Of all the various innovations we’ve seen in this console generation, it may be the business model changes that have the most lasting impact on the games industry. Though originally introduced in the back half of the previous generation, the notion of giving consumers “free” games on a monthly basis for continuing their subscription to console online services has become a standard part of the model in this hardware generation.
The degree to which this is expected, and to which the perceived quality of each month’s offerings is hotly debated, is a clear signal of how the value relationship between consumers and game software is changing. Now, within the next few months, both Microsoft and Sony will evolve that relationship even further, with services which aim to give consumers access to current-gen game software through a very different transaction model.
Microsoft was first out of the blocks with its announcement, revealing at the end of last month that a large library of software for the Xbox One will be made available for a $9.99 recurring monthly subscription. Sony’s version of the concept is similar in business terms, if dramatically different technologically; it’s going to start adding PS4 titles to PS Now, a game-streaming service which currently offers a huge library of PS3 games for a $20 recurring subscription (or $45 for three months, which gets it a little closer to Microsoft’s pricing).
The goal being pursued by both firms is fairly obvious; paying monthly rather than buying titles outright is the model which has become dominant for both music and video, so it stands to reason that games will follow down the same path, at least to some extent. There’s certainly some appeal to the idea of a “Netflix / Spotify For Games”. From a business perspective, getting $120 (or $180) from consumers in flat monthly fees for games is probably actually a revenue boost if the service is primarily picked up by the kind of consumers who don’t buy a lot of new games – either predominantly buying pre-owned, waiting for titles to hit bargain basement prices, or borrowing games from friends, for example.
On the other hand, there’s an abundance of consumers out there who buy far, far more than the two new games a year that you’d get for that $120 fee – so any of those who stop buying new games in favour of a subscription service will represent a major revenue loss to the industry. Many people will be worried about that possibility, no doubt, but the reality is that there’s plenty of precedent to suggest that a subscription service won’t harm sales of new games.
New titles won’t go directly onto a subscription service; there’ll undoubtedly be a lengthy exclusivity period for people who pay for a physical or digital copy of the game, with titles only appearing for subscribers once their revenue potential in direct sales is already all-but exhausted. Subscription revenue therefore becomes a second bite at the cherry – a way of boosting the industry’s often rather ratty-looking “long tail”.
From a consumer perspective, that’s actually not all that different from the way things are now. If you’re not bothered about playing a game in its first few months on the market, then you’re probably going to end up buying a second-hand copy – or getting it from the bargain bin, or borrowing it from a friend, or perhaps even just waiting for it to pop up on PlayStation Plus at some point.
Game software generally loses value dramatically after the first few months on the market; lots of options exist for picking it up cheap, but decades of experience shows that this doesn’t dissuade fans from buying new games they really care about. Games are a “zeitgeisty” medium; people want to be playing the game everyone else is playing right now (as anyone who’s had to put up with their social media feeds being filled to the brim with Zelda chat while every electronics store in the city remains out of stock of Switch can tell you – not that I’m bitter, of course).
For the industry, however, most of these options aren’t very appealing. Second-hand software sales enrich GameStop, and just about nobody else; there’s an argument that second-hand sales boost new software sales by providing trade-in value, but it’s hard to balance the effects of that against the simple revenue loss game creators suffer from the repeated recycling of second-hand stock through stores that often deliberately push consumers towards used games instead of new ones. Borrowing the game from a friend is arguably preferable to the industry; no money is changing hands at all, so at least potential revenue hasn’t been sucked out by a third party.
Given, then, that we’re already talking about consumers who have a range of options for accessing software which provide no revenue to game creators, something like a Netflix-esque subscription service starts to make a lot of sense. How the revenue works in the back-end will, no doubt, be subject to endless negotiation and dispute, but the point is that at least the revenue exists; games on the service will continue to generate cash for their creators as long as they’re being played, and every cent they receive is a cent they’d never have seen in the currently dominant second-hand models. Moreover, the existence of subscription services could be a net boost for the games industry as a whole; the ability to access a large library of software for an affordable monthly subscription fee is something that will appeal to a lot of consumers, potentially bringing them into the console ecosystem.
If the business case for these services is very clear, however, the question of which technical approach will succeed is rather less so. For now, I think that Microsoft’s model – allowing consumers to download and play locally the software on its subscription service – is comfortably superior to the PS Now streaming system.
Game streaming over the Internet remains a technology that’s arguably ahead of its time; there are question marks over the business case (since the provider needs to pay for racks and racks of hardware which every consumer using the service already possesses in their own home, a duplication of functionality that makes little sense, especially since PS Now recently dropped support for “thin client” platforms like Bravia TVs), but more importantly, a huge number of consumers simply won’t be able to make use of the service because their broadband connections are not up to the standard required for high-quality, real-time gameplay. The demands of real-time game streaming are very different from the demands of watching live streams of video, because you can’t buffer a real-time game stream; when it works, it’s impressive, but the reality is that for a great many consumers it either doesn’t work at all or only works at time when the network isn’t congested.
Given the limitations of PS Now (and I think the dropping of support on Bravia TVs, mobile phones and so on is an ominous sign for the future of the service), Microsoft’s native software approach seems far more likely to be a hit with its consumers – indeed, the company may be hoping to recapture some of the magic of the Xbox 360 era, when its enormous advantage over Sony in online services helped it to maintain a lead over the PS3 for several years.
For Sony’s part, the desire to try to boost PS Now may be its undoing, at least in the short term; but an enhanced version of PS Plus (PS Plus… Plus?) with a library subscription built-in seems like a no-brainer in the medium term. It’s a win-win situation for platform holders and game creators alike. The only really big loser in all of this will be heavily pre-owned reliant retailers like GameStop; if game subscription services truly take off this year, they’ll have to scramble to find a new model before it’s too late.
Washington D.C. intends to become the home of eSports in the United States, with a strategy that includes sponsorship of the NRG Esports team and the construction of a $65 million stadium.
The city’s plans, which were revealed to Mashable, will be executed by Events D.C., the District of Columbia’s convention and sports authority. The deal with NRG Esports is among the first instances of a city sponsoring a pro gaming organisation, and Washington D.C. will now have its logo and branding on NRG teams’ uniforms, livestreams and websites.
NRG, which has teams competing in Overwatch, Counter-Strike: GO, Hearthstone and Rocket League, has roots in the world of traditional sports. It was founded by Andy Miller and Mark Mastrov, the co-owners of the NBA’s Sacramento Kings, and counts the basketball player Shaquille O’Neal and the baseball stars Alex Rodriguez and Jimmy Rollins among its investors.
“This is just another prong in our strategic approach to continue to make D.C. a great place to live and work and play,” Events D.C. chairman Max Brown told Mashable, highlighting the number of students attending the city’s many universities.
