“Both Sony and Microsoft have said games can be resold and that’s exactly what we anticipated. It’s a recognised way to make these games more affordable. All three new platforms understand that,” Bartel told Forbes.
“As people upgraded to PS3 they traded in their old systems and libraries, which is why Sony made the move to not support backwards compatibility with later iterations of PS3. That’s why the ‘buy, sell, trade’ model works well. It enables people to purchase new games by trading in their old ones. We expect to see the same thing with this transition for PS4 and Xbox One. Trade-ins allow for a seamless transition.”
He added that 70 per cent of the $1 billion that GameStop brings to the market goes to new game sales.
After the Xbox One reveal yesterday there was still some confusion about how the machine’s internet requirements would affect the sharing and resale of games, leaving Microsoft executives to clarify the details.
A day that SEGA fans thought would never come has arrived: SEGA has entered into a deal with Nintendo where Nintendo consoles will get the next three Sonic the Hedgehog titles as platform exclusives. The once bitter rivals are calling this a “worldwide partnership,” which despite being a bit short on details apparently leads us to believe that SEGA will be developing additional new software for the Wii U and 3DS consoles going forward.
The next three Sonic titles will include Sonic: Lost World, Mario & Sonic at the Sochi 2014 Winter Olympic Games, and a third unannounced title that the company is expected to officially announce at E3. The reason for the Sonic exclusive deal has to do with the past performance of Sonic titles on Nintendo consoles, and since they have proven to be good sellers, the deal does seem to make a lot of sense for both companies.
What is more interesting, however, is the other aspects of the partnership that will see additional titles developed for the Wii U. Nintendo needs all of the software support it can get for the Wii U, and just getting SEGA to continue to release new titles for the Wii U is a good thing. Sources tell us that SEGA has some new Wii U titles planned for announcement at E3, but it isn’t known exactly what SEGA might be cooking up.
While a big deal with Activision or Take-Two is really what Wii U owners might want, at least getting SEGA to continue producing Wii U titles is a positive news thing. It does remain to be seen, however, if SEGA can deliver the kinds of titles that will be successful sellers on the Wii U when so many owners are looking for the big titles from some of the other publishers.
Electronic Arts may be through with the Wii U. According to a Kotaku report, EA has confirmed that it is no longer working on Nintendo’s new console.
“We have no games in development for the Wii U currently,” EA’s Jeff Brown is quoted as saying. Brown did not indicate if EA would resume development on the system in the future
Earlier this month, EA confirmed it would not be bringing this year’s Madden NFL 25 to the Wii U. At the time, a representative said, “We have a strong partnership with Nintendo and will continue to evaluate opportunities for delivering additional Madden NFL products for Nintendo fans in the future.”
EA has released four games for the Wii U to date. The first three (Mass Effect 3, Madden NFL 13, and FIFA Soccer 13) were system-launch-day ports of titles that had shipped earlier on other platforms. The fourth game, Need for Speed Most Wanted, hit stores in March, months after that game debuted for Xbox 360, PlayStation 3, and PC.
The brief duration of support for the Wii U is surprising given EA’s vocal endorsement of the system at Nintendo’s 2011 Electronic Entertainment Expo media briefing. To cap off the event, then-EA CEO John Riccitiello promised the publisher’s support for the system. Brown told Kotaku that the quartet of titles already released represented EA making good on that promise.
Nintendo representatives did not immediately return requests for comment.
It appears that the Ouya is going to be a bit delayed.
This is good news though, as it is being delayed because the console developers have more cash to spend on it, $15m more to be precise.
Ouya already raised around $7m on Kickstarter, and now, when it should be taking its last steps towards completion, it has had almost twice as much more injected into it by lovely venture capitalists.
We were expecting the console in early June, but that has slid back to 25 June. The time and money will in part be used to solve an issue with sticky buttons, something that usually only happens once consumers have taken some hardware home with them.
The money comes from venture capital firms and other companies including Kleiner Perkins Caufield & Byers (KPCB), Nvidia, Shasta Ventures, and Occam Partners. KPCB’s general partner Bing Gordon will join the Ouya board of directors as a result.
“We want Ouya to be here for a long time to come,” said Julie Uhrman, Ouya founder and CEO.
“The message is clear: people want Ouya. We first heard this from Kickstarter backers who provided more than $8 million to help us build Ouya, then from over 12,000 developers who have registered to make an Ouya game, next from retailers who are carrying Ouya online and soon on store shelves, and now from top pioneering investors.”
Gordon is in charge of digital investments at KPCB and is a veteran of the games industry, having started at Electronic Arts in 1982.
“Ouya’s open source platform creates a new world of opportunity for established and emerging independent game creators and gamers alike,” he said.
“There are some types of games that can only be experienced on a TV, and Ouya is squarely focused on bringing back the living room gaming experience. Ouya will allow game developers to unleash their most creative ideas and satisfy gamers craving a new kind of experience.”
