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Despite short-term questions, games software/hardware to top $200 billion by 2023 – TechCrunch

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There has been some negative sentiment surrounding the games industry recently, with stock prices of public games companies in question in both the U.S. and China. While being contrarian to market sentiment is always risky, it’s also possible that folks might be taking a long-term solution to a short-term problem. Games industry software/hardware combined revenue could drive well over $200 billion of revenue by 2023, and there was a record $5.7 billion investment in games companies in 2018. So what’s going on?

The games industry isn’t one monolithic sector. Depending on how you slice it, the market is made up of 15 sectors, eight platform types (e.g. mobile, PC, console) and even more proprietary hardware/software platforms (e.g. iOS, Android, Xbox One, Sony PS4, Nintendo Switch).

Games software/hardware sector revenue share versus growth (2018-2023)

(Note: See selected data below. Free charts do not include all the numbers, axes and data from Digi-Capital’s Games Report, with underlying data sourced directly from companies and reliable secondary sources.)

Mobile games rule

We first forecast mobile’s dominance of the games market way back in 2011. At that time, many traditional games companies didn’t believe mobile/online games could become the driving force for games. Some of those companies no longer exist, so what’s happening today is nothing new.

Total global mobile app store revenues (gross across games and non-games apps, including app store revenue share) topped $100 billion for the first time in 2018. Mobile games delivered around three quarters of that number, as they have consistently for years. So where mobile games drove more than $70 billion gross revenue globally last year, they could top $100 billion revenue (again gross, including app store revenue share) in their own right in the next five years. But like all games sectors, mobile games are hit-driven. And this could be the source of some of the mismatch between the market’s understanding of short-term trends and long-term potential.

For example, Supercell’s Clash of Clans and Clash Royale have delivered over $10 billion revenue to date. However, Supercell also saw revenues and profits decline in 2018 for the second year in a row as its franchises matured. Yet Supercell’s newest franchise, Brawl Stars, delivered $100 million revenue within its first two months. Swings and roundabouts.

Epic Games had the biggest breakout mobile games hit of 2018, with Fortnite contributing significantly to a reported $3 billion profit in 2018. It also anchored part of the interest behind a record $1.25 billion fundraising round last year. Yet the company removed once-dominant mobile franchise Infinity Blade from the App Store, and redirected internal development resources to focus on Fortnite by closing Paragon and stopping further development on Unreal Tournament. We will come back to Fortnite in the context of mobile games becoming platforms in their own right.

Perhaps the biggest concern for mobile games after last year is China, in which the regulator ceased approving new games for most of 2018. This weighed particularly heavily on market heavyweights Tencent and NetEase, although the regulator returned to approving their games this year. However, the regulator again stopped accepting games in February, only to approve more games in March. This regulatory risk has resulted in our downgrading Chinese games revenue growth rates until a clearer long-term pattern emerges.

Niantic’s mobile AR smash Pokémon GO took just over 1 percent of mobile games revenue globally last year, and has been reported to drive some astonishingly big numbers: 800 million downloads, more than $2.5 billion lifetime revenue, 147 million MAU, 5 million DAU, 78 percent of users aged 18 to 34, 144 billion steps taken by users, 500 million visits to sponsored locations and Niantic’s valuation of nearly $4 billion (Note: Not all of these figures have been confirmed by Niantic.) Off the back of this, Niantic is exploring Pokémon GO’s potential to become a platform, with GO Snapshot challenging Snapchat, and the Niantic Real World Platform as a serious AR Cloud player. We’ll come back to these.

PC games hardware/software is big, too

PC games hardware/software is made up of four individual sectors, including PC games hardware (gaming computers, upgrades and peripherals), PC games, online (DLC, IAP and subscriptions), PC games (digital sales) and PC games (physical sales). While each subsector has different characteristics, scales and growth rates, together they make up the only part of the market close to mobile games long-term. Google’s new Stadia cloud gaming platform and competitors could also fundamentally impact high-end gaming across all platforms (not just PC). Mobile games software and PC games hardware/software combined could deliver three quarters of total games industry revenues by 2023.

Selected multiplayer PC games (ex-China)

While PC games hardware is massive, users are buying that hardware mainly to play MMO/MOBA games. This part of the market is consolidated around franchises from major public games publishers such as Tencent and Activision Blizzard, as well as independents like Wargaming and Bluehole.

The console abides

Console games were the market leader for games hardware/software for decades, and remain huge despite no longer being an engine of growth. The highest growth here could come from console games (digital sales) and console games (online), with console games hardware and console games (physical sales) both ex-growth long-term. Despite flattish platform growth for console games hardware/software, they could still deliver multiple tens of billions of dollars revenue by 2023.

