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Will the gaming industry clutch up in 2019? – TechCrunch

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2019 promises to be a great year in games. Innovation and competition will elevate the industry’s offerings and drive more inclusivity among a broader range of audiences.

Cloud gaming emerges as the new frontier and brings about unlikely partnerships.

Collectively, gamers will serve as the canary in the coal mine as large tech companies look to introduce new technologies to mainstream consumer audiences. Companies like Amazon, Tencent, Google and Microsoft already own and operate massive data centers that virtually run enterprise applications. In 2019, we will see continued investment in infrastructure and content acquisition as these billion-dollar companies seek to claim the consumer market.

Cloud gaming is a massive market opportunity that extends beyond just interactive entertainment. Microsoft already generates significant revenues from cloud-based services, and doubling down on gaming will open the door to broader adoption by consumers and a bigger piece of the market.

It also comes with significant competition, each player with their own motivations. Tencent, for one, got hit hard with a slowdown in mobile game approvals by the Chinese government, causing its share price to drop. Since then, things have started to improve somewhat, but it has incentivized Tencent to reduce its exposure in gaming and look for other non-content business segments that generate steady revenue and require less government regulation. For the first three quarters of 2018, Tencent’s cloud operations generated $864 million (RMB 6 billion) in revenues and more than doubled year-over-year.

Google has also been trying to wiggle its way into the cloud gaming business. Its cloud operations make about $10 billion annually, and recently appointed a new CEO likely to expand Google Cloud’s vertical product capabilities in non-tech categories.

And there is, of course, Amazon. With currently more than 50 percent market share in cloud computing and a strong user acquisition and engagement channel with Twitch, Amazon is uniquely positioned. But its previous efforts around interactive entertainment have so far not produced any real tangible results despite it ramping up expenditure. This makes it more likely that Amazon will become a third-party infrastructure provider for companies like Sony and Nintendo instead.

As these titans double down on cloud gaming initiatives, we can expect to see some surprising partnerships. For instance, Tencent and Google are currently working together in China. This gives the latter an entry point into a market that has long been out of reach. Meanwhile, incumbents like Sony, Nintendo and legacy game publishers will have to decide on going at it alone, as is the case of Electronic Arts, or buddying up and surrendering a piece of revenue.

Gamers win as the PC games market breaks into pieces.

It’s not a bad thing. But after more than a decade of a virtual monopoly held by Valve, new contenders have emerged. We already saw how Valve tried to get in front of Epic’s announcement that it was lowering its platform fees. And not long after, Discord popped up with an even better rate.

Breaking with the standard 30 percent cut, which is what most platforms (Apple, Facebook) claim in exchange for their services, Valve announced a few major changes. Two key sentences from the announcement. First, Valve’s new revenue distribution: “when a game makes over $10 million on Steam, the revenue share for that application will adjust to 75%/25% on earnings beyond $10M. At $50 million, the revenue share will adjust to 80%/20% on earnings beyond $50M.” Succinctly, make more and keep more.

Part of what is driving this is consolidation at the top. In the PC market the top-line firms have been growing at an incredible rate. Between 2013 and 2017, Activision grew its PC operations at +10 percent compound annual growth rate. EA’s was +30 percent, and Bethesda’s +36 percent. Meanwhile, the share of the top four public companies, based on PC gaming revenue, grew from 44 percent to 60 percent in that same period. It’s getting less crowded at the top and digital stores will have to compete.

The big publishers like Activision, Ubisoft and EA already have their digital storefronts and distribution platforms. Different from the brick-and-mortar space, publishers managed to build their own rather than rely on third-parties. For years, the big guys have had no interest in putting their content side-by-side with a growing number of small and medium-sized game companies.

