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Can eSports Become A Billion Dollar Industry?

October 1, 2015 by Michael  
Filed under Gaming

Over the last few years, competitive gaming has made huge strides, building a massive fanbase, supporting the rise of entire genres of games and attracting vast prize pots for the discipline’s very best. Almost across the board, the phenomenon has also seen its revenues gaining, as new sponsors come on board, including some major household names. Sustaining the rapidity of the growth of eSports is going to be key to its long term success, maintaining momentum and pushing it ever further into the public consciousness.

In order to do that, according to Newzoo, eSports need to learn some lessons from their more traditional athletic counterparts. Right now, the research firm puts a pin in eSports revenues of $2.40 per enthusiast per year, a number which is expected to bring the total revenue for the industry to $275 million for 2015 – a 43 per cent increase on last year. By 2018, the firm expects that per user number to almost double, reaching $4.63.

That’s a decent number, representing very rapid growth, but it pales in comparison to Newzoo’s estimates on the average earning per fan for a sport like Basketball, which represents a $14 per fan revenue – rising to $19 where only the major league NBA is a factor. To catch up to numbers like this is going to take some time, but Newzoo’s research has listed five factors it considers vital to achieving that aim.


Right now, MOBAs are undeniably the king of the eSports scene, and one of the biggest genres in gaming. The king of MOBAs, League of Legends, is the highest earning game in the world, whilst others like Valve’s DOTA 2 are also represent huge audiences and revenues, including the prestigious annual International tournament. Shooters are also still big business here, with Activision Blizzard recently announcing the formation of a new Call of Duty League.

Nonetheless, MOBAs are still the mainstay and if you don’t like them, you’re not going to get too deeply into competitive gaming as a fan. Although their popularity with the athletes is going to make them a difficult genre to shift, Newzoo says that broadening the slate is a key factor to growth.

Geographic reach

The major tournaments bring players, and audiences, from all over the world, but it’s often only the very top tier of players who can find themselves a foothold in regular competition. Major territories like the US, South Korea and Europe have some local structure, but again League of Legends stands almost alone in its provision of local infrastructure. By expanding a network of regular leagues and competitions to more countries, eSports stands a much better chance of building a grassroots movement and capturing more fans.


Already a problem very much on the radar of official bodies and players around the world, the introduction of regulation is always a tough transition for any industry. However, when you’re putting up millions of dollars in prize money, you can’t have any grey areas around doping, match fixing and player behaviour at events. These young players are frequently thrust into a very rapid acceleration of lifestyle, fame and responsibility – a heady mixture which can prove to be a damaging influence on many. Just like in other sports, stars need protecting and nurturing – and the competitions careful monitoring – in order for growth to occur without scandal and harm to its stars.

Media rights

Dishing out the rights to broadcast, promote and profit from eSports is a complex issue. Whilst games like football are worldwide concerns, with media rights a hotly contested and constantly shifting field, nobody owns the games themselves. With eSports, every single aspect of the games being played is a trademark in itself, with its owners understandably keen to protect them. However, with fan promotion such a key part of the sport’s growth, and services like Twitch a massive factor in organic promotion, governing the rights of distribution is only going to become a murkier and more complex business as time goes on. With major TV networks, well used to exclusivity, now starting to show an interest, expect this to become a hot topic.

Conflict between new and old media

That clash of worlds, between the fresh and agile formats of digital user-sourced broadcasting and the old network model is also going to be source of many of its own problems. One or the other, or even both, is going to have to adapt fast for there to be a convivial agreement which betters the industry as a whole. There’s currently considerable pushback from established media against the idea of eSports becoming accepted as a mainstream activity, fuelled in no small part by their audiences themselves, so a lo of attitudes need to change. Add to that the links between these media giants and many of the world’s richest advertisers and you can start to see the problem.


Is Sony Dropping Morpheus?

September 21, 2015 by Michael  
Filed under Gaming

Sony has pulled back the curtains on its virtual reality headset, giving it an official introduction to the wild and a real-life name.

That name is PlayStation VR, which is an obvious but uninspired choice. The name that the unit had earlier, Morpheus, which was probably a nod towards starts-great-but-ends-badly film series The Matrix, had a bit more glamour about it.

The firm has shown off the hardware to the local journalistic crowd at the Tokyo Game Show, and provided the general press with information, details and specifications.

PlayStation VR was first discussed in March 2014 when it had the cooler name. Since then the firm has been hard at work getting something ready to announce and sell, according to a post on the PlayStation blog.

A game show in Tokyo would seem the most likely place for such an announcement.

Sony said that the system is “unique”, apparently because of a special sound system, and makes the most of the Sony PS4 and its camera. The firm is expecting the device to have a big impact on PlayStation gamers and gaming.

