Sony Counters Microsoft With PS4 Bundles

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Microsoft got the jump on the competition last month by announcing a very effective price drop on its Xbox One console bundles, decreasing the normal pricing by $50 with packages that include Call of Duty: Advanced Warfare and Assassin’s Creed Unity, among others. However, Sony is more than prepared to take on its rival for Black Friday.

The publisher has announced that two PlayStation 4 bundles will be available in time for the popular Black Friday selling season, retailing at $399.99 – the current price that the stand-alone system goes for now. In each bundle will be two high-profile games, catering to both mature and younger audiences.

The first bundle will include a retail copy of Rockstar Games’ Grand Theft Auto V, which will be available at retail tomorrow. This new version of the game features all the content from the previous year’s release, along with a much-heralded first-person mode that could change the way players look at the series. In addition, the bundle will also include a digital download of Sony’s critically acclaimed The Last of Us Remastered.

Those who prefer something a little more kid-friendly should show interesting in Sony’s other holiday bundle, which will also be released in time for Black Friday. This bundle includes a physical copy of WB Games’ Lego Batman 3: Beyond Gotham, which is available in stores now, along with a digital download of this week’s forthcoming action/adventure game LittleBigPlanet 3.

Unlike Microsoft’s deal, however, Sony will only be offering these bundles for a limited time, probably through the holiday season at best. It’s unknown if the system will see any sort of permanent price drop in 2015, so those interested in a PlayStation 4 console would probably be wise to pick up one of these deals.

While the Xbox One is still slightly lower in price at $350 (for some of the bundles – the Call of Duty one still goes for $450, but that includes a 1 TB hard drive), this does add value to Sony’s system, and the fact two different bundles are available to choose from adds variety to the deal.

NPD October US Retail: Overall Sales Are Flat

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Once again, US retail sales for video game hardware, software, and accessories presented a mixed picture. October 2014’s overall retail sales ($790.7 million) were just about the same as October 2013 ($791.3 million), with a massive 59 percent rise in hardware sales (to $273.5 million) and 22 percent rise in accessories sales (to $166.8 million) offsetting the 27 percent decline in software sales (which dropped to $350.3 million from last year’s $482.6 million).

On the one hand, it’s clear that the PS4 and the Xbox One have done very well in their first year. Last month marked the one year anniversary of both the PS4 and the Xbox One in the US retail market, and NPD declared that these new consoles are selling far better than the last generation did at launch. “October 2014 marks the first 12 months of sales for the Xbox One and PS4; and after the first year, these consoles have had a great start as cumulative sales are currently over 70 percent higher than the combined first year totals of Xbox 360 and PS3,” said NPD’s Liam Callahan.

Left out of the congratulations is Nintendo’s lagging Wii U console, which has now been passed up in total sales by both the Xbox One and the PS4. Despite the boost provided by Mario Kart 8, and the expected boost from Super Smash Bros., it’s clear that the Wii U is still on course to be the worst-selling console in Nintendo’s history. The recent price reduction of the Xbox One to $349, and the bundled software offered by many retailers for the holidays, puts it around the same price as the Wii U — with a far greater library of software and a massive power advantage. That’s a heavy burden for Nintendo to overcome, with key new Wii U titles slowly making their way to market.

Overall, though, hardware is a bright spot for retails stores, providing much-needed dollars to keep the numbers looking good. “Hardware sales of eighth generation consoles represent close to 80 percent of dollar sales this month driving overall consoles sales to increase by 186 percent over October 2013,” said Callahan.

Microsoft noted that the $50 price cut for the Xbox One has driven the total units shipped over 10 million worldwide and tripled its weekly sales, outselling the PS4 by nearly two-to-one over the past few weeks. That 10 million unit number puts the Xbox One not too far away from Sony’s PS4 at 13.5 million worldwide. Sony applauded its PS4 sales in an infographic, noting that the PS4 has 56 million unique active users that have spent over 1 billion hours playing online.

Accessories were also a cheery note for retail stores, as the category rose 22 percent for the month. “Accessory sales in October 2014 grew by 22 percent over October 2013, due to increased sales of gamepads, headsets/headphones, and video game point and subscription cards,” Callahan said. “Gamepad sales were related to hardware growth as the top items were for the Xbox One and PS4.” The category was also helped by strong sales of digital value cards. “This month marked the best October on record for video game point and subscription cards, beating out the second best October, which happened to be last October, by 24 percent — another sign that consumers are starting to shift their purchasing towards digital,” Callahan added.

The picture for retail video game software is a very different one, and NPD struggled to present the picture in a positive light. “Declines in software this month were driven by further declines of seventh generation software, which were not fully offset by gains in eighth generation consoles,” Callahan noted. “New launch performance was also soft as games that launched this month sold 42 percent fewer units than the games that launched in October 2013. Despite, however, the declines in sales this month of seventh generation software, research from our quarterly Games Market Dynamics: U.S. showed that usage of seventh generation consoles across Q3’14 is still larger than that of eighth generation consoles.”

This shift is beginning to worry analysts. “Given the strong shift toward new-gen games that is apparent from recent data, and the fact that digital currently appears to be taking as much as 25 percent share of total new-gen sales depending on the game, we continue to expect total Q4 physical unit sales to be down double-digits year-over-year,” wrote analyst Doug Creutz of investment firm Cowen and Company.

GameStop seems to be working hard to overcome this retail weakness through a variety of efforts, by Creutz is concerned about other retailers like Walmart and Target that have significant video game sales. Those retailers just aren’t putting in the same effort for the category that GameStop is. Certainly the next two months will have massive sales, and the Black Friday deals are already generating tremendous interest. The new year will likely dawn with a continuing sales problem for retail software, as more dollars head to digital.

