Activision Blizzard reported its financial results for the quarter ended June 30 today, revealing an unprecedented reliance on digital revenues.
The publisher reported revenues of $970 million in sales on a GAAP basis, 49 percent of which came from digital channels. On a non-GAAP basis (excluding the impact of changes in deferred revenues), the digital percentage was actually 73 percent of the company’s $658 million in sales. Activision attributed the digital strength to Blizzard’s lineup of titles (World of Warcraft, Hearthstone, and Diablo III), combined with digital sales for Call of Duty.
However, not all of those digital sales drivers posted strong numbers for the quarter. World of Warcraft in particular lost about 800,000 subscribers over the period, and as of the end of June was down to a paying player base of 6.8 million gamers. However, Activision Blizzard characterized this decline as a “seasonal” dip in advance of the next expansion, Warlords of Draenor, which is set to launch later this year. The publisher likened the downturn to the subscriber losses that happened in 2012 ahead of the Mists of Panderia launch.
On a GAAP basis, Activision Blizzard revenues were down nearly 8 percent, with net income down 37 percent to $204 million. However, the publisher still beat its previous guidance. On a non-GAAP basis, revenues were up about 10 percent to $658 million, while non-GAAP net income was reported at $45 million, down 50 percent year-over-year.
The quarter’s performance gave Activision Blizzard enough confidence to update its previous guidance for the full year. For calendar year 2014, the publisher had previously forecast total GAAP revenues of $4.22 billion, but moved that up to $4.24 billion today. The company also projected earnings per share of $0.91, up from $0.89.
Those who have been eagerly waiting for October to experience the latest adventures of Batman from developer Rocksteady, are going to be very disappointed to learn that the game will not make its originally announced October release.
Instead developer Rocksteady has confirmed that the game will be released in 2015. An exact release date has not yet been decided upon. We are hearing however, that as spring release for Arkham Knight is very likely.
While the exact reasons behind the delay were not announced, but the game is much bigger than previous Batman titles that Rocksteady has done and it is the first all next-generation title that the developer has done which also might be contributing to the delay. The game is still scheduled for release only on the Xbox One, PlayStation 4, and PC so the next generation status of the game has not changed.
In the Far Cry games, fire is a wonderful tool. It spreads dynamically, opening up a wealth of creative and strategic possibilities for players to achieve their goals. However, it also gets out of control in a hurry, potentially coming back to hurt the player in sometimes unpredictable ways.
It’s an appropriate metaphor for the series’ approach to controversial subject matter. Last week, Ubisoft announced the development of Far Cry 4, showing off some key art in the process. The picture depicts a blonde light-skinned man in a shiny pink suit against the backdrop of the Himalayas, smirking as he uses a defaced statue as a throne. His right hand rests on the head of a darker skinned man who is kneeling before him, clutching a grenade with the pin pulled. Though we know very little about the characters depicted, their backgrounds, or their motivations, the art got people talking (and tweeting). Some were concerned about racism. Others were worried about homophobia. Many saw neither. At the same time, details about the game are so scant that it’s entirely possible the problematic elements here are properly addressed within the context of the game itself.
But at the moment, we don’t have that context. It’s promotional art, so to a certain extent, it’s designed to exist out of context, to catch the eye of someone on a store shelf, even if they’ve never heard of the series before. And while we lack the context the actual game would provide, there’s no such thing as “without context.” Here, the context we have is that this is a Far Cry game, the latest entry in a series that has been earning a reputation for boldly storming into narrative territory where other games fear to tread (often with good reason).
Like the fire propagation mechanic, this narrative ambition was introduced to the series with Far Cry 2. What had previously been just another shooter (albeit one in a tropical setting more attractive than most) became a series that embedded its stories within thorny issues. Far Cry 2 cast players as a mercenary in a fictitious African country’s prolonged civil unrest, using blood diamonds, malaria, and Western imperialism as texture in a story emphasizing the moral vacuum of war. Far Cry 3 took things a step further, with players controlling a spoiled rich white kid on a tropical island vacation who suddenly must deal with nefariously swarthy pirates and intentionally stereotypical natives. And just in case that didn’t stir up any controversy, the story also weaves in rape, sex, drugs, and torture. In both cases, some critics and players felt the games offensively trivialized important or tragic subjects.
Given this history, it’s not surprising that Far Cry 4 would not universally receive the benefit of the doubt. Much more surprising (to me, at least) is that Ubisoft is continuing down this path with the franchise. Far Cry 3 sold a staggering 9 million units, putting it in the same class of blockbuster as Assassin’s Creed (last year’s version of which sold 11 million units). However, the publisher’s narrative approach to the two games could not be more different.
Assassin’s Creed is a fascinating case study for dealing with touchy subjects in AAA video games. It wasn’t long after the US invaded Afghanistan and Iraq that work on the first Assassin’s Creed started. You know, the one set in the middle of a holy war between Christians and Muslims. Assassin’s Creed II had players attempt to assassinate the pope. Assassin’s Creed III put players in control of a Native American protagonist during the Revolutionary War. Assassin’s Creed IV: Freedom Cry saw the gamification of emancipation.
