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Microsoft Gaming Division Growing

February 12, 2018 by  
Filed under Gaming

Microsoft today reported its quarterly earnings, giving a glimpse into the health of its gaming business in the process.

Over the final three months of 2017, Microsoft’s gaming business brought in $3.92 billion, up 8% year-over-year. Much of that growth was driven by sales of the Xbox One X, which launched during the quarter at a premium price point of $500. Microsoft said hardware revenues for the quarter were up 14% year-over-year.

Microsoft’s gaming software and services revenues were also up, but not as sharply. The company saw a 4% rise year-over-year, with continuing growth in digital distribution helping offset first-party AAA revenues that were down compared to the previous holiday season. Microsoft’s 2016 holiday lineup included Gears of War 4 and Forza Horizon 3, while the 2017 slate relied on Forza Motorsport 7.

As for Xbox Live, Microsoft reported 59 million active users on the service during the last three months of the year, up 7% year-over-year.

Courtesy-GI.biz

Nintendo’s Switch Helps Push Profits Higher

February 9, 2018 by  
Filed under Gaming

The former maker of playing cards Nintendo reported its biggest third quarter operating profit in eight years, driven by smashing demand for its new Switch games console.

The outfit now expects annual earnings to outstrip its previous estimate. This is thanks to the growing popularity of the hybrid home-portable Switch which nearly doubled Nintendo’s stock price to nine-year highs. Sales have far exceeded initial estimates, beating those of predecessor Wii U, and leaving suppliers scrambling for parts.

Nintendo posted an operating profit of $1.07 billion for the third quarter, up almost fourfold from a year ago. This is the highest ever that the company has earned in the October-December period since 2009.

Nintendo President Tatsumi Kimishima said that Switch sales during the holiday season were stronger than expected in Japan, the United States, and Europe.

Nintendo sold 7.2 million Switch consoles in the three months through December and raised its annual sales forecast to 15 million units from 14 million units.

That already exceeds lifetime sales of 13.56 million consoles for the Wii U which was on the market for about five years.

The company expects Switch console sales to further rise to 20 million units or more next year, starting April.

As yet another attempt to diversify, Nintendo said this month it would launch in April “Labo” a set of LEGO-style accessories for the Switch console that kids can build themselves on cardboard sheets.

Courtesy-Fud

Monster Hunter World Does Well In The U.K.

February 7, 2018 by  
Filed under Gaming

Capcom has just scored its most successful Monster Hunter launch in the UK so far.

The Japanese smash hit franchise has a dedicated by small audience in the West, and the publisher had hoped to grow the fanbase in Europe and the US with a PS4 and Xbox One game [recent entries have been confined to Nintendo 3DS).

And it appears to have got off to a good start. Monster Hunter World is the fastest-selling Monster Hunter game in the UK ever, tracking all the way back to Monster Hunter on PS2 back in 2005. It comes off the back of some impressive review scores from critics last week.

Of course this data does not include digital sales, so the game will have performed even stronger.

72% of physical sales came on PS4.

Monster Hunter World marks (finally) the arrival of a slew of new games in the charts. No.2 is Dragon Ball: Fighterz, also for PS4 and Xbox One. The game sold pretty much the same as 2015’s Dragon Ball Xenoverse, but debuts a whole place higher – the highest chart position ever for a Dragon Ball game,

77% of Dragon Ball Figtherz boxed sales came on PS4.

That means Call of Duty: WWII topples to No.3 (although sales did rise 3%), FIFA 18 dips to No.4 with a 17% sales increase, and GTA V slips to No.5 with a 7% decrease in sales.

There were a handful of other new games in the charts this week, with Sony VR game The Inpatient making it to No.10, and the 3DS boxed version of Pokémon Crystal (which features a code in a box) making No.12. That’s two games in the charts which are effectively a code in a box (the other being PlayerUnknown’s Battlegrounds).

Finally, after failing to chart in its first week, Street Fighter V: Arcade Edition saw an increase in sales week-on-week, and creeps into the charts at No.30.

Courtesy-GI.biz

Are States Going To Label Loot Boxes As Gambling

February 5, 2018 by  
Filed under Gaming

Just as the loot box controversy waters seemed to be calming, a Washington state senator has introduced a bill into the Legislature aimed at defining whether or not the mechanic in games constitutes gambling.

While the Washington Gambling Commission is aware of loot boxes, it has yet form an official position. Kevin Ranker, a Democratic state senator for Orcas Island, is now asking Washington officials and game developers to help reach a conclusion.

“What the bill says is, ‘Industry, state: sit down to figure out the best way to regulate this,'” Ranker told the News Tribune. “It is unacceptable to be targeting our children with predatory gambling masked in a game with dancing bunnies or something.”

The bill highlights three major concerns: firstly whether games and apps containing loot box mechanics are considered gambling under Washington law; secondly whether these mechanics belong in games and apps; thirdly whether minors should have such ready access to games and apps that do feature loot boxes; and finally the “lack of disclosure and transparency with respect to the odds of receiving each type of virtual item.”

