Number crunchers working for Jon Peddie Research (JPR), the industry’s research and consulting firm for graphics and multimedia have noted that during the second quarter AMD gained market share in the add-in board (AIB) market.
But while AMD fans might be cheering, and while Nvidia fanboys work out ways they can beat them up after school, JPR says that over all the AIB market decreased.
For those who came in late, AIBs using discrete GPUs are found in desktop PCs, workstations, servers, and other devices such as scientific instruments. They are sold directly to customers as aftermarket products, or are factory installed by OEMs.
AIBs are the higher end of the graphics industry with their discrete chips and private, often large, high-speed memory, as compared to the integrated GPUs in CPUs that share slower system memory.
The PC add-in board (AIB) market now has just three chip (GPU) suppliers which also build and sell AIBs. The primary suppliers of GPUs are AMD and Nvidia. There are 48 AIB suppliers, the AIBOEM customers of the GPU suppliers, which they call “partners”.
JPR has been tracking AIB shipments quarterly since 1987-the volume of those boards peaked in 1999, reaching 114 million units, in 2015, 44 million shipped.
The news for the quarter was encouraging and seasonally understandable, quarter-to-quarter, the AIB market decreased -20.8 percent (compared to the desktop PC market, which increased 2.5%), the report said.
AIB shipments during the quarter decreased from the last quarter -20.8 percent, which is below the ten year average of -9.7 percent.On a year-to-year basis, it found that total AIB shipments during the quarter rose 0.8 percent, which is greater than desktop PCs, which fell -0.2 percent, JPR added.
In spite of the overall PC churn, which is mostly because of tablets and embedded graphics, the PC gaming momentum continues to build and is the bright spot in the AIB market.
The overall GPU shipments (integrated and discrete) is greater than desktop PC shipments due double-attach-the adding of a second (or third) AIB to a system with integrated processor graphics.
Another reason is the increase in dual AIBs in performance desktop machines using either AMD’s Crossfire or Nvidia’s SLI technology Improved attach rate. The attach rate of AIBs to desktop PCs has declined from a high of 63 percent in Q1 2008 to 34 percent this quarter, a decrease of -22.7 percent from last quarter which was negative. Compared to this quarter last year it increased a single miserable percentage point.
This research said that the global GPU market demand in Q2’16 decreased from last quarter, and decreased from last year, to 83.32 million units.
“In recent years, as the gaming ecosystem is shaping up, software and hardware developers, information service providers, and even governments have been attempting to unearth market opportunities coming from this new arena. However, global PC shipment volume is forecast to fall further,” the report said.
Last week, Remedy tapped Tero Virtala to be its new CEO and said he would guide the Quantum Break studio’s move to developing multiple projects simultaneously. Virtala recently spoke with GamesIndustry.biz to flesh that idea out a little more and provide other details about his vision for the company’s future.
To start with, Virtala acknowledged that Remedy had intended to make a move into multiproject development for a while.
“This idea has lived for such a long time, but naturally, Quantum Break being such an ambitious and big project, it took most of the resources, people, the energy, most of the money the studio has been using for a long time,” Virtala said. “Now Quantum Break has been made and there is a new phase clearly starting for the company. As this strategic path has been discussed, it’s a commonly shared view that going for multiple projects is the way the people at the company want to go. And it also makes a lot of sense.”
Even though Remedy managed to put out the digital release Alan Wake’s American Nightmare and free-to-play mobile game Agents of Storm while Quantum Break was in the works, it’s clear much of the studio’s focus was on its Xbox One title. As Virtala explained, Quantum Break was an immense task for the studio: a new IP on a new platform with new gameplay mechanics and new tech, all paired with a new transmedia approach that would see a four-episode live-action serial created alongside the game.
“You take so many new things at one time and it made sense to focus on just one big project at a time,” Virtala said. “Now when we fast-forward to this moment, there’s so much more experience and skills, competencies that we can use with what we’ve learned. Also, the technology and tools we’ve developed are much further along and much more reusable than they used to be. So that built a base we can utilize, and then you take what else is needed for two projects.”
The studio’s old method of focusing on one big game for as long as five years at a time just isn’t sustainable in the long run, particularly when Remedy prides itself on cutting edge technology and envelope-pushing creativity.
