If you follow digital media, you’ve heard a lot about the importance of creating and measuring audience engagement (Forrester’s recent marketing conference centered on engagement - see our posts). After all, the difference between broadcast media and interactive media is the interaction part. But most engagement conversations focus on audience interaction with linear content – viewing, commenting, and sharing.

Imagine instead that as a member of the audience you were part of the action – you enter the video, talk to the characters, and they talk back to you. Or that the story was about you and your family members. Or that the characters in commercials cared about what you have to say instead of just shouting at you.

We’re not as far as you might think from this kind of convergence between media, video gaming, and artificial intelligence. At the most recent Digital Hollywood conference, Andrew interviewed Jonathan Strietzel, Founder of BigStage and Peter Hodge, CEO of Virsona, whose companies offer intriguing components of this future that have the potential to create big value for brands and media companies today.

BigStage’s technology allows users to create and integrate life-like 3-D avatars of themselves into movies, videogames, commercials, and other digital video content, using just three digital face photos. Virsona offers artificial intelligence technology that can recreate and automate any personality after just a couple of weeks of training – allowing characters to personally interact with an unlimited number of audience members.

If you are part of a brand, media, or other company with the vision to imagine what moving from linear to interactive content could do for your business, these interviews with BigStage and Virsona are must-listen conversations.

Technorati Tags: Interactive Media, Big Stage, Virsona, Advertising

In Digital Podcast 52, Andrew interviews Jonathan Strietzel, Co-founder and Chief Creative Officer of Big Stage, whose breakthrough technology allows users to create and integrate life-like 3-D avatars of themselves into movies, videogames, commercials and other digital video content using just three digital face photos.

Imagine if you and your friends could star in a music video, famous movie clip, or commercial as realistically as if you were around for the shoot. Jonathan describes the company and the potential that its technology has to transform advertising and the audience relationship with movies, television and videogames.

In the interview, Jonathan describes his early start as a wunderkind discovered by SoCal VCs (0:00), his insight into the coming importance of personalization as he discovered the technology behind Big Stage (2:45), and how he helped move the technology to become consumer internet capable and fundable (7:05).

He talks about the current business, his monetization model through brands and content partners based on the technology’s dramatic impact on advertising effectiveness (11:35), and what the big media networks are seeing in terms of monetization and CPM rates (16:12). He also describes privacy considerations (17:40) and the other cool non-advertising stuff, like videogaming and short internet adventures, that Big Stage will be making possible (19:05).

Jonathan Strietzel is co-founder and chief creative officer of Big Stage. He brings 10 years of experience as an entrepreneur in the entertainment and technology industries, including founding Stritz Studios, a boutique special effects studio. He has also invented multiple systems for delivering digital advertising and currently holds a U.S. patent for his work in particle-based advertising. In addition, Jonathan has worked with numerous TV studios and Fortune 500 companies, including developing the highly publicized online clue delivery system for NBC’s “Treasure Hunters.” Jonathan graduated from Chapman University with a Bachelor of Science degree.

Technorati Tags: Digital Hollywood, Big Stage, Jonathan Strietzel, Virtual Reality, Avatar, 3D

In Digital Podcast 51, Andrew interviews Peter Hodge, CEO of Virsona, about Virsona’s new artificial intelligence technology that can bring any personality to life.

Imagine if anyone could have a personal conversation with Iron Man, the Michelin Man, or their great-great-great-great grandfather. Peter describes his new company and technology that is about to make these ‘holodeck’ scenarios a reality – at least the conversation part.

In the interview, Peter shares how he founded Virsona after being inspired by his desire to continue conversing with a recently deceased friend (1:21), and why the internet will accelerate the development of artificial intelligence based on his meeting with David Levy, a foremost AI expert (4:10).

He describes how we’ll be able to interact with Virsona’s technology shortly (6:00), including re-creating our own personalities (11:05). Here are some screen shots of the site:

Perhaps most importantly, Peter describes how Virsona’s platform can be leveraged by Hollywood, brands, and others to deepen relationships with consumers and audience (11:55). He even gets into some of the complexity and norms that may evolve with virtual personalities, especially the need to keep some information and aspects of our personalities more private, as well as the future capabilities we might see from virsonas (19:05).

Peter Hodge is CEO of Virsona Inc. Peter has worked with and for some of the biggest names in the Technology, Telecoms and Media industries over the last 20 years both in the US as well as globally. He brings significant experience to Virsona with over 20 years in technology including development, sales and management experience. Peter holds a BSc in Computer Science from the University of Greenwich, London and lives in Boca Raton, FL.

Technorati Tags: Digital Hollywood, Peter Hodge, Virsona, Interactive Media, Artificial Intelligence

There’s a love-hate relationship between Hollywood and gaming, and tremendous friction around licensed properties and what they mean for the gaming industry. In this panel, the experts explore where the relationship is symbiotic, where it is destructive, the underlying sources of friction, and how the relationship is now evolving. This is a continuation of our live blogging at the eighth panel from Digital Media Wire’s LA Games Conference 2008.

Bill Kispert, VP, Interactive, NBC Interactive
Sandi Isaacs, SVP, Interactive & Mobile, Paramount Digital Entertainment
Daniel Offner, Partner, Nixon Peabody LLP
Mike Breslin, VP, Global Marketing, I-play
Moderator: Andrew Wallenstein, Deputy Editor, The Hollywood Reporter

Where are we now in 2008 where things seem divisive in the Hollywood and games dynamics?