A conclusion must be drawn upon no later than December 1, 2018. The Washington State Gambling Commission must provide written recommendations regarding how best to regulate the practice and, include options for the implementation of regulations restricting the sale of games containing loot box mechanics.

In the same way Apple recently changed its terms of service making loot box odds transparent in all games on the App Store, Ranker believes the odds for all such mechanics should be made public.

“If [parents] realised how predatory these game are then they wouldn’t want them under their Christmas tree, they wouldn’t want them going to their kids,” he said.

As the latest and arguably the most significant case of a government body or official casting a gaze towards loot boxes, it highlights the gulf of opinion between politicians and the games industry. While the Belgian Gambling Commission and Hawaiian state representatives are approaching this issue with a great deal of concern – and seemingly ready to introduce legislation – the Entertainment Software Rating Board and publishers like EA continue to fervently deny that loot boxes are gambling.

Courtesy-GI.biz

U.S. Video Games Industry Jumped To 36 Billion Last Year

January 30, 2018 by  
Filed under Gaming

US games revenue spiked to a record total of $36.4 billion in 2017, according to the Entertainment Software Association.

The report, jointly released by market research firm The NPD Group, shows an 18% growth in revenue generated by the games industry in 2017 over the year prior.

The figure combines hardware revenue, including peripherals, and software revenue from physical and digital sales, including in-game purchases and subscriptions.

Hardware revenue was up by 19% from $5.8 billion to $6.9 billion, while software revenue rose 18% from $24.6 billion to $29.1 billion.

US mobile spend data, which includes paid downloads and in-game purchases for mobile through the App Store and Google Play, was collected from App Annie.

“The spectacular growth of our industry in 2017 proves video game developers, artists, and storytellers are the brightest lights in the US economy, finding more ways to delight the world’s 2.6 billion gamers each year,” said Michael D. Gallagher, president and CEO of ESA.

“Congratulations to our industry’s brilliant creators on delivering another record year of remarkable entertainment that inspired the passion of gamers everywhere.”

Courtesy-GI.biz

Are Hackers On The Verge Of Jailbreaking Nintendo’s Switch

January 25, 2018 by  
Filed under Gaming

The dark satanic rumor mill has manufactured a hell on earth yarn claiming that hackers are on the verge of opening the Nintendo Switch thanks to Nvidia being rather too forthcoming about the GPU.

Throughout 2017 hackers had been recording partial vulnerabilities on the firmware but had no joy at completely knocking it over.

Now according to Ars Technica hackers have discovered a Webkit flaw that allows for basic “user level” access to some portions of the underlying system and a service-level initialization flaw that gives hackers slightly more control over the Switch OS. Last month at the 34th Chaos Communication Congress (34C3) in Leipzig Germany, hackers Plutoo, Derrek, and Naehrwert outlined an intricate method for gaining kernel-level access and nearly full control of the Switch hardware.”

They worked out a few basic exploits discussed above as a wedge to dig deep into how the Switch works at the most basic level. They also managed to sniff data coming through the Switch’s memory bus to figure out the timing for an important security check. They also solder an FPGA onto the Switch’s ARM chip and bit-bang their way to decoding the secret key that unlocks all of the Switch’s encrypted system binaries.

Oddly though the hackers efforts received an unexpected hand from chipmaker Nvidia. The “custom chip” inside the Switch is apparently so similar to an off-the-shelf Nvidia Tegra X1 that a $700 Jetson TX1 development kit let the hackers get significant insight into the Switch’s innards.

More than that, amid the thousands of pages of Nvidia’s public documentation for the X1 is a section on how to “bypass the SMMU” (the System Memory Management Unit), which gave the hackers a viable method to copy and write a modified kernel to the Switch’s system RAM. As Plutoo put it in the talk, “Nvidia backdoored themselves.”

Courtesy-Fud

Do Retro Games Resonate With Gamers

January 9, 2018 by  
Filed under Gaming

Almost half of all gamers in Europe like to go back and play games from their youth.

The latest data comes from ISFE and Ipsos Connect’s GameTrack consumer survey, and is based on a question posed by GamesIndustry.biz.

The results also show that 41% of consumers are eager to go back and experience games that they missed first time around.

The figures confirm the motivation behind the success of retro gaming products such as the NES and SNES Mini consoles, plus the popularity of remakes such as last year’s Crash Bandicoot.

However, the majority of gamers disagree that classic games are better than modern titles (only 22% agreed with the statement), while 45% are of the belief that realistic graphics are an important part of a great game.

The survey also specifically spoke to users of recent retro products, including the NES and SNES Mini, Crash Bandicoot, the Sega Forever project and more. It’s unsurprising that these consumers are more enthusiastic about going back and experiencing classic games (66% like to revisit games from their youth, while 67% like to play older games that they missed). 49% of these consumers also admit that nostalgia is one of the key reasons behind why it buys the games and consoles that they do.

41% of retro gamers are also of the belief that older games are better than current ones, with just 23% disagreeing with that statement (the rest neither agree or disagree). However, a number do find themselves disappointed with their trips down memory lane, with 38% stating that classic games are never as good as they remember.

