With Amazon’s Fire TV device the first out the door, the second wave of microconsoles has just kicked off. Amazon’s device will be joined in reasonably short order by one from Google, with an app-capable update of the Apple TV device also likely in the works. Who else will join the party is unclear; Sony’s Vita TV, quietly soft-launched in Japan last year, remains a potentially fascinating contender if it had the right messaging and services behind it, but for now it’s out of the race. One thing seems certain, though; at least this time we’re actually going to have a party.
“Second wave”, you see, rather implies the existence of a first wave of microconsoles, but last time out the party was disappointing, to say the least. In fact, if you missed the first wave, don’t feel too bad; you’re in good company. Despite enthusiasm, Kickstarter dollars and lofty predictions, the first wave of microconsole devices tanked. Ouya, Gamestick and their ilk just turned out to be something few people actually wanted or needed. Somewhat dodgy controllers and weak selections of a sub-set of Android’s game library merely compounded the basic problem – they weren’t sufficiently cheap or appealing compared to the consoles reaching their end-of-life and armed with a vast back catalogue of excellent, cheap AAA software.
“The second wave microconsoles will enjoy all the advantages their predecessors did not. They’ll be backed by significant money, marketing and development effort, and will have a major presence at retail”
That was always the reality which deflated the most puffed-up “microconsoles will kill consoles” argument; the last wave of microconsoles sucked compared to consoles, not just for the core AAA gamer but for just about everyone else as well. Their hardware was poor, their controllers uncomfortable, their software libraries anaemic and their much-vaunted cost savings resulting from mobile game pricing rather than console game pricing tended to ignore the actual behaviour of non-core console gamers – who rarely buy day-one software and as a result get remarkably good value for money from their console gaming experiences. Comparing mobile game pricing or F2P models to $60 console games is a pretty dishonest exercise if you know perfectly well that most of the consumers you’re targeting wouldn’t dream of spending $60 on a console game, and never have to.
Why is the second wave of microconsoles going to be different? Three words: Amazon, Google, Apple. Perhaps Sony; perhaps even Samsung or Microsoft, if the wind blows the right direction for those firms (a Samsung microconsole, sold separately and also bundled into the firm’s TVs, as Sony will probably do with Vita TV in future Bravia televisions, would make particular sense). Every major player in the tech industry has a keen interest in controlling the channel through which media is consumed in the living room. Just as Sony and Microsoft originally entered the games business with a “trojan horse” strategy for controlling living rooms, Amazon and Google now recognise games as being a useful way to pursue the same objective. Thus, unlike the plucky but poorly conceived efforts of the small companies who launched the first wave of microconsoles, the second wave is backed by the most powerful tech giants in the world, whose titanic struggle with each other for control of the means of media distribution means their devices will have enormous backing.
To that end, Amazon has created its own game studios, focusing their efforts on the elusive mid-range between casual mobile games and core console games. Other microconsole vendors may take a different approach, creating schemes to appeal to third-party developers rather than building in-house studios (Apple, at least, is almost guaranteed to go down this path; Google could yet surprise us by pursuing in-house development for key exclusive titles). Either way, the investment in software will come. The second wave of microconsoles will not be “boxes that let you play phone games on your TV”; at least not entirely. Rather, they will enjoy dedicated software support from companies who understand that a hit exclusive game would be a powerful way to drive installed base and usage.
Moreover, this wave of microconsoles will enjoy significant retail support. Fire TV’s edge is obvious; Amazon is the world’s largest and most successful online retailer, and it will give Fire TV prime billing on its various sites. The power of being promoted strongly by Amazon is not to be underestimated. Kindle Fire devices may still be eclipsed by the astonishing strength of the iPad in the tablet market, but they’re effectively the only non-iPad devices in the running, in sales terms, largely because Amazon has thrown its weight as a retailer behind them. Apple, meanwhile, is no laggard at retail, operating a network of the world’s most profitable stores to sell its own goods, while Google, although the runt of the litter in this regard, has done a solid job of balancing direct sales of its Nexus handsets with carrier and retail sales, work which it could bring to bear effectively on a microconsole offering.
In short, the second wave microconsoles will enjoy all the advantages their predecessors did not. They’ll be backed by significant money, marketing and development effort, and will have a major presence at retail. Moreover, they’ll be “trojan horse” devices in more ways than one, since their primary purpose will be as media devices, streaming content from Amazon, Google Play, iTunes, Hulu, Netflix and so on, while also serving as solid gaming devices in their own right. Here, then, is the convergence that microconsole advocates (and the rather less credible advocates of Smart TV) have been predicting all along; a tiny box that will stream all your media off the network and also build in enough gaming capability to satisfy the mainstream of consumers. Between the microconsole under the TV and the phone in your pocket, that’s gaming all sewn up, they reckon; just as a smartphone camera is good enough for almost everyone, leaving digital SLRs and their ilk to the devoted hobbyist, the professional and the poseur, a microconsole and a smartphone will be more than enough gaming for almost everyone, leaving dedicated consoles and gaming PCs to a commercially irrelevant hardcore fringe.
There are, I think, two problems with that assessment. The first is the notion that the “hardcore fringe” who will use dedicated gaming hardware is small enough to be commercially irrelevant; I’ve pointed out before that the strong growth of a new casual gaming market does not have to come at the cost of growth in the core market, and may even support it by providing a new stream of interested consumers. This is not a zero-sum game, and will not be a zero-sum game until we reach a point where there are no more non-gaming consumers out there to introduce to our medium. Microconsoles might do very well and still cause not the slightest headache to PlayStation, Xbox or Steam.
The second problem with the assessment is a problem with the microconsoles themselves – a problem which the Fire TV suffers from very seriously, and which will likely be replicated by subsequent devices. The problem is control.
Games are an interactive experience. Having a box which can run graphically intensive games is only one side of the equation – it is, arguably, the less important side of the equation. The other side is the controller, the device through which the player interacts with the game world. The most powerful graphics hardware in the world would be meaningless without some enjoyable, comfortable, well-designed method of interaction for players; and out of the box, Fire TV doesn’t have that.
Sure, you can control games (some of them, anyway) with the default remote control, but that’s going to be a terrible experience. I’m reminded of terribly earnest people ten years ago trying to convince me that you could have fun controlling complex games on pre-smartphone phones, or on TV remote controls linked up to cable boxes; valiant efforts ultimately doomed not only by a non-existent business ecosystem but by a terrible, terrible user experience. Smartphones heralded a gaming revolution not just because of the App Store ecosystem, but because it turned out that a sensitive multi-touch screen isn’t a bad way of controlling quite a lot of games. It still doesn’t work for many types of game; a lot of traditional game genres are designed around control mechanisms that simply can’t be shoehorned onto a smartphone. By and large, though, developers have come to grips with the possibilities and limitations of the touchscreen as a controller, and are making some solid, fun experiences with it.
With Fire TV, and I expect with whatever offering Google and Apple end up making, the controller is an afterthought – both figuratively and literally. You have to buy it separately, which keeps down the cost of the basic box but makes it highly unlikely that the average purchaser will be able to have a good game experience on the device. The controller itself doesn’t look great, which doesn’t help much, but simply being bundled with the box would make a bold statement about Fire TV’s gaming ambitions. As it is, this is not a gaming device. It’s a device that can play games if you buy an add-on; the notion that a box is a “gaming device” just because its internal chips can process game software, even if it doesn’t have the external hardware required to adequately control the experience, is the kind of notion only held by people who don’t play or understand games.
This is the Achilles’ Heel of the second generation of microconsoles. They offer a great deal – the backing of the tech giants, potentially huge investment and enormous retail presence. They could, with the right wind in their sales, help to bring “sofa gaming” to the same immense, casual audience that presently enjoys “pocket gaming”. Yet the giant unsolved question remains; how will these games be controlled? A Fire TV owner, a potential casual gamer, who tries to play a game using his remote control and finds the experience frustrating and unpleasant won’t go off and buy a controller to make things better; he’ll shrug and return to the Hulu app, dismissing the Games panel of the device as being a pointless irrelevance.
The answer doesn’t have to be “bundle a joypad”. Perhaps it’ll be “tether to a smartphone”, a decision which would demand a whole new approach to interaction design (which would be rather exciting, actually). Perhaps a simple Wiimote style wand could double as a remote control and a great motion controller or pointer. Perhaps (though I acknowledge this as deeply unlikely) a motion sensor like a “Kinect Lite” could be the solution. Many compelling approaches exist which deserve to be tried out; but one thing is absolutely certain. While the second generation of microconsoles are going to do very well in sales terms, they will primarily be bought as media streaming boxes – and will never be an important games platform until the question of control gets a good answer.
“Grey Goo is remarkable not for what it has added to the RTS formula, but what it has stripped away,” PC Gamer wrote in its reveal of Grey Goo, a new real-time strategy game from the veterans at Petroglyph. Perhaps the same could be said of Grey Goo’s recently formed publisher Grey Box, which is seeking to strip away the more negative aspects of game publishing. Suits and creatives typically will bump heads because the two sides are looking at the creation of games from wildly different perspectives. But what if they actually had the same goals?
