Game Industry Predictions for 2012 - Billy PidgeonThe New Year is almost upon us! As we gear up to celebrate the transition into 2012, we bring you the final installment in our Game Industry Predictions series. You can read our previous entries with other analysts by clicking the Predictions topic tag on the right rail. For this last entry in the series, we got the top five predictions from M2 Research analyst Billy Pidgeon.
Console Transition Arrives, Builds Slowly
The next generation of consoles begins to arrive in 2012. We know that Wii U will launch in 2012. Microsoft will announce a successor to Xbox 360 at E3 2012. Sony will not announce PS4 in 2012. Nintendo will see all Wii U shipments sell through, and Microsoft should see similar performance in 2013 with the next Xbox. Next generation, however, we won't see a "Wii effect" where uptake is aggressive with sustained momentum and production can't meet demand within a year. Production and uptake will be more restrained, resulting in slower penetration. Console vendors should seek higher attach rates to smaller bases in the early launch stage. This will require vendors to provide more quality first party titles for both current and next generation consoles than seen in previous console launches, to sustain software performance and usage in current generation while slowly building a quality generation base.
Dedicated Gaming Handhelds Cannot Be Replaced by Phones
Dedicated handhelds will sell strongly in 2012. Hardware sales of both Nintendo 3DS and Sony Playstation Vita will bring in big revenue for the industry next year, and uptake will be rapid relative to predecessors. There will be a good number of quality software titles for both systems. However, high performance retail sales of dedicated handheld hardware and software will likely fail to meet expectations, which are out of whack due to the continued false conflation of high quality and high value portable console games with the high quantity of cheap and free casual games downloaded to convergent mobile devices. Triple A games for 3DS and Vita are portable console experiences worth $40 to $60.
Powerful high efficiency processors are helping high end phones and tablets close the performance gap with PCs and consoles, but the App Store and the Android Market will not support the price points above $10 to $20 that triple A console quality games require to provide developers and publishers with a sustainable business. My next prediction reveals the sector most likely to be disrupted by mobile phones.
Social Gaming Goes Mobile, Threatens to Unfriend Facebook
Free-to-play mobile games will grow globally in 2012. Free-to-play casual games on mobile networks, a business model created and refined in Japan, will begin to show significant impact next year not only in other countries throughout Asia, but also in Europe and in the Americas. Zynga, EA, Ubisoft and other large publishers will continue to perform strongly in the free-to-play casual social network (Facebook) games sector next year, but success on Facebook will not directly transfer to more narrowly defined social networks dedicated to gaming on mobile. By the end of 2012, influential Facebook games publishers will be worried about cannibalization by mobile social games, for good reason.
Indie Games Continue to Shake Things Up
Indie games will grow in influence, reach and sales performance in 2012. Among the outstanding titles of 2011 were quirky games flouting the follow-the-leaders risk-averse design strategy indigenous to large publishers. Games such as Mojang's Minecraft and Supergiant Games' Bastion, through a combination of quality, value pricing and the convenience of digital distribution, had retail impact out of proportion to development and marketing budgets. Other indie games such as Playbrain's Sideway: New York, Trendy Entertainment's Dungeon Defenders, Xona's Score Rush, Playdead's Limbo, Pocketwatch Games' Monaco and Frozenbyte's Trine 2 may not have sold millions of units, but defied the conventional wisdom that games must be big in scope and budget to glean high ranks from critics and gamers.
That backlash has followed the rise of the indie games sector as wags attempt to discredit the biggest indie games as "not really indie" should come as no surprise to followers of the indie music and film movements. The criticism holds some merit, as large publishers continue to acquire, emulate and fund small, creative studios earlier and more heavily to get in on the "indie" action. Indie games will now define a genre, as in music and film, and we'll need a new term to describe games made by micro-developers. In 2012, there will be more indie games in the top downloadable games list, indie games will represent a larger portion of casual games, and at least one indie game will be prominently covered in the mainstream media.
PC Gaming, Already Huge, Grows Bigger
In 2012, PC games will continue to show strong gains, both in revenue and in share of time spent gaming due to multiple factors in play. One major factor contributing to more PC gaming is the winding down of this console generation, which is now in the back half of its lifecycle. PC games look as good or better than console games, and provide the online multiplayer action most hardcore game fans crave and AAA PC games like Bethesda's Skyrim also satisfy single player gaming fans. Blizzard's Diablo III will scratch both itches. Digital distribution methods are following Steam's lead by rewarding rather than penalizing consumers. Massively multiplayer games are growing as a category, with Trion's Rift and EA's Star Wars: The Old Republic leading.
Business models are more flexible and innovative, with "pay what you want" gaining traction as well as hybrid free-to-play, subscription, and transaction models that match the diverse needs of larger consumer bases. PC games span a broad range of formats from AAA hardcore titles to indie games and casual games and leverage not only the ubiquity of the PC platform, but also translate well onto the growing tablet platform. PC gaming also matters in emerging markets where consoles will never gain a significant foothold due to pricing and piracy issues.
PC also provides a leading platform for cloud-based gaming and for quality Web-based gaming. Flash has provided a rich albeit somewhat flawed medium for games, and HTML5 promises even higher quality and likely more secure browser-based gaming. Outside of cloud-based gaming, Chrome is currently the top performer as a Web browser platform, as evidenced by the recent launch of Bastion and other relatively high end games in the Chrome Web Store.
Also in 2012...
- Dance and exercise games will continue to sell, extending the trend of motion-controlled gaming.
- Starhawk will be a critically acclaimed system seller for Sony PS3.
- Paid downloadable games for consoles and dedicated handhelds will bring in over ten billion in revenue in 2012.
- Android games will outsell iOS games.
- Xbox Live on Microsoft Phone 7 will raise the bar for mobile games.
