There’s a popular narrative about Japan’s game development industry: it’s an industry in trouble, lagging behind the West and running out of ideas. If any Japanese developer wants to get themselves splashed into the headlines, all they need do is trot out a soundbite disparaging their own industry; in a world of click bait headlines, the fall of Japanese development is a sure-fire winner. The apparent decline of Japan’s game developers is linked to a secondary narrative as well, namely the decline of Japan’s internal market for videogames. Once the undisputed gaming capital of the world, Japan seems to be falling out of love with the pastime – at least on consoles, and at least according to some rather unusual readings of the data.
There’s a nugget of truth to both of these stories; just enough to make them worth considering, yet certainly not enough to prevent the majority of reporting and discussion on them from being a torrent of absolute nonsense. Japanese game development is somewhat troubled, but it’s troubled by exactly the same factors that are giving sleepless nights to Western game developers – skyrocketing AAA budgets, new business models, a diversification of platforms and the globalisation of the audience. Japanese development studios remain perfectly capable of making superb games that delight their fans; their problem, just as everywhere else, is figuring out how to make money from those games in a new world where profitability escapes everything but the million-selling megahit.
That links back to the second narrative; Japan is falling out of love with games. On the surface, it’s hard to see this alleged decline. The country’s arcades may not be what they once were, but they’re still far more numerous and spacious, not to mention well-attended, than any such establishments in the west. Dedicated videogame stores remain a fixture of shopping districts, while every large electronics store (and there are plenty of those, dominating most city centre areas) has a large videogames section – a stark contrast with, for example, central London, where actually going out and buying a videogame in a shop is an increasingly difficult task. Food courts and fast-food joints still play host to groups of children and teenagers engaged in the likes of Pokemon and Monster Hunter, and a trip outside in an urban area with a 3DS in your pocket will bag a full complement of Street Pass hits in no time flat.
Where’s the decline, then? Well, as figures released earlier this week by Japanese magazine publisher and industry data agency Enterbrain confirm, it’s not actually a decline so much as a stagnation. Enterbrain’s report, widely reported online after being translated in part by Kantan Games’ boss Serkan Toto on the company’s blog, showed that combined hardware and software sales in the first half of 2014 were almost exactly the same as the first half of 2013 – showing growth of just 0.1%. Toto’s entirely reasonable point was that this is much, much lower growth than Japan’s booming smartphone game market, yet this seems to have been picked up by many outlets as further confirmation of a Japanese gaming decline and specifically of a failure to ignite interest in the PS4.
Let’s be clear – the Japanese smartphone game market is in extraordinarily rude health. Revenues from mobile games, by some measures, surpassed packaged game revenue about three years ago and haven’t looked back since. For every person you see playing a 3DS or a Vita (the latter, I note, becoming vastly more commonplace on trains in recent months), you see dozens engrossed in mobile games. Puzzle & Dragons remains the clear favourite, but a trip on a busy Tokyo commuter line will turn up any number of different games gracing the ubiquitous smartphones. The industry’s revenues are clear to see, too; the vast majority of expensive marketing campaigns for games here are for mobile games, not console titles. Only last week I walked onto a train carriage on the phenomenally busy Yamanote loop line in central Tokyo to find that every advertising space in the carriage was full of Clash of Clans marketing; the huge billboard near my apartment, meanwhile, alternates fortnightly between ads for hopeful Puzzle & Dragons clones and ads for new singles by terrible boybands. There’s a huge amount of cash flowing through mobile games in Japan right now, and from a business perspective, that makes it a more interesting (if vastly more challenging) space than the console market.
Yet that doesn’t change the slowdown of Japan’s console market into a “decline” or a “crisis”. We all know that Japan has been ahead of the curve in terms of the adoption of videogames since the 1980s. 30 years down the line, is it surprising that it has hit a plateau? Gaming as a whole – including mobile, browser and online gaming – continues to grow at a massive rate, but in Japan at least, the console space has reached a point where there simply isn’t much new market to conquer. That may change in future as new devices open up new audiences, but console games as they stand don’t seem to have much further to go in Japan. That doesn’t make them a bad business. It means that if you want to make huge bucks and impress shareholders with your growth figures, you probably want to place your investments elsewhere – but if you want to make great games and make money selling them, a mature, stable market is no worse a place to do that than a growing one.
Moreover, when you consider the underlying factors in Japan’s economy, maintaining a steady market size is actually quite impressive. Japan’s population peaked in 2008 and has slowly declined since then; the most rapid decline being the proportion of young people (the most avid consumers of videogames). So this is a market with less “core” consumers of videogames than before; moreover, a series of ill-targeted reforms and a few decades of economic slump have meant that a very large proportion of those young people are trapped in low-paying work with no job security. Furthermore, Japan’s prices have been in slow but steady decline since the early 1990s. Yes, unlike most western economies, Japanese prices aren’t slowly rising due to inflation – rather, they’re falling due to deflation. This has supposedly been reversed in the past 12 months or so, with tiny inflation figures finally showing up, but most of the change so far has been down to a sharp rise in energy costs (a consequence of expensive imported fuels replacing Japan’s still-offline nuclear power plants) and it generally hasn’t been reflected in consumer goods.
One other economic factor has been mentioned by a handful of writers this week. They pointed out that Japan’s consumption tax went up from 5 per cent to 8 per cent in April, in the middle of this reporting period; if that 3 per cent hike were included in Enterbrain’s figures, it would mean industry revenues actually fell. However, to my knowledge Enterbrain’s numbers are based on pre-tax figures, much as US market data is, and thus the consumption tax rise isn’t a factor – except in that it would have been expected to push videogame sales down, thus making the rise slightly more impressive.
In short – Japan has less consumers for games and it’s charging less for things than it used to. Under those circumstances, a market which was performing precisely as well this year as it did last year would be expected to show a modest decline. Just staying still would mean you’d actually grown by a few percent in relative to offset the underlying audience decline and price deflation. Growing by 0.1% in Japan is comparable to growing by a couple of percent in the USA or much of Europe, where population is still generally growing and prices are being inflated, not deflated.
These factors don’t combine to mean that Japan is magically showing strong growth in defiance of the figures, but they are important to understanding what the figures mean. Japan’s “decline” is more like stagnation, and in the past year, even that stagnation has showed a positive trend. The market for consoles and games remains big and pretty healthy even as the market for smartphone games shoots through the roof; both of them clearly have an important place in the future of the country’s games industry.
As for the supposedly “disappointing” impact of the PlayStation 4? There’s no doubt that the performance of the console has slowed down significantly since a very strong launch, but it’s worth noting that sales of hardware were actually up nearly 7% year-on-year, with the PS4 and the resurgent Vita picking up slack from slower sales of the 3DS. PS4′s software line-up in Japan is still largely composed of western titles with limited appeal to the local audience, and the console probably won’t pick up significantly until more local software is available later this year – it’s notable that the PS Vita’s success in the first half of 2014 is largely attributable to the sudden arrival of software titles that match local tastes, and not (as some commentators would have it) to an upsurge of interest in PS4 Remote Play functionality. Overall, PS4 in Japan continues to perform as you’d expect for a new console with limited software – a great launch, followed by slow but steady sales while it awaits new software to spark purchases from new audiences. It’s done well, but it hasn’t “rescued” the Japanese market; but then again, if you take the time to understand the figures, it should be pretty clear that the Japanese market doesn’t actually need rescuing.
