Here’s are my guesses/market trends based just on what I’ve been seeing/hearing/guessing:

• Mobile computing (i.e. smartphones) is a powerful new force that is here to stay and is really pushing computing and gaming in new directions.  Since mobile is now entering into its ‘teenage’ years, there is still a lot of rushing around and ‘land-grabbing’ going on trying to align markets, business models, programming models, distribution, and revenue streams.  There is very good money to be made for the savvy, but it’s also more risky.  Those software companies that enter and establish a good name/brand will likely do very well, but almost certainly will be smaller, more nimble companies.  Nobody is making a killing on phone apps and very few can quit their day jobs and live off what they make solely from that revenue stream until things settle more.
• Consoles will continue to be developers’ target platform because they have a stable user base, known revenue stream/model – but are in severe danger of being rendered impotent.  They need to solve:
  • Aging graphics.  With no new consoles in the works for a few years, things are already looking dated and it will only get worse.  There was absolutely no talk of any new consoles – which means it’s at least 2+ years away.  Microsoft appears to be trying to figure out it’s own strategy as there was no info for a new version of DirectX and a lot of effort clearly trying to get Winphone 7 adoption/features/devs going.
  • Terrible loading times, frequent updates, etc are all a terrible experience and hindrance to keeping people using their consoles.  I already know several people to whom their XBox 360 is really just a Netflix box.  And with the advent of all those features in smart TV’s coming – that selling point will soon disappear.
  • There were a number of rants about 40+ hour games and how people simply don’t finish them or want to play one game that long anymore (except for AAA titles like Call of Duty/etc).
  • Not as solid of a digital distribution of whole games like on PC/Mac where you can get whole games online (Steam/etc)
  • Higher entry bar for indie developers to develop for vs PC/Mac
  • No instant on/off features like every laptop and phone has.  Waiting 5 minutes to boot your console and scan past splashes/intro crap/etc is intolerable in an age they will be competing against smartphone games.
• Smaller, faster casual games will grow like wildfire but generating a sustainable (and livable) revenue stream from them will still be getting hammered out for the next few years.  Studios that develop them will stay smaller and live leaner – but likely deliver a lot of the innovative new gameplay for casual markets.  We’re in the exuberant pre-teen days of this movement, so it’s direction is still very malleable.  Yet, there will be a point at time at which the limitations are felt out and they get their stride.  It’s already happening and the signs are very positive.
• The indie developers will continue to come out with buckets of games.  Following the 80/20 rule, 80% of them will be garbage, but 20% will do well.  The top 1-5% will be phenomenons (i.e. Minecraft) and those 1-5% will really move gaming in a newer direction. That direction being:
  • Game developers will develop with off-the-shelf engines and middleware, not programming stuff themselves.
  • Games will focus on simpler and more creative elements.
  • It will keep the industry from going into stagnation and death, but take it in a new direction very different than the old guard.
• Big houses will become fewer, but get more powerful and likely be lonelier at the top (ala movie studios).  As the cost of AAA games rises each year, consolidation and shake-out will happen.  Which means they’ll likely be more and more conservative and get more entrenched in their franchises – which probably means less innovation on the IP front, but they will be cutting-edge beautiful.
• PSP’s and handheld gaming will just about disappear in the next 5 years as smart-phones will become so ubiquitous and be just as powerful with many more options.  Nobody will pay for two wireless plans to connect their PSP’s/DS’s.  This is bad news for Nintendo, and somewhat Sony, who have a large portion of their revenue stream from their handheld gaming devices.  It’s unclear whether they see this threat – but Sony appears to be seeing this threat with a ‘certification’ program for mobile devices.