What’s interesting is that I think there’s lots of interesting information here about what’s going on in the core business, and I think there’s a major shift coming in the business models as we head to the next generation.

I’m also wondering if the term “budget title” is being used as a derogatory term for casual and social.

Also interesting that discussion about the developer/publisher relationship.

That’s clearly an issue for publishers and developers since games aren’t a tiered business like movies, so there is no point in the business that they can be guaranteed a sale, unlike movies.

That said, it’s hard to deny that some of this is the publishers fault. At $60 AAA retail games are probably overpriced compared to actual perceived value, so consumers are going to look for ways to bring down the cost to a level that’s more in line with their expectations.

It’s clear that first-user-free content, such as the extra maps that were provided with Gears of War, are a good way to get your fans to buy your product new. It also creates a sense of value for your content.

But I have to wonder if it wouldn’t make sense to simply decrease the cost of the product at retail and add some of the features a la carte as DLC. Sure, they’d still lose some sales to used copies, but more consumers might also pick up the product at retail. It also means that you might see games appearing in more places than just GameStop, Big Box, and online stores.

Microsoft did end up releasing those Gears of Wars maps as a separate purchasable download. I’m curious how that did for them.

Ultimately DLC helps turning your product from a single event to an ongoing platform that can has some legs beyond the initial sale. And as the flexibility of the type and pricing of downloadable content grows, you can also bundle together that content at a later date for a lower price.

And one day you might even have a tiered business…

The always entertaining TechDirt has something to say on that subject, that is, I think, relevant to those who may not see the future of gaming that’s rapidly approaching:

The problem is that it’s not the reporting that’s attracting the community. It’s the community. For way too long, the newspapers have ignored or diminished the role of the community. They were forgetting that, in the end, it really is the community that’s their "product." They sell the attention of that community. But, for years, they had little to no competition in doing so. That meant they could basically ignore serving the community… and they did. Now that there are sites that actually do serve the community, people prefer going to them than the sites that treated the "community" like lower class riffraff to be kept away. Funny how that works.

Games have existed in a similar vacuum for the last twenty years, but the outlets for the old fashioned single-player experiences are growing smaller and smaller every day.

The first on is up now. You can check it out here

Here’s a taste:

While there’s lots to love about the iTunes experience as a customer, if you’re a publisher you only have very limited ways to connect with your audience. There’s the main page, some top ten lists, and even a bit of advertising scattered throughout the app store experience. Heck, there’s even a “What We’re Playing” list, although how you go about getting on it is something of a mystery, and it makes you wonder who “we” is actually supposed to be. But that’s it. There’s no social community to reach out to, no viral thought leaders, and no magazine or blog where you can really reach the players who “matter”.

But Casual Games haven’t become the all-encompassing juggernaut that some people were predicting  they would be a few years ago. Meanwhile, Social Games are quickly expanding into exactly the same market.

So are Social Platform Games just casual plus plus, or are they the new bigger better thing?

Here are ten reasons that it just might be both:

10. Social games are hard to clone.

Cloning is more than common in the world of casual, it’s a way of life. Whether it’s the hundredth hidden object game, millionth match three, or trillionth time-management title, every single success spawns endless of knock-offs. And sometimes the copies are even better than the original. (Luxor, anyone?)

Sure, you can clone Mob Wars, but can you clone a community? The halls of videogame history are littered with the corpses of products that tried and failed to create a quick copy of a social phenomenon. And that’s because in a social game the players are more than just an audience, they’re an active part of the game’s success. That’s something you have to build. You can’t just copy it.

9. Micro-transactions work better in Social Games

While a lot of people understand what micro-transactions are, relatively few people seem to understand how they really work. The biggest factor in successfully convincing someone to give you their money is communicating exactly what they’re going to get when they give you that dollar. While you can buy a new level or outfit for a casual game, it’s harder to sell someone a new experience. Everyone wants to buy something something more than just more, the want something that’s going to make the game better.

8. Conversion is hard to do.

It’s relatively easy to get people to show up on the internet. What’s more difficult is convincing them to stick around, especially if you’re going to charge them $20 to do it.

The current model for Casual downloads invites everyone to the party, then locks the door and demands that they either pay up or get out. In the end only one to five percent actually break out their credit cards. The rest go see what’s happening next door.

But Social Platform games are truly free. And spending is about enhancing and expanding the experience of playing the game that they’re already playing. With the right integration of social elements a player will not only keep playing the same game longer, they’ll be ready to come back and play again the moment you tell them that you’ve given them more.

7. Social is scaleable.

If you’re lucky enough to have a hit Casual Game your next step to profit is to make your whole game over again and add a "2" to the end of its name.

