So this one is THE most restless industry, period.

It also incites sweet nostalgia and futuristic fascination. Our old 8-bit consoles with Mario, Road Fighter, Pacman, Contra, Spartan etc. Not saying that 8-bit games were the only primitive forms of such entertainment. There were older screen products and also those hand-held Tetris and other game devices. Speaking of hand-held, some of us would also remember those little liquid-filled pads with push-buttons to force hoops/rings to stack up around the sticks (Yeah I'm coming to terms with pushing 30). So moving on, later came the Segas, the PC Games, the Playstations and the Xboxes. Much of the story till late had been that of incremental innovation and inevitable evolution along the lines of technological progress. As processing capabilities went about following Moore's law, a game of one-upsmanship reigned supreme amongst the players in the alley. Breakaway trends finally emerged with Nintendo Wii's motion sensing controls and Xbox Kinect's next-generation console-free environment. And that was just the beginning. The plot thickens by the day and the rules are changing, fast. The alley is joining the highway.

The numbers today and near-future projections for the Gaming industry look like in the illustration here. The Hardware segment mainly consists of console boxes, the Software mainly of console and mobile content, and Online mainly of web-based gaming (by independent publishers or console-enabled). So, nothing extraordinary about this picture, right? Well, let's start reading between the lines.

The rise of Free & Freemium models-

If you haven't taken the Free (ad-based) and Freemium (in-game purchases of virtual goods) business models seriously till date, these inforgraphics may spring up a surprise.
Add to this the power of social gaming and you've got yourself a money-making machine. Zynga, the game-developers behind Farmville, Cityville, Texas Hold'em Poker etc., nearly knocked over their 2010 annual earnings figure of US$ 850 Mn in this year's first 3 quarters itself with 80-100% YoY growth registered in each. Besides, the company is valued at about US$ 20 Bn.

Empowered Publishers-

The mobile platforms and the internet have given more power into the hands of game-developers and publishers who in the erstwhile set-up were dependent mainly on consoles to reach the customers. This has kindled ambitions and more and more independent publishers are coming to the fore. Doomsayers club all of this and argue that this is leading towards a race to zero-pricing, market conditions of supply outstripping the demand and eventually an industry crash reminiscent of the 80's. But pit these arguments against Zynga's success story and the changing order of the day in the field, and you'd be able to do the math.

Mobile and Cloud Gaming -

Infographic time again...
Just foreseeing these developments and backing up the foresight with effective targetting made some publishers overnight millionaires. The mobile gaming industry will have raked in a total of about US$ 8 Bn in this year and is expected to grow to US$ 11.4 Bn by 2014.
Cloud Technology had 'game-changer' written all over it right at conception. There have been a couple of problems with games on clouds though. The offline challenge comes from the Second-Hand games market flourishing under the patronage of brick-and-mortar retailers. There is value in it for the hardcore gamers and it's likely to stay its course. The other, more direct was the technical challenge of storage capacity of consoles. But with Cloud-based storage of in-game profiles (Xbox & PS3) and upcoming platform-independent streaming technologies (see http://www.onlive.co.uk/) being hailed as the future of cloud gaming, this new dimension has all but arrived.

Why the signs are ominous...

A recap would tell you that. If we look back at the illustration about industry numbers and growth, the online segment seems set to see a boom through independent developers and cloud technology. The hardware segment can see a major upset coming from the rise of cloud-assisted platform-independence. Imagine the time when heavy-content games can be streamed and played equally effectively on your tablets, PCs and consoles (may it be any). The traditional gatekeepers of gaming formats (Xbox, Playstation, Wii) that the publishers had to comply with would've grown weaker. Anyone with a manufacturing capacity (even though with very basic technological capabilities) can compete. So, the platform war moves elsewhere., specifically to the mobile-software sub-segment.
Apple, with its iPhone & iPad, seems to be the first name that comes to mind when we think about monetizable benefits of mobile platform dominance. Perhaps that was also the main reason why former Sony Playstation VP, Phil Harrison, said six months ago that in ten years, Apple will own the gaming industry. And there clearly have been signs of intent with Apple readying its token two cents for the console segment. Steve Jobs' demise aside, there seemingly is still one big spanner in those works and it is called Android. This one (a few months old) may illustrate what I mean..

Google has been strengthening its Gaming division and may have plans of levering Android's growing might with publishing and distributing its own content. As its history suggests, it is more than capable of giving the traditionalists a headache or two.

End-Game for the Big3?

Not quite, I would guess though. Nintendo through Wii and Xbox through Kinect have their own specialized interactive interfaces, something that is away from the regular fare and may not be directly threatened by platform-independence. (Nintendo, through its DS lines, also competes heavily in the handheld games market. Sony with PlayStationPro has a presence there too.)

Also, Playstation and Xbox (through Xbox 360 dashboard) have been repositioning themselves rather as Digital Convergence devices. So, all said and done, they may still have a viable excuse to enter the homes of the consumers and it's a case of further creative thinking from thereon.

So, it's clear that a lot would transpire in the next 5 to 10 years in this industry and we may very well see a New World Order. The current intruders may end up as forerunners or the incumbents may find a new equilibrium with the environment to retain their lead. To say that the industry picture shall remain static was, is and always will be a fool's bet. The offerings for the customers are going to get bigger and better, as they always have. With the magazine today for them being an iPad that doesn't work (http://www.youtube.com/watch?v=aXV-yaFmQNk), our future generations would grow up relishing these fruits of technology and innovation. We, as is clearly established now, would be the last generation that would be able to tell tales of how we found joy in simple, stupid things, (real games, park games, ancient video games) and then saw it all go down. :)

Posted 24th December 2011 on the blog 'Pregnancy of the mind - it has slept with so many thoughts'