Gaming meets the media: reasons to fear us, reasons to love us.
Gerhard Florin (EA)
Gaming meets the media: reasons to fear us, reasons to love us.
Reasons to fear us and reasons to love us: wider society gets to see and hear of our industry (slides of headlines). I don’t believe we’ve created millions of killing zombies intending to kill people and neither will we do that, but we get portrayed on the front pages when a single event like Manhunt occurs. We have to look for the dialogue with our consumers – all the people who play games known that games don’t make them violent – but people think and write about games having WATCHED them instead of PLAYING IT. You can’t experience games in a two minute trailer, you can’t watch a game, you have to play them. The people who burnt books could not read. Nowadays it’s the same, if you’re a new form of entertainment, people don’t understand what it’s about, often they condemn it. Rock and roll and TV were evil in my day.
You fear us because:
We take away your audience. There’s only a certain amount of time in someone’s day. Since 1998-2002, gaming consumption in hours has DOUBLED. And it was at the cost of radio, magazines, books and TV. If this continues [and he predicts it will] the mindshare of young consumers will be intense. It’s broadening too, not just young. Our products are broad church.
We are mainstream. Mainstream is measured on the hype occuring over the opening weekend. GTA launch was the biggest ever. It generated more revenue than the biggest film release ever (Prisoner of Azkhaban).
We’re mastering the technology. Our industry takes a huge leverage from technology. Where we go is most easily understood.. 8bit, 16 bit.. currently we’re at 132 bits: compare gameboy colour (8bit) to gameboy advance (16bit) to playstation (32bit), 5 years ago; etc. How any polys per frame, which is restricted by processor power. (shows slide of film) each technology leap is 10 to 35 times faster than the last. So in PlayStation 3 6000 polys for harry potter’s face. This will mean another huge leap in the industry – movielike realism.
Can we afford it? Are we powerful enough? Yes. We’re financially powerful. You can measure against ROIC return on invested capital (Microsoft 46% ea 42% consumer soft 36% ebay 18% and film aol time warner newcorp 6%). Or, looking forward, how can you measure? Market cap. MGM market cap 2.5 m. EMI 3.2. Mattel 7.4m. Pearson 9m. EA 14.6. BT 30.8. Time warner 80m. "We are high up there and we will help shape the future in the entertainment environment".
So – we take the audience, we’re mainstream, our tech is driving us forward and we’re financially powerful.
You love us because:
We’re advertisers. We spend 300m annually in Europe advertising our games in mags, news, TV. If we have a hardware launch year like next year, it will be higher. New hardware campaigns will have 20-50m dollar budget to establish themselves with.
We offer new licensing opportunities. There is almost no film without a game anymore. If you think back 3-4 years ago, when a
Hollywood film was being set up, they were thinking of giving the licenses away, like to print teeshirts. Now they’ve learned games take 2 years and are more important than teeshirts, so the planning cycle is very different. A film takes a year. Games take longer. The filmmakers come early and partner and talk together to ship on the same day, otherwise it doesn’t work. It also goes the other way round – Lara Croft,Final Fantasy, and so on. On the TV side we are thinking of Sims TV, or Big Brother. Malcolm in the Middle (
UK comedy) – EA sponsored – but we’re thinking of making the Sims into a weekly soap. Or a big brother game. Pokemon grew via TV. We can partner wonderfully here.
We have joint branding and association. We can ’marry’ our marketing. Sun Newspaper advertised in football hoardings, product placement and in-game advertising. You only take in-game advertising on where it appears naturally – hoardings, billboards, etc. The average boy plays 50 hours of FIFA so you get a lot of eyeballs with that product placement
Cultural relevance. If you look in our editorial and cultural sections of newspapers, usually one person working on games. Usually one. Books or films – HEAPS of people. But you compare the relevance: if you want to keep your media young, you cannot ignore this. Reviews or culture still in the online/tech part. We also need to do thought-leading NEWS STORIES. Positive stories. "Gaming as a force for good" = guardian supplement last week. We as an industry have to take time to educate broader media to discuss this stuff. Gaming has much more to offer, we’re not creating zombies, we’re helping people to become smarter. I’d rather have my kids in front of a computer game than a cartoon, because they’re using their brain. You can’t stand still playing a game. It’s a modern tool, and kids love it – our products have a fundamental part in allowing the future generation to do things like handle digital devices and multitask. It’s important to learn this because our world is getting faster, and if you can’t digest lots of info coming in, then you’ll have trouble in the future . problem solving is a good thing. You’re making them smarter to conquer the future.
