The 2012 Game Developers Conference is underway in San Francisco and this year’s event is continuing its transformation into less of an industry insider event and more of a trade show where businesses in the field make major new product announcements and illuminate their recent successes.
Recent GDCs have been potent harbingers of how certain video game companies will fare in the coming year. For example: Nintendo’s (PINK:NTDOY) president Satoru Iwata delivered the keynote address at GDC 2011, and his speech was colored by fear of a changing market. Just one month before his company released the Nintendo 3DS device, Iwata knocked Apple’s (NASDAQ:AAPL) iPhone and iPad as well as the successful App Store as being founts of cheap games that diminished the value of other publishers’ wares.
The 3DS, according to Iwata, would rehabilitate the portable gaming market. Just four months later, Nintendo reported a quarterly loss of $297 million and slashed its expected annual operating profit from an expected $2.2 billion to just $431 million, its lowest earnings in nearly 10 years.
GDC is where, with the right eyes, you can see where the games businesses will be heading throughout the year.
What are the big stories coming out of GDC?
Valve’s Steam Box Console
Independent game developer Valve’s Steam is the No. 1 digital distribution channel for games online. In the same way that Apple’s iPhone dominates digital music sales, so Steam does for games on Windows PCs and Macs. GDC Valve is expected to set its sights on the living room market with a new console called the Steam Box.
Like Microsoft’s (NASDAQ:MSFT) Xbox 360 and Sony’s (NYSE:SNE) PlayStation 3, the Steam Box will plug directly into a television. Unlike those machines, though, Valve’s device will only download titles from the Internet, not use discs. Not only will Valve then be competing with Microsoft and Sony, it will intensify its digital-versus-physical battle with retailers like GameStop (NYSE:GME). Valve doesn’t reveal its financials, but Forbes estimated that the company made approximately $300 million to $400 million from Steam alone in 2010. Of course, since then Steam’s number of registered users has nearly doubled, growing from 25 million to 40 million. The Steam Box console could, if it’s real, change the face of the industry.
EA Brings SimCity Back
Electronic Arts’ (NASDAQ:EA) SimCity game is an icon. While it has largely been surpassed by its offspring, The Sims — a series that has sold more than 150 million copies since 2000 generating $740 million in revenue on its own — SimCity remains a record-breaking brand. The last entry in the series was released in 2003, to a profoundly different market from the one that exists today, and the new SimCity will be built to reflect those changes. The city-planning simulator will allow online play between multiple people. Considering ERTS’ heavy emphasis on social gaming in recent years, it will also likely feature heavy social elements. Right now EA is only discussing the Windows PC version of the game. PC games sales totaled $18.6 billion in the U.S. last year, so EA is bringing its much-loved brand back to a healthy market.
Peter Molyneux Leaves Microsoft
Though Peter Molyneux isn’t a household name like Nintendo’s Shigeru Miyamoto, the man has been instrumental in the success of Microsoft’s Xbox 360 game console. His studio, Lionhead, was responsible for the Fable series of games, which has gone on to sell more than 10 million copies in the past eight years. Molyneux also acted as the creative lead of Microsoft Studios Europe. His departure leaves Microsoft with one less major personality in its stable, troubling for a company whose business is already lacking the creative figureheads that have been crucial not only to Microsoft but to Nintendo and Sony’s businesses.