The question (which combines online sampling with over-the-phone and face-to-face surveys) was posed to gamers from the UK, Spain, France and Germany. In terms of individual territories, French gamers are narrowly the more nostalgic consumer, although the results are relatively consistent across each market.

You can find out more information about the GameTrack survey here.

Courtesy-GI.biz

Hacker Exploit The Nintendo Switch

January 8, 2018 by  
Filed under Gaming

A homebrew kit could be the key to getting more games onto the Nintendo Switch, as hackers have figured out how to crack the console through its Nvidia chipset.

Nintendo consoles are notoriously locked-down in order to keep software and game development limited to Nintendo’s in-house or approved third-party developers; homebrew games have not been welcome even though Nintendo has been more supportive of indy titles.

But at the 34C3 hacking conference in Germany, hackers Derrek, Naehrwert and Plutoo demonstrated how they had managed to crack into the kernel of the Switch thanks to the use of a Nvidia Tegra X1 chip, which is well documented and has easily accessible debugging and diagnostic tools.

Through some hard work, as reported by wololo.net, the hackers got past the Switch’s security layers on the Tegra X1’s System Memory Management Unit (SMMU).

This essentially allowed the hackers to have higher privileges on the Switch than Nintendo allows, which would provide the means to run non-Nintendo approved software on the hybrid console.

While the hackers are keeping their kernel exploits under wraps, likely to prevent others from stealing it or for the effective backdoor to be slammed shut by Nvidia or Nintendo, they are planning to release a homebrew kit to allow for extra software to be run on the Switch.

This is good news for people bored of gaming gems like Mario Odyssey and The Legend of Zelda: Breath of the Wild. But it’s worth noting the exploit and subsequent homebrew will only work on Switch consoles running firmware version 3.0.0.

The use of ‘off-the-shelf’ components like the Tegra X1 is one way to fuel the rise of such hobby hacking, as there’s often a lot of information on how such hardware works; this is in direct contrast to some of the custom chipsets the PlayStation 4 and Xbox One X have, though we doubt that prevents curious hackers from poking them with a metaphorical stick.

Courtesy-TheInq

With Two Million Units Cuphead Appears To Be A Winner For Microsoft

December 28, 2017 by  
Filed under Gaming

Cuphead has sold over two million units since its launch at the tail end of September, developer Studio MDHR has announced.

The Moldenhauer brothers, the duo behind Cuphead, broke the news in a post on their website, saying that “much to our shock and amazement” Cuphead has gone double platinum.

“Even in our wildest dreams, we never thought our crazy little characters would be embraced by this many fans from around the world and we are continuously humbled by your support,” said the brothers.

“So to everyone who has drawn fan art, composed memes, performed songs, conquered challenge runs, streamed their playthrough, or just played Cuphead and had a good time, we love and appreciate all of you from the bottom of our hearts.”

According to SteamSpy, just over one million of the sales were on PC.

Cuphead was a somewhat divisive game upon its release, with the level of difficulty in particular stoking tensions between fans and critics.

Fortunately for the Moldenhauer brothers, who remortgaged their homes and quit their jobs in order to make Cuphead happen, that didn’t hamper the game’s success and allusions have already been made towards a sequel.

Courtesy-GI.biz

Are Video Games Contributing To Inflation In Great Britan

December 19, 2017 by  
Filed under Gaming

The price of video games has been highlighted as a key factor in the latest rise in UK inflation, a report claims.

Figures released by the Office for National Statistics show that the Consumer Prices Index has risen by 3.1% in the twelve months ending November 2017. This is an increase on the 3.0% recorded in October and the highest since March 2012.

While the largest contribution to this increase was identified as air fares, the ONS notes that: “Rising prices for a range of recreational and cultural goods and services, most notably computer games, also had an upward effect.”

The increase in prices for video games, toys and other hobbies between October and November was much sharper than in 2016, with the ONS adding: “This effect came from computer games whose prices are heavily dependent on the composition of bestseller charts, often resulting in large overall price changes from month to month.”

This is no doubt partially down to the sheer number of new releases over the past couple of months, traditionally the busiest time for the games industry’s release slate.

It’s also worth noting that while the biggest new releases have often been heavily discounted within a few weeks of launch in the past, there seems to have been less significant price cuts in 2017. Certainly, Black Friday appeared to have less of an impact when it comes to titles less than a month old dropping from £50 to around the £20 to £30 mark.

That said, the ONS’ declaration that computer game prices have risen to the point where they can be singled out as a contributing factor to UK inflation is somewhat frustrating.

By and large, video game prices have remained relatively static over the past decade, with new releases almost always around the £50 price point – despite the rising cost of development. This is something developers commented on when discussing the increasing need for monetisation mechanics like loot boxes, controversial though they may be.

Similarly, publishers have previously seen a backlash when trying to adjust prices to account for economic shifts. Most notably, Paradox Interactive attempted to raise the cost of its games earlier this year and was immediately met with consumer complaints – to the extent where the publisher was compelled to retain its previous price points and offer refunds to those affected.

Time will tell whether the impact on UK inflation further deters publishers and retailers from increasing the cost of games.

