Bbr Volume 2 Issue 6

BRUINBUSINESSREVIEW

VOLUME II ISSUE VI

GAMING INDUSTRY

2008-2009 BBR STAFF Shannon Kung President

Christine Liu Vice President of Marketing

Stefanie Ju Finance Department

Joanne Hou Editor

Jaeman Kim Vice President of Corporate Relations

Sonia Bhasin Marketing Department

Benjamin Lo Assistant Editor Sunny Wong Vice President of Operations Grace Chan Vice President of Finance

Erika Solanki Creative Development Department Head Gloria Ho Marketing Department

Eric Park Marketing Department Julie Chen Corporate Relations Department Fred Kim Advisor

ABOUT US Bruin Business Review is a student-run online publication established in 2007 for the purpose of providing the UCLA student body with a convenient source of business news and career information. We publish every two weeks on the Internet and by subscription, allowing our content to be accessible to everyone. Our goal is to enrich our readers’ knowledge of the business world and the career options within it by presenting a wide range of business-related topics in a non-technical style. Our broad range of topics encompasses current business news, resume tips, employer and MBA program profiles, industry insight, and others. For more information about BBR, visit www.bruinbusinessreview.com. QUESTIONS, COMMENTS, CONCERNS? E-mail: [email protected] Mailing address: Bruin Business Review 118 Kerckhoff Hall 308 Westwood Plaza Los Angeles, CA 90024-1641 2

January 2009

January 29

February 11

UBS Stock Market Competition Start Date: January 29, 2009 End Date: March 9th, 2009 Description: Teams of 3 students put together an investment portfolio; winners get cash prize. Email [email protected] for more information.

Moss Adams: Big Four vs. Mid-tiers Hosted by: Student Accounting Society Time: 12-1pm Location: Ackerman Union 2408 Description: Learn why accountants picked mid-tier firms over the Big Four. February 12

February 3 High Income Careers: Sales Management Hosted by: Career Center Jump Search Jump Start Time: 4-7pm Location: Career Center 3rd floor, Conf. Room Description: Learn the secrets about sales and management and meet industry experts.

Careers in Econ., Finance, and Accounting Hosted by: Career Center Jump Search Jump Start Time: 4-7pm Location: Career Center 3rd floor, Conf. Room Description: Learn the secrets about a career in financial services and management. February 17

Secrets for Winning College Cash Time: 5-5:30pm Location: 229 Covel Commons Description: Learn how to effectively search for scholarships; sign up on my.ucla.edu. February 4 BDO Seidman: 10 Dark Secrets of Accounting Hosted by: Student Accounting Society Time: 12-1pm Location: Ackerman Union 2408 Description: Learn about accounting and network with professionals of BDO Seidman. UBS Etiquette Dinner Time: 7-9pm Location: Covel Commons South Bay Room Description: Learn the proper etiquette in social situations in order to impress companies. February 5 How to Get Letters of Recommendation Time: 4:30-5pm Location: 229 Covel Commons Description: Learn from the experts about how to effectively ask for recommendations. February 10 How to Win Scholarships Time: 4-5pm Location: 229 Covel Commons Description: Learn how and where to obtain scholarships for college.

Future Business Leaders of America - Phi Beta Lambda 3rd Annual Networking Night Time: 6:00pm Location: TBA Description: Network with members of the fraternity and gain connections. February 18 Media and Entertainment Night Time: 7-9pm Location: Tom Bradley International Hall Description: Meet recruiters from top media and entertainment firms. February 19 Government & Community Career Fair Time: 11am-3pm Location: Ackerman Union, 2nd Floor Lounge Description: Wondering what it’s like to work for a government organization? Check out this fair to talk to recruiters. February 26 Law Hosted by: Career Center Jump Search Jump Start Time: 4-7pm Location: Career Center third floor, Conf. Room Description: Learn about a career in law from law school admission officers and law professionals.

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table of CONTENTS 5

California’s Troubling Unemployment Problems

6

News Briefs

8

The Video Gaming Industry Explodes

11

Video and Computer Game Demographics and Industry Overview

14

From Pong to Wii: How the Video Game Industry Has Developed Over Time

16

Gaming Wars: Top Three Systems

18

The Comeback of Nintendo

20

Featured Employer: Blizzard

22

Crossover Trends: Games to Movies & Vice Versa

23

The Reality of Video Sports Games

25

Professional Gamers

27

Extreme Gamer Behavior: When Gamers Go Overboard 4

California’s Troubling Unemployment Problems Dmitry Shuster Staff Writer It was 5.3% in December 2007 and 8.4% in November 2008. Now California’s unemployment rate is at an astonishing 9.3%. In the past year, the largest state in the United States lost roughly 257,400 jobs, which amounts to 1.7% of the workforce. The unemployment rate for the world’s tenth largest economy (if California were a separate nation) has not been near such levels since January 2004, when the state was emerging from its last recession. In the last month of 2008, California lost 78,200 jobs as employers sliced payrolls to reduce costs in the contracting economy. The current recession for the state, and the national economy as a whole, only seems to be deepening. Riverside County reported the highest jobless rate of 10.4%, with 97,900 unemployed workers out of a workforce of 937,400. San Bernardino County, Los Angeles County, and Orange County reported unemployment rates of 9.7%, 9.5%, and 6.5%, respectively. In the month of December, the state lost a total of 80,500 jobs in 10 different categories while only adding 2,300 jobs in health and educational services. For the entire fiscal year of 2007, health and education services, along with government, natural resources, and mining added 58,700 jobs. However, this is a small number relative to the 316,100 jobs lost in the following sectors: construction, manufacturing, trade transportation and utilities, information, financial activities, professional and business services, leisure and hospitality, and other services. It is perhaps no surprise that construction showed the largest single-industry decline for the past year with a total of 92,600, or 10.8% of the workforce losing jobs. Governor Arnold Schwarzenegger expressed concern for the state’s worsening situation yet offered little comfort as to the future. Now, questions as to whether the state can meet its short-term debt obligations are frequently appearing, thus causing more uncertainty. This unemployment news also comes at a time when U.S. giants such as Microsoft and Intel are announcing that they will lay off thousands of employees. What is more troubling is that California’s unemployment rate of 9.3% is noticeably higher than the national unemployment rate of 7.2%. Furthermore, the state joins Michigan and Rhode Island as the three states with the highest unemployment rates. This raises concerns as to whether the state that is home to over 30 million residents can effectively manage the waves of the economy to emerge with some stability. Many states are experiencing shrinking budgets and are beginning to turn to the federal government for financial assistance. California is no exception. Lawmakers plan to expand the state’s unemployment insurance system to provide benefits to the growing number of unemployed residents. This can make the state eligible for an additional $900 million from the new stimulus bill that Congress is considering. While this is certainly better than nothing, it can be likened to applying a small bandage to a larger, growing problem. California’s budget will face a deficit of over $40 billion over the next two fiscal years.