Mike – There are a few ways to look at it. You need collaboration between the production and the game developers, sets, and so forth; you can’t just hand over a style guide anymore. It also comes down to finding teams who share the creative vision. So collaboration is improving but it comes down to finding fit early in the process.

Keith – There are only three factors in the film license – time between film and game release, marketing budget, and likelihood of franchise to the film.

Sandi – I feel like everyone’s missing the point. It’s never been a more exciting time for film makers to collaborate with game makers. Now we have a great opportunity to start prototyping early in the process and explore business models, not just stay in the licensing box. At Paramount we’re putting together a team of game industry veterans to help make that happen. It’s also not just about the new release, but also the classics like The Godfather. It’s about the game, making a great experience and making it profitable for the studio.

Daniel – I’m slightly amused by the question, is Hollywood killing the game industry. We’ve worked with THQ for many years, and they make their bread and butter selling licensed games. There are some interesting changes now, though. The convergence of casual games, community and the web, and the access of content through broadband connectivity. The ability to tap the digital distribution platform opens up all kinds of interesting things. The other thing is having great content coming out of the studios and pairing that up with really great talent. I don’t think retail is going away – Wal-Mart, Amazon, etc. – but digital distribution is becoming very important.

Mike – I can speak with mobile industry perspective. One reason there has been consolidation in mobile is the cost of licenses with the peak of interest in mobile. Of course the studios are trying to maximize their license revenue, but from the side of the team investing in these licenses and putting together teams, you overextend on the licenses and can kill your business.

Sandi – Obviously we’re investing heavily in these properties which drives the mobile licensing terms. It’s a tricky fragmented business but the players know the challenge. It’s not the cost of the IP but the economics of the mobile game business overall.

What does the mobile game business look like, all license or some original IP too?

Mike – We’ve had success with some of our own IP. But on the license side, I think that Hollywood can help the game industry with the co-marketing and opportunity to leverage a brand where the studios are spending millions of dollars.

Keith – That’s a key point, you have to work with the license holder, because if you don’t, you’ll lose the value of the marketing, events, co-marketing if you don’t check in regularly and see what they are doing with the IP.

Sandi – Another factor is the broadening of the game demographic overall, expanding the scope of movies that work for games.

Keith – And now for the first time you have gamers making movies; the producer or director says from day one ‘where’s my game’, and wants to be involved on a creative level and ensure quality. They are also not demanding large up front payments as part of the deals.

Bill – You could argue that Hollywood can drive the game industry going forward – places, characters and worlds, with game play layered on top of it. Then there are millions of other promotional touch points, like theme parks, television, fast food, and more.

Keith – The other really important point is that when you talk about these $8 million marketing budgets, you can piggyback on those budgets and have credibility going into Wal-Mart for retail distribution and retail promotion. By paying for the license, you get to piggyback the buy for the sell-in level, let alone the consumer level.

Daniel – My question for the studios is, as what point will you be in my clients’ business and not need them any more.

Sandi – I think we already are and that’s the issue. There are going to be different parts of the value chain where we need the game companies, but other parts of the value chain where we don’t. We’re looking to work with partners based on value-added for both parties, not a single model.

Keith – That’s no different for any other part of the studios’ businesses.

Bill – Our ability to take things on ourselves also depends on the capacity we have available at different points of time. But it’s a very good time for independent developers to have conversations with studios. It used to be that we would go to Vivendi or another publisher and they in term would deal with the independent developers.

Sandi – It’s going to be very similar to the TV and film industry, lots of co-financing, lots of distribution deals.

With all these changing models that are happening, are there any upcoming releases that will put things to the test?

Sandi – On our side it will come from the casual gaming side. We are going to put in the time to develop really great games.

Boesky – There’s one coming up in September called Afro-Samurai from Gonzo. Gonzo committed to making a mini-series, and we invested in it from the creative side. Spike picked it up for a nominal license fee. They only got the right to run it; it was a great five episode commercial for us. We pick up revenue from the DVD, iTunes, action figures, and the action game coming out from Namco. All of the revenue from all of those ancillaries go directly to Gonzo, and Spike made so much money from the advertising without paying for content that they commissioned another run from us.

Bill – The notion is that if you’re really trying to build a franchise, you need content across platforms, and think about how you release them strategically.

Keith – The lie we told in the 90s is now true. We actually can use our game assets across media. Disney, Warner are starting to do it sometimes.

With a show of hands – is there a perception that Hollywood games are bad games? (Many hands are in the air)

… Andrew’s note: My fingers can’t keep up with the debate!

Mike – We all know there’s nothing more discerning than a gamer.

Keith – If it’s a bad deal, don’t buy the game. If you have a desperate publisher who wants something, or who messed up and can’t get it right – they won’t pull the public.

Sandi – We’re talking about hard core gaming reviews coming out and killing Sponge Bob. These mass market games are not targeted at the hard core gamer. It’s about being realistic, what game are you playing and what the audience expects for it.

Keith – If you compare these titles to other games, look at what you’re comparing them too. If I invest $30 million in BioShock, I can only invest $10-15 million in a licensed property because of the spend on the license.

Sandi – And that’s why the studios are developing games ourselves, so we can reinvest in our own IP.

