What you don’t know about the video game industry just might surprise you. Generating revenues in excess of $10B in 2005, it has well eclipsed the $9B Hollywood film industry. What if I told you that the conditions were ripe for an explosion in this sector in Georgia?

I’m fresh off the yearly Thanksgiving eating binge, so bear with me as I attempt to string together a few cohesive words.

It isn’t just the revenues that are impressive. Consider the ever-expanding demographic. When most people think about “gamers”, they envision some 14 year old kid plopped on the sofa, eyes glazed over, and unable to tell you who the President of the United States is. That image couldn’t be further from the truth.

• According to the Entertainment Software Association (ESA), the average age of the gamer is thirty-three (33.) In other words, old enough to have a kid in middle school and a mortgage (however, not quite old enough to run for the office of President of the United States.)
• Women over the age of 18 make up 30% of the market, while boys under the age of 17 only comprise 23% - bet ya didn’t know that!
• 25% of people over the age of 50 play video games

Born in the 60s, and growing up in the 70s, I still remember the day the local pizza parlor (yes, that’s what we called them back then) carted off the pinball machine in favor of the new Asteroids coin-op unit. My generation is nearly a decade older than the average gamer. Keep that in mind. The average gamer doesn’t remember phones with cords, and doesn’t remember not having electronic games within the home. But they are of a very mature age.

The line between Hollywood films and video games has also gotten significantly blurrier over the past decade. Whereas game publishers used to turn successful movies into video games, Hollywood now trolls the shelves at Wal-Mart for the latest hit games, all in an effort to bring them to the big screen.

Even academia is getting in on the action. Consider this 50 question examination that I managed to come across. This is from the University of Teesside’s (in the U.K.) School of Computing. The course is called “COM1006: The History of Games.” There are at least a dozen schools that have cropped up dedicated to pumping out graduates armed with the latest knowledge in 3D graphic design and game engine mechanics (examples: Fullsail and Guild Hall at SMU). Even the overly commercial DeVry is getting in on the action.

While the costs to produce a hit game can easily top $10M, a hit can generate a significant fortune. Take John Madden’s storied gaming classic, Madden Football. In 17+ years, EA Games has sold more than 53 million units. The recently released Madden ‘07 topped 2 million units, earning EA Games a treasure chest worth over $100M in the first week alone. Microsoft’s Halo 2 earned $125M in the first 24 hours after it was released in 2004. While a $10M investment may sound like a lot to Georgia investors, I should point out that there are plenty of opportunities for lower-cost indie (independent) efforts, not to mention cheaper plays within the wireless gaming market.

Got your attention yet?

So, let’s turn the focus a little closer to home - Georgia. There are a number of reasons why I personally think that Georgia is primed to experience a veritable explosion in the gaming sector:

1. Initial wave of startups are here
2. Atlanta has a large creative/design community that is now gearing up for gaming
3. Support infrastructure is beginning to appear
4. Research centers are popping up
5. Atlanta can capitalize on its position within the wireless/mobile space

Initial wave of startups, early players are here

The initial wave of gaming companies are now here. These range from gaming hosting providers to publishers and studios.

Game Hosting Networks

• Super Computer Inc / Super Computer International, Inc. (”SCI”), founded in early 2002, provides a high performance clustered video gaming infrastructure (“Jupiter Cluster”) that enables various vertical market leaders to provide a highly scalable and customizable video gaming platform to the online gaming community.

Mobile Game Studios

• Blue Heat: Formed in 2001, Blue Heat is a leading developer of games for mobile platforms.
• Tapscore: Tapscore Mobile creates innovative game titles for mobile devices.

PC and Console Game Studios

• 404 Gaming: 404 Gaming is working on a HipHop MMO Game.
• Mergato Studios: Mergato Studios is a dynamic new independent game development studio that is focused on producing outstanding fantasy titles.
• Flying Rock Enterprises: Ace of Angels™, produced by Flying Rock Enterprises, is a space fighter simulator, that allows you to fight head to head against others across the Internet.
• Kaneva: Kaneva is focus on providing digital entertainment over the Internet, in the area of interactive video games and digital media.
• CosmiQ - MMO startup
• Rapid Reality: RapidReality is working on three MMO’s, The Chronicles, Machines, Survival Instict.
• Hirez Studios: Hi-Rez Studios is a newly founded independent game developer working on a next generation massively multiplayer online (MMO) title for the PC.
• Heuristic Park: Founded by the designer of the most popular Wizardry PC Games, focused on developing RPGs.
• GameTap: Turner’s newest venture into providing an online retro-game portal.
• X-Factory – Xbox startup

Web Based Gaming

• Cartoon Network – Interactive: Plenty of online games.
• Macquarium: Macquarium has incubated a variety of technologies.
• StudioCom: Creates dynamic online experiences for clients.
• CokeStudios: A web-based MMO game for members to make music, chat, own a place, etc.
• Big Fun – Founded by the remains of Turner Interactive, focused on web games.

Motion Capture, Peripherals, and other Sundries

• Giant Studios: Giant Studios, an animation and motion capture production company, is in the business of providing services to the entertainment industry while developing its own library of original content and proprietary motion capture technology.
• SimCraft: The ultimate tactile advance is an experience that provides full body stimulation; made possible by a motion simulator.
• Playmotion: Interact with virtual environments simply by using your shadow against the wall - very cool stuff here.

Game Music Studios

• DARP Studios DARP Studios is a full service, world class studio. DARP, the brainchild of producer Dallas Austin, claims Atlanta as its home. I

Computer Animation

• Fathom Studios: Fathom was originally an outgrowth of the interactive agency, Macquarium, designed to service clients who required creative solutions for broadcast and film.
• FrameFlow: FrameFlow provides computer animation and modeling services.