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NEWSBRIEFS Stefanie Ju Staff Writer

CHRYSLER SLAHES PRICES IN HOPES OF ATTRACTING CONSUMERS In such a tight economy, consumers are looking for discounts and are increasingly reluctant to spend their money on anything not considered a necessity. Chrysler has recognized this and, in the aftermath of its 30% sales drop in 2008, has created a new incentive for consumers to buy its products. It is marketing new “Employee Pricing Plus” plans, which make models available to the general public at the same rates employees pay with their discounts. This will allow customers to save approximately $4,000 depending on the car model they choose. In such a bad economy, sellers are being forced to slash their prices significantly and try new marketing strategies in order to survive.

OBAMA’S STIMULUS PACKAGE President Obama’s inauguration was a highly anticipated and emotional event for many. Finally in office, he is working on trying to fix the broken economy. Obama has outlined a stimulus package, which includes making government buildings more energy efficient, which should save taxpayers $2 billion. His American Recovery and Reinvestment Plan also calls for greater investment in Pell Grants for college students. These grants are sponsored by the Department of Education and are awarded to students based on financial need. For those worried about government accountability in spending, he has also announced that after the stimulus bill is passed, a government website will be created to display how taxpayer money is being spent.

NEW LEGISLATION TO MAKE SUING FOR PAY-DISCRIMINATION EASIER On January 27th, the House of Representatives passed the Lilly Ledbetter Fair Pay Act, which makes suing for paydiscrimination much easier for workers. The act gives employees the right to sue within 180 days of their most recent paycheck if they feel they have been the victim of unequal pay. Laws in place now state that workers are limited to suing within 180 days of their first unfair paycheck. The fair pay act has already passed through the Senate and was signed by President Obama on Thursday with Lilly Ledbetter present.

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CALIFORNIA’S UNEMPLOYMENT HITS A 14-YEAR HIGH Many families in California have felt the recession across the nation. Now, new numbers are confirming that the job market in California is shrinking. The unemployment rate in California jumped from 8.4% to 9.3% in about a month, up from 5.9% just a year earlier. Not only has the percentages increased but they have skyrocketed in an alarmingly short amount of time. This unemployment rate marks a 14-year high for California and was even higher than the national average at the time the surveys were taken. Top economists have predicted that California is on a quick ride to the double digits, expected to pass 10% soon. Some government agencies are trying to lobby Governor Arnold Schwarzenegger to strengthen the state’s unemployment insurance system, but because California’s budget is already so unbalanced (the state is short $40 billion), government intervention may not be the beacon of hope unemployed citizens are looking for.

HARLEY-DAVIDSON TO CUT JOBS AND CLOSE PLANTS With the steadily deepening financial crisis, many companies are being forced to close plants and cut jobs. The motorcycle maker HarleyDavidson has recently announced a cutback of 1,100 jobs (estimated to be 12% of its total workforce) and the shutdown of various plants. Harley -Davidson also announced that its quarterly earnings were down far more than Wall Street had expected, forcing the company to operate at a loss. Its stock prices are plummeting, down to $0.34 a share from $0.87 the previous year; sales also fell 6.8% in the same amount of time. In order to try to correct its monetary woes, Harley-Davidson has plans to reduce production levels in 2009 by up to 13% in order to achieve lower inventory levels.

INTERNATIONAL MONETARY FUND PREDICTIONS FOR 2009 As global economic growth slumps all over the world, the International Monetary Fund (an international economic organization of 185 countries) announced that 2009 will bring the most “challenging year for economies since World War II”. The IMF predicts that economic growth will slump to 0.5% in 2009, an alltime low in over 60 years; growth rates were already declining in 2008, but still averaged a significantly higher 3.4%. Advanced countries like the United States are expected to face gross domestic product drops of at least 2%, and even quickly developing countries (including China and India) will only grow 3.25% in 2009, as compared to 6.25 in the previous year. In order to try to reinvigorate the economy, many countries have introduced fiscal stimulus plans.

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THE VIDEO GAMING INDUSTRY

EXPLODES Julie Chen Staff Writer The Entertainment Software Association recently announced that the economic growth of the video game industry is outpacing that of the total U.S. economy. The game industry had a 17% growth rate between 2003 and 2006 compared to just 4% for the U.S. economy in the same time period. While general retailers struggled this past holiday season, the game industry saw sales of $5.29 billion in December, which was the first time it had ever cleared the $5 billion mark in a single month. The growth of the gaming industry is pretty remarkable when considering the economic outlook of virtually every other industry at the moment. Historically, video game sales have increased every year. But what kind of history are we talking about? The industry itself is only about 30 years old but now represents over half of home entertainment sales. So how exactly did the gaming industry get so big so fast?

