We talk to the boss of Sony Computer Entertainment Europe and the life president of Square Enix about the Bafta awards and the future of the games business.
Wednesday night sees the 2011 GAME British Academy Video Games Awards, with developers competing in 16 categories, involving some of the biggest entertainment brands in the world.
But while there are plenty of astonishing titles on the list, there are two key question marks. The nominations are dominated by a handful of core shooter and action franchises, and of the 40-or-so games up for recognition, only a fraction were developed in the UK. Why?
To find out, I spoke to two members of the Bafta video games committee: the chairman, Ray Maguire, head of Sony Computer Entertainment UK, and the deputy chair, Ian Livingstone, life president of Square Enix. We talked about the health of the industry, where the interesting ideas are coming from and what can be done to get Britain moving back up the international games development table. Here is the first part of our discussion.
How is the video game industry faring at the moment? 2010 seemed to be a difficult year, with several major publishers showing losses and both ChartTrack and the NPD Group reporting falling revenues.
Ray Maguire: ChartTrack measures the EPOS data out of retail stores, which last year was reported to be 15% down on the year before. But the online side of the business is not reflected in that number. So actually, the industry as a whole is growing.
How is the video game industry faring at the moment? 2010 seemed to be a difficult year, with several major publishers showing losses and both ChartTrack and the NPD Group reporting falling revenues.
Ray Maguire: ChartTrack measures the EPOS data out of retail stores, which last year was reported to be 15% down on the year before. But the online side of the business is not reflected in that number. So actually, the industry as a whole is growing.
At Sony, I can see that the online side is quite dynamic. We had a good year anyway on the retail side, but without a doubt, there's this transition into a blended model of retail and online. We have to start thinking about our industry as a growing and dynamic marketplace which has core gamers at the centre and then other people, younger and older, in the casual area – the people who are more into digital 'snacking' content. It appears on the outside that there's a decline – and there is on the retail side – but it's more than covered by the expansion of the online side of the business. So the industry is in good health in terms of revenue and especially in terms of audience reach. It's never been bigger.
Is it the same story from a publisher standpoint?
Ian Livingstone: If you read the headlines you'll think that the industry is in decline, but that's absolutely not the case. It represents $50bn a year in software sales alone, and it's estimated to be $90bn by 2015. The industry is at a crossroads, moving from boxed products sold at retail, to online services, and all the substantial growth is coming in the online space. There are some extraordinary stories out there: the rise of a company like Zynga – it didn't exist three years ago, then it released Farmville and had 80 million people playing. They launched Cityville on December 1 2010 and within 44 days they had 100 million monthly active users. We've seen 50 million downloads of Angry Birds, there are 12 million people playing World of Warcraft, 35 million people have registered for Moshi Monsters…
Ian Livingstone: If you read the headlines you'll think that the industry is in decline, but that's absolutely not the case. It represents $50bn a year in software sales alone, and it's estimated to be $90bn by 2015. The industry is at a crossroads, moving from boxed products sold at retail, to online services, and all the substantial growth is coming in the online space. There are some extraordinary stories out there: the rise of a company like Zynga – it didn't exist three years ago, then it released Farmville and had 80 million people playing. They launched Cityville on December 1 2010 and within 44 days they had 100 million monthly active users. We've seen 50 million downloads of Angry Birds, there are 12 million people playing World of Warcraft, 35 million people have registered for Moshi Monsters…
All of the opportunities, growth and investment is happening online, and certainly, traditional publishers have struggled in moving their super tanker of skills toward the new online world. They're going to have to do that through acquisition or via some radical organic growth internally. If you look at games that are doing really well at the moment, like FIFA 11 or Call of Duty, they've got significant online and multiplayer components. It's get online or get out.
RM: Our business is a blend now. You still have to put some very large chunks of data into the market place – the Gran Turismo 5 disc is something like 40GB of content, which would be almost impossible to download. But then of course, your secondary revenue – where you make the money – is selling DLC afterwards. As the networks get better, there will be a higher percentage of download to retail, but at the moment [boxed games] are a very efficient way of getting a lot of data to the consumer. However, at the same time we have the PlayStation Minis, which are download-only content. That's the transition we're talking about, making sure we have product not only for hardcore gamers, but also the massive casual marketplace.
IL: Clearly, console games still lead the way. They're interactive cinema with huge production values and graphical fidelity that's unmatched by casual titles. And they have amazing brand value: using Black Ops as an example, Activision will sell 20 million copies at 50 dollars a pop – that's a billion dollar franchise! That's hard to replicate in any other entertainment industry, with the exception of movies like Avatar. But it does mean there's a polarisation in traditional console gaming – everyone is buying the same titles, the best in class, and spending the rest of their gaming time snacking via whichever social media device they prefer.
