Steel Cowboy

There’s been about 30 percent less Wii Nunchuk, and probably just as much more style in the way Ubisoft has been presenting Red Steel 2 compared to the prequel.  The Nunchuk’s gone because no one fishes using the Wii s novelty as a hook any more.  One could argue that a lot of the style comes from the game wanting to be a Spaghetti Western, and Ubisoft obliging wholeheartedly in the title’s positioning.  In fact Red Steel 2 seems to become more of a Western with each trailer.  This one’s the most Morricone-esque yet.

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Watch it at GameTrailers.

Exclusive: A Dose Of Intelligence In A Fluid Market

In this exclusive interview, DFC Intelligence founder and president David Cole discusses industry trends along with two of his firm’s recent research initiatives, one looking at emerging markets abroad, the other at changing game distribution channels here in the West.

By Meelad Sadat


David ColeDavid Cole, founder and president, DFC Intelligence

To grasp how long DFC Intelligence has been covering the videogame industry, consider how different the game market was when the firm started in 1995.  The game retail space was an alien landscape, one where stores such as Babbages and Software, Etc. peppered malls, most of which still had an arcade.  Inside the stores, customers were more likely taking games home on cartridges rather than discs.  The console market had familiar players, but in much different positions as they entered the 3D game era with 32-bit and 64-bit consoles.  Sega was the champ, Nintendo a bruised contender, and Sony an unknown outsider.  Microsoft was sitting in the audience.

The game industry has come a long way, and anyone who has followed DFC’s analysis over the years may have come across fewer surprises.  The firm has been often-early and on-point on areas such as the run-up in game development budgets, the peaking of the hardcore console market, and more recently the growth of MMO and casual games.  Just last week, DFC announced that it was turning its focus to another growth area, emerging markets abroad.  It joined veteran China market analyst firm Niko Partners to form a new research arm called DFC-Niko Emerging Markets.  The partnership is a research initiative focusing on ten burgeoning game marketplaces including Brazil, Mexico, Hong Kong, and a wide swath of fast-developing Asian countries.  DFC has also launched a new internal initiative, again targeting an emerging area for the game industry.  The firm started research on the current state of game distribution channels, an area seeing some fluidity as business flows from brick-and-mortar retail to digital distribution and downloadable content.

With all of the activity, the[a]listdaily reached out to David Cole, founder and president of DFC, to talk about the firm’s new initiatives as well as get his thoughts on recent industry developments.


the[a]listdaily: DFC has been right on top of covering the growth of MMO as well as online casual and social games.  Do you think these types of games are affecting the console market?

David Cole: Right now, I do not think casual, social and MMO games are having much of an impact on the console market.  Of course, long term they could take time and money away from the console systems, but I don’t think that is happening yet.  While there has been indications of a decline in the console business that is really a natural part of the cycle and would have happened regardless of growth in other areas.  DFC had been forecasting that 2008 would be a peak year for consoles for many years.  Since 2005 DFC has forecasted a decline in 2009 and a further decline in 2010.  However, this is a decline from amazing record sales and consumer spending on consoles is still robust.

The biggest problem facing the console market is that Sony and Microsoft have helped subsidize the business by spending billions on R&D and marketing.  Now, Sony and Microsoft are struggling to make money in the console business and as a result they have cut back on much of the spending that helped grow the market for all participants.

[a]: When you launched DFC-Niko Emerging Markets, your firm said that covering game growth in South Korea helped you recognize these ten emerging markets.  What are some telling signs of a burgeoning game market in a developing country?

DC: The biggest sign of growth is increasing broadband penetration and a population that is connected.  In South Korea, this usage started in PC Bangs, or Internet cafes, where consumers could play online and be charged by actual usage.  As home broadband penetration grew this allowed consumers to play at home.  Of course, government initiatives can help technology industries grow (or not) and this is another important factor we monitor.

