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Square Enix Is Giving IO Interactive The Boot

May 23, 2017 by  
Filed under Gaming

Square Enix is dropping IO Interactive, the Danish studio behind the long-running Hitman franchise.

In a statement released today, the Japanese publisher said the decision was part of a strategy to “focus our resources and energies on key franchises and studios.”

The withdrawal was in effect as of the end of the last financial year, on March 31, 2017, and resulted in a ¥4.9 billion ($43 million) extraordinary loss on the company’s balance sheet.

Square Enix has already started discussion with potential new investors, the company said. “Whilst there can be no guarantees that the negotiations will be concluded successfully, they are being explored since this is in the best interests of our shareholders, the studio and the industry as a whole.”

IO Interactive was acquired by Eidos in 2003, just before it launched Hitman: Contracts, the third game in what was already its signature franchise. Eidos was acquired by Square Enix in 2009, and it has launched four games in the time since: Mini Ninjas, Kane & Lynch 2: Dog Days, Hitman: Absolution, and Hitman, last year’s episodic take on its most celebrated IP.

The bold new structure implemented in Hitman saw the game’s missions being separately on digital platforms, with various live events and challenges taking place between the release of each one. Square Enix originally planned to give the entire series a boxed retail release, but that never materialised. It has never disclosed official numbers regarding the sales figures for Hitman, either as a series or for individual episodes.

However, the series’ ámbition was widely appreciated within the games press – it was named 11th best game of 2016 by Eurogamer, for example, and was Giant Bomb’s overall Game of the Year. When we talked to IO studio head Hannes Seifert last year, he described the pride his team felt at the “new feeling” the game created, and made it clear that plans for Hitman extended far beyond a single season of epsiodes.

“When we say an ever expanding world of assassination, it means we don’t have to take everything that’s out there, throw it away and make a new game,” he said. “We can actually build on that. Just imagine after two or three seasons, you enter at that point in time, the amount of content will just blow your mind. That’s where we want to be.”

Seifert stepped down as IO’s studio head in February this year. He was replaced by Hakan Abrak, IO’s former studio production director.

Courtesy-GI.biz

Will Digital Video Game Sales Grow This Year

May 18, 2017 by  
Filed under Gaming

The growth of full game downloads in the console space has surprised EA, the firm says.

The company told investors during its Q&A – as transcribed by Seeking Alpha – that full game downloads accounted for 33% of unit sales. That’s considerably ahead of the firm’s previous estimate of 29%, and 9% higher than the figure it posted last year.

The firm says the chief driver was “the continuing evolution of consumer behavior. but some of the out-performance was driven by the shift from Star Wars Battlefront to Battlefield 1, as well as the digital performance of our catalog.”

It expects full game downloads will account for 38% of its console unit sales during 2017.

However, EA’s CFO Blake Jorgensen anticipates that for the whole industry the figure will be even higher – around 40%. This is because EA’s big titles, such as FIFA, often perform strongly in markets with slower digital uptake.

“In terms of full-game downloads, the number surprised us because we had thought that it’d be around the 5% year-over-year growth,” he said. “Some of that may simply be the consumer is shifting faster than we know or we expected. The trends can sometimes jump in dramatic ways and maybe we’re starting to see that overall shift. And some of it could be product-related. We do think the industry will end calendar year 2017 probably above 40%. We will most likely lag that as we have historically because FIFA is such a large product and it is so global that we are operating in markets where either the ability to purchase digitally, or the ability to download based on bandwidth speeds, are compromised and thus we tend to skew a little lower on FIFA than we do on the rest of our portfolio. So we’ve always lagged the industry slightly, but we are excited about the potential that you’re seeing the consumer possibly shift quicker to digital than we’d originally anticipated.”

EA remains optimistic about the console space. It says that at the end of last year the install base for both PS4 and Xbox One was 79m, and that it would grow to 105m by the end of 2017. This figure does not include Nintendo Switch, although EA is bullish about Nintendo, too.

“We have a tremendous relationship with Nintendo and have done for many, many years and are excited by the fact that they have come out very strong and are bringing in a whole new player base into the ecosystem,” said EA CEO Andrew Wilson. “We continue to be bullish on it and are looking at other titles that we might bring to the Switch. Our console number that we quoted does not include the Switch at this point, so anything that Nintendo does is additive to that number.”

There were a few additional takeaway points from EA’s financials. The publisher said that the traditional DLC mode is becoming “less important” as it moves further into live services. We’ve already seen EA evolve its DLC model with Titanfall 2, which is giving away all of its DLC for free.

EA also revealed that its new EA Motive studio in Montreal has 100 staff, and the publisher expects that number will grow to 150.

Courtesy-GI-biz

Can Big Game Developers Keep Innovation Alive

May 12, 2017 by  
Filed under Gaming

The games industry has gone through a series of major transitions and changes over the past couple of decades – changes to the platforms people play on, the way they pay for and interact with games and even to the audiences that are actually playing. Each of those has brought along a series of challenges which the industry has had to surmount or circumvent; none of them, arguably, is a perfectly solved problem. Meanwhile, though, there have also been a handful of challenges running in the background – consistent issues that are even more fundamental to the nature of the games business, less exciting and sexy than the latest great transition but no less in need of clever solutions. Education and skills is one example; tax regimes and the industry’s relationship with governments is another.

Perhaps chief among those issues, though, is one which ties in to a common problem across a wide variety of industries, creative and otherwise. It’s the problem of innovation; specifically, the question of how to make innovation work in the context of a large corporation. The conventional wisdom of modern capitalism is that innovation bubbles up from small start-ups; unencumbered by the institutional, structural and cultural constraints that large, established companies operate within, they’re free to create new things and execute original ideas. As firms grow bigger, they lose that nimbleness and flexibility. Projects become wrapped up in internal politics, in the stifling requirements of handling shareholder relationships, and all too often, in the innovator’s dilemma – the unwillingness to pursue fresh innovation for fear that it’ll disrupt one of your proven cash cows.

As a result, we see a structure in which innovation happens at small start-ups, which large companies tap into through acquisitions. We see this in the games industry too, in the form of big publishers acquiring innovative and successful developers. Such acquisitions usually come with golden handcuffs for the key talent, requiring them to work for their firm’s new owners for a certain amount of time – after which they’re free to go off and create something new, small and innovative again (with a few million quid in their back pocket, to boot). This creates a cycle, and a class of serial innovators who repeatedly build up new, successful small companies to sell to larger, innovation-starved firms.

For many large companies, this isn’t an entirely satisfactory situation. Surely, they reason, there must be some way for a company to scale up without losing the capacity to innovate? Yet for the most part, the situation holds; big companies can create great products, but they are generally iterative and derivative, only very rarely being major, disruptive breaks from what was offered before. There are just too many barriers a game or a product needs to get through; too much politics to navigate, too many layers of management stumped by new ideas or worried about how something hard to explain will play to investors who only want to hear descriptions like “it’s like GTA, but with elements of Call of Duty”, or “it’s like an iPhone, but with a better camera”.

The desire to find some way to bottle the start-up lightning and deploy it within existing corporations runs deep, though, and it’s resulted in a number of popular initiatives over the years. Perhaps the most famous of recent years is the buzz around Eric Ries’ book The Lean Start-Up, a guide to effective business practices for start-up companies which extolled a launch-early, iterate-fast approach. Though it had some impact in the start-up world, The Lean Start-Up seemed to find its most receptive audience among executives at large corporations keen to find some way to create “internal start-ups” – silos within their companies which would function like incubators, replicating the conditions which allowed start-ups in the wild to innovate and iterate rapidly.

For the most part, those efforts didn’t work. The reality is that a start-up inside a company isn’t the same as a start-up in the wild. It doesn’t have the same constraints or the same possibilities available to it; its staff remain employees of a large corporation and thus cannot expect the same rewards, or be exposed to the same decision-making environment, as staff at a start-up. Even something as basic as success or failure can’t be measured in the same way, and in place of experienced venture capitalists (often the final-stage Pokémon evolution of the serial innovators described above) as investors and advisors, an internal start-up finds itself being steered and judged by executives who have often spent a lifetime working within precisely the corporate structure they now claim to wish to subvert. It’s hardly surprising that this doesn’t work very often, either within games or in any other sector.

We haven’t talked about Hearthstone yet, even though it’s right up there in the opening lines. Let’s talk about Hearthstone.

Hearthstone is Blizzard’s card battling game, available across a variety of platforms. It’s a spin-off from the Warcraft franchise, and last year it made somewhere in the region of $350 million (according to estimates from SuperData). This week it topped 70 million unique users, and though the company doesn’t release concurrent user figures, it claims to have set a new record for those following the release of its latest expansion pack in April. It also remains one of the most popular games in the world for streaming. It’s a hell of a success story, and it’s also, in essence, a counterpoint to the notion that big companies can’t do small, innovative things. Hearthstone was prototyped and built by a small team within Blizzard, and ever since its launch it has embraced a distinctly start-up approach – iterating quickly and doing its experimentation in public through features like the “Barroom Brawl”, a sandbox that allows developers to test new mechanics and ideas that might make their way into the main game if they work well.

Given Hearthstone’s commercial success and the relatively small team and infrastructure behind it (relative, that is, to a behemoth like World of Warcraft), it’s probably Blizzard’s most profitable game. The question is, can other publishers and developers learn from what Blizzard did here? There’s a tendency with Blizzard success stories to simply attribute them to some intangible, indefinable “Blizzard Magic”, some sparkling pixie dust which is sprinkled liberally on all of their games but which can only be mined from the secret goblin tunnels under the company’s Irvine campus. In reality, though, Blizzard is simply a very creative and phenomenally well-managed company – one which has, in many respects, placed the solving of the whole question of how to innovate within a large company environment at the very heart of how it structures and defines itself.

One of the most famous things that people in the industry know about Blizzard is that the company is ruthless in its willingness to take an axe to projects that don’t live up to its standards. StarCraft: Ghost never saw the light of day after years in development; Titan, the planned MMO follow-up to World of Warcraft, was similarly ditched (with a core part of its team going on to rapidly develop the enormously successful Overwatch as their “rebound project”). What that means is that Blizzard has developed something within its internal culture that a lot of other firms in the industry lack; a capacity to coolly, rationally judge its own work on a purely creative and qualitative level, and to make very tough decisions without being overly swayed by internal politics, sunk-cost fallacies or other such calculations.

It’s instructive to listen to comments from people who worked on cancelled projects at Blizzard, even at a high level; while it was no doubt an emotional and difficult experience for them, their comments in hindsight usually express genuine agreement with the decision. There appears to be a culture that allows the company to judge projects without extending that judgment to the individuals who worked on them; I don’t doubt that this is an imperfect system and that there’s still plenty of friction around these decisions, but by and large, it seems to work.

There is no magic pixie dust involved in the success of games like Hearthstone (or Overwatch, for that matter). This is a model that can be replicated elsewhere… it’s not dissimilar to the structure of a company like Supercell”

That creates an environment in which a start-up style approach can actually thrive. Small, creative teams can work on innovative games, rapidly prototyping and being effectively judged for their quality along the way. After only a couple of cycles of internal culling and restarting, surviving projects can be pushed out to the market as a kind of “minimum viable product”; not a thinly disguised prototype, but the minimum required to be a viable Blizzard game. Polished, fun and interesting, but designed as a springboard from which the team can go on to iterate and innovate in a way that’s informed by feedback from a real audience, rather than as an expensively developed, monolithic product.

Not every company can accomplish this; it’s not just Blizzard’s exacting standards of quality that permit it, there are also important factors like the company’s opaqueness to investors (which allows it to make products for the market rather than making products for shareholders) and its ability to bootstrap new games with IP from existing franchises (the Nintendo model, in essence) to consider. There is, however, no magic pixie dust involved in the success of games like Hearthstone (or Overwatch, for that matter). This is a model that can be replicated elsewhere, given the right approach and the right people in decision-making roles. In fact, it’s a model that does exist elsewhere; it’s not dissimilar to the structure of a company like Supercell, for example, which helps to explain why Supercell is one of the only mobile developers that’s been able to “bottle its lightning” and consistently develop hit titles. It’s also close, though slightly different in structure, to the way Nintendo has shifted towards working in recent years, which has resulted in titles like Splatoon.

Big companies can be creative; they can be innovative, daring, clever and even disruptive. Hearthstone shows this at work within Blizzard, and it’s also present in a select but distinguished line-up of other game companies that have made it a priority to nurture innovation and to create a culture where good taste and creative excellence are celebrated above all else. For many companies, this would be a radical shift – requiring a change in priorities, in structure and even in staffing – but in the long run, such a shift might end up a lot cheaper than having to pull out your wallet every couple of years to buy the next innovative start-up that came up with an idea your own firm couldn’t conceive of.

Courtesy-GI.biz

Can The PS4 Pro Stop The Falling Sells Of The PS4?

May 4, 2017 by  
Filed under Gaming

Sony Interactive Entertainment sold 20 million units of its PlayStation 4 console in the last fiscal year, boosting revenue by 6% and operating income by more than 50%.

In the 12-month period ended March 31 2017, SIE’s Game & Network Services division earned $14.7 billion in revenue, a 6% increase over the year before. Operating income for the division was $1.2 billion, a more significant 53% increase over the prior year, largely due to cost reductions on PS4 hardware and rising software sales.

Guerrilla Games’ Horizon: Zero Dawn will have been a major contributor to software revenue, becoming the fastest-selling new IP of the PS4 era after moving 2.6 million units in the two weeks following its late-February release. Uncharted 4: A Thief’s End also launched in the accounting period; Naughty Dog’s widely acclaimed title sold 8.6 million copies by the end of calendar 2016.

Across the entire year, 20 million units of the PS4 were shipped, 13% more than the 17.7 million units in the previous fiscal year. Given that the PS4 had 40 million confirmed sales in May 2016, that puts the total PS4 installed base somewhere around 60 million – possibly just below, but certainly not very far away.

Sony offered no details on the specific performance of the PS4 Pro, and no further information on PSVR sales beyond the 915,000 unit figure revealed in February. Both devices launched at the end of calendar 2016.

Looking ahead, Sony expects PS4 shipments to decline to 18 million next year. However, it expects the GNS division to improve in general, with a 14.6% increase in revenue and a 34% increase in operating income.

Overall, Sony Corp. earned $67.9 billion in revenue in the last fiscal year, down 6%, and a $654 million net profit, a more dramatic 50% decline.

Courtesy-GI.biz

Blizzard Entertainment Wins Cheating Lawsuit

April 14, 2017 by  
Filed under Gaming

Blizzard Entertainment has asked for $8.5 million in damages from Bossland, a German company that makes and sells cheats and hacks for its most popular games.

This is the latest and probably final step in a legal complaint Blizzard filed in July 2016, which accused Bossland of copyright infringement and millions of dollars in lost sales, among other charges. Cheat software like Bossland’s Honorbuddy and Demonbuddy, Blizzard argued, ruins the experience of its products for other players.

According to Torrent Freak, Bossland’s attempt to have the case dismissed due to a lack of jurisdiction failed, after which it became unresponsive. It also failed to respond to a 24-hour ultimatum to respond from the court, and so Blizzard has filed a motion for default judgement.

The $8.5 million payment was calculated based on Blizzard’s sales projections for the infringing products. Bossland had previously admitted to selling 118,939 products to people in the United States since July 2013, of which Blizzard believes a minimum of 36% related to its games.

“In this case, Blizzard is only seeking the minimum statutory damages of $200 per infringement, for a total of $8,563,600.00,” the motion document stated. “While Blizzard would surely be entitled to seek a larger amount, Blizzard seeks only minimum statutory damages.

“Notably, $200 approximates the cost of a one-year license for the Bossland Hacks. So, it is very likely that Bossland actually received far more than $8 million in connection with its sale of the Bossland Hacks.”

Update: The court has granted Blizzard’s motion for default judgement, ordering Bossland to pay $8.56 million in damages.

That number was calculated based on 42,818 sales of Bossland’s products in the US. The court ruled that the German company should not be allowed to sell Honornuddy, Demonbuddy, Stormbuddy, Hearthbuddy and Watchover Tyrant in the country from now on, as well as any future products that exploit Blizzard’s games. Bossland will also have to pay $174,872 in attorneys’ fees.

Courtesy-GI.biz

The Witcher Franchise Goes 25 Million Units

April 12, 2017 by  
Filed under Gaming

The Witcher 3: Wild Hunt continues to pay off for CD Projekt. The Polish publisher today reported its financial results for calendar year 2016, and the hit 2015 role-playing game loomed large over another successful campaign for the company.

CD Projekt said its revenues “continued to be dominated by ongoing strong sales” of The Witcher 3 and its two expansions. While the base game and its first expansion debuted in 2015, the second and final expansion pack, Blood and Wine, arrived last May and helped drive revenues of 583.9 million PLN ($148.37 million). That was down almost 27 percent year-over-year, but still well beyond the company’s sales figures prior to 2015. Net profits were likewise down almost 27%, with the company posting a bottom line gain of 250.5 million PLN ($63.65 million).

The company also announced a new milestone for the Witcher franchise, saying the three games have now cumulatively topped 25 millions copies sold, a number that doesn’t include The Witcher 3 expansions packs. That suggests 2016 saw roughly 5 million copies sold over the 20 million reported in CD Projekt’s 2015 year-end financials.

Even if this year saw overall sales take a dip for CD Projekt, its GOG.com online retail storefront still managed to post its best year ever. The company reported GOG.com revenues of 133.5 million PLN ($33.92 million), up 15% year-over-year.

CD Projekt is currently testing its Gwent free-to-play card game in closed beta, and intends to open it up to the public this spring. It is also working on its next AAA game, Cyberpunk 2077, thought it has no release date as yet.

Courtesy-GI.biz

Can Violence In A Game Promote Safety?

March 30, 2017 by  
Filed under Gaming

When the original Doom was released in 1993, its unprecedentedly realistic graphic violence fueled a moral panic among parents and educators. Over time, the game’s sprite-based gore has lost a bit of its impact, and that previous sentence likely sounds absurd.

Given what games have depicted in the nearly quarter century since Doom, that level of violence no longer shocking so much as it is quaint, perhaps even endearing. So when it came time for id Software to reboot the series with last year’s critically acclaimed remake of Doom, one of the things the studio had to consider was exactly how violent it should be, and to what end.

Speaking with GamesIndustry.biz at the Game Developers Conference last month, the Doom reboot’s executive producer and game director Marty Stratton and creative director Hugo Martin acknowledged that the context of the first Doom’s violence had changed greatly over the years. And while the original’s violence may have been seen as horrific and shocking, they wanted the reboot to skew closer to cartoonishly entertaining or, as they put it, less Saw and more Evil Dead 2.

“We were going for smiles, not shrieks,” Martin said, adding, “What we found with violence is that more actually makes it safer, I guess, or just more acceptable. It pushes it more into the fun zone. Because if it’s a slow trickle of blood out of a slit wrist, that’s Saw. That’s a little bit unsettling, and sort of a different type of horror. If it’s a comical fountain of Hawaiian Punch-looking blood out of someone’s head that you just shot off, that’s comic book. That’s cartoonish, and that’s what we wanted.”

“They’re demons,” Stratton said. “We don’t kill a single human in all of Doom. No cursing, no nudity. No killing of humans. We’re actually a pretty tame game when you think about it. I’ve played a lot of games where you just slaughter massive amounts of human beings. I think if we had to make some of the decisions we make about violence and the animations we do and if we were doing them to humans, we would have completely different attitudes when we go into those discussions. It’s fun to sit down in a meeting and think about all the ways it would be cool to rip apart a pinky demon or an imp. But if we had the same discussions about, ‘How am I going to rip this person in half?’ or rip his arm off and beat him over the head with it, it takes on a different connotation that I don’t know would be as fun.”

That balancing act between horror and comedy paid off for the reboot, but it was by no means the only line last year’s Doom had to straddle. There was also the question of what a modern Doom game would look like. The first two Doom games were fast-paced shooters, while the third was a much slower horror-tinged game where players had to choose between holding a gun or a flashlight at the ready. Neither really fit into the recent mold of AAA shooters, and the developers knew different people would have very different expectations for a Doom game in 2016.

As Stratton explained, “At that point, we went to, ‘What do we want? What do we think a Doom game should be moving forward?’As much as we always consider how the audience is going to react to the game–what they’re thinking, and what we think they want–back in the very beginning, it was, ‘What do we think Doom should be, and what elements of the game do we want to build the future of Doom on?’ And that’s really where we came back to Doom 1, Doom II, the action, the tone, the attitude, the personality, the character, the irreverence of it… those were all key words that we threw up on the board in those early days. And then mechanically, it was about the speed. It was about unbelievable guns, crazy demons, really being very honest about the fact that it was Doom. It was unapologetic early on, and we built from there.”

It helped that they had a recent example of how not to bring Doom into the current generation. Prior to the Doom reboot, id Software had been working on Doom 4, which Stratton said was a good game, but just didn’t feel like Doom. For one, it cast players as a member of a resistance army rather than a one-marine wrecking crew. It was also slower from a gameplay perspective, utilizing a cover-based system shared by numerous modern shooters designed to make the player feel vulnerable.

“None of us thought that the word ‘vulnerable’ belonged in a proper Doom game,” Martin said. “You should be the scariest thing in the level.”

Doom 4 wasn’t a complete write-off, however. The reboot’s glory kill system of over-the-top executions actually grew out of a Doom 4 feature, although Stratton said they made it “faster and snappier.”

Of course, not everything worked as well. At one point the team tried giving players a voice in their ears to help guide them through the game, a pretty standard first-person shooter device along the lines of Halo’s Cortana. Stratton said while the device works well for other franchises, it just didn’t feel right for Doom, so it was quickly scrapped.

“We didn’t force anything,” Stratton said. “If something didn’t feel like Doom, we got rid of it and tried something that would feel like Doom.”

That approach paid off well for the game’s single-player mode, but Stratton and Martin suggested they weren’t quite as thrilled with multiplayer. Both are proud of the multiplayer (which continues to be worked on) and confident they delivered a high quality experience with it, but they each had their misgivings about it. Stratton said if he could change one thing, it would have been to re-do the multiplayer progression system and give more enticing or better placed “hooks” to keep players coming back for game after game. Martin wished the team had messaged what the multiplayer would be a little more clearly, saying too many expected a pure arena shooter along the lines of Quake 3 Arena, when that was never the development team’s intent.

Those issues aside, it’s clear the pair feel the new wrinkles and changes they made to the classic Doom formula paid off more often than not.

“Lots worked,” Stratton said. “That’s probably the biggest point of pride for us. The game really connected with people. We always said we wanted to make something that was familiar to long-time fans, felt like Doom from a gameplay perspective and from a style and tone and attitude perspective. And I think we really accomplished that at a high level. And I think we made some new fans, which is always what you’re trying to do when you have a game that’s only had a few releases over the course of 25 years… You’re looking to bring new people into the genre, or into the brand, and I think we did that.”

Courtesy-GI.biz

Can Microsoft Make Game Pass Profitable?

March 29, 2017 by  
Filed under Gaming

Of all the various innovations we’ve seen in this console generation, it may be the business model changes that have the most lasting impact on the games industry. Though originally introduced in the back half of the previous generation, the notion of giving consumers “free” games on a monthly basis for continuing their subscription to console online services has become a standard part of the model in this hardware generation.

The degree to which this is expected, and to which the perceived quality of each month’s offerings is hotly debated, is a clear signal of how the value relationship between consumers and game software is changing. Now, within the next few months, both Microsoft and Sony will evolve that relationship even further, with services which aim to give consumers access to current-gen game software through a very different transaction model.

Microsoft was first out of the blocks with its announcement, revealing at the end of last month that a large library of software for the Xbox One will be made available for a $9.99 recurring monthly subscription. Sony’s version of the concept is similar in business terms, if dramatically different technologically; it’s going to start adding PS4 titles to PS Now, a game-streaming service which currently offers a huge library of PS3 games for a $20 recurring subscription (or $45 for three months, which gets it a little closer to Microsoft’s pricing).

The goal being pursued by both firms is fairly obvious; paying monthly rather than buying titles outright is the model which has become dominant for both music and video, so it stands to reason that games will follow down the same path, at least to some extent. There’s certainly some appeal to the idea of a “Netflix / Spotify For Games”. From a business perspective, getting $120 (or $180) from consumers in flat monthly fees for games is probably actually a revenue boost if the service is primarily picked up by the kind of consumers who don’t buy a lot of new games – either predominantly buying pre-owned, waiting for titles to hit bargain basement prices, or borrowing games from friends, for example.

On the other hand, there’s an abundance of consumers out there who buy far, far more than the two new games a year that you’d get for that $120 fee – so any of those who stop buying new games in favour of a subscription service will represent a major revenue loss to the industry. Many people will be worried about that possibility, no doubt, but the reality is that there’s plenty of precedent to suggest that a subscription service won’t harm sales of new games.

New titles won’t go directly onto a subscription service; there’ll undoubtedly be a lengthy exclusivity period for people who pay for a physical or digital copy of the game, with titles only appearing for subscribers once their revenue potential in direct sales is already all-but exhausted. Subscription revenue therefore becomes a second bite at the cherry – a way of boosting the industry’s often rather ratty-looking “long tail”.

From a consumer perspective, that’s actually not all that different from the way things are now. If you’re not bothered about playing a game in its first few months on the market, then you’re probably going to end up buying a second-hand copy – or getting it from the bargain bin, or borrowing it from a friend, or perhaps even just waiting for it to pop up on PlayStation Plus at some point.

Game software generally loses value dramatically after the first few months on the market; lots of options exist for picking it up cheap, but decades of experience shows that this doesn’t dissuade fans from buying new games they really care about. Games are a “zeitgeisty” medium; people want to be playing the game everyone else is playing right now (as anyone who’s had to put up with their social media feeds being filled to the brim with Zelda chat while every electronics store in the city remains out of stock of Switch can tell you – not that I’m bitter, of course).

For the industry, however, most of these options aren’t very appealing. Second-hand software sales enrich GameStop, and just about nobody else; there’s an argument that second-hand sales boost new software sales by providing trade-in value, but it’s hard to balance the effects of that against the simple revenue loss game creators suffer from the repeated recycling of second-hand stock through stores that often deliberately push consumers towards used games instead of new ones. Borrowing the game from a friend is arguably preferable to the industry; no money is changing hands at all, so at least potential revenue hasn’t been sucked out by a third party.

Given, then, that we’re already talking about consumers who have a range of options for accessing software which provide no revenue to game creators, something like a Netflix-esque subscription service starts to make a lot of sense. How the revenue works in the back-end will, no doubt, be subject to endless negotiation and dispute, but the point is that at least the revenue exists; games on the service will continue to generate cash for their creators as long as they’re being played, and every cent they receive is a cent they’d never have seen in the currently dominant second-hand models. Moreover, the existence of subscription services could be a net boost for the games industry as a whole; the ability to access a large library of software for an affordable monthly subscription fee is something that will appeal to a lot of consumers, potentially bringing them into the console ecosystem.

If the business case for these services is very clear, however, the question of which technical approach will succeed is rather less so. For now, I think that Microsoft’s model – allowing consumers to download and play locally the software on its subscription service – is comfortably superior to the PS Now streaming system.

Game streaming over the Internet remains a technology that’s arguably ahead of its time; there are question marks over the business case (since the provider needs to pay for racks and racks of hardware which every consumer using the service already possesses in their own home, a duplication of functionality that makes little sense, especially since PS Now recently dropped support for “thin client” platforms like Bravia TVs), but more importantly, a huge number of consumers simply won’t be able to make use of the service because their broadband connections are not up to the standard required for high-quality, real-time gameplay. The demands of real-time game streaming are very different from the demands of watching live streams of video, because you can’t buffer a real-time game stream; when it works, it’s impressive, but the reality is that for a great many consumers it either doesn’t work at all or only works at time when the network isn’t congested.

Given the limitations of PS Now (and I think the dropping of support on Bravia TVs, mobile phones and so on is an ominous sign for the future of the service), Microsoft’s native software approach seems far more likely to be a hit with its consumers – indeed, the company may be hoping to recapture some of the magic of the Xbox 360 era, when its enormous advantage over Sony in online services helped it to maintain a lead over the PS3 for several years.

For Sony’s part, the desire to try to boost PS Now may be its undoing, at least in the short term; but an enhanced version of PS Plus (PS Plus… Plus?) with a library subscription built-in seems like a no-brainer in the medium term. It’s a win-win situation for platform holders and game creators alike. The only really big loser in all of this will be heavily pre-owned reliant retailers like GameStop; if game subscription services truly take off this year, they’ll have to scramble to find a new model before it’s too late.

Courtesy-GI.biz

Can Washington D.C. Become The Center Of eSports?

March 22, 2017 by  
Filed under Gaming

Washington D.C. intends to become the home of eSports in the United States, with a strategy that includes sponsorship of the NRG Esports team and the construction of a $65 million stadium.

The city’s plans, which were revealed to Mashable, will be executed by Events D.C., the District of Columbia’s convention and sports authority. The deal with NRG Esports is among the first instances of a city sponsoring a pro gaming organisation, and Washington D.C. will now have its logo and branding on NRG teams’ uniforms, livestreams and websites.

NRG, which has teams competing in Overwatch, Counter-Strike: GO, Hearthstone and Rocket League, has roots in the world of traditional sports. It was founded by Andy Miller and Mark Mastrov, the co-owners of the NBA’s Sacramento Kings, and counts the basketball player Shaquille O’Neal and the baseball stars Alex Rodriguez and Jimmy Rollins among its investors.

“This is just another prong in our strategic approach to continue to make D.C. a great place to live and work and play,” Events D.C. chairman Max Brown told Mashable, highlighting the number of students attending the city’s many universities.

“There are lots of younger kids who are here and are coming here every year through our universities, so we think it makes a lot of sense for us as a city to plant a flag [for eSports], and ultimately be the capital of eSports like we’re the capital of the United States.”

There are other “prongs” to the city’s strategy, the most notable being the construction of a new stadium. The arena will be used by the WNBA team the Washington Mystics, as well as other events, but it is being built “with eSports in mind.”

“A $65 million 4,200-seat, state-of-the-art arena,” Brown added. “[It will] come online in late-2018, early-2019. Fully tailored and wired for esports.”

Courtesy-GI.biz

Mass Effect: Andromeda PC Specs Revealed

March 6, 2017 by  
Filed under Gaming

EA and Bioware have released official PC system requirements for its upcoming Mass Effect: Andromeda game that has gone gold and will be launching on March 21st.

According to details provided over at EA’s Origin site, those looking to play the new Mass Effect game will need at least an Intel Core i5-3570 or AMD FX-6350 CPU, 8GB of RAM and Nvidia Geforce GTX 660 2GB or AMD Radeon HD 7850 2GB graphics card.

The recommended system requirements rise up to an Intel Core i7-4790 or AMD FX-8350 CPU, 16GB of RAM and either an Nvidia GTX 1060 3GB or AMD RX 480 4GB graphics card.

Both minimum and recommended system requirements include at least 55GB of storage space as well as a 64-bit version of Windows 7, Windows 8.1 or Windows 10 OS.

The official release for the game is set for March 21st in the US and March 23rd in Europe and it will be coming to PC, Playstation 4 and Xbox One. Those with EA Access and Origin Access should get the game five days earlier.

Courtesy-Fud

Is The Xbox Game Pass A Good Move For Microsoft?

March 2, 2017 by  
Filed under Gaming

Microsoft has just made the Xbox One console a bit more interesting by announcing a new subscription service called the Xbox Game Pass, which will give access to over 100 games for US $9.99 a month, when it launches later this spring.

The Microsoft Xbox Game Pass will include over 100 games, like Halo 5: Guardians, Payday 2, NBA 2K16, and SoulCalibur 2. Unlike other similar subscription based services, Xbox Game Pass will allow users to download available games and buy them with a 20 percent discount if they decide to keep the game. This also means that users won’t have to worry about streaming, bandwidth or other connectivity problems.

Add-ons for those games will be available for purchase with the same exclusive discount for Xbox Game Pass members as well.

While it was initially announced as a service that will only be available on Xbox One and Windows 10 devices, the Windows 10 part was later removed from the official Xbox Game Pass site, but it is still possible that it will be coming to the PC later this spring.

Microsoft announced that some big game publishers have already signed on including 2K, 505 Games, Bandai Namco Entertainment, Capcom, Codemasters, Deep Silver, Focus Home Interactive, Sega, SNK Corporation, THQ Nordic GmbH, Warner Bros. Interactive Entertainment and Microsoft Studios.

Currently, the Xbox Game Pass is available in an alpha preview stage with a limited number of games so we are certainly looking forward to what it will look like when it launches this spring.

Courtesy-Fud

Why Are The NPD Games Sales Kept Private?

February 22, 2017 by  
Filed under Gaming

When I first began my career in the games industry I wrote a story about an impending digital download chart.

It was February 2008 and Dorian Bloch – who was leader of UK physical games data business Chart-Track at the time – vowed to have a download Top 50 by Christmas.

It wasn’t for want of trying. Digital retailers, including Steam, refused to share the figures and insisted it was down to the individual publishers and developers to do the sharing (in contrast to the retail space, where the stores are the ones that do the sharing). This led to an initiative in the UK where trade body UKIE began using its relationships with publishers to pull together a chart. However, after some initial success, the project ultimately fell away once the sheer scale of the work involved became apparent.

Last year in the US, NPD managed to get a similar project going and is thus far the only public chart that combines physical and digital data from accurate sources. However, although many big publishers are contributing to the figures, there remains some notable absentees and a lack of smaller developers and publishers.

In Europe, ISFE is just ramping up its own project and has even began trialling charts in some territories (behind closed doors), however, it currently lacks the physical retail data in most major markets. This overall lack of information has seen a rise in the number of firms trying to plug the hole in our digital data knowledge. Steam Spy uses a Web API to gather data from Steam user profiles to track download numbers – a job it does fairly accurately (albeit not all of the time).

SuperData takes point-of-sale and transaction information from payment service providers, plus some publishers and developers, which means it can track actual spend. It’s strong on console, but again, it’s not 100% accurate. The mobile space has a strong player in App Annie collecting data, although developers in the space find the cost of accessing this information high.

It feels unusual to be having this conversation in 2017. In a market that is now predominantly digital, the fact we have no accurate way of measuring our industry seems absurd. Film has almost daily updates of box office takings, the music market even tracks streams and radio plays… we don’t even know how many people downloaded Overwatch, or where Stardew Valley would have charted. So what is taking so long?

“It took a tremendous amount of time and effort from both the publisher and NPD sides to make digital sales data begin to flow,” says Mat Piscatella, NPD’s US games industry analyst. NPD’s monthly digital chart is the furthest the industry has come to accurate market data in the download space.

“It certainly wasn’t like flipping a switch. Entirely new processes were necessary on both sides – publishers and within NPD. New ways of thinking about sales data had to be derived. And at the publishers, efforts had to be made to identify the investments that would be required in order to participate. And of course, most crucially, getting those investments approved. We all had to learn together, publishers, NPD, EEDAR and others, in ways that met the wants and needs of everyone participating.

“Over time, most of the largest third-party publishers joined the digital panel. It has been a remarkable series of events that have gotten us to where we are today. It hasn’t always been smooth; and keep in mind, at the time the digital initiative began, digital sales were often a very small piece of the business, and one that was often not being actively managed. Back then, publishers may have been letting someone in a first-party operation, or brand marketing role post the box art to the game on the Sony, Microsoft and Steam storefronts, and that would be that. Pricing wouldn’t be actively managed, sales might be looked at every month or quarter, but this information certainly was not being looked at like packaged sales were. The digital business was a smaller, incremental piece of the pie then. Now, of course, that’s certainly changed, and continues to change.”

“For one, the majors are publicly traded firms, which means that any shared data presents a financial liability. Across the board the big publishers have historically sought to protect the sanctity of their internal operations because of the long development cycles and high capital risks involved in AAA game publishing. But, to be honest, it’s only been a few years that especially legacy publishers have started to aggregate and apply digital data, which means that their internal reporting still tends to be relatively underdeveloped. Many of them are only now building the necessary teams and infrastructure around business intelligence.”

Indeed, both SuperData and NPD believe that progress – as slow as it may be – has been happening. And although some publishers are still holding out or refusing to get involved, that resolve is weakening over time.   “For us, it’s about proving the value of participation to those publishers that are choosing not to participate at this time,” Piscatella says. “And that can be a challenge for a few reasons. First, some publishers may believe that the data available today is not directly actionable or meaningful to its business. The publisher may offer products that have dominant share in a particular niche, for example, which competitive data as it stands today would not help them improve.

“Second, some publishers may believe that they have some ‘secret sauce’ that sharing digital sales data would expose, and they don’t want to lose that perceived competitive advantage. Third, resources are almost always stretched thin, requiring prioritisation of business initiatives. For the most part, publishers have not expanded their sales planning departments to keep pace with all of the overwhelming amount of new information and data sources that are now available. There simply may not be the people power to effectively participate, forcing some publishers to pass on participating, at least for now.

“So I would certainly not classify this situation as companies ‘holding out’ as you say. It’s that some companies have not yet been convinced that sharing such information is beneficial enough to overcome the business challenges involved. Conceptually, the sharing of such information seems very easy. In reality, participating in an initiative like this takes time, money, energy and trust. I’m encouraged and very happy so much progress has been made with participating publishers, and a tremendous amount of energy is being applied to prove that value to those publishers that are currently not participating.”

NPD’s achievements is significant because it has managed to convince a good number of bigger publishers, and those with particularly successful IP, to share figures. And this has long been seen as a stumbling block, because for those companies performing particularly well, the urge to share data is reduced. I’ve heard countless comments from sales directors who have said that ‘sharing download numbers would just encourage more competitors to try what we’re doing.’ It’s why van Dreunen has noted that “as soon as game companies start to do well, they cease the sharing of their data.”

Indeed, it is often fledgling companies, and indie studios, that need this data more than most. It’s part of the reason behind the rise of Steam Spy, which prides itself on helping smaller outfits.

“I’ve heard many stories about indie teams getting financed because they managed to present market research based on Steam Spy data,” boasts Sergey Galyonkin, the man behind Steam Spy. “Just this week I talked to a team that got funded by Medienboard Berlin-Brandenburg based on this. Before Steam Spy it was harder to do a proper market research for people like them.

“Big players know these numbers already and would gain nothing from sharing them with everyone else. Small developers have no access to paid research to publish anything.

“Overall I’d say Steam Spy helped to move the discussion into a more data-based realm and that’s a good thing in my opinion.”

The games industry may be behaving in an unusually backwards capacity when it comes to sharing its digital data, but there are signs of a growing willingness to be more open. A combination of trade body and media pressure has convinced some larger publishers to give it a go. Furthermore, publishers are starting to feel obligated to share figures anyway, especially when the likes of SuperData and Steam Spy are putting out information whether they want them to or not.

Indeed, although the chart Dorian promised me 9 years ago is still AWOL, there are at least some figures out there today that gives us a sense of how things are performing.

“When we first started SuperData six years ago there was exactly zero digital data available,” van Dreunen notes. “Today we track the monthly spending of 78 million digital gamers across platforms, in spite of heavy competition and the reluctance from publishers to share. Creating transparency around digital data is merely a matter of market maturity and executive leadership, and many of our customers and partners have started to realize that.”

He continues: The current inertia comes from middle management that fears new revenue models and industry changes. So we are trying to overcome a mindset rather than a data problem. It is a slow process of winning the confidence and trust of key players, one-at-a-time. We’ve managed to broker partnerships with key industry associations, partner with firms like GfK in Europe and Kadokawa Dwange in Japan, to offer a complete market picture, and win the trust with big publishers. As we all move into the next era of interactive entertainment, the need for market information will only increase, and those that have shown themselves willing to collaborate and take a chance are simply better prepared for the future.”

NPD’s Piscatella concludes: “The one thing I’m most proud of, and impressed by, is the willingness of the participating publishers in our panel to work through issues as they’ve come up. We have a dedicated, positive group of companies working together to get this information flowing. Moving forward, it’s all about helping those publishers that aren’t participating understand how they can benefit through the sharing of digital consumer sales information, and in making that decision to say “yes” as easy as possible.

“Digital selling channels are growing quickly. Digital sales are becoming a bigger piece of the pie across the traditional gaming market. I fully expect participation from the publishing community to continue to grow.”

Courtesy-GI.biz

Will Politics Bring Down The Gaming Industry?

February 20, 2017 by  
Filed under Gaming

If you’re someone who makes a living from videogames – as most readers of this site are – then political developments around the world at the moment should deeply concern you. I’m sure, of course, that a great many of you are concerned about things ranging from President Trump’s Muslim travel ban to the UK Parliament’s vote for “Hard Brexit” or the looming elections in Holland and France simply on the basis of being politically aware and engaged. However, there’s a much more practical and direct way in which these developments and the direction of travel which they imply will impact upon us. Regardless of personal ideology or beliefs, there’s no denying that the environment that seems to be forming is one that’s bad for the medium, bad for the industry, and will ultimately be bad for the incomes and job security of everyone who works in this sector.

Video games thrive in broadly the same conditions as any other artistic or creative medium, and those conditions are well known and largely undisputed. Creative mediums benefit from diversity; a wide range of voices, views and backgrounds being represented within a creative industry feeds directly into a diversity of creative output, which in turn allows an industry to grow by addressing new groups of consumers. Moreover, creative mediums benefit from economic stability, because when people’s incomes are low or uncertain, entertainment purchases are often among the first to fall.

Once upon a time, games had such strong underlying growth that they were “recession proof,” but this is no longer the case. Indeed, it was never entirely an accurate reading anyway, since broader recessions undoubtedly did slow down – though not reverse – the industry’s growth. Finally, as a consequence of the industry’s broad demographic reach, expansion overseas is now the industry’s best path to future growth, and that demands continued economic progress in the developing world to open up new markets for game hardware and software.

What is now happening on a global basis threatens all of those conditions, and therefore poses a major commercial threat to the games business. That threat must be taken especially seriously given that many companies and creators are already struggling with the enormous challenges that have been thrown up by the messy and uneven transition towards smart devices, and the increasing need to find new revenue streams to support AAA titles whose audience has remained largely unchanged even as development budgets have risen. Even if the global economic system looked stable and conditions were ideal for creative industries, this would be a tough time for games; the prospect of restrictions on trade and hiring, and the likelihood of yet another deep global recession and a slow-down in the advances being made by developing economies, make this situation outright hazardous.

Consider the UK development industry. Since well over a decade ago, if you asked just about any senior figure in the UK industry what the most pressing problem they faced was, they’d give you the same answer: skills shortages. Hiring talented staff is tough in any industry, but game development demands highly skilled people from across a range of fields, and assembling that kind of talent isn’t cheap or easy – even when you have access to the entire European Union as a hiring base, as UK companies did. Now UK companies face having to fill their positions with a much smaller pool of talent to draw from, and hiring from abroad will be expensive, complex and, in many cases, simply impossible.

The US, too, looks like it may tighten visa regulations for skilled hires from overseas, which will have a hugely negative impact on game development there. There are, of course, many skilled creatives who work within the borders of their own country, but the industry has been built on labour flows; centres of excellence in game development, like the UK and parts of the US, are sustained and bolstered by their ability to attract talent from overseas. Any restriction on that will impact the ability of companies to create world-class games – it will make them poorer creatively and throw hiring roadblocks in the path of timely, well-polished releases.