“The name PlayStation VR not only directly expresses an entirely new experience from PlayStation that allows players to feel as if they are physically inside the virtual world of a game, but reflects our hopes that we want our users to feel a sense of familiarity as they enjoy this amazing experience,” said Masayasu Ito, EVP and division president of PlayStation product business.

“We will continue to refine the hardware from various aspects, while working alongside third-party developers and publishers and SCE Worldwide Studios, in order to bring content that delivers exciting experiences only made possible with VR.”

Specifications are available, but they relate to a prototype and are subject to change. Sony said that the system has a 100-degree field of view, a 5.7in OLED display, a 120Hz refresh rate, and a panel resolution of 960×RGB×1080 per eye.

This will not put it at the high end of the market, as the field of view is only 10 degrees greater than with Google Cardboard, and 10 degrees under that of Oculus Rift. Some rivals go as wide as 210 degrees.

And no, no release date or price have been mentioned. We predict that these will be 2016 and expensive.


Does The Xbox One Mini Exist?

September 1, 2015 by Michael  
Filed under Gaming

The rumor mill might have been a bit broken when it was announced that Microsoft was about to launch an Xbox-mini.

The rumor claimed that Microsoft would be holding a launch event in October where people could expect the company to launch the Surface Pro 4, Lumia flagships and an “Xbox One Mini.”

It was claimed that the X-box mini would be third the size of the current console and lack a Blu-Ray drive.

However Microsoft’s Phil Spencer has now debunked this theory, stating that the rumors are simply “not real”. Although he didn’t say the project didn’t exist just that the rumor that it was coming out in October was “not real.”

Given the nature of reality, and theories that the universe is a holographic game being played two-dimensional gods, we are not ready to dismiss out of hand yet.

While the Xbox One Mini definitely won’t be happening the Lumia flagships; Cityman and Talkman, new Surface tablets including the Surface Pro 4, the eagerly awaited Band 2 and perhaps even a slimmer Xbox One is still a possibility at the event.


Console Software Sales Strong And Growing

August 13, 2015 by Michael  
Filed under Gaming

As the 7th console generation was coming to an end several years ago, there was much pessimism regarding the impending launch of the 8th generation. Just as 7th generation software sales were starting to lag, mobile gaming exploded, and PC gaming experienced a renaissance. It was easy to think that the console players were going to be going elsewhere to find their gaming entertainment by the time the new consoles hit the scene. However, the 8th generation consoles have had a successful launch. In fact, the Sony and Microsoft consoles are as successful as ever.

A comparison of the year over year console software sales suggests that the 8th generation is performing better than the 7th generation – provided you exclude the Nintendo consoles. The following graph shows physical and digital software sales for years 1 through 3 of each generation for the Xbox and PlayStation platforms.

The annual numbers take into account the staggered launch cycle, so year 1 comprises different sales years for Xbox 360 and PS3. The data shows that the Sony and Microsoft platforms have outperformed their 7th generation counterparts, especially in the first two years of the cycle. The 8th generation outperforms the 7th generation even in an analysis that excludes DLC, which now accounts for an additional 5-10 percent of software sales.

However, the picture is far different if we include the Nintendo platforms. The graph below shows the same data, but now includes the Wii and Wii U in their respective launch years.

The data shows how much the “Wii bubble” contributed to the explosive growth in software sales in 2008, the year the Wii really took off as a family and party device. This data corroborates a broader theme EEDAR has seen across our research – new, shortened gaming experiences that have added diversity to the market, especially mobile, have cannibalized the casual console market, not the core console market. People will find the best platform to play a specific experience, and for many types of experiences, that is still a sofa, controller, and 50 inch flat-screen TV.

The shift in consoles to core games is further exemplified by an analysis of sales by genre in the 7th vs. 8th generation. The graph below shows the percentage of sales by genre in 2007 versus 2014, ordered from more casual genres to more core genres. Casual genres like General Entertainment and Music over-indexed in 2007 while core genres like Action and Shooter over-indexed in 2014.

It has become trendy to call this console generation the last console generation. EEDAR believes one needs to be very specific when making these claims. While this might be the last generation with a disc delivery and a hard drive in your living room, EEDAR does not believe the living room, sit-down experience is going away any time soon.

Sony Finally On Solid Ground Thanks To The PS4

July 31, 2015 by Michael  
Filed under Gaming

The PlayStation business has had another phenomenal quarter in the first four months of 2015, selling three million PS4 units and turning in an operating income of $160 million from revenues of $2.365 billion. There are now 25.3 million PlayStation 4 units in the hands of players worldwide – a number achieved in less than two full years.