Once consumers are connected online, companies have a way to reach consumers on a cost effective basis without having to worry as much about the devastating impact of piracy.  Basically, technology is allowing legitimate publishers and distributors to out price the pirates in many emerging markets.

[a]: Speaking to a West-based marketer or a developer, how would you define the opportunities in these emerging markets?

DC: With the cost of developing products it is becoming essential to have a global business.  Obviously from a sheer numbers perspective only about 1 billion people are in the Western markets out of a global population approaching 7 billion.  However, more than sheer numbers, emerging markets tend to like products that have extremely high profit margins.  If you look at the top game companies in a country like China they are making these ridiculous profits on games that are often over five years old.

Of course, it is easier said than done.  There are numerous issues in trying to establish a global business and each country will have its own obstacles.  A major part of our research initiative involves working with lawyers to understand the unique rules of each country.  Another part of the research involves identifying who developers should look to partner with in specific countries.  In many cases it may not make sense for a company to try and enter a particular country.  However, it will become very important for publishers to have a strong understanding of the global potential for a specific product.

[a]: You just launched a survey looking at game distribution channels here in North America.  What prompted the research initiative and what are the objectives?

DC: The explosion of distribution channels is one of the biggest growth opportunities for the game industry.  It also represents a potential pitfall for companies that don’t fully understand what changes are occurring and the implications of those changes on existing practices.

The ability to utilize the broadband networks to digitally distribute products is a major change for all entertainment products.  It breaks the stranglehold large retailers and distributors had on getting products in consumer hands.  Furthermore, online access allows for more flexible business models including subscriptions, rental, demos, buying low cost items.  Of course, from a marketing standpoint, social networks allow companies to leverage masses and reach millions of users AND distribute products to those users at a low cost.

DFC is actually doing several surveys on distribution channels.  It is an extremely complex and fast moving area and there is no single data source for reliable information.  Our goal has been to survey consumers, collect actual usage data from several million consumers and collect sales data from distributors that will report to us. However, another major initiative has been to get publishers and developers to participate in surveys.  We are asking industry insiders how specific products are being distributed through various channels.

We think by using a multiple approach of surveying consumers, collecting actual data and surveying the channel we will be able to triangulate what is truly going on in the market. As an incentive for completing the survey we are giving out a free report of the results to everyone that fills out the survey. We think the results will prove fascinating for marketers looking to understand the various ways consumers are now accessing products.  Anyone that wants to take the survey can go here.

Catching Up With PS3

Industry Gamers James Brightman has an excellent interview with Sony senior VP Rob Dyer, who oversees game publisher relations.  While covering recent PlayStation 3 market gains, Dyer talks candidly about challenges that have faced the console as a third-place contender.  He sheds some light on how Sony issues such as trouble getting game exclusives and having developers optimize titles for rival console Xbox 360.  Dyer also hints to a retail strategy designed to boost PS3 in-store presence being unveiled this summer.

Read the article at Industry Gamers {link longer active}.

Famed Designer Garriott Forms Social Game Company

Famed game designer Richard Garriott has returned from his two-year hiatus from the game industry, during which NASA launched him as a space tourist to the International Space Station, to launch something closer to home.  As reported in Edge-Online, Garriott is behind Portalarium, a company looking to make casual games and other apps for social media networks.  Garriott is best known for pioneering RPG and MMO games with his Ultima series.  He last worked on the high-profile but ultimately not widely adopted MMO Tabula Rasa for NC Soft.  His new company spells out a future that expands beyond games.  Edge says Portalarium describes itself as broad based and eventually extending into open learning and open government applications.  Its first offering is not a game, nor an app, nor technically even a product.  The company has launched the Portalarium Player, a free browser-based development kit that allows game makers to port their content seamlessly into social networks such as Facebook.  Garriott said the new venture really takes me back to my roots in the game business, citing smaller teams and budgets needed for the type of projects being pursued.  Read more at Edge-Online {link no longer active}.