The Assassin’s Creed franchise draws some criticism from time to time for its handling of these subjects, but the series has rarely found itself at the flashpoint of controversy. Part of the reason for that is the Assassin’s Creed developers research their subjects thoroughly. They understand what the concerns surrounding the sensitive topics are, and by virtue of the games’ historical settings, they can point to factual evidence of certain people’s actions, or common situations of each era.
When it comes to dealing with controversy, Assassin’s Creed is much like its stealthy protagonists are imagined to be: quiet, cautious, and efficient. Far Cry, on the other hand, deals with these topics more like the way Assassin’s Creed protagonists behave when I play them: recklessly uncoordinated and endlessly destructive. Even when it’s clear Far Cry’s developers have put plenty of thought into what they’re saying, it’s not always clear they’ve put much thought into what people will hear them saying through their games.
It speaks volumes about how Ubisoft perceives the long-term value of the two series. Assassin’s Creed is the company’s biggest and most adaptable blockbuster, an annual gaming event based on a premise that can be mined and iterated on endlessly in almost any medium, a recurring revenue stream to be nurtured over time. Far Cry, this key art release suggests, is just another first-person shooter, a brand defined primarily by how hard it works to shock people, perhaps because the company doesn’t have faith that it can sell on its other merits. One of them is the kind of project you make a Michael Fassbender film around. The other might be more of an Uwe Boll joint.
I’m not saying that Far Cry should avoid these subjects. I actually love to see games of all sizes attempting to tackle topics and themes often ignored by the industry. But the right to explore those subjects should come with a responsibility to do so with care. These are legitimately painful subjects for many people. If developers want to force players to confront them, they should have a good reason for it that goes beyond pushing people’s buttons, exploiting tragedy for shock value and an early preorder campaign. In video games, we don’t push buttons for the sake of pushing buttons. We push them to do things.
Gears of War will continue to turn, as Microsoft has acquired the sci-fi shooter franchise from Epic Games. Microsoft Studios head Phil Spencer confirmed, saying the deal covers the intellectual property, all existing games and assets, and the rights to continue the franchise in the future.
As for who will make the Gears of War games with Epic out of the picture, that task has been entrusted to Microsoft’s Vancouver-based Black Tusk Studios, under the leadership of the studio’s general manager Hanno Lemke. Spencer called it “a big vote of confidence” for not just the studio but the Vancouver development scene. (Microsoft closed its nearby Victoria development studio last month.)
Future development on the franchise will be led by Rod Fergusson, who was a producer on the first three Gears of War titles. While Fergusson has a long history with Gears of War, his appointment at Black Tusk has to be considered surprising. Just four months ago, Take-Two announced that Fergusson was launching a new Bay Area studio to work on a new project for the publisher.
“It’s kind of nice he can tie the franchise, the culture, bring it all together, and really help with the talent we already have up at Black Tusk to get the franchise going with a new organization,” Spencer said.
Fergusson released a statement on his new appointment, saying, “I’m extremely excited to be joining Black Tusk Studios to oversee development on the Gears of War franchise. I’ve been privileged to work on a lot of great games with a lot of great teams, but Gears has had the most impact on me professionally and personally, so this really feels like a homecoming. I can’t wait to share more with you all soon.”
“[I]f you look at what we did with 343 and getting them up to speed for Halo 4, you can maybe anticipate some things that are similar to that.”
This isn’t the first time Microsoft has had to find a new studio to take over a blockbuster sci-fi shooter IP. In 2007, Bungie struck a deal to split off from the Xbox maker, leaving the Halo franchise in need of a new developer. Spencer said there were lessons to be learned from the successful transition of the Halo series to 343 Industries, and mentioned Lemke would be speaking with 343′s Bonnie Ross about her experiences.
“We’re not announcing anything right now, but I think if you look at what we did with 343 and getting them up to speed for Halo 4, you can maybe anticipate some things that are similar to that,” Spencer said. “But it does give me confidence knowing that we’ve done this once with 343.”
343 cut its teeth on the Halo franchise with Halo: Combat Evolved Anniversary, an Xbox 360 remake of the original Xbox launch title Halo: Combat Evolved.
Whatever else changes with Gears of War, one thing that will likely stay the same is the technology powering the franchise. Spencer declined to say whether the deal requires Microsoft to use the Unreal Engine for future Gears games, but he did say the company was a big fan of the technology.
“We’ve used the Unreal Engine in our development of the Gears franchise and other franchises,” Spencer said. “Unreal is important for us. So I don’t see us moving away from Unreal. I have confidence in the Unreal Engine going forward, and it’s important to the franchise.”
Spencer also noted that a Black Tusk teaser trailer shown at E3 was built using Unreal. And even though that clip–a man rappelling down the side of a present-day skyscraper before swinging in an open window to clobber a gun-toting guard–looked decidedly unlike Gears of War, Spencer called it a concept piece, and not a project that is being shelved as a result of the IP acquisition.