“The industry’s developing so fast,” Virtala said. “On the one hand, there are so many great games out there, so when you’re bringing your game out, it has to stand out. It has to be unique. It has to be [high] quality. And if our studio is focusing on one project only, we’re putting all our people there. It usually means the length of the project grows, and if you take four or five years to develop a game, it’s a very risky game. You start the project with certain assumptions of the market, and in four or five years’ time in this type of creative, technology-driven industry, it changes so fast.”
That approach was also limiting the partners Remedy could work with. Virtala had nothing but great things to say about long-time partner Microsoft, but a relationship like that with a single-project studio would necessarily keep the company from collaborating with other publishers. And of course, Remedy fans would probably like more than one new game every five years or so.
Virtala wants Remedy to make more games, and he wants a shorter development cycle for those games. At the same time, he stressed, “We stay loyal to the strengths we have in this industry,” which he interprets as excellent games with a distinctive quality, visually impressive and immersive worlds populated with compelling characters.
As for how Remedy can deliver content to the same quality on a much shorter time scale, Virtala didn’t give many specifics. The company has a headcount of 125 people with another 15 open positions, but Virtala declined to say if there were plans to dramatically expand the staff size. As for doing more with the same amount of people, he did note that the technology and tools that have been developed for Quantum Break over the past five years can be used in future games, so “we are definitely able to provide AAA quality in a shorter time than we have before.”
He was similarly careful when talking about whether the shorter development cycle would be achieved by changing the types of games Remedy makes. The company is exploring “new game mechanics” that
Nvidia has updated its Grid software platform with deeper performance profiling and analytics tools for planning, deployment, and support of virtual GPU users.
According to the company the improved management tools address both host (server) managment and virtual client monitoring. Nvidia says that with the new Grid software, admins will be able to get information about the number of virtual graphics instances in use and the number they can potentially create.
They can also see usage information for the stream processors on board each card, the percentage of the card’s frame buffer that’s in use, and the load on each card’s dedicated video encode and decode hardware.
Each guest vGPU instance will tell admins information on encoder and decoder usage, frame buffer occupancy, and the vGPU use. Nvidia adds that it all takes the guess work out of vGPU provisioning and the data it’s exposing about vGPU usage will let system administrators tailor their virtual user profiles better.
All this means that it might stop the admins giving too much processing power to accounts when it is needed for the graphics team. Nvidia thinks those operational improvements will also help lower costs. The August 2016 Grid software update should be available immediately.
Google is believed to be spending a small fortune getting content ready for the platform, particularly video games and apps, licensing sports leagues and shooting 360-degree videos.
Daydream is being hardwired into Android 7.0 which launched this week. Google says that Samsung, HTC, ZTE, Huawei, Xiaomi, Alcatel, Asus and LG had agreed to make “Daydream ready” smartphones.
Google wants the software to be the Android of VR. It will provide a VR platform and other outfits will create the hardware and its Android chums will configure their smartphones to run the beast. But while the product is nearly good to go, so far no one has put their hand up and said they will be making headsets specifically for the platform.
The VR market is getting crowded from Facebook, Sony, Samsung Electronics and HTC. However there are a limited number of apps and even fewer games. Sony’s Morpheus headset is tethered to its PlayStation video-game console, but Google is focused on lower quality mobile-based VR, whereby consumers snap their phones into a visor or headset. With the headset on, Daydream presents users with an array of apps, from YouTube to HBO Now.
While we were hoping to see it bundled with some recently launched Polaris-based graphics cards, it appears that AMD wants to give some love to those that decide to buy AMD’s FX-series CPUs.
To be available in most popular retail/e-tail stores, the bundle will include a copy of the new Deus Ex: Mankind Divided game with a purchase of a 6- or 8-core AMD FX CPU. According to details provided by AMD, the promotion will run from August 23rd to November 14th or until the supply lasts.
Currently, some of the hot AMD FX-series CPUs like the 6-core FX-6300 or 8-core FX-8320 are selling for as low as US $100 and US $130, so bundling a US $60 game sounds like a really good deal.
Hopefully, AMD will decide to bundle the game with some of its Polaris-based graphics cards after Deus Ex: Mankind Divided gets its DirectX 12 patch later in early September.
Electronic Arts has one of the deepest back catalogs in the industry, but to date it has steered clear of mining it for new revenue through remastered and HD editions. That’s likely to change soon, according to a Game Informer interview with EA Studios executive VP Patrick Soderlund from last week at Gamescom. When asked if anything in EA’s stance on remasters had evolved in the last year, Soderlund tipped the publisher’s hand.
