It’s a ‘live services’ world, we’re just living in it
This week in Protocol Gaming, your weekly guide to the business of video games: the evolution of online gaming, Sony's PS5 supply woes and the technology Activision Blizzard's Daniel Alegre is most looking forward to.
In case you missed it, we held our first-ever gaming event last week! You can check it out here.
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The Big Story
Thanksgiving is for online gaming
Happy Internet Gaming Day! The Tuesday before Thanksgiving (today) marks an important anniversary in the annals of global media. It's the day, 16 years ago, when online multiplayer gaming finally escaped its nerd niche and became mass entertainment.
I refer, of course, to Blizzard Entertainment's Nov. 23, 2004, launch of World of Warcraft.
"So I planned to roll over there around 11 p.m., and as I tried to get off the freeway I look over and I see this gigantic, dark, surging mass around Fry's, and I'm like, 'What in the world is that?'" Paul Sams, who went on to run Blizzard's business operations, told me just a few months later. It turned out the seething, pulsing monster around the electronics store was human.
"The cars were backed up on the off-ramp," he said. "I parked like a mile away, and when I get there the line is looped around the building, and then looped around the parking lot. It was like a football tailgate, with the RVs and barbecues in the lot and everything."
As far as I know, that was the first time online gamers emerged from our caves to camp out for a computer game en masse. The conventional wisdom back then was that anyone unspeakably nerdy enough to want to play a persistent internet game was already doing it.
- EverQuest, the progenitor of all modern massively-multiplayer games, had topped out around 400,000 players.
- Blizzard's stretch goal was to match that number in a year. They surpassed it in days.
That was the true beginning of gaming as a global social layer — the start of the march toward Among Us attracting almost 300 million players last month. Along with titles and systems like Guitar Hero and Nintendo's Wii, "vanilla" WoW played a major role in gaming's mid-aughts escape from the cultural basement and reemergence in mainstream living rooms.
The two-days-before-Thanksgiving thing worked out so well that, 16 years later, Activision Blizzard is doing it again. Today (last night, depending on your time zone), the company launched WoW's eighth major expansion, called Shadowlands.
- As usual, I stayed up all night bingeing the new content.
- As usual, my Blizzard friend list was packed with players I hadn't seen online since the early days of the last expansion in 2018.
- And as usual, one would expect a nice bump in the company's financials.
There are parts of the game industry that still consider "live services" — selling players a constant stream of new content in addition to the core retail product — a new idea. But the sharp operators got there a long time ago. For example, Take-Two and Rockstar have achieved the incredible in leveraging Grand Theft Auto V into GTA Online.
Meanwhile, Bobby Kotick at Activision Blizzard takes more atmospheric Twitter flak than anyone else in the video game business. But when you look plainly at the evolution of his business, you have to give him huge credit for moving the company into mobile and live services.
- Yes, there has been a lot of tension between some members of the old-school Blizzard team in Orange County and their Activision overlords in Santa Monica.
- But keep in mind that Blizzard's original leader, Allen Adham, has returned to the company — not fled — and is working on an unannounced new project.
Before returning to WoW last night, I spent much of last weekend blissfully blowing away bad guys in the latest entry in Activision's other marquee franchise, Call of Duty. (As you'd expect, a $3,000 PC makes prettier pictures than a $500 console. Thank you, Nvidia RTX 3080 GPU and AMD Ryzen 5 5600X CPU.) Of course the campaign is short, but that's because the heart of the "real" game is online, just like the heart of the game business overall now.
And you don't even have to camp out in a parking lot anymore to enjoy it.
- Seth Schiesel
- "We need a new class of multiplayer games. Specifically ones that don't require your whole brain and whole attention." — Shopify CEO Tobi Lutke is big on the concept of "ambient gaming."
- "We're not fighting for a lower commission. Epic is fighting for fair competition." — Epic's Tim Sweeney said Apple's new, lower commission for developers earning under $1 million isn't good enough.
