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Harrison criticises Iwata's social gaming stance

Tue 15 Mar 2011 8:57am GMT / 4:57am EDT / 1:57am PDT
MobileCasualSocial Network

Ex-Sony Worldwide Studios boss says Nintendo president was "wrong" in GDC keynote

Nintendo president Iwata was wrong to characterise social and mobile games as a case of quantity over quality, or of lowering the value of games, says ex-Sony Worldwide Studios boss Phil Harrison.

"Iwata-san has done an incredible job rebuilding Nintendo over the last few years. He is a great leader of that company, but in this particular case he is wrong. He is mistaken if [he thinks] this is some kind of fad that will go away. Social networks, as a way of powering our game and entertainment choices, is here to stay," said Harrison to IndustryGamers.

"I thought it was fascinating that pretty much simultaneously with Iwata-san talking about Nintendo, in a hall across the street Steve Jobs is talking about the iPad 2, which got massive pickup and global coverage.

"Some people are talking about 50 to 80 million 'smartpads' being sold a year for the foreseeable future. It's going to create an enormous market, dwarfing every other market," he added.

Social networks, as a way of powering our game and entertainment choices, is here to stay.

Phil Harrison, London Venture Partners.

Iwata's keynote speech at the recently concluded Game Developers Conference saw him outline three concerns over the future of game development. The most important of these was the future of "high value" games, by which he meant traditional retail products, in the face of social network and mobile games.

"These platforms have no motivation to maintain the high value of video game software - for them, content is something created by someone else," said Iwata. "Their goal is just to gather as much software as possible, because quantity is what makes the money flow - the value of videogame software does not matter to them."

Harrison isn't the only developer to criticise Nintendo's stance - last week Frima Studio told GamesIndustry.biz that "if you aren't able to offer it for a compelling price point, then your competitor will."

As co-founder of London Venture Partners, Harrison is now specialising in funding online and mobile gaming start-ups. In October last year he predicted that traditional video game market leaders could be dethroned in the move to a digital market.

14 Comments

Keldon Alleyne
Handheld Developer

422 361 0.9
It's dangerous times for an industry when price point is a major factor in a buyer's decision rather than the quality of the product.

But I think two completely different types of customer are being confused. Yes they all play games, but they are buying a different solution to a different problem. Quick fix experiences and longer term game experiences.

I really doubt hardcore games fans are going to suddenly jump ship to another product just because they can buy a lesser alternative for 3 instead of 30. We'll find out if the next generation of gamers are still interested.

The masses are a completely different kettle of fish to the existing islands of gamers who might play angry birds but still want Gears of War.



When you think about it, casual gaming could be the gateway to premium gaming experiences.

Edited 1 times. Last edit by Keldon Alleyne on 15th March 2011 10:57am

Posted:3 years ago

#1

Private
Industry

1,187 185 0.2
It`s a bit like TV. You got your people who mainly watch bite sized TV series and maybe sometimes a movie when it`s on cable. On the other side you got your Blockbuster loving people who go regularly to the cinema and pay 10 bucks to watch a 2 hour long movie or buy the DVD/Blu Ray for 20 bucks and you have people who like both.

Companies could use the mobile market a lot more in their favor like spin offs of franchisees that might get people interested and might convince them to try the proper normal games of the franchise. The games are less expensive so there is not that much too lose if it doesn`t even sell and if it sells you might get a few more people onto the normal gaming platform.

One isn`t going to kill the other one and let`s be realistic the smartphones games are not going to steal the core gamers from the console market. They are not going to take a 3 bucks app over CoD, Halo, Mario or Uncharted. But the console market could grab people from the smartphone gaming section if you give them good reasons and show them what they miss out on. Of course that`s all very hard to do proper.

Edited 1 times. Last edit by Private on 15th March 2011 1:28pm

Posted:3 years ago

#2

Erlend Grefsrud
Creative Director

22 0 0.0
The masses are a completely different kettle of fish to the existing islands of gamers who might play angry birds but still want Gears of War.

I think you'll find that the overlap between the Angry Birds and Gears of War population is significantly smaller than the population playing Angry Birds. If you got 10 million people who want both, and 40 million people who only want one of them, it's pretty clear which audience you should be focusing your attention towards.

And I believe Harrison is right: There's going to be so much non-dedicated consumer hardware that's not purpose-built for games but still run them that dedicated gaming platforms will be a tougher sell than before. In earlier days, games were only really found on PC and console hardware, while you can now get them on anything from mobile phones to eReaders.

That's bound to change the dynamics of the market, no matter what. Especially if they all feature browsers supporting some manner of multimedia standard suitable for games, whether that be Flash, HTML5 or some other technology we've yet to see.

Edit: At the very least, it spells the end of platform holders subsidizing hardware and profiting off licensing. That pretty much spells the end of the current console business model.

