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IDSA President Doug Lowenstein on the state of the game industry

In his annual speech to E3 media, IDSA President Doug Lowenstein declared that innovation would determine the success of the entertainment software industry in coming years. "It is the key to whether we continue to broaden our reach to new, largely untapped consumers and maintain our hold on current gamers, and it is the key to whether we grow as an art form," he said.
Even though the software sales numbers so far for 2003 remain about even with last year's, Lowenstein said that an informal survey of major retailers revealed that they remain optimistic about the outlook for the balance of the year. "Most expect total console and PC software sales to hover right around the 10 percent threshold, bringing total sales to nearly $8 billion," he said.
Lowenstein went on to discuss the topic of online gaming. "The good news is that the percentage of most frequent gamers saying they play games online continues to rise, reaching 37 percent in 2003 compared to 31 percent a year ago and 19 percent in 2000. It's also clear that a certain genre of online games-free, downloadable titles-are a mass-market phenomenon and are growing in popularity. Even my 83-year-old father-in-law plays them!"
The connected network of cellular phones has enabled that market to burgeon for gaming. "Among handhelds, PDAs, and cell phones, the latter were the only platform that saw an increase in usage in the past year," Lowenstein said. "Two factors are converging to make the cell phone a more promising platform for games. One is that the manufacturers have concluded that games are one of the ways to revive sales of mobile phones. You can't see a cell phone ad without games as a selling point. The second factor is that the business model is becoming clearer. While some mobile games will continue to be free, charging consumers a monthly fee shared by the carrier and the game publisher is becoming the norm."
Lowenstein then turned to the issue of licensing and sequels. "Unlike other industries, where new technology produces economic efficiencies, ours is the only industry I know of where the opposite is true: Each new console and PC advance makes it harder, longer, and more expensive to produce games," Lowenstein said. "So there is little margin for error and turning to the familiar and successful is a sound and prudent business practice."
However, Lowenstein noted that an overdependence on licenses could stifle creativity. "Innovation does not mean just coming up with better ways to kill characters or blow up cars. It means focusing more on character development and storylines. It means using artificial intelligence in ways that bring characters to life and enhance the player's sense that they're interacting with real allies and opponents who can outthink and outsmart them. It means looking for new genres that go beyond the tried and true that top the best seller charts annually," he said.
One of the strongest external forces endangering the industry's innovation is the relentless assault on copyright laws being waged in Washington. "These bills masquerade as consumer rights statutes, but in fact will eviscerate the long-accepted principles of copyright law that balance the interests of consumers and creators," he said. "One of the more insidious provisions would legalize mod chips and similar devices. Here we have a pirate's dream come true, and the absolutely intolerable prospect of Congress opening the floodgates to massive game piracy. Other proposals would create a digital first sale right that would in effect permit people to legally distribute tens of thousands of pristine copies of a videogame or other work across the world via the Internet."
Other state and federal legislative proposals seek to regulate the sale of videogames. "Even if they were not unconstitutional, these proposals would be misguided. The FTC found that more than 82 percent of parents are involved in the purchase and rental of videogames. IDSA's own research found that 96 percent of parents say they pay attention to the games their kids play, and that more than 90 percent of actual game purchasers are adults," he said. "This means that if kids have Mature-rated games, chances are they got them from Mom and Dad. We believe that instead of politically inspired rhetoric, kids would be better served by a concerted, cooperative campaign between industry, retailers, parent groups, schools, and government, to make sure parents use the tools available to them to make informed decisions about the games they buy."
A final way for the industry to innovate with games is to use them in new ways for learning and education. "Videogames are also the basis for an innovative way to teach kids Internet safety. For the past year, the IDSA Foundation has been providing financial support to a group called Web Wise Kids, which created a videogame called Missing to help kids learn how to avoid Internet predators. The folks there will tell you that this game has much more impact than an Internet 'do's and don'ts' fact sheet stuffed in a backpack," Lowenstein said.
"It's useful to remind ourselves that interactive entertainment is an incredibly rich art form and an incredibly powerful form of expression. Still in its infancy, we've already accomplished the amazing things, and have not yet seen the best this technology has to offer. And if, as I hope, people within the games industry and outside of it harness the power of this medium-if they continue the rich tradition of innovating that has been a hallmark of the industry-games will not only give people tremendous entertainment value, they will also positively and significantly affect our world in ways yet unimagined, and your children will look back on the games made in the first decade of the 21st century and say, 'Those were classics.'"
-By George T. Chronis
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