Bill – We’ve introduced a hybrid model where we are co-funding games. Some developers said thank god, we’ve been waiting for the studios and networks to put skin in the game, and other showed no interest.

Daniel – A question for Ubisoft, THQ, and the others is will the studios still be giving out their best AAA properties? Will they be asking for a different economic deal, or will the studios just do it themselves and use publishers for retail distribution?

Sandi – If publishers have internal great teams, they often don’t want to put them on licensed properties.

Bill – We’ve tried to adjust our internal model to get involved early and put our publishers in a position to succeed.

Technorati Tags: LA Games Conference 2008, Hollywood, Videogames

We continue our live blogging at the sixth panel from Digital Media Wire’s LA Games Conference 2008. The mobile games panel focuses on the question, what’s it going to take for mobile games to go mainstream, exploring differences between the US and international markets, and different business models that are being used to tackle the mobile phenomenon.

Mobile Games: Challenges & Opportunities to Create a Mass Market Phenomenon
Scott Scherer, VP Product Management, Hands-on Mobile
Jill Braff, SVP, Global Publishing, Glu Mobile
Stephen Jackson, CEO, Smashing Ideas
Kay Gruenwoldt, Head of Industry Marketing, Nokia
Erica Chriss, VP of Strategy & Business Development, Greystripe
Moderator: Mark Donovan, CMO & Senior Analyst, M:Metrics

Jill, what have you seen shift in the last year in terms of drivers of your business?

Jill – The increase in people playing mobile games. Back in 2002 with Sprint, we were doing focus groups and couldn’t find anyone playing. Now we can find active players a day after posting an ad in CraigsList. The core audience may be different from the typical mobile user, but that’s what you need to grow a business. Also, we’re trying to see the carriers start to measure RPU (Revenue Per User). As the networks become a commodity, these services become more important.

Scott, HandsOn involves bringing titles like Incredible Hulk to market. How is that doing?

Scott – Guitar Hero 3 has been a tremendous success, the number one title since it’s launch in December. It’s a brand that’s hard to screw up, but also hard to create a long tail and ongoing revenue stream. So we deployed an option where if you buy the game you get three additional songs each month, which drives people maintaining their subscription. People are coming back and trying out the new songs and getting more great experiences each month.

Mark – That underscores the shift to subscription models and evolving content.

Jill – It’s awesome to see this kind of stickiness to content and episodic content. Mobile really should be about this kind of close relationship with consumers.

Steven, you’re a serial entrepreneur with Smashing Ideas, a smaller company. What does this market look like to you?

Steven – The company has been a casual game maker for 12 years, generated 150 million game plays last year. We’re the largest independent Flash developer in the US. Adobe decided they’d spend $900M to address the mobile space with Flash Lite and we jumped on the Adobe bandwagon for the mobile space. We have 30 applications on Verizon and 80 screen savers. We create 60% of our games, and then for the other 40% distribute for other developers. As a small player, we play in the Adobe Flash Lite niche and that’s where we focus.

Kay, tell us what’s happening with Nokia. When nGage was first launched it was laughed at, but you’ve been tenacious and successfully relaunched. How does it fit in?

Kay – We’ve learned a lot over these last 3-4 years. It took quite a while to come up with the new nGage platform, and we’ve accomplished all the points we set out to address: fragmentation, discovery, purchase process. We’re focusing on a premium experience for higher end phones. The average price for games on the platform is from $8-14. People pay for it because they can try the content out first and perceive the value. Now, original IP is leading ahead. The content that our games publishing unit creates is selling very well. That’s great news for smaller game companies and developers, they have a chance to be successful.

Erica, your business model is what Greg just said is way too early, ad supported games. How does that work, and is it cannibalizing the market?

Erica – We see it as a great market, and we know we are not cannibalizing it because our publishers are telling us so. It’s increasing the scale of the entire market, enabling discovery, and providing content for folks who will never pay for content. Instead of having them pirate your content and pay you nothing, why not allow them to create meaningful experiences that you can monetize. We’re seeing 300K downloads per day, and a large percentage surveyed would not pay for games, and are experiencing similar conversion rates as other distribution models.

Are there top tier publishers signing on with Greystripe?

Erica – We do have a number of top tier publishers whom we work with, including Hands On and Vivendi. First, we can be thought of as part of a windowing strategy, like DVD vs. theatrical. Things that are utility based, applications, do very well. We also have content from top tier providers who are experimenting with simultaneous introduction through us and carriers. They are measuring cannibalization careful and finding none – we’re just an addition channel.

What are you seeing as the relative importance of carrier vs. handset vs. direct to consumer distribution?

Scott – For HandsOn most of the revenue comes from the carrier deck. For B2C, it’s less about creating a portal for us, and more about working with larger brands like World Poker Tour where it makes sense – we run a website that offers free play online and then upsell to mobile

Jill – Certainly today, the lion’s share of the business comes from carriers. I’m actually interested in learning more about how much money you’re seeing from advertisers, Erica. There are other channels that are more direct that we are exploring. Over time this will look more like one-to-one marketing. The great thing about mobile is that literally it is always with people.

Mobile as an industry is a real pain, with so much fragmentation and handset standards. Is that getting any better?