Then there’s the question of trade barriers; not only tariffs, which seem likely to make a comeback in many places, but non-tariff barriers in terms of diverse regulations and standards that will make it harder for companies to operate across national borders. The vast majority of games are multinational efforts; assets, code, and technology are created in different parts of the world and brought together to create the final product. Sometimes this is because of outsourcing, other times it’s because of staff who work remotely, and very often it’s simply because a certain piece of technology is licensed from a company overseas.

If countries become more hostile to free trade, all of that will become more complex and expensive. And that’s even before we start to think about what happens to game hardware, from consoles that source components from across Asia before assembly in China or Japan, to PC and smart device parts that flow out of China, Korea, Taiwan and, increasingly, from developing nations in South-East Asia. If tariff barriers are raised, all of those things will get a lot more expensive, limiting the industry’s consumer base at the most damaging time possible.

Such trade barriers – be they tariff barriers or non-tarriff barriers – would disproportionately impact developing countries. Free trade and globalisation have had negative externalities, unquestionably, but by and large they have contributed to an extraordinary period of prosperity around the world, with enormous populations of people being lifted out of poverty in recent decades and many developing countries showing clear signs of a large emerging middle class. Those are the markets game companies desperately want to target in the coming decade or so. In order for the industry to continue to grow and prosper, the emerging middle class in countries like India, Brazil and Indonesia needs to cultivated as a new wave of game consumers, just as many markets in Central and Eastern Europe were a decade ago.

The current political attacks on the existing order of world trade threaten to cut those economies off from the system that has allowed them to grow and develop so quickly, potentially hurling them into deep recession before they have an opportunity to cement stable, sustainable long-term economic prosperity. That’s an awful prospect on many levels, of course (it goes without saying that many of the things under discussion threaten human misery and catastrophe that far outweighs the impact on the games business), but one consequence will likely be a hard stop to the games industry’s capacity to grow in the coming years.

It’s not just developing economies whose consumers are at risk from a rise of protectionism and anti-trade sentiments, however. If we learned anything from the 2008 crash and the recession that followed, it should be that the global economy largely runs not on cash, but on confidence. The entire edifice is built on a set of rules and standards that are designed to give investors confidence; the structure changes over time, of course, but only slowly, because stability is required to allow people to invest and to build businesses with confidence that the rug won’t be tugged out from underneath them tomorrow. From the rhetoric of Donald Trump to the hardline Brexit approach of the UK, let alone the extremist ideas of politicians like Marine le Pen and Geert Wilders, the current political movement deeply threatens that confidence. Only too recently we’ve seen what happens to ordinary consumers’ job security and incomes when confidence disappears from the global economy; a repeat performance now seems almost inevitable.

Of course, the games industry isn’t in a position to do anything about these political changes – not alone, at least. The same calculations, however, apply to a wide variety of industries, and they’re all having the same conversations. Creative industries are at the forefront for the simple reason that they will be the first to suffer should the business environment upon which they rely turn negative, but in opposing those changes, creative businesses will find allies across a wide range of industries and sectors.

Any business leader that wants to throw their weight behind opposing these changes on moral or ethical grounds is more than welcome to, of course – that’s a laudable stance – but regardless of personal ideology, the whole industry should be making its voice heard. The livelihoods of everyone working in this industry may depend on the willingness of the industry as a whole to identify these commercial threats and respond to them clearly and powerfully.

Courtey-GI.biz

Is The Gaming Industry Due For An Overhaul?

February 16, 2017 by  
Filed under Gaming

Physical retailers are calling for a change in how video game pre-orders are conducted.

They are speaking to publishers and platform holders over the possibility of selling games before the release date. Consumers can pick up the disc 1 to 3 weeks before launch, but it will remain ‘locked’ until launch day.

The whole concept stems from the pre-loading service available in the digital space. Today, consumers can download a game via Steam, Xbox Live and PSN before it’s out, and the game becomes unlocked at midnight on launch day for immediate play (after the obligatory day one patch).

It makes sense to roll this out to other distribution channels. The idea of going into a shop to order a game, and then returning a month later to buy it, always seemed frankly antiquated.

Yet it’s not only consumer friendly, it’s potentially retailer and publisher friendly, too.

For online retailers, the need to hit an embargo is costly – games need to be turned around rapidly to get it into consumers’ hands on day one.

For mainstream retailers, it would clear up a lot of confusion. These stores are not naturally built for pre-ordering product, with staff that are more used to selling bananas than issuing pre-order receipts. The fact you can immediately take the disc home would help – it could even boost impulse sales.

Meanwhile, specialist retailers will be able to make a longer ‘event’ of the game coming out, and avoid the situation of consumers cancelling pre-orders or simply not picking up the game.

Yet when retail association ERA approached some companies about the prospect of doing this, it struggled to find much interest from the publishing community. So what’s the problem?

There are a few challenges.

There are simple logistical obstacles. Games often go Gold just a few weeks before they’re launched, and then it’s over to the disc manufacturers, the printers, the box makers and the distributors to get that completed code onto store shelves. This process can take two weeks in itself. Take the recent Nioh. That game was available to pre-download just a few days before launch – so how difficult would it be to get that into a box, onto a lorry and into a retailer in advance of release?

It also benefits some retailers more than others – particularly online ones, and those with strong distribution channels.

For big games, there’s a potential challenge when it comes to bandwidth. If those that pre-ordered Call of Duty all go online straight away at 12:01, that would put a lot of pressure on servers.

Piracy may also be an issue, because it makes the code available ahead of launch.

The end of the midnight launch may be happening anyway, but not for all games. If consumers can get their game without standing in the cold for 2 hours, then they will. And those lovely marketable pictures of snaking queues will be a thing of the past.

None of these obstacles are insurmountable. Getting the game finished earlier before launch is something that most big games publishers are trying to do, and this mechanism will help force that issue. Of course, the disc doesn’t actually have to contain a game at all. It can be an unlock mechanism for a download, which will allow the discs to be ready far in advance of launch. That strategy is significantly riskier, especially considering the consumer reaction to the same model proposed by Xbox back in 2013.

As for midnight events, there are still ways to generate that big launch ‘moment’. Capcom released Resident Evil 7 with an experiential haunted house experience that generated lots of media attention and attracted a significant number of fans. Pokémon last year ran a big fan event for Sun and Moon, complete with a shop, activities, signing opportunities and the chance to download Mew.

So there are other ways of creating launch theatre than inviting consumers to wait outside a shop. If anything, having the game available in advance of launch will enable these theatrical marketing events to last longer. And coupled with influencer activity, it would actually drive pre-release sales – not just pre-release demand.

However, the reality is this will work for some games and not for others, and here lies the heart of the challenge.

Pre-ordering is already a relatively complex matter, so imagine what it’ll be like if some games can be taken home in advance and others can’t? How many instances can we expect of people complaining that ‘their disc doesn’t work’?

If this is going to work, it needs cross-industry support, which isn’t going to happen. This is a business that can’t even agree on a digital chart, don’t forget.

What we may well see is someone giving this concept a go. Perhaps a digital native publisher, like Blizzard or Valve, who can make it part of their PR activity.

Because if someone like that can make the idea work, then others will follow.

Courtesy-GI.biz

Are Publishers Missing The Billion Dollar Opportunity Of eSports?