Late last year, Frank Gibeau switched roles at Electronic Arts, moving from president of the PC and console-focused EA Labels to be the executive vice president of EA Mobile. Speaking with GamesIndustry International at E3 last month, Gibeau said he was enticed by the vast opportunity for growth in the mobile world, and the chance to shape the publisher’s efforts in the space.
“One of the things I enjoy doing is building new groups, new teams and taking on cool missions,” Gibeau said. “The idea was that EA is known as a console company, and for our PC business. We’re not particularly well known for our mobile efforts, and I thought it would be an awesome challenge to go in and marshal all the talent and assets of EA and, frankly, build a mobile game company.”
It might sound a little odd to hear Gibeau speaking of building a mobile game company at EA. After all, he described EA as “the king of the premium business model” in the mobile world not too long ago, when the company was topping charts with $7 apps like The Sims 3 or raking it in with paid offerings like Tetris, Monopoly, or Scrabble.
“Two years ago, we were number one on feature phones with the premium business model,” Gibeau said. “Smart devices come in, freemium comes in, and we’re rebuilding our business. I think we’ve successfully gotten back into position and we see a lot of opportunity to grow the business going forward, but if you had talked to me about two years ago and tried to speculate there would be a company called Supercell with that much share and that many games, we wouldn’t even have come close.”
Gibeau expects that pace of upheaval to continue in the mobile market, but some things seem set in stone. For example, Gibeau is so convinced that the days of premium apps are done, he has EA Mobile working exclusively on freemium these days.
“If you look at how Asia operates, premium just doesn’t exist as a business model for interactive games, whether it’s on PC or mobile devices. If you look at the opportunity set, if you’re thinking globally, you want to go freemium so you can capture the widest possible audience in Japan, Korea, China, and so on… With premium games, you just don’t get the downloads you do with a free game. It’s better to get as many people into your experience and trying it. If they connect with it, that’s great, then you can carry them for very long periods of time. With premium, given that there are so many free offerings out there, it’s very difficult to break through.”
Unfortunately for EA, its prior expertise is only so relevant in the new mobile marketplace. Its decades of work on PCs and consoles translated well to premium apps that didn’t require constant updating, but Gibeau said running live services is a very different task – one EA needs to get better at.
“Our challenge frankly is just mastering the freemium live service component of what’s happening in mobile,” Gibeau said. “That’s where we’re spending a lot of our time right now. We think we have the right IP. We have the right talent. We’ve got great production values. Our scores from users are pretty high. It’s really about being able to be as good as Supercell, King, Gungho, or some of these other companies at sustained live services for long periods of time. We have a couple games that are doing really well on that front, like The Simpsons, Sims Freeplay, and Real Racing, but in general I think that’s where we need to spend most of our time.”
As Gibeau mentioned, EA has already had some successes on that front, but its record isn’t exactly unblemished. The company launched a freemium reboot of Dungeon Keeper earlier this year and the game was heavily criticized for its aggressive monetization approach. In May, EA shuttered original developer Mythic.
“Dungeon Keeper suffered from a few things,” Gibeau said. “I don’t think we did a particularly good job marketing it or talking to fans about their expectations for what Dungeon Keeper was going to be or ultimately should be. Brands ultimately have a certain amount of permission that you can make changes to, and I think we might have innovated too much or tried some different things that people just weren’t ready for. Or, frankly, were not in tune with what the brand would have allowed us to do. We like the idea that you can bring back a brand at EA and express it in a new way. We’ve had some successes on that front, but in the case of Dungeon Keeper, that just didn’t connect with an audience for a variety of reasons.”
The Dungeon Keeper reboot wasn’t successful, but EA continues to keep the game up and running, having passed the live service responsibilities to another studio. It’s not because the company is hoping for a turnaround story so much as it’s just one more adaptation to running games with a live service model.
“If you watch some of the things we’ve been doing over the last eight or nine months, we’ve made a commitment to players,” Gibeau said. “We’re sincere and committed to that. So when you bring in a group of people to Dungeon Keeper and you serve them, create a live service, a relationship and a connection, you just can’t pull the rug out from under them. That’s just not fair. We can sustain the Dungeon Keeper business at its level for a very long time. We have a committed group of people who are playing the game and enjoying it. So our view is going to be that we’ll keep Dungeon Keeper going as long as there’s a committed and connected audience to that game. Are we going to sequel it? Probably not. [Laughs] But we don’t want to just shut stuff off and walk away. You can’t do that in a live service environment.”
Much like EA’s institutional experience, there’s only so much of Gibeau’s past in the console and PC core gaming world that is directly relevant to today’s mobile space. But as the segment grows out of what he calls the “two guys in a garage” stage, EA’s organizational expertise will be increasingly beneficial.
“These teams are starting to become fairly sizeable,” Gibeau said, “and the teams and investment going into these games is starting to become much greater. Now they’re much, much less than you see on the console side, but there’s a certain rigor and discipline in approach from a technology and talent standpoint that’s very applicable… If you look at these devices, they will refresh their hardware and their computing power multiple times before you see a PlayStation 5. And as you see that hardware get increasing power and capability on GPU and CPU levels, our technology that we set up for gen 4 will be very applicable there. We’re going to be building technologies like Frostbite that operate on mobile devices so we can create richer, more immersive experiences on mobile.”
Even if mobile blockbusters like Candy Crush Saga aren’t exactly pushing the hardware, Gibeau said there’s still a need for all that extra horsepower. With the increased capabilities of multitasking on phones, he sees plenty of room for improvement before the industry runs up against diminishing returns on the CPU and GPU front. He likens today’s mobile titles to late-generation PS2 games, with PS3 and Xbox 360-level games just around the corner.
“As it relates to games, this is like black and white movies with no sound at this point, in terms of the type of games we’ve created,” Gibeau said. “We’re just starting to break through on the really big ideas is my personal view. If you look at games like Clash of Clans, Real Racing, even Candy Crush, they’re breaking through in new ways and spawning all types of new products that are opening up creativity and opportunities here. So I think computing power is just something we’ll continue to leverage.”
The best part for Gibeau is that the hard work of convincing people to buy these more powerful devices isn’t falling solely on the shoulders of game developers.
“The beauty of it is it’s not a single-use device,” Gibeau said, “so people will be upgrading them for a better camera, better video capability, different form factor, different user inputs, as a wearable… I think there’s so much pressure from an innovation standpoint between Samsung, Apple, Google, and Windows coming in, that they’ll continue to one up each other and there will be a very vibrant refresh cycle for a very long period of time. The screens get better, the computing power gets better, and I don’t have to worry about just games doing it like we were in the console business. Those were pretty much just games consoles; these are multi-use devices. And the beauty of it is there will be lots of different types of applications coming in and pushing that upgrade path.”
Gran Turismo 7 had been rumored to already have been in development, but now Kazunori Yamauchi, CEO of Polyphony Digital has now confirmed officially that this is the case. Yamauchi revealed to Eurogamer that “we are working on the title, but added that he doesn’t think it will make it this year.”
In addition we learned that Gran Turismo 7 will not be getting a Prologue release this time around with the development team instead focusing on the full release. PS2 ear cars are likely to be included with Gran Turismo 7, but they may be upgraded to Premium, highly detailed models for this release. It is unlikely that they will be getting rid of any of the standard cars because each car has its own fans.
Sony has not officially announced Gran Turismo 7, but Yamauchi already had told fans back in September to expect a Gran Turismo release on the PlayStation 4 in a year or two.
Support for a union among game developers has grown, according to survey results released today by the International Game Developers Association. The group today announced the result of its Developers Satisfaction Survey from earlier this year, which found that more than half of respondents were in favor of unionization.
