Hit Points
Independent games industry analysis and commentary by Nathan Brown (ex-Edge).
Documents
Death of the Titans
The gaming industry is witnessing a potential decline in the influence and relevance of its largest traditional publishers, specifically Activision Blizzard, Ubisoft, and Electronic Arts.
- Major publishers including Activision, Ubisoft, and EA are experiencing a decline in influence and creative output, struggling to maintain their status as reliable hitmakers.
- Sales for the mainline Call of Duty franchise dropped 40% year-on-year as of November 2021, signaling a potential cooling of interest in established AAA franchises.
- EA’s Battlefield 2042 launched with significant technical issues and negative reception, highlighting the operational failures and lack of quality control currently plaguing major publishers.
Big Funge
The gaming industry’s recent focus on non-fungible tokens (NFTs) and blockchain technology reflects a broader trend of public companies prioritizing speculative revenue streams to satisfy shareholder expectations.
- Take-Two CEO Strauss Zelnick expressed skepticism toward the metaverse and warned that NFTs currently lack inherent value, emphasizing that they are speculative assets rather than guaranteed revenue streams.
- EA CEO Andrew Wilson identified NFTs as a future pillar of the company's growth strategy, specifically citing their potential to expand revenue within live services like FIFA Ultimate Team.
- Ubisoft CEO Yves Guillemot publicly committed to blockchain technology, characterizing it as a revolution that will enable play-to-earn models and long-term industry growth.
Duty Calls
In October 2021, Activision Blizzard CEO Bobby Kotick announced a series of corporate reforms aimed at addressing a major sexual harassment scandal and improving the company’s internal culture.
- Activision Blizzard CEO Bobby Kotick has pledged to waive his salary, bonuses, and equity awards until the company meets specific diversity targets, accepting only California's minimum wage of $62,500 in the interim.
- The company committed to increasing the percentage of women and non-binary employees by 50% and has pledged $250 million toward broader diversity initiatives.
- Activision Blizzard will end the practice of forced arbitration for employee grievances and implement a zero-tolerance policy for harassment, resulting in immediate termination for violations.
Nobody Move
The modern video game industry increasingly relies on aggressive player retention tactics that prioritize metrics over user experience.
- Ubisoft has begun using aggressive, shaming email tactics to re-engage players who have stopped playing Far Cry 6, specifically calling out individual playtime metrics.
- The gaming industry is increasingly shifting from rewarding player engagement to using 'deterrents to abstention,' such as time-limited events and daily login rewards, to artificially inflate active user metrics.
- Microsoft's gaming division reported strong financial growth, with hardware revenue increasing by over 160% and total business revenue rising by 16%.
Like and Subscribe
Microsoft’s Xbox Game Pass experienced a notable deceleration in growth during the fiscal year ending June 30, 2021, failing to meet internal performance targets.
- Xbox Game Pass growth slowed significantly in the 12 months ending June 30, 2021, reaching 37.48% growth against a target of 47.79%.
- Microsoft reined in its internal growth targets for Game Pass from 71% down to 48% for the fiscal year, yet the service still failed to meet these adjusted expectations.
- Game Pass subscription growth is one of six key metrics used to calculate Microsoft executive compensation, alongside other areas like Microsoft Teams usage.
Token Gestures
Valve’s decision to ban games utilizing NFTs and blockchain technology from the Steam platform marks a significant shift in the digital distribution landscape.
- Valve has banned games featuring NFTs or blockchain technology from the Steam platform, marking a significant shift for a major digital storefront.
- The ban is driven by concerns over legal liability, potential scams, and regulatory risks, such as those highlighted by the Evolved Apes project where a creator absconded with $2.7 million in NFT sales.
- While Epic Games has stated it remains open to blockchain games, its policy requires strict adherence to laws and age-rating standards, creating significant legal hurdles that may effectively prevent such titles from appearing on its store.
Community Spirit
The acquisition of the gaming forum ResetEra by the Swedish firm MOBA Group for $4.5 million highlights the ongoing trend of industry consolidation and the challenges of monetizing organic online communities.
- MOBA Group acquired the gaming forum ResetEra for $4.5 million, a valuation based on the site's previous year revenue of $700,000 and an 80% profit margin.
- The acquisition of online communities like ResetEra carries high risk because the user base is organic and mobile, as evidenced by the site's own history of forming from a mass exodus of NeoGAF users.
- MercurySteam is facing criticism for its credit policy, which excludes developers who worked on a project for less than 25% of its development cycle, such as in the case of Metroid Dread.
Never Too Much
The analysis examines the strategic tension between Sony’s current business model and the stated ambitions of its leadership regarding audience expansion.
- PlayStation CEO Jim Ryan has expressed a desire to expand the reach of Sony's first-party titles from the current 20–30 million player base to hundreds of millions, though the company's current strategy remains focused on high-budget, single-player console blockbusters.
- Microsoft is currently better positioned than Sony to scale its audience due to the value proposition of Xbox Game Pass, the affordability of the Series S console, and a device-agnostic approach via xCloud.
- Sony is reportedly planning to partner with TSMC to open a chip manufacturing plant in Japan by 2024 to mitigate global semiconductor shortages and reduce reliance on Taiwanese manufacturing.
57: To the Point
Sony’s acquisition of Bluepoint Games highlights a distinct, protectionist strategy compared to the aggressive expansionist tactics employed by competitors like Microsoft.
- Sony’s acquisition of Bluepoint Games reflects a protectionist strategy of securing long-term partners, contrasting with Microsoft’s aggressive expansionist approach of buying multiplatform studios.
- Bluepoint Games plans to transition from its established role as a remaster specialist to developing original content, a significant strategic shift for the studio.
- New Chinese government regulations are imposing strict content restrictions, including bans on 'effeminate males' and the removal of morality systems that allow players to choose between good and evil paths.
Odd Future
This analysis examines the integration of non-fungible tokens (NFTs) and blockchain technology into the video game industry as of September 2021.
- The gaming industry is seeing a surge in venture capital investment into blockchain and NFT-based gaming, driven by speculation rather than proven benefits for player communities.
- NFT-based scarcity models, such as the 26-second sell-out of character skins in 'Blankos Block Party', prioritize speculative profit for early adopters and developers over equitable access for players.
- The 'play-to-earn' model risks gamifying labor and introducing the pressures of late-stage capitalism into gaming, potentially worsening existing industry trends toward repetitive, job-like grinding.
10 Print RIP
This industry commentary reflects on the legacy of Sir Clive Sinclair, the British computing pioneer who passed away in September 2021 at the age of 81.
- EA's share price fell by approximately 7% following the announcement that Battlefield 2042 would be delayed by one month.
- Mobile analytics firm App Annie and its CEO were fined $10 million and $300,000 respectively by the SEC for misleading practices regarding the handling of confidential data.
- Former Bungie audio director Marty O’Donnell was found in contempt of court and ordered to pay $100,000 to his former employer for unauthorized use of Destiny assets.
Behind the Curtain
The September 2021 industry analysis examines the implications of a major database leak from Nvidia’s GeForce Now service, which exposed numerous unannounced game titles.
- The Nvidia GeForce Now database leak revealed numerous unannounced game titles, prompting industry concerns regarding the impact of premature disclosures on development teams and marketing strategies.
- Developer 1047 Games, creator of the early-access title Splitgate, raised $100 million in its third funding round since May 2021, reaching a valuation of $1.5 billion.
- Activision Blizzard faces a new lawsuit from the Communications Workers of America, which accuses the publisher of engaging in worker intimidation and union-busting practices.