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Call of Duty should stop innovating

The series’ biggest successes don’t come from innovative ideas, but old ones done well.

Call of Duty lost its way.

Call of Duty is one of the oldest franchises in gaming. After Call of Duty 4: Modern Warfare, Activision began releasing new Call of Duty (COD) games every year. That makes 15 games in 15 years. The latest COD game is Call of Duty: Modern Warfare 2. This is the second time they’ve released a game called Call of Duty: Modern Warfare 2. It gets confusing.

Four studios release Call of Duty games: Infinity Ward, Treyarch, Raven Software and Sledgehammer. Infinity Ward started the series and made the first four games, but the original creators, Jason West and Vince Zampella, left in 2010 after contract disputes. Infinity Ward still lives on and makes games in the series, but without its original creative direction.

I’ll be going through the rise of Call of Duty, the decline, and the resurgence.

All Call of Duty games released since Call of Duty 4, in order of release.

The Rise of Call of Duty

Call of Duty 4: Modern Warfare, 2007 -> Call of Duty: Black Ops 2, 2012

The franchise used to be on top of the world. The first three games sold alright and established the franchise. However, starting with Call of Duty 4: Modern Warfare, they released the biggest hits of their era. COD 4 shattered expectations and changed the way the world viewed shooters. It was one of the bestselling games of all time. They released World at War the next year. It deviated from the modern theme, and came close to, but did not exceed Call of Duty 4. Modern Warfare 2 was a return to form. It outsold Call of Duty 4 by almost ten million copies. The year after that, they released Black Ops. It was the biggest game of all time when it launched. It looked like Call of Duty would start breaking records every single year.

They didn’t quite make it. After Black Ops, they released Modern Warfare 3. It didn’t match up to Black Ops, but it was still a huge success. The capstone of Call of Duty’s era of dominance was Black Ops 2. It hit $1 billion dollars in sales faster than any other entertainment property ever to that point. It was also the last time a Call of Duty would reach those heights for a decade.

The Decline of Call of Duty

Call of Duty: Ghosts, 2013 -> Black Ops 4, 2018

What happened? Call of Duty lost its way. 
After the smash hit of Black Ops 2, they released Call of Duty: Ghosts. For the first time since World at War, people saw Ghosts as a step back for the franchise. Black Ops 2 had refined the game to a level Ghost’s couldn’t match. The solution? Change things up.

They made Advanced Warfare, a game which completely changed the way Call of Duty played. Gone were the days of real-world weapons and tight, grounded gunplay. Instead, they introduced flying movement options, robot suits with chain guns, and a futuristic aesthetic. To be fair, Black Ops 2 also had a futuristic theme. However, Advanced Warfare pushed far beyond what Black Ops had been willing to do. Audiences didn’t like it. It sold worse than Ghost and Modern Warfare 2. It heralded the true decline of Call of Duty.

Infinite Warfare (2016) marked a whole-new low for the franchise.

They managed to recover slightly with Black Ops 3. BO3 was another deviation from the standard COD formula. They introduced characters with ultimate abilities, not too dissimilar from games like Overwatch. It didn’t sell well, but it wasn’t the disaster that Infinite Warfare was. 
 The next game, Infinite Warfare, doubled down on a lot of Advanced Warfare’s features. Advanced Warfare failed to outsell Call of Duty: Ghosts, but Infinite Warfare didn’t even outsell Call of Duty: World at War. It was the worst selling COD title since Call of Duty 3. They followed it with WWII, which barely outsold World at War. The last title in their six-year slide was Black Ops 4. It also failed to outsell World at War. Call of Duty looked like it had fallen off.

The Resurgence of Call of Duty

Call of Duty: Modern Warfare, 2019 -> Call of Duty: Modern Warfare 2, 2022

Call of Duty didn’t return to having the largest game launch in history by innovating. They did it by polishing.

There was a time when the Call of Duty franchise innovated. Call of Duty 4: Modern Warfare changed multiplayer shooters forever with its progression system and loadout customization. For years, every other shooter needed to be Call of Duty. Then, the leadership behind the series left. They formed Respawn, who has recently innovated on the Battle Royale genre with Apex Legends. That left multiple studios to maintain the series, but none of the original creative spark. So far, Infinity Ward, Treyarch and Raven have succeeded through polishing, not innovating.

They did it with horde mode. Gears of War created horde mode, a mode where players would defend an area against waves of AI controlled units. Treyarch implemented and furthered the mode with Nazi Zombies, a horde mode in Call of Duty: World at War. They have created the most successful hoard mode of all time.

Call of Duty’s Warzone is outperforming all other BRs on Steam

More recently, they did it with the battle royale (BR). PUBG and Fortnite set the world on fire with the BR genre. Battle Royale games pit a large group of players in an increasingly shrinking arena, akin to the Hunger Games. Every shooter added a hoard mode, and Call of Duty had to do the same. Though it was not world-beating, Treyarch created a BR in Black Ops 4. Infinity Ward showed just how good they were at polishing when they created Warzone. Warzone is one of the biggest BRs in the world. They didn’t add much to the genre. They took a lot of existing ideas and they put a Call of Duty twist on them. They polished, not innovated.

Odd Studio Out

I left a studio out: Sledgehammer. I think Sledgehammer proved that they do know how to innovate. Most of the failed Call of Duty games rolled out half-baked ideas and innovations that didn’t change the core gameplay loop. Advanced Warfare took COD in a new direction. It was the most innovative COD game since Call of Duty 4. The problem was that it wasn’t a COD game.

They changed too much, and the game didn’t feel right to COD players. However, this just shows the potential Activision has with Sledgehammer. A lot of the changes in Advanced Warfare went on to be successful elsewhere. The movement system in the game is similar to the movement system in Apex Legends. The future aesthetic is similar to Titanfall or Halo. In a lot of ways, Sledgehammer carries the torch handed off by West and Zampella. They just haven’t been a good fit on Call of Duty.

The Future of Call of Duty

Call of Duty players just want to play Call of Duty. There’s a lot of crossover between COD players and fans of other shooters. However, time has shown that when people buy a COD game, they are looking for something specific. COD finds itself in an interesting position. On the surface, COD would be perfect as a live-service game. Just release a new COD every 3–5 years instead of every year, and just provide new content for the game during that lifecycle. However, that doesn’t fit the business model. Even poor COD launches made millions, so why pass up on selling a new game?

Call of Duty should embrace what it is and market itself like a sports game. Instead of messing around with Vanguards or WWII, they should release yearly versions of the games. Modern Warfare 2022, Black Ops 23. That way, they can keep polishing the games every year, keep adding new content, but not worry about having reinvent the wheel every single year. People don’t want a new wheel anyway.

Sources:

vgchartz.com for sales figures.

Steam charts for player data.

Gamerant for COD games ranked by sales.

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Six companies used to rule gaming. Only two of them still exist.

Photo Credit: Jason from The Wasteland

Titans in Gaming Part 1: The Old Titans

I found a series of articles in Computer Gaming World from the late eighties talking about the “Titans of Gaming.” They covered what they considered to be the five most important game producers. Of the five, two names may be familiar: Electronic Arts and Activision. And the things that are said about them are telling. On Activision:

“Activision’s forte is raw talent and rampant creativity. For optimum effect, this must be harnessed and channeled, not just sprayed around indiscriminately, and the only way to do so is under pressure from the consumer.” Computer Gaming World 38, June 87 (emphasis added).

On EA:

“Some of EA’s games are based on premises which have already been explored by other companies, but even when this is the case, EA’s distinctive style brings new life to the most over-exploited of ideas.” Computer Gaming World 37, May 1987 (emphasis added).

These do not sound like the companies of today. One does not think of “rampant creativity” when they think of Activision. EA still makes games based on premises that have already been explored, but would you say that they have a distinctive style? I would argue that both companies are natural evolutions of their 1980s versions, and that they outlived their competition because of changes they made during the video game crash.

The video game crash

Gaming went through a rough period in the early eighties. The video game crash happened in 1983, and many companies active at the time didn’t make it. The crash primarily affected console makers and console game studios in the US, but it had ripple effects throughout the rest of the industry. Most of the companies we’ll be looking at today made PC games during the 80s, which did not take as much of a hit as console games. Still, you will see how the turbulence caused a need for change that some could weather, and others could not.