October 2014 Top 10 Games (New Physical Retail only; across all platforms incl. PC)
1. NBA 2K15 (PS4, XBO, 360, PS3, PC) Take 2 Interactive
2. Super Smash Bros. (3DS) Nintendo
3. The Evil Within (PS4, XBO, PS3, 360, PC) Bethesda Softworks
4. Borderlands: The Pre-Sequel! (360, PS3, PC) Take 2 Interactive
5. Destiny (360, XBO, PS4, PS3)** Activision Blizzard
6. Skylanders Trap Team (360, Wii, NWU, PS3, XBO, PS4, 3DS, MOB)** Activision Blizzard
7. FIFA 15 (PS4, 360, PS3, XBO, Wii, PSV, 3DS)** Electronic Arts
8. Madden NFL 15 (360, PS4, PS3, XBO)** Electronic Arts
9. Middle Earth: Shadow Of Mordor (PS4, XBO, PC) Warner Bros. Interactive
10. Minecraft (360, PS3, PS4) Microsoft / Sony
**(includes CE, GOTY editions, bundles, etc. but not those bundled with hardware)

Redefining Gamers

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The rapid evolution of the game industry over the past fifteen years has had a huge impact on the people and companies working in and around the industry. The customers haven’t seen the changes in the same way — and many of them haven’t really noticed or cared very much. Recently, though, as some game players are getting concerned about whether the content of their games will change, and familiar companies like Nintendo have hit a rough patch, it’s becoming clear that the market changes have reached the audience for games as well. The very meaning of common words and phrases like “gamer” and “core games” is changing, and we’re seeing awkward neologisms like “mid-core” being bandied about, though the meaning depends on who’s using the term.

It’s past time that the industry started being aware of this nomenclature issue and being better about defining or re-defining terms. It’s important because this affects the choices game companies make, the types of games that are being made, and who those games are marketed to — and whether or not those customers are getting the games they want, or the games they think they are getting. Let’s see if we can make some progress towards sorting it all out.

Back in the early days of electronic gaming in the 1970’s, game players were either people who were messing around with computers at universities — and therefore, mostly male and college-age — or they were buyers of the simple consoles back then, playing Pong-like games. Those home players tended to be overwhelmingly male, and with higher incomes, and probably pretty young. The demographics started to shift in the 1980’s with the home PC beginning to sell in the millions, and Nintendo redefining the home console after the 1983 crash.

PC game players were the early target market for companies like Electronic Arts, while Activision largely focused on consoles. The early PC gamers still tended to be young, well-educated, and well off, because computers were still fairly expensive. The console gaming audience that Nintendo developed was aimed more at kids, and a whole generation grew up in the late 1980s with Nintendo (and later, Sega) consoles as their primary gaming experiences. Those kids were still mostly males, as games were primarily action-oriented and competitive (at least for comparing high scores).

The 1990’s saw the rise of more sophisticated computer games, and consoles became more powerful and capable of subtler games as well. The hugely successful PlayStation really moved units by appealing strongly to an audience older than the classic Nintendo pre-teen. Teenage and college age boys became the largest part of the console audience, and computer games began appealing to even older males as well. Women were still a minor part of the game audience, but as the Internet became popular multiplayer and online games began to take hold, and graphical MMORPGs began to appear — which tended to have more appeal to women.

The first decade of the 21st century saw massive changes in game technology and a vast expansion of the game audience. The explosive growth of social games came about largely through millions of casual players, mostly women, who adopted a less intense type of game. FarmVille became the poster child for this new audience, and the average social gamer was a mom in her thirties or forties. The rise of mobile gaming through smartphones coincided with the decline of social games, but again many mobile games were bringing in women as players — the mobile audience was much more evenly divided among men and women than previous gaming audiences. As smartphones spread, and online games became ever more available around the world, the overall gaming demographic enlarged.

Now people who play games can be virtually any age, from toddlers tapping on a tablet to centenarians keeping themselves up past midnight playing online games. Game players are found all around the global, and billions of dollars in game revenues are generated in countries where no one ever managed to sell games in retail stores.

The shape of the problem is clear now. What the industry used to call “gamers” back in the 90’s were teenage boys of all ages. That demographic is still a strong one for a particular type of game, mostly console games — and in particular, Sony’s and Microsoft’s consoles, as they have deliberately targeted older gamers. (Yes, there are certainly games targeted towards younger players or women on those consoles, but the titles that sell 10 million units or more are mostly aimed at men.) Nintendo is really still aiming mostly at kids, although nostalgia for Nintendo games drives many sales among older players as well.

What’s a “core gamer” then That would be the audience that used to be “gamers” a decade or two ago, mostly male. Except that women have been enjoying games by the millions, and many of them are enjoying ever more complex and engaging games like World of Warcraft or League of Legends. A “core gamer” is not necessarily male any more, which is perhaps distressing to some long-time core gamers.

What’s a “mid-core” game Perhaps it’s a game with a deeper strategy that is easier to learn than some of the classic games. The term is often shorthand for “we’d like to sell this game to as many people as possible.” While not every Candy Crush player is destined to become a Mortal Kombat fan in the future, we are seeing plenty of Clash of Clans players enjoying a little strategy along with their building and tending and cartoony graphics.

