Microsoft and Facebook’s cloud vision
This week in Protocol Gaming, your weekly guide to the business of video games: Genvid's strategic positioning with Rival Peak, the PS5 was Sony's biggest launch ever and get hyped for Super Nintendo World!
We forgot to include in last week's newsletter a link to our first Protocol Gaming online panel, including Activision Blizzard's Daniel Alegre, AMD's Frank Azor, EA's Samantha Ryan, Facebook's Vivek Sharma and Manticore's Frederic Descamps. Here it is!
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The Big Story
Cloud gaming's Rival Peak
In October, we asked, "What good is cloud gaming? … Rather than distributing the same old games to new screens, the real promise of cloud will be realized when we start seeing brand-new entertainment experiences that could only be enabled by cloud resources. And those may be coming a bit sooner than many people expect."
The following week, Facebook unveiled its broad new strategy to become both a destination and vehicle for interactive experiences (including games) delivered via cloud resources on its eyeball-owning platform. Facebook's initial announcement was about porting mobile games, but more innovative concepts were already in the works.
Today, those pieces started to fit together publicly as Facebook announced Rival Peak, a new sort of entertainment reality show powered by some slick interactive streaming software from startup Genvid Technologies.
Genvid's systems and approach have far-reaching implications, but it's also worth considering another aspect of the strategic positioning.
Matthew Henick, Facebook's vice president of content planning and strategy, who approved the Genvid deal, described the context.
- "When you think about the spectrum between passive video and gaming, there's always been this belief that they're going to merge somehow into some sort of new format, but so much of the innovation that's happened in the entertainment space has really been about business models more than anything."
- But then in describing why he jumped on the Rival Peak project, Henick used a very specific phrase: "We haven't really seen a partner or an industry take the technological advances we've made in terms of the social internet and cloud, and use that to build an experience that actually puts people at the center. So when Jacob and Genvid threw out this project, lightbulbs started going off for me in terms of this was an experiment we wanted to get on board with."
When I heard Henick say "actually puts people at the center," it wasn't like a lightbulb going off for me. It was like a big fat spotlight.
- Because you know which other gaming and technology behemoth constantly talks about putting gamers/players/people "at the center"? Microsoft, Phil Spencer and the Xbox leadership team.
- That exact phrase is the strategic touchstone of Microsoft's entire gaming strategy: to make Xbox an ecosystem that allows people to experience entertainment across devices and modalities but with common social and reward layers. (That is very different from Sony's approach, which is about making the PlayStation device itself the focus.)
And wouldn't you know? Microsoft and Facebook are already emerging as allies of a sort in mass gaming and entertainment.
- Microsoft folded its Mixer streaming service into Facebook Gaming over the summer in a friendly deal.
- And the two companies are cooperating to deliver Microsoft xCloud gaming on the Facebook platform.
When Spencer called out Amazon and Google as Xbox's main competitors going forward, he omitted Facebook. It seems clear that Facebook also sees Amazon and Google as major competitors. And naturally, neither Facebook nor Microsoft have any love lost for Apple.
Microsoft and Xbox have the hardcore gaming chops. Facebook has all the eyeballs. As both the Big Tech giants and startups like Genvid scale their own cloud gaming Rival Peak, it will be fascinating to watch which alliances emerge.
— Seth Schiesel
- "Stadia actually brings something to the table in terms of development that's great and unique. It's actually kind of perfect for remote development because you can share builds seamlessly." — Stadia's Jack Buser said the cloud-based platform had helped developers work remotely through the pandemic. Microsoft said last month that its xCloud tech also helped in a similar way.
- "We can change 'should I start playing' to 'which part should I start playing?'" — In documents shared with developers, Sony said its new Activities feature could help single-player games retain players.
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.
- The PS5 was Sony's biggest launch ever, it said, though it didn't disclose actual sales numbers (they're likely to have topped the PS4's 2.1 million, however). Microsoft has said the same thing about the Series X/S launch.
- Square Enix made work from home permanent. As of today, most employees are allowed to work from home the majority of the time, though some are still designated as "office based."
- 45- to 54-year-olds increased their game spending by 76% in the last six months, compared to a year earlier. Overall, game spending is up 33%.
- EG7 bought Piranha Games for $24.2 million. In other deals, Keywords Studios bought G-Net Media for $32 million; TinyBuild bought a majority stake in Hologryph for $3 million; and Supercell invested $2.8 million in 2Up.
- Mediatonic opened a U.K. studio, led by Phil Warner. In other moves, Fumiko Okura became Keywords Tokyo's general manager; Peter Levin will be Bublar Group's new CEO and Anders Lundström its CFO; and Jeremy Dela Rosa launched a new nonprofit, Leyline.
Five Questions for …
Matthew Ball, media investor, writer and Genvid adviser
What was your first gaming system?
If you can believe it, Nintendo 64 was the first I personally owned. Parents didn't support video gaming. Of course, had been playing constantly for a decade prior.
What is the most important trend in the game business in 2020?
Games with non-gamelike goals and the destigmatization of game-based socializing.
What has been the most overlooked aspect or development in the game business over the last year?
The general topic is widely covered, but the implications of app store fees/policies on the development of in-game marketplaces and virtual economies (e.g. those of Roblox).
What new technology or technical development are you most looking forward to?
AR glasses and the mass market rollout of real-time motion capture that's integrated into virtual experiences. The latter won't just mean your Fortnite avatar mimics you, but that "games" like GTA Online's casino will actually have virtual laborers rather than just AI dealers and program-based "entertainment."
What games are you playing recently that don't come from your company?
Replaying the BioShock series, Spider-Man: Miles Morales, Betrayal.io, Roblox, and, of course, a ton of Fortnite as always.
Look out for
Your 2021 vacation
For many, myself included, video games have provided a welcome alternative to international travel this year. But even when travel does get back up and running, games aren't going anywhere. That's because Super Nintendo World opens at Universal Studios Japan on Feb. 4, making it the obvious first post-COVID vacation for absolutely every gamer in the world. See you in Osaka.
— Shakeel Hashim
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