Online Gambling

• RealTime Gaming: Founded in 1998, RealTime Gaming is a leading provider of online casino software.

Internet Broadcasting

• DaveNetworks: DAVE Networks utilizes the latest matrix distribution technology to deliver music, video and other information assets to consumer, corporate and commercial customers.

Fortune 1000 Companies with digital and interactive departments

• Cingular: Cingular is headquartered in Atlanta and has a strong focus on mobile games and ring tones.
• Coca-Cola: Very popular web based games that allow kids to participate in a virtual world and collaborate on making music and playing games.
• TimeWarner/Turner: Has significant digital entertainment media for broadcasting and movies.
• Scientific-Atlanta: Scientific-Atlanta is a leading global manufacturer and supplier of products, systems and services that help operators connect consumers with a world of integrated, interactive video, data and voice services. C

Atlanta’s creative/design communities are gearing up for gaming

The recent expansion into Atlanta of the renowned SCAD (Savannah College of Art and Design.) This brings the creative piece to the equation. There is quite a bit of creative design talent floating around. SCAD also now offers a degree in Interactive Design and Game Development. Coincidence? I think not.

Oh, and don’t forget the Art Institute of Atlanta. This venerable institution now also offers a degree in Game Art & Design.

Moreover, Atlanta has long been a hub for the music and interactive media scene - there is a lot of crossover. We have the talent pool.

Support infrastructure is beginning to appear

Supporting infrastructure is beginning to appear. (Chris’ list, GA gaming assoc - or whatever it is called, etc.)

• Georgia Game Developer’s Association: a non-profit trade association of businesses and professionals of the video and electronic game manufacturing industry of Georgia. GGDA is committed to the growth and development of this industry and the success of its members as they compete internationally.
• The Technology Association of Georgia (TAG) now has an entertainment society.
• Greenberg Traurig Atlanta: Since opening in 1998 with six attorneys, Greenberg Traurig’s Atlanta office has grown to nearly 50 attorneys and relocated to The Forum building in Buckhead to accommodate its growth. One of their key practice areas is entertainment/gaming.
• IGDA (International Game Developer Association): The IGDA Atlanta Chapter is dedicated to helping the Metro Atlanta area establish itself as a center of excellence for the Entertainment Software industry.
• Atlanta Game Development Meetup: Informal group gets together monthly to discuss game development.
• The Georgia Production Partnership (GPP): a not-for-profit coalition of leaders, companies and individuals who are active in the state’s film, video, music, and digital industries. Established in 1998, this proactive group has been instrumental in the grass roots organization of the production community and the development of key legislative incentives. Their goal is to bring Georgia back to the forefront of U.S. production.
• The Interactive Media Alliance: TIMA is a nonprofit professional organization here in Atlanta, Georgia consisting of various levels of technical and artistic talents. The purpose of the group is to foster the interchange of ideas and knowledge between interactive media disciplines. Members of TIMA are dedicated to promoting the advancement of interactive media technology and passionately develop and support interactive media initiatives in the local community.
• National Academy of Recording Arts and Sciences (The Recording Academy) Focused on music and its makers.
• Urban Media Makers Association: The Urban Mediamakers Association, Inc. is a not-for-profit organization that promotes and supports the independent media arts community of Atlanta and the Southeast. We bring talented and aspiring individuals together to focus on independent mediamaking — animation, film, music, print, television, writing and video.

Research centers are popping up

Consider Georgia Tech’s Experimental Game Lab. Simply put, they explore the frontiers of gaming. In this interdisciplinary lab, computer scientists, designers and artists work together to push the boundaries of existing genres and create new genres of electronic games. Speaking of Georgia Tech, there is an interesting group of bloggers who have banded together to discuss, among other things, gaming (Grand Text Auto.)

The wireless connection (no pun intended)

Atlanta is at the forefront of the wireless/mobile revolution, and has been for a while. Cingular, one of the world’s largest mobile carriers is headquartered here, as are a plethora of mobile tech plays. Did I mention how hot wireless gaming is?

• Nearly 25% of cell phone owners play games on their phone at least once a month (source: M:Metrics)
• Women make up 65% of the market for mobile phone games (source: Telephia)
• Nearly 50% of cell phone owners have three (3) or more games installed on their devices (source: M:Metrics)
• Over 10M children between the ages of 10 and 14 have their own cell phones
• There are over 73M kids in the U.S., and they’re spending multiple hours a day using mobile devices for games, messaging, and music.
• Researchers project nearly 2 billion phones capable of playing games will be in circulation by 2010
• The mobile gaming industry is projected to grow to $18B by 2010

Sound good - so what’s missing?

The companies listed above are early adopters and pioneers within the local market. We need more Georgia entrepreneurs to take advantage of these trends locally to drive innovation.

On the flipside, we need investors to realize that there are other wealth-building opportunities that exist in Georgia outside of the manufacturing and telecommunications sectors. I would strongly encourage local investors to get involved in this space - before we see another influx of outside deal-makers arrive at Hartsfield International Airport with their checkbooks in hand.

2007 will be a breakout year for gaming - especially given Microsoft’s strategy for pushing the PC/Vista combo as a front-shelf retail game platform. It will be interesting to see how much push Georgia-based players can make in this space.

I welcome your comments below! Please note that if you are a first time commenter, your comment will need to be approved first before it will appear on the blog.

Special thanks to Chris Klaus of Kaneva for his assistance with this post. For those of you who are interested - stay tuned to The Pothole, as in the coming weeks, Chris Klaus will be joining Mike Blake and I for a podcast where we’ll discuss this very subject!

Cheers.