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What next-generation gaming consoles? The real action in the $160 billion video game business is on PCs.
That was Nvidia's dismissive subtext on Tuesday as the company unveiled its first major new line of consumer graphics hardware in two years. While Sony and Microsoft are yet to reveal pricing and timing details for their new game machines expected this fall, Nvidia is getting on the all-important holiday wish lists early, with specific product announcements that will make many gamers' eyes water.
In addition to announcing a new line of powerful PC graphics cards for the fall — ranging from $500 to $1,500 — Nvidia also flaunted its tight relationships with many of the largest and most popular game developers. Nvidia and Epic Games — which is locked in a high-stakes antitrust lawsuit with Apple — announced that Fortnite, Epic's flagship franchise, would soon add support for Nvidia's ray-tracing technology, which generates more realistic and immersive lighting effects. Nvidia also revealed footage of two other highly anticipated games — Call of Duty: Black Ops Cold War (from Activision Blizzard) and Cyberpunk 2077 (from CD Projekt) — that will use the same technology.
PCs are the world's most popular gaming platform with about 1.5 billion players — roughly half of the 3 billion gamers worldwide. By contrast, only about 8% of gamers globally appear to be dedicated console players. That's one reason why Nvidia, the leader in PC graphics, does not appear especially chagrined that both Microsoft and Sony opted for graphics systems from AMD for their new consoles. Dedicated PC gamers will pay more for a single graphics card than console gamers pay for their entire systems.
Wearing his trademark leather jacket and standing in his home's kitchen, Jensen Huang, Nvidia's chief executive, announced that the company's new 3070 card would be released next month starting at $499, the 3080 card would be released Sept. 17 starting at $699 and the 3090 (continuing a new trend of revealing hardware from his oven, saying "Come here, papa") would arrive Sept. 24 starting at $1,499. The company said that the 3080 — which Huang called the company's new "flagship," presumably because of what it sees as a sweet-spot positioning of price and performance — delivers up to twice the horsepower of current 2080 cards, which can cost up to $1,200.
In addition to the new cards, Nvidia also revealed new software to improve the performance of older cards; enable advanced machinima storytelling; and improve video and audio streaming quality.
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Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
Microsoft wants to replace artists with AI
Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.
Turning your stories into images.
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.
And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
Everything you need to know about the Roblox direct listing
The company is expected to go public via direct listing on the New York Stock Exchange in February.
Roblox CEO David Baszucki is taking the company public.
Roblox is a video game platform, though it describes itself alternatively as a "metaverse," "human co-experience platform" and "new category of human interaction." It's expected to go public via direct listing on the New York Stock Exchange in February.
In simpler terms, Roblox enables developers to build games within the Roblox virtual world, which looks like a crossover between Minecraft and Lego. Developers publish and distribute their games through Roblox to an audience of some 31.1 million daily active users.
What Does Roblox Do?
<p>Many of the core Roblox experiences are free, but the virtual currency, Robux, can be used to customize player avatars, unlock premium games and purchase in-game perks. Roblox makes money by charging users for Robux and through its <a href="https://www.roblox.com/premium/membership" target="_blank" rel="noopener noreferrer">subscription service</a>, Roblox Premium, which offers discounts and access to exclusive content. Developers keep <a href="https://developer.roblox.com/en-us/articles/developer-economics#:~:text=When%20you%20start%20developing%20on,via%20our%20virtual%20currency%20Robux" target="_blank">a portion</a> of the Robux generated through their games, and can cash out through the <a href="https://en.help.roblox.com/hc/en-us/articles/203314100-Developer-Exchange-DevEx-FAQs" target="_blank" rel="noopener noreferrer">Developer Exchange Program</a>. </p><p>An active Roblox developer community means content is always changing. On my homepage, for instance, Roblox gives me the option to play a <a href="https://www.roblox.com/games/4996049426/UPDATE-All-Star-Tower-Defense?refPageId=7098b58b-fcbf-42bd-86a0-fcd00216ed05" target="_blank" rel="noopener noreferrer">tower defense game</a>, <a href="https://www.roblox.com/games/166986752/Plane-Crazy?refPageId=7098b58b-fcbf-42bd-86a0-fcd00216ed05" target="_blank" rel="noopener noreferrer">flight simulator</a>, <a href="https://www.roblox.com/games/364802243/Freeze-Tag-NEW-MAP?refPageId=7098b58b-fcbf-42bd-86a0-fcd00216ed05" target="_blank" rel="noopener noreferrer">freeze tag simulator</a>, a <a href="https://www.roblox.com/games/920587237/Adopt-Me?refPageId=7098b58b-fcbf-42bd-86a0-fcd00216ed05" target="_blank" rel="noopener noreferrer">pet game</a> reminiscent of Nintendogs and a <a href="https://www.roblox.com/games/5596703547/Weight-Lifting-Simulator-5?refPageId=7098b58b-fcbf-42bd-86a0-fcd00216ed05" target="_blank" rel="noopener noreferrer">weight-lifting simulator</a>. Developers have created more