HOW THE RECESSION HELPED People have always used entertainment to distract themselves from tough economic times. Similar to the domination of musicals during the Great Depression, video games seem to be the number one choice of entertainment for consumers. The belief that the video game industry is recession-proof stems from the belief that video games offer much higher entertainment value per dollar than other options. The number of hours of solid entertainment that comes from a video game purchase is much greater than a movie. The growth of the game industry is driven by a package of benefits that includes a much higher degree of interactivity and engagement than more passive forms of entertainment such as television.

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EXPONENTIALLY ADVANCING TECHNOLOGIES

The power of games stems from advanced technologies and the ability to emotionally connect to customers. The movement toward three-dimensional engines to create graphics, greatly increased the gaming industry’s market attention. The detail of the characters, the vibrant colors, and the realistic scenes all attract players and commercial users from one previously hot game to the next. It is not a stretch to say that video games are graphically close to perfection.

Video game graphics from 1992 (left) and 2005 (right).

The game industry is often the first place to create a commercial offering of a new technology created in a research laboratory. For instance, the Artificial Intelligence (AI) techniques created in academic labs were adopted for games long before they showed up in other industries. In the 1970s, Atari was the first to use AI in a video game, Pursuit, a single player game with enemies. Possibly the best at pushing the technological boundaries is Nintendo, which rewrote the video game rulebook with a motion-sensitive control system called the Wii. These technological innovations prompted the company to lead video game sales last year.

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THE SOCIAL FACTOR The multifunctional nature of today’s video games has made gaming more socially acceptable. Games have largely overcome the stigma that they are just fun toys for kids. The average game player age in 2008 has increased to 35. The gaming industry has been able to enhance its number of customers with the release of more games that do not require a specific audience. The percentage of women playing games has also steadily risen over the past decade to 43% percent of all gamers. Games like The Sims, were huge crossover successes that attracted many women who had never played games A tennis game on Wii Sports. before. The term “gamers” now encompasses everyone from five-year-old girls to 70-year-old grandfathers. While there will always be a significant sector of the industry that caters to and is serviced by hard-core gamers, it is becoming apparent that there is almost no one who is left out of what video gaming is today. Video games are now better than ever at appealing to a widespread audience and improving people’s lifestyles. Many games, like Guitar Hero World Tour, attract all types of people by encouraging group play. Nintendo’s Personal Trainer: Cooking gives you step-by-step instructions for over 245 recipes and offers videos of techniques, portion calculations, and calorie counters. Ubisoft has expanded to teaching foreign languages with the release of My French Coach and My Spanish Coach. Interac5 Myths About Video tive games are now also a good way to get exerGames cise with games like Dance Dance Revolution 1. Scientific evidence links and Wii Sports. The violent game play with games mentioned beyouth aggression fore are popular because they offer either a social 2. Children are the primary The cover of My French Coach. or functional element market for video games not seen in other forms of entertainment. It is evident that the popular3. Video game play is socially ity of interactive video games stems from their ability to boost intellecisolating tual stimulation, enhance hand-eye coordination and promote bonding 4. Women do not play games among family and friends. Giving us a new way to experience leisure, 5. Video games are not a video games have advanced to the forefront of entertainment. At the 2009 Consumer Electronics Show, Activision’s CEO, Mike Griffith, stated, meaningful form of expres“Movies, recorded music and television – these are all stagnating or sion contracting entertainment sectors. Video games are poised to eclipse all other forms of entertainment in the year ahead.”

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VIDEO & COMPUTER GAME

DEMOGRAPHICS & INDUSTRY PROFILE An astonishing 38% of American households have at least one video game console. [Source: ESA, entertainment software association]

Grace Chan Senior Staff Writer When we think of video and computer gamers we usually picture young adolescent males but a good 40% of gamers are female, and the average age of gamers is 35 years old. In fact, there are more women players over the age of 18 (33% of the gameplaying population) than there are male players under the age of 18 (18%). Perhaps this should not come as a surprise as more and more video games are marketed to people of all ages and sex. Games like Diner Dash are targeted more towards women, while games like Wii Fit and Wii Sports are easily enjoyed by the entire family. That’s not to say that female gamers cannot and do not enjoy games that might seem more traditionally male oriented. Feminists would point out that the term “sex” denotes biological differences between men and women, while the term “gender” denotes differences between men and women imposed by society. We might be able to view this as a closing gender gap; we can no longer make assumptions such as, “female gamers would not be interested in violent games.” Indeed, you might be surprised at how many of your female friends play Halo or Super Smash Brothers.

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While many violent and bloody games such as Call of Duty 4 and Grand Theft Auto make up a disproportionate amount of news in the video and computer game industry, only about 15% of the total number of games sold is rated as mature. Games rated for everyone still make up the bulk of sales. This should put to rest some of the worries that people have regarding the possible detrimental psychological effect on children.

Top 10 Selling Video Games of 2007 [By Number of Units Sold]

The top 10 video games sold in 2007 represent a medley of different types of genres and ratings. From the more violent games such as Halo 3, Call of Duty 4, and Assassin’s Creed, to the family oriented Wii Play, Super Mario Galaxy and Guitar Hero. It is important to note that no one genre or gaming platform has a clear domination of the sales.

Rank

Title

Platform

Rating

1

Halo 3

Xbox 360

Mature

2

Wii Play

Wii

Everyone

3

Call of Duty 4: Modern Warfare

Xbox 360

Mature

4

Guitar Hero III: Legends of Rock

PlayStation 2

Teen

5

Super Mario Galaxy

Wii

Everyone

6

Pokémon Diamond Version

Nintendo DS

Everyone

7

Madden NFL 08

PlayStation 2

Everyone

8

Guitar Hero 2

PlayStation 2

Teen

9

Assassin’s Creed

Xbox 360

Mature

10

Mario Party 8

Wii

Everyone

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Top 10 Selling Computer Games of 2007 [By number of units sold]

Rank 1 2 3 4 5 6 7

Title World of Warcraft: Burning Crusade Expansion Pack World of Warcraft The Sims 2 Seasons Expansion Pack Call of Duty 4: Modern Warfare Sim City 4 Deluxe The Sims 2 Command & Conquer 3: Tiberium Wars

Rating Teen Teen Teen Mature Everyone Teen Teen

8

The Sims 2 Bon Voyage Expansion Pack

Teen

9 10

MS Age of Empires III The Sims 2 Pets Expansion Pack

Teen Teen

The World of Warcraft and The Sims franchise have dominated the top 10 selling computer games of 2007. That goes to show how loyal their players are, or perhaps how addicted their players are. You have all probably had a friend that stays up till the wee hours of the dawn obsessively playing “WoW,” and you have probably noted that at some point, these dedicated gamers have missed class or forfeited studying in the name of gaming greatness.

