Hit Points
Independent games industry analysis and commentary by Nathan Brown (ex-Edge).
Documents
Delayed Gratification
This analysis examines the state of the global video game industry as of September 2021, focusing on the efficacy of digital-first marketing strategies and significant regulatory shifts.
- A US judge ruled that while Epic Games failed to prove Apple is a monopoly, Apple must allow developers to include links to third-party payment systems within their apps.
- The Chinese government has ordered game companies to prioritize social control over profit, specifically targeting 'obscene and violent content' and 'money-worship,' while simultaneously slowing the approval process for new online games.
- Tencent's market value dropped by $60 billion following the Chinese government's announcement of stricter regulatory oversight and reduced game approvals.
China Crisis
The Chinese gaming market represents the largest single sector for video games globally, surpassing the United States in both total revenue and player count.
- The Chinese government has implemented strict new regulations limiting minors to playing video games for only one hour per day (8-9pm) on Fridays, Saturdays, Sundays, and public holidays.
- To enforce these restrictions, Chinese gaming companies are required to implement real-name registration and facial recognition technology to prevent minors from bypassing playtime limits.
- China represents the world's largest gaming market by both player count and revenue, making it a critical but increasingly volatile territory for western developers.
Everywhere
This analysis examines the state of the video game industry as of August 2021, focusing on the centralization of influence, shifting release schedules, and significant corporate developments.
- Apple settled a 2019 class-action lawsuit allowing developers to communicate alternative payment methods to users via email, bypassing the standard 30% App Store commission for those transactions.
- Geoff Keighley has achieved significant industry centralization by managing major events including E3 Judges Week, the Game Critics Awards, The Game Awards, and headline roles at Gamescom.
- The first quarter of 2022 is heavily congested with major releases, including Horizon Forbidden West, Destiny 2: The Witch Queen, Sifu, and Saints Row all debuting within a single week in February.
Undead: Live-Service Game Analysis
The proliferation of live-service games is fundamentally altering the nature of major industry events and consumer expectations.
- Live-service games are increasingly dominating major industry showcases, often at the expense of new announcements, which risks alienating audiences seeking fresh content.
- Microsoft is expanding its xCloud streaming service to Xbox Series X/S and Xbox One consoles by the end of 2021, with over 100 titles available at launch.
- California’s Department of Fair Employment and Housing has expanded its lawsuit against Activision Blizzard to include testimony from temporary workers and allegations of document destruction.
Trust Nobody
The release of the Impostors game mode within Fortnite serves as a case study for the growing power imbalance in the video game industry.
- Epic Games released a new Fortnite mode called Impostors that is a direct clone of the game Among Us, which was developed by the small studio Innersloth without any prior collaboration or communication.
- The release of Impostors highlights a power imbalance in the industry where large corporations like Epic Games utilize their scale to replicate the successful mechanics of smaller, independent developers.
- People Can Fly reported that the game Outriders has yet to generate profit for the developer, despite publisher Square Enix reporting 3.5 million launch players and the title's inclusion on Game Pass.
Positive Education
The gaming industry is currently undergoing a critical shift in how leadership addresses the long-standing issue of crunch culture.
- Nexon CEO Owen Mahoney publicly rejected the industry standard of providing game release dates to equity analysts, citing the need to prioritize employee well-being and avoid the 'pernicious' practice of crunch.
- Following Mahoney's announcement that Nexon would prioritize product quality over meeting arbitrary launch deadlines, the company's share price increased by 8%.
- Publisher No More Robots generated $12 million in revenue during the previous year without releasing a single new title, highlighting alternative paths to financial success for indie publishers.
Lights Out
The gaming industry faces a pervasive crisis of workplace culture and corporate ethics, as evidenced by recent controversies surrounding independent and major studios alike.
- The game industry is facing a widespread cultural crisis as allegations of toxic work environments and misconduct emerge at prominent studios like Fullbright and Activision Blizzard, leading to the departure of key leadership figures.
- Xsolla fired 150 employees based on AI-driven analysis of their activity in workplace software like Jira and Gmail, citing low productivity as the primary justification.
- Epic Games has invested $500 million into the Epic Games Store to secure market share and does not anticipate the platform becoming profitable until 2027.
Moving Forward, Looking Back
This analysis examines the state of Electronic Arts (EA) during the July 2021 industry event cycle, specifically focusing on the company’s shift from predictable, profit-driven marketing to more engaging product reveals.
- EA Play 2021 marked a shift in strategy for Electronic Arts, moving away from its traditional reliance on celebrity-driven marketing toward highlighting gameplay innovations like the new 'Portal' mode in Battlefield 2042.
- Battlefield 2042's 'Portal' mode leverages nostalgia by allowing players to mix and match maps, factions, and rules from across the franchise's history, creating a sustainable content loop that reduces the burden on post-launch development.
- Activision Blizzard is facing significant industry scrutiny following a lawsuit regarding systemic sexual harassment, discrimination, and pay inequality.
Deck Building
The July 2021 industry analysis focuses on the unveiling of the Steam Deck, positioning the handheld PC as a significant and optimistic development for the gaming market.
- Valve’s Steam Deck, priced between $399 for a 64GB model and $649 for a 512GB NVMe model, positions itself as a competitive handheld console with a vast library of existing PC titles.
- The industry is seeing a wave of game delays for titles including Lemnis Gate, Resident Evil Re:Verse, Warhammer 40k: Darktide, and the Evil Dead tie-in, following their appearances at not-E3 events.
- Phil Spencer has publicly advocated for increased industry efforts in game preservation, though the author notes a potential conflict with the subscription-based model of Xbox Game Pass.
Turbulence
The gaming industry faces a significant shift in monetization strategy as Google updates its Stadia Pro revenue-sharing model.
- Google Stadia introduced a new revenue-sharing model for its Pro subscription service, allocating 70% of revenue to developers based on 'session days' rather than total playtime or sales.
- The 'session day' metric counts any number of game loads within a single calendar day as one unit, which disproportionately rewards live-service and multiplayer games while penalizing shorter, narrative-driven single-player titles.
- Industry critics argue that engagement-based payout models incentivize the creation of addictive, grind-heavy gameplay loops at the expense of high-quality, finite narrative experiences.
Denial of Service
The game industry is currently facing significant criticism regarding the operational practices of Sony’s PlayStation platform, specifically concerning its treatment of independent developers.
- Indie developers and publishers have publicly criticized Sony's PlayStation platform for its lack of support, citing opaque communication and a lack of control over game promotion and sales.
- Developers report significant operational friction, including months-long waits for account manager responses and disorganized internal communication from Sony teams.
- Sony's current developer tools lack essential features for modern indie success, such as the ability for developers to manually discount their own games or access meaningful data to optimize store visibility.
Consolidation Prizes
The video game industry is currently experiencing a significant wave of consolidation, characterized by a surge in venture capital funding and an aggressive trend of major corporations acquiring smaller studios.
- The gaming industry is experiencing a massive wave of consolidation, exemplified by Embracer Group completing 25 acquisitions since the start of 2020 and currently pursuing 20 more.
- Major industry players are aggressively acquiring studios, including EA spending over $3 billion to purchase Codemasters and Glu Mobile, and Epic Games acquiring 13 companies in two years.
- The investment climate for game developers has shifted significantly, with a surge in gaming-focused venture capital from Europe and Asia providing developers with more funding options than in the previous decade.