Epic’s wild success with Fortnite has afforded it a much broader range of strategic options. So far it has lowered its store fees and retroactively paid developers on its platform. And now it is budding into the digital PC market by using its vast financial resources to compete head-on with Valve. Finally, Discord’s entry should be noted, too. Adding a content offering to an existing community, rather than the other way around, Discord is the new hot thing. Certainly, it has yet to lay claim to a hit title of its own. But it has both the expertise and critical mass to become an important next store front. It raised an additional $150 million right before the holidays.

All this takes place against the backdrop of a declining physical games market. It’s been a tough few months in meat space. In its recent earnings, GameStop came in at $2.08 billion and +4.8 percent in global sales, but Wall Street was not impressed. GameStop blamed Call of Duty and “sports titles.” With the recent sell-off of Spring Mobile to lower its debt, the specialty retailer continues on the hunt for new leadership, either in the form of a new CEO (unlikely) or new owner (likely). Whoever is going to scoop up GameStop is probably waiting for 19Q1 when sales dip and its valuation will be lower.

The breaking up of Valve’s dominance is good for players and companies that make games. Consumers will get better prices and more choice, and the various digital stores will compete over functionality and improved user experience. This is a win-win for all.

Walled gardens will be broken down, enabling cross-platform play with anyone, anywhere.

Despite digitization, the bulk of interactive entertainment has remained within one of the various walled gardens. That is going to change. Like telecom networks that allow people to speak to each other irrespective of their phone provider, so, too, will online gaming break down silos. In 2019, cross-platform play will become ubiquitous. The end of 2018 has already shown the potential of this as Fortnite’s success resulted in each of the platforms agreeing to play nicely with one another.

Legacy publishers like Activision Blizzard have also tasted what cross-platform play can do for their franchises: Hearthstone has continued to dominate the collective card game category, because it works seamlessly across PC and mobile, and offers a smooth integration with live-streaming platforms like Twitch.

Cross-platform play should be at the top of every studio’s design agenda in 2019.

Subscriptions and bundled content will drive sales in 2019.

After seeing the initial success with subscriptions enjoyed by Twitch and Microsoft’s GamePass, more companies will adopt this monetization model. Large platform holders like Sony and Apple are looking to grow their revenues by offering content subscriptions. Both of these companies have indicated they have plans to increase services revenue as a direct response to reaching the limit of how much hardware they can sell.

Game publishers have been experimenting with micro-transactions to great success. Tentpole franchises like FIFA, Hearthstone and GTA V Online have made a mint from what they call “recurrent revenues.” Beyond up-selling their audiences on a regular schedule with content updates, they will explore subscription models that will provide massive discounts and unique content to players in exchange for a more predictable revenue flows.

Video games will face more and new regulation with a focus on kids.

Now that gaming has emerged as a mainstream form of entertainment, the industry can expect more scrutiny. In addition, there will be sharper focus on kids and technology in 2019. Data companies will be increasingly under the microscope. Similar to the loot box scandal that resulted in various governments speaking out, we will see an effort focused on protecting children. This means that game companies will be held to a higher standard with regards to how they handle data on minors. Against the background of a festering trade war between eastern and western economies, data ownership, in particular around children, will emerge as a political topic and strategic business challenge.

It also means that titles like Fortnite will be fingered as culprits in narratives around an erosion of culture and well-being (although this is largely driven by misinformed industry critics). The title’s appeal to younger audiences will make it a likely scapegoat as the usual choir sings its disdain for video games. This year’s congressional hearing in the U.S. more than satisfied our need for examples of how disconnected government representatives are from technology used by literally everyone else. Different from previous generations, however, I expect the companies currently at the top of the food chain to know exactly how to respond. They will push titles that offer a safe, pleasant space for kids to play, uninterrupted by broader challenges found everywhere else.

Next year will, however, not be a continuation of exuberance as we’ve seen previously. Trends in related industries suggest that gaming, too, will move toward a more concentrated competitive landscape and closer government monitoring.

Image: Bryce Durbin/TechCrunch

Further consolidation is imminent for the games industry.

