Chinese search engine Baidu Inc announced that it has launched an augmented reality (AR) lab in Beijing as part of a $200 million effort to revitalize the company’s shrinking profits with cutting edge technology.
The lab, which currently employs 55 people, will initially aim to drive revenue through AR marketing, though will later explore healthcare and education.
“AR marketing is taking off,” Andrew Ng, the chief scientist overseeing Baidu’s artificial intelligence (AI), augmented reality and deep learning projects, told Reuters.
Popularised in 2016 by Nintendo Co Ltd’s Pokemon Go game, augmented reality involves rendering virtual images over real life settings viewed on a smartphone, headset or other device. In marketing, the software can be used to animate a product or a branded space.
Baidu’s AR launch comes as the company gears up to report full-year earnings next month. It has forecast a revenue drop of around 4.6 percent as it grapples with the aftermath of new government curbs on medical advertising. Those curbs have slashed into the profits of its core search business and saw ad customers drop 16 percent in the quarter ended in September.
The company injected $200 million into its AI and AR unit in September in an effort to kick start new growth, followed by the announcement of a $3 billion investment fund announced in October focusing on mid-to-late stage startups.
The company in a statement said it is currently working with AR in China with Yum! Brands Inc’s KFC, BMW and L’Oreal SA’s Lancome among other brands, and has demonstrated a small range of high-end applications.
Baidu began working on the technology two years ago, and is working on integrating it with AI to produce visuals capable of interacting with real-time surroundings, unlike current popular AR games.
“It’s working quite well now, but it’s clear that it could be better,” said Ng. “I’m quite optimistic.”
AR technology is still going through a regulatory teething phase in China. While Pokemon Go is yet to launch there, location-based AR concepts have sprung up, drawing the ire of regulators who have refused to license some services over security concerns.
According to Ng, Baidu is yet to run into the same issues.
“I feel like the abilities for AR have risen up in China faster than the Western world may be aware,” said Ng.
Finnish mobile games and animation developer Rovio Entertainment is intensifying its search for new hit games by opening a studio in London to focus on multiplayer games that would not rely on the company’s Angry Birds brand.
Privately-held Rovio has struggled in recent years as profits from the Angry Birds franchise dropped, prompting deep job cuts and divestments.
But last year Rovio launched an animated Angry Birds 3D Hollywood film that it said did well at the box office and yielded new licensing deals.
“MMO is a genre that is growing in mobile, but it is not fully saturated. We are not looking for a niche position but a very wide, inclusive game,” Wilhelm Taht, head of games, told Reuters.
The original Angry Birds game, in which players use a slingshot to attack pigs who steal the birds’ eggs, was launched in 2009 and it remains the top paid mobile app of all time.
Rovio exploited the brand early on by licensing its use on a string of consumer products. But the company’s failure to bring out new hit games resulted in falling profit, prompting Rovio to cut more than 300 jobs in 2014 and 2015.
“In the long term, our new characters may generate intellectual property and even a brand,” Taht said.
Rovio has a series of smartphone games based on Angry Birds characters. In 2015 it published a puzzle game called Nibblers and it will soon put out Battle Bay, a real-time multiplayer game.
Rovio is not looking to launch a large number of games this year, Taht added.
“Perhaps there’s been some change in our thinking here,” he said. “The market is favorable for games that will live long and that are operated with a service mindset.”
Asked about Nintendo’s hit smartphone game Pokemon GO, Taht said the game truly put augmented reality (AR) on the gaming map.
“We will, of course, be following AR as a technology and a tool,” he said.
In the first half of 2016 Rovio booked a small operating profit, compared with a loss a year earlier, help by growth in game sales.
Rovio has around 200 employees spread between its four game studios in Finland and Sweden and about 400 in total.
I was prepared to write all about virtual reality once again, despite the fact that my colleague Brendan Sinclair did a fine job of it last week, but then I woke up today to see Nintendo’s appearance on The Tonight Show with Jimmy Fallon and it got me thinking about the company’s future.
Before I dive into it, the one thing I’ll say on VR is that I’m encouraged by moves that bring about unity. With the Global Virtual Reality Association pushing for solidarity and open standards, and the discovery this week following the launch of Oculus Touch that Rift with Touch can support most SteamVR titles, developers should find it easier to target the combined (albeit still limited) installed bases of the PC VR platforms. Game makers in the VR ecosystem need all the help they can get.
Onto Nintendo, the company is quite possibly on the cusp of a major comeback after a miserable few years with its worst performing console in history, the Wii U. Watching as an excited audience witnessed Shigeru Miyamoto play the Mario theme along with The Roots, followed by Reggie Fils-Aime demoing both Super Mario Run on iPhone and The Legend of Zelda: Breath of the Wild on Switch reminded me that there’s still quite a lot of goodwill for Nintendo and its highly valuable IP. Now it’s up to the company to actually capitalize on that excitement. The rise of Pokemon Go, which helped jumpstart Pokemon Sun and Moon to become Nintendo’s fastest-selling titles ever in Europe and the Americas is just the start.