“There are lots of younger kids who are here and are coming here every year through our universities, so we think it makes a lot of sense for us as a city to plant a flag [for eSports], and ultimately be the capital of eSports like we’re the capital of the United States.”
There are other “prongs” to the city’s strategy, the most notable being the construction of a new stadium. The arena will be used by the WNBA team the Washington Mystics, as well as other events, but it is being built “with eSports in mind.”
“A $65 million 4,200-seat, state-of-the-art arena,” Brown added. “[It will] come online in late-2018, early-2019. Fully tailored and wired for esports.”
According to details provided over at EA’s Origin site, those looking to play the new Mass Effect game will need at least an Intel Core i5-3570 or AMD FX-6350 CPU, 8GB of RAM and Nvidia Geforce GTX 660 2GB or AMD Radeon HD 7850 2GB graphics card.
The recommended system requirements rise up to an Intel Core i7-4790 or AMD FX-8350 CPU, 16GB of RAM and either an Nvidia GTX 1060 3GB or AMD RX 480 4GB graphics card.
Both minimum and recommended system requirements include at least 55GB of storage space as well as a 64-bit version of Windows 7, Windows 8.1 or Windows 10 OS.
The official release for the game is set for March 21st in the US and March 23rd in Europe and it will be coming to PC, Playstation 4 and Xbox One. Those with EA Access and Origin Access should get the game five days earlier.
Take-Two today reported its financial results for the three months ended December 31, and they paint a mixed picture of the company’s performance for the holiday season.
Speaking with GamesIndustry.biz, Take-Two chairman and CEO Strauss Zelnick touted the company’s holiday slate of releases, mostly updating numbers revealed around Take-Two’s last earnings report. Mafia III has now sold-in approximately 5 million copies, while Civilization VI has surpassed 1.5 million units sold-in. NBA 2K17 has sold-in nearly 7 million units (up about 10% year-over-year), while Grand Theft Auto V continues to move copies, with sell-in now topping 75 million. Its recurrent consumer spending business (virtual currency, microtransactions, and DLC)has also done well, Zelnick said, noting that Grand Theft Auto Online posted a record number of players in December.
Despite some of those gaudy numbers, the quarter was not an unqualified success. The publisher reported GAAP net revenues of $476.5 million, up 15% year-over-year but near the low end of its $475 million to $525 million guidance. Additionally, Take-Two’s guidance called for a net income of $17 million to $30 million, but it ultimately posted a net loss of $29.9 million for the quarter.
“I know it’s a bit clouded by GAAP reporting, which requires us to defer revenues, and requires us to accelerate costs related to those deferred revenues, so we have a mismatch,” Zelnick explained. “It can look like, from a GAAP point of view, that we’re not doing as well as we’re doing from a bookings and cash flow point of view.”
Total bookings for the quarter did indeed jump 51% year-over-year to $719 million, with the aforementioned titles and WWE 2K17 serving as the largest contributors to that number. Bookings from recurrent consumer spending did particularly well, growing 55% year-over-year and making up 23% of the company’s total bookings.
The holiday quarter also saw the release of Take-Two’s first VR efforts, Carnival Games VR and NBA2K VR Experience. The company didn’t provide any performance metrics for those titles, but it’s clear Zelnick wasn’t counting on them to contribute too much.
“We were happy to bring the titles to market because it was a reflection of the fact we have the R&D abilities to address video games in a VR format if and when that’s a meaningful part of the business,” he said. “I have expressed skepticism in the past, and I think that’s been borne out by the fact that the market for VR in video games remains quite small.”
Zelnick also addressed the company’s $250 million acquisition of Social Point, the Barcelona-based mobile developer of Dragon City and Monster Legends. As for how the new studio will be integrated into the company, Zelnick said the goal was more to support them to continue doing what they’ve already been successful doing, while being mindful not to mess with what works.
“What we like about Social Point is they have multiplicity, it’s not just one [hit] and that distinguishes them from a lot of people in this space,” Zelnick said. “And they know how to monetize those hits and interact with their audience. I’m hoping we can help them grow even faster, but minimally, we want to be supportive so they can keep doing what brought them to this place in the first place… the way we tend to integrate new creative acquisitions is we want those companies to retain their identity and their independence, and to continue to do what works in the market.”
That’s not to say the company is abandoning all hope of synergy. Zelnick said he hopes Take-Two can help lend its experience in Asian markets to help Social Point find success in those territories, while acknowledging that Take-Two can probably learn a few things about monetizing in a free-to-play environment that could be brought to bear on titles like NBA 2K Online and WWE Supercard.
The traditional sports ecosystem is dominated by three models of organisation. The most decentralised sports, like the PGA Tour or NASCAR, consist of largely independently organised competitions, which are sanctioned and governed by an administrative body and are open to any qualifying athlete. From there, we have typical leagues like the NBA or Premiership, which have a set number of recurring teams and players, and are extensively managed by a league front office that’s owned by each team.
eSports are quite different. If you choose to race without NASCAR or play basketball without the NBA, there’s nothing – and no official body – that can prevent you from replicating the experience. No one ‘owns’ racing or basketball, but someone does own Overwatch, and if you want to play you essentially have to go through that company. If you wanted to create your own eSports league, your ability to market or represent it would be entirely dependent on the legal team of the game’s publisher. Furthermore, the core experience is fully controlled by that publisher.
“No one ‘owns’ racing or basketball, but someone does own Overwatch, and if you want to play you essentially have to go through that company”
Leagues that are operated or endorsed by publishers can do unique things – e.g. item drops, exclusive/first-release capabilities, bundled original content – and offer unique monetisation opportunities. Three months before The International, the annual world championship for Dota 2, Valve sells interactive in-game items that directly contribute to the tournament prize pool. This model has been so successful that, in 2016, the prize pool reached $19.17 million.
Most tier-one publishers also handicap the data streams that the public can leverage. Whereas in traditional sports there are multiple providers of a firehose of sports data, game publishers offer barebones APIs that allow access to little more than character information and select match data. Valve offers an open API but, as events this year have demonstrated, it can shut off access and change policy at any time. On the platform side, Twitch is miles ahead of its competitors in terms of creating an external ecosystem thanks to its two year head-start and passionate developer community, but it maintains an ever more precarious balance between build vs. buy.
Because of these walled gardens, the investible opportunities within eSports often end up being features not products, which set them and their investors up for more of an acquihire than a Twitch-esque exit. There’s a strong argument to be made to publishers that working with third-party developers will lead to a stronger overall bottom line, foster innovation and provide defensibility.