In response to the slowdown in consumer spending, some game companies will go out of business and others will gobble up the failing ones to strengthen their market positions. Nothing new here, but it does leave room for speculation as to who will buy whom. I previously speculated that Amazon would buy GameStop and still think they might. Only it will happen when GameStop reaches its wits end, probably at the end of Q1 2019.

Across Europe there have been a series of smaller acquisitions throughout the year, some of which are now turning sour. Starbreeze had its offices raided (which I’m told sounded worse than it was). Even so, this year the ambitious portfolio approach of buying up smaller studios and leveraging their IP against efficient distribution networks became, perhaps, too popular.

Finally, I expect companies like Tencent to continue satisfying their appetites for foreign assets. If nothing else, this year has cemented Tencent’s need to diversify as they look to mitigate some of its recent stresses by lowering its exposure to games revenue and further investing in western companies and platforms. Over the past two years its success with this strategy has greatly lowered competition across PC and mobile, the two most innovative categories.

This does not mean that innovation itself is at risk. It just means that the stakes will be higher for any firm that does not make a billion or more in revenues.

Courtesy of Feodora Chiosea/Getty Images

The coming winter brings a slowdown in growth, and possibly in revenue and innovation.

I’ve been writing about this for a while now. But don’t misunderstand: I want to be wrong about this. While I would like to predict that 2019 will bring even more growth and more money for everyone, the supporting evidence simply isn’t there.

For one, mobile gaming is showing saturation across different markets, including in China. It has evolved from insignificance to become the biggest games market worldwide and is now starting to slow. We are also at the end of the current console cycle. This simply means that the platforms are going to discount their hardware and the bulk of consumers looking to spend are disproportionately price conscious.

Overall economic indicators suggest that consumer spending, especially in the U.S., is headed to a slowdown. Following the tax breaks earlier in the year, overall spending surprised even the retailers. But that party is going to end soon. Finally, as gaming has become mainstream, its underlying economics have shifted. In broad terms this means that where previously the games industry may have seemed “counter-cyclical” it is going to follow suit with whatever happens to consumer spending at large. In addition, investors have become savvier and are starting to trade aggressively against game stocks. This means game companies are less inclined to take risks on content innovation (as in the case of EA).

The long-term silver lining here is that this imminent stagnation is the precursor of the industry’s overall transition. But before spring comes winter.

Live-streamers and influencers embark on a drama binge.

Yes, newfound fame will get the better of them and stupid things will be said. This is still the very first generation that suddenly finds itself thrust into the mainstream spotlight — they don’t have the benefit of the intense vetting that other industries have subjected their rising stars to before sending them on the main stage. With many still amateurs and competing against one another to win the favor of audiences and aggregators alike, the stakes are substantially higher.

In their hunger for attention, aspiring streamers will sacrifice their authenticity and some will undoubtedly ruin their careers before it even starts. Mounting pressures from growing competition will drive this new generation of tastemakers to “keep it real” and remain authentic. Twitch and YouTube will do what they can, I’m sure. But for many, this authenticity will be too much.

EA takes a hit in 2019.

Among the Big Three, Electronic Arts will have the toughest year. Despite its aggressive expansion effort illustrated by the acquisition of GameFly’s streaming division, EA is going to face the music with investors. This is somewhat undeserved, because financial investors insist on continual growth and generally can’t see past the next quarter. And, to be fair, EA has a few weaknesses: its revenue and its margin are highly dependent on the continuing success of FIFA Ultimate Team. In addition, it has relatively little new IP in the pipe, which makes it even more difficult for investors to care about the longer-term future. Simply put, EA can’t free itself from Wall Street’s needs as several analysts have already started to lower their expectations for the year ahead.

Photo courtesy/Getty Images/Guido Krzikowski/Bloomberg

GameStop sells, but it’s not a party.

