E3: ESA President looks back, forward ten years

On this 10th anniversary of the Electronic Entertainment Expo (E3) in Los Angeles this week, Entertainment Software Association (ESA) President Doug Lowenstein offered attendees a look back at the past ten years in the gaming industry and offered some prognostications of what the next ten years might hold. Lowenstein talked frankly about some of the issues facing the industry, including risk aversion caused by mammoth development budgets and licensing fees, the never-ending cycle of hardware improvements and more.

When the first E3 took place in 1995, the PC was ascendant, and many pundits predicted the gradual decline of the console business. “PC games haven’t exactly buried console games,” Lowenstein remarked, noting that PC games now comprise only about one third of the industry’s total 2003 sales of US$7 billion. Those comments underscore a trend in Mac gaming, where Mac game publishers have increasingly sought to license and develop both the PC and Mac versions of console games.

“The graying of the game audience will continue into the next decade,” said Lowenstein — the core market is still 18-34 year olds, but the average age of gamers has risen over the years from a primarily teenaged market to 29 years old. What’s more, many more women are playing games than ever before — one-third of gamers are women, and that’s a trend that continues to rise, according to market research.

Less focus on technology, more on content

Lowenstein predicts that the hardware technology that drives high-end game development will level off. There’s less and less room to make games look and sound more realistic, now that photorealistic graphics and advanced audio systems are the norm, he said. Lowenstein hopes that this will translate into an increased focus on game play and original content development, though he’s not blind to criticism that game companies take fewer chances as budgets soar into the stratosphere.

“Game designers and publishers will not be able to get by just making games that appeal to their friends,” Lowenstein said. He quoted research that determined that 70 percent of male gamers want the industry to focus on more original content, less on sequels, licensing and games that are only iteratively different than their predecessors.

Lowenstein also believes that peripheral technology will advance in the years to come to provide gamers with a more immersive experience. Force feedback peripherals, devices that let you interact with games in new ways — such as Nintendo’s recently-unveiled GameBoy DS, which features an interactive touch screen — and other changes will come in the next few years.

Hot trends in social gaming, online distribution

The burgeoning market for online games and games that emphasize social interaction are important trends to watch, according to Lowenstein. He suggested that massively multiplayer games like Everquest, World of Warcraft and Shadowbane will continue to be successful, but characterized their market appeal as a niche — the ESA’s research, a nationwide poll conducted by market research firm Ipsos-Insight suggests that such titles only include about 7.8 percent of the online market.

Instead, he suggested, online social games like There and Second Life will appeal to a broader audience that want to interact with many others in social environment, as well as play games online.

So-called “casual” games — puzzle, board, game show, trivia and card games — make up the lion’s share of the online market, according to the ESA’s research; 54.7 percent of online gamers say they play those games most often.

Lowenstein also pointed to recent advances in online distribution. In announcements earlier this week, Microsoft unveiled plans to increase its Xbox Live online service with Xbox Live Arcade, which will allow players to download arcade games and other content to their Xbox consoles; this year’s E3 also marks the first big showing of Infinium Labs’ controversial Phantom console, which will use online distribution for its games.

This isn’t limited to those examples, said Lowenstein. He believes that mainstream game design will become an “open-ended task” to support and upgrade constantly evolving games. He also suspects that game publishers may try serialization in the future, much in the same way that television broadcasters show weekly sitcoms and dramas.

Sustaining a vibrant culture

Tacitly acknowledging criticism that the game industry receives about the dearth of original content, Lowenstein thinks that worries have been exaggerated. He called the game industry a rapidly evolving market that’s driven by innovation and creativity.

“Innovation and creativity don’t operate on any strict timelines,” Lowenstein said.

In concluding his address, Lowenstein quoted from The Grateful Dead’s classic anthem, “Truckin’.”