The important thing for people inside and outside the game industry is to realize that a “gamer” may not have the same meaning it used to. For some, a person who likes to play games is a gamer… but other people may still think of a “gamer” as someone highly dedicated to certain types of games, perhaps in a certain age range, likely male. Discussions or arguments between people with two very definitions of the same term are not likely to be very productive.

When you’re talking about the audience for games, try to be more precise in your definitions. Think about who you’re designing a game for, and who you’re marketing it to, and make sure you describe the game in the right terms that your intended audience will understand. Don’t assume that “gamer” or “mid-core game” or “hard-core gamer” means the same thing to everybody, because it doesn’t. That’s good game design advice, good marketing advice, and good business advice — and we all need to keep it in mind as the game industry, and its terminology, continues to evolve.

SuperData: October Digital Game Sales

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Analysis from SuperData CEO, Joost van Dreunen, follows:

  • Zynga gets pummeled after alienating its poker fans
  • Destiny sells 1 in 5 copies via digital download on console
  • Games industry seeks to better connect with mobile gamers
  • Electronic Arts discontinues Dawngate, as MOBA market slows.

With a combined total of $957 million in sales in October, up 12 percent from the same month a year earlier, the digital games market is growing stronger. The adoption by next-gen console gamers of full-game downloads presents an important driver to the overall market, as digital console sales reached $96 million. A slew of new title releases stalled spending in the free-to-play segment, but both mobile and downloadable games on PC thrived, totaling $327 million and $212 million, respectively. Activision especially made its presence felt this month, as Destiny accumulated 9.5 million registered users, roughly one-fifth of which downloaded the game directly to their console hard drives.

Zynga gets pummeled after alienating its poker fans

Now under new management, Zynga likely expected different results when its re-released Zynga Texas Hold ’em Poker dropped from 8.1 million daily active users in September to 7.1 million in October. Losses were especially heavy on mobile. The company managed to offset some of its losses by posting higher revenues at its quarterly earnings report, but this may prove to be only a temporary relief from prying eyes. Critics of the publisher have become increasingly vocal about the absence of a concrete release schedule following the $527 million acquisition of Natural Motion at the beginning of this year. While Zynga is clearly gearing up to service all types of audiences, combining social casino games with its well-known Ville-type games and recently entering both the racing and sports market, delaying a strong release may provide a big enough window for competitors to steal Zynga’s thunder. The overall social games market was up slightly month-over-month, reaching $168 million, but with a 2 percent decline compared to the same month last year, it has certainly lost some of its shine.

Destiny sells 1 in 5 copies via digital download on console

As the interactive entertainment market prepares to end 2014 on a high note, bets made earlier in the year are already starting to pay off as publishers observe a growing percentage of sales via digital channels. With major publishers now fully behind digital distribution, this year’s big titles so far sold, on average, 12 percent of total units via digital downloads on consoles. Notably, in its first two months since launch, Activision’s Destiny sold roughly twenty percent of full game downloads on consoles, driven by the combination of a growing install base of next gen devices and aggressive pre-order incentives at retail. For the holiday season we conservatively forecast the share of direct-to-consoles downloads of full games to double, as consumers seek to avoid the inconvenience of having to wait for delivery or stand in line. That said, GameStop has so far proved to be well-positioned to capture a piece of this uptick in digital games revenue. We do, however, anticipate lower-than-expected game sales over the winter break for online retailers like Amazon.

Games industry seeks to better connect with mobile gamers

With the mobile games market reaching $328 million in monthly sales, up 24 percent from the same month last year, game developers are becoming increasingly cautious of the market’s volatility. As development and marketing costs continue to rise, a growing number of small and medium-sized development studios, often the source of innovative content, increasingly focus their attention on sustainability. According to a detailed study among 41 UK-based game studios, 34 percent of respondents recently changed their business model, hoping to increase the overall efficiency of their production processes, and emphasized the importance of strategic relationships in mitigating risk. Results of the study were first presented at GDC Next and are available for download here.

MOBA segment plays musical chairs and EA bows out

Following the announcement of EA’s discontinuation of Dawngate, its contender to the immensely popular MOBA category, it appears that League of Legends and Dota 2 have the market to themselves. Despite the growing success of SMITE (Hi-Rez Studios) in key markets, the title is a distant third, followed by slew of promising contenders that are currently still in beta like Arena of Fate (Crytek). EA’s exit from this market removes a credible potential competitor. All eyes are now on the tablet market where a band of former Riot developers are about to launch Vainglory on November 18. Overall, the free-to-play MMO segment slowed, declining to $116 million, following a growth period that coincided with a flurry of tournaments.

Mobile Game Earnings Roundup: Q3 2014

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As the mobile games business continues its upward trajectory, it’s useful to examine the growing number of companies that actually report their financial results on a regular basis — the publicly traded mobile game companies. It’s true that private companies generate the majority of the revenues in the mobile games business, but observing the public results can help us judge the health of the sector.

Overall, the results are encouraging, as most of the companies reported making good profits from mobile games. Still, Tencent did show a slowdown in its mobile games revenue in the huge China market, and the game giant will be redoubling its efforts as well-funded competitors like Alibaba (which recently teamed up with Kabam) attack its market share. Zynga is still making the transition to a mobile game company from social games, and it’s still losing money on that journey. King Digital is still hauling cash to the bank, but the company is coming off the sugar rush induced by Candy Crush Saga.

It looks like the companies that have managed to build themselves a huge audience for mobile games are increasingly able to come up with revenue from that audience. While hits are still unpredictable, building regular release schedules of solid titles is a sound business strategy if you can keep your costs in line. When the occasional huge hit comes along, like Kim Kardashian: Hollywood, results will look great for a time. Companies that can resist the temptation to expand too much on the basis of such a hit have a good future ahead of them.