22% of frequent gamers pay to play online games. Market data shows that there are an increasing number of people willing to pay. This is a lucrative opportunity for many game developers since developing games is a relatively low-cost endeavor. Additionally, if online gaming websites are able to draw a significant number of players, they could charge a hefty amount for advertising.

Computer and video game sales have grown steadily the past decade from averaging 2.6 billion dollars of revenue in 1996, to 9.5 billion dollars of revenue in 2007. Even during this economic downturn, the gaming industry has remained pretty strong while other industries have faced slumps. It is relatively cheaper to buy computer and video games than it is to buy tickets to a sporting event or theme park. Unlike tickets to a sporting event or theme park, these games have the ability to provide utility for a longer period of time. Families might find that these games provide a quicker or more efficient source of entertainment as opposed to driving somewhere.

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FROM PONG TO Wii:

HOW VIDEO GAMES HAVE DEVELOPED OVER TIME Christine Liu Senior Staff Writer An escape from reality? A physical workout? Or the chance to “be” someone else? Whatever the reason, the video gaming industry has shown a dramatic increase since the early ‘90s, which has yet to slow down. It all started in 1958, when a physicist created a ping pong- like game on an oscilloscope screen. What resulted just a little more than a decade later was the phenomenon called videogames. Here, we detail the industry from its start in the ‘70s to the 21st century.

1970’S Nolan Bushnell released the cult-classic PONG in 1972. He first put a test unit in a local bar for two weeks. Soon after, the unit broke down because the coin drop was clogged with quarters, an affirmation of the success of PONG. He then made a deal with Sears in 1975 and PONG sold 19,000 units, launching the videogame industry. Now a leading industry in videogames, Japan was not far behind the U.S. in the ‘70s. In 1978, Tomohiro Nishikado created Space Invaders. It was so popular that the creator admitted that the game was considered a threat to children's education because kids were willing to steal money or make counterfeit coins to play games at arcades. At one point, it even generated a 100-yen coin shortage in Japan. As an economic recession hit from 1973-1975, the popularity of the video games decreased. In response, Bushnell came up with the idea of pay-per-play for just a few coins, which led to the arcade. Some of the first realtime 3D games were made in arcade format. Asteroids, released in 1979, became the most popular and profitable game of the decade. It featured a joystick to dodge rocks and launch weapons but the real secret of the game's influence and popularity was that it allowed gamers to save their score under their user names for all to see.

1980’S In 1983, a sudden crash in the industry was triggered by a weak economy. Furthermore, many companies such as Quaker Oats and Chuck Wagon dog food decided to produce videogames as well. However, these poor quality games over-saturated the market. Later, a line of highly popular games were produced including Pac-Man (created to attract girls to the arcade), Donkey Kong, Tetris, and Super Mario Brothers. At the end of the ‘80s, the video game industry crashed again, triggered by the fall of Atari, the company that created PONG. Atari’s fall was caused by its lack of quality control on released games. Atari had rushed a release of a game based on the 1982 E.T. movie after only three months of development. What resulted was a boring storyline with poor graphics that reduced Atari’s reputation among gamers.

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1990’S The dot-com boom and the creation of 3D graphics boosted the industry in the early ‘90s. The Internet also made it possible for gamers to interact with players from all over the world, thereby heightening the reality of the game. The ability for gamers to role-play on the Internet gave them the opportunity to be a part of a team as well as the freedom to be someone else and escape from real life. There were two competing universal icons of this decade, Nintendo’s Mario and Sega’s Sonic the Hedgehog. Mario, who was an Italian plumber, was an appealing character because of his blue-collar status. On the other hand, Sonic conveyed a more independent character with an attitude. The home console became a must-have. Driven by the competition among Nintendo, Sony, and Sega, each offered gamers a wide collection of quality games. But the success of Sony and Nintendo’s home console ousted Sega as the former had consoles with higher processing power and better graphics.

2000’S U.S. computer/video game software sales skyrocketed 4% in 2005 to a total of $7 billion, due to a growing portable gaming market of Game Boys, Nintendo DSs, and PSPs. The computer/ video game software sales were more than double the sales just nine years earlier. The big three of Nintendo, Microsoft and Sony has dominated this decade-- Nintendo has sold an astonishing 20.9 million in Wii game consoles worldwide, while Microsoft has sold 16.9 million Xbox 360s and Sony has managed to sell 9.8 million PlayStation 3s (PS3). This decade has focused on High Definition games and on developing interactive and immersive settings, utilizing realistic physics and improving artificial intelligence. Gaming has evolved to become more about engaging all the senses, with games that make the player physically swing, hit, dance, drum, sing, slash, or strum. Videogames also became more mainstream, where games such as Tomb Raider became so popular that Hollywood made them into movies. With the new century, games changed from just keyboards and buttons to motion sensors and a variety of vibration functions like DDR and of course, the Wii.

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GAMING

WARS

Sunny Wong Senior Staff Writer

Nintendo, Microsoft, and Sony are the main players of the oligopolistic video game industry, which has surprisingly not seen a decline in sales in the midst of this global recession. In 2008, the video game industry saw a rise of 10% for video game consumption, with U.S. consumers spending a total of $21.33 billion on video game consoles, games, and accessories.

