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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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The best game-exploiting speedruns of Summer Games Done Quick 2022

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Enlarge / All four of the mascots seen in this SGDQ promo image appear in various speedruns hosted over the past week.

Summer Games Done Quick

The Games Done Quick series of charity events has long been a favorite among the gaming fans and critics at Ars Technica since it combines classic, beloved video games and carefully studied methods to break them apart in search of high-speed exploits.

This year’s summertime installment is particularly special, as it’s the first in 2.5 years to take place at a physical venue—albeit with some of the most stringent masking and distancing requirements we’ve seen in a livestreamed public show in 2022. (GDQ’s organizers appear to read the news, which makes sense for a series that benefits the likes of Doctors Without Borders.) Even with precautions taken, its combination of players, commentators, and crowds in the same room has brought excitement back to its broadcasts, which is why we’re pulling together some of the best runs from the past week, as archived at GDQ’s official YouTube channel.

The event is still ongoing as of this article’s publication, which means you can watch it right now via its Twitch channel. The event’s final runs, dedicated to Elden Ring, will conclude in the late hours on Saturday, July 2.

Tunic speedrun, Summer Games Done Quick 2022

Tunic, 2022, “true ending” run

If you haven’t yet played Tunic, we recommend you pause before watching this game-breaking, spoiler-filled romp through many of its biggest secrets. (My March review of the game has far fewer spoilers.) But if you’ve already collected the game’s slew of hidden “instruction booklet” pages, consider this a must-watch, because it includes a compelling guest on real-time commentary: Andrew Shouldice, the game’s lead designer, programmer, and artist.

He’s joined by a member of the Power-Up Audio team, which worked on the game’s soundtrack, and they divulge tons of information about how the game was made—including confirmation about how many of the biggest exploits were intentionally left by the devs in the game. At one point, Shouldice watches a trick begin to play out, telling the crowd that he programmed it to be a possibility but could never personally trigger it. Moments later, the speedrunner demonstrated the trick, allowing him to warp through a wall and bypass a ton of tricky content.

Halo Infinite speedrun, Summer Games Done Quick 2022

Halo Infinite, 2021, “no tank gun” run

Many classic games’ speedruns include multiple categories, and the most broken ones are known as “any-percent” runs, since they allow players to use any tricks and skip any quests that they want. In certain games’ cases, these kinds of runs can be boring to watch, and the infamously glitchy Halo Infinite is no exception.

This speedrun begins with a demonstration of the “tank gun,” which bolts an unlimited-ammo gun to Master Chief’s feet. That’s too much assistance for speedrunners’ tastes, but this SGDQ demonstration still includes a ton of wacky tricks that combine geometry clipping and otherworldly physics exploits—all boosted by Chief’s immediate access to a new grappling hook item. Sure, the hook makes players move much faster through the world, but it also figures into a wild glitch that makes players bounce off explosive barrels in ways that defy gravity.

Thunder in Paradise speedrun, Summer Games Done Quick 2022

Thunder in Paradise, 1995, all-cutscenes run

We’re not sure whether this is GDQ’s first speedrun dedicated to a full-motion video (FMV) game, but it’s certainly one of the dumber examples of the mid-’90s CD-ROM genre. Thunder in Paradise is based on the short-lived TV series of the same name, which starred Terry “Hulk” Hogan alongside Jack Lemmon’s son as a crime-solving action duo on the beach, and it was as bad as that sounds. The video game version, relegated to the CD-I console, forces players to watch excruciatingly bad live-action footage between light gun shootout sections.

In most video game speedruns, players skip as many cinema scenes as possible, but GDQ elected to show this game’s filmed footage in its entirety while cheesing the gun gameplay parts as quickly as possible. Strap in, brother.

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Cuphead expansion pack review: As good as DLC gets

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Enlarge / In the new expansion pack The Delicious Last Course, Miss Chalice makes three.

Studio MDHR

Some people will look at an expansion pack like Cuphead: The Delicious Last Course and make up their minds after a single glance. This $8 add-on’s beautiful brutality follows the same path as the original 2017 game Cuphead, a notoriously tough descendant of the Mega Man school of game design. Maybe you love playing games that are as beautiful as they are difficult. Maybe you don’t.

I’m here to talk about Last Course because I might be a lot like you. I’m not Last Course‘s target audience. I never beat the original Cuphead. I have contended that a tough game like this is easier for me to watch than it is to play. But when I saw the expansion’s hands-on demo at this month’s Summer Game Fest Play Days, I shrugged my shoulders, grabbed a gamepad, and gave it a shot. Might as well occupy myself between other scheduled game demos, I thought.

And then I fell in love. For whatever reason, the demo I played, and my subsequent completion of Last Course‘s “normal” difficulty content, grabbed me and wouldn’t let go—which is why I’m compelled to recommend picking it up.

