Gaming Consoles: Stop-gap Technology or Mainstay Trend?

By John Greaves

Gaming consoles have enjoyed a unique niche in our culture fueled by a fairly loyal and growing fan base. Now they face challenges to their product offerings on several fronts. Blu-Ray players and set-top boxes continue to compete with consoles for streaming video and television content and OnLive has emerged as a contender in the video game world with partnerships with game developers like Electronic Arts, Take-Two, Ubisoft and Atari.

The advantage game consoles have is a pre-established fan base, one accustomed to the world of online content, Internet streaming and more than stand-alone set top boxes like Vudu can offer. According to blogger Michael Wolf in a 2008 post for eHomeUpgrade, “The price tag for standalone boxes is more than most would pay, especially if they can get similar (if not equal) services through another box like a game console (which also, it goes without saying, plays games and DVDs)”.

According to Netflix vice president of corporate communications, Steve Swasey, his company is aware of the value consoles add industry wide. “There are three jewels to the crown and Netflix is wearing the three jeweled crown with three devices the Xbox 360, the Playstation 3 and we announced that we’ll be available on the Nintendo Wii in the spring. The Wii has sold 22 million units in the U.S. alone. So we are able to reach a lot of subscribers through these consoles alone.” This adds a lot of value for these consumers as Swasey points out that Netflix revolutionized the video rental industry by saving people from going to video stores.

Still it is significant that Netflix is not exclusive to consoles. “The goal here for Netflix is to be ubiquitous on any device to watch movie and TV episodes on. The game consoles are one way for us to reach that level of ubiquity. We also have deals with Blu Ray disc manufacturers and TV manufacturers like LG Electronics and Samsung and then of course stand alone devices like the Roku and TiVo, now we have more than fifty devices which stream instantly from Netflix,” Swasey says.

Add to that the fact that Boxee, arguably one of the fastest-growing software solutions for internet streaming content, doesn’t currently run on any game consoles. Andrew Kippen, vice president of marketing for Boxee, says he doesn’t know what technology issues would have to be addressed to get Boxee on game consoles but they’re interested in working with manufacturers to make it happen.  “We see Boxee as the Android of the living room - software that runs on TVs and any device that connects to them.  With game consoles already sitting underneath millions of TVs - we’d love the opportunity to provide our media experience on them.”

While Kippen acknowledges the attractiveness of the large footprint Sony, Microsoft and Nintendo have, he says Boxee is also watching a newcomer to the space. “I like the idea of something like OnLive as well. If we look at a platform like that, the minimum requirements that Boxee has probably gel pretty nicely with the minimum requirements that that platform has, so I hope one day we can create a Boxee OnLive box. We haven’t had any formal discussions with them but I think it would be a great customer experience to get that kind of all in one box for all of your entertainment.

Rob Green of Imagine Communications says, “I think consumers want the content they want, how they want, where they want it.” So in order to remain relevant it appears that consoles are going to have to do more.

Encouraging news for Sony and Nintendo at least is that Netflix appears open to the idea of coming to the PSP and Nintendo DSi handhelds at some point. “Long term we want to stream on any device you want to watch on,” Swasey says.

This means at least two of the big three can hope to increase the attractiveness of those platforms. Nevertheless, consoles cannot rely on pushing sales across their platforms to save them. As the danger of “box fatigue” grows the resulting push for cross- functional devices means that the race is on to plant flags in prized living room real estate and consoles need to be among those running. Console manufacturers seem to be reacting dynamically to the threat.

Microsoft which was the first gaming company to partner with Netflix, and has planned an IPTV offering since 2007, has announced that Xbox 360 owners in the U.S. will be able to get AT&T’s Uverse offering by this spring. Xbox Live members already have access to Zune, last.fm and social networking through Twitter and Facebook integration. According to blogger Michael Mahoney Microsoft also has a deal with British broadcaster Sky to leverage Xbox to stream live television programs, including sports, TV shows, and movies.