“This obviously isn’t something that started yesterday in terms of our discussions with Epic,” Spencer said. “Hanno’s been involved for quite a while, so he’s known that this is something we could land. And the leadership team there obviously knew as they started to build their road map for what they would be focused on. I wouldn’t say things have been shelved. Obviously, this will become a big focus of the studio and something that will be critical to them driving forward. There’s not really something that was on the road map that all of a sudden goes away.”
When Microsoft opened Black Tusk in 2012, studio representatives said it was not working on an existing franchise, but instead was “looking to build the next Halo” from the ground up.
Financial details of the acquisition were not disclosed.
The Samsung Gamepad is compatible with all Android phones running Android 4.1 Jelly Bean and above, though Samsung said that it is specifically optimized for Android 4.3 Jelly Bean and above. It features an eight-way D-Pad, two analogue sticks, four action buttons, two trigger buttons, a Select button and a Play button.
The Play button is a link to the Samsung App Store selling console optimized games at “reasonable prices”. The Gamepad uses Bluetooth 3.0, but can also pair via NFC and even cast gaming onto the big screen using Samsung Allshare. Although there are a number of Chinese imports available, this is the first time a major player has brought an Android game controller to the table.
Samsung said 35 games are available through the Play button at launch with more to come in 2014. Launch titles include Need for Speed: Most Wanted, Asphalt 8, Modern Combat 4, Virtua Tennis Challenge, and Prince of Persia. These are in addition to existing games from Google Play.
Samsung is keen to tout this new device as an alternative to buying a more expensive console such as an Xbox One or Playstation 4 (PS4), and while we’re not really sure if it can match them, we can certainly see the advantages of a device like this over Android game consoles such as the Ouya or Gamestick.
The device is already available for pre-order at Expansys for $125.99. At present there is no date attached to it, and Samsung is only committing to “the coming weeks” as the time-frame for availability.
As it’s a device with a steel casing, Samsung clearly is not aiming this at the budget market, and if its functionality matches its specifications, it could be one to watch in 2014.
The Delaware Supreme Court has overturned a preliminary injunction preventing Activision Blizzard from buying Vivendi’s stake in the company. In September, the Delaware Court of Chancery blocked the sale due to a lawsuit filed against Activision by shareholder Douglas Hayes. Hayes argues that the sale requires the approval of shareholders to proceed. Vivendi filed an emergency appeal against the ruling in late September, attempting to remove the injunction before the October 15 termination date on the agreement.
The Delaware Supreme Court agreed with Activision’s assertion that the sale was a stock repurchase and did not require the approval of minority shareholders.
With the injunction gone, Vivendi and Activision expect the deal to close by October 15. The deal will have ASAC II, an investment group led by Activision Blizzard CEO Bobby Kotick, buying 172 million shares from Vivendi for $2.34 billion and Activision Blizzard buying 429 million shares for $5.83 billion. The two transactions would give Activision control over Vivendi’s 61 percent stake.
Wedbush Securities expects Activision’s stock to outperform once the deal is completed, with a 12-month price target of $22 per share.
“While some investors may have concerns about declines for the company’s core businesses, we remain fans of Activision Blizzard. The company communicates clearly, executes well, and its management appears to truly understand how to make money,” said Wedbush is a recently released note.
The independent gaming scene has been growing by leaps of bounds, so it makes sense that the events designed to celebrate it are keeping step. This weekend’s IndieCade Festival in Culver City, California (on the West side of Los Angeles) is the largest in the event’s seven-year history. IndieCade founder and CEO Stephanie Barish said the event is expecting to draw more than 5,000 people to Culver City, which has a population around 39,000.
Much like the indie scene it promotes, the show has also been getting increased attention from the mainstream gaming industry of late. Sony has been a primary sponsor of the event for years, but the 2013 show sees Nintendo chip in for the first time, with Microsoft returning to the list after taking 2012 off. Activision is also on the list of sponsors, as well as Epic Games (for the Unreal Engine), Unity, and 20 more companies. Barish said some of the event’s more recent sponsors saw how Sony benefitted from its overtures to independent developers and have been following suit.
“[Sony has] put four or five years of effort now into the indie development sector and it’s really paid off for them,” Barish said. “Developers are really interested in meeting with them. They see there are possibilities, that Sony has proven [indies] can do well and are treated well. More and more the fact that independent games are interesting to a broader public is becoming apparent to the larger publishers. As well, there’s a huge creative energy and force and momentum coming out of the independent sector, and they don’t want to not be part of the future.”
That future is a big part of the attraction for IndieCade. Attendees to this year’s show will be able to try out a handful of games on upcoming hardware like the Oculus Rift and PlayStation 4. In all, IndieCade 2013 features 36 “official selections” for the festival, with dozens more games on show. Barish expects that crop of games to not only produce some of the next big hits, but also draw attention to the next crop of important developers. In the past, she said IndieCade has served as a coming out party for indie hits like Braid and Everyday Shooter, or developers like Telltale Games (who would go on to create the multiple Game of the Year award-winning The Walking Dead series). It’s also been a place to debut games that think outside the set-top box, like Johann Sebastian Joust, a six-player game that uses music and PlayStation Move controllers, but no screen.