Ouya consoles should start arriving in living rooms on 25 June. If you want one, you are going to have to come up with around $100 dollars, plus another $50 dollars if you want two controllers.
Some well-known industry analysts are suggesting that Microsoft could be behind as much as six months on software development for the Xbox Next. According to these sources, a combination of events have put Microsoft in this position, but it seems that some titles that were being developed internally have been canned. The situation led to Microsoft seeking to secure exclusives from 3rd party sources to fill in the gaps.
We first suggested a link between EA and Microsoft on some sort of an exclusive deal back when they were not a part of the Sony press conference earlier this year. Now, we find that they have a deal of some sort for the new Respawn title, which will apparently be exclusive to the Xbox 360 and Xbox Next. That’s not all, as it is expected that Microsoft has more exclusives to announce. What the question is really about is whether these are true exclusives or are just timed exclusives that we will see on the PS3/PS4 at some point in the future.
Even if Microsoft’s internal exclusives lack for the Xbox Next at launch, we expect them to catch up; we don’t see a big gap developing, but we know that Microsoft has solid properties to use on the Xbox Next and they will get those titles developed and out. No worries: it is going to be similar to all console launches where the software lacks when the system is released.
The NPD Group will report its US video game retail data this Thursday, and in a preview note Wedbush Securities analyst Michael Pachter commented that he’s expecting Nintendo to post yet another weak month of Wii U sales. For the Wii U’s fifth month on the market, he’s forecasting that Nintendo sold just 55,000 units, which would represent a 17 percent decline month-over-month. Moreover, Pachter’s expecting this slide to continue for Wii U, even if Nintendo chooses to implement a price cut.
“The only key hardware device to under-perform our expectations was the Wii U,” Pachter said of last month’s numbers, “and its fortunes appear unlikely to improve for several months, even if Nintendo decides to drop price, as there are an insufficient number of core titles that are generating interest in the console. We think that core gamers are far more likely to turn their attention to the PS4 (due in the holiday season) and the next Xbox, which we believe will be unveiled before E3 and have a launch alongside that of the PS4, and believe that the long-term appeal of the Wii U will be severely limited by the perception that the PS4 and next Xbox will be much more powerful with greater online integration and multimedia functionality.”
And if the pricing on the PS4 and next Xbox is reasonable, it could really put Wii U in a bind, Pachter added: “Should the new consoles from Sony and Microsoft be price competitive, we think that Wii U sales may continue to stagnate.” In fact, Pachter believes that next-gen consoles are likely to be subsidized and will therefore look even more affordable to consumers.
“We think that the next-generation consoles will perform a wide range of multimedia functions. We should learn more in the coming months, but we expect the next Xbox to have an IPTV tuner that will allow an MSO to deliver services over the Internet outside of the MSO’s regulated geographic boundaries. If we are right, any of Microsoft’s MSO partners will have an incentive to subsidize the purchase of the next Xbox in exchange for a long-term service commitment (similar to the cell phone model). If the subsidies are steep, it is likely that the next Xbox will appear more affordable to many consumers than currently anticipated, and it may capture market share faster than many expect. We don’t expect Sony to sit idly by watching, and believe that the PS4 will follow Microsoft’s lead in short order, suggesting to us that next-generation consoles could have lower starting prices than any in history,” he said.
As for March retail game sales overall, Pachter expects the numbers to be up slightly (just one percent) thanks to big AAA releases like Gears of War: Judgment, Tomb Raider and BioShock Infinite.
Ouya, the open Android-based console designed by Yves Behar, is being shipped to its Kickstarter backers today, and the company officially announced this week at GDC that it will hit retailers in the US, UK and Canada on June 4. Ouya is promising “hundreds” of titles for the June 4 release and the $99 console will be available at Amazon, Best Buy, GAME, GameStop, Target, and the store on OUYA.tv. Additional controllers will be sold for $49.99. And for digital purchases, consumers will be able to get pre-paid cards with redeemable codes at retail if they wish.
The company said that over 8,000 game developers worldwide are currently developing games, including both up-and-comers and more well known game makers like Square Enix, Double Fine Productions, Tripwire Interactive, Vlambeer, Phil Fish’s Polytron Corporation, and Kim Swift’s Airtight Games. “The majority of devs so far are experienced devs who’ve never built an Android game before. About 1 out of 5 have never even built a game before,” Ouya CEO Julie Uhrman said that at the GDC unveiling. She boasted that Ouya “already has more titles a couple months before launch than any console has ever launched with.”
The Ouya hardware itself is even smaller than we had previously thought (think Rubik’s Cube or smaller), and its sleek design and brushed aluminum is pleasing to the eye. Uhrman, however, stressed the controller more than anything else. “What we spent the most amount of time on is the controller. We really want this to be our love letter to gamers,” she said, adding that Ouya focused on the ergonomics, the weight, the feel, and wanted it to be a precise, accurate controller. “This is one of the pieces of Ouya that evolved a lot based on early supporter feedback,” she continued.