NINTENDO Nintendo has performed considerably well in 2008. It has secured its dominance in the video game industry with over 50% market share in home consoles. According to the National Purchase Diary (NPD), a global market research firm, Nintendo has sold 10.17 million Wii consoles. This is significant because no other console has sold more than 10 million units in a single year in the United States. The Nintendo DS has also performed remarkably well. In 2008, 9.95 million DS units were sold, breaking its previous yearly sales record of 8.52 million units. Nintendo hopes to extend its lead in the portable gaming arena with its release of the DSi, which is an upgraded version of the DS. The DS features a camera and a memory card slot and is expected to be released in the U.S. in the second quarter of 2009.

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MICROSOFT Despite a tough year in the world economy, Microsoft managed to have its biggest year in Xbox 360 sales. Up through the end of 2008, Microsoft managed to sell 28 million Xbox 360 video game consoles worldwide, which is 8 million more than the PS3. However, Xbox still lags behind the Wii, which has sold approximately 9 million more units. One of the main factors for the Xbox 360’s strong performance this year was its $50 cut in the price of the console back in September. The Xbox 360 now sells for only $199, which is $50 less than Nintendo’s Wii console. Microsoft has also done well in its online sales of the Xbox live online service. Since its back in 2005, Xbox users have already spent over $1 billion on the Xbox live service. The Xbox live community now has 17 million members globally.

SONY On the other end of the spectrum, Sony has been struggling to keep up with the competition. For the first time in 14 years, Sony has reported an operating loss of $2.9 billion, which was 100% more than their original estimate. Although much of the loss can be attributed to the global recession that contracted consumer demands for electronic goods, much of the problem lies in Sony’s Playstation division. Low Playstation 3 (PS3) sales is cited as the primary culprit. Currently at a distant third, the PS3 has sold approximately 16.84 million units. Although many consumers are hoping for some price cuts right now, this will probably be unlikely. This is because Sony currently does not obtain any profit from its PS3 hardware. By lowering PS3 prices further, Sony will begin losing even more money, and, given the current economic conditions, it would be a rather risky move. In the meantime, Sony may concentrate on lowering its production costs for each PS3 sold in order to lower the losses from each PS3 currently sold. After this is accomplished, Sony can potentially lower PS3 prices, which would stimulate the demand for this product. It is possible that Sony can offset these losses from Blu-ray sales, games, and royalties. The near future looks bleak for Sony’s video game division. The division has reported a loss of about $377 million, and Sony plans to cut approximately 16,000 jobs by 2010 as a part of its restructuring plan. Until Sony can reduce its production costs for the PS3, it is unlikely for it to surpass the Xbox 360 anytime soon.

2009: WHO WILL WIN THE CONSOLE WAR? If we disregard the long-run, Nintendo appears to be the clear winner. Nintendo will continue to roll out advancements in its consoles and accessories such as the DSi and the new Wii Motion Plus. Even if there is a decline in Wii sales for the upcoming year, Nintendo will still outsell the rest of the competition. It is very unlikely that the Xbox 360 will outpace the Wii but it will continue to secure its second place position ahead of Sony. For 2009, Microsoft will probably focus on expanding its Xbox Live online service and potentially cut more prices on the 360, hoping to steal some market share from Nintendo’s casual gamers. For Sony, it must figure out a way to lower production costs on the PS3 in order to lower prices on the PS3. In the meantime, Sony must rely on strong sales in the PSP and PS2 to help offset its losses.

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the comeback of

NINTENDO Jaeman Kim Senior Staff Writer

In 1889, a company called Nintendo Koppai was created by Fusajiro Yamauchi, and it sold a playing card game called Hanfuda. As the card game began to gain popularity, the company continued to grow. Eventually, Yamauchi allowed his adopted son-in-law, Sekiryo Kaneda, to take over the company. At this time, the company was renamed Yamauchi Nintendo & Company. By 1963, the company, now known as Nintendo Company, Limited, had become very successful in the card business. However, by about 1964, the playing card market had become saturated in Japan, leaving no more room for expansion. Therefore, Hiroshi Yamauchi, who was the president of the company at the time, decided to explore other areas of business. Between 1963 and 1968, Nintendo Company set up a taxi company, a hotel chain, a food company that sold instant rice and various other items. All of these ventures failed except for toy making. The pursuit of the toy making market, along with the hiring of Gunpei Yokoi, a maintenance engineer, in 1965 proved to be the turning point for Nintendo.

The Original NES

Nintendo did not start out well as a toy company. It fell further into debt over several years and was dominated by already established company such as Bandai and Tomy. However, in 1970, Hiroshi Yamauchi was observing one of Nintendo’s factories when he noticed an extending arm toy that Gupei Yokoi had built for his own entertainment. Seeing the potential of this arm as a toy, Yamauchi had Yokoi develop this arm as a product, which came to be known as the “Ultra Hand.” It became a huge hit, selling over a million units. Yokoi was then pulled from the maintenance team and moved to product development. Yokoi continued to develop several successful products over the next seven years. In 1977, Shigeru Miyamoto was hired to work under Yokoi, and a new era for Nintendo began. Along with Yokoi, Miyamoto and Nintendo began producing video games, creating hits such as Radar Scope and Donkey Kong. Then in 1983, Nintendo released the Famicon system in Japan. While at first it was a failure, it became widely popular with the introduction of the Mario Brothers game. In 1986, the Nintendo Famicon was released in America, except with a different name: Nintendo Entertainment System (NES). The system proved to be successful. Then in 1989, Nintendo released the Game Boy, along with the game Tetris, which also saw similar success. The Nintendo Wii

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1991 saw the release of the Super Nintendo Entertainment System, or the SNES; in 1996 the Nintendo 64; the GameCube in 2001; and the Nintendo DS in 2004. However, during the release of these consoles, Nintendo began to lose much of the video game market that it had once dominated with the NES. Continual competition, brought first by the Sega Genesis and then by the Sony Playstation and the Microsoft Xbox, made it difficult for Nintendo to capture a larger market. By 2006, it appeared as if Nintendo had nowhere to go. Even as the videogame business grew into a $30 billion global industry, Nintendo saw sales in the United States plunge to almost half of what they had been almost twenty years ago.

