Tech Brew Ride Home - The State of The Gaming Industry With Jason Schreier @jasonschreier

Episode Date: February 23, 2019

Last week there was a bunch of gaming news, and if you’ll recall, I put a shout out to see if anyone could tell me what the heck is going on in the gaming space. Well, Jason Schreier, the news editor of Kotaku answered my Bat Signal, and so, here it is. The state of the video game industry, how has Fortnite changed it, does Fornite have a competitor in Apex legends, and even… what is the state of VR gaming? Sponsors: Burrow.com/tech Bubble.is (coupon code "ride") Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to a bonus episode of the Tech Meme Ride Home. I'm Brian McCullough. Last week there was a bunch of gaming news.

And if you'll recall, I did a shout out to see if anybody could tell me what the heck was going on in the gaming space. Well, Jason Schreier, the news editor at Kataku, answered my bat signal. And so here he is to tell us the state of the video game industry. How Fortnite has changed it? Does Fortnite have a competitor in Apex Legends and even what is the state of VR gaming? But first, a word from our sponsors. Okay, Jason Schreier from Kataku. I mean, I can talk about anything.

I can bloviate about whatever you want. All right, well, then let's start bloviating officially. This was prompted, as I said, by the news of the layoffs last week. and also, but I had seen that the stocks of all of the big gaming companies had been down recently. So what's going on here? Is this just the usual boom-bust cycle of gaming as an industry? Or is there more this time or even maybe unique things going on here this time? Yeah, I mean, I think it was a difficult 2018 for all these companies for a variety of reasons.

analysts have certainly blamed Fortnite, which I think has become sort of a scapegoat. I really don't think that Fortnite is the biggest problem in the venue game industry. I actually think a lot of it is just economic downturn all around. Markets kind of coming to Earth after a wild 2018 full of just rapid inflation. Because all of those, all the big video game stocks had been up a lot last year. Yes, yeah, but all of the stocks, the entire, all of them. Right, sure, certainly. Yeah, so it's just, I mean, Fortnite is one of the, one of the factors.

And yeah, I mean, there are a bunch of other things. One of the biggest things is that it was just not a huge year for a lot of these companies. I mean, if you look at Activision's release lineup, they had like two games, I think it was. They had a new Call of Duty and like a Destiny 2 expansion and maybe a couple of Blizzard things. Like they barely had anything. And even though Call of Duty did well, as it always did. does, they didn't have the sort of lineup that a video game company really needs in order to be successful. And same of the EA. They just had a lot of games. All these companies have narrowed

their scopes to focus on lots of big release or sorry, very few big releases instead of lots of smaller releases. So instead of just like throwing 10 darts at the board, they're trying to throw three. And what that means is that all three of those have to be pretty close to center in order for those companies to be doing well on an even year. And so when EA announces the Battlefield 5 has only sold 6 million copies instead of the 7 million they expected, whatever the numbers were, then that is why they're stock tanks. So, yeah, it's just a combination of the factors. I mean, a large part of this is just that these stocks are all based on predictions and expectations and numbers that aren't actually real. So even when these companies are still generating

millions of dollars in revenue. They still appear to be tanking in the stock market because they didn't have expectations, which it's almost a little silly, a little ridiculous. Yeah, well, that just sounds like the same old story that it's a hits-based business, and also it's a boom-and-bust sort of cycle, and so generally that sounds like the same old story. But when you talk about the effect, and let's dip into this for a second, and then we'll come back to it later. The effect that Fortnite might be having on even the perception of the industry, is it because Fortnite is suggesting that there is a different business model going forward that these companies haven't quite embraced yet or maybe are not equipped to embrace?

No, I don't think so. I think a lot of these companies, I mean, certainly if they haven't looked at free to play before, then they're just ignorant. And I think they all have looked at free to play before because League of Legends was doing free to play successfully on PC many more years, many years before Fortnite ever was. And other games have come and succeeded with the same model. We saw Dota 2 do it pretty well. We've seen CounterStrike succeed. We've seen a lot of games succeed with that free to play, like release the game for free and sell microtransactions against it with that model. Harthstone from Blizzard works really well as free to play. It tended to be more mobile games than console games, but even on console, a lot of games have done it successfully.