King Digital reported lower revenues as Candy Crush Saga continues to lose its sweetness, but the company still generated $144 million in cash, and non-Candy Crush games were responsible for 49 percent of the company’s revenue. Non-GAAP revenues of $543.9 million were down from last year’s $648.2 million, and the profit of $177.4 million was down from $229.2 million last year.

“With the launch of two new mobile games during the third quarter as well as the Facebook version of Candy Crush Soda Saga last month, we are continuing to execute on our strategy to develop a portfolio of games for our massive network of players,” said King CEO, Riccardo Zacconi. “We have a consistent track record of developing successive hit games and as a result, have increased our non-Candy Crush Saga gross bookings to $264 million in third quarter 2014. If annualized, this represents more than a $1 billion run rate, and makes our non-Candy Crush Saga business larger than most every other mobile gaming company.”

Glu Mobile, riding high on the success of Kim Kardashian: Hollywood, reported record revenues for the third quarter. Non-GAAP revenues hit $83.6 million, up 270 percent from last year and 138 percent from the previous quarter, with earnings of $15.4 million.

“Glu’s third quarter was the strongest in the company’s history as non-GAAP revenue and Adjusted EBITDA set all time records,†stated Niccolo de Masi, Chief Executive Officer of Glu. “The record quarter was driven by the strength of Kim Kardashian: Hollywood, our new releases Dino Hunter: Deadly Shores and Tap Sports: Baseball, ongoing traction with Deer Hunter 2014 and Eternity Warriors 3 and the addition of Racing Rivals to our product portfolio.”

Zynga, in the midst of its transition to a mobile game company, reported non-GAAP bookings of $175.5 million, and a non-GAAP loss of $6.7 million. Compared to the prior year, Zynga has reduced its losses and halted the erosion in its user base, while mobile bookings represented 55 percent of the total. Zynga’s stock jumped nearly 11 percent in one day after analyst firm Jefferies changed the stock from “hold” to “buy” based on the new release of Words With Friends and the company’s upcoming slate of titles.

“I am encouraged by the results of the quarter as we navigate through this time of transition. In Q3, we reported bookings at the high end of our guidance range and Adjusted EBITDA near the midpoint of our guidance range. Our teams have been working hard over the last year to reshape our business and we are seeing that work show up in two important areas – our franchise bookings and mobile bookings growth. Last quarter, our core franchises — Casino, Words With Friends and FarmVille — grew 30 percent year over year in terms of bookings, and we achieved meaningful growth in mobile with a 111 percent increase in mobile bookings annually,” said Don Mattrick, CEO of Zynga.

Chinese giant Tencent, which derives the majority of its revenues from games, reported a 28 percent rise in revenues ($3.2 billion from all sources) and a 46 percent rise in profits (to $923 million), though both numbers disappointed investors by missing the estimates, due largely to slowing revenue from mobile games (which generates more than half the company’s sales). Revenue from its mobile-gaming business declined to 2.6 billion RMB, compared 3 billion RMB in the previous quarter. Furthermore, WeChat’s monthly active users rose just 6.8 percent during the quarter to 468 million monthly active users, its most sluggish growth since Tencent first started releasing user numbers. Tencent had warned investors back in August that it expected its mobile gaming revenue growth to level out temporarily as it works on adding more titles and integrating e-commerce services.

Korean mobile game publisher Gamevil reported revenues of $38.9 million (over 100 percent growth) with a net profit of $8.9 million (almost 450 percent growth). The publisher cited the success of titles like Dragon Blaze domestically and globally pointed to MLB Perfect Inning and Monster Warlord. It should be noted that about a year ago, Gamevil acquired one of its earliest competitors Com2uS, which is still reporting its own earnings separately. Just yesterday, Com2uS announced a record quarter with $40 million in profit, partially thanks to Summoners War.

Gameloft reported sales dipped by 10 percent in the third quarter to $69.3 million. Despite the sales decline in Q3, Gameloft boasted that it was the worldwide number one developer and publisher on iOS and Google Play by downloads according to App Annie’s worldwide index for games.

“After several quarters with a low number of releases, Gameloft has returned to launching new games at a more regular pace. While this is not yet apparent in the quarterly sales, we believe it will progressively start showing in the coming quarters and accelerate throughout 2015,” stated Michel Guillemot, CEO of Gameloft.

 

CPL Founder Discusses His Return To eSports

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Angel Munoz was an early eSports backer with the Cyberathlete Professional League (CPL) long before livestreaming helped propel professional video gaming into a global pastime. Munoz is the founder, president and CEO of Mass Luminosity, and the creative mind behind Gaming Tribe, a next-generation social media network for gamers and technology enthusiasts. Launched in March 2014, Gaming Tribe has an audience of nearly 250,000 gamers who are active PC gamers. With sponsors like AMD, Logitech G and XFX, the site gives away high-end PC gaming rigs and other tech as prizes on a regular basis. Munoz talks about the integration of eSports functionality across this platform in this exclusive interview.

Angel Munoz Mass LuminosityAngel Munoz

How did you get involved in eSports the first time around?

I became involved with eSports before it was called eSports, back then we referred to it only as professional gaming. My participation in the sport commenced with the launch of the Cyberathlete Professional League (CPL) in June 1997, which was the first professional league for computer gamers, and some think the initial propulsion of modern eSports.

How have you seen eSports grow since you sold Cyberathlete Professional League?