The NES Mini microconsole has been continually selling out at retail, feeding into nostalgia for NES classics while people eagerly await the launch of the first ever Mario game for smartphones, Super Mario Run. The game, which quickly saw 20 million people sign up to be notified about its release, will be a fascinating test for the mobile market given its $9.99 price point and for Nintendo, which hopes that both lapsed gamers and new players will come to appreciate the Italian plumber and seek out deeper and even more engaging experiences — on the Switch of course.
“Super Mario Run is going to introduce millions of more people to the fun of Mario, and it’ll become the entry point for them,” Miyamoto told The Verge. “And then the question becomes, once you’ve gone through that entry point, then what comes next? Is it a more traditional Mario experience? Is it something like the Mario Galaxy games? We’ll then have to look at what it is these new fans want from a Mario game, and we’ll continue to see Mario evolve in that way.”
Miyamoto and Nintendo may be a bit too optimistic to think that everyone who picks up Super Mario Run will want to run out and spend several hundred dollars more on a dedicated gaming platform plus software, but I’m convinced that a certain portion of the Super Mario Run audience will do just that. Another, possibly much larger, portion of that audience, however, could very well decide that Super Mario Run is fantastic and they’d simply like more experiences like that from Nintendo on smartphones. Either way, that’s great news because it means Nintendo has vastly expanded its audience.
“Frankly, I think the future is once again starting to look quite bright for Nintendo. The next critical step for the company is to absolutely get its marketing message right as it moves forward”
In a sense, the Switch will become the “niche” product for the hardcore Nintendo fan, while mobile will ultimately become where Nintendo reaches the majority of players. If the lion’s share of revenues for Nintendo begin to come from mobile, it’ll pose a very interesting question about the future of hardware like Switch, but as long as people crave in-depth games like Breath of the Wild, Nintendo will find a way to make them, regardless of platform.
Frankly, I think the future is once again starting to look quite bright for Nintendo. The next critical step for the company is to absolutely get its marketing message right as it moves forward. All the love and excitement Nintendo engendered with the Wii was squandered with the Wii U, but now the company has a legitimate chance to see a real domino effect take place, with each piece pushing the next forward – Pokemon to Super Mario Run to Switch and Zelda, etc, etc.
What needs to happen from now through next March when the Switch launches is an all-out assault on the media; mainstream news, talk shows, social networks, and more. What Nintendo achieved with Jimmy Fallon this week was pure marketing brilliance, and it’s that sort of approach that catapulted the original Wii to stratospheric heights in 2006. The Wii didn’t succeed because IGN or GameSpot thought it was cool; it took off because everyone from The Wall Street Journal to the New York Times to Bloomberg wrote glowing things about it. Nintendo’s appearance on Fallon could perhaps be the start of a new media blitz; it needs to be if Nintendo wants to reclaim its place atop the industry.
We’ll see how the next domino piece tilts in one week when Super Mario Run launches. “This is definitely a defining moment for Nintendo,” Yoshio Osaki, president of IDG Consulting Inc, told The Wall Street Journal. “If Mario can’t get the job done, I don’t know what other character could.”
Nintendo is offering cash rewards for hackers that can expose security weaknesses in its 3DS family of consoles.
Upwards of $20,000 will be made available to successful hackers who can help address the weaknesses in Nintendo’s portable machine. The offer does not extend to Wii U.
It’s part of a program the firm is working on with HackerOne.
The offer is Nintendo’s renewed efforts to reduce piracy (including game application dumping and game copying execution), cheating (which includes game modification and save data modification) and the spreading of inappropriate content to children.
It suggests that Nintendo is true to its statement that it wants to maintain its 3DS business, even after the launch of its Switch console in March. Switch, which doubles as both a home and portable console, is seen as the natural successor to the 3DS, although Nintendo has stated it will continue to release games for the hardware. Over 60m 3DS consoles have been sold worldwide since the machine launched in 2011.
The ‘reward’ for finding vulnerabilities in the 3DS hardware will range from $100 to $20,000, and the amount will be at Nintendo’s discretion. Vulnerabilities that are already known will not be counted. The level of the reward will depend on the importance of information, quality of report and the severity of the vulnerability. Nintendo is looking for reports that include a proof of concept or functional exploit of code.
The upcoming titles will free up some of Sony’s popular gaming franchises, such as Everybody’s Golf, from PlayStation consoles to make them available on Apple Inc’s iOS and Google’s Android mobile platforms.
An aggressive push into the rapidly growing segment is seen as a necessity for Sony as its games unit has emerged as the group’s largest profit contributor following an overhaul of the group’s consumer electronics business.
They will be available initially in Japan and eventually in other Asian countries, Tomoki Kawaguchi, executive director of Sony’s mobile gaming unit, told reporters.
The announcement comes before Nintendo debuts its game franchise Super Mario Bros on Apple’s iPhone next week.