Courtesy-GI.bz

Is The Nintendo Switch A Runaway Success

December 18, 2017 by  
Filed under Gaming

How well you think you will do and how you end up doing dictates our reaction. That’s why Resident Evil 7 can sell 4 million copies and be described as ‘disappointing’, whereas a strategy game can shift 250,000 units and be called an unmitigated success.

In that regard, Nintendo Switch is an unquestionable triumph.

Nintendo had set itself a target of 2 million consoles sold by the end of its first month and ended up selling 2.74 million, having to fly in stock to try and meet demand (at great additional cost). The firm raised its full year projections to 10 million and then, three months later, raised projections again to 14 million for its financial year. By the end of March, Nintendo expects to have shipped 16.74 million Switch consoles worldwide.

So it has utterly smashed its own expectations but, just as significantly, it outshone everyone else’s estimations, too. IHS expected Switch to sell 4.4 million units by the end of 2017 (it did that by the end of July), SuperData was slightly more optimistic with a 5 million prediction (it passed that shortly afterwards). Both analysts felt they had been optimistic, as both numbers were higher than what the Wii U managed.

Daniel Ahmad at Niko Partners took to Twitter to suggest that it isn’t impossible for Switch to ship 10 million units in its first year. Even that optimistic analysis is likely to be beaten.

Nintendo’s strategy and pitch just worked. The initial weak software line-up and high priced accessories and games didn’t have the negative impact many had predicted, partially due to the quality of The Legend of Zelda: Breath of the Wild. The decision to spread out releases throughout the year turned out to be a brilliant one, with the console continually in the news with critically acclaimed software such as Mario Kart 8 Deluxe, Arms, Splatoon 2, Mario + Rabbids and Super Mario Odyssey.

There’s no denying it, Switch (along with PUBG) is this year’s success story.

Nintendo has stated that the Switch is a home console, and you can see why; the games feel like home console titles, and according to Nintendo’s own data, most gamers are playing the device on the TV at least occasionally. In fact, the data did show that 30 per cent of the audience primarily play in handheld mode, but it’s not clear exactly where they are playing (because if they are anything like me, they’re probably playing from the comfort of their sofa).

This means the market and media has been comparing Switch to Wii U, and seeing as that console was a big flop, the comparisons look favourable. Switch has already more than doubled Wii U’s first year and will likely have passed its lifetime sales number before the end of 2017.

However, the market expectation is that the Switch will be Nintendo’s only console hardware release for some time, effectively replacing Wii U and its 3DS sister machine (although the 3DS continues to have a retail presence at this moment). Comparisons to 3DS are less favourable. 3DS had a lower price point, yet it suffered a troubled first few months, and still shipped almost 17m units by the end of its first year. That’s pretty much identical to what Nintendo Switch is expected to do.

Indeed, over the course of the Wii U/3DS generation, Nintendo will have sold around 85 million consoles – and this is a generation widely seen as a disappointment for the company (as a comparison, Xbox 360 and PS3 both sold around 84 million consoles each).

Comparing Wii U and 3DS to Nintendo Switch is not completely fair, of course. The product is very different to both devices, there will have been a significant cross-over between the Wii U and 3DS audiences, and 3DS’ price point was (and is) significantly lower. In addition, Nintendo’s investment in smartphone games may effectively replace its legacy handheld business over time.

Nevertheless, if Nintendo wants to have a bigger generation this time around, then it needs to beat 85 million. The 100 million Switch sales figure that Nintendo has casually suggested in its financial calls now looks more like a genuine sales target. It’s been a decent first year, but we are a long way away from reaching those figures.

In addition, with a reliance on one console, Nintendo will be hoping for a higher spend per user on Switch than what it has achieved previously. This is going to require a stronger slate of software and digital add-ons that extends beyond its first few years; not just from Nintendo, but third-parties, too.

There are a few positive signs here. Nintendo’s first party slate has been good thus far, and independent developers are achieving strong results from the eShop. Yet there are also multiple warning signs.

IHS estimates that around 20 per cent of Switch software sales are digital, which is far below PS4 and Xbox One. With physical retail under threat, that creates a real challenge for Nintendo moving forward in terms of reaching its consumers. The Switch’s small internal storage space has not been friendly for gamers that like to download, either.

What’s more, the costs of the cartridges are high. This has prevented some developers from creating physical product (because it forces the price of the game upwards), and has also made things challenging for bigger third-party publishers. Indeed, we’ve seen numerous third-party ports to Switch that have been priced significantly higher than their counterparts on other machines. This is an issue when you consider that Switch has been attracting a sizeable core gamer audience – the sort of consumer that may already own a PS4, PC or Xbox One – which will impact sales of games such as Doom or Skyrim.

The lack of flexibility on pricing is one issue that will hinder Nintendo’s efforts in trying to pull in more third-party support.

There’s no doubt that 2017 has been a good year for Nintendo. Switch has sold in large quantities, and products like the SNES Mini are selling faster than they can be made. It’s a positive position for the company to be in.