When we sold the CPL in 2010 and the new owners decided to move the league’s operation exclusively to China the sport went through a brief period of dormancy in the Western hemisphere, but with the launch of competitive titles likes DOTA, DOTA2, and League of Legends a new generation of competitive gamers emerged and the sport started its growth trajectory again.

Why did you decide to re-enter the eSports space?

Actually, I have no interest in entering the professional arena again, the sport seems well served by the big title events. What I believe is needed is a global amateur league, that can provide new teams with rankings, on-going competitions, strong community support and access to potential sponsors and fans.

How are you going to use the Gaming Tribe to target eSports fans?

Gaming Tribe’s tech-engine can be effectively adapted to schedule, monitor, support and rank online competitions, while also providing a starting base of 250,000 PC gamers and potential fans. We already have a number of companies supporting Gaming Tribe, who also happen to be actively supporting eSports — so this intersection of social media and competitive gaming seems both feasible and timely to us.

What do you feel differentiates your PC gaming audience from others out there?

The Gaming Tribe community is often referred to as the “best community of gamers in the world.”  I think some of the reasons for this is how we successfully integrated a rich social media experience with active interaction with the community.  Also our engagement numbers are through the roof and trump all of our other social media activities on the larger networks, by a factor of two to one.  This may be due to our gamification of the social media experience through leaderboards, earned badges, reward-action promotions and our proprietary Loot Drop giveaways.

What are your eSports plans?

Right now we are working on completing Phase II of Gaming Tribe RWD (Responsive Web Design), once we complete that process we have a couple of smaller projects to launch and then in early 2015 we will add the eSports feature to Gaming Tribe.  We already have on our staff the two primary programmers who helped develop the now inactive Cyberathlete Amateur League (CAL): Andrew Waterman and Andrew Slane.  That gives us a distinct advantage.  We are also chatting with other members of the community who wish to assist us with this new development.

What games will you focus on?

Our global amateur league will not have a specific focus and will be open to any competitive game the community wants to support.

How will you work with game publishers and established leagues?

If game publishers or leagues feel it’s of value to partner with us we are willing to discuss that when the time comes, but neither are necessary at this stage of our development.

What opportunities has livestreaming opened up for you when it comes to eSports tournaments and events?

Livestreaming will be incorporated into our platform, either through the Twitch API (which seems a bit undeveloped at this time) or our own solution.  We are fine with either path, but would love to see Twitch fix some of the glitches we have encountered in supporting their platform remotely.

What opportunities do you see for sponsors and brands through your eSports endeavors?

We think the reach and interactivity of our new platform will be very attractive to sponsors, and in fact our early discussion with our top corporate sponsors about this new initiative have elicited unanimous approval and high levels of excitement.

What role has social media and social networking played in connecting your audience with PC gaming brands?

Social media is a unique form of crowd-sourcing content in real-time, and its augmented by the close interaction of its participants. We know that young gamers are consuming traditional media at extremely low levels, so the opportunities for advertising are systematically vanishing. Therefore, social media, especially one focused on this core demographic, is truly the ideal environment to present brands and services in a fresh new way, not only to create new customers, but also to reinforce the loyalty of existing customers.

 

Creative Studio Aims for Core Games

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The advance of technology has had sweeping effects on the game industry, opening up new markets and new opportunities for game publishers. The convergence of better tools and digital distribution has also opened up possibilities for companies in related industries to create and market games, using the skills and capabilities already in-house. One such company is Psyop Media Company, a “full-spectrum creative studio that delivers entertainment experiences across all mediums and formats” as it bills itself, recently announced the formation of Psyop Games, headed up by industry veteran Rocco Scandizzo. The company will make, produce and publish video games under Scandizzo’s leadership.

“We are storytellers and world builders and we want to leave our mark with memorable experiences,” said Mark Tobin, COO, Psyop Media Company. “Rocco’s knowledge of the games industry is an invaluable asset and he has quickly put together a team whose passion, experience and dynamic personality are the perfect ingredient to stir up the creative possibilities as Psyop takes a serious step into becoming a full spectrum creative studio that has a robust games arm.”

Rocco Scandizzo

Scandizzo brings more than 15 years of experience in the video game industry and marketing to the Psyop team. Prior to joining Psyop, Scandizzo worked for Creative Artists Agency (CAA), where he oversaw developer relations and business development. Before joining CAA in 2012, Scandizzo served as a Partner at ISM, an industry leader in video game developer management. Previously, he was Director of Franchise and License Development at Activision Blizzard, Director of Global Strategic Growth at Vivendi Games and also held positions with THQ Inc., and Atari, Inc.

“Great games come from a great team, where great creative and design are a key ingredient,” said Scandizzo. “That’s why I am super excited to join Psyop’s insanely talented group of people and to bring on board industry veteran’s to bolster our efforts as we dive into the game industry head first. I can’t wait to play in the creative sandbox at Psyop and explore rewarding alliances with talent all over the world.”

Psyop has also added some key game industry veterans with significant experience to round out the team. Matt Wilkinson joins Scandizzo as Head of Technology, with additional design and writing oversight provided by the crew of Sleep Deprivation Lab, led by Christian Cantamessa and Jeff Harkavy.