It’s no secret that being a top publisher is a lucrative business. Activision reported $1.57 billion in revenue for Q2 of 2016 and EA $1.271 billion. It’s rumoured that Valve’s 2015 revenues reached $3.5 billion in 2015, and Riot Games’ over $1.6 billion. It’s not hard to see why partnerships with third parties and external API infrastructure aren’t a priority with so much money flowing, but that’s shortsighted. As publishers start thinking about how to monetise beyond game licenses and IAP, every moment not spent developing the ecosystem is a wasted one.
This isn’t unparalleled, and we can see examples of where large platforms in other verticals have made the decision to invest in their future, often early on in their company lifecycle. Salesforce, an enterprise software company, has a market cap of $50 billion. A report last year by IDC put the opportunity front and center: the AppExchange currently generates 2.8x the revenue of Salesforce itself and is expected to grow to 3.7x the size of Salesforce.
“As publishers start thinking about how to monetise beyond game licenses and IAP, every moment not spent developing the ecosystem is a wasted one”
Slack, the enterprise collaboration tool darling, also gets it. Even before raising money in April 2016, at a $3.8 billion valuation and boasting over 1.25 million paying users, they announced the Slack fund in December 2015 - an $80 million investment into supporting new integrations. Slack and Salesforce could have gone the closed route and developed these integrations and products internally, but they understood that the immediate revenue trade-off was well worth the ability to focus on creating the best core product possible, in addition to leveraging minimal company resources.
Now to everyone’s favourite eSports comparison : traditional sports. During the height of the daily fantasy sports craze in 2014/15, the NBA entered a multi-year partnership with FanDuel that gave it an ownership stake. The NFL expanded its partnership with Providence Equity in 2013, investing $300 million to participate in, “media and technology deals where it believes the league could help play a strategic role.” And these are just a few examples. Partnering with and investing in new properties allows older, larger establishments to participate in the upside of nascent industries quickly and cheaply.
Publishers are thinking about the shelf-life of games. The NFL and NBA will both be around in 25 years, but what about League of Legends or Counter-Strike? Opening up the ecosystem not only benefits players and fans by allowing them an outlet to interact with their favorite IPs, but ultimately enhances the core value of those IPs and gives publishers an opportunity for additional exposure through revenue share, API fees and strategic investments.
In addition to commercial benefits, let’s look at network effects. Valve is the publisher of both Counter-Strike: Global Offensive (25 million+ copies sold, 8.2 million+ players in the last two weeks), and Dota 2 (87 million+ times downloaded, 11 million+ active players in the last two weeks.) While the titles have richer histories than virtually any other competitive esport, Valve’s open API, developer tools and hands-off approach has contributed to their sustained success and status as two of the top eSports titles.
ELeague, FaceIt Esports Championship Series and Gfinity, ESL One and IEM. These streams of revenue have contributed to a high demand for professional CS:GO players, leading to lucrative contracts and opportunities.
3: The most lucrative has been the in-game skins economy, which allows players to purchase crates that contain different cosmetic versions of CS:GO weapons or Dota 2 items. During major tournaments, Valve has offered exclusive stickers that generate up to high six-figures for qualified teams. Valve has also allowed free reign on opening up use cases within this skins economy, which led to wagering, gambling and marketplaces (Bloomberg estimated yearly transaction volume to be >$7 billion.) Variations of this model have since been followed very conservatively by multiple franchises, including Call of Duty, Halo, H1Z1 and Overwatch.
On the platform side, Twitch’s dominance in livestreaming can largely be credited to going all-in on eSports first, but Twitch also has numerous native or platform exclusive features for its users. Diving deeper, this experience is powered by a blend of features that were built in-house or created by third parties. Examples include:
Bits, preceded by Streamlabs and StreamTip: direct donations from viewers are one of the foundations of a streamer’s income.
Clips, preceded by Oddshot, Plays.tv and Forge: allows viewers and creators to efficiently capture highlights and share to different social media channels.
Subscriptions / Partner Program and 3rd-party services (Revlo, Gamewisp and Curse/Discord integrations): subscriptions are another big source of income for streamers, and the third-party services all add further value to a sub and reduce churn.
TwitchPlays: what started out as a fun social experiment (TwitchPlaysPokemon) is now its own category to interact with potential customers for publishers.
Chatbots (Moobot, Nightbot and Xanbot): automated assistants that help moderate chat to prevent spamming and inappropriate behaviour.
Stream+ currency: Twitch’s new currency announced at TwitchCon 2016, which will allow developers to integrate monetisation options directly into games.
Facebook Live has launched to much fanfare, and given the massive distribution channel it will always be a huge threat. However, until it can get to feature parity Facebook Live will need to rely on traditional media partnerships or viral hits to create consistent content. These types of partnerships don’t scale when we’re talking about the individual streamers and professional players that have played a large part in getting Twitch to 100m+ MAUs, although the signing of G2 and Heroes of the Dorm is a good first step. YouTube Gaming is farther along and is doing a great job of starting to launch some analogous features.
How, then, should publishers look to partner with entrepreneurs and third parties? I’d like to see publishers create a vehicle, individually or collectively, in the model of Disney Accelerator, to offer mentorship, funding and support to kick-start the next generation of eSports businesses. Publishers should be developing their games as platforms, not individual entities - tons of data are being generated and archived and there is a treasure trove of use cases for them.
I’m confident that we’re slowly moving in the right direction. One day we’ll see a truly open ecosystem with publishers and third parties living in harmony.
In the summer of Pokémon Go Mania, it is easy to forget that there was a different obsession gripping fans of another iconic 1990s franchise. The Resident Evil 7 demo (released during E3 last June) was a creepy experience where you had to escape a dilapidated house owned by a murderous family. It went down well with horror fans; so well in fact, that when players stumbled upon a seemingly useless item – a mannequin finger – it turned into an obsession. Twitch streamers would play the demo for hours on end in an effort to uncover its mystery, theories would pop up on forum threads that would go on for hundreds and thousands of pages, and my inbox was full of friends – as if I had some insider knowledge – asking me: ‘What does the finger do? Will it get me out of the house?’
“We were really surprised by all that,” says Resident Evil 7 producer Masachika Kawata “We were planning to update the demo, but also leave a few loose threads, imply bigger things and just have odds and ends for you to discover, and one of those just so happened to be a mannequin finger. But the fact that it became such a focus of people’s attention, that was something that took us quite by surprise.”
Game director Koshi Nakanishi adds: “It certainly put a lot of pressure on us to put out the next update to the demo. We went faster on that than we had originally planned because of the explosive buzz around the finger. We didn’t want people to wait too long. This was the summer of last year, so we were working on a demo update while we were also in the middle of the development of the main game. Doing those things in parallel was certainly difficult for us.”