Apparently, the feedback led to numerous changes on the controller in terms of button placement, and the style of d-pad. The team found out that many preferred a cross-style d-pad than a disc because it’s superior for fighting games. Also, the engineers retooled the tension of the analogs and the design of shoulder buttons. And Ouya even made the responsiveness and speed of the center touch pad customizable. In this journalist’s hands, it felt comfortable and familiar while playing a few titles.
After showing off the hardware, Uhrman dived into the user interface of Ouya. The whole UI is incredibly streamlined, with four categories and an apps-like layout. The four categories are Play, Discover, Make, and Manage (which is for settings). Play is simply where anything you’ve downloaded – games or music or video apps – will be placed. Discover is the store, and it’s been designed to encourage people to “find the best games.” For example, sub-selections in Discover include featured channels like Go Retro, Hear Me, Genres, and Sandbox. The plan is to offer more descriptive names for games within genres.
“The way games get exposed in the genre list is based on what we call the O-rank, which is our fun algorithm. It’s how we rank great games. A lot of app platforms today use downloads as a metric or they use revenue as a metric and we don’t think that’s a good way to say if it’s a good game,” Uhrman said. “You could download a game and never play it again. And with the free-to-try model, revenue isn’t necessarily the best model either. What is [a good metric] is what proves that the game is fun, and that’s engagement. So things like how long you have played a game, how many times you’ve played that game over a certain period of time. How quickly from the time you boot up Ouya, which is an always-on device, do you play that game… It’s those types of engagement metrics that we think prove it’s a fun game.”
Another interesting area within Discover is Sandbox, which offers developers an opportunity to put builds up and ask people to thumb it up. The idea is for great games to get out of the Sandbox and be searchable and merchandized. It encourages developers to market their games and promote them to fans. Once you get out of Sandbox you know the people next to you have great quality games, Uhrman explained.
The Make channel is an area that appears to still be in flux. Uhrman said the goal is to serve two audiences, gamers and developers, equally. While Make is a place where a developer can upload early builds, over time it’ll be a place for devs to communicate with fans. “We also can grow it to be, what if you want to make a game, here’s how to market a game, etc. We’ll look to devs and gamers for feedback on how to evolve the section,” Uhrman said.
A console that’s as open as Ouya should have a fairly simple submission process for developers right? Uhrman confirmed that it’s not overly complicated and should be something most can complete within an hour. “It’s something we thought a lot about given that we’re an open platform… but we wanted to make sure that there are good quality games, at least to the extent that it was optimized to the television and for the controller. So the guidelines isn’t necessarily a quality review, but it checks if there’s malware, does it break or freeze often, does it use our controller schema in the right way, we need to make sure there’s no IP infringement, no pornography, does it elicit real-world violence, you are who you say you are kind of thing – that’s the review. We try to keep it under an hour. Developers can choose to go live immediately or they can choose a certain time,” she detailed.
Curiously, there’s been no partnership reached with the ESRB to rate the games in North America. Right now, the games will be self-rated by devs and community reviewed. Given that Ouya is being sold in mainstream retail, however, we do have to wonder if this will pose potential problems for the company in an atmosphere where some people are still pointing fingers at violent video games. “We’ll take it as it comes; right now we want to expose great content from any type of developer and we do have the thumbs-up/like feature or the report if this is abuse on the system,” responded Uhrman, adding that “We basically say that we can change the rules at any time and we can reject the game for any reason that doesn’t fit our content guidelines – we want everybody on Ouya to have a great experience.”
Ratings aside, one of the big questions surrounding Ouya is whether or not it can truly carve out a market for itself in the console space as industry veterans Sony and Microsoft prepare to launch their respective next-generation systems. The games we saw on Ouya are not graphically intense and are very indie in nature. Can Ouya handle high fidelity triple-A releases? Or does it even need to in order to get noticed?
Ouya does has a partnership with OnLive, so that’s one way to get triple-A games. “That’s one solution. We also support 1080p, hi-def… and we have a USB port so someone can add an external hard drive, so for games that are heavy you could absolutely use that. We have a max download size of 1.2GB for the first download, but as a developer if you want to add and send additional content from your servers you can,” Uhrman said.
“Traditional games take longer to develop, and we have some of those in development that we’re really excited about. Ouya is not about the number of polygons on the screen,” Uhrman acknowledged. “That’s not where we went. We wanted to have innovative and creative exclusive content, and we’re already starting to see that.”
Exclusive content plus a very appealing $99 price point is what could make the system an easy impulse buy for many gamers Uhrman believes. Moreover, Uhrman noted that most core gamers tend to purchase more than one console, so Ouya is likely to be something they’ll want to buy even if they are getting a PS4.
“Ouya offers something different; every gamer has a different expectation depending upon the platform and we believe we’re going to have innovative, creative games and exclusive games to Ouya… And the barrier to entry at just $99 where every game is free-to-try, I think opens up the opportunity for a number of gamers, even core gamers. Core gamers on average own more than one console. We don’t really think it’s an either/or situation. We’re offering something different – I think they’re going to want Ouya too,” she said.