Wilkinson brings 25 years of experience to Psyop Games, after a decade-long tenure at Activision Blizzard and more than another decade across Climax, BAM, Acclaim, Psygnosis, and Rare. Cantamessa is a designer, writer and filmmaker known for his work as co-writer and lead designer of Red Dead Redemption. Since then he co-wrote and directed the cinematics for the critically acclaimed Shadow of Mordor. Most recently he co-wrote and directed his first feature film, AIR, starring Norman Reedus and Djimon Hounsou and produced by Robert Kirkman, creator of The Walking Dead. Harkavy is a writer-director-editor with a broad set of experiences ranging from directing commercials for the NBA and CBS News to editing feature films that garnered awards at the Berlin and Toronto film festivals. Most recently he has been a writer on AAA games like Ubisoft’s The Crew and Warner Bros.’ Shadow of Mordor.

The [a]listdaily spoke with Rocco Scandizzo about this new venture and his view of the state of the market.

[a]listdaily: Tell me about Psyop Media Company ““ why did you join them to begin a games division

Rocco Scandizzo: Psyop is a company that focuses on creative and CG, and it’s well known for things ““ in the games industry ““ all the ads for Clash of Clans or the Battlecry trailer at E3. They are setting up to get more into original IP. The creation of Psyop Games as a separate division is part of this movement to get into original IP, and seeing the game space as the future of interactive media.

If you look at the creative at Psyop, they have a very high quality bar. They have an innate ability to tell a story in a very small amount of time, with very compelling art. That’s something that I find is a transferable skill when you look at creating IP in the video game industry, especially if you’re going after the core consumer.

[a]listdaily: What type of games will Psyop Games create

Rocco Scandizzo: We’re in very early stages. The focus of what we want to do, and the core team we put together, is focused on core games. We want to create original IPs for the core gamer, and we want to focus on shorter experiences that have an emphasis on story and art, and are built around one strong core mechanic. We have two projects we’re working on right now that are in this realm.

It’s more of a philosophical answer than ‘these are specific projects and these are specific genres,’ but if I were to define the the genre I would expect most of our games would have a strong adventure-based connotation, where there’s a story to be told and choices to be made, but game play would change dramatically with the titles we work on.

[a]listdaily: What platforms will these games be on

Rocco Scandizzo: The approach would definitely be PC and digital first. We think it makes sense both with our core customer we’re targeting, and with the size of the games. The great freedom that has been given both to consumers and to developers is that now we don’t have to hit that critical mass of content that justify the game to be on shelves. We can create experiences that are of the size players want. Shorter games can be sold at prices that actually make sense for players. Our games are not going to be free to play, we are targeting initially that they will be premium.

[a]listdaily: Free-to-play is a very difficult monetization scheme to square with games that have a strong story, isn’t it

Rocco Scandizzo: I entirely agree. It’s a very difficult genre to make a game that delivers the kind of core values we want to deliver to players, and i’s also a very difficult genre to play in, generally speaking. Free-to-play is an extremely complex world, and we feel our core focus keeps us away from it.

[a]listdaily: When do you expect to start delivering games

Rocco Scandizzo: We’re currently looking at the end of 2015 for at least one of our projects, and ideally we’d have something to show probably at GDC.

[a]listdaily: Any parting thoughts

Rocco Scandizzo: I want to emphasize just how happy I am to have the core team that we’ve put together. It’s the first stepfor us in getting our core strategy off the ground. These guys are very well versed in making games, and their expertise in creating stories is compelling. Their experience in delivering lots of core IP in a way that players have related to is going to be a very strong advantage for us.

Bringing Mobile Games To China

BY

The massive growth of mobile games is a phenomenon that’s occurring all over the globe, but nowhere faster than in China. Smartphone adoption is growing by double-digit rates, and the market is measured in hundreds of millions of smartphones and billions of dollars. Yet with all this rapid growth, Western game publishers haven’t had much success in bringing mobile games to the Chinese market. The Chinese app charts are dominated by Chinese mobile games, despite the large numbers of games developed elsewhere in the world that have generated devoted audiences.

This seems like a tremendous opportunity, and Golden Gate Games was formed precisely in order to take advantage of it. The company, founded by game industry veterans Keith McCurdy and David Zhu, helps developers and publishers bring games to China. “Working in China can be a challenge for all but the largest companies in the gaming industry,” Golden Gate Games’ web site proclaims. “With G3’s local knowledge, Shanghai game development studio, corporate and financial cross border structure, publishing team, and distribution connections, we can culturalize your game for the China market and publish it via a wide array of app stores and mobile operator channels.”

Golden Gate Games has already taken several games into China since its founding in February of this year, and more are on the way. The [a]listdaily spoke with co-founder Keith McCurdy about the company’s efforts to help Western developers gain a place in the vast Chinese market.

Keith McCurdy

[a]listdaily: What’s the state of the Chinese market for mobile games

Keith McCurdy: The market is exploding. It doubled in the last two years each year, some say more than doubled last year. It’s probably going to double again in 2014. It’s on a hyper-growth trajectory, and there’s lots of new smartphones being sold in China. There are 400 million new Android phones this year and another 400 million Android phones next year. That’s almost a billion empty Andropid phones. While some of them are low cost, they are still high quality. They’re dual core, big-screen phones that can play the type of games that 80-90 percent of the mobile gaming market covers just fine.

It’s a huge and growing market, and they do like Western content. In the top ten games, five of them are Western games, things like Plants Vs. Zombies and Subway Surfers. There’s a huge, fast-growing market, and there’s a proven appetite for Western content. There’s just a couple of things missing in the equation. One, it’s very difficult for Westerners to deal with China, culturally, legally, product-development-wise, publishing, and otherwise. It’s also very difficult when you make money in China to bring it back to the West. It’s very hard to know what to do with your games; you can’t just localize by changing the language, publish it in China and expect to make money.

