Welcome to Master the Meta, the #1 newsletter about the business of video games.
Here’s your weekly roundup and analysis of what’s happening in the video game industry.
✍️ My Latest Article
Earnings: Xbox, PlayStation, Nintendo & EA — Although earnings releases are mostly backwards looking, we can read between the lines and infer what’s to come. Plus, I explain where each of these companies are succeeding, failing, and where there’s upside potential. Link
📰 News
More earnings! Since I posted my last article, even more companies — Activision Blizzard, Take-Two Interactive, Ubisoft, and Zynga — have reported their earnings results. Instead of digging into all the takeaways today, I’m going to write another separate post to dive deeper. Stay tuned for full coverage!
Dan Houser leaves Rockstar. Houser’s resignation from Rockstar (GTA, Red Dead, etc.), a studio he co-founded and played key creative roles in, spurred a flurry of reactions on Twitter, and Take-Two’s stock even took a minor hit. While his absence definitely isn't a positive, overreacting is likely a mistake. Yes, we all should keep a close eye on Rockstar’s culture, but his brother Sam remains President, there’s a deep bench of talent, and Rockstar will still likely go on to make blockbuster hits. Link
Rod Fergusson heads to Blizzard. Fergusson has a talent for pushing difficult projects over the finish line. He helped Take-Two turn BioShock Infinite into a hit, supervised the Gears franchise for Microsoft, and now he’s coming to Blizzard to take on Diablo IV. The launch of Diablo IV is still a couple years out, but this hire signals that 1) the game isn’t in great shape, and 2) things will get better. Link
Ubisoft acquires Kolibri Games. This deal (undisclosed terms) likely provides a solid exit for Kolibri — the mobile studio behind Idle Miner Tycoon & Idle Factory Tycoon — but it may be less solid for Ubisoft. Yes, Ubisoft needs to step up its mobile presence, and this will make it a leader in the Idle genre, but this deal feels… random. What’s the strategy here? How will Ubisoft make Kolibri better and/or how will Kolibri make Ubisoft better? Honestly, I have no idea, which gives me hesitation. I’m not convinced Kolibri will find another win the size of Idle Miner Tycoon, and Ubisoft’s previous deals (like acquiring the majority of Green Panda Games) makes me think Ubisoft doesn’t have the strongest mobile game plan. Management needs to share more of its thinking. Link
Nvidia officially launches GeForce Now. Nvidia is finally opening the doors to GeForce Now, the company’s attempt to take on cloud gaming. There are two tiers — free (1 hour sessions) and premium (extended sessions, more features) — and early adopters can sign up to get low founder rates. Nvidia’s wants to ensure PC gaming stays relevant as cloud gaming takes off, and its approach is to let users stream what they already own in places like Steam and Uplay. It seems like a compelling offering, but I worry about Nvidia’s long-term positioning.
In fact, this topic was my very first Master the Meta post — AMD, Nvidia, and What Streaming Means for GPUs — and here was my take at the time: “Generally speaking, when the ultimate metric of success is units sold, vertical integration should be approached with skepticism. Very few companies are optimally positioned to vertically integrate, and very rarely should part suppliers turn into full service providers. I root on the success of GeForce NOW and the SHIELD — the more competition the better — but remain skeptical.” As Nvidia’s high-end GPU business eventually gets threatened by cloud gaming, the company can choose to either sell GPUs to those who provide cloud gaming services (like Microsoft and Google) or create its own competing service offering. The answer may be a bit of both (it recently partnered with Tencent in China), but it seems like Nvidia is actively choosing the latter option, forfeiting significant business to AMD (who offers lower prices). The game is far from over — and an innovative business like Nvidia may figure things out — but the company is still taking a major business model risk by leaning into services. Link
Mobile esports is ascending. Mobile esports continues to quietly attract massive audiences. Yesterday, the concurrent viewers (CCV) of Free Fire esports on YouTube was higher than the CCV of entire categories on Twitch. (H/T Jeff Chau) Link
🖥 Content Worth Consuming
Game Regulations in China: Everything You Need to Know. “These changes will primarily impact the amount of time minors can spend in game, the amount of money they can spend in game and the types of games they can play.” Link
The Next Frontier for Storytelling Universes and the Never Ending Desire for More. Matthew Ball is killing it lately. “Soon, it will be a fight for dominance between all franchises and across all mediums. The major stories will expand into all categories, from film to TV to podcasts, and be envisioned as interactive experiences, whether UGC worlds or ever-extending game universes, that allow them to grow indefinitely. And as long as these franchises continue to offer more “more,” there’s little reason for a fan to look (and invest) elsewhere.” Link
Vulcan to Cloud9: Inside the Trade that Defined the 2019 LCS Offseason. “Vulcan's buyout resulted in cries of inflation around the esports industry in November. As esports has continued to rise, led by League of Legends, consumers and business executives alike have grown concerned about a bubble. How can a single player cost $1.75 million? "I'm getting nauseous reading these headlines," said G2 Esports CEO Carlos Rodríguez Santiag.” Link
The First Mobile Esport With Home Venues: A Guide to Honor of Kings in 2020. “China boasts the most robust and developed mobile esports game to date: Wangzhe Rongyao (王者荣耀, known in English as Honor of Kings). On Jan. 5, game publisher Tencent unveiled a new esports plan for the Honor of Kings esports ecosystem, including six home venues, two new media rights partners, and more competitions for international teams and players. Below is a greater guide to Honor of Kings esports and where franchising will go in 2020, followed by five highlights from that conference.” Link
Microsoft’s Game Stack chief: The next generation of games and game development. “[There are] 2.8 billions gamers in the world, and we need to reach them all. We acknowledge that we will never reach more than 100 million of them by selling them an Xbox. The only way to reach the remaining 2.7 billion is something else, whether it’s xCloud or things like Playfab, where we’re not reaching them directly, but we’re providing technologies to help reach them.” Link
True Sight : The International 2019 Finals. “TRUE SIGHT is a documentary series that takes you behind the scenes of the journeys of professional Dota 2 teams. This episode follows Team Liquid and OG through the grand finals at The International 2019.” Link
See you next week!