Of the more than 2,200 developers surveyed, 56 percent said yes when asked if they would vote to form a national union of game developers in their own countries today. That’s up from the group’s 2009 Quality of Life Survey, where just 35 percent of more than 3,300 developers said they would vote in favor of unionizing at that time.
As for whether the IGDA was considering a move in that direction, the group’s executive director Kate Edwards dismissed the notion.
“For the IGDA, we will always be a professional association,” Edwards told GamesIndustry International. “That’s what we exist for, and what we’ll always be. But if we are seeing that developers feel unionization is what they perceive to be a solution, then that’s something we’re going to pay attention to and see where it goes for them.”
“When we asked people how many jobs they’d had in the last five years and the average number was four, that was pretty eye-opening for us.”
IGDA head Kate Edwards
The survey also yielded new findings on gender diversity. While the group determined that men still “dominate” the industry, it isn’t to the same degree as before. The IGDA found 22 percent of respondents identified as female, up from 11.5 percent in 2009. Additionally, the 2009 survey only included “male” and “female” designations; this year’s poll found 2 percent of respondents identifying as male-to-female transgender, male-to female transgender or “other.”
Edwards also found responses on the lack of job security in the industry notable, if not exactly surprising.
“When we asked people how many jobs they’d had in the last five years and the average number was four, that was pretty eye-opening for us,” Edwards said. “But I do think it basically confirms what a lot of us have sort of known and have been hearing anecdotally for a while now.”
The Developers Satisfaction Survey also polled people on their salary, and found that nearly half of developers earn less than $50,000 annually. That stands in stark contrast to the Gamasutra annual Game Developer Salary Survey, which found that last year the average developer made more than $84,000, with QA being the only discipline with a sub-$50,000 average salary (and even that was a little shy of $49,000). Edwards chalked the difference up to a high percentage of the IGDA survey respondents who identified themselves as independent developers, saying they were likely working in freelance or start-up capacities.
A little less than two-thirds of respondents (61 percent) said they planned to work in games indefinitely. Of those who saw themselves leaving at some point, the most frequently given reason (39 percent) was a desire for a better quality of life.
The IGDA will release a summary report of the survey next month, followed up by reports focusing on specific topics within the survey, like diversity, quality of life, and employment practices. The group has said it will use the findings to help identify what its members care about and prioritize its initiatives and advocacy efforts around those subjects. To keep up with members’ needs as they change, the IGDA is planning the Developer Satisfaction Survey as an annual exercise.
Those who have been eagerly waiting for October to experience the latest adventures of Batman from developer Rocksteady, are going to be very disappointed to learn that the game will not make its originally announced October release.
Instead developer Rocksteady has confirmed that the game will be released in 2015. An exact release date has not yet been decided upon. We are hearing however, that as spring release for Arkham Knight is very likely.
While the exact reasons behind the delay were not announced, but the game is much bigger than previous Batman titles that Rocksteady has done and it is the first all next-generation title that the developer has done which also might be contributing to the delay. The game is still scheduled for release only on the Xbox One, PlayStation 4, and PC so the next generation status of the game has not changed.
In the Far Cry games, fire is a wonderful tool. It spreads dynamically, opening up a wealth of creative and strategic possibilities for players to achieve their goals. However, it also gets out of control in a hurry, potentially coming back to hurt the player in sometimes unpredictable ways.
It’s an appropriate metaphor for the series’ approach to controversial subject matter. Last week, Ubisoft announced the development of Far Cry 4, showing off some key art in the process. The picture depicts a blonde light-skinned man in a shiny pink suit against the backdrop of the Himalayas, smirking as he uses a defaced statue as a throne. His right hand rests on the head of a darker skinned man who is kneeling before him, clutching a grenade with the pin pulled. Though we know very little about the characters depicted, their backgrounds, or their motivations, the art got people talking (and tweeting). Some were concerned about racism. Others were worried about homophobia. Many saw neither. At the same time, details about the game are so scant that it’s entirely possible the problematic elements here are properly addressed within the context of the game itself.
But at the moment, we don’t have that context. It’s promotional art, so to a certain extent, it’s designed to exist out of context, to catch the eye of someone on a store shelf, even if they’ve never heard of the series before. And while we lack the context the actual game would provide, there’s no such thing as “without context.” Here, the context we have is that this is a Far Cry game, the latest entry in a series that has been earning a reputation for boldly storming into narrative territory where other games fear to tread (often with good reason).
Like the fire propagation mechanic, this narrative ambition was introduced to the series with Far Cry 2. What had previously been just another shooter (albeit one in a tropical setting more attractive than most) became a series that embedded its stories within thorny issues. Far Cry 2 cast players as a mercenary in a fictitious African country’s prolonged civil unrest, using blood diamonds, malaria, and Western imperialism as texture in a story emphasizing the moral vacuum of war. Far Cry 3 took things a step further, with players controlling a spoiled rich white kid on a tropical island vacation who suddenly must deal with nefariously swarthy pirates and intentionally stereotypical natives. And just in case that didn’t stir up any controversy, the story also weaves in rape, sex, drugs, and torture. In both cases, some critics and players felt the games offensively trivialized important or tragic subjects.
Given this history, it’s not surprising that Far Cry 4 would not universally receive the benefit of the doubt. Much more surprising (to me, at least) is that Ubisoft is continuing down this path with the franchise. Far Cry 3 sold a staggering 9 million units, putting it in the same class of blockbuster as Assassin’s Creed (last year’s version of which sold 11 million units). However, the publisher’s narrative approach to the two games could not be more different.
Assassin’s Creed is a fascinating case study for dealing with touchy subjects in AAA video games. It wasn’t long after the US invaded Afghanistan and Iraq that work on the first Assassin’s Creed started. You know, the one set in the middle of a holy war between Christians and Muslims. Assassin’s Creed II had players attempt to assassinate the pope. Assassin’s Creed III put players in control of a Native American protagonist during the Revolutionary War. Assassin’s Creed IV: Freedom Cry saw the gamification of emancipation.
The Assassin’s Creed franchise draws some criticism from time to time for its handling of these subjects, but the series has rarely found itself at the flashpoint of controversy. Part of the reason for that is the Assassin’s Creed developers research their subjects thoroughly. They understand what the concerns surrounding the sensitive topics are, and by virtue of the games’ historical settings, they can point to factual evidence of certain people’s actions, or common situations of each era.
When it comes to dealing with controversy, Assassin’s Creed is much like its stealthy protagonists are imagined to be: quiet, cautious, and efficient. Far Cry, on the other hand, deals with these topics more like the way Assassin’s Creed protagonists behave when I play them: recklessly uncoordinated and endlessly destructive. Even when it’s clear Far Cry’s developers have put plenty of thought into what they’re saying, it’s not always clear they’ve put much thought into what people will hear them saying through their games.
It speaks volumes about how Ubisoft perceives the long-term value of the two series. Assassin’s Creed is the company’s biggest and most adaptable blockbuster, an annual gaming event based on a premise that can be mined and iterated on endlessly in almost any medium, a recurring revenue stream to be nurtured over time. Far Cry, this key art release suggests, is just another first-person shooter, a brand defined primarily by how hard it works to shock people, perhaps because the company doesn’t have faith that it can sell on its other merits. One of them is the kind of project you make a Michael Fassbender film around. The other might be more of an Uwe Boll joint.