Another island getaway—with useful new abilities

Miss Chalice can only join the battle when she tricks one of the original main characters to chomp on a magical cookie. This temporarily sends someone else to a ghost realm so that she can join in. The trio goes on a quest to bring her back to life for good, no tricky cookies required.
Enlarge / Miss Chalice can only join the battle when she tricks one of the original main characters to chomp on a magical cookie. This temporarily sends someone else to a ghost realm so that she can join in. The trio goes on a quest to bring her back to life for good, no tricky cookies required.

Studio MDHR

Like many other classic “expansion packs,” Last Course requires owning the original game (which is conveniently on sale at most digital download storefronts between this article’s publication date and July 7) and bolts new content onto Cuphead‘s 2D action foundation. The original game divided its 18 boss battles across three “islands” of content, and Last Course adds, among other things, six bosses on a brand-new island.

Miss Chalice's double-jump ability will be useful to get away from those pesky gnomes gathering at her feet.
Enlarge / Miss Chalice’s double-jump ability will be useful to get away from those pesky gnomes gathering at her feet.

Studio MDHR

It also introduces a third playable character, named Miss Chalice, and she appears when you equip a Chalice-specific “charm” on either existing character (Cuphead or Mugman). She comes with four points of health by default (compared to three points for the other characters) and three unique abilities: an invincible dodge-roll, a double-jump, and a parry dash. (The latter gives players a larger “hitbox” when attempting the game’s crucial parry maneuver, making it easier to counter enemies’ specially colored attacks.) Since she must be activated as a charm, Miss Chalice can’t equip other charms in the game, and in two-player co-op sessions, only one person can turn their character into Miss Chalice.

As I made clear earlier, I’m not a Cuphead pro, so I was delighted by the new, novice-friendly character when I first tested the game at Summer Game Fest. All of her special abilities are tuned for higher maneuverability to help you contend with the chaos that is an average Cuphead boss battle, and in addition to her extra point of health, she also has a custom “super attack” option that doesn’t do any damage. Instead, it gives her an additional, temporary point of health, and this can be regenerated during long, brutal boss fights. Once she’s unlocked, she’s available in the original campaign’s levels as well, which makes her a nifty entry point for anyone like me who never beat the original campaign.

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Thanks to fans, the weirdest official Doom game is now playable on Windows

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Enlarge / A seemingly lost turn-based version of Doom RPG is now fully playable on modern Windows PCs, thanks to efforts from the Doom reverse-engineering community.

id Software

The creators of the Doom series have presented plenty of official and unofficial historical retrospectives, but these often leave out the weirdest official Doom game ever made: Doom RPG.

Even id Software’s official “Year of Doom” museum at E3 2019 left this 2005 game unchronicled. That’s a shame, because it was a phenomenal example of id once again proving itself a master of technically impressive gaming on a power-limited platform. And platforms don’t get more limited on a power or compatibility basis than the pre-iPhone wave of candy bar handsets, which Doom RPG has been locked to since its original mid-’00s launch. You may think that “turn-based Doom” sounds weird, but Doom RPG stood out as a clever and fun series twist to the first-person shooter formula.

Its abandonment to ancient phones changes today thanks to the reverse-engineering efforts of GEC.inc, a Costa Rica-based collective of at least three developers. On Wednesday, the group released a Windows port of the game based on their work on the original game’s BREW version (a Qualcomm-developed API meant for its wave of mobile phones from 2001 and beyond).

Time for T9

Forget the clunky world of ancient mobile phone platform emulation. <em>Doom RPG</em> feels way better in this week's new native port.
Enlarge / Forget the clunky world of ancient mobile phone platform emulation. Doom RPG feels way better in this week’s new native port.

id Software

GEC.inc’s freely downloadable Windows port has no copyrighted assets and won’t work without the game’s original files. (The same typically goes for other major community efforts that revolve around the reverse-engineering of classic games.) That’s where this whole thing gets tricky, as legitimate access to the game in 2022 is incredibly unlikely. Access requires owning a compatible mid-’00s phone on which the game was purchased, likely via an ancient game-sales marketplace that no longer exists, then extracting the game’s original files from that phone—and that’s assuming its original hardware is functioning and hasn’t been damaged by, say, a slowly expanding lithium-ion battery. id Software has never re-released the game outside of its original platforms (BREW, J2ME), arguably because EA Mobile got a stake in the game after acquiring original publisher Jamdat Mobile.

Whether you’re among the very few to have a preserved, working phone with a purchased copy of the game’s BREW port or you figure out another way to somehow access Doom RPG, you can dump the original game’s data into GEC.inc’s custom asset-translation executable. Ars Technica can confirm that this process is painless and leads to near-instant gameplay on Windows.

The port’s interface is admittedly barebones, made up of menus that require a keyboard to pick through, and its incompatibility with mice and touchpads is startling at first. It’s a hard crash back to the early ’00s to remember that, yes, this game was designed for T9 button arrays by default. Thankfully, the port plays nicely enough with Windows to make it easy to bind an Xinput gamepad via its default menus if you prefer a gamepad (or something like Steam Deck) over the usual WASD options.

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