Ted Morris, executive producer at Petroglyph, felt an immediate kinship with the team at Grey Box. “As a small [studio] – small being 50, 60 people – we are always talking to publishers to see what deals we can put together. But with Grey Box, I think that we meshed better on a personal level with them as a company and as a group of people than we have ever meshed with another group,” he enthused to GamesIndustry International during GDC. “And we’ve worked with Sega and LucasArts – all the big guys – and certainly talked to everybody else, too – the EAs and everybody – and these guys – man, we just gelled with these guys so well.”
Morris said that Grey Box’s approach to publishing was noticeably different from the start. While other, larger publishers may immediately come up with marketing plans and sales targets, Grey Box found itself on the same page with Petroglyph: fun comes first.
“Every meeting that we have is always a sit down and then people open up financial books and they start talking about what the sales figures are going to be like, and when we sit down with [Grey Box], it’s like ‘how can we make a great game?’ We don’t even talk about money, we talk about ‘how good can we make this game?’ and ‘how successful will it be?’ You know, let the game drive the sales, don’t let the marketing drive the sales, don’t let the sales department drive the sales. It’s really about, if you make a great game, they will come,” Morris continued. “They spoke to that so often, so frequently that we thought, ‘man, these guys just want to help us focus on what’s really important.’”
One of the defining traits for publisher Grey Box is that they’re all gamers at heart, noted Josh Maida, executive producer for the publisher.
“I’m not going to pre-judge any of those other publishers – I mean, for all I know they love games as much as we do. And we do. We all love games. We all come from different areas. I lost a whole grade point in college to Street Fighter, and… we want to be fiscally mindful. You need to make money, but with the money we make, we want to make more games,” he remarked.
“So I think at the core of that is we’re not trying to take away from the industry. We want it to feed itself and go bigger. Quality over quantity is something that we’re mindful of. We also just want to make a good working relationship for our partners… everybody’s in here for fulfillment. The talent we work with, they could all be working in private industries for twice the amount they do, but they’re here because they love to make games, and so we want to be mindful of that. And when people die, they want to know they did great things and so we want to create those opportunities for people.”
Tony Medrano, creative director for Grey Box, criticized other publishers for being too quick to just follow another company’s successful formula.
“We’re not chasing a trend, we’re chasing something we believe in, we’re chasing something we like, and we’re not trying to shoehorn a formula or monetization model onto things that just don’t work because they’re popular,” he added. “I think from the get-go, it’s been all about how can we make the best game, and then everything else follows from that. I think a difference structurally [with other publishers] would be that we have a very lean and mean team. We’re not trying to build a skyscraper and have redundant folks. Everybody that’s here really cares, has some bags under their eyes from late nights… I think it is just that we look at all our partners as actual partners. We let them influence and make the product better, whether it’s the IP or the game.”
Speaking of monetization models, Maida commented that there’s no “secret agenda to Zyngafy RTS or anything.” Grey Goo is strictly being made for the PC, but the RTS genre easily lends itself to free-to-play. Upon the mere mention of free-to-play, however, you could almost feel the collective blood pressure in the room rising. It’s clearly not the type of experience that Petroglyph and Grey Box are aiming for.
For Petroglyph’s Morris, in particular, free-to-play hit a nerve. “I’m going to jump in here, sorry. I’m really annoyed!” he began. “There’s been such a gold rush for free-to-play right now that is driving publishers – I mean, there needs to be a good balance. There’s a great place for free-to-play – I play lots of free-to-play games – but it is driving developers like us to focus on money instead of making great game content. I’m not going to name any examples, but I’ve been disappointed with some of the free-to-play offerings because it’s not so much about making a great experience for the player anymore. It’s about ‘how can we squeeze them just a little bit more?’ or annoy them to the point where they just feel like they have to pay.”
Medrano added, “I get frustrated when I play free-to-play games, and if I purchase something, I feel dirty. I feel like ‘oh, I got cheated, I fell for the trap.’ Or even more modern games where they baby you through the whole thing. There’s no more of that, like, ‘this is tough, so that means if I get good at this, there’s reward – there’s something there.’”
Ultimately, while Petroglyph and Grey Box came together thanks to a shared love of the RTS genre, they feel there’s a real opportunity to bring back hardcore, intelligent games.
Andrew Zoboki, lead game designer at Petroglyph, chimed in, “It’s almost as if the industry has forgotten about the intelligent gamer. They feel like that everyone’s going to be shoehorned in there, and I would say even from a design perspective that a lot of design formulas for a lot of things, whether they be free-to-play or what the mainstream is going to, next-gen and such, that all those titles are kind of a little more cookie-cutter than they probably should be. They’ve tried to shoehorn gamers into a formula and say, ‘this is what a gamer is,’ rather than understanding that gamers are a very wide and diverse bunch of individuals, everyone from the sports jock to the highly intellectual, and they all have [different] tastes… there’s different games that will appeal to different demographics… if you make the games that players want to play, they will come.”
And that really is at the heart of it. Morris lamented how business creeps into the games creation equation far too often. “They’re trying to balance the game with Excel spreadsheets instead of sitting down and actually playing it and having focus tests and bringing people in and actually trying to iterate on the fun,” he remarked about other publishers.
For Grey Box at the moment, the focus is on making Grey Goo the best it can be, but the company does have plans for more IP. It’s all under wraps currently, however.
“We do have a roadmap, but it’s not based off of the calendar year. We do have another game in the works right now and we might announce that at E3. And we have a road map for this IP, as well,” Maida said. “Obviously we want to get it in the hands of players and fans to see what they respond to, but we’ve got capital investment in the IP with hopes to not only extend this lineage of RTS’s but possibly grow out that franchise and other genres as well.”
Grey Box plans to release Grey Goo later this year.
In April of 2011, GameStop acquired streaming tech firm Spawn Labs because cloud gaming was the future. Today, the retailer announced it had closed Spawn Labs because cloud gaming is still the future.
Speaking with GameSpot today, the retailer’s vice president of investor relations Matt Hodges said cloud gaming isn’t a good fit for today’s consumers.
“While cloud-based delivery of video games is innovative and potentially revolutionary, the gaming consumer has not yet demonstrated that it is ready to adopt this type of service to the level that a sustainable business can be created around it,” Hodges said.
For the time being, GameStop’s cloud gaming business will be focused on selling subscription cards for programs like PlayStation Now through its retail locations.
Beyond the closure, the specialty retailer also reported its fourth quarter and full-year financial results this morning. The launch of the Xbox One and PlayStation 4 reinvigorated the console market, helping to drive sales and profits growth.
For the year ended February 1, total revenues were up nearly 2 percent to $9.04 billion. At the same time, the company returned to the black, turning the previous year’s $269.7 million net loss into a $354.2 million net profit. The company also underlined the growth of its digital and mobile business, which brought in more than $1 billion for the year.
The fourth quarter saw sales rise more than 3 percent to $3.68 billion, with net income slipping nearly 16 percent to $220.5 million. Those figures include goodwill and asset impairment charges of $28.7 million, “primarily due to the closure of Spawn Labs and store asset impairments.”
GameStop also released its first outlook for the current fiscal year and its first quarter. For the full year, the retailer is expecting total sales to be up 8 to 14 percent, with a net income between $398 million and $433 million. For the current quarter, it has projected year-over-year sales growth between 7 and 10 percent, with profits between $64 million and $70 million.
Microsoft is using this year’s Game Developers Conference as a platform to push ID@Xbox, with the company yesterday announcing dozens of titles headed for the console under the indie self-publishing program. Microsoft corporate vice president Phil Harrison sat down with GI discuss the reasons behind the initiative and where the company hopes to take it in the future.
“A lot of the platform decisions we made in previous generations have really been around the fact we had a predominantly retail business model,” Harrison said. “You don’t want to be pressing millions of discs only to find they don’t work. Those are expensive investments that are difficult to retract from. But in a digital world, those constraints go away. In the previous generation, all console companies had walled gardens with pretty high walls. And now we’ve got gardens with small fences around them, or maybe a hedge. The barrier to entry has definitely come down, and that is a really positive trend for gamers, but also for creating an on-ramp for developers looking to get into our industry.”
Harrison acknowledged that a platform holder could run into problems by taking that approach too far, but suggested that the ID@Xbox program isn’t in any danger of that situation just yet.
“There’s always a balance to be had, but right now our push–and we’ll continue for the foreseeable future–is to democratize access to our platform,” Harrison said. “As you know, we have an intention that every retail Xbox One can become a dev kit, and we want to open up the platform to as many people as possible.”
The company has also set up some of the Xbox One’s core feature set specifically to address some of the potential problems of being overly open, Harrison said. Social features like user recommendations and trending offerings will help, but the Twitch streaming and ability to upload screens and gameplay to video are expected to really help games attract more attention from the wider community.
“We think those platform features will help the best games connect with the biggest audience, and the biggest audience can find the best games,” Harrison said. “It’s a virtuous cycle. We’re probably just scratching the surface of what’s possible with that, but I really like where it’s headed.”