The Resident Evil 7 demo was a strategy that certainly seemed to work for Capcom. The concept was borrowed almost wholesale from Konami, which announced its horror game Silent Hills via the demo PT. Silent Hills was cancelled soon after and PT was removed from the PlayStation Store, disappointing horror game fans the world over. Capcom capitalised on that, although Nakanishi and Kawata insist its decision to do a demo was more about educating fans than anything else.
“With the launch announcement trailer for Resident Evil 7, we made a promise that we were going back to horror,” Nakanishi explains. “So we wanted to have a horror-focused demo that told gamers that they can trust us when we say: ‘Resident Evil is a horror game once more’. At the same time, it wasn’t the right moment to tell everybody about everything that is in the game in terms of gameplay. We wanted to get them on-board with the horror aspect first, and then the rest of the dominoes could fall. That’s why we decided to have a demo featuring just horror and no combat. Yet as the campaign progressed, and people accepted the new direction, we started to announce more details about characters and combat, and we could update the demo.”
Resident Evil 7’s reviews have just started to emerge, and the reception from critics is that Capcom has managed to rejuvenate its biggest IP after a couple of disappointing releases.
In particular the last game. Resident Evil 6, released in 2012, sold well but received a kicking from the consumer press. The game was bloated and more an action blockbuster than a horror game. However, although critics – and die-hard fans – were disappointed by the direction the series had been heading in, the franchise’s popularity had never been higher. Resident Evil 6 is the second most successful game Capcom has ever released, just behind the equally action-orientated Resident Evil 5.
“From a business perspective, Resident Evil 6 was a success,” acknowledges Kawata “But we had pushed that style of Resident Evil gameplay, with the big storyline and the hero characters, pretty much as far as we could. It was a blockbuster scale of game. That almost left us with no choice but to change the series in order to keep it alive, because where do you go after that size and scale of game?”
He continues: “Certainly if you compare the sales of Resident Evil 1, 2 and 3 as a unit [the more traditional horror games], and compare it to Resident Evil 4, 5 and 6 [which are more action-orientated], the sales were a lot higher on the more recent titles. But that’s not just because of the types of content, we have got better at selling our games. The market has got bigger as well. So just because we are going back to horror, I don’t expect we will see a drop to historical levels. The whole company is behind this title and the horror approach, and I’m confident that we are going to do well with this one.
“We also take a look at lifetime sales, and not just day one. Because some fans might be on the fence a bit, and be unsure about the new direction. So whether or not that has an effect on our initial out-of-the-gate sales, I am not sure yet. But over the lifetime of the product, I’m sure we will be able to hit our targets.”
“Although the situation with horror games is not the same as it was the last time we released a mainline title, we do still feel we can appeal to a lot of people, including hardcore horror fans.
Masachika Kawata, Capcom
The survival horror genre has had an interesting few years. Via the indie scene, it’s enjoyed somewhat of a renaissance via the likes of Slender Man and Outlast. However, the results have been mixed in the triple-A space. In 2014, Sega released Alien: Isolation, while just a few weeks later Bethesda launched The Evil Within (which was from the original creator of Resident Evil). Both titles were well received by critics, but commercially they failed to dissuade the theory that the survival horror genre was past its prime.
“The market for horror games has changed over the years, I suppose,” Kawata adds. “But Resident Evil has always been a series that keeps up, it isn’t afraid to change the style of gameplay. We have evolved a lot over the years in order to meet the needs of the market and our fans. So although the situation with horror games is not the same as it was the last time we released a mainline title, we do still feel we can appeal to a lot of people, including hardcore horror fans.
“And the fact that we have rival titles in the horror space is not a bad thing, because it only increases the market for horror games as a whole. And we will do the same when we release this game. There will be a further hunger for more horror games in general, and that can only be a good thing for us in the long term.”
Mr Baker is not someone to be trifled with
Resident Evil 7 brings back many of the classic components of past games in the series, including item management and save rooms. There’s also a huge mansion to explore, which evokes memories of the very first title in the franchise. It still feels distinctly like a Resident Evil game, but the developer has made a number of major changes, particularly in terms of the perspective. Whereas all the mainline Resident Evil games have adopted a third-person view, Resident Evil 7 has gone first-person – and for the first time since the Gun Survivor/Dead Aim light gun series on PlayStation 1 and 2. It follows in the footsteps of Outlast, Slender Man and Alien: Isolation, which also used a first-person view.
“The first-person perspective is one way to make any kind of game, it is an option that you have at any time,” Nakanishi says. “And as Kawata-san says, after Resident Evil 6 we had to reflect upon what the series was and where it was going. Some fans had said that Resident Evil 6 had lacked focus, and I wouldn’t disagree, and it was certainly one of my concerns in terms of how far we were going in that direction. So bearing that in mind, having a more focused, scarier, intimate Resident Evil was needed. We wanted to be able to not only do that, but also bring this more focused and scary experience to players in a very fresh and novel way that hadn’t been seen before in a Resident Evil.
“Some fans had said that Resident Evil 6 had lacked focus, and I wouldn’t disagree.”
Koshi Nakanishi, Capcom
“If you have a mission in mind to make a very immersive, atmospheric survival horror game, first-person is a good way to achieve that. The first-person viewpoint was more an obvious answer in terms of how to achieve our goals for Resident Evil 7, than being particularly inspired by any other external influences in the horror genre.”
That first-person perspective also enabled Capcom to capitalise on another new trend in the games sector – virtual reality.
“Going back about two and a half years, when we decided on the first-person perspective, it was obvious to say: ‘Oh you could do VR because first-person is the typical VR experience’,” he explains. “But it was just a vague idea at that point, and it wasn’t until later in development that we actually implemented VR. It was something that was relatively easy to do since we were at a stage where we had an atmospheric first-person experience in place.”
Nothing was cut from the game to better fit VR, but there were a few tweaks, including measures to reduce camera shaking in order to “make VR more comfortable”. Yet one thing the studio was a little concerned about is how scary the experience can be. The game is obviously meant to be frightening, but as anyone that played the demo at E3 will tell you, being completely immersed in that house can be quite an overwhelming experience. At E3, Capcom reps were recounting stories to me about how several journalists had asked to have the headset removed.
“When people are playing the game in VR for the first time, you do find yourself telling them not to push themselves and respect their own personal limits when it comes to intensity of experience in VR,” Nakanishi says.
Kawata adds: “I would almost recommend that if people are not sure, or think VR is too much for them – even if you have a PSVR at home – there’s no pressure to use it when you play the game for the very first time. Play the game normally first, see how you like it, see how scary it is for you on the TV, and then consider whether you want to jump into the VR mode. As it is so easy to change into VR as well, you can just take it at your own pace.
