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Protocol Gaming
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The next-next-gen cometh

The next-next-gen cometh

Good morning! This week in Protocol Gaming, your weekly guide to the business of video games: a look back at 2020's most important developments, a rare Nintendo acquisition and Tencent's fight with Huawei.

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The Big Story

A look back at gaming in 2020

At the start of 2020, many gamers were already looking forward to the end of the year, when the newest consoles from Sony and Microsoft would be released. Little did we know that a pandemic would lead us to become intimately acquainted with the aging systems we already had. This week, we're looking back at some of the biggest storylines in a very unusual year — and ahead to how they'll play out in 2021.

Animal Crossing brought back socializing while we were starved of physical interaction.

  • One of the biggest hits for the Nintendo Switch for a few years, Animal Crossing: New Horizons, the fifth edition of the series, was a way for many people to reconnect virtually with friends and family when they couldn't see them in person. It inspired memes, performances and even political rallies.
  • But the question remains whether Nintendo can keep pumping out hits for its nearly 4-year-old console. The Switch has now outsold all of Nintendo's other home consoles barring the Wii, but Animal Crossing hype had certainly died down by the summer. While Mario Kart Live was a great stocking stuffer, it remains to be seen whether Nintendo can find another Breath of the Wild before the Switch has had its day.

Fortnite took on Apple in a battle over who really controls gaming.

  • Epic's cross-platform sensation continued its success into 2020 (and now 2021), to the point where the games maker felt confident enough to challenge Apple's stranglehold on the iPhone app market. "To say that the fact that [Apple] have some costs justifies taking 30% of a company's revenue and preventing other companies from competing with them is absolutely abhorrent," Epic founder Tim Sweeney told Protocol.
  • Fortnite was later yanked from the App Store after Epic undercut Apple's rules by selling its V-Bucks cheaper directly than if gamers bought them through Apple. Epic sued Apple, alleging its rules to be anticompetitive.
  • Apple eventually agreed to lower its rates for some app makers — though not larger companies like Epic. It seems likely that the two companies will go to court this summer, and that this battle will shape the future of how games are distributed.

The next generation of gaming arrived. Well, for some people at least.

  • More or less in time for the U.S. holiday season, the PlayStation 5 and Xbox Series X and S were released. Perhaps unsurprisingly — given so many people were (and still are) stuck at home, and the pandemic continues to affect global supply chains — demand far outstripped supply.
  • Both companies' top-end new consoles were fairly well-received by critics, though we're still waiting on more blockbuster games to fully test out the future of gaming.
  • For both companies, the future looks to hinge on recurring revenue from subscription services like Xbox Game Pass and Playstation Now, which allow gamers to play a range of titles and play on other devices for a single monthly fee. The challenge in 2021 will be to continue signing up publishers to the services so that gamers see the value in what they're paying for.

But does the next-gen even matter when the next-next-gen looks so damn promising?

  • The future of gaming may well reside in the cloud, rather than our living rooms. Google's Stadia, Nvidia's GeForce Now, Sony and Microsoft's offerings and even services from Amazon and Facebook all picked up steam as the year closed out.
  • Case in point: Google's Stadia was touted as one of the few systems that could reliably handle Cyberpunk 2077. (More on that mess below.)
  • But none of these systems are yet a "Netflix for games," partially because of bandwidth issues, but also because no one has managed to corral all the top-tier games makers into one place. Without that, we could be looking at a cloud gaming landscape that's as atomized as the TV streaming industry.

And Cyberpunk 2077 failed to deliver in spectacular fashion.

  • First announced about eight years ago, this futuristic open-world RPG was one of the most anticipated games in years. But even before it saw the light of day, developer CD Projekt Red had to apologize several times over for delays and gaffes.
  • Even the long weeks and late nights CD made staff work in the run-up to release weren't enough to fix the game, especially on older consoles. When reviewers eventually did get their hands on the game, it was a mess (albeit a beautiful mess). The only clips people shared were of the comically broken world of Night City.
  • Eventually, Microsoft and Sony both offered gamers a full refund, and CD offered another apology. But that wasn't enough to stop investors from filing a class-action suit against the company, alleging that it knew how poorly the game ran on current-gen systems. Now, the pressure is on CD to get the game working soon enough for gamers to forgive it.

— Mike Murphy

Overheard

  • "Focusing on historical Chinese figures with their own unique stories in the game ... helped players feel familiar with the characters and game." —Niko Partners analyst Daniel Ahmad said Honor of Kings' China-centric design has helped contribute to its huge success.
  • "We hope sharing this knowledge can help combat shady practices where predatory people and companies fleece devs by virtue of this knowledge being so scarce." —Raw Fury explained why it made its publishing agreement public.
  • "The whole point is to have games on the blockchain. It's fun. They're different types of experiences. And it's secure, because it's on the blockchain." —Atari CEO Fred Chesnais said the company's all-in on blockchain gaming, using collectible non-fungible tokens in card games.

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Lootbox

  • Nintendo acquired Next Level Games for an undisclosed amount. The Canadian developer had been working exclusively with Nintendo for the past several years.
  • Yoozoo CEO Lin Qi died after an apparent poisoning. Police detained one of his colleagues, identified only by the surname "Xu," on suspicion of "committing a major crime."
  • Tencent games were briefly removed from Huawei's app store, reportedly due to a revenue sharing dispute. Huawei wanted 50% of Tencent's sales, Reuters reports. It's unclear if a deal was reached, though Tencent games were reinstated to the store.
  • Apple removed 39,000 games from its Chinese App Store on New Year's Eve, with only 74 of the top 1,500 paid titles surviving the purge. It was due to new enforcement of Chinese laws that require games to have a government-issued license.
  • Blackstone invested almost $400 million in Liftoff, the mobile app marketing platform. It follows Blackstone's $750 million Vungle acquisition. In other deals, MAG Interactive acquired Apprope for $6 million.

Look Out for

Epic's new home

After a pretty incredible few years for Epic Games, the company looks to have big growth plans. It's just bought an 87-acre former mall for its new HQ, which is set to become a gigantic new campus. Sounds like a perfect Fortnite map, too.

Shakeel Hashim

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