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With Digital Downloads Rising, Is It Game Over For Video Game Retailers

January 8, 2018 by  
Filed under Gaming

2017 ended up as a solid year for games retailers.

It got hairy at times. Earlier in the year, GAME issued a profit warning and its share price plunged to a worrying level – before a surprise intervention from Sports Direct arrested the slide (the sports retailer bought up a chunk of GAME’s shares).

Over in the US, GameStop’s profit was hit by lagging Xbox One sales – results that would have been worse had it not been for the sale of Kongregate, which added $7.3m to its bottom line.

The first half of 2017 was concerning, and it was following a disappointing Christmas 2016, which suffered significantly from the under-performance of key titles, in particular Call of Duty: Infinite Warfare.

Then things took a turn for the better.

Nintendo Switch was the hero the market needed. Strong launch sales were set back by stock shortages, but that was quickly rectified in time for Christmas. Switch has been a dream for the High Street. The lack of space on the machine’s internal hard-drive means that it has become a very physical-friendly product (IHS estimate that only 20% of Switch game sales are digital), and the variety of accessories has created a plethora of add-on products for retailers to sell.

Then came Call of Duty: WWII, which is on track to be the most successful Call of Duty of the generation.

Those two, combined with continued strong sales of PS4 hardware and software, meant that 2017 was a solid year for the market. In the UK, where physical sales had been declining, overall sales of physical software was flat compared with the year before.

Furthermore, 2017 saw an increase in downloading across the board. This was particularly notable in the AAA console space, where anecdotal reports stated that between 30 – 45% of AAA game sales were now being made via Xbox Live and PSN.

This trend is only likely to accelerate. We are already seeing publishers behave more aggressively in pushing digital retailers alongside physical ones, and we can expect that to increase.

2018 is also likely to see a decline in PS4 sales. We are now into the fourth year of PS4 and Xbox One, and Xbox (physical) sales have already begun to slide. PS4 will likely follow as this generation starts to show its age.

Talk of PS5 and Xbox ‘Two’ is already beginning to surface – with some developers already working on next generation specs – but even the most optimistic of analysts do not expect to see anything before late 2019.

So with digital adoption accelerating, the current generation showing its age and with no major hardware launches on the horizon, 2018 can look bleak for the physical retail market.

It is worth observing that physical games retailers are not oblivious to the market trends. Most major retailers have been transitioning their business models and diversifying, whether that is through events, esports, digital, content, accessories, technology and so on.

Therefore, retailers like GAME and GameStop don’t necessarily need to sell as many games or consoles in 2018 as they did in 2017 to enjoy a strong year.

However, physical game sales remain the bedrock of these businesses, and any significant downturn will have a negative effect. GAME, for one, is aware of this, which is why it has repeatedly told its shareholders of its short store leases, allowing the firm to reduce its store base rapidly if needed.

So what can games retailers bank on in 2018 to keep sales buoyant?

The most obvious product is Nintendo Switch.

The console will be heading into its second year, where sales will likely accelerate (Nintendo anticipates 20 million shipments over its 2018/2019 financial year, bringing the total to more than 36 million consoles in the market by April 2019). This creates a big audience for retailers to capitalise on.

However, there are some lingering concerns. Last year’s sales performance was boosted, globally, but Zelda, Mario Kart 8, Splatoon 2 and Super Mario Odyssey. These were the four major system sellers for the console during the year. 2018 currently lacks a killer app for Switch (with the exception of Pokémon, which only has a tentative 2018 date and may arrive in 2019). It’s common for Nintendo to limit the window between announcing a product and releasing it, and the firm is planning one of its ‘Direct’ video presentations later this month. Yet, as it stands, there is uncertainty over what software will drive Switch sales during the first part of the year.

The other key product is Red Dead Redemption 2. This is a major launch for Spring 2018 and may well be the biggest game of the year. The last Red Dead Redemption (2010) sold 15 million units globally, yet that was in an age before GTA V. GTA V has shifted more than 86 million games worldwide (by comparison, GTA IV – which came out in 2008 – sold around 30 million). It’s very unlikely Red Dead Redemption 2 will get close to GTA V’s massive figure, but even half-way will be a major, major boost to the market, and anticipation for Rockstar’s next open world epic is enormous.

Of course, there will likely be a strong download element to Red Dead this time around – especially as Rockstar has spent the last five years training its audience to download things through its Grand Theft Auto Online mode (a similar phenomena happened last year around Destiny 2, which performed very strongly over Xbox Live and PSN).

It’s also worth noting that the Red Dead and Rockstar names alone do not guarantee success. As we have seen with Star Wars: Battlefront II and Call of Duty: Infinite Warfare, if gamers are unhappy for whatever reason, they will vote with their wallets irrespective of the brand name attached to the product. Red Dead Redemption 2 has the ingredients to be a major hit, but nothing is certain in this business.

Beyond Nintendo Switch and Red Dead Redemption 2, Ubisoft’s big March game is Far Cry 5, Xbox has a slightly stronger slate with Crackdown 3 and Sea of Thieves, and Sony is expected to launch Spider-Man and God of War. Yet little is known about the back half of the year at this stage. Companies such as Take-Two, Ubisoft and Square Enix have teased some special projects for the year, but what they are remains a mystery.

As a result, 2018 will likely remain a difficult year for games retailers. GAME and GameStop’s new growth areas are showing signs of life, and both companies are on solid financial footing. Yet any significant downturn in physical game sales will take a heavy toll, and the market will be relying – once again – on just a handful of products to see them through.

