An International Perspective with an independent game developer bias

1
An International Perspective(with an independent
game developer bias)

• Bob Wallace
• Principal
• Strategic Alternatives

2
Electronic Gaming Industry

• Big, complex and worldwide
• Entertainment is the product
• Success is difficult to achieve
• My view Oz developer positioning
• Why work in games development?

3
Big Complex and Worldwide p1

• gt9 Billion (US) per year, and growing
• Internal Market Structure
• 3 Console makers - have control
• Sony, Nintendo Microsoft
• Publishers consolidating
• Electronic Arts is nearly 3x the size of nearest
  pure-play publisher competitor
• Independent Developers challenged by
  competition
• Must be best at something specialize or perish
• Specialist Development Services emerging
• Next generation consoles will drive development
  team size up toward being unjustifiable on a
  full-time basis

4
Games Publisher Revenue Comparison(Gamedeveloper,
October 2004 issue, top 20 only)
5
Games Publishers by Corporate Nationality(Gamedev
eloper, October 2004 issue, top 20 only)
WITHOUT CONSOLE MAKERS USA 6 Japan, 5
publishers France UK, 3 publishers each
WITH CONSOLE MAKERS USA Japan, 7 publishers
each France UK, 3 publishers each
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Big Complex and Worldwide p2

• Platforms
• Console (PS2, Xbox, GCN)
• PC (and Mac)
• Online (MMOG and small format downloadable)
• Handheld (GBA, plus new Sony Nintendo products)
• Wireless (meaning cell-phone playable)
• New market segments emerge with new technologies

7
Entertainment is the Product

• Entertainment tastes vary by culture
• So do gaming tastes
• Games appeal to varying degrees in different
  markets
• Localization for worldwide markets is imperfect
• NAUKANZ largest common-taste segment
• Entertainment platform preferences vary somewhat
  by country, too
• Part technology infrastructure
• Part cultural preference

8
Success is Difficult to Achieve p1

• Big royalty checks for developers are rare
• Most games dont get funded
• Of those that do, most dont make a profit
• Of those that do, many dont yield developer
  royalties
• Publishers look out for their interests
• They have multiple developer options for a
  project
• They want you to do work for free, before signing
• Unless youre the best developer in the genre,
  you are not their first choice

9
Success is Difficult to Achieve p2

• When a project is signed, one is not OK
• Projects sometimes get cancelled
• Publishers have some inexperienced (or in the
  worst case, incompetent) internal producers
• Some publishers may not be financially able to
  provide adequate production or Marketing support
• If a mediocre product results, its your
  reputation that suffers
• One is always in competition to be the best
• Internally, for publisher marketing resources
• Externally, to be best in genre at launch

10
My View Oz developer positioning

• Strengths
• Right culture for best market
• Great people
• Skilled workforce
• Strong work ethic
• Entrepreneurial
• Government assistance
• Easy communication
• Relative cost advantage (vs. USA)

• Weaknesses
• Small local market
• No native
• console makers
• major publishers
• Difficult communication
• Relative cost disadvantage (vs. PRC E. Europe)

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Why Work in Games Development?

• Being part of a winning team - One collaborates
  with creative and motivated professionals
• Pride in product - One sees the results of their
  efforts in stores everywhere in the world
• Competitive compensation The games industry
  pays well
• Future Opportunity The games industry is a
  growth sector
• Opportunity for value - for shareholders upon
  sale of an independent development company to a
  publisher

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• Questions?