Gaming Industry Growing Pains

A five-person panel made up of executives from leading game and media companies discuss franchises, development costs, and an Xbox portable

The session, titled "Continued Growth of Gaming" took place during the MBA Media and Entertainment Conference last Friday.

Chris Di Cesare, director marketing, Xbox, explained how a licensed property could be properly handled.

"To make a successful game based on a media franchise - like Spiderman, Star Wars, etc. -  you have to take advantage of the richness of the franchise," he said. "Knights of the Old Republic actually added to the Star Wars universe - it didn’t simply try to retell the same old story. Goldeneye was a great shooter that innovated within the James Bond franchise. You want to make a compelling game, not get painted into a corner by the IP."

The issue of rising development costs predictably came up during the panel discussion. Greg Costikyan, the outspoken founder of Manifesto Games said, "If we’re going to break free of this trap, we have to find another way to distribute games, which is what my company is all about. I also really appreciate Xbox Live Arcade for this very reason."

Joseph Varet, senior director of business development and strategy at MTV Networks added, "Some of the most successful developers out there are making $5 million or $10 million off games with $1 million budgets or less. It’s a good model."

In-game advertising has been causing a stir lately, with some parties claiming it will be a multi-billion dollar business in the next five years, and others, such as DFC Intelligence saying that its true potential is a long ways off. Costikyan agrees with the latter stance.

"I think there is way too much VC money chasing this particular chimera," he said. "Dynamic advertising only makes sense in 20 percent of games - no Coke machines in the dungeon, thank you. And right now, only PCs and the Xbox 360 offer a viable platform for dynamic advertising. I just don’t see it. There is something there, but I don’t see how it will turn into the multibillion dollar business everyone is talking about."

Di Cesare had some interesting comments concerning the feasibility of a Microsoft portable gaming and media device, and also expressed doubts regarding whether a global launch for future hardware would be a good idea.

"We’re looking at the portable market. We want to be sure we can bring something unique to that space. The Xbox is attractive to us because it’s a great entry into the living room. The digital living room represents a whole host of new opportunities for Microsoft. Portable devices are a natural extension of that, but they aren’t considered quite so strategically important."

He continued, "In terms of the 360 launch, the real challenge is that when you launch a new console, you’re really constrained in terms of production. It’s really hard to meet demand, and we’re still not there yet. We tried to do a global launch — the first ever publisher to try. We were short on supply in all three major markets. Next time around, we’ll think very carefully about whether a global launch is the right way to go."

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