Courtesy-GI.biz

Were Physical Games Sales Flat In The UK In 2017

January 5, 2018 by  
Filed under Gaming

23.7 million physical video games were sold in the UK during 2017, the latest data from GfK reveals.

It is pretty much identical to last year’s number of 23.8m – a decline of 0.4%.

In terms of revenue, the amount of money made by physical games has risen slightly by 2.1%. This is due to an increase in game pricing over 2017, driven partially by the higher priced Nintendo Switch games. In total, £792m was made from physical software sales in 2017.

We have requested additional sales figures for UK hardware and accessories from GfK, which will likely show some growth for the UK physical retail market overall.

The best-selling game of the two weeks over Christmas and New Year was Call of Duty: WWII, which has now scored nine consecutive weeks at the top of the charts. It equals the number of consecutive weeks Modern Warfare 2 spent at the top of the charts, and if it gets two more weeks, it will match Call of Duty: Black Ops III as the most No.1s overall for a Call of Duty game.

Call of Duty: WWII has already well passed Infinite Warfare’s lifetime sales, and was the UK’s second best-selling game of 2017. The best-selling game was FIFA 18, which was the No.2 over Christmas and New Year. FIFA 18 has been on sale for five weeks longer than Call of Duty: WWII.

Physical sales of FIFA are actually down quite notably compared with the 2017 edition. The number of FIFA 18 units sold in the UK is 16.2% down compared with FIFA 17, however, digital sales have not been taken into account.

Indeed, it wasn’t an especially happy Christmas for EA. Take Star Wars: Battlefront II, the company’s big Christmas shooter is down 51% compared with sales of last year’s Battlefield 1 (which was on sale for four weeks longer by the end of the year) and 49% compared with the first Star Wars Battlefront (the first EA one, anyway).

Sales of the new Need for Speed is also down 11% compared with its 2016 predecessor. Although, once again, digital numbers will likely have made up for some of this decline (if not all of it).

It may have been a tough few months for EA, but it was a strong end of the year for Ubisoft. Assassin’s Creed Origins is up 32% in sales compared with last year’s Watch Dogs 2, and 13% up compared with Assassin’s Creed Syndicate (which was on sale for a week longer back in 2016). Nintendo also had a strong end to the year, with Super Mario Odyssey, Mario Kart 8: Deluxe and The Legend of Zelda: Breath of the Wild all in the Top Ten come New Year. All three games sold over 300,000 copies a piece so far, with Mario Kart 8 ending the year as the No.1 Switch title (just narrowly ahead of Super Mario Odyssey).

The late release of the year, PlayerUnknown’s Battlegrounds, performed strongly. The boxed version didn’t feature a disc (it’s just a code in a box), but still debuted at No.4, dropping to No.8 and ending the year at No.11. It is likely that digital will have made up the bulk of sales, but it still performed well as a Christmas gift.

Here is the GfK/UKIE Top Ten for the Week Ending December 30th.

Courtesy-GI.biz

With Two Million Units Cuphead Appears To Be A Winner For Microsoft

December 28, 2017 by  
Filed under Gaming

Cuphead has sold over two million units since its launch at the tail end of September, developer Studio MDHR has announced.

The Moldenhauer brothers, the duo behind Cuphead, broke the news in a post on their website, saying that “much to our shock and amazement” Cuphead has gone double platinum.

“Even in our wildest dreams, we never thought our crazy little characters would be embraced by this many fans from around the world and we are continuously humbled by your support,” said the brothers.

“So to everyone who has drawn fan art, composed memes, performed songs, conquered challenge runs, streamed their playthrough, or just played Cuphead and had a good time, we love and appreciate all of you from the bottom of our hearts.”

According to SteamSpy, just over one million of the sales were on PC.

Cuphead was a somewhat divisive game upon its release, with the level of difficulty in particular stoking tensions between fans and critics.

Fortunately for the Moldenhauer brothers, who remortgaged their homes and quit their jobs in order to make Cuphead happen, that didn’t hamper the game’s success and allusions have already been made towards a sequel.

Courtesy-GI.biz

Are Video Games Contributing To Inflation In Great Britan

December 19, 2017 by  
Filed under Gaming

The price of video games has been highlighted as a key factor in the latest rise in UK inflation, a report claims.

Figures released by the Office for National Statistics show that the Consumer Prices Index has risen by 3.1% in the twelve months ending November 2017. This is an increase on the 3.0% recorded in October and the highest since March 2012.

While the largest contribution to this increase was identified as air fares, the ONS notes that: “Rising prices for a range of recreational and cultural goods and services, most notably computer games, also had an upward effect.”

The increase in prices for video games, toys and other hobbies between October and November was much sharper than in 2016, with the ONS adding: “This effect came from computer games whose prices are heavily dependent on the composition of bestseller charts, often resulting in large overall price changes from month to month.”

This is no doubt partially down to the sheer number of new releases over the past couple of months, traditionally the busiest time for the games industry’s release slate.

It’s also worth noting that while the biggest new releases have often been heavily discounted within a few weeks of launch in the past, there seems to have been less significant price cuts in 2017. Certainly, Black Friday appeared to have less of an impact when it comes to titles less than a month old dropping from £50 to around the £20 to £30 mark.

That said, the ONS’ declaration that computer game prices have risen to the point where they can be singled out as a contributing factor to UK inflation is somewhat frustrating.