Jill – We really like the complicated part. Not only is it a barrier to entry but it’s something that for us is a competitive advantage. We also do localization, day and date launches, event marketing tied in with carrier marketing. It’s similar to any other entertainment business. You can’t let people have a game only on one type of phone. Consumers don’t understand the technical complexity, it has to be seamless for the consumer.

Scott – For us it’s a lot like what Jill said. License partners expect global launches across carriers. We end up doing dozens of unique builds instead of a “high” and a “low”. It ends up creating a lot of extra work that changes the economics of the business.

Kay – What this discussion shows is that if you really want to grow this business you have to look across these issues as a whole. How you distribute. Consumer experience and discovery tools. Billing mechanisms. We are trying to address these as a whole, and those who do will be successful.

What would the panel’s advice be for people making games on other platforms and are eyeing mobile?

Kay – My key advice is do not copy and paste, it will not work. You can ruin great IP and a great brand by copying and pasting. The technology is a lot different from a PC and a console. It has a lot more – cameras, motion sensors, touch screens, wifi, GPS. Don’t just slap what you have onto mobile.

Erica – What’s interesting is that might decrease your chances of getting carrier distribution. But we believe that consumer choice leads to real experimentation, original IP, and reinforce the entire system.

Jill – If I were a strong brand holder I would build a really strong license business given the risks and uncertainties. If I were a developer I’d talk to carriers and publishers. You need to understand the carrier retail environment, and then partner with a publisher as a way of getting in the channel. On the flip side if you were going to develop for nGage, iPhone, etc, you wouldn’t have to deal with the porting issues but do have to deal with the complexity of developing for these platforms. There’s room for innovation. Even the videogame business, which is dominated by large publishers, has room for this kind of innovation (look at Guitar Hero).

Erica – It’s actually a wide open market, and new developers have the opportunity to take share with hit products.

Mark – But most of the volume is through the carrier channel, and that’s a tough channel to crack if you’re two guys in a garage.

Is location a component of games you are developing or see in the market?

Kay – Location is something that needs to develop, especially location based gaming. The only reason it’s not out there bigger is that noone has yet been able to develop a valid business model for it. With GPS in so many devices, it’s something we have to look at. I can’t say more at this point. If anyone here has a great concept, hit me up after the panel!

Erica – We’ll experiment with anything and we have a very cool distributed mostly in Japan that is all location based treasure hunting etc.

Are you seeing things outside the US that foreshadow what we’ll see here?

Stephen – We’re seeing a lot of interest in off-deck distribution models outside the US.

Jill – As an industry we make the mistake of talking about mobile from a US perspective. It’s also not one size fits all outside the US. We’re very successful in China and it’s all very local content that would probably be rejected by Verizon. In Europe networking is just starting to happen in terms of game play. Or in Latin America people are experiencing entertainment the first time through mobile, they don’t have cable or Wiis because of cost.

Mark – Did you just suggest that Verizon is a stronger censor than the Chinese government…

Are mobile games being usurped by casual online games; are these competition for eyeballs, dollars and entertainment?

Kay – Everyone is competing, it’s entertainment as a whole whether movies, mobile, or others. One note is that we are now looking at cross platform gaming across mobile and PCs.

Jill – From the consumer point of view, people are used to being on many screens simultaneously. There’s a lot more gender neutral user base for mobile, so it’s more akin to and complementary with what you see in casual games. That seems to make the brands grow far more than a cannibalization effect.

Stephen – One of our customers is Cartoon Network and we’re taking their online games and immediately bringing them to mobile.

Are we seeing games start on mobile and then go to other platforms?

Jill – That’s where we are trying to go as an industry.

Kay – There are pretty good examples already of that happening, one example from Germany that went from mobile to retail distribution in supermarkets for PCs.

Stephen – The challenge for us is monetization. We are able to sell clicky sticky games for mobile, but not Flash games for online.

Erica – That’s a challenge as games go cross-platform, consumers free expectations transfer to mobile, so advertising is important.

You still haven’t told us how much money publishers can earn through advertising!

Erica – In places like India and China we are seeing advertising with higher CPMs through advertising than through purchase. We’re seeing CPM’s in the US as high as $40, and in India as high as $15.

What do you see for the mobile games market going forward?

Scott – The real innovation will be through multiplayer connected games, which is a way of having a terrific experience, to reach out and add new experiences.

Jill – All these new technologies and devices are not for technology’s sake but to create more immersive, richer experiences.

Stephen – We’ll see much better discovery, the ability to find, share and play content.

Kay – Richer, more immersive experiences. Multiplayer and connected game play going beyond what you can have on your PC because mobile is something you walk around with.

Erica – More UGC, more social viral content now that there is a revenue model that can support free things.

Technorati Tags: LA Games Conference 2008, Mobile gaming, International mobile

Johnathan “Fatal1ty” Wendel is the first gaming superstar. He talks about what it takes to succeed as a gamer – it’s not that different from succeeding as an athlete – and the “Fatal1ty” brand that he wants to build into the Nike of the videogame space. Ken Rutkowski interviews him for Digital Media Wire’s LA Games Conference 2008.

LA Games Conference Featured Interview
Johnathan “Fatal1ty” Wendel
Interviewed by Ken Rutkowski, Host, Ken Radio

Johnathan is the most accomplished professional PC gamer in history. He has joined forces with the Championship Gaming Series, which is owned by DirectTV, as a spokesperson.