While disappointing sales of Wii U consoles helped push Nintendo into mobile gaming, Sony has been a decisive winner in console gaming with over 40 million PlayStation 4 sales, almost double the sales of Microsoft Corp’s XBox One.
But Sony is facing the increasing threat from mobile in countries such as Japan, the world’s third largest game market where mobile gaming accounts for more than half of the $12.4 billion market, according to games research firm Newzoo.
Sony has launched some games for smartphones through its music entertainment unit but failed to fully introduce mobile gaming to its PlayStation business.
Analysts doubt Sony’s chances of major success in mobile gaming, citing a lack of powerful characters like Nintendo’s Super Mario and Donkey Kong, which have achieved widespread appeal globally.
EA CFO Blake Jorgensen says he ‘can’t yet predict’ if people will be interested in Switch alongside their regular portable device.
His statement came at the UBS Global Technology Conference, and reported by GameSpot. He says the firm is excited about the product and committed to bringing ‘one or two’ of its biggest games IP to the platform. Based on EA’s history with Nintendo, these will likely be games from its sports catalog.
“We’re excited for Nintendo, it’s an interesting device,” Jorgensen stated. “But I can’t yet predict how broad it’s going to be, and if folk will be interested in a portable device alongside their regular portable device that they already have.”
He continued: “In their announcement they announced that we’ll be supporting with a game or two on that new platform. We haven’t yet announced what game, but you should assume that it’s one of our bigger games we’ve been involved with.”
It is clearly positive for Nintendo that EA is showing support for its next machine after it abandoned publishing efforts on Wii U shortly after the machine launched. The company’s Wii U line-up included ports of Need for Speed and Mass Effect 3.
Nintendo proudly boasted a strong Switch third-party line-up, with the likes of Activision, Capcom, Warner Bros, Sega, Take-Two, Codemasters, Konami, From Software, Square Enix, Ubisoft, Bethesda, Bandai Namco, Platinum, Level-5, GameTrust and Atlas already signed on to support the device.
If Nintendo hopes to maintain this level of third-party support, it will need a significantly stronger start for Switch than it achieved with its Wii U console. It’s not clear what the launch line-up for Switch will be, with reports suggesting that the highly anticipated The Legend of Zelda: Breath of the Wild will miss the console’s release window. Other games shown during Nintendo’s Switch reveal, although not confirmed titles, included Mario Kart, a new Mario platformer, Skyrim and Splatoon.
More details on the Switch launch is scheduled for January, with the machine due to launch in March.
Nintendo president Tatsumi Kimishima has asserted that the company’s new console does not represent a shift in the way it sees its audience. “As the name implies, we’re switching a lot of things,” he told Bloomberg, “but we have no interest in switching our customers.”
The Switch debuted in a promotional video that had a distinct lack of families and children, two groups with which Nintendo is closely associated. It also featured footage from core-facing franchises like The Elder Scrolls and NBA 2K, despite neither being confirmed for the console when it launches in March next year.
According to Kimishima, however, Nintendo has no intention of “just going after a certain age group. Depending on the kind of software that comes out, families and kids will be able to play too.” The prominent use of games like Skyrim was to communicate with groups who “will grasp it right away,” referring to the console’s ability to be used as a handheld or connected to a television. “For families and kids,” he added, “we want them to understand by actually experiencing it.”
“Our core philosophy is that we want to increase the number of gamers at all ages, and there’s no change to that. So we have no intention to lean just towards core gamers. But to communicate our new idea, when you think about who will understand it first, naturally it will be people who really understand games. To communicate that as quickly as possible, we focused on those folks who really understand games.”
Kimishima placed the Switch in the context of a plan to “revitalize” Nintendo, which he devised along with creative lead Shigeru Miyamoto and tech led Genyo Takeda three years ago. Console hardware was one aspect, smartphone software another, and making better use of the company’s enviable IP stable another.
“Now the critical period is finally here,” he said. “From the end of this fiscal period and into the next one is when we actually show the product and deliver it to our customers.
“Our revenue has fallen for eight straight years. What we aim for is to increase the number of people who play games. We want to deliver all kinds of new surprises to our customers, and it is through their support that our revenue increases. That’s the end result. But if that result doesn’t show, that means we weren’t able to deliver. Next year is when we see the result.”
Kimishima also described the Switch’s detachable controllers are “add-on hardware” or “accessories,” and that we “can assume that there will be a wider array.”
Now that Nintendo has finally teased the world with its Switch hardware reveal, everyone of course wants to know more and bigger questions about Nintendo’s strategy have become top of mind. Analysts have brought up a number of potential issues facing Nintendo as it moves forward. Most importantly, who is Nintendo really targeting with its new product and how is the company positioning the Switch against powerful consoles like next year’s Xbox Scorpio or this year’s PS4 Pro?
“Nintendo’s Switch reveal trailer unveiled a product positioning which aims to defend against the increasingly robust encroachment of the smartphone and tablet gaming opportunity yet still appeal to traditional console gamers that are looking for a big-screen gaming solution in the home. It has designed the Switch to deliver a flexible solution to cover multiple types of usage, but must avoid delivering a substandard experience by trying to be all things to all users,” said Piers Harding-Rolls, head of games research at IHS, which is now forecasting that Switch will sell 2.85 million units globally next March when it launches.