50% of our consumers are adults. Nobody says "this news is only for 18 plus". Brutal pictures everywhere! But our games, you put 18 on the front, and you still get ’ban these games’ , even when they’re for adults. We’ve established a European-wide age rating. It’s a voluntary system. We have clear guidelines for marketing.. 18 products don’t get marketed to kids. We work with retail: you encourage them to set up mechanisms to control sales. It’s easy with GAME and co, they have well educated staff. But the hypermarkets are troublesome. We ask them to guarantee a system to flag our products for checkout people, and we say, you don’t put this stuff in, we won’t give you our games. But 18 rated games are still under 3% of the total = and the troublesome headlines are because of an easily sellable story. In 15 years, every editor will have been a gamer, or will be a gamer, so it’ll be fixed. But do we want to wait 15 years? No!
Mike Morris, Channel 4 International
Exploiting game content for TV
I think this is a fine intiative. Picking up on Gerhard’s presentation, which is right on the money – today’s story hasn’t been one of fear or love, but total indifference and misunderstanding. But this is going to have to change: broadcasters like c4 whose business model is about generating relationships and income.. we were set up by the government to provide alternative public service broadcasting to the BBC. We have a remit: a certain amount of education, innovation, diversity and alternative choices but at no cost to the taxpayer, so we’re entirely commercially funded. This explains some of the programming – Big Brother, to hardhitting documentaries; it also explains why we’ve been so successful: our programming delivers a very upmarket and a very young audience. It’s our editorial choices that makes this work: C4 is a "10% channel" in the UK. We basically have 10% of the audiences at peak time. However, if you look at particular parts – ABC1s and 16-34, we tend to generate a share of over 11%. So that gives us commercial advantage. We sell our ABC1 impacts at a premium – almost double rate.
That’s been the story for 20 years But we’re not in that situation any more. If you think , just to draw some OFCOM stats, the situation where we were one of three terrestrials broadcasters has changed. For the first time, in 2003, subscription revenue was greater than ad revenue. In the UK now more than half of homes have digital TV, and 13m were receiving signal. Our landscape is changing. Where before we had control of scarce spectrum, the industry is now far more fragmented. Then there’s the success of Freeview. Freeview enables you to receive up to 30 channels once you’ve paid 50 quid for a box – no subscription. The other big threat to our world is analog switchoff in 2012. that process could start in 2007, and our responses to that fragmentation is to put more money into programmes. In ’98 terrestrials spend 2.5bn on programming, and it delivered 87% of homes. In 2003 we spent 2.9bn but delivered only 67% of homes. It’s not working. Also, different platforms have different viewing figures and demographics. So while we’re a 10% on average, in analogue we’re 13%, in digital more like 8%. More competition see, and by 2012 there will be NO analogue homes. So the business model has been real successful over 20 years, but it’s under enormous pressure.
In addition to the pressures that we face in terms of competitive broadcast, we also have pressure from other forms of entertainment media. In the UK there are already TV over DSL services like Homechoice, and we’re seeing more TV with computing power; mobile 3g is widely available on Vodafone and Orange, and you can get TV on the move. So on the whole landscape, there was a cosy inward looking terrestrial community run by north London caf? society, basically. But we can no longer look inwardly.
Threat comes from elsewhere. Broadband is growing at 50,000 a week. Broadband connected people spend an average of 16 hours a week online and mobile continues to grow – 55m subs in 2004. Where it will end up is difficult to predict. One of the things that we need to realise when we’re dealing with the broadcast community – there are differing views. Most of the senior figures in broadcasting don’t necessarily see the world in post-linear terms by 2014. We have to realise that not everyone sees it in this post-linear way that Gerhard outlined. As someone who has to engage channel 4 and other broadcasters in the debate about involvement with the computer gaming market, it’s interesting to think about a few quotes in presentations I’ve done internally: this is the response from a very senior editorial figure within Channel 4. There was a computer gaming project targeted at a peak or off-peak slot. They decided it would have to be Saturday morning, only appealing to 12 year olds. To reflect some of Gerhard’s concerns, another quote was: that the project "needed to be much darker to work for 12 year old boys. Think warhammer, mike."
