The$Industry$

$•  Growing$

$•  Diverse$

$•  Complex$

Growing:$$80B$by$the$end$of$this$year$

Diverse:$5$main$categories$

Complex$

The$five$main$categories$could$be$each$analyzed$as$a$single$industry.$$$Social$Gaming$and$PC$Boxed$Gaming$are$both$small$and$declining.$$

Will$be$analyzed:$•  MMO’s$•  Mobile$

–  China$•  Consoles$

–  8th$GeneraLon$–  Sony,$MicrosoN$and$Nintendo$–  FPS$– OpportuniLes$and$Threats$

•  DLC$•  Steam$

•  VR$$$

MMO:$Massively$MulLplayer$Online$games$

•  Great$number$of$players$playing$simultaneously$

•  Joining$the$same$virtual$plaUorm$

League$Of$Legends$

The$most$played$game$ever$

•  67M$monthly$users$

•  27M$daily$users$

27M$viewers$watched$the$2013$LOL$world$championship$via$streaming$over$the$internet.$

League$Of$Legends$

MMO$

•  21%$video$game$market$shares$•  $11Billions$revenues$•  Very$Concentrated:$70%$of$its$revenues$come$to$the$10$biggest$licenses$

Biggests$MMOs$(before$2012)$

Some$of$those$licenses$belong$to$the$same$publishers$$(Blizzard$with$WoW$#4$and$Hearthstone$#10)$

Last$Challenge:$P2P$b>$F2P$

New$MMO’s$rely$more$on$Free$to$Play$than$Pay$to$Play.$Using$business$models$like$cosmeLc$or$in$app$purchase.$

Next$Challenge:$Go$mobile!$

Mobile$Gaming$

Growth$

•  Mobile$Gaming$made$$17,5Billions$in$2013.$It$reached$$25Billions$in$2014.$

•  It$should$top$35$to$$40Billions$by$2017$•  CAGR$2013b2017$around$19,1$to$23,5%$•  In$2014$Apple’s$Gaming$SecLon$made$$4Billions$sales,$which$is$more$than$Nintendo$as$a$whole.$

Growth(bis)$

A$diverse$market$

•  LaLn$America$shows$the$strongest$growth$with$60%$this$year$

•  Asia$is$the$biggest$market$

•  North$American$have$the$highest$willingness$to$pay$

Costs$

Mobile$video$games$are$not$really$costly$to$develop,$compared$to$other$plaUorms.$A$great$part$of$the$success$of$a$mobile$game$is$adverLsing.$Therefore$adverLsing$represents$the$highest$costs$for$developing$studios.$

Costs$

At$this$year’s$SuperBowl,$three$adverLsings$where$about$mobile$games:$$

•  Game$of$War,$Heroes$Charge$and$Clash$of$Clans$•  +$86,$+96$et$+18$places$in$the$AppStore$$•  $16M:$the$total$price$of$those$three$commercials.$

$

Les$couts$

For$Game$of$War,$SuperBowl’s$spot$is$part$of$a$$40M$communicaLon$plan$aiming$at$generaLng$$1M$daily$revenues.$

Candy$Crush$faces$a$$2Billions$yearly$income.$$$400M$are$spend$on$online$markeLng!

Revenues$

Mobile$game$revenues$are$generated$by$one$or$more$of$the$following$business$models:$$$$

•  AdverLsing$

•  Pay$per$Download$

•  In$App$Purchase$

•  Freemium$

•  SubscripLon$

China$

China$•  In$2014,$the$80.000$Chinese$mobile$game$developers$

released$an$impressive$100$games$per$day.$•  In$2008$Chinese$growth$was$66%.$Today$the$Chinese$

market$is$reaching$saturaLon.$•  RepresenLng$$1B$in$2013$the$market$should$reach$$2.8B$

by$2016.$•  In$2012,$8$of$the$10$biggest$mergers$and$acquisiLons$in$the$

video$game$industry$took$place$in$Asia.$•  League$Of$Legends$belongs$to$Tencent,$a$Chinese$holding.$For$all$those$reasons,$more$and$more$developers$ajend$the$“China$Joy$Conference”$in$Shanghai$in$addiLon$to$the$GDC.$