A number of traditional consoles in the past have launched selling at a loss. Since Ouya is built with off the shelf components, it may be easier to contain costs, but Uhrman wouldn’t confirm that each unit is sold at a profit. “We’re really comfortable with our business model,” is all she would say.
That said, if things go the way Uhrman would like, this is only the beginning. Ouya will continue to evolve its software and hardware, and the hardware is likely to get refreshed quickly.
“We’re like any other software platform that iterates and grows over time, and we’ll have a hardware refresh rate more similar to a mobile refresh rate than a console refresh rate because we want to take advantage of the best chips out there and falling commodity prices. We will certainly make sure that there’s enough content that’s optimized for that chip and we don’t push on higher prices to the consumer,” she said.
Does that mean some Ouyas in future will not be compatible with certain games? Uhrman is looking to avoid that scenario. “We have a plan where all content will be compatible with future Ouya systems; we don’t want to fragment our own market for developers, and we always want gamers to have a great experience,” she commented.
Ouya will be interesting to watch. It’s a bold move for the industry and everything we’ve seen so far is completely unconventional. Whether or not that will pay dividends in the long-run is hard to judge at this point in time. “The market is calling us the ‘un-console’ and we like doing things the ‘un-way’,” Uhrman remarked.
When Crytek opened its new Crytek USA studio, it picked up a number of the staff from Vigil when THQ hit bottom. Now, it looks like those former Vigil studio members might be lucky enough to see Crytek acquire the Darksiders franchise that these folks poured their hearts and souls into.
Crytek is apparently looking to buy the rights to the Darksiders franchise. This is not to make a new Darksiders game, but is in the spirit that the people who created the game might as well own the IP if someone if going to get it.
Former Vigil boss, David Adams, now the head of Crytek USA, went to Twitter to announce the news that Crytek would be bidding to acquire the franchise because the IP belongs at home with is creators, according to the Twitter posting.
While it is far from assured that Crytek will acquire it, the courts and the legal wrangling will determine how it shakes out. Still, it is nice thing to see that some of the former Vigil crew could end up with the IP being under the roof where they work again. It does not get anywhere close to a new Darksiders game, but it would be nice for the Vigil folks to have something good come their way.
Steam Box prototypes will be in the wild for customer testing in the next three to four months, according to Gabe Newell. Valve has given up on pretending that it’s not interested in the hardware game; its ambitions are now pretty clear, and somewhat wider than we expected. Where once the concept of a Steam Box was thought to be simply a minimum set of specs for PC manufacturers to follow in order to get a “Steam Powered” sticker on their boxes, now Newell talks openly about the nitty gritty of hardware challenges like heat and noise management, or building bio-metric sensors into the custom controller for the console.
A great many people are hugely excited about the Steam Box. I’m one of them, I confess – I think it’ll be just the thing to ease me back into PC gaming, which is where my roots as a gamer lie, but from which I’ve become increasingly (if unwillingly) estranged. However, I think there are some tough questions and unhappy realities about the Steam Box – whatever final form it may take – that still need to be addressed, especially by the most outspoken proponents of the system.
The crux of the problem is this – Valve’s console is already being lauded as a chariot of openness, a triumph for all those who love things that are Open as opposed to Closed, even if some of them aren’t very good at defining what those terms actually mean. The box will presumably run either Windows or some Linux variant, and if you want to, you’ll presumably be able to leave the Steam environment and pop back to the desktop of that OS and run whatever games or other software you want. (That’s the assumption, anyway; we shall see.) That’s certainly Open compared to, say, a PlayStation 4 or an iPad, which won’t run anything Sony or Apple respectively don’t want you to run.
However, there are other facets to this which look less convincing. For a start, while Steam is an amazing distribution platform that has massively boosted the appeal and reach of PC gaming, in many ways it’s just as much a walled garden as any of the consoles. Indeed, when I wrote a column recently calling on Sony to lower the barrier for indie studios and small firms wishing to publish PSN games (something they seem intent on doing with PS4), many people pointed out that Steam can actually be an even tougher place to publish a game than PSN – and with the advent of a PS4 based on PC architecture and seemingly more open than ever to self-publishing, that contrast may become rather stark. It’s already a stark contrast with the iOS App Store and Google Play, which both place only the smallest of barriers in front of creators who want to put their games in front of consumers.
As such, the question I’m asking myself is this; to an average consumer, who doesn’t really want to dig around in another OS that sits behind the “console” interface, is Valve’s proposed console really all that different to what Sony are suggesting? It seems to me that while Valve and Sony have started out on very different ideological and technological ground (and as such, are bringing along vocal supporters who originate in diametrically opposed viewpoints), they’ve converged significantly towards a midpoint. Sony, a company whose consoles have been totally closed ecosystems that were extremely difficult to publish on, has made huge strides towards welcoming self-publishing and liberalising its pricing and business models. Valve, a company with its roots in the open free-for-all of PC distribution, has gradually erected taller and taller walls around its garden and will, in the final analysis, build something that’s rather more like a games console than most PC gaming fans are comfortable admitting.
