Written by Feliks Olko
10 min read
Cloud Gaming Newsletter: February 2020
Major Industry Developments
The Key Stories from this Month
- The Game Developers Conference (GDC) has been postponed due to Coronavirus concerns
- WINGS Interactive has set up a relief fund for Indie developers struggling after GDC’s postponement
- Bethesda games have been removed from GeForce Now
- Pearl Abyss America CEO, Jeonghee Jin, has been discussing the changing face of MMO monetisation
- Microsoft CEO, Satya Nadella, said the technology behemoth is betting big on 'intelligent cloud' – cloud and artificial intelligence.
- LVP discusses why in their opinion investors misunderstand esports' opportunity
- CD Projekt has become Europe's second-biggest video game company
- Chinese games company NetEase is now larger than Activision Blizzard and Electronic Arts in terms of games software and services revenue with over $6.6 billion in revenue (against $6.5 billion and $5.4 billion respectively).
The Game Industry in Numbers
- The Global Game Market 2019 was worth $148.8 billion (7.2% year-on-year growth = $3 billion less than forecast) with 2.2 billion worldwide gamers and 4.4% of all gamers download a new game every single day.
- By 2022, the market is expected to grow even further to $189.6 billion, with mobile and console game accounting for a combined 80% of revenues.
- In 2020, the global in-game spending is expected to reach $32 billion, up from 2015's $22 billion.
- The total free-to-play game market in 2018 was worth $87.7 billion – 80% of digital games revenue with 54% of gamers play MMO games.
Notable M&A and Investments
- Online gaming platform Roblox, now home to 115 million largely Gen Z players per month, announced today it has raised $150 million in Series G funding, led by Andreessen Horowitz’s late-stage venture fund
- Embracer Group, formally THQ Nordic AB, has acquired World War Z developer Saber Interactive in a deal worth $525 million
- It's been revealed that Sony paid £177 million for Spyro The Dragon, Ratchet & Clank, and Resistance developer, Insomniac in August 2019
- Tempo Storm has announced that it has raised a $3.3 million investment led by technology investor Galaxy Interactive as it plans to launch a card game and establish an interactive media franchise
Key Technology Predictions for 2020
Prediction 1: The Smartphone Multiplier Means An Incredible Market
This represents a 15% ($58 billion) increase over the prior year, already greater than the $26.6 billion (6%) year-over-year growth that smartphones may see in 2020.
With smartphone sales in 2020 expected to reach $484 billion, the entire smartphone ecosystem – smartphones plus smartphone multipliers – will be worth over $900 billion.
Prediction 2: The Insurgence & Challenge of Video Game Streaming
Some of the world’s largest cloud providers have announced plans to stream multiplayer video games. Doing that, however, is quite a different challenge from streaming video.
Considerable computational power and network messaging goes into instantaneously synchronizing actions between the game and its players, particularly if synchronization is required across the globe.
The most popular multiplayer games today host more than a million players simultaneously, but they only manage this by partitioning users into smaller groups in separate instances of the game (for example, by creating 10,000 different “worlds” that host 100 players each).
The newer streaming video game providers claim that their services will allow a single game instance to potentially support thousands of players, placing greater demands on CDNs to manage the necessary synchronization.
Prediction 3: Artificial Intelligence Permanently Alters Enterprise Computing
Oracle predicts that Artificial Intelligence (AI) technology is fundamentally altering enterprise computing by changing how organizations receive, manage, and secure business data.
Enterprises are quickly embracing AI as they perceive its ability to improve efficiency, boost productivity, and reduce costs.
By 2025, 100% of enterprise applications will include some form of embedded AI.
These technology advancements will impact all parts of the business, accelerating time to insight by helping managers and executives obtain a better understanding of operations, employees, markets, and customers.
Forward-looking customers are drawn to these next-generation clouds for three primary reasons:
- To accelerate agility: 70 percent of IT decision-makers believe cloud computing makes them more agile.