I’m not saying that Far Cry should avoid these subjects. I actually love to see games of all sizes attempting to tackle topics and themes often ignored by the industry. But the right to explore those subjects should come with a responsibility to do so with care. These are legitimately painful subjects for many people. If developers want to force players to confront them, they should have a good reason for it that goes beyond pushing people’s buttons, exploiting tragedy for shock value and an early preorder campaign. In video games, we don’t push buttons for the sake of pushing buttons. We push them to do things.
It was the best of times, it was the worst of times; while I hesitate to apply Dickens’ immortal words to something as fleetingly temporal as Sony’s financial woes, it’s a quote I couldn’t quite shake as I digested this week’s results statement. Here is a company that has just launched one of its most important products in years, the PlayStation 4, to almost universal fanfare and massive sales; whose reputation has risen remarkably in its core markets and whose overseas sales are, finally, being buoyed once more by a sensibly-priced Yen. The best of times! And yet; here is a company whose computer entertainment division can’t turn a profit, a company posting huge losses against all expectations, a company whose already-interminable restructuring is set to last another year. The worst of times.
Sony lost over $1.2 billion last year. Revenues were up, though; over $75 billion poured through the company during the year, a 14.3% increase on the previous year. That’s important context for the scale of the loss, but it doesn’t make the loss itself any smaller. Market analysts expected a small profit. Instead, they got not only a loss overall, but a loss in the videogames division specifically, whose seemingly stellar performance recently could not plug the $78 million gap in its finances.
To add to the company’s woes, its new CFO – the commendably straight-talking Yoshida Kenichiro – says that next year will be another loss. There’s more restructuring ahead, he told analysts at a briefing this week, and it’s going to hit the company’s balance sheet hard in the next 12 months. Yoshida simultaneously promises light at the end of the tunnel, and a rocky road ahead; a travel-related mixed metaphor that probably doesn’t fill any veteran Sony-watchers with confidence.
It’s worth digging a little deeper into Sony’s results to try and understand what’s actually happening here. For all that it has trimmed its operations over the past decade, Sony remains a pretty enormous sprawl of a company, with interests that extend far beyond the consumer electronics for which western consumers recognise the firm. Sony Music and Sony Pictures, of course, are major parts of the business; Sony Computer Entertainment we all know and love; cameras and TVs we understand; but how about Sony’s life insurance businesses, or its banking efforts? How about its semiconductor operations, or its sidelines in making camera components for other firms’ smartphones? How about its fabrication plants for CDs, DVDs and Blu-Ray discs, responsible for a huge proportion of the discs on sale around the world today?
The challenge in interpreting Sony results lies in trying to understand the full scale of those business interests and then in trying to figure out where negative results really stem from. We know, for instance, that Sony is taking on major costs in winding down disc fabrication plants in some parts of the world. We know that the television division has been in trouble for years thanks to competition (some of it state-backed) from Asian rivals, and will finally be spun off and left to sink or swim in a major swathe of restructuring this year. That won’t be without its own costs, of course. Other costs or profits may be harder to discern. Clients for component businesses are generally somewhat anonymous; it’s considered an open secret that Sony provides the camera for recent iPhones, but few component contracts are quite so well-known, and thus, their bottom line impact is harder to discern.
What I’m saying is that Sony (and to an even greater extent, its rival Microsoft) is a bloody hard business to read and understand on the basis of financial reports. Companies like Nintendo, Electronic Arts and Activision Blizzard really just do videogames, so when their results are poor, it’s easy to discern what’s going on. We know their products, we know their markets and we can usually quite easily discern the weaknesses causing difficulties (although seeing the difficulty and suggesting an effective prescription are two very different talents). Sony, however, is big, complex and obfuscated to no small degree. We get broad outlines; a big loss is a big loss; but the fine detail is hard to get a grasp upon.
None of which is to say we shouldn’t try. Sony is one of the most important companies in the games business; with the success of the PS4 over the past six months, it’s arguably the most important company in the business right now. Hence, yes, it’s a concern that it’s making big losses. It’s doubly concerning that some of those losses are coming out of the seemingly successful computer entertainment division, but we can make some educated guesses at what’s happening here. Firstly, the extremely high sales of the PS4 in its early months are actually a short-term negative to the company’s figures. Sony’s console business is a razor-and-razorblades model, selling hardware at a loss initially but recouping this money through software sales and, ultimately, through more profitable hardware sales down the line when manufacturing costs have fallen. Thus, the more units PS4 sold in its launch period, the more money Sony would lose – but this lost money is really more of an investment, since the firm is betting on getting it back in software sales down the line.
High early sales also contribute to losses in other ways. Sony’s launch plans for PS4 were hugely ambitious in terms of the number of units shipped to each territory; the company did end up somewhat supply-constrained, but it aimed to avoid such constraints where possible with enormous shipments and rapid resupply of inventory. This strategy may have been partially aimed at capitalising on Microsoft’s launch weakness before strategic changes could be made to the Xbox One’s product or pricing, but I’m sure that a wider goal was also in mind. Rapid sales of a new home console would silence some critics expecting tablets and smartphones to destroy this market sector entirely; such rapid sales would require a good supply chain, and those don’t come cheap. The exceptional ramp-up of Sony’s PS4 manufacturing capabilities won’t have been cheap, an expense compounded by the loss the firm will have registered on manufacturing every PS4 shipped to date.
In the short term, that means a loss for SCE; but CFO Yoshida seemed pretty blase about that, and rightly so. In the medium term, it’s a good investment. Sony has a great track record of strong attach rates for its consoles, meaning it will get its money back with interest. Moreover, it has a truly fantastic track record of cost-cutting on console manufacture, even managing to get the tricky Cell-based PS3 into a vastly smaller and cheaper casing in the end. The faster the installed base grows, the faster the bulk discounts to manufacturing costs can be realised; with PS4 selling far faster than PS3 or Xbox 360 did before it, Sony can expect its new console to be in the black well ahead of schedule.
As for the rest of the company; I reiterate my position that Kaz Hirai’s job is not an enviable one. It was said of John Riccitiello’s tenure at EA that he faced the task of trying to explain to shareholders why his company was in the fifth year of a three-year restructuring that was going to take seven years. Hirai’s task is even more tricky, in some regards. He’s only been in the top job for two years, so if his ambitious restructuring can truly be completed by next year (as Yoshida claims, with some authority) then it will actually have been a rather fast turnaround. However, Sony is already restructure-weary; seven years of turmoil under former CEO Howard Stringer left the company and its commentators skeptical of any claims regarding light at the end of the restructuring tunnel. Stringer did many good things and helped to move Sony’s culture to a point where Hirai’s ideas could find fertile soil, but he also permitted (or felt that he could not fight) all manner of poor strategy in core divisions, most notably television, where Sony has stumbled from disastrous strategy to doubly disastrous strategy on a near-annual basis for the past decade.
Hirai, at least, appears to have the confidence and the clout to make his plans work where Stringer’s did not. Separating the almost certainly doomed TV business from the rest of Sony is a good plan, but one that required extraordinary political capital within the firm. Having the respected Yoshida as CFO is also a good move, since it’s given Hirai the cover he needs to bring all of the financial pain of his restructuring plans into the current year and the following year. The temptation would have been to spread things out, but the markets seem to respect Hirai and Yoshida’s honesty in front-loading the costs, anticipating a return to profitability in two years’ time.
That, perhaps, is the big difference between Sony and Nintendo – two companies that have been compared heavily in discussion over their recent financial results. Both have some very profitable divisions (3DS does well for Nintendo, while movies and finance, in particular, are solid performers for Sony), but both have just recorded financial results well below expectations and triggered alarm among market commentators. Nintendo, though, can only suggest vague directions it might take to exit its current situation; it will take a major new product announcement to see whether the company can get back on track, and that’s not likely for a couple of years. Until then, Nintendo’s financial health is largely a matter of faith.