That’s fine, of course. If anything, it’s a triumph for common sense. The companies that used to build totally closed systems are recognising the immense benefits of more open platforms and loosening the reins accordingly. Companies who were ideologically wedded to the concept of openness, meanwhile, are recognizing that a certain degree of gatekeeping helps to ward off malware, fraud, viruses and a host of other damaging software. Perhaps the best thing about Steam, from a personal perspective, is that I trust implicitly that both it and the software it hosts will not damage my computer, which is a very major step for PC gaming but not one that could be taken without first stepping back a little bit from the concept of “openness”.
What I’m trying to challenge here, I think, is the notion that whatever Valve does with the Steam Box is necessarily going to ride roughshod over next-gen console efforts. I simply don’t think that’s a given. The Steam Box will have advantages – a huge catalogue of games being the most obvious – but it’s simply wrong to assume that it’s going to be waving some extraordinary flag of democratization and leading the charge against a closed console market. It’s just going to be another walled garden among several walled gardens – the good news being that the walls this generation are going to be much, much lower than they’ve ever been before. It goes without saying, though, that Xbox and PlayStation are much stronger brands with the consumer market than Steam or Valve, so there’s an uphill struggle to be fought in that regard.
From both a consumer and developer standpoint, though, this all looks rather positive. Assuming that the leaks about Xbox 3 are correct, we’re talking about three consoles backed by serious, heavy-hitting companies, each based on PC architecture that’s pretty straightforward to develop for, and in the case of Valve and Sony at least, each courting the notion of openness and self-publishing. That level of competition is very, very healthy indeed – so much for the notion that the console market is moribund and set for an early grave. Consoles are changing and adapting to new conditions; not extinction but evolution. It’s great to see Valve being a part of that process and helping to knock down the utterly artificial barrier between PC and console gaming, which have always had far more commonalities than differences.
Developers, publishers and others involved in the industry simply need to be careful about how they conceptualize this shift. There is going to be a lot of fanboy nonsense written and spoken in the coming months about Valve turning up to “smash” the consoles, or about how “Open” is going to obliterate “Closed”. Valve isn’t smashing consoles; it’s building one. Open isn’t obliterating Closed; all the major players from both sides of that ill-defined fence are cherry-picking the best bits of both models to create an environment that makes sense for a modern, digital world. It’s going to be a topsy-turvy few years – I still can’t quite get over being told by several indie developers that they find it easier to publish on Sony’s consoles than on the PC via Steam, and I expect to have plenty more such preconceptions and notions being overturned in years to come. The only real certainty about the ongoing digital transition is that it still holds a great many surprises and turnabouts.
Sony announced its Playstation 4 console last month, with most of the firm’s event devoted to the AMD accelerated processing unit (APU) that will drive the console. Now Nvidia has said that despite its chips not powering Sony’s next generation games console, games developers programming for the console can use its Physx technology.
Nvidia’s Physx technology is a physics library that works on PCs and current generation consoles. It’s no longer limited to the firm’s own GPUs, meaning that AMD’s APU can execute Physx code properly, though perhaps Nvidia would argue slower than its own chips.
Aside from Nvidia’s Physx software, the firm’s Apex SDK also boasts support for the Playstation 4. Nvidia’s Apex is a set of tools that allows games designers to rapidly develop models and interactive game content. Mike Skolones, product manager for Physx at Nvidia said, “Great physics technology is essential for delivering a better gaming experience and multiplatform support is critical for developers. With Physx and Apex support for Playstation 4, customers can look forward to better games.”
Nvidia still wants games developers to use its tools despite not being in at least two of the three next generation games consoles, because it gives the firm a chance for its desktop graphics cards to win benchmarks when games are ported to the PC.
With the PlayStation 4 unveiled and rumors swirling that Microsoft is preparing to announce a new Xbox in April, next-gen is all the buzz right now. These are massive investments from the respective platform holders, and under the old “razor and blades” model the hope is to make back much of the money on software. And since some of that software is going to cost a good deal more to develop (although not as much as some think, says Hermen Hulst) should consumers be worried that $69.99 will become the new standard AAA game price?
The consensus seems to be that $59.99 should be able to hold, but some big budget titles like Call of Duty and others could get away with higher.
Sony Computer Entertainment America boss Jack Tretton told AllThingsD that PS4 will support a variety of prices from $0.99 to the $60 range (of course, “range” could imply $69.99). But the bottom line is that in this digital era, a variety of content will lead to all kinds of pricing. And as EEDAR’s Jesse Divnich pointed out to us, publishers can maintain the $59.99 price but bring in much more revenue with additional DLC.