Early results from Microsoft’s indie outreach are promising. Harrison said in the ID@Xbox program’s first four months, it has already attracted 250 developers, more indies than the Xbox 360 has drawn in its eight years on sale.
Thanks to Silicon Valley, there’s no shortage of tech companies hosting meetings or conferences in the Bay Area, but when it comes specifically to the business of games, there are few conferences in San Francisco that can rival the annual Game Developers Conference. For most in the industry (or those looking to enter the industry) it’s one of the few must attend events each year. And you can bet the city of San Francisco is happy to host GDC, as the financial benefit to local businesses is substantial.
“GDC is the highlight of March for the San Francisco hospitality community – everyone knows when GDC is here judging from the packed bars, restaurants, and streets. I love that turning any given corner in or near the convention center, one will hear an international language spoken. Their current financial impact is estimated at over $46 million,” Leonie Patrick, senior director for Moscone Expansion Sales at the San Francisco Travel Association.
“Although San Francisco is fortunate to have several large conventions, the demographic of GDC is unique and high energy. GDC is a valued, annual group and we do our best to assist with their success every year. When they thrive, we thrive,” she continued.
While GDC used to take place in San Jose, the conference quite simply outgrew the city, and San Francisco became its new home, offering more convention space and hotel accommodations. The conference has been consistently growing along with the industry itself, and it’s definitely been a boon to San Francisco.
“GDC has been with us since 2005, with the exception of 2006. They have demonstrated tremendous growth. They started off with 10,000 people crammed into Moscone West, and they have more than doubled their attendance in 8 years,” Patrick said. “GDC has also had extreme room growth, starting at 1,900 on peak to almost quadrupling that number.”
While some locals have resented the impact that highly-paid tech sector employees have had on San Francisco’s cost of living, San Francisco Travel Association isn’t concerned that GDC will be affected by any of this sentiment. “We have no concerns about how the GDC attendees will be received by San Francisco. San Franciscans know that tourism is our number one industry and conventions are a different issue from residency issues. We welcome GDC happily each year,” Patrick added.
Indeed, tourism is a wonderful thing for the great city of San Francisco. From the sights and sounds to the places to eat, there’s plenty to enjoy for GDC attendees who might want to nip out of Moscone for some downtime as well.
“Many attendees have been here repeated times so they want more than the typical icons. They may want to explore the more offbeat neighborhoods like the Castro, Union & Fillmore Streets, eat a great meal in the Mission, or walk around Noe Valley. For the first and second timers, they should see the Golden Gate Bridge, Coit Tower, ride a cable car, go down Lombard Street, sit in a café in North Beach, walk along the Wharf, visit the Ferry Building, or window shop in the Haight,” Patrick recommended. “And I can’t forget about Golden Gate Park, or maybe see the Pacific Ocean if they have not before. And if they really have time visit one of the many neighboring cities. Sausalito, Tiburon, Monterey/Carmel, Lake Tahoe… the list goes on.”
And even if you don’t have a car, it’s thankfully not too difficult to get around San Francisco (unlike Los Angeles, for example).
“Luckily, San Francisco is a large city contained in a small footprint. It is an extremely easy city for walking. Despite its reputation for having many hills, which it does, take a walk along the waterfront in order to get you from the convention center to the Wharf – you will avoid them all,” Patrick noted. “We also have great public transportation that can take you to outlying areas of San Francisco as well as outlying cities very economically.”
While it’s a bit late now, her advice for future GDC attendees should definitely be heeded: “Use the hotels that the event staff at GDC recommends since they are all vetted and reviewed by the GDC staff. And try not to book your hotel too late since rates are likely to get higher closer to the event date.”
User acquisition is a big buzz word in the mobile games space nowadays. But it’s not all it’s cracked up to be. Acquiring users has gotten expensive, and it won’t matter how many you acquire if the churn is so high that they’re all leaving your game in a few days. That’s why player retention is so important and it’s how Yvolver, a new Dallas-based startup, hopes to make a difference.
CEO Steve Nix, former executive at id software and GameStop, believes that most developers should stop paying for user acquisition. It costs more than $3.00 per install to acquire customers and that’s only increasing.
“Lately the trend is that costs for paid user acquisition are increasingly prohibitive, especially for mid- and smaller-sized developers. There is a point where paid user acquisition doesn’t make good economic sense for some games anymore,” Nix told GamesIndustry International. “Hopefully developers are also going to acquire players organically through typical paths like word of mouth, social and online discovery or digital store search.
“The big difference that Yvolver brings to the table – we are much more concerned about the behaviors and value perceived by users already in the game. This makes any users acquired more likely to return to the game, more likely to make a first or second in-app purchase and much more likely to recommend the game to a friend. Every customer acquired, regardless of how they got there, will be that much more valuable to the developer. So to a large degree, we are not replacing acquisition services or methods, we are just making them much more cost effective or viable for the developer.”
Nix added that the problem for many developers is that they’ve become far too concerned with the acquisition part of the equation rather than focusing on engagement.
“Right now, many developers are focused on acquisition as the only tool in their toolbox outside of the gameplay mechanics and changes to their economies that they can directly control themselves. Gameplay mechanics may be difficult to iterate upon quickly or the developer may just not have the resources to make all of the changes that they would like. We know that these same developers are increasingly viewing their acquisition programs as dumping money into a giant leaky budget. Yvolver helps plug the leaky money bucket that acquisition dollars are being poured into by encouraging retention, engagement and in-app spend for those users once acquired,” Nix continued.
“There are also a lot of great developers out there that are fantastic at creating a fun, gorgeously crafted games, but they do not have the resources to study user engagement and spending behaviors the way that the major studios can with their dedicated teams. That is all we focus on at Yvolver, so we are excited about improving the health of the business model for developers that may not have the capabilities that our laser-focused team of veteran data science and loyalty experts can quickly bring to their games.”
The crux of Yvolver is a loyalty rewards program. In fact, Yvolver teamed with Hal Brierley, who’s serving as a key investor and providing counsel on the design of its loyalty services. Brierley is an expert when it comes to loyalty rewards, having been a pioneer in the design of major loyalty programs, including American Airlines AAdvantage, Hilton HHonors and GameStop Power-Up Rewards.
So how does it work? Essentially, Yvolver users are able to build up a monthly Yvolver Score by completing events that are set by the developer in combination with making in-game purchases. Users can then convert their monthly score into prizes – both digital in-game items or power-ups and physical real-world rewards, like electronics, clothing or other goods. The score is persistent across games/apps and different platforms.
And while you might think that a program like this would be intrusive or take away from the experience for some players, Nix insists that it’s been designed in a way that won’t push away players – besides, that goes against the very thing the company was built for.
“The core premise of Yvolver is that we only have value for developers if we are creating value for the gamers playing their games. Most of the team here came out of game development and we have been critically focused on every detail of the user experience and making sure that we only add to the enjoyment of the game,” Nix said. “We should never be throwing confusing pop-ups out, blocking the user’s progression, making them think they have somehow left the game, or all of the distracting stuff that you see in a lot of the ad and offer platforms that are integrated into so many games now. We have worked closely with our game developer partners to make sure that we are respecting their game, and the response so far has been that we are firmly on the right path.”
The supporting cast around Nix and Brierley is strong as well, coming from companies like id, GameStop, Zynga, Apple and more. Former Apple App Store games manager Cory Lewis is a co-founder and is leading biz dev, former id lead programmer Jah Raphael is a co-founder and is serving as CTO, and Matt Himelfarb, a managing partner at Dallas Venture Partners is a co-founder and acting as CFO. You can read more about the entire team here.
On the business side of things, Yvolver believes its own interests run in parallel to the developers it’s looking to help. Much like a sales associate on a commission, Yvolver only benefits when the developer starts seeing sales.
“We work with our developer partners to build loyalty-driven events and programs that add value for their users and incentivize the behaviors that are most important to the developer. When users engage with the game in these desired ways, combined with that user’s in-app spend, they will receive an Yvolver score. The more the desired behaviors and in-app spend happen, the higher the user’s score will be. Our revenue is based directly on the Yvolver scores generated in an app in a month. The beauty of this model is that we only make money if the developer is making money through these in-app purchases. We are completely aligned with our development partners, which is important to us,” explained Nix.
Yvolver has been in private testing with a number of apps so far, but the company isn’t worried about signing tons of developers right away.
“We are not concerned about integrating with two-thousand apps the first year and game count is really a meaningless metric for us… Our data science and account teams are working continuously to become more creative and efficient in the programs that we develop with our partners, and that is how we really think about our progress. We believe gamers will quickly start seeking out titles that have integrated with Yvolver, and gamers will ultimately tell us if we are successful through their behaviors,” Nix said.
To kick things off, a beta version of the Yvolver service will launch exclusively with Zombie Gunship Zero from Limbic. The game will be available for download on March 13 and the beta service will follow in the “near future.”
Limbic CEO Arash Keshmirian commented, “Running a successful independent mobile games studio has become an increasingly complex challenge during the past two years. Market competition is at an all-time high, and marketing resources are becoming increasingly scarce and expensive. We couldn’t be more excited to partner with the Yvolver team to not only help engage and retain our current fan base, but to bring those fans real, added value within the Zombie Gunship Zero experience. It’s a win-win for us.”
It is, for the moment, just a conspiracy theory, and it goes something like this: Microsoft wants to get out of the games console business. It’s planning to package up the Xbox part of the Devices & Studios division and separate it off from the rest of the company, so it can be sold as a going concern. Who’s buying? Amazon, which views acquiring Xbox as a step towards dominance of the living room. If there’s anything to this theory at all, the coming year or two could see the end of Microsoft Xbox and a warm welcome for Amazon Xbox.
Let’s lay all the cards on the table. The evidence is sketchy and circumstantial. We know that Microsoft is looking at some pretty major strategic changes in the wake of the appointment of new CEO Satya Nadella. Nadella’s focus throughout his career has been on the business end of Microsoft – servers, cloud services and enterprise tools – which remains in robust health compared to the troubled state of the firm’s consumer divisions. Choosing him as CEO could suggest that the company is aiming for a future focused on enterprise tools and platforms, not consumer products.
Then there’s the man who wasn’t chosen as CEO, Stephen Elop. Elop used to work at Microsoft, then became CEO of Nokia. Now that Nokia is selling its mobile phone division to Microsoft, Elop is back where he started. Moreover, he saw himself as a strong candidate for the CEO job when Steve Ballmer resigned. With Nadella in the CEO’s chair, Elop’s consolation prize is that he’s taking over as head of Devices & Studios. That’s a logical choice, since Devices & Studios will include Nokia under its umbrella, at least to some extent, so Elop will continue running his old Nokia team alongside the Xbox and Surface teams at Microsoft.
Given that, it would perhaps be more surprising if Elop wasn’t put in charge of Devices & Studios. His presence ought to ease the transition as Nokia is absorbed into Microsoft, a major acquisition that’s likely to cause some indigestion along the way. However, during the CEO selection process, while Elop was still in the running, Bloomberg reported that he had some very interesting plans for the company if he was running it. The reported plans included, notably, a willingness to sell off business units Elop viewed as distractions from Microsoft’s main goals – business units including the Bing search engine and the Xbox. As logical as his new job at Devices & Studios may seem, you can’t blame people for raising an eyebrow when a man who supposedly wanted to sell off the Xbox division is put in charge of the Xbox division.
It takes two to tango, so how about the Amazon side of the deal? Well, whispers of Amazon’s keen interest in the games market have flown around for months now, including rumours that the company has discreetly hired a number of veterans from the games industry while keeping their involvement quiet – for now. Last month, Amazon bought games studio Double Helix, fresh from working closely with Microsoft to prepare Killer Instinct as a launch title for Xbox One. Something is afoot. Occam’s Razor suggests a “Kindle” console, an Ouya-style box under the TV linked to Amazon’s digital content platform, but given the plethora of Android consoles currently underwhelming the market and failing to gain a foothold, it’s not unreasonable to suggest that Amazon would want to make a much bolder move into the console space. Plus, Amazon certainly isn’t scared of making big acquisitions when it wants to open up a new market opportunity for itself – it’s hard to conceive of a cash value for Xbox, not least given how obfuscated the financials of the console business are, but I don’t doubt that Amazon could afford it if it really wanted to.
That’s it – that’s the conspiracy theory. I don’t deny for a second that the evidence, if you can call it that, is pretty thin. Microsoft is probably going to refocus on enterprise; a guy who wanted to sell Xbox is the new boss of that division, but he’s also the most logical choice for the job. Amazon is setting itself up for a big move into the games space and may (or may not) have hired some senior games people on the down-low. That’s the sum total of the evidence, and we should all bear that in mind. Even this article exists not to promote this theory, which I view as interesting but unsupported by the available information, but rather to evaluate, hypothetically, whether there is any real possibility of an Xbox spin-off and sale. In short, there’s no real evidence that Microsoft is going to do this thing, but it’s an interesting academic exercise to evaluate whether they could do it if they wanted, and whether a motivation to do so might exist.
So how hard, in theory, would it be to spin off and sell Xbox? The answer to that depends on what exactly Microsoft is proposing to sell. Xbox, as mentioned earlier, is part of the Devices & Studios division, which also houses Surface and will shortly be joined by Nokia. Some other odd things are rolled into this division, apparently. It was claimed last year that the patents which force Android device makers to cough up a fee to Microsoft for every handset they sell are held, for financial purposes, in Devices & Studios, thus accounting for a big chunk of the division’s revenue.
If Microsoft’s new management had come to view Xbox as a distraction that doesn’t fit with their new enterprise focus, one might reasonably ask if they’ll take the same view of Surface. That product which hasn’t performed well and has reportedly soured relationships between Microsoft and other hardware vendors, who aren’t terribly happy with the company from whom they license the Windows operating system suddenly being in direct competition with them. The company wouldn’t be happy about losing the patents related to Android, not least since Windows and Windows Phone presumably use the technology described by those patents as well, so that probably wouldn’t be included in any sale, but aside from that it’s plausible that Microsoft could sell the entire Devices & Studios operation, thus putting itself out of the hardware business entirely.
Alternatively, Microsoft could decide to hold on to Surface and simply divest itself of Xbox and the various Microsoft Game Studios operations. Surface would then be joined by Nokia in the much-reduced Devices division (no more studios!), which would be entirely focused on tablets and smartphones without the “distraction” of games. Such a disentanglement wouldn’t be terribly difficult, either. Xbox is actually fairly well divorced from the rest of Microsoft’s operations. Its operating system shares a visual language with the “Metro” interface of Windows 8 and Windows Phone, while various game-related elements of Microsoft’s other operating systems have also been given the “Xbox” and “Live” monikers. Bing, of course, runs on the Xbox dashboard. By and large, though, the technology and services which drive Xbox are divorced from the rest of Microsoft – although it’s worth noting that the much-vaunted Cloud functionality of Xbox One relies in part on Azure, Microsoft’s cloud services platform. Any buyout of Xbox would include various contracts ensuring that any Microsoft technologies or services upon which the console relies would continue to be provided to the new owner, so this would not be a major stumbling block.
A bigger question might be, would Microsoft even want to do this? That really depends how seriously you take the idea of “distraction”. Xbox One has had its thunder stolen by PS4, but is still selling well – and Xbox 360 was a major success. In fact, it’s the only success Microsoft has ever had in the consumer hardware space. Xbox proved Microsoft’s ability to create a great consumer brand and sell hardware to people. It’s a real bright spot in a few tough years for the company – especially compared to everything else it has attempted in the consumer space, from Zune and Surface to its latest operating system, Windows 8.
Why would you get rid of that? Well, you probably wouldn’t – but let’s brainstorm a motive. You could argue that Xbox is a bright spot that doesn’t have any real relevance to the rest of the company. Microsoft in the early 2000s wanted to reinvent itself as a consumer-facing company, but with Xbox being the only success in a small sea of failures, Satya Nadella is likely to try to bring the firm back to focusing on the enterprise market. As the oil tanker slowly turns around to head into more corporate seas, Xbox will be more and more at odds with the culture and mission of the rest of the company. It will arguably be a distraction both internally, where it won’t fit with Microsoft’s culture, and externally, where it will detract from a brand message that promotes Microsoft as a serious, corporate, business-focused partner for enterprise (as distinct from the more consumer-led branding of rivals Apple and Google). Selling off Xbox would generate cash (not that Microsoft needs it), streamline the company and start the new CEO’s tenure with a dramatic gesture that sets out his vision more clearly than any speech or press release.
In short, Microsoft could do this and, if we assume that upper management take the notion of “distraction” seriously and are genuinely willing to abandon the firm’s ambitions in the consumer devices space, there’s a motive for doing it. How about Amazon’s side of the table? This deal would cost billions; would Amazon stand to gain enough to justify that kind of outlay? After all, aren’t consoles a dying space? Plenty of pundits seem to expect that PS4 and XB1 will be the last generation of consoles. Would a company as smart as Amazon get sucked into a market that’s about to collapse?
Amazon, like Microsoft a decade ago, has major ambitions in the consumer devices space. The company built itself on the back of selling physical goods but has neatly sidestepped the so-called “innovator’s dilemma” by being more than willing to disrupt its own business. The world’s biggest seller of physical books became the world’s biggest promoter of ebook readers. Music downloads, streaming video, cloud services; Amazon has taken an active and enthusiastic interest in every field that might disrupt its existing businesses, seeking not to shut down threats but to be the biggest player in whatever comes next. It supplemented the Kindle e-reader with Kindle tablet devices whose market performance is largely unknown, but is thought by analysts to be one of the only genuine competitors to the iPad’s sales dominance. Anyone who owns a Kindle device knows that they are designed from the ground up to be a great interface to accessing and buying content from Amazon’s ecosystem. That’s Amazon’s play; own the media ecosystem, building the devices themselves if that’s what it takes.
That ambition is a pretty solid fit for the console business. Moreover, it can’t have escaped Amazon’s notice that Steam, PlayStation Network and Xbox Live together make up a big area of digital content provision in which it has no involvement right now. Amazon will also be paying careful attention to the interest around set-top boxes (like AppleTV and Google’s TV efforts) and Smart TVs. Here there’s huge potential for consumers to be accessing media ecosystems directly from their TVs and connected devices – again, a game in which Amazon has no skin. For Amazon, the ideal would be that when you want to watch or play something on your TV, you do so through Kindle interface that links right into Amazon’s digital library, just like the Kindle tablets work. Of course, an Android microconsole would achieve that goal, but it wouldn’t be of much interest to gamers – at best, it would capture a fringe of the market who engage with Kindle tablets.
Is appealing to gamers important? This comes back to the question of whether consoles are really dying – and honestly, who knows better about that question than Amazon? Amazon is the largest retailer in many countries. Not only does it see how many consoles and console games are sold, it also sees loads of connected information which is hidden from even game publishers. It knows how high-spending gamers are in other areas – whether they’re likely to buy a lot of gadgets, a lot of books, a lot of movies or albums. It knows how much they engage with the brands they love, whether they cross-promote to friends resulting in more sales, whether they leave reviews and promote products on social media. Amazon can make an estimation of the actual value of the core gamer market more accurately than any other company.
What is that estimate looking like? I don’t know, of course, but Amazon’s actions in the coming months are going to tell us a lot about it. Regardless of whether the Xbox conspiracy theory pans out, Amazon is going to make some kind of game-related move relatively soon. It will be interesting to see how much importance and focus the company places on the games space at that time.
Until we see more evidence, though, it’s impossible to construct a fully credible argument which places the future of Xbox anywhere but Microsoft. There’s simply not enough information out there to support that kind of conclusion. That said, there is a possible motive to sell on the part of Microsoft, and a possible motive to buy for Amazon. If I had to pin my colours to a mast on this, I’d say Microsoft is probably discussing a sale with interested parties, including Amazon, but hasn’t made a final decision on whether to start sale proceedings as yet. I also wouldn’t read too much into that, given that it’s the responsibility of management to consider such possibilities as part of their duty to the shareholders. Then again, under Microsoft’s new management, perhaps such things are being considered rather more seriously than before.
The change was initially published to Steam’s private developer forums, but was ultimately leaked by a Reddit user known as “Sharkiller.”
The new Steamworks tools cover both fixed weeklong promotions, which developers can decide to join and then set a percentage discount, and custom promotions, where the price and duration can be decided up to a two-week maximum. Prior to this change, pricing in Steam sales was worked out in collaboration with Valve.
“As with the addition of a ‘Recently Updated’ section to Steam, this is another effort to shorten the distance between developers and customers,” Valve’s Alden Kroll said in a statement issued to Ars Technica.
“This new Steamworks tool allows developers to configure discounts for their own products, on their own schedules. They can define custom sale periods or opt in to regularly scheduled sales. This will enable developers to better coordinate their promotions with events, announcements, or major updates they are planning for their products.”
While there have been arguments both for and against the short, deeply discounted sales on Valve’s digital distribution platform, from a consumer perspective they have been instrumental in allowing Steam to become such a force in retail.
These new tools, and the freedom they give developers to control their own inventories, represent another bold step from Valve.
In a keynote conversation with Entertainment Software Association boss Mike Gallagher at the Digital Entertainment World conference, Electronic Arts COO Peter Moore talked about industry lessons learned as the business transitions more to digital games.
For now, games remain a hybrid of physical and digital, and the quick sales of the new consoles are enabling the industry to coalesce around two great platforms that offer a tremendous competitive environment, which ultimately benefits the market. While he believes the console sector’s in great shape, Moore does see mobile gaming thriving, and digital revenues should surpass that of physical game sales in just two years, he said.
Looking back at the music industry’s transition to digital (which it still hasn’t recovered from), Moore said that the games industry must embrace “creative destruction” – there’s nothing an industry can do to stop a shift in consumer tastes and habits. The most important thing for EA – and much of the industry is headed this way with the digital transition – is that games are becoming live operations. That means they require a massive infrastructure with customer service and global billing. Moore noted that it’s a completely different industry now, with a global network running live ops, and gamers deserve their games to be always up and available, and it’s EA’s job to provide this access. Moore acknowledged that EA is still learning a lot about what that takes.
The online environment has been incredibly valuable to EA in building a direct customer relationship. Moore said that EA’s customers used to be the retailers, but now they’re the gamers. In fact, EA has tripled its customer facing support staff resources in the last five years. It’s changing how the publisher interacts with, and markets to, gamers. He eschews “marketing” and prefers “engaging”. Social media has become crucial to success, and Moore noted that on Twitter a gamer will get a response from EA within 30 minutes to resolve a problem.
On the marketing end, Moore said that EA’s TV spend is down 20 percent while the company has actually doubled its digital spend and engagement. Social media and community management are changing the rules. Don’t spend tens of millions on TV to see if it lifts sales, Moore said; instead game companies can more effectively use digital channels and focus on performance-based marketing.
“TV ads today are chum in the water. It attracts customers, then reel them in with digital media so you can engage instead of pushing a message out,” he remarked.
It’s pretty hard to figure out exactly where the new generation of consoles stand in terms of sales right now, but the general picture is clear. PS4, still supply constrained in many markets, leads Xbox One by at least a million consoles sold, possibly as much as two million – so the oft-cited ratio of 1.5:1 seems to be holding. Assuming little else changes, that ratio will tip even further in Sony’s favour in the coming weeks, with the PS4 finally launching in Japan, a market where it can expect to sell very strongly – although I wouldn’t expect to see the dominant 3DS removed from the top of the hardware charts for too many weeks. Meanwhile, Nintendo’s rather less successful console, the Wii U, continues to lose ground to both of the newcomers and will likely be surpassed in overall sales by Sony sometime this month (if it has not been so already) and by Microsoft within the next quarter.
It’s important to put this in some context – the Xbox One would look like a pretty successful console launch if it wasn’t stacked up against the PS4, but eyebrows would still be raised over the slackness in demand for what would be expected to be a fully supply constrained launch. Meanwhile, Wii U’s performance wouldn’t look great in any reality, but certainly wouldn’t be attracting the current degree of fainting and pearl-grasping were it not being compared to the extraordinary success of its own predecessor, the Wii.
“I’d argue that the real problem with these innovative pieces of kit isn’t that they’re inflating the price – the real problem is that they are, so far, utterly pointless”
The only console among them which resists any attempt at contextual negativity is the PS4, which is performing incredibly well. Hardly anyone has a bad word to say about the PS4, other than “I can’t find one to buy” – the hardware has turned out to be very solid; the online services (PS Plus in particular) are well-liked; and Sony’s approach of wooing key indie developers to the console for launch period has helped to stock the console with early adopter friendly titles which generate plenty of goodwill as the wider market waits for big AAA hits to filter through. Giving several of these games away on PS Plus, especially while new owners are in their freebie period, has also been a great move.
It’s hard to argue against a surface reading of this situation which says that Sony has executed superbly on its product while Microsoft and Nintendo have stumbled. Nintendo dropped the ball on Wii U software for its first year, arguably at least, and made a mess of marketing its new console – just as it initially did with the 3DS, which makes me wonder exactly what compromising pictures of Iwata the firm’s amazingly still-not-fired marketing bosses are keeping in a concrete bunker somewhere. Microsoft lost the trust and goodwill of a huge swathe of the early adopter audience, especially outside the USA, when it announced the Xbox One as a TV-watching box, compounded its error with a horribly anti-consumer policy on used software, then changed its mind on the latter (a good thing, but much damage was already done) and botched the execution of the former. Now it’s got a mountain to climb to restore goodwill, a console that’s $100 more expensive than its well-liked rival and a fresh salvo of unflattering technical comparisons between the systems emerging each week – a tough position, to say the least.
I think that beyond that surface reading, there’s something more fundamental at work – a level on which both Nintendo and Microsoft made the same mistake. Sony’s PS4 isn’t just superbly executed, it’s also conservative. It’s a powerful console with great engineering behind it, a great OS and network services, and a superb messaging strategy in which Mark Cerny and Shuhei Yoshida, who are actually at the coalface of developing the system and its software, have been allowed to take very public roles and to speak openly and honestly. That’s all fantastic, but PS4 is also very clearly an evolution of what came before. In architectural terms it’s vastly different from PS3, of course, but from a consumer standpoint – here’s a black box that you stick discs into and then play them with a Dual Shock pad. You can play with your friends online, and even buy games online, but arguably the only real departures from the traditional console model lie with the online services – PS Plus (which existed on PS3 as well, of course) and video streaming.
Xbox One and Wii U are less conservative, because both of them make some effort to change the interface and context of videogames. Xbox One includes a vastly updated and improved Kinect motion sensor, which shoulders the brunt of the blame for the console’s inflated price tag. The sensor, like its predecessor, is designed to map and understand the movement of human bodies around the room in front of it – unlike its predecessor, it actually appears to be capable of doing so very well. The Wii U, meanwhile, includes the GamePad, a touchscreen controller that lets you play games even while others are watching something else on TV, but more interestingly, also creates a second screen for gameplay and has potential uses in asymmetric multiplayer, wherein one player uses the screen to set up a game while others use Wii Remotes to tackle the challenges being created.
