Possibly you missed the news that the Serious Games Summit, described by its organizers as an opportunity to "forge links between the traditional videogame industry and program managers for homeland security, state and local governments, military agencies, and educational institutions," kicked off yesterday in Washington, D.C. Even if you didn't pony up for a ticket, however -- well, it was $500, and that's just for the early birds -- the summit's reason for being is nevertheless an interesting one for video game watchers.
If the idea that video games might not be all about fun is new to you, check out Jose Antonio Vargas' article from yesterday's Washington Post, in which the author previews the conference and takes a closer look at something the U.S. military has known for a while: Video game companies are good at simulating things, and it might be useful to have those things be simulated. (Attempting to practice military maneuvers with live ammunition faintly recalls the old joke about the magician whose big trick involves chugging nitroglycerin and swallowing a match: He can do it only once.)
The Post piece notes that the Pentagon spends some $4 billion each year on simulations -- more than consumer market leaders Electronic Arts (NASDAQ:ERTS) and Activision (NASDAQ:ATVI) had in 2003 revenues put together. That should be reason enough for any investor or game executive to take notice, particularly, as the conference's schedule suggests, because there's more to serious games than war-games -- there could be medical, scientific, or educational applications as well.
Whether the major players in this sector can turn this into big business remains to be seen, but you can be sure they are cognizant of the financial opportunity, as well as the opportunity to reclaim some control of their public image. (The conference's location in the same town as Congress, where people like to get up and blame video games for the erosion of traditional values from time to time, should be a giveaway there.)
What's perhaps worth watching as this story develops is the potential need for video game software companies to develop yet another type of operational model for dealing with customers: They've long been accustomed to packaging and selling software, and are now largely moving toward a subscription and service model through the growth in monthly-fee online gaming.
Large, corporate-style fixed-term per-user contracts with potentially even more stringent service requirements might be the next wave, posing a further challenge -- but they're unlikely to pass up on the opportunity.
David Gardner recommended both Electronic Arts and Activision for Motley Fool Stock Advisor subscribers. Want to see what else has made the cut? Sign up today with the benefit of a six-month money-back guarantee.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article.