- "I think the cloud will probably become more important over the course of the next few years, even though there are still business model and technology challenges. As that happens we're continuing our studies and our investment." — PlayStation's Jim Ryan said this year was all about the PS5, but PlayStation Now and Plus were still "very important."
- "In the console space over the last four or five years, most of the growth that the industry has realized has been growth per user, not growing the number of console users that are out there." — Microsoft's Phil Spencer said the company wants to change that with the Series S and xCloud, which he said is coming to smart TVs in the next year.
Customer experience (CX) is having a moment. The pandemic has forced and accelerated the adoption of digital channels for many. This is great news. But customer expectations of the digital experience is high, and companies who are thoughtful about the customer experience and differentiate themselves will be winners.
- Roblox filed for an IPO, firmly pitching itself as the company that can build the metaverse. It's certainly got a big in-game economy: It brought in $589 million in revenue between January and September, though it lost over $200 million.
- PS5 launch weekend sales were about a third of the PS4's in Japan, according to Famitsu, suggesting that Sony's supply chain woes are having a significant impact. In the U.K., reseller groups have been buying consoles in droves.
- ByteDance launched a publishing arm and gaming platform. Pixmain, its publisher, currently has five games in the pipeline: three of which are coming to PC and one set for a Switch release. Danjuan Games, meanwhile, is a mobile game store.
- Activision Blizzard's layoffs continue: Around 30 people are being made redundant in APAC. 10 people at Bossa Studios are also at risk of layoffs.
- Ubisoft removed Hugues Ricour from managing its Singapore office after accusations of workplace misconduct. In other moves, Kevin Lin is leaving Twitch; Chelsea Blasko became co-CEO at Iron Galaxy Studios, with David Dague joining as head of communications; and Mike Laidlaw, Thomas Giroux, Jeff Skalski and Frédéric St-Laurent B founded Yellow Brick Games.
- Kahoot acquired Drops, the language-learning game company, for $50 million. And Epic bought Hyprsense, which builds real-time facial motion capture technology.
- Cloud gaming is finally coming to iOS. Nvidia launched a beta of a GeForce Now web app, and Google said Stadia would launch something similar in the coming weeks. Both use WebRTC, which looks like the hottest new tech in gaming.
- Soccer players are angry at EA. Zlatan Ibrahimović and Gareth Bale raised questions about the use of their likenesses in FIFA games, and The Athletic reports that thousands of other players are set to do the same.
Five Questions for …
Daniel Alegre, president, Activision Blizzard
What was your first gaming system?
It isn't a system but we had an original arcade Pac-Man at my house growing up. I loved playing it so much that the Pac-Man negative appeared when I would close my eyes getting ready to sleep.
What is the most important trend in the game business in 2020?
I think the most important trend from 2020 is the continued growth of cross-platform play, especially across mobile, desktop, and console, and the social interactions that have resulted from it. Global gaming is more open now because players are no longer restricted by the platform. There is now an expectation for more social platforms across a gaming franchise.
What has been the most overlooked aspect or development in the game business over the last year?
Due to COVID-19, game development has become more decentralized, as people have learned how to operate and collaborate remotely. This will likely lead to more democratized game development in the future. Developers and development can come from anywhere in the world, and from a talent perspective, the question of where you can and should be building is less relevant.
What new technology or technical development are you most looking forward to?
5G networks on mobile with higher-display resolution is bringing immersive gaming to the entire world. It puts high-computational games, such as Call of Duty and World of Warcraft, at billions of people's fingertips instead of limiting the experience to just PC and console.
What games are you playing recently that don't come from your company?
I play a lot of games to better understand the competition and most recently immersed myself in Fall Guys.
Look Out For
And you thought $70 was expensive
Game prices might be going up, but an auction last week contextualizes things a little. A copy of Super Mario Bros. 3 sold for $156,000, with 20 people bidding for a slice of gaming history (the game has a rare box design where the word "Bros." covers Mario's hand). A reminder to hold onto your old games; your grandkids might be grateful.
- Shakeel Hashim
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