“What’s changed is that there is proof in the market that people want it, maybe more than there was when we spoke [previously],” Soderlund said. “There were some that did it before, but I think there is even more clear evidence that this is something that people really want. The honest answer is that we are absolutely actively looking at it. I can’t announce anything today, but you can expect us most likely to follow our fellow partners in Activision and other companies that have done this successfully.”
Soderlund added that if EA were to remaster games, it would “have to be careful in choosing the right brands for the right reasons at the right time.” Part of that would be ensuring the company handles the remasters properly instead of just selling quick and dirty ports.
That attitude is a pretty clear pivot from where the company’s thinking was just a year ago. Last October, Peter Moore said EA wasn’t interested in remakes and remasters because “it feels like pushing stuff out because you’ve run out of ideas,” adding, “I don’t know where we find the time to do remakes. We’re a company that just likes to push forward.”
While EA hasn’t been especially aggressive with remastered games, it has produced HD versions of older games like American McGee’s Alice and Crysis, primarily as preorder incentives for sequels in those series.
The Z2 phone, equipped with a 4-inch screen and India-specific features such as a safety mode for motorcyclists, will be the cheapest Tizen phone Samsung has launched to date at 4,590 rupees ($68.44).
The phone, the first Tizen-powered device that will run on 4G networks, will start selling in India on Aug. 29.
The world’s top maker of smartphones, televisions and memory chips is trying to reduce its dependence on Google, whose Android operating system powers Samsung’s Galaxy smartphones.
The firm has been using Tizen on products ranging from TVs, home appliances and wearable products to enable the devices to communicate with each other and phones via the internet.
Samsung has so far kept Tizen for a small number of markets such as India and Bangladesh, where many potential customers are still first-time buyers looking for a cheap device and do not necessarily need a big library of apps.
The firm declined to comment on sales figures but analysts have said the Z2’s predecessors have found some success.
AMD has revealed a heap of details about its 32-core Zen based product – codenamed Naples – and we have a few things to add.
According to our well-informed sources the engineering samples were expected in Q4 2016 which starts in October. Remember, we were the first to mention Naples in detail in June 2016. Sometimes AMD calls these products Alpha versions but it looks like AMD was able to demonstrate the CPU a bit earlier as it did a public demonstration at the event in San Francisco last week. This could have been a pre-Alpha version that was stable enough to run.
The beta version will follow Q1 2017 and this CPU should be the pre-final version before the company goes to initial production. There is another step in between called the final/general sample that is expected in Q2 2017 and followed by initial production.
When a tech company says a product will launch in the second quarter, expect it to happen towards the end. Our best guess is a launch time around Computex 2017. It will take place in the last days of May or the first days of June 2017.
The fact that AMD now supports DDR4 memory, USB 3.1 Gen 2 10Gbps, NVME makes its server portfolio a bit more competitive with Intel’s offering.
AMD’s Michael Clark is expected to give an audience at the Hot chips conference a bit more details about “
A New, High Performance x86 Core Design from AMD” but we doubt that he will talk about the possible launch date in as many details as we did.
According to a well-informed sources the engineering samples were expected in Q4 2016 which starts in October. Sometimes AMD calls these products an Alpha version but it looks like AMD was able to demonstrate the CPU a bit earlier as it did a public demonstration at the event in San Francisco last week. This might be a pre-alpha version that was stable enough to show.
The beta version is following already in Q1 2017 and this CPU should be the pre-final version before the company goes to initial production. There is another step in between called final / general sample that is expected in Q2 2017 and it is followed by initial production.
When a company says a second quarter for a launch, you should expect it to happen towards the end of it. Our best guess is a launch time around Computex 2017. It will take place in last days of May or first days of June 2017.
The fact that AMD now supports DDR4 memory, USB 3.1 Gen 2 10Gbps, NVME makes its server portfolio a bit more competitive with Intel’s offering.
AMD’s Michael Clark is expected to give an audience at the Hot chips conference a bit more details about “A New, High Performance x86 Core Design from AMD” but we doubt that he will talk about the launch date in as many details as we just have.
Fresh after scoring a reasonably sized contract for the iPhone, Intel is getting more excited about its mobile business and is talking about its 5G plans.