“It’s really important for the mainstream to see what’s at the cutting edge, and we just continue to bring things in that are more cutting edge, that are more different than publishers or other mainstream things would even think to look at yet,” Barish said. “We’re really a window into what’s going to happen.”
Among this year’s selections are That Dragon, Cancer (a narrative-driven game set in a children’s hospital over three years), Perfect Woman (a “strategic dancing game” for the Kinect), and [code] (a PC game in which players delve into ersatz programming code to solve puzzles). While some of the IndieCade games will almost certainly prove to be lucrative for their creators, Barish stressed that isn't the only way to measure their success.
"There's definitely a desire for the Cinderella story, but having seen so many of the games, they're really good," Barish said. "So even if they're not commercially successful, they're impacting the way mainstream games are designed, the directions and the trends for those."
The trend for IndieCade looks to be continued growth. This year saw the event spawn an IndieCade East sister show in New York City, a second installment of which is confirmed for February 14-16, 2014 at the Museum of the Moving Image. Beyond that, Barish said there has been talk about expanding the festival even further with a European event.
Thirteen people have been indicted, accused of being members of the Anonymous hacktivist group and allegedly involved in Operation Payback.
Operation Payback was the retaliation against payment firms that Anonymous put in motion following their blocking of Wikileaks donations.
The 13 are accused of taking part in a series of distributed denial of service (DDoS) attacks, and the US Department of Justice filed a federal grand jury indictment in US District Court in Alexandria, Virginia. The indictment charges them with conspiracy to intentionally cause damage to protected computers.
Anonymous is a loosely linked digital rights collective. In its early days it pulled together volunteers from all walks of life.
Operation Payback struck a number of organisations including Mastercard, Visa, Paypal and the Motion Picture Association of America. The attacks lasted between September 2010 and January 2011. As well as retaliating against payment providers, part of Operation Payback was aimed at parties thought to be involved in a campaign against The Pirate Bay.
Agence France Presse (AFP) has seen the indictment and named those indicted in it. They are Dennis Owen Collins, Jeremy Leroy Heller, Chen Zhiwei, Joshua Phy, Ryan Russel Gubele, Robert Audubon Whitfield, Anthony Tadros, Geoffrey Kenneth Commander, Austen Stamm, Timothy Robert McLain, Wade Carl Williams and Thomas Bell.
According to AFP the 13 alleged Anonymous members “planned and executed a coordinated series of cyber-attacks against victim websites by flooding those websites with a huge volume of irrelevant internet traffic with the intent to make the resources on the websites unavailable to customers and users of those websites.”
In short, they are accused of having conducted a digital sit-in protest
Fans of traditional, “core” games are often extremely hostile towards the new wave of casual and mobile titles, and even towards the people who play them. They’re keen to draw a line in the sand between these titles and “real” games and quick to portray players of Farmville, Candy Crush Saga or Puzzle & Dragons as mindless consumers of low-grade, repetitive entertainment that’s utterly disconnected from and disrespectful of gaming culture and the medium’s development as a form of art and entertainment.
There are good discussions to be had around those topics – not Internet flame-wars, but some interesting if slightly dry academic discussions defining the form and shape of “gaming” as a pastime, a medium and an artform. If we’re very lucky, some of those discussions could even avoid becoming tedious tug-of-war sessions between the “narrative has no place in games!” crowd and the rest of the world. None of them, however, will gain anything from employing “casuals” as a vicious epithet, or deciding to sideline millions of game players as insignificant because they’re “fake” gamers who play the wrong kinds of game.
Why does this kind of knee-jerk unpleasantness get so consistently applied to new, more casual audiences? There are uncharitable explanations which often point to uncomfortable truths – self-styled “gamers” have built something of a boys’ treehouse over the years, and dislike the invasion of new demographics which can include such unwelcome treehouse guests as women, homosexuals, trans people, ethnic and religious minorities, and even – gasp! – their own mothers and relatives. Is nothing sacred?! There’s also a broader sense in which this is not specific to games at all – there’s a more universal knee-jerk reaction which sees adherents of any niche pastime resenting and rejecting the arrival of a mass-market audience and products tailored to them. (“Ugh, you listen to chart music? Are your ears broken?” “You actually like JJ Abrams movies? What’s wrong with you?”)
At the root of much of the dislike of casual games and their players, however, lies a more basic concern – a fear that the rise of this kind of game is going to replace and erase the sorts of games which existing gamers actually enjoy. Watching Clash of Clans or Candy Crush Saga roll in countless millions in cash is a deeply uncomfortable feeling for the kind of gamer who trekked for tens of hours across Skyrim, who can utterly lose themselves in the flooded corridors of Rapture or the dingy streets of Dunwall, or whose adrenaline pours out when they’re ambushed by the Covenant or surrounded by the Combine. If Candy Crush Saga can make so much money, is that the future? Is that all we’re going to be left with – if not thematically, then as a business model or a creative approach?