Mahoney says Sony and Nintendo are working with BBC’s iPlayer to provide recent television shows to their consoles. According to Mahoney, “A major benefit of console subscription-based service is it eliminates the need for set-top boxes and satellite dishes, a huge cost-saver for Pay TV operators to deploy, service, and upgrade.”

Another major offensive strategy is gaming consoles’ encouragement of social networking in their fan base. According to a December 17, 2009 Sony press release, “10 million users around the world have visited PlayStation Home to play games, attend special events, watch videos, listen to music, meet new friends, and launch into multiplayer PS3 games — averaging 60 minutes per visit. Over 250 community events have been held in PlayStation Home since its launch, many organized by the PS3 community.”

Sony is sweetening the deal at Playstation Home by giving Playstation 3 version 3.10 users the ability to “easily showcase their game accomplishments to friends and family, and post information about the PS3 games they purchase from PlayStation®Network to Facebook.”

It’s not clear whether these moves will be enough or whether current game consoles will join the Sega Genesis and Commodore 64 as museum artifacts.

Partnerships Profit From Gaming Consoles

By Alan Smodic

It’s no secret that online streaming content is quickly becoming the first choice for many viewers and the battle to expand that beyond the computer screen continues to build.

Microsoft’s Xbox 360 and Sony’s PlayStation 3 stand at the forefront to provide consumers with a set-top box that offers a complete multimedia experience as a gaming console, DVD or BluRay player, online content provider and social media aggregator.

Both consoles attempt to stay on top of the game, and one step ahead of the other, in this venture. But as they do, who stands to benefit the most?

A prime example of the possibilities was brought forth by Xbox last month when it was reported that the system may soon reach a deal to stream ESPN-televised sporting events, for a per-subscriber fee.

CNET gaming writer Jeff Bakalar says that setup should be a no-brainer for TV networks. “Theoretically, a TV network could reach millions of people with an Xbox Live ‘channel.’ Microsoft has sold 39 million consoles worldwide, with half of those systems hooked into Xbox Live,” he says. “With numbers like that, it’s no wonder cable companies are looking to game consoles as another outlet.”

The content provides added value to the hardware for consoles like the Xbox 360, PS3 and Nintendo Wii, which benefits each company. For Xbox, it also allows the company to charge a premium for the extra content such as its current setup with Netflix streaming movies.

On the other hand, the content creators are able to reach another mass audience without much effort, thus displaying its ads to many more eyes.

Currently, however, the top streaming site, Hulu, limits its video sharing, which was not always the case. Hulu had been made previously available through applications like Boxee (a media-aggregator application for Windows, Mac or Linux) or the PS3’s browser. But that fact is leaving a number of people perplexed, including the U.S. Government, which asked NBC Universal CEO Jeff Zucker about the decision during a recent congressional hearing. Hulu is a joint venture between NBC, Fox, ABC and others.

Zucker’s response to the questioning didn’t clarify a thing. “This was a decision made by the Hulu management to, uh, what Boxee was doing was illegally taking the content that was on Hulu without any business deal. And, you know, all, all the, we have several distributors, actually many distributors of the Hulu content that we have legal distribution deals with so we don’t preclude distribution deals. What we preclude are those who illegally take that content,” he says.

Boxee issued a response almost instantly, stating that it uses a browser to access the content, just as anyone with a computer or PS3 was already doing and wasn’t stealing a thing. It even offered to speak with Zucker and noted that Hulu should be taking advantage of Boxee’s userbase.

“There are now close to a million people using Boxee,” Boxee says in a statement. “When they watch shows from Hulu they are watching the ads and generate real revenues to NBC. We hope we will be able to work with NBC and offer more content and value to Boxee users as we believe a good number of our users will also be willing to pay one-time or subscription fees to access NBC’s content.”

Boxee, in addition to its computer software, has plans to release its own set-top box later this year, which will provide direct competition to the gaming consoles — minus the gaming factor.

The high number of consoles already sold (a reported 60 percent of American homes have at least one console), though, gives the PS3 and Xbox 360 a nice headstart. But, as Hulu is showing, providing that content can be tricky.