However, 2018 will be just as crucial. It is the year Nintendo needs to keep the pressure on in terms of big Switch launches (the current release slate is lacking, although there’s almost certainly a new Nintendo Direct on the horizon), it’ll need to ramp up its digital business significantly, and it will want to find some consistency in the smartphone market.

Only then can we feel confident that the troubles of Nintendo’s recent past have been put firmly to bed.

Wii sales came to a crawl after five years, they were 90 million at that time. That makes an average of 18 million sales per year. Sony just announced 70 million sales after four years, which puts them at an average of 17.5 per year with a product priced between 300€ to 400€ over its lifetime.

The Switch certainly started strong enough to play in that league, but whether sales can be sustained for another four years is a tough question. It depends on whether you see Nintendo on the same level as Sony or not.

The continued success of the Switch is entirely down to Nintendo’s slate of titles, how regularly they arrive and how much penetration they can make into the family / casual market. Third parties aren’t going to support the Switch, the compromise from PS4/Xbox One to Switch is an expensive one, nobody wrote an engine ground up to run on all three. In addition to that the PS4/XBox One market is largely 18-35, while those people will quite possibly own a Switch as a second console any mainstream title they’ll buy for their main console at home. Publisher’s know that which is why they’re either on the sidelines, dipping their toes or being funded to port older titles.

Comparisons to the Wii are way off in my belief, that platform was a total anomaly in terms of time and place and demographic. The other factor that’s interesting is that local retail still has Switches in stock, albeit aided by Nintendo nearly shutting off supply through the middle of the year to stock pile that’s a big difference.. It’s clearly selling well but you couldn’t buy a Wii for TWO Christmas’s at retail without lining up, this is the Switches first Christmas and there isn’t anything like the frenzy associated with it. Now you can argue their Switch supply is definitely outstripping their Wii supply and they stage managed the Wii better but there is a very demonstrable difference here in the US at least.

If I were Nintendo I’d be looking at 25m and then 50m ; talk of 85m of 100m is fantasy land.

Courtesy-GI.biz

Can EA Learn From Rainbow Six Siege With 25 Million Players

December 12, 2017 by  
Filed under Gaming

Ubisoft has announced that two years after launch, Rainbow Six Siege has over 25 million registered players.

Now entering its third year, Ubisoft has lined-up more content to prolong the life of the game for another season, proving that games-as-a-service can be done properly in the AAA space.

When Siege launched at the tail end of 2015, critics took the game to task over its threadbare offerings, which featured a single PvP mode, no campaign, and only a handful of maps, not to mention a litany of bugs.

Since then, however, many of the criticisms have been dealt with and Siege has held a regular spot in the UK top 20.

What’s especially interesting about the success of Siege is how quiet it’s been. With each competitor that shambles onto the market, whether that be Star Wars Battlefront II or the latest addition to the monolithic Call of Duty franchise, Siege has rarely attracted the same level of controversy, despite employing the most common games-as-as-service monetization techniques.

With games-as-a-service reportedly having tripled the value of the industry, and EA looking to replace annual sports games with live services, has Ubisoft laid out the framework for how to do it right?

“Player investment has been core to the success of the game with longevity being always very important to us. As the game progressed, we continued to develop it with the community in mind,” said Alexandre Remy, Rainbow Six Siege brand director in a statement.

A community-centric approach is the obvious answer to increasing the longevity of any game. Over recent months, we’ve seen a great deal of discussion around finding the “sweet spot” for monetization techniques, and we’ve also seen the fallout of what happens when communities feel disrespected. Loot boxes and season pass DLC can work, Siege has demonstrated that, but striking that delicate balance is something publishers have long struggled with, and continue to do so.

That said, it’s important to consider the particular niche that Siege operates in. Yes, it’s a competitive online shooter, but unlike many of its contemporaries, it’s a much more strategic and team-focused affair. While there is definitely a crossover between Call of Duty players and Siege players, the latter has a niche appeal the former cannot possibly hope to replicate without disenfranchising its mainstream audience.

The likes of Activision and EA can certainly learn from Ubisoft’s approach to games-as-a-service. With no immediate Siege sequel on the horizon, a further cash investment into the game is a relatively easy thing for consumers to justify.

However, when players know that the life of a game will be artificially shortened by an annual release, rather than extended by DLC, it becomes difficult to rationalize spending anything above the $60 entry price, especially when the monetization techniques are perceived to be so aggressive.

Ubisoft is not the only publisher to have successfully implemented these techniques with minimal backlash. Blizzard, for example, kept its hands relatively clean with Overwatch and only recently got caught-up in the Belgian Gambling Commission’s investigation which mainly cast its attention towards Star Wars Battlefront II.

But with Siege, Ubisoft has employed the delicate and reasoned approach that’s been missing from the industry’s clumsy, heavy-handed adoption of the games-as-a-service model. As a result, the two-year-old game boasts a large, dedicated community that numbers in the millions and is willing to spend.