By and large, video game prices have remained relatively static over the past decade, with new releases almost always around the £50 price point – despite the rising cost of development. This is something developers commented on when discussing the increasing need for monetisation mechanics like loot boxes, controversial though they may be.

Similarly, publishers have previously seen a backlash when trying to adjust prices to account for economic shifts. Most notably, Paradox Interactive attempted to raise the cost of its games earlier this year and was immediately met with consumer complaints – to the extent where the publisher was compelled to retain its previous price points and offer refunds to those affected.

Time will tell whether the impact on UK inflation further deters publishers and retailers from increasing the cost of games.

Courtesy-GI.bz

Can EA Learn From Rainbow Six Siege With 25 Million Players

December 12, 2017 by  
Filed under Gaming

Ubisoft has announced that two years after launch, Rainbow Six Siege has over 25 million registered players.

Now entering its third year, Ubisoft has lined-up more content to prolong the life of the game for another season, proving that games-as-a-service can be done properly in the AAA space.

When Siege launched at the tail end of 2015, critics took the game to task over its threadbare offerings, which featured a single PvP mode, no campaign, and only a handful of maps, not to mention a litany of bugs.

Since then, however, many of the criticisms have been dealt with and Siege has held a regular spot in the UK top 20.

What’s especially interesting about the success of Siege is how quiet it’s been. With each competitor that shambles onto the market, whether that be Star Wars Battlefront II or the latest addition to the monolithic Call of Duty franchise, Siege has rarely attracted the same level of controversy, despite employing the most common games-as-as-service monetization techniques.

With games-as-a-service reportedly having tripled the value of the industry, and EA looking to replace annual sports games with live services, has Ubisoft laid out the framework for how to do it right?

“Player investment has been core to the success of the game with longevity being always very important to us. As the game progressed, we continued to develop it with the community in mind,” said Alexandre Remy, Rainbow Six Siege brand director in a statement.

A community-centric approach is the obvious answer to increasing the longevity of any game. Over recent months, we’ve seen a great deal of discussion around finding the “sweet spot” for monetization techniques, and we’ve also seen the fallout of what happens when communities feel disrespected. Loot boxes and season pass DLC can work, Siege has demonstrated that, but striking that delicate balance is something publishers have long struggled with, and continue to do so.

That said, it’s important to consider the particular niche that Siege operates in. Yes, it’s a competitive online shooter, but unlike many of its contemporaries, it’s a much more strategic and team-focused affair. While there is definitely a crossover between Call of Duty players and Siege players, the latter has a niche appeal the former cannot possibly hope to replicate without disenfranchising its mainstream audience.

The likes of Activision and EA can certainly learn from Ubisoft’s approach to games-as-a-service. With no immediate Siege sequel on the horizon, a further cash investment into the game is a relatively easy thing for consumers to justify.

However, when players know that the life of a game will be artificially shortened by an annual release, rather than extended by DLC, it becomes difficult to rationalize spending anything above the $60 entry price, especially when the monetization techniques are perceived to be so aggressive.

Ubisoft is not the only publisher to have successfully implemented these techniques with minimal backlash. Blizzard, for example, kept its hands relatively clean with Overwatch and only recently got caught-up in the Belgian Gambling Commission’s investigation which mainly cast its attention towards Star Wars Battlefront II.

But with Siege, Ubisoft has employed the delicate and reasoned approach that’s been missing from the industry’s clumsy, heavy-handed adoption of the games-as-a-service model. As a result, the two-year-old game boasts a large, dedicated community that numbers in the millions and is willing to spend.

Courtesy-GI.biz

Is EA Screwing Up The Planned Move To Games As A Service

December 8, 2017 by  
Filed under Gaming

Every now and then, a major publisher goes through a bit of a rough patch in PR terms; the hits just seem to keep on coming, with company execs and representatives seemingly incapable of opening their mouths without shoving their feet right inside, and every decision being either poorly communicated or simply wrongheaded to begin with. At present it’s EA that can’t seem to put a foot right, from Battlefront 2’s microtransactions to lingering bad feeling over the closure of Visceral; every major company in the industry, though, has had its fair share of turns in the barrel.

These cycles come around for a couple of reasons. Part of it is just down to narrative; once something goes wrong for a company, they are scrutinised more closely for a while, and statements that might have slipped under the radar usually are blown up by the attention. Another part of it, though, is genuinely down to phases that companies go through; common enough periods in which the balance between the two audiences a major company must serve, its consumers and its investors, is not being managed and maintained expertly enough.

Most companies encounter this difficulty from time to time, because the demands and desires of shareholders are often damned near diametrically opposed to those of customers. The biggest problems arise, however, when a firm ends up having to take a Janus-faced approach, presenting a different picture in financial calls and investor conferences to the one it tries to convey in its customer-facing PR and marketing efforts.

That’s broadly speaking the situation EA has found itself in once again; forced to be conciliatory and diplomatic in talking to customers about everything from loot boxes to its commitment (or lack of same) to single-player experiences, while simultaneously being bullish with investors who want to see clear signs of progress in the shift towards a set of business paradigms core consumers volubly dislike.

CFO Blake Jorgensen’s comments at Credit Suisse’s conference earlier this week are archetypal of this genre of corporate communication; from a blunt denial that the company’s microtransaction strategy on Battlefront 2 is changing overall to a throwaway comment about Visceral’s closure being related to declining popularity (by which, being a CFO, he meant revenue) of linear game experiences, Jorgensen spoke to investors in a way that was quite markedly different from how the rest of the company has addressed its actual customers on these issues.