So we're heading toward something like the Hollywood movie industry, which is now being sustained by mega-budget blockbusters at one end and small indie titles at the other, with very little going on in between. Is that the case?
RM: Yes, without a doubt. Consumers have only got so much time and money, so rather than buying four massive 40-hour games, they might buy one or two of those now and fill up with snacking content. Look at the retail model now: there's price erosion in the market place – a huge amount of aggressive pricing – so it has become much more of a challenge for stores. Consequently, the range is being reduced, and the games being eliminated will be the ones that don't rate highly on Metacritic. But then, a lot of these are B-type games that perhaps shouldn't be there in the first place...
RM: Yes, without a doubt. Consumers have only got so much time and money, so rather than buying four massive 40-hour games, they might buy one or two of those now and fill up with snacking content. Look at the retail model now: there's price erosion in the market place – a huge amount of aggressive pricing – so it has become much more of a challenge for stores. Consequently, the range is being reduced, and the games being eliminated will be the ones that don't rate highly on Metacritic. But then, a lot of these are B-type games that perhaps shouldn't be there in the first place...
IL: There's also the issue on choice and price. Games that are delivered via physical media have a heavier cost attachment to them. You can buy one game on a console or get 40 on an iPhone for the same price. There's a lot of choice for the consumer now.
But not everything in the middleground is a game that's aspired to blockbuster status but somehow failed. There are plenty of niche titles, that are amazing, buy can't and don't aim to compete against Call of Duty. I'm thinking, say, Vanquish, Mirror's Edge or Demon's Souls. What happens to those games now?
RM: I think it's probably true that most studios are now quicker to cancel stuff if it's not living up to expectations in the green light process – the costs are so big. But, actually, the technology inside today's consoles means that we have the ability to tell stories in a better way, a much more graphic way, allowing us to get deeper into the narrative and become more creative in the way we put an experience in front of a consumer. In the case of Heavy Rain, that's an entirely narrative-driven game – when I used to work for Sega, I was introducing games like Golden Axe on the Mega Drive, narrative wasn't even part of that conversation! But now we have the technology, we're opening up new avenues of creativity.
RM: I think it's probably true that most studios are now quicker to cancel stuff if it's not living up to expectations in the green light process – the costs are so big. But, actually, the technology inside today's consoles means that we have the ability to tell stories in a better way, a much more graphic way, allowing us to get deeper into the narrative and become more creative in the way we put an experience in front of a consumer. In the case of Heavy Rain, that's an entirely narrative-driven game – when I used to work for Sega, I was introducing games like Golden Axe on the Mega Drive, narrative wasn't even part of that conversation! But now we have the technology, we're opening up new avenues of creativity.
But then could Heavy Rain have been made without Sony's close firstparty support?
RM: There is a funding issue. We as a platform holder have a duty to push the boundaries, we will gamble on using technology and exploring different experiences, because someone has to. But if you're a multiplatform publisher and selling to the marketplace that those platforms have created, then it's purely a commercial decision.
RM: There is a funding issue. We as a platform holder have a duty to push the boundaries, we will gamble on using technology and exploring different experiences, because someone has to. But if you're a multiplatform publisher and selling to the marketplace that those platforms have created, then it's purely a commercial decision.
Is Sony still planning to gamble on offbeat projects, with the market as it is in 2011?
RM: Absolutely – it's fundamental to us.
RM: Absolutely – it's fundamental to us.
And how about Square Enix? Is it difficult to compete and think about new IP?
IL: Clearly, you need large capital reserves to invest in big Triple A pillar titles, and you're going to see a lot more consolidation in the industry going forward. That's why it made sense for Square Enix to acquire Eidos – it gives them a global publishing and development company.
IL: Clearly, you need large capital reserves to invest in big Triple A pillar titles, and you're going to see a lot more consolidation in the industry going forward. That's why it made sense for Square Enix to acquire Eidos – it gives them a global publishing and development company.
But at the moment there seem to be few safe bets. Activision has just canned Guitar Hero, once one of the biggest brands in the industry. Do you think we'll see more of this going on in the near-future?
IL: Well, the market dictates these things – no one does it out of choice. But yes, I think we will see more of it. And also, if a game's not ready, it's not going to be just shoved out of the door – those days are over. With people's knowledge of games through the internet and word of mouth, it'll be destroyed. Instead, it's going to be delayed to make it the game it should be, to realise its full potential. But clearly, this means we're going to concentrate on fewer titles rather than having a broad portfolio as we've done in the past.