That’s the fear that drives the aggression. There’s a hobby which we love, and a wealth of creative works which have given us unforgettable experiences – gamers fear that the new business reality represented by F2P and casual games is an outright threat to that experience and that hobby. In the chase after the new casual audience, game companies will be forced to abandon the pursuit of the kind of experiences which enrapture and delight the existing audience – or at the very least, to turn them all into tawdry fairground toys which demand that you pump coins into them to keep on playing, robbing them utterly of the atmosphere and immersion which is so much of their appeal.
I wonder, then, if the atmosphere of discussion and debate around games might become a little more civil (on this topic, at least) in the wake of two fairly important events in the past week. Firstly, you can’t have failed to notice that GTA V came out and smashed through sales records not only for games, but for just about every entertainment media imaginable. Of course, week-one sales of games surpassed the revenue of blockbuster movies long ago, but GTA V cements games as the dominant entertainment medium of our era by finally silencing the last bastion of naysaying – not only did it make more money in a single weekend than the biggest films in the world make in their entire lifetime, it was also purchased and played by more people in one weekend than the number who bought tickets for any recent movie. Revenue or volume; count it how you like, GTA V is the biggest entertainment property on earth.
Meanwhile, in Japan, another entertainment property went on sale – Monster Hunter 4, Capcom’s latest release. Its figures don’t rival GTA’s, but in the supposedly “declining” Japanese games market, it sold over two million units in its first week and helped to drive hundreds of thousands of sales of the 3DS – a console that’s meant to be a miserable flop thanks to the unstoppable advance of smartphones and tablets. That can’t rival Apple’s 9 million unit sales of the iPhone 5S and 5C, of course, but then again, that’s not a remotely useful comparison, no matter how often blowhard mobile evangelists trot it out – the 3DS purchasers are all confirmed gamers who will go on to spend heavily on expensive game software, while only a certain portion of mobile phone owners play games, a much smaller portion pay any money for them, and the amount of money they pay can be quite small (or quite large, of course, but certainly rarely exceeding the spend of a console owner).
GTA V and Monster Hunter 4; two games which are absolutely squarely aimed at the core gamer who is presently so terrified of being squeezed out by the flood of mobile, casual and social software. Two games which, completely uncoincidentally, have just become the biggest entertainment properties in the world and in Japan over the past few weeks.
There is no threat here. There’s a small and dwindling clique of hardcore evangelists who will try to characterise GTA’s success in particular as an outlier, an erratic piece of data that doesn’t change the overall context of the industry, but they’re absolutely wrong. GTA’s enormous release is actually a perfectly logical and predictable continuation of a curve which has seen the top-rated properties in traditional gaming ranked higher and higher in sales terms over the past decade or two. GTA V is not a last gasp of sales success for a doomed industry; it was inevitable that eventually, a core videogame would achieve this level of sales success, and it is also inevitable that a future franchise will surpass this (although perhaps not for a few years, as the new console generation and the other systems which will play host to the next giant release need to establish themselves first).
Social, mobile and F2P gaming isn’t going anywhere. Developers are going to get better and better at creating and honing those experiences, targeting specific audiences and even creating experiences in those categories that appeal to core gamers – no question. But this isn’t the only way to make a game or to make money from games. There will still be a huge audience who want 8 to 12 hour long amazing narrative-driven interactive experiences. There will still be a core audience for combative multiplayer. Hardcore FPS, long-form RPG, exploration of vast worlds; all of these things have huge audiences which, far from being drawn away by the lure of Hay Day or Bubble Witch Saga, are continuing to grow and expand. Yes, the really impressive expansion right now is at the casual end of the market – but that doesn’t stop core games from selling even more than they used to, as this month’s success stories prove.
This isn’t a zero sum game, and everyone needs to stop talking and acting as though it is. As long as there’s an audience that wants and is willing to pay for core game experiences, there will be companies that provide for that need. Mums playing Candy Crush Saga outside the school gates do not in any way detract from the value of the market that wants a new GTA, a new Monster Hunter or any other core experience. This expansion is not be aimed at core gamers, and a big mistake being made by lots of companies now is trying to apply rational choice models to a fundamentally irrational consumer behaviour and deciding that core gamers actually SHOULD want this kind of business model or game experience. However, that mistake aside (and it’ll stop once a few companies get badly burned for their foolishness), this expansion also does not harm core gamers. Once they realise that, perhaps we can all tone down the rhetoric and instead enjoy the hegemony of videogames as, quite remarkably, this generation’s truly dominant entertainment medium.
The mobile and tablet market has grown tremendously in the last several years. The number of apps on Apple’s App Store and Google Play is downright mind boggling, and if you’re an app developer… well, best of luck to you. As the new survey from App Developer Conference organizers revealed this week, piracy and discoverability are making it incredibly hard to succeed. Nearly half of the app developers surveyed made no profit at all.
So the question has to be asked: after years of flocking to mobile, are developers actually retreating to the PC and console space? “I speak with lots of mobile devs regularly and most are moving away or at least thinking of it, either to other platforms or out of the trade completely,” Paul Johnson, managing director and co-founder of Rubicon, told us. “Having to give your game away for 69 cents a throw (after Apple’s and Google’s cut) and then competing with 1000 new apps each day is hardly a draw for anybody. We’ve reached a point now where even those slow on the uptake have realized the goldrush is over. It’s actually been over for a few years.”