Sony, on the other hand, has a plan. It’s a tough plan, but a solid one; the divestment of loss-making businesses, the refocus on core pillars that actually make money, and more specifically to our industry, the tried-and-tested approach to bringing the PS4 into profitability as rapidly as possible. A CFO like Yoshida can speak plainly about how Sony is going to change, what it’s going to cost and when it’s going to start making money; Nintendo, relying on products still under wraps to give it a relevant future, lacks the ability to be so blunt and straightforward about how it will build future success.
Even the rather tolerant Japanese stock market and its very patient institutional investors have limits, and Sony could yet reach those limits. The company’s restructuring to date would try the patience of even someone playing a very long game; but Yoshida is a credible figure, Hirai seemingly retains the ability to carry out the reforms he plans, and the company’s generally profitable divisions, including games, are still in good shape. Even if another year of pain does loom for Sony, the end might finally be in sight; in 12 months time we can hope to hear of a leaner, tighter and more focused Sony, with black ink finally starting to crop up on its accounts.
Ubisoft announced that Watch Dogs is setting pre-order records for the publisher. The company said that it’s the most pre-ordered new IP in Ubisoft’s history, the second-highest pre-ordered Ubisoft game ever, and the most pre-ordered new IP in the industry this year. Moreover, retailer GameStop confirmed that Watch Dogs is the most pre-ordered next-gen game to date.
All that said, Ubisoft actually did not disclose how many units were pre-ordered. GamesIndustry International pinged Ubisoft to ask for a pre-sales figure and we’ll be sure to let you know if we get one.
[Update: On the company's earnings conference call, executives said that they fully expect Watch Dogs to perform better than the first Assassin's Creed, meaning it should exceed 6.3 million in lifetime sales. "We expect it to become a major heavyweight of the industry," said CEO Yves Guillemot.]
“These strong pre-orders are a clear indication of players’ anticipation and excitement for Watch Dogs,” said Geoffroy Sardin, Senior VP Sales and Marketing at Ubisoft. “The teams have worked tirelessly to ensure that players will enjoy a top quality game with enormous scope, and we can’t wait to get the game into their hands.”
“We are seeing tremendous excitement for the new Watch Dogs game… It is on track to be one of the top selling video games across all consoles in 2014,” added Michael van den Berg, vice president of Merchandising at GameStop International.
Watch Dogs development is being led by Ubisoft Montreal, but similar to other massive AAA projects in the industry it’s been a collaborative effort with assistance from teams at Ubisoft Bucharest, Ubisoft Paris, Ubisoft Quebec and Reflections. The game will release on May 27 for current-gen and next-gen consoles, PC and it’s coming to Wii U “at a later date.”
Fireproof Games’s Barry Meade has issued a blunt jeremiad to what he sees as a mobile gaming industry hurtling towards creative irrelevance due to its reliance on data.
In an article published on Polygon, Meade lamented the reality that Fireproof’s The Room franchise is an extremely rare exception in mobile gaming: standalone experiences that earn good revenue from paid downloads.
“In a market as huge as mobile how the fuck are Fireproof among the only makers of premium games that saw this kind of success?” Meade asked, citing data indicating low levels of engagement (66 per cent of mobile games are not played beyond the first 24 hours) and incredibly small numbers of paying customers (two to three per cent) as evidence that the dominant free-to-play model is not providing quality entertainment to the market
“This is a statistically insignificant amount of happy gamers and nothing that gives you a basis to make claims about ‘what people want’. I think it just as likely that mobile’s orgy of casual titles is due to simple bandwagon-ism or, in other words, not knowing what people want.
“This is a statistically insignificant amount of happy gamers and nothing that gives you a basis to make claims about ‘what people want’”
“So it bothers me to hear game developers talking as if casual games are the new paradigm on mobile when so very few developers are actually happy with the games as they are, and mobile gamers clearly seem to “care” least of all. Free-to-play and casual titles should be a part of a greater gaming ecosystem, but right now they are the entirety of it on mobile.”
For further evidence, Meade pointed towards the top-ten grossing charts, which are dominated by an unchanging crop of huge titles that do little more than trade their relative positions of dominance. To the public, however, these “ten cute grinding games that are clones of each other” seem like the best the industry has to offer, and continue to reap the vast majority of the rewards.
“The free-to-play model itself serves a million uses to developers and gamers, I’ve chucked lots of time and money into World of Tanks, Warhammer Quest and many others myself – the model is not the problem,” Meade continued.
“The problem is more general, that taken as a whole the games industry is making mobile games that nobody cares about available to millions of players for nothing. Free-to-play producers chime that quality levels are obviously fine, ‘If it’s making money it’s objectively good, see?’
“Well no, not quite, shit sells by the ton every day. In the real world Burger King doesn’t get three Michelin stars. Burger King gets to be happy with its revenue not its reviews, and our industry’s inability to see the difference will only pull us further into our creative vacuum.”
The dominance of the free-to-play model in mobile continues to be divisive, and there are certainly counterpoints to Meade’s take on the matter – most notably from Ben Cousins, who has argued the relative merits of free-to-play both at conferences and in the press. However, Meade is far from alone in his doubt, and that includes developers who have spent years working with the free-to-play model.
At Casual Connect Europe this year, The Workshop’s Laralyn McWilliams gave a talk in which she warned the industry about mistaking data for an emotional connection. “There’s no measuring spoon for love. You can’t quantify it,” she said. “Retention is not the same as happiness.”
Meeting with GamesIndustry International after her talk, McWilliams expressed very real concern that the amount of money being made is masking the negative connections created by free-to-play games, and the possible long-term damage that could result from that relationship.
“The moment that you monetise in Candy Crush you’re probably extremely frustrated. You want to get past this level you’ve failed to complete 40 or 50 times, and that’s the moment you spend. But mixed into that moment where you spend is that frustration. It’s building a bad connection. I’m not monetising at a positive moment.”
Meade concludes his argument with perhaps the most salient point of all: “The audience knows better than all of us and if our mobile public truly does signal ‘I care’ through purchasing, I don’t think its radical for the industry to start listening to the 98 per cent of mobile gamers out there saying ‘I don’t care’.”
The full version of the article is over on Polygon, and it’s well worth your time.
Deep Silver has a pretty deep portfolio these days with Dead Island, Saints Row, Metro, as well as a couple of other franchises that they are now handling the distribution for.
What we already know that Metro” Redux is coming for the Xbox One and PlayStation 4, so if the company announced both a new Saints Row and Dead Island game that would fill the two unannounced title slots that the company is talking about. Sources tell us a new Saints Row game is in development, but it is unknown if it will be ready to be announced at E3.
The IDC is preparing to publish its latest console forecast and the research firm has given GamesIndustry International an exclusive preview of the report. There are several key takeaways to note, including Sony’s dominance of the new console cycle, Microsoft’s need to unbundle Kinect, and a general decline in the physical retail side of the games business.
IDC predicts that Sony’s PlayStation 4 will have the single biggest share of the market in 2016 with 51 million sold globally. Microsoft hasn’t been faring quite as well, but IDC believes Xbox One will make a serious comeback, particularly in North America where it’s forecasted to take the lead. This will be spurred on by unbundling Kinect, IDC said.
“The presumed unbundling of Kinect and Xbox One, which should facilitate rough price parity between it and the PS4, should lead to a spike in Xbox One sales; assuming the console and sensor are unbundled in 2015, IDC expects Xbox One to recover and emerge with the largest installed base of any console in North America by the end of 2016,” the firm explained.