Ken starts talking about travelling through Korea with Johnathan, where he is a gaming superstar mobbed by gaming groupies. He’s a spokesperson now, and is no longer playing games at a competitive level, but for the right game, moment, and TV exposure will jump back in.

Succeeding in gaming is about focus, like any professional athlete. For gamers, a lot of skill sets are required: Discipline, timing, psychology, even math (for understanding the odds).

Johnathan believes that as CGS reaches hundreds of millions of homes worldwide, there will be more and more gaming stars in different countries. They already number in the hundreds, and increasingly are getting sponsorship from brands. They will be the new professional athletes.

The “Fatal1ty” business model is to pick the up coming athletes, pay them salaries, and build the revenue behind them. Andrew’s comment — It sounds a lot like the music labels until a few years ago.

Johnathan has moved from trying to split his time between running his business and gaming to just focusing on the business – it takes a substantial investment of time.

The “Fatal1ty” brand is a lifestyle brand for gamers. The keyboard, the mouse, the headset, etc., evolving from Johnathan as a celebrity to a brand for gamers, like Nike is to most physical sports.

What do you think about the Wii Fit? Very exciting. Johnathan is looking forward to using it. He woke after a Wii session sore, realizing that his work out was throwing punches with Wii. He’s a hardcore sports guy, football, tennis, and was a top 50 tennis player in his space.

Technorati Tags: LA Games Conference 2008, Videogames, Fatal1ty, Johnathan Wendel, Ken Rutkowski, Championship Gaming Series

These gaming industry experts share their perspective on what makes a game great – in terms of game play and financial results – and what new technologies and capabilities will be changing the face of killer games going forward. This is a continuation of our live blogging at the fourth panel from Digital Media Wire’s LA Games Conference 2008.

Matthew Bellows, VP, Consumer Strategy, Vivox
Catherine Herdlick, Dir., Game Production, GameLab/Co-Founder, Come Out & Play
Spencer Hunt, VP, Game Production & Digital Dev., Sony Pictures Television Int’l
Ariella Lehrer, President/CEO, Legacy Interactive
Chris Petrovic, VP, Digital Media, Playboy Media Group
Moderator: Scott Steinberg, Managing Director, Embassy Multimedia Consultants

What does having a successful game mean? Financial return? Set up for follow-up game? Great reviews?

Ariella – Obviously with a small company you have to make money, so number one is generating enough revenue to pay for your marketing and development expenses. Right now we have a number one product, Lost Cases of Sherlock Holmes, so that’s a success.

Spencer – First and foremost it’s about getting deck placement, and it’s about carrier relationships and consumer uptake. We do a lot with licenses, and for us, if the original content creator is excited about the product, that’s a strong indicator for market success. With mobile, if you’re getting 50K downloads a month for a few months, that would be fantastic.

What about retail distribution?

Ariella – For our games retail is now an afterthought. Online with our prentice Los Angeles game we sold 60K online and 20K at retail.

Let’s look at a popular game, Guitar Hero, and discuss what are the common factors that lead to success.

Catherine – Aspirational qualities are important, the desire to be a rock star. The game lets a consumer immediately identify with a role that has broad appeal and gives them the power to be the star.

Matthew – So much of a game developers’ motivation is to make something amazing and exciting, that even if a game is not a success based on revenue but pushes boundaries and finds passionate fans.

Chris – Aspirational is an important element for us (Playboy), on the male side living the good life as Hef does, and on the female side it’s important as well, though we’re still looking for what that element is.

Spencer – Everyone wants to be a rock star, so Guitar Hero nails the aspirational component. Also the core game play mechanic – it’s very easy to play the easy level, but very difficult to master, and it provides encouragement along the way.

Ariella – Also for Guitar Hero, the innovative use of the controller which allows people who have never played games to interact with the content. The interface is a large part of the success.

Matthew – What’s interesting about the controller is that it was not seen as the right thing to do from a business standpoint. It was a financial risk that publishers took, it drove up the SKU price, but it was all about game play.

How important is doing the groundwork, picking a business model?

Spenser – It’s all about following through on a vision. If you are really passionate about a decision, like Nintendo’s controller emphasis rather than graphics, following through is key.

Matthew – Look at Harmonix. They tried for ten years to follow through with the vision of making music accessible, and now they’ve hit the right formula and it’s a big success.

How important is it to be able to turn on a dime when you’re approach isn’t working?

Ariella – Very important. You look at the strengths and weaknesses of your developers to decide how to transform a property into something great. Then the process of refining and developing is a very iterative process. We’ll do the extra month or two at the end of the process to beta test, refine and polish before launching so we get it right. You have to be sure you have enough time to do it right.

How many concepts do you go through and throw out before deciding what to put into production, and whether to design by committee or use one person’s input.

Catherine – We go through dozens of ideas per month, and the decision depends on many factors, what we think will resonate with the market, production capacity, etc. We discuss as a committee but don’t design by a committee, the producer is the filter through which management, developers, etc. can voice their concerns.

How about prototype development?

Catherine – It’s absolutely imperative, you have to put something together almost immediately to have a vision for what the game is. With Fashion Play we iterated for four months, scrapped the product, than started over and created the finished product in five months.

How far into left field should you go with your original concepts?

Spencer – Left field is great for original IP, but for licensed content, you will have a flop if it varies from consumers’ expectations. You can go further out in mechanics, though.

