Guest Blog: Toto, we’re not in GameStop anymore – Digital distribution and the new Oz for video games

Today’s Blog is a guest post by gaming expert Blake Lewin. Blake has been in the gaming industry for many years, leading a variety of large gaming ventures. He is currently President of Atlanta Game Cooperative and leads business development for Cyan Inc.

Blake will be leading a webinar on the evolution of the gaming industry and how that is impacting infrastructure decisions. If you are in the gaming business and are looking to understand how infrastructure is evolving in your industry, this webinar is for you.

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NOTINKANSAS

Digital distribution came in like a tornado. It decimated some industries and left others seemingly untouched. If you had been a record executive in 1999, you would have been living high on the hog, totally oblivious to the fact that your industry was about to get hit by this tornado and smashed to pieces. As newspaper, magazine and other media executives run for their storm cellars, the video game industry seems to be one of the lucky ones. The industry continues to grow and is projected to be at $86.1 billion globally by 2016. But make no mistake, just because growth hasn’t been disrupted by any destructive winds, the game industry isn’t in Kansas anymore. Digital distribution has picked it up and dropped it down into the middle of a whole new world.

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Back on the farm in Kansas, games used to be packaged goods. They were products that you built, tested and shipped. They were sent off on trucks to stores where they sat on shelves with a shelf life of 6 to 12 months if you were lucky. Now, games are delivered directly to consumers with in-game purchases, episodic content, updates, advertising, extensions, rewards, social sharing, Twitch broadcasts… the list goes on an on. Games are no longer products they are free to play services with digital revenues that continue to grow. Digital game & content sales, once a small fraction of revenues, are growing at a rate of 33% year over year in the US and EU. Market forecasting company DFC Intelligence reported that 92 per cent of all PC game sales in 2013 were digital.

But, digital distribution and free to play games are not new ideas. Online web based gaming has been around for decades. MMO’s have been evolving the free to play model for years. Multiplayer games like Call of Duty and Halo have been running their servers around the clock. So, what’s the shift?

In the 4th QTR 2014, iTunes averaged over 12,000 new game submissions a month. Newzoo predicts that in 2015 mobile game sales will rise to $30 billion and surpass console gaming. That’s a lot of new games, chasing after a lot of money. In addition, over-the-top micro-consoles (Amazon Fire TV, NVidia Shield, Google Nexus, etc.,) are starting to drive tablet games onto the big screen. Layer in the slow but steady growth of cloud gaming (Playstation Now, Onlive, Nvidia Grid, PlayCast), Virtual Reality (Oculus, Morpheus, Samsung Gear VR), wearable tech (Apple Watch, Nod, Microsoft Holo Glasses) and you have a perfect storm ripping the house off the foundation and dropping it down in OZ.

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In the new OZ, publishers and developers need to understand that games are no longer static works of art or commerce. They are dynamic, engaging services that consumers expect to be always running, always working and always available – instantly. Games need to maintain low latency connections, uninterrupted service, efficient and cost effective data transfer and downloads. Publishers and digital distributors need to insure the network performance of their games and so insure reliability for their customers.

In this new world, infrastructure decisions are every bit as important as art and story.

Gaming companies need to be as responsible for the operations of their games as they are for gameplay. An online gaming customer is twice as likely to abandon a game when they experience a network delay of 50 additional milliseconds. Over 80% of Internet users abandon a page when a video fails to start immediately. Successful online games need a Multi-CDN and Cloud delivery strategy to accommodate infrastructure demands. Gabe Newell revealed to The Escapist gaming magazine that a 2013 patch for online game Dota 2 generated 3.5 terabits per second and accounted for 2% of all Internet traffic. Handling bursts like this requires the real-time optimization of cloud, CDN and data center performance.

Cedexis offers great tools for all types of situations needed to support a game centered digital distribution strategy. Cedexis Openmix provides a way to route traffic to the best performing components in real time, programmatically, using industry standards. Openmix helps manage both cloud and CDN services with its next generation, data-driven, Global Traffic Management (GTM) system. This solution allows publishers to optimize their Content Delivery Networks, clouds and data centers for performance, cost, availability and many other key performance indicators. The Cedexis programmable solution enables better traffic shaping decisions that are important to help optimize game delivery to customers. That’s why services like Cedexis Radar and Openmix should be in every game wizard’s bag of tricks.

Unlike Dorothy, there is no going back home. But fortunately, companies like Cedexis make staying in OZ way better than living in Kansas.

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http://www.gamesindustry.biz/articles/2013-03-29-digital-game-sales-growing-33-percent”
http://www.pcr-online.biz/news/read/digital-sales-make-up-92-of-global-game-revenues/034551