CES: Game Industry Perspectives For 2012The stages have been struck, the tents folded and put away, the exhibits and oddities have been packaged and shipped, and the great halls of the Las Vegas Convention Center are empty and echoing. The show has ended, but the impacts will be felt throughout the gaming industry in 2012. Game accessories were all over the show: Wireless controllers, tablet controllers, specialty controllers, mice, keyboards. They mattered little to the giants whose feet were in the halls, but who were straining against each other far overhead: Microsoft, Sony, Google, Apple, Nvidia, Intel. What will happen in the gaming industry in 2012, based on information from CES? Here are some thoughts.
Smartphones and Tablets
Apple's presence loomed large at CES even though the company had no official booth. More than half of one hall was taken up by iPhone and iPad accessories. Occasionally you'd see a random Android phone case, but everywhere you could see things designed for the iPhone and the iPad. The relative standardization of the iPhone form factor and connections have made it easy for accessory makers, so the iPhone/iPad ecosystem looks stronger than ever. It's part of the advantage Apple maintains over Android; all those add-ons you can get for your iPhone or iPad, if you need them, are a powerful selling point.
Android phones are everywhere, in a dazzling variety of features and sizes. That's part of the problem, though, for Android. There's so much variation in the operating systems (half a dozen different versions all in use in significant numbers), processors, graphics processors, screen sizes, screen resolutions, and other details, that creating games for the platform requires testing on dozens of configurations - which is why game developers still make more money from iOS than Android, even though new Android activations are outpacing iOS activations by a substantial percentage. Google is still working to reduce fragmentation in the Android world; perhaps 2012 will show some progress.
Shadowgun, Tegra 3 game for Android, projected to an HDTV screen at CES.
Meanwhile, RIM is running on empty; the Blackberry's time has passed. There was no clearer indicator of this than a stroll by the RIM booth, where you could have fired a cannon and not hit any attendees, whereas the rest of the show was so packed it was hard to move sometimes.
Windows Phone 7 looked good at the Microsoft booth, and Nokia's new phones running WP7 also looked slick. Yet now word comes that Nokia's Lumia phones have already had their price slashed (from $50 with 2 year contract to $0) because they just weren't moving, after only a week on the market. It's still an open question whether Microsoft and Nokia can create a viable third player in the smartphone market. Without some compelling advantage (Price? Some new app or hardware feature no one else has? Xbox Live integration?) it's going to be very difficult for them.
The view from CES is that smartphones and tablets will continue to grow strongly, and the free-to-play business model will dominate and influence other sectors of the gaming industry even more strongly. Smartphones already account for the majority of handheld gaming revenue, and regardless of how well the 3DS and the PS Vita do that will only be more true in 2012 and beyond. Publishers will commit even more resources to smartphone and tablet game development, perhaps at the expense of other types of game development.
"2012 is the year that streaming games will begin to significantly impact the gaming industry."
Streaming Games
2012 is the year that streaming games will begin to significantly impact the gaming industry. Two big announcements made this clear: OnLive being built into Google TV, and Gaikai being built into new LG televisions. We'll probably see millions of Google TVs adopted during the year, and probably LG will sell millions of TVs (and other TV makers will start including Gaikai in their sets). All the big TV set manufacturers are putting Smart TVs at the forefront of their new product development; most new sets will include some degree of connectivity. This means significant numbers of people will be exposed to a wider variety of gaming, with a variety of business models making it easy to try out games. More games getting to more people means good news for the gaming industry, for the most part.
It's even good news for consoles, if it means customers may have more ways to experience console games. Could we see OnLive or Gaikai coming out of consoles instead of directly from TVs or additional boxes? It would be a bold move, but it's a way for a console manufacturer to get ahead of a trend rather than get steamrollered by it. Look for more high-profile streaming announcements in 2012.
Next-Gen Consoles
The Wii U made a tentative appearance, behind closed doors to a selected few. Strangely, Nintendo showed no new features over what had been seen at E3. No new information about the Wii U at all. This seems strange for a very important device for Nintendo that's set to launch in the latter half of 2012. Isn't it time to start building excitement by releasing at least a few tidbits of information? Or is the development still so uncertain about features, timing, and pricing that Nintendo doesn't want to commit just yet? Perhaps Nintendo doesn't want to say too much in case that causes Microsoft or Sony to jump in sooner, lulling them into a false sense of security... “Your current consoles are just fine, guys, nothing to worry about, go back to sleep...”
Microsoft's CES booth.
The next generation of consoles continues to be a subject of much speculation. Sony stated positively that no PS4 would be at E3. One knowledgeable insider claimed that one of the big 3 would back out of doing a next-generation console entirely, and that would be the big news at E3. Is the Wii U really a “next-generation” compared to the Xbox 360 and the PS3, or is it just a next generation for Nintendo? Without specs it's really hard to say. Since Nintendo has not been boasting about how the raw graphics horsepower of the Wii U would crush the pathetic graphics of the Xbox 360 and the PS3, it's likely that the Wii U will be roughly comparable or maybe a little bit ahead of Microsoft and Sony. A definitive advantage would surely have been touted by Nintendo already.
The next generation of consoles is going to be affected by multiple outside factors: Smart TVs, Google TV, Apple TV/iTV, streaming games, free-to-play, smartphone and tablet gaming. These factors, shown at CES to be increasing in importance and reach, are going to impact the timing, the pricing and the feature sets of next-gen consoles. Microsoft and Sony have to decide, and fairly soon, if they are going to make any announcements at E3 about future devices, or even if they plan to start leaking information at E3. Perhaps Sony and Microsoft are waiting to see if more information about trends helps them decide which choices to make; but they'd better choose quickly, and well.
Conclusions
The view from CES is that 2012 will continue to be a year of upheaval in the game industry. 2011 proved to be the third straight year of retail sales declines (8% this time!), while digital distribution, mobile, and social games continue to grow at double-digit rates. Streaming games are poised to enter millions of households, while Nintendo will start shipping the Wii U. Brace yourself for more changes ahead.
