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Protocol Gaming
Your essential guide to the business of gaming with Seth Schiesel and Shakeel Hashim.

EA CEO Andrew Wilson on gaming in 2020

Andrew Wilson

Hello, and welcome to Protocol Gaming, your new weekly guide to the business of video games. This week: EA's Andrew Wilson on the holiday shopping season and the impact of COVID-19, success and questions at the highest level of esports, delays from Blizzard and Nvidia, Facebook's Vivek Sharma on the game he still can't beat, and why Hollywood is coming to play.

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Welcome

I'm just a little biased, but I think interactive entertainment is the most interesting industry in the world. Either way, it is certainly one of the most important.

Like it or not, playing some sort of electronic game has become one of the most popular ways that humans spend leisure dollars and time. Video games and their attendant online ecosystems are perhaps the most powerful vector of global community and culture.

If you're reading this first newsletter, you probably know the well-worn statistics about how games are bigger in various ways than other sorts of media. But the game industry doesn't have to be defensive or envy any other business anymore. Gaming is now a leader in global entertainment, not a follower.

Protocol Gaming is here to help you understand what's going on out there. We'll keep you updated on the most important stories and issues from a business perspective. You'll hear directly from some of the most important, influential and insightful people in the global game business. And, if only because this is a video game newsletter, we'll also try to have a little fun.

Just a little about ourselves: I'm mostly an online PC gamer with some mobile habits, whereas my colleague Shakeel Hashim is mainly a single-player console guy. We can be reached at sschiesel@protocol.com and shakeel@protocol.com.

Welcome to Protocol Gaming.

Seth Schiesel

Interview

EA CEO Andrew Wilson on gaming in 2020

I'm writing this from the exact basement room where I became a gamer. When I was a kid, Woodstock, N.Y., was a Commodore town (check out my original C64 manual) and I grew up on games from Electronic Arts. From Archon (1983) through The Bard's Tale (1985), I went deep on pretty much every game the company published.

A few decades later, EA remains a pillar of the game industry. While Microsoft and Sony prepare to release a new generation of consoles next month, global third-party publishers like EA have in some ways the broadest perspective on the overall industry. EA released Star Wars: Squadrons last week and on Tuesday releases the company's most important game of the year, FIFA 21.

On Tuesday, EA CEO Andrew Wilson answered a few questions by email. Lightly edited excerpts follow.

What's the headline from your perspective on the last six months and what it tells us about the future of games?

Amidst all of the challenges, it's been really energizing to see how people have found joy in games. We had more than 20 million new players join our network from April to August — that's before we started launching major new titles this year. So what's clear at this point is that interactive entertainment continues to be a growing force and a very important part of people's lives.

In light of the Squadrons launch and the new FIFA out today, what's different in the market this year than in past years?

You've got record numbers of people playing games. With Madden NFL 21, we saw sales up 20% year-over-year in the first week. The first week for Star Wars: Squadrons has also been really strong. There's been more than 90 million minutes of streaming from Squadrons watched in just four days since launch. Now there's a lot of excitement and strong engagement in the early access period for FIFA 21.

How are consumption patterns changing?

The tremendous amount of attention and focus on games is not just because other entertainment options are limited. The nature of social connection is moving from physical to digital. In FIFA, Apex Legends, The Sims 4 and more, people are using games as a center point in how they communicate and interact. And those relationships go beyond the game and into what they share with their friends and networks, the content they create, and other aspects of their online lives. Technology barriers are coming down with more games integrating cross-play, and cloud streaming services can make it possible for even more to join. Games are becoming the central thread of the digital lifestyle for people around the world.

It's a year of disruption for real-world sports. Besides more people playing sports games, what are the long-term effects of this?

The trend that started well before COVID is that consumption of sports and entertainment is moving from linear to interactive. Younger fans are consuming more sports than any generation before them. In addition to regular matches, they'll watch a week's worth of highlights in a 15-minute summary on YouTube, or the day's sports news in 15-second clips on Instagram. Then they're engaging in deep online conversations and building deeper connections with the sports, teams and athletes they love in FIFA, Madden, NHL or UFC.

We're launching FIFA 21 worldwide this week, and already the number of players engaging through our EA Play subscriptions is up by more than a third over last year. Nearly 2 million players are in the game through early-access alone. The takeaway here is that the disruption to sports in the last six months, where our games became sport for a period of time when there was no real-world action, really just put a spotlight on the importance of interactive experiences.

How big a deal is it if many consumers can't get their hands on a next-gen console this year? Short term vs. long term?