Jeffrey Lim, producer, Wicked Dog Games, agreed: “The mobile space offers certain advantages, like having the largest customer base and relatively low development costs. However, there’s no doubt it is getting harder to be profitable with the ongoing piracy and discoverability issues.”
“So yes, we do think developers (especially indies) are considering going back to develop for the PC – and even game consoles. The cost of self-publishing on these platforms has dropped significantly, and console makers are also making their platforms more indie-friendly now,” he added, alluding to efforts on next-gen systems like Sony’s PS4.
Chillingo COO Ed Rumley isn’t quite of the same mind as Johnson and Lim, but as a publisher, Chillingo has noticed that too many developers simply are failing to make high quality games, so it’s no wonder that their titles are being ignored.
“The number of games being submitted is growing, as is the number of developers contacting us. I’m not sure if some are being scared away, but we know from experience that some developers underestimate the time and quality it takes to make it in mobile now. Consumers are a savvy bunch and spot second rate games a mile off. You can’t just knock something together in your spare time, upload it and wait for the money to roll in anymore,” he warned.
Michael Schade, CEO, Fishlabs Entertainment, acknowledged the big challenge in mobile, but he doesn’t think developers are going to have to look elsewhere.
“Sure, mobile’s not an easy market to breach into, but then again, which market really is? No matter what business you’re in or what product you’re trying to sell, you’ll always have to work hard to gain your ground and make a name for yourself,” he noted. “So that alone shouldn’t scare you away from mobile, especially when you keep in mind that no other platform in the history of digital entertainment has ever evolved faster and born more potential than mobile! With more than a billion smart connected devices in use and hardware capabilities on par with current-gen gaming consoles, today’s smartphones and tablets constitute by far the most widespread, frequently used and innovative gaming platform the world has ever seen.”
Schade also remarked that the last few years of veteran developers getting into the mobile scene has made things more difficult. “The fact that more and more established PC and console veterans open new mobile gaming studios and more and more traditional publishers port their titles to iOS and Android, doesn’t make it easier for one particular company or product to stick out. But that’s not necessarily a bad thing, as it clearly shows that the trend goes towards mobile, rather than away from it,” he said.
For every developer we spoke with, the discoverability issue reared its ugly head. There’s no doubt that this is a major concern. While building a high quality game can help, it’s simply not enough. In the world of apps, you cannot let the game do the talking for you.
“I think many developers have the misconception that it’s simply enough to release the game and let it speak for itself. They underestimate the importance of a marketing/PR campaign leading up to the game’s launch,” Lim stressed. “As a result their games fail commercially; not because of the quality, but due to lack of visibility. Hence the marketing/PR campaign should be seen as an integral part of the game’s development. An appropriate portion of the overall budget and effort should be allocated to increasing the game’s visibility, and if developers do not have the experience or time in marketing/PR they should consider hiring professionals in this area to lend a hand.”
Gree vice president of marketing Sho Masuda concurred that marketing is becoming crucial to mobile success. “They have to spend more time thinking about marketing and post-launch efforts in addition to building the the games. Fortunately, there are a lot of tools and services available for devs of all sizes to ensure that they can get the direction and support they need in these areas. Additionally, the mobile dev community is a very, very tight knit community and there is an amazing level of information sharing and support,” he said. “We encourage mobile devs of all sizes to talk to their peers, take advantage of all the meet-ups and events, and get to know all the services available to help get eyeballs on their games.”
A number of devs also believe that platform holders have a larger responsibility that they’ve been shirking so far. “For platform holders (e.g. Apple’s App Store), they can start to curate apps released on their store because there are too many clones of existing games that are taking up the traffic. They could attempt something like Steam Greenlight; although it is still an imperfect system, it’s better than not having any curation at all,” Lim commented.
Paul Johnson agreed, telling us that he’d really like platform holders to have a much more active role, as the discoverability issue has “about reached terminal” for unknown devs.
“If Apple don’t pick your game out for a feature, and you can’t drum up enough interest before launch yourself, then I’d say you’re pretty much screwed. It doesn’t matter how good your game is if nobody ever sees it and downloads it. They can’t tell their friends about something they themselves don’t know about!” he stated.
“The only thing I think the platform holders could do to help is stop allowing crap to be released. There’s only so much space for features and the end users only have so much effort in them to look under all the categories all the time, so I really don’t think adding more of them would help much. Maybe more apps for shorter times, but this is all a drop in the ocean really.”
“The one thing I’ve come up with that would make a real difference is for the platform owners to charge five grand for a developer license. All the utter crap would disappear and there’d be less apps fighting for space,” he continued. “And the end-users wouldn’t have to waste time downloading the crap as nobody who makes stuff they don’t believe in would dream of fronting that license fee. It’s Draconian but it’s really the only thing I can see having any noticeable effect. Anything else is just lip service.”
Discoverability issues aside, another major – and possibly growing – problem for devs to contend with is piracy. The App Developer Conference survey showed that 26 percent of devs had their apps pirated and a similar amount even had in-app purchases stolen.
