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I just spent the past week in GDC attending GDC on behalf of FiringSquad. John Callaham has already covered the show in depth, but I thought I would share some of my impressions.

My main purpose in going was to connect and reconnect with old contacts and friends and to establish better relationships with some key companies in the industry. Many of these companies were exhibiting their products on the expo floor, with a focus towards game development. However, since I am a “suit” (business guy in game-industry speak…no I don’t wear a suit) and not a technical guy what I found most enlightening were the lectures and seminars I attended on the gaming industry. I’ll be posting a few blogs on interesting things I learned while at GDC, so stay tuned.

The first lecture I attended, "Tip of the Iceberg", hosted by Lars Buttler from Trion, spoke about how the future of media was to be found online, through the growth of broadband penetration. Although this is pretty obvious to most FiringSquad readers, Buttler quoted some pretty impressive figures and had some valuable insights. Apparently traditional media such as print, TV and Radio have essentially stopped growing which means there is approximately $800 Billion that is looking for a new home and will eventually find its way to the online media (good news for me!). The online gaming market is projected to grow to $13 billion by 2011, with some pretty phenomenal growth forested: 60-80% based on current growth rates. Most FS readers will have played one or two MMOs over the past little while, but did you know that the profit margin on these titles is currently standing at about 60%, with Average Revenue per User/month at $5-15? These kinds of numbers are mostly unheard of in other industries (besides the Telcos of course), and the gaming industry as a whole is looking at them thinking “how can we get involved?”

Buttler explicitly pointed out the Asian connection to all of this, and how a few years ago the US companies were looking at the Asian phenomenon of MMOs and saying “That’s a cultural phenomenon, it can’t happen here.” Well guess what is happening? With the growth in broadband penetration, Americans are adopting online gaming culture much the same way as Asians do. Buttler referred to this as an “Infrastructure Phenomenon” (as opposed to the “Cultural Phenomenon” previously and erroneously thought), as the US lags behind much of Asia in adopting broadband, and therefore online gaming.

This growth of broadband penetration, besides allowing you to stay up all night chatting pointlessly on MSN instead of actually hanging out with your friends, has also proved to be what economists call a “disruptive influence”-it is disrupting the entire industry by creating new business models, which in turn makes the old way of designing games and doing business open to question. These new business models mean that a title like WoW can make exponentially more money than, say Battlefield, so why would publishers put the same kind of resources into titles with the “old” business model?

And, because broadband enables all sorts of interactions between developers and end users, from immediate feedback all the way to User Generated Content, the “old” way of designing games seems rather quaint. For developers and gamers, this means that titles can be released as a framework and updated and enhanced, much as any MMO now releases expansion packs, but with far more profound implications.

With all this change going on, how do developers and publishers compete and win in this environment? Buttler’s prognosis is for games, media and Web 2.0 technologies to merge, creating a new type of media that is a totally interactive, service oriented business that not only listens to customer demands, but is developed by customers. Because broadband enable change to happen daily, this opens up the door to even more user-focused online worlds and games that have some elements of the online media incorporated. How this will pan out will be interesting to watch. And of course, by going beyond gaming as a traditional package good business, developers and publishers stand to make better profits, and hopefully for gamers, better games.