Gaming Not Just for The Hardcore, Boston’s Talent Pool is Hot, and More Takeaways from MIT Sloan’s Business In Gaming Conference

3/14/11Follow @xconomy

Thursday’s Business in Gaming conference, put on by MIT’s Sloan School of Management, showed me that gamers aren’t afraid to say what they really think. And that Facebook is really stirring debate in the industry, as it is in communication, commerce, advertising, and almost anything else we can think of. I caught a lot of candid comments from panelists, who represented all slices of the gaming industry: small indie startups, console developers, social gaming companies, big MMO players, VCs, and lawyers. Check below for a rundown of some of the points that really struck me.

—Gaming is a frontier with plenty of room for new participants. At the first panel I attended, called “The Game Entrepreneurs Play,” moderator Steve Charkoudian, who chairs Goodwin Procter’s technology transactions practice, noted the dominating presence of big names in console games (think Harmonix), social games (Zynga), and massively multiplayer online games (World of Warcraft). “Part of me wants to ask, ‘Are you crazy, what are you thinking?’” to the new entrepreneurs trying to break their way into the scene, Charkoudian said.

“There are more opportunities now for a small startup to make money than ever before,” said Eitan Glinert, creative director and founder of Cambridge-based indie game startup Fire Hose Games. “Because the market’s growing so much, all of a sudden these new channels are available.”

Thanks to Facebook and smartphones, online gaming has really cracked open to the masses, beyond the hardcore gamers who make a life of it (more on that later). Games are cheaper to develop, and thus don’t have to reap the millions of dollars that traditional, big console titles do, said North Bridge Venture Partners principal Dayna Grayson, a panelist on the entrepreneurs’ session.

There are plenty of “small, lean, nimble teams making games for less money,” agreed Ichiro Lambe, founder and president of Boston indie game firm Dejobaan Games.

—No one knows quite what to do with mobile yet. “There’s a lot of confusion and Wild Wild West to that market now,” Grayson said. “Confusion in the space means opportunities if you can figure it out before someone else.”

And growth with gaming on new devices and platforms will continue, thanks to the introduction of the iPad last year, and the new class of tablet devices expected to roll out on the Android platform and from other makers.

—The method for funding games is evolving as new gaming channels emerge, said David Cappillo, a partner in Goodwin Procter’s corporate and technology companies groups.

Bootstrapping and contracting out was a big favorite among the indie game developers on the panel. Also, the new social and mobile-based games may not get the VC funding the way traditional big gaming titles and studios did.

Many of the game startups focused on mobile and social channels look much more like media companies than technology firms, Grayson said. “Recognize that is different from what a lot of VCs set out to do,” she said. “It’s nothing personal. You could be going to the moon in terms of usage and revenue, but they’ll still be scratching their heads and saying what’s next,” for technology and new game titles.

—Boston is a hot place to do business, thanks to the talent pool coming from area universities. At the one panel I attended at last year’s BIG conference, gaming execs and politicians bemoaned the fact that Massachusetts had tons of gaming talent and promise that it wasn’t boasting enough about. Red Sox veteran pitcher Curt Schilling, who founded a gaming and media company 38 Studios in Maynard, MA, in 2006, even said the state would lose companies and talent if it didn’t kick in tax incentives for the industry. His company did get pulled away to Rhode Island a few months later, thanks to some loan guarantees from the state.

But it looks like gaming startups have still taken notice of the Bay State, even if it’s more on the indie side. “The cross pollination of ideas is remarkable, it makes us more productive,” Lambe said of the Boston scene.

Michel Bastien operates his gaming startup Moonshot Games out of Seattle and Somerville, because his Boston-area developer is “so talented it’s worth the pain” of splitting a small team across coasts. Now, he loves the exposure to two hot gaming markets, he said.

“It started as one of our bigger risks; it’s now really turning into an advantage,” he said.

—Social games have opened up a whole new audience for the industry, but haven’t taken it over yet. The second panel I attended was titled “Level Up. Have Social Games Overtaken Hardcore Games?” Nabeel Hyatt, who’s been head of Zynga Boston since his startup Conduit Labs was acquired by the social gaming giant, had an interesting answer. “I think the assumption with the question is it’s a zero sum game,” he said. Not the case, because the majority of avid players of Farmville and the like weren’t those up late at night playing things like Halo or World of Warcraft, he said.

Also, they haven’t taken dollars from traditional gaming titles and outlets. “Certainly [social games] are where the explosive growth is, but not the majority of revenue,” Hyatt said.

We’ll have to keep our eyes on that, though. “I can say without fair hesitation, yes, the momentum has changed,” said Daniel Witenberg, lead designer of the LEGO Universe games, and a self proclaimed member of the old school world of big budget gaming titles. “[Gamers] are starting to redefine culturally what they are interested in.”

—The “socialness” of social games is up for debate. Witenberg pointed out something that “core online games do extraordinarily well: the idea of shared communities and shared events. Social games are structured so that they have individual achievement ladders with soft social touches.” Meaning players duking it out over a Facebook-based Scrabble match don’t have to play at the same time, while the MMO participants are all rallied around an interface at once in real time, even if they’re thousands of miles a part. So the traditional games might be a bit more social than games over Facebook, he says.

Wade Tinney founding partner and CEO at Large Animal Games, presented another side to this coin. Traditional hardcore online gamers have always played against strangers; but with social games, there’s already a relationship outside of the gaming screen, he said.

Playing games with people you already know is bringing gaming back to its origins, said Hyatt (my guess is he was referring to games before the digital era: bocce ball, card games, board games, tag.) “Games 200 years ago were all social,” he says “We went through a period where games were a solitary thing you did in your basement to get more and more pale. I’m excited they’re going to get back to what they were supposed to be in the first place.”

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