I already predicted this last year and was almost right: GameStop has been trying to get acquired for the past six months. Its C-suite has seen better days, most recently resulting in a letter from one of its largest shareholders, Tiger Management, to get its sh!t together (aka perform a strategic review). The company has been unable to find a buyer and now finds itself forced to essentially abandon the diversification strategy it initiated in 2014 by acquiring retail chain in parallel market segments. Just recently GameStop sold off Spring Mobile and is likely to use the money to pay off its debts and improve the likelihood of some private equity firm or a company like Amazon to buy it. No one expected it to be a great year for games retail, but it’s getting sadder.

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Robert Pattinson broods and batters his way through new The Batman trailer

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Robert Pattinson stars as billionaire Bruce Wayne, aka the Caped Crusader, in director Matt Reeves’ forthcoming film, The Batman.

Robert Pattinson is appropriately dark and brooding and beating up bad guys in the latest trailer for The Batman, which debuted at DC FanDome this weekend. Directed by Matt Reeves, the film’s release has been delayed multiple times, but will finally hit theaters next March.

As I’ve written previously, the original plan was to set the film within the DCEU, after the events of Justice League. But as Warner Bros. was rethinking the shared-universe model for its superhero films in favor of standalone films and franchises, Affleck announced he was stepping down as director, and the studio replaced him with Reeves. Affleck would eventually withdraw from the project altogether, following his divorce from Jennifer Garner and a stint in rehab for alcohol abuse.

Reeves brought a very different vision to The Batman, saying that he wanted it to be “an almost noir-driven, detective version of Batman,” focused on Bruce Wayne’s second year fighting crime as the Caped Crusader, rather than once again retelling the character’s origin story. 

Reeves said that the plot would follow a series of murders, revealing the history of corruption in Gotham and how Bruce’s family is linked to that corruption. The classic bad guys—the Riddler, Penguin, Catwoman—are also in the early stages of their development into full-fledged villains. Reeves has cited Alfred Hitchcock films as a major influence on the overall look and feel of his film, as well as Chinatown, The French Connection, and Taxi Driver.

Filming was paused in March 2020 due to COVID-19—dialect coach Andrew Jack died from the disease shortly thereafter—after a quarter or so of the film had been shot. And three days after filming resumed in September 2020, Pattinson tested positive for COVID-19, briefly shutting down production again. Filming didn’t wrap completely until March of this year, and the studio pushed the film’s release to 2022 as a result.

In addition to Pattinson, the cast includes Jeffrey Wright (Westworld) as Commissioner Jim Gordon; Colin Farrell (Fantastic Beasts and Where to Find Them) as Oswald Cobblepot/Penguin; Andy Serkis (The Lord of the Rings trilogy) as Bruce Wayne’s butler and mentor, Alfred Pennyworth; John Turturro (Barton Fink, The Big Lebowski) as crime boss Carmine Falcone; Paul Dano (Okja, 12 Years a Slave) as Edward Nashton/The Riddler; and Zoë Kravitz (X-Men: First Class) as Selina Kyle/Catwoman. (Kravitz voiced the character in The Lego Batman Movie.)

Enlarge / Zoë Kravitz plays Selina Kyle, aka Catwoman

YouTube/Warner Bros

The first teaser dropped during last year’s DC FanDome, and the Warner Bros. CinemaCon panel this past August featured a brief sizzle reel of new footage. This latest trailer opens with the arrest of Dano’s Riddler in a coffee shop, although we don’t see his face—just the question mark pattern in the foam of his cappuccino. We get a bit more footage of Batman beating up street goons, some serious sparkage with Selina/Catwoman, and a fiery confrontation with Oswald Cobblepot. But it’s the Riddler who seems to dominate the proceedings, with an ominous voiceover: “What’s black and blue and red all over? You.”

