Speaking at the NLGD Festival of Games in Utrecht, Netherlands, Sean Kauppinen said that industry analysts predict revenues for the global game business would reach $57 billion in 2009.
Providing what organizers called a global view of the games industry – from space – the founder of the International Digital Entertainment Agency said that this $57 billion number doesn’t take into account serious games or social games.
Kauppinen also stated that the big game publishers haven’t been signing as many large deals with independent developers, something he called a “short-sighted move” because it would leave a major hole in the publisher’s calendars, resulting in unforeseen cash-flow problems. It’s also led to the closure of companies like Factor 5.
“There’s an expected price cut on the PS3,” probably before the end of the summer. “That’s what everyone’s saying,” revealed Kauppinen. If those insider rumors are true, and Sony does make a change by September, he predicts that Microsoft will react in kind by lowering the price-point for their Xbox 360 within six months to a year.
Live, Network, Ware
Last year, Kauppinen had predicted
a glut of games for Xbox Live, the PlayStation Network, and WiiWare – all in development from independent studios, but without publishers or approval from Microsoft, Sony, or Nintendo.
He updated the audience, saying that if they’ve developed such titles it would take more time to get into the digital marketplace. “It might take a year, because they don’t have a slot for you.” He’s noticed that working with a third-party publisher can push things through a little bit faster.
Kauppinen says that social gaming is taking off – but there’s saturation with games about zombies, pirates, and ninjas. “I don’t know how many of these game requests I’ve turned down in the last year,” he says, going on to praise companies like Zynga and Playdom for creating deeper gasming experiences.
When looking at the iPhone market, Kauppinen noted it’s only 2% of the mobile market, “which is incredibly small.” The difference is that on this platform, “people buy things.”
But because of the low quality of many of the titles, and lack of quality control standards, consumers will become increasingly weary of trying and buying these titles. “We have a lot of low quality junk on this platform,” he warned.
“In the end, there needs to be some level of quality control. I think Apple will figure this out,” Kauppinen continued, detailing the history of Nintendo’s seal of approval, instituted when the NES faced a similar flood of shovelware. “If Apple had a program like that…they would start to gain the trust of consumers who are looking for guidance in a sea of confusion.”
“This is really the wild, wild, west,” he told an audience of developers, advising: “Do your land-grab now, because later it will get harder.”
Kauppinen concluded with some predictions about the future: that publishers would begin signing more and bigger deals by August, as games are shipped to retail for the holiday season.
Self-publishing is rising, he pointed out, as well as the film finance model. Kauppinen also said that a slimmer core team equals a lower burn-rate. “It’s bad when people lose their jobs. It’s good when people starting running their companies like a business.
But the biggest change to the business he sees is the way we pay for games. “My prediction is that time-based play, which is big in China, will become the model of the future.”