VR and first-person aside, some of the other changes Capcom made was in terms of development approach. As well as building a new engine (aptly titled the RE Engine) the team also adopted photogrammetry when putting items and even actors in the game. Capcom would fully scan the subject and simply place it in the game, with no need for additional drawing. The firm hopes this had improved the realism of the experience, although it wasn’t without its challenges.
“With photogrammetry, the actors needed to be in costume, they needed to be wearing movie-style make-up so that they look exactly like we want for the final game.”
Koshi Nakanishi, Capcom
Nakanishi concurs: “You get quick results, although the preparation takes a lot more work. Actors were difficult. Whenever you scan an actor, what I would prefer to do – and have done in the past – is take that scan and touch it up, but with this it tends to head into unrealistic territory. It doesn’t look good if you have a scan and start fiddling with it. So you have to get it really right at the scan stage. So the actors need to be in costume, they need to be wearing movie-style make-up so that they look exactly like we want for the final game. That way, once the scan is done, then you pretty much have the final result. That sort of preparation was a lot more difficult than with other processes.”
There’s also been a significant change when it came to writing. Resident Evil has a reputation for terrible dialogue, and fans would argue that’s part of its B-movie charm (although it’s probably more to do with bad translation). It’s never easy for a Japanese studio to try and build a convincing game set in a Western environment, and so the team hired Texan writer Richard Pearsey (best known for FEAR and Spec Ops: The Line) to help them Westernise its latest effort.
“The reason we hired Richard was for cultralisation, really,” Nakanishi explains. “The series is famous – especially the first titles – for having weird, cheesy english dialogue. Things like: ‘You were almost a Jill Sandwich’… it’s well known by now. It’s been part of the fun of the series in many ways, but you certainly couldn’t say the old lines were especially naturalistic. Coming to the modern day, although we love that classic stuff, if you want to make a serious horror game, you need to have a natural dialogue. It has to feel right and can’t be something that’s been translated badly from Japanese, or whatever.
“So at Capcom, we worked on the flow of the game from start to finish, and put in place the general storyline. And then Richard made the dialogue make sense, polished it up for us and made suggestions on how to make things stick together better. So that when the player plays it, it feels like almost natively Western.”
There’s still a level of uncertainty over whether the game will be successful. There are question marks over the genre, the impact of previous disappointing Resident Evil games and the fact it’s coming out in January – a month not known for high game sales. You could also argue that in today’s uncertain political and economic environment, we could probably do without a horror game.
Even so, this is the most impressive Resident Evil title since the groundbreaking Resident Evil 4 in 2005. And it’s been backed by a major PR and marketing campaign – including some inventive live-action experiences and those expansive demos. Capcom has given it its best shot, now it’s a case of seeing whether the market responds.
It would appear that the trend of big publishers hosting their own events will continue in 2017. Last year’s E3 show floor was missing booths from the likes of Electronic Arts, Activision Blizzard, Disney and Wargaming. For its part, EA decided it could better serve the fans by hosting its own event next door to E3, and now the publisher has confirmed that EA Play will be making a return for the second year in a row, but it won’t be as close to the Los Angeles Convention Center.
EA Play will be held from June 10-12 at the Hollywood Palladium, which is around seven miles away. “Whether in person or online, EA Play 2017 will connect fans around the world to EA’s biggest new games through live broadcasts, community content, competitions and more. Those that can attend in Hollywood will experience hands-on gameplay, live entertainment and much more. For anyone joining digitally around the world, EA Play will feature livestreams, deeper looks into EA’s upcoming games and experiences, and content from some of the best creators in the community,” the company stated in a press release.
Furthermore, a spokesperson confirmed to GamesIndustry.biz that EA will indeed be skipping out on having a major E3 presence. “EA Play was such a powerful platform for us last year to connect with our player community. We learned a ton, and we wanted to build on everything we loved about last year’s event to make EA Play 2017 even better,” EA corporate communications VP John Reseburg said.
“So after an extensive search, we’ve selected the Hollywood Palladium as a place where we can bring our vision of creativity, content and storytelling to life, and build an even more powerful experience to connect with players, community leaders, media and partners. EA Play 2017 will originate from Hollywood, with more ways for players around the world to connect and experience the excitement.”
It’ll be interesting to see what the other major publishers do about E3 this year. We’ll be sure to keep you posted.
Games generated $91 billion worldwide in 2016, according to a report from beancounters at SuperData Research who have been adding up some numbers on Christmas Party napkins.
Most of the cash was made in the mobile game segment some $41 billion (up 18 percent), followed by $26 billion for retail games and $19 billion for free-to-play online games.
Beancountrs at SuperData said that the new categories such as virtual reality, esports, and gaming video content were small in size, but they are growing fast and holding promise for next year. Hardware firms like Sony and HTC to take the lead in 2017. Still,
VR grew to $2.7 billion in 2016. Gaming video reached $4.4 billion, up 34 percent.
Mobile gaming was driven by Pokémon Go and Clash Royale. The mobile games market has started to mature and now more closely resembles traditional games publishing, requiring ever higher production values and marketing spend. Monster Strike was the top mobile game, with $1.3 billion in revenue.
The esports market generated $892 million (up 19 percent) in revenue. A string of investments in pursuit of connecting to a new generation of media consumers has built the segment’s momentum, as major publishers like Activision, Riot Games, and EA are exploring new revenue streams for selling media rights, according to the report.
Consumers increasingly download games directly to their consoles, spending $6.6 billion on digital downloads in 2016 which has helped improve margins.
PC gaming continues to do well, earning $34 billion (up 6.7 percent) and driven largely by free-to-play online titles and downloadable games. League of Legends together with newcomers like Overwatch are driving the growth in PC games.
PC gamers also saw a big improvement with the release of a new generation of graphics cards.
Nintendo is offering cash rewards for hackers that can expose security weaknesses in its 3DS family of consoles.
Upwards of $20,000 will be made available to successful hackers who can help address the weaknesses in Nintendo’s portable machine. The offer does not extend to Wii U.
It’s part of a program the firm is working on with HackerOne.
The offer is Nintendo’s renewed efforts to reduce piracy (including game application dumping and game copying execution), cheating (which includes game modification and save data modification) and the spreading of inappropriate content to children.
It suggests that Nintendo is true to its statement that it wants to maintain its 3DS business, even after the launch of its Switch console in March. Switch, which doubles as both a home and portable console, is seen as the natural successor to the 3DS, although Nintendo has stated it will continue to release games for the hardware. Over 60m 3DS consoles have been sold worldwide since the machine launched in 2011.
The ‘reward’ for finding vulnerabilities in the 3DS hardware will range from $100 to $20,000, and the amount will be at Nintendo’s discretion. Vulnerabilities that are already known will not be counted. The level of the reward will depend on the importance of information, quality of report and the severity of the vulnerability. Nintendo is looking for reports that include a proof of concept or functional exploit of code.
