CES: New Technologies for Gaming

IndustryGamers attended a CES panel discussion on top consumer electronics gaming trends, to see what experts expect to see in gaming technologies heading to market for the next few years. The panel included Tim Chang, Managing Director of Mayfield Fund venture capitalists; Tom Dubois, Executive Producer, OnLive; Shawn DuBravac, Chief Economist, Director of Research, Consumer Electronics Association; and Jonathan Epstein, President, Omek Interactive (the company provides gesture recognition and body tracking technology).

One of the most important new technologies introduced for gaming in the last year was Kinect, and Jonathan Epstein explained where gesture recognition is going: “Kinect has expanded the field of gaming. When we look at how gesture recognition and motion gaming will spread out across other devices it's really driven by two trends: One is the availability of a range of 3D cameras, cameras like the Kinect, and having them out there, and the other is how these are being adopted by consumer electronics manufacturers. Until recently the camera landscape has been driven by one company called PrimeSense. They licensed their technology to the Kinect. Because they essentially had control position a couple of things happened. One, they weren't allowed to to go into other consoles because of their deal with Microsoft, and second their price points were rather high. That's starting to change rapidly. We're starting to see a lot more competition in the world of 3D cameras. Intel is moving into that space, cameras are coming from Samsung and Panasonic and other companies. The availability of different technologies and more competition will drive price points down, which then makes the incorporation of these 3D gesture capabilities into a range of devices much more feasible. I believe we'll see 3D gesture TVs in the fall of 2013, along with set-top boxes.”

Epstein noted a new development that was shown at CES. “One trend to keep an eye on, which should be of interest to everyone building games, is shown by a couple of companies at this show, PMDTec most notably, starting to show close-range gesture cameras that allow for hand and finger gesture recognition, a whole new paradigm for gaming. Those devices will also start to come into laptops and tablets and mobile devices as well.” The idea of hand or finger gestures controlling games raises many interesting questions for game designers. Would it really be possible to dispose of the physical controller entirely while still allowing for all of the delicate control combinations possible? Recognition of finger gestures would have to be amazingly accurate for that to even be possible, and without something physical to grasp it might be impossibly hard for gamers to control their finger motions to that degree. It seems more likely to that hand and finger gesture recognition would be used in games in new ways, rather than emulating old control methods.

Shawn DuBravac noted that we won't be seeing just one or two sensors being added to our gaming devices. “We're hitting an important inflection point when it comes to gestures and more natural interfaces. If you look at the history of technology, whenever we move from scarcity to a surplus we then start to waste that resource. When it was computing power, we started to make computers with graphical user interfaces. I think we're moving there quickly with respect to sensors. We're going to end up pushing a variety of these sensors out onto the devices, it's not just a single camera. When you look at the Kinect you've got 4 microphones, you've got 3 cameras. So expect there to be multiple inputs on these devices, and it's going to be a variety of sensors, not just cameras, not just microphones, but a plethora of sensors because we're moving past that inflection point where the costs go down, so we start to waste them.”

It's not enough to just have new gaming hardware; Tim Chang pointed out. The important is this: “How do you make money on this stuff? There's probably 3 business models. First is, sell the hardware. Make margin on your dongle. The second is, even if it's a loss leader in the hardware, I want to own the App Store. The distribution of software, services, subscriptions, things that are enabled by the hardware. Third would be back to the old license royalty game, when I'm licensing the software or the middleware to another party.”

The panel agreed that gesture recognition had a bright future ahead of it. As costs go down, noth voice recognition and gesture recognition will be put into a wider variety of devices, such as connected TV sets. There it will have other uses besides gaming, of course.

DuBravac noted that how hardware makes money has changed, and this has implications for how hardware manufacturers decide what to put into their devices. “One thing to think about, from a hardware perspective the paradigm has shifted. Historically manufacturers owned the underlying factory. So the way they made money was they kept the capacity utilization at very high levels, and they make money off the turn, not necessarily the margin off of selling the product. So that's why market share has always been king when it comes to hardware, because owning the underlying factory and keeping the capacity utilization high you make the money on the factory not on the retail sale of the device. That market has changed a little bit. They don't have any underlying factories, there's joint ventures for that kind of stuff, they're outsourcing more pieces, and the economic cost/benefit analysis has changed as well. You used to be able to figure what the cost to add an additional feature, how many additional marginal consumers do I attract by that additional cost, and then it's simple arithmetic, does it add up. Now, increasingly, manufacturers (you see it in the smartphone space and the personal space) say if I add a new sensor is a software developer going to come by and do something very interesting with that hardware functionality that then will trickle back to me by selling more units.”

As hardware prices continue to fall, we'll see various sensor-based technologies like Kinect built into more and more devices. (Does this mean the Xbox 720 will have Kintect built in?) As gesture and voice recognition become widespread, none of the console makers will have a competitive advantage because it will be everywhere. This will level the playing field for games and consoles somewhat; they'll have to find different reasons why their hardware is better..

Discussion turned to tablets and smartphones, and Epsteing made an interesting prediction: “We think we'll see tablets with gesture recognition in the docking station by 2013; building it into the devices may take a little longer due to power requirements.” This would be interesting. It presumes the tablet is held by the docking station so you have room to maneuver. “Interface is the driver,” said Epstein. “Being able to interact with your tablet from a distance will be a driver, gaming and game developers will benefit from this.”

Tim Chang cautioned that excessive focus on technology is not necessarily the way to make the most money.”From a moneymaking standpoint, the most popular games don't use any of this fancy stuff; Angry Birds for instance. Don't get caught up in all this tech wizardry – there's a lot of innovation even in just basic 2D, which is mass-market targeted, and tablets are the sweet spot for new genres, namely kid's edutainment. The tablet is the best pacifier humankind has ever seen. We need more hardcore games on mobile, like realtime strategy games. What does Starcraft look like on a tablet? What does Riot Games' League of Legends look like on a tablet? We'll see a lot more of what I call 'gaming archaeology' all the games from the past PC world going on tablets. You'll see other new genres optimized for tablets pop up.” Epstein agreed. “There's no substitute for basic gameplay.”

On the question of how will social network games evolve, Chang had a blunt answer. “I think it's over, and Zynga won. There was a short period when, with the rise of the platforms, the landscape was open for land grab, and there are basically three key pieces to that. Virality, which is really free marketing; there's retention engagement, and then there's monetization. The innovations were free-to-play, in-game purchases, and virality. Now that there's no more virality, there's no more free lunch, we're back to who's got the biggest war chest to spend on advertising, so VCs aren't backing social game companies any more. That said, there's no Zynga of mobile yet, there's no Zynga of connected TV yet, so whenever you get these new platforms that's when the land grab opens up, and that's what you're gunning for. That window's never more than 12-18 months.”