The DeanBeat: Learning from the smartest people in the room

We had a lot of smart people speak at our GamesBeat Summit this week at the Cavallo Point resort in Sausalito, Calif., where our goal was to gather the right executives, CEOs, investors, and startup people in a big room so that we could see more big deals happen in gaming.

We’ll see soon enough if any deals come out of it. But on our main stage, the wisdom spilled over the sides. The learnings were a lot more than I can recount in this one column. But I figure it’s worth summarizing some of the things that made the most sense. And not surprisingly, the learnings were culled from years of experience and turned out to be really simple.

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Simplicity

Nolan Bushnell, the founder of Atari, gave the most inspiring talk. Four decades after launching the video game business, the showman of the industry laughed off the GamerGate controversy. He told me games make us smarter. I asked him how that explained GamerGate, the gamer rage movement. And he replied that half the population is dead from the neck up. His big tip, he said, was to hire people who are alive from the neck up.

His advice about where to invest? The blue ocean, where no one else is swimming, is better than the red ocean where all the sharks are eating each other. To Bushnell, that means educational games like those his startup BrainRush is doing. Jamil Moledina, games strategic partnerships lead at Google Play, suggested that the blue ocean is where other players aren’t, and for him that includes games for smart TVs. Everybody had a different answer about the blue ocean.

John Riccitiello, CEO of Unity, had a good analogy for why Sony is winning the console war in the PlayStation 4 generation so far. Sony was like the player in a game of billiards that lined up a shot and made it, mainly by building the PlayStation 4 with gamers in mind. Microsoft sought a wider audience with a broader entertainment strategy. But it thought so hard about the second and third shots, that it missed the first one.

“There was a clash of titans here, a clash of ideas that really separated Sony and Microsoft in this generation,” Riccitiello said. “They had very similar architectures. But Microsoft focused on the entertainment marketplace. And entertainment beyond gaming. They wanted to be big in the way Apple was big or Google was big. Sony just said we are making the best f***** game console we can.”

Adam Boyes, vice president of publisher and developer relations at Sony’s U.S. game division, basically agreed with that. He acknowledged that Sony was a bit full of itself in the PS3 era, and with the PS4, it talked to gamers and game developers more. It was more humble, and it simplified things such as the process of submitting a game. One of the cool ideas that came from communicating more directly was the PlayStation Experience, Sony’s hugely successful fan event last fall. It turns out that talking to fans and developers and then giving them what they want is a strategy that works.

Brands

Marvel’s interactive and digital distribution chief Peter Phillips said that he has learned not to slap a brand on anything because you’re in a big rush. His company has worked with seasoned free-to-play developers like Kabam to build hot titles like Marvel: Contest of Champions. Being more thoughtful about matching great, passionate game developers with great brands was a common refrain among the Marvel, Warner Bros., and Lionsgate movie-game executives at the event. These companies have realized that they’re stewards of brands, not brand slappers.

“The first thing we learned in the game business was a brand wasn’t enough,” said David Haddad, executive vice president at Warner Bros. Interactive Entertainment. “The brand is just the starting point. Where is the game, where are the ideas, and how do you bring those together?”

The shocker of last year was that Warner was able to take the Lord of the Rings brand and marry it with innovative game design to produce a game that won more than 200 awards: Middle-earth: Shadow of Mordor. I played that game for more than 80 hours, and I was surprised to see how well it did.

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Peter Levin, president of Lionsgate’s game business, said that a simple solution is to marry a brand with a cool new technology, such as taking a brand into a next-generation console or augmented reality. Plenty of people in the movie industry are experimenting with virtual reality and augmented reality.

Interestingly, the movie folks aren’t quite as ready to embrace user-generated content when it comes to letting players mess around with their superhero characters. And that’s one of the biggest trends in gaming, thanks to titles like Minecraft. That’s an area where the brands are still treading carefully, Phillips said.

Virtual reality

Just about every speaker mentioned explorations into virtual reality as the next big thing, since mobile gaming is becoming so difficult because of the dominance of Supercell’s Clash of Clans and King’s Candy Crush Saga. Tim Merel, managing director at game market advisory firm Digi-Capital, made a bold prediction at the outset of the conference: Augmented reality and virtual reality will add up to a $150 billion business by 2020. Most of the business, he believes, will be in augmented reality.

