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Not Just Cool, Ice Cold

As we stated above, video games are cool. In fact, the perception of the industry is so incredibly cool that it is almost considered to be part of the entertainment business. It follows then that anyone involved in the design, creation and manufacture of video games is also cool. Countries in which video games are created have their street cred beefed up 200% by definition. Take Poland and Finland. Both are beautiful, interesting countries, rich in culture and history – and also, it would seem, rich in developer talent, IP, and high-quality video game know-how. Both countries have rapidly expanding industries centering around the development of high quality video games, a wealth which puts them well and truly on the map, in the minds of many – in particular the next generation of video game players.

Significant Difference: A Common Misunderstanding

Let’s be very clear about the subject at hand. The term “gaming” can be used with regard to any sort of game, although the term is often perceived by many to mean a specific kind of game, which involves monetary payouts – in other words, gambling and/or casinos. While technically speaking, this is not an inaccurate use of the word, it does offer a somewhat distorted perspective. The term was hijacked by those who create online casino ventures, and games which garner monetary payouts as rewards, and the video games industry are adamant that there should be no confusion between the two separate entities.

Is Gaming the Next Cybersecurity?

So how does this relate to the subject of Israel’s home-grown video games industry? If we take a look at how the land lies as far as the Israeli Video Game industry is concerned, the view is very interesting. Israel boasts nearly 200 companies who create and develop digital games. These span a variety of specializations, including variously mobile gaming, hardware development capabilities, gaming monetizing platforms and AR/VR/MR. Revenues for video games in Israel total more than a billion dollars, and several Israeli companies are already recognized as global leaders in the field, in particular the companies that develop games for mobile platforms.

There have also been some extremely successful exits in the industry. In fact, the accumulative value of the exits made by the 20 largest Israeli video games companies totals somewhere around $46B over the last five years, including: Playtika, acquired in 2016 by Shanghai Giant for whopping $4.4B. Clearly, Israel boasts much homegrown talent. For example, in 2015 it was recorded that of the top ten Facebook game developers, at least three were Israeli. In addition, there have been many success stories in and around the hardware and technology of video games, including innovations in such areas as gesture control, virtual reality hardware, mobile hardware for gaming (such as ironSource, or the creators of Kinect, PrimeSense, who were bought by Apple in 2013). In short, the growth and success of the video games industry can significantly contribute to the expansion of Israel’s ecosystem, offering many benefits and much future promise.

Helping Solve the Human Capital Shortage

One of the more acute issues facing high-tech is the reality that the pool of human resources is running somewhat dry. That said, the gaming industry is not in direct competition with the rest of the high-tech industry. Other sectors “share” engineers – a software engineer can cross from Fintech to cybersecurity to Digital Health with alacrity – although they do so each at the expense of the other, without increasing the pool of talent.

Paradigm Shift

It’s interesting to note that we are always looking to see how we can make the broader high-tech industry grow, however, as things stand it is largely a case of “taking from Peter to pay Paul”, and the paradox is that there are simply not enough engineers. However, in the Digital Game industry, the situation is somewhat different. Engineers in Digital Games are far more likely to be closer to entry-level. To successfully work creating video game software, engineers do not need to be experts in algorithms or machine learning or big data analytics. The skill set is in and of itself more adapted to entry level, meaning that there is a lower shortage. In practical application, this means that there is more work and more workers available to fill the positions.

Game Changing

The video games industry provides high-tech grade employment to people who are not usually found in high-tech, or those who feel able to apply to enter it, such as graphic designers, musicians, artists and storytellers. In these professions, generally speaking, making a salary that is equable with a high-tech wage is much more complicated. These are professions that largely comprise freelancers, a different and separate community of independent workers who are often also being supported in some way by the economy, rather than the other way round. With the advent of Digital Games, the paradigm shifts significantly, and human capital does not experience the crisis that it does in high-tech. All of which makes the Digital Games industry a huge potential for gainful employment and financial viability. And if you consider the global M&A possibilities, the sky is genuinely the limit.

