10 years ago this month: September 2005

The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz will run a monthly feature chronicling the biggest happenings in gaming from exactly a decade ago.

Everything Old is New Again

If there is a larger lesson to be pulled from this recurring feature--premature as it may be in this, the second installment--it is that history does indeed repeat itself. As much as we talk about this industry as one in a constant state of upheaval, the things we worry about now, the things we see coming down the pipe in the future, and the things we only faintly remember as challenges can be strikingly similar in shape and function.

In September of 2005, for example, Nintendo got into the mobile market for the first time. Granted, it wasn't like the deal with DeNA Nintendo announced earlier this year, but the unveiling of the Nintendo Mobile service in Japan was a clear sign that the company understood the need to have a presence in the then-emerging market. For the equivalent of a couple dollars a month, the subscription service provided users with animated images and ringtones featuring Nintendo's celebrated stable of franchises.

On top of that, Valve was experimenting with the idea of paid mods. Not in the way that so recently blew up in its face, of course, but with the announcement that it would be adding the Half-Life mod Day of Defeat to its online storefront, Steam. (To give an idea of just how different things were at the time, news articles about Steam often explained the concept fully on first reference, introducing it to the reader as "the developer's digital distribution service, Steam.") Day of Defeat began life as an amateur mod, but Valve offered it for sale as a stand-alone product.

And in a bit of a departure from the games industry, do you remember last October when Marvel Studios announced plans for a whopping nine new movies, prompting a small avalanche of thinkpieces complaining about the absurd amount of super hero blockbusters? That seems like a plan of unprecedented ambition (hubris, even!) until you remember that Marvel's original 2005 announcement of a credit facility to make its own films called for a slate of 10 movies. (Perhaps wisely, heroes like Iron Man and The Hulk were added to the slate, while plans for Power Pack and Cloak and Dagger movies never materialized.) The story's very existence on GI.biz underscores how different an era it was; back in 2005, it was a given that all of these proposed movies would have a big-budget licensed tie-in game, making the plan (arguably) relevant to our readership.

What Disruption Looks Like

Even if time is a circle, that's not to say there are no singularly important moments, events that fundamentally change the industry, providing a nice clean dividing line between "the time before this" and "the time after this." September of 2005 featured a pair of those. First, Nintendo unveiled the controller for its next-gen system, code named Revolution. Then-Nintendo president Satoru Iwata introduced what he called the "Direct Pointing Device" as a key part of a strategy to attract new players.

"Firstly, we face the reality that within one family there are people willing to pick up a game controller, and those who would never touch one," Iwata said. "Anyone will pick up a TV remote control, but not necessarily a game controller. Why is this? We thought it was the requirement of moving right and left fingers separately and nimbly that was creating a psychological barrier. To expand the gaming population, it was needed for us to design a pad so that any family member would see it on the living room table, think that this was something relevant to them and pick it up."

As anyone who tried to get their hands on a Nintendo Wii during the system's years-long supply shortages can attest to, the strategy worked. Even if the Wii phenomenon cooled off eventually and Nintendo failed to recapture lightning in a bottle with the Wii U, the hardware left an indelible mark on an industry that has spent the past decade chasing ever-broader audiences.

People knew the Revolution's controller was a big deal even at the time. Nintendo was coming off a console generation that saw the GameCube finish a three-way race in third place, but Nintendo of Europe senior director of marketing Jim Merrick was already predicting (accurately) that the new controller could make it the market leader. Even Microsoft Xbox VP Peter Moore was applauding the hardware, giving Nintendo kudos for the innovative approach to attracting new audiences even as he was busy prepping for the imminent launch of the competing Xbox 360.

Not all industry-altering events are quite so obvious. 10 years ago this month, Valve announced to relatively little fanfare that it would begin selling other developers' games on Steam. The first third-party game on Steam was Rag Doll Kung Fu, a physics-based side project from former Lionhead developer Mark Healey. It would be Healey's only game on Steam before he founded Little Big Planet studio Media Molecule and went to work exclusively for Sony platforms, but there was no shortage of other developers bringing their wares to Valve's storefront. Last September, Valve reported having more than 100 million users and offering 3,700 games, not to mention a selection of productivity tools, movies, and now (through retail partners) its own hardware.

Exceeding Expectations

It would be tough to find someone who predicted Valve's overwhelming success with Steam. Even the people who fully understood digital distribution was the next big thing were short-changing just how quickly the industry would go digital. While Valve was just opening its doors to other developers, Screen Digest released a report titled "Digital Distribution of Games - Growth Opportunities and Forecasts to 2010" that projected the industry would post $400 million in digital gaming revenues outside Asia by 2010. Screen Digest was right that digital would be big, but it may have underestimated just how big. While it's not a perfect apples-to-apples comparison, in 2010, a single company--Activision Blizzard--posted digital revenues of more than $1.5 billion.

On a similar note, DFC Intelligence was right with a 2005 report predicting that the Chinese gaming market would explode, but considerably underestimated just how explosive it would be. DFC was expecting the market to triple by 2010 and total $1.7 billion. However, a 2010 Niko Partners report put the Chinese market's annual revenues at $4.61 billion, which would represent nearly eight times DFC's assessment of the 2005 Chinese market.

On top of those, Sony's then-VP of studios Phil Harrison appeared at the Game Developers Conference in London as his company was launching the PSP in Europe, and made a bold prediction about the future of the mobile market, saying, "I think as the sophistication of gaming functions in phones increases, clearly there's a crossover and within ten years we'll definitely see processing functionality of mobile phones exceed that of today's PSP."

Harrisson added, "I'm not sure users are ready to combine the form factors of a phone and a gaming device, I think they'll remain separate."

The original iPhone launched less than two years later, with its initial iteration sporting a faster CPU and more RAM than the PSP. The App Store gave it gaming functionalities in 2008. By that time, consumers had adequately prepared themselves for combining the form factors of a phone and a gaming device.

A Handheld Golden Age

Amidst all the excitement over the future, it was easy to miss the present. One could argue that 2005 represents a Golden Age for dedicated gaming portables unlike any before or since. Sony's PSP finished its worldwide rollout with the September 1, 2005 launch in Europe. It was the first time since the Sega Game Gear that Nintendo had faced anything remotely resembling a proper competitor in the handheld space. Though its often thought of as an also-ran, the PSP started strong (setting a new UK record for Sony hardware by moving 185,000 units in three days), and went on to sell more than 80 million units before its discontinuation just last year.

Not that Nintendo was sweating. Even as the PSP was debuting, the DS was transitioning from "solid seller" to "worldwide phenomenon" thanks in large part to the launch of Nintendogs, which sold a quarter of a million copies in the US in its first five days on sale and posted a staggering 15 percent attach rate for the hardware. Even Nintendo's half-hearted "third pillar" strategy was paying off, as the Game Boy Micro debuted to better-than-expected sales.

And for all the nonsense written above about history repeating itself, let's just say that the idea of another dedicated handheld heyday is looking less and less likely to come over the horizon.