High-growth from a low base

Of the remaining market sectors, a handful are small today but have high-growth potential long-term. These include VR games, VR hardware, AR games and esports. Yet taken individually, each sector is likely to deliver in the 1 percent to 2 percent range of total games market revenue in five years’ time. So great for indie developers, but more challenging commercially for the big guns in terms of scale.

United nations of games

Geographical games market discussions tend to focus on China and the U.S., but there are more than 50 country markets driving growth at a global level. Scales and growth rates vary dramatically from giant, stable growth countries such as China (even with its current uncertainty), the U.S. and Japan to higher growth markets like India and Russia. In aggregate, Asia could take around half of global games market revenue by 2023 (despite short-term concerns about China). Europe might deliver around a quarter of global revenue, followed by North America at around one fifth in the same time frame. Countries in MEA and Latin America make up the balance at a much lower level.

Concentration versus growth

The law of big numbers caught up with the games industry years ago, with the 10 largest publicly listed games companies taking three quarters of public games company revenues globally (Note: This ratio does not include private games company revenues, which are substantial). When you already produce billions to tens of billions of dollars in revenue, high growth rates aren’t easy to come by as new hits counterbalance maturing franchises.

Public games company revenue share

(Note: Heat map displays relative revenue scale of publicly listed games companies. Private games company revenues not shown on this chart.)

Top grossing mobile games of recent years (outside China) often came from independents. Standouts include Supercell, King, Epic Games, Niantic, Machine Zone and others. Perhaps in response to this dynamic, there was more than $75 billion of games M&A over the last five years. Major games companies have been buying both growth and cash flow.

Mobile games as platforms?

The beauty of what Steve Jobs created with the App Store is that it democratized distribution of apps at scale beyond the early social games market. It also enabled indie games developers to build some of the rocket ships we’ve seen over the last decade. Yet despite massive growth, even the biggest mobile games couldn’t really be described as platforms in the traditional sense. Not yet.

Where Tencent’s WeChat messaging platform looks like a domestic app store rival with its “mini-programs,” some mobile games pureplays are taking very different routes to becoming platforms in their own right.

For Epic Games, the recent Marshmello concert in Fortnite held out the tantalizing prospect of the beginnings of the “Metaverse” on ubiquitous, affordable mobile devices. With 10.7 million concurrent attendees, this represents a significant milestone in the evolution of games as platforms. Given Fortnite’s previous records for streaming on Twitch and concurrent esports tournament viewers, the savvy Tim Sweeney is beginning to leverage all that scale in a totally new way. Together with building its own app store and the quality of its Unreal Engine, the lessons learned from Fortnite and partial owner Tencent are leading to new horizons.

Where Epic Games is building a metaverse that is a little like Ready Player One without the headsets, Niantic has taken a different approach. Leveraging the real-world, big data stream coming from Pokémon GO, Niantic is building the core of an AR cloud ecosystem to challenge Google, Apple and Facebook. It could also move the company far beyond its entertainment origins for real-world navigation, social, e-commerce, advertising and more.

Epic Games and Niantic could become two of the most valuable platform companies in the world, with long-term potential even they might not fully understand yet.

To infinity and beyond

All this potential doesn’t mean that short-term concerns aren’t valid, or that some games companies (even those currently at scale) might not fall from grace. Some of the volatility of recent times could turn out to be right on the money. When we talked to Epic Games’ CEO Tim Sweeney about all of this, he said “I think that we’re just in the final days of a long transition away from the old retail-centric game release model. Good times ahead.”

With the long-term prospects for games still looking positive, the brave, bold and lucky could have a bright future.

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Eldritch terrors come forth in Chilling Adventures of Sabrina S4 trailer

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Kiernan Shipka’s Sabrina Spellman faces the Eldritch Terrors in the final installment of The Chilling Adventures of Sabrina.

Sabrina Spellman and the good people of Greendale face their most terrifying adversary yet as otherworldly beings seek to bring about the end of all things in the official trailer for the fourth and final season of The Chilling Adventures of Sabrina. The Netflix series is based on the comic book series of the same name, a part of the Archie Horror imprint.

(Some spoilers for prior seasons below, most notably the S3 finale.)