“Interestingly, the Switch reveal trailer was squarely targeted at young adults, which suggests that Nintendo is refocusing its early marketing on more traditional console gamers and those that also increasingly like gaming on the move. To build success with these buyers the offering must include third-party titles that are supported on other platforms,” Harding-Rolls continued. “Nintendo looks to have killed off its motion controllers with the Switch and opted for a more traditional form of gaming experience. This suggests the company is serious about getting third-party publishers to support the platform with multi-platform titles. Potentially, this will help Nintendo’s ambition to target young adult gamers.”
Third-party support does seem to be better already. Wii U had a list of just 21 publishers and developers at its launch while Switch has close to 50. Support, of course, is something that’s always in flux, but it’s crucial for Nintendo to get its messaging right with consumers if it wants to maintain that support from third parties. “They need a proper message. Right now I am concerned they are pitching it as just another tablet with controllers,” said DFC Intelligence’s David Cole.
“Nintendo’s ability to market a clear use case message to the audience [will be key]. Nintendo failed to do this with the Wii U and paid the price,” added Harding-Rolls.
SuperData’s Joost van Dreunen believes Nintendo needs to do a better job in defining its audience. “I have my reservations with regards to the breadth of the audience it targets. The Switch will likely be most popular among a younger audience: its functionality is uniquely geared toward pre-teens and teenagers. While the device seems much less like a toy than we’re used to from Nintendo, its features like backseat multi-player and the ability to have several people play using a single piece of the controller target Nintendo’s traditional audience. The reveal video makes a lot more sense to me if you swap out all the adults in it with kids,” he noted.
It’s clear that the widespread adoption of gaming on smartphones has had an impact on Nintendo, and indeed the company is pushing out its own mobile titles like Super Mario Run this holiday, but will that approach truly serve as a stepping stone to the Switch, or will it ultimately cannibalize Nintendo’s new hardware?
Dr. Serkan Toto, an analyst who specializes in the mobile market in Asia, remains skeptical. “Sorry, but is a portable/home console approach really that innovative in 2016? I am most concerned about the target group of the device: who else but die-hard Nintendo fans will buy the Switch? The Switch lacks a killer feature, and I think it will be very difficult for Nintendo to win back the casual gamers that are mostly on mobile now,” he commented. “In Japan, for example, the mobile gaming sector is already 2-3 times bigger than consoles. Even the PS4 struggles over here. It’s going to be a huge challenge to try to reverse that trend.”
So will Super Mario Run make a difference? “I find it very difficult to picture a scenario where a critical number of mobile, free-to-play users converts to console and buy hard- and software for several hundred dollars upfront. Different markets, very difficult to bridge,” Toto continued.
As ever, the biggest factor in the Switch launch and its chances for success could be its price. “Price pretty much depends on specs, and success depends on both price and specs. If the specs are close to PS4, I think they can price around the same ($249), and at most $299. If specs are weaker, price could be lower,” noted Wedbush Securities’ Michael Pachter.
“Assuming they are close to PS4, they are making porting of games easy for developers (and inexpensive), and I think they will get a lot of third party support. If the specs are weaker, porting will be costly and less likely to occur. So my ‘prediction’ is that if specs and pricing are similar to PS4, the Switch will get a lot of third party support and will be immensely successful. If specs are weaker or if pricing is too high, sales will suffer because of lack of third-party support or because of uncompetitive pricing.”
Analysts agreed that $299 really is the highest Nintendo could acceptably go. “They must find a way to release the Switch at US$299 to stand a chance, that’s the threshold,” said Toto. “It’s not impossible by offering the device in multiple versions, i.e. without the home dock. ‘Hardcore’ video game fans can, at US$299, already get fantastic devices from Sony and Microsoft. The portable gaming use case, at scale, has been taken over by smart devices.”
SuperData’s van Dreunen added that a high profile bundle, like Zelda, which we know is a launch title, could play an important role in incentivizing consumers. “I’m hoping they’ll keep it under $300, ideally bundled with a Zelda or Mario Kart. Anything over that will severely limit its market potential,” he said.
Harding-Rolls sees $300 as the max as well, commenting, “The reveal suggests it is competing more significantly with traditional home consoles, but with the edge of mobility. Pricing will need to be competitive in this context and anything over $300 may not be a convincing proposition.” He pointed to similarities with Nvidia’s Shield as evidence that Nintendo may very well end up in that price range.
“The new console shares a number of design, positioning and component similarities with Nvidia’s Shield tablet. As such it is likely that Switch will be capable of displaying 4K video content and judging by the pricing of the original Shield tablet is likely to sit in the $250-$300 range,” he said.