The Casualties

Epyx

Epyx is one of the failed titans of the gaming industry. They had their heyday during the video game crash. They specialized in action games. One of their most popular games was called California Games. It was a different time. During this era, action games did not dominate the landscape like they do today. Most AAA games today would be considered action games then. During that era, adventure games had a larger foothold in the PC marketplace, and action games did better in the arcade and on consoles. Unfortunately for Epyx, the console market crashed for a few years.

Epyx’s California Games is one of the few Epyx titles still being sold

Epyx failed the way many of the companies in that era did: they failed to adapt. They made most of their money on the Commodore 64, and they refused to make games for Nintendo systems because they didn’t want to pay the licensing fees. They ended up in a situation where they wasted money on old systems, and when they did move forward, they made a deal to make games for the Atari Lynx. They ended up being overextended, and they had to file for bankruptcy. They sold off their properties piecemeal and have left virtually no footprint on the gaming landscape.

Infocom

Infocom specialized in a type of game that doesn’t exist anymore: text-based adventures. They created Zork, which you may have heard of, and many others you haven’t. They relied on text-based games for their entire lifespan. They dominated in the PC market in the 70s. They survived the video game crash initially because they didn’t rely on the console market. In the 80s, though, their limited range started to hurt them. Graphical games were growing in popularity. Infocom’s solution? Marketing. They argued that graphics were overrated compared to the power of human imagination. For a while, people believed them.

Infocom’s campaign against graphics in games.

Their lack of range hurt Infocom, but their non-game efforts forced them to sell the company. Infocom tried to expand into business software while continuing in games. This meant that they dropped a huge amount of money into a database product called Cornerstone. Unfortunately, Cornerstone flopped, and they didn’t have enough money to keep the doors open long-term. They laid off half of their staff and sold the company to Activision. Activision would close the studio entirely not long after. Overall, the value of the Infocom library was not as high as it could have been. Zork remained a valuable property for years, but the rest of their adventures faded into obscurity. Their inability to adapt to the graphical era ended up ruining the brand in the long run.

MicroProse

MicroProse formed right before the video game crash. They specialized in PC games, though, so the crash didn’t force them out of business right away. They made simulation games and started a number of game series that are ongoing today. Sid Meier was one of three founders. MicroProse released XCOM and Civilization.

MicroProse’s most successful franchise, Civilization, outlived the company by decades.

Of the three dead titans, MicroProse’s library would transfer the best to modern day. They made many vehicle simulation games, like Solo Flight and F15 Strike. Vehicle simulation games thrive now as a niche market. Their other specialization, strategy games, has grown into a larger niche now than it was at the time. XCOM and Civilization, two strategy games MicroProse invented, have both gone on to be top games in the strategy genre. In fact, both titles are produced by Firaxis Games, a studio formed by former MicroProse members.

Ultimately, MicroProse fell prey to two major problems. The first is talent drain, a common theme among all these fallen companies. The most well-known man to leave MicroProse was Sid Meier. However, when Sid Meier left, he also left with other talented leaders and developers. The other thing that MicroProse failed in was diversification. Their niches weren’t large enough in the 80s and 90s to support their business, so they looked for other options. Bill Stealey, one of the founders, insisted on investing in arcade games. Sid Meier disagreed and ended up leaving over that disagreement. MicroProse’s arcade games failed, and they went public to pay back the debts that they had accrued in the arcade business. They limped along for a few decades as the team shrank and they produced fewer and fewer games. Firaxis, the company formed from former MicroProse talent, is alive and thriving to this day.

Atari

Atari wasn’t mentioned in the Titans of Gaming series, but it definitely fit the bill. Atari used to be synonymous with console gaming, and they also played a core role in the video game crash. They made the most successful gaming console of their generation: the Atari 2600. They popularized the gaming console. They started out as a game studio, making arcade ports and a few original games. Nolan Bushnell, Atari’s founder, wanted to build a console, but knew the company couldn’t afford to bring it to market. So, he sold the company to Warner Communications. The 2600 succeeded, but Bushnell and Warner had a falling out, so Warner let him go. Just five years later, they became to the main cause of the video game crash.

The Atari 2600 was synonymous with gaming for years.

They failed in many ways, but ultimately, they overextended and produced too many games that they couldn’t sell. They produced a poor port of Pac-Man for the 2600, and they printed more copies of the game than existing 2600s, expecting it to sell the console. They failed to sell all those copies, and so had to eat the manufacturing costs of printing all of those cartridges. Then they made what is widely cited as the worst game of all time: E.T. Atari rushed E.T. out the door with six weeks of development time. They failed to sell many of the two million copies they shipped.

All these things come back to a company that had become bloated, and who thought they could sell video games regardless of their quality. When the games market flooded, they had too many failed titles and excess stock to stay afloat. Warner Communications sold the company, and it looked like the end of gaming.

Fall of the Titans

Each of those companies was a titan in their heyday. Some still exist as brand names, like Atari and MicroProse, without any of the people or properties they used to have. Others are gone completely. What do they have in common?

1. Failure to adapt to the shifting market: Although Epyx, Atari, MicroProse and Infocom all made different types of games/consoles, they all fell apart within ten years of each other. The 80s and 90s were a period of rapid change in gaming, and these companies didn’t follow along with it.

2. Loss of original leadership: Most of these companies lost prominent members around this era. Atari lost its founder and MicroProse lost Sid Meier. The talent drain crippled their ability to adapt.

Now, let’s look at some of the survivors.

The survivors

Gaming had a lot of growing to do, and it bounced back better after the video games crash. However, most of the existing market was replaced. Most, but not all. I want to highlight some of the survivors of the video game crash and show why they are still winners today.

Activision

Activision is an old game company. They were, in fact, the first company to make third-party console games. Former Atari employees started the company in 1979. They made Atari 2600 games. And just a few years after they opened, the console market crashed. They pivoted a few times, first to PC games, then to PC software. They even acquired Infocom. None of it worked. However, a young businessman saw potential in the company, and you might recognize his name: Bobby Kotick.

Bobby Kotick has owned Activision for over 30 years 

Kotick saw the value of Activision for its brand name, so he bought it. Kotick led the company through bankruptcy and moved them back to basics. He focused on IP. He went through Activision’s back catalog and republished what he could, and he released sequels to things that worked, like Zork. Business trended back up.

They used their success to go on an acquisition spree. They bought many well-known companies, some of which they still hold. Raven Software, Infinity Ward and Treyarch are all acquisitions that Activision made in the late 90s/early 2000s and now all three work on Call of Duty. They expanded out across genre and platform, and succeeded as a business first, and a producer of games second.

Bobby Kotick saved Activision, and he is still at the helm. In many ways, they are still the same company. They use their IP and back-catalog on a level rivaled only by Nintendo. They do not hesitate to gut companies under them when they underperform. They are not the company they were pre-Kotick, known for “raw talent and rampant creativity.” Often, raw talent leaves Activision to form their own studios. However, they are a true titan of gaming.

EA

EA was a company formed on the eve of the video game crash. They started in 1982, and they focused on home computer games, not console games. Unlike Activision, or Infocom, or Epyx, EA was not formed by a passionate group of game developers. It was the brainchild of Trip Hawkins, a former Marketing Director at Apple. He saw the business of games as being profitable, and so he formed a game publisher, not a developer. The EA formed then was not too dissimilar from the one today.

Sports games have been a cornerstone of EA’s business since the 80s

EA got its big break making sports games. To this day, sports games make up a large portion of their revenue. Sports games were competitive at the time, and EA gained an advantage through smart partnerships. First, they partnered with NBA players Dr. J and Larry Bird to make a one-on-one basketball game. The game succeeded, but not on the level of their next major sports title, Madden. They partnered with John Madden and worked closely with him to hone the gameplay. In both cases, EA used its partnerships to improve gameplay and to advertise the game. EA’s success throughout the video game crash came down to smart business decisions. They were ahead of their time, behaving more like a big tech company than an old-school game developer.

Nintendo

Nintendo wasn’t listed as a Titan in Gaming in the 80s, but they would definitely qualify. I won’t go into much detail about them here, because I already wrote another article on their president during this era. They succeeded by making an affordable console, and by having strong game IP for decades. Their president had a strong hand in both.

The new titans

How would the titans in gaming list look today? Well, we already know two of the names. To keep with the spirit of the CGW list, we will ignore the console makers. These are the five most important game publishers today.