In other Batman news, Warner Bros. dropped a short sneak peek of footage for The Flash film that’s been in development for a good 17 years. It’s loosely based on the 2011 comic crossover story Flashpoint, in which Barry travels back in time to prevent the death of his mother, and accidentally unravels space and time as a result. This new footage confirms that. Ben Affleck is rumored to reprise his Batman, along with Michael Keaton, who last played the Caped Crusader in 1992’s Batman Returns. Yep, we might be getting a mutliverse version of the DCEU.

We don’t see the face of either Affleck or Keaton in this footage, but we do see Barry approach Batman from behind and ask, “Are you in?” And that does sound like Keaton in the voiceover. The studio doesn’t seem to have released the footage on their own YouTube channel, but a version is embedded below. You can watch the full streamed DC FanDome event here.

The Batman is slated for release on March 4, 2022. The Flash is scheduled to hit theaters on November 4, 2022.

Batman returns in teaser trailer for the forthcoming film The Flash.

Listing image by Warner Bros.

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John Cena shows off comedic chops in extended teaser for Peacemaker series

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John Cena reprises his role as Peacemaker for the forthcoming HBO Max spinoff series Peacemaker.

John Cena’s Peacemaker was among the standout characters in The Suicide Squad‘s star-studded ensemble cast, so we were intrigued by the news that a spinoff series was in the works. We knew that Peacemaker was being written and directed by James Gunn (Guardians of the Galaxy), and that the series will explore will explore the origins of the character and his subsequent missions. And now we have our first look, thanks to HBO Max, which released an extended teaser trailer for the series during the DC FanDome event.

(A couple of spoilers for The Suicide Squad below.)

Gunn wrote the series last summer during the COVID-19 lockdown, just for fun, but then DC Films approached him about a possible spinoff series for one of the characters in The Suicide Squad. I’m not sure Peacemaker would have been my first choice—Cena’s performance was terrific, but I haven’t quite forgiven the character for the Very Bad Thing he did in that film—but Gunn’s instincts are pretty impeccable, and he clearly felt there was more story to tell.

“He’s not an evil person, he’s just a bad guy,” Gunn told Variety in August. “He seems sort of irredeemable in the film. But I think that there’s more to him. We didn’t get a chance to know him [in The Suicide Squad] in the way we get to know some of the other characters. And so that’s what the whole show is about.” HBO Max was sufficiently impressed with his take that it ordered Peacemaker straight to series.

The eight-episode series is set after the events of The Suicide Squad, specifically after the post-credits scene, in which we learned that Peacemaker had survived what had appeared to be a fatal shooting. That scene hinted that the US government still had some use for him. The teaser makes that hint explicit, as Peacemaker (aka Christopher Smith) is recruited by Clemson Murn (Chukwudi Iwuji) for another mission in order to avoid going back to prison.

That mission is even less noble than the one he was assigned by Amanda Waller: he’s basically an assassin, but hey, at least he’s only killing bad people. He gets assistance from John Economos (Steve Agee)—warden of the Belle Reve penitentiary—NSA agent and former Waller aide Emilia Harcourt (Jennifer Holland), and new team member Leota Adebayo (Danielle Brooks). The cast also includes Robert Patrick as Peacemaker’s crusty father, Auggie Smith (who thinks his son is a “nancy-boy”); Freddie Stroma as Adrian Chase, aka Vigilante, a district attorney who fights crime and has rapid healing abilities; and Nhut Le as Judomaster.

The teaser is heavy on the cheesy, off-color bro-humor, including shots of Peacemaker bending over to to shoot at a target during practice, as well as having Vigilante fire at a bottle held at groin level. Then there’s the whole bizarre conversation about “butt babies.” But in Gunn’s capable hands, the irreverent, over-the-top tone is note-perfect—very much in line with the character and with the tone of The Suicide Squad (which I loved)—and we already know Cena has a remarkable gift for physical comedy, shown to good advantage here. Honestly, we’ll be tuning in to just watch him dance in his apartment in his underwear, and bond with a bald eagle. (“Oh my god. He’s hugging me.”)

