Tracking key shifts in digital trends that are shaping the way content distribution and business innovation is taking place across video games industry - Year 2013.

1. THE WORLD OF DIGITAL
KEY SHIFTS IN THE DISTRIBUTION OF VIDEO GAMES
JULIUS CHEN
juliuschen985@gmail.com
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2. DIGITAL’S TIME IS HERE
30 billion pieces Worldwide 32 billion More than 2 The average
of content were IP traffic searches were billion videos teenager sends
added to will performed last were watched on 4,762 text
Facebook this quadruple month... on YouTube... messages per
past month by 2015 Twitter yesterday month
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3. DIGITAL’S TIME IS HERE
NPD Group: Digital Business grows 16%, Physical down 21%
“In addition to the $7.09 billion spent in the U.S. by consumers on new physical video
and PC game software during 2012, the total consumer spend on other physical forms
of content (used and rental) reached $1.79 billion, and content in digital format (full
game and add-on content downloads, subscriptions, mobile games and social network
games) generated $5.92 billion.”
According to the 2012 Games Market Dynamics: U.S.*
report from global information company, The NPD Group

4. DIGITAL LANDSCAPE EVOLUTION
 1) Increased broadband penetration
• Increased internet penetration
o 1.034B Internet users in Asia versus 2.3B
Global total.
• Real strategic opportunity to hit a critical mass.
• Average connection speed optimum in core markets.
o South Korea: 15.7 MBPS , Japan: 10.9 MBPS
o Global average 2.6 MBPS
 2) Technology Convergence
• Increasingly overlapping technology devices –
between the Computer, Mobile Phone, Tablet, Mobile
Console Devices.
o By 2015 media tablet shipments will reach
around 50% of laptop shipments and Windows
8 will likely be in third place behind Android and
Apple.
o Devices will contain faster two and four-core
processors, and with bigger, brighter, higher-
resolution screens.
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5. DIGITAL LANDSCAPE EVOLUTION
 3) Evolution and Ease of Digital
Payment Methods
• Mobile payments
• Virtual Wallets
• Virtual Currencies
• Pay per usage models/Time cards
• Subscription models
 4) Online activity is increasingly social
• Crowd-sourced opinions become more prevalent.
• People are increasingly sharing and connecting with each
other which Gartner suggests is a “seamless shift
between computing and communicating”.
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6. Interpreting the change
8 KEY TRENDS FOR DIGITAL DISTRIBUTION
IN THE VIDEO GAMES INDUSTRY
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7. 1. FROM DAY 1 TO HOUR 1
 Digital distribution removes the traditional
barrier to buying games — having to drive or BioShock Infinite’s Pre-
walk to a brick-and-mortar retail store and order on Steam came
with exclusive BioShock
purchase it.
Infinite Team Fortress
Characters, Free
 Stores like Steam, a digital distribution front run by BioShock and Free XCOM:
Valve, capitalize on impulse buying habits of gamers Enemy Unknown!
by making it extremely easy to purchase and
All for US$ 59.99!
immediately begin playing games.
 Creative pre-ordering packages makes it extremely
attractive to purchase and download online.
 Instant Play within first hour of launch: Game
files are pre-loaded and users can pre-download a few
days before the game is able to activate.
 Fanatic gamers are no longer appeased by just
getting a game within day one of release. It is
now about playing within the first hour.
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8. 2. FROM PACKAGED GOOD TO CUSTOMIZABLE OWNERSHIP
 Digital distribution allows unlimited
number of variations of each title to be NBA 2K13 launched mini
virtual store allowing users
created and sold, expanding its potential
to purchase items for their
audience. MyPlayer profile. Coupled
with DLC add-ons, there
• Single player, multiplayer, downloadable was a large component of
content packs, starter editions, complete customizable ownership.
editions, free-to-play bonus levels, virtual
currencies for in-game items.
• Allows consumers to self-determine how much
commitment they want to make to a
title/franchise.
• Offer a better value to those who just want to
purchase a segment of play or at a windowed
period. Blizzard took a different direction with its
Catacyclsm expansion by catering to newer
and lower level players with new content.
Traditionally, expansion packs for online
games focus on new content for players that
have already reached the end of the game.
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9. 3. FROM ONE EXPERIENCE TO EXTENDED EXPERIENCES
 Many game developers adding downloadable digital content (DLC) to their gaming
titles, in order to enhance the gaming experience and add additional revenue sources.
 For the past few years, we’ve seen the AAA publishers take fewer risks on new titles and place
bigger bets on those they release.
 With this increased focus on the big releases, DLC content becomes increasingly important as a
risk management strategy and to drive revenue for an IP. Publishers are also moving to “season
pass-like” structures, providing ongoing access to the latest game content at one bulk price.
Did You know? Since release in Fall 2012, Borderlands 2 launched with 22 DLC Packs.
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10. 4. FROM OFFLINE GAMING TO ALWAYS ON GAMING
 The term ‘always on’ refers to the connected online nature
of gaming.
 Leading gaming experiences transition from the typical launch-
focused strategy to an evergreen state that remains fresh
through regular content updates and incremental platform
introductions.
• The key reasons for this shift is to fight piracy, drive in-
game trading economies, ease single-player gamers into Games like D3 and Simcity were
multiplayer modes for higher/longer player retention. released to be ―always online‖
games.