Courtesy-GI.biz

Is EA Screwing Up The Planned Move To Games As A Service

December 8, 2017 by  
Filed under Gaming

Every now and then, a major publisher goes through a bit of a rough patch in PR terms; the hits just seem to keep on coming, with company execs and representatives seemingly incapable of opening their mouths without shoving their feet right inside, and every decision being either poorly communicated or simply wrongheaded to begin with. At present it’s EA that can’t seem to put a foot right, from Battlefront 2’s microtransactions to lingering bad feeling over the closure of Visceral; every major company in the industry, though, has had its fair share of turns in the barrel.

These cycles come around for a couple of reasons. Part of it is just down to narrative; once something goes wrong for a company, they are scrutinised more closely for a while, and statements that might have slipped under the radar usually are blown up by the attention. Another part of it, though, is genuinely down to phases that companies go through; common enough periods in which the balance between the two audiences a major company must serve, its consumers and its investors, is not being managed and maintained expertly enough.

Most companies encounter this difficulty from time to time, because the demands and desires of shareholders are often damned near diametrically opposed to those of customers. The biggest problems arise, however, when a firm ends up having to take a Janus-faced approach, presenting a different picture in financial calls and investor conferences to the one it tries to convey in its customer-facing PR and marketing efforts.

That’s broadly speaking the situation EA has found itself in once again; forced to be conciliatory and diplomatic in talking to customers about everything from loot boxes to its commitment (or lack of same) to single-player experiences, while simultaneously being bullish with investors who want to see clear signs of progress in the shift towards a set of business paradigms core consumers volubly dislike.

CFO Blake Jorgensen’s comments at Credit Suisse’s conference earlier this week are archetypal of this genre of corporate communication; from a blunt denial that the company’s microtransaction strategy on Battlefront 2 is changing overall to a throwaway comment about Visceral’s closure being related to declining popularity (by which, being a CFO, he meant revenue) of linear game experiences, Jorgensen spoke to investors in a way that was quite markedly different from how the rest of the company has addressed its actual customers on these issues.

You can argue quite reasonably that this approach is dishonest in spirit if not in substance; even if the words of each statement are chosen carefully so the investor messages don’t technically contradict the consumer messages, the intent is so clearly tangential that consumers have every right to feel rather miffed. I think it’s worthwhile, however, to look beyond that to the motivation and strategy behind this – not just in terms of EA’s month of bad PR, but looking beyond that to the industry as a whole, because pretty much every major publisher is undertaking a similar strategic shift in a direction they know perfectly well is going to annoy many of their core customers, and they’re all going to have their own turn in the barrel as a consequence.

At the heart of this issue lies the fact that for many investors and executives, the business model that has sustained the games industry for decades has started to look frustratingly quaint and backwards. “Games as a Product”, whereby a game is made and sold, perhaps followed up by a handful of add-ons that are also made and sold (essentially smaller add-on products in their own right), is a model beloved of core consumers – but business people point out, not entirely unfairly, that it has many glaring flaws.

Some of those flaws are very real – the product model creates a high barrier to entry (you can’t attract new customers without convincing them through expensive marketing to spend $50 to $60 on trying out your game), hence limiting audience growth, and has not scaled effectively with the rising costs of AAA development. More controversially, they dislike the fact that the product model creates a relatively low cap on spending – after buying a game, there’s only so much money a consumer can spend on DLC packs (each of which has its own associated development costs) before they hit a hard limit on their purchases.

Hence the pressure to move to a “Games as a Service” model, which neatly – if not uncontroversially – solves each of these issues. The service model can be priced as low as zero to create a minimal barrier to entry, though for major titles with a big brand attached publishers still show a preference for having their cake and eating it, charging full AAA pricing for entry to an essentially freemium-style experience. An individual player’s spending may be theoretically limitless, as purchases of cosmetic or consumable items could run to many thousands of dollars in some cases – hence also allowing the game’s revenue to scale up to match the huge AAA development and marketing budgets that went into its creation.

You can “blame” mobile games for this if you wish, but in a sense they were merely the canary in the coalmine; the speed with which the mobile gaming market converged on the F2P model and the aggression with which it was pursued was a clear sign that the rest of the industry would eventually try to move in a similar direction. The reality is that mobile games shone a light on something a few industry types had been saying for years; that there was a massive, largely untapped audience for games out there, who would never climb over the barriers to entry to the traditional market but who could potentially be immensely valuable customers of games with lower barriers to entry.

The correct height for those barriers turned out to be “free games for devices you already own”, and yet this market did turn out to be enormously valuable; and now much of the industry is eyeing up the model that works on smartphones, looking at their own rising costs and shrinking slice of the pie, and wondering how to get from over here to over there.

The problem is that making that crossing – from being a successful creator or publisher of core games to being a successful company in a smartphone-style paradigm – is damned tricky to do when the business model you (and your investors!) want to have is anathema to many of the customers you actually have right now. Not all of them, by any means – plenty of core gamers are actually pretty relaxed about these models, for the most part – but enough of them to make a lot of noise and to potentially put a major dent in the bottom line of a company that genuinely manages to drive them away.

Hence, much of the approach we’ve seen in 2017 (and prior) has really been akin to the parable about putting a frog in cold water and gradually raising the heat; companies have slowly, softly been adding service-style features and approaches to their games, hoping that the slowly warming water won’t startle its occupants too much.