Chris – We’re an evergreen brand so there aren’t a lot of pockets for totally original things. Evergreen is good but it has it’s constraints. Used to be you could reskin existing game engines, but we’re past that now. It’s hard to innovate as an original IP holder without new and different hits to go from.

How important is international?

Chris – For us international is much bigger. Looking at mobile we’re not on deck here but have been from early days globally. Existing and new territories, Asia Pacific and Latin America are very important.

Do review scores actually matter and influence sales?

Ariella – They don’t matter for casual games, but do for hardcore. Casual gamers look at top-sellers. Brands are becoming more important for the casual game market with 20 new games a day. If you as the millennial generation, they don’t believe in experts anymore, they believe in what each other and their friends think. GameRanking.com etc. are important for us when we are looking to find developers and see how they’ve scored with their games; it’s more of a business-to-business use of expert scores versus consumer driven.

Can good marketing sell a bad game?

Matthew – Marketing can definitely get the first launch 50% or 100% above what you ‘should have been’, but good games last. Here reviews do have an influence. I love the consumer reviews of the title, not so much expert reviews but people who have played games, love them, and think of themselves as expert. They set an incredibly important tone.

Let’s learn from common mistakes by players in the game space…

Chris – I’ll use ourselves as an example, though it preceded me. We had an online game aggregator come to us, suggest we slap our brand on an existing arcade, and we had about two consumers come to that URL. The web has a long memory about bad experiences. Reskinning without advancing the brand is disastrous.

Catherine – I’ll add perspective about thinking through the use of the controller. Most of our games use the mouse. We’ve launched games that can hurt your arm if you play too forcefully. In one example, we promised a game that we couldn’t make because it was technically impossible with the control mechanism, and kept bumping against the wall and eventually had to abandon the effort.

If you haven’t played a GameLab game, audience, download one now. They are top notch.

Ariella – We produced a game for a wonderful charity, Starlight / Starbright. We were given a script with celebrity participation. The only game we could come up with that fit the script was a side-scrolling platform game, and this type of game is not very successful as a downloadable PC game. It was actually well reviewed, but it didn’t do well in terms of sales. It was the wrong game for us as a developer and for the audience. Nothing was good about the result.

Spencer – It’s very easy for the team to follow in love with pieces of the game but they can’t pull away from the closeness to see how it relates to the brand or how playable it really is. Pulling away is an emotional rather than technical problem. You always have to build in the time to make adjustments.

Matthew – We had a concept game for MoPets and bring it out for mobile phones. It was original content, we had a great partner (Sony BMG), but it’s so hard to break original IP on mobile versus on downloadable PC where you can get cat, dog, etc. lovers engaged.

Are there any trends improving chances of success across the board?

Catherine – There has been discussion about franchising, licensing, etc. One of the exciting things now is original IP starting with games and moving to other media

Ariella – There are huge opportunities thinking about innovative controllers, look at the Wii Fit and other titles. We’ve really just touched the surface of what’s possible here.

Matthew – I’m so excited right now to be in the video games industry. You can do things so many ways – Flash, browser, mobile, etc. – we’re seeing a lot more creative things being developed.

Spencer – The reality of multiple platforms is finally being realized. Everyone in media is recognizing the power of this.

Chris – Building on that, the concept of synchronous game play through multiple platforms is finally coming to fruition.

Matthew – For example look at PMOG, Justin Hall’s passively multiplayer game. It’s a browser plug-in that tracks you as you go through the web, and you acquire your points, levels, badges, and so forth just as you browse the web.

Catherine – The whole definition of what’s a game is evolving, turning every day activities like buying groceries into a game – it’s pretty amazing.

Audience Questions

There’s a lot of discussion about innovate controllers. How do we do this without having to acquire another set of plastic toys that fill our rooms?

Spencer – Are you talking about the same plastic working across multiple publishers?

Maybe getting rid of the plastic altogether.

Spencer – I’ve wondered why noone has created a Guitar Hero controller that connects to an actual guitar

Catherine – I think we’re actually streamlining it more than we were 15-20 years ago.

What new innovate technology is on your radar screen as the next big thing for gaming – haptic interfaces, 3D, etc.?

Spencer – I’m really interested in location based games, and game design that takes advantage of that information. Use of GPS, photos for scavenger hunt, community, etc.

Catherine – I definitely think that GPS will become huge and change the way we play.

Ariella – I saw a presentation from an Israeli company that has to do with how your body interacts with the PC – there’s some camera that tracks your movement and allows you to physically interact with what you see in the screen

Matthew – I’m very interested in the integration of speech into games, facilitating a much more natural interface

Scott – We also haven’t talked about UGC, such as with the SIMS, which is important.

Chris – Having a tactile interaction with a virtual experience. I’ll leave that to your imagination regarding the implications for our world (Playboy).

What is your development cycle, and how does new technology impact that?

Chris – For Playboy, because games are not a core part of our business, we are strategically opportunistic about pursuing opportunities. We’ll sit back and analyze the financial benefit to us, with the partner taking the majority of the risk. We see a lot of pitches and don’t execute on 99.9% of them because it doesn’t make sense.

With respect to Matthew’s comments about voice in games … I was reading an article that discusses the advantages of using a third party voice provider like Ventrillo is that you can still talk to your guild when the game crashes. What do you think about this?

