Mobile gravity, and what it may mean for games (part 2)

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Link to Part 1

In hindsight, a lot of my first post was about mobile gaming as the classic low-end disruption to PC&console gaming – mobile devices may be more constrained across the board (power, storage, screen size, input precision etc.), but they can compete along other dimensions (almost universal availability to play, wherever your are; hardware that’s not available to PC&console, e.g. camera, motion sensors etc. that unlock new design space; etc.). And also using the disruptive innovation analytical framework, it may very well be possible PC&console are over-servicing the player needs – e.g. it’s nice to have ever-more realistic graphics, but there’s probably a case of diminishing returns for actual player value delivered by these graphics. (The rest of the framework applies nicely after this setup – I won’t bore you with writing out the conclusions.)

I ended the first post with a quote from The Terminator series – “there’s no fate but what we make for ourselves.” In my view it is by no means a fore-gone conclusion that the PC&console product category will be sucked in by mobile gravity. It is possible they can thrive at an arms’ length. Again, to think this through we can look from the lens of “jobs to be done”. Some examples here:

  • The cinema business is thriving in the digital age, and IMHO suffering minimal to no impact from online piracy. One big reason is the industry has convinced the audience that going to the cinema is a fun and unique experience compared to other film-viewing experiences – it is the aggregate of the high-tech audio-visual hardware (e.g. IMAX screen, Dolby surround), the mood & atmosphere of the cinema, the social event characteristics (group activity with friends / family, it is almost socially unacceptable for someone to go to the cinema by him/herself), as well as any differentiating service the cinema tries to provide (e.g. adult-only viewing in laid back seats with food&drinks service)
  • The arcade business in Japan. I’ve not visited Japan yet, so this is mostly hearsay, but my impression is that there is still a rather lively arcade business in Japan, and it has been ingrained somewhat into the cultural fabric. It’s worth pondering why people still go to arcades when there’s likely a better selection of games at home on their consoles – what are the jobs being done?
  • Similarly, the PC cafe ecosystem in Korea, and other developed Asian economies (e.g. Taiwan, and the coastal area of China). As a ballpark figure there are still something like 10,000 PC cafes in Korea with probably a million PCs. As far as I understand it, it is a social norm in Korea for people to go to a PC cafe after work/school and play for a couple of hours, just like how they may go to bars / restaurants / clubs. It is a quite mainstream social activity – with emphasis on social being a primary job being done here. This is why Korea is probably the most advanced country in the world in terms of internet connectivity (fiber to the home, 4g networks etc.) and yet people still flock to PC cafes.
    • If you are wondering what effects smartphone adoption has had on Internet cafes – in China actually there’s a renewed growth of Internet cafes (largely driven by government removing stringent license requirements), and a new wave of more sophisticated cafes – WYWK for example has customized hardware/software as well as a mobile social app that generated headlines previously for being a hook-up tool (sex has consistently been a primary “job to be done” of social apps). Also if you visit any PC cafes in China, you’ll notice that the primary application (by far) are games, similar to Korea

To go on a bit of a tangent – in the specific case of PC cafes, I think there’s a strong argument to be made that a PC games developer can be financially viable by focusing on this channel. I don’t mean just using biz-dev tactics to ensure an install base / player-base in PC cafes – most competent publishers know how to do that already. Instead, I’m thinking about game experiences that acknowledge the PC cafe setting and strategically leverage them in the game design, e.g.:

  • Core gameplay that really takes advantage of keyboard+mouse input method
  • Strong multiplayer focus, if not multiplayer only. PVP or team-based PVE
  • Preferably session-based play, with minimal setup & downtime in between sessions
  • In-cafe location-based-services which also scale online, e.g. in-cafe tournaments/game-modes, local social features, local leaderboards, cafe vs. cafe leaderboards etc. Also provide incentives to repeat play from the same cafe (e.g. cafe-based reward loops – this aligns the developer’s interests with the cafe’s interests, and also makes sense for players because it creates a more stable local scene)1

The first 3 points are super generic and pretty much applies to all the top PC PVP games right now (League of Legends, DotA 2, CS:GO etc.). They can be enjoyed in any setting but they are clearly best enjoyed when you and your friends are physically sitting together. The last point has not been done well for any game developer (none that I know of)2, probably partially because PC cafes are not a thing in North America and that’s where most of these games are developed.

The above side-discussion is to illustrate one area where PC developers can use an existing infrastructure to hopefully sustain against mobile gravity. At the end of the day, players will continue to seek fun / engaging gameplay experiences, and if these experiences are conveniently available and part of an accepted lifestyle (as PC cafe gaming is in Korea), then PC gaming as we know it today can continue to thrive.

