Russ Pearlman's Blog

The last day of E3 is here. By now, anyone who is really interested in all the gory details will have tracked down a number of sources to get the dirt. So, let me focus on 2 areas that probably haven’t received too much attention: devices and game monetization.

Devices

As for devices, yes, there is a lot of hoopla over Natal – Microsoft’s planned 3D controller that doesn’t require you to have anything in your hands. Sony countered with their own motion controller announcement. But, I’d like to focus on what’s there now as opposed to what might be in the future.

Platforms: the PS3, XBox 360 and Wii are still the top platforms. There is little to no change (outside of pricing) to these consoles this year. That’s a good thing since games are still behind the full capabilities of these platforms in terms of graphics, physics and AI.

Hand-helds: the king of hand-helds is still the Nintendo DS. This last year, they introduced the Nintendo DSi and replaced the DS original with the DS Lite. So, what’s the difference?

• The DSi has a larger screens than the DS Lite
• The DSi has better aesthetics: slimmer and wider, discreet matte finish, better grips and click-able buttons
• The DSi has a camera and can play MP3′s
• The DSi only supports DS games – unlike the DS Lite, it can’t support Game Boy Advance titles
• The DSi can utilize the DSi Shop which provides online access to games

In my mind, only the last point makes any difference – and if Nintendo was really pushing this – it’s a huge difference. Imagine no longer having to buy or rent games. You could just download them like books on the Amazon Kindle. But, alas, Nintendo has only provided 256 MB of internal memory, and major retail titles aren’t available for download.

While at E3, I did get the chance to see a DS competitor called M2. It’s a more robust entertainment device that has a camera, video capabilities, music playback, etc. But, without the availability of titles, I don’t expect much from it.

Sports controllers: probably this biggest innovation over the last year was the introduction of sports controllers that have led to the huge success of Wii Fit. This year, there were a bunch of additional controllers from imitation Wii platforms, to skateboards, etc. I even saw a really interesting wheel that you can put an iPhone in the middle of to play racing games on the iPhone. Overall, I think this is an area where the industry will continue to push – after all, how can mom’s object to kids getting exercise while playing video games?

Monetization

The elephant in the room at E3 is certainly money. After all, this is a business conference. But, little has been said in the way of monetization strategies outside of selling physical products in the retail channel. A few interesting tid-bits during the conference:

• Super Rewards (srpoints.com) provides virtual currency for the gaming and social networking space. Major publishers and platforms have used similar strategies for individual titles, but Super Rewards provides an external capability that can be leveraged. I think this is extremely interesting for not only social networking sites and games but also for any other site where you want to charge a small premium for additional content (can anyone say newspapers?)
• InComm Gaming provides prepaid currency cards that are available at retailers such as Best Buy. They enable branding of cards specifically for games. The best part of this option is that it allows users without a credit-card (i.e., players under 16) to have access to premium content.

Overall, there wasn’t a lot of innovation being discussed at E3 around monetization. Microsoft’s plans around movies and games-on-demand was very short on detail around this, and I saw very little in the way of micro-transaction (outside of Forza Motor Sport 3 which will have a number of add-ons available). As I posted yesterday, I’m skeptical about Microsoft’s plans until we see pricing.