Matthew – It’s a good point, though there’s not much for the guild to do when the game crashes. But we’re working on a project to make that capability possible, keeping the voice independent of the game.

Technorati Tags: LA Games Conference 2008, game design, videogames

Find out why there really is no difference between casual and hardcore gamers, and what it will take for the rest of the world to become players of casual games in the third panel from Digital Media Wire’s LA Games Conference 2008.

Casual Games: What’s Next Now that Everyone’s Involved?
Peter Blacklow, Pres., WorldWinner (Liberty Media subsidiary), EVP, Digital, GSN
Kate Connally, Vice President, AddictingGames, MTV Networks
Eric Lavanchy, Director of Gaming, Endemol USA
Matt Turetzky, VP, Non-PC Games, RealNetworks, Inc.
Dave Madden, EVP, Sales, Marketing & Bus. Development, WildTangent
Moderator: Mike Vorhaus, Managing Director, Frank N. Magid Associates

Give a profound or controversial comment with your introductions:

Dave – I think that casual games are generally going free, with monetization inside and and at the back end of the game

Matt – News Flash: Gaming division is about to spin off from RealNetworks as a publicly traded company – and that’s all I can say about it

Eric – I’m convinced that within 5 years there will be no game shows or reality shows without a significant online component that intimately involves and integrates people into the show.

Kate – This is a profound question, not a statement. What will be the successful types of games that are going to spring to life on television?

Peter – Celtics in 4 over Detroit

In such a crowded old space, how do new casual game titles break through?

Dave – It depends on how you define casual, psychographic or demographic. If casual is a game found online, no money spent, no time investment required … in that world, it’s going to be much bigger than the traditional game business is today.

What’s the next new thing in casual games?

Kate – We’re looking at platforms like Facebook and MySpace engaging a much bigger interactive audience daily than ever before who are looking for something to do. You give them an interactive experience while they’re on their web page, and you have a much better chance of engaging with them. There are also some innovative game styles emerging but they are still early stage, like the viral vampire games which are interesting at first but seem to become annoying.

Matt – Obviously there are a lot of interesting things happening on social networks, but in general I don’t think there’s much new. We’re all to blame for focusing on things that have been successful over time, but that sameness will open the door to brands, like Scrabble, Mattel and Hasbro.

Eric – It needs to be remembered that this is a very nascent area; Facebook as a platform has been opened for all of two years now. In the early days of TV they were filming radio plays. We probably haven’t seen the thing that can really get accomplished through social media yet.

Peter – This whole industry – online casual games – is still brand new. Particularly at GSN, we hear a lot from people who enjoy the game shows on TV and who have no idea that they can go online and compete in these games. Wheel of Fortune is the number one syndicated show week after week after week, and while Sony is doing a great job trying to move people online, the viewers and loyal fans are just beginning to move online.

What tools do you use to get viewers on to game sites?

Peter – Back to TV shows, none of these should happen without an online component. Example, Bingo America, GSN was getting 2000 registered users per day, not many. When we launched Bingo America with prizes and contests, that jumped to 22,000 registered users a day.

Is there really a difference between the casual gamer and the hardcore gamer?

Peter – I also work with GamerDNA, a company that I’m on the board yet, which is focused on hardcore gamers. This segmentation around casual, hardcore, etc. games doesn’t work the same way in any other industry – people listen across music genres for example. We’ve all lost sight of the gaming consumer, who don’t define themselves that way.

Kate – We’ve also defined gamers by the way games are delivered, the platform, vs. the games that are differentiated by brands and programming vs. platforms.

Matt – There’s a perception that casual games are for women 35 plus. If you look at the traffic coming to RealNetworks is much more balanced, 50/50. Casual is just about monetizing.

Dave – The credit card is the gating factor for gaming online, who has it and who has access to it in order to buy the game. I load up my iPod at 99 cents a song but I can’t do the same thing in gaming, to break the price down and sample games on a bite-sized basis. It’s dependent on microtransactions and other forms of monetization, the ways people can pay for games.

Kate – Or advertising.

Can Eric talk about mobile vs. internet entries?

Eric – We’re trying to minimize the distinction, and that’s how consumers see it.

How about voting, mobile vs. internet?

Eric – Because of the way we advertise and make money from the calls, it’s 90% mobile vs. 10% internet but that will change over time. If you look at Current.TV, over 40% of the audience is having a two screen experience while they watch.

Are people interested in learning about or improving themselves through gaming? Self-awareness?

Eric – Nintendo has a whole line of such games

Kate – We’ve done research, and the drive for personal achievement and accomplishment is a big part of the motivation. Consumers say it’s the one time they can actually finish something.

Matt – Our research indicates the same thing, that our users play games for relaxation, entertainment and also a sense of achievement. When you want to relax and feel good about yourself, you might want to pop balloons vs. do math problems, because the frustration level gets in the way of the sense of accomplishment.

Peter – When we started to benchmark people’s scores against others in tournaments, we doubled our conversion from free to money.

Are you looking at all at casual gaming as a way of affecting how people engage and connect with each other, and understanding the effect on others?

Mike – The SIMS is the closest to what you are describing.

Kate – The concept of collaborative play is creating awareness that people can accomplish more in groups than they can individually. Collaborative play is an exciting new area where we are seeing a lot of interest from gamers.