Meanwhile, Nintendo’s Wii U is expected to finally receive “the equivalent of a $50 price cut worldwide in late 2014 or early 2015,” but it won’t make a serious dent in the installed base gap between Wii U and the competition.
Looking at the bigger picture, the retail component of the video game business is expected to see continued declines, IDC said. IDC’s forecast states that, together, eighth generation consoles will generate about 10 percent less retail revenue from console hardware and disc-based games than seventh generation (Xbox 360, PS3, Wii) consoles did combined through their first six years on the market.
That being said, total eighth generation console hardware revenue actually is projected to come in above the comparable seventh generation total thanks to higher average selling prices (ASPs). It’s a different story, however, for the physical disc business, which IDC forecasts will see 45 percent fewer discs sold to retailers in the first six years compared to the seventh generation physical games sales.
It’s clear that more and more games are being purchased digitally, and the good news is that digital sales will keep the industry healthy. “Given current trends, more than 50 percent of total game and direct app/service spending across all consoles will come through digital channels by 2019 (just over the edge of our forecast window),” said Lewis Ward, IDC research manager. “Microsoft and Sony will get there faster than Nintendo; the projection mixes all game/service spending on big 3 OEM platforms.”
In order for the industry to match the sales of the seventh generation, digital will have to continue to grow – and it appears that it will. “If digital games and related online console revenue streams are included in the picture… the outlook for eighth generation consoles improves substantially. The inclusion of digital console game spending, subscription revenue and other content/service/app purchases billed through online eighth generation console stores pushes total revenue up to within a few percent of the seventh gen total through the first six years of availability,” noted IDC. “Rising digital revenue is forecast to nearly offset the fall in disc-based revenue.”
IDC’s 73-page report, Worldwide Video Game and Entertainment Console Hardware and Packaged Software 2014-2018 Forecast, will be available this week.
When the Xbox One finally rolls out in Asian territories this September, almost a year after its western debut, all eyes will be on its performance in one key territory. Not Japan, where expectations for the console’s performance are about as close to absolute zero as you can imagine, but rather China; a late, and somewhat surprising, addition to Microsoft’s launch plans.
You’d think that China, the world’s most populous nation and second-largest economy, would be an obvious and attractive target for a console platform holder. Indeed, China is on track to be the world’s top economy within the coming years (perhaps even next year, according to recent projections in the Financial Times); corporations around the globe are eyeing the nation’s rapid growth and swelling middle class as a huge opportunity. Games on PC and mobile phones are already big business in China; why shouldn’t console platform holders take a piece of that pie?
Yet in September, when Microsoft introduces Xbox One to the Chinese market, it will be the first platform holder to attempt such a launch for many years. Neither Nintendo nor Sony has shown any indication that they intend to bring their present home console platforms to China, and despite the apparent potential of the market, you’d struggle to find any serious analyst who expects Xbox One’s performance there to be anything more than an interesting experiment. Chinese news site QQ reports that Microsoft is only planning to ship 100,000 units of the console in the region; Microsoft denies that rumour, but only does so in pointless newspeak. It’s “a figure which does not reflect Microsoft’s vision,” apparently, which translates into actual human language as “we can’t deny it, we just don’t want you to say it out loud”.
“Chinese gamers have mostly grown up without consoles and are used to mobiles and PCs as their gaming platforms, so the level of demand is questionable”
So what’s the problem with China? Why isn’t the world’s largest economy in waiting an open goal for console manufacturers? The problems are actually summed up quite well by the very circumstances which have allowed Microsoft to launch Xbox One in the market – namely the partial repeal of a rule dating back to 2000 which quite simply banned the sale of any foreign-made games console in China. Sony tried to flout the rule by marketing the PS2 as a more generalised home entertainment device, but even after trying to accommodate the thoroughly unimpressed Chinese authorities, found itself subject to a ban. Nintendo had a little more success, creating a joint venture called iQue which marketed a heavily modified N64 (the iQue Player) with a very limited range of software, but since since 2003 has focused solely on handheld consoles.
The recent expansion of the Shanghai Free Trade Zone has brought with it a change to this rule, along with many other liberalisations of trade within a specific zone around Shanghai. This has allowed Microsoft to establish a partnership with local firm BesTV – not just for Xbox One, but a more broad partnership aimed at extending Microsoft’s media interests into China.
Note two things about the above narrative. Firstly, for all its rapid growth and development as a marketplace, China was as recently as 2000 and beyond still establishing strict new rules prohibiting overseas countries from bringing consoles and games to the country. These rules were justified largely on cultural grounds; the authorities were apparently concerned that console games were bad for the development of children and would violate the cultural norms which the country’s censors wish to enforce. Concerns for childhood development, however, seemed not to apply to the country’s homegrown games industry, which has boomed in recent years. China now has a huge market for mobile and PC games, largely served by domestic companies, with only occasional success stories for western companies who manage to navigate the nation’s tough regulatory environment; Blizzard being the obvious example.
I don’t doubt that Chinese concern over the cultural aspects of games was real. The Chinese authorities believe strongly in the power of media and communication to impact upon their populace, and have a particularly deep-seated fear of external influences which might loosen their grasp on power within the country. Console games, a creative industry dominated by America and Japan – nations seen as rivals at best, as enemies at worst – would certainly appear suspect to those authorities, and a belief that games are bad for children’s development, albeit unsupported by research, does seem commonplace among Chinese parents. The justifications weren’t untrue, then; they were just very, very convenient, since they allowed the authorities to enact trade rules that very effectively protected a burgeoning local industry from international rivalry. This kind of protectionism is not unique to China, nor is it necessarily a bad thing, but the government’s willingness to wield this weapon in its economic battles around the media industries is a major concern for any new player in the marketplace.
This is far from being the only protectionist measure with which console manufacturers – Microsoft included – must contend. The second thing that’s notable about the narrative is that Microsoft is to launch the Xbox One in China not by itself, but in partnership with a local company, BesTV. This is not because of any particular desire to tap into local knowledge and experience, but rather because of legal requirement; doing business in China requires a local partner. Blizzard’s World of Warcraft, a rare foreign success story in the market, is presently operated in China by local firm NetEase, and as mentioned, Nintendo’s foray into the market also takes the form of a joint venture.
This naturally reduces both the profitability of any operation in China, since the overseas parent company simply receives a royalty payment rather than the full profits of its operations, and also reduces control over Chinese operations in a potentially frustrating manner. Blizzard notably ran into major difficulties with the launch of World of Warcraft expansion packs in China, with the nation’s censors objecting to large swathes of content; the launch of Wrath of the Lich King in particular seems to have been delayed far, far longer than the company would have wished as a consequence of switching Chinese partners (from The9 to NetEase) during the negotiation process with the authorities.
“None of this is to say that console success in China is impossible; merely that it is very, very unlikely”
Such problems are, of course, surmountable, especially if the pot of gold at the end of the rainbow is big enough. Certainly, there is some audience for consoles in China; grey imports from Hong Kong are openly sold in Chinese stores, albeit at pretty high prices which are only appealing to the most devoted of enthusiasts. However, Chinese gamers have mostly grown up without consoles and are used to mobiles and PCs as their gaming platforms, so the level of demand is questionable. Moreover, those platforms are where Chinese game developers publish their work, tailor-made for their own audience. Software in a market like this is chicken-and-egg; no console platform will succeed without software that appeals to the local audience, yet no local developer will work on a new platform without a decent installed base. Microsoft’s dollars could intervene to help, but that would require a very major financial commitment to a market in which success is a very, very slim possibility.
