Eric Goldberg moderates Michael Pachter of Wedbush Morgan, Colin Sebastian of Lazard Capital Management, and David Cole of DFC Intelligence.

While game publishers might want to phase-out retail boxed products, Colin Sebastian, from Lazard Capital Management, thinks that we’re going to see a lot of friction with online distribution.

Sebastian was on the analyst panel at our GamesBeat 2009 conference today in San Francisco. At the panel, Wedbush Morgan’s Michael Pachter also said that recently announced technology OnLive will create value for the consumer, and that Sony, Microsoft, and Nintendo will lose in the equation.

David Cole, of DFC Intelligence, said: “We know that consumers spend a whole lot of money on games.” Currently, he added, two-out-of-three dollars goes to Sony, Microsoft, and Nintendo.

Pachter said the game industry can have 10 percent annual macro growth forever, because much of that will fueled by China and India.

“I actually think we’ve seen the last generation of consoles,” stated Pachter. He predicts that Nintendo will upgrade the Wii to high-definition version.

Microsoft is in a strong enough position to try another generation of Xbox, but Pachter said, “I think the publishers will tell them to pound sand. ‘We haven’t made any money this cycle, and we’re not going to support it.’” Sony, he said, won’t make another console until they make a profit on the Playstation 3. “They will make a profit in 2015.”

Cole notes that Sony have said they have a 10-year plan. “From a financial standpoint, they need that 10yyear plan to work.” But he believes it’ll be closer to 2012.

Ooyala’s Alexa Lee interviewed Softkinetic chief executive Michael Tombroff, and you can see her video below. You don’t get to see the dance game that the Atherton, Calif. company is working on, but Tombroff answers some questions about about the product, and he and Lee also show off their dance moves.

“I believe that social gaming is something that will reach over to a mass audience that [most gaming] has not,” Pincus said. “I believe that social gaming is a new medium.”

When pressed on whether he was being too grandiose (after all, don’t most games have a social aspect?) Pincus elaborated on how playing a game on, say, Facebook differs from playing a game on Nintendo’s Wii: It’s all about social capital. On Facebook, when you play games you’re actually building up your social capital with your connections on the network. On the Wii, you’re just socializing with your friends: “It’s fundamentally different.”

During the venture panel Liew also made a comment specifically about Zynga to illustrate his point that viral marketing isn’t actually that effective — he said Zynga’s strong growth comes from traditional advertising, not social networking. But Pincus said that’s just not true.

“We’re signing up 700 to 800 new users a day,” he said. “If we were doing that primarily through advertising, honestly, we probably wouldn’t be able to sit on a panel and say that we are profitable.”

“Fun is one of a very small portion of experiences that humans can have,” Chen said.

To illustrate his point, Chen compared the current stage in game development to the early days of cinema — when most films were all about gimmicks and (primitive) special effects, rather than longer, deeper, and more engaging narratives. Just as the movie medium matured to encompass a much broader range of experiences, so will games. That will also involve fulfilling players on three fronts — intellectual, emotional, and social. (I got the sense that Chen was about to expand on this idea, but unfortunately the panel ended before he got a chance.)

He wasn’t the only one to make the comparison to film, either. Elan Lee made a much more literal connection, since his company Fourth Wall Studios makes alternate reality games that promote movies. For example, Fourth Wall’s game 6minutestomidnight allowed you to interact with characters from the film Watchmen on your mobile phone. (Too bad the film wasn’t a huge hit — maybe because it wasn’t that good.) He also touched on other channels for games, such as social networking sites like MySpace, and more unusual concepts like gaming through apparel.

The other presenters included Michael Tombroff of Softkinetic — who previewed the company’s gesture-based controls, which would allow you to play a game without using any controllers, and Raph Koster from Metaplace, who spoke broadly about the difficulty of predicting where the games industry is going.

“Especially given that the pace of change is accelerating … it’s safer to predict the present in some ways than it is to predict the future,” Koster said. In other words, it’s impossible to predict what kind of big breakthroughs we’ll be seeing; all we can do is identify some of today’s emerging trends: “Games will be more multiplayer, more social, and will be delivered as a service.”

Geoff Keighley interviews Seamus Blackely

Everyone wonders what Hollywood’s view of the game business is. And speaking at the GamesBeat 2009 conference this afternoon, talent agent Seamus Blackley described “one of the pains of our existence inside [Creative Artists Agency]” as the perception of how Hollywood thinks the game making process works.