The number of games on Steam continues to rise at a daunting rate. According to new data from Steam Spy, the number of full games released on the store this year rose 40% over 2015.
Steam Spy founder Sergey Galyonkin published a chart on Twitter that indicated a total of 4207 games launched on Steam in 2016, up from 2964 last year. If accurate, that means 38% of all games on Steam were released within the last 12 months – a sobering thought for any developer trading on Valve’s market leading platform.
Of course, the notion that Steam is crowded with product is hardly new, but Steam Spy’s chart – republished above – clearly illustrates the pace at which the trend is playing out.
The only small consolation is that the 40% rise over last year is actually lower than the 67% increase in new games between 2014 and 2015. Galyonkin noted that the chart doesn’t include movies and non-game software, but it also filters out relevant content like DLC packs and “games without owner data.”
Valve is certainly cognisant of the issues that Steam’s teeming inventory has created for both developers and consumers. It has responded with two “Discovery Updates” that gave more control over the experience to both groups, the first in 2014 and the second little more than a month ago.
Following the second Discovery Update, GamesIndustry.biz talked to developers about the “huge impact” of the changes.
Last week, over three and a half years after its initial release, Digital Extremes’ free-to-play shooter Warframe broke its concurrent player record with expansion The War Within, hitting Steam’s top three on the weekend of release, recording a maximum of 68,530 players online at once and logging an incredible 1.2 million hours of playtime in a single day. Across PC and the more recent Xbox One and PS4 versions of the game, over 1 million of the 26 million players who have registered since the game’s 2013 launch had played by November’s halfway point, beating all previous monthly unique records with a fortnight to go.
Those are impressive numbers, especially for a game at a point in its lifecycle where it could certainly be forgiven for slowing down – and it’s no anomalous bump. Instead, a quick glance at SteamSpy’s graphs for the game show a steadily increasing number of players for the game, as well as a very healthy schedule of updates, patches and big content drops. Rather than leeching users to other games as it ages, Warframe is going from strength to strength.
Meridith Braun, VP Publishing at Digital Extremes, says that it’s been a tight compromise of strategies – resulting in a success which far exceeds the expectations of a game which was initially seen as something of a make or break exercise. Key to that, she says, has been a careful acquisition process, but not one which has come at the cost of long term curation and engagement of existing players.
“It’s definitely a balancing act between catering development to new players and veterans of the game,” Braun explains, “but after 3.5 years, the core of the game has grown so much that for new players there are literally hundreds of hours of missions, quests, customising and exploring game systems before they catch up to where veteran players are.
“Whilst many of our updates focus on adding new content and improving game systems that our veterans are most interested in, earlier this year we took a fresh look at the new player experience and released an update that refined some of the tutorials, updated the UI, tied quests together to help the lore flow better, and revamped the market for easier functionality. It was not our most played update, like The Second Dream or The War Within, but it served a long-tail purpose of making Warframe more inviting and easier to understand for new players. It helps them navigate to the really intricate depths of the game with the intent to retain them long-term.”
“We spend very little compared to other free-to-play games that focus a large amount of their budgets on acquisition”
Polishing the tip of the spear is a tried and tested acquisition technique, but it’s not usually a way of sidestepping the vast costs which many companies associate with gathering new players. Warframe’s marketing, though, was forged in a crucible of necessity, at a time when budgets were almost non-existent. As a result, the studio has learned to maximise the gain from channels which deliver users without draining revenue, although the financial success of the game has also enabled them to operate in areas previously well beyond their price range.
“We spend very little compared to other free-to-play games that focus a large amount of their budgets on acquisition,” says Braun. “Warframe was a passion project – the studio’s ‘Hail Mary’ pass, if you will. There was barely budget to buy an account server for the game, let alone to spend on marketing at the time. We turned to viral everything to get the word out: live streaming, social media, Reddit, forums, PR, knocking on partner’s doors for promotional opportunities. Once we launched in open beta and more players got a taste of the game, it was clear we had something unique on our hands. Since then our acquisition strategy has focused primarily on our update schedule and community involvement.
“We discovered early on that frequent significant updates – updates that added dramatic gameplay changes, enhancements and content, and transparency with our community, brought in droves of new players. Now that we have more wiggle room in our coffers, we work the usual acquisition channels – online CPA-focused advertising, social media, streaming, etc. – but nothing beats age old word-of-mouth between players telling their friends to join in on a game that only gets better and better over time.”
What’s perhaps even more unusual about the current high that Warframe finds itself riding upon is that it comes at a time when the AAA shooter market is crowded with a wide spread of very high quality competitors – many of which are under-performing at retail. The game’s peak numbers come at a point when there are brand new Battlefield and Call of Duty games at market, as well as extremely well reviewed releases like the Titanfall and Dishonored sequels.
“Warframe was a passion project – the studio’s ‘Hail Mary’ pass, if you will. There was barely budget to buy an account server for the game, let alone to spend on marketing at the time”
Braun very much sees free-to-play as playing a significant part in the difficulties which Warframe’s boxed rivals are experiencing.
“I think we’re seeing the F2P model disrupting the standard retail model for larger budget games,” she says. “The continued rise of AAA-quality, free-to-play games coming to market – and their ability to fill the long gaps between large IP releases – is taking a bite out of the big game market. Just this year it was great to see F2P titles like Paragon and Paladins launch to great fanfare and numbers, I’m sure they both had some effect on the big budget FPS games alongside Warframe.
“It’s hard to compete with free. Sure, we want people to eventually pay for the entertainment they’re receiving – but when you have the ability to try out a game for free for as long as you want, a game with equally great production value, and then decide if it’s a game that deserves your money, that’s pretty stiff competition. The larger games also aren’t built to be as agile and reactive to the market after they ship. Free games at their core are made to continually update and improve, offering incredible value and entertainment over a longer period of time.”
Blizzard probably has a few things to say about the notion that free-to-play games offer the best long-term player engagement and responsive improvement, and Braun freely admits that games like Overwatch share that strategy of player curation. Warframe, she says, also offers something else, though. Because it wasn’t a Blizzard game, born almost fully-fledged and slickly functional, early adopters have had the joy of watching it smooth out its rougher edges.
“When Warframe first launched it was a shell of the size of game it has become, and our players have stayed with our growth throughout its life-span. They enjoy taking the ride with us, being a part of the evolution, experiencing game development from the front seat. If you’re not thinking about long-term engagement and game service at the heart of your game design as a good part of the future of gaming, you may have yet to come to grips with the dwindling projections of one-and-done games.”
Whether it is the return of X-Files and Twin Peaks, or Shenmue and Pokémon, bringing back classic IP has become a safe way to secure headlines and generate copious amounts of hype.
