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Facebook ‘CSI’ Sleuths Crack Video-Game Trade Show Dominated by Assassins

Facebook sleuths playing “CSI” will share the spotlight with assassins at Ubisoft Entertainment (UBI) SA’s E3 booth next week, the latest sign that video game makers recognize the threat posed by lower-priced casual titles.

The annual Electronic Entertainment Expo video-game conference in Los Angeles, once the muscle-car showdown of big names and costly titles for mostly young males, is beginning to showcase family fare targeting a wider audience.

Games that can be downloaded anywhere and played for a few minutes at a time top many agendas. Almost 25 percent of France- based Ubisoft’s 6,000 developers now create titles defined as more casual, mobile and social, said Chris Early, vice president of digital publishing. Makers of 99-cent iPhone games are joining the competition for players’ time and money.

“Everything will be about social games” in five years, said Keiji Inafune, who developed hits including “Resident Evil” in 23 years at Osaka, Japan-based Capcom Co. Now developing a social game, he predicted “smaller upstarts will overtake established major publishers, who have treated them as a bush league.”

U.S. sales of video-game hardware, software and accessories declined 6 percent to $18.6 billion in 2010 as consumers drifted to digital play from packaged games played on consoles, according to NPD Group Inc., an industry researcher based in Port Washington, New York. Global sales of social-networking games played on PCs doubled to $1.4 billion, according to IHS Inc. (IHS)’s ISuppli research unit.

Photographer: Susan Goldman/Bloomberg

The change in direction may be the most significant in the 16-year history of the show, said Brian Farrell, chief executive officer of THQ Inc., maker of the WWE wrestling titles. Close

The change in direction may be the most significant in the 16-year history of the show,... Read More

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Photographer: Susan Goldman/Bloomberg

The change in direction may be the most significant in the 16-year history of the show, said Brian Farrell, chief executive officer of THQ Inc., maker of the WWE wrestling titles.

Zynga’s Share

Games played on social networks are free at the start, with publishers charging as little as a $2 for virtual goods that help players advance to higher levels. Console games such as Activision Blizzard Inc. (ATVI)’s “Call of Duty” shooting series cost as much as $60 for a title, with additional revenue from downloadable maps, weapons and other contents.

Zynga Inc., the biggest game operator on the Facebook Inc. social-networking site, generated $544 million in revenue last year selling virtual objects, according to ISuppli. The San Francisco-based company controlled 39 percent of the global market, twice the combined share of its four nearest rivals.

Nintendo Co., Electronic Arts Inc. (ERTS), Sony Corp. (6758) and other longtime game makers are also reacting to upstarts such as Kabam Inc. and KingsIsle Entertainment Inc., which are grabbing millions of casual players on Facebook and the Web.

Electronic Arts, the second-largest U.S. video-game publisher, today started a website, Origin, where players can buy games online, play titles including “Scrabble” on smart phones and interact with their friends.

Platform Yes, Console No

On June 7, Kyoto, Japan-based Nintendo will unveil its “Project Cafe” console, a successor to the best-selling Wii. The device is expected to showcase games in high definition, include a new controller and deliver more online support for casual gamers, said John Davison, vice president of programming for San Francisco-based Gamespot.com, owned by CBS Corp. (CBS)

The day before, Tokyo-based Sony and Microsoft are scheduled to outline their upcoming slates. Sony will provide more details about its next-generation portable, expected to go on sale late this year, according to Michael Pachter, an analyst for Wedbush Securities in Los Angeles.

Microsoft executives have said they will emphasize that the Xbox 360 console is a platform for everything from Netflix Inc. (NFLX) streaming to Kinect motion-sensing control of Hulu LLC programs -- and not just for hard-core gamers.

Up to 40 percent of owners use the console for services other than games, Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, said May 31 on the company’s blog.

Lower Prices

The change in direction may be the most significant in the 16-year history of the show, said Brian Farrell, chief executive officer of THQ Inc. (THQI), maker of the WWE wrestling titles. Companies that once focused on delivering games that cost $50 million to develop now must compete in an increasingly fragmented industry, he said.

THQ, based in Agoura Hills, California, is tinkering with different formulas to address that fragmentation. In May, the company offered its new “MX vs. ATV Alive” motorcycle racing game for $39.99, or $20 less than a typical console title.

Additional content, including branded vehicles, helmets, goggles, graphics kits and new tracks are available online for $1 to $5, keeping the game fresh for months and potentially creating more spending per user, Farrell says.

THQ is also working on a game for Facebook and Apple Inc. (AAPL) devices called “Margaritaville Online,” based on the Jimmy Buffett song. The company describes it “an immersive 3-D paradise, filled with frozen concoctions, music and adventure.”

“We want to get our games into the hands of more players by delivering things of value and creating brands people want more of. It’s as simple as that,” Farrell said in an interview.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net

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