The Massively Multiplayer Gaming Explosion – from the PC, to the Console and then Mobile Dave Laux Global Executive, Games and InterActive IBMIBM What is the Games market ?

What are the real demographics ?? The Growth of the Games Industry (Direct Revenues)

PWC projects a conservative growth of the entire video game market to be 16.5% CAGR, In the US Alone PWC expects a 12.9% CAGR through 2009

3 Games is segmented by game type, gaming platform, and number of players.

Business Model Consumer Retail Sales vs. Subscription Hardcore/Core/Casual Per Game vs. Aggregation Genre Platform Number of Players n n Strategy (RTS) & Role Playing (RPG) Console Single Player (SP) – Individual Playstation / PS2 / PS3 (Sony) game experiences on a single console or PC. Retail Business Xbox / Xbox 360 (Microsoft) Sports & Extreme Sports Model. (e.g. Nintendo) GameCube / Wii (Nintendo) Action/Adventure/Fighting n PC Based n Multi­Player (MP) – Groups of n Handheld 2­64 players hosted by a single server. Games are a set length Racing DS (Nintendo) and high­twitch. Subscription PSP (Sony) Business Model. (e.g. Xbox Live) Shooters n Mobile n Cell phone (incl. Nokia NGage) Massively Multi­Player – (MMP) Thousands of people PDA Family Entertainment/Children play on a hosted server game environment. Games are Casual running 24/7. Subscription Business Model.(e.g.Everquest)

Simulation and Serious Games

4 Online game revenue breakdown

Source: CITL March 2006 5 Gamers: Do the facts match the stereo­type ?

In 2005 25% of gamers were over the age of 50

The average age of the most frequent game purchaser is 40

42% of online players are Female

Source ESA: Essential game Facts May 10 th 2006

6 Gamers: Do the facts match the stereo­type ?

TThehe ste stereoreotytypepe of of a a g gamame pe playelayer as r as a sa shuhut­t­in, in, ouout ot of tf toouchuch, , isoisolatelated hd heermrmit iit is s nonot sut supppoporterted d by by resreseaearcrh. ch. TThhe fe foollowllowinging f factsacts cam came fe froromm a a PPeteeter D. Harr D. Hart t ReseaResearch rch reprepoort rt in in 2200004.4.

What else are Game Players Doing?

§ 79% of game players, all ages, report exercising or playing sports 20 hours a month

§ 45% of gamers volunteer an average of 5.4 hours a month

§ 93% of game players also read books or daily newspapers

§ 62% of game players consistently attend cultural events such as concerts museums or theater

§ 51% of all gamers play games, in person, with other players

Source ESA: Essential game Facts May 10 th 2006

7 Who is playing what ?

Source ESA: Essential game Facts May 10 th 2006 8 Marketplace trendss Marketplace trends: new business model emerge § THEN – Retail distribution of physical asset (cartridge, CD) § NOW – New models appearing (digital downloads, subscriptions, ad­ based) – “trial and error” phase § FUTURE – “There is no ONE model” • Subscription based (e.g. World of Warcraft) • Play for free, pay for stuff (e.g. GoPets) • Advertising supported (adver games and in­game advertising, e.g. Anarchy Online) • Merchandise supported (e.g. Webkins) • Commerce supported (e.g. Second Life)

10 Marketplace trends: Move outside the Silo

§ §TThen hen § §SSucuccceessssful Mful Movoviesies, ,T TVV s shohowwss, ,To Toyy B Branrands ds drdrovove Gae Gamme Dee Devvelelopopmmeent nt

§ §NNow ow § §SSucuccceessssful Gaful Gamesmes dr drivive Me Movoviesies, ,t oytoyss, ,an and d sshohowwss

§ §FuturFuture e § §SSucceuccess ss wilwill del depepennd d onon succ successfessfulul cr crososs s MMededia/ia/MMedediumium r rollollouout ­t ­ eve everyry m medediumium d drives rives eveeveryry ot otheher mr medediumium