The console continues to be the company’s fastest seller – outpacing the PS2, which took two years and eight months to reach the 20 million mark. Furthermore, thanks to dropping production costs for PS4 hardware, a 12 per cent increase in sales from the same quarter last year translated to a massive 350 per cent rise in operating income.

A strengthening dollar again hurt Sony’s bottom line, having an estimated impact of 15.6 billion Yen on the revenue total of 288.6 billion Yen, but this was massively outweighed by the increase in sales and the efficiency gains of Sony’s operation. On the strength of the results, Sony has added another 20 billion Yen in operating income to the sector’s full year forecast.

The sales rate of PS4 shows a healthily steady growth in player base, returning to a gradual upswing after a huge blip in Q3, 2014. Sony has upgraded it full year forecast from 16 million units to 16.5 as a result – a figure which would show a substantial increase on 2014′s 14.8 million total. By Sony’s own reckoning, the end of Q1 2016 will see nigh on 40 million of the consoles in homes. Vita sales once again went unmentioned in the report, whilst the gradual decline of PS3 continued.

Hardware wasn’t the only success story. Network, (“Network includes network services relating to game, video, and music content provided by Sony Network Entertainment Inc.”) mad almost as much in revenues, netting around 105.8 billion Yen compared to Hardware’s 129.5 billion. The Other category (Other includes packaged software and peripheral devices) brought in 30.6 billion.

Overall, the corporation turned a healthy profit, banking $676 million in net from sales of nearly $15 billion. Whilst the PlayStation business is very healthy indeed, it’s far from Sony’s only, or even biggest, success story: Devices, Imaging, Financial Services and Music all continue to return a higher operating income.


Does Steam Have A Security Issue?

July 28, 2015 by Michael  
Filed under Gaming

A security problem with the Steam gaming on-demand system means that players and their personal details are at risk.

It is possible that one day we will report on which companies made it through the night without being hacked or without exposing their users.

For now, though, the opposite is the norm and today we are reporting about a problem with gaming system Steam that, you guessed it, has dangled the personal details of punters within the reach of ne’er-do-wells.

The news is not coming out of Steam, or parent Valve, directly, but it is running rampant across social networks and the gaming community. The problem, according to reports and videos, was a bad one and made the overtaking of user accounts rather a simple job.

No badass end-of-level boss to beat here, just a stage in the authentication process. A video posted online demonstrates the efforts required, while some reports – with access to Steam’s PR hot air machine – say that the problem is fixed.

A statement released to gaming almanac Kotaku finds the firm in apologetic clean-up mode.

Steam told the paper that some users would have their passwords reset, those being the ones who might have seen their log-in changed under suspicious circumstances, and that in general users should already be protected from the risks at hand.

“To protect users, we are resetting passwords on accounts with suspicious password changes during that period or may have otherwise been affected,” the firm said.

“Relevant users will receive an email with a new password. Once that email is received, it is recommended that users log-in to their account via the Steam client and set a new password.

“Please note that, while an account password was potentially modified during this period, the password itself was not revealed. Also, if Steam Guard was enabled, the account was protected from unauthorized log-ins even if the password was modified.”

The firm added its apologies to the community.



Can Cansoles Ever Crack The Chinese Market?

July 14, 2015 by Michael  
Filed under Gaming

The launch of Sony’s PS4 and Microsoft’s Xbox One consoles in China hasn’t attracted much fanfare, perhaps because both firms were aware from the outset of what an uphill struggle this would be, and how much potential for disappointment there was if expectations were set too high. Last week saw the first stab at estimating figures, from market intelligence firm Niko Partners, who reckon that the two platforms combined will sell a little over half a million units this year; not bad, but a tiny drop in the ocean that is China’s market for videogames.

These are not confirmed sales figures, it’s important to note; market intelligence firms essentially make educated guesses, and some of those guesses are a damn sight more educated than others, so treating anything they publish as hard data is ill-advisable. Nonetheless, the basic conclusion of Niko Partners’ report is straightforward and seems to have invited no argument; the newly launched game consoles are making little impact on the Chinese market.

There are lots of reasons why this is happening. For a start, far from being starved of a much desired product, the limited pre-existing market for game consoles in China is actually somewhat saturated; the country is host to a thriving grey import market for systems from Hong Kong, Taiwan and Japan. This market hasn’t gone away with the official launch of the consoles, not least because the software made officially available in China is extremely limited. Anyone interested in console gaming will be importing games on the grey market anyway, which makes it more likely that they’ll acquire their console through the same means.

