Gaming

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

Published

4 years ago

March 21, 2019

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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Gaming

Why Transformers now look like a big bunch of gears and car parts

Published

14 hours ago

March 28, 2023

Francisco Peguero

Enlarge / How did one of the rarest 911s end up becoming a Transformer?

Stef Schrader

“I didn’t know what car Mirage was going to be at first,” said Steven Caple Jr., director of Transformers: Rise of the Beasts. “Where I’m from, in Cleveland, Ohio, I’d never even been in a Porsche before,” he continued. “My actual first introduction to Porsche was Bad Boys I, so shout out to Michael Bay—that’s all I really had.”

Caple admitted in a panel during Austin’s South by Southwest festival that the star car of the beloved action film Bad Boys inspired him to make Mirage a classic Porsche in the upcoming film. Mirage is a bit of a rebel himself, and the callback to the classic buddy-cop movie just felt right.

Fortunately, extraterrestrial Autobots won’t be tempted to pull over in any sketchy places to debate the merits of in-car snacking, but this does mean they have bigger nemeses that necessitate transforming into giant robots to handle. It can be more complicated than you’d expect to make a cool Porsche into an Autobot film star, though—in fact, Porsche has a whole team that helps Hollywood studios get just the right car on the silver screen. Here’s how it all comes together.

Character development

It starts with a character. Filmmakers have a certain look and vibe in mind when a new Transformer is “cast,” so to speak. Mirage is a bad boy with an attitude, and the film, set in 1994, is meant to be a sequel to Bumblebee. That made Caple think of the 1994 911 Turbo from Bad Boys.

“I was born in the ’80s, and I was a kid in the ’90s… this is the era when I grew up,” Caple explained. “This movie is like a time capsule to me.”

“You get to ’94, and everything started to change—from the wardrobe to the culture to the music to the cars,” he continued. “You start to step away from square-bodied cars and say, ‘hello curves.'”

Enlarge / You probably have to be pretty into your Porsches to spot that this is a 3.8 RS and not a 911 Turbo.

Stef Schrader

The “casting” choice of the 964-era 911—a car that was dramatically smoother and more streamlined than any 911 before it—is a callback for the current Transformers series, given that Bad Boys was Michael Bay’s feature-length directorial debut. Yet Mirage has always been portrayed as an upper-crust member of Autobot society, so it makes sense that the Transformers team picked an even rarer 964-generation Porsche to portray him: a 1993 911 Carrera RS 3.8.

“When I was designing the character, it started there,” Caple said. “I talked to Owen [Shively] and the team at Porsche and said… he’s going to be an outlaw. He’s going to be a rebel. Going to be flashy. Very confident, but smooth.”

That’s when Porsche suggested looking into the 911 Carrera RS 3.8.

The Carrera RS 3.8 uses the same wider body shape as Bad Boys‘ 911 Turbo, but it was a homologation specially produced to legalize the Carrera RSR race car with a host of lightweight parts and a hardcore aerodynamic package designed for track domination. Porsche only ever made 55 RS 3.8s, according to Total 911, making it an exceptionally rare ride. In other media and toys in the past, Mirage has been a Ferrari and a Formula 1 car, so an ultra-rare Porsche feels like a solid fit.

While many of us associate the Transformers series with the heavy use of CGI, the filmmakers still need to source real cars to use for many of the shots—and Porsche has a whole team dedicated to helping filmmakers place just the right car into film and television projects.

Owen Shively, from that early ideation conversation Caple mentioned, is the CEO of RTTM Agency, Porsche Cars North America’s exclusive representative when it comes to entertainment partnership requests like this. When Porsche needs someone to arrange a specific car for a new film or TV project, Shively’s agency is where they turn.

Gaming

Link as MacGyver: Tears of the Kingdom demo shows new material-crafting abilities

Published

15 hours ago

March 28, 2023

Francisco Peguero

For a major game that was first announced nearly four years ago and is set to launch in less than two months, we’ve seen remarkably little gameplay footage from The Legend of Zelda: Tears of the Kingdom beyond some very sparse trailers. Nintendo set out to partially fix that today, releasing a new video in which Zelda producer Eiji Aonuma showed off some of Link’s new abilities in a guided 10-minute gameplay presentation.

The most impactful new ability on display was called “Fuse,” which lets Link put together two disparate objects to create a new one with a brand-new effect. In the simplest example of this, Aonuma fused together a basic tree branch (which breaks incredibly easily even during simple fights) with a rock, creating a makeshift hammer with a lot more power and durability.