Both of these things are interesting. Both of these things, inevitably, inflate the price of the console to which they’re attached. Both Wii U and Xbox One could seriously do with being $100 cheaper than they are right now – such a price cut wouldn’t be the end of their woes, especially in the case of Wii U, but it would level the playing field and make everything much more interesting. Yet I’d argue that the real problem with these innovative pieces of kit isn’t that they’re inflating the price – the real problem is that they are, so far, utterly pointless. Not only have both Microsoft and Nintendo failed to create software that effectively capitalises on the potential of Kinect or the GamePad, both firms have also completely failed to explain the devices to consumers in a way that stands any hope of making them excited about such potential. The very fact that the first reaction of many consumers and commentators to weak sales from these consoles is “get rid of Kinect / the GamePad!” is a demonstration of just how badly communication, explanation and demonstration of these features has failed.
It could be, of course, that the features themselves just aren’t much good. I think the potential of the GamePad remains to be tapped, but have some sympathy with the argument that Kinect, even in its vastly upgraded Xbox One incarnation, is a solution for which no readily apparent problem can be found. Certainly its present function, as an utterly sub-par way of controlling the console’s menu functions and an occasional shoehorned annoyance in games, does little to explain why this expensive piece of hardware is a mandatory part of Xbox One – yet I know that there are plenty of enthusiastic and intelligent games people at Microsoft, and there must be a genuine belief that Kinect 2 can deliver unique and worthwhile experiences that won’t be possible on other consoles. The problem is that, just as with the thus-far largely meaningless GamePad, Microsoft has failed to demonstrate or articulate just what those experiences will be.
In short, I think consumers are confused about what exactly Nintendo and Microsoft want to sell them. Sony’s proposition is clear – it’s a much-upgraded and improved successor to the PS3, which was a much-upgraded and improved successor to the PS2, and so on. Nintendo and Microsoft make claim to be something more than that, then mumble incoherently when asked what exactly they mean, or what precisely they’re proposing to achieve.
It feels like both companies want to bottle some of the magic which fuelled the Wii to such great heights in the last generation, but they’ve forgotten that the real magic of the Wii wasn’t actually the Wiimote – it was Wii Sports. In one superbly crafted game, bundled free with the console in many territories, Nintendo explained exactly what the Wii was for. A few minutes with Wii Sports showed anyone and everyone what the Wiimote was designed to do and how it would change the game experience. Moreover, it set out a clear agenda for the console as a whole – a social machine, a family machine, an accessible machine. Wii Sports wasn’t just a game, it was a powerful demonstration, a mission statement and perhaps the greatest piece of marketing anyone in the games industry has ever crafted.
The Xbox One and the Wii U both have their Wiimote, but neither has their Wii Sports. One of Satoru Iwata’s big pledges in his mea culpa speech after Nintendo’s projections were downgraded was that the firm would double down on the GamePad, creating software and marketing that would explain the controller better to the public. If that means finding the Wii U’s Wii Sports, it will absolutely be a worthwhile effort – it doesn’t have to mean establishing the Wii U in the same market as the Wii, but making a clear mission statement for the console would definitely help. Microsoft, too, needs some of that focus. Right now, Kinect 2 is not differentiating Xbox One in the marketplace – it’s just hanging around the console’s neck like a deadweight. Unless Microsoft can find the software and the messaging required to make Kinect into a real system-seller, its mandatory inclusion may go down as one of the worst self-inflicted wounds of any console battle in history.
While many video game publishers are racing to embrace the mobile world – and seeing some significant earnings in the process – Take-Two Interactive Software CEO Strauss Zelnick is moving cautiously.
There’s certainly potential in the market, he concedes – but, so far, the hardware isn’t where it needs to be to be a proper showcase for the company’s games. And he’d rather wait than make compromises.
The experience Zelnick has in mind has already been showcased a few times. Older Grand Theft Auto games have been ported over – and last year, the company transferred XCOM: Enemy Unknown to the mobile world.
“As tablets become more powerful, I am of the view that they’ll be a wonderful gaming platform – but they’re not quite there yet”
XCOM was notable in that it wasn’t a drastically altered adaptation of the game, but rather a complete transfer of the PC and console experience to a mobile device. The game garnered great reviews and was able to command a premium price – and that’s what Zelnick wants to do with other titles in the company’s current catalog.
“We don’t differentiate between mobile and not mobile,” he says. “As long as we can distribute a game in a high-quality version – and as long as the consumer wants to interact – we’re happy to be there. … We’re not a platform company. We’re a content company.”
When it comes to newer platforms – specifically, the Xbox One and PlayStation 4 – Take-Two is pretty happy, though. While the company has only put out one game for the systems (NBA 2K14), sales were strong and Zelnick says he’s “thrilled with how the new consoles have sold so far”.
At present, Take-Two has more than 10 games in development for next generation systems – but it’s not saying much more than that. Evolve, WWE and the next NBA2K are announced, but otherwise, the company’s pipeline is a mystery.
That extends to its crown jewel as well. Despite plenty of speculation, Zelnick wouldn’t address whispers about a PC or next-gen version of Grand Theft Auto V. And he knows how much that agitates fans and investors.
What’s unlikely is that many – if any – of those games will make it to the Wii U. Zelnick has never been a vocal cheerleader for Nintendo, noting that the Kyoto-based company’s mission and Take-Two’s games don’t mesh well. But with the Wii U floundering in the market, there’s less incentive to consider the system.
“We haven’t talked about specific titles in development, but we’ve said our strategy is to meet consumers where they are,” he says. “If they’re buying hardware, we’ll be there with software. That said, we make these really big, AAA titles that work on some platforms, but not others.”
“Oculus Rift was a big smash and wonder at CES – and our folks were very impressed with it”
The hesitation to commit to the Wii U shouldn’t be misunderstood as a reluctance to branch into new areas. Zelnick notes that the Oculus Rift is a device the company is keeping a close eye on, even if it hasn’t made any formal announcements regarding software for the device.
While Zelnick hasn’t personally had a chance to test the hardware (something that’s not entirely surprising as he often describes himself as “a suit, not a gamer”), he’s encouraged by what he hears from Take-Two employees.
“Oculus Rift was a big smash and wonder at CES – and our folks were very impressed with it,” he says. “It remains to be seen what we can do with it, but [Oculus] has already addressed some of the big challenges (such as users getting motion sick) that it faced early on. … I’m encouraged by anything that gets people more engaged with interactive entertainment.”
While Rockstar Games’ Leslie Benzies, Dan Houser and Sam Houser will be celebrated later this month at the D.I.C.E. Summit, receiving inductions into the AIAS Hall of Fame, Take-Two suffered something of a staffing blow last month, when Rod Fergusson, who was heading up a new studio for 2K in the Bay Area, defected to Microsoft to run the Gears of War franchise.
While there has been speculation about the fate of the Bay Area studio in the wake of that departure, Zelnick says those fears are overblown.
“We think the world of Rod, but he chose to move on,” he says. “We have a big studio out there with terrific leadership. I was saddened to lose Rod, but they’re full steam ahead on their project.”
Nobody seems to be terribly happy about the new Dungeon Keeper game. That’s a sentence I hoped I’d never write, given how much I loved the original Bullfrog games – but that fact alone places me firmly within the least happy demographic of all: the original fans of the franchise. The rest of the unhappy parties can form an orderly queue behind us; that means you, game critics who think the game is terrible, mobile gamers who think it’s not nearly as good as its most obvious inspiration, Clash of Clans, F2P advocates who could do without another awful example being used to unfairly crucify the entire business model, and, well, EA themselves, I expect.
Lots has been written about Dungeon Keeper in the week since it launched, almost all of it deeply critical and a good deal of it entirely fair. Dungeon Keeper is a nicely presented but mediocre game in the mobile/F2P genre it inhabits. Within the franchise it inhabits, however, it’s a disastrous, idiotic travesty of a thing, a game whose design process wouldn’t be out of place in the imaginative dungeons of the original titles – involving, as it did, the snapping of limbs and crunching of bones in order to stuff the screaming body of a much-loved core gamer title into a box that is distinctly too small and painfully the wrong shape. It’s enough to make a Dark Mistress’ eyes water.
I like the free to play business model, in principle. More than that – I think the free to play business model, still in its infancy and thus still making countless mistakes, is actually an inevitable step for the games industry. It’s not going to replace other business models, which will continue to be a better fit for certain types of game and certain types of audience, but it’ll probably be the most important and profitable business model in future (some would argue, convincingly enough, that it already is). From the moment it became possible to distribute games for free, it was certain that someone would do that, and devise a system for making money later, once an audience had been built up. Under the circumstances, carefully considered and ethically implemented F2P is probably the best, and fairest, system possible.
