Flat to Tilted: How to make your region into a gaming powerhouse

Dean TakahashiLead writer for GamesBeat

VentureBeat

Background• I have covered technology news for 25 years and games for 20 years• VentureBeat: founded 11 years ago. 12 million readers a month• GamesBeat: Started 9 years ago when I joined• GamesBeat events: GamesBeat Summit on May 1-2, 2017 in Berkeley,

CA; GamesBeat 2017 on Oct. 2-4, 2017 in Bay Area• Web site: GamesBeat channel and subchannels for AR/VR, esports, PC

gaming, and other game stories. We do reviews, news, and interviews.• I wrote two books, “Opening the Xbox” (2002) and “The Xbox 360

Uncloaked” (2006)

This is me

The places I’ve been• I have been lucky to talk to game developers about the economic

growth of games in Helsinki, London, Marseilles, Shanghai, Tel Aviv, Los Angeles, San Francisco, Seattle, Dallas, New York, Montreal, Amsterdam, Berlin, Tokyo, Osaka, Fukuoka, Hamburg, and Las Vegas.• This is my fourth trip to Berlin• All of that has taught me that the world is flat when it comes to

making games. I borrowed that idea from best-selling author Thomas Friedman of the New York Times.• Competition is global. And it’s a non-zero-sum game

The Dead Sea

My favorite game of all time• The Last of Us by Naughty Dog, made in Los Angeles

That makes me qualified to say this: You can make a game anywhere• Siberian brothers employ 100 in Yakutsk; 30 million downloads• MyTona made 15 games, and their last one was a big hit• Mobile games can be made anywhere• Globalization has helped games spread• Costs are shifting and so are audiences• Workforces are educated• The world is flat

But strong regions tilt the odds in your favor• San Francisco, Los Angeles, Seattle, Tokyo, Kyoto, New York are strong • Regions have their advantages in rich history, culture, and costs• Related industries can help a region thrive, like the proximity to

Hollywood• Science fiction, tech, and games: That’s the theme of our conference• It works best if you have a gaming hub. Example: Japan has strong

hubs for gaming, while India is only emerging.

Here’s one of Japan’s natural advantages

The origins of strong game regions• Silicon Valley started in 1940s• Atari and Homebrew Computer Club started in 1970s• Taito’s Space Invaders kickstarted Japan in 1978, Pac-Man in 1980• Nintendo and Sega rise in Japan in 1980s• Ocean Software in UK in 1980s• Demo Scene in Helsinki started in 1990s• Id Software started in 1990s in Dallas• 3D animation software started in 1980s in Montreal

Ingredients for a strong region• Strong technology sector• Entertainment industry• Good universities• Favorable business climate• Cultural engagement• Leadership• Specialization• Government support• Legal protection• Financial support• International talent

How Silicon Valley beat Boston in tech• Regional Advantage: Culture and Competition in Silicon Valley and Route

128• Silicon Valley won, as it embraced the horizontal business model, while

Boston stayed with the older vertical model. Horizontal firms like Intel and Microsoft won the PC market, while vertical companies like Digital Equipment lost.• Annalee Saxenian’s Regional Advantage book captured this story• The platform owners hold the power• Bay Area platforms: Oculus, Facebook, Google, Apple, Intel• The Bay Area has stronger venture capital investment

Global game sales by region

North American game studios (SuperData)

U.S. game industry• Strong regions: San Francisco, Seattle, Los Angeles, New York, Dallas, Austin, Boston• Top states: California, Texas, Washington, New York, Massachusetts• 1641 companies, 546 in California• 406 universities with full game programs• Silicon Valley• 150,000 jobs• Jobs grew four times the rate of U.S. economy 2009-2012• $94,747 average salary (source: The ESA)• Trump is not an advantage

Asian game studios (SuperData)

European game studios (SuperData)

Game job postings by country (Indeed.com)

Game developer jobs postings by city (Indeed.com)

Top 10 public game companies in 2014 (Newzoo)• 1. Tencent• 2. Sony• 3. Microsoft• 4. EA• 5. Activision Blizzard• 6. Apple• 7. Google• 8. King• 9. Nintendo• 10. Ubisoft

Nothing stays the same• The game business and its leaders are always changing• But games are always growing, topping $100 billion and reaching

billions• Supercell with 200 employees is valued at $10 billion• Ubisoft with 10,000 employees is valued at $3.7 billion

Top public game companies in 2015 (Newzoo)• 1. Tencent• 2. Sony• 3. Activision Blizzard• 4. Microsoft• 5. Apple• 6. EA• 7. NetEase• 8. Google• 9. Bandai Namco• 10 Mixi

Top 10 public game companies 1H 2016 (Newzoo)• 1. Tencent• 2. Sony• 3. Activision Blizzard• 4. Microsoft• 5. Apple• 6. EA• 7. NetEase• 8. Google• 9. Bandai Namco• 10. Mixi