To go full cycle back to the start of this discussion series though, developers should be super conscious why they made a platform choice in the first-place. Is it because your existing skill-set / dev-tools / infrastructure are tied to a platform? Or is it because the gameplay experience you are going after are best suited to that platform’s strengths? The chances of success in the former case are much lower than the latter.

And perhaps one other take-away, for all developers regardless of their platform choices – be conscious that with regards to the general internet, the mobile internet IS the internet and to a first approximation everyone should probably be thinking mobile first when it comes to around-the-game experiences (like community forums and other social engagement).

  1.  Take note what Magic: The Gathering did for its hugely successful local play programs, and recreate that experience digitally with PC cafes as the venue ↩
  2. Interestingly, ecosystem developers in China have made serious attempts at this space – but because of lack of integration with the core game, and sometimes malicious intent, the results are shaky from the players’ perspective ↩

Mobile gravity, and what it may mean for games (part 1)

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Ben Evans had a couple of posts several weeks ago that I’ve been chewing on:

Microsoft, capitulation and the end of Windows Everywhere

The smartphone is the new sun

In particular, his central summary/analogy that “the smartphone is the Sun and everything else orbits around it” is both elegant and provocative. Combining his two posts, you can say that he looked at it from both a platform perspective and a supply chain perspective.

From an end-user perspective (consumption behavior), there’s certainly data that supports the analogy. Especially in emerging markets, mobile share of internet consumption has been steadily rising (e.g. this recent post).

This is a virtuous & self-reinforcing cycle – because of the healthy growth and sheer size of the smartphone market (e.g. people see it as a critical personal device, replaced every 2 years), it now commands the tech supply chain; because of the userbase and growth outlook, developers are naturally shifting their attention/priority to mobile; and as there are more mobile apps that users have formed sticky habits with, and as these apps build their inter-connectivity / inter-dependency (symbiotic relationships, e.g. wechat as social identity / payment provider for other mobile apps), it becomes more and more cumbersome for users to context-switch to non-mobile platforms 1 for tasks, and hence more incentive for aspiring developers to solve these tasks on the dominant mobile platforms (and hence the cycle goes).

Another analogy (and IMO fittingly also physics related) to describe this is “mobile gravity”, the first part of this post’s title. All other hardware / software products that we regularly experience in our daily lives are encountering the gravitational pull of the mobile hw/sw ecosystem. A few obvious examples:

  • Mobile is a key enabler of the on-demand economy. Uber and its clones are forcing people to rethink our entire relationship with cars / public transportation. In this case, “mobile gravity” will likely permanently transform the auto industry, at least in the end-user service experience layer (and probably beyond that, in the supply chain & production as well, which is not a new concept if you’ve been following asymco)
  • In some smaller products / services, they have been/will be completely pulled in by “mobile gravity” and are no longer standalone categories. MP3 players (iPods) and compact digital cameras are 2 prime examples of dedicated-purpose products that have been replaced by the general purpose smartphone. Dedicated gaming handhelds are another product category that may be dangerously close to being assimilated, because the jobs they are hired to do can mostly be performed competently by smartphones
  • Some portable electronics categories will be embraced by mobile as peripherals. The Apple Watch (and wearables in general) act as extensions of mobile computing – they are kind of interesting as standalone products, but where they unlock value is when they work together with mobile platforms. And it’s not hard to imagine niche categories such as DSLRs move more of their tasks to the mobile computer and just act as “dumb cameras” that have the hardware capabilities to take complex photos2

So far I believe I have been stating the obvious. I think few people today would disagree that smartphones will likely remain the most personal computing device for the next decade3.

What I wanted to drill down further to discuss, and which forms the second part of the post’s title, is what exactly does this mean for games? (After all, I currently work in this specific sector of tech.) Though with a question so broad (and vaguely presented), there are of course many different ways to speculate.

The most obvious implication (and perhaps the most uninteresting as it’s so obvious) is the rise of smartphones as a gaming platform in its own right. Clash of Clans, Candy Crush Saga, Game of War, Puzzle & Dragons and Monster Strike are 5 games that were/are in the $1B/yr revenue ball-park, with millions (if not tens of millions) or players. By any traditional games-industry measure these are massive numbers4. And there will likely be more of these games (by sheer virtue of the platform sizes, and people’s intrinsic needs for amusement on the go, which is a gross & criminal over-simplification of the “jobs being done” by these games).