Click here to download the Israeli Video Games Ecosystem: Converging Technologies, Emerging Opportunities report, by Start-Up Nation Central and Deloitte Israel.

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Jeremie was the Director of Worldwide Bizdev at PrimeSense (acquired by Apple) and is a co-founder of GameIS. He also sits on the boards of several innovative technology startups and is taking gaming in Israel to the next level. Below is a direct transcript of the interview.

1- What are the major challenges this sector is facing?

At the global scale, gaming is the largest entertainment industry ($90b in 2016), which is more than the sport industry ($70b), and double the size of the movie and the music industries (about $45b each, and both copyright-related content). Gaming doubled in size since 2008, and keeps on growing at a rate of +20% per year. In such a dynamic environment, there are many challenges the gaming industry faces: 1) The market fragmentation and lack of standardization; it is a jungle of platforms and contents. 2) Recognition, policies and generation gaps, because governments and traditional corporations are still disconnected from the realities of this economy. 3) Monetization, due to free content, piracy and new behaviors that appeared with mobility and changes in consumer habits. 4) The unfair competitive position of a few players, such as in online distribution: Valve with Steam for PC gaming and Apple with the iOS AppStore for mobile gaming. 5) Hardware innovations which can only be pushed forward by the few corporations that control a comprehensive and healthy ecosystem (hardware + OS + developer communities + content + distribution), Microsoft, Sony, Apple, Nintendo and Google.

2- What is special about Israeli expertise? What is the competitive advantage?

The Israeli gaming industry benefits from the great local startup ecosystem. Israeli engineers are at the forefront of innovation for sensors (to detect movements, emotions, wellness, etc.), Big Data (for online marketing, leverage user databases, etc.), computer vision and video analysis (VR, AR, etc.), Artificial Intelligence, IOT, and many more. In addition, since the end of the ‘90s and the rise of the Internet, some Israeli companies became world leaders in the online casino and poker industry and developed exceptional know-how around online user acquisition, retention, marketing, and monetization.

3- What unique technologies or companies come from Israel?

Playtika is the biggest local company developing social gaming platforms. They were sold in 2016 to a Chinese conglomerate for $5b.

Plarium is a global leader for Facebook and mobile mid-core multiplayer games, serving 260 million players in total.

TabTale will soon hit one billion downloads for their 400 kids’ games, which makes them the world leader, well before Disney in the App Store.

Other leading game development companies are Jelly Button, Funtactix, Sidekick, and various indie game studios.

Regarding online marketing, some of the leaders are Matomy and AppsFlyer. Playbuzz also offer innovative services for brands to use gamification to generate content. PrimeSense was the 3D sending technology behind the Kinect for XBOX 360 before it was acquired by Apple in 2015.

4- Will we see an Israeli AAA game in the future? Should the industry set it as a goal?

There are currently no AAA game studios in Israel. The gaming sector is different than the other traditional high-tech sectors – it is a bridge between technology and contents. Although all the talents are available locally, Israeli investors are not familiar with content development. The business models of AAA game studios are too different: the funding, the risk evaluation and the development cycles have nothing in common with technology startups. The budget to develop an AAA game starts at $10M and can reach $300M in some cases. Unless a global player will decide to bring its expertise to Israel, I do not see it happening… it will not grow organically from Israelis.

5- How do you predict the sector’s development and what will it lead to in 20 years from now?

The Israeli high-tech industry is facing major growth challenges; access to talents is limited, and salaries for engineers and tech specialists are exponentially rising. I do believe that the era of content development is still to come and that storytellers, musicians, graphic designers and animators will become as demanded as engineers. The gaming sector has a huge potential for horizontal growth and the global market will double again within just a few years. Israel still has a lot to strengths to leverage. Some countries that have managed to develop the gaming sector are Canada (they aggressively attracted talents using tax incentives), Finland (with the success of Rovio and Supercell – 2 mobile gaming powerhouses) and Poland (with CD Project RED – the creators of the most advanced AAA games and of a very popular marketplace, GOG). All the ingredients are available in Israel, and with a proper push, it can also become a country where gaming technologies, high-level contents, and online marketing meet and merge.