So there’s an indifference. There’s misunderstanding. Top level editorial isn’t listening. Gaming can appeal to an older and more female demographic, but they don’t see it. So, where will we end up? I think there are four views as to where the UK terrestrial broadcast world might end up between now and 2015:
Nothing Changes: we will still be in an analogue world but while it’s physically digital, the position occupied by terrestrials will be the same as it is now. It’s a nice comfortable view to hold, and doesn’t challenge us much, but it also is based on the success of 18 months of Freeview. Free digital will dominate, and especially among upmarket viewers; Freesat will fill in the gaps, pay-digital will peak at 12m, so big but not dominant, and the big freetoair broadcasters will keep the lion’s share of viewing. Interactive, online and gaming is a secondary experience. Many senior execs in TV think this is a genuine possibility.
Digital Pay Takes Over. Most broadcasters thought we’d end up here before Freeview turned up – a world where pay-TV is 75% of households, but only boring old people like me have free TV. Pay channels take the lion’s share. And people like Sky become very much like commissioning broadcasters. Subscription remains the dominant business model. I’d say there were more opportunites for gamers to interact with scenario 1 than this scenario, because we’re analogue under threat there. This view is more difficult to find a strategic reason to engage the game industry because it’s financially successful under its own terms: this scenario is TV Doesn’t Need Anything Else.
Timeshift Rules. This is basically looking at the impact of tech like PVRs and TiVOs. It’s a very attractive tech, gives the control of the schedule to the audience and in this world we’re looking at close to 60-70% of viewing taking place thru timeshifting. In this world there is significant amount of minority viewing and LIVE viewing is relegated to those big set pieces. Advertising is focused on those big propositions to cut thru the timeshift world.
Post-linear world. Broadband to PC rises to 70% -- same as TV. Bigger penetration amongst those under 34, the core audience to people like channel 4. The consumption of standard and longform TV stops, people are looking at TV in a fragmented way and pay content goes mainstream. Yahoo and microsoft compete alongside traditional media companies.
The potential strategic rationale here for broadcasters to partner with game companies depends on which world we end up with. Actually in the New World it’s possible for all four to exist, with some models in some homes and other models in others. Important commercial homes will probably live in a post-linear world. So to date it’s not surprising that there’s been no engagement between games and TV worlds. In the UK that’s been heightened by indifference, there’s never been any NEED to engage with anyone outside.
[alice’s note: he’s taking a bit of a commercial-only view here – the BBC has engaged rather more than most perhaps, with Fightbox and Time Commanders both blending games and TV, and both games kept being referenced all throughout the day later, to support this ..]
Whichever world we end up in, there’s going to be a much greater strategic reason for us to embrace the gaming world. And interestingly in an away day with senior management a few weeks ago, there was unanimity that we’ll have a post-linear world in 2012.
So we have a new opportunity. Our new Director General embraces technology. I think there are opportunities now, threats now to our model aren’t just in the future: we need to find cross-industry solutions. They always have to be creative solutions. We need better PR. but you’re knocking at an open door if you have good crossover ideas.
Q: Activision and Creative Assembly have had some success here. Rome Total War is hugely successful, and it was the basis of that game that formed Time Commanders and has gone on to be a driving force on the History Channel.
A: Yeah. [ missed something ] Also the whole area of online communities and online gaming is going to be an area that’s hugely interesting. The area of education and doco programming – also good. As the Activision example shows, there’s already interest. But I’m not editorial, I must point out. Big Brother also. A 13 week demo of the Sims in a prelinear world, isn’t it? That’s all it is? A group of people that you have some control over. So where could that go?
Gerhard: I think it’s 2005-2010 where the change is going to happen. SMS was unknown 3 years ago, now everyone uses it. I think tech runs quicker than your guys might think.
A: I agree! These changes are happening now and the landscape will change very quickly. You could be right about the timescale.