As we’ve reported previously, the show was originally intended as a companion series to the CW’s Riverdale—a gleefully Gothic take on the original Archie comic books—but Sabrina ended up on Netflix instead. The show retains some of the primetime soap opera elements of Riverdale but it incorporates more full-blown horror without bowing to the niceties imposed by network television. As I wrote earlier this year, “Ultimately, the best thing about The Chilling Adventures of Sabrina is how gleefully and unapologetically the show leans into its melting pot of the macabre. It’s quite the high-wire act, exploring serious themes while never, ever taking itself too seriously—and never descending into outright camp.”

In the S3 finale, Sabrina transforms a trio of unholy artifacts into a medieval spiked ball and chain known, appropriately enough, as a morning star. She uses this to create a time loop, enabling her to go back and correct the grievous errors she made over the course of the season. Showrunner Roberto Aguirre-Sacasa has already said Sabrina’s time meddling will have “huge repercussions” in this final season, one of which is the fact that there are now two Sabrinas. The original Sabrina Spellman returned to her life in Greendale while her alternate self, Sabrina Morningstar, took up her rightful throne as Queen of Hell. They’re supposed to always stay within their respective realms, but, well, what are the odds of that happening with such a headstrong heroine?

Aguirra-Sacasa has also hinted that S4 will go full-blown Lovecraft. The title of S4’s first episode is “The Eldritch Dark,” an allusion to sci-fi/horror writer and Lovecraft contemporary Clark Ashton Smith, who wrote a 1912 poem with that title. S3 concluded with a now-mad Father Blackwood (Richard Coyle) performing a summoning ritual to call forth the “Eldritch terrors” and telling his loyal acolyte Agatha (Adeline Rudolph) that they will bring about “the end of all things.”

The S4 trailer opens with Spellman family and friends singing “Happy Birthday” to Sabrina, who senses the arrival of something foreboding as she is about to blow out the candles. “They’re here,” Zelda (Miranda Otto) declares, meaning (one assumes) the Eldritch terrors. Meanwhile, cousin Ambrose (Chance Perdomo) helpfully describes “ancient entities. They are world-destroying, and there are more terrors yet to come, culminating with the arrival of The Void.”

It’s up to Sabrina and her friends and family (as always) to stop the boogey-men. And it’s clear from the trailer that Sabrina’s trusty doppelgänger, Sabrina Morningstar, Queen of Hell, will prove to be a handy ally. One assumes that Hell, after all, will also be subject to the end of all things: “A threat to one of us is a threat to us both.”

Will Sabrina and her plucky crew succeed? Will Prudence (Tati Gabrielle) finally take revenge on Blackwood (her biological father)? And are things heating up again with Nick Scratch (Gavin Leatherwood) after his time imprisoned in Hell? Whatever the outcome of this final showdown, our heroes will finish it the way they always do: “together.”

The final installment of The Chilling Adventures of Sabrina drops on Netflix on December 31, 2021, so you can usher in the new year with a suitably Lovecraftian binge.

Listing image by YouTube/Netflix

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BioWare studio GM and Dragon Age lead are both leaving company

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BioWare

Casey Hudson, BioWare’s general manager, and Mark Darrah, the executive producer of the Dragon Age franchise, are both leaving the company before the end of the year, BioWare announced today.

EA executive Laura Miele announced the departures in a corporate blog post. “I want to personally thank Casey and Mark for everything they have done for the BioWare community, and particularly for our players,” Miele wrote. “They will always be an essential part of the studio’s history, we appreciate their many contributions, and we look forward to seeing what they’ll each do next.”

Leaving is “not an easy decision to make,” Hudson said. Hudson served as project director on the Mass Effect trilogy before departing BioWare in 2014. He returned in 2017 to take on the role of general manager.

“When I became Studio GM a little over three years ago, our goal as a leadership team was to position our people and projects for long-term success,” Hudson said. “Now, as BioWare celebrates its 25th anniversary, the studio is poised for an exciting new era of amazing games. It’s an exciting time, both in terms of projects you’ve heard about and some things not yet announced.”

Darrah similarly expressed confidence in the studio where he has worked for more than 20 years. “This has been a very difficult decision for me,” he said. “The team of amazing developers on Dragon Age, make my life fuller and better. They have taught me so much. But the strength of the team is also what makes this possible. I know that Dragon Age won’t just survive without me, it will thrive.”

BioWare has been working hard this year to assure its ardent fans that new installments in both its banner franchises, Mass Effect and Dragon Age, are on their way… eventually. In August, the studio dropped a sizzle reel featuring concept art for the eventual, as-yet-untitled Dragon Age 4 at GamesCom. Although the tease gave no glimpse of gameplay or potential release window, it did feature designers and voice actors at work against a dazzling array of concept art.