Japan • Long history with Sony, Nintendo, and Sega• Strong third-party companies• Arcade industry• Succeeded without a real Hollywood• Strong gaming culture• Influential throughout the world

Canada• Government help• Better measurement• 472 active studios, 143 new since 2013 (ESA of Canada)• $3 billion annual revenue, up 31% since 2013• 20,400 game jobs in Canada; 36,500 equivalent full-time jobs• Major companies with Canadian studios: EA, Capcom, Ubisoft, Activision Blizzard,

Microsoft, Nintendo, Sony, Disney, Warner Bros., Square Enix, Sega, and Bandai Namco• Home grown: BioWare (EA), Ludia, Behaviour, Relic Entertainment• Costs are 25% of U.S.• 1/10th the size of U.S., but 1/3 as many studios

New platforms disrupt the old order• Virtual reality• Augmented reality• Mobile• Television• Toys to life• Esports• These are all opportunities to change the world order

China is coming on strong• Urging worldwide expansion• Strong shows like ChinaJoy• Strong in PC and mobile. Not much console• Big push into VR• Financial power and geographic arbitrage• Tencent has bought stakes in Supercell, Actvision Blizzard, Riot Games,

and Epic• Problems with censorship, trade restrictions• 6,111 game studios (SuperData)

Israel, Finland, and others• Israel specialized in online gambling, social casino, marketing tech,

mobile• Finland specialized in mobile• Canada is broad-based across Montreal, Vancouver, Edmonton,

Quebec City, and Toronto• Technology, entertainment, and games inspire each other• How do you become fast?• How do you create a gaming culture? Finland has to export

Europe’s game industry• German has 450 games companies with 30,231 employees• United Kingdom has 2,088 companies, 12,000 employees• Spain has 480 companies, 4,460 employees• Netherlands has 455 companies, 3,030 employees• Finland has 290 companies, 2,700 employees• Sweden has 236 companies, 3,709 employees• France 300 companies, 5,000 employees

Natural attrition• Regions can suffer• Layoffs affect places such as Boston, Austin• Geopolitics matter in Israel, Ukraine• Silicon Valley has become too expensive• Immigration policies should be friendly• Political climate should be stable and welcoming• Some companies in Canada failed, like Roadhouse and United Front

Games. But Kabam’s Vancouver is driving enterprise value• Mino Games decided to leave SF and move to Montreal

What’s coming next• Emerging territories of AR, VR, toys-to-life, Internet of Things, drones,

robotics, esports, retro and more• VR is strong in the U.S. and China• Silicon Valley is strong in AI• Massive simulations enabled by the cloud• The intersection of sci-fi, tech, and games• Westworld

Game developer map

New regions• Iran has 150 game companies with 2,500 game developers• Israel has 200 game companies with thousands of employees• Lithuania has 30 companies with 400 employees• India? Brazil, Russia?• It’s almost impossible to count them all. But I would love to do it.

The game developer map that matters• San Francisco: Pokemon Go, Game of War, The Sims, Star Wars, Plants vs Zombies• Los Angeles: The Last of Us, Uncharted, Crash Bandicoot, Call of Duty, Diablo,

Hearthstone, World of Warcraft, StarCraft, Overwatch, God of War, League of Legends

• Dallas: Doom, Quake, Age of Empires• Montreal: Assassin’s Creed, Fallout Shelter, Deus Ex• Edmonton: Mass Effect, Dragon Age• Vancouver: Need for Speed, Gears of War• Maryland: Civilization, Fallout, Skyrim• New York: Grand Theft Auto, Red Dead Redemption• Seattle: Halo, Half Life• Tokyo: Final Fantasy, Pokemon, Kingdom Hearts, Sonic, Ico, Gran Turismo, Tekken

Game developer map continued• Osaka: Resident Evil, Street Fighter• Kyoto: Mario, Zelda, Wii Sports, Mario Kart, Nintendogs• Helsinki: Angry Birds, Clash of Clans, Clash Royale• Stockholm: Candy Crush Saga, Minecraft, Battlefield• Moscow/Honolulu: Tetris• Florida: Fifa, Madden• England: Tomb Raider• Boston: Rock Band• South Korea: CrossFire

Reducing your region’s risk • Multiple territories make sense• Wider talent pools• Cultural expertise• Diversity works• No one has a monopoly on good ideas• Diversify your game types• Get government involved• Market the game industry

Games find a way• Conclusions• You can’t just think about building a company. You have to build a

region. And that region has to produce blockbusters.• You can build a video game economy, but it takes time• Cost isn’t the only advantage• A gaming hub needs veterans, fresh talent, a culture of fun, low costs,

a critical mass of companies, and government support• If games have this, they will take over the world