• We will also see more collaborative development of game-
play and associated assets.
Games like Little Big
• Developers (big and small) will work alongside consumers Planet started to
to produce game titles and create a vested sense of show deeper
commitment with their players. engagement with
players by allowing
them to collaborate
in level creation for
other players.
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11. 5. FROM SINGLE-PLAYER EXPERIENCES TO SOCIAL CONNECTEDNESS
 With increased connectivity, more gamers are going for socially engaging
experiences.
 Multiplayer gaming helps extend the product lifecycle and reduces used-product market by
making consumers hold on to their physical box set.
 Social leaderboards and hierarchies become key features in platforms/games.
In Korea, multiplayer gaming is a prevalent
form of gaming – where Online games lead
the market and few PC products become Steam Achievements, Mobile Game Center Leaderboard,
huge hits unless they contain very strong XBOX Live Leaderboard, PSN Leaderboard have all become
multiplayer components. a central part of one’s gaming experience.
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12. 6. FROM BUILT-FOR-WW TO BUILD-TO-TERRITORY
 Traditionally, games were built in one format and for a WW (US
market). Now, by releasing games digitally, there is further
opportunity to cater to specific territory needs.
 These include multiple languages, different tastes and appetites,
different windows (vs consistent release patterns/dates per country) and
different platforms which have differing penetration capability. Language patching post D1
distributed via digital channels
help grow products in specific
 Games can find homes overseas in many markets and windows apart
territories.
from the mainstream or major US/UK platforms.
T2 released GTA III and Civilization
Revolution in Korea as Android game –
moving into a platform relevant market
In Japan, releasing on Sony Japan
versus WW release of the iOS versions.
PSN drives more than 10x revenue
versus XBOX360.
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13. 7. FROM PURE DISTRIBUTION DEALS TO HYBRID BUSINESS MODELS
 Platforms’ business models are also starting to become more multi-layered to handle
different formats, consumer price points, and windows.
 Figital – Finished Goods Retailer & Digital Models
 Streaming /cloud gaming models
 Pay per usage/package models
 Connected TV models
 B2B Café distribution and Download models
Gamestop traditional retailer
opened its digital channel Impulse
and incorporates sales of DLC
content into stores. Gamers can
also use any accepted form of
OnLive cloud gaming services moves payment — including used game
Sony acquires Gaikai for $380M, a hint to GoogleTV letting users play trade-ins, gift cards — to
that consoles may be going to the cloud. console quality games via their TV. purchase brand new titles.
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14. 8. FROM PLATFORM SPECIFIC GAMING TO INTEROPERABLE GAMING
 As technology converges, mobile and gaming Sony will release
devices are increasingly becoming alike and are digital versions of all
sharing the same space. new games alongside
physical copies so
gamers can download
 Whilst viewed as a more spread out competitive and begin playing
space, this becomes opportunities for game games immediately
on its newest portable
companies to create new immersive gaming
gaming device, the
experiences that are cross-platform. Sony Next Generation
Portable (NGP).
 Game platform owners are taking the competition in
stride, creating new devices tailored to a companion
relationship that improves the big screen game
experience but also offers an on-the-go component
too.
• The PlayStation Vita and Wii U are the first
announced contenders and we may hear of
others very soon. In Jan 2013, Disney announced the that it
• Developers and IP-holders creating more plans to launch Disney Infinity globally in
content across devices to reach new users and June across a suite of consoles (Wii, Wii U,
extend the experience for current users. Xbox 360, PS3), with versions for mobile
phones and tablets, Nintendo's 3DS, and an
online PC version to be supported as well.
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15. IN SUMMARY
 Digital has produced a whole new language for distribution and business optimization:
• Hour 1
• Customizable ownership
• Extended experiences
• Always on gaming
• Social connectedness
• Build-to-territory
• Hybrid business models
• Interoperable gaming
 Distribution formats, content delivery methods and business innovations must evolve to
keep us relevant to the consumer.
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16. ABOUT JULIUS
JULIUS CHEN
Regional Director, Digital Business, Take Two Interactive
P&L holder for T2's Asia digital business portfolio and key strategic business lead in developing and ensuring the execution of T2
Asia’s digital business strategy and growth of markets overseeing digital distribution across PC, PS3, 360 and mobile platforms,
working closely with T2’s global headquarters Take Two New York to ensure alignment of business objectives and provision of
strategic in-market advisory for Asia. Multiplied Asia's digital revenue eight-fold in 24 months.
In charge of deal structuring and business roll-out and optimizations on multiple game digital distribution platforms across Asia -
including PC, XBOX, PS3, Mobile (iOS & Android). Key role in driving business development requirements, sales/finance related
functions, provision of technical assistance and project management for all Asia digital accounts. Reporting directly to VP
Publishing (Asia) and dotted line to VP Digital (Global). Full supply chain of work includes: financial modelling, deal closing for
new business, budget and forecasting, sales analytics, platform logistics/operations, legal, market localization & game ratings
processes, channel marcoms/promotions and partner relations for our digital sales platforms across Asia.
Launched in-market digital business portfolio with top consumer portals like Amazon Japan, NHN Korea, JoyMoa Korea,
Gamer.com Taiwan, Gamer.com Hong Kong etc. Previously, Business Owner of Julius Truffles, Consumer Marketing/Advertising
(WPP Group, P&G)
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