Peacemaker debuts on January 13, 2022, on HBO Max.

Enlarge / John Cena’s Peacemaker gets his own spinoff series on HBO Max and a brand new team—including a bald eagle because why not?

YouTube/HBO Max

Listing image by YouTube/HBO Max

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Star Trek: Exploring New Worlds exhibit comes to LA’s Skirball Center

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Back in 2016, the Museum of Pop Culture (MoPOP) in Seattle unveiled an immersive new exhibit, Star Trek: Exploring New Worlds, in its Science Fiction Museum and Hall of Fame–a tribute to the hugely influential long-running franchise. The exhibit embarked on a national tour two years later and has been traveling around the country ever since. And now it’s come to the final stop on its journey: the Skirball Cultural Center in Los Angeles, California, where Gene Roddenberry first created his visionary series, Star Trek: The Original Series (TOS).

“Star Trek’s vision resonates deeply with the Skirball’s commitment to using the power of arts and storytelling to help build a society in which everyone belongs,” museum director Sheri Bernstein said during the press preview last month.

Among the highlights of the exhibit are Captain Kirk’s command chair, and the wooden helm and navigation console from TOS, fully restored. There are plenty of props: different designs of tricorders, communicators, phasers, and P.A.D.Ds; a model of a Borg cube; and lots of weaponry, including a Klingon disruptor pistol.  

And of course, there are many, many models of the various spacecraft featured in the franchise over the decades, including filming models for the Enterprise, the USS Excelsior, and the Deep Space Nine space station. “I love spaceship models,” MoPOP’s Brooks Peck, curator of the exhibit, admitted. “Now it’s all digital, but back then it was all about plastic and wood models, so there’s a wonderful craft to those pieces.”

Peck is also proud of the fact that the exhibit showcases the captain’s uniforms from all the major Star Trek TV shows. His personal favorite? Kathryn Janeway from Star Trek: Voyager. “Best Star Trek captain ever,” Peck joked. “I will fight you over that.” There are also many original costumes worn by cast members of the various series, from TOS —including the tunic worn by evil Captain Kirk in the episode “Mirror, Mirror”—all the way through to Star Trek: Discovery.

On the interactive side of things, visitors can crawl through a Jeffries tube, or be “assimilated” by the Borg. A transporter simulation lets people create short films of themselves beaming down to to the surface of an alien planet. There’s a station where one can listen to people reminisce about their favorite Star Trek films and shows, and what the franchise has meant to them. And of course, there are tons of tribbles lurking throughout, for eagle-eyed visitors who want to try and spot them.

In his press preview remarks, Peck emphasized that the characters and themes of TOS were quite radical when it first aired in 1966. This was a time when the Cold War was in full swing, and there was a great deal of racial tension in the US, despite passage of the Civil Rights Act in 1964 and the Voting Rights Act the following year. This was the broad cultural backdrop against which Captain Kirk and the crew of the USS Enterprise had their adventures, all infused with Roddenberry’s optimism for the future.

“Roddenberry believed not that we would get past our differences, but that we would, in fact, embrace our differences, in the sense of diversity,” said Peck. “Sadly, this is a rough time in this nation. We’re seeing a lot of division again. So I’m pleased that we can take some time to look at Star Trek, and its idea of inclusion and working together to build a better and just society, and to hold that up in a fun, artistic form. What Star Trek brings is this optimistic vision of the future that is really inspiring to people.”

Laura Mart, managing curator for the exhibition, also expressed her hope that the exhibit would channel the original Star Trek ethos, ending her remarks with an especially apt quote from Roddenberry:

I believe in humanity. We are an incredible species. We’re still just a child creature, we’re still being nasty to each other, and all children go through those phases. We’re still growing up. We’re moving into adolescence now. When we grow up, man, we’re going to be something.

Listing image by Skirball Center/MoPOP

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