Moreover, there’s a big cultural difference to overcome. Game consoles are actually a pretty tough sell, especially to families, in countries where they’re not already well-established. Their continued strength in western markets is largely down to the present generation of parents being accustomed to game consoles in the home; cast your mind back to the 1980s and 1990s in those markets, though, and you may recall that rather a lot of parents were suspicious of game consoles not just because of tabloid fury over violent content, but because these machines were essentially computers shorn of all “educational” value. I didn’t own a console until I bought a PlayStation, because my parents – otherwise very keen for us to use and learn about computers, resulting in a parade of devices marching through the house, starting from the Amstrad CPC and ending up with a Gateway 2000 PC in which I surreptitiously installed a Voodoo 3D graphics board – wouldn’t countenance having a SNES in the house. That’s precisely the situation consoles in China now face with much of their target audience; a situation amplified even further by the extremely high-pressure nature of Chinese secondary education, which probably makes parents even more reluctant than mine when it comes to installing potentially time-sucking entertainment devices in their homes.

Besides; Chinese people, teens and adults alike, already play lots of games. PC games are enormously popular there; mobile games are absolutely huge. This isn’t virgin territory for videogames, it’s an extremely developed, high-value, complex market, and an expensive new piece of hardware needs to justify its existence in very compelling terms. Not least due to local content restrictions, neither PS4 nor Xbox One is doing that, nor are they particularly likely to do so in the future; the sheer amount of content and momentum that would be needed to make an impression upon such a mature landscape is likely to be beyond the scope of all but a truly herculean effort at local engagement and local development by either company – not just with games, but also with a unique local range of services and products beyond gaming – and neither is truly in a position to make that effort. It’s altogether more likely that both Sony and Microsoft will simply sell into China to satisfy pre-existing local demand as much as possible, without creating or fulfilling any expectations higher than that.

Is this important? Well, it’s important in so much as China is the largest marketplace in the world, with a fast-growing middle class whose appetite for luxury electronics is well-established. Apple makes increasingly large swathes of its revenue in China; companies with high-end gaming hardware would like to do something similar, were the barriers to success not raised so high. Without building a market in China, the global growth potential of the console business is fairly severely limited – the established rich nations in which consoles are presently successful have a pretty high rate of market penetration as it is, and growing sales there is only going to get tougher as birth-rates fall off (a major factor in Japan already, but most European and North American states are within spitting distance of the Japanese figures, which is worth bearing in mind next time someone shares some moronic clickbait about sexless Japan on your Facebook feed). So yes, the failure of consoles to engage strongly in China would be a big deal.

The deal looks even bigger, though, if you view China as something of a bellwether. It’s a unique country in many regards – regulations, media environment, culture, sheer scale – but in other regards, it’s on a developmental track that’s not so different from many other nations who are also seeing the rise of an increasingly monied urban middle class. If the primary difficulty in China is regulations and content restrictions, then perhaps Sony and Microsoft will find more luck in Brazil, in India, in Indonesia, in the Philippines and in the many other nations whose rapid development is creating larger and larger audiences with disposable income for entertainment. In that case, China may be the outlier, the one nation where special conditions deny consoles a chance at market success.

If the problem with China is more fundamental, though, it spells trouble on the road. If the issue is that developing nations are adopting other gaming platforms and systems long before consoles become viable for launch there, creating a huge degree of inertia which no console firm has the financial or cultural clout to overcome, then the chances are that consoles are never going to take root in any significant degree in the new middle class economies of the world. Games will be there, of course; mobile games, PC games, games on devices that haven’t even been invented yet (though honestly, Niko Partners’ tip of SmartTV games as a growth market is one that I simply can’t view from any angle that doesn’t demand instant incredulity; still, who knows?). Consoles, though, would then find themselves restricted geographically to the markets in which they already hold sway, which creates a really big limit on future growth.

That’s not the end of the world. The wealthy nations which consume consoles right now aren’t likely to go anywhere overnight, and the chances are that they’ll continue to sustain a console audience of many tens of millions – perhaps well over 100 million – for years if not decades to come. Moreover, the future of games is inevitably more fragmented than its present; different cultures, different contexts and different tastes will mean that it will be a truly rare game which is played and enjoyed to a large degree in all quadrants of the globe. There’ll still be a market for a game which “just” does great business in North America, Europe and so on; but it’ll be an increasingly small part of an ever-growing market, and its own potential for growth will be minimal. That, in the end, is a fairly hard cap on console development costs – you can’t spend vastly more money making something unless your audience either gets bigger, or more willing to pay, and there’s little evidence of either of those things in the console world right now.

The real figures from China, if and when they’re finally announced, will be interesting to see – but it’s unlikely that Niko Partners’ projections are terribly far from the truth. Whether any console company truly decides to put their weight behind a push in China, or in another developing country, over the coming years may be a deciding factor in the role consoles will play in the future of the industry as a whole.

