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Broadband to Make 'Pervasive Gaming' Mainstream, Study Says

If you're willing to believe what Forrester Research analyst Jeremy Schwartz is saying, get ready for a radical shift not only in the way game-obsessed Quake fans get their sadistic kicks, but also a tremendous change in the way almost every form of entertainment media is presented. And credit interactive broadband Internet access with making it possible.

In a new Forrester report, "Pervasive Gaming Goes Mainstream," Schwartz and a team of analysts assert that "powerful platforms, bigger pipes and people with a penchant for games will converge and unify the fragmented games market with a new $26 billion entertainment genre (by 2005)."

It will be a genre, the study indicates, with real mass-market appeal, one that that will attract grandmothers as well as teen-agers while potentially transforming the entire entertainment industry. It will be a TV-and-console-based multimedia platform that represents convergence to a degree that will far overshadow more familiar TV-PC convergence expectations.

"Basically, the crux of the story is that there is tremendous opportunity as a result of these new console platforms coming online," Schwartz told Newsbytes today. "It's one of those kinds of pivotal points in the games business.

"We already are in a transition year from the current generation of platforms like Playstation and Nintendo 64, moving to the new platforms, just from the point of view of richer processing power, more exciting games, etcetera."

Much of that is familiar talk. What's new, Schwartz said, is the element of broadband, which Forrester projects will be present in 50 percent of US households by 2005. "There's this really significant element here that we haven't had before, which is the fact that these devices can potentially allow these gamers to play each other online," Schwartz said.

Currently, the gaming industry is broken into fragmentary pockets of audience adoption, Schwartz said. What gaming consoles will achieve, especially when manufacturers take the simple step of adding TV-tuning capabilities to them, is the establishment of interactive gaming on a mass-market scale.

That's because the devices will not only be broadband-connected, giving them richer media, they will be simpler to use. So they will expose people to playing online games with people in other towns or other counties.

They will allow house-bound grandmothers to experience peripheral soap opera story lines they've created with their friends, that operate in tandem with the TV shows themselves. They will allow loyal viewers of shows like "Homicide" to bring back favorite characters written out of the show, or to "kill off" characters they don't like.

In short, there is a chance that broadband-based console gaming will change everything about the way people allow themselves to be entertained by mass media. Publishers will produce games that are so intertwined with TV shows and movies as to be indistinguishable; they will come to overshadow the old-media productions much in the way that merchandise was the true reason for the airing of the old children's show, "Transformers," Schwartz said.

"There's certainly reason to believe that these shows will link very closely to their game counterparts," Schwartz said. "Certainly it's the case, if you look at the kind of overall revenues that come from movies taken out several years (after) theatrical release. The merchandising and the sort of ad hoc, peripheral revenues typically outweighs the revenue that came from the box office,"

He added, "There is a convergence of media here where you might be not only blending a TV experience with a games experience, but also a music experience. There's really just kind of blending a lot of different media here into an interactive experience."

The concept is named "pervasive gaming" in the Forrester report, defined as "console-based interactive entertainment delivered over broadband that integrates multiplayer games with TV, movie and music programming, for mainstream consumers." The concept will take root in the mass audience when three things happen, the report says:

-- Game platforms connect to the Internet and control TVs,

-- "pipes" deliver content at broadband speed, and

-- people seamlessly segue from playing games to watching TV.

The trend will really take hold when consoles begin to replace set-top boxes on many homes' television sets, Schwartz said, because at that point people still too afraid to try using a computer will be able to get interactive -- easily switching from watching TV to playing games and back, without committing to any serious learning curve.

The Forrester report is in part based on prior Forrester data. But the company also interviewed executives at 20 game sites and game-publishing companies; 20 entertainment companies ranging from music labels to movie studios; and 20 technology companies including cable, broadband and network providers that distribute games to consumers.

Eighty percent of the game-publishing executives polled said that they expect that by the year 2003, gaming consoles will be the most widely used platform, far outdistancing PCs and cable set-top boxes. Ninety-four percent of those executives said they expect that the right console is already on the market; they indicate the Sony Playstation 2 will be the No. 1 console by 2003.

Other conclusions:

-- Wireless gaming: Though not addressed at length in the report, Schwartz questioned how fast wireless gaming will be adopted by the public. He said there are many issues to be resolved with the wireless infrastructure and data services that suggest adoption may be slower than TV-console adoption.

-- Revenue: There will be a slight erosion of traditional, one-time CD-ROM retail game sales, Schwartz said. "I think this idea of episodic gaming, to buy a CD as a starting point and adding episodic additions on a monthly basis or quarterly basis, is good," he said. "There's quite an interesting development issue in terms of being able to scratch (new) things out very quickly.

"But production techniques are such that a modular approach to an episodic story could be turned into a subscription-based game that could be incredibly popular and incredibly lucrative. There will be ongoing revenue that publishers haven't really seen before."

-- Product placement in games. Addressed at some length in the report, Schwartz said it will take a lot of work and experimentation to get game fans to accept placement of products the way they accept similar placement in movies. And it will be difficult to get gamers to click through ads in the games without losing the context of the game itself, he said. But it is a potential avenue to big revenues.

-- Regulation: The government can be expected to step in when interactive gaming makes it easy for young gamers to switch the face of an "enemy" in a fighting game with that of a celebrity, a friend or a sibling, the report says. "Laws will require console makers to install new versions of the V-chip to block kids from personalizing their games without parental permission," the report says.

"And after writing reports on the hazards of smoking and obesity, even the Surgeon General will chime in with 'Game Addiction in America: A Report of the Surgeon General.' "

Forrester Research is on the Web at www.forrester.com.

Reported by Newsbytes, www.newsbytes.com.

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