But as many would quickly point out, there’s a world of difference between the 5 games I listed above and “core” console & PC gaming titles such as Metal Gear Solid 5, The Witcher 3, and the Call of Duty franchise, to name a few. And this is where things start to get interesting IMO…  If by “console & PC gaming” we are actually referring to the core content experience (hi-fidelity audio-visuals presented in an immersive format such as a big screen or VR in future, richness of interactivity and gameplay depth etc.), I don’t think the need for that is going away. I think people will continue to crave  these types of highly polished entertainment experiences, and the bar will continue to be raised – bigger screens, higher fidelity, more immersion (VR?).

Again, stating the obvious I think. But what’s not obvious is whether Windows / Mac / Xbox One / PS4 (which btw are all based on the x86 CPU architecture) will be the software platforms powering these core experiences in 5 years’ time.

I think one way to think about this is via the following set of questions regarding the content experience:

  • What is the desired experience? e.g. “a cinematic story set in a big & richly detailed open-world that the player is fully immersed in” (which is kind of what The Witcher 3 is)
  • How do you interact with the experience? This includes both the input method but also the presentation method, e.g. “designed for big screen (40″+ TV) viewing, and meant to be played with a dual-stick gamepad” or “designed for a VR device with a VR controller”
  • What’s required to power the experience? This is computing horsepower, storage, power consumption, network requirements (e.g. latency is a key bar for good real-time PVP experiences), and also the presentation hardware and input method hardware

It’s important to note that while from a current standpoint mobile platforms are far behind PC/console in most of the above listed requirements, things are constantly in flux and paradigms can be broken:

  • Many peripheral vendors have tried making a controller peripheral for smartphones / tablets. From what I’ve read (haven’t bought any, partly because a lack of games, which is the classic chicken & egg problem) they are mostly suboptimal, but as long as there’s continued effort a breakthrough could be coming. Similarly there are experiments like the Steam controller that’s trying to reach parity with the keyboard+mouse in the living room
  • Related to above, a well crafted game can sell the peripherals required to play the game… Rock Band / Guitar Hero is the prime example where the hardware barrier to entry didn’t matter – people wanted the experience that bad. So it’s not unfathomable a phenomenal game can sell the platform and the peripherals needed to enjoy the game
  • We may frequently over-estimate the input method lock-in. Keyboard+mouse is seen as the pinnacle for FPS gaming (much more accurate / responsive than gamepads, which is partly why multi-platform FPSes don’t support cross-platform play), but let’s not forget that console FPSes generally speaking outsell their PC counterparts by a lot (which leads to development decisions such as making Destiny console-only). Similarly, there are developers constantly pushing the limits of our imagination in terms of what’s “playable” on a touchscreen – The Executive being a recent example of a touchscreen fighting game that I had a good time with (caveat being I’m not a core fighting game player)
  • I’m skeptical about the current wave of VR devices, but again this is something that likely will be cracked one day, and when that day comes, gaming will be one of the biggest applications and you will no longer be constrained to your living room to enjoy a core experience

I’m going to take a quick break here… I feel I’ve rambled a lot. There are still a few more things I’d like to note down in a next post. As a small teaser, despite what I wrote above, it’s not necessarily all doom & gloom for PC/console – at the end of the day, “there’s no fate but what we make for ourselves”, and there are some angles that PC/console platforms can leverage to sustain their position in gaming.

 

  1. I’m not speaking of specific form-factors / devices, but rather software platforms, i.e. Windows vs. iOS vs. Android. I suspect iOS / Android & other mobile platforms will increasingly expand to more form-factors, just like how they’ve already done so with both the tablet and the smart-watch↩︎︎
  2. As an aside – DSLRs on-camera software generally suck in terms of their usability, and feel they belong to the feature-phone era. This cannot sustain – either DSLRs actively integrate with mobile platforms, or they will be replaced by new specialized camera peripherals for mobile platforms that can perform the tasks of the DSLR↩︎︎
  3. They will continue to evolve / extend, but the basic premise of a battery-constrained, ultra-portable computing device with built-in wireless connectivity will probably persist for a while.↩︎︎
  4. BTW this doesn’t equate to mobile gaming being a profitable field – it’s very much a “red ocean” as I understand it and these are the “unicorns” amongst a sea of “dead” games.↩︎︎

The Witcher 3 – a review

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I’ve played The Witcher 3 probably for over 60 hours now, and just finished my first play-through. Some thoughts…

From a systems/mechanics perspective, I found The Witcher 3 to not really hold any surprises:

  • Large open-world layout, supporting immense amounts of open exploration. Even with 60 hours in it, my map holds more “?” marks than explored areas. However I rarely felt the desire to explore
  • A deep questing system with a simple “mechanical” setup: explore 3 large areas of the world (with lots of optional quests per area) sequentially to uncover the next major set of main quests. The later main quests would at times take me back through these 3 areas and revisit earlier acquaintances
  • Real-time combat that’s mostly swords-based, with some defense/offense spells. The base versions of the spells (“signs”) are already learnt at game-start, as thematically you are a traveled witcher. To me the combat was the least interesting aspect of the game
  • A leveling system that mostly provides passive benefits to your character’s stats / abilities, with some limited additional active spells unlocked (twists on existing spells). Interestingly leveling is primarily through questing, as combat/exploration provides very little experience rewards
  • A crafting system that supports hunting/gathering component resources. The alchemy part of the crafting system plays a strong role in supporting the thematics, however in practice I rarely felt the need to hunt for components – I had the habit of looting pretty much everything in sight, so when I did need to craft a potion/piece of gear I usually had the ingredients (or could salvage them from dismantling items)
  • A few mini-games: a very thematic card game, horse-racing

The execution of most of the above areas are mostly just so-so (with one notable exception), and what’s worse is that there are quite a few glitches / bugs… For example in my PS4 copy, the Gwent card game tutorial repeatedly crashed for me, which made me give up on this entire mini-game altogether.

I’ve also seen quite a few reviews comment that “the combat is not Dark Souls / Bloodborne“, undoubtably with Bloodborne fresh on players’ minds – this was my impression as well. It is an unfair but relevant comparison, and to me shows the importance of focus – a game cannot be the perfect game to all players, it must choose what it focuses on excelling at.

For The Witcher 3, that focus is the storytelling (the exception I mentioned earlier). The questing system itself is wholly generic (and even cuts some corners with designs such as a notice board where you can conveniently pick up side missions). And the mechanics of the quests are not ground-breaking in any way – it’s the standard fare of “go there” / “get that item for me” / “kill someone”. But the writing quality, the sheer amount of writing, and the related production values in presenting those writing (voice-acting etc.) is simply astounding. Quests, even the smallest side-quests, will often have (surprising) consequences later on; there are always interesting plot twists, supported by a memorable ensemble cast of NPCs; and the game’s grim world-view will repeatedly show the player that the best intentions can have objectively bad results (such is the tragedy of life).

In one sense this is basic storytelling – create numerous interesting characters; plant some seeds and come back to them later (preferably in unexpected ways); have multiple narratives in parallel, creating pace and tension, etc. – but the finesse and ease at which this game ties its quests together are remarkable.

Lastly, The Witcher 3 mostly succeeds by having about a dozen characters that the player cares about, and having the player make numerous narrative decisions per character throughout the long playthrough. Some of the consequences of these choices are not apparent until the ending; in other cases, they require the player to make immediate life/death choices (forced under a timer) between characters. As the credits roll, it’s hard not to reflect on these choices and wonder what could have been (although with the power of youtube and community wikis, exhaustively exploring all the other choices is a trivial task).

Bloodborne – a short review

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Bloodborne is the first Souls game I’ve played, and it represents a wholly different experience from other games I’ve played the past few years. Below I’ll summarize some quick thoughts I have after my first playthrough.

Much has been said about the game’s high difficulty, but to be honest I don’t think that’s why Bloodborne is unique. Diablo 3‘s randomly-generated elite mobs sometimes created extremely difficult ability combinations that created a lot of player frustration – these mobs were certainly hard, but the frustration came from not their random-difficulty but rather the lack of tools to deal with them. In contrast, Bloodborne is difficult because it ruthlessly punishes reckless play and mistakes, but it is also “easy” when you pick the right strategy and have honed your execution to a certain level of competency. Most of the times when I died, I only had myself to blame (“yep, got too greedy / cocky there”), but there was a minority of cases where I felt the game to be unfair (the design of certain enemies that I felt were too punishing, or when I felt I actually executed a parry but the game thinks otherwise).

The other unique thing about this game IMO is how it gives players a sense of progression. The industry convention nowadays is to track progression with leveling – again, Diablo 3 is a prime example (and executed quite well – as you level up you gained stats but also unlocked new abilities, which overall offered a “smooth” learning curve, spiced up gameplay, and provided things to look forward to), and certainly the dime-a-dozen mobile card battle games are entirely based on stats growth. Bloodborne does something very different – while there are certainly progression mechanics such as leveling up your weapons and your stats (and they matter a lot still), the real progression I felt (especially in the first 5-10 hours) was mastery of my character / weapons as well as combat tactics against specific enemies. It felt incredibly rewarding to be able to consistently clear an area where a few hours ago I was struggling to even deal with a couple of enemies – leveling up stats and weapons certainly makes this easier (and is a legitimate route to reduce the difficulty if I felt stuck on something), but the bulk of the progression came through learning and mastery. What I also liked is how the different weapons really had different personalities and facilitated a wide range of playstyles – I could cruise through a lot of the game on my trusted hunter-axe, but on another weapon (even at the same powerlevel) I felt like a completely noob.