- To scale more easily: Companies that adopt cloud services experience a 20.6% average improvement in time to market.
- To get online fast: 49% of enterprises see faster time to deployment as a key reason for migrating to a modern cloud.
“One ongoing challenge is the contrasting tones of the source material and the MMORPG space. Historically, Star Trek has been less focused on action and more on exploration, moral dilemmas, solving mysteries and character-driven stories -- there is many an episode where a phaser is never even fired.
Whereas, video games (and particularly MMOs) tend to be undeniably driven by combat! To combine both worlds in industry needs tech that can support this visionary scale of a never ending space exploration!"
– Al Rivera, Principal Lead Designer | Cryptic Studios
Industry consultant Ben Cousins outlined the most common pitfalls for developers tackling a new structure and business model in a recent article for GamesIndustry.biz.
- A lack of customer focus and service thinking
Free-to-play and live-service games are fundamentally different from traditional games in that they operate as ongoing services rather than one-shot products
- Incorrect budget allocation
In a meeting at the end of last year, someone asked: "What is the biggest change game teams must make when they move from products into services?" My answer: "They need to get used to the idea that half their budget will be spent on UI."
- Production values are too high (Time to Market, Expensive Prototyping)
In an interview with Gears of War's Rod Fergusson, he revealed that he has almost cancelled Fortnite while it was in development because it didn't hit his quality bar. This failure for a AAA studio to understand the need to drop some of the production values and move to live prototyping as soon as possible is key!
Feliks note: Moving towards cloud-native development will give studios more time to flesh out their pipeline through feedback coming from live testing, which will make the post-launch practice much smoother.
- Ignoring the importance of pipelines and practices for post-launch
When developers launch traditional product-based games, to a degree they are 'throwing something over the wall'. The game is complete, the tools may never be used again, and the codebase might never again be touched. If there is post-launch work on patches or a little DLC, it might be completed by a different team, and the vast majority of the actual work is already done pre-launch.
- Cosmetic-only monetization in free-to-play games
The argument here is that the games that make billions from cosmetic-only economies typically only succeed because of the sheer numbers of players. On a per-user basis they actually have very poor monetization, relative to games that use more aggressive methods. This is because for a multiplayer game that is built from the ground-up to be about dominating other players, the proportion of the audience who are interested in self-expression via cosmetics is rather small.
Feliks note: Personally, I believe any monetization tool in place that is not cosmetic-only in nature will, in the long run, lead to players migrating to another game regardless of how good the actual gameplay is. On top of this short-term damage, the longer-term impact on a company's brand (see Electronic Arts (EA) and the loot box controversy), it's far better to be safe than try to gain a short-term, small financial uptick.
- Post-launch panic (Time to Monetization)
When we compare traditional game products with live-service games and free-to-play we see huge differences, but there's one that usually causes the most hand-wringing and consternation among first-time developers, publishers and money people – the immediate post-launch performance of a game.
Successful product-based game
Successful live-service games
Other Stories From The Month
- What You Can Expect From the Next Generation of Gaming
- Riot Games will be using Unity Engine for Legends of Runeterra and League of Legends: Wild Rift
- How Star Trek Online managed to live long and prosper
- RIP Stadia? Nvidia’s newly launched cloud-gaming service is (mostly) a stunner
- What are TFLOPs, and why do they matter?
- 'PUBG' cross party play capability for PS4 and Xbox One has arrived
- Why investors misunderstand esports' opportunity
- Rockstar's cryptic new website imagery appears to be teasing something
Apr 3, 2020 5:30:00 PM | 12 min read
How do you stop the spread of a contagious pathogen throughout a heavily globalised world?
Mar 31, 2020 11:59:00 AM | 9 min read
Major Industry Developments The Key Stories from this Month COVID-19 and Gaming One of the knock-on effect of everyone ...
Mar 18, 2020 6:08:57 PM | 2 min read
Combating COVID-19 is a collective effort that all of us, and not just medical professionals, have responsibility for. ...
View all Blog articles
Posts by Tag
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017