There is, of course, an appetite for content from overseas within China, which could help to drive uptake of consoles like the Xbox One. In this, however, the hand of China’s censors remains a serious issue. Although the Shanghai Free Trade Zone regulations finally permit the sale of consoles, they do not free platform holders and publishers from the onerous requirement of passing their software under the watchful eye of the censorious authorities before release. In the past, the changes to software demanded by those authorities have been very significant; even small graphical elements which are seen as running counter to traditional Chinese culture in some manner are forbidden in many cases (although they pass without mention in locally developed software), while any game with an overtly political message will simply never be released. You may not think that terribly many games have an overtly political message, but then again, you’re (presumably) not a member of any of China’s censorship authorities, who have a penchant for seeing threats to the nation’s civil order around every corner.
None of this is to say that console success in China is impossible; merely that it is very, very unlikely. I haven’t even mentioned the issue of piracy, which remains rampant in the country, and means that many game consumers have become accustomed to paying incredibly low prices for software, while games companies have largely switched to business models like subscriptions and F2P for their wares. This is just another problem sitting in Microsoft’s way; adding pricing and business model to a list which already contains major cultural, legal and censorship hurdles.
It’s easy to see, I think, why Microsoft is alone in taking advantage of the newly liberalised Shanghai Free Trade Zone; why Sony is holding back from further engagement with the nation (although it does a fine trade in Hong Kong) while Nintendo is keeping its engagement low-level through its existing iQue partnership. Both firms actually have major business interests in China; like Microsoft, they manufacture their consoles there. Yet neither is keen to throw good money after bad in the hostile and difficult Chinese market. No doubt, they will watch Microsoft’s experiment carefully – they would be foolish not to – but nobody should hold out serious hope for consoles in China. There are new markets to be tapped all around the world for videogames and consoles, but for all its growing wealth and success, China is about as far from being low-hanging fruit as you can imagine.
Last week, Virtuix announced a $3 million round of seed funding to complete its flagship product, the Omni virtual reality treadmill. While a far cry from Facebook’s $2 billion acquisition of Oculus, the Virtuix investment is yet another indication that investors believe in the potential of virtual reality.
Speaking with GamesIndustry International after the funding was announced, Virtuix CEO Jan Goetgeluk stopped short of crediting the Facebook deal with drumming up investor interest, but nevertheless called it an exciting endorsement for the entire VR field.
“Haptics are fairly complicated; it’s very difficult to make it work in a way that’s affordable for consumers and accessible for a mass market.”
“It certainly validated the message that we’ve been presenting to investors when fundraising, which is that VR is set to become a mass market new medium, with applications that stretch way beyond gaming,” Goetgeluk said. “Social activites, health care, fitness, you name it…VR is not set to stay a niche; it’s set to be a mainstream platform.”
Facebook isn’t the only company trying to turn VR into a mainstream platform. Last month’s Game Developers Conference was a coming out party for a number of VR headsets, including Sony’s Project Morpheus.
“I think investors now believe and see that given all these headsets coming to market, and given how compelling the experience is–not just for the headsets but the Omni–the bottom line is it’s an excellent experience, and it’s here to stay,” Goetgeluk said. “It’s not a fad. It’s not just a fun thing to try out. It’s an incredible experience and a new medium that will impact various aspects of our daily lives. And investors that tried the experience were convinced, and that’s why they invested.”
Even with the rush of companies looking to stake their claim in the VR field, the preponderance of activity seems to be in the headset market, with fewer companies looking to tackle the haptic part of the VR equation. Goetgeluk suggested two main reasons for that.
“One, the visual aspect of VR is certainly a crucial part,” he said. “If there’s no visual element of the VR system, then there’s no virtual reality at all. It’s also a problem that is easier to solve than haptics. Haptics are fairly complicated; it’s very difficult to make it work in a way that’s affordable for consumers and accessible for a mass market. The visual problem is an easier nut to crack, and certainly with immediate applications.”
Of course, the Omni only addresses one element of that haptic problem. But when asked if Virtuix had plans to tackle other elements to complete the illusion of VR for players, Goetgeluk said the company had more pressing concerns in simply getting Omni to market.
“That’s our focus right now; we don’t have the resources to do much beyond that at this point,” Goetgeluk said, adding, “The pressure is on to deliver a top quality product in a timely manner.”
The Omni is set for a release this summer, which poses a potential problem. Virtuix is creating a $500 VR peripheral that is largely reliant on the user having a VR headset as well, but the two biggest names in the field, Sony and Oculus, have yet to even announce commercial release windows for their VR headsets. The idea of being a product “ahead of its time” doesn’t really bother Goetgeluk.
“In tech, you’re either early or you’re late. So we’re certainly early, but that’s not necessarily a bad place to be,” he said.
Given Virtuix’s production capacities, showing up to the party early might not be the worst course of action. Virtuix has already sold 3,000 Omni treadmills, and new preorders placed through the company’s site aren’t estimated to ship until September. The company might not mind arriving a little earlier than the VR headsets, but it definitely needs them to arrive.
“We’re a VR product and if VR doesn’t take off, then we’ll stay a niche product, and that’s not the intention.”
“We’re a VR product and if VR doesn’t take off, then we’ll stay a niche product, and that’s not the intention,” Goetgeluk said. “I think VR is an incredible experience, the technology is here, and I think VR is here to stay this time.”
That’s not the only potential concern critics of the Omni may have. When asked about the difficulty for players to find room to keep a VR treadmill next to their PCs, Goetgeluk said he expects people to be surprised by the final production version of the Omni. The company has made a number of changes to the hardware from what they’ve been carting along to trade shows.
“That’s our prototype, which is made of wood and certainly looks a bit big and clunky,” Goetgeluk said. “The final product will be a tad smaller and certainly sleeker looking, smaller than a regular treadmill, and also easy to disassemble and store away. It’s not a small product, but I don’t think size is necessarily an issue.”
Additionally, Goetgeluk brushed aside concerns about developer support for the device. It acts as a plug-and-play substitute for a gamepad or keyboard, and developers who choose to actively support the Omni can access more advanced features, such as mapping travel speed in the game with the player’s speed on the Omni, or to decouple the walking direction from the looking direction. Virtuix is also creating its own demo, TRAVR, to showcase how the Omni could be integrated with traditional first-person shooter and horror games.
Finally, Virtuix needs to figure out how to get people to experience gaming with Omni first-hand. Appearances at trade shows have been a good first step and one Virtuix will continue pursuing, but the company is also considering placing Omni demos in certain retail stores or malls.
“We certainly want to make it as feasible as possible for people to try out, because it’s a device where when you try it, that’s when you realize its potential,” Goetgeluk said.
Oddworld creator Lorne Lanning has never played well with big corporations. In 2005, following a particularly vicious quarrel with Electronic Arts, his studio Oddworld Inhabitants seemed all but dead, taking the beloved franchise with it. Now it’s back, and barrelling towards a bright new future. At GDC earlier this year, Lanning was keen to explain to GamesIndustry International his new approach to the business – and why he trusts major publishers less than ever.
“I don’t want to be a slave to the big ships, and that’s what was happening with AAA, with publishing and with game devs,” he explained. “Every game dev that I know that’s still doing AAA retail products is trying to figure out a way to get out of it.
“Those deals are just getting worse and worse, even though your expectation of the money is getting higher and higher. Labour’s getting more expensive and the rewards are getting smaller. So that’s why we decided to stop playing for a while until we could start getting our games up digitally, see if we could build our own business. It’s working, it’s funding new content.”