[a]listdaily: What is it that you have to do to mobile games for the Chinese market

Keith McCurdy: All the games that are making money in China are heavily culturalized. By culturalization we mean not just changing the language, but changing the some of the content — the graphics, the style, the user interface, the monetization mechanics, sometimes the difficulty level because Chinese like things different. There’s a lot of work to be done. Two years ago people thought it was a lot like porting. What David and I have found is it’s more like product development work, You have to really come to the table with a plan to take a Western game and change it in a way that will make money in China. There’s the fundamental bones of the game that will make money, but the outer-facing stuff will need to be adjusted in a very conscientious way to apply to the Chinese market. Stuff like changing what you sell, or how often you sell it, or how aggressively you push it, or changing the way the main character looks, or how you navigate the user interface. These are all easy things to do once you have a good game that’s accessible, but they take know-how in country — Chinese designers, programmers, artists — and you have to do it specifically for that market.

Romans from Mars

 

[a]listdaily: What are the biggest changes you see headed to the market in China

Keith McCurdy: There’s growth and what’s driving it, just the massive number of new handsets and new users, and and people upgrading from feature phones and to better smartphones. The other growth drivers is the move to 4G quality networks. China is really expanding that quickly, which is allowing people to download bigger apps, do more connected stuff, more video streaming, and stuff like that. Those are the growth drivers.

The other big change in China is around billing. Right now a lot of the billing in mobile gaming in China goes through the carriers. Even if you download a game from, say, the Baidu app store (which is one of the largest), you still have to pay for stuff. If you’re, say, a China Mobile subscriber (which is like being a Verizon subscriber) you can buy stuff in the game by using SMS billing, where it shows up on your phone. They charge a lot for that — they charge 30 percent for that billing. But there are a lot of people like AliPay and WeChat Pay and other systems that are integrated that are lowering that charge for billing to the publisher down to 10 percent or lower. That’s a huge bonus for us content guys that make games. Instead of paying 30 percent to collect revenue, you’re paying 5 percent to 10 percent.

That will make some channels and some games and some customers much more profitable on a percentage basis than even the West, where we pay 30 percent across the board. That whole transition is a big open thing — similar to the way app stores are fragmented, billing is fragmented.

[a]listdaily: How do you see publishers approaching the Chinese market

Keith McCurdy: I’ve talked to a lot of guys at some of the bigger publishers, and they all say ‘we want to work in China because we feel it’s a precursor of what’s going to happen in the West.’ This is an example of that. In China, the deep integration, the community, the sharing, that’s what drives all the revenue. We’re seeing that in the West now, but I think it started in China a year and a half ago. People in the West look to China and Asia in general to see the future of free-to-play, online gaming, and mobile gaming.

What’s going on with WeChat, Line, Kakao, is important. If you’re familiar with Xiaomi, they’re like the Apple of China. [Xiaomi is a rapidly growing smartphone maker with phones reminiscent of Apple — Ed.] Xiaomi is creating its own instant messaging social network and gaming is a big part of it. There’s a lot of stuff going on in Asia, and I think Western publishers look at it and say “We need to be doing stuff there and learning from there, because they are figuring out stuff at a faster pace than we are in the West.”

BlizzCon 2014: A Marketing Master Class

BY

Once again Blizzard is hosting BlizzCon, the eighth time the company has held this convention for its most devoted fans. The audience is immense, with more than 20,000 people attending in person, with millions more expected to tune in to the more than 50 broadcast streams in 14 languages being provided by Blizzard’s wall-to-wall coverage.

The convention includes not only world final competitions in Hearthstone, StarCraft II, World of Warcraft Arena, and Heroes of the Storm, but it’s also packed with seminars, cosplayers, many new game features to try out at the show – and even a new game. Cosplayers stalk the halls, there’s a costume contest and a talent contest, and to cap it all off there’s a concert by Metallica to look forward to at the climax of the show. Oh, yes, and there’s plenty of news to set the fan’s hearts afire with anticipation and excitement.

BlizzCon is a marketing tour-de-force for Blizzard, providing value to the company on multiple levels. Before getting into that analysis, though, Blizzard’s news (announced during the opening ceremony) is quite consequential and deserves discussion on its own.

As expected, there’s more news about Blizzard’s existing games as well as announced games that are in development. All of the major World of Warcraft news coming up is already known with the release of the massive Warlords of Draenor expansion arriving shortly. Still, Blizzard CEO Mike Morhaime did announce that a charity pet will be put on sale inside World of Warcraft this December to benefit the RED Cross in Ebola relief efforts. The Warcraft movie, heading to theaters in 2016, also got a lot of attention.

Hearthstone‘s first expansion was announced as Goblins Vs. Gnomes, launching in December, along with the arrival of Hearthstone on Android tablets. Starcraft II gets a new stand-alone expansion with StarCraft II: Legacy of the Void, with a new multiplayer mode that lets two players control a single base. While Heroes of the Storm is still in alpha, the closed beta was announced for January, and the game is getting The Lost Vikings as part of the array of heroes.

The biggest news, though, was the unveiling of Overwatch, a new multi-player team battle game which many observers compared to Team Fortress. The introduction including an impressive cinematic reminiscent of Pixar films, and a healthy chunk of gameplay showing the game in action.

The advanced state of Overwatch may have puzzled some people, but it’s not surprising when you realize that much of it was salvaged from the massive Titan development project that was canceled some time ago. That game, a multi-year development effort that is rumored to have cost well over $100 million, was apparently a massive effort that included many things, and ultimately Blizzard felt it just wasn’t what they were looking for.