5G is a good thing to talk about as there is no standard yet and it could be years away before carriers think of moving to away from 4G. However, it does inspire confidence that companies, like Intel are busy researching it.
However the Intel Developer Forum (IDF),in San Francisco heard how Intel is not that interested in trying to create 5G modems for mobiles and will instead focus on the back-end infrastructure supporting the technology.
Intel said that while 5G will power the mobile internet, Intel believes there will be a lot of room for its processors and data centers to look after the millions of sensors, cars and internet of things devices which will all be part of it.
Intel said that 2G networks were about phones and voice, and it was rolling out 4G there were requirements that hadn’t been planned for when it was originally designed.
While 5G is expected to start appearing by 2020, it should support IoT devices, as well as broadcast-like services and lifeline communications. This means that the backbone of datacenters will need to be in place to make it go.
While Intel has been talking about this backbone, it does seem odd that it is not mentioned much about the modem front end of the technology. Our guess is that it is something that Intel cannot ignore and does not appear to be doing so, with its various Internet of Things gadgets.
Samsung Electronics Co Ltd is gearing up to launch a program to sell refurbished used versions of its premium smartphones as early as next year, a person with direct knowledge of the matter told Reuters.
The South Korean technology firm is looking for ways to sustain earnings momentum after reviving its mobile profits by restructuring its product line-up. As growth in the global smartphone market hits a plateau, Samsung wants to maximize its cost efficiency and keep operating margins above 10 percent.
The world’s top smartphone maker will refurbish high-end phones returned to the company by users who signed up for one-year upgrade programs in markets such as South Korea and the United States.
Samsung would then re-sell these phones at a lower price, the person said, declining to be identified as the plan was not yet public.
The person declined to say how big a discount the refurbished phones would be sold at, which markets the phones would be sold in or how many refurbished devices Samsung could sell.
A Samsung spokeswoman said the company does not comment on speculation.
It was not clear to what extent the phones would be altered, but refurbished phones typically are fitted with parts such as a new casing or battery.
Rival Apple Inc’s iPhone has a re-sale value of around 69 percent of its original price after about one year from launch, while Samsung’s flagship Galaxy sells for 51 percent of the original price in the U.S. market, according to BNP Paribas.
Refurbished phones could help vendors such as Samsung boost their presence in emerging markets such as India, where high-end devices costing $800 or so are beyond most buyers.
Apple sells refurbished iPhones in a number of markets including the United States, but does not disclose sales figures. It is trying to sell such iPhones in India, where the average smartphone sells for less than $90.
Selling used phones could help Samsung fend off lower-cost Chinese rivals that have been eating into its market share, and free up some capital to invest elsewhere or boost marketing expenditure.
Deloitte says the used smartphone market will be worth more than $17 billion this year, with 120 million devices sold or traded in to manufacturers or carriers – around 8 percent of total smartphone sales. Some market experts expect the used market to grow fast as there are fewer technology breakthroughs.
“Some consumers may prefer to buy refurbished, used premium models in lieu of new budget brands, possibly cannibalizing sales of new devices from those budget manufacturers,” Deloitte said in a report.
Last Friday, Toshiba Corporation said that an extensive company restructuring effort over the past year has allowed it to produce a profit of $197 million (¥20.1 billion) for the first time in six consecutive quarters.
This is a noticeable turnaround from a $64.2 million (¥6.5 billion) loss a year earlier, yet still comes in below a $330.8 million profit based on five analyst estimates.
Now, the present Toshiba has emerged as a company focused on semiconductors, nuclear energy and social infrastructure. A decade ago, the company acquired Westinghouse Electric Company in October 2006 for $5.4 billion, one of the world’s largest producers of nuclear reactors, obtaining a 77 percent stake. It then sold 10 percent a year later, leaving it with a 67 percent stake. Toshiba recently claimed in 2015 that the business is now more profitable that at acquisition in 2006.
Accounting scandal leads to losses, followed by recovery
The company’s restructuring efforts included cutting thousands of jobs and letting go of its consumer electronics business. In April 2015, the company began cooperating in a U.S. federal investigation uncovering seven years of accounting manipulation. An official report placed blame on two former CEOs for pushing employees to postpone losses or push forward sales on accounting. According to people familiar with the investigation, the company hid $1.3 billion in losses at its nuclear power operations. The two CEOs, also known to be rivals who disliked each other, resigned their posts in July 2015.