Digital Games On Consoles Growing Rapidly

June 12, 2015 by Michael  
Filed under Gaming

By examining trends between the digital and physical ecosystem, EEDAR has found the digital space to be increasingly driving the future of new console game publishers.

In recent years, the physical games market on consoles has been experiencing a consolidation of publishers and a downturn in the number of games released. From 2008 to 2014, the number of games released on the physical format across Microsoft, Nintendo, and Sony consoles declined from 383 (in 2008) to 145 (in 2014).

Conversely to the physical games’ market, the digital space has been growing considerably within this same time frame. Thanks to the growing focus of online digital ecosystems on consoles, more publishers than ever are releasing console games. In 2008, there were 102 digital-only games released across all consoles; in 2014, there were 279 digital-only games released, according to release data taken from EEDAR’s internal database which tracks all physically and digitally released games on these platforms.

EEDAR defines the Digital Only category as games that do not have a simultaneous (within 90 days) physical release. The Physical + Digital category encompasses most AAA game releases which see simultaneous physical and digital releases, and the Physical Only category consists of games that do not also appear on digital storefronts. Nearly every title released today on consoles also makes an appearance on the console’s digital storefront. The Digital Only category by itself accounts for 66 percent of total game releases. This digital ecosystem is not only reinvigorating game releases, but the number of active publishers has been increasing considerably.

Since 2011, the Traditional Market (defined as Physical + Digital and Physical Only releases) has seen a decline in the number of active publishers. In 2014, there were only 46 different publishers releasing new games compared to the 82 publishers active in 2011. While the traditional market continues to be more dominated by the few larger AAA publishers, the digital space has become a hotspot for numerous smaller publishing companies.

The 8th generation of consoles has caused a resurgence in publisher activity in the digital-only space. Thanks to the growing digital ecosystem and more robust digital storefront experiences on the 8th-gen consoles, publishers continue to flock to the digital games space. In 2014, the total count of publishers releasing digital-only games in the console gaming space was the highest in history at over 146 different publishers.

In the Digital Only market, game releases are more spread across the active publishers. For each active yearly publisher, games released per publisher has been decreasing within the digital-only space. This represents a market with a diverse range of publishers where the larger, more established publishers do not overshadow the presence of other publishers.

Is Amazon Serious About PC Gaming?

June 9, 2015 by Michael  
Filed under Around The Net

Amazon has looked at the gaming market and felt that it is an area it can make a pile of dosh.

So far its games have been restricted to mobile devices. But it looks like that’s about to change: Amazon Game Studios is currently hiring for what it describes as an “ambitious new PC game project using the latest technology.”

It looks like this will be Amazon’s first ever PC release. Amazon hired notable developers like Kim Swift, designer of Portal, as well as Clint Hocking, who previously worked on franchises like Far Cry and Splinter Cell.
It has spent a small fortune licensing the CryEngine, the same one used to make high-end PC games like Crysis 3 and bought the game streaming service Twitch last August for $970 million, and made gaming a big focus for its Fire TV media box.

In a statement Amazon said: “We believe that games have just scratched the surface in their power to unite players,” the job posting reads, “and will produce some of the future’s most influential voices in media and art.”


GameStop Acquires ThinkGeek

June 4, 2015 by Michael  
Filed under Gaming

Last week it was reported how Geeknet Inc. was in the process of being bought out by retailer Hot Topic for $16 a share or $37 million in cash.

However we have just discovered that deal was squashed because Thinkgeek got a better deal from Gamestop.

GameStop offered $20 per share and Hot Topic wanted away. GameStop’s $20 per share deal also includes $37 million in cash and comes out to a total valuation of $140 million.

Geeknet must pay Hot Topic a three percent “break-up fee,” which GameStop has agreed to reimburse.

What this will mean is that ThinkGeek customers can pick up ThinkGeek merchandise in GameStop stores.

The press release also mentions the potential of offering GameStop PowerUp Rewards members “exclusive, unique and cutting edge merchandise related to their favorite entertainment.”

The deal should be concluded by the end of GameStop’s second financial quarter of 2015, which will happen in August.


Does The PS4 Have a Weak First Party Fall Line-up?

May 29, 2015 by Michael  
Filed under Gaming

At Sony’s 2015 Investor Relations Day today, Sony Computer Entertainment president and global CEO Andrew House detailed the company’s strategy for the coming year, including how it will address some shortcomings.