11 Marketplace trends: new “players”

§ Then – Core gamers (teen and tween boys)

§ Now – Games trying to appeal to new markets to sustain growth • Women (Casual Games) • Minorities and Cultural Communities (not just translating a game) • Age groups (Wii)

§ Future – hyper­segmented content, marketing and features – Trusted brands – “Serious” applications (simulations, training, e.g. MMOs as environments for developing leadership skills)

12 Marketplace trends:

Integrated cross­platform experiences, anytime, Technology is making everything faster, anywhere better, cheaper § § Then Then –Handhelds, console, PC and online –Clunky or complex user interfaces were all independent games with little –Slow graphics and processing cross platform development power –Expensive and proprietary § Now equipment, software –Franchises (or brands) exist upon § multiple platforms and offer same Now feel , or similar art –Breakthroughs in user­interfaces –Commercial, off­the­shelf IT § Future powering development and device –Integrated “experience” across multiple platforms § Future –Ubiquitous, high­bandwidth mobile –Better: improved realization, access simulation, quality –“Playing the game is creating the –Faster: development, processing game” – UGC, new narrative models power, bandwidth –Games as social experiences –Cheaper: development, devices, economics

13 Marketplace trends:

§ Then –Games were designed for single player –Multiplayer meant how many could play off same device § Now –Few Games developed are solely single player –Multiplayer includes everyone logged in through same device § Future –Games as social experiences –Access similar content through device I have with me now –Time Invested works for me regardless of how I access

14 Game Access Devices

PPC C SSaalesles i n 2in 2006006 ~~23230M 0M

MMoobbiliele Ph Phononeses S Salaleess i in n 20200606 ~~850M850M

15 Source: Cnet news.com Massive Games Need Massive Technology

Division of NCSoft

16 Actual Infrastructure in Use

Active Servers ~ 195

Dev Servers ~ 200

Weight About 2.5 Metric Tons of equipment

CPUS > 420 CPU cores > 1 THZ

RAM > 7.5 Terabytes

Estimated FLOPS > 7.5 Terra

Bandwidth Total Bandwidth Estimate ~ 400 Gbs

17 17 There is a huge number of topics that have to be addressed to bring a game to market

In world Economic 2D Database Collision Design system Textures Internationa Engine Detection Documentation Hosting l Billing Data Model Database Design Development Occular Object Servers Schema Network Occlusion Metadata 3D Video International Game Cheat Asset Path finding Abuse Card Support Management Taxation Balance prevention Code Review Prevention Process Ridged Client Audio Card Art review Voice 3D engine body Hack Billing Support process Talent dynamics preveGantionme Multiple OS 2D Interface Quest Music gravity Master Account Support engine Engine System Management Internationalization Client World Scripts Contextual Script Team & Group script Synchronization Music engine engine Support 3D In Game Server Script 3D Particle Shadier Models Voice engine animation system engine In Game Game IM Game Game Game Web Procedural In Game Marketing Economics Support integration textures Email Web Site Website

18 Most have to be addressed for each target platform individually

2D Database Collision Design Textures Internationa Engine Detection Documentation Hosting l Billing Data Model Database Design Development Occular Object Servers Schema Network Occlusion Metadata 3D Video International Game Cheat Asset Path finding Abuse Card Support Management Taxation Balance prevention Code Review Prevention Process Ridged Client Audio Card Art review Voice 3D engine body Hack Billing SConupposrot le process TalePC nt Handheld dynamics preveGantMionmobe ile Multipule 2D Interface Quest Music gravity Master Account OS Support engine Engine System Management Internationalization Client World Scripts Contextual Script Team & Group script Synchronization Music engine engine Support 3D In Game Server Script 3D Particle Shadier Models Voice engine animation system engine In Game Game IM Game Game Procedural In Game Marketing Game Web Economics Support integration textures Email Web Site Website

19 So Why not today ?