“We want to offer the best entertainment on Xbox Live in as many countries as we can,” Xbox corporate VP John Schappert told G4 at E3. “But it takes a while to get these deals done, it takes a while to form these relationships, form these partnerships and find a great experience for [all] of our partners.”

In addition to streaming other videos, both Microsoft and Sony have offered their own direct-to-console shows - The Guild, which airs exclusively on Xblox LIVE; and The Tester, a free reality TV show that will debut on PlayStation 3 and PlayStation Portable this month.

The success of these two ventures for the gaming giants opens another realm of content distribution. With that in mind, they both are poised to serve as a be-all, end-all box-top system.

That success, however, may lie with whomever secures the better partnerships first and that answer could come soon enough.

Alan Smodic is a freelance journalist and web administrator. Follow him at twitter.com/alansmodic.

Virtual Worlds Go Mainstream For Businesses

By Ron Callari

Viximo, a 2-year-old start-up company, is fast becoming a leader in the burgeoning virtual goods industry. For those who are new to this commercial space, virtual goods are digital products that are gifted, bartered or paid-for items online or via mobile phones. Videos, icons, e-cards, personalized avatars - items that allow people to better express themselves, add gravitas to their online persona, or increase their enjoyment of a game - make up the products that are now known as virtual goods.

Considered an unlimited opportunity for thousands of Web publishers, Viximo distinguishes itself from its competition in how it addresses the market. It claims it is the first and currently the only virtual goods provider that brings together everything a publisher needs for virtual goods in one complete, easy to implement, customizable solution.

Viximo is one of the only companies that offers both a system for selling virtual goods and the goods themselves. This then permits clients to either upload directly into their own virtual gift stores or customize at will.

In addition to partners such as Fotolog and Zorpia, Viximo just added BlackPlanet.com, SmartDate.com and FanIQ.com into its virtual goods platform. These deals extend Viximo’s reach to 60 million users, a new milestone for the company.

The increased interest in virtual goods is apparent by how quickly it has scaled. U.S. consumers spent $1 billion on such items in 2009, according to Inside Network, a market research company focused on Facebook and social gaming sites. Daniel Strang, the newly appointed CEO of Viximo, says he “sees these types of purchases as a potential substitute for dying revenue streams (such as subscriptions) in the publishing world.”

Brian Balfour, founder and vice president of product marketing for Viximo, speaks with DMB about how companies can capitalize on the virtual goods market.

What is the current status and future of the virtual goods market and how does it break down percentages between social networking, online gaming and online dating sites?
The current size of the virtual goods market in 2009 was about $1 billion in North America, and about $7 billion world wide. While North America still represents only one-seventh of the global market, it is the fastest growing - quadrupled in 2009 - and the youngest. There is still a lot of room to grow in North America and we expect it to double in 2010. I am unsure of exact percentages, but the majority of virtual goods purchases are taking place on social networks, which includes social gaming - probably around 50 percent. The next biggest area is more traditional gaming and virtual worlds, with online dating being the smallest piece at the moment.

What do traditional brands use virtual goods for? (e.g.  Kohl’s, American Apparel, Sears, K-Swiss, Eberjey)
There are a couple opportunities for brands to get involved in virtual goods.

The first way is a sponsorship model. Users are highly engaged with virtual goods and spread them virally to their friends, so it’s a great place for brands to embed themselves. Brands can pay to have branded virtual goods offered to the users in various social networks and games. It basically acts as a very engaging form of promotion that performs much better then banner advertising does on social communities.

The second way is a licensed model. Certain brands that have a luxury appeal to them have an opportunity to sell virtual goods around their brand to users for actual money.