“The $59.99 price point in the United States for next-generation games are unlikely to change. As we’ve seen through the years, however, revenue per game has increased gradually as publishers have been able to capitalize on additional in-game and digital content,” he said. “With publishers focusing on fewer, yet bigger and longer lasting titles, I’d expect publishers to keep the $59.99 price point intact, but expand on their digital offerings with more in-game content and expansion packs.”
He added, “And I don’t think this is a scenario where publishers ship a ‘base’ product and gauge on digital offerings. We believe these digital offerings, like they are today, will expand upon the player experience and offer even more value than they do today.”
David Cole of DFC Intelligence agrees. While he thinks the “super AAA” games may test out the $70 price, most content will come in much lower than that. “I think we will see an incredibly wide range of prices. Premium games command premium prices. Think Skylanders, Collector’s editions, Guitar Hero and Wii Fit in their day. What gets squeezed is the stuff in the middle that must compete with high-end development on one hand and low cost/low price games on the other,” he pointed out. “So you have fewer big budget titles but those will have even bigger budgets and that will be cost passed on to the consumer. Of course, very few games will be able to do this.”
Even if there is a slight bump on AAA game pricing, the average selling price (ASP) will beging coming down as the cycle advances, according to IDC Research manager Lewis Ward.
“While there will always be collector’s and limited edition console game discs that cost $80 or more, I’m not projecting that the PS4 or next-gen Xbox will raise the typical ‘AAA’ game disc to $70. 7th gen disc ASPs have trended down a couple dollars per year since 2006-2007. 8th generation discs will come in closer to $60 – which we’re already seeing with Wii U – and then start trending down a few dollars per year. So there will probably be a ~$10 gap in pricing between 7th and 8th gen discs, but due to ASP slippage over time, the overall console discs ASP through 2016 should remain in the low to mid-$40s range,” Ward explained.
An ASP in the mid-$40s is palatable for many hardcore gamers, but the console business is still going to have to face the fact that mobile, tablets, and free-to-play are changing the gaming landscape and the business of games. With PS4 supposedly being more open than any console before it, hopefully developers will being able to offer more free-to-play games and titles at more attractive prices.
Since Sony decided to keep it simple and talk about games and everything except the actual hardware inside the Playstation 4, AMD’s John Taylor not only decided to write a blog post and elaborate on it, but also gave quite a good hint on what we can expect in the near future.
First of all, we noticed that John Taylor, previously working as Director of GBU Marketing has now become the Vice President of Global Communications and Industry Marketing at AMD, so we are quite sure that we will see quite a few interesting things from him down the road. In case you missed it, John Taylor was leading the product communications at AMD from 2006, before joining the GBU marketing team.
Although he does not reveal any precise details regarding the APU itself, John did shed some light calling it a semi-custom APU. As you already know, an APU is a single chip that combines the CPU And GPU with various system elements including memory controllers, specialized video decoders, display outputs and similar things. What makes it interesting is the actual level of customization that can be done for customers that have a very specific demands.
If you read between the lines, it is quite clear that the APU inside the Playstation 4 will not be the last custom part will see. It pretty much all but confirms that AMD has scored the Xbox Next win as well completing the “Holy Trinity” of consoles. The customization might be an interesting deal as it also means that Xbox Next APU might be a bit different than the one found in the PS4. Of course, it could still end up with the same AMD Jaguar CPU cores that are the main part of the PS4 APU probably the similar GPU part but with such a level of customization, anything is possible.
AMD’s VP of Global Communciations ans Industry Marketing, John Taylor, finished its blog post with quite an interesting line stating that this is going to be a very exciting year for gamers, especially for those with AMD hardware in their PCs and consoles as AMD has even more game-changing announcements still to come.
Sources that we have spoken with from several studios have indicated that their publishing partners are pulling back a bit for the time being on the development of additional Wii U titles. The reason is simply the lack of sales on the Wii U console.
Despite coming out of the blocks fast, sales have not been that strong; and both the Xbox 360 and PlayStation 3 had sales numbers in January that topped the Wii U. This, of course, has not gone unnoticed by publishers and developers alike.
As one source told us, “While planning for the platforms that our next titles would be released on, it was obvious that our titles for this year and at least the first half of next year would be primarily focused on the Xbox 360 and PlayStation 3, with several titles for the next-generation systems. Talk of Wii U ports for any these projects was met with a negative reaction, saying there just was not enough sales to warrant the development cost associated with it.”
Another source said to us, “We are only planning the couple of Wii U releases that we are already committed to doing and we might do one or two ports, but right now there just does not seem to be a demand. Our thinking is that the safe bet is to focus on the 2013 releases for Xbox 360 and PlayStation 3, and a couple of those will be converted to the new next-gen systems. In 2014, however, we expect our titles that come out after mid-year to be focused on the next-gen consoles, with only a few those being released for the Xbox 360 and PlayStation 3, as well, unless sales of the next-gen consoles don’t go well. The Wii U would have to make very significant gains to figure into our 2014 and 2015 planning at this point.”