Judging by the enthusiastic response from the BlizzCon attendees and the Internet, though, Overwatch looks like it has plenty of audience appeal. Blizzard was careful to point out that the game would have “widespread appeal” and be very approachable, though no one from the company would address the elephant in the room – would this game be free-to-play That would seem like a distinct possibility, but we’ll ave to see how the game develops as it gets into the hands of players during the upcoming alpha and beta testing phases.

The enthusiasm generated for Overwatch (especially when it was announced that there are over 600 computers set up at BlizzCon for attendees to play the game for themselves) demonstrates very clearly the marketing value of BlizzCon. Yes, putting on an event like this is an immense effort and expense for Blizzard, which is why they haven’t made it an annual event (some years the convention just doesn’t make an appearance).

The utility of BlizzCon, even despite the cost and effort required, shows clearly the importance of audience in this era of the game industry. Hearthstone is certainly a good game, but if it didn’t have a connection to the vast and enthusiastic Warcraft audience it world certainly be much, much smaller. This show is a terrific way to keep fans engaged in the company’s brands, and to get them enthused for new brands like Overwatch. More than that, while Blizzard may or may not make money on the event, it does sell a lot of tickets to help defray the costs. Not to mention DirecTV is a sponsor, and no doubt contributing to the event. How often can you say that about marketing expenses

BlizzCon shows the value of providing content to your audience, especially when you have games that are worthy of such engagement. Now, it would make sense for King Digital to have a Candy Crush convention – the company’s products have a thin coating of content over the chewy gameplay center, and those games are not something that create fans devoted in the same way as World of Warcraft fans.

Activision has held Call of Duty conventions, which are similar but don’t have the depth or the breadth that BlizzCon does. Blizzard has a range of titles with dedicated fans and rich backgrounds, and there are few companies that can boast that. Still, some games have deep followings that might be interested in a virtual convention, or other sorts of events dedicated to fans of the game. Certainly something like The Elder Scrolls universe has the right kind of following for this.

Marketers should be taking notes about how Blizzard is creating all kinds of marketing materials around BlizzCon. The benefits don’t stop here, as fans will be watching videos created at this event for months ahead, endless articles will be written, and generally this is creating a tremendous amount of engagement for Blizzard. If you’ve got a game that has potential for deep content, BlizzCon is a master class in marketing.

 

Nintendo Talks Third Party, Holiday Strategy

BY

For a while, Nintendo was struggling with its Wii U console, with third-party developers dropping support for the system and worries that it would break the company’s successful streak of popular video game hardware. However, as of late, it’s gone through a turn-around, fueled by the forthcoming Amiibo toy line and such powerhouse game releases as Super Smash Bros. (due November 21st) and Mario Kart 8.

In an interview with Re/code, Nintendo president Reggie Fils-Aime got around to addressing these concerns, but seemed confident that the company would see a strong holiday season, leading into an even bigger and better 2015 line-up.

First up, Fils-Aime discussed the company’s recent turn-around in profits, with the previous quarter showing an increase after so many losses. “We are fortunate that on both our handheld business and our home-console business, we speak to a very wide group of consumers: From children having their first gaming experience to that more active gaming demographic to their parents, it’s a very wide swath. Our demographic footprint is very wide, very diverse, and that’s a key advantage for us. You can’t say that for some of our more direct competitors,” said Fils-Aime.

He also expressed confidence in the company’s holiday line-up. “A great holiday for Nintendo of America is [the multiplayer fighting game] Super Smash Bros. — not only a strong launch of Smash Bros. for Wii U, but continued strength for Smash Bros. 3DS. A strong holiday for us is Pokémon Omega Ruby and Alpha Sapphire, having a strong launch of those games and continued strong sell-through of [last year’s] Pokemon X and Pokémon Y. Lastly, an effective launch of the Amiibo (interactive toys) platform. We do those three things well, we’ll have a very strong holiday season.”

As for third-party support, Fils-Aime remained bullish on the Wii U’s performance. “In the end, what third-party companies want is a large install base to sell their games into [and] a wide demographic footprint that they can target their games to,” he said. “They also want a robust connected environment so that they themselves can explore downloadable content or digital sales. [For] the Wii U business, year-to-date versus last year, our install base is almost doubled. We’re building that footprint for developers, with a range of games from Bayonetta 2 to Mario Kart.”

He also didn’t show much concern over the console’s lack of a new Call of Duty game for the first time since its release. Said Fils-Aime, “I would answer the question in a couple ways. Third parties are bringing multi-platform content to our platform – Watch Dogs from Ubisoft, as an example. I would love to have Call of Duty on our platform. I would love to have any of the big blockbuster, multi-platform titles. But I have to say, more specifically, I want games that provide a differentiated consumer experience. If you look at the other two competitive platforms, fundamentally, what’s the difference ”

Finally, Fils-Aime addressed the growing market of digital sales, compared to physical copies of games. “Retail still is the majority of the business for us. But what’s interesting is, game by game and at different points in time, you see a different consumer reaction,” he said. “Smash Bros. for 3DS, consumers wanted that game immediately. They didn’t even want to spend the time to get in their car and drive to retail to get it, so our digital percent for that game is quite high — about 20 percent of the games sold here in the U.S. were digital, which is a pretty significant piece. Compare that to Bayonetta 2. That’s a huge game, and could take up a large part of the memory in the 32-gig Wii U. That’s a game with a digital percent on the lower side, today about 10 percent or so. Our mentality is, we want the consumer to have the choice based on what makes sense for you, what makes sense for the type of game it is.”

More of the interview can be found at this link.