Everyone’s gonna love subscription-based gaming. Promise.

Not too long from now will we be seeing a range of (fragmented) subscription services offering access to the full buffet of a publisher or platform. Better, targeted subscription packages, not unlike cable TV, that give you front row access to a few keystone titles and hope that you’ll find value in a slew of outdated (retro!) or mediocre content. The writing is on the wall for traditional content firms, with Google and Facebook exploring new ways for news companies and content providers to monetize (premium content placement, subscription). Netflix is trying to get ahead of losing anymore licensing deals like Disney. We’ve already traded the $100/month cable package for a handful of online video subscriptions (Hulu, Amazon Prime, etc.). Chances are we’ll soon do the same with EA, Activision, Ubisoft, and Take-Two. And for those that can’t afford the $10/month fee, there’s always advertising.

Everyone will be happy. Promise.

Below are my weekly thoughts and observations on entertainment and technology. Here’s the link to last week.

🤳🏻 TwitchCon draws 50k attendees.
The streamer-focused event attracted 40% more attendees than last year (35k) and 3M online viewers. While these events are obviously meant to bring more streamers onto the platform and build out available content, it is also an important meet-and-greet of well-known content creators (not unlike YouTube’s Vidcon). A focus among the speaker panels is how to be a ‘great’ streamer. Productions like DrDisRespect are increasingly slick and professional. But the broader amateur community is still wrestling with quality consistency of their content, the increasingly grueling production schedule, and honoring the wish of those that indicate they do not want be live-streamed. (Awkward.) Games companies like Daybreak Games held its own in Long Beach last weekend with its H1Z1 arena and a three-day tournament, especially considering PUBG’s massive presence. Link

High margin esports sponsorship taking a bit longer, says MTG.
At its quarterly earnings call, MTG’s CEO reported 49% growth in the quarter, but pointed at slower-than-expected “high margin” sponsorship sales. The firm did renew with Intel (because where else would Intel go at this point?), but has run into difficulties convincing non-endemics like Mercedes to invest in esports. New kids on the block PUBG and Paladins (Hi-Rez) are driving overall excitement, and the firm expects to see 40%+ growth in the second half of 2017. MTG is parent company to ESL, InnoGames, and Kongregate (which it recently acquired from GameStop for $55M). As esports viewing numbers continue to grow, says the CEO, it is only a matter of time before high margin products get traction. Our friends in the North continue to impress me: MTG and others have managed to make their mark on interactive entertainment in spite of only servicing relatively modest domestic markets. Link

UK government says loot boxes are not gambling.
Meanwhile in the UK the word is in on whether loot boxes constitute gambling (it does not). Rule of thumb I learned from social casino is that in order for something to be considered gambling it needs to have a monetary payout of sorts, which loot boxes don’t.

Activision granted match-making patent.
In the world of multi-player online gaming, it can be no surprise that beyond great content publishers now also rely on a growing amount of tech magic under the hood. To that end Activision filed a patent application in 2015 that specifies how its match-making works. And last week the patent was granted. What makes this news is the fact that it also covers how specific guidelines in its match-making algorithms can be deployed to incentive player purchases (“match a more expert/marquee player with a junior player to encourage the junior player to make game-related purchases”). In response to the half-hearted outrage that this type of news encourages, Activision assured everyone that it was merely considering its options and that it’s not been implemented in any games currently on the market.

Netflix adds 5.3m subscribers.
Outperforming expectations on Wall Street, Netflix currently seems poised for success as its original content continues to pave the way for international expansion and price increases. (Management is planning on spending between $7B and $8B next year.) Dig a little deeper, however, and you’ll find that (1) its profitability on the international business is lower due to relatively high competition over content compared to its domestic market, and (2) growth in North America is inevitably going to slow down soon, especially following a price increase. Original content production is the way out, of course, but this expense will likely grow faster than it can attract new subs. A slew of comparable companies — including Spotify, Hulu, and basically all cable providers — are finding that licensing content is costly, making it difficult to eek out a living. Unless, of course, Netflix is developing a free-version of its service that relies on ad revenue. Link

Reuters Institute and University of Oxford release initial study on #fakenews
Here’s an interesting summary of a broader study on how average people perceive ‘fake news’. Some argue the eroding credibility in journalism spells certain doom. Others, like myself, think it’s the best thing that’s happen to journalism in a long time. In a world beset by noise and deliberate misinformation, there’s an important role for experts to help others understand which way is up. This happened before in the 1920s as wartime propaganda dominated the headlines, and it’s happening now as average people struggle to create meaning from the information that reaches them. With Google and Facebook invested in the topic (and therefore providing non-profit research funding for the foreseeable future) the optimist in me says we’re already on our way to recovery. Full report here.

Paris Games Week is growing, but by how much?
Here’s an article discussing the popularity of the second largest (?) European games conference. (I’ll be out there next week to do a few talks btw, if you want to have meet up.) The host of PGW notoriously over-reports attendance, but there does seem to be growing interest. I’m guessing it’s because Gamescom in Cologne is still the key venue for publishers and platforms to market their wares to Euro-folk. Oh and flying into and staying in Paris costs more. Just saying.

💀 Electronic Arts shuts down Visceral Studios.
After several years of working on a Star Wars title, one of EA’s spreadsheets indicated imminent unprofitability and triggered a shutdown. Driving factors were likely (1) an already heavy release slate from EA (Anthem, Battlefield), (2) the exceeding ambition from Visceral which had previously burned its fingers on Battlefield Hardline (huge beta, then fizzle), and (3) the never-ending increase in development costs forcing portfolio-focused publishers to refocus. The shutdown also led to a discussion on the long-term viability of single player game play. But that’s like saying romance movies are going to cease to exists because we now have horror films. Link

That was superhelpful. I want to receive this a day earlier via email, so I’m going to subscribe.

Interactive entertainment — Oct 24, 2017

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