The Video Game Industry's Strategy Guide

Douglas Lowenstein is a little like Sonic the Hedgehog; he's on a tireless race to take his game to the next level.

I'm not saying that he resembles a hedgehog (you can compare and contrast on your own time). Rather, the chief of the Entertainment Software Association is determined to turn the video game industry into the multi-billion-dollar kraken that so many people already think that it is.

Speaking at the start of this week's three-day Electronic Entertainment Expo in Los Angeles, Lowenstein urged developers and executives to take video games out of children's bedrooms and basements and turn them into conversation pieces at happy hours and dinner tables. Sure, this is something that happens already, but don't think for a minute that the intensity has reached the level that Lowenstein wants.

"Lowenstein ... compared the gaming and film industries for the first of many times in his speech, and commented on the increasingly common claims that the video game industry is bigger than Hollywood," Gamespot's Brendan Sinclair reported. "'Let me set the record straight. It's simply not true,' Lowenstein said. 'We like to say it. It feels good to say it, but it's not true yet.' While game hardware and software sales together exceed the motion-picture box-office figures, Lowenstein pointed out that such a comparison doesn't factor in the sales of DVDs and VCRs and rental and television revenue. When taking everything into account, Lowenstein said the actual breakdown shows film as a roughly $45 billion industry, with gaming trailing behind at $28 billion."

Here's a quick take from the USA Today E3 blog, courtesy of Pete O'Brien: "[Lowenstein] urged the gaming community to learn a lesson from 'The Passion of the Christ.' He said Hollywood didn't recognize the desire for alternative content, and he doesn't want his industry to make the same mistake. He hopes games are made that 'keep you up at night wrestling with whether or not you made the right moral and ethical choices.' Lowenstein also believes the industry can't get snobby about its offerings, recommending significantly shorter and cheaper games. Much like a silly comedic movie that provides an hour and a half of escapism, 'we need games that are shorter, simpler and more shallow.'"

The Dallas Morning News's Victor Godinez wrote a longish story outlining Lowenstein's master plan for the video game market: (He also offered the best one-sentence description of E3 that I yet have seen: " The show floor feels and sounds like a rock concert in the middle of a battlefield.")

One way to get game talk on more people's lips would be to make them give people "a thrill from achieving success." In other words, make them easier, as Lowenstein said: Too often in games, "we make it a grueling and unsatisfying experience for newcomers. Let's be honest, no one likes to die over and over and over."

The games business needs more money: "Mr. Lowenstein said worldwide sales for the industry are at $28 billion now. Video and computer game sales hit a record $7.3 billion in the United States in 2004. 'But if we're going to equal or surpass the film industry, I suspect we'll need new sources of financing beyond the existing ones,' he said." Among the strategies: squeezing venture capitalists for more cash; squeezing cell phone subscribers for the same.

China, baby. Lowenstein said a country with 103 million Internet users by 2006 and broadband Internet access available to 30 percent of the population in major cities is an indispensable market.

It's a Bandwagon

Two recent news stories contradict Lowenstein's assertion that video games haven't taken their proper place in modern American culture:

You know there's real money in any industry where the talent starts complaining that there's money out there being made that they're not getting. The Screen Actors Guild and the American Federation of Television & Radio Artists sense this trend in games, according to Boston Globe columnist Hiawatha Bray.

"While major stars can command fat contracts for their work, most of the roughly 2,000 SAG members who do game voice-overs earn a standard rate of pay. Game companies have offered to increase wages by 35 percent over 3½ years. They've also agreed to shorten hours, improve working conditions in recording studios, and increase the companies' contributions to the unions' health insurance programs," Bray reported. "But the unions want something more: a cut of the profits made by the most popular games. They're pushing a plan similar to the 'residual' benefits that actors get when one of their movies or TV shows is rebroadcast or sold on DVD. The unions say their performers ought to get a similar deal for any game that sells more than 400,000 copies."