Thirdly, I did develop a deep appreciation for Bloodborne‘s level design. It is incredibly well thought-out, and complements the gameplay well – finding and unlocking the many “shortcuts” designed in the world serves as great points to “base” (and hence helps with pacing) and gives another way of measuring progression. And the sense of connected-ness made the immersion deeper – it felt like a real world I was exploring, not a series of levels I was fighting through.

If I had any gripes about the game, I’d say that the final act of the game is not as interesting / strong as the earlier sections. I wasn’t particularly impressed with the latter stage boss fights (I thought some of the optional areas and bosses were truly spectacular, and got stuck on a few). The other annoyance is camera control – I felt it was subpar especially in tight areas (say a narrow corridor), and contributed to a lot of frustration in particular areas of the world.

To B or to C, that is the question

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Jon Russel of TheNextWeb had this interesting tweet the other day:

 To paraphrase Ben Evans’ excellent post a couple of weeks ago, this is an unfair comparison, but a relevant one.

There are a couple of thoughts that I have on this. Firstly, the clichéd “necessity is the mother of invention.” Asian social media companies have generally been pioneers in the space of monetization via virtual goods, whereas Silicon Valley companies have focused more on ad-based monetization. IMO a big factor is the availability and maturity of advertising dollars – if the US does not have a thriving advertising industry and sophisticated advertisers (the blue chip companies and their global brands), Silicon Valley biz models will look very different.

Secondly, an ad-based biz model (B2B) demands a fundamentally different set of organizational structure and capabilities from a virtual goods biz model (B2C). In Silicon Valley, the former often requires an ad sales force fluent with convincing Madison Avenue ad execs to allocate client ad spend, as well as building the tools and support systems needed. In Asia, the latter model requires sophisticated retail / payments capabilities, such as a distribution network for physical gift cards that consumers can buy to convert to virtual currency (which can then be spent on virtual goods), as well as handling various online payment schemes (or building your own from scratch) and fraud, and also a customer support service that can handle literally tens of millions customers.

Another way to look at the fundamentally different capabilities required: ad-based biz model is generally about monetizing user data – user behavior / intent that advertisers value, so data aggregation / modeling / predictions would be key tech capabilities; whereas virtual goods biz model is about creating demand for content – “I want to buy that virtual rose so I can express my feelings to my loved one” – and hence requires a content pipeline as well as understanding of what types of content sells.

Thirdly, from a product perspective, “adding advertising to my free service without annoying my users (or not annoying them to the point of churning)” is a very different design goal from “providing value-added services that a (typically small) % of my users are willing to pay for”. Advertising in exchange for a free service is something that users tolerate; getting users to actually pay real cash is generally speaking much harder.

To be clear, I’m not saying that one model is better than the other, simply that two similar services (from users’ perspective) could mean fundamentally different company strategies.

I’ll end this post with another set of examples for comparison: twitch.tv and YY streaming. Both operate online streaming services in the video-games space. Twitch monetizes via video ads (as well as cut of premium subscription fees). YY mostly monetizes via virtual goods that viewers buy to gift streamers in the public chat feed that accompanies the stream – if that sounds bizarre, you really need to see it in action.

Video-games: the jobs to be done

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I had recently ran into @asymco in a private event, and I asked him his opinions on the future of PC gaming (given the context of the decline of PC hardware sales). He responded that I should think less of devices and more of “what is the job being done?” And hence I’ll try to take a stab at “the jobs to be done” by video-games.

(A casual 5-min literature research turned up this post on Medium, which was an interesting read but not structured enough for my purposes, though there are clearly some points which will overlap.)