You can argue quite reasonably that this approach is dishonest in spirit if not in substance; even if the words of each statement are chosen carefully so the investor messages don’t technically contradict the consumer messages, the intent is so clearly tangential that consumers have every right to feel rather miffed. I think it’s worthwhile, however, to look beyond that to the motivation and strategy behind this – not just in terms of EA’s month of bad PR, but looking beyond that to the industry as a whole, because pretty much every major publisher is undertaking a similar strategic shift in a direction they know perfectly well is going to annoy many of their core customers, and they’re all going to have their own turn in the barrel as a consequence.

At the heart of this issue lies the fact that for many investors and executives, the business model that has sustained the games industry for decades has started to look frustratingly quaint and backwards. “Games as a Product”, whereby a game is made and sold, perhaps followed up by a handful of add-ons that are also made and sold (essentially smaller add-on products in their own right), is a model beloved of core consumers – but business people point out, not entirely unfairly, that it has many glaring flaws.

Some of those flaws are very real – the product model creates a high barrier to entry (you can’t attract new customers without convincing them through expensive marketing to spend $50 to $60 on trying out your game), hence limiting audience growth, and has not scaled effectively with the rising costs of AAA development. More controversially, they dislike the fact that the product model creates a relatively low cap on spending – after buying a game, there’s only so much money a consumer can spend on DLC packs (each of which has its own associated development costs) before they hit a hard limit on their purchases.

Hence the pressure to move to a “Games as a Service” model, which neatly – if not uncontroversially – solves each of these issues. The service model can be priced as low as zero to create a minimal barrier to entry, though for major titles with a big brand attached publishers still show a preference for having their cake and eating it, charging full AAA pricing for entry to an essentially freemium-style experience. An individual player’s spending may be theoretically limitless, as purchases of cosmetic or consumable items could run to many thousands of dollars in some cases – hence also allowing the game’s revenue to scale up to match the huge AAA development and marketing budgets that went into its creation.

You can “blame” mobile games for this if you wish, but in a sense they were merely the canary in the coalmine; the speed with which the mobile gaming market converged on the F2P model and the aggression with which it was pursued was a clear sign that the rest of the industry would eventually try to move in a similar direction. The reality is that mobile games shone a light on something a few industry types had been saying for years; that there was a massive, largely untapped audience for games out there, who would never climb over the barriers to entry to the traditional market but who could potentially be immensely valuable customers of games with lower barriers to entry.

The correct height for those barriers turned out to be “free games for devices you already own”, and yet this market did turn out to be enormously valuable; and now much of the industry is eyeing up the model that works on smartphones, looking at their own rising costs and shrinking slice of the pie, and wondering how to get from over here to over there.

The problem is that making that crossing – from being a successful creator or publisher of core games to being a successful company in a smartphone-style paradigm – is damned tricky to do when the business model you (and your investors!) want to have is anathema to many of the customers you actually have right now. Not all of them, by any means – plenty of core gamers are actually pretty relaxed about these models, for the most part – but enough of them to make a lot of noise and to potentially put a major dent in the bottom line of a company that genuinely manages to drive them away.

Hence, much of the approach we’ve seen in 2017 (and prior) has really been akin to the parable about putting a frog in cold water and gradually raising the heat; companies have slowly, softly been adding service-style features and approaches to their games, hoping that the slowly warming water won’t startle its occupants too much.

When things spill over as they have done for EA in the past month, it tends to indicate that someone got impatient; that investors were too demanding or executives pushed too hard, and the water started to heat up too rapidly. The course will be corrected, but the destination remains the same. Short of a really major pushback and some serious revenue damage across the board from these approaches – which bluntly seems unlikely to materialise – the move towards games as a service is inexorable, and 2018 will bring far, far more of the same. Whether you view that as the industry’s salvation or its ruin is really a matter of personal perspective, but it’s a new reality for AAA titles that we’re all going to have to make some kind of peace with.

Courtesy-GI.biz

HDMI v2.1 Standards Finally Set

December 4, 2017 by  
Filed under Around The Net

The HDMI Forum has officially published the latest HDMI v2.1 specification, paving the way for up to 10K resolutions, dynamic HDR, and support for variable refresh rate.

According to details provided by the HDMI Forum, the new HDMI v2.1 specification will be backward compatible with all previous HDMI standards but will also need the new ultra high-speed HDMI cable for those new upgrades.

As for those upgrades, the HDMI v2.1 standard will offer 48Gbps of bandwidth, which is a significant improvement over 18Gbps of bandwidth on the HDMI 2.0. It will also bring higher resolution reaching 8K@60Hz without the Display Stream Compression (DSC) and 10K@120Hz with DSC. It also features the new Auto Low Latency Mode (ALLM).

Another big novelty for HDMI is support for Dynamic HDR as well as the Variable Refresh Rate (VRR) technology, which should reduce lag, frame stutter, skipping and freezing as well as deal with that pesky frame tearing. Unfortunately, HDMI Forum did not provide a lot of details regarding the VRR technology and we are not sure how different it is from AMD FreeSync.

In addition, the HDMI v2.1 standard will also include eARC, as well as Quick Media Switching (QMS), which eliminates the delay that can result in a blank screen before content is displayed and the Quick Frame Transport (QFT) feature which also aims to reduce latency in gaming and real-time interactive virtual reality content.

