Power

Target quietly opens concept store for the future of gaming

Target hasn't announced its new concept gaming store publicly yet, but it's open now.

Target's gaming concept store in San Francisco

Target's new Game Room is all about the future of gaming.

Photo: Janko Roettgers

Target quietly soft-launched a new concept store in downtown San Francisco a few days ago: The Game Room lets people try out Magic Leap and Oculus Quest headsets, gaming PCs and mobile gaming rigs. It's an obvious play to make Target look hip to San Francisco's tech-savvy clientele, but it's also indicative of bigger industry changes.

Missing from the store are the typical gaming fodder you'd find in your neighborhood Target. No physical discs or accessories for current-generation consoles. Instead, the Game Room is all about the future of gaming, from phones hooked up to Google's cloud gaming service Stadia to a corner that explains Apple Arcade and Google Play Pass to multiple VR/AR areas. You can buy some, but not all, of the items on display. (Target doesn't currently sell the Magic Leap headset, for instance.)

Get what matters in tech, in your inbox every morning. Sign up for Source Code.

The store is largely a test of how Target can capitalize on the growing interest in gaming even as the huge amount of money being spent by gamers is increasingly on digital goods and services not sold in stores.

It also shows what a big retailer like Target considers the cool fun new thing right now. Until recently the space housed the Target Open House: a display-room for the Internet of Things, which first opened in 2015, to show off products like smart speakers and connected doorbells. It was meant to be a splashy, experiment space to demonstrate how a smart home actually works, back when that seemed exciting. The Open House closed in early January, and its website has since been promising "something exciting for the new year." The retailer has yet to announce the Game Room publicly and didn't immediately respond to Protocol's request for comment.

Back when Target opened the Open House, it wanted to make sense of IoT products, figure out which ones it could sell to a wider audience, and how it could best present these products in its regular stores. It worked.

Some of the things that were popular at Open House eventually made it into Target's regular stores, including Tile sensors, Petnet smart pet feeders and the Hello sleep tracker. "Target now has a funnel for going to market with IoT products based on data from real shoppers," the Core77 design community explained in 2017, when the Open House won its design and research award.

Now IoT devices have gone mainstream: They don't need to be demonstrated in a concept living room anymore because people understand what the smart home is. That changes the zeitgeist. Smart speakers used to be cool. Now, they're everywhere. AR headsets, on the other hand, are still way ahead of the curve, so transitioning the experimental space in San Francisco to cutting-edge gaming is a way for Target to attempt to stay relevant.

But like the IoT incarnation before it, the store will serve a practical purpose, too: It will hopefully provide data on what consumers actually want out of the future of gaming — a future that represents significant challenges for a brick-and-mortar retailer. Free-to-play games like Fortnite and PUBG have changed how consumers pay for games, and mobile gaming has been growing at a much faster pace than both PC and console gaming. Video game research company Newzoo estimates that 46% of the global gaming revenue in 2019 was for mobile games. As a brick-and-mortar retailer, Target sees next to none of that money.

For console and PC gaming, trends are less than favorable for Target as well. The retailer may still have shelves full of physical discs at its stores, but the money is clearly elsewhere: Gamers spent some $61 billion on digital downloads for PCs and game consoles globally in 2019, according to Newzoo estimates, but only $16.1 billion on physical games.

Even with this move to digital sales, there are still ways for Target to participate. After all, gamers still need consoles, PCs and phones, all of which can be sold at a store. But two trends should be even more concerning for the retailer: the launch of game subscription services like Apple Arcade and cloud gaming services like Google Stadia.

Both rely on recurring billing and digital goods, making it much harder for Target to participate in the revenue stream. Beyond that, Stadia in particular does away with expensive hardware, relying instead on a combination of game controller and Chromecast streaming adapter to bring games to the big screen — products with much smaller margins than your PS4 or Nintendo Switch. And with a recent IHS Markit estimate showing cloud gaming revenues growing to $2.5 billion by 2023, retailers like Target do have to wonder which role they will play in this world.

Get in touch with us: Share information securely with Protocol via encrypted Signal or WhatsApp message, at 415-214-4715 or through our anonymous SecureDrop.

With the Game Room, Target now has an opportunity to observe how consumers interact with these services in real life, and whether they'd be spending any money on these services in a store. The concept store had plenty of gift cards for Apple and Google services on display. The data coming out of the store could also be valuable as Target rethinks gaming for its regular retail locations, if only to figure out whether it should focus more on VR, game computers or mobile gaming accessories.