At a very high level, what are some of the “jobs” that people employ video-games to do? A quick list on a napkin might look this:

  1. To kill time – many mobile games’ default use case
  2. To experience a personalized narrative – anecdotally it seems that especially with female gamers, quite a lot play games primarily to experience the story. I have met many Chinese girls who recollect fondly their experiences playing Chinese RPGs such as PAL (仙剑奇侠传, which has spawned a whole TV series) 
  3. To appreciate immersive, high-fidelity audio-visuals – the arms race for better immersion; some games have such great visual design they can appreciated as art
  4. To be mentally stimulated – Sudoku / Chess
  5. To relax and be amused – escapism from real-life stress
  6. To compete – competitive multiplayer is a core feature for many games today
  7. To socialize with friends, as a group activity – getting together for Rock Band, Wii Sports, or the more “hardcore” stuff such as Call of Duty / Halo
  8. To seek expression of individuality (creativity, dexterity, etc.) – sandbox games such as Minecraft
  9. To seek peer recognition – leaderboards and ranked ladders
  10. To seek a sense of achievement – core to any “addictive” video-game are the feedback loops that make players proud of themselves
  11. To seek a specific social identity and a sense of belonging – affiliation with an online community, but also in esports the emergent signs of personal identity traditionally associated with following “real” sports

This is a very hasty list (some items share overlaps, for example the motivation behind “to compete” could be to seek a sense of achievement and recognition, but there’s also the enjoyment from the struggle of competition itself). In any case, a game would usually hit at least a couple of the above; a great game will likely cover many.

2013 Top-grossing Video-games Observations

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Yesterday I tried to put together a guesstimate list of the top-grossing video-games of 2013 (in terms of player spending, not dev/publisher revenue).

To summarize, a top 10 list would look something like this (in ball-park descending order, sources are in the previous post):

  • Grand Theft Auto V – $2B
  • [EDIT3 Candy Crush Saga – $1.5B, simple estimate from their S1]
  • Puzzle & Dragons – $2B [EDIT1 – $1.4B after changing my assumption for whether their revenue was pre or after platform 30% cut]
  • Call of Duty: Ghosts – $1B
  • World of Warcraft – $1B?
  • Candy Crush Saga – $1B?
  • Clash of Clans – $1B?
  • Crossfire – $1B*
  • League of Legends – $0.6B*
  • [EDIT2 Clash of Clans – $-0.5B – revising these games’ numbers after Supercell’s revenue disclosure]
  • Fifa 14 – $0.5B
  • Pokemon X/Y – $0.5B

*Crossfire and League of Legends are Superdata Research estimates, and as I don’t know their methodology I’m unsure what adjustments need to be made from “game revenue” to “player spending”. Also the same disclaimer/disclosure as the prior post, while I work on League of Legends I’m not using any internal data and I’m not vouching for the accuracy of external research claims.

As I look at this list, some take-aways jump out:

  • From a return on investment perspective, the top-grossing mobile games are likely an order of magnitude better than other platforms – the production / marketing / operating costs behind P&D / CoC / CCS are probably a fraction of that of GTA V / CoD.
    • However, this doesn’t mean mobile games represent better ROI overall – the 3 mobile titles on this list are the extremely lucky few out of hundreds of thousands of mobile titles.
  • These 10 games represent a surprisingly wide (IMO) range of gaming experiences (genres, platforms and business models). This would actually be very interesting to probe further, in terms of asking the question of “what are the jobs being done?” by these products/services.
    • I’ll try to tackle this specifically in a future post.
  • The rise of mobile is really fast – would anyone a couple of years ago have imagined not one, but three mobile games, in a top 10 grossing list? It suggests that there may be an entirely new (and much bigger in scale) segment of gamers via mobile.
    • Would these new gamers remain “casual” gamers, or can they be introduced to the more “core” gaming experiences? (Or to flip the question around, can “core” gaming experiences be brought to mobile?) This is literally a multi-billion dollar question
  • The geographic markets behind these 10 games show interesting concentrations. GTA V / CoD / Fifa are primarily driven by western markets; P&D / Pokemon are primarily Japan; CF is mostly China; CCS / CoC may have the most global distribution.
  • Future growth potential – I think there’s an almost 100% obvious answer (with immense implications) to the question of “which types of games are likely to grow faster in future?”

What were the top-grossing video-games of 2013?

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On reading some of the financials disclosed recently by games publishers, I had this question in my head: what were the top-grossing video-games of 2013? I’ll do a simple write-up here using a few public sources and some ball-park estimates.

To start off, let’s define top-grossing as measured by player spending. That is, I’m not particularly concerned with how much revenue publishers/developers took in (versus the cuts taken by the various distribution channels, or factoring in how revenue is recognized from an accounting perspective), but rather looking at how big the pie was in terms of money that players paid out-of-pocket.

As a first step, let’s look at boxed retail, which is mostly console/dedicated handheld titles: http://www.vgchartz.com/yearly/2013/Global/

Grand Theft Auto V was clearly the monster hit of the year, with almost 30MM units across Xbox360 and PS3 in 2013 (Take Two announced 32.5MM units shipped recently). Assuming an average retail price of $60 + tax (say, 10%), GTA V comes in at just shy of $2B of player spending. (A different cut is using Take Two’s reported earnings data, where GTA accounted for 72.2% of $2.15B from Mar-Dec 2013, which is $1.55B – which is about $50 per unit, which sounds about right for the pre-retail markup price.)

