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Gamasutra's Best Of 2011: Top 5 Surprises
Gamasutra's Best Of 2011: Top 5 Surprises Exclusive
December 29, 2011 | By Leigh Alexander

[Continuing our 2011 retrospective, Gamasutra editor-at-large Leigh Alexander rounds up the year's five biggest surprising events -- from closures following successes to unexpected hardware performance..]

To be frank, sometimes it gets a little predictable covering the games business. Our readership sometimes bemoans the static state of gaming news, but the fact is quite a bit of it is stuff you can see coming a mile away. Very successful two-installment brand is getting a third title? Wow, really? Companies undertake strategic initiatives geared at staying abreast of current trends? Shocking!

We do, however, work in an exciting business in a constant state of flux. And every year, there are developments in news that are unexpected and pleasantly surprising. Here, we present some of the most notable surprises of 2011.

5. Amazon's Kindle Fire

That the most prominent online retailer has been interested in games -- adding its own downloadables and used game program, for example -- makes a lot of sense. But any hardware leap is interesting, particularly in the crowded mobile and tablet space. When Amazon unveiled its new Kindle Fire, it was a strong statement of the total pervasiveness of app stores. Not only that, but it helped seal the concept that games were a crucial part of digital business for retailers in any space.

In advance of the new touch tablet's launch, companies like Electronic Arts, PopCap and Zynga were boldly in support of the device, along with thousands of other gaming apps including Angry Birds, Fruit Ninja and Cut The Rope amenable to the modified Android OS that the Kindle Fire runs.

4. 3DS Bounces Back

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The launch of Nintendo's souped-up 3D-ready saw some early troubles: Believed at launch to be priced too high, growth was slow, and an early price cut was uncharacteristic for Nintendo hardware. The release of a cradle that added an extra analog stick looked to many like some kind of mea culpa, quietly: the general consensus was that the hardware released too early, was not ideally designed, was overly high-priced.

Midsummer saw a stunning gash in the system's price -- $249.99 to $169.99. The price cut came at the expense of profitability, leading to a first-ever annual loss for Nintendo.

That alone was new territory for a company that has a history of surprising the market with product strategies that may seem opaque and little-understood at first, yet have historically borne fruit. But from there it seems many didn't expect just how strong the effect of the company's compensatory measures would be. By the Christmas season, the 3DS was seeing record sales in Japan, with just one week seeing more than half a million units. The surging 3DS ultimately overshadowed the much-anticipated launch of Sony's shiny new, far better-equipped Vita handheld in the country.

3. Team Bondi Collapses

la noire.jpg
Few games sees as much anticipation as L.A. Noire, from early recognition at New York's prominent Tribeca Film Festival to much publicity for its cutting-edge MotionScan facial recognition technology. With the backing of the gilded Rockstar juggernaut and a boatload of critical acclaim at launch, no one would ever have assumed that Australian developer Team Bondi would be set for anything other than some bonuses and vacation time, especially as the game shipped some 4 million units on consoles as of June.

Yet the revelation that all wasn't well rapidly bubbled up. First there were rumblings of a poor relationship between Rockstar and Team Bondi, with the controversial studio head Brendan MacNamara rumored to be at the root amid mismanagement allegations. Team Bondi developers expressed distress at being excluded from the credit, and after a period of arbitration came the news that the developer would close. It reportedly owes employees some $1.4 million in unpaid wages and bonuses -- talk about bittersweet success.

2. PopCap Acquired By EA

As the most successful casual gaming company, PopCap's has only seen its independent success compound over the years. Rumors of the company as acquisition target have swirled numerous times over the years, but PopCap has always been in an enviable position: It owns its own IP and was ahead of the digital publishing, casual and social gaming curves, and many thought the company had no need to sell itself to anyone.

Electronic Arts has made no secret in recent years of its aims to play as strongly as it can in the social, digital and casual spaces; the publishing giant has a massive physical footprint, but mainly chose to adapt to new business transitions through acquisitions. Anyone would have expected the company to want PopCap, especially amid rumors that pegged a potential buy at up to $1 billion.

PopCap took a deal with EA ultimately worth $750 million with a $550 million potential earnout. It wasn't the money that appealed most strongly to the publisher; we were told the company most valued EA’s massive infrastructure and focus on generating new cross-platform digital IP. “We’ve essentially created an environment where they get a lot more bang for their buck,” explained EA CEO John Riccitiello.

1. Zynga's Muted IPO

The rest of the game industry could say whatever it wanted about the metrics-driven design of the social gaming space, but for the past few years Zynga has virtually printed money on its meteoric rise to dominance over the Facebook platform. The company’s long-awaited IPO was expected to act as a watershed moment for the market, a milestone for the mainstreaming of social games as a muscular industry.

But even before Zynga became ZNGA, analysts like Sterne Agee and Cowen & Company were less then excited, rating the stock “Underperform” and “Neutral”, respectively. The company was valued at $7 billion and priced its initial offering at $10 per share -- but has since malingered below that line. As of press time it’s worth $9.50 per share, but it’s seen valuations as low as the $8 range over the holiday period.

News reports cast uncertainty on Zynga’s management and operational future the company’s communications skills haven’t yet been able to dispel, while visible over-valuation cases like Groupon seem to have made many investors wary of voting with their money behind a trendy digital business.

For months it seemed the company had a road paved to easy street, but the generally-muted IPO has surprised many with an important message of care in a hot new space.