If you look back over the history of this industry, every console transition has effectively expanded the audience that is playing games, and we expect this one will as well. We're looking forward to releasing two great new games on the new consoles in FIFA 21 and Madden NFL 21. We've also put upgrade paths in place to ensure a smooth transition for players who are already engaged on the current consoles.

With all that being said, what we've seen historically is that the overall strength of the console generation, both in hardware and software, is really built in the first couple of years. We're only at the beginning of the groundbreaking experiences and immersive fun that we're going to be able to create for players on the new consoles using more AI, machine learning, adding social layers to make connection and communication seamless and more. Where we're going will be truly transformative.

A MESSAGE FROM MICROSOFT AZURE

Azure

Make next level games with Microsoft's own AAA-grade development toolbox, including the battle-tested solutions of Azure and PlayFab, powering some of the world's biggest games.

Learn more.

Overheard

  • "Some also expressed doubts about our ability to change. I assure you, these changes will take place, and we will carry them out together." — Ubisoft CEO Yves Guillemot responded to a survey that found roughly one-quarter of Ubisoft employees have witnessed or experienced workplace misconduct.
  • "I don't think any Chinese-made game has ever had that many preregistrations outside its home market." — Serkan Toto, CEO of consultancy Kantan Games, said Genshin Impact had the biggest international launch of any Chinese game. It was downloaded more than 17 million times over its first four days on the market.
  • "I know this is in direct opposition to what we've said about crunch … But we've extended all other possible means of navigating the situation." — CD Projekt Red studio head Adam Badowski called for compulsory six-day weeks ahead of Cyberpunk 2077's Nov. 19 launch. The company had previously said it would avoid mandatory "crunch."

Level Two

Activision shakes up its esports management

Activision Blizzard's Overwatch League is changing — again. A year after its founding commissioner Nate Nanzer left for Fortnite, his replacement Pete Vlastelica is moving to a new role at the company.

  • The departure caps a difficult year for the league. "Activision had made this big bet on in-person events," Roundhill Investments co-founder Tim Maloney told me. Given COVID, that's backfired.
  • The OWL hasn't had the smoothest transition to online streams, either, with languishing viewership and a series of player departures. Team owners, who have spent a reported more than $20 million on slots in the league, are probably "not thrilled" as a result, Maloney said. Activision has appeared to make concessions, reportedly offering to defer franchise payments.

Activision's Call of Duty League has fared better, pulling in record viewers. That may explain why CDL commissioner Johanna Faries has been promoted to the new title of Head of Leagues and will now oversee both OWL and CDL, Protocol has confirmed with the company. The Esports Observer first reported the news.

  • "If [team owners] have liked what [they've] seen from Johanna on the Call of Duty side, you'd think that they'd be more likely to want to work with her on Overwatch as well," Maloney said, noting that the majority of CDL owners have OWL teams, too. "There's probably an internal demand to streamline [league management] a little bit."

But there are significant challenges ahead. For one, Activision faces a tough rival in Tencent-owned Riot. Riot's League of Legends World Championships have drawn sponsorship ranging from Mercedes-Benz to Nike's first major esports ad and are regularly drawing more than 1 million viewers per match. Riot's new team shooter, Valorant, has outperformed Overwatch — and drawn in some Overwatch players.

For a game publisher, there are fundamentally two ways to manage an esport. It can be designed to stand on its own as a viewer- and sponsor-supported business (like traditional spectator sports), or it can be managed to mostly drive revenue back into the core game. An Activision spokesperson said Tuesday morning that the company is firmly committed to the latter.

