August 2, 2022
Image: Vadim Sazhniev/Getty Images
Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re looking at the console game industry’s rough second quarter and the road ahead as a potential recession sets in, as well as Sony’s lavish praise for Call of Duty and the mystery of a hidden church that took the JRPG community by storm last week.
Market research firms had been ringing alarm bells for the better part of the last month about a downturn in the video game market, and Microsoft and Sony last week both confirmed what analysts had been forecasting: After two years of record growth, the game industry is trending downward. And it may not recover until next year.
A complex set of factors — including supply constraints on new hardware, major game delays across the board and macroeconomic pressure from a looming recession — has created a precarious environment for even the industry’s biggest and most insulated players, many of which enjoyed record growth during the pandemic’s early years.
But it’s not all bad news. This is likely temporary, both game makers and analysts are saying, even if it means there are not that many exciting new games on the calendar for 2022.
Microsoft’s bittersweet quarter. In many ways, the Xbox business symbolizes the current moment in the games business through its short-term pains, but also its long-term bets that seem poised to pay off starting next year.
Sony is in a tougher position with PlayStation. Sony’s console gaming business model relies heavily on a mix of exclusives, strong hardware sales and high consumer spending on third-party hits like Fortnite, Call of Duty and others.
Is the game industry recession-proof? A lot has been written over the past two years about the game industry’s resilience, from the transition to remote work to its adaptability when faced with rapid and unprecedented changes to consumer behavior since the start of the pandemic. But the jury is still out on whether gaming is in fact “recession-proof.”
Gaming remains one of the cost-effective forms of entertainment; many of the world’s most popular games are free, and a single $20 or $40 or $60 game can yield hundreds of hours of play. To that point, Newzoo said it expects “players will pick up where they left off in terms of spending” once the economy — and the new release schedule — stabilizes.
— Nick Statt
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines co-founder and CEO Greg Cross and his co-founder Mark Sagar, Ph.D., FRSNZ are leading their Auckland and San Francisco-based teams to create AI-enabled Digital People to populate the internet, at first, and soon the metaverse.
“The harassment we’ve spoken to isn’t just rude replies on Twitter or vague comments. There have been real threats towards our people and our studio. We’re taking them seriously, which is leading to an amount of reduced communications as the team plans future protections/strategies to help avoid these sorts of things.” — Bungie community manager Dylan “dmg04” Gafner opened up on Reddit about his decision to take personal time following threats and harassment and the company’s new policy of reduced transparency in light of the attacks.
“I guess there weren't a lot of key people interested. And it shows the health of the value of the potential of Eidos, unfortunately … It was a train wreck in slow motion, to my eyes, anyway. It was predictable that the train was not going in a good direction. And maybe that justified $300 million. That's really not a lot. That doesn't make sense." — Stephane D'Astous, the founder of Deus Ex developer Eidos-Montréal, spoke to GamesIndustry.biz about his time overseeing the studio and his bafflement when Square Enix sold it and other Western studios to Embracer Group earlier this year.
Diablo Immortal races past $100 million. Blizzard’s free-to-play mobile take on the Diablo franchise has earned more than $100 million in revenue in just eight weeks, Sensor Tower reported last week. That’s faster than Fortnite (12 weeks), but not as fast as Pokémon Go (two weeks).
Roku warns investors: It’s early 2020 all over again. The company warned of a “significant slowdown in TV advertising spend,” and withdrew its full-year guidance due to economic uncertainties.
PlayStation’s experiment in kindness ends in failure. Sony discontinued a feature called Accolades that encouraged players to reward strangers for good behavior in multiplayer games. The reason? It hadn’t “seen the level of usage we anticipated,” the company said Monday.
Xiaomi releases its own take on Google Glass. The Chinese brand’s new Mijia smart glasses don’t offer full AR, but combine simple projection with a headworn camera.
Linear TV viewing is declining. The time people spent watching old-fashioned TV declined across all markets in 2021, according to a new Omdia report.
“Cyberpunk: Edgerunners” arrives next month. Combining the visual talent of esteemed anime maker Studio Trigger with the world of CD Projekt Red’s Cyberpunk 2077, the trans-media series Edgerunners airs on Netflix this September.
China’s game approvals tick up. The number of licenses China has issued to game developers more than doubled last month, a positive sign for the rebound of the country’s struggling game sector after a fierce regulatory crackdown, Niko Partners analyst Daniel Ahmad reported.
Sony sings the praises of Call of Duty. In a regulatory filing, transcribed by VGC, Sony told the Brazilian government that Microsoft’s acquisition of Activision Blizzard may harm its console business, arguing Call of Duty “has no rival” and commands unique influence over the market.
A curious snippet of video featuring a never-before-seen section of the 5-year-old Japanese role-playing game Nier: Automata sent the gaming community (or at least a very specific corner of it) into pure pandemonium last week. On Friday, the masterminds behind the plot revealed it was all a very polished software mod, putting to bed one of gaming’s more enjoyable Easter egg puzzles in recent memory.
Nier, created by the mad genius Yoko Taro, is known for playing with convention. When fans were confronted with a secret church hidden inside one of the game’s more enigmatic environments, known as the Copied City, they thought perhaps Taro had pulled off his greatest magic trick yet: keeping a secret hidden in the game for half a decade. The fervor surrounding the church took over virtually every Nier-dedicated forum on the internet and spilled over onto Twitter, Instagram and TikTok.
It was a testament to the modders’ technical prowess that their secret area, equipped with its own cutscene and even a combat encounter, could pass as the real deal. Some fans thought it was an Easter egg pointing to an upcoming game reveal, or just another of Taro’s mischievous pranks left hidden away in the launch version of the game and patched out later.
But the modders, a trio of quite capable 3D artists and mod designers, had had their fun and pulled the curtain back with a live Twitch stream and joint statement after about four days. For a full breakdown of the saga, check out GamesRadar’s interview with one of the tricksters in question and revel in just how devious the whole performance was. Taro would be proud.
— Nick Statt
They created Digital People. Now they've made celebrities available as Digital Twins: Soul Machines is at the cutting edge of AGI research with its unique Digital Brain, based on the latest neuroscience and developmental psychology research.
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