Nintendo needs something to happen to help get the Wii U flying off the shelf again; but many are now waiting to see what the Next-Generation Microsoft and Sony systems are going to offer and at what price before trying to choose which one to buy or if they will ride it out. If cost is the main factor, we could see a lot of gamers waiting, as long as they continue to get ample software flowing to their current systems, which is no real help to sales of the Wii U.
World of Tanks creator Wargaming.net has swooped for troubled PC developer Gas Powered Games.
The studio had been on its last legs, struggling through a failed attempt at funding through Kickstarter, shedding staff to keep the business afloat.
Now Belarusian business Wargaming.net, led by Victor Kislyi, has come forward to pick up the developer of games including Supreme Commander, Demigod and Dungeon Siege – all of which will bolster Wargaming’s portfolio in the online gaming space.
“Gas Powered Games’ heritage and development pedigree shows us just how valuable an addition Chris and his company will make to the Wargaming family,” said Kislyi. “Gas Powered Games has a long track record of providing incredibly engaging AAA gaming experiences and we can’t wait to start working with them.”
Wargaming has been on a spending spree of late, picking up console game developer Day One Studios for $20 million and last year engine-maker Big World for $45 million. It did not disclose the price of Gas Powered Games.
Chris Taylor, CEO of Gas Powered Games, will remain with the business.
“Wargaming’s growth in recent years has been tremendous, and we’re looking forward to joining one of the fastest growing gaming companies in the world,” added Taylor.
It was a better than expected quarter that capped off a record year for Activision. The fourth quarter brought in $2.6 billion in revenue, compared to analyst estimates of $2.44 billion. The company came within spitting distance of $5 billion in revenue for the year ($4.987 billion, to be precise), which is amazing for a company that’s not manufacturing console hardware. The downside of this performance: Activision is already telling us it won’t happen again in 2013, with the company projecting results substantially lower for this year (at $4.175 billion). Will the company see growth again, or was 2012 the highest point it will ever reach?
CEO Bobby Kotick praised the company’s performance: “We achieved record fourth quarter and annual results. And in 2012, on a non-GAAP basis, we generated approximately $5 billion in revenues, a 34 per cent operating margin and EPS growth of 27 per cent over the prior year. We increased our operating cash flow by 41 percent.” It’s extremely impressive; Activision continues to manage its properties well in a horrible retail environment.
Kotick also provided some other info to show Activision’s dominance. “In the US and Europe, we were the #1 video game publisher at retail, we’re the #1 title overall, the #1 console title and the #1 PC title.” Kotick also threw in the following: “We’re also the #1 independent Western Digital game publisher and had the #1 subscription-based MMORPG.”
Notice the exceptionally careful phrasing here, to conveniently exclude Chinese, Korean and Japanese publishers, as well as Russia’s Wargaming.net. And being the #1 subscription-based MMORPG isn’t saying much, given that almost every other MMORPG these days is free-to-play. The lily is already pretty damn impressive; there’s really no need to add gilding.
The rapid growth of Skylanders was given some special attention. “Skylanders, our newest franchise, which is both toys and video games, has life-to-date sold in excess of $100 million toys and generated revenues of approximately $1 billion. This week, Activision Publishing revealed the third game in the Skylanders franchise for holiday 2013. And while there are new entrants in the category and challenges from slower than expected adoption of the Wii U, we remain enthusiastic about Skylanders’ future prospects.”
First we had EA’s CEO saying the Wii U wasn’t a next-generation console, and now Activision’s CEO is calling out the Wii U for slow sales. Nintendo doesn’t appear to be getting much love from third-party publishers in the West.
Kotick then sounded a cautionary note: “We recognized that 2013 is a transition year, as we enter the ninth year of the current generation of console video game systems. We encounter new threats from unproven business models, and we compete against new category entrants. We aren’t immune to unfavorable market dynamics, but we have navigated through the transitions many times before, and we are well prepared to do so again.”
If a business model is unproven, how is it a threat exactly? Isn’t it a threat if it’s doing really well, which in some sense proves that it (or at least that instantiation) works, doesn’t it? Perhaps what Kotick is saying is that there are business models (like free-to-play) which are working damnably well, but unfortunately Activision hasn’t used those models, so they (to Activision’s experience) are unproven. Let’s simplify this: If it’s working well enough to be a threat, shouldn’t Activision at least be experimenting with it?
CFO Dennis Durkin looked ahead to this year’s prospects: “Our product lineup is expected to be anchored by 4 of our top franchises: Call of Duty, Skylanders, World of Warcraft and StarCraft. It will also be a year of significant continued investment in several new properties with long-term potential that are not factored into our 2013 financial outlook, including Activision Publishing’s new Bungie universe, Call of Duty Online for China and the new Blizzard MMO.” That could mean none of those new titles will ship this year. Or perhaps one or more might ship, but Activision isn’t sure, and doesn’t want to count revenue that may not materialize.