Satoru Iwata, Nintendo’s Current CEO

However, Nintendo’s now CEO Satoru Iwata and Shigeru Miyamoto realized two things: the first, consumers cut back on game time as they start careers and families; second, as consoles become more powerful, making games become more and more expensive. So rather than follow in the steps of Sony’s Playstation 3 and Microsoft’s Xbox 360, Nintendo decided to create a low priced motion control machine known as the Wii. When comparing the three consoles, it looks like the Wii falls behind due to the fact that the Playstation 3 and the Xbox 360 are so much more advanced. However, the Wii has proven to be the winner in that it appeals to people from all ages. With the Wii, players are no longer confined to mashing buttons. Instead, they can now feel like they are actually throwing a football or swinging a bat. The Wii has changed videogames from being a passive activity to one that requires physical movement, making videogames appeal to a much wider audience. Another high point for the Wii is that it is actually bringing in profit for Nintendo. Sony and Microsoft, however, continue to lose money on every single console that they sell. Still, not everything is perfect. To this day Nintendo has been unable to keep up with demand for the Wii. While 2.15 million units were sold in December 2008, market analysts are seeing this as somewhat of a disappointment. Had Nintendo been able to keep up with demand, it is possible that over 4 million units would have been sold.

Shigeru Miyamoto, Game Developer for Nintendo

While Nintendo may be having some trouble getting the Wii into the hands of consumers who want it, the console has nonetheless changed the videogame market forever. The Wii has brought a new image to Nintendo and has created an enthusiasm for videogames comparable only to the introduction of the original NES.

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Sonia Bhasin Staff Writer

COMPANY OVERVIEW Blizzard Entertainment, a subsidiary of Activision Blizzard, is a video game developer and publisher based in Irvine, California. This company was originally founded as Silicon & Synapse in 1991 by Allen Adham and Michael Morhaime, who currently serve as presidents of Blizzard, and Frank Pearce, who serves as the vice president. All three are graduates of UCLA and founded the company only one year after receiving their bachelor’s degrees. The company currently employs over 2,700 workers and earns an annual revenue of $1.1 billion. Blizzard is one of the most successful video game developers of all time.

PRODUCTS Blizzard Entertainment originally served as a thirdparty developer, creating entertainment software for various platforms, including MS-DOS, Macintosh, and Sega Genesis. Since then, however, Blizzard has developed many best-selling PC games such as World of Warcraft, StarCraft, and Diablo.

WORLD OF WARCRAFT World of Warcraft, the most successful and wellknown of the Blizzard products, initially launched in North America, Australia, and New Zealand in 2004, with subsequent launches in countries all around the

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world. The game, which is a subscription-based massively multiplayer online role-playing game (RPG), is popular all over the world, with currently more than 11.5 million subscribers worldwide. This means that thousands of players from all around the globe come together online and battle against each other and against the world in an online fantasy land, with each player creating his or her own character. However, the game can be played at a player’s own pace. It is available in eight different languages based on the different regions in which it has been released. Blizzard Entertainment's most recent game release, World of Warcraft: Wrath of the Lich King, which launched in November 2008 and was an expansion to the World of Warcraft line, sold 2.8 million copies in its first 24 hours of availability, and over four million in its first month, breaking records and making it the fastestselling PC game of all time. Blizzard Entertainment is currently working with Legendary Pictures, creators of The Dark Knight and 300, on a movie based on World of Warcraft.

A scene from World of Warcraft.

STAR CRAFT StarCraft, a highly popular real-time strategy game, revolves around three species—the Terrans, humans exiled from Earth adept at adapting to any situation; the Zerg, a race of insectoids, in pursuit of genetic perfection obsessed with assimilating other races; and the Protoss, a humanoid species with advanced technology and psionic abilities attempting to preserve their civilization and strict philosophical way of living from the Zerg—fighting for dominance in a distant part of the Milky Way galaxy. It is one of the most popular games in professional tournament gaming. This is especially the case in South Korea, where the game's huge popularity played a pivotal role in the birth of the professional-gaming and game-broadcasting phenomena, as well as serving as one of the key drivers behind the growth of the PC-game-room business. This means that the game is played in sponsored matches and televised tournaments with professional gamers and teams. StarCraft is one of the best-selling PC games of all time, and raised the bar for the development of real-time strategy games.

OPPORTUNITIES There are many positions available at Blizzard to avid gaming enthusiasts, ranging from engineering to design and artistry. Blizzard also offers an internship program, and actively recruits recent college graduates. For more information, visit: http://www.blizzard.com/us/jobopp/universityrelations/

