Is casual gaming destroying the traditional gaming market?

March 18, 2010: 6:14 AM ET

Trip Hawkins sees a videogame business at war with itself. It's Farmville vs. Halo and the winner could shape the next generation of game play.

It was only a few years ago that the videogame industry was tagged as "the new Hollywood," a billion-dollar market that operated with binary simplicity: A game's opening weekend – like a theatrical release – would determine whether the tens of millions a developer had spent had paid off. People threw parties around drop dates and critics posted reviews. Then it was onto the next game.

But the Hollywood metaphor has turned out to be wrong. Launching a game is more like launching a standalone business. Launch it and the staffing and resource commitments continue seemingly forever:  expansion packs, networking options, new levels and additional characters. There is no moving on, there is only more spending. And just like in the business world, sometimes seemingly trifling competitors can rise up to cause unexpected damage—the kind of from-the-garage innovation that causes CEOs to cower with fear.

The disruption at work was on the mind recently of videogame vet Trip Hawkins, who has been working out of the proverbial garage since starting his company, Digital Chocolate, in 2003. The business model of gaming is broken, he says, and traditional gaming faces its largest challenge since id Software unleashed Doom in the early '90s. The culprit? Casual games, with their small pleasures, constant releases, ease of play and cheap price. They can be played anywhere off any device—and in this device-frenzied age (hello, Android and iPad), the spread of these games is just going to get faster. More

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