James Vaughan told us, “Plague Inc. has a piracy rate of about 30-35 percent, which equals millions and millions of copies, but I don’t consider piracy to be a problem; it is simply a fact of life and I don’t get too worked up about it. Piracy is a byproduct of success and I choose to focus on the success which has resulted in piracy rather than the piracy itself. (The best way to stop your game from being pirated is to make a crap game!) I focus on continually improving and updating Plague Inc. which makes the game even more valuable to the people who have brought it (and encourages pirates to buy it as well).”
For those devs who actually do lose sleep over piracy, there are some ways to combat it, Lim said.
“There’s no question that piracy is prevalent, and I think it will continue to be so for a long time to come. In fact, with high-speed Internet access and the wide spread use of file-sharing software nowadays I think this problem is going to get worse,” he observed.
“The first way to deal with piracy is to implement the appropriate business model, and I think free-to-download with micro-transactions is the right way to go. Making the game free for download can work to our advantage; it allows us to reach out a larger customer base. And if players are hooked by the game, they can be enticed to buy additional high-quality content for a minimal price.”
“The second way would be to build a strong rapport with our customers – e.g. through frequent interactions on social media, events or even email. Developers of notable games (e.g. Hotline Miami and Game Dev Tycoon) have addressed piracy in this manner. By having a loyal customer base which is appreciative of our efforts in delivering quality content, they would empathize with us and be more willing to pay for the games in support of our development efforts.”
The good news for iOS devs, at least according to Schade, is that Apple’s store is less prone to piracy. “Having lived through the ‘dark ages’ of Java and made it out of there with two black eyes rather than one, piracy has been a very delicate topic for us at Fishlabs ever since. Based on our own experience, however, it is not as much of an issue on the App Store as it is on other platforms,” he noted. “I guess that’s mostly because Apple still has a lot of ‘premium’ customers willing to pay for high-quality content. Of course, we’re well aware of the fact that neither the closed iOS environment nor the Free-2-Play model will ever be able to eradicate software piracy entirely, but at least they are doing a comparatively good job at containing it as good as possible.”
If developers can effectively navigate the problems of discoverability and piracy, there’s no doubt that the potential is massive. One look at the overwhelming success of Angry Birds, Temple Run, Clash of Clans and others proves what’s possible. But for the vast, vast majority of devs, that’s a pipe dream.
“From the consumer angle, it’s a golden age. The amount of good quality games that can be bought for laughable prices is fantastic and there’s a ton of money being spent on this platform as a result. The problem for developers is that each individual cut is tiny. This isn’t even remotely sustainable and I don’t know what the future is going to look like. If I was starting again now from a blank slate, without an existing fan base, I wouldn’t touch mobile with a ten foot pole,” said Johnson.
Though just a concept, the idea has been put forward as part of the IC Tomorrow’s Digital Innovation games contest, a program launched by the UK Technology Strategy Board, which is offering five businesses up to £25,000 each to develop innovative digital applications and meet the objectives of five prolific technology companies, including Crytek, Sony and Google.
Crytek’s technical director of research and development Jake Turner spoke at the programmer’s launch event on Thursday, challenging developers to help integrate the free map data with existing games engines such as Crytek’s Cryengine 3 Sandbox.
Turner said, “We had probably spent a year making a city in America of our games and it’s taken a year to before we could actually start to play the game and experience it, involving how big that city should be, how detailed that city should be, so one of the challenges here is ‘how can we do this instantly?’”
“Why do we have to use people to make a city when there’s consistent open source street data out there which is very detailed, it’s got buildings, lights, it’s got streets – material data. Why can’t we just press a button and instantly see that?”
The challenge Crytek is putting forward is for developers to built an app so that we can “instantly drop into any part of the world” and see, in 3D, data being streamed in from the open source street map data.
“One of the ultimate goals, we would like to start an office in the UK and be able to fly at the press of a button all the way to the office in Frankfurt, and drive around Frankfurt, or any place in the world,” Turner added.
“Aimed primarily to purpose-make these virtual worlds based on real world environments, opened instantaneously without processing, we’d be able to see it instantly streamed over the cloud.”
Turner revealed that if successful, the project could be made part of future games, where users themselves can decide which city in the world they would like to play in, simply jumping from one to another with the scenery being generated instantly for the player.
However, he did add that this is still “a very long way away”.
Activision Blizzard’s moves to separate from its parent company Vivendi has been put on hold. The move, which surprised many, angered one shareholder that he sued to prevent this from happening.
Delaware Chancery Court was told that the whole move is a huge waste meant to cover a power grab. But now the court has put the move on hold until it can be argued in court. In order for the separation to continue, either the injunction must be modified on appeal or a majority vote by non-Vivendi stockholders must come down in favor of continuing the process.
Activision Blizzard said it was exploring options to ensure it still takes place. Vivendi has been trying to get rid of Activision Blizzard for nearly a year now in hopes of boosting its shares.
In a “fireside chat” at Casual Connect, ex-EA CEO John Riccitiello sat down with journalist John Gaudiosi to talk about the state of the business.