According to the press release, the HDMI v2.1 Compliance Test Specification (CTS) will be published in stages from Q1 to Q3 2018 and will notify the HDMI adopters as it becomes available.

Courtesy-Fud

Disney Very Protective Of IP and Brand

December 1, 2017 by  
Filed under Around The Net

A decade or two ago, a common topic of speculation in the games business was which of its giant publishers would be the one to topple Disney from its position as the world’s most important warehouse of intellectual property. EA, then the industry’s big beast, was comfortably the favorite, especially as it seemed set on weaning itself off its reliance on licensed sports titles in favor of building new IP. Activision was on the radar for some; Nintendo, though the industry’s most obviously ‘Disney-like’ company, seemed slow to produce and capitalize on new IP at the time.

History didn’t play out that way. EA became embroiled in a decade long turnaround and restructuring effort; Activision, though boosted massively by its merger with Blizzard and the success of games like Call of Duty and Destiny, has fumbled in its management of properties outside the high-spending core. Nintendo’s library of IP has grown and thrived, of course – but none of these companies can come close to matching what’s happened at Disney. Since the time when we speculated over when EA might overtake them, Disney has absorbed first Pixar, then Marvel, then Lucasfilm, placing itself beyond any reasonable challenge. It is the world’s most valuable IP holder, and will be for years to come.

Along the way, Disney has largely given up its ambitions of being a game developer or publisher – at least for now. It shuttered studios. It shut down internal projects in favor of licensing its properties to other developers and publishers. There is a slight twist of irony to the fact that, in the process, Disney has gone from being a second- or third-tier publisher to being arguably the most powerful company in the games business; a licensor absolutely aware of the value of its IP, and willing to protect that IP and its development regardless of the cost to any partner company.

This month we’ve seen two examples of Disney flexing that muscle. The company severed ties with Gazillion Entertainment, developer of licensed Diablo-esque RPG Marvel Heroes; what happened behind the scenes to precipitate this is unclear as yet, but there were signs that Disney was dissatisfied with the developer or with its relationship for some time, and the company ultimately pulled the plug on the game. Just a few weeks later, a much bigger firm, Electronic Arts, also got a taste of Disney’s willingness to exercise its power; the controversy over pay-to-win loot box mechanics in Star Wars Battlefront 2 took an abrupt turn when pressure from Disney forced EA to remove premium currency from the game before its launch, pending a re-engineering of the game’s monetization systems.

For Gazillion, the consequences are stark; the firm has shut down, with staff claiming on social media that they are not receiving severance pay or PTO. The chances of refunds for players who bought expensive items in the free-to-play game seem slim. EA, of course, won’t face anything remotely that drastic as a consequence of the changes to Battlefront, but that’s more to do with the scale of EA and its capacity to absorb losses than anything else.

The company’s financial projections for Star Wars Battlefront 2 were based on the assumption of a premium currency and loot box system that worked in a certain way and attracted a certain amount of revenue. It set its development budget based on those projections, spent money on marketing based on those projections; Disney has now unceremoniously dumped those projections in the bin.

Entirely independent of the conversation over whether EA’s monetization model was ill-conceived or not, there can be little doubt that the company’s bottom line for this project will be hit by the removal of premium currency, even temporarily. Without seeing the company’s internal figures it’s hard to say, but it’s not beyond the realms of possibility that, given high enough costs for licensing, development and marketing, this change could even leave EA struggling to stay in the black on what should have been one of its most profitable titles of the quarter.

For Disney, these decisions no doubt make absolute sense. To a large extent, Disney’s choices about games are based on the same rationale as Nintendo’s have been; an understanding that preservation of the value of the IP needs to come ahead of short-term profitability of any one product based on that IP. Just as Nintendo will severely delay games and leave its release schedule looking anaemic at times in order to ensure quality of its finished products and preserve the value of the IP, Disney will shut down, delay or change games that look like they pose a threat to that value – even at risk of damaging business relationships and thoroughly screwing over partners.

Disney has a dual objective with every licensing deal it signs for a major property, such as a game or a TV show. It wants to make money, of course, but it also wants to support the IP it’s licensing; keeping it relevant and in the public eye, preferably boosting its appeal, and whatever else, no matter what, absolutely not damaging or devaluing it.

This makes working with Disney – even for a company as big and powerful in its own right as EA – into something of a risky and challenging business. It’s natural that any developer or publisher would jump at the chance to work on Star Wars, a property tied in to the Marvel Cinematic Universe, or something related to a major Pixar movie, but these deals are not the license to print money they may look like at first glance.

Disney’s willingness to aggressively protect its IP and flex its muscle in these arrangements makes it vital to bear in mind that Disney and the companies that license its IP to make games have different objectives; of course both parties want to make money, but for Disney that comes with a powerful and often overruling caveat. It will sacrifice profit for long-term health, and a developer or publisher, with no financial interest in that long-term health, may be hung out to dry as decisions made in service of profitability are reversed.

In a sense, Disney’s position in the games industry has become similar to Apple’s in the hardware business. Apple makes some of the best-selling high-end products in the world, but for a manufacturing firm to join that supply chain is actually a double-edged sword, because the company is famous for micro-managing the processes of its suppliers and shaving their margins down to the knuckle. Working with Apple can mean enormous contracts to supply high-end parts for globally famous products; it can also mean paper-thin margins, constant supervision and tough contract terms from a company whose business objectives do not always align neatly with those of its suppliers.

Of course, the lure of working on Disney IP will not diminish. These are among the world’s most valuable brands, and for game creators they’re a treasure chest. But before diving into those waters, even the biggest of companies would do well to think about whether their intentions actually align with what Disney will permit. This is a company at the peak of its power; the rewards for working with it may be great, but no publisher should fool itself that Disney will ever put a business relationship ahead of its own central interest in the protection of its IP.

Courtesy-GI.biz

Did The Star Wars Battlefront 2 Fiasco Hurt The Franchise

November 27, 2017 by  
Filed under Gaming

The run-up to launch for Star Wars: Battlefront II has been, to put it bluntly, a fiasco. I would suggest that it has also provided a model for publishers to follow in the future.

When Electronic Arts announced at E3 that it was scrapping the Season Pass model for Battlefront II, the move was met warmly by players. After all, the Season Pass split the player base into people with the DLC and without, preventing them from enjoying new maps and game modes together. At the time, the understanding was that EA would introduce a system for unlocking content within the game, where progress could either be earned through gameplay or purchased through microtransactions. And for the most part, people were fine with that.

But as the company revealed exactly how the system would be implemented, details like how long it would take to unlock things without paying and what sort of advantages paying players could expect in multiplayer matches rankled players. EA’s repeated insistence that it was taking the feedback seriously and changing the system in response did little to appease the angry fans. The uproar seemed to gain more traction as the game’s release approached until, on the literal eve of launch day, EA announced that it was shutting off the game’s microtransactions, reinstating them at a later date when the progression system had been properly fine-tuned.

You could characterize it as a desperate move to salvage the launch of a massive publisher’s holiday lynchpin release, or you could point to it as a new standard, a potential solution to a problem that has dogged the AAA industry since Oblivion’s horse armor first debuted over a decade ago. Why don’t more AAA games launch with a microtransaction-free grace period?

The benefits to the players are fairly clear. By not having microtransactions turned on at launch, publishers know they have to provide an experience that is fun and engaging for non-payers, and ensures that in-game systems won’t be designed around an intolerable grind pushing people into spending more money. It dissuades developers from locking content that players would consider essential (like, say, playing as Luke Skywalker or Darth Vader in a Star Wars game) behind unreasonably high progression walls. In short, it “keeps them honest,” while the early adopters who pay full price (or close to it) for a new release get to enjoy a premium, limited-time experience without the constant pressure to spend more money.

At the same time, it provides publishers with plenty of upside as well. For one, they get to monitor how paying customers are behaving in their game under real-world conditions for a length of time to help with balancing the microtransaction system. And assuming they design the game to be fun without the microtransactions, they’ll almost certainly benefit from better word of mouth and review scores at launch.

And most crucial of all, publishers who adopt a grace period before instituting microtransactions will be mitigating some of the harmful effects of the AAA marketing hype cycle. It’s no coincidence that the backlash to Battlefront II’s microtransactions has grown as the game has neared launch, even though EA has apologized and downgraded the aggressiveness of its approach multiple times in response.

The company’s successful marketing campaign was designed to generate interest and excitement and passion in such a way that would crescendo at launch. And it did. But as we’ve seen too many times in recent years, “passion” in the player base is not an exclusively positive thing. Passion is a multiplier of other emotions. It makes those who love a game get tattoos, and those who hate it lob death threats online. Waiting until after the launch window to turn microtransactions on allows publishers to benefit from the passion they’ve spent so much time and money building, while putting off one obvious source of potential backlash until people have cooled down a bit and the monetization scheme of last holiday’s big shooter release just doesn’t seem like something worth grabbing a pitchfork over. This is especially true given how many members of the pitchfork mob will have purchased the game, played it, and traded it in or redirected their enthusiasm to the next big release in the meantime.

And what would it cost the publishers to do this? A couple months’ worth of microtransaction revenues in games that are designed and intended to be live services. For a successful live service game, the first months of revenue are well worth sacrificing if it might buy you the traction you need for the long run. (Grand Theft Auto Online is four years old and just had its most lucrative quarter ever.)

Microtransactions are a powerful force for the games industry these days, opening up a slew of alternative business models and providing potential answers to many of the problems that have long dogged publishers. EA may have unwittingly showed us a way to finally bring balance to the Force.

Courtesy-GI.biz

Belgian’s Decide Star Wars Loot Boxes Is A Form Of Gambling

November 24, 2017 by  
Filed under Gaming

The Belgian Gambling Commission has decided that loot boxes in Star Wars Battlefront II constitute gambling, and the practice should be banned.

Last week the gambling authority turned its eye towards the issue and since concluded that loot boxes present a danger to children.

VTM News reported that Belgian minister of justice Koen Geens said the gambling commission will take the matter to Europe.

The Dutch authorities joined the recent investigation too, and while a decision has yet to be reached, arriving at the same conclusion as Belgium doesn’t seem unlikely.

Accompanying the news was an announcement that Hawaiian legislators are also considering action against loot boxes in games.

At a press conference, Hawaiian democratic state representative Chris Lee described Battlefront II as a “Star Wars-themed online casino,” warning that it was a “trap” for children.

“We’re looking at legislation this coming year which could prohibit access, or prohibit sale of these games to folks who are under age in order to protect families, as well as prohibiting different kinds of mechanisms within those games,” he said.

“We’ve been talking with several other states as well, with legislators there who are looking at the same thing. I think this is the appropriate time to make sure that these issues are addressed before this becomes the new norm for every game.”

