Data Filter

Electronic Gaming Business, Oct 6, 2004

News-o-Matic

Whassup: In 2003, venture capitalists made six investments totaling $50 million in mobile game companies, but in Q2 of 2004 alone five investments totaled $86 million, according to VentureOne. Jamdat's IPO netted it $86 million, Sorrent recently raised $20 million, and Mforma has raised $44 million, reports Silicon Valley Business Journal.

So What?: Investors like the mobile model for its low development costs and ability to amortize risk over a large slate of titles (pretty much exactly the opposite of the model for many console game makers). With so much cash gushing into this relatively infantile space, we may well see a lot of acquisitions and consolidations, a rush to become a dominant force unusually early in the niche's growth cycle.

Whassup: While it is not news that development costs for next-gen machines will rise substantially, the reality of it is starting to worry investors. PiperJaffrey says publisher estimates are all over the map (30% to 300% more than current titles) and settles on a 50% to 70% figure itself. While most AAA titles are developed expensively for PS2 and ported to Xbox for a fraction of the cost, an early Xbox launch could force publishers to have to develop substantially different versions for each at higher overall costs. So What?: Investors are getting concerned that game companies cannot project very effectively over the next few years, in part because the transition period this time may be less disastrous sales-wise but much more damaging on the R&D end. It gets worse. Developers are saying that top PSP titles will probably exceed $2 million budgets. How much of an installed base will the PSP need to achieve to make that model work for publishers? And at $300 each?

Whassup: Singapore continues its full court press to become a hub of digital distribution for U.S. game companies entering the Asian market. It launched the Games Exchange Alliance, a 12-member consortium of game service providers who will help game companies get their properties into the many national and regional markets in Southeast Asia. Firms involved include Internet infrastructure and online payment services.

So What?: For U.S. companies looking to grow revenues during the transition, digital distribution into the Internet Cafe market in Asia remains attractive, especially as China ramps up to be a massive new presence here. Both Vivendi and EIDOS are already experimenting with Noribox distribution system out of Singapore. Whether western game play and MMOGs really can work in this regions is a big gamble, but the market is large enough to be a very lucrative market for casual games, since this type of more abstract design is less culturespecific than the mainstream titles.

Whassup: MTV 2 launched its Game Mods series in mid-September, airing weekly on Saturdays at 9:30 p.m. EST. The show uses game engines and characters in music videos put to familiar tunes. Big Bear Entertainment is the development house behind the idea, and the first episode included videos using the Fight Club, Bloodrayne2, Sims 2 and Tribes: Vengeance engines. So What?: Aside from The Sims 2 engine recreating the Stacey's Mom video (clever for all of three minutes), this first set of game mods proves yet again that we aren't even close to repurposing the gaming gestalt effectively into other media. Rather than depicting a band playing a hit song, these game engines would do both the music and the games more justice if they were used to create dramatic scenes and tension. As it is, Game Mods is a novelty that hasn't shown why we would want music videos made from game engines.

Whassup: Those GBA cartoons-on-a-cartridge paid off for Majesco, accounting 79% of its unit sales last quarter, which rocketed net revenues to $33.9 million from $4 million year ago quarter and gross profit to $7.1 million, up from $1.5 million. The cartoon videos retail for $19.95 and include recycled TV episodes of SpongeBob Squarepants, Jimmy Neutron and others. This month, several vendors launched handheld Portable Media Center players, which target adults with a Microsoft-powered A/V unit priced at $500.

So What?: Never underestimate a child's willingness to watch the same cartoon forever, but keep in mind that adults don't sit in the back seat with nothing better to do. Other new data suggests the burgeoning portable video market will not register as well with adults. Lyra Research found that 53% of adult mobile phone users are "not at all" or "not very" interested in watching TV or videos on mobile devices. Only 9% are "very interested." Sony is hoping that portable video viewing will be a key driver of PSP interest, but videos aren't MP3s. You can't watch them while driving or walking down the street.

Whassup: Vote now, vote often. Voting for inclusion in the San Francisco game Walk of Game (www.walkofgame.com) has opened at the site. The stars will be embedded in sidewalk slabs at the Metreon building in downtown SF. So What?: Lifetime Achievement nominees include Nolan Bushnell and Shigeru Miyamoto, while games/character nominees include everything from Star Wars to Zelda and even Yorda of cult classic Ico. Voting continues through Oct. 31.