Riccitiello said that he thinks it will take longer to get AR and VR markets going, but they’ll be big. Bushnell thinks that VR will be big in things like public spaces, and he’s also a big fan of the CastAR augmented reality tech. Jules Urbach, chief executive of cloud graphics firm Otoy and a maker of tools for building VR, is shocked at the speed with which VR is developing.

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“It’s way too early to know what experience is going to work around VR,” Riccitiello said. “With VR, you get presence. You put a headset on and you feel like you are someplace else. It is convincing. When you look down and know you are going to die if you take a step forward, that is powerful. We’ve all had three minutes of it. The question is what will we do with an hour or two hours of it.”

Going global

Asia could take more than half the mobile game business, which could be $45 billion by 2018, Merel said. But it’s still rare to see a single Western game do well across territories like China, South Korea, and Japan, said Jeff Lyndon, founder of China’s iDreamsky. Developers still have to pay attention to the quirks of each market, like how Chinese gamers love meta games in their titles, Lyndon said.

Clearly, the onset of mobile games is creating a huge force for globalization, as a tiny developer in Finland can distribute a game that can reach a billion people. Andrew  Sheppard, chief operating officer of Gree, suggested investing in local teams to build local connections, a key to success in a global market. Gree, for example, recently founded a team in Berlin, Germany. But Sheppard believes that game companies have to treat China as a unique market. It was a simple idea, once again, but it really paid off in a doubling of the game’s reach and helped it reach 10 million downloads.

Going international proved to be very important for ZeptoLab, the publisher of Cut the Rope and the recent King of Thieves. Misha Lyalin, chief executive of the Moscow-based company, used Chinese game publisher Yodo1 to publish the King of Thieves game in China. In the first week, the game had 2 million users in China, compared to 2.3 million for the rest of the world.

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Haddad noted there are 20 movie theaters opening a day in China, and that is going to make the Chinese consumers more aware of Western brands. That represents a big opportunity for Western-branded games in the future.

Diversity

Kate Edwards, head of the International Game Developers Association, was like the conscience of the conference, reminding us that diversity matters. She warned that indie game developers are easier targets for the foes of diversity because they don’t have the corporate structure to support them against Internet harassment. She credited the negativity of GamerGate with at least causing positive reactions, such as Intel’s investment of $400 million into diversifying the talent of tech and gaming.

If we get diversity among our developers, we’ll get more diverse games. And we need that. Alan Gershenfeld, president of E-Line Media and creator of the Never Alone game based on Native Alaskan culture, was there to promote a strategy of making games that no one else is making. John Riccitiello, chief executive of Unity, said he’s sick of the culture of copycats in gaming, with hundreds of titles coming that mimic the gameplay of Clash of Clans. His hope? More than a million developers are creating games on Unity’s platform. Gamers are downloading 700 million or more games based on Unity each month. That’s going to provide an injection of diversity in content.

Diversity of strategies also matters. Lisa Marino, head of RockYou, figured out that you can build a good business by operating the games that other publishers have decided to shut down. Her company is climbing back into relevance by acquiring games with “long tail” customers and finding a profit where no one else could. Kabam, by contrast, is narrowing its focus on games, said Kent Wakeford, chief operating officer of Kabam. His company needs a huge hit — akin to Call of Duty on the console side — in order to justify its 800-plus person team in mobile gaming. Which company has the better strategy? I’m sure the game industry is big enough for both strategies to prosper.

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Conclusion

The opportunities in gaming are huge. There were $24 billion in deals in gaming last year, according to Digi-Capital. But those opportunities aren’t found by following the crowd.

They can only be done by doing something different, like when Super Evil Megacorp launched Vainglory on tablets, as described by Super Evil’s chief operating officer Kristian Segerstrale.

We hope that the people who came to our conference will mingle and produce even more deals.

Bushnell said he looks for disruptive innovation. If we lose our imagination and produce the same old thing, the golden age of gaming will collapse and the industry will start to shrink. But if game makers stay in touch with gamers and their changing habits, if they track things such as being social and the rise of e-sports, and if they pay attention to the diversity of gamers and the development ecosystem, then we’ll have plenty of opportunities and chances for bold ideas that can change the world.

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