Identity, Security and Privacy in the Gaming Sector

Identity

In the past decade, video game characters have become moldable and specific to the user.  During the early years of simple computer games and the original Mario & Luigi, gamers had the option to select from a variety of pre-developed characters.  Gamers could identify with certain characters or simply pick a favorite, and adopt them as their own for use at every new game.  Choices were finite.

As video game structures have changed from short epics to longer, complex levels, video game makers have given gamers the opportunity to design themselves in their virtual worlds.  With the advent of Wii, gamers were encouraged to model themselves as a cartoon, choosing, for example, hair color and style. As technology advances and graphics improve, gamers will get the opportunity to create avatars that are the spitting images of the real thing.  There is tremendous potential to use such technology to educate individuals and influence behavior. For example, if someone creates a character with the same body proportions, goes on a binge eating rampage in the game and sees the results, an obese man who has difficulty completing tasks within the game, the individual might rethink how he conducts his real life. Seeing yourself and the effects of your choices on screen can send a powerful message.

Also, with interactive gaming gaining popularity, gamers will are able to modify their identities to project a persona that they wish to have rather than what the reality of the physical world dictates.  Their virtual lives can serve as an escape from reality, where they can experiment, test, and revert to their ideal state with the click of a button.

Security

Security in gaming came to the forefront and turned into a mainstream issue with news of a security breach of Sony’s PlayStation Network by a group of hackers that shut down the service for nearly a month and ultimately cost Sony millions of dollars in revenue and damage to the PlayStation brand. This security breach is now the largest breach in history with over 77 million accounts compromised, which surpassed the TJX security incident back in 2007 (http://en.wikipedia.org/wiki/PlayStation_Network_outage). Incidents similar to Sony’s will continue to occur in the sector for the foreseeable future, although at a much smaller scale, now that gaming has entered the digital era and online accessed content and platforms become ubiquitous. The spotlight is now brighter than ever on security in the gaming sector as Sony is still recovering from this incident, but security has always been an issue for all companies that are associated with gaming.

Security is a blanket statement in gaming because there are so many different contexts where security is applicable. Some examples include manipulating code in games, accessing online game servers, cheating to obtain an advantage, assuming another gamer’s identity, and so on. These are just a few examples, but the reality is that compromises in security can have a profound adverse effect in this sector compared to the other sectors where security may not be as vital. Game developers and publishers can lose millions with pirated software while gamers can become frustrated and lose interest when other gamers cheat to gain a competitive advantage in online video games. For the most part, security has been adequate in the gaming sector up to this point but the PlayStation incident brought the sector to its knees. While that incident was devastating to Sony and the PlayStation brand, it will serve as a reminder to the rest of the industry that security is going to play a major issue in the future and that companies must do everything they can to mitigate that risk. The digital era will usher in additional challenges and unforeseen risks that all companies must grasp or face a similar outcome that Sony experienced earlier this year.

Privacy
Privacy in video games is a challenge for game developers, console manufacturers, and consumers. Consumers could have their gaming experience in complete isolation and experience privacy, but the value added from having a connected gaming experience drives most gamers to open communication channels. The challenge then for the game developers and console manufacturers is to ensure privacy controls within the connected gaming experience.
For example, Microsoft Xbox Live shows a when a user is logged in, their achievements, the game they are playing or the movie they are watching at that time. Users are prompted upon first setting up their Xbox Live account to enable or disable this feature, and the choice can be changed at any time. The result is a value added connected gaming experience while enabling consumers to have a finer degree of control over their information.
The changes in the cloud computing era will also impact privacy in video games. Microsoft recently enabled cloud storage for game saves (http://www.youtube.com/watch?v=g77UF5tGfm8). This requires consumers to sacrifice a bit of their privacy for added value in a balance that Microsoft must consistently deliver.

Updated Gaming Bipartite Network

Updated Network Insights

As we look at the network model for the gaming industry over the next few years, a few trends emerge. Even over the past five years, more firms who were traditionally platform providers or content creators have moved into distribution, leveraged by content digitization and with the strategic goal of cutting the middle man. We have seen companies such as Microsoft, Apple, and Nintendo develop direct consumer relationships -- areas once controlled by GameStop, Target, and other brick and mortar retail stores. We have seen this play out in the music industry and more recently with ebooks.

Also as a result of the digitization of video games, it is becoming easier for new content creators ("indie studios") to reach an audience. The gaming platforms that are being developed also require a less formal knowledge structure to begin development. For example, the mobile gaming SDKs have a lower learning curve than the more robust XBOX or PlayStation SDKs. These dynamics have led to a proliferation of smaller independent video game development firms, who can create and deliver a video game with as little as one person -- a feat that was impossible as recently as five years ago.

All this trends are visible in our network of relation of the industry. When analyzing the network big picture it is interesting to observe that the bigger players in the Industry - Microsoft, Sony, Nintendo - are positioned in a central node that allow them to oversee the industry and influence in the different layers. Also is remarkable how heterogeneous the game development layer is. With game studios, movie makers and brands interacting for the content development creation.

In our view in the near future this network will continue its expansion towards the online and social gaming layers, those companies able to effectively incorporate this new trends in their value chain will prevail in the market. At the same time content creation will become even more competed since technology has increase the availability of tools for creative small player and also has lowered development cost.

Physical distributors of new video games are beginning to feel some major heat

The gaming industry is truly changing, and we are in the midst of a major transformation. Revenues from last quarter from digital distribution (the combination of digital purchases, subscriptions, downloadable content, social network and mobile games) surpassed those of physical distributors for the first time, to the tune of $1.74bn vs. $1.44bn. And this is only the tip of the iceberg. Digital distribution, serving information goods, all have less variable costs and thus higher margins.

Gaming might be the second canary in the brick & mortar coal mine -- after music. Soon we will see digital distribution overtaking retail in many other areas as well: movies, books, and online shopping in general seem ripe to have their digital distributions overtake the analog counterparts.

From: http://www.engadget.com/2011/10/06/digital-video-game-distribution-finds-brick-and-mortar-camping/