The West needs to recognize that the free-to-play model is the future, before it's too late.

In the PC Gaming Alliance's first "Horizons" Report, we found that the PC gaming market generated $10.7 billion worldwide during 2007. Half of that came from Asia, where the free-to-play microtransaction and ad-supported model has found huge success.

The West can close the gap on Asia by introducing more high-quality free-to-play games. In fact, it has to do that, because if game companies over here don’t do it, then Asian companies will be coming over here and dominating the business. There’s no doubt.

Right now, the West assumes that free-to-play games are somehow lesser products than traditional games in which you pay up up front. But what happens if one day we wake up and these "lesser" free games start rivaling games that use traditional pricing? What happens when an Asian company comes here, produces a "Crysis" and makes it available for free? It's an entirely possible scenario.

What we must do as an industry is really start thinking about how we make money from games. When we figure this out, what we're going to see is a resurgence in PC gaming. These new business models such as free-to-play can take better advantage of the huge scalability provided by a massive worldwide PC installed base. Think about what that means: those 20 million Xbox users are a fraction of the audience that you can reach on PC.

Speaking of consoles, people often pit PCs against consoles. But consoles are not at all bad for the PC gaming market. First of all, the number of people working in the industry and creating videogames because of consoles is at a record high. How could that be bad? And most console owners in the West also own a PC. Consoles offer a baseline experience, and PC is the best it can be, so I don’t think consoles pose any threat to PC. I own a PS3, I own an Xbox 360, I own an Xbox, I own a PS2. I also own three or four PCs. I can’t think of people where it’s a case of "either or."

Physics: the next frontier

I'd also like to touch on what I feel is the next step in creating more interactive, realistic game experiences: improved physics. We’re reaching a stage now where there’s probably a greater return on investment in developing physics in games. Physics are compelling and a core component of gameplay, and most people would argue that gameplay is one of the single most important things in games. Gameplay means interactivity--the degree to which you can swing in on something, whether you can walk in it, fly in it, drive it, touch it, throw it, pick it up. That's all physics, and it defines the level of interactivity.

We also believe it’s possible to run the AI on the GPU. Even though it was formed just as a graphics device, any task that is massively parallel is best run on the GPU, so we already run AI behaviors. There is so much more to do in this area.

We really have seen nothing yet. In fact, 2008 is 1993 in terms of physics. We’ve just now got started, and physics is going to be a substantial area. A lot of people are underestimating just what we’re going to see in terms of physics developments in games, but it will be huge.