Games Events In a Post-COVID World

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Roundtable: The Good, The Bad, and The Strategy of PlayStation Subscriptions

In this Metacast episode, Anil Das-Gupta, Aaron Bush and Chong Ahn, join your host Maria Gillies to discuss:

Axie Infinity’s Ronin Sidechain Hack
Deep Dive on PlayStation Plus Subscriptions
Miniclip Exceeds 4B Downloads

As always, you can find us on Spotify, Apple Podcasts, Google Podcasts, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.

Check Out The Episode

E3 2022 is Canceled, What Does the Future Hold?

Earlier this week news broke that E3, the game industry’s perennial trade show, had been canceled. The event moved to an online-only format following COVID concerns, but has faced its fair share of issues over the past few years. The event was canceled during the height of the pandemic in 2020 and was met with a lukewarm response when it went digital in 2021.

As an avid consumer of the event for the last 10+ years, E3’s cancellation is disappointing to see. The show has become synonymous with an almost Christmas-like level of experience for me. My work calendar has always held a one-hour block each June so I can put aside time to see the latest E3 headlines from Nintendo, and watching recap videos of the conference from some of my favorite creators is something I find myself doing year round.

However, despite my personal misgivings, I’m fascinated by E3’s decline these past few years. How did an event like this fall out of favor in only a few short years? In my mind, it boils down to two key reasons — let’s dive deeper.

The Move To Digital

As its core E3 was built for an in-person experience. Old photos of the event are filled with celebrity cameos, long booth lines, and gaudy statues of our favorite game characters. But while E3 is at its best when it builds IRL-centric experiences, the tastes of the games industry have seemingly gone in the other direction. Both consumers and developers alike have slowly begun to shift preferences away from physical media in recent years in favor of more-digital first options (higher margins, of course), and it’s becoming increasingly clear that E3 may be a casualty of that trend.

On the consumer side, digital sales have been catching up to physical sales, showing no signs of slowing down. With digital trends having been accelerated thanks to the pandemic and with console-providers releasing digital-only systems in hopes of building their own “walled garden” game stores, consumers are being nudged into a digital-first world whether they like it or not. This “play anywhere”, digital-first mentality is expanding beyond purchasing patterns for consumers, too. If you don’t even need to get up from the couch to buy your favorite game, why would you spend money to fly to LA to experience E3 in person? In a digital era, middlemen like E3 get cut out in favor of direct-to-consumer relationships.

*Digital software far outpaces its physical counterpart for Sony | Source:* *Sony Earnings Report*

Meanwhile for publishers and developers, digital mediums offer more control and nuance in their marketing. The captive audience of E3 often comes at the cost of millions of dollars in budget and stringent guidelines around timing and space limitations. With more fans staying home, and the developers who do opt for live shows at E3 beginning to create more memes than headlines, its not surprising to see companies questioning if its worth participating in the event at all. It’s a big reason we’ve seen brands like Nintendo move to pre-recorded content for the show, and why a company like Sony has opted to withdraw from E3 altogether. There just isn’t enough benefit to showing up at the event for developers these days. Pair this with an increasingly competitive event space (often courtesy of Geoff Keighly) that gives developers more control and nuance of their announcements for a fraction of the cost of E3, and the new digital-first world starts to look great in comparison to the E3 of the past.

The Power of LiveOps & The Rise of The Niche

All this has also opened the door to new development techniques and distribution tactics that wouldn’t have otherwise been possible. The most notable of these trends to call out is free-to-play titles. By nature, this model facilitates opportunities for developers to launch more content, more frequently, rather than all at once.

*For LiveOps titles, much of the work comes after launch* *| Source:* *GameDeveloper*

This launch strategy sits in direct contrast to something like E3, which occurs so infrequently that it best serves games that only release news once or twice across a multi-year development cycle. Games like Legend of Zelda: Breath of The Wild or CyberPunk: 2077 are natural fits for the spectacle of E3, because fans are clamoring for more info on the games, but don’t expect to receive more than two or three sneak peeks before the title is launched. It's the difference between a development style that’s catered towards a “big bang” release rather than a sustained release. With E3 being developed, popularized, and built around the former, while much of the game industry continues to move towards the latter, the event continues to fade into obscurity.

Meanwhile on the consumer-side, the digitalization of games has made it easier than ever for indie developers to build, launch, and distribute their own titles. With an ever increasing supply, consumers have more options of where to spend their time than ever before. This diversification means consumers will naturally have some mind-share taken away from traditional AAA retail titles. Unfortunately, those are the exact types of games that excel at E3. Combining the fact that most AAA titles today fall squarely into that LiveOps category, suddenly this combo of market changes begins to eat into a sizable portion of what E3’s brand is built on top of.

*Steam continues to be increasingly dominated by Indie titles | Source:* *VGInsights*

ESA, the team behind E3, has already promised the event will be back in full force starting next year, with 2022’s resources being devoted to creating an even better experience in 2023. However, despite the organization’s promises, I have to wonder if this year’s cancellation serves as the proverbial ending for E3 as we’ve known it? Industry trends continue to shift in a way that is not conducive to the show’s long-term success, and as more and more technological advancements push towards a digital-first approach, it's not hard to imagine that whatever form E3 takes next year is ultimately doomed to fail if it doesn’t innovate in some particularly substantial ways. It’s a sad prospect — the event that defined the industry for many fading into a slow fall to irrelevance — but not all hope is lost. Through Summer GamesFest, Nintendo Directs, Sony’s State of Play, the spirit of E3 continues to live on, albeit in a different form. There are also other conferences like PAX that center on a more builder-centric audience, as compared to E3's consumer focus, that could pick up the mantle. I have confidence something will step in to fill the gap left by E3 in the next few years, if it hasn’t already, it's just a question of which option it will be. (Written by Max Lowenthal)

🎮 In Other News…

💸 Funding & Acquisitions:

gCC announced its $110M early stage fund. Link
Fractal raised a $35M seed round led by Paradigm and Multicoin. Link
VR Studio nDreams raised $35M. Link
Anzu, a games advertising platform raised $20M. Link
Liv announced an $8.5M raise to enable AR and VR content creators. Link
Crypto Raiders raised $6M from DeFinance Capital and Delphi Digital. Link
Battlebound announced a $4.8M seed round led by a16z. Link

📊 Business:

Sky Mavis’ Ronin was hacked in a $600M+ exploit. Link
Putting Elden Ring’s 12M in sales in context. Link
Japan digital store rankings for February 2022. Link
Sensor Tower report mentions that mobile game earnings were down 7% in Q1 2022. Link

🕹️ Culture & Games:

E3 is cancelled for 2022. Link
Moving away from Fortnite’s core build feature. Link
List of games award winners at GDC. Link

👾 Miscellaneous Musings:

Play-to-earn opens a brave new world for kids. Link
Dark Forest oral history. Link
Omdia estimates the biggest subscription opportunities for mobile are in casual and cloud. Link
PlayStation’s Jim Ryan interview with gi.biz on the company’s new subscription. Link