E3 2011: Social Climbing

It's likely that you won’t get to the top of the $25-billion video gaming industry without making a few friends. If there's one thing to take away from this year's E3, it's that companies are clearly making a large push to create and market games designed to keep the living room and families social through interconnected play.
August 3, 2011

It’s likely that you won’t get to the top of the $25-billion video gaming industry without making a few friends.

The Los Angeles Convention Center was filled with echoes of that very sentiment this past June as the gaming industry’s premier trade event got underway. This year’s E3, which drew 46,800 people from across the globe, was as much defined by its traditional draw of the latest and greatest in hardware and software as it was by a shift in focus from both large and small companies to more social and mobile game play.

In fact, talk often revolved around Facebook and iOS device platforms, even though they didn’t have a physical presence on the show floor. With San Francisco-based Zynga, creator of the Facebook social gaming phenomenon FarmVille, valued at close to $20 billion—almost double the value of gaming giant Electronic Arts—it’s easy to understand why social and casual gaming are now top of mind for entertainment software companies. And while traditional hardware and software are still king when it comes to young kids—it’s still E3, after all—companies are clearly making a large push to create and market games designed to keep the living room and families social through interconnected play.

And it’s no wonder. Industry watchmen at the Entertainment Software Association (ESA) estimate that 45% of parents play computer and video games with their children at least once a week, a 9% increase since 2007. And games rated E for Everyone now make up the largest chunk of the market, driving 44% of software sales, according to market research firm The NPD Group. Digital gaming, which encompasses mobile apps and social network gaming, represents just 25% of the total gaming market. However, the sector is steadily growing (up 4% since last year) and is expected to accelerate. Additionally, the ESA says more than half of gamers are now playing on their phones or handheld devices, while eMarketer recently reported that the US social gaming market will exceed US$1 billion this year—marking a 28% increase over 2010. Meanwhile, Facebook-dwelling social games like those belonging to Zynga are readily available to the reportedly 7.5 million kids under 13 who are registered on the world’s largest social network.

“Everybody wants a piece of social gaming,” says Martin Rae, president of California-based Academy of Interactive Arts and Sciences, which serves as a barometer of trends within the industry.

Rae and the gamers he represents believe that packaging experiences and stretching brands and storylines across accessible platforms are the best ways to reach a young social gaming demographic that’s constantly on the go.

“You really don’t have to play a console game anymore to experience gaming, and you can have difference bite-sized pieces of game play spread across different technologies,” says Rae. “It’s more about the experience than the hardware now.”

For example, with an exclusive Marvel license came great responsibility for California-based Gazillion Entertainment, which launched its first social online gaming experience this past April. Marvel Super Hero Squad Online allows kids ages six and up to interact with each other and an array of Marvel superheroes in an open gaming environment.

“The free-to-play market is an untapped market with opportunities for young kids,” says Jason Robar, VP and studio manager for Gazillion’s The Amazing Society. He adds that the company consciously made its foray into online gaming with a kid-friendly property.

Designated areas within the game are referred to as social zones and the animations are given customizable emoticons, since the primary purpose of the game is to socialize with other players. While the game is free to play, Gazillion is monetizing the product through micro-transactions. For instance, $5 buys 500 units of “gold,” which can be used to purchase items like heroes and collectible card game packs.

“Now is a unique moment of double-generation gamers. Kids don’t have to convince their parents because their parents were gamers, too,” says Robar. Not surprisingly, Gazillion is using Facebook and Twitter to promote the game to parents, and each week, new characters are introduced via Facebook to tease players. “Because we are online, we don’t have to force kids to go to a store. Persistence is the key to courting the fandom for Marvel, and online can sustain that with new information and content.”

New content is certainly on the agenda for the mobile developers at Australia-based Halfbrick Studios, which has experienced success with its Fruit Ninja app (25 million downloads and counting).

“Mobile, social and casual are really our focus,” says Phil Larsen, director of marketing at Halfbrick. “But we want to make sure the brand is extended appropriately.” Fruit Ninja Frenzy is a Facebook take on the kid-friendly fruit-slicing app that will be offered as a freemium game (free to play with subsequent micro-transactions to expand game play). Nine-year-old Halfbrick is setting its sights high with its first social game and intends to attract 15 million monthly users. Larsen hopes to achieve this through existing brand recognition and special add-ons like weekly fruit-slicing tournaments that will pit friends against one another.

The fruits of Disney’s Playdom acquisition, meanwhile, are finally being harvested. The House of Mouse bought the social gaming startup in 2010 for more than US$760 million in an effort to strengthen its digital gaming portfolio. The biggest Playdom game to launch since the acquisition, Gardens of Time, debuted on Facebook in April and has since garnered more than three million daily active users. The hidden-object game is free to play with in-game bonus options. While Disney’s Interactive Media segment marked a $100-million loss in Q2, the company says it is moving full steam ahead with a number of social and mobile titles in the pipeline that span original as well as branded IP. In fact, a large Disney virtual world is heading into the mobile app space by late summer, and the company debuted eight new apps this year—double the number unveiled at E3 2010.

Digital gaming can get old for some players, and others, of course, are just not old enough for it. At Disney, younger-skewing console game Phineas and Ferb Across the 2nd Dimension for Sony Playstation 3, Nintendo Wii and DS is hitting retail this month to coincide with the premiere of the Disney Channel original movie of the same name.