Excitement is currently sky high for the Switch. In fact, as noted by Bloomberg yesterday, right after Nintendo said it would unveil the console, its shares climbed almost 5% leading to a market value gain of $1 billion (the stock is up 3.34% as of this writing today). The company’s stock is up more than 50% in 2016 in large part because of its embrace of smartphone gaming, but how Nintendo balances its portfolio and its message on mobile and Switch will be fascinating to watch in the next 6-12 months and it will reveal a lot about the future of the firm.
A little bit of clarity can go a long way. A few weeks ago at the reveal of the PS4 Pro, in a staff roundtable I questioned whether Sony’s new console would hurt Microsoft’s chances with the more powerful Scorpio. I also gave Sony an edge because of its HDR rollout to all PS4s. As it turns out, the HDR update is practically useless (no games supported yet and no video streaming) and the PS4 Pro itself will see most games upscaled, according to Sony Interactive boss Andrew House.
While PS4 architect Mark Cerny did make it clear during the conference that the Pro does not render games in true 4K resolution, many fans had no doubt assumed it would and likely glossed over his technical explanation of the Pro’s “streamlined rendering techniques” and “temporal and spatial anti-aliasing.” It’s hard to say how much consumers will care when the Pro goes on sale in November, but Microsoft wasted no time in puffing up its chest to declare its superiority with a console that won’t ship for many, many months.
Microsoft Studios Publishing general manager Shannon Loftis told USA Today, “Any games we’re making that we’re launching in the Scorpio time frame, we’re making sure they can natively render at 4K.” Moreover, Albert Penello, senior director of product management and planning at Xbox, hammered home the point with our sister site Eurogamer, commenting, “I think there are a lot of caveats they’re giving customers right now around 4K. They’re talking about checkerboard rendering and up-scaling and things like that. There are just a lot of asterisks in their marketing around 4K, which is interesting because when we thought about what spec we wanted for Scorpio, we were very clear we wanted developers to take their Xbox One engines and render them in native, true 4K. That was why we picked the number, that’s why we have the memory bandwidth we have, that’s why we have the teraflops we have, because it’s what we heard from game developers was required to achieve native 4K.”
That’s a punch to the gut in true console war fashion, and one that Microsoft is no doubt happy to get in during a console cycle which has seen PS4 dominate. It may not seem like a big deal right now, as 4K TV sales are still relatively minor, but the prices are falling and interest in 4K and HDR is picking up, not only with consumers, but also with game developers and content providers for streaming services like Netflix. This could be a decent holiday for the 4K TV market, and by the time Scorpio actually does launch there will be that many more 4K TV owners to target with the only console that renders 4K natively. That’s a nice feather in Microsoft’s cap.
This week we also featured an interesting writeup on VR and AR from DICE Europe. While VR proponents like Unity’s Clive Downie said there will be over a billion people using VR in the next 10 years, others such as Niantic’s John Hanke and Apple boss Tim Cook cast doubt on the long-term appeal and commerical success of VR. Of course, this isn’t the first time that people have wondered whether VR will ever move beyond a niche category – and indeed, our Rob Fahey talks about the over-investment in the space in his column today – but the idea that VR is merely an intermediary step before AR comes into its own is the wrong way to think about these technologies in my view.
Just because they both offer altered realities and utilize headsets does not mean they should be lumped together. The use cases and experiences are vastly different for VR and AR, and while I agree that AR likely is the better bet from a commercial standpoint, I don’t underestimate VR for one second. I’ve had way too many fun game sessions using the tech already, and it’s early days. Beyond that, serious movie makers are starting to leverage the great potential of the medium. Jon Favreau (Iron Man, The Jungle Book), for example, is working on a VR film called Gnomes and Goblins and he’s even brought on veteran game designer Doug Church (System Shock, Thief) to fine tune the VR interactions.
The fact is VR has enormous storytelling potential and can immerse its users in ways that we’ve never experienced before. “As I work in film, so much has been done,” Favreau commented. “There are technological breakthroughs but there is less and less up in the air. You’re really writing a song in the same format that has been going on for at least a hundred years. And what’s interesting about VR is that, although I really don’t know where it’s going or if it’s going to catch on in a significant way culturally, I do know that there is a lot of unexplored territory and a lot of fun things as a storyteller for me to experiment with. It’s exciting to have so much fresh snow that nobody has walked through yet. There’s been no medium that I’ve felt that way since I’ve come into the business, where it feels like you can really be a pioneer.”
AR will be tremendously exciting in its own right, and I can’t wait for Magic Leap, HoloLens and castAR, but to think that VR will be cast aside to make way for AR’s ascendancy is totally off base.
Nvidia might be getting ready to launch a new Shield Android TV console later this year.
According to a filing to the FCC made public, Nvidia has applied for permission to flog a new console with a model number P2897. Obviously the rest of the filing is time secret but really the only thing that can fit the bill is a new Shield.
Listed under the labeling portion, we see that the device is rectangular and that the console features 802.11ac WiFi. A new shield remote and Controller device also went through the FCC last week.