Edited 1 times. Last edit by Erlend Grefsrud on 15th March 2011 3:37pm

Posted:3 years ago

#3

Private
Industry

1,187 185 0.2
In Japan mobile phone gaming exists since a very very very long time and did not impact the consoe market at all. Its something new for us in the west, but over there you got more complex mobile games and they perfectly co exist. For us EU and US guys its all new and the rage but they will just co exist next to each other.

Posted:3 years ago

#4

Keldon Alleyne
Handheld Developer

422 361 0.9
If you got 10 million people who want both, and 40 million people who only want one of them, it's pretty clear which audience you should be focusing your attention towards
Well there's no questioning which audience is larger. My point is that casual gaming does not remove the need for premium gaming, so the $2Bn did not necessarily dent the classical games market. It only affects the classical games market when classically priced games become the foregone choice (opportunity cost).

So far, the DS has sold more than previous handhelds, though I suspect the iOS App Store affected DSiWare sales (through foregone choice).

Should we be focusing more on social gaming models than classical gaming models because of market size? First I would ask what is the market for classical gaming pricing models? Currently: still good - even when sold digitally.

That being said, social gaming is growing; but how mature are the business models? For instance, tens of millions was recently invested into 'Angry Birds' rather than the creation of new IP's. If that was the best decision, what does it say for the profitability of new IP's? If it would have been a better decision to invest in a hundred smaller teams to create the next $100M game (or ten $10M games), what does that say about our understanding of the market?

Why does this feel like a repeat of the dot com gold rush we had not so long ago?

My thoughts on investment strategies are about widely spread investments, run multiple teams that share a single pot of earnings with 5 years.

Edited 2 times. Last edit by Keldon Alleyne on 15th March 2011 5:45pm

Posted:3 years ago

#5

Jim Webb
Executive Editor/Community Director

2,209 2,048 0.9
How did Harrison come to the conclusion that Iwata said social gaming is a fad that will go away? Statements like that tell me he isn't interested in actually correcting any of Iwata's logic but rather taking an opportunity to spout positive his own industry segment.

Iwata never said it was a fad but rather poses a danger to the current pricing models. Harrison isn't even touching on what Iwata said at all.

Good job though Phil...free press by name dropping someone else and then speaking on something irrelevant to the principle.

Posted:3 years ago

#6

Haven Tso
Web-based Game Reviewer

255 8 0.0
Seriously the whole compelling price point is a fad. At the end of the day how many games in the social gaming devices such as iPad made headlines? So far we still only have a few out of thousands out there - Angry Birds, Flight Path, Fruit Ninja. It annoys me that when just a few made it to headlines they think they are changing the industry directly. As compared to the current console games, there are a lot more quality titles out there. They may not be selling at 2 bucks a pop but they are more interesting games than the loads of crap on iTunes store.

Posted:3 years ago

#7

Tony Johns

520 12 0.0
I still have concernes that if a developer is not able to get a proffit and the game does not sell well at either retail or at download service, then there is little hope of the developer to exist when there are so many people making games with hard work but little income.

That to me, is more concerning and that is what I feel about the mobile games industry...is it enough to support the developers making games for that platform?

Posted:3 years ago

#8

Erlend Grefsrud
Creative Director

22 0 0.0
Well there's no questioning which audience is larger. My point is that casual gaming does not remove the need for premium gaming, so the $2Bn did not necessarily dent the classical games market. It only affects the classical games market when classically priced games become the foregone choice (opportunity cost).

What about risk assessment? The traditional game space is a lot riskier than any of the emerging platforms, simply due to the difference in cost of development and marketing. That said, of course the returns are higher in the traditional game space because of the premium prices. I suppose it's a question of how you spread your investments and a deep understanding of the market, something it appears many of the major publishers lack since their blockbusters keep sinking.

I'm not saying that premium games are going away, I'm suggesting it's highly unlikely that they'll remain bound to the console space. For one, there's massive and pointless market fragmentation since most games are multiplatform anyway, which doesn't really benefit anyone. Secondly, the retail-driven business model that they rely on is going away. I could offer a deeper analysis of why that's bound to happen, but then we'd stay here all night. E-mail me if you'd like a longer take.

Finally, I believe that the privileged position consoles have traditionally held as dedicated entertainment computers is about to be eroded by the influx of more domain-specific devices such as mobile phones and tablets. They're pitched and already established as simple computers mostly meant for entertainment purposes, and I think that's precisely what the x360 and PS3 tried and failed to become.

The business opportunity that Sony and Microsoft were trying to seize has been snatched from them by Apple and Google. Since both Sony and Microsoft are now running only moderately profitable businesses that won't endure and can't justify their investments, they should think long and hard about their next moves.

Sony has already demonstrated that they don't get it by announcing the Xperia Play, their PlayStation tablet AND the NGP at the same time, cannibalizing their own product lines while fragmenting their market further. Microsoft has yet to make a move, but I'd be very surprised if they suddenly announced a new high-end console based on a new architecture that relied on retail-driven content.

