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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.)

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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.

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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.

Protocol | Fintech

Plaid’s COO is riding fintech’s choppy waves

He's a striking presence on the beach. If he navigates Plaid's data challenges, Eric Sager will loom large in the financial world as well.

Plaid COO Eric Sager is an avid surfer.

Photo: Plaid

Eric Sager is an avid surfer. It's a fitting passion for the No. 2 executive at Plaid, a startup that's riding fintech's rough waters — including a rogue wave on the horizon that could cause a wipeout.

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The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.

Microsoft’s master plan for consumer AR: Start with the plumbing

The company's new Mesh platform allows developers to share holograms and avatars across mixed-reality devices.

Ever since launching the original HoloLens in 2016, Microsoft executives have hinted at plans to eventually build consumer AR hardware and services.

Image: Microsoft

Microsoft unveiled an ambitious new AR/VR platform called Mesh on Tuesday that allows developers to add avatar synchronization, spatial audio, shared holograms and persistent virtual spaces to any app. At the company's Ignite conference, executives demonstrated Mesh with a virtual keynote held in AltSpace, Microsoft's social VR world that is being powered by the platform going forward. Developers will also be able to build Mesh-powered apps for VR headsets, including Facebook's Oculus Quest, and desktop PCs. Support for Android and iOS will be added in the near future.

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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.

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Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

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Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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People

How Chess.com built a streaming empire

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Photo: William West/Getty Images

There's something inherently perverse in calling chess "open source." It's a bit like saying France "pivoted" from monarchy to republic, or that indoor plumbing was a "10x idea."

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Hirsh Chitkara
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