Since all this is happening at once it seems likely that the new Shield Android TV will be in the shops sometime in autumn. However, Nvidia has applied and obtained FCC approval for things before and we never saw any product in the shops. An updated Shield Tablet went through the FCC and we are still waiting for it to appear.
All this guessing means that it is unclear if the new Shield TV is something new or radical or just a few updated bits stuck inside the existing box. It is also unknown whether Nvidia will launch a new hardware design for the Shield TV or simply stick updated components inside its existing package.
From the advent of what we might consider modern game consoles in the 1980s through to the point when standard budgets for individual games topped $10 million took around 25 years. Budgets spiked significantly when the PlayStation shifted the industry from 2D to 3D, but that merely drove them from six to seven figures; it wasn’t until the last generation, with Xbox 360 and PS3, that $10 million became the baseline for developing a AAA game.
From the advent of modern smartphones, in mid-2007, less than a decade has passed; so when Kabam CEO Kevin Chou talks about budgets of over $10 million for mobile games, and easily twice that when launch marketing costs are taken into account, it’s a sign of how quickly the world has accelerated.
Only a few years ago, mobile was the platform recommended to anyone starting out in game development; it was a new, exciting and fertile land waiting to be discovered by anyone with a smartphone, a copy of Xcode and a flash of genius. The very lure of mobile was that it was fast, it was cheap and it had no gatekeepers; you could prototype an idea, try it out in the marketplace, and either discard it or iterate upon it in a matter of weeks or months, even with a tiny indie team.
It would be wrong to imply that there’s no room in the mobile space for small teams and indies any more – an inspired game and a bolt of astonishing luck could still create a cultural phenomenon and a smash hit for something developed on a shoestring budget. Short of winning the development lottery in this way, though, it’s pretty clear that the big opportunities for smaller developers on mobile aren’t just shrinking; they’re actually gone entirely.
What Chou is saying merely reiterates what’s been clear to those watching the industry carefully for the past few years. Mobile games have become an enormous business, but most of the activity in the sector is no longer focused on game development, per se; it’s an incredibly marketing led business. The games that dominate mobile in 2016 are, with the notable exception of Pokemon Go, the same games that dominated 2015 and 2014. They’ve been updated somewhat and are constantly tweaking their formulas based on the data fed back from the playerbase, but the real efforts that drive consistent chart-toppers like Clash of Clans or Candy Crush Saga are marketing led – and very, very expensive marketing at that.
Indeed, while Chou’s comments on development budgets may seem intimidating to an indie creator, they’re the part of his message that deserves to be taken with a pinch of salt. Sure, moving to 3D has boosted development costs in mobile, but high quality 3D is not a hard and fast requirement for a successful game – and his claim that mobile games will be running with a graphical quality comparable to today’s home console titles within two years is pure fantasy (and not even desirable, were it possible; any game attempting such graphical quality will crucify its own retention statistics by being an unforgivable battery hog). Mobile development is unquestionably more expensive than it has been in the past and I don’t doubt Kabam’s budget estimations – they’re in line with what I’ve heard from others in the mobile sector recently – but this level of budget is still a nice-to-have, not a must-have.
In two areas, though, budget is non-negotiable. The first is network services. The reality is that even if a small independent developer came along tomorrow with a Pokemon Go beating game (which won’t happen, because Pokemon Go’s primary strength is in its license, but humour me anyway), the game wouldn’t survive a month. Either the game wouldn’t scale to match its audience, and would abruptly fall over and lose all market momentum; or it would scale, but the bills for the cloud services used in the process would reach unsustainable levels before the revenues from players actually started to roll in. Without good financial backing and the ability to sustain some high up-front costs, a runaway hit could be more likely to bankrupt its creator than a mediocre success.
The second area in which budget is non-negotiable, or rapidly becoming that way, is the aforementioned marketing. Chou suggested that Kabam is putting around $10 million in marketing behind its launches, which is a huge figure that’s still dwarfed by the amount big players such as Supercell and King are spending on “player acquisition” (which is just another way of saying marketing, in mobile game parlance) on their behemoth games. The sheer volume of TV, outdoor and online advertising space occupied by mobile games dwarfs the marketing for even the biggest console games, for the simple reason that the equation is different. Mobile game operators know that their existence relies on acquiring lots of players (which costs marketing money), holding on to as many of them as possible for as long as possible, and ultimately making more money out of each player than it cost to acquire them.
As the mobile market has grown, the cost of getting a player to try your game (Cost Per Acquisition, CPA) has risen enormously. That’s a cost that’s right there from day one of a mobile game’s existence; if you don’t have an acquisition strategy, which means expensive, high-profile advertising, you don’t have a mobile game with any chance of commercial success. Far, far more than any boost to development budgets, that’s what’s locking small teams and indies out of the mobile space. There are workarounds to some degree – like getting someone at Apple to love your game and feature it on the App Store frontpage, for example – but they’re a million to one shot.
