Show Me The Money, Mario; The Next Big Thing – Gaming as a Service

People often ask me, “What is the ‘Next Big Thing’ in technology?” and I usually come up with a few little ideas of problems that need to be solved or even better opportunities for people to make more money in an already established market. It is often the latter that seems to be the most often Next Big Thing, and frankly it’s because it is easier to see the money. Always follow the money if you want to see what the Next Big Thing is going to be.

So, where is the money?

I know one area where the money is exploding. Gaming. I look at gaming a lot like other Entertainment products. One that has become incredibly consolidated, but is ripe for a rebirth of the Indies, but one thing stands in the way. Distribution. Guess what, it was fixed in Film, it was fixed in Broadcast, it was fixed in Literature and it was fixed in Music, but has only been partially fixed in Gaming.

Sure we have seen the rise of new, smaller companies because of mobile gaming, but I see that as a subset of the opportunity. The real opportunity lies in the move to gaming everywhere for everybody. The best way to get there is through gaming as a service.

The fact of the matter is, the devices to deliver the gaming experience are still very expensive. When I say expensive, I mean expensive for the common player, not the crazy enthusiast. The latest generations of consoles are close to $500 for each platform, and that doesn’t even get you a decent game or display device. It just gives you a game processor and an internet connection. The console makers themselves are not big fans of this delivery system either; they often lose money for years after introducing a new console. Over the years many quality game companies have actually been put out of business trying to build consoles to deliver their games… think Sega and Atari to name a couple real biggies.

It also makes total sense from a real dollars and cents on both sides of the ball. Most of the money spent on consoles is just “stranded” cost and not good for the gamer or the game companies (remember they do not make much money, if any, on the hardware). The hardware sits idle 90% of the time, and it not useful for anyone. If the same amount of spend was centrally located in a data center it could be used 80% of the time to deliver quality content to devices that were optimized to be controllers and network end points (I am looking at you tablets and smart phones). These devices can also double as display devices for many games, but now can easily connect to the same display devices the game consoles currently run on. The staggering amount of cost optimization available is nothing short of a mountain of money with at least 3 commas after the dollar sign, waiting to be mined.

So the next question is, “Why is it not happening yet?”. Simple, the big players in the space are not quite ready to eat their young, and so far no one else has started doing it to them. They are still making a lot of money and want to make sure they do not get “Appled” like the music companies did with iTunes or “Netflixed” like the movie companies. So they are taking their time to get it right this time. Evolution in gaming has always resulted in several major companies disappearing almost overnight. It will happen though, because of the mountain of money to be mined. It is just a matter of when and how fast it will happen, because there are now billions of viable end points in place waiting to become game devices streaming centrally rendered content. The opportunity is there and all of the pieces are in place.

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