We've seen Warframe is a notable example of just a big service game that does well and free to play. Fortnite, I mean, has become a cultural phenomenon and epic games. The creators of Fortnite certainly deserve credit for what they did there, but it's not like they are setting some new paradigm that the video game industry needs to suddenly follow. Everything Fortnite has done has been done before, including the whole concept of a battle royale, which Fortnite essentially took from a game called Player Unknown's Battlegrounds had come out before it. So even though Fortnite is certainly like, it's huge, it's humongous, I don't want to downplay or diminish the success of Fortnite because obviously it's a humongous success. I think any companies that look at that

and say, oh my God, we need to have our own Fortnite are kind of heading in the wrong direction. Well, then, so I'm changing what I was going to do then. So what? What is the lesson that Fortnite is teaching the gaming industry? Like, what is the thing that everyone is trying to rush to replicate? Be in the right place at the right time? I mean, I think that the lesson that it should teach the game industry is that you want to create a game that is a place where people can feel like they want to hang out. And that's the type of, like, game that succeeds is a living game and an online game.

That concept that people have been batting around about, like, Fortnite as like the third place sort of in the Starbucks was always called the third place, not your home, not your work. Yeah. Or like a hybrid sort of social network sort of thing is what you're saying. Yeah. Yeah. Well, especially now. I mean, when I say right place, right time, I mean that in a lot of ways. And I think now for younger generation and for older generation, I mean, for everyone really, social media and especially Facebook has just lost so much luster because of all the contrast.

where you surrounding it and the fact that Facebook appears to be run by just a bunch of f***ads oh sorry if i'm not on to curse that's fine but uh yeah and i think that if you're i mean whether you're younger or older and you don't want to spend as much time on those social media platforms but you want to still want to find a place where you can congregate with your friends and show off your latest cool thing fortnight is a perfect place and i think that people in my generation i'm in my 30s grew up with um sort of our own versions of this Some people took to World Warcraft. Other people, I remember playing a lot of tech space muds back in the day.

That was my third place, so to speak. And Fortnite is just a new evolution of that. But I think that game companies that are just chasing after the dollars that Epic is raking in are just going down the wrong path, and we're going to see that. The video game industry tends to move in cycles. And so I mentioned World of Warcraft. After that came out, there was a whole cycle of every single company trying to make their own massively multiplayer online game to replicate the success of World of Warcraft, and it did not

work out for most of those companies. Then, I believe the next one was Mobas and League of Legends came out, and every single company was trying to replicate that game's success. Did not work out. And now we're starting to see the same exact thing with Battle Royale games, and we're starting to see different companies enter the Battle Royale marketplace. Some have already failed big time. Some have succeeded like Apex Legends, which just came out and has been just a remarkable success. And these things tend to repeat themselves. And I'm sure in another two years we'll be talking about the next big fad that everybody's trying to copy. I think if video game companies want to find success, they need to be looking to be the ones to start the trend rather than chase it.

Why has Apex Legends been such a success? And again, obviously, it's early days. It's not even a month old at this point. But why has that been successful? Yeah, I mean, I think there are a lot of reasons. I think their marketing strategy was absolutely brilliant. They essentially flew out a bunch of streamers to come and play and then paid them. And therefore, these streamers were all playing it, and it was on the front page of Twitch as soon as it launched.

The fact that it was announced and launched on the same day is just, a brilliant move for them because people tend to be naturally skeptical of big publishers like EA releasing free-to-play games. People, for multiple reasons, tend to look at companies like that as trying to nickel and dime customers at every opportunity. So with a free-to-play game that has loop boxes in it, loop boxes are this very controversial mechanic where you can pay money for a randomized piece of equipment or item or something like that in a game. They become super. They become like this buzzword that everybody hates in the midgame industry. So yeah, so they made the very wise move of just launching it, letting people jump right into it and without even having an

extended marketing circle or anything like that. And it worked tremendously well. It also helps that it was made by developers who have made incredibly good games in the past. It's a company called Respond. Before this, they made Titanfall and Titanfall 2, which were both really excellent games, excellent shooter games. And even before that, at their previous company, Infinity War, they were making this studio was founded essentially by the creators of Modern Warfare, Call of Duty, Modern Warfare,

which is one of the most iconic beloved Call of Duty games. So, yeah, so that combination, and obviously it's a really good game, but that combination of things, of factors led to Apex Legends success. All right, shifting gears to streaming gaming, is who are the big players moving into this? Is theoretically everyone in the gaming industry moving into this,

and then I did two segments this week about Google and their supposedly streaming service that also has a hardware component. So who are the players trying to make streaming gaming happen? Yeah, Google is the biggest one right now. I've talked to some developers who are just buzzing and very excited about what Google is doing. this concept, just to zoom out for a second, this concept, there are a few different concepts

when it comes to streaming, a few different hooks in which that streaming can quote unquote happen. One of them is Netflix for gaming, which is this idea that you pay a subscription service and then you can download or stