Wedbush Securities analyst Michael Pachter spoke at the Game Monetization USA Summit in San Francisco, and once again made some bold predictions about the future of the game industry. He pulled no punches as he evaluated the current state of affairs in the business, and he had some hard advice for a number of companies.
Pachter noted that more people are playing games on more devices than ever before, but he doesn’t think the console market will be growing. “I don’t think you’re ever going to see 500 million consoles out there,” Pachter said. For lifetime sales, Pachter expects the Wii U will ultimately sell 30 million “or fewer” units, the PS4 will sell 100 to 120 million units, and the Xbox One will sell 90 to 110 million units.
“The reason Sony beats Microsoft is solely the price,” Pachter noted. “Microsoft loses the next generation unless they cut price. If Microsoft drops its price to $399, I expect the sales to be equal to the PS4.”
The lifetime sales Pachter predicts compare to current sales of the PS3 and the Xbox 360 at about 80 million units apiece, but it’s far below some estimates of hundreds of millions of next-gen consoles. “I don’t know where they get those numbers,” Pachter said. He feels that at several hundred dollars, with games costing $60 or more, consoles are just too pricey to ever sell hundreds of millions of units.
The Wii U’s performance so far Pachter characterized as “underwhelming,” but noted it’s possible “but unlikely” that exciting new titles will reinvigorate growth. He believes that Nintendo is missing a huge opportunity to bring new gamers into their brands: Nintendo should put old GameBoy Advance content on phones and tablets for free, and charge $3 to $5 for more recent titles from the DS. Pachter feels this would generate enormous revenue for Nintendo and bring millions of new fans into their brands, and give them a strong way to sell newer titles on the 3DS and Wii U that use those brands.
“I don’t know why Iwata is still employed,” Pachter said, given that he refuses to take advantage of this opportunity while the handheld market continues to shrink and the Wii U has failed so far to catch on in a big way.
Pachter is more positive on the PlayStation 4 – “Sony thrives, Nintendo doesn’t” – saying it’s impressive as a game playing device. “The graphics are phenomenal, and the huge RAM makes future innovation likely,” Pachter pointed out. He noted that the multimedia features remain unclear, but the CPU power of the PS4 allows the potential for huge improvement in the future. As for the Xbox One, Pachter noted it’s impressive as a multimedia device, and the added features of Kinect and Skype give it additional value. “We’re sticking with our prediction of a built-in TV tuner” for the Xbox One, Pachter said, which would simplify the ability of the Xbox One to control your television viewing.
“The next generation of consoles is probably the last,” Pachter said. “We expect frequent model updates instead of new consoles.” Moreover, there’s going to be renewed interest in the PC, he predicted. “I think the PC is going to make a comeback, the PC will be the hub of all this stuff,” he stated. He feels Smart TVs are a dumb idea, noting that you don’t have a smart monitor connected to your computer. He envisions there will be a number of screens around the home, perhaps controlled by a tablet, being driven by a supercomputer in your pocket that we call a smartphone.
The Wii U gets a new system update from Nintendo. While details are a bit vague on what all the new system updates actually does, Nintendo says it “improves overall system stability” and also includes minor adjustments “to enhance the user experience”.
The update comes ahead of a planned Nintendo update for the 3DS that is scheduled to arrive next month. The 3DS update will bring the Miiverse to the 3DS as well as adds the ability to combine eShop balances on both the 3DS and Wii U systems. In addition it will add Network IDs to the 3DS to access the eShop. Apparently 3DS owners will not have to take advantage of using a NNID to combine their eShop purchases and will still be allowed to download software from the eShop without a NNID.
Rumors suggest that another system update for the Wii U is just around the corner, but will likely not arrive till early next year, unless Nintendo has a reason to release it sooner. On the software front, the Wii U is still struggling, but the recent sales boost has helped, but Nintendo needs strong sales for the Wii U this holiday season in order to help get published and developers re-engaged in developing for the console. Whispers suggest that Nintendo expects supplies of the Wii U to be plentiful this holiday season and does not foresee shortages like what has plagued the Wii consoles of the past. The problem is however that the lack of software will likely keep many buyers away.
The company has approached potential buyers about the portfolio of patents, which include those related to webOS – the smartphone and tablet-computer operating system that HP acquired through its 2010 buy of Palm Inc, people told the agency.
HP sold the webOS operating system to South Korea’s LG Electronics Inc earlier this year, but retained the patents and all the technology relating to the cloud service of webOS.
“We don’t comment on rumor and speculation,” Michael Thacker, a spokesperson for Hewlett-Packard told Bloomberg.
HP could not immediately be reached for comment .
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.
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.
Bethesda’s Pete Hines had some choice words regarding Nintendo’s third-party strategy, suggesting that the time for getting better software support for the Wii U may have already passed.
In an interview with Game Trailers’ Bonus Round, Bethesda’s vice president of PR and marketing underlined the company’s commitment to making its games available on every platform – as long as those platforms don’t require compromise on the original vision.
As far as Bethesda’s games are concerned, that has led to their absence on Nintendo hardware despite their huge popularity. And Hines intimated that the situation is representative of Nintendo’s approach to third-party developers as a whole.
“The time for convincing publishers and developers to support Wii U has long past. The box is out,” Hine said, while sitting on a panel that also included Borderlands 2 lead writer Anthony Burch.
Hines pointed to Sony and Microsoft’s diligent and long-running efforts to communicate with third parties during the hardware design process as a better strategy for most developers.
“It’s not that every time we met with them we got all the answers we wanted, but they involved us very early on, and talking to folks like Bethesda and Gearbox, they say ‘here’s what we’re doing, here’s what we’re planning, here’s how we think it’s going to work’ to hear what we thought – from our tech guys and from an experience standpoint.
“You have to spend an unbelievable amount of time upfront doing that. If you’re just going, ‘we’re going to make a box and this is how it works and you should make games for it.’ Well, no. No is my answer. I’m going to focus on other ones that better support what it is we’re trying to do.”
This adds colour to comments Hines made in an earlier interview, where he stated that the Wii U was, “not on [Bethesda's] radar.” Nintendo is now attempting to address the Wii U’s less than admirable position by cutting $50 off its price.
Nintendo president Satoru Iwata has attributed slow sales of the Wii U to the available games, rather than the price of the console, in his most recent interview.
“I understand that the real issue is the lack of software, and the only solution is to provide the mass-market with a number of quality software titles,” he told CVG.
“If the price is actually an issue [with Wii U], then there is some contradiction between the current sales balance between the Basic and Premium versions of the Wii U. The basic version should have sold a lot, but the fact of the matter is that people are buying more of the premium version. So the issue is not there.”
Last week a Nintendo representative confirmed that the Wii U console was still being sold at a loss, making it a price cut in the near future unlikely.
Recent financial results also revealed that in the past three months the machine had only sold 160,000 units worldwide.
Nintendo’s battle for Wii U support from third-party publishers isn’t just about the installed user base. It’s also about the system’s horsepower, according to Bethesda Softworks. Speaking with Joystiq at QuakeCon, Bethesda VP of PR and marketing Pete Hines explained the company’s absence from the system.
“It’s largely a hardware thing,” Hines said, adding that Bethesda’s plan is to “make the games that we want to make, on whatever platforms will support them as developed.”
The company’s slate of upcoming games includes The Elder Scrolls Online, Wolfenstein: The New Order, and The Evil Within. While Elder Scrolls Online is only being developed for the PC, Xbox One, and PlayStation 4, the other two games are also coming to the Xbox 360 and PlayStation 3. Hines wouldn’t rule out Bethesda eventually working on Nintendo’s console, but it’s clearly not a priority for the company.
“None of the game’s we’ve announced are being developed for the Wii U, so it’s guaranteed that none of those games are coming to Wii U,” Hines said. “Will any future ones come out? I can’t say for sure, in our near-term focus it’s not on our radar.”
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.”
Shares of the company, which depends on government spending for most of its revenue, fell as much as 10 percent on the New York Stock Exchange in heavy trading on Wednesday.
Motorola Inc spun off its cellphone arm into Motorola Mobility in January 2011 and renamed itself Motorola Solutions. Motorola Mobility was later sold to Google Inc.
Revenue from Motorola Solution’s enterprise business is expected to fall by a low-single digit percentage, Chief Financial Officer Ed Fitzpatrick said on a post-earnings conference call.
Enterprise business revenue, which makes up about a third of total revenue, declined for the sixth straight quarter in the three months ended June 29.
“This demand environment we face in enterprise is not unique to us, as the broader industry is impacted by customers carefully managing their IT budgets in the face of macro uncertainty,” Chief Executive Greg Brown said on the call.
MKM Partners analyst Michael Genovese said Motorola Solutions’ main problem was not that businesses spending was falling but that it was taking too long to develop and launch new products.
“That’s probably causing some slowdown in decision making and purchasing,” said Genovese, who expects the company to cut its 2013 outlook again in the next quarter.
He cited as an example the delay in launching Microsoft Windows 8-based products from the second half of this year to the first of 2014.
Motorola Solutions’ enterprise business makes and sells rugged handheld devices, tablets and security products.
The company said in April its large customers were delaying projects as they contemplate a transition to Android or Windows 8 operating systems, but it expected a recovery in the second half of the year.
Motorola Solutions said on Wednesday that it now expects 2013 revenue to remain unchanged or rise by up to 1 percent. It had forecast a revenue growth of 3-4 percent in April.
Wednesday’s revised forecast implies full-year revenue $8.69 billion-$8.77 billion.
Let’s get this out of the way up front. Yes, you never, ever count Nintendo out of the game.
That’s the go-to response for pretty much anyone in this industry when asked if the company will be able to dig itself out of the hole the Wii U has created – and it’s usually a valid one. (Think back to the GameCube days and things were just as dire as they seem today – but it managed to turn things around.)
But as we head into the Wii U’s second holiday season, the pessimism about the system is starting to crest. And despite Nintendo’s push of first party software coming in the next year, there’s nothing to suggest that a turnaround of any sort is imminent.
Third party partners are, in a word, disappointed with Nintendo. And while you’ll still hear the usual refrain about not giving up on the company at some point, you’re more likely to hear dissatisfaction when you speak with executives.
Yves Guillemot, Chairman and CEO of Ubisoft, is typically one of the biggest proponents of new systems, but betting big on the Wii U didn’t work out well for the company. ZombiU, one of the most popular launch titles for the system with players, was not profitable, he says. Not even close. As such, he says, there are no plans (or even desire) for a sequel.
“It seems like a box that’s out of sync with the future of EA – which is one that gives a real social feel to our games. The Wii U feels like an offline experience right now”
It was, in fact, because of that game’s performance that Ubisoft decided to make Rayman Legends a multiplatform game.
“We must find a way to ensure the creativity of those games could have a big enough audience,” he says. “We hope it will take off. At the moment, we’ve said ‘let’s do through Christmas and see where we are from there.’”
Activision, also, was a notable launch partner for the Wii U, but like Ubisoft, the results haven’t been strong enough to justify a notable further investment in the system.
“We came to the table with a robust slate,” says Eric Hirshberg, president and CEO of Activision Publishing, at E3. “But we have no announcements now.”
No one, however, is more direct than EA’s Peter Moore. EA, at present, has no games in development for the Wii U – and its AAA game engine isn’t compatible with the system.
“We were there with four games for them [at launch],” he says. “It’s been a disappointment when you look at sell-through and, as a company, we have to be very judicious where we deploy our resources.”
For EA, at least, it’s the system’s lack of a rich multiplayer environment that’s one of the big concerns – especially for sports titles. (That’s part of the reason Madden won’t appear on the system this year.)
“The lack of online engagement that we see on Wii U [is troubling],” says Moore. “It’s so integral to what we do. They’re so small it’s hardly worth running the servers. It seems like a box that’s out of sync with the future of EA – which is one that gives a real social feel to our games. The Wii U feels like an offline experience right now.”
Nintendo systems have always been led by the rich slate of first party titles, but the company isn’t an island – and knows it can’t remain competitive without the cooperation of third party publishers. And while some, like Capcom, are sticking with the Wii U, even Nintendo admits it needs to woo back its publishing partners by boosting sales.
Rather than focusing on the negativity surrounding the platform, Nintendo itself says it’s making software development its primary focus. With no price cuts on the horizon (something global CEO Satoru Iwata has been very insistent about), it realizes that the only way to boost hardware sales is to come up with a must-have game. And while the company is counting on Mario Kart and Super Smash Bros. to do their part, it realizes that those alone won’t convince people to invest in the system.