The success of HD re-releases of Stranger’s Wrath and Munch’s Oddysee has provided the resources to create a full remake of the original Abe’s Oddysee, titled Abe’s Oddysee: New ‘N’ Tasty. Lanning hopes that the sales of this latest offering will, in turn, open up further new opportunities. Ultimately the goal is to get Oddworld Inhabitants to a place where it can create a new AAA IP totally independently.
“We’re spending cold cash on this, a couple of million. Not a public company partner. Ourselves. If we lose, we lose big. But if we can get it to that next level where we’re spending five or six million on content, we can do a new IP,” he said.
“It’s not money we’re sticking in our pockets, it’s money we’re leaving in the bank to fund new stuff”
It’s the sort of money he doesn’t think could be raised through crowd-funding – he’s dismissed suggestions that he should run an Oddworld Kickstarter. He’s determined to live up to the “AAA expectations” of Oddworld, and he’s confident that with a cycle of game releases followed by re-investment in the business, they’ll get the funds they need.
“I do think success in the product can raise that money. It’s not money we’re sticking in our pockets, it’s money we’re leaving in the bank to fund new stuff,” he explained. “It’d be nice to be getting paid again! [laughs] That hasn’t been happening for me. It’s all going into the product.”
For Lanning, going independent doesn’t mean going it alone. None of Oddworld Inhabitants’ progress so far would have been possible without their partnership with Just Add Water. The small, Yorkshire-based company has been responsible for the development of all three remakes, with Oddworld Inhabitants taking on a supervisory role and handling publishing. Now Lanning is working with a second studio, mobile developer Square One, who will be producing a port of Stranger’s Wrath to iOS and Android devices.
“What’s nice, working with other indie guys, is that they believe that quality is going to be their lifeline,” he said of his partner studios. “These guys are like, ‘if we’re going to succeed it’s because we build really superb quality products’.”
The indie community as a whole is something he’s keen to embrace. He spoke enthusiastically about cross-promotion plans with developers 17-BIT (Skulls Of The Shogun, Galak-Z: The Dimensional) and Switchblade Monkeys (Secret Ponchos), pointing to an almost union-like spirit of mutual co-operation and support among independent studios. The sort of interactions, he pointed out, that are impossible for studios hitched to major publishers. Among indies, he says, it’s not about competition.
“It’s funny, because people ask me, for New ‘N’ Tasty, ‘who do you see as your competition out there, what titles?’,” he said. “It’s interesting, because if you’d have asked me that for an Xbox release it would be a very specific answer and I’d be trying to convince you why we’re a better offer for your money. But we’re not looking at it that way anymore. We’re looking at it like if you like this type of game, and there’s another type of game like this, we want to be recommending it to you!”
Of course, Lanning’s glowing positivity about the indie community is always framed as a contrast with his misgivings about the past and current actions of major publishers. He pointed to Battlefield 4 as an example of how wrong he feels the developer-publisher relationship can go.
“Why did a title that was so incredible ship prematurely?” he asked. “Now I know, without talking to anyone, if you look at the quality of that title, and if you know how games are built, you know how much hard work went into that, you know how much love and pain and sleepless nights the developers put into it. And you know they were devastated when someone made the decision to release that project before it was ready. Because they’re smart enough not to do that.”
He speaks from personal experience too; the original release of Abe’s Oddysee was criticised for its buggy state, and Lanning places the blame firmly on now-defunct publisher GT Interactive.
“A gold master with all the bugs fixed was in Fed-Ex while someone else made the decision to release a buggy game, because they’re in the sales department and they thought ‘Hey that’s enough time, I don’t need to wait til tomorrow, it’s good enough’,” he recalled. “And then you get stung by the hardcore gamers asking ‘why did you f**k this game up?’. I know what a heartbreak that is.”
In his eyes, it’s the need to impress shareholders taking priority over the need to satisfy customers. “When shareholders are more important than the customers, how long is your business really going to last?” he asks.
Lanning points to the level of trust and transparency indie developers have with their audience, and the more direct relationship that creates. It’s already affecting the way Oddworld Inhabitants do business in a significant way – following the re-release of Munch’s Oddysee, the company polled their audience as to what title they’d like to see developed next. Abe’s Oddysee: New ‘N’ Tasty was the winner. “When creators can go directly to the audience it’s a much better existence,” said Lanning.
“Trust is the most endangered commodity, it’s the rarest commodity today,” he pointed out, referring to the lack of trust consumers have in large businesses. Indie developers, he believes, are in a unique position to gain that customer trust, but it takes a leap of faith. It means being honest even when you don’t know that things are going to go your way.
“You’ve got to answer their questions in a sincere way, even if it’s not what they want to hear. You have to say ‘you know what? You’re right, we f****d up like this or we f****d up like that, but this is where we’re at, this is why we’re doing it, this is what we’re trying to achieve,” he explains.
For Lanning, however, the benefits are absolutely worth the risk. It’s that direct relationship with the fans that has allowed Oddworld Inhabitants to revive itself in the way it has, and will allow it to continue moving forward. Without the resources behind them to do large-scale marketing, they’re relying on word-of-mouth to sell units.
As ever, Lanning is supremely confident, convinced that the fans will come through for him. So far, they have, with the two remakes to date generating impressive figures. Strikingly, Stranger’s Wrath HD has actually out-sold the original, perhaps finally vindicating Lanning’s claims that he was failed by publisher EA’s marketing department when it was first released. He’s enthusiastic about the future, talking excitedly about potential future projects, even mentioning in passing developing something for VR devices.
He’s also convinced he knows where the industry is headed.
“High-end AAA isn’t going away, but within 5 years, I think what we’re going to see is high-end AAAs competing against indies. The indies will be rising up,” he predicted. “More and more sales will be digital and the retailers are going to have a harder and harder time. Some more retail businesses will go out.
Double Fine has warned indies of the dangers of devaluing their products, citing its new publishing initiative as a way of protecting against that outcome.
In an interview with USgamer, COO Justin Bailey expressed concern over the harmful side-effects of low price-points and deep discounting for indie games. By giving away too much for too little, he warned, indie developers could reach a similar situation as that found in the casual market.
“I think what indies really need to watch out for is not becoming the new casual games,” he said. “I don’t think that’s a problem from the development side. Indies are approaching it as an artform and they’re trying to be innovative, but what’s happening in the marketplace is indies are being pushed more and more to have a lower price or have a bunch of games bundled together.”
Double Fine is publishing MagicalTimeBean’s Escape Goat 2, the first occasion it has assisted another developer in that way, and it won’t be the last. According to Bailey, what seems to be a purely business decision on the surface has a strong altruistic undercurrent.
“Double Fine wants to keep indies premium. You see that in our own games and how we’re positioning them. We fight the urge to just completely drop the price. That’s one of the things we want to encourage in this program. Getting people to stick to a premium price point and to the platforms that allow you to do that.”
“We’re not looking to replace… we’re trying to augment the system,” he replies. “We’re making small strides right now. Costume Quest 2 is a high-budget game. It’s one that I thought it was best to have a publishing partner who can also spend some marketing funds around it.”
Double Fine is not the first developer to express concern over the tendency among indies to drastically lower prices.
In January, Jason Rohrer published an article imploring developers to consider the loyal fans who buy their games full-price only to see them on sale at a huge discount just a few weeks or months later. Last month, Positech Games’ Cliff Harris went further, suggesting that low price-points actually change the way players see and interact with the games they purchase.