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Aug 06, 2004



There are some big IFs, aren't there? As in, women and children will push mmog growth - if the industry figures out a way to interest them. And broadband will push growth - if the Korean model is indeed applicable to the rest of the world.

It's really hard to predict the future in the medium term. Short-term, we're in a shake-out. Long-term, you can see that this technology is going to have a major impact. Medium term? Who knows.


Indeed, it seems like it would be an interesting report to read. Do they accept VR creds?! Got those in abundance!

What strikes me about the broadband adoption is that, from what heard, the speed will not get any faster, it might even decrease. This is due to the inability to build hardware cabels in the same speed as new users sign up. Thereby clogging up the existing cables. So will there be more lag in the future? Poorer graphix?

But for the kids and women as the future role of gamers, definately! But one must not forget the 40+ either. In my oppinion, the genres that are avalible today are way too limited. But of course, who dares to be different?


Edward Castranova>Short-term, we're in a shake-out.

Interestingly, it doesn't seem that the short term shake-out rate is any higher than for game development in general. I think it more telling that every game that does successfully launch grows the market with no ill effects on any existing titles' subscription bases. Even without women and children, we haven't hit any sort of wall in growth. No need to predict the future correctly today -- we've got time to stumble across the Rosetta Stone of mass market design.

Putting on my prognosticator's hat, I think the medium-term will start shifting toward the NCSoft style of VW publishing. Publish more, smaller, very focused games; and expand the ones that take off.

This methodology is well suited to trying new and quirky designs to grow the audience that hasn't been pulled in by the traditional designs. It's also quite resistant to the pains of trying to design to please everyone, and the need to see too far into the future (as it shortens up development time).


It would be interesting to see whether this report addresses the fact that the economies of games are already generators of wealth, and what benefits will the adoption of frierndly legislation will give to the countries that embrace this trend (via tax heaves etc).


DFC predicts the online gaming market will generate $9.8 billion in 2009 - I recall hearing/calculating that the industry is growing 30% a year. pow (1.3, 2009-2004) * $1.9B of current revenue = $7B. $9B might be a bit agressive, but then again, companies doing market analysis like to be optimistic about their market.

Industry growth will be driven by greater adoption of broadband - The interesting question is how many virtual worlds will rely upon an initial retail package, and how many will be entirely downloadable, like Guild Wars. Even with broadband, really high quality graphics (we're talking 2009) will require 10's of gigabytes... Home-broadband has troubles with that much data, AND it's likely to be expensive unless the more fiber becomes available.

Women and kids will play a big role in future industry growth - Aren't they a fairly sizable chunk already?


DFC hasn't usually been as wildly over-optimistic as some other sources, and my own back-of-the-envelope estimates of market growth mesh fairly well with theirs.

After having spent a lot of time in the "broadband is not a panacea" camp, I've now switched sides: Broadband will save us all. I've done so because of two things:

1) The observation that 85% of our current players are on broadband, even though we've been bending over backwards trying to accomodate the dialup users and broadband has less than 20% of the overall internet residential market.

2) I found some reports on neurocognitive experiments that indicated that (a) Human beings actually have the world's best lag-compensation built into their brains, and (b) The limits of this compensation are somewhere between 100 and 200 milleseconds, depending on the person.

The first was an experiment that measured the difference between when the neural impulse to twitch a finger was fired (which could actually be measured by specialized equipment), and when people made the conscious decision to twitch their finger (which was accomplished by them noting the position of a dot on a disk rotating roughly once per second and a half).

The result was that the neural impulse came roughly 150 milleseconds (on average) before the awareness of the decision to twitch the finger. In other words, the finger was ordered to twitch, and then our conscious mind told itself it was telling the finger to twitch over a tenth of a second later.

The other report was on an experiment that deliberately induced a measured amount of lag into people's control of a virtual robotic arm while trying to perform a simple task. What they wanted to know was when they would no longer feel like they were performing the task, and rather were steering a robot which was performing the task (as close to a clinical definition of the slippery concept "immersion" as I can imagine). The result: Depending on the person, somewhere between 150 and 250 milleseconds.

If you're on a dialup modem, your *minimum* lag is 120 milleseconds, even if the game server is on the same local network as your ISP and it responds instantly (in practice, internet overhead will add at least another 50 milleseconds to that). So the only way to feel like "you" are performing the actions of your character in the world is to have broadband.

Then the question becomes: Are our customers switching to broadband in order to improve their game experience, or are the dialup players being "selected out" and only broadband players staying with us? I was unfortunately unable to do the polling that would have settled that.



One thing I forgot to point out about the 30% growth rate assumption...

When I worked on speech recognition, one speech recognition market analysis firm predicted a 30%-50% annual increase in the number of units shipped, which was a very reasonable assumption. They never counted on the price per unit to fall, which was a bad assumption. Prices for a dictation system fell from $5000+ to $100 in just 7 years.

While I don't expect such a dramatic price drop in virtual worlds, I wouldn't expect revenues per customer to stay constant. This does not necessarily destroy the assumed annual 30% growth in revenues though... A drop in price might be offset by an increase in customers because the service is now more affordable.


It would be great if Market forecasters include a sentivity analysis for each of the variables used.

A few dollars here, a few percentages there, and a few million people here and there ends up with a big margin of difference.

They could also give their probability weighting for a good, average, and bad scenario too.

Unfortunate, most market forecast numbers are used to "shock and awe."

The analysis probably would be more use than the top-line numbers.


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