Durkin went on to say: “For the full year 2012, Diablo III contributed more than $0.20 of EPS on a standalone basis. This year, our outlook for Blizzard includes the release of the StarCraft II expansion pack, Heart of the Swarm, in March and one additional title. For Call of Duty, consistent with our past practices, we are planning for the mainline release in Q4 to be down versus 2012.”
Activision reached peak sales of Call of Duty two years ago, and expects this year to be lower once again than last year. When you’re coming out with a new version of the game every year, it’s hard to keep posting record numbers. New consoles might help, but they will probably be too late in the year to matter much even if Activision does have a version of Call of Duty ready for them.
Why won’t new consoles matter much for 2013? Let’s look at the numbers. Assuming a new console ships in November, it’s unlikely to sell more than a couple of million units by the end of the year; let’s say it’s an amazing success and sells 5 million. Selling a game to half of those buyers would be incredible; that would be 2.5 million units. When a Call of Duty title can sell nearly ten times that amount, you can see why it’s not reasonable to expect new consoles to help Activision’s numbers significantly. Sure, they might, if absolutely everything goes well. But companies like to be a little conservative on their projections to give themselves a good chance to beat the numbers. Investors like it when companies beat their numbers.
Blizzard CEO Mike Morhaime then gave some color on his products: “World of Warcraft added more than 9.6 million players, down slightly from the previous quarter. The majority of the decline came from China, while subscribership in the West was relatively more stable.” Later, Morhaime added: “With respect to China, in spite of the decline in subscribership, it is important to note that the engagement levels of the core items did increase with the launch of the expansions and I think that, that suggests increased engagement by our core players.”
So WoW subscriber numbers are shrinking, but the remaining players are more engaged. To some extent, this is acceptable if overall revenue can remain constant or even rise if virtual goods sales are high enough among the remaining players, and they stay subscribed longer. At some point, though, if subscriber numbers keep falling overall revenue will drop. The key information here is that World of Warcraft has apparently already burned through the boost it got from Mists of Pandaria, and is back to losing subscribers (at least in China), but the rate of erosion isn’t too alarming. Yet.
One of the analysts asked whether development costs will rise for titles destined for next-gen consoles. Kotick was straightforward: “This is my 22nd year doing this, and in every single console transition, we’ve seen an increase in development costs.” Margin improvement for next-gen titles is going to depend on selling more DLC, not on reducing development costs. Until next-gen consoles are in tens of millions of households, revenue from next-gen titles will be lower than current-gen titles – and development costs will be higher. That’s not a good combination.
Activision’s stock has mostly hovered between $10.50 and $12.50 for the past several years, though after yesterday’s report it’s shot up to $13.41, a gain of over 11 per cent. Wedbush analyst Michael Pachter has a long-term target of $19 for Activision stock, which is above the stock’s high point five years ago. It’s difficult to see how the stock gets there unless gaming stocks in general become more well-received by investors. Perhaps if new consoles launch strongly, and Bungie’s new game is a smash hit, and everything goes well…
Meanwhile the general message of this earnings report is that Activision is being careful with major strategy moves. Activision is still merely dabbling in mobile games, and doesn’t expect them to be a significant contribution to the company in the coming year. So far, the company is resisting moving World of Warcraft over to a free-to-play model; that may be wise given that such a changeover doesn’t always work well. Where’s the chance for major growth? Bungie’s new title, the new Blizzard MMO, and Call of Duty in China, that’s where. There are questions about all of them, of course. Will Bungie’s title pull in a significantly different audience than Call of Duty, or will it cannibalize that game’s players? Will Blizzard’s MMO merely move players over from World of Warcraft, or will it attract a significant new audience? Will Chinese players really turn out in big numbers for Call of Duty Online?
Looming over all of these questions is the long-term viability of the console market, and whether the new consoles coming from Sony and Microsoft will revive the console game business to the heights of 2008. Activision is in great shape right now, with billions of dollars in cash and four great brands that generate amazing sales. Of those four brands, three are getting pretty long in the tooth; can they perform at their current levels, or will they continue to decline slowly? The success of new consoles may be critical to Activision’s future. The company may choose to diversify with acquisitions, or it may keep the cash tucked away for a rainy day or a larger strategic acqusition.
Activision’s had a great 2012, and 2013 looks pretty good. The company’s longer-term picture depends mostly on how the console market continues, and how the MMOG market evolves along with Activision’s products in that area. Mobile doesn’t appear to have big potential for Activision yet. The other potential big mover for Activision is a major acquisition, like, say, Take-Two. Activision has enough cash to make such a purchase, or some other large strategic move. We’ll have to keep watching to see how that strategy game might play out.
For now, at least, Activision expects to have sales lower than last year’s level. Growth is only going to happen in 2014 and beyond if Activision’s new projects can do well, and new consoles do well, and existing brands don’t fade too quickly. When you’re at the top of the mountain, climbing higher is difficult. Perhaps the Skylands offer a path higher…