When things spill over as they have done for EA in the past month, it tends to indicate that someone got impatient; that investors were too demanding or executives pushed too hard, and the water started to heat up too rapidly. The course will be corrected, but the destination remains the same. Short of a really major pushback and some serious revenue damage across the board from these approaches – which bluntly seems unlikely to materialise – the move towards games as a service is inexorable, and 2018 will bring far, far more of the same. Whether you view that as the industry’s salvation or its ruin is really a matter of personal perspective, but it’s a new reality for AAA titles that we’re all going to have to make some kind of peace with.

Courtesy-GI.biz

Disney Very Protective Of IP and Brand

December 1, 2017 by  
Filed under Around The Net

A decade or two ago, a common topic of speculation in the games business was which of its giant publishers would be the one to topple Disney from its position as the world’s most important warehouse of intellectual property. EA, then the industry’s big beast, was comfortably the favorite, especially as it seemed set on weaning itself off its reliance on licensed sports titles in favor of building new IP. Activision was on the radar for some; Nintendo, though the industry’s most obviously ‘Disney-like’ company, seemed slow to produce and capitalize on new IP at the time.

History didn’t play out that way. EA became embroiled in a decade long turnaround and restructuring effort; Activision, though boosted massively by its merger with Blizzard and the success of games like Call of Duty and Destiny, has fumbled in its management of properties outside the high-spending core. Nintendo’s library of IP has grown and thrived, of course – but none of these companies can come close to matching what’s happened at Disney. Since the time when we speculated over when EA might overtake them, Disney has absorbed first Pixar, then Marvel, then Lucasfilm, placing itself beyond any reasonable challenge. It is the world’s most valuable IP holder, and will be for years to come.

Along the way, Disney has largely given up its ambitions of being a game developer or publisher – at least for now. It shuttered studios. It shut down internal projects in favor of licensing its properties to other developers and publishers. There is a slight twist of irony to the fact that, in the process, Disney has gone from being a second- or third-tier publisher to being arguably the most powerful company in the games business; a licensor absolutely aware of the value of its IP, and willing to protect that IP and its development regardless of the cost to any partner company.

This month we’ve seen two examples of Disney flexing that muscle. The company severed ties with Gazillion Entertainment, developer of licensed Diablo-esque RPG Marvel Heroes; what happened behind the scenes to precipitate this is unclear as yet, but there were signs that Disney was dissatisfied with the developer or with its relationship for some time, and the company ultimately pulled the plug on the game. Just a few weeks later, a much bigger firm, Electronic Arts, also got a taste of Disney’s willingness to exercise its power; the controversy over pay-to-win loot box mechanics in Star Wars Battlefront 2 took an abrupt turn when pressure from Disney forced EA to remove premium currency from the game before its launch, pending a re-engineering of the game’s monetization systems.

For Gazillion, the consequences are stark; the firm has shut down, with staff claiming on social media that they are not receiving severance pay or PTO. The chances of refunds for players who bought expensive items in the free-to-play game seem slim. EA, of course, won’t face anything remotely that drastic as a consequence of the changes to Battlefront, but that’s more to do with the scale of EA and its capacity to absorb losses than anything else.

The company’s financial projections for Star Wars Battlefront 2 were based on the assumption of a premium currency and loot box system that worked in a certain way and attracted a certain amount of revenue. It set its development budget based on those projections, spent money on marketing based on those projections; Disney has now unceremoniously dumped those projections in the bin.

Entirely independent of the conversation over whether EA’s monetization model was ill-conceived or not, there can be little doubt that the company’s bottom line for this project will be hit by the removal of premium currency, even temporarily. Without seeing the company’s internal figures it’s hard to say, but it’s not beyond the realms of possibility that, given high enough costs for licensing, development and marketing, this change could even leave EA struggling to stay in the black on what should have been one of its most profitable titles of the quarter.

For Disney, these decisions no doubt make absolute sense. To a large extent, Disney’s choices about games are based on the same rationale as Nintendo’s have been; an understanding that preservation of the value of the IP needs to come ahead of short-term profitability of any one product based on that IP. Just as Nintendo will severely delay games and leave its release schedule looking anaemic at times in order to ensure quality of its finished products and preserve the value of the IP, Disney will shut down, delay or change games that look like they pose a threat to that value – even at risk of damaging business relationships and thoroughly screwing over partners.

Disney has a dual objective with every licensing deal it signs for a major property, such as a game or a TV show. It wants to make money, of course, but it also wants to support the IP it’s licensing; keeping it relevant and in the public eye, preferably boosting its appeal, and whatever else, no matter what, absolutely not damaging or devaluing it.

This makes working with Disney – even for a company as big and powerful in its own right as EA – into something of a risky and challenging business. It’s natural that any developer or publisher would jump at the chance to work on Star Wars, a property tied in to the Marvel Cinematic Universe, or something related to a major Pixar movie, but these deals are not the license to print money they may look like at first glance.