than 18 million games/experiences for the Roblox platform, though users <a href="https://venturebeat.com/2019/12/09/robloxs-10-biggest-games-of-all-time-each-with-more-than-a-billion-plays/" target="_blank" rel="noopener noreferrer">tend to gravitate</a> to a much smaller subset of the available content. Flexibility in gameplay is critical to Roblox's long-term value proposition, since it hopes to avoid the boom-and-bust cycle of a typical standalone game. </p><p>If you feel old reading any of the above, it's probably because over half of Roblox users were born after 2006. But what the community lacks in life experience, it makes up for with enthusiasm: Roblox <a href="https://www.sec.gov/Archives/edgar/data/1315098/000119312520298230/d87104ds1.htm#INDEX" target="_blank">users spent a total</a> of 22.2 billion hours on the platform for the nine months ended Sept. 30, 2020, which comes out to 2.6 hours per day for each active user. With children locked out of other social activities during the pandemic, Roblox experienced a massive uptick in usage; total time spent on the platform <a href="https://www.nytimes.com/2020/08/16/technology/roblox-tweens-videogame-coronavirus.html" target="_blank">doubled between February and July 2020</a>.</p>Roblox's Financials
<p>Roblox isn't yet profitable, but it has managed to grow revenue at an impressive clip. According to the company's S-1, Roblox generated $588.7 million in revenue for the nine months ended Sept. 30, 2020, representing a 68% jump from the same period in 2019. Costs grew even faster than revenue, however, so Roblox posted a $205.9 million consolidated net loss in the 2020 period, down from the $46.3 million consolidated net loss in the first nine months of 2019.</p><p>Roblox's highest expense is developer exchange fees, which accounted for roughly 26% of total expenses in the first nine months of 2020. Other significant costs include server fees, consumer safety (Roblox contracts out some 1,700 agents to monitor its platform to uphold community standards), research and development investment and the 30% fee owed to Apple and Google for mobile OS purchases. </p>What Could Go Wrong?
<p>Three themes stand out from Roblox's S-1: loss of user interest, access to distribution channels and user safety.</p> <p><strong>Children's attention is notoriously fickle, </strong>and Roblox is asking investors to bet billions on its ability to remain relevant for years to come. For every Lego or Nintendo that has defined multiple generations of childhoods, there's a Club Penguin, Neopets or Webkinz that quickly went from all the rage to irrelevant.</p><ul><li>"The multitude of other entertainment options, online gaming, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with our platform and seek other entertainment options," Roblox writes. "Moreover, the majority of our users are under the age of 13. This demographic may be less brand loyal and more likely to follow trends, including viral trends, than other demographics."</li><li>Another concern is that Roblox won't be able to sustain its boost in user activity after the pandemic subsides. The company writes: "The COVID-19 pandemic and resulting social distancing, shelter-in-place and similar restrictions led to increased developer and creator and user engagement on our platform relative to our quarterly forecast and historic trends. These increases in user activity are almost certainly not indicative of our financial and operating results in future periods."</li></ul> <p><strong>Roblox's access to distribution channels is contingent </strong>upon external partnerships.</p><ul><li>In December 2020, Roblox <a href="https://www.scmp.com/tech/apps-social/article/3112379/us-gaming-platform-roblox-licensed-release-china-company-plans-go" target="_blank" rel="noopener noreferrer">gained approval</a> to operate in China through a joint venture with Tencent. This could be an enormous revenue opportunity, but it comes with uncertainty given the <a href="https://www.theverge.com/2020/10/23/21531154/judge-denies-trump-administration-ban-wechat-tencent-china" target="_blank" rel="noopener noreferrer">tense relations</a> between the U.S. and China.</li><li>Apple and Google also have significant leverage over Roblox. "For the nine months ended September 30, 2020, 34% of our revenue was attributable to Robux sales through the Apple App Store and 18% of our revenue was attributable to Robux sales through the Google Play Store, and during the same period 68% of our engagement hours on the platform were from users who signed up through the Apple App Store and Google Play Store," the company writes. Roblox raises the possibility that Apple or Google could damage their profitability by changing fee structures or data policies. </li></ul> <p><strong>Roblox needs to uphold high safety standards</strong> since so many children are on the platform; failing to do so would damage their reputation. </p><ul><li>The company writes: "We have faced allegations that our platform has been used by criminal offenders to identify and communicate with children and to possibly entice them to interact off-platform, outside of the restrictions of our chat, content blockers, and other on-platform safety measures. While we devote considerable resources to prevent this from occurring, we are unable to prevent all such interactions from taking place." </li><li>Roblox also brings up the possibility that developers make content that the community considers "illicit, explicit, profane, or otherwise objectionable." The company bans such content, but with millions of experiences available, some could slip through the cracks. </li></ul>Who Gets Rich?