So I reject the notion that Dungeon Keeper is an illustration of F2P’s intrinsic evils. It’s not, any more than any number of terrible boxed games were an illustration of intrinsic evils of the retail game business model. F2P isn’t intrinsically evil or bad, but it’s open to abuse – just like the old boxed game model was plenty open to abuse, as you’ll know if you’ve ever preordered an expensive game only to find that reviews were withheld until after launch, previews had been based on glimpses of unrepresentative sections of the game, screenshots and trailers were a cocktail of lies and the whole thing is actually a massive stinker. F2P trips up more often because it’s new and many developers are still feeling out the parameters of the business model – and moreover, because it requires developers whose core skill is designing games to also design a business model in tandem with their game, which is a new skill that doesn’t necessarily come naturally.
That means that if we’re being reasonable, rather than just howling pointlessly into the wind because it makes us feel better, we need to consider Dungeon Keeper not as an omen of doom but as a learning exercise. It’s obviously a mess. It’s disappointed lots of people and made a core group of those people – people who ought to have been its most rapt advocates – very very angry indeed. But why is it a mess? What does Dungeon Keeper actually do wrong?
You could say “microtransactions”, and you’d be right in one sense – it does microtransactions wrong, but not because microtransactions themselves are intrinsically wrong. Plenty of games handle them rather nicely and fairly. Supercell’s games are pretty good examples – Hay Day is, I think, the only F2P game I’ve bought premium currency in, and I’m perfectly happy with the few quid I spent there, as I knew perfectly well what my money was buying and what the alternative was to acquire the things I wanted in-game. I mentioned last week my Japanese friend who has spent the equivalent of $500 in Puzzle & Dragons, and doesn’t regret it in the slightest – from my own experience, P&D, the biggest-grossing F2P game in the world, is also scrupulously fair and up-front about its micro-transactions, and generous to a fault at handing out premium currency for free, thus allowing you to save up for things you want instead of feeling forced to fork out.
Those games – and Clash of Clans, the Supercell game to which Dungeon Keeper owes much of its genre heritage – get F2P microtransactions right. Even Candy Crush Saga, a game which I personally dislike quite intently (I think that describing yourself as a puzzle game and then confronting the player with randomly generated levels which are actually impossible to solve is a miserable failure of fundamental game design), is far from being abusive in its approach to microtransactions; a solid majority of players who complete all its levels do so without ever spending any money. I played Clash of Clans for months without spending, and I’m coming up on a year in Puzzle & Dragons without spending – both of which I still find fun, and both of which, I think it’s fair to say, are genuinely living up to the promise inherent in the words “free to play”. I’m quite convinced, incidentally, that they’re among the world’s most profitable games precisely because they allow most players to continue enjoying them for free, rather than in spite of that seemingly foolish generosity.
Dungeon Keeper isn’t a generous game. It’s a grasping, unpleasant game – which is a shame, because with a more likeable, generous approach to its players, it wouldn’t be a terrible game. It’s certainly among the better of the Clash of Clans clones, a multitude of which fill the App Store with game mechanics and art styles shamelessly copied from Supercell’s hit and absolutely zero effort at innovation. Dungeon Keeper – though I say it through gritted teeth, since the franchise abuse still rankles – has the guts of a decent mobile game that builds worthwhile variation onto the Clash of Clans formula. The problem is, you advance through that experience at a snail’s pace, halted every few seconds by a glowing gem icon that invites you to spend expensive premium currency to speed up your progress. That premium currency itself arrives in an absolutely miserable trickle, rendering the notion of saving up to buy things into a sad joke.
Slowing down progress to encourage players who are really engaged with the game to spend a bit of money to advance is a core tenet of F2P design. Some people hate that, which I perfectly understand, but it’s not necessarily the end of all things – it’s worth pointing out that lots of non-F2P games also stretch out tasks artificially for a variety of commercial and gameplay reasons (I’d point to World of Warcraft in the first instance and Animal Crossing in the second as good examples of this). The point is that in doing this, designers need to make sure they’re not compromising the fun of the game, and err on the side of generosity rather than grasping. Dungeon Keeper fails these tests. It starts asking for money almost straight away, long before any player has a chance to become really engaged or engrossed in the game, and continues to wheedle at players to pay up on an ongoing basis, ramping up within a couple of days to the point where it’s taking 24 hours to complete simple tasks like digging out a square of rock, and literally weeks to finish a tunnel or room unaided by a dip in your wallet. Good F2P design is about making people really love your game and then giving them opportunities to spend money on it. Dungeon Keeper is a grubby chancer who tries to steal your wallet before the main course has even arrived on your first – and last – date.
There’s an even more fundamental problem at work here, though. Making a bad, greedy F2P game with the beloved Dungeon Keeper license is inexcusable – but to be honest, making any kind of F2P game with this license was a terrible idea. Dungeon Keeper is an old franchise, one which never came to consoles – making it much loved by a significant group of gamers who are older and significantly more “core” than the primary market for mobile F2P games. If you weren’t a PC gamer in the 1990s, Dungeon Keeper has almost certainly passed you by entirely. On the other hand, if you were a PC gamer in the 1990s, I think it’s fair to generalise and say you’re probably firmly in the camp that by and large dislikes microtransactions and considers F2P in general with suspicion – suspicion which you’ll consider to be all but confirmed by Dungeon Keeper’s many transgressions.
So why did EA do this? What on earth did they believe they stood to gain from resurrecting a franchise like this in a form which would be utterly despised by the only people who recognise it, while the potential audience it might reach successfully – gamers who like mobile F2P and are looking for something different in flavour and approach to Clash of Clans – will have zero brand recognition with Dungeon Keeper, but may be dissuaded by the outpouring of one-star scores on the App Store with which gamers are registering their dislike. Note too that while it’s conventionally and reasonably held that the specialist games media has no impact on mobile game performance, the hatred for Dungeon Keeper has spilled over into the mainstream press – and while “no publicity is bad publicity”, newspaper articles accusing your game of greedy monetisation tactics aren’t the ideal way to introduce it to the public at large, while Google results populated with fiery critique and all manner of accusations don’t help much either.
Ultimately, EA could have avoided this by making essentially the same game (although doing a lot more careful consideration of monetisation tactics and trying not to destroy the game’s hopes of retaining players by being too greedy too early wouldn’t go amiss) without the Dungeon Keeper brand and the vaguely ghoulish overtones of corpse-robbing that go with Dungeon Keeper’s pilfered, ill-matched mechanisms and characters in this game. Alternatively, it could probably have made quite a decent commercial success out of a premium-priced Dungeon Keeper game carefully updating the original and launching on Steam and iPad – a game with a significant built-in audience and a huge store of goodwill, much of which has now been squandered. It could even have included some IAP further down the line for deeply devoted players, although more in the line of cosmetic items and so on than game-changing consumables. Hell, EA could have done both of those things, resuscitating a much-loved franchise and creating a brand new F2P franchise, thus ending up with two successful IPs rather than one battered, bruised and sorely abused one.
This comes back to a point I made earlier – there is an audience for F2P, a huge audience with a significant amount of spending power, but it’s not the only audience (even if it’s the biggest). There are other audiences who crave other genres, other business models, other price points. The notion that the vast expansion in the demographic reach of videogames is going to be attended by an absolute contraction of the possible business models for videogames is a transparent nonsense – F2P is an inevitable and by no means negative consequence of the reduction in distribution costs to (just about) zero, but it’s not the only business model or price point enabled by recent technological change. The first challenge for designers, producers and executives in this new era is to figure out what business model best fits the franchise, the genre and the audience for your project. EA isn’t the first company to fail that challenge, nor is Dungeon Keeper the last game which will do it – but for those of us with fond memories of Bullfrog’s glory days, this is the one that leaves the most bitter taste. The lesson, however, must not be “F2P is bad” – it must be, “Do F2P where appropriate, do it with care, and do it well”.
Steam Music will allow Steam gamers to listen to their own music while gaming, Valve said. Steam users will be able to view and play albums and tracks, manage the queue, and access the Steam Music player by pressing the Guide button on a Steam Machines controller, where they will be presented with an iTunes style interace.
Keyboard and mouse users can access the active player from Big Picture’s main menu, Valve added.
Valve explained in a blog post on Monday, “With Steam Music, you can now listen to your music collection while playing games. Once you’ve pointed Steam to your local music directory, your Steam Library will include Album and Artist views of your collection.
“From there you can view and play albums and tracks, manage your queue, and access the Steam Music player by pressing the Guide button on your controller. (No controller? Keyboard and mouse users can access the active player from Big Picture’s main menu.)
“Once in-game, the music player follows you via the Steam overlay, where you can manage your current playlist, browse your collection and listen to whatever suits your mood.”
Valve will soon launch a beta of Steam Music for Big Picture and Steam OS, with integration in the desktop version of Steam coming in the future. Those who want to try it out in Beta must join the Steam Community, where invitations will be sent out “in waves”.
Nintendo has issued a detailed and far-reaching response to the pervasive concerns about its future as a business.
In a meeting with investors, Nintendo president Satoru Iwata outlined the company’s strategy in both the short-term and as far ahead as 2016. From changing the fortunes of the Wii U to evolving the way we think about game consoles as a concept, Nintendo displayed striking candour in its attempt to allay the criticisms it has received since it drastically reduced its sales forecasts earlier this month.