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CROSSOVER TRENDS: GAMES TO MOVIES & VICE VERSA Shannon Kung Senior Staff Writer The videogame industry catapulted from $2.6 billion in sales to $7 billion in the short span from 1996 and 2000, and it does not look like the gaming industry is going to slow down any time in the near future. The gaming industry is predicted to soon eclipse the music industry. This phenomenal growth has led to other industries becoming more and more involved in the video game sector, most notably the film industry. Both are able to mix visionary ideas with incredible imagination and special effects. Hollywood injects touches of cinematic flair into the gaming sector, while videogames engage devoted fans with interactive play. Movies based on video games and video games based on movies are now prevalent in today’s market. This synergistic relationship between Hollywood and gaming can be seen in the number of games coming to the big screen. Popular games such as Prince of Persia Sands of Time, Halo, EverQuest, and so on are all slated to be released in the next few years. Game franchises such as Mortal Kombat and Lara Croft were boosted by their entrance into film, further bolstering their cultural impact. Also, gamers are a loyal and intense bunch. Many will devotedly follow a franchise and thus spend unbelievable amounts of money on promotional material such as grand scale movie figurines, posters, etc. Many filmmakers are even learning from the video games and taking concepts such as digital introductory teasers to enhance their movie. Even Steven Spielberg, in an interview with Yahoo! Games commented on the fact that movies these days have a gaming feel, noting, “The Bourne Ultimatum had a lot of videogame savvy in the quick cuts and the audacity of camera angle.” Nowadays, it seems that every movie is required to have a video game based around it be released. Even kid movies are being turned into games, such as Kung Fu Panda, High School Musical, Harry Potter, and, of course, the many Disney franchise based games in the market. Although these video games are not the average one player shooter games typically associated with gamers, these are the games that have helped make crossing over to other industries a wildly successful multi-billion dollar concept. As video games are starting to appeal to a mass audience, film studios are taking note and are trying to get their slice of this developing industry. The concept of the Hollywood and gaming crossover goes beyond the traditional concepts of branded entertainment or product placement. Instead, a mutually beneficial path has been created to help build a franchise effectively and efficiently by providing many opportunities for client interaction and new platforms for distribution.

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the reality of

VIDEO SPORTS GAMES Eric Park Staff Writer The Bruins trail by a point with three seconds left in the game. The leading scorer, Josh Shipp, inbounds the pass to Jrue Holiday, the starting shooting guard. Holiday dribbles before pulling up and launching a jumper from the key over the outstretched arm of UCONN’s Kemba Walker and the ball… hits nothing but net! The Bruins have won the 2009 NCAA men’s basketball championship! The crowd goes wild here in Detroit, Michigan! You breathe a sigh of satisfaction, and then proceed to save your successful championship season onto your memory card. Then reality sets in, and that is the real NCAA champions will not be officially crowned until March, but UCLA can be immortalized as champions today and forever in the video game world. Last year the video gaming industry brought in an estimated $21 billion in revenue while Major League Baseball alone brought in an estimated $6 billion in revenue in 2007. It is quite clear that American consumers have a passion for sports and video games. Therefore, it is only fitting that sports video games would be in high demand. In 2008, sports was the most popular selling genre of video games. This genre of games provide players with the options to play as their favorite players, act as the general manager of a team, and even play and simulate through the exact seasons of their favorite teams. Every summer, people wait in lengthy lines for the annual midnight release of Madden. This football game has a cult like following amongst fans and even has its own tournament called the Madden Challenge. It is also tremendously popular with NFL players, as they too have their own tournament known as the Madden Bowl. The Madden Challenge is held in select cities across the U.S. and the prizes range from cash, gift cards and even trips. The players’ tournament is held annually at the host city of the NFL’s championship, the Super Bowl. The winner of this tournament receives a trophy and recognition in the next year’s Madden game. The Madden franchise

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is tremendously successful and recently celebrated its 20th anniversary. It has been in the top 10 video game sellers each year for its 20 years of existence. The creator behind this franchise is the gaming powerhouse known as EA Sports. It was reported that they had an estimated $4 billion of revenue in 2008.

EA Sports is a sub division under the Electronic Arts video game company. This company produces video games for just about every sport including basketball, soccer, hockey, boxing and even cricket. EA Sports is able to generate tremendous revenues partly due to having no exclusive ties to gaming console companies. This company is also known for its innovation and creativity by constantly creating new features such as podcasts and ESPN streaming of live scores and videos to gamers. Gamers now have the ability to listen to audio from their favorite sports reporters and analysts. They can also see scores and videos of actual live games while playing their own games. Sports video games have lasting power and potential due to their popularity, innovation, and their inclusion into popular culture. Through these games, sports fan can come close to the reality of being involved with a professional team. Gamers can engineer their own ultimate fantasy roster of stars to win championships and experience the day to day lives of athletes. While Bruin fans have to wait until March to see the true champions, fans can also coach and play the virtual Bruins to any number of championships through the virtual reality of video games.

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PROFESSIONAL GAMERS Gloria Ho Staff Writer It would be a dream-come-true for a large demographic of the world, particularly those whose happiest hours are spent shooting at aliens or enemy soldiers on a computer screen, if they could become professional gamers and live off of their gaming skills. Yet, the world of competitive gaming can be treacherous and is not quite as glamorous as it first may seem. In fact, if you were to decide to become a professional gamer, be prepared to do a lot of hard work. The world of a professional gamer basically involves competing against other professional players in a tournament to become the best at a chosen game. Tournaments can be hosted locally at cyber cafés or gaming pubs. Some are even hosted internationally by large, multi-nation organizations. The Cyberathlete Professional League, or CPL, is such an association. Founded in Dallas, Texas back in 1997, the organization was recently acquired by an investment group in the United Arab Emirates. Well known among those acquainted with professional gaming, it has over the course of 10 years hosted 60 international main events, invited 600 qualified participants, and given out $3 million in cash prizes. The World Cyber Games, hosted in South Korea, enjoys similar fame among gamers and it is often considered the “Olympics of Cyber Gaming.”

Logo of the Cyberathlele Professional League (CPL).

In order to be able to participate in the final round of a gaming tournament, participants must first enter and win in a series of qualifying games or qualifiers in their respective countries. Usually, corporations seeking to advertise to teenagers and young men would sponsor the competitive gamers. In 2005, McNeil Consumer & Specialty Pharmaceuticals, a Johnson & Johnson subsidiary, sponsored a six-member Counterstrike team. Burger King is also noted to be a sponsor of professional gaming in Germany. Though there is hope that cyber-gaming will one day attract a large enough following to become a mainstream spectator sport such as baseball, soccer, or chess, as of now professional gaming is an infant industry. The only exception to this may be South Korea, where gaming is recognized as a legitimate sport. Online gaming has become so popular in the country that three cable channels broadcast the sport and 10 professional leagues exist. Due to StarCraft’s extremely large following among Koreans, TV stations have found it profitable to provide coverage during leagues and tournaments on a regular basis for the game. Even professional gamers who have not risen to the top can find themselves making thousands a month playing StarCraft, which may be why professional players of StarCraft have come from all across the globe to the Asian country.