Consoles$

…a$quesLon$of$generaLons$

The$history$of$consoles$is$Led$to$its$numerous$generaLons.$The$8th$generaLon$was$released$in$2013.$Historically$each$new$generaLon$outreached$the$previous$one$both$in$power$and$number$of$sales.$

Life$Cycle$of$a$generaLon$

•  In$the$beginning,$only$early$adopters$acquire$new$consoles.$•  As$the$number$of$available$Ltles$rises,$more$and$more$consumers$turn$

to$the$new$version.$•  When$genng$closer$to$the$next$generaLon,$consumers$prefer$to$wait$

and$not$buy$unLl$the$release$date.$Then$they$chose$to$either$buy$the$next$generaLon$one,$or$the$current$one$for$a$lower$price.$

7th$generaLon$release$

One$month$aNer$the$release$of$the$7th$generaLon,$people$conLnue$to$buy$6th$generaLon$consoles$someLmes$even$more$than$the$7th$(Sony)$Missing$data$for$MicrosoN$6th$gen.$

8th$generaLon$release$

One$month$aNer$the$8th$gen$release,$7th$gen$sales$plummeted$while$8th$gen$sales$are$more$than$average.$Missing$data$for$Nintendo$7th$gen.$

Comparaison$

Comparing$the$two$situaLons,$8th$generaLon’s$failure$is$impressive.$There$where$more$previous$gen$consoles$sold$during$the$7th$gen$release$than$new$ones$during$the$8th$gen$release.$Not$only$the$8th$generaLon$release$is$a$failure,$the$whole$industry$is$in$crisis$

!!>#First#genera-on#to#perform#lower#than#the#previous#one.#

Post$launch$situaLon$

Downward$trend$got$confirmed$in$the$following$months$with$historically$low$sales.$

Numbers$

•  23%$drop$between$2013$and$2014$•  7e$generaLon$sold$360$million$units:$

•  100$millions$Wii$(Nintendo)$•  80$millions$PlayStaLon3$(Sony)$•  80$million$Xbox360$(MicrosoN)$

•  Forecasts$for$the$8th$generaLon$plan$a$maximum$100$million$units.$$

The$Reasons$(1/2)$

1.  Between$2007$(7th$gen)$and$2013$(8th$gen),$compeLLon$on$people’s$free$Lme$drasLcally$increased$

2.  The$innovaLon$pace$on$compeLLve$plaUorms$such$as$mobile$or$PC$is$much$faster.$

3.  The$8th$generaLon$of$consoles$was$the$first$ever$to$be$less$powerful$than$available$(middle$class)$computer$hardware.$

The$Reasons$(2/2)$

4.  There$is$now$a$cleavage$between$casual$vs$hardcore$gamer:$the$first$type$goes$for$mobile$while$the$other$one$favor$PC$that$are$more$powerful$and$customizable.$

5.  With$the$increasing$power$of$new$machines,$development$costs$lead$game$publishers$to$focus$on$their$AAA$licenses.$This$causes$a$large$decrease$on$game$diversity,$finally$resulLng$in$lower$consumers$incenLves.$

Sony:$PlayStaLon$

The$PlayStaLon$Network$is$an$online$plaUorm$where$users$can$play$and$buy$games$online.$It$has$been$hacked$several$Lmes$in$the$past$few$years.$

While$the$impact$on$sales$is$sLll$unknown,$it$already$cost$Sony$$270M$as$damages$for$consumers.$

MicrosoN:$Xbox$New$Kinect$to$record$conLnuously$and$therefore$breaking$into$peoples$privacy$$MicrosoN$publically$denied.$$

Nintendo:$WiiU$

A$long$decrease$$

7th$Gen$Wii$was$a$U.F.O.$The$Wii$was$the$best$sales$among$the$7th$gen$consoles,$with$more$than$100M$units.$Unfortunately$the$new$WiiU$should$top$at$under$10M$

FPS$for$First$Person$Shooter$

•  First$FPS:$DOOM$in$1993$•  FPS$counts$for$15%$of$consoles$games$•  Last$evoluLons$where$on$realism$as$creaLvity$topped$with$games$like$BajleField$(source:$Counter$Strike$execuLve)$