At the same press conference, fellow representative Sean Quinlan draw comparison to ’80s and ’90s cigarette mascot Joe Camel.

“We didn’t allow Joe Camel to encourage our kids to smoke cigarettes, and we shouldn’t allow Star Wars to encourage our kids to gamble,” he said.

Writing recently for GamesIndustry.biz, Rob Fahey warned against interference from legislators if publishers overstepped the mark with loot boxes.

“There’s a real chance that companies involved in this are on the hook for permitting minors access to a gambling platform,” he suggested.

“If the games business doesn’t figure out where the sensible limits to this kind of business model lie, they risk a public outcry leading to regulators stepping in.”

Avoiding a moral panic has never been a strength of games, but with politicians across the world diving into the fray, the industry could find itself facing another assault from the mainstream media and outside pundits.

Courtesy-GI.biz

Did EA Screw Up SW Battlefront II With Microtransactions

November 22, 2017 by  
Filed under Gaming

EA has suspended microtransactions in Star Wars Battlefront II following a furor over loot boxes, hours before the game’s launch earlier today.

Loot boxes have been increasingly controversial in recent months but the backlash towards Star Wars Battlefront II has eclipsed the debate.

While other developers and publishers have been embroiled in the controversy, EA has taken the brunt due to the imbalance potentially caused by randomized loot in a competitive multiplayer shooter.

“We hear you loud and clear, so we’re turning off all in-game purchases,” said DICE general manager Oskar Gabrielson in a statement. “We will now spend more time listening, adjusting, balancing, and tuning.”

The option to purchase in-game currency will be taken offline until a later date while the team make changes to the game. Until then, all progress will be earned through gameplay.

“Our goal has always been to create the best possible game for all of you – devoted Star Wars fans and game players alike,” added Gabrielson.

launch, it’s clear that many of you feel there are still challenges in the design. We’ve heard the concerns about potentially giving players unfair advantages. And we’ve heard that this is overshadowing an otherwise great game. This was never our intention. Sorry we didn’t get this right.”

Just yesterday DICE took to Reddit for an Ask Me Anything session which was met with derision from the community due to the the developer’s vague, non-committal answers.

The news comes just days after it was announced that the Belgian and Dutch gambling authorities are investigating whether loot boxes in Battlefront II and Overwatch constitute gambling.

 

Courtesy-GI.biz

 

 

Xbox One X Beats PS4 PRO In The UK

November 16, 2017 by  
Filed under Gaming

The first week sales of Xbox One X is over 80,000 in the UK, GamesIndustry.biz can reveal.

Retailers have shared data that reveal that Microsoft’s new super-powered console has sold as many units in its first week as Nintendo Switch did in March (hardware figures are up-weighted 20%. Xbox One X raw data is at 67,000).

It’s first week sales are also well ahead of PS4 Pro, which did a little over 50,000 back in November 2016. Indeed, it took PS4 Pro four weeks to reach the same number.

Of course, stock shortages of both PS4 Pro and Switch will have impacted the performance of those machines.

The majority of sales were for the special Project Scorpio version of the machine.

It’s a pleasing performance for Microsoft, which has had a quiet year in terms of new Xbox products so far.

The best-selling Xbox One game of the week was Call of Duty: WWII, followed by Assassin’s Creed Origins (which was promoted with the system), FIFA 18 and the Forza duo: Forza Motorsport 7 and Forza Horizon 3.

Courtesy-GI.biz

Is Sony’s PSVR Taking Off

November 14, 2017 by  
Filed under Gaming

Sony is increasing the production of its motion-sensitive PlayStation Move controllers ahead of an anticipated deluge of new titles.

Speaking at Develop:VR in London today, Stuart Whyte – Sony London Studio’s director of VR product development – said Sony is tracking the number of players who own Move controllers, and hopes to increase this as the PSVR userbase grows.

“Currently, two thirds of the games released so far on PlayStation VR are Move-compatible or require Move,” Whyte told attendees. “As we see more Oculus and Vive titles come to PSVR, we’re expecting this number to increase. Sony is increasing the Move production capacity to [cater] to this.”

PlayStation Move first launched in 2010 as a response to the huge popularity of Nintendo Wii, but struggled to match that console’s success. However, the tech has been given a new lease on live thanks to its use in PlayStation’s virtual reality titles.

It’s a safe bet that more Oculus and Vive developers will bring their titles to PlayStation’s platform given that it is currently the market leader in VR with over 1m headsets sold. Whyte shared more learnings from the first year of PSVR, revealing that PS4 Pro users are more likely to own the device.

“The ratio of PS4 Pro attachment for PSVR is high,” he said. “One in five PS4s sold now are Pros, but that ratio [for PSVR] on PlayStation Pro is higher again.

“It’s definitely worth supporting the extra power available on Pro when you’re developing for PSVR, but it’s still also super important to run on a base PS4.”

Since PlayStation VR first launched in October 2016, more than 140 titles have been released for us and 75% of this content are games rather than less interactive experiences. Whyte predicts games will continue to be the main sales driver for virtual reality, citing the fact that they already provide 70% of revenue for mobile app stores.

“This is going to be true for VR,” he added.

He continued: “We’re currently sitting at five games sold per headset, so we’re seeing a really strong attach rate from our first year. Many of those games to date are smaller experiences, they’re experiences that we as developers [use to] get to know the platform built around one or two mechanics.

“We feel that for VR to get to the next level, we need bigger, built from the ground up VR AAA experiences.”

