Market Insight

CES 2015: Games round-up

January 21, 2015  | Subscribers Only

Piers Harding-Rolls Piers Harding-Rolls Director – Research and Analysis Director, Games, IHS Markit

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Virtual Reality for games

Tipped pre-show as a major trend for this year, what was actually shown revealed that 2015 will not be the year of VR, as there remain a number of technological and user hurdles to overcome. The idea of VR as a major new platform is still some way off.

There have been advancements in the technology - not least in spatial sound for Oculus which adds to the immersion, but the issues of display resolution, refresh rates, user experience, content and control mechanisms in the game remain a challenge. In this sense Oculus/Facebook is one of the more grounded companies when it comes to assessing what can be achieved and when.

An issue worth highlighting is that other industries are looking to jump on this opportunity and create VR content, enabled by opportunistic moves by companies such as Razer launching its open-source software initiative alongside its own headset. Currently most of the skills to develop VR content reside within the games sector, so there may be some squeezing of availability for the games sector as a result, which may push up staff costs for game publishers.

Android consoles and gaming smartphones

Chinese games company Snail Game announced a modular Android console and also a 3D screen gaming smartphone, which essentially resembles a handheld console. The idea of a modular Android console is interesting, not least because this gives the company a flexible strategy to launch the device in both China and the US if different specifications if required.

Prospective success in the US is questionable, considering the reception for other Android consoles (content and user experience seem to be the major issues). The Android STB market in China is now reasonably well established but has been heavily driven by TV and video streaming services available on these devices, which show unregulated and unlicensed overseas content. This content loophole has now been closed by the Chinese state and sales of streaming devices have fallen away as a result. As such, industry interest in games as an engagement tool has increased and Snail Game's Android console ambition is a reflection of this. In the context of the recent launch of Xbox One and imminent launch of PS4, this is an interesting development although work will need to be performed repurposing Android apps or porting existing PC games to put forward a competitive offer to the consumer. Razer also announced the Razer Forge TV, which is an Android STB device with a strong gaming focus (similar to the Amazon Fire TV product and launch pricing is similar too). We don't as yet expect this to carve out a significant presence.

Nvidia X1 announcement

While the power and efficiency of the chip is undeniable, we don’t yet see a content ecosystem forming around Nvidia's products that can take advantage of this power. The K1-powered Shield tablet is a well-made device, but the strategy of building products to serve enthusiast gamers on the move seems very niche and the streaming service offer from Nvidia has a high threshold of infrastructure requirement to deliver a decent user experience.

PlayStation Now pricing

The beta launch of PS Now did not have a subscription offer, only rental, the pricing of which didn't sit particularly well with consumers. It is no surprise that official launch in USA now sees a subscription offer introduced. At $20 month to month ($45 for 3 months), this rests on the expensive end of the entertainment subscription spectrum, but brings into the focus the challenge of matching desirable content with service delivery and profitability for both streaming service operators and content partners.

If newer current-gen games are introduced, we expect it to be under a retail or rental model alongside this subscription offer – otherwise we don't see how else it works commercially. This older back catalogue content is well suited to this experimental phase and it will be interesting to see how this shakes out for the publishers and whether this incremental income will be worth the effort. The other thing we'll be looking out for this year is whether the older Nvidia-based infrastructure that Sony has in play to support this streaming service will be able to be scaled successfully. It may be that some of the load will need to be transferred to Amazon's Nvidia-based instances, which may have an impact on the cost profiling of the service.

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