Disney’s willingness to aggressively protect its IP and flex its muscle in these arrangements makes it vital to bear in mind that Disney and the companies that license its IP to make games have different objectives; of course both parties want to make money, but for Disney that comes with a powerful and often overruling caveat. It will sacrifice profit for long-term health, and a developer or publisher, with no financial interest in that long-term health, may be hung out to dry as decisions made in service of profitability are reversed.

In a sense, Disney’s position in the games industry has become similar to Apple’s in the hardware business. Apple makes some of the best-selling high-end products in the world, but for a manufacturing firm to join that supply chain is actually a double-edged sword, because the company is famous for micro-managing the processes of its suppliers and shaving their margins down to the knuckle. Working with Apple can mean enormous contracts to supply high-end parts for globally famous products; it can also mean paper-thin margins, constant supervision and tough contract terms from a company whose business objectives do not always align neatly with those of its suppliers.

Of course, the lure of working on Disney IP will not diminish. These are among the world’s most valuable brands, and for game creators they’re a treasure chest. But before diving into those waters, even the biggest of companies would do well to think about whether their intentions actually align with what Disney will permit. This is a company at the peak of its power; the rewards for working with it may be great, but no publisher should fool itself that Disney will ever put a business relationship ahead of its own central interest in the protection of its IP.

Courtesy-GI.biz

Did The Star Wars Battlefront 2 Fiasco Hurt The Franchise

November 27, 2017 by  
Filed under Gaming

The run-up to launch for Star Wars: Battlefront II has been, to put it bluntly, a fiasco. I would suggest that it has also provided a model for publishers to follow in the future.

When Electronic Arts announced at E3 that it was scrapping the Season Pass model for Battlefront II, the move was met warmly by players. After all, the Season Pass split the player base into people with the DLC and without, preventing them from enjoying new maps and game modes together. At the time, the understanding was that EA would introduce a system for unlocking content within the game, where progress could either be earned through gameplay or purchased through microtransactions. And for the most part, people were fine with that.

But as the company revealed exactly how the system would be implemented, details like how long it would take to unlock things without paying and what sort of advantages paying players could expect in multiplayer matches rankled players. EA’s repeated insistence that it was taking the feedback seriously and changing the system in response did little to appease the angry fans. The uproar seemed to gain more traction as the game’s release approached until, on the literal eve of launch day, EA announced that it was shutting off the game’s microtransactions, reinstating them at a later date when the progression system had been properly fine-tuned.

You could characterize it as a desperate move to salvage the launch of a massive publisher’s holiday lynchpin release, or you could point to it as a new standard, a potential solution to a problem that has dogged the AAA industry since Oblivion’s horse armor first debuted over a decade ago. Why don’t more AAA games launch with a microtransaction-free grace period?

The benefits to the players are fairly clear. By not having microtransactions turned on at launch, publishers know they have to provide an experience that is fun and engaging for non-payers, and ensures that in-game systems won’t be designed around an intolerable grind pushing people into spending more money. It dissuades developers from locking content that players would consider essential (like, say, playing as Luke Skywalker or Darth Vader in a Star Wars game) behind unreasonably high progression walls. In short, it “keeps them honest,” while the early adopters who pay full price (or close to it) for a new release get to enjoy a premium, limited-time experience without the constant pressure to spend more money.

At the same time, it provides publishers with plenty of upside as well. For one, they get to monitor how paying customers are behaving in their game under real-world conditions for a length of time to help with balancing the microtransaction system. And assuming they design the game to be fun without the microtransactions, they’ll almost certainly benefit from better word of mouth and review scores at launch.

And most crucial of all, publishers who adopt a grace period before instituting microtransactions will be mitigating some of the harmful effects of the AAA marketing hype cycle. It’s no coincidence that the backlash to Battlefront II’s microtransactions has grown as the game has neared launch, even though EA has apologized and downgraded the aggressiveness of its approach multiple times in response.

The company’s successful marketing campaign was designed to generate interest and excitement and passion in such a way that would crescendo at launch. And it did. But as we’ve seen too many times in recent years, “passion” in the player base is not an exclusively positive thing. Passion is a multiplier of other emotions. It makes those who love a game get tattoos, and those who hate it lob death threats online. Waiting until after the launch window to turn microtransactions on allows publishers to benefit from the passion they’ve spent so much time and money building, while putting off one obvious source of potential backlash until people have cooled down a bit and the monetization scheme of last holiday’s big shooter release just doesn’t seem like something worth grabbing a pitchfork over. This is especially true given how many members of the pitchfork mob will have purchased the game, played it, and traded it in or redirected their enthusiasm to the next big release in the meantime.

And what would it cost the publishers to do this? A couple months’ worth of microtransaction revenues in games that are designed and intended to be live services. For a successful live service game, the first months of revenue are well worth sacrificing if it might buy you the traction you need for the long run. (Grand Theft Auto Online is four years old and just had its most lucrative quarter ever.)

Microtransactions are a powerful force for the games industry these days, opening up a slew of alternative business models and providing potential answers to many of the problems that have long dogged publishers. EA may have unwittingly showed us a way to finally bring balance to the Force.

Courtesy-GI.biz

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