Yet it’s not just brands that are tapping into our love for the familiar. Take this summer’s smash Netflix show Stranger Things, which plays homage to both ’80s Spielberg and classic horror. Or indeed the millions of dollars that the likes of Yooka-Laylee and Bloodstained have raised on Kickstarter – the former riffing on 1990s platformers like Banjo-Kazooie (and made by many of the same team members), with the latter acting as the spiritual successor to Castlevania (from former producer Koji Igarashi).
Ron Gilbert is another person looking to recreate those ’90s feelings. The adventure game maker behind the likes of Maniac Mansion and Monkey Island is creating a new one called Thimbleweed Park, a point-and-click adventure with retro 8-bit visuals that raised $626,250 via Kickstarter.
“I think a lot of the nostalgia that is around right now comes from a desire to go back to a simpler time,” suggest Gilbert, speaking to Gamesindustry.biz shortly after appearing at Melbourne International Games Week in Australia.
“Back then games were a little bit simpler and seeping with charm. A lot of people that love the 8-bit games today might not have even been alive back then, but they still identify with that era because it was so interesting and charming.
“It is really one of the reasons we did Thimbleweed Park. We were looking at and asking why was Monkey Island and Maniac Mansion so appealing? What is it about modern adventure games, although they’re interesting and have great stories, that means they lack the charm those games from that era had? Can we recreate that old feeling today?”
Point-and-click adventure games are enjoying a small renaissance, thanks in part to the rise of indie developers – as indeed are platformers, Metroidvania games and a whole host of other genres long thought dead.
“I don’t know exactly why adventure games faded away,” Gilbert continues.
“I do feel that somewhere around the mid-90s, point-and-click adventures sort of ran off the rails. A lot of really – for want of a better word – stupid puzzles were being made. I think what happened was that people looked at this, and went: ‘Wait a minute, you’re asking me to do completely ridiculous and random things to get through these games.’ Some players just checked out at that point.
“You also had games like Doom that came along and were first person and were more action orientated, and those games attracted a very different audience into games. So I don’t know if adventure games necessarily fell, but they certainly didn’t grow with the rest of the industry. But now we are seeing this place where we are attracting a much broader audience, and a little bit of that is due to mobile games being so ubiquitous. There are just so many more people playing games these days, and with adventure games being very story and character focused, they are able to attract that broader audience.”
He continues: “You have games that have always been niche markets. Now, because of digital distribution and the way the democratization of development tools is working, niche markets can be viable markets.”
Gilbert is enjoying the current state of indie development and the ability to make decent games with relatively small teams. It speaks to his days making titles in the ’80s and ’90s. Maniac Mansion was made with three people, Monkey Island had five full time members of staff, which increased to seven for its sequel.
Thimbleweed Park is also being made by just a handful of creators, with input from the game’s plentiful Kickstarter supporters. But this desire to go back to those early days is not just about how the visuals looked or how small the teams were, Gilbert also wants to head back to a period when developers didn’t take themselves quite so seriously.
“When we were making games back then, it was all kind of new,” Gilbert remembers. “We didn’t have anything to go from, so it was a more innocent time. Games today, although I love modern adventure games like Firewatch or Kentucky Route Zero, they are very deep and thoughtful. They require a lot from me as a player, or the viewer, because there are very interesting, deep messages that I am gleaming from this stuff. And that’s largely just the advancement of the art form. The games of the ’80s and early ’90s, they were just more innocent, and simple and therefore more charming.
“Adventure games have certainly improved. Visually, games like Firewatch are much more advanced. But I think they’ve advanced in some ways and they’ve actually de-evolved in others. I think they’re more advanced because they are trying to tell more meaningful stories, stories that are truly about something interesting or important.
“But in other ways, they haven’t moved forward. Games like Kentucky Route Zero… although I enjoyed that game quite a bit, I sort of jokingly call it the ‘press A to continue game’, because I didn’t feel like I was making a lot of choices. I was just kind of pressing the A button to get to the next piece of dialogue, and it was greatly written dialogue and it was a captivating world, which made it ok. In Firewatch, you are spending a lot of time walking around and exploring this world, and it is a very fascinating world and a very beautiful place, so I was utterly enthralled with it, but there’s not actually a lot to do. The old school adventure games really required you to work. It was a case of: ‘here is a load of puzzles and here is a bunch of story, and you have to solve all these puzzles, which should lead to uncovering the next part of the mystery’. The classic adventure games were more sophisticated in that sense.”
Like Yooka-Laylee with Banjo-Kazooie and Bloodstained with Castlevania, Thimbleweed Park is a game that could easily have had the words ‘Maniac Mansion’ or ‘Monkey Island’ plastered on the artwork. Gilbert does hope his new IP can be successful enough to become a series, but he also, quite publicly, wants to revisit those classic franchises that made his name. Both Maniac Mansion and Monkey Island were created at LucasArts, so the rights to them currently reside in the vaults somewhere at Disney’s HQ.
Disney has largely moved on from video games, and Gilbert has asked the media giant on Twitter to let him buy back the rights to his old franchises. To no avail, so far.
We ended our conversation by asking Gilbert if he had considered returning to Kickstarter to raise the funds he might need to acquire those 1990s brands.
“Buying the rights back for those games… it’s not a matter of money, it is a matter of Disney being willing to sell them,” Gilbert concludes. “If Disney came to me and said: ‘Hey, we’ll sell you Monkey Island’. I will go get the money. No amount of crowd-funding is going to make this happen, it’s just a case of Disney agreeing to sell them.
“I’ve not managed to talk to anyone at Disney who is high enough up the ladder to make that decision. I fear that the people who would make that decision have no idea what Monkey Island is.”
Call of Duty: Infinite Warfare was the No.1 boxed game in the UK this week, but Week One sales were down 48.4 percent compared with the same period for last year’s Black Ops III.
It’s the fiercest drop the franchise has suffered since it became one of the world’s most popular entertainment properties following the success of Call of Duty: Modern Warfare in 2007.
There was no PS3 or Xbox 360 version this year, however even just comparing the PS4 and Xbox One figures shows a sales drop of 43.6 percent.
Activision has changed its strategy a little with the series, and has put an increased emphasis on generating more revenue from its fans via DLC, special editions and microtransactions, as opposed to growing user numbers. Nevertheless, such a steep fall will come as a big disappointment to the firm and to UK retailers.
This was still the second biggest UK game launch of the year after FIFA 17. However, Call of Duty now finds itself playing catch-up with its biggest rival, Battlefield 1, which has already passed over half a million sales in the UK – the game has been on sale for two weeks longer.
It is important to note that all of these statistics do not factors in sales made via Steam, PSN, Xbox Live or EA Origin.
