On the heels of LG's announcement at CES that it is partnering with Gaikai for streaming game demos, the consumer electronics giant also made a deal with game-technology maker Unity Technologies to carry Union games on LG TVs. Unity has made waves in the game technology community by upending business models for how game engines are licensed. The company has focused on providing a low-cost game engine to get as many game developers in the market as possible. Its revenue is generated by many different business models including customer support subscriptions, an online asset store for Unity developers to trade game assets and its own distribution channel, Union. Unity 3D developers can supply their own games to app stores in the iOS and Andriod environments, and consoles, browsers, PCs and Macs directly from the engine. If developers want to target other environments such as Blackberry, set top boxes, or televisions Unity will distribute those through Union for 20% of game revenue. LG also has a partnership with PlayJam to serve its portfolio of games on certain TVs, signed in April 2011.
LG is taking a decisive step to build a comprehensive offering around games, a move that other TV manufacturers have not yet implemented. The concept of providing games directly from the television has been toyed with for many years. The debate has centered on the cost of technology in the television to execute games, the distribution channel (will it be a walled-garden proprietary system such as cable, or open distribution such as the Internet), and who will pay the extra cost to establish the market.
Connected internet enabled TVs are set to answer the distribution question. Historically, pay TV operators have been reticent to add extra cost to STB rollout with the intention of improving gaming performance. If LG is willing to take the capital on high-end televisions that have enough processing power on-board for a quality gaming experience they may be able to drive some gaming-centric television fans to these devices. With Unity on board alongside an expected Gaikai powered service and also games from PlayJam, LG's offering is starting to take shape. This strategy underlines that LG is keen to make up ground on its major competitors, including Samsung - which supports games, but has yet to build a comprehensive games offering - and believes games and connected TV content services could help deliver this target.
The claim that this type of service, or even those on-demand offers from Onlive and LG/Gaikai's planned upcoming streaming service, will kill the specialist games console is premature at this stage. 3D has proven that consumers are not driven to buy new televisions every time a new feature comes along. It all depends on how much LG is willing to invest in deeper gaming on televisions, how fast Unity can get very compelling games on Union, and how well both companies do selling this feature to consumers.