Video Gaming Continues to Yield Enormous Profits
I watch the video game industry closely for several reasons. One is straightforward and simple. It’s huge and growing furiously. Hollywood is pretending otherwise, but gaming today is a bigger industry than the movie business. Last year, according to the Consumer Electronics Association, video game industry sales increased 22 percent. This year, with no new consoles scheduled to hit the market, analysts are saying that growth will “slow” to 13 percent.
I’m not convinced the analysts are correct, largely for one reason. The Nintendo Wii has surprised everybody by pushing sales into demographic sectors no one expected. There has, in fact, been a series of incredulous headlines about the popularity of the Wii among older people. Many retirement communities are now providing Wii consoles and games as a basic service to residents.
The reason for this shift in usage is the Wii interface, a point and click devise that senses changes in direction. With it, gaming becomes far more intuitive and realistic. Wii bowling, for example, is enormously popular even in many nursing homes where administrators welcome both the entertainment and physical activity the game provides. Wii bowling, after all, is played the same way as real bowling, but the bowler holds a controller rather than a ball. Wii tennis, baseball and golf are also big hits.
The gaming industry itself was taken by surprise by this shift in usage. The games that were expected to lead in sales last year were all hard-core young male “shooters.” Instead, many have been pushed out of the top ranks by sports and simple puzzle games.
This is not to say, though, that the complex “twitch” games that feature combat are less popular. They’re not. They are, though, joined by and sometimes surpassed by less violent and easier games to master. There is, however, something even easier than the Wii controller coming to market soon.
OCZ has announced that they will release the first of the direct neural controllers this year. Production has already begun and I believe they will eventually have a far greater impact than the Wii. OCZ’s Neural Impulse Activator contains sensors, located on a headband, that detect electrical changes in the nervous system and muscles. Those signals are amplified and interpreted by the computer.
Most of the complex processing takes place in the real powerhouse computer — the human brain. Because of the brain’s remarkable ability to adapt, a series of simple exercises onscreen quickly teaches users how to unconsciously control game play. The company says that after a short period of adjustment, users can take over game controls mentally, reacting 60 percent faster than they can using hand-held controls. This technology will obviously be extremely useful to persons with physical disabilities for non-gaming uses as well. Look for completely unexpected “hacks” for these devices.
With a price between $300 and $600, OCZ’s neural controllers will be purchased and used first by early adopters. I haven’t used one myself though and, despite positive reviews, I have no way to predict if they will score big. It’s good to keep in mind, though, that just over two years ago, Nintendo was trading steadily around $13 a share. A few weeks ago, it almost hit $80.
Other companies are working on their own versions of direct neural controllers. They will include additional sensor technologies that detect the point of users’ eye focus, motion and voice recognition. As was the case with graphics card technology, gamers will continue to push the technology and drive down per unit costs.
No matter which succeeds, the technology will continue to expand the gaming market…
For transformational profit,
March 5, 2008
P.S.: I’m not ready now to recommend a gaming buy, but I’m getting close. There are several new companies approaching IPO that are poised to become the next Nintendo. When I am ready to drop the hammer on this trend, my Emerging Capital Report readers will be the first to know.
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