So, let's start off with David [Reid, VP of Marketing]. GameTap has had some serious changes over the last couple years. The service has almost mimicked the life of a cable television station. Starting off by showing mostly re-runs geared to the demographic and slowly introducing original programming. Is this an accurate model of what we should expect in the future?
Well, yes and no. You've got some of the history there pretty accurate. Internally, we look at Cartoon Network at how GameTap got started. Turner Broadcasting has this core competence in acquiring content. That's how TBS got started, Cartoon Network got started and how GameTap got started. The real difference is [GameTap] was Turner's first direct consumer business, its first games business and first broadband business. There has been a big push in Turner to get digital fast and build on the expertise they had on the licensing front.
What you'll see more of is a less purist game business model and more of an overall broadcast model. Like our ad-supported games service. Providing publishers a much richer sense of opportunity to make money off their intellectual property. Right now, the games industry, it's very much like box office. Like a movie, you see the marketing, you go to the theater and get the experience. The digital retail business we're launching on Thursday is sort of like a box office premiere. Then our subscription business (what we've known GameTap as), which keeps getting better, is video-on-demand. Then the free service is your free broadcast television. So, our model, it's more like what film and TV does rather than what cable does.
So, people get how GameTap used to work. You pay your monthly fee and you get access to this library of games. This new free, or ad-driven service, is a very different concept. Can you explain as simple as possible for those still confused what's going on there?
It's pretty straight forward: There's lots of places to play free games on the internet if you're intent to play Bejeweled, or checkers, or things like that. If you are looking to play free games, there's one place in the world where there's real games which have been hits on the PC or consoles and that's GameTap.com. If you like those games, you can always subscribe and then you'll have access to the 900 games on the service. Then you can play games like Tomb Raider: Anniversary when they release.
So will we be seeing a lot more Adult Swim (part of Turner's Cartoon Network) content on GameTap?
Yeah, you're going to see a lot more integration across all our business. Particularly because Adult Swim and Cartoon Network do have a very big games business on their site with a lot of free ad-supported flash games. I think you're going to see a lot more integration.
Considering five years out is too far for anybody to think, there's obviously a short term strategy in effect. Let's talk two years. What will we see from GameTap in 2008 and 2009?
First of all, what you're going to see is a lot of traffic coming to our site on a regular basis. The dynamics of having free content online brings a lot of positive word of mouth. Particularly with "challenge play," available for free online, we're going to have people playing things like Metal Slug and King of Fighters against each other online for free. The GameTap.com site is going to be a lot more like what you see in the casual games business on MSN or Pogo, with those kinds of numbers, except a much different demographic, a much more mainstream gamer demographic rather than a casual gamer demographic. Content wise we're going to keep making our bets on GameTap originals and episodic content.
Rick [Sanchez, VP of Content], today we officially heard about Grimm, a 24 episode game. Have you played it?
No.
Tell us a little bit more about it, it sounds very different than the Sam & Max classic adventure-style game.
Grimm, it's gonna be dark, fun, scary, creepy sort of game. Whereas Sam & Max is also creepy -- in a different kind of way -- our goal with Grimm is to do something different. Something only we could do given our delivery platform. No other publisher has a platform where they could do a 24 episode kind of game. We've got a lot more details, but nothing we're ready to reveal just yet.
What do you guys do over there that makes this episodic content concept work? Nobody else seems to be able to get it to work other than GameTap. Why is it working for you guys and Valve can't get two games out in two years?
Well, that's a really hard question to answer if one wants to be fair to Valve. It's two things: One, we laid out a concept, we needed to find out what an episodic game is and what its value was. So, one of the values was that each game in the series must be relatively self-contained and could be played by itself and enjoyed. You also need to know when the next game comes out and how many there are. We're only talking to developers who can actually deliver on a schedule.
The idea follows from television. TV series have to deliver on schedule because they have air dates. You expect them not to have the same visual caliber as a movie. Environments are somewhat smaller than movies. If you look at our episodic games, you aren't getting the AAA title from EA, you're getting a very good quality game that takes much less time to create, so you get much more content faster. So, all these things strung together is how we make episodic work.
What I think Valve has done is they've said, "We've got this really cool game [Half-Life 2 Episodes]. We can either give it to you five years from now, or we can break it into pieces and give it to you in chunks between now and the end of five years." They call it episodic, I think it's more a serialized game. They're trying to deliver a theatrical quality experience, relative to our television quality experience. That's the fundamental difference between us. In order for it to be episodic, it absolutely, positively must come out on a schedule and you know when and where. If it doesn't do that, it's not episodic.
What future original games can we expect from the service? Can you at least talk genres?
I'll give you a very short answer, anything I look at that makes me go, "That's cool."
Will there be more options available for Mac users in the future other than Myst? Has there been enough of a Mac presence to make it worthwhile?
It's definitely something we're looking into -- late summer we'll have a Mac product.
Late summer you'll have a what?
We'll have a Mac product. So yes, late summer Mac users will get use of GameTap.com and our subscription service.
So, GameTap subscribers getting Tomb Raider: Anniversary on the same day it hits stores is a pretty big deal. Can we expect to see more co-releases in retail and on the service? Can you explain a little bit how that even happened?
I have some pictures that aren't flattering, and they had to give us the game to keep us from publishing them. What it really comes down to is that subscription businesses do not need to be competitive with retail. There are always going to be people who will want to buy a product and will never subscribe no matter what you do. There are also people who will never buy, but would be willing to try it on a subscription service. It's not going to make sense for every game but for a lot of games, a lot of the market is still in place even with these different outlets. Tomb Raider is a first of many.
What's been the most surprising hit on the service?
RS: There is one title Uplink: Hacker Elite. We did this really big deal with Strategy First. It was a game that Strategy First believed in and they said we should pick it up. We put it out there with no fanfare at all and it got a lot of play. Like, I actually had forgotten we licensed this game. I was sitting there looking at our performance measure and I'm going, "What's this game? I don't remember this game, when did we release this?" The one surprising thing about the subscription system is you can predict the big games will do well, you really can't predict how games that didn't get that exposure are going to perform. The titles that people didn't want to buy, but always wanted to play seem to rise to the top in our service without an expectation.
DR: A great example of this is one of our launch titles from 2005 was Beyond Good and Evil. The consumer didn't pick it up at retail. Ubisoft had a lot of titles out there during that time and Beyond Good and Evil was a great game that just didn't make it at retail. It was a game every gamer had heard about, but not every gamer had $49.99 to pay for it. It was a big hit for us in our launch portfolio. And many people have appreciated that we had it. It did really well for us.
Is there anything you guys would like to add?
DR: There are a lot of gamers that have been to GameTap at some point or subscribed at some point. The thing I'd like to send out is that on May 31, it's a brand new GameTap.com. There's a whole new set of things for people to enjoy. I think people who think they know GameTap owe it to themselves to take another look. The website is going to do a much better job articulating the breadth of content, it's really hard to explain to someone what 900 of the greatest games of all time in one place means.