However, Iwata was clear about one thing from the outset: regardless of what followed, there are certain aspects of Nintendo’s business that will not change, namely the frequently proposed idea that it should take its IP stable to new platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business,” he said. “Naturally, we are moving ahead with research and development efforts for future hardware as we have done before, and we are not planning to give up our own hardware systems and shift our axis toward other platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business… We are not planning to give up our own hardware systems and shift our axis toward other platforms”
“From a medium- to long-term standpoint…we don’t believe that following trends will lead to a positive outcome for Nintendo as an entertainment company. Instead, we should continue to make our best efforts to seek a blue ocean with no rivals and create a new market with innovative offerings.”
Here are the key points from Iwata’s presentation
The Wii U is Nintendo’s top priority
It is no secret that Nintendo has struggled to repeat the success of the Wii with the Wii U, but Iwata reassured investors that it has no intention of abandoning its ailing console. The possibility of a further reduction in price was ruled out immediately, with Iwata instead emphasising the company’s ongoing failure to adequately demonstrate the value of the GamePad controller, and to distinguish the console from its hugely popular predecessor.
“By looking at the current sales situation, I am aware that this is due to our lack of effort,” he said. “Our top priority task this year is to offer software titles that are made possible because of the GamePad… We have managed to offer several of such software titles for occasions when many people gather in one place to play, but we have not been able to offer a decisive software title that enriches the user’s gameplay experience when playing alone with the GamePad. This will be one of the top priorities of Mr. Miyamoto’s software development department this year.”
Iwata offered a strong first-step by setting an official May release date for the release of Mario Kart 8, but he also indicated that Nintendo’s development teams would focus on the GamePad’s near-field communication (NFC) function – the same basic technology as that used in lucrative franchises like Skylanders and Disney Infinity. Iwata promised more details of its plans for NFC at E3 in June.
The end of “device-based relationships”
While many have cited the Wii U as evidence of Nintendo’s failure to respond to the changes in the games industry since the launch of the Wii, Iwata stated that the company has already laid the foundations for a fundamental shift in the way it thinks about its products.
Before now, Nintendo had “device-based relationships” with its customers. This was mitigated somewhat by the strength of its software IP, but fundamentally the link with any given consumer followed the lifecycle of each piece of hardware. “We became disconnected with our consumers with the launch of each new device as we could only form device-based relationships,” he said.
However, the Wii U saw the introduction of “Nintendo Network IDs,” an attempt to create “account-based” customer relationships that could continue across different hardware platforms and generations. In the future, Iwata said, “connecting with our consumers through NNIDs will precisely be our new definition of a Nintendo platform.”
With this in mind, Iwata was able to put an end to the speculation around Nintendo’s strategy for smartphones and tablets. He made it quite clear that Nintendo has no plans to release its games on smart devices, but it does intend to use them as a way to communicate and build relationships with new audiences. Iwata offered few details of how the company intends to accomplish that goal, but he indicated that it would include a mobile app that leveraged Nintendo’s existing IP to raise awareness of its hardware and software.
“I have not given any restrictions to the development team, even not ruling out the possibility of making games or using our game characters. However, if you report that we will release Mario on smart devices, it would be a completely misleading statement. It is our intention to release some application on smart devices this year that is capable of attracting consumer attention and communicating the value of our entertainment offerings.”
Flexible pricing for existing and emerging markets
The existence of NNIDs and account-based relationships will also give Nintendo the ability to alter the way its products are sold. Iwata highlighted the company’s role in establishing the model of selling a console for several hundred dollars and individual games for fifty or sixty dollars, but Nintendo now recognises that this model is no longer viable in the long-term.
The first aspect of this that Nintendo intends to challenge is the fixed price-point of software. Iwata suggested a system where the price of a games could be tailored to individual customers based on their NNIDs: someone who purchased five games in a year might pay less and less for each one, for example, or there might be incentives tied to recommending a game to a friend.
“If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform… Nintendo aims to work on this brand-new sales mechanism in the medium term, but we would like to start experimenting with Wii U at an early stage.”
“While we will continue to devote our energy to dedicated video game platforms, our first step into a new business area is the theme of ‘Health’”
This flexibility will also extend to emerging markets for gaming across the world. Nintendo is a globally recognised brand, but Iwata conceded that the price of its products has put them beyond the reach of people in certain countries. While Iwata didn’t mention any specific regions, he is likely referring to countries like Brazil and India, where the interest in gaming has increased in concert with the disposable income available to the population.
“To leverage Nintendo’s strength as an integrated hardware-software business, we will not rule out the idea of offering our own hardware for new markets. But for dramatic expansion of the consumer base there, we require a product family of hardware and software with an entirely different price structure from that of the developed markets.
“We aim to connect with consumers who do not own Nintendo’s video game systems yet, which will play an important role in cultivating new markets. Once we can establish such a connection with consumers in these nations, we will be able to use smart devices to share our information as well as important content distribution infrastructure. We plan to take significant steps toward such a new market approach in the year 2015.
Going beyond games
There may be no chance of playing Super Mario World on an iPad anytime soon, Iwata did state Nintendo’s interest in making money from its IP outside of first-party video games. Nintendo has always been very cautious of damaging its iconic characters through excessive merchandising and licensing, but one need only look at Rovio’s Angry Birds to see how much profitable such deals can be. Indeed, Iwata attributed the strength of Nintendo’s IP stable to that very reluctance, but, he said, “we are going to change our policy going forward.”
“To be more precise, we will actively expand our character licensing business, including proactively finding appropriate partners. In fact, we have been actively selling character merchandise for about a year in the U.S. Also, we will be flexible about forming licensing relationships in areas we did not license in the past, such as digital fields, provided we are not in direct competition and we can form win-win relationships.
“By moving forward with such activities globally, we aim to increase consumer exposure to Nintendo characters by making them appear in places other than on video game platforms.”
Nintendo’s new business idea: Health
Iwata closed the presentation with Nintendo’s planned entry into an entirely new area of business, one that will provide the “blue ocean” the company so desperately needs.
“While we will continue to devote our energy to dedicated video game platforms, what I see as our first step into a new business area in our endeavour to improve [quality of life] is the theme of “Health.” Of course, defining a new entertainment business that seeks to improve [quality of life] creates various possibilities for the future such as “learning” and “lifestyle,” but it is our intention to take “health” as our first step.”
Again, exact details of what this focus on health will entail were not provided, but Iwata described the concept as “an integrated hardware-software platform business” that will use the company’s experience making products like Wii Fit, Brain Age and the Touch Generations series as a springboard for a more pervasive and persistent initiative.
“We will be able to provide feedback to our consumers on a continual basis, and our approach will be to redefine the notion of health-consciousness, and eventually increase the fit population… I feel that not only can this [quality of life]-improving platform utilise our know-how and experience about video game platforms, but also we can expect it to interact with games and create a synergistic effect.
“While we feel that this is going to take two to three years after its launch, we expect the [quality of life]-improving platform to provide us with new themes which we can then turn into games that operate on our future video game platforms, too. Once we have established such a cycle, we will see continuous positive interactions between the two platforms that enable us to make unique propositions.”
Iwata promised to announce more details this year, and confirmed that the new business will officially launch during the fiscal year ending March 2016.
Valve is looking to halt its Steam Greenlight process, Gabe Newell revealed today during in an introductory address at Steam Dev Days. Attendees at the developer-only event have been tweeting out bits of news, with Hot Blooded Games CFO Dave Oshry among those sharing updates with the outside world.
“Our goal is to make Greenlight go away,” Oshry quoted Newell as saying. “Not because it’s not useful, but because we’re evolving.”
Oshry said the Valve head had been talking about how he wanted to give developers more control over Steam and how they use it to promote their games. The Greenlight process lets developers post pages for their games on Steam and lets the community give input on whether or not they look like something worth purchasing.
While details about the how and why of Greenlight’s eventual disappearance aren’t known yet, they’ve already been speculated upon. Earlier this week, PC Gamer reported on a translated GameKings.tv interview with Vlambeer’s Rami Ismail in which the Ridiculous Fishing developer guessed that Valve would soon be killing Greenlight.
“I’m thinking that because they’ve been clearing the queue at such a rapid rate,” Ismail said. “They’ve been clearing 100 games every month. . .You don’t do that because there are 100 good games on Greenlight every month. You do that because you want to get rid of everything that isn’t greenlit before you kill it, so you don’t upset developers.”
Ismail then guessed that Valve would replace the program by letting any developer put their game up on Steam and relying on a peer-to-peer recommendation system to solve the issue of content discoverability.
Coinciding with the beginning of Steam Dev Days, Valve also announced that its digital storefront had passed a new milestone with 75 million active users, a 15 percent jump from the 65 million total announced in October. The company also released a geographic breakdown of its sales, with North America and Western Europe accounting for most of its business (41 percent and 40 percent, respectively), but noting that Russia and Brazil have shown tremendous growth in the last year (125 percent and 75 percent, respectively).