<p>Investors in Roblox saw the company's valuation grow seven times over the past year. In February 2020, Roblox raised $150 million in a series G round that valued it at $4 billion. Then in January 2021, Roblox closed a $520 million series H round that generated an astounding $29.5 billion valuation.</p><p>This valuation may seem absurd to some. Is a children's video game (OK, "platform") worth <a href="https://www.barrons.com/articles/ford-has-a-hidden-asset-just-like-gm-its-stock-could-rise-soon-too-51611159634" target="_blank" rel="noopener noreferrer">nearly as much as Ford</a>? Whether Roblox can justify its valuation in the long run, here's who stands to gain from a stellar IPO, based on shareholder disclosures from the <a href="https://www.sec.gov/Archives/edgar/data/1315098/000119312520298230/d87104ds1.htm#rom87104_3" target="_blank" rel="noopener noreferrer">S-1 filing</a> on Nov. 19, 2020:</p><ul><li>Altos Ventures <a href="https://www.cnbc.com/2020/11/19/roblox-s-1-ipo-filing-released.html#:~:text=Altos%20Ventures%20is%20Roblox's%20largest,and%20Tiger%20Global%20owns%207.3%25." target="_blank" rel="noopener noreferrer">owned</a> 21% of shares.</li><li>Meritech Capital owned 10% of shares. </li><li>Roblox founder, president and CEO David Baszucki owned 12% of outstanding shares.</li><li>Index Ventures owned 9.9% of shares. </li></ul>What People Are Saying
<p><strong>"The S-1 makes plain exactly how big Roblox's ambitions are: It's trying to build an entire new world, with a new economy, a new currency, a new everything, and not just for kids. The company wants to be thought of like a tech giant, not a game developer."</strong> —Protocol's David Pierce <a href="https://www.protocol.com/newsletters/sourcecode/the-metaverse-goes-public-roblox-s1-ipo?rebelltitem=1#rebelltitem1" target="_self">wrote in Source Code</a> after Roblox filed its S-1.</p><p><strong>"Roblox could be to Facebook what Shopify is to Amazon, the non-social media social media firm. Just as hospitals, doctors offices, headquarters, shopping malls, and campuses are being bypassed and shifting hundreds of billions in stakeholder value, Roblox could disrupt the kid attention economy. Roblox is set to go public this month, and will create meaningful shareholder value. Prediction: stock trades up 70% or more on first trade. More important, Roblox could be the first social media firm whose shareholder value isn't designed to extract value from the least powerful stakeholder, kids."</strong> —NYU Professor Scott Galloway in his <a href="https://www.profgalloway.com/roblox-and-the-dispersal-of-creativity" target="_blank">No Mercy / No Malice newsletter</a>.</p>Meet the man behind The Game Awards
He doesn't make games or invest in them, but he founded one of gaming's biggest events.
Geoff Keighley created, produced and hosts The Game Awards.
Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
A few weeks ago, a somewhat-serious Twitter thread considered, "Who is the face of video games?"
According to an extremely unscientific skim of the more than 4,000 responses, No. 1 was clearly Nintendo's iconic character Mario. No. 2, and the leading real person, was Phil Spencer, Microsoft's head of Xbox. Neither should surprise you.
Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
This startup wants to upend cloud entertainment
Genvid CEO Jacob Navok thinks Google, Amazon and Microsoft have cloud gaming all wrong.
Rival Peak is a Facebook Originals animated reality show running over a 12-week season. Think "Lost" meets "Fantasy Island" meets "Survivor."
Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
Imagine yelling at live television and the characters actually hear you and respond in real time. Imagine watching a live streamer and affecting the content of the game they're playing — while they're playing — just by clicking or tapping the stream itself. Imagine online worlds you can explore with other real people simply through an interactive video stream, no downloads of any kind required.
Totally new forms of entertainment don't come along too often. Yet the path toward those innovative scenarios may become real on Wednesday as Facebook and Genvid Technologies release a genre-defying online experience called Rival Peak.
Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
For Microsoft and Sony, it’s all about the games again
The Xbox Series X and PlayStation 5 deliver superb, but different, entertainment experiences.
Astro's Playroom, which comes with the PS5, is a game about exploring the inside of a game console.
Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.
You know you've got a problem when you have a song about a graphics chip stuck in your head. A high-class, next-generation problem, that is.
But that's me, mentally trapped in the lush green GPU Jungle level of Astro's Playroom, the delightful platforming game (lots of jumping) included with Sony's new PlayStation 5.
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Seth Schiesel ( @SethSchiesel) is a contributing editor for Protocol focused on the business of video games and adjacent industries. He is a former editorial writer for The Boston Globe, entrepreneur and business reporter, technology writer and video game critic for The New York Times.