The outcome resulted in slashing 14,000 jobs, shrinking its semiconductor business and selling its home appliances and medical devices groups.
The past fiscal year beginning April 2015 and ending March 2016 was not without significant setbacks in debt-financing abilities and credit-rating concerns. In April 2016, the company booked an impairment charge of $2.3 billion for the financial year on its Westinghouse nuclear unit as a goodwill attempt to address a slow decline in the nuclear business since the 2011 Fukushima meltdown.
A containment building at the site of Westinghouse’s first AP1000 power reactor in China (via Pittsburgh Post-Gazette)
In May 2016, the company reported its worst-ever consolidated net loss of $4.4 billion for FY2015 after restructuring costs, writing down asset values, and reducing deferred tax assets. The company’s official statement said restructuring costs represented $1.09 billion (¥110.5 billion), while asset write-downs represented another $3.21 billion (¥325.1 billion) drag. Total jobs transitioned from 203,100 employees down to 185,900 employees over the course of 2015.
Recovering balance sheet has come under threat
Sources close to Toshiba now claim that its recovering balance sheet has come under threat from Chicago Bridge and Iron Company, which sold its nuclear construction business to Toshiba subsidiary Westinghouse Electric Company for $229 million in October 2015. The purchase was made so that Toshiba could speed up construction on four reactors in the United States – two in Georgia and two in South Carolina.
Chicago Bridge and Iron said last month it was suing Westinghouse because the Toshiba subsidiary demanded $2 billion in additional payments related to the October sale, justifying its claim with some provisions of the purchase agreement. If CB&I’s claim to the lawsuit is upheld, Toshiba could be obligated to pay $2 billion liabilities and may need to either issue new shares to investors or consider listing its semiconductor business on the financial market.
Tech giant Samsung Electronics won a contract to make Nvidia GPUs according to South Korea’s Chosun Biz newspaper.
The paper said Samsung would start making the next-generation Pascal GPUs using its 14-nanometre production technology before year-end. It did not specify the value of the order or say how many chips will be made. Samsung and Nvidia are not saying anything.
According to the newspaper Samsung Electronics is currently testing the Nvidia Pascal (Pascal) architecture on new production lines at the S1 campus Giheung, Gyeonggi Province. It is expected that the first GPU from Nvidia will be supplied by Samsung later this year.
Nvidia normally ships this sort of thing through Taiwan’s TSMC but has changed its mind because of recent unstable supply issues and the fact it wants to diversify its production line, the paper claimed.
Nvidia released its financial results yesterday for the second quarter of its fiscal year 2017, which ended July 31, 2016.
The company’s numbers came in slightly better than expected during a quarter fueled by consumer interest in the 4K-capable 16nm Pascal GPU product family, along with increasing enterprise investments in Nvidia’s GPU-accelerated deep learning, computer vision and AI platforms and products.
The company turned in revenues of $1.43 billion with 58.1 percent adjusted gross margin. This is up nine percent from $1.30 billion in Q1 (February 1 to May 1, 2016) and up 24 percent from $1.103 billion a year earlier in Q2 FY2016 (April 27 to July 26, 2015).
Looking ahead at a forecast for Q3 FY2017 – ending late October – the company is issuing guidance between $1.65 and $1.71 billion, or between 57.5 and 58.5 percent adjusted gross margin.
During the company’s Q2 FY2016 ending July 31, 2016, the company unveiled its flagship Geforce GTX 1080 graphics card along with the Geforce GTX 1070 and Geforce GTX 1060. Just two days later after the quarter ended, it released an even higher-performing Pascal enthusiast model – the Geforce GTX Titan X – although revenue numbers from this card will be presented in Q3 FY2017 results in a few months from now.
“Strong demand for our new Pascal-generation GPUs and surging interest in deep learning drove record results,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA. “Our strategy to focus on creating the future where graphics, computer vision and artificial intelligence converge is fueling growth across our specialized platforms — Gaming, Pro Visualization, Datacenter and Automotive.”
As we mentioned a few days ago, the driverless automotive market is expected to grow to $42 billion in nine years and so far the few companies that have signed on with Nvidia’s Drive PX hardware include BMW, Ford, Daimler and Audi. Nvidia is currently working closely with Audi as its primary brand but will soon move to Volkswagen, Seat, Skoda, Lamborghini and Bentley.