Call of Duty: Ghosts had close to 15MM units, which translates to about $1B of player spending (assuming $60+tax).

Aside from these two titles, no other title seemed to come close to $1B of player spending – Pokemon X/Y had 10MM units, but a lower retail price ($40), so it would come below $0.5B. Fifa 14 had close to 9MM units, which would be around $0.5B as well. It’s also worth noting that the top PC game at boxed retail was Starcraft 2: Heart of the Swarm, with only 1.1MM units.

Next let’s look at PC digital retail (as in, purchase once, play forever, via Steam etc.). I’m actually drawing a blank as I write this thinking of a major PC game in 2013 under the digital retail model that would come close to $0.5B or more. (Doing a quick scan on steamgraph I really struggled to find any 2013 releases that would be likely – so let’s table this for now.

Next up – subscription-based games. Or, basically, World of Warcraft. I’ll just do a quick back of the envelope exercise rather than dig through Activision earnings. It seems the last publicly announced WoW subscriber numbers were 7MM as of July 2013 – assuming $15 per month (ignoring the bulk discounts and tax, or regional pricing models in Asia – which could really change the picture but I haven’t researched this in detail) that comes out to $1.26B. So WoW is probably around the billion dollar club in terms of player spending.

Next, free-to-play games. A big disclosure/disclaimer here, I work on League of Legends in my day job, and I will not be disclosing any internal data points. Instead, I’ll only use publicly available info, such as this a publicly released research piece. (I’m not vouching for the accuracy of the report, especially any League of Legends estimates from this research vendor.) From this source, it seems there’s 2-3 online games under the free-to-play model that are in the ballpark of $0.5-1B in player spending.

Lastly (and this is what I really want to talk about), mobile games (basically iOS + Android). GungHo released their numbers recently, and Puzzle & Dragons scored huge, accounting for 91% of the $1.5B revenue. Adding back the 30% app store commission (I’m assuming their revenue numbers are net of this commission, since that’s what they get from Apple/Google), that comes out to just shy of $2B in player spending. [EDIT1: I’m now assuming that the standard revenue reporting for mobile games includes the Apple/Google 30% cut, as this was stated in the reports last year on Supercell, e.g. this post]

While we don’t have full year numbers for Clash of Clans or Candy Crush Saga, it’s not far-fetched to see them in the billion dollar club. For example, some research vendors estimate that Clash of Clans was the overall top-grossing iOS game of 2013, while Candy Crush Saga was the top-grossing Google Play game of 2013. Picturing what we know about Puzzle & Dragons, then these two titles are almost certainly billion dollar titles in terms of player spending. [EDIT2: Supercell’s 2013 revenue is $892MM, so Clash of Clans by itself may be around $500-650MM, since it is generally higher ranked than Hay Day].

[EDIT3: So King filed their IPO prospectus, and we have a lot more data on Candy Crush Saga. If we do a simple estimate and take the reported bookings contribution from CCS from Q4 2013 (78%) and apply it to the whole year revenue of $1.9B, that’s around $1.5B from CCS. And King reports gross revenue, so that’s the amount players spent.]

Mobile Card Games

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(A sort of free-flow post that goes all over the place in my attempt to get back to blogging)

For the past couple of years, app stores around the world have been invaded with a range of casual card games. I’m not referring to card games of the poker / casino variety (though that’s certainly a major category revenue-wise, especially in western markets), but rather the “collectible card game” type which has taken an interesting evolution in mobile.

One of the earlier games to hit market success in this model was probably Rage of Bahamut, which still puts on a respectable showing today (I was able to quite easily find it on App Annie’s grossing charts). But since then tons of clones have leveraged the same underlying engine, some with astonishing levels of success – Puzzle & Dragons being the flag-bearer (it has a match-3 mechanic, but the meta gameplay is the same). Various big name IPs have also been leveraged, such as Marvel (Marvel Puzzle Quest) and Star Wars (with the horrendous Force Collection mobile game). In China, “I’m MT” reached massive success with a derivative IP (it’s based on a fan-art based on WoW), and since then there’s been literally hundreds of clones, many infringing on global IP franchises such as Naruto, One Piece, and League of Legends (disclosure: which I happen to work on).