For the under-seven set, Warner Bros. Interactive Entertainment (WBIE), through its exclusive Sesame Street license, is dishing out a crop of preschool games built around the concept of co-playing. The new Once Upon a Monster for the Microsoft Kinect, which launches this fall, introduces traditional Sesame characters to original monsters. Developed for WBIE by Double Fine Productions, the game is the company’s fourth Sesame Street title and the first for the controller-free Kinect platform.

Once Upon a Monster directly speaks to sibling empowerment,” says Jeff Neinstein, director of marketing for WBIE. “Microsoft is really pushing the Kinect as a family-friendly console, and this game highlights the use of more experiential dual playing among very young kids.” Additionally, features such as Kinect’s voice-recognition tool are being tapped through Once Upon a Monster to develop vocabulary skills among preschoolers.

2K Play’s Nicktoons MLB is also among the preschool games that take advantage of the Xbox 360 Kinect’s motion-sensing abilities. Launching next month on the Nintendo Wii and DS platforms as well, the company’s second Kinect-compatible title pits official Nickelodeon characters like SpongeBob SquarePants against real-world Major League Baseball players. The Kinect’s remote-free system lets kids bat, field and pitch with their bare hands.

While the Kinect is making waves for widening its offering of family-friendly games, hardware talk at this year’s E3 revolved primarily around handhelds like the new Nintendo Wii U, the Sony Vita and the four-month-old Nintendo 3DS—all of which feature design elements reminiscent of the burgeoning mobile tablet market.

After a tumultuous few months dealing with the PlayStation Network hack, Sony is looking to get back on track with its new HD handheld device, the PS Vita. The tech is ripe with kid-friendly features, notably a touchscreen interface, as well as dual analog sticks, a rear touchpad, front and back cameras, and motion sensors. It is also primed for social gaming with Wifi and 3G capabilities, as well as voice chat features that allow players to interact with friends while gaming. Priced at between $249 and $299, the handheld is set to launch in time for the holidays with 80 titles, including kid-friendly ones such as LittleBigPlanet and ModNation Racers.

Also tapping into the touchscreen market is Nintendo’s new Wii U, which won’t hit living rooms until 2012.

“I have underestimated Nintendo in the past and then they go ahead and take things by storm. Wii U will be as good as the developers they have on it. Give them some time on this system,” says Rae at the Academy of Interactive Arts and Science. “It points back to Nintendo really wanting to own the living room.” The Wii U is hoping to do just that by creating new ways to communicate while gaming. The HD console controller, which bears a strong resemblance to Nintendo’s DS handheld, features a touchscreen, circle control pad, inward facing camera, wireless functionality and the ability for controller users to have a completely different vantage point while playing the same game against other players. But unlike the DS, it is quite literally tied to the console experience in that it is connected to the television screen. Like its Wii predecessor, the Wii U is looking to attract both casual and hardcore gamers.

“Kids love touchscreens, and any time you can bring them into the equation the pipeline gets bigger for children,” says Warren Buckleitner, editor of New Jersey’s Children’s Technology Review. “I think the Wii U will offer big opportunities for kids through tracing, puzzles and more app-like experiences. And it will have backward-compatibility with the Wii.” The initial family-friendly demos harness the touchscreen elements and speak to the console’s HD graphics (something the Wii does not possess). While news on the device remains cryptic at best, it’s been confirmed that users will be able to share information online via the Wii U controller.

Of course, developers are already eyeing the Wii U platform. Majesco, creator of the popular and kid-friendly Cooking Mama franchise, sees the console as a breakthrough in terms of HD possibilities. “The kind of graphics we will be able to use with the Wii U will just be amazing,” says Joe McHale, producer of the Cooking Mama games, which have collectively sold more than 10 million units since their 2006 debut. “We’re definitely hoping to take our franchise to the next level on the Wii U. Kids are so adaptive and they will figure out the Wii U very quickly. And the interface for multiplayer gaming is huge.”

In the meantime, McHale is focusing his efforts on developing games for what he believes will be the hottest holiday gift of 2011—the Nintendo 3DS. Nintendo is certainly  banking on the anticipated releases of legendary Super Mario and Mario Kart titles on the glasses-free 3D handheld to lift sales of the device, whose performance has been underwhelming since its late-March retail launch. The company is also looking to pique both kids’ and mobile gamers’ interest by hyping the 3DS’s StreetPass functionality, which enables the exchange of game information when players come within roughly 100 feet of one another.

“The 3DS is designed for gaming on the go and we want people to be playing individually but also sharing their experiences with others,” says Matt Ryan, communications manager at Nintendo. In terms of privacy, StreetPass doesn’t connect people on a personal level but rather through their gaming scores and characters, which means it fits nicely within the kids market. For instance, the 3DS title Nintendogs + Cats allows kids to share their puppy characters with fellow 3DS owners and receive notifications from others in their own games via StreetPass. And at a time when 3D entertainment is poised to lose its luster, StreetPass functionality could keep things relevant for gamers of all ages.

“It makes it exciting to open your system and get a notification from another player,” says Ryan. “Kids are always looking for immediate gratification, which is an element that’s alluring in social networking.”

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