“We have been unsuccessful in coming up with one single software with which people can understand ‘OK, this is really different’ and I can understand the real value of that as soon as I saw that,” says Iwata. “Because there’s no software that’s simple and obvious for people as ‘Wii Sports’ for the Wii, potential consumers do not even feel like trying to touch the Wii U. Our challenge today is with the software lineup we are introducing now; we have to encourage them to want to experience the Wii U in the first place.”
The problem is: That game’s not coming out this holiday, based on what the company showed at E3. And if the Wii U tanks for a second holiday in a row, it’s going to be that much harder to get publishers back on board.
Electronic toy maker Nintendo’s CEO Satoru Iwata thinks that the reason that the toilet themed Wii U console didn’t sell was because of poor marketing.
Talking to CNBC, Iwata said that the outfit had relaxed its marketing efforts, so the consumers today still cannot understand what’s so good and unique about the Wii U. After all few people told “You Wii” will do so without someone turning a tap first. He said that Nintendo had been unsuccessful in coming up with one single software with which people can understand.
People who have hands-on experience can appreciate the value of the Wii U, but because there’s not software that’s simple and obvious for people as ‘Wii Sports’ for the Wii, potential consumers do not feel like trying it. The Wii U console sold 3.45 million units worldwide for the 2012-13 fiscal year, which ended March 2013.
Nintendo cut its Wii U sales forecast in January as a result of lower-than-anticipated sales. Expectations were set for 4 million units sold, down from an initial target of 5.5 million.
A day that SEGA fans thought would never come has arrived: SEGA has entered into a deal with Nintendo where Nintendo consoles will get the next three Sonic the Hedgehog titles as platform exclusives. The once bitter rivals are calling this a “worldwide partnership,” which despite being a bit short on details apparently leads us to believe that SEGA will be developing additional new software for the Wii U and 3DS consoles going forward.
The next three Sonic titles will include Sonic: Lost World, Mario & Sonic at the Sochi 2014 Winter Olympic Games, and a third unannounced title that the company is expected to officially announce at E3. The reason for the Sonic exclusive deal has to do with the past performance of Sonic titles on Nintendo consoles, and since they have proven to be good sellers, the deal does seem to make a lot of sense for both companies.
What is more interesting, however, is the other aspects of the partnership that will see additional titles developed for the Wii U. Nintendo needs all of the software support it can get for the Wii U, and just getting SEGA to continue to release new titles for the Wii U is a good thing. Sources tell us that SEGA has some new Wii U titles planned for announcement at E3, but it isn’t known exactly what SEGA might be cooking up.
While a big deal with Activision or Take-Two is really what Wii U owners might want, at least getting SEGA to continue producing Wii U titles is a positive news thing. It does remain to be seen, however, if SEGA can deliver the kinds of titles that will be successful sellers on the Wii U when so many owners are looking for the big titles from some of the other publishers.
Electronic Arts may be through with the Wii U. According to a Kotaku report, EA has confirmed that it is no longer working on Nintendo’s new console.
“We have no games in development for the Wii U currently,” EA’s Jeff Brown is quoted as saying. Brown did not indicate if EA would resume development on the system in the future
Earlier this month, EA confirmed it would not be bringing this year’s Madden NFL 25 to the Wii U. At the time, a representative said, “We have a strong partnership with Nintendo and will continue to evaluate opportunities for delivering additional Madden NFL products for Nintendo fans in the future.”
EA has released four games for the Wii U to date. The first three (Mass Effect 3, Madden NFL 13, and FIFA Soccer 13) were system-launch-day ports of titles that had shipped earlier on other platforms. The fourth game, Need for Speed Most Wanted, hit stores in March, months after that game debuted for Xbox 360, PlayStation 3, and PC.
The brief duration of support for the Wii U is surprising given EA’s vocal endorsement of the system at Nintendo’s 2011 Electronic Entertainment Expo media briefing. To cap off the event, then-EA CEO John Riccitiello promised the publisher’s support for the system. Brown told Kotaku that the quartet of titles already released represented EA making good on that promise.
Nintendo representatives did not immediately return requests for comment.