Does Viximo supply Second Life with virtual goods? According to the blogosphere that site has lost popularity over the years? Why?
Viximo does not supply virtual goods to Second Life. We primarily work with social networks, online dating and casual gaming sites. These areas are where most of the growth happened in 2009 and will continue to happen in 2010. I think the fact that the public has lost interest in Second Life is a good thing for the virtual goods industry. Typically people originally associated virtual goods with something very geeky and non mainstream like Second Life or other 3D worlds. The fact is that they represent a smaller portion than other areas like Social Networking. Virtual goods is a mainstream thing and as users become exposed to it more often, it will become more socially acceptable and we will continue to see the industry as a whole grow.

What types of sites are “hot” right now? And why?
The three verticals [that we] mentioned are where we will see most of the growth in 2010. There are still thousands of these sites worldwide that have yet to institute virtual goods. But looking forward beyond 2010 there is a question of how virtual goods will expand into the broader social Web and content arena. It will happen, but just how we don’t know yet. Other areas of potential opportunity in North America would be consoles (xBox, Wii, etc).

Ron Callari is a freelance journalist and editorial cartoonist whose work has been published on AlterNet, CounterPunch and the Sacramento News & Review. He is currently a social media blogger for InventorSpot.com and the author of two graphic novels.

For Mobile Gaming’s Success, ‘Constraint is the Mother of Innovation’

By Alan Smodic

When the Facebook platform went live in May 2007, Zynga’s Bing Gordon says it changed everything about the social gaming industry.

“Its developer APIs were as solid as any video game console development tools, and it achieved mass market penetration much more quickly (Facebook apps are estimated to have reached 40 million users in just 12 months),” he wrote.

Social games, like Zynga’s Farmville and Mafia Wars, burst onto the scene and never looked back in the last two years, which led to the rapid growth of the industry. Zynga alone sees about 230 million monthly active users on Facebook.

But as the realms of social media move away from the computer and onto mobile platforms, more specifically to those of the iPhone, Android and BlackBerry devices, the young industry must adapt with it.

On the developer’s end, that hasn’t been too much of a problem, especially in terms of Apple’s iPhone. “The iPhone apps development environment has also proven to be enormously productive,” Gordon says, “and the iTunes Apps store is clearly a new ‘killer app’ for mobile computing.”

However, things begin to get a little trickier when other platforms come into the mix. Translating game play from the Web to fit onto numerous devices running either Android, BlackBerry, iPhone or even Windows Mobile takes time. And money.

Foursquare, which recently launched a beta of its BlackBerry app to about 5,000 testers, stated before that it ramped up its BlackBerry development only after it secured more funding. Gowalla, Foursquare’s biggest competitor, has yet to implement BlackBerry or Android native clients.

“As soon as we felt good about the financing going through, we hired our friend Pete to start working on it,” the company says in a press release.

Even then, it took another four months before the beta released. Meanwhile, iPhone and Android users were already growing well accustomed to their apps thanks to what many developers consider a better programming experience.

What has slowed down the applications more, though, (other than the opinionated arguments behind the SDK, API and IDEs) is the lack of ability to transition all profitable elements of the gameplay from the Web.

Each major social gaming company has admitted that they are tinkering with the elements that make them profitable. But most have found success through virtual currency, which hasn’t fully optimized yet on the mobile platforms.

For instance, Zynga reports that purchases of virtual currency account for most of its more than $100 million in revenue in 2009. That says a lot for its necessity to be included in all versions of its games to be successful.

It’s these limitations, or others that may surface as the industry continues to grow, which will only help it flourish, according to Scott Jon Siegel, a former iPhone lead designer for Zynga who now works for Playdom.

Playdom boasts more than 20 million monthly active users and possesses the no. 1 game on MySpace, Mobsters, which recently launched on the iPhone.

Siegel likes to work with a personal slogan: “Constraint is the mother of innovation.” ”As a game designer, I refer to this principle on a daily basis,” he writes. “Whether working on a brand new title, or making improvements to an existing one, the best ideas are born out of limitations - boundaries which designers must work around to achieve their goals.

“Easy problems are simply those with too many solutions. It’s when our options are severely limited that we begin to look in new and exciting directions.”