[Other 2011 retrospectives: Top 5 Major Industry Events, Top 5 Major Industry Trends, Top 5 Controversies, Top 5 Most Anticipated Games Of 2012; Top 10 Indie Games, Top 5 PC GamesTop 5 Overlooked Games, Top 5 Social Games, Top 5 Cult Games, Top 5 Developers, Top 10 Games of the Year, Top 5 Disappointments and Top 5 Mobile Games.]

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Charles Battersby
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Zynga was not a surprise.

Leo Gura
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Biggest surprise this year for me was the PSN hack, and that fact that it took Sony months, instead of days, to fix the problem. Second biggest was the crazy valuations Rovio was setting for themselves.

The 3DS bounce back is a good one. Definitely belongs on the list. Just goes to show how critical pricing is for hardware sales. 3DO, PS3, and now 3DS, confirm this fact. Handhelds really need to be around $150 to sell well, and consoles need to be around $250. 3DS vs Vita will be an interesting battle to watch in 2012.

Jeremy Reaban
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The 3DS was hardly a surprise. People just wrote it off prematurely, despite the lack of AAA software from Nintendo (which was one the way). It hasn't even seen a Pokemon yet - then it's going to explode. Maybe not be as successful as the DS, but not many products ever will be...

Ian Uniacke
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I think that's kind of the point. At "this" stage it looks like the 3DS may be BIGGER than the DS. Of course it's fortunes can rapidly change either way, as demonstrated by recent sales.

Glenn Sturgeon
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I thought the 3DS aggressive price drop after only being out a couple of months was a suprise. At the current price, its realy no suprise its doing well.imo

Other suprises for 2011 to me were the closing of Bizarre creations, the legth of time PSN was gone and blizzards real currency plans for the diablo3 auction house.

Charles Battersby
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The price cut was a genuine surprise. The rebound seemed inevitable once the Mario games were given release date.

Ian Uniacke
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I will reiterate what I said above, but I believe it's the size of the rebound that is a surprise. From dead on arrival to fastest selling console ever could probably not have been predicted by anyone imho.

Joe McGinn
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Not one of these events was even remotely surprising.

Rajat Ojha
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PSN Hack and lack of Sony's quick turnaround on this issue was definitely surprising and another surprise is that even after Zynga's muted IPO, FB game companies are mushrooming. Rest all, absolutely no surprises!!!

Joe Wreschnig
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The 3DS being sold at a loss is a big deal, but "leading to a first-ever annual loss for Nintendo"? You don't think it was the earthquake? Or the incredibly strong yen? Not to mention, that's a forecast. They haven't actually announced a fiscal loss yet - and if it happens, it will include the 3DS's bounce back as well.

The 3DS seems like a distant third cause at best.

Jamie Mann
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In the first half of FY 2011, Nintendo reported gross losses of 107.8 billion yen, of which 52 billion was identified as being due to currency issues. And Nintendo's own forecasts indicate a 20-billion yen loss for the full year.

So, currency was a significant factor, but it wasn't the only one. And while the earthquake in Japan would obviously have had some impact, it had zero impact on sales outside of Japan. And in Japan, sales of Sony's PSP continued to be strong after the earthquake hit - they actually rose!

With that said, the 3DS did meet it's projected sales, but it took a hefty price cut and the release of key titles (Monster Hunter, Mario, Zelda, Mario Kart, etc) to drive up sales, and there's a risk that the 3DS could go the way of the Gamecube, where people generally only bought Nintendo IP - and Nintendo's releases aren't frequent enough (they published just 9 3DS games in 2011) to sustain the entire platform.

However, I think Nintendo's biggest problem at the minute is in the home-console area. The Wii is pretty much dead in the water, the Wii U is a long way off (and there's serious doubts about it's new touch-screen interface) and Nintendo seems to have an institutional bias against online capabilities; there's hints they may be getting over this, but it's going to take a huge amount of work to compete with Sony and Microsoft's established and highly sophisticated implementations.

Joe Wreschnig
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With the state of the 3DS I think it's incorrect to talk about Nintendo's "institutional bias" against online capabilities.

The 3DS has the best online system of any handheld (except maybe the Vita, which I haven't tried yet) right now - it's at least comparable in quality to PSN, and some ways better. Mario Kart and Swapnote have tightly integrated networked modes, two launch titles featured free DLC, and the eShop is regularly getting notable titles, both classic and new.

You can argue that they took their sweet time getting here, but Nintendo now has a top-tier online system for their platform and games, period.

Otherwise I agree with you - Nintendo's past performance does not reflect well on their current state. But I think the 3DS is going to end up being a mostly neutral or slightly positive effect for the whole year, not the primary cause of Nintendo's financial "troubles."

Jamie Mann
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@Joe: on the 3DS side of things, fair enough; I haven't yet had a chance to play with it :) With that said, I was mostly thinking of the reports on Nintendo's (lack of) online strategy for the Wii U:

Beyond that: I agree with you that the 3DS isn't going to drag Nintendo down at the end of the financial year, but I think the way it's been handled is symptomatic of bigger issues within Nintendo. But Christian and I have debated that one enough already ;)

Ian Uniacke
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I second Joe's opinion about nintendo's online strategy on the 3ds. It's by far one of, if not the, best online implementation I've seen. There are still some issues with the friends list but in terms of the digital store I'd rank it as the best possibly second to apple only (in terms of functionality...obviously Apple wins hands down in content, at least amount of content).