While most of the video game news out there these days is about the gee-whiz new consoles like the PlayStation 2 and the Dreamcast, the software makers deserve credit for their abilities to harness new technology and turn it into increasingly impressive entertainment experiences. Now, though, some of those same companies are looking for ways to move games "off the box" and further into our lives.
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A news release that might have gone unnoticed by most video game stock watchers nevertheless bears mentioning here: "A First in the Computer Gaming Industry," reads the December 5 headline, "Gamers Can Communicate with S&SI with New Finnish Technology Called SMASH." What's this mean? S&SI is Simon & Schuster Interactive, which is the digital finger of the publishing arm of media monster Viacom (NYSE: VIA). SMASH is a technology developed by Finland's Add2Phone that, the company says, "integrates wireless advertising, value-added services and mobile electronic commerce." All this comes together in the form of S&SI's new PC and Macintosh game Star Trek Deep Space Nine: The Fallen. Using SMASH, an acronym for Smart Mobile Advertisement Server -- gamers in the U.S. and Canada will be able to receive hints and cheats directly to their wireless telephones. Web-ready and WAP-enabled phones will let players email back for more information; eventually, Trekkies will "be able to browse the ds9thefallen.com website via their WAP-enabled cell phones and navigate for hints that are categorized by each character and each level." The service will be free. We've discussed the role mobile devices could play in the future of gaming before -- a June story introduced some of the efforts in the space from the likes of Motorola (NYSE: MOT) and Nokia (NYSE: NOK) as well as software makers like the U.K.'s Eidos (Nasdaq: EIDSY) -- as device and game makers alike hope to bring increasingly complex gaming functions to mobile phones and personal digital assistants. But what S&SI and Add2Phone are talking about is really something else entirely. Consider this recent article previewing Majestic, a game Electronic Arts (Nasdaq: ERTS) -- which I own -- intends to bring to market early next year as a subscription product available from its EA.com website. Probably the easiest thing to do is just crib directly from Matt Sammons' article on DailyRadar.com: "When you sign up, you provide vital stats, including phone number, email address, America Online (NYSE: AOL) Instant Message ID, age, etc... Gradually, you'll start to receive a strange mix of email, bizarre faxes, threatening phone calls and instant messages. By analyzing these incoming messages, you will begin to unravel the game's mystery. EA has even gone so far as to set up dummy corporations, with real phone numbers that you can call, and fake websites, containing a mix of real and fictional information, which aim to provide clues and draw you into the story." It's a remarkable concept: On the one hand, you've got improvements in game quality that serve to draw a player increasingly inward with the improved realism that comes from better pictures and sound. On the other hand, however, you have the idea that games will soon also be able to reach outward -- toward the player -- to create a level of involvement not seen since Jeff Bridges took on the MCP in Tron. When discussing the next wave of video gaming, the temptation is to begin and end with the next-generation consoles: last year's Sega Dreamcast, this year's Sony (NYSE: SNE) PlayStation 2, and the Nintendo GameCube and Microsoft (Nasdaq: MSFT) Xbox (both planned for next October). That's certainly not fallacious, as this quartet of super-powerful machines -- all of which deliver graphics, sounds and gaming experiences that would impress nearly anyone -- is expected to drive one-off software license growth for the game makers for the next half-decade or so. (This market is discussed in depth in our Industry Focus 2001 report.) The "next waves" are generally seen as being twofold: the Internet (from all of its many and varied access points, which will increasingly include the consoles) and mobile devices. This is true, but there's more to the story. "Like any leisure time business," Activision (Nasdaq: ATVI) CEO Bobby Kotick said during a late-October CNNfn interview, "you've got the constant challenge of having to continue to create new forms of Indeed. But the advent of services like S&SI's and games such as Majestic indicate that there's more to creating a good gaming experience than just continually improving the quality of the graphics. Heck, there are already several uninspiring PlayStation 2 games out there that aren't anywhere near as much fun as a few rounds of a timeless classic like Connect Four. It's when game makers are conscious of this and search for the elusive "fun element" that makes a game addictive and entertaining -- particularly when that search takes the idea of games in a new direction -- that they sow the seeds for growth down the road. Long-term investors in this sector should be on the lookout for companies willing to commit resources to delivering top-quality gaming experiences through more mediums than just the DVD-ROM.
entertainment for your customer and I think the video game business is no exception. We just have a lot more to work with."
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