Call of Duty’s performance follows the disappointing launch of Titanfall 2. That EA game suffered a relatively mild 41 per cent week-on-week drop in its second week, but it is still selling well below what would have been expected for the IP.
It once again calls into question the logic of launching three huge first person shooter games within such close proximity.
There was one other new entry in the physical retail charts this week, Football Manager 2016 at No.6. The PC game almost certainly would have performed far better than this once you consider digital sales.
It wasn’t all bad news for Activision, Skylanders Imaginators has returned to the Top Ten following recent TV advertising, with sales rising 131 percent week-on-week.
All figures are courtesy of UK physical games tracker GfK and UKIE.
The announcement of Red Dead Redemption 2 has gamers and Take-Two investors alike eagerly anticipating the game’s release next fall, but the company’s been giving both camps reasons to pay attention in the meantime. Take-Two today announced its results for the quarter ended September 30, meeting (and in the case of bookings, exceeding) guidance and touting some record-breaking recent releases.
September’s NBA 2K17 and Mafia III (which launched in the current quarter) set new records, with the former selling in more units at release than any previous title in the franchise, and the latter selling in more units than any previous game on the 2K label (which includes BioShock and Borderlands, but not Rockstar series like Grand Theft Auto or Red Dead Redemption). The company also noted that NBA 2K17 posted the highest Metacritic scores that series has seen to date, as well as the best scores of any annualized sports game this console generation. (As of this writing, NBA 2K17 has a Metacritic average of 90, which the series has previously surpassed, but not since Take-Two acquired it from Sega in 2005.)
Speaking with GamesIndustry.biz, Take-Two chairman and CEO Strauss Zelnick acknowledged Mafia III’s reviews were not quite as record-setting as its sales. At the moment, they range from 62 to 69, depending on the platform. However, he characterized its overall reception as “phenomenal.”
“I think the scores have been a bit disappointing because there were some scores much lower than we expected,” Zelnick said. “But the reviews, especially from those who matter, have been phenomenal. And consumers absolutely love it; it’s selling really well.”
While it has been years since the NBA 2K series has been pushed by a strong competitor (Sony stopped making its own basketball series and EA has been struggling to return NBA Live to its former standing for years), Zelnick said the developers don’t take their success for granted.
“This was record first-week sell-in and we’re excited about that; virtual currency sales are up 160% year-over-year,” Zelnick said. “But if you sat with our creative team, they could give you a long list of things they feel we should be doing better, and we’re focused on all of them. Every year we aim to delight consumers, every year we make progress, and every year we fall short a bit from our own point of view. So I think we have plenty of motivation to delight the consumer, internally.”
But as games continue posting bigger and better numbers, so too do the expectations around them rise in lockstep. Zelnick said the return on investment for what constitutes a successful AAA game has only risen over time.
“For our successful titles, the ROI is very strong and getting stronger,” Zelnick said. “And I think that’s attributable to the fact that a few years ago, we’d make a title, market it, sell units, then sell catalog. And today, we offer opportunities for the consumer to engage after that release. And in many instances, we offer an opportunity to spend money after that release.”
He added that has “unquestionably” made the industry more hit-driven.
“I said in 2008 or 2009 that good is the new bad. Standards are going up, and that’s why our strategy always has been to be the most creative, innovative, and efficient company in the business,” Zelnick said. “And more often than not, we are. Sometimes we fall short.”
Take-Two met its expectations for the second quarter, posting net revenues up 21% to $420.2 million with net income of $36.4 million, down from $54.7 million in the year-ago quarter. The company also reported bookings up 28% to $452.8 million (well above the $400 million top-end range of its guidance) and non-GAAP net income of $50.7 million, down from $56.2 million the year before.
The second fiscal quarter is historically the quietest stretch for Electronic Arts, but the three months ended September 30 gave the publisher reason for optimism heading into the crucial holiday season. The company today released its second quarter results, beating its net income guidance and showing strong growth in its EA Sports Ultimate Team efforts.
“Q2 was an excellent quarter for Electronic Arts, led by breakthrough new EA Sports titles engaging players across console and mobile,” CEO Andrew Wilson said. “We are in an outstanding position for the quarter ahead, with two of the highest-rated games of this console generation in Battlefield 1 and Titanfall 2, global competitive gaming tournaments underway, and our first virtual reality experiences coming soon. Across all platforms, this holiday season will be a fantastic time to play.”
While Battlefield 1 and Titanfall 2 launched after the second quarter, EA used the report to tout the games’ early achievements. For Battlefield 1, the company said the total player base during the first week of release nearly doubled that of 2013’s Battlefield 4. As for Titanfall 2, which just launched last Friday, the company said dozens of press outlets had given review scores the equivalent of a 90 out of 100 or above.
As for the releases actually covered by EA’s second quarter results, they would include EA Sports mainstays Madden 17 and FIFA 17. The company said “20% more players were engaged” in FIFA 17 during its first week than in the first week of FIFA 16, but made no mention of specific performance for Madden. However, the EA Sports Ultimate Team game modes appear to be healthy, as EA said Ultimate Team’s net sales between the FIFA, Madden, and NHL series are up 15% year-over-year on a trailing 12-month basis.
For the second quarter, EA reported net revenues of $898 million, up 10% from last year, but short of the $915 million it had given as guidance. However, the company’s net loss for the quarter of $38 million was a significant improvement on the previous second quarter’s net loss of $140 million, and better than the projected $51 million net loss.
EA gave the early performance of FIFA 17 and the holiday slate of releases as reason enough to adjust its full-year expectations, with the company now expecting net revenue for the year ending March 31, 2017 to be $4.775 billion, up from $4.75 billion. Net income for the year is also projected to reach $848 million, compared to the previous guidance of $809 million.
Update: On the earnings call, EA CFO Blake Jorgensen addressed the early feedback on Battlefield 1 and Titanfall 2, noting that it’s too early to update any sales projections but that there’s “incredible excitement” around both and the company is “very optimistic” not just for this holiday season but for the longer term. Citing the fact that “quite a few players” were still playing Battlefield 4 years after it released, Jorgensen said he expects similar long-term interest in both titles. More generally, looking at EA’s business, Jorgensen is also encouraged by the opportunity that this generation’s consoles and the mid-cycle upgrades affords a big publisher like EA since the console installed base is already up 33% in the West compared to the previous generation, he said.
Interestingly, when asked about one of EA’s big upcoming titles, Mass Effect: Andromeda, Jorgensen effectively said that EA is not afraid to push the title back yet again (it was originally scheduled for 2016 but is now loosely slated for Q4, which ends next March). While that shouldn’t be read as a sign of trouble – Jorgensen said Mass Effect is “tracking extremely well” – it appears EA wants to be 100% sure that the game does not need any additional time before it commits more fully to a release date.