IL: Well, the market dictates these things – no one does it out of choice. But yes, I think we will see more of it. And also, if a game's not ready, it's not going to be just shoved out of the door – those days are over. With people's knowledge of games through the internet and word of mouth, it'll be destroyed. Instead, it's going to be delayed to make it the game it should be, to realise its full potential. But clearly, this means we're going to concentrate on fewer titles rather than having a broad portfolio as we've done in the past.
The games receiving most nominations at the Bafta awards this year are the big 'core' releases: Halo, Call of Duty, Assassin's Creed, Battlefield: Bad Company... Is that a concern? Does it say the industry hasn't evolved?
RM: You have to look at each of those games and ask, how have they developed? Look at some of the larger games: Call of Duty has more depth now than it's ever had in the past. All these games are progressing. In terms of creativity, this year we have had more than I've ever seen in the industry. Heavy Rain branches off into new areas, where your judgement actually steers the storyline – developers could apply that to any story. We could see the start off a new genre.
RM: You have to look at each of those games and ask, how have they developed? Look at some of the larger games: Call of Duty has more depth now than it's ever had in the past. All these games are progressing. In terms of creativity, this year we have had more than I've ever seen in the industry. Heavy Rain branches off into new areas, where your judgement actually steers the storyline – developers could apply that to any story. We could see the start off a new genre.
Also, look at the film world and how transmedia conversations have started in a big way. The guys at Power to the Pixel put on a programme of events every year and you see how you can start blending film with ARGs… The same thing is happening within our own industry – people are making smaller games, homebrew stuff, all that is happening agan...
But while the film industry is taking games seriously, the wider media doesn't seem to be...
IL: There's a perception problem with games – we've always been seen as the unruly step-child of the creative industries. The media has tended to concentrate on violent games or on the idea that games are addictive, and that has a knock-on effect. Teachers and parents don't see games as a viable career options; politicians distance themselves for fear of rabid headlines in the popular press; and the investment community has not backed the industry like it should have done.
IL: There's a perception problem with games – we've always been seen as the unruly step-child of the creative industries. The media has tended to concentrate on violent games or on the idea that games are addictive, and that has a knock-on effect. Teachers and parents don't see games as a viable career options; politicians distance themselves for fear of rabid headlines in the popular press; and the investment community has not backed the industry like it should have done.
Video game design plays to the strengths of the UK – we're brilliant at creativity and we're brilliant at high technology. With manufacturing and the financial services in turmoil, what better industry for the digital economy can you ask for than games? It ticks all the boxes: it's IP creating, it's knowledge-based, it's green, it's broadband-enabled... People need to understand what we're offering. 70% of the UK population play games and if you look at most of the content, less than 5% is 18 rated, which means that 95% of the content is suitable for family entertainment. Games have moved out of the bedroom as a single-player 'nerdy' pastime and into the living room as a social experience. This is having an effect on our culture. Games are as important, socially, culturally and economically as any other entertainment media.
So why aren't we seeing games on the Culture Show?
RM: I think that's a discussion to be had with the media channels! But the experience of gaming is personal and it's difficult to replicate that kind of emotional connection via TV. It has also been difficult to create news stories around the industry that capture the public's imagination. With movies, half the attention is about the star, not about their performance, we don't have that within our industry.
IL: Our heroes are virtual!
RM: If you want to sell a newspaper, bad news is better. I think we'll always have an issue with this, but as we start to tell more involving stories, which is what's happening right now, perhaps things will change.
IL: Games are an artform! We get an emotional response out of people who play them. Happiness, sadness, fear – we can play with those emotions. And on a positive level, games teach you about solving problems, about intuitivity, choice and consequence, about social engagement, using a computer, even dexterity – these never get featured in the press.
RM: I think that's a discussion to be had with the media channels! But the experience of gaming is personal and it's difficult to replicate that kind of emotional connection via TV. It has also been difficult to create news stories around the industry that capture the public's imagination. With movies, half the attention is about the star, not about their performance, we don't have that within our industry.
IL: Our heroes are virtual!
RM: If you want to sell a newspaper, bad news is better. I think we'll always have an issue with this, but as we start to tell more involving stories, which is what's happening right now, perhaps things will change.
IL: Games are an artform! We get an emotional response out of people who play them. Happiness, sadness, fear – we can play with those emotions. And on a positive level, games teach you about solving problems, about intuitivity, choice and consequence, about social engagement, using a computer, even dexterity – these never get featured in the press.
But do you feel that now, games are certainly understood within Bafta?
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