Console$games$reparLLon$

FPS$encouraging$crime?$

Threat:$SteamOS$

Steam:$a$big$player$

Opportunity:$DLC$DLC$for$Downloadable$Content$is$the$opportunity$for$the$gamer$to$buy$virtual$goods$(levels,$maps,$tracks)$that$extend$the$lifeLme$of$the$game.$First$appeared$in$1997.$

$DLC$are$more$and$more$criLcized$by$gamers$as$they$tend$to$restrain$the$game$experience$of$free$players$$

DLC:$the$new$business$model$

Digital$vs$Physical$

Digital$sales$rose$together$with$the$broadband$connecLon$speed.$Digital$sales$include$DLC$but$also$buying$a$whole$game,$subscripLons,$etc.$Last$year$DLC$market$was$$2.22M,$bigger$than$second$hand$console$games$market($1.6M)$Digital$sales$should$catchbup$with$physical$sales$by$2018.$$$

The$future:$Virtual$Reality$

First$step:$the$NES$Zapper$(1985)$

Second$step:$the$Wii$(2006)$

100Million$units$sold$worldwide$$

Third$step:$$Kinect$(2010)$

8Million$units$sold$within$the$first$60$days.$

The$new$wave:$$Independent$developers$

Peregrine$Glove$

The$user$controls$a$game$simply$by$touching$fingers.$No$need$for$a$keyboard.$

Razer$Hydra$

CombinaLon$of$the$freedom$of$Wii$controllers$and$the$quality$of$PlayStaLon$controllers.$

Airaig$

HapLc$suit$that$failed$its$kickstarter$campaign.$The$purpose$was$to$let$the$player$feel$its$avatar$wounds$through$vibraLon.$

PercepLon$Neuron$

Successfully$closed$its$kickstarter$campaign$at$$571K.$This$full$suit$aims$at$capturing$every$move$of$the$player’s$body$to$replicate$it$in$a$virtual$environment.$

Virtuix$Omni$

Virtual$treadmill$that$allows$to$walk$freely$in$any$direcLon,$and$replicate$user’s$moves$in$VR.$They$successfully$closed$a$$1.1M$kickstarter$campaign$in$July$2013.$The$project$is$the$brain$child$of$a$Belgian$fellow.$

Cyberith$Virtualizer$Another$virtual$treadmill$from$Austria.$They$closed$a$kickstarter$campaign$last$summer$at$$360K.$

OCULUS$RIFT$

Virtual$Reality$headset$project$that$started$on$kickstarter$looking$for$$250k.$Closing$of$the$campaign$in$2012$at$$2.5M.$Acquired$by$Facebook$for$$2B$in$2014.$Some$sources$say$they$might$release$their$first$consumer$version$around$April$of$this$year.$One$of$the$biggest$revoluLon$to$come.$By$replicaLng$real$heads$movements$in$virtual$world,$the$immersion$offered$by$Oculus$is$stunning.$$$

VR$Headsets$Many$big$players$are$since$engaged$in$the$race$of$VR$headset.$Samsung$released$its$first$headset…$made$by$Oculus.$

Sony$is$also$engaged$in$the$race$and$working$on$its$own$version.$It$is$seen$as$a$good$strategy$by$the$game$industry.$$

According$to$Oculus$internal$sources,$HTC$is$their$most$serious$compeLtors$to$date.$$

VR$roundup$•  Even$though$VR$headsets$can$be$used$as$stand$alone$devices,$the$VR$experience$rely$on$mulLple$accessories.$$

•  Most$of$those$products$ran$a$kickstarter$campaign.$Crowdfunding$might$foster$innovaLon$on$gaming$

•  The$new$field$opened$by$VR,$the$VR$games,$is$a$great$chance$for$independent$developers$as$tradiLonal$markets$reached$maturity.$

•  VR$is$a$threat$or$an$opportunity$for$console$gaming.$Depending$on$MicrosoN$and$Sony’s$reacLon.$

PresentaLon$Roundup$

•  MMO’s:$steady$growth$

•  Mobile:$impressive$growth$

•  Consoles:$plummeLng$

•  VR:$the$future$$

WANNA$KNOW$MORE?$MEET$US$NEXT$YEAR$@$

16$

Belgian$Trade$Commission$

Trade$Commissionner:$Baudouin$de$HempLnne$

$Program$Coordinator:$

Audra$Martyn$$

Startup$Liaison:$QuenLn$Malgaud$