“We are more excited than ever about the impact of deep learning and AI, which will touch every industry and market. We have made significant investments over the past five years to evolve our entire GPU computing stack for deep learning. Now, we are well positioned to partner with researchers and developers all over the world to democratize this powerful technology and invent its future,” Jen-Hsun said.
During the quarter ending July 31st, Nvidia also launched the Quadro P6000 workstation GPU with 12 teraflops of compute power, introduced the Tesla P100 accelerator for PCI-E based servers, released its first self-created game called VR Funhouse, and introduced an ultra-high resolution screenshot capture utility called Ansel, although it is limited to a few select games for now.
TSMC is gearing up to build MediaTek’s new Helio X30 SoC using the 10nm process and it looks like everything will be set for volume production in the first quarter of 2017.
It looks like the chip will be out before TSMC uses the same process to make Apple’s new chips later in 2017. Of course when Apple releases its chip it will try to convince the world that it is the first and it invented the whole process.
TSMC will also offer its backend integrated fan-out (InFO) wafer-level packaging (WLP) technology for Apple’s 10nm A11 chips.. However this timetable it means that hte X30 will really be the ground breaking technology which tests TSMC’s 10nm and MediaTek is taking the biggest risk.
Digitimes said that Qualcomm worked with Samsung Electronics to produce its next-generation Snapdragon 830 chips using its 10nm technology and that TSMC lost the orders for Qualcomm’s Snapdragon 820 series to Samsung.
TSMC told its July investors meeting that its 10nm process will start generating revenues in the first quarter of 2017. The node has received product tape-outs from three clients, and more tape-outs are expected to come later in 2016, the foundry said.
Pokemon Go is the only thing anyone wants to talk about. Even people who don’t want to talk about Pokemon Go end up talking about it all the time, if only to tell everyone how sick they are of people talking about Pokemon Go. Social networks are full of Pokemon Go, going out for a drink is now impossible without occasional interruptions as a buzzing phone signals the possible arrival of a rare beast, and comparisons of recent prized acquisitions have replaced complaints about the weather as smalltalk.
It’s not just your social group that’s talking about Pokemon Go, though. Damned near every conversation I’ve had within the industry in recent days has turned to Pokemon Go at some point. The games industry has produced some remarkable social phenomena in recent decades – Grand Theft Auto 3, Halo and Angry Birds all spring to mind as games that leapt across the boundaries to ignite the mainstream imagination, at least for a time – but none has been as fast, as widespread or as visible as Pokemon Go. It’s inevitable, then, that business people across the industry find themselves wondering how to help themselves to a slice of this pie.
Behind the headlines about the game itself, there’s another story building steam. Some investors and venture capitalists are hunting for the “next Pokemon Go”, or a “Pokemon Go killer”; developers are frantically preparing pitches and demos to that effect; IP holders are looking at their own franchises and trying to figure out which ones they could “do a Pokemon Go” with. I know of several investor meetings in the past week alone in which developers of quite different games were needled to push their titles towards mobile AR in an effort to replicate the success of Pokemon Go.
This is an ill-advised direction, to say the very least. From a creative standpoint, it’s hard not to roll one’s eyes, of course; this bandwagon-hopping occurs after every major hit game earns its success. For a couple of years after any truly huge game captures the industry’s imagination, it seems that the only words investors want to hear are “it’s like that hit game you think you understand, but with something extra”. Sometimes that’s not a bad thing; “it’s like Grand Theft Auto but with superpowers” was probably the pitch line for the excellent Crackdown, while “it’s like Grand Theft Auto but we drink more heavily in our design meetings” was probably not the pitch line for Saints Row, but should have been. This approach does also yield more than its fair share of anaemic clones of great games, but it has its merits, not least in being a clear way of communicating an idea to people who may not be experts in game design.
In the instance of Pokemon Go, however, there’s a really fundamental problem with the bandwagon jumping. Even as third parties fall over themselves to figure out how to hop aboard the Pokemon Go bandwagon, the fact is that we don’t even know if this bandwagon is rolling yet. Pokemon Go is a free-to-play mobile game, which means that its phenomenal launch is only the first step. In F2P, a great launch is not a sign of success, it’s a sign of potential; the hard work, and the real measure of a game’s success, is what comes next.
