Dec. 5, 2008 SDF Games 1

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On Friday December5, 2008 at the Microsoft in Mountain View SDForum hosted “Business of New Media III Gaming: The New Frontier”.

The opening keynote featured Bernie Stolar interviewed by Mary Jane Irwin of Forbes. As the number of channels, formats and platforms multiplies, content is still king. Content is what drives traffic and customers. Stolar sees too many games that are low quality and no fun. There is no concrete rating standards that customers can rely on. To get through hard times he recommends keeping low overhead and headcount and narrow down to develop games that are easy to learn and access. Micro-transactions may drive more revenue than advertising. Think about online games that have broader appeal outside of young males. Limit your audience and you limit your income. After the downturn he thinks there will be fewer developers and retailers.The first panel discussed “Mobile Gaming: Challenges and Opportunities”. Mark Duncan of Askmar moderated Guy Ben-Artzi of Mytopia, Keith Lee of Booyah and Jeff Weiser of SGN. Developing a Java games for phones is hard when they must run on different phones and carriers. If you can get a game out there, getting a user to buy it can take in significant revenue. Virtual world games where people buy virtual goods make money. Advertising has limited returns in social gaming. A hybrid between user pay and advertising may be more stable. Apple’s iPhone AppStore has a great example of social mobile gaming. Facebook Connect allows users to share game experiences on their iPhone with others. The haptic and motion sensing features like tilt have great potential for gaming.

The second keynote speaker was Michael Zyda of USC Game Pipe Laboratory. Zyda developed a multidisciplinary program to teach the next generation of game developers. Artists, designers, scientists and engineers work together to create some of the weirdest games you have ever seen, including one where pigeons get points when they poop on people. Game companies and movie studios now hire their graduates and pay them six figures.

The second panel discussed “The Business of Gaming: How to make money in the game?” Lisa Rutherford of Twofish moderated Jonathan Epstein of Double Fusion, Hill Ferguson of Echovox, Dan Kolkowitz of Playspan, and Anu Shukla of Offerpal Media. They ways to make money are direct purchase, advertising or subscription. Hybrid revenue models work best. Payment through mobile carriers or debit cards for casual gamers is quick and easy. There is a concern by parents that children will run up quite a monthly bill playing online mobile games. The solution is to put spending limits on juvenile accounts of hard-core gamers. Social gaming appeals to more people but does have risks. The most disturbing story was Facebook’s Friends For Sale where Saudi Arabians wanted to pay $30,000 to buy the friends who were attractive women.

The third panel discussed “What will Gaming Look Like in Five years?” Dan Offner of Nixon Peabody moderated Ian Atkinson of THQ, Lars Buttler of Trion World Network, Anne-Marie Roussel of Microsoft and Dan Winters of Activision. Packaged and easily pirated games will be replaced with subscribers building value in the game communities as they join. The future is online mobile social gaming with micropayments or subscriptions. Game companies have to master building communities.

The fourth panel discussed “Next Generation Gaming- what’s coming up?” Michael Kim of Rustic Canyon moderated Lee Crawford of Twofish, Steve Hoffman of Rocketon, Sean Ryan of Meez, Shanna Tellerman of Wildpockets, and David Wallerstein of Tencent. Games are rule-based interaction to achieve a goal resulting in a fun experience. Expect major growth in status-based games in China. Virtual goods may generate more revenue than buying the game.

The fifth panel discussed “The Venture Landscape: Who, What and Why?” David Anderson of Nixon Peabody moderated Tim Chang of Norwest Venture Partners, Jeff Karras of Levensohn Venture Partners, Han Kim of Altos Venture Partners, Rich Wong of Accel and Richard Yen of Saban Ventures. The downturn has focused investment on seeking more than one revenue stream or exits. Flexible strategies to profitability will sustain game companies. The good news is that they see the global market for games growing over time.

The sixth panel discussed “Casual Gaming” in Today’s Market”. The panelists were Jonathan Flesher of Electronic Arts, Michaels Powers of My MiniLife, Paul Rowland of Starfever Agency, Ranah Edelin of Raptr.com. There will still be hardcore gamers but there is a growing mass casual market. It will easier to join social games and drop in and out of these environments. Unlike core gamers who may tire of a narrowly focused game after a week, social gamers can play for years. Casual games offer a broader longer experience and more opportunity for revenue. Sharing a high score with friends can make them compete with you adding to more game play and revenue.

Lars Buttler of Trion World Network made the closing remarks. You cannot pirate a social game. You cannot take the value added by a community of users. Winning the players and not the game will be the goal.

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Copyright 2008 DJ Cline All rights reserved.