And after you’ve made an entirely new version of your game you have to distribute and market a new title that’s now competing with your old one!

A social game is defined by the relationship, so you can add in new content at any time, and your fans are already showing up to play.

6. Social Games work for everybody.

Can you get a hardcore gamer to play your Casual Game? Occasionally, and only if the content is just right.

But for every Bookworm or Peggle, there are a hundred titles featuring babies, weddings, and all the other things that are as deadly to the hardcore as holy water to a vampire.

And while it is completely possible to create Social Games that are every bit as female friendly as the latest casual title, the diversity of genres also makes it possible to convince a hardcore gamer to join the tribe.

Social Games provide developers with set of tools that can be used in almost any type of game. So you can have a casual social game, and a social hardcore game, but you can’t have a casual hardcore game. It may seem like semantics, but the bigger fish is way more likely to eat the smaller one.

5. The Browser is better.

While not every social game is going to be played in a browser, it’s much easier for a player to load a web-page than it is for them to install a whole new application. It’s also a lot less frightening as well.

4. The more they play a Social Game the more you earn.

The casual gaming demographic tend to play the same game for long time. To put it another way: once they’re "into" a game it takes them a long time to get out. But with traditional game profit models that means there’s actually a dis-incentive to keep the player playing. After all, you already have their money, and you’re not going to get any more until they buy another one.

But with Social Games the more time you and your player spend together the more potential there is for you to earn.

Yes Casual Games have embraced integrated advertising, but it’s much harder to hold an audience with a commercial in a stand-alone application than it is on a browser. Freedom is just an alt+tab away…

3. Piracy.

It isn’t said out loud too often, but one of the dirty little secrets of casual gaming is that it relies on the ignorance of the audience to control copying, and to hold back the download Armageddon that has decimated PC gaming. After all, is Grandma really going to figure out how to download a Diner Dash torrent off of The Pirate Bay?

But ignorance is a two way street, and while the technologically elite can argue the ethics of downloading all day long, once the mythical Grandma has learned how to download a cracked game is she ever going to pay for another one ever again?

Social games, on the other hand, are inherently "copy protected" by the value you get from the other players. You’re not just asking someone to pay for an experience, you’re asking them to pay for access and status.

2. The Portals

When The Gap first opened up their stores back in the seventies there was no such thing as "Gap" brand jeans. The store’s original slogan was "Levis for Guys and Gals", and they sold a hell of a lot of them. But as jeans became more and more mainstream, and high-end brands begin to dominate. Fewer and fewer people cared if their denim pants came from one of the "big two" manufacturers. By 1991 you couldn’t buy a pair of Levi’s at the Gap anymore, but it didn’t keep customers from walking through the doors, and it didn’t keep them from walking out with a pair of denim pants.

These days the big game Portals have little to lose and everything to gain by doing the same thing with their competitor’s games. Their customers will come to get the latest iteration of Diner Dash, but once they’ve signed up, they’re loyal to that particular portal and the games they sell. By bringing together large groups of customers, the portals have the leverage they need to lower the price of a game and still take a bite of every sale you make.

While it’s true that on the social side MySpace and FaceBook are controlling the distribution of the Social Game Content, they aren’t the only game in town. They’re also not your competitors, so it’s not necessarily in their interest to reach as deep into your pockets as the possibly can.

1.Virality

Everybody wants something for nothing, and there’s nothing that’s more satisfying to a marketing person than free word of mouth. But in a world where everybody is talking about everything all the time, if you want to be more than the a one day wonder, you’ll need something that’s going to have your players working to get everyone on-board with your latest product, or even the newest update.

It’s nice to have your friends playing the same game you are; it gives everyone something to talk about. And when someone likes a game they’ll work hard to bring friends on-board. That’s more than just a shared experience, it’s real value that you can take the virtual bank.

Unfortunately for any young industry, the really high adoption rates that got everybody excited a few months ago can be your worst enemy as a significant chunk of your audience finds you so fast that you can’t sustain the same relative growth rate.  There’s still big numbers, but anything over zero is infinitely larger than what you’ll get year over year.

Another issue that’s been faced by every new game category is after the initial wave of success there’s a following surge of new products into the marketplace as other developers and publishers enter the space. That’s doubly true when your development costs are low. The existing audience is quickly fractionated by all the offerings and you don’t get to have the string of huge numbers for every title that you had when you started out. And even if you can get a steady stream of new players, your "mature" gamers become more and more discerning in their tastes.

Social Platform Games are an exciting market, and there are lots of things to love about the possibilities in the next year. But like any hit driven business we can expect to see more and more failures landing between the successes.