It is, bluntly, long past time that we called time on the romantic myth of the indie mobile developer. If you’re an indie with good skills and a great idea, you’re far better off peddling that idea elsewhere. PC remains fertile ground for indie developers, of course, but one of the wonderful things that mobile has done for game development is the role it’s played in forcing console platform holders to open up to indies. If you’re talented and creative, getting access to a console development kit has never been easier or cheaper – in some cases, such as Microsoft’s ID@Xbox program, platform holders actually give dev kits away for free to just about anyone who wants one. It’s a far, far cry from the walled gardens of only a few years ago.
At first glance, mobile still looks like a more open platform than console (or even perhaps than PC, where Steam and its dubious Greenlight program act as de facto gatekeepers); everyone has a smartphone, the development tools to make games on them are free and anyone can upload a game to the App Store or the Play Store with ease. In reality, though, the opportunities for a small studio to succeed on mobile have narrowed rapidly to the point of nothingness, while opportunities on PC and on traditionally more “closed” platforms have boomed. Short of finding someone with a genuinely amazing, eye-opening idea for a mobile title, I’d be hard-pressed to recommend mobile development to any indie studio in 2016.
The wheel may yet turn again. Mobile game audiences, if nothing else, are still very new and very fickle; their tastes and desires may well shift, and more commercially viable niches may grow within the mobile space. As these devices get more powerful and capable, they’ll enable new experiences and consumers may come to demand more diversity from their gaming. For now, though, mobile has gone the way of console games around a decade ago; rising costs and an escalating arms race in marketing have killed, or are killing, the low-cost end of the market entirely. Unless you’ve got millions you don’t mind losing on a risky gamble, consider the mobile space closed to new entrants for the time being.
According to leaked FCC documentation, it appears that Nvidia has decided to cancel its new Shield Tablet, that was earlier spotted in the in the FCC filing.
According to a leaked document from Federal Communications Commission (FCC) database, dated August 1st and spotted by Androidpolice.com, Nvidia has decided to cancel the tablet “for business reasons”.
The earlier rumored Shield Tablet refresh, which was spotted at FCC, packed some impressive specifications, including an 8-inch 1920×1200 resolution screen, faster Tegra X1 SoC, 3GB of RAM and 32GB of storage.
The most probable reason is the decline in tablet sales and Nvidia’s focus on cars.
Hopefully, this doesn’t mean that we won’t see any more tablets or similar devices from Nvidia in future but not the new Shield Tablet.
It’s been more than five years since The NPD Group said it would start including digital data in its monthly reports on the US video game business. In those five years, not only has digital grown, but publishers, analysts, press and more have all thrown shade at NPD, questioning the relevancy of a service that only offers physical sales data in an increasingly digital era. Today, NPD is finally taking that first step to offer a more complete picture of the entire games market as it’s unveiled its digital point-of-sale (POS) sourced service, tracking SKU-level sales data on digital games.
“Following several years of beta testing, the Digital Games Tracking Service will allow participating clients to understand the size and growth of the digital market, and analyze attach rates and other important metrics. Combined with physical data available by NPD, these clients can gain a better understanding of the interplay between the physical and digital sales channels,” the firm explained in a press statement.
“As has been experienced across a wide variety of industries, digital has made a big impact on the overall gaming market, and we’ve risen to meet the demand for a reporting mechanism that tracks those sales in a timely and accurate way,” said Joanne Hageman, President, U.S. Toys & Games, The NPD Group. “With the participation and support of leading publishers – whose cooperation makes this possible – we are excited to launch an industry-first service that addresses a long-standing need.”
The usual report on physical sales data will now be combined with digital sales data and issued on July 21 instead of July 14; it’s expected to follow that cadence (the third data Thursday of the month) moving forward. Initially, NPD has gained the support of major publishers like EA, Activision, Ubisoft, Capcom, Square Enix, Take-Two, Deep Silver and Warner Bros. There are notable exceptions, however, like Bethesda as well as first-party publishers like Microsoft, Sony and Nintendo, but NPD analyst Liam Callahan promised that more publishers would be signing on as the service evolves.
“This has been several years of beta testing and we’ve been doing this in partnership with publishers, shaping the product, encoding the data the way the industry wants to see it. It’s really at the behest of or on the behalf of the publishers that we’re moving forward with this announcement… Really the goal is to bring a new level of transparency never before seen, at least in the US market. This is really the first step. We recognize that there’s still a ways to go, we want more publishers to join, we want to be able to project for people who are not participating. It’s an evolution, it’s something that takes time and our philosophy was really to start – if we waited to have every publisher in the world to sign up it would take forever. We’ll be improving this as time goes on,” he said.
Importantly, NPD will notate next to game titles on the chart that do not include digital data. Callahan wants the service, which is being produced with the assistance of EEDAR, to ultimately be able to project data even for non-participants but NPD isn’t starting with that ability just yet. Instead, it’ll focus on tracking revenue from full-game downloads across Xbox Live, PlayStation Network and Steam. Services like Battle.net and Uplay won’t be included at this point.
