dollar industry. While there are more cell phones in the world than there are televisions and game consoles combined, mobile games have long been considered the ugly step- 28 March/April 2009 www.ce.org http://www.lagamesconference.com http://www.lagamesconference.com http://www.ce.org
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