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.
✍️ Latest Article
Deep Dive: Epic Games & The Quest to Push Boundaries — In my most popular article so far (thank you to everyone who read and shared), I attempt to explain how the most innovative company in gaming got to where it is today, what’s next, and why it’s been able to do what others can’t. Link
NetEase launches Fever Game, its own digital distribution platform in China. For context, Tencent’s WeGame dominates China’s PC gaming platform sector (300+ million registered users & 80 million MAUs), and Steam sits in second with 30 million MAUs (~⅓ of their total active user base). No matter what the strategy is, it’ll be tough for NetEase — the next best company to create a PC gaming platform in China — to carve out significant market share. They’re simply late to the party. That said, Fever Game’s approach is to “promise better customer support, and [focus] on offering Chinese players quality imported titles.” NetEase is the second most popular partner for foreign publishers to work with who wish to sell in China, and this announcement partially helps explain why the company invested in / established so many foreign studios over the past couple years. I think NetEase will be able to carve a niche out for itself, but competing this late in the game with WeGame will be a tough hurdle. Of course, Steam faces the highest regulatory risk, and if the government were to ever crack down on the platform, it could present Fever Game (+ WeGame) an opening to steal additional market share. Link
ByteDance Readying Assault on Tencent’s Mobile Gaming Kingdom. This news is potentially more problematic for Tencent than the NetEase news, because ByteDance could very well use Tencent’s own formula against them on mobile: build incredibly popular platforms with 100s of millions of users and push them into your own games. Owning major platforms ensures lower customer acquisition costs, which lowers risk and increases profitability, which in turn encourages even heavier reinvestment (rinse, repeat). ByteDance looks to be working on its initial push, and we’ll learn more over the coming months. Keep in mind, Bytedance has a leg up on Tencent in one important regard: TikTok reaches 100s of millions of people outside of China. (Also, the more I study what’s going on in China, the more convinced I am that Facebook should be the dark horse outside of China that scales up a global gaming presence rapidly and successfully.) Link
Microsoft goes all-in on the 'evergreen platform'. I touched on this last week with the Phil Spencer interview, but I figure it doesn’t hurt to be blunt about what an “evergreen console” means. It’s the idea that a product will incrementally evolve instead of generationally launch, which means backwards and forwards compatibility becomes table-stakes (like iPhones). There are clear trade-offs. In one sense, this was inevitable, and it’s a “golden rule” decision in which recent Xbox buyers don’t feel like they wasted their money. The downside of biting the bullet right now is that this more or less solidifies PlayStation’s advantage going into the 2020 holidays. Xbox will lean heavier on its ecosystem to win over gamers, and PlayStation will probably lean more heavily on its library of exclusives. Xbox’s ecosystem approach is a smart long-term decision, but in the short-run the quality/quantity of great games wins out. (Also, recent noise about Playstation’s Horizon Zero Dawn going to PC doesn’t mean PlayStation is giving up the idea of exclusives.) Link
Miniclip purchases Ilyon Games for $100 million. Miniclip’s brand might be best known for its early-2000s browser games, but it’s long since evolved into a mobile gaming (and Tencent-backed) juggernaut. I can’t comment on the reasonableness of the price, but it’s a decent-sized move that bulks up Miniclip’s bubble shooter presence. I understand the diversification appeal — and Miniclip is a serial acquirer — but I struggle to grasp what upside Miniclip must see. Link
2019 US NPD numbers are in. I’ll share two important snippets, but make sure to go check out the rest of this informational Twitter thread from Mat Piscatella. Link
The 10 best-selling games of 2019:
The 10 best-selling games of the 2010s:
Three quick reactions: 1) there’s been a ton of noise over the years about “CoD killers,” but just like there were supposed to be “Netflix killers” and “iPhone killers,” it turns out most killers are mythical; 2) Take-Two Interactive is such an obvious acquisition target for a big media company… Rockstar is a gem, and the rest of the business tends to have a strong showing too; 3) the more the industry changes the more fragmented data becomes… I really want to see someone compile data in a way that makes all games — from CoD and Fortnite to Candy Crush and Roblox — comparable.
More AAA delays. The number of delays for highly anticipated games is mounting: The Last of Us Part 2, Doom Eternal, Watch Dogs Legion, Cyberpunk 2077, and now Dying Light 2 (and I’m sure I’m missing a couple others). It’s ubiquitously the right move. There’s an obvious cost to delays — higher development costs with delayed revenue — but there’s an even higher cost to selling lackluster games. As games become more demanding, delays become more likely. Hopefully, development teams can learn from this and better forecast their timelines in the future. Lastly, it wouldn’t surprise me if we see a light Spring sales season that benefits “evergreen” games.
Huya acquires broadcast rights to even more League of Legends. “Huya already distributed the broadcasts of all LCK matches exclusively on its platform, and since the partnership seems to have gone well, Riot is expanding the partnership. Huya will be the only Chinese streaming platform with official broadcasts of all the four major League of Legends competitions.” Huya is likely paying a record amount of money to secure rights for as much League of Legends broadcasting in China as it reasonably can. Just like the West followed the East’s lead in paying for streamers’ exclusive broadcast rights, I expect the bidding over exclusive esports rights to emerge next. Link
Fortnite adds a Ninja skin, a Pokimane emote, and opens the opportunity to everyone. “Starting with a Ninja skin, Epic has now added a Pokimane emote to Fortnite, as the streamers who play the game continue to become a part of it… Famous streamers aren't the only ones being given an opportunity to immortalize themselves in Fortnite. Epic has partnered up with TikTok to run a competition with which players can submit dances of their very own. The winner will have their dance moves turned into a Fortnite emote.” This is a fun move that stirs up buzz, encourages creation, and lets the game capture more snippets of the real world. Link
🖥 Content Worth Consuming
The Metaverse: What It Is, Where to Find It, Who Will Build It, and Fortnite. Matthew Ball’s excellent and comprehensive taking on the metaverse. If you liked my Epic Games article, you’ll love this one. Link
The Promise of Cloud-Native Games. Another great write-up from Jon Lai: “The real innovation in cloud gaming won’t simply be in how we play, but what we play: “cloud-native” games will completely upend the gameplay experience itself, as well as how those games are marketed and sold.” Link
Deconstructor of Fun’s 2020 Predictions. The DoF team is writing a series of deep, data-heavy posts reflecting on the 2019 mobile gaming market and creating new 2020 predictions. So far, puzzle games, arcade games, and RPGs have been covered.
How ESL is keeping in stride with esports tournament growth. ESL is a legacy esports organizer and production business that continues to look for ways to add more — and more profitable — events. Most of this conversation center around how partnering with brands / advertisers has been trending. Link
Tencent's TiMi Studios discuss Call of Duty: Mobile, Pokémon partnership, and 2020 trends. “The desire and expectations of a higher quality of mobile gamers will continue to grow. Triple-A experiences in mobile games is a trend we expect to continue. There are so many mobile game users across the globe now. The market size of mobile games is now bigger than that of PC and console combined, and has great potential to grow in 2020. These mobile-first players want great, core games to play. The mobile devices are improving and game development technology on mobile is getting closer to that on console and PC. And while we know subscriptions like those offered by Apple and Google drew a lot of headlines in 2019, we still believe in the power of games as a service and that business model. TiMi has been building games like this over the years and we anticipate it will continue to be the driving force for mobile games in 2020.” Link
See you next week!