Five Minutes with Paul Campbell, '93
The Games People Play
Image by Beth Rooney
When it comes to games people play on personal computers, “the increasing complexity of graphics-laden battles creates an addictive need for greater horsepower,” the New York Times said. To get the “terrifying speed and realistic animation they crave, gamers are willing to pay thousands of dollars” for PCs. After introducing the $5,000 Blackbird 002, Hewlett-Packard Company is clearly in the game. Paul Campbell, ’93, VP of HP’s gaming division, spoke to Chicago Booth Magazine about launching that division in 2006 and what makes the industry so hot.
When did you start with HP and what drew you to the company?
I joined in 1986 because I’d had such good experiences with its products. HP is the original Silicon Valley startup and has reinvented itself multiple times since 1939. I stay with HP because it provides an environment for starting new growth businesses.
When did you realize the gaming business would explode? Around 2004, we realized PC gaming had crossed into the mainstream and had become the number-two use of PCs ahead of web browsing.
As we got into it, we learned that we needed to create a lot of special hardware and special experiences to make it very real for gamers, and we worked aggressively to make it happen.
How did you convince HP to let you create a new division?
I had investigated gaming with engineers Tom Szolyga and David Smith. One day, Tom and I were talking with Todd Bradley, the executive VP in charge of the PC group, about an upcoming meeting, and when Todd asked what else we were working on, we told him about our idea for gaming. He immediately gave us funding to start it up. We launched it in March 2006; in September 2006, HP bought Voodoo PC to accelerate our efforts. We started with the efforts of three employees; now we’re approaching about 100.
Why is gaming such big business?
Consumers love it because it’s interactive and personal. You play the game the way you want to play it. With the rise of social gaming and online games like World of Warcraft, you play with your friends and meet new gamers online, so PC gaming has become very social and fun.
Who’s your customer? Who’s playing?
People of all demographics, from teenagers whose parents bought the Blackbird to men and women in their 20s, 30s, 40s, and 50s who want to be able to play the most difficult and challenging games.
How is your business model different?
Other media have been subsidized by advertising for years and delivered free content, but with gaming, the financial rewards for providing innovative games are pretty muddied right now because there are so many different ways that games can be subsidized, like advertising, or a subscription model where you buy a chapter and pay as you go. In the gaming console market, you sell the hardware at a loss and make up for it in the game content. Many approaches are being tried but none has become dominant.
The challenge is, At what point will good, quality games be rewarded with a bigger share of the revenue and profits while inferior games miss out? And how will consumers sort through the choices and reward those who make great games?
What’s the toughest thing about the gaming industry?
The fast pace of technological change. Every month there’s something new coming out for a PC. In the past year alone, the power of video cards doubled. So did the processor’s power. It creates a problem for game developers who want to design games that take advantage of the latest technology in order to give a better experience, and it creates a problem for us in the hardware business to keep providing the latest systems that work flawlessly.
The other challenge is the proliferation of platforms on which consumers can play games—cell phones, cable, PCs, three varieties of consoles. Developers have to decide which platforms to target. I saw an estimate that cell phone gaming is going to become a $10 billion business by 2010. In the overall videogame industry, the games themselves are roughly a $19 billion business. And then you add in console hardware, PC hardware, all the workstations that are used to create games, the servers used to deliver games through online gaming — it’s a very big business. We don’t even know how big it is, but we estimate it in the $40 to $50 billion range. It has rapidly fragmented, and that’s a huge challenge.
What’s the best part of your job?
Being able to create a new business inside a couple of very large organizations. HP just topped $100 billion this year, and our PC business is roughly a $35 billion business. In spite of this size, I’ve structured an environment of innovation that’s creating new growth businesses. I love it.