House began his presentation on a positive note, talking up PlayStation 4 as “the fastest selling hardware platform in our history,” showing better-than expected growth and pushing PlayStation Plus subscriptions to twice what they were in fiscal year 2013. He said the company has a competitive advantage for the moment, and laid out three ways it hopes to maintain that. In addition to next year’s launch of the Project Morpheus virtual reality headset and continued cost reduction efforts, House said the company needs quality software.

“We are working very hard to continue very strong support from third-party pubs and devs,” House said. “Our first-party lineup is a little sparse this year, so I think this places even greater emphasis on getting good third-party support.”

That doesn’t necessarily mean exclusive third-party support. To date, House said Sony has been primarily trying to get multiplatform developers to simply take advantage of features the PS4 has over the competition, like SharePlay, or maybe include extra content in the PS4 version or give players early access to add-on content. Third-party exclusives are still an option, just not a frequently used one.

“I will admit that these are, in the current publishing landscape, few and far between, but we were able to announce a full exclusive around a franchise like Street Fighter so that Street Fighter 5 is a complete exclusive for PlayStation 4,” House said, adding, “Although given publishing dynamics and development costs, those are increasingly difficult to secure.”

House also talked about the decline in Sony’s other platforms. As much as the PS4′s growth has exceeded expectations, so too has the PlayStation 3′s decline. House said the system’s price simply isn’t as competitive in the market as the PlayStation 2 and PSone were after their successors launched, and added that the shift toward more connected console experiences has also made less capable offerings less attractive.

House also cast a dim view of the company’s handheld business. While he noted that the Vita platform remains “strong and vibrant” in Asia and Japan, his outlook for the current fiscal year included declines in the US and Europe. Additionally, he referred to the PlayStation Vita and its microconsole counterpart the PlayStation TV as “legacy platforms” when discussing a write-off of hardware components for the two.

“I would characterize 2015 as the beginning of a harvest period for the PlayStation 4 platform,” House said. “The beginning of a harvest period. That being said, we are also undertaking to invest in the future, and 2015 will also be a year of investment.”

That investment will be focused on a few areas. There’s the Morpheus, of course, as well as continued spend on original PlayStation entertainment content like the TV show Powers (which was recently greenlit for a second season). On top of that, House said Sony would be investing in the expansion of its PlayStation Vue television streaming platform and a continued re-architecture of its PlayStation Network with an eye toward increasing stability and reducing maintenance downtime.


Are Paid Mods On The Horizon For Gamers?

May 5, 2015 by Michael  
Filed under Gaming

Valve is no stranger to its ventures having a somewhat rocky start. Remember when the now-beloved Steam first appeared, all those years ago? Everyone absolutely loathed it; it only ever really got off the ground because you needed to install it if you wanted to play Half-Life 2. It’s hard now to imagine what the PC games market would look like if Valve hadn’t persisted with their idea; there was never any guarantee that a dominant digital distribution platform would appear, and it’s entirely plausible that a messy collection of publisher-owned storefronts would instead loom over the landscape, with the indie and small developer games that have so benefited from Steam’s independence being squeezed like grass between paving stones.

That isn’t to say that Valve always get things right; most of the criticisms leveled at Steam in those early days weren’t just Luddite complaints, but were indeed things that needed to be fixed before the system could go on to be a world-beater. Similarly, there have been huge problems that needed ironing out with Valve’s other large feature launches over the years, with Steam Greenlight being a good example of a fantastic idea that has needed (and still needs) a lot of tweaking before the balance between creators and consumers is effectively achieved.

You know where this is leading. Steam Workshop, the longstanding program allowing people to create mods (or other user-generated content) for games on Steam, opened up the possibility of charging for Skyrim mods earlier this month. It’s been a bit of a disaster, to the extent that Valve and Skyrim publisher Bethesda ended up shutting down the service after, as Gabe Newell succinctly phrased it, “pissing off the Internet”.

There were two major camps of those who complained about the paid mods system for Skyrim; those who objected to the botched implementation (there were cases of people who didn’t own the rights to mod content putting it up for sale, of daft pricing, and a questionable revenue model that awarded only 25% to the creators), and those who object in principle to the very concept of charging for mods. The latter argument, the more purist of the two, sees mods as a labour of love that should be shared freely with “the community”, and objects to the intrusion of commerce, of revenue shares and of “greedy” publishers and storefronts into this traditionally fan-dominated area. Those who support that point of view have, understandably, been celebrating the forced retreat of Valve and Bethesda.

Their celebrations will be short-lived. Valve’s retreat is a tactical move, not a strategic one; the intention absolutely remains to extend the commercial model across Steam Workshop generally. Valve acknowledges that the Skyrim modding community, which is pretty well established (you’ve been able to release Steam Workshop content for Skyrim since 2012), was the wrong place to roll out new commercial features – you can’t take a content creating community that’s been doing things for free for three years, suddenly introduce experimental and very rough payment systems, and not expect a hell of a backlash. The retreat from the Skyrim experiment was inevitable, with hindsight. With foresight, the adoption of paid mods more broadly is equally inevitable.