Enlarge / Tree branch + boulder = makeshift hammer.

Unlike in Breath of the Wild, where Link had to hunt for the most powerful weapons, the focus here will be on creating those weapons from component parts, Aonuma said. Fusing a long stick with a pitchfork can give you a longer attack range, for instance, and fusing various materials to arrows can create useful side-effects like freezing powers or a homing capability.

Fusion can also be used more defensively; Aonuma attached a mushroom to his shield, leading to an enemy-blinding explosive dust cloud when he blocked an attack. “Even if you struggle with combat, you can take down enemies using similar methods,” Aonuma said.

Enlarge / Attaching a fan to some logs to make an ersatz airboat.

The ability to put different objects together extends beyond combat, too. A new “ultrahand” ability (named in an apparent nod to an antique Japanese Nintendo toy) let Aonuma stick together three logs to craft a raft and add two self-powered fans to create a kind of airboat. Aonuma noted that the car and flying machine Link rode in previous Tears of the Kingdom trailers were similarly constructed from individual parts in the game world and not inserted wholesale by the developers.

Other abilities shown in the brief gameplay demonstration highlighted Tears of the Kingdom‘s verticality. An “Ascend” ability, for instance, lets Link climb right through any ceiling above his head to the floor above, a method that even works in caves or with small ridges overhanging from cliff faces.

To reach the “sky islands” floating high above Link, Aonuma also showed off a “Recall” ability to reverse the movement of a large asteroid-like block that had fallen from the sky, using it as a kind of elevator. Aonuma said this was just one of many ways to get to these far-off islands in the sky.

Enlarge / Link glides through the sky, getting a panoramic view before diving into a river on the ground.

But enemies can also use wind-based weapons to blow Link off the edges of these sky islands, forcing him into a paratrooper-without-a-plane-style skydive. In the demo, Aonuma guided Link’s descent as the ground quickly approached, ending with a dramatic dive into a river.

Aonuma stressed that he would “run out of time” if he discussed all the new features in Tears of the Kingdom, which he said has now completed all development work. Based on what was shown today, though, it looks like the game should lead to the kind of player experimentation and clever puzzle solving that could give Tears of the Kingdom a long life with tinkerers and content creators well past the “end” of the game’s story.

Listing image by Nintendo

Gaming

Wii U and 3DS eShops close down later today, risking hundreds of unique games

Published

1 day ago

March 27, 2023

Francisco Peguero

Enlarge / Your last chance to buy individual games for the Wii U and 3DS—assuming you have credits in your wallet account—arrives tonight.

Only a few hours remain for anyone who wants to buy games from the eShops for Nintendo’s Wii U and 3DS.

As it promised more than a year ago, Nintendo is shutting down those digital storefronts tonight at 8 pm Eastern, after previously halting the ability to add eShop funds in May 2022. After today, you can still download or re-download any titles you’ve previously bought from those shops, though that can obviously change in the future. Closing the eShops means that roughly 1,000 digital-only games will no longer be accessible, according to research by VGC, including 335 Virtual Console games that aren’t available through the Nintendo Switch Online service.

These kinds of sweeping moves, while perhaps understandable from a business perspective, pose a serious danger to the preservation of many games in the systems’ libraries. As Ars detailed earlier this month, video game preservationists are hamstrung by laws and regulations around remote access to DRM-protected work, even if it’s kept by research-driven organizations. Nintendo is one of many organizations that, through the Entertainment Software Association, lobbies to prevent libraries from offering legal access to archived games.

Today’s shutdown also marks the end of Nintendo’s Virtual Console, which allowed for the purchase of individual games from Nintendo’s catalog without a subscription. The Console was killed on the original Wii in 2019, and Nintendo does not intend to offer it on the Switch, noting in an FAQ about the eShop shutdown that it currently has “no plans to offer classic content in other ways” (since removed, but archived here). It has, however, offered a website on which you can “Bring back your gaming memories” of 3DS and Wii U titles you’ve purchased and played.

The Completionist’s explanation of how he spent nearly a year buying every available 3DS and Wii U game before today’s shutdown.

If you’re wondering what it would take to buy every game on the eShop, somebody already did that. The Completionist, aka Jirard Khalil, downloaded 1.2TB of Wii U and 267GB of 3DS games, taking 328 days and costing $22,791. “Since the industry started, we run a daily risk of losing games forever,” Khalil tells viewers in the video. “That’s why this matters.” Khalil is donating the consoles and storage containing all the games to the Video Game History Foundation and will host a Preserved Play fundraiser for the foundation April 15-16 on his Twitch channel.