The dynamic industry of gaming continues to grow rapidly, but that doesn’t mean it’s not facing major challenges. Professionals like Jeremie, with exceptional insight, vision and know-how are the experts that will lead gaming companies to the next level of success.

Read here to learn more about how startups are shaping Gaming.

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Interview with Daniel Kashti of KamaGames

Gain valuable insight into the future of the social gaming industry as you read Calvin Ayre’s exclusive interview with Daniel Kashti, CMO of KamaGames. This article covers the events of Casual Connect, the popular social gaming conference that recently took place in Tel Aviv. Learn about the challenges the industry faces as it expands into the Asian market, technological predictions for the further incorporation of Virtual and Augmented Reality into the gaming experience, and the impact of crypto currencies on the industry’s expansion.

In-Game Product Placement: The Future of Mobile Game Monetization

Mobile gaming developers interested in unique product monetization opportunities will want to read this recent Chartboost publication, discussing in-game product placement. Learn about the unique in-app gaming experience this popular gaming monetization method creates, as well as the increased user engagement and product revenue it generates. Developers will gain tips on how to incorporate in-game product placement opportunities on a basic design level, as well as foster branding opportunities with advertising agencies.

Shaping the Future of the Virtual Reality Experience

This Mashable article covers the opinions of five leading Virtual Reality developers that participated in the recent “Hype Train” PAX Australia conference. Find out in which ways the VR experience is developing similarly to traditional gaming, and in which ways the industry is setting itself apart. Gain expert input on popular VR development issues such as optimal engagement time and the role of enhanced user sensations within the VR experience.

The Impact of Augmented Reality on the Gaming Market

Find out how the increased popularization of Augmented Reality games such as Pokemon Go, have been revolutionizing the traditional gaming experience. In this Adobe Digital Marketing article, you’ll read up on how emerging technologies such as VR and AR, are profoundly impacting today’s consumer experience, as well as reshaping the future of in-game branding and monetization opportunities.

Valencell’s Revolutionary Biometric Technology

This Fitness Gaming article discusses the advanced biometric sensors developed by Valencell, and how the innovative technology is shifting and shaping the face of today’s fitness market. Read about the unique biometric feedback system implemented in all Valencell Performance Tek equipment. Find out how the company’s technology has been revolutionizing the industry with its ability to perform under the most extreme fitness conditions, seamlessly track user progress, monitor ongoing health issues and gamify traditional workout routines.

The AI Challenge: Google’s Deepmind takes on StarCraft II

Gamers rejoice! In this recent Racked article, DeepMind (now owned by Google) announced its latest AI challenge: to crack and defeat Blizzard Entertainment’s StarCraft II. The popular, professionally played game involves highly complex game mechanics that have never before been machine learned or mastered. Should the British AI company manage to defeat the system, the practical implications both within the gaming world and the real word, can be real “game changers”.

Understanding the Unique Challenges of the Kids Gaming Market

This White Nights magazine interview with Indigo Kids Project Manager, Maksim Kochurin, discusses some of the unique challenges faced by companies developing kids gaming applications. Maksim provides insight into kids gaming issues such as: marketing to young audiences, retaining young users, the ethics of in-game monetization methods and the difficulties in converting free users into paying ones.

The exponential expansion and development of the gaming industry as seen in the above articles, demonstrates what a powerful growth opportunity the industry offers for up and coming hi-tech companies. To learn about Israeli start-ups leading innovations in the industry, visit SNC Finder, the largest search engine for partnering international professionals with Israeli hi-tech companies.

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