Hit Points
Independent games industry analysis and commentary by Nathan Brown (ex-Edge).
Documents
Heavy Meta
The gaming industry’s recent pivot toward the metaverse is characterized by a lack of substantive definition and a reliance on corporate buzzwords.
- Unity laid off approximately 200 employees (4% of its workforce) following a 70% decline in its share price year-to-date and multiple missed financial forecasts.
- Niantic reduced its headcount by 85 to 90 staff (8% of its workforce) and cancelled several projects, including a Transformers title, citing a need to prepare for potential economic instability.
- Unity has historically failed to achieve profitability, despite significant capital expenditures such as the $1.6 billion acquisition of Weta and $320 million for Parsec.
All You Can Eat
The proliferation of game subscription services is fundamentally altering consumer behavior and the emotional connection players have with video games.
- The proliferation of subscription services like Game Pass and the new PlayStation Plus is shifting consumer behavior toward a 'buffet mentality,' where players are less likely to commit to individual games and more likely to avoid full-price day-one purchases.
- Sony’s reliance on high-budget, full-priced blockbuster exclusives faces potential disruption as its new subscription service includes relatively recent first-party titles like Returnal, undermining the traditional sales model.
- The abundance of choice provided by subscription services is negatively impacting player engagement, making it harder for users to form deep, long-term connections with specific games.
Full Bore: #130
The June 2022 analysis of the Xbox showcase during the "not-E3" period evaluates the company’s marketing strategy and the broader state of the console industry.
- Devolver Digital shares fell nearly 50% after the publisher significantly downgraded its full-year revenue forecast from an original projection of $130m–$140m to a new range of $27m–$32m.
- Microsoft’s 'not-E3' showcase focused exclusively on games launching within the next 12 months and available on Game Pass, signaling a strategy that prioritizes subscription service growth over broader industry visibility.
- Bethesda’s 'Starfield' was presented as a major title for the upcoming year, but its scope—including 1,000 explorable planets—raises industry concerns regarding potential development delays.
No Jacket Required
The June 2022 Summer Game Fest is analyzed as a lackluster industry event characterized by poor curation and a repetitive reliance on sci-fi and horror genres.
- Geoff Keighley officially announced that Summer Game Fest will return in June 2023 as both a digital and in-person event, positioning it as a direct successor to E3.
- The Summer Game Fest showcase suffered from a lack of content diversity, with a heavy over-reliance on sci-fi, horror, and violent themes across its triple-A game lineup.
- Devolver Digital’s public listing on the London Stock Exchange and subsequent investment from Sony and NetEase have drawn criticism for undermining the company's long-standing 'anarcho-punk' and anti-corporate marketing persona.
The Comeback
The live-service gaming industry faces a significant strategic oversight by focusing almost exclusively on user acquisition and the retention of highly engaged players.
- Live-service games are currently failing to address the 'lapsed player' demographic, focusing almost exclusively on user acquisition for new players and retention for existing ones.
- Implementing 'reboarding' strategies—designed to help returning players quickly understand new story arcs, currencies, and gameplay systems—could be as effective as traditional marketing campaigns for long-term game health.
- As live-service games age, the cost of user acquisition rises, forcing developers to rely on expensive, high-reach advertising like Super Bowl spots or platform-specific deals to maintain growth.
Floor Fillers
The industry landscape surrounding the 2022 "not-E3" season reflects a growing trend of conservatism among major publishers, characterized by a reliance on established franchises rather than innovative surprises.
- Sony’s June 2022 State of Play event signaled a conservative industry trend, focusing on established franchises like Resident Evil, Street Fighter, and Final Fantasy rather than new, experimental IP.
- Industry observers note that major game announcements are increasingly predictable due to early reveal cycles for recruitment purposes and the prevalence of leaks, potentially marking the end of the 'megaton' surprise reveal era.
- Geoff Keighley’s Summer Game Fest shifted expectations by explicitly focusing on previously announced titles, reflecting a broader industry cooling of hype for major showcases.
Loss Leader
The launch of the revamped PlayStation Plus service serves as a case study in how corporate leadership styles dictate organizational culture and product strategy.
- Sony's launch of the new PlayStation Plus service has been criticized for a lack of retro content, the use of inferior 50Hz PAL versions of classic games, and restrictive policies regarding subscription stacking.
- The company faced backlash for requiring users who had previously purchased discounted, stacked PlayStation Plus memberships to pay the difference when upgrading to the new service, a move Sony later attributed to a 'technical error'.
- Sony projects $300 million in revenue from PC games for the current year and expects PS5 supply shortages to stabilize by 2024.
Electronic Boutique
Electronic Arts has actively pursued potential mergers and acquisitions for several years, engaging in high-level discussions with major corporations including Apple, Amazon, Disney, and Comcast.
- Electronic Arts has held acquisition or merger talks with companies including Apple, Amazon, Disney, and Comcast, with negotiations with Comcast reaching the most advanced stage before failing over deal structure and pricing.
- EA CEO Andrew Wilson has reportedly prioritized potential deals that would allow him to remain in his leadership role within the newly merged entity.
- Ultimate Team remains a critical financial pillar for EA, generating approximately $1.5 billion in annual revenue, which accounts for over 20% of the company's total earnings.
Unlikely Story
The gaming industry is currently experiencing a trend where established developers and struggling companies pivot toward speculative technologies like NFTs and the metaverse to secure funding.
- Saudi Arabia’s Public Investment Fund has acquired a 5% stake in Nintendo, making it the company's fifth-largest shareholder.
- Improbable has pivoted to the metaverse through its new entity, M2, which secured $150 million in funding from Andreessen Horowitz to develop 'Otherside' in partnership with Yuga Labs.
- Improbable’s previous cloud-computing platform, SpatialOS, struggled with scalability and high costs, with one developer estimating server maintenance at $5 per user per month.
No Time to Explain
The esports industry faces a significant barrier to mainstream growth due to a persistent failure to make competitive gaming accessible and readable for casual viewers.
- Esports broadcasts consistently fail to accommodate newcomers, as high-speed camera cuts and jargon-heavy commentary create significant barriers to entry for non-aficionados.
- Competitive gaming titles like Overwatch and Halo Infinite struggle with spectator readability, often prioritizing high-level balance over the clarity required for a broader audience.
- Capcom revised its restrictive tournament licensing agreement for Street Fighter V following community backlash, acknowledging the importance of grassroots support.
Star Burst
The delay of Bethesda’s Starfield and Redfall from 2022 to the first half of 2023 highlights a significant shift in the development expectations for Microsoft’s first-party studios.
- Bethesda has delayed the release of both Starfield and Redfall from 2022 to the first half of 2023.
- The delay leaves Microsoft's Xbox Game Pass with a lack of major first-party titles for the remainder of 2022, highlighting a continued reliance on third-party content to sustain the service.
- While Microsoft's acquisition strategy provides developers with a financial safety net and reduced pressure to meet traditional Q4 release windows, it simultaneously increases expectations for technical quality and stability from studios like Bethesda.
Final Score
The dissolution of the thirty-year licensing partnership between Electronic Arts and FIFA marks a significant transition in the sports simulation genre.
- Electronic Arts and FIFA have officially ended their 30-year licensing partnership, with EA transitioning its football series to the new brand name 'EA Sports FC'.
- EA is moving away from the FIFA license because it has secured independent rights with individual clubs, leagues, and players, and believes its 'Ultimate Team' brand is strong enough to stand alone.
- Elden Ring has reached 13.4 million units shipped, contributing to a 50% profit increase for Bandai Namco in the 2022 fiscal year.