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The reality is that the situation in South Korea, where 15 million people (or 30 percent of the population) are registered for online gaming, is not the norm. Though there are players out there who have made over $100K in a year competing in gaming tournaments, most players would find themselves hard-pressed to make a comfortable living out of gaming. Competitive gamers must reach a level far beyond that of the casual gamer and this usually means daily practice that can take up to eight to 10 hours a day. Another problem is that once you reach that level, there exists the very real possibility that a tournament host may decide to scrap the game and choose a new game or platVideo game enthusiasts playing Super Smash Brothers Brawl form. As the popularity of particular games rise and fall, gamers could find themselves rising and falling with them unless they adapt to the new platform by becoming adept at a new game. Unfortunately, switching from one game to another is not always so easy. Different games could have different gameplays and different sets of physics that make it difficult for a gamer to adapt. Those who make it onto a sponsored team of professional gamers in the U.S. typically earn $30,000 to $40,000 annually (excluding prize money) provided that they are successful. In South Korea, where groups of sponsored professional gamers are much more prevalent and are able to play in professional leagues, it is more likely for a gamer to make more than $100K a year. Yet it is typical for a group of gamers to live together in company barracks and to be expected to spend at least 12 hours a day honing their skills. And just like any professional sport, there is always the pressure to perform well and to keep up ratings. The fact of the matter is that many leave the industry when they realize that professional gaming lacks stabilSite of a qualifying tournament. ity. Most professional gamers are in their late teens or early twenties and either grow out of gaming or quit completely. However, if the popularity of online gaming were to extend beyond South Korea to other nations, there exists the possibility that electronic gaming could become the next big thing. After all, computer games only started in the 1950s, and the industry only recently began in the 1990s. Think of how many more years other sports like baseball have had to become established.

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EXTREME GAMER BEHAVIOR: WHEN GAMERS GO OVERBOARD Joanne Hou Senior Staff Writer The explosion of gaming in the world in recent years has led increasing numbers of people to become obsessed, irrational, and even violent when it comes to besting other gamers. A number of incidents have sprung up in the last few years in which addicted gamers have killed, stole, and kidnapped other gamers for either financial gain to for access to gamer accounts. These crimes have led to new debates about virtual property rights and expanded the boundary of illegal activities into the virtual world.

GAMER KILLS FELLOW GAMER OVER VITRUAL SWORD SALE In 2005, a 41-year-old Chinese gamer named Qiu Chengwei fatally stabbed another gamer, 26-year-old Zhu Caoyuan, because the latter had sold a virtual sword called the “dragon saber” that Qiu and another gamer had won jointly through playing the Massively Multiplayer Online Role Playing Game (MMORPG) The Legend of Mir 3. Apparently Qiu had lent Zhu the virtual sword but Zhu sold it for 7,200 yuan without Qiu’s permission. However, because China has no laws to protect virtual property such as property won through online gaming, Qiu could not get damages from Zhu by law. Instead, the method Qiu used to bring what he called “justice” was to stab Zhu while the latter slept in his home. Qiu was then given the death penalty but would be communed to life in prison instead if he behaves well in prison.

Avatar from The Legend of Mir 3

This case has led some in China to discussion about how to treat virtual properties such as this sword won from playing the game. Some countries, such as South Korea, have police who investigate crimes arising from gaming, but no all countries have similar policies. Some argue that virtual properties should belong to the player like any other private property because the player has spent time and/or money to acquire it. Others, such as members of the gaming industry, argue that the property should belong to the provider of the games since they created these otherwise non-existent entities.

BRAZILIAN GANG KIDNAPS GAMER TO SELL ACCOUNT In July 2007, a Brazilian gang called La Firma, consisting of members ranging between 19 and 28 years olds, conspired to kidnap the gamer with the top score of the very popular online role playing game GunBound in order to sell the account. The group had hoped to obtain account access information of this gamer in order to sell his account for as much as $8,000. But after failing to transfer the account 22 times, the group came up with

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with a more drastic plan to achieve its goal. The new plan involved the girlfriend of one of the kidnappers befriending the victim on a popular Brazilian social networking site in order to set up a meeting at a mall in Sao Paolo. However, instead of the girl being at the mall, the gang showed up and took the gamer hostage at gunpoint. Then, the gang interrogated the victim for five hours in order to gain the account information. However, the victim continually refused to give up the information so he was let go. The gang was arrested soon after. While the game company forbids accounts to be transferred, a black market for these accounts does exist. Some of the accounts have sold for as much as $5,000. A battle during GunBound.

TEENAGE THIEVERY RING STEALS VIRTUAL FURNITURE Dutch police arrested a seventeen-year-old in November 2007 for stealing virtual furniture in Habbo Hotel, a 3D virtual world for networking. He was a part of a gang of Dutch teenagers who have stolen items such as chairs and sofas with a total value of almost $6,000. Habbo Hotel, popular in Europe, allows people to create their own virtual rooms, and then decorate them with virtual furniture that are bought with real money. This ring of teenage thieves set up a website that lured Habbo players to reveal their passwords, which are then collected by the teenagers who would access these accounts and transfer virtual furniture to their own virtual rooms. Since the stolen furniture was actually bought with real money, the police were called and one member of this robbery ring was arrested. There are four 15-year-olds who are also questioned in connection with this virtual furniture theft ring.

A room with virtual furniture in Habbo Hotel

Problems with this theft can pose serious problems to these sites if they are not careful to keep their users safe from theft, hacking, or phishing. These games and virtual worlds are supported entirely by gamers who visit the sites and so their economy is seriously dependent on the faith and trust of the users. Losing credibility over user information security on the part of these sites can mean the end of them.

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