Playfish's Kristian Segerstrale

I believe that we are right in the middle of a fundamental shift in the games industry. Games are moving away from being a physical product to become digitally distributed. Games are moving away in fact from being products altogether to being services, a bit like software has done already. And where games are moving the business model, how we sell games is moving from being paid for up front – GBP 40 for a game – into being a model where people will pay over time, as they would for any service. Whether through a subscription or through micro-payments or through advertising. And now also because of social networks, games are increasingly becoming a social activity, which wasn't possible before. It was difficult before to create social, online games that let you connect with your real world friends. You couldn't play with them like you would play a board game, or with the Nintendo Wii at home. What I will try to do is paint the picture of where the games industry is at the moment and how things like social networks and broader changes in the games industry is going to affect developers and publishers. Also, what kind of lessons I think we can draw from it early and where the games industry is likely to go in the future.

I've been at Develop now for a number of years. It's an incredibly important event on the calender because it focuses on such a broad range of topics and this year's agenda in particular has the Evolve event which focuses very much on the future of the industry as well as more traditional sessions on development. I think it's a very important event in this year's calender. It definitely rivals some of the other events in the US and continental Europe.

I think the iPhone has been an important milestone in the games industry for a couple of reasons. The main one being that they have ignited the expectations of consumers that you should be able to have high quality gaming experiences on devices which are not fundamentally gaming devices. And bringing that marketing message to the consumer I think has been incredibly important. Also I think Apple has done a lot to create a model, if you like, digital distribution eco-system with the App Store.

Having said that, I actually think the iPhone and App Store have a very long way to go. The steps they have taken in the mobile gaming world is amazing - they've created a user experience which is unrivalled. But the environment is still a catalogue one - an environment where it's very hard to be successful unless you happen to have the breakaway hit. And even with a breakaway hit, you end up with a price war down to 99p. The economics of that marketplace haven't been that great. What I think is the most exciting thing that Apple has done is the 3.0 software update and the direction the platform is taking from that. They are actively encouraging games on the iPhone to become a service - I think that's really important.

They still have steps to go - I think it should be possible for consumers to get games for free and then pay for additional features - something currently not possible as you have to pay something up front if you want to pay for features. Also I think Apple should be far more aggressive in encouraging viral distribution of its games because viral discovery, as we've seen with social networking, is very powerful in broadly distributing games. Implement social discovery, where you can check out what your friends are playing and you can better figure out what the people around you are up to and you enable an application distribution environment where quality genuinely rises to the top.

They have things to do still, but they have made an admirable effort and in many ways iPhone will be seen as a very important turning point or early milestone in where the games industry is going.

I think Sony and Nintendo both have a real challenge on their hands. They both - Nintendo in particular - have been extremely successful in some ways. Their core innovation that gaming is more fun with friends and their positioning of the Wii as a home social gaming device for family and friends was a very bold, very innovative move and worked out incredibly well for them. Where they will face a challenge is as distribution becomes digital and gameplay becomes connective. Can they bridge that role as innovator in unconnected home consoles into being an innovator of an online connected games service? It will be a large challenge for them. So far I don't think they've done a particularly good job of that - but you should never discount either Sony or Nintendo and what they might do in the future.