How do you determine content synergy with consumer lifestyle?

Collective hmmm… from the panel

For example, in the videogame Crimes of New York, who was creating that lifestyle and how do you create synergy with the games.

Eric – Some Endemol examples – Extreme Makeover Home Edition. We’re aggregating people based on lifestyles and interests, allowing for social interaction.

Kate – We have a whole category called News Games based on things that celebrities and politicians do. We have a whole team of creative developers who make those choices and let fly.

But the kids are playing GTA IV, etc. Who’s keeping this real world?

Kate – It’s the responsibility of the game publisher

Eric – We’re starting to see platforms for user generated gaming content. So the whole question of control won’t matter over time, you’ll control it, the consumer will. A few years ago, that wasn’t possible.

Kate – At Addicting Games, 70% of our games are coming from independent developers who might be teenagers learning Flash. Our most popular game last year was developed by a 14 year old in Sweden.

Dave – The same plumbing being used by Real Time Worlds to launch their games is being structured as a Wiki. Individuals will be able to create their own story lines, story arcs, etc., and a $50 million bet was just made against it.

Who’s the hard core gamer and who’s not?

Dave – If you are an aggregator of games, you don’t need to worry about it. But the payment models is where things get interesting. The number one game played by RuneScape, Habbo’s users, is free. There’s a whole slew coming out like this where you get in for free, and then pay for new capabilities on a microtransaction basis or through advertisers.

Eric – To answer an earlier question, what happened to the paid download model for casual games – it’s not gone yet but there consensus that it’s going away.

But the paid download model is paid and growing, it’s bigger than PC retail!

Matt – We agree with that but the mix is moving toward online and free, ad and microtransaction supported.

Peter – As you know I don’t like the hardcore / casual distinction. At Worldwinner, all of our gamers are hardcore casual gamers. On average, they spend $400 a month on contests. Our commission is 15-25%.

Dave – That’s called gambling addiction and people do it at the horse race all the time.

Peter – The gamblers don’t stick around very long. People know they are going to lose $300 a month but are doing it for the entertainment value not because they think they are going to make money.

What’s going to get the other 250 million people involved in casual games?

Matt – It’s a question of ubiquity. We’re distributing our games through as many portals and locations as possible to drive that reach.

Dave – It’s a huge addressable audience, the way you make money is multi-faceted but it’s going to be a huge market from an advertising perspective.

Kate – We need to make great efforts to diversify the types of people who are making games. To date it’s been an outgrowth of technologists but we need people from artistic and creative backgrounds.

Eric – It’s about taking gaming out of its box and immersing games in other participatory experiences.

Peter – Television. Liberty Media, by buying our small skills based gaming company and merging it with a television network, is saying that they are going to drive people from TV to the internet to play games.

Technorati Tags: Casual Games, LA Games Conference 2008

If your audience includes teens, you might want to check out what Habbo has learned in their survey of over 50,000 teens worldwide, with insight into how US teenagers are similar to – and different from – teenagers worldwide in this research presentation from Digital Media Wire’s LA Games Conference 2008.

The 2008 Global Habbo Youth Survey
Emmi Kuusikko, Director, User & Market Insight, Sulake Corporation / Habbo Hotel

Habbo is an online entertainment company focused on virtual worlds, with 1300 employees in 15 countries, and over 8 million unique visitors per month globally. Their teen users create avatars, visit different public rooms, and engage in a lot of social interaction. There are active communities in 31 countries. This is the second global survey performed by Habbo.

Here’s what they learned:

US teenagers vs. peers globally.
(US sample size 7,730 respondents, 13-18 year-olds, 46% girls, 54% boys; globally 58,500 responses).

What’s similar:

• Friends and family are valued the most
• Craving for respect

What’s unique

• Having lots of difference experiences in life
• More traditional than Europe, less so than Mexico (religion, marriage)
• With Singapore, most ambitious teenagers – many life goals (education, wealth, influence, career)
• More positive attitudes toward military, very patriotic, but not visible in consumption behavior (don’t prefer domestic products)
• Higher share of “creatives” and “achievers” psychographic segments, fewer “loners”

Media habits

90% globally consider internet important, clear winner.
70% US consider TV important.
56% US consider radio important, significantly higher than global.

Internet habits

IM and Email are till most important web services (68%), but social networking has taken a lot of share (56%), especially compared to the rest of the world. Internet is really all about communicating and socializing.

Favorite web sites and games (outside of Habbo): MySpace (54%), YouTube (25%)

Brands

Drinks: Coca Cola (22%), then Pepsi
Fast Food: McDonald’s (27%), then Burger King and Wendy’s
Clothing: Hollister (8%), then Abercrombie & Fitch. Nike dropped to 9th!
Shoes: Nike (26%), then Vans and Converse
Mobile: Verizon (21%), then all others. US doesn’t distinguish between carriers and handset makers. Biggest growth in this category – listening to music, taking photos, SMS.

Summary

Teens are surprisingly similar worldwide

There are cultural differences, though, and US teens are more ambitious and crave experiences and respect (but note that Japan is even more different than the rest

Internet is important, and US teens lead in social use of internet.

To buy: webstore.sulake.com, marketinginsight@sulake.com

Technorati Tags: LA Games Conference 2008, Market Research, Habbo, Teens, Media Behavior, Internet Behavior