The Year In Review: Game Biz Analysts On The Best Happenings Of 2010

[Gamasutra asked a half-dozen of the most notable game industry analysts about the best and worst things to happen to the game industry this year -- with some intriguing and unexpected responses.] Wall Street analysts spend most of their time looking forward – trying to predict future trends and events in the video game industry. Rather than having them pull out crystal balls as we inch towards 2011, we thought it would be interesting to ask them to look in their rear view mirrors and give their thoughts on the year that was. We start on a positive note – looking at the best changes of the year. (The group’s thoughts on what went wrong will run next week.) Michael Pachter, Wedbush Securities Pachter has been vocal this year in his calls for developers – specifically Activision – to begin charging for online play. This has led to a lot of eye-rolling by gamers and grumbling from publishers, who have had to address the issue. But from a gaming perspective, he says, the explosion in online has been a big driver for the industry. “The best thing that happened was the expansion of free multiplayer,” says the oft-quoted Pachter. “The idea that you have tens of millions of people who are able to play games for a significantly extended period and not pay more than the original cost of the packaged product? That’s really healthy for the industry. And you could expand that into free and cheap games, too, like Facebook and apps.” Colin Sebastian, Lazard Capital Markets The phenomenal retail success of Call of Duty: Black Ops was the first thing to occur to Sebastian. The record setting sales numbers definitively proved that the core game consumer was still very much alive and well and that high-quality games could still command big market opportunities. As he thought more about the question, though, his answer changed. “But the iPad strikes me as a boon to the broader industry,” he said. “[It brings] in new consumers to play games, with a new platform that should cater to both casual and core gamers. … The iPad could [also] herald a new trend bringing game apps to televisions.” John Taylor, Arcadia Research Taylor agrees with Sebastian’s thoughts that the rise of Apple is certainly the most notable thing to happen in the industry – though as he’ll explain more next week, it hasn’t all been for the good. “I’m gonna quote Dickens on this: ‘It was the best of times. It was the worst of times.’ And they both start with Apple,” he says. “The amazing popularity of the iPhone, iPod Touch and iPad sort of reinforced by the super easy user interface of the app store expands gaming significantly. It was really a combination of Facebook and Apple – but non-traditional players like Zynga and Apple reaching tens of millions of people dramatically increased the audience.” Eric Handler, MKM Partners While the packaged goods business is likely to end the year with lower sales than it saw in 2009, that doesn’t necessarily mean the industry is in peril, says Handler. Digital distribution is a growing force – and, while it’s very much in the early stages, industry trackers are finally starting to shine a spotlight on hard numbers behind it. “One of the best things that happened is people started quantifying digital transactions and showed that yes, packaged goods are declining, but when you include digital, the industry is actually growing," he says. "People were playing it so close to the vest previously about how big digital was that no one really knew.” Handler’s also a fan of Move and Kinect – not necessarily as products, but as ways to extend the lifespan of the current console generation. “This business is so tough,” he says. “The thought of people having to reinvest in a new cycle when this cycle has not been that great for many of the companies, would be disastrous. The last thing the industry needs right now is a new cycle.” Billy Pidgeon, M2 Research Pidgeon, like many of the analysts we spoke with, was enthusiastic about the new avenues for players to explore. But unlike the others, his praise wasn’t focused on social gaming or iDevices. “I liked the further roll out of motion control interfaces with Kinect and Move,” he says. “I think this is something that’s going to continue. I like it because it opens up the industry to a wide group of people [with] high value goods, as opposed to the app store and Facebook." "It continues to offer high value, high impact immersive experiences to a wider audience that might otherwise go down the cheap route. I think it’s good for the industry to provide experiences that are worth paying for that appeal to the widest group of people.” Jesse Divnich, EEDAR Chalk up another fan of the expanded audience – but again, with a slightly different take on things. ”For me, it was two things. The first was the introduction of Move and Kinect,” he says. “What that showed us is that for the longest time, we thought that the casual gamer was moving towards mobile, but with the launch of Kinect and its marketing campaign, it showed that if you make a good product and market it properly, the audience is still there. We thought these gamers were gone forever, but it turns out they were just hibernating. “I also liked the expansion of gaming into new verticals. We’re seeing games being adapted into Web TV products. Even the Kindle has games. I think it’s great that we’re expanding into new platforms and not being reliant on one platform or even industry.”