Gaudiosi asked what Riccitiello thinks of the state of the industry today and who the winners are in mobile. “It’s shocking how long titles stay in the Top Fifty,” Riccitiello said. He also noted that there’s no publisher with broad, long-term success on mobile. “Most publishers have only one or two titles in the Top Fifty,” said RIccitiello. “Almost no one has a title with more than a year in the Top Fifty, and there’s never been a successful sequel.”
Riccitiello’s solution? “Mobile needs to build brands,” he said. “Madden is in its 25th year. So far there’s precious little to indicate mobile is building long-term brands.” The touchstone for Riccitiello is how well people do version 2.0 of a successful mobile game. Can publishers create brands that will last for multiple years? He feels that is going to be a key towards creating a valuable mobile publisher for the long term.
Gaudiosi asked what the role of a publisher is in mobile games, and Riccitiello said that’s still developing. Classically, he explained, publishers do three things: Provide capital, turn content into money (transactions), and provide editorial service. Mobile developers still need capital (especially as budgets increase), and help improving a game (both technical and design help) is always useful. What’s not clear, according to Riccitiello, is how helpful publishers can be in handling transactions when the platforms provide much of that mechanical assistance. The conversion of content into money is a mix of technology, marketing, and design, and mobile games are showing themselves to be different in many ways than games on other platforms.
What needs to change, according to Riccitiello, is the balance of revenue between the distribution platforms and the content providers. “For Apple and Google over the last five years, perhaps half or two thirds of their increase in shareholder value is directly from mobile products. That’s about $300 billion of capital created by the distribution platform,” said Riccitiello. On the other side is content. “Games are about 75 percent of all mobile app monetization; perhaps $25 billion of shareholder value has been created by content. That’s ten times more value created by the platform creator. That wasn’t the case in console.” Riccitiello feels that there’s great potential for game creators to change that equation and generate a lot more value from the content than from the platform.
Gaudiosi then asked Riccitiello what mobile can learn from console. “I’ve visited with many developers since I left EA,” Riccitiello said. “Many have told me they want to bring console level graphics to mobile, and that will make them better. I tell them investing in better graphics without a better game is a road to ruin.” Riccitiello feels that while mobile power is increasing, the rewards will go to developers that generate more satisfying games, not just better-looking games. “One bit of advice as you’re looking at more powerful mobile,” said Riccitiello. “Think about how that allows you to create an experience you haven’t seen before. What game mechanic wasn’t possible before?” Developers that find good answers to that question will do well.
Finally, Gaudiosi asked if Riccitello had any thoughts on how second screen gaming is impacting the business. “No one really knows the answer,” said Riccitiello. “I sit on my couch looking at my email, playing a game on console, and playing Candy Crush on my tablet. I’m using mobile screens all the time. I have seen some absolutely stupendous dual screen experiences with console and mobile. I don’t think we’re scratching the surface so much as we’re waving our hand above a surface that we’re yet to scratch.”
Riccitiello said that some of us would argue that all you need is a tablet or a phone and wireless HDMI out, but he disagrees. “TV is going be used for mobile games and dual screen will be a really big idea when you figure out a gameplay experience that is better.”
Activision Blizzard is to become an independent company as CEO Bobby Kotick leads an investor buyout from Vivendi worth $8.2 billion.
The publisher of World of Warcraft and Call of Duty will buy 439 million shares from Vivendi for $5.83 billion. In addition, an investment group lead by Kotick and co-chairman Brian Kelly, will purchase 172 million shares worth $2.34 billion.
With Vivendi no longer a major stakeholder, Activision Blizzard becomes an independent company led by Kotick and Kelly, whose investment group also includes Chinese operator Tencent, Davis Advisors and Leonard Green & Partners.
“These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi,” said Kotick.
“We should emerge even stronger-an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world’s most important entertainment companies. The transactions announced today will allow us to take advantage of attractive financing markets while still retaining more than $3 billion cash on hand to preserve financial stability.”
Kotick added, “Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world, including Call of Duty and World of Warcraft. Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi’s partnership through this period, and we look forward to their continued support.”
Kotick’s investment group will hold around 24.9 per cent of the company, with Kotick and Kelly investing $100 million combined of their own cash. Vivendi will continue to hold around 12 per cent of shares.
As has been thought for some time, Epic is working on a new Triple-A shooter that is currently in development. During a talk at Develop, Epic founder Tim Sweeney confirmed this was true. What Sweeney did not confirm is if the new title in development was another chapter in the Gears of War franchise for the Xbox One. Many believe this is the case.
What we do know is that Epic is currently working on Fortnight, a sort of “Minecraft meets Left 4 Dead”, according to Sweeney. We also know that Epic has developed both Gears of War and Unreal Tournament titles, both of which are shooters.
Really, the confirmation is nothing more than news that suggests that Epic is developing a new shooter as well as Fortnight. From whispers we hear, if an announcement of a new Gears of War title is coming, it will not be announced till next year, if it is in fact an exclusive for the Xbox One. That much we are reasonably sure of.