Put aside the specific puzzle mechanics in Puzzle & Dragons etc. (which I argue add some real gameplay engagement but doesn’t explain the popularity of the overall genre, especially all the games with no combat mechanic at all), the basic formula of these games is the card “level-up/evolution fusion” mechanic, the randomized card purchasing via a treasure-box, and a cheap PVE questing system.

The “level-up/evolution fusion”  mechanic is essentially a convoluted card leveling system which dramatically extends the collection depth, obfuscates the collection cost, and acts as an economy drain for in-game items that players farm up – a card can be both “leveled up” by using other cards as source material as well as “evolved” (again using various items as material) to become a different card (usually a higher-tier card of the same character). So, say you have a Tier I warrior that is level 5, he can be leveled up to a max of level 30, at which point he can be evolved to a Tier II warrior that starts at level 1 (and the cycle repeats).

The card purchasing treasure-box functions to add scarcity (and therefore collection depth) via randomization. It satisfies a psychological itch very similar to gambling (and is often called a gambling mechanic). It’s also the same primary gameplay loop that players seek out when farming items in Diablo (the chance to get some really good item “drop”).

The cheap PVE questing system is exactly that – highly repetitive, low production cost PVE engagement, with various bells and whistles on top to drive engagement (for example, some levels are only open at certain times of the day or week). Players generally farm these PVE levels to gain items that help them pursue the card level-ups and evolutions.

The fact that this basic formula has demonstrated immense market success is also revealing in other ways. For example, the fact that a large number of these games are successful without any stimulating “moment-to-moment” gameplay (e.g. Puzzle & Dragons’ match-3 combat) shows that players are engaging with them in a very low-intensity fashion (not in terms of time/money commitment, but rather attention and focus). These games are catered towards capturing the popular “fragmented time” space pursued by many mobile apps. They can be great “second screen”/multi-tasking experiences, which a high intensity game cannot satisfy.

At the same time, it’s really hard to see these games as not a fad. The formula can be extremely sticky initially but once players experience fatigue there’s very little to prevent them from churning. Some games have tried differentiating with higher production value (e.g. Million Arthur, which leveraged famous anime voice-actors) and/or IP tie-ins to create that initial draw, but I’m skeptical that players will continue to enjoy products in this space after engaging deeply with one product and breaking from it.

This brings my rather unfocused post to the other elephant in the room – Blizzard’s Hearthstone. This game has all the signs of being a massive mobile card game, despite only beta-testing on PC/Mac so far. Ironically, I get this confidence from playing the Chinese rip-off of Hearthstone which Blizzard has just taken action against. It has the right type of session length, onboarding accessibility, and gameplay depth. And it leverages a very familiar IP. (I do think there’s a lesson or two Blizzard could learn from the Chinese rip-off, especially the small client-size which I do think is a big deal on mobile.)

In short – Hearthstone may be the first massively popular “hardcore” game that is truly achieves cross-platform parity between mobile and PC/console (I’m discounting ports like XCOM because the mobile experience still has some issues). As more and more games figure this out, it may incidentally accelerate the decline of PC gaming. Once hardcore gamers form the habit of gaming on mobile, it will be harder to lure them back to PC/console experiences (demanding even higher production costs etc., which may break economics). All of this is just speculation at this point, but dramatic gaming engagement shifts may be coming.

The making of Diablo

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I came across this gem of a book recently via video-games industry veteran Pat Wyatt’s blog. It’s a breeze to read and I finished the main chapters in a day (I say main chapters, as the book takes cues from its subject matter and contains a ton of optional extra reading).

The book is mainly a behind-the-scenes account of how Diablo came to life. I consider Diablo to be one of the best games I’ve ever played, and it has a permanent place in my childhood. As a personal side story, it was one of the few games that I bought a legal copy of growing up in China – I pooled together 160RMB (~$20 at the exchange rate back then) with two friends and we rode our bicycles to the burgeoning Zhongguancun area (now a renowned high-tech hub) in Beijing to buy the box.

The making of Diablo has a distinct Silicon Valley feel to it – not unlike the other stories from the west coast of how iconic tech brands had very humble beginnings. While Silicon & Synapse (the start of Blizzard) and Condor (the start of Blizzard North) did not literally begin in garages, these two companies were incredibly scrappy and were often fighting to make payroll. And then there’s also the part of overnight riches (due to buy-outs) and how the spoils were shared (or not shared) with the employees.

But mostly, the book is about video-games development – an endeavor that is a mix of traditional software development and a creative effort (like writing a novel or making a film). The Diablo that players loved was a very different beast from its original design document, and that’s a good thing – the fascinating twists and turns of how the product came to be is inspiring and showcases the amazing things that can happen when a group of people share a common vision and passion.