— Shakeel Hashim

Lootbox

  • Roblox Corp. is exploring a public listing early next year, Reuters reported. The company behind the fabulously popular eponymous game appears to hope for a valuation as high as $8 billion. It's reportedly considering a direct listing as well as a more traditional IPO.
  • Tencent bought "a major stake" in 10 Chambers, the Swedish studio founded by Payday developers. Financial terms were not disclosed.
  • Kati Levoranta is out as Rovio's CEO. She will be leaving the maker of Angry Birds at the end of the year in a decision described as mutual.
  • Top esports tournament and festival operators ESL and DreamHack are merging. Both are owned by Modern Times Group, which is now combining them under the name ESL Gaming. ESL co-CEOs Craig Levine and Ralf Reichert will run the new company.
  • Thunderful Group bought Coatsink Software for around $30 million. It paid half in cash to the Phogs publisher, with the rest in shares. There was also an additional earn-out attached that could take the total price to $85 million.
  • Nvidia said it would delay the highly anticipated RTX 3070 PC graphics card by two weeks, to Oct. 29. At $499, the 3070 is to be the most affordable entry in the company's powerful new Ampere line. The new release date is only one day after rival AMD is to unveil its own latest, greatest graphics hardware.
  • The U.S. Navy paid marketing giant Young & Rubicam $2 million as part of its foray into esports, Vice reported. The Navy's venture has been met with a frosty reception by many gamers.
  • Activision Blizzard delayed Shadowlands, its new expansion for World of Warcraft. Originally scheduled for Oct. 27, Shadowlands will now arrive later this year. Longtime WOW players (Seth included) generally applauded the company for taking additional time to polish game balance and features.
  • Twitch is testing a new music feature. Soundtrack by Twitch offers streamers more than 1 million rights-cleared songs they can play without legal complications, via partnerships with music companies including SoundCloud and Monstercat (but not major labels). Last month, Facebook Gaming announced what appears to be a broader deal with labels to offer streamers legal music options.
  • Xbox's Game Studios unit is having its best year ever, according to Microsoft, with close to 1.7 billion hours played so far this year on the division's titles. And of course Microsoft is now adding the ZeniMax/Bethesda roster of franchises including Doom, Fallout and The Elder Scrolls to its stable.

Five Questions For …

Vivek Sharma, head of Facebook Gaming

Every week we'll ask a leading industry figure five big questions. First up is Vivek Sharma, head of Facebook Gaming. While No. 3 in game streaming behind Twitch and YouTube, Facebook Gaming's audience is growing quickly, with more than 1 billion hours watched in this year's third quarter, according to a new report.

What was your first gaming system?

Nintendo NES! This was my first Christmas gift when I arrived in the U.S. from India. Ever since then, I've loved Christmas, gaming and mall game store window shopping (although, so sad about that last one starting to go away).

What is the most important trend in the games business in 2020?

Cross-play and free-to-play models continuing to change AAA games. By volume, most AAA titles are not in this category, but it sure feels like the ones that are extremely popular are all cross-play in some way — and, in turn, all platforms including mobile, PC, consoles are exploding as these games expand the market. It makes me wonder what the competitive advantages of any hardware platform will be over time rather than sheer exclusives.

What has been the most overlooked aspect or development in the games business over the last year?

Crossovers from traditional media (movies) to games have always seemed a bit corny and controversial as neither type of fan is ever satisfied. We are going to see a marked change in crossovers into gaming as Disney and others shut down physical experiences and movies continue to take a hit due to the pandemic. Where else will these compelling onscreen movie and comic characters live on? The biggest change from the pandemic will be the shift of storytelling and performance, including music, in new mediums like gaming and streaming.

What new technology or technical development are you most looking forward to in gaming?

We've been in an ever-escalating hardware race for as long as gaming has been around; I don't expect that to stop. But I really do believe that the hardware race will start shifting to data centers with more games building larger multiplayer and deeper gaming experiences. Yes, cloud will be a thing, but it will be about increasing the processing power of games with respect to the target player device and not about replacing consoles or PCs as it's currently being marketed. We lived through this explosion in the move from on-premise servers with limited capabilities to massively more powerful shared infrastructure in the cloud and we're going to see it again in gaming. Or you can expect to pay handsomely for a 1TB SSD just to hold two games at a time.

What games are you playing recently that don't come from your own company?

I refuse to stop playing Starcraft II until I beat the $^@^* Elite AI. I think I may be in a DeepMind A/B test. Also I play with a Mac touchpad, coincidence?

Look Out For

The largest war in Eve's history

Over the last 17 years, perhaps the most consistently fascinating online game in the world has been the unique Icelandic space opera known as Eve Online. Every few years, tens of thousands of proud internet space nerds from every time zone throw themselves into around-the-clock wars that can last for months on end. And those wars are only surface symptoms of deep personal rivalries that often date back to George W. Bush's first term.

Well, it's happening again, and today is probably the day to check it out. The largest war in Eve's history has been building since July, and today is basically D-Day as a supercoalition known as PAPI (don't ask) invades the home region of the game's most powerful empire, The Imperium.

Check it out on Twitch, or if you're ready for some top-end gamer memes, the Eve subreddit.

A MESSAGE FROM MICROSOFT AZURE

Azure

Make next level games with Microsoft's own AAA-grade development toolbox, including the battle-tested solutions of Azure and PlayFab, powering some of the world's biggest games.

Learn more.

Thanks for reading. Tell your friends and colleagues to subscribe here, and send tips, feedback and ideas to sschiesel@protocol.com and shakeel@protocol.com. See you next week.

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