They might, and I may be completely wrong, but I think games are going to move outside the console space and eventually leave it behind.

Posted:3 years ago

#9

Jim Webb
Executive Editor/Community Director

2,209 2,048 0.9
Demand....I repeat this word...demand.

So long as demand exists, the market will exists. Demand doesn't give a rats posterior what other markets do.
Unmet demand dictates far more than over saturated supply.

And the console market still has enough demand to warrant existence.

Posted:3 years ago

#10

Jeremy Glazman
Programmer

28 4 0.1
@Jimmy Webb yea I had the same thought, I was at Iwata's keynote and I don't remember anything of the sort even being hinted at. If Iwata thought a flood of cheap mobile shovelware was just a fad, why would he consider it a danger to the industry?

Personally I think free-to-play games are a bigger threat to the core console market than cheap throwaway mobile apps. But Iwata makes a good point (that lots of people have been making for a while), the majority of mobile games are so far beyond the shovelware plaguing the Wii. Some of the games Apple chooses to feature on the App Store are just offensive in how bad they are...

Edited 1 times. Last edit by Jeremy Glazman on 16th March 2011 1:16am

Posted:3 years ago

#11

Jim Webb
Executive Editor/Community Director

2,209 2,048 0.9
Thanks, Jeremy. Glad someone else sees the broader picture unencumbered by the politics of their market segment.

If Harrison and Rovio truly wanted their segment to grow and be considered valid markets, expand and thrive for generations to come, their best bet is not to attack the console market like an enemy (probably the dumbest damn decision any of them can make) but address them like a market to penetrate themselves.

Treating the console market like a doomed market and with disdain in their statements only leads to further derision of the market producers and alienates the new producers into fighting for themselves against the big boys. Something only the most idiotic of mobile developers would wish to confront.

I'm just going to be frank and say it. Stop being idiots. Claiming your segment to be superior to another. Desperately, yeah...desperate as hell, trying to convince others, investors mostly, that you have the right mind set to what will direct what will happen in the game industry over the next 5 years...BULLSHIT. You're a salesman no more than a concept pitch man at a long term studio trying to get an idea picked by a publisher. The more honest you are, the more I, and others, will take you seriously. Until then, keep spouting bullshit until someone dumb enough gives you $42 million.

I'm tired of the games. And I don't mean the ones I play as an end result of the efforts of developers but as a result of the stupid ass efforts from people claiming the end of "insert something here". You make me hate your industry more than respect it. You are cowards that feed on fear to get investments. You want props? Frikkin earn it. EARN YOUR MEDIA HEADLINES.

I'm out. Earn my money. Free to play....earn my play time, and money, before the title screen even hits my console and you may be one to something. Until then, piss off. And I mean that. Give me a solid reason...a reason more solid than adamantium laced titanium wrapped around hollow carbon non-tube structured graphene and I might consider your argument. Until then...It's more much bullshit than a bovine waste treatment facility.

Scientific concepts...the burden of proof weight most heavily on your shoulders. And your evidence so far equates to Intelligent Design.

Posted:3 years ago

#12
@Jimmy - was thinking exactly the same thing. Harrison isn't commenting on any of the 3 points that Iwata made.

And as for 100m vrs 10m: this is exactly the point. Would you rather go for 100m, at $1 each - or 10m, looking to spend up to $1,000 a year on gaming? I know which Apple is targeting, and I know which Nintendo is targeting - but I'm not so sure about most of the others (Sony, EA, etc).

An unanswered question is "Can you target both?" - or if you had the latter market, would you risk chasing the initial market?

The yearly revenue Nintendo makes from software far exceeds the total revenue ever generated by the AppStore (i.e. across ALL devs). The only reason it works for Apple, is 95% of their profit comes from hardware. Will Sony try the same thing?

Posted:3 years ago

#13

Curt Sampson
Sofware Developer

564 278 0.5
Michael: I think it's pretty clear which market Sony is targeting with the NGP. With the PlayStation Suite the question is open, but it could well be that Sony's not even sure about that. What they do know is that they've got a large catalogue of high-quality PS1 games that they can sell cheaply because the development costs are already written off, a new set of widely available mobile devices that now have the power to run these games, and a confirmed interest in games by the owners of said devices. Given all that, it would be a bit dumb not to get into this market, regardless of whether members of this audience are going to be anything more than "casual gamers" or not.

As for Eriend's thought that consoles will vanish: I just don't see it. Console gaming is an entirely different experience from mobile gaming, and that won't change until we have the equivalent of headphones for our eyes, and maybe not even then. Mobile video has been around for ages, and has never gotten any real traction much less replaced televisions and DVD players; how are games so different?

Edited 1 times. Last edit by Curt Sampson on 16th March 2011 5:17pm

Posted:3 years ago

#14

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