1. Tencent

2. NetEase

3. EA

4. Activision

5. Bandai Namco

Soon, I’ll cover what makes these the new titans in gaming.

References:

The Ultimate History Of Video Games Revisited (retrieved from https://archive.org/details/ultimatehistoryofvideogamesrevisited).

Computer Gaming World Issues 36–41

CGW Issue 53 (on Activision) https://archive.org/details/Computer_Gaming_World_Issue_53/page/n55/mode/2up

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The real story behind the Activision-Blizzard acquisition drama

Sony has a lot to fear from the Activision-Blizzard acquisition, and it has little to do with Call of Duty

A business move has dominated gaming news for the last month. Not new game announcements, or a new console, or tech or a service. We’ve been caught up in the drama around a business deal and the fallout from it. We’ve been caught up in a new saga of Xbox vs PlayStation, with Activision-Blizzard as the newest wrinkle. Microsoft offered almost $70 billion buy Activision-Blizzard in January of 2022. Activision-Blizzard is made up of three game publishers: Activision, Blizzard and King. Activision has been one of the biggest and most consistent game publishers for over thirty years. They own Call of Duty, the biggest console-gaming franchise in the world. King dominates on mobile. You may have heard of Candy Crush, which King produces. Candy Crush has been a top-ten grossing mobile game for years running. Blizzard rounds out the three. Blizzard has had a rough few years, but they still own World of Warcraft, Diablo and Overwatch. Overall, Activision-Blizzard owns the most valuable third-party game catalog in the world. Microsoft wants to own that.

Microsoft may have jumped the gun a little bit on their promo graphics.

Blizzard accepted Microsoft’s deal. Microsoft announced the deal with fanfare and talked about all the things they would do with the Activision-Blizzard catalog. Not all were pleased.

Government Intervention

The deal has not gone off as smoothly as Microsoft had hoped. Microsoft is a global company, and so they are subject to scrutiny in many countries. Some countries, like Brazil, have already cleared the deal. However, others are holding it up. Most of the news around the acquisition right now centers on the Competition and Markets Authority (CMA) in the United Kingdom. The CMA won’t approve the acquisition until they finish their investigation. Microsoft is taking the CMA seriously. The CMA recently required Meta to sell Giphy, a GIF sharing website it owned. They reasoned that Meta could restrict access to GIFs from other social media sites, gaining an uncompetitive advantage. They hold the power to cancel the Activision-Blizzard acquisition as well.

The CMA building in London

The CMA has called into question a lot of things regarding Microsoft and Sony’s position in gaming. Why Sony? Sony has been talking openly to the CMA about the perceived harm that Microsoft would inflict on the industry. They brought up the power of Call of Duty, and called it an “essential game”. The CMA entertained that argument. Microsoft countered by bringing up Nintendo’s success. The Nintendo Switch doing great without even having Call of Duty on their platform. Then, Sony pivoted, and brought up the danger of Microsoft making Activision-Blizzard games exclusive. They stated with console exclusivity, and then pivoted again to the dangers of Microsoft putting Call of Duty on Game Pass. Microsoft CEO Satya Nadella argued that Xbox is in third place in the console wars. Sony, in his estimation, is winning. “So if this is about competition, let us have competition,” Nadella said.

All of this can come off as childish. Maybe Sony is being a sore loser, or Microsoft is deliberately misrepresenting their strength as a company to get the acquisition to go through. It runs deeper than that, and the arguments to this are revealing a lot about Microsoft and Sony’s business models and views on gaming.

Microsoft’s Long-Term Strategy with Xbox

Xbox is prioritizing the cloud. Photo by Muha Ajjan on Unsplash

Xbox struggled during the Xbox One era. The Xbox One underperformed in sales, losing both to the PlayStation 4 and the Nintendo Switch. Microsoft had to cancel or delay big exclusives like Scalebound and Halo Infinite, and the exclusives that did come out didn’t compete well with PlayStation exclusives. With all this in mind, Microsoft decided to shift their focus. They stopped focusing on selling consoles, and instead focused on building the Xbox brand outside of consoles

They created Game Pass, a game subscription service similar to Netflix. They moved in 2018 to put all their first-party games on Game Pass day one. At the time, you could buy a year’s subscription to Game Pass for $60. For the price of one game, you could have access to every new Xbox release and a library of other games, too. They launched Game Pass on PC the next year, at the same introductory price point. Microsoft decided to make a long-term investment. They pivoted away from the traditional console strategy. 

Nintendo sells their first party games for full price years after release. Mario Kart 8: Deluxe has been a top-10 seller for boxed games since its release in 2017 and it hasn’t seen a price decrease. PlayStation games don’t hold that much value, but as we’ll talk about soon, they still rely on first-party AAA game sales at $70 apiece. They’ve released a few first-party games in the top-ten grossing for the year. Microsoft has released zero. Microsoft still sells their first-party games standalone, but they have shown that they don’t plan to win in gaming the same way as Sony or Nintendo.

Microsoft is trying to play the long game on the console wars. The Xbox Series S has the worst specs of current generation consoles, but it runs Game Pass games just fine. With cloud streaming, Microsoft could also extend the life of the Series S beyond when its hardware falls too far behind. They sell both the Series X and the Series S at a loss, but the Series S is sold at a higher loss. With chip shortages, both Microsoft and Sony have a hard time producing enough premium consoles to meet demand. The Series S gives Microsoft another way to push their platform even when they face supply constraints. 

Xbox as a platform makes most of its revenue digitally. AAA games sales don’t matter as much to Microsoft as they do to Sony. However, they do care about subscription revenue. The Brazilian investigation of the acquisition forced Microsoft and Sony to report how much they make from subscription services. Microsoft made approximately 20% of their revenue on Game Pass alone. The exact number for PlayStation Plus hasn’t been released publicly, but we know that it is lower. These numbers only take console data into account, so Game Pass is outperforming PlayStation Plus by even more if you take PC into account.

In this light, the Activision-Blizzard acquisition is just another step in a long-term plan. Microsoft could put Activision-Blizzard games on Game Pass and get their subscription revenues up. They could also sell the games on other platforms, like they already do with Bethesda. Over time, the percentage of their revenue that they make selling Xbox consoles and games will drop, and they will make more money from subscriptions and sales on other platforms.

Sony’s strategy with PlayStation

Photo by Kerde Severin on Unsplash

Sony’s strategy with PlayStation is closer to the traditional console strategy. They make more money than Microsoft on console sales, and they make more money on AAA game sales. They also make more money on boxed game sales than Microsoft. They have higher revenue and profit from gaming right now than Microsoft does. 

For these reasons, Sony wants to maintain the status quo in gaming. As long as consumers are buying their AAA games for $70 and buying them multiple times a year, Sony will maintain and build on their lead. They have more first- and second- party AAA IP, and these games have sold better than Xbox exclusives. They lose these advantages if they have to follow Microsoft. They don’t have enough IP or cash-flow to buy IP to make PlayStation Plus compete with Game Pass on value. If they started releasing games on PC the same day as on PlayStation, they would cannibalize their console sales and their full-price AAA game sales. They cannot compete on infrastructure, either, so cloud gaming and subscription services are not going to be as viable for them.

The Sticking Point: Game Subscriptions and Cloud Gaming

Photo by C Dustin on Unsplash

All of this comes back to cloud gaming and subscription services. The CMA agrees. The two points of competition that they keep coming back to are cloud gaming and subscription services. Here’s how they laid it out in their issues statement

“The Merger gave rise to a realistic prospect of an SLC [substantial lessening of competition] as a result of vertical effects arising from:

A: Microsoft withholding or degrading Activision’s content — including popular games such as CoD [Call of Duty] — from other consoles or multi-game subscription services; and

B: Microsoft leveraging its broader ecosystem together with Activision’s game catalogue to strengthen network effects, raise barriers to entry and ultimately foreclose rivals in cloud gaming services.”

They worry that Microsoft could leverage Activision content to force other multi-game subscriptions and cloud gaming services out of business.

Microsoft created a rebuttal, arguing against both points. On cloud gaming, they argued that the technology is still new, and that they only advance cloud gaming in general through innovation. On multi-game subscriptions, they argued that “Multi-game subscriptions are a means of payment — not a market.” You can find the full arguments here, as they are too extensive to quote.

Whether subscriptions are an innovation or just a different means of pay, they are changing the gaming landscape as we know it. Microsoft is hitching their future in gaming to Game Pass. Sony sees that as a threat, and so they are trying to convince the CMA to shut the acquisition down. If the deal goes through, we will see if Sony adapts to the subscription landscape, or if the gaming ecosystem becomes more stratified. We could see a world where Xbox, PlayStation and Nintendo do not directly compete with one another at all in gaming.

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Nintendo’s Godfather: Winners in Gaming 2

“I tell people that ‘entertainment is valuable when it is different from other entertainment,’ and these are Yamauchi’s words. It was Yamauchi who laid the foundation of our universal way of thinking and the foundation of Nintendo today.” — Current Nintendo president Shuntaro Furukawa

Hiroshi Yamauchi, Third President of Nintendo

Nintendo has only had three presidents since it became a gaming company. They’ve been in gaming for about 80 years, and one man sat at the helm for 60 of those 80 years. That man was Hiroshi Yamauchi, the godfather of Nintendo. He didn’t follow the typical path, but he exemplifies winning in gaming. Most of the influential figures in gaming history are passionate creators. You have the John Carmacs, the Shigeru Miyamotos, even the Vince Zampellas. Yamauchi does not fit this mold. He was not an engineer, and he knew nothing about making games. He didn’t even play video games. He preferred to play Go. He was, however, one of the biggest winners gaming has ever seen.

Yamauchi brought Nintendo into gaming. When he started, they made playing cards. He shepherded them from playing cards to the move into games all the way into the GameCube era. He led the company for almost 60 years, which blows other industry leaders out of the water. His actions often hid behind the scenes, but you can see his impact. Nintendo nearly went out of business multiple times early in his tenure, but he crafted them into one of the biggest juggernauts in gaming, and the largest gaming company in Japan. He made Nintendo what it is today.

This is the second post in the Winner’s In Gaming series. If you enjoy it, check out the first one on Phil Spencer.

He learned to deal with adversity early

Yamauchi’s young life was rough. His father left him and his mother when he was young. His mother gave him up to her parents. His grandfather, Sekiryo Kaneda, owned Nintendo. Yamauchi had a strict upbringing: he went to prep school, and then law school. He didn’t even get to finish law school. His grandfather asked him to take over Nintendo when he was only 21. This sort of upbringing sets him apart from others at his level. He didn’t have a technical education, he didn’t grow up playing games, and he didn’t have a passion for tech. He took charge of Nintendo because of his grandfather’s failing health.

Yamauchi was a hard man

Yamauchi had one condition for taking over Nintendo: his grandfather had to fire every other family member who worked there. He got his own cousin fired and took over the company. Immediately, the factory workers went on strike. Yamauchi fired them all. He even set up multiple R&D departments that directly competed against one another. He was a hard man.

These things are at odds with how we see Nintendo from the outside. They made playing cards, then toys, and finally video games. Their mascot is Mario, who always smiles. They appeal to all ages. Yet, Yamauchi set all of these things in place. He was the one who moved Nintendo into toys and into gaming, and he insisted that they be a family-friendly company.

Yamauchi had a hard upbringing, and he saw Nintendo as a business, not a passion project. In many ways, he resembles a similar figure: Walt Disney. Disney was seen as tyrannical to many, and he also insisted on his company being family-oriented. Yamauchi pushed for success first. He put the company first. In his mind, making video games was just the best way to achieve that.

There were some choices he made that people wouldn’t agree with today. He was considered a tyrant. He worked his team hard. He even set up his teams in competition with one another. He had two R&D teams competing for funding. That work environment sounds difficult, maybe even toxic. However, employees of his reported that they thought he was a good boss. He resembles Steve Jobs, Bill Gates and other tech giants. He had high expectations and saw markets well ahead of their time.

He created the NES

Photo by Jason Leung on Unsplash

Yamauchi was ahead of the curve on game consoles. Nintendo didn’t release the first gaming console, but Yamauchi’s approach was unique. He wanted something other companies couldn’t copy for at least a year, but at the same time something so cheap almost everyone could buy it. He wanted to make a console that they could sell reliably for years.

He saw the hardware as a means to an end, and that set the tone for Nintendo from their beginnings as a game company until today. His vision for the NES was to make a cheap system that was easy to program for. In a lot of ways, he resembles an early Bill Gates. He was more interested in getting Nintendo consoles with games into people’s homes than with turning a large profit on a per-console basis.

He focused on games, not hardware

Yamauchi focused on games first, setting the tone for Nintendo as a company. He personally approved every game that Nintendo released for years. He didn’t even play games, but he had a great idea of what would sell in the market. He picked out the people who would make them, too. He hired Shigeru Miyamoto. He gave Miyamoto a chance on Donkey Kong, Miyamoto’s pet project. Others saw Miyamoto as a dreamer without business sense, but Yamauchi saw the talent in him. Donkey Kong sold great, and Miyamoto would go on to create Super Mario Bros., Zelda and other greats.

Photo by Cláudio Luiz Castro on Unsplash

Yamauchi valued his developers as creators, not for their technical skills. From the book Game Over by David Sheff: “Nintendo would, Yamauchi decided, become a haven for video-game artists, for it was artists, not technicians, who made great games.” Even though he made the final decision on whether to ship a game, he still valued talent, and he trusted his team enough to have them make innovative games.

He left the company on good terms

Yamauchi held the office of president at Nintendo for 53 years, but not on purpose. He wanted to leave around 1996, but didn’t until 2002 because he failed to find a good successor. Not surprising, because he had such a close hand on the company that he approved each game. He didn’t know if the company could handle itself without him.

After that, he stayed on the board for a number of years until Satoru Iwata became the CEO. At that point, he felt the company was in good hands. He didn’t even draw a pension, despite his being worth millions, because he felt he had enough with his equity in the company. He wanted the money to be put to good use in the company. It really shows his character. He cared more about Nintendo as a company than most people would.

Yamauchi created the most dominant gaming company in the world, and he did it by his own vision. He took risks. Under his leadership, Nintendo almost went out of business many times. He presided over the rise of Nintendo, and personally picked many of the current leaders in the company. He is undoubtedly one of the greatest winners in gaming.

Sources: https://www.tofugu.com/japan/hiroshi-yamauchi/, · https://www.usgamer.net/articles/hiroshi-yamauchi-the-iron-fist-in-the-velvet-glove, https://www.nsidr.com/archive/profile-hiroshi-yamauchi

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The Horizon Zero Dawn Remaster Makes Sense (to Sony at least)

A document leaked a couple of days ago that covered upcoming PlayStation releases. It listed a remake for Horizon Zero Dawn. Sony has gotten into the habit of remaking games recently. The Last of Us remake already seemed a little strange given how recent that game was (the Last of Us released in 2013, and they remastered it the first time in 2014). Horizon Zero Dawn came out in 2017, and it got an upgrade on PS5 already . Why does it need a remaster? Because Sony is using it for cross-platform promotion.

The Last of Us remake came out right before they released the first trailer for the Last of Us show. They released the Uncharted: Legacy of Thieves collection one month before the Uncharted movie launched. They are coordinating their releases of games and other media to cross-promote one another. They want to have a Horizon game closer to the release of either the show on Netflix or to the promotional blitz that will come for the show. The next full game in the series would miss the launch of the show. They also seem to be prioritizing releasing a game that is covering the same materiel as the adaptation. For The Last of Us, they remade the first game, which is the game that the show is adapting. They did a similar thing with Uncharted.

Other companies have found success with this model. Most recently, Cyberpunk 2077 hit its biggest player count since its launch. They released new content at the same time that the show launched, and their sales and play numbers skyrocketed. This strategy will become more common in the industry as publishers get better at adapting their IP.

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Stadia is shutting down

But the tech will live on

Google announced that they are shutting down Stadia at the beginning of next year. This came as a surprise to game studios still making games for stadia and no one else. Stadia has not been doing well for a long time. Many considered it dead on arrival. The writing was on the wall as early as 2021, when Google shut down their internal game studios.

Stadia did not fail because of the streaming service itself. The technology works. It is a competent streaming service. I talked about this in my blog post about the cloud gaming wars, but the business model really let Stadia down. Playing games on the service works, but it has a poor catalog, and you have to buy your games individually. It’s positioned to compete with consoles, and so it loses to other cloud gaming services on value and on IP. Why would you spend on a gaming library on Stadia when you could get all of Game Pass for $25 a month? Even Amazon Luna is a better value than Stadia.

Because the tech behind Stadia is good, it still has a future. Google spun off Stadia’s B2B service as Immersive Stream for Games. They licensed the tech out to Capcom to fuel a browser-based Resident Evil: Village demo. They could always sell the technology that way. If any other company wants to get into cloud gaming, like Nintendo, Google could sell them Stadia as a technical solution. They could also just sell smaller, browser-based solutions to companies. Either way, Stadia as a service is dead, but the tech behind it will live on as Immersive Stream for Games.  

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Crunch is a Parasite on Gaming

Crunch ruins games, and it ruins lives

It’s 1pm on Saturday. You sit in a full office. You see dark circles under eyes illuminated by computer screens. The office smells of catered meals eaten at desks. Some people type away, frantically fixing bugs. Others spend time not doing what they were hired for, like creating artwork or models, but instead playing the game and logging bugs. One man stands up, and heads for the door. Most of the room turns to glare at him, as he leaves work “early” on a weekend to see his wife for the first time in a week. The rest continue working, clocking their 73rd hour of the week. All this day’s work and the next will be worked for free, as the studio does not pay overtime. Call it crunch, call it a death march. Call it whatever you like: this is game development.

How did we get here? How did it become the industry standard to work long hours day after day for months on end? Some other industries deal with crunch. Films and TV practically required it. But why is crunch with unpaid overtime so prevalent in software? The law.

The USA designates software developers as “skilled workers”, who don’t have to be paid overtime. This classification started on the state level and moved to be nation law. This means that game studios can work their workers well over 40 hours a week and well over 8 hours a day without paying anything extra.

Project management has a concept known as the iron triangle. Every software project deals with Scope, Budget, and Schedule. These are considered “iron” because you can’t change one without impacting the others. Unless you don’t have to pay overtime. In game development, solving issues by increasing the amount of hours scheduled does not result in an increase in cost. If studios had to pay overtime, they would be forced to delay the game (and get their additional scheduled hours that way), increase budget and hire more, or reduce scope aggressively (removing features from the game). Right now, it is much easier to force your team to work for more hours.

The bonus system reinforces crunch culture. Game developers are not particularly well paid, but they are promised large bonuses if the game sells well. The catch? This is a bonus, so it can be held back for a lack of performance or effort. Developers have no equity and do not collect royalties from game sales, so if they do not comply with crunch, they might miss the real payoff. In addition, if they leave the project early or get fired, they don’t get their names in the credits. A good credit could secure your career in games, but you will miss out if you get fired or leave, even if you spent years working on a game.

After these months (or years) of crunch, many companies lay off most of their staff. You have a culture that squeezes developers, forcing them to give up on the rest of their lives and pushed to work 60, 80, 100-hour work weeks. But, when the project ends, they could be laid off, and must find other work. They build no lasting equity or future in the company, and yet they are expected to put aside their families, health, and mental wellbeing.

Here are a few cases of crunch that you might be familiar with.

Well-known cases of crunch

Cyberpunk 2077

Cyberpunk 2077’s failed launch sent shockwaves through the industry. CD Projekt Red developed the game for almost five years, including eight months of delays. With that much time, how did the game come out with so many bugs and so much under expectations? Crunch. Some developers reported working overtime for over a year. The death march on Cyberpunk lasted months and led to a pile of bugs. The public slammed the team behind Cyberpunk for the mess the game was in. It didn’t fail due to lazy employees, or a lack of passion. The studio crunched to put out the game too early and it led to an unfinished game that took a long time to improve. In the end, Cyberpunk has recovered, and the game has positive reception now. It is doing better than it ever has. The team also isn’t deep in crunch anymore. The initial crunch only hurt the game and the company’s reputation.

Red Dead Redemption 2

Leading up to Read Dead Redemption 2’s launch, some Rockstar employees crunched for over a year. Even though Rockstar allowed employees to discuss their stories of crunch, most people were afraid to say anything. Multiple sources behind the scenes said there was a “culture of fear” in Rockstar. People were so afraid of being fired, missing a bonus, or not being credited that they put up with horrible crunch. The notable difference between this launch and Cyberpunks is that Red Dead Redemption 2 was a massive success. Stories of crunch quickly fizzled out after players got their hands on the game. Even if the game succeeds, crunch is not worth it.

Anthem

Anthem came from a prestigious company: Bioware, creators of Mass Effect and Dragon Age. They planned to make an ambitious game that was different than what they had made in the past. This meant a lot of experimentation, and it also meant that they didn’t have much to show on the game for a long time. Anthem’s development is fraught with issues, talent drain being high on the list, but it featured months of hard crunch before release. All the while, leadership touted “Bioware Magic,” the studio’s ability to bring everything together at the last minute through hard crunch. Well, they tried it, pushing hard towards the end of development, unwilling to delay the game any further. In the end, Anthem failed, and it didn’t get a comeback like Cyberpunk. No amount of Bioware Magic or overwork made it a success.

Effects of Crunch

Crunch leads to burnout, and burnout ruins lives.

Photo by Christian Erfurt on Unsplash

Burnout leads to apathy and reduced productivity in people, and overwork paired with burnout destroys relationships. Developers are asked to spend most of their waking hours at work, and then they are worked to the point of not caring anymore. Their spouses, family, friends, anyone else in their lives are neglected. Even the time developers spend outside of work is tainted. 

One point that is understated is that crunch has negative effects on work. Overwork in software leads to worse development. Overworked developers leave companies sooner, and as time spent working increases, the number of bugs generated increases. Developers regularly mention that crunch leads to them feeling like the need to be in the office more than work. You are forcing some to work themselves to apathy, while other work inefficiently just to appear more productive. Crunch incentivizes hours over productivity, and it can lead to worst games. Anthem and Cyberpunk both failed after months of hard crunch.

Crunch in Hollywood

Some argue that crunch is necessary. To get out high-quality games, they must work long hours leading up to launch. However, most creative industries have similar launch constraints, and other creative industries have fought against overwork. Hollywood is a good example.

Film shoots run long, and they run under strict time constraints. With that in mind, how do you deal with having staff from lighting techs, to camera operators, to assistants and more working long hours? You pay them well for overtime.

In California, film workers are paid 1.5x their hourly rate for:

  • Hours worked over eight in a workday
  • First 12 hours on your 6th day
  • First 8 hours of work on your 7th day

and they’re paid 2x the hourly rate for:

  • Hours worked over 12 in a workday
  • Over 8 hours on your 7th day

These provisions would limit overtime in games. If studios wanted to speed up development, they would need to start spending a ton. Crunch only happens now because it is cost-effective. That changes with paid overtime. So, where do we go from here?

Developer leverage

All of this sounds great, but it exists in the world of theory. How do we achieve it? First, engineers need to realize their leverage. The number of skilled game developers is not high. The whole industry hangs on the work of engineers. Engineers are creatives. The work they do to realize the visions of game designers requires creative work, and they cannot be easily replaced, especially late in a development cycle.

There are two options for engineers to avoid the death marches. First, they could band together and form a union. The games industry has been resisting unions for years. However, some QA testers just managed to unionize. This is possible, but not achievable by any one developer.

The other option is for developers to use the leverage that they have. They can risk it, betting that they cannot be replaced late in a dev cycle. They have too much institutional knowledge and proprietary skill. There is immense pressure on engineers to just push for launch, but they do not hold responsibility for a game launching on time. The leadership, who sets the deadlines, is responsible for making launch on time. Engineers can leverage their position to not work extra hours. This is not letting the team down. Pressure from coworkers perpetuates crunch.

However, engineers have a reason to be fearful. If you hope to continue working after launch, you must keep leadership happy. If you want to benefit from a successful launch, you must keep leadership happy so you can get a nice bonus. If you don’t want to be blacklisted, you must keep leadership happy. And if you want your name to be in the credits so that you can take a job that you really want, you must keep leadership happy. 

Leadership and management must act to end crunch. The managers who directly manage engineers are going to have to step up and refuse to work unpaid overtime. Engineers need to have someone above them who cares for their wellbeing. Leadership holds the authority to change timelines, but management directly oversees the work. Both of them work together to perpetuate crunch. Without change, Game Dev will continue to burn out and ruin the lives of the people who make them. We can’t keep taking leadership’s word that they will end crunch right after this project.

Cover Photo by Fotis Fotopoulos on Unsplash

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The Next Streaming War Has Already Started

The players are different, but the tactics are the same.

Game streaming is the next streaming war. Major companies have been landing their boats on the shore for years, but this year, the war has begun in earnest.

The Stakes

For years, people have been talking about cloud gaming. Just like video streaming has all but killed DVD players and music streaming killed CDs, people have been predicting that the same would happen to gaming. Other entertainment industries have gone there, why couldn’t gaming? We are farther from that future than the cloud salesmen tell you. It could happen, but gaming hardware isn’t going anywhere anytime soon. Cloud gaming doesn’t work as well gaming on a console or a PC. Even if cloud gaming catches up technically, ownership of games matters. Not to all gamers, but to enough gamers. With cloud streaming, you eliminate any possibility of true ownership of games.

Even if cloud streaming doesn’t edge out traditional gaming, it has its place. The video and music streaming industries show that people are willing to pay a subscription fee for entertainment. Right now, people have, on average, four video streaming subscriptions. Cloud streaming also offers gaming on TVs or phones without requiring you to buy an expensive console. For these reasons, the game streaming wars have started. 

Points of Competition

Technical aspects of game streaming

Game streaming requires more infrastructure than video streaming does. Video streaming is primarily one way; the video is streamed from host servers to the client machine. Occasional messages have to be sent the other way, like play and pause commands. Users won’t notice small amounts of lag in these communications. For game streaming, you need to transmit player input back quickly. Lag ruins the experience of playing a game.

The other major technical difference comes from rendering. For a video streaming service, you need services capable of sending a video file. The primary things they need are excellent IO, network performance, and fast storage. Game streaming servers need all of these, and they need to be able to run the games they stream. They need GPUs, and they need fast CPUs. These mean that you can’t use traditional public cloud infrastructure. You can either buy this infrastructure yourself, or you can pay for it from a specialized provider.

Game IP

Just like video streaming platforms, each game streaming platform has to compete on IP. Some platforms do it by offering all original IP, and some buy the streaming rights to games. Just like in video streaming, there are a lot of studios producing indie to mid-level games. The AAA games drive the most traffic, similar to premier shows like Stranger Things and The Lord of the Rings: The Rings of Power. 

How do they charge?

Most video streaming services charge a monthly subscription fee. This fee covers everything on their service, like a buffet. Some services, like Amazon Prime Video, use a hybrid subscription: you get most things for free, but for the nice stuff, you have to pay à la carte. Some services, like Vudu, charge for everything à la carte, but those aren’t what you think of when you think of streaming services.

No standard exists for cloud gaming services. As discussed above, it costs more to stream games than to stream video. Some early game streaming companies opted for a hybrid model: you pay a monthly fee to access the streaming service, and then you buy the games on top of that. Others charged nothing for the streaming service itself, but you had to buy the games from the company full price. Now, some services are closer to Netflix: you pay a monthly subscription fee for unlimited access to a catalog of games. This really works for companies capable of offering a large number of games. In the minds of consumers, these different pricing models constitute completely different products. You wouldn’t consider all-you-can-eat buffets, gourmet restaurants and theme-park food courts the same thing. Consumers will expect different levels of quality for each.

The Players

Sony

Sony bet on cloud gaming early. They launched PlayStation Now in 2014, a service that allows players to stream PlayStation games to either a PlayStation or a PC. They built their service using in-house tech. First, they bought Gaikai, a cloud gaming company. Then, they created a “server” that combined 8 PS3s on one server rack . This seems complicated, but they still found it easier than trying to just emulate the games. They have brought a lot of first-party IP to the service, like Spider-Man and Uncharted. They recently combined PlayStation Now into PlayStation Plus, their other subscription service. It has strong, first-party IP, but the third-party options are lacking compared to some other services. It is cost-effective, given you have a PlayStation. For $18 a month, you get the catalog of games for streaming, and you also get online play on your PlayStation. If you already planned on paying for online play, you could argue that PlayStation Plus cloud streaming only costs $8 a month.

PlayStation Plus Premium has a major flaw: it only works well on a PlayStation.

The PC app for PlayStation Plus Premium is not good. It does not have a search bar, and it does not support all controllers. It doesn’t support keyboard and mouse controls at all, which the other streaming services do. Even the streaming performance is unreliable on PC. PlayStation Plus Premium also has no mobile app. Mobile is the primary use case of cloud gaming right now. Sony even has an app for remote play on your PlayStation console. For these reasons, PlayStation Plus Premium is behind the competition right now. However, they are still a threat in the streaming wars. These problems can be solved internally. Unlike some of the others on this list, they don’t need to worry about IP problems. If they solve their technical issues, they have the chance to be a long-term player in the game streaming wars.

Microsoft

Microsoft’s cloud gaming service has been doing pretty well — their hourly usage is up 1800% in the last year. Xbox Cloud Gaming is part of Xbox Game Pass. Xbox Game Pass is commonly called the Netflix of gaming. It’s the best value preposition of any gaming subscription. It costs $24.99 a month, but you get a massive catalog of games. Their catalog dwarves all of the other services. All of this would be moot if the streaming experience didn’t work well. Microsoft got the most important part right. Xbox Cloud Gaming is smooth both on PC and on mobile. 

Microsoft is taking advantage of their cloud platform, Azure. It is the second largest public cloud platform. Microsoft has dropped billions on cloud infrastructure in the last 10 years and it shows. Microsoft’s position looks like the strongest right now. They are the only platform that can combine strong technology, a large catalog of games and a great value proposition for the gamer.

Google

Google’s first major move into gaming came in Stadia, their cloud gaming platform. Stadia launched in 2019, earlier than most. Google touted Stadia as an alternative for game consoles, and they secured partnerships with AAA game studios like Capcom and CD Projekt Red. Google Cloud Services is the third largest public cloud service, so Google should have the infrastructure to get it done. However, Stadia doesn’t have many games.

Right now, the service has about 300 games. Stadia has more games than Amazon Luna, but fewer than the other options. They rely on developer support to port games, and developers have been hesitant to do so. They also use a hybrid subscription/purchase system. You can subscribe to Stadia Pro, and get a limited selection of games. You have to individually purchase all other games. Stadia, then, is not a good deal, and it has to live or die as a streaming service. It is flagging, but Google is considering pivoting it into a B2B service. This would salvage Google’s investment into cloud gaming, but it would remove them from the streaming wars.

Amazon

Amazon Luna is the new kid on the block. They just launched in 2021, and they have a lot of the same sales points as other platforms: they stream games, you can subscribe to get access to a lot of games together, and they have their own controller. Amazon Luna is easy to mistake with Stadia at first glance. Amazon has invested in game development, but they aren’t relying on their own IP to sell their service. Instead, Amazon Luna relies on their controller, their infrastructure, their Channels and Amazon Prime as their selling points. 

(Left) Xbox Controller vs (Right) Luna Controller

The Luna controller is very similar to most modern controllers. It does not move the needle in a world with so many good, cheap controllers. Luna’s performance does move the needle. Luna has low latency, and it leads to a close to console gaming experience. This makes sense, because Amazon owns AWS, the largest public cloud platform. They understand networking, and already have infrastructure to make Luna work. It makes Luna among the best of the streaming services in terms of gameplay. 

They also took a different approach on the subscription service. You can subscribe to different Channels, which gives you access to sets of games. For example, you can subscribe to the Ubisoft channel, and get access to Ubisoft’s catalog. There are interest-based channels as well, like the Family channel. I like the idea of channels, but I don’t think they will win out over the value offered by Microsoft or Sony. Xbox Game Pass and PlayStation Plus both offer more games for cheaper. Even TV is moving away from the channel model. 

Amazon’s ace in the hole is Amazon Prime. They already have people paying a subscription fee, and they throw in a selection of Luna games with a Prime membership. They are approaching it similarly to how they use Amazon Prime Video. In the future, this could be a real boon to Amazon. Right now, Luna doesn’t have many subscribers. I would chock that up to the mediocre library, and poor marketing. 

Nvidia 

Nvidia has GeForce Now, their own subscription service. GeForce Now has been around a long time, in one form or another. They started their public beta in 2015. Nvidia has a unique position out of all the competitors: they are primarily a GPU manufacturer. They brought great tech to bear with GeForce Now, and it has the best technology of all of the services. The experience of playing GeForce Now is the closest to the experience of playing a game on your own PC. They also promise higher fidelity than their competitors. Their games run on high-end gaming PCs rather than on retrofitted consoles or servers. You have to pay for that fidelity, though. 

GeForce Now charges $10–20 for a subscription, and they don’t use the same game subscription model that most the rest do. Instead, they allow you to play your own games for free. This approach makes GeForce Now unique: it’s not positioned as a replacement to a gaming PC, but instead as a supplement. They let you play your own library on other devices you own, like phones or laptops. 

They have been around for a while, but they don’t have the resources of the rest of these companies. However, they are well positioned to act as infrastructure partners with one of the other platforms. They are unlikely to come out of the streaming wars as the winner, but they might survive as an enthusiast solution. 

Other Game Streaming Services

There are other companies trying to make it in game streaming, but none of them have much traction. Plenty of companies have tried cloud gaming in the past, and they crashed and burned. OnLive and GaiKai both failed to make it as their own services, so they sold to Sony. Game streaming is expensive, and the infrastructure required puts it out of the reach of most companies. These other services are years away from profitability, and they don’t have good prospects.  

I’ll highlight an exception: Parsec. Parsec allows you to stream games from your own PC to another PC. It has been around for a while, and it doesn’t appear to be going anywhere. Unity acquired the company in 2021. They have a sustainable business model — but they don’t directly compete with true game streaming.

Takeaways

PlayStation needs to change or die

PlayStation holds most dangerous position of all these services. They don’t have mobile streaming, and they don’t have a good PC experience. They have a good value proposition, but that doesn’t matter if people can’t find the games they want. Sony needs to improve their infrastructure and add mobile streaming, or else they will lose the war. 

Xbox has the best deal

Xbox cloud streaming works. It’s close to a native experience. They also give you many games under the subscription, and it’s easily the best deal right now. Microsoft has marketed it well. Right now, Xbox Cloud Streaming is the most fully realized version of cloud gaming we have ever seen. If things continue as they are, they will win the game streaming wars.

Amazon Luna has a lot of potential

Amazon Luna plays fine. Right now, it’s not very well marketed. Most people probably aren’t even aware that it came out. However, Amazon Prime is Amazon’s X factor. If Amazon can leverage their existing Amazon Prime subscribers better, they have a chance of winning it all. They also need more game IP on their service, but they have shown with Prime Video that they are not afraid to dump money on a platform. Amazon Luna is the dark horse of the streaming wars.

Google and Nvidia could work as B2B products

Both products are falling behind on the consumer front. Stadia suffered from poor press at launch, and it has fallen behind Microsoft. GeForce Now doesn’t have problems right now. However, they will struggle to keep up with the rest of the pack in spending. That being said, both services have potential as B2B products. Google is already moving Stadia in that direction, and Nvidia has partnered with many companies in the games industry in the past. Either company, or both, could have success in game streaming through B2B, especially if Nintendo ever decides they want to get in on the war. 


Like the streaming wars, this war won’t end with a single winner. When the dust settles, we will have a few options. We won’t likely have six remaining. I would bet on Microsoft and Amazon as the victors when the dust settles.

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Xbox Game Pass Offers an Alternative to Steam Sales

Instead of getting pennies for their games, studios can get new fans.

Deathloop and Assassin’s Creed: Odyssey are both coming to Xbox Game Pass. Both are AAA games. Deathloop launched as a PS5 title and did alright in sales. Alright. It fit well into the anemic release calendar of the PS5 last year. Now, it has dwindled in popularity, and the exclusivity deal with Sony has ended. They could have just released the game for Xbox Series X/S, but by moving it to Game Pass, they also get higher visibility and a large play spike.

Assassin’s Creed Odyssey is in a similar boat. The game is four years old and has a sequel already. Ubisoft could relegate it to Steam Sales, selling the game for pennies on the dollar four times a year to get a little more out of it. Xbox Game Pass again gets them more visibility.  

But what about the money? In both cases, the companies involved will get paid for players playing their games. I also suspect that Microsoft will pay each of them a flat fee for putting the game on Game Pass. The bigger benefit to going on Game Pass is the player base. For Deathloop, they will get access to a group of gamers who might not have ever considered them. These players can enjoy the game and become fans of the studio. For Ubisoft, the deal is even more straightforward. They have a newer title available for sale, Assassin’s Creed: Valhalla. If people enjoy Assassin’s Creed: Odyssey on Game Pass, they will likely enjoy Valhalla as well. Game Pass gives game studios an opportunity to win new customers, and make a little money on the side, too.

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The New Console Battleground

The console wars have a new battleground: mobile

The console wars have been going on for decades. Atari vs. the Colecovision. Nintendo vs Sega. For the last three console generations, that battle has been between Sony, Nintendo, and Microsoft, the Big 3. They were competing over the television. Recently, that battle has matured, and now, there is a new, legitimate screen that all these companies want to dominate. The console wars are ending, and now the war is moving to different platform: mobile.

The size of the mobile market

Mobile gaming has been around since 2007, but the console makers mostly stayed out of it. So, what has changed? First, the size of the market. Mobile game spending is more than 3x console game spending. There are 3x the number of mobile gamers as console gamers. Second, the mobile games market has different demographics than the console market.

Portable gaming has always been bigger than console and PC gaming in Japan. However, mobile gaming created a new market in the rest of Asia. South-East Asian countries like (Malaysia, Thailand, and the Philippines) have had lower player counts in the past because the cost of owning a dedicated gaming PC or console was too high. Now, the mobile games market there has exploded. The casual mobile market is growing, as it is in the rest of the world. The core and hardcore gaming markets have been growing, too — on mobile.

The Big 3 have little market penetration in these markets with their consoles. Mobile gaming gives them a way to reach new customers. So, these three are making different moves to exploit the rise of mobile games.

Mobile gaming options:

Mobile gaming is broad. Here are the different ways the Big 3 could monetize mobile games.

Traditional mobile games

The early days of mobile gaming resembled other parts of gaming. Companies produced a game, and players could buy the game for a one-time fee. Games like Angry Birds and Fruit Ninja made millions while charging $1. Now, one dollar for a game is too low. Companies are moving away from Pay2Play games, but there are still traditional games sales on mobile, like Minecraft and Five Nights at Freddy’s. These are PC/Console-first franchises that port their games to mobile and charge a premium price. They can charge a premium price because of their perceived value. People think of Minecraft as a $15 game, and so they will spend $15 on it.

Minecraft Pocket Edition is one of the top paid mobile games 


Low perceived value is a hurdle in selling mobile games. Average perceived value varies per platform. On PlayStation, players are willing to pay $70 USD for a AAA game. On Xbox and the Switch, they pay $60 USD. On PC, prices tend to be lower than $60 USD, although some premium games start at that price point. On mobile, the expectation is $0. The perceived value of a top-selling game like BloonsTD6, which is polished and has tons of content, is still only $6.99 USD. This is not irrational. Play sessions on mobile are shorter than console, and the places people play are different. Control schemes and device power hold back mobile games from a console-level experience. So, it is difficult sell mobile games for even $5 USD. On other platforms, even small games tend to charge more than that.

Overall, this pricing model is antiquated, and none of the big 3 seem interested in pursuing it further. This keeps them from releasing direct ports of successful games on mobile.

F2P revolution and game design

Mobile games have moved beyond P2P and have embraced F2P. All of the top 10 grossing mobile games of 2021 were F2P. If the Big 3 hope to do well in mobile gaming, they will need to approach F2P. However, F2P does influence game design.

Unity’s CEO recently got into some hot water for saying that you’re a “f***ing idiot” if you don’t think about monetization during the creative process. He certainly could have phrased it better, but for mobile games, he wasn’t far off . Developers of free-to-play mobile games must consider monetization. Mistakes in monetization leads to unfun gameplay, unprofitable games, or lack of player retention. There are a lot of ways to monetize a mobile game, and most are different than in console games.

In Bloons Pop, you can watch an ad to receive additional rewards
  • DLC or expansion content: This is shared with console games. The core offering of the game is free, but you can spend money to access additional content in the game.
  • Ad-Supported Games: This has been tried in traditional games, and it failed miserably there. But it’s one of the biggest forms of monetization for mobile games. Games can combo ads with other forms of monetization or be entirely ad supported by making users watch an ad to play. They can lock purchasable content behind an ad as well, and many more options. To get the most out of ads in games, you need to either design things to be gained by watching ads, or put places in the game where an ad can slot in (similar to network television).
  • Limited Free Plays: F2P games can give you a limited number of free plays. After they are used, players have to wait or spend money to play. Candy Crush is one game that uses this.
  • Gacha/Card Packs/Lootboxes: These are the games where you have a random chance to receive an-ingame reward. These are similar to real-world baseball card packs. Gacha games tend to work well with established properties, so large IP owners like the Big 3 should be able to take advantage.
  • Subscriptions: Some games offer individual subscriptions (I would include battle passes as subscriptions). Companies are also experimenting with multi-game subscriptions, kind of like to Netflix. This might be a better solution for premium games on mobile than purchasing them individually, but the medium is still young. Apple has Apple Arcade, Netflix added games to their subscription, and Google has the Google Play Pass, to give some examples.

Game streaming

In recent years, there has emerged another option for mobile games: game streaming. Xbox has a service where you can play AAA console games streamed to your phone for a monthly fee. There are a few problems, though:

  • The Controller Problem: Most streaming services require you to use a controller. Controllers are not widespread across the world, and they also reduce the portability of the mobile game experience.
  • Connection issues: Game streaming struggles to stay smooth over fast internet connections. This is made worse over cellular connections.

Nintendo’s moves

Nintendo has been a historically isolated company in terms of their ecosystems, so it is surprising that they have made the biggest splash in terms of the Big 3 when it comes to of mobile gaming.

Pokemon Go

Nintendo really knocked it out of the park with Pokemon Go. Pokemon Go was the marriage of IP and concept. It was one of the first AR games, and Pokemon fit well with the regional nature. Pokemon Go swept the world. The game was a commercial success as well. It made almost 300 million dollars in its first year, and it’s grown year over year. It hit $5 billion in revenue in 2021. It was the sixth-highest grossing mobile game of 2021.

New Super Mario Bros. (Right) and Super Mario Run (Left)

Mario Run

Nintendo then tried Mario Run, an endless-runner version of Mario. It seemed like a perfect fit: huge brand in Mario, an established mobile genre, and gameplay like regular Mario games. They even got to save money by reusing assets. The game did great at first, and they charged a one-time fee of $9.99 to unlock all of the levels. It did well, but not as well as some of Nintendo’s other mobile games.

Fire Emblem: Heroes

The other really huge success they had on mobile was Fire Emblem: Heroes. They found a lot of success by taking their IP and using it to make a gacha game. Heroes is a casual RPG, where you form your team from different characters from the Fire Emblem franchise. Nintendo locks these characters behind a gacha mechanic, in which players spend money have a chance of getting the character they want. This system works very well for games based on existing IP: Marvel has a few gacha games, as do Star Wars and other similar brands. In the case of Heroes, Nintendo has been able to make more money from the mobile game than from any of their traditional Fire Emblem titles. It is one the highest earners in mobile games.

Overall, Nintendo, despite adopting mobile late, has capitalized well on the medium.

Xbox’s moves

Microsoft hasn’t succeeded on mobile. Windows phone peaked at around 3% market share. They haven’t used their IP like Halo or Gears of War on mobile. They have been taking a different approach than their competitors.

If the Activision deal goes through, Microsoft will have an IP advantage

Activision Deal 

Microsoft has put in an offer to buy Activision-Blizzard. Activision-Blizzard owns many strong brands like Call of Duty and World of Warcraft. They also control strong mobile properties. Call of Duty Mobile generated nearly a billion dollars from October 2019 to July 2022. Diablo Immortal, a recent release from Blizzard, was panned for its microtransactions. Still, the game was the second fastest mobile game ever to reach $100 million in player spending.

Both games are dwarfed by another publisher under the Activision-Blizzard banner: King. Of the three game publishers owned by Activision-Blizzard, King has the highest net revenue. They are a mobile games developer and publisher, and they are the creators of Candy Crush. Candy Crush originally launched 10 years ago and has been a hit since then. The game was the fifth-highest revenue mobile game of 2021. By acquiring Activision-Blizzard, Microsoft would catapult themselves into being one of the top mobile games publishers.

Xbox Cloud Streaming

Microsoft is embracing cloud streaming, and they have the best tech of the big three so far. They own Azure, one of the top public cloud platforms. This means they can save significantly on cloud costs. Sony and Nintendo might be using Azure to power their own cloud services as well. Microsoft is also using Xbox Gamepass to offer a lot of games streamed for a low cost. Their streaming service is starting to roll out mobile-native control schemes. Not requiring users to carry around a controller is a huge boon to cloud gaming. Of the Big 3, Microsoft is the only one in place to push cloud gaming. It’s working right now: Xbox Cloud Streaming playtime is up 1800% this year.

Unity partnership

Microsoft recently partnered with Unity to integrate Azure . Unity is a popular engine, but it is especially dominant in mobile gaming. This is a good way for Microsoft to use their strength as a B2B company in gaming. If mobile game developers use Azure, then Microsoft wins. They can profit without having to own every mobile game developer. This is something the other two members of the Big 3 can’t replicate.

Sony’s moves

Xperia

Sony has a phone line known as Xperia. They have tried to use this line to push the PlayStation brand in mobile. Most notable is the Xperia Play, a hybrid smartphone and PSP. The Xperia Play flopped. The Xperia Play is an example of why porting console or handheld games to mobile doesn’t work. They had to entice publishers to port their games to Android, just so that only Xperia Play owners could play them. These days, a phone with a built-in controller might be an easier sell because of game streaming. Either way, Sony has abandoned the idea of gaming smartphones and canned an Xperia Play 2 years ago.

The Xperia Play might have been ahead of it’s time

PlayStation Mobile Games

Sony made mobile games using their PlayStation brands. One successful attempt is Run Sackboy! Run! They decided to use their premier platformer brand to make an endless runner before Nintendo made Mario Run. Sackboy didn’t do quite as well as Mario Run, but it still has accrued over 10 million downloads on Google Play since it came out in 2015. Earnings numbers have not been announced, but it looks like a mild success.

This doesn’t come close to their biggest success. Sony owns Aniplex, a company that makes anime and some games. They have one major mobile success: Fate/Grand Order. This gacha game surpassed $4 billion in revenue back in 2020. It had the 10th highest revenue of any mobile game last year. Sony doesn’t necessarily have to leverage PlayStation to succeed in mobile games.

Savage Games Acquisition

In August of 2022, Sony opened a mobile games division and brought Savage Games, a mobile game studio. Savage Games has not released a game yet, but it is founded by industry vets with experience in mobile games. They are rumored to be working on a live-service mobile game. Sony has also said that they want to release games using their existing properties. This could be successful for them. I’m sure they would love to have their own Pokémon Go or Fire Emblem Heroes.

Takeaways

The Big 3 are all spending money on mobile games. They see the size and value of the market. Their approaches vary, but they all see it as valuable. Here are some takeaways:

  • Game streaming is untested, but could be an option. It is the only way that porting console games to mobile could work. Sony could try it, but right now, only Microsoft is in position to capitalize on it.
  • The most reliable way to execute on mobile is to use existing IP to fuel live-service games. All three companies are moving that way. Nintendo is doing the best job of it now. They have Pokémon Go and Fire Emblem: Heroes, with a few other live-service as well. Sony is doing alright. Fate/Grand Order is a hit, but they aren’t leveraging their own IP. Microsoft has no mobile, live-service games. If the Activision-Blizzard purchase goes through, they will have the most live-service games of the Big 3.
  • Overall: Nintendo has a head start, Sony is doing ok with Aniplex, but not as well as Nintendo, and Xbox will take the lead if the Activision Blizzard deal goes through.

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  • Crunch is a Parasite on Gaming
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  • The Next Streaming War Has Already Started
    The players are different, but the tactics are the same. Game streaming is the next streaming war. Major companies have been landing their boats on the shore for years, but this year, the war has begun in earnest. The Stakes For years, people have been talking about cloud gaming. Just like video streaming has all…
  • Xbox Game Pass Offers an Alternative to Steam Sales
    Instead of getting pennies for their games through deep sales, studios can get back new fans by going with Xbox Game Pass.
  • The New Console Battleground
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  • Splitgate Developer Announces End of New Feature Development
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