People in Hollywood think that any project can be made into a game, that it will make a fortune overnight, and that this will guarantee a successful franchise. “They have a naive, but very good view of the game business,” Blackley said.

But he cautions that approach is everything: “You can’t ever approach anything good from a licensing standpoint. If you don’t start from a genuine place, you don’t get a genuine product.”

That shouldn’t be too surprising, since GamesBeat attendees identified the iPhone as the most promising platform in a survey conducted prior to the conference — and indeed, VentureBeat’s games writer, Dean Takahashi, who moderated the panel, recently wrote a post titled, “30 million iPhones sold — now that’s a game platform.” And although Apple itself was absent, it had a vocal advocate on the panel in the form of Neil Young, chief executive of iPhone-focused mobile gaming company Ngmoco.

Young said he has developed games for the other major portable gaming platforms — namely, the Playstation Portable and Nintendo’s DS — and found that the iPhone is the best device of the lot. He said he isn’t impressed by the other smartphone platforms. Susan Panico of Sony PlayStation Network objected, saying that Young’s assertion was debatable. His retort? “It is not debatable.”

Earlier in the discussion, Panico had already made a case for the PlayStation and the PlayStation Portable, implying that the iPhone may be all right for casual games but that Sony stands out when you want to make something more sophisticated, artistic, or in-depth.

“What kind of game do you want to make?” she asked. “Our core passion, our competency is based on creating great games.”

That may be so, but VentureBeat’s Takahashi pointed out that Sony is actually in third place behind Nintendo and Microsoft in the console wars. When asked how Sony can come back, Panico noted that there have been some strong, innovative PlayStation games released recently such as Killzone 2 and Flower. She also pointed to the PlayStation Network as a promising development. Sony may not have “come out of the gate kicking and screaming,” but it’s in the battle for the long haul, with a 10-year plan, she said.

Another question the panel addressed was how startups can compete in an environment where giant publishers have established themselves. On the iPhone side, Young said they need to make good games that are native to the iPhone and take advantage of its capabilities. Then startups need to find a way to expose their games to as many consumers as possible. Jason Oberfest of MySpace added that third-party developers for the social networking site do well if they have a strong understanding the site’s users and its application programming interfaces (APIs).

Sony Online Entertainment president John Smedley, delevering the keynote address at GamesBeat2009

John Smedley, president of Sony Online Entertainment, delivered a keynote address for GamesBeat2009 that looked at the history of SOE, and the company’s bold new strategy to expand their market.

He begans by telling the story of his earliest experience playing an online game through Genie – and getting at bill for $600 at the end of the month.

“As I got excited by online gaming, I was able to get my company, Sony, to invest in online gaming.”

That game was EverQuest, which is celebrating it’s tenth anniversary. And it’s worth noting that without EverQuest, there would be no World of Warcraft.

Smedley described the nuances of running something that wasn’t a traditional retail boxed product. “This is not just a game, it’s a service.”

Original massively multiplayer online games were most often based on Dungeons and Dragons fantasy, and were played by males.

But Smedley said he is most proud of SOE’s latest project, Free Realms, going so far as to say it’s the most fun game they’ve worked on yet. “This is our attempt to broaden our demographic out,” he told the audience. The goal is fifty-fifty male/female.

“It’s primarily aimed at ten-to-twelve-year-old boys and girls,” Smedley explains, adding that the game is built with specific experiences for girls, specific experiences for girls, and even ways that families can play together.

SOE has been known for it’s development of PC titles, but Smedley says Free Realms will be heading to the PS3. “Rest assured, we think the PlayStation3 is an excellent platform for online games.” ]]> http://venturebeat.com/gamesbeat-2009/2009/03/24/sony-online-hopes-to-capture-youth-family-market/feed/ http://venturebeat.com/gamesbeat-2009/2009/03/24/vc%e2%80%99s-eye-an-infinitely-fragmented-market/ http://venturebeat.com/gamesbeat-2009/2009/03/24/vc%e2%80%99s-eye-an-infinitely-fragmented-market/#comments Tue, 24 Mar 2009 16:36:25 +0000 Evan http://venturebeat.com/gamesbeat-2009/?p=685

Gaming Investor Discussion: Mitch Lasky (Benchmark Capital), Gus Tai (Trinity Ventures), Janice Roberts (Mayfield Fund), Tim Chang (Norwest Ventures), Jeremy Liew (Lightspeed Venture Partners), and Mark Friedler (CEO of Worlds and Games).