Yesterday our industry saw some of the biggest changes we’ve seen in one day, with EA announcing the $400 million acquisition of social gaming startup Playfish, and the 1,500+ person downsizing and studio closures at EA. I totally agree with Shacknews’ Garnett Lee when he wrote in a column yesterday, “As the dust settles this marks one of the most dramatic signs of the times for the videogame industry“. What I would like to do is share some of my thoughts on what this might mean for the game industry and some possible outcomes that I see from this huge change. Some of this may dip more into “What is the new game industry”, rather than just what will happen in the aftermath of the changes at EA.
More social game company investment and development
A $400 million exit is a pretty good indicator that the social game market is huge, and that doesn’t even take into account the hundreds of millions of dollars a year companies like Zynga are making (Zynga is a competitor to Playfish, with games like Farmville and Mafia Wars in their portfolio). These companies are crushing it, with what I’m guessing is huge profit margins. These games aren’t particularly complicated..and in most cases aren’t even original. They’ve got to be cheap to make and maintain, and the money that is made on microtransactions and offers is huge. This market was already expanding quite rapidly, but I’m betting this encourages more game developers (that are now unemployed?) to create new businesses, and it encourages more Venture Capitalists to invest a few million in a social gaming startup.
More “social” elements and micro-transaction models in EA portfolio games
This isn’t anything particularly new, considering EA has been dabbling with this stuff for awhile now. Most recently we saw them launch Battlefield Heroes, a free-to-play, micro-transaction funded game based on the popular Battlefield franchise. I’m not sure how well it has done since launch, but I’m interested in seeing how many more games we’ll be seeing from EA that are micro-transaction based.
This should also manifest itself in the form of more paid DLC for released games, which EA has said “extend the life and profitability of our disc-based games“. Last week Dragon Age: Origins released and had DLC immediately available, and EA reports that they have “seen strong early performance”.
More engaging social game experiences
In my opinion..most Facebook games are pretty lame. I don’t feel particularly invested or engaged with the games, with most of the motivation for playing coming from the competition with friends to be a higher level Mobster/Farmer/whatever. Ultimately everyone is the same, with your character and farm looking exactly the same as all the other players. I never feel invested in my characters or the games themselves, which I think is a lost opportunity.
I personally would like to see more engaging and interesting experiences – something more along the lines of Quake Wars or even Battlefield Heroes, but in the browser and as a Facebook game. I’ve never played a Facebook game that blew my socks off, and I’d like to see that changed.
Enthusiast Press will start covering the social game space
I think it has been interesting to note the lack of coverage of the social game market by the enthusiast press (Joystiq, 1up, Shacknews, Kotaku, Destructoid, etc). I understand why they do it, though, since they’re writing content for their community, and most of their community probably doesn’t find this stuff very interesting. If perhaps the game experiences become more interesting and advanced, the coverage of the space will start to increase. Or maybe if EA continues to dump millions and millions of dollars into the space the enthusiast press (and hardcore gaming community) will have to take notice.
It’s probably worth noting that EA owns Pogo.com, a company that makes free internet games and casual retail games, and the enthusiast press don’t really cover that side of EA’s business…so perhaps this one won’t come true 
Opportunities for game developers and publishers
I’m wondering what Activision thinks about all of this…Do they see a big opportunity to take market share in the vacuum that may form from all of the EA titles being canceled, or will Activision follow suit and join the social gaming market?
Since so many developers are now out of work, now is a great time for new businesses to be created. Hopefully we will see all these creative and talented folks start new game companies that will push the boundaries and do interesting things. The traditional big publisher model of funding isn’t the only way to go, with alternative funding models like Venture Capital investment being real opportunities for developers. Riot Games recently spoke to Gamasutra about how they have funded League of Legends without taking money from publishers and sacrificing IP ownership.
These new indie studios could partner up with hungry publishers like Warner Bros. Interative Entertainment, who seems to be pretty eager these days to try new things. They’ve been acquiring quite a few studios over the past year, and most recently published 5th Cell’s Nintendo DS game Scribblenauts. With 194,000 unit sold in the first month, I’d guess that 5th Cell is pretty damn happy with that arrangement.
What are your thoughts on the impact of the EA changes? Where do you think the game industry is going next year, and beyond? Am I full of shit?
Interested in your thoughts!
-Sam
Life, Sam, Social Media, Video Games | Sam Houston | 
June 29, 2010 1:38 pm | 
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