Why? Why must an area which has thrived for so long without being a commercial field suddenly start being about money? There are a few reasons for the inevitability of this change – and, indeed, for its desirability – but it’s worth saying from the outset that it’s pretty unlikely that the introduction of commercial models is going to impact upon the vast majority of mod content. The vast majority of mods will continue to be made and distributed for free, for the same reasons as previously; because the creator loves the game in question and wants to play around with its systems; because a budding developer wants a sandbox in which to learn and show off their skills to potential employers; because making things is fun. Most mods will remain small-scale and will, simply, not be of commercial value; a few creators will chance their arm by sticking a price tag on such things, but the market will quickly dispose of such behaviour.

Some mods, though, are much more involved and in-depth; to realise their potential, they impact materially and financially upon the working and personal lives of their creators. For that small slice out of the top of the mod world, the introduction of commercial options will give creators the possibility of justifying their work and focus financially. It won’t make a difference at all to very many, but to the few talented creative people who will be impacted, the change to their lives could be immense.

This is, after all, not a new rule that’s being introduced, but an old, restrictive one that’s being lifted. Up until now, it’s effectively been impossible to make money from the majority of mods. They rely upon someone else’s commercial, copyrighted content; while not outright impossible technically, the task of building a mod that’s sufficiently unencumbered with stuff you don’t own for it to be sold legally is daunting at best. As such, the rule up until now has been – you have to give away your mod for free. The rule that we’ll gradually see introduced over the coming years will be – you can still give away your mod for free, but if it’s good enough to be paid for, you can put a price tag on it and split the revenue with the creator of the game.

That’s not a bad deal. The percentages certainly need tweaking; I’ve seen some not unreasonable defences of the 25% share which Bethesda offered to mod creators, but with 30% being the standard share taken by stores and other “involved but not active” parties in digital distribution deals, I expect that something like 30% for Steam, 30% for the publisher and 40% for the mod creator will end up being the standard. Price points will need to be thrashed out, and the market will undoubtedly be brutal to those who overstep the mark. There’s a deeply thorny discussion about the role of F2P to be had somewhere down the line. Overall, though, it’s a reasonable and helpful freedom to introduce to the market.

It’s also one which PC game developers are thirsting for. Supporting mod communities is something they’ve always done, on the understanding that a healthy mod scene supports sales of the game itself and that this should be reward enough. By and large, this will remain the rationale; but the market is changing, and the rising development costs of the sort of big, AAA games that attract modding communities are no longer being matched by the swelling of the audience. Margins are being squeezed and new revenue streams are essential if AAA games are going to continue to be sustainable. It won’t solve the problems by itself, or overnight; but for some games, creating a healthy after-market in user-generated content, with the developer taking a slice off the top of the economy that develops, could be enough to secure the developer’s future.

Hence the inevitability. Developers need the possibility of an extra revenue stream (preferably without having to compromise the design of their games). A small group of “elite” mod creators need the possibility of supporting themselves through their work, especially as the one-time goal of a studio job at a developer has lost its lustre as the Holy Grail of a modder’s work. The vast majority of gamers will be pretty happy to pay a little money to support the work of someone creating content they love, just as it’s transpired that most music, film and book fans are perfectly happy to pay a reasonable amount of money for content they love when they’re given flexible opportunities to do so.

Paid mods are coming, then; not to Skyrim and probably not to any other game that’s already got an established and thriving mod community, but certainly to future games with ambitions of being the next modding platform. Valve and its partners will have to learn fast to avoid “pissing off the Internet” again; but for those whose vehement arguments are based on the non-commercial “purity” of this corner of the gaming world, enjoy it while it lasts; the reprieve won this week is a temporary one.

Will The Gaming Industry Pass $90 Billion In Sales This Year?

April 27, 2015 by Michael  
Filed under Gaming

It’s going to be another big year for games, as Newzoo is projecting that 2015 will see global gaming revenues jump 9.4 percent year-over-year to $91.5 billion. The future looks bright as well, with the research firm’s upcoming Global Games Market Report projecting worldwide revenues to reach $107 billion in 2017.

As the overall market grows, the distribution of where that money is coming from will also shift. Newzoo’s projections for this year have a surging Chinese market narrowly overtaking the US as the single biggest revenue contributor, bringing in $22.2 billion (up 23 percent) compared to the American market’s $22 billion (up 3 percent). As far as regions go, Asia-Pacific is far and away the largest source of gaming revenue, accounting for $43.1 billion (up 15 percent). Latin America is the smallest of the four major markets with just $4 billion in revenues, but it is also growing the quickest, up 18 percent year-over-year.

