Ken’s Blog

Not surprisingly, someone else has decided to throw their hat into the hosted gaming service arena along side OnLive’s. Gamasutra’s reporting that said competitor’s got a name, Gaikai. Better still, David Perry, the person behind Gaikai, is boasting that his service doesn’t require all the proprietary crap OnLive’s service has.

At least that means there’s going to be some competition in this market, which I love. Now, OnLive’s got a reason to continue to improve the service (though I suspect they’ll spend more time and effort on landing publishers before Gaikai does rather than spend on R&D).

I think Gaikai might be better positioned, though, since I think they’ll make a killing in Korea, China and Japan. A new PC used to be (and probably still is) the equivalent of a year’s salary in Korea…thus the reason LAN centers are the hub of gaming activity there. With this, they could shell out for an older PC and still keep up with the newer requirements of modern games…or better yet, play the games on their smartphones which I expect the Japanese to be doing already.

The bigger question will be if console makers will give in to these services. It’ll hurt their console sales. Though their business model’s all about game sales they’re still manufacturing those consoles and still measure penetration based on sales of those consoles. Besides, Microsoft and Sony both want to own that last leg (from the ISP to your home)  since it’s the most important leg when it comes to exposure and services. If Sony can advertise the hell out of their BluRay’s on your home entertainment center made by them, they’ll be a lot happier than having you use OnLive of Gaikai to just stream your entertainment (yup, don’t forget, if they can stream games, they can stream movies and TV eventually) to your home.

The next couple years will be very telling for this market. We’ll see…

kn

The Wall Street Journal reported today that Amazon’s opened the doors to its Casual Games store…well, the beta anyway. 600 titles at $10 or less!

It seems casual games have come to the fore pretty quickly and have reason to be successful: everyone wants to play games and the US is saturated with computers that can handle casual games with low footprints just fine. The question is, how saturated is the market at this point?

The Casual Games Association (when they’d get one of those?) reported in 2006 that by 2008 the market would reach $1.5 billion worldwide, $690 million of that in the US. By way of comparison, the not-so-casual game market reached almost $11 million in 2008 with $701 million of that being PC games.

If you assume the PC game market (non-casual) represents a portion of the potential market (i.e. maybe 2-3 of every 20 people out there are non-casual gamers), you’re talking about a huge potential market. I know I’m pulling numbers out of thin air here but if $701 million in sales represents an average of $30/game, you’re talking about over 20 million units moved. So, with equal saturation, the casual game market could see more like 200 million units moved in the US alone. Of course, you have to account for the fact that these suckers cost a hell of a lot less, probably averaging between $5 and $10 a pop. So, you could be looking at a potential market of $1.5 billion with today’s population.

Consider, though, that each generation brings more computer-savvy people and means the average computer per person will increase as everyone wants and gets a computer in addition to the one they’re likely driving at work.

So, back to Amazon. I love Amazon but while I’m sure they’re going to expand the market a bit I can’t imagine it’s going to be significant. They’re more likely to cannibalize the sales of other players out there. Yet, they represent a significant exposure potential (not everyone’s heard of PlayFirst and other casual game sites) but Microsoft, Yahoo, and AOL have their own casual games markets/portals. I think we’re looking at a mixed bag. You’ve got die-hards like me who wander the crowded halls of Amazon.com who will possibly be interested in a purchase (though I also wander PlayFirst.com as well).

In the end, with Amazon’s hat-toss into the casual ring, I think we’re going to see the peak of sales/distribution in this area. Google could get involved and change that but there are few other players that could get the job done (and would bother in this market). What you won’t see peak, though, is development and sales. Casual games have exploded but I think there’s a lot more distance to cover before you’ll see this market slow down. It’s easier and cheaper to throw out some casual games (have you seen all the iterations of Diner Dash? FFS…) than AAA titles so you can win on volume.

Time will tell…

kn