International CES inspires the same feelings you’ll hear when cocktail party chatter turns to television. There are the devotees who can’t imagine life without it, others publicly declare they’ll have nothing to do with it, but the 99 percenters get value by zeroing in on what’s important to them while shrugging off the hype at both extremes. It’s in that spirit that Digital Media Wire is producing the first dedicated Games Summit at CES on January 11.
No company involved with entertainment can afford to ignore gaming. According to the Entertainment Software Association, consumers spent $25.1 billion on video games, hardware, and accessories in 2010. The opportunities extend far beyond that, however – anyone who controls any kind of intellectual property or who wants to reach today’s consumers needs to look at the opportunities games offer. That includes publishers, developers, advertising agencies, investment firms, social networking professionals, all kinds of people in the electronics and telecoms industries, mobile experts and more.
AdAge noted that last year Coca-Cola held its global marketing meeting at CES, the first time it wasn’t in the company’s Atlanta home. Procter & Gamble, Unilever and Citibank are also among the non-techies attending in force. Michael Learmonth wrote, “What put CES on the advertising map? Two megatrends: Technology focused on ad-supported models, and mass marketers realized that reaching the next generation means understanding the technology that is altering the way they shop, communicate, consume media and experience brands.”
As all that indicates, it is essential that the entertainment industry expands its definitions. At its most basic level, there are differences in perception regarding what role consumer electronics play. Michael Pachter, research analyst at Wedbush Securities, noted how indifferent the games press was regarding the extensive movie and television content available on Xbox Live, and how it enabled searching and selecting from program guide using the Kinect peripheral instead of a remote control. “That box is in tens of millions of households, it’s just that gamers think of the box as being a game box,” he said.
That kind of limited thinking extends to mobile devices as well. He compares a smartphone in the hands of a 50-year-old businessman to one in the hands of a teenager. “The businessman thinks of it as a phone, but the girl thinks of it as her GPS device, her Internet device, her texting device – she uses it as a phone, but she also thinks of it as being capabile of doing a lot more,” Pachter said.
Some of the luster has rubbed off the gaming sector in the past few years, and it’s now lagging behind the rest of the entertainment industry. But part of that is just because the runaway success of Guitar Hero and Nintendo’s Wii created a bump in the curve, according to Pachter. “We were up an average of 9 percent for the 13-year period 1995 to 2008, but the last two years were up 27 to 32 percent,” he said. “We then saw a decline to 10 percent in 2009, 5 percent in 2010, and it looks like we’re going to end up down about 4 percent [for 2011]. All that taken together, we’ve normalized, we’re getting ready to start growing again, the publishers have all these new areas to exploit, and I think that you’re going to see the industry positioned for great growth the next couple of years.”
Another factor is that the games business has fragmented from being purely a packaged goods business into being that plus social media, mobile, online games, multiplayer console games, free-to-play massively multiplayer games and more. People are spending more time playing games than ever before, but they’re paying less per hour. That represents a huge opportunity for anyone who can figure out how to improve monetization.
Additoinal potential is inherent in the trend for consumer’s demanding control over their entertainment experiences, which affects gaming just as much as it does movies, television and music. Consumers want their their choice of entertainment wherever they are, at any time, and on any device, and Pachter said the companies who can respond to this new reality are the ones that are going to thrive. Smartphones are the technological equal to many PCs, after all, so it’s only their screen size that limits what game developers can do.
More than 20 million people play Activision’s Call of Duty online at least once a month. If your business can afford to ignore that many consumers, then it should go ahead and skip CES.
The Consumer Electronics Association said that “the Games Summit at CES, produced by Digital Media Wire, will reveal the trends and drivers that make gaming such a hot CE category.” The CEA is hosting the podcast of Michael Pachter’s interview here.