To put this in blunt terms, Pokemon Go has just managed to attract the largest audience of any mobile game within weeks of its launch – and it could just as readily find itself losing that audience almost in its entirety within a few weeks. If that happens, those enormous download numbers and the social phenomenon that has built up around the game will be almost meaningless. Mobile games make their money over long periods of time and rely upon engaging players for months; a mobile game that’s downloaded by millions, but is only being played by thousands within a few weeks, is not a success, it’s a catastrophic case study in squandered potential.
I’m not necessarily saying that this will happen to Pokemon Go – though there are warning signs there already, which I’ll get to in a moment – I’m saying, rather, that it could happen to Pokemon Go, and that it’s therefore vastly premature for anyone to be labelling this as a model for success or chasing after it with their own mobile AR titles. There are shades of what happened with VR, where Facebook’s acquisition of Oculus drove ludicrous amounts of capital into some very questionable VR startups and projects, inflating a valuation bubble which many investors are now feeling deeply uncomfortable about. Here, the initial buzz for Pokemon Go has sent capital seeking out similar projects long before we actually get any proper feedback on whether the model is sustainable or worthwhile.
There’s actually only one way in which Pokemon Go has been an unqualified success thus far, and that’s in its incredibly powerful validation of the Pokemon brand. Nintendo walks away from this whole affair a winner, no matter what; the extraordinary launch of the game is, as I’ve argued previously, a testament to the huge appeal of Pokemon, the golden age of nostalgia it’s going through, and the clever recognition of its perfect fit to the outdoor, AR-based gameplay of Niantic’s games. The thing is that thus far, we simply can’t tell to what extent Pokemon Go is riding the wave of that brand, and to what extent it’s actually bedding in as a sustainable game with a huge playing (and paying) audience.
I have my own suspicions that Pokemon Go is actually quite troubled on the latter count. Looked at from the standpoint of mobile and F2P game design, the game is severely lacking in the crucial area of player retention. At first, it does a great job; it trickle-feeds new Pokemon to you and filling out the first 100 or so entries in the Pokedex is a fun challenge that keeps players coming back each day. It’s then that things become more problematic. As players reach higher levels, the game applies significantly more friction (not necessarily in fun ways, with Niantic making some very dubious guesses as to the tolerance for frustration of their players) even as the actual reasons for playing start to fade away.
At high levels, finding or evolving new creatures is incredibly rare, and the only other thing for players to do is battling at Pokemon Gyms – which some players find entertaining, but which is a completely disconnected experience from the thing people have been enjoying up to that point, namely exploring and collecting new Pokemon. The idea that players who love exploring and collecting will be motivated by combat at Gyms seems naive, and misunderstands the different motivations different people have for playing games. My suspicion is that on the contrary, lots of players, perhaps a significant majority, will complete as much of their Pokedex as they reasonably can before churning out of the game – a high churn rate that will be exacerbated by the dying down of the “halo” of social media around the game, which inexplicably lacks any social features of its own.
I could be wrong – I’d be very happy to be wrong, in fact – but my sense of where Pokemon Go is headed is that, absent some dramatic updates and changes from Niantic in the coming weeks, the game is destined to be a fad. It will achieve its objective for Nintendo in some regards, establishing the value of the firm’s IP on mobile and probably igniting interest in this year’s upcoming 3DS Pokemon titles, but in the broad scheme of things it’s likely to end up being a fun summer fad that never converts into being a sustainable, long-term business.
In that case, those companies and investors chasing the Pokemon Go dollar with ideas for Pokemon Go killers or Pokemon Go-alikes are running down a blind alley. Crucially, they’re misunderstanding the game’s appeal and value; at the moment, Pokemon Go’s appeal is firmly rooted in its IP, and no other IP is ever going to replicate that in the same way. Digimon might have some appeal within a certain age group; Yokai Watch is largely unknown in the west and its players in Japan skew too young for an outdoor AR game to make much sense; I can think of no other franchise that would fit the “Pokemon Go model” well enough to make for an appealing game. If Pokemon Go turns out to be sustainable, then there’s potential for other companies to start thinking about what to do with this new audience of people who have fallen for mobile AR experiences; but until that happens, every VC dollar or man-hour of design time spent on a “Pokemon Go killer” is most likely being wasted entirely.