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Rosy ’12 Outlook for Game Industry

Posted by Neal Leavitt on February 29th, 2012 at 5:38 pm

With the Game Developers Conference in San Francisco just looming over the horizon, what’s on tap for the industry? Any integral trends/issues that might be game changers?

For starters, what you don’t readily see is vitally important. UK-based, publicly-held Imagination Technologies creates and licenses multimedia IP cores for graphics, video, and display processing; licensees include many leading semiconductor and consumer electronics companies.

According to VP-Marketing Tony King-Smith, a key issue is improving texture compression in order to get the best quality game with the fastest download times.

“Increasingly in software downloads the total file size is dominated by texture data – indeed, up to 70% or more of a top game title may be textures,” says King-Smith. “This has had a massive impact on everything from app store download and update times through to device main memory usage.”

The most notable trend we’ll see this year is the shift to mobile games – from independent developers to traditional publishers, most companies are now directing their efforts around mobile strategies (smartphones, according to IndustryGamers, already comprise the majority of handheld gaming revenue).

Wanda Meloni, who heads up Encinitas, CA-based market research firm M2 Research, predicts the mobile games market will exceed $6 billion this year.

“With mobile comes more social games and more companies are starting to target core gamers,” said Meloni. “This in turn will lead to higher quality graphics in mobile and social games which we believe will start to play a defining factor with consumers.”

Ultimately, noted Meloni, as competition heats up in the mobile games space, more companies will be looking to differentiate around feature sets such as enhanced graphics quality, deeper game play, and engaging storytelling.

“We are still just at the beginning of the growth curve for mobile games,” said Meloni.

Games on the iOS and Android ecosystems will continue to grow in terms of development support, user base and revenue. And the industry is clearly developing different ways of playing and interacting with games and media.

“Smartphones and tablets are offering ways for smaller and indie developers to get noticed and sell their game to potentially millions without needing a huge budget or marketing campaign,” said Kristina Kozlova, a marketing manager at Altabel Group, a Vilnius, Lithuania-based software development/consulting company.

“We’ll also continue to see voice integration as well as motion controls make a big push in 2012,” said Kozlova.

Ted Pollak, a senior gaming analyst with Jon Peddie Research, a Tiburon, CA firm that provides consulting/market forecasting services, added that the handheld market may lose some casual consumers to smartphones and tablets, but the 3DS and PSVita control dynamics “blow away the competition in most cases, and playing handhelds doesn’t decimate your smartphone battery. Gamers get this – build them and they will buy them – tens of millions of them.”

A few more trends worth mentioning.

Denuo, a digital marketing shop, predicts that this year we’ll see a game come close to breaking the $1 billion sales mark in its first week.

“We’ll also see huge growth in the approachable games category as well. A social game will break the 250 million player mark thanks to being available on multiple platforms in addition to Facebook. Across all categories of games, our minds will be blown by the number of gamers these big titles are able to acquire.”

Denuo also thinks we’ll see more downloadable content releases to keep gamers engaged.

“There will be more collaborative development of game play and associated assets. Developers will work alongside consumers to produce game titles and create a vested sense of commitment with their players.”

Streaming games will make an impact in 2012 too. Last month at CES, it was announced that Gaikai is being built into new LG televisions and OnLive is being built into Google TV.

Steve Peterson reported in IndustryGamers that every big TV set manufacturer will include some degree of connectivity in most new sets.

“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,” said Peterson. “More games getting to more people means good news for the gaming industry.”

I could prattle on as all of the aforementioned is only the tip of the proverbial iceberg, but you get the gist. There will be some upheaval, of course, but the industry should continue to post healthy double-digit growth rates for the foreseeable future.

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