February 6, 2017 by  
Filed under Gaming

The traditional sports ecosystem is dominated by three models of organisation. The most decentralised sports, like the PGA Tour or NASCAR, consist of largely independently organised competitions, which are sanctioned and governed by an administrative body and are open to any qualifying athlete. From there, we have typical leagues like the NBA or Premiership, which have a set number of recurring teams and players, and are extensively managed by a league front office that’s owned by each team.

eSports are quite different. If you choose to race without NASCAR or play basketball without the NBA, there’s nothing – and no official body – that can prevent you from replicating the experience. No one ‘owns’ racing or basketball, but someone does own Overwatch, and if you want to play you essentially have to go through that company. If you wanted to create your own eSports league, your ability to market or represent it would be entirely dependent on the legal team of the game’s publisher. Furthermore, the core experience is fully controlled by that publisher.

“No one ‘owns’ racing or basketball, but someone does own Overwatch, and if you want to play you essentially have to go through that company”

Leagues that are operated or endorsed by publishers can do unique things – e.g. item drops, exclusive/first-release capabilities, bundled original content – and offer unique monetisation opportunities. Three months before The International, the annual world championship for Dota 2, Valve sells interactive in-game items that directly contribute to the tournament prize pool. This model has been so successful that, in 2016, the prize pool reached $19.17 million.

Most tier-one publishers also handicap the data streams that the public can leverage. Whereas in traditional sports there are multiple providers of a firehose of sports data, game publishers offer barebones APIs that allow access to little more than character information and select match data. Valve offers an open API but, as events this year have demonstrated, it can shut off access and change policy at any time. On the platform side, Twitch is miles ahead of its competitors in terms of creating an external ecosystem thanks to its two year head-start and passionate developer community, but it maintains an ever more precarious balance between build vs. buy.

Because of these walled gardens, the investible opportunities within eSports often end up being features not products, which set them and their investors up for more of an acquihire than a Twitch-esque exit. There’s a strong argument to be made to publishers that working with third-party developers will lead to a stronger overall bottom line, foster innovation and provide defensibility.

Economics 201

It’s no secret that being a top publisher is a lucrative business. Activision reported $1.57 billion in revenue for Q2 of 2016 and EA $1.271 billion. It’s rumoured that Valve’s 2015 revenues reached $3.5 billion in 2015, and Riot Games’ over $1.6 billion. It’s not hard to see why partnerships with third parties and external API infrastructure aren’t a priority with so much money flowing, but that’s shortsighted. As publishers start thinking about how to monetise beyond game licenses and IAP, every moment not spent developing the ecosystem is a wasted one.

This isn’t unparalleled, and we can see examples of where large platforms in other verticals have made the decision to invest in their future, often early on in their company lifecycle. Salesforce, an enterprise software company, has a market cap of $50 billion. A report last year by IDC put the opportunity front and center: the AppExchange currently generates 2.8x the revenue of Salesforce itself and is expected to grow to 3.7x the size of Salesforce.

“As publishers start thinking about how to monetise beyond game licenses and IAP, every moment not spent developing the ecosystem is a wasted one”

Slack, the enterprise collaboration tool darling, also gets it. Even before raising money in April 2016, at a $3.8 billion valuation and boasting over 1.25 million paying users, they announced the Slack fund in December 2015 - an $80 million investment into supporting new integrations. Slack and Salesforce could have gone the closed route and developed these integrations and products internally, but they understood that the immediate revenue trade-off was well worth the ability to focus on creating the best core product possible, in addition to leveraging minimal company resources.

Now to everyone’s favourite eSports comparison : traditional sports. During the height of the daily fantasy sports craze in 2014/15, the NBA entered a multi-year partnership with FanDuel that gave it an ownership stake. The NFL expanded its partnership with Providence Equity in 2013, investing $300 million to participate in, “media and technology deals where it believes the league could help play a strategic role.” And these are just a few examples. Partnering with and investing in new properties allows older, larger establishments to participate in the upside of nascent industries quickly and cheaply.

Publishers are thinking about the shelf-life of games.  The NFL and NBA will both be around in 25 years, but what about League of Legends or Counter-Strike? Opening up the ecosystem not only benefits players and fans by allowing them an outlet to interact with their favorite IPs, but ultimately enhances the core value of those IPs and gives publishers an opportunity for additional exposure through revenue share, API fees and strategic investments.

In addition to commercial benefits, let’s look at network effects. Valve is the publisher of both Counter-Strike: Global Offensive (25 million+ copies sold, 8.2 million+ players in the last two weeks), and Dota 2 (87 million+ times downloaded, 11 million+ active players in the last two weeks.) While the titles have richer histories than virtually any other competitive esport, Valve’s open API, developer tools and hands-off approach has contributed to their sustained success and status as two of the top eSports titles.

ELeague, FaceIt Esports Championship Series and Gfinity, ESL One and IEM. These streams of revenue have contributed to a high demand for professional CS:GO players, leading to lucrative contracts and opportunities.

3: The most lucrative has been the in-game skins economy, which allows players to purchase crates that contain different cosmetic versions of CS:GO weapons or Dota 2 items. During major tournaments, Valve has offered exclusive stickers that generate up to high six-figures for qualified teams. Valve has also allowed free reign on opening up use cases within this skins economy, which led to wagering, gambling and marketplaces (Bloomberg estimated yearly transaction volume to be >$7 billion.) Variations of this model have since been followed very conservatively by multiple franchises, including Call of Duty, Halo, H1Z1 and Overwatch.

On the platform side, Twitch’s dominance in livestreaming can largely be credited to going all-in on eSports first, but Twitch also has numerous native or platform exclusive features for its users. Diving deeper, this experience is powered by a blend of features that were built in-house or created by third parties. Examples include:

Bits, preceded by Streamlabs and StreamTip: direct donations from viewers are one of the foundations of a streamer’s income.

Clips, preceded by Oddshot, Plays.tv and Forge: allows viewers and creators to efficiently capture highlights and share to different social media channels.

Subscriptions / Partner Program and 3rd-party services (Revlo, Gamewisp and Curse/Discord integrations): subscriptions are another big source of income for streamers, and the third-party services all add further value to a sub and reduce churn.

TwitchPlays: what started out as a fun social experiment (TwitchPlaysPokemon) is now its own category to interact with potential customers for publishers.

Chatbots (Moobot, Nightbot and Xanbot): automated assistants that help moderate chat to prevent spamming and inappropriate behaviour.

Stream+ currency: Twitch’s new currency announced at TwitchCon 2016, which will allow developers to integrate monetisation options directly into games.

Facebook Live has launched to much fanfare, and given the massive distribution channel it will always be a huge threat. However, until it can get to feature parity Facebook Live will need to rely on traditional media partnerships or viral hits to create consistent content. These types of partnerships don’t scale when we’re talking about the individual streamers and professional players that have played a large part in getting Twitch to 100m+ MAUs, although the signing of G2 and Heroes of the Dorm is a good first step. YouTube Gaming is farther along and is doing a great job of starting to launch some analogous features.

How, then, should publishers look to partner with entrepreneurs and third parties? I’d like to see publishers create a vehicle, individually or collectively, in the model of Disney Accelerator, to offer mentorship, funding and support to kick-start the next generation of eSports businesses. Publishers should be developing their games as platforms, not individual entities - tons of data are being generated and archived and there is a treasure trove of use cases for them.

I’m confident that we’re slowly moving in the right direction. One day we’ll see a truly open ecosystem with publishers and third parties living in harmony.

Courtesy-GI.biz

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