Sony London’s answer to this is Blood & Truth, a new VR shooter that is inspired by the London Heist section of last year’s launch title PlayStation VR Worlds. The game will be optimised for PlayStation Move, although Whyte said the team hopes to include standard controls as well.

Courtesy-GI.biz

Are Xbox One X Sales Higher Than Anticipated

November 10, 2017 by  
Filed under Gaming

At $499, the new Xbox One X isn’t going to attract people in droves, but it’s going to fare better than some might expect. Feedback on pre-orders has been encouraging and analysts are upgrading their forecasts. Wedbush Securities analyst Michael Pachter recently told us that he’s upping his Xbox One X sales forecast from 1 million to 1.5 million for 2017, and now IHSMarkit has raised its numbers as well.

“Feedback on pre-order volume for both the limited-edition Project Scorpio Xbox One X and for the standard version of the X console has led us to increase our 2017 sell-through forecast for Xbox One X,” said IHSMarkit’s Piers Harding-Rolls. “The Project Scorpio limited edition pre-order strategy has been particularly effective in driving what is expected to be a robust launch week in key sales territories. IHS Markit has therefore increased its 2017 forecast from 500,000 to 900,000 units. At this level, Xbox One share of total Q4 2017 Xbox One console family sales will be close to 20 percent, similar to the performance of PS4 Pro at launch. If Microsoft outperforms and delivers sales in excess of this forecast it will be considered a major launch success.”

Harding-Rolls even thinks some PlayStation fans could switch to Xbox One X: “A small share of PS4 Pro gamers that are keen to have the most powerful hardware for playing third-party published games are likely to shift their usage across to the new console, which may moderately shift the sales share of games between the two competing platforms.”

The extra sales for Xbox One X aren’t about to tip any scales in Microsoft’s favor, however: “Xbox One X is poised to give the company a boost in its ambition to compete more effectively with PS4 Pro in strategically important markets of the USA and UK. Other select markets, such as Germany in Europe with its PC gaming heritage, are also forecast to deliver solid launch traction. Overall, however, IHS Markit does not expect Xbox One X to have a dramatic impact on market share between Sony and Microsoft in continental Europe as the market’s current momentum is well entrenched. IHS Markit currently forecasts the Western Europe installed base of PS4 family of consoles to reach 26 million by the end of 2017 compared to 8 million for the Xbox One family of consoles.”

Importantly, while Microsoft is not selling Xbox One X hardware at a profit, the platform should help the company’s bottom line. Harding-Rolls adds, “Sales of the more expensive Xbox One X console will also help mitigate the fall in Xbox One S hardware average sales price which in recent fiscal quarters has undermined the positive impact felt by Microsoft of increased revenues from software and services. As such, Microsoft’s games business-related revenue is expected to increase year-on-year in Q4 2017.”

Courtesy-GI.biz

Are Digital Games Catching Up With Physical Media Games

November 6, 2017 by  
Filed under Gaming

The tipping point for digital in the UK console space is approaching faster than previously expected.

Confidential digital data, shown to GamesIndustry.biz, reveals that the digital-to-physical split on some AAA console games now exceed 45% in the UK.

Last year, the split was estimated at between 15% and 25%, depending on the game.

GfK data, which only counts physical sales, showed that some recent games have sold below their predecessors – titles such as Destiny 2, FIFA 18, Wolfenstein II, The Evil Within 2, Forza Motorsport 7 and Assassin’s Creed Origins. However, according to the data shown to us, some of these games were actually up over their previous titles due to the significant increase in downloading.

It’s a potential blow to the physical retail market, although one publisher told us that it’s the lack of discounting from retailers that may have resulted in this rapid switch.

“UK retailers have been selling new games closer to their RRP, so although digital titles are still quite expensive, they’re now closer to their physical counterparts in terms of price,” a senior source said. “Some consumers have clearly found that the convenience of digital offsets the now slight premium – whereas before they were paying upwards of £15 more for the privilege, that’s not the case this year.”

Another publishing boss said: “The challenge retailers face is how they react to this. To protect their revenue, the temptation may be to keep prices high, but this might only cause the digital acceleration to speed up further.”

EA’s financials this week showed that 36% of their PS4 and Xbox One sales are digital on a global basis, and that includes territories with lower broadband penetration. Last year that number was 30%. The firm says that 25% of FIFA 18’s sales have been digital after three weeks, whereas FIFA 17’s number was just 16%. Madden’s download share is also up 9% to 34% of total sales.

EA believes its games may have a lower download penetration generally, with its sports title being more mainstream and therefore appealing to consumers that perhaps don’t use download services.

“We were very pleased and a bit surprised at the strength of digital downloads, both for FIFA and Madden,” said CFO Blake J. Jorgensen in EA’s latest financial call. “FIFA, in particular, since it’s such a global game and sold in many markets where digital is not as strong as it is in some of the more mature markets. So it’s great to see the movement towards digital. And we attribute that to some digital-only promotions that we did, some special digital packages, as well as the continued involvement of everyone with Ultimate Team, which is 100% digital, and I think that’s driving the adoption.”

Meanwhile, the latest UK stats from October show that physical software sales were down 16% compared with the year before. However, early reports state that physical pre-orders for upcoming titles such as Call of Duty: WWII and Star Wars: Battlefront II are strong, and coupled with continued demand for Nintendo Switch and the upcoming Xbox One X, the expectation is that Christmas 2017 may still prove to be a strong one for physical stores.

Courtesy-GI.biz

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