The platforms on which people spend money gaming are also in flux. Tablet revenues are expected to be up 27 percent year-over-year to $9.4 billion, with smartphone and watch revenues jumping 21 percent to $20.6 billion. However, PCs are the most popular platform for games, bringing in $27.1 billion (up 8 percent) from standard titles and MMOs, while casual webgames will draw an additional $6.6 billion (up 2 percent). Newzoo grouped TV, consoles, and VR devices into their own category, projecting them to bring in $25.1 billion (up 2 percent) in game revenues. The only market segment not seeing growth at the moment is the dedicated handheld, which Newzoo expects to bring in $2.7 billion in revenue this year (down 16 percent).

While the firm’s grouping of VR and smartwatch revenues in other categories may be unusual, it said both segments are too small to report for now.

“Short- to medium-term VR revenues will be limited and largely cannibalize on current console and PC game spending as a share of game enthusiasts invest in the latest technology and richest experience that VR offers,” Newzoo said. “Smartwatches will be a success but not add significant ‘new’ revenues to the $20.6 billion spent on smartphones this year.”

Is EA Shuttering It’s Free To Play Model?

April 20, 2015 by Michael  
Filed under Gaming

EA is shuttering four high-profile free-to-play games, all of them allied to popular IP like Battlefield and FIFA.

Battlefield Heroes, Battlefield Play4Free, Need for Speed World and FIFA World will all continue for another 90 days, at which point they will be taken offline for good. Further development on the games has stopped already.

“In more than five years since most of these titles launched, how we play games has changed dramatically,” said Patrick Soderlund, EVP of EA Games, in a statement. “These were pioneering experiences, and we’re humbled that, over the years, so many of you joined us to enjoy the games and the community.”

In terms of EA’s growing interest in free-to-play models, the real pioneer among that group is Battlefield Heroes, which was pitched at “frustrated, restricted” gamers back in 2008. Need for Speed World and Battlefield Play4Free followed, launching over the second half of 2010.

By the start of 2012, EA was reporting a combined total of 25 million players across the six games in its “Play4Free” initiative, with Battlefield Heroes and Need for Speed World contributing 10 million players each.

However, FIFA World is by no means a forerunner. It only reaching open beta late in 2013, and so it is being shuttered after substantially less than two years of public availability. This wouldn’t imply a slow decline in interest, but a lack of interest in the first place.

That’s in stark contrast to FIFA Online, the free-to-play version of the game made specifically for markets in Asia. In 2012, EA’s Andrew Wilson claimed that FIFA Online was making $100 million a year in revenue. A year later, FIFA Online 3, the most recent iteration, was the leading online sports game in both traffic and revenue in Korea.

One thing is certain, take these four titles away from EA’s free-to-play games on Origin, and you’re left with only Command & Conquer: Tiberium Alliances and Star Wars: The Old Republic – in his statement, Soderlund stressed the latter’s “enthusiastic and growing” community, and reiterated EA’s commitment to providing new content.

The remainder of the company’s free-to-play catalog is composed of games like Outernauts, The Simpsons: Tapped Out and Bejeweled Blitz. Casual, social, call them what you will, but they are intended for a very different audience to Need for Speed World and Battlefield Play4Free, and that audience has just lost two-thirds of the games EA had made to satisfy its needs.

Was Crytek Saved By Amazon?

April 9, 2015 by Michael  
Filed under Gaming

The deal that helped Crytek recover from its recent financial difficulties was Amazon, according to a report from Kotaku.

The online retail giant signed a licensing deal for CryEngine, Crytek’s proprietary game engine. Sources within the company put the deal’s value at between $50 million and $70 million, and suggested that Amazon may be using it as the bedrock for a proprietary engine of its own.

However Amazon uses the technology, though, the importance of the deal for Crytek cannot be overstated. Last year, during the summer, it became apparent that all was not well at the German developer. Employees hadn’t been fully paid in months, leading to an alleged staff walkout in its UK office, where a sequel to Homefront was in development. Koch Media acquired the Homefront IP and its team shortly after.

When the company’s management eventually addressed the rumors, it had already secured the financing necessary to take the company forward. No details of the deal were offered, but it’s very likely that Crytek got the money it needed from Amazon.

We have contacted Crytek to confirm the details, but it certainly fits with the perception that Amazon could emerge as a major creator of game content. It has snapped up some elite talent to do just that, it acquired Twitch for a huge sum of money, and it has been very open about where it plans to fit into the overall market.