“EEDAR is excited to be part of this initiative with NPD and the participating publishers. Tracked digital revenues have seen annual growth of over 100% each year since 2012. In 2016, we’ve already tracked more digital revenue than we saw in 2012 and 2013 combined. This initiative is a great milestone for the industry which will allow publishers to make better business decisions with a broader data set,” added EEDAR CEO Rob Liguori.
Add-on content like DLC and microtransactions will be tracked as well, but that data will only be released to participants, not the media and public. “We’re waiting until that’s a little more fully baked for us to roll that out to the media. We’re doing things in stages,” Callahan said.
It may be frustrating for the media to not have a granular breakdown at the SKU level to see what portion of a game’s sales are digital versus physical, but NPD anticipates more openness as the service evolves.
NPD communications chief David Riley commented, “This is a closed service, the detailed data is only available to participants so if you’re a non-participating publisher you cannot see the data. The fact that we’re allowed to go out with something for the media is a huge step in the right direction. I think as the service matures and as the publishers get used to it and we get more on board, we have more history, we do some benchmarking, we can provide that, but what we wanted to do for multiple reasons, including appeasing the publishers was to combine full-game physical with full-game digital, keep away from the DLC, keep PC games separate because that’s a whole different ball of wax. It’s not comprehensive, but it’s the most comprehensive, we’re the first in the market to track this and we’re sort of very cautious.”
He added, “I expect a good old slamming from the industry press because of the limitations here but what we don’t want to do is open ourselves up by separating it at this time. We’ve just opened the gates right now. Just as you’ve seen a withdrawal [of data] on the physical side – we used to give units – this is sort of going to be the reverse I’m hoping and we can provide more over time.”
Working with the publishers is great, but there are numerous digitally released titles from indies which make up a growing piece of the industry pie. Will the service grow to track those titles too? “Indies are a big part of the industry in terms of their innovation and I think when I talk about our projection methodology and assets at NPD, that is part of how we can track everything, not just for publishers, including indie games and everything that’s outside the panel right now,” Callahan said.
“Some of those smaller games are published through a publisher or first-party so there are ways to get some of those with our publisher-sourced methodology, and otherwise we’re approaching it with developing a robust projection methodology. That’s certainly part of our plan, we’re not going to ignore the indie piece.”
In our previous conversations with NPD, the firm had hinted at possibly working towards the goal of global digital reports. That’s not off the table, but it’s not a focus at the moment. “US is our core competency… our vision is to expand this as much as we can in a way that makes sense for our partners. If that’s global that may be what we pursue. But we also want to do the best job that we can in projecting for the market and recruiting as many publishers as we can,” Callahan concluded.
A Democratic U.S. senator requested the software developer behind Nintendo Co Ltd’s Pokemon GO to clarify the mobile game’s data privacy protections, amid concerns the augmented reality hit was unnecessarily collecting vast swaths of sensitive user data.
Senator Al Franken of Minnesota sent a letter to Niantic Chief Executive John Hanke asking what user data Pokemon GO collects, how the data is used and with what third party service providers that data may be shared.
The game, which marries Pokemon, the classic 20-year-old cartoon franchise, with augmented reality, allows players to walk around real-life neighborhoods while seeking virtual Pokemon game characters on their smartphone screens – a scavenger hunt that has earned enthusiastic early reviews.
Franken also asked Niantic to describe how it ensures parents give “meaningful consent” to a child’s use of the game and subsequent collection of his or her personal information.
“I am concerned about the extent to which Niantic may be unnecessarily collecting, using, and sharing a wide range of users’ personal information without their appropriate consent,” Franken wrote.
“As the augmented reality market evolves, I ask that you provide greater clarity on how Niantic is addressing issues of user privacy and security, particularly that of its younger players,” he added.
Franken additionally asked Niantic to provide an update on a vulnerability detected on Monday by security researchers who found Pokemon GO players signing into the game via a Google account on an Apple iOS device unwittingly gave “full access permission” to the person’s Google account.
Pokemon GO on Tuesday released an updated version on iOS to reduce the number of data permissions it sought from Google account users.
Niantic did not immediately respond to a request for comment about Franken’s inquiry.
The company, spun off by Google last year, created the game in tandem with Pokemon Co, a third of which is owned by Nintendo.
Nintendo is keeping fairly quiet about its VR plans, although a system is clearly on the drawing board.
The rumor mill suggests that the former playing card maker is determined to fix a problem which has dogged other VR machines on the market. Basically after you have worn a headset for half-an-hour you get tired and a bit sick.
Nintendo’s acting representative director Shigeru Miyamoto told shareholders that the company was “researching VR” – but didn’t want to show off the NX at E3 as they wanted to “avoid imitators.”
The research appears to be focused on coming up with a way that the headsets can be deeply immersive without turning the player into Linda Blair from the Exorcist. But it is clear that Nintendo does want to incorporate VR into its hardware once more.
It must think that it is likely to do better now than when it tried to in 1995 to run the Virtual Boy.
Apparently it will have a machine ready to show off in March next year. If it manages to avoid the VR fatigue then it might be onto a winner.