Playdom’s CEO and co-founder, Dan Yue, takes it one step further, stating that sticking to his company’s values of relying on user feedback and metrics to understand exactly what players want and expect will make social games successful on any platform.

“As long as we continue to respond to our players, we’re confident our games will be successful on new platforms and as player expectations evolve,” he says.

Alan Smodic is a freelance writer and Web administrator. Follow him: @alansmodic.

TransGaming Launches Developer Program, SDK for its On-Demand Gaming Service, GameTree.tv

By: itvt.com

TransGaming, a Toronto-based company that has developed an on-demand gaming service, called GameTree.tv, that it says will be available to consumers next year through Intel CE Media Processor-powered Internet-connected HDTV’s, set-top boxes and consumer electronics devices (note: the company, which recently announced a “strategic collaboration” with Intel–see the article published on itvt.com, September 27th–

[Read More and Discuss]

All-For-One Entertainment: Gaming Consoles Compete With IPTV

By Alan Smodic

The future of the gaming industry is beginning to rest more on a console’s versatility than the actual gameplay.

That notion isn’t such a bad thing, says Microsoft’s director of programming for Xbox Live Larry Hryb.

“Multiplayer gaming has surpassed moviegoing as society’s imaginative escape of choice,” Hryb says. “Games are at the center of attention and are very social.”

The social features that are found in games are now connecting users to the growing social media world found typically on a personal computer. With the PlayStation Network and Xbox Live, Sony and Microsoft have developed social networks of their own, allowing users to connect, share info and play together.

In fact, both networks recently expanded their features when they rolled out updates to include other social networks. Sony introduced Facebook to the PlayStation network, while Xbox Live now integrates its users with last.fm, Facebook and Twitter.

Integration like this opens the doors for much more. “We added value to our system with the original Xbox Live feature and now we view it as the killer application,” Hryb says. “It’s even better that these other consoles have followed suit with their own networks. “It’s only going to make our industry stronger and better.”

The notion presented by Hryb is that competition equals better results. He says the aim to provide the industry’s top choice increases innovation.

Hryb, better known to Xbox Live users as his gamer tag “Major Nelson,” says that Xbox Live now carries about 20 million members with a new account being created every five seconds. Of those members, 32 percent are female.

The numbers and connectivity alone are now appealing to content creators and advertisers who are looking to flood the networks. The power of the user base added one million new accounts on last.fm in one week since the upgrade.

Sony’s initial approach to social networking took a change for the better in recent months as third-party developers created a flurry of mini-games on the PlayStation Home network.

“In the early days when we built Home, we really were building a social network for gamers,” platform director Jack Buser says. “Through that, over the last year, it’s developed into a game platform, first and foremost.”

In addition to that change, PlayStation users also saw the addition of streaming Netflix to the system - a feature Xbox customers already enjoy.

Both systems provide downloadable content in the form of online marketplaces, including HD quality TV shows and movies. These shops, built in the same mold as the iTunes Store and Amazon Video, deviate the need for a desktop computer or Apple TV hookup.

In addition, Microsoft has already started development on an IPTV service that will sync with the Xbox 360. The service, which is seeing heavy testing in overseas markets first, will add another arsenal to the gaming console and its quest to pack everything into one box.

With the consoles now possessing the ability to stream movies, play Blu-Ray (on the PS3), access Windows media libraries, play games, connect with friends and mingle with the online social world, they are turning into one-for-all media hubs.

And when that occurs, the possibilities expand. “For software makers and enthusiasts, the rules of the game are quickly changing,” Scott Steinberg writes. “That means for us, the desktop computer and HDTV-huddled masses, there’s never been a better time to come out and play.”

As the major gaming consoles evolve into these media hubs, and computers for some, the industry will benefit from it.

Users no longer have an excuse to need to leave the gaming network. The console has brought, and will continue to bring, everything to them.

“It’s exciting,” Hryb says. “It’s not just about games anymore. There is a lot more going on and a lot more in store for the consumer.”

Alan Smodic is a freelance journalist and web administrator. Follow him at twitter.com/alansmodic.

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