MTV Adds Real-Time Ads To Online Videos

MTV Networks is rolling out real-time ad targeting in online videos served through its network of sites, reports Mediaweek.  The company has enlisted online ad measurement firm Quantcast to enable advertisers to target audiences accessing its online video content based on specific demographics and lifestyle, and do so in real-time.  Quantcast says its technology can pinpoint the audience for a given piece of content at a given moment by combining data from a variety of sources such as panels and ISPs.  It describes the system as a mass scale inference model.   MTV ad sales executive VP Kevin Arrix said the tech allows us to mine our audience across the entire portfolio.   Mediaweek says MTV is rolling out the tech across its online network including web sites for VH1, Spike, and MTV s Tribes ad network.  Read more at Mediaweek.

Zynga Keeps Growing With Launch Of India Office

Venture Beat reports that Zynga has launched a development studio in India, the social game maker s first international office.  The satellite studio is the third one set up in less than a year by San Francisco-based Zynga.  The company announced a studio in Los Angeles earlier this year, only about seven months after it had set up its first outside office in Baltimore, Maryland.  Zynga’s India office is based in Bangalore and expected to employ around 100 people.  The location’s focus will be on game development and infrastructure for existing Zynga games, though the company expressed hope that the office will also help it build demand for its games in India.  Venture Beat says India has about 81 million internet users and is expected to become the third largest online market globally by 2013, behind U.S. and China.  Read more at Venture Beat {link no longer active}.

Adidas Launches Retro Shoe With A Retro Game

Adidas has been preparing an augmented reality campaign for its Originals shoe line, one where codes will unlock online games where the shoes themselves are used as controllers.  According to game blog Game Culture, Adidas is packaging one model from the line with a videogame mimicking old-school console games.  Adidas new ZX500 shoes are based on a design the company introduced in the eighties.  Fitting to its origins, the shoe model has its own game in ZX Runner, a side-scrolling platform game entirely inspired by 8-bit console games from the era.  Game Culture says in addition to being available to play online, Adidas is including a USB drive containing the game with the shoes.  Read more at Game Culture.

New Measurement Tool Aims For Online Video Benchmarks

Visible Measures is hoping a new metrics tool helps set benchmarks for online video campaigns.  As reported in Mediaweek, the online video measurement firm has released Trends, a post-campaign analysis tool being used to provide metrics for existing online video efforts and provide data that can be used to plan new campaigns.  Visible Measures chief marketer Matt Cutler said many of their clients express that it s difficult planning out their video campaigns without knowing the benchmarks for success.  Trends data will try and remedy that by providing a metric for existing campaigns based on various measurements including reach, audience demographics, user ratings and online chatter.  The data can be categorized by campaign types, such as social videos, trailers or ads, as well as sorted by industry and product targeting considerations.  Visible Measures said it has data on campaigns by more than 100 companies across dozens of industries.  The company is launching a public beta test for Trends listing the 100 top performing viral videos in its database.  Read more at Mediaweek {link no longer active}.

Facebook Rolls Over Yahoo, Spoons Google

Facebook beat Yahoo in unique visitors in the U.S. for January, becoming the most visited web site next to Google.  As reported in Mashable, internet analytics firm measured a little more than 133.6 million visitors to Facebook for the month, beating Yahoo by more than 1.6 million visits.  The firm’s measures for December 2009 had shown Yahoo still in second place behind Google, with Facebook a close third.  For last month, tracked nearly a million and a half fewer visits to Yahoo.   Meanwhile it saw Facebook increase by nearly that same amount, nudging up by 1.49 million unique visitors.  Mashable says the milestone comes after Facebook announced its 400 millionth visitor earlier this month.  Read more at Mashable.

Fun With Physics

Square Enix and Avalanche Studios get creative again in highlighting the game play in Just Cause 2.   The open world action game is showing off an incredible amount of freedom.  The game makers inject a bit of comedy in this trailer to show off the variety of kills players can pull off, much of it thanks to impressive in-game physics.

Watch it at GameSpot.