Last month, not only did Hudson himself confirm that a full remaster of the much-loved original Mass Effect trilogy is in the works for spring 2021, he also dropped the surprise announcement that another game in the Mass Effect franchise is under development at BioWare.

All of those projects will be continuing, Hudson and Darrah assured fans. Going forward, Christian Dailey—currently studio head of BioWare Austin—will be helming Dragon Age. The Mass Effect side of things will be led by Mike Gamble, who was a producer on Mass Effect: Andromeda and lead producer of Anthem.

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Warner Bros. will release entire 2021 film slate in theaters and on HBO Max

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Enlarge / WarnerMedia dealt another blow to struggling movie theater owners by announcing it will release its entire 2021 slate of films simultaneously in theaters and on HBO Max.

Just a few weeks ago, we learned that Wonder Woman 1984—whose release has been delayed multiple times in the face of continued theater closures due to the pandemic—will keep to its new December 25 theater release date. The catch: it will also debut on HBO Max that same day. Now WarnerMedia has announced that it will follow a similar concurrent digital/theater launch plan for all the movies slated for release in 2021, Variety reports. It’s yet another staggering blow to movie theaters still struggling amidst a raging pandemic that shows no sign of slowing down, particularly in the United States.

“After considering all available options and the projected state of moviegoing throughout 2021, we came to the conclusion that this was the best way for WarnerMedia’s motion picture business to navigate the next 12 months,” said CEO Jason Kilar in a statement. “Our content is extremely valuable, unless it’s sitting on a shelf not being seen by anyone. We believe this approach serves our fans, supports exhibitors and filmmakers, and enhances the HBO Max experience, creating value for all.”

Warner Bros.’ 2021 slate of films will be available to HBO Max subscribers for 31 days, after which they will only be playing in theaters. Once the traditional time has elapsed between theater and home release, the films will be available to rent via the usual online platforms (Amazon, iTunes, or Fandango). The current slate includes The Little Things, Judas and the Black Messiah, Tom & Jerry, Godzilla vs. Kong, Mortal Kombat, Those Who Wish Me Dead, The Conjuring: The Devil Made Me Do It, In the Heights, Space Jam: A New Legacy, The Suicide Squad, Reminiscence, Malignant, Dune, The Many Saints of Newark, King Richard, Cry Macho, and Matrix 4.

In a statement, WarnerMedia chair and CEO Ann Sarnoff referred to the model as a “unique one-year plan,” given the unprecedented challenges inflicted on the industry by the ongoing coronavirus pandemic. This is not expected to continue into 2022. Per Sarnoff’s statement:

We’re living in unprecedented times which call for creative solutions, including this new initiative for the Warner Bros. Pictures Group. No one wants films back on the big screen more than we do. We know new content is the lifeblood of theatrical exhibition, but we have to balance this with the reality that most theaters in the U.S. will likely operate at reduced capacity throughout 2021.

With this unique one-year plan, we can support our partners in exhibition with a steady pipeline of world-class films, while also giving moviegoers who may not have access to theaters or aren’t quite ready to go back to the movies the chance to see our amazing 2021 films. We see it as a win-win for film lovers and exhibitors, and we’re extremely grateful to our filmmaking partners for working with us on this innovative response to these circumstances.

Just how many movie theaters can survive another year like 2020 remains an open question. So far, only one chain has responded to the news. An unnamed Cinemark rep told Deadline Hollywood: “In light of the current operating environment, we are making near-term booking decisions on a film-by-film basis. At this time, Warner Bros. has not provided any details for the hybrid distribution model of their 2021 films.”

At least HBO Max subscribers won’t have to pay extra to watch these films, unlike the Disney+ strategy for Mulan. The streaming platform charged a $30 premium purchase to Disney+ subscribers, although it was released theatrically in territories where the streaming platform is not available. (FYI, Mulan will become available free of charge to all Disney+ subscribers this Friday, December 4, 2020.)

Wonder Woman 1984 will face off against Disney-Pixar’s animated film Soul, which is launching on Disney+ the same day. (It, too, is included as part of the standard Disney+ subscriptions.) And for those (like Ars’ own Samuel Axon) who had been put off by the prospect of watching Wonder Woman 1984 at a measly 1080p with no HDR and sluggish bit rate, Director Patty Jenkins tweeted that Wonder Woman 1984 will be the first film to stream in 4K HDR (UltraHD) on HBO Max when it premieres. It will also stream with Dolby Atmos audio. Hopefully that bodes well for the digital future of the 2021 releases, too.

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