Gaming goes mainstream

As Microsoft continues its struggle with Yahoo’s board this week, following the rejection of its recent bid for the portal, a second corporate battle is brewing in the technology sector. Gaming company Electronic Arts (EA) on February 24 launched an unsolicited $2 billion bid to acquire its competitor, Take Two Interactive.  Consolidation in the gaming sector suggests that its two-decade long growth surge is ending -- but technological convergence and audience expansion could precipitate a renewed boom.

EA’s $26 per share offer represents a 50% premium on Take Two’s February 22 closing price.  Like Yahoo, Take Two is regarded as more creative than the steadily growing, disciplined Electronic Arts, and, in a further parallel, Take Two’s chairman has rejected the bid, claiming that it undervalues the firm, particularly given that it appears to have been timed to take advantage of the latest release in Take Two’s Grand Theft Auto franchise.

However, commonalities between the two takeover battles -- which will dominate the corporate side of the technology world in the months ahead -- do not end there.  Just as Microsoft is seeking to position itself to influence the development of the next generation of the internet, EA wants to tap into Take Two’s creative talent as gaming evolves.  Indeed, these processes are likely to have significant parallels, and could transform gaming from a widely enjoyed and enormously profitable niche into a mainstream -- and even more lucrative -- form of media entertainment.

There are a number of trends that will have a role in this process:

• Improvements in bandwidth will allow realistic, high-resolution gaming to be an increasingly social activity, which could well incorporate some of the features that have made networking sites such as Facebook so popular.  Indeed, the distinction between gaming and virtual worlds such as Second Life could become increasingly blurred.  Games will continue to have characters and plots, but avatars may well become portable between virtual worlds and virtual reality gaming environments.

• Development of augmented reality hardware and software will mean gamers will be able -- at a relatively affordable cost -- to have experiences that use all five senses.  For example, Ethereal Technologies is developing a graphics display that visually immerses users in a way not possible with current screens, while headphones are also now available that allow users to feel events, such as explosions, as well as hear them.

• As high quality internet access on mobile devices becomes more widespread, gamers will be able to immerse themselves in the activity to a degree that is not currently possible.  This means that the distinction between virtual worlds and the real world will increasingly fade.

• Demographic as well as technological factors also will come into play, as the current ‘first generation’ of gamers ages, and gaming is no longer an activity restricted largely to the young.  Enhancements in game writing and development, incorporating genre elements such as romance, are also attracting more women.