And then there's the PR factor. The Game Room is clearly also meant as marketing, and not just to San Francisco residents who may be jaded about AR and VR by now: Located across from the Moscone Center, the store is bound to attract convention-goers from across the country. And if Target can't drive the future of gaming, it may at least use it to look hip.

The fast-growing paychecks of Big Tech’s biggest names

Tech giants had a huge pandemic, and their execs are getting paid.

TIm Cook received $82 million in stock awards on top of his $3 million salary as Apple's CEO.

Photo: Mario Tama/Getty Images

Tech leaders are making more than ever.

As tech giants thrive amid the pandemic, companies like Meta, Alphabet and Microsoft have continued to pay their leaders accordingly: Big Tech CEO pay is higher than ever. In the coming months, we’ll begin seeing a lot of companies release their executive compensation from the past year as fiscal 2022 begins.

Keep Reading Show less
Nat Rubio-Licht
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

COVID-19 accelerated what many CEOs and CTOs have struggled to do for the past decade: It forced organizations to be agile and adjust quickly to change. For all the talk about digital transformation over the past decade, when push came to shove, many organizations realized they had made far less progress than they thought.

Now with the genie of rapid change out of the bottle, we will never go back to accepting slow and steady progress from our organizations. To survive and thrive in times of disruption, you need to build a resilient, adaptable business with systems and processes that will keep you nimble for years to come. An essential part of business agility is responding to change by quickly developing new applications and adapting old ones. IT faces an unprecedented demand for new applications. According to IDC, by 2023, more than 500 million digital applications and services will be developed and deployed — the same number of apps that were developed in the last 40 years.[1]

Keep Reading Show less
Denise Broady, CMO, Appian
Denise oversees the Marketing and Communications organization where she is responsible for accelerating the marketing strategy and brand recognition across the globe. Denise has over 24+ years of experience as a change agent scaling businesses from startups, turnarounds and complex software companies. Prior to Appian, Denise worked at SAP, WorkForce Software, TopTier and Clarkston Group. She is also a two-time published author of “GRC for Dummies” and “Driven to Perform.” Denise holds a double degree in marketing and production and operations from Virginia Tech.

Hybrid work has some distinct advantages when it comes to onboarding.

Photo: LogMeIn

Jo Deal is the chief human resources officer at LogMeIn. She is responsible for leading global people strategy with a focus on attracting, developing and engaging talent.

The desire for change that sprung up during the pandemic resulted in the highest attrition levels in decades and a fierce war for talent playing out in the market. The Great Resignation forced managers to suddenly make hiring their top priority, and recruitment partners became everyone’s best friend as leaders scrambled to replace key roles within their teams.

Keep Reading Show less
Jo Deal
Jo Deal serves as LogMeIn’s Chief Human Resources Officer. She is responsible for leading global people strategy with a focus on attracting, developing and engaging world class talent by expanding LogMeIn’s reputation as one of tech’s most desirable career destinations, and by providing a collaborative learning environment where employees can grow their careers.
Boost 2

Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs WordPress.com, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool Parse.ly and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Entertainment

Peloton’s terrible, horrible, no good, very bad year

2022 just started, and Peloton has already halted bike production and is talking about mass layoffs. How did the pandemic darling get here?

How did Peloton go from pandemic star to sinking ship? One answer is the classic problem of supply and demand.

Image: Peloton; Protocol

It’s been a hell of a ride for Peloton. The headlines have been practically nonstop, from 2019’s cringey wife ad to 2021’s series of unfortunate “Sex and The City” events. But in 2020, Peloton could do no wrong. The at-home fitness company saw a 172% spike in sales over the course of that year, buoyed by the pandemic forcing wealthy gym-goers to stay home.

But nothing is ever easy or certain when it comes to Peloton. In the past week, Business Insider reported that Peloton is considering laying off 41% of its sales and marketing staff and closing down stores. CNBC learned that the company has hired McKinsey & Co. to help cut costs. And yesterday, CNBC reported that Peloton is temporarily halting production of its bikes. Peloton shares promptly plunged 24%.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

Entertainment

Netflix looks to expand gaming with major IP deals, Fortnite-like updates

Remarks made to investors and recent job postings hint at big ambitions for Netflix’s nascent gaming efforts.

Netflix may be taking some cues from games like Fortnite and Apex: Legends for its own video game initiative.

Photo: Cameron Venti/Unsplash

Two months after launching mobile games to all of its members, Netflix is looking to double down on gaming: The company told investors Thursday that it wants to expand its portfolio of games “across both casual and core gaming genres.” Recent job offers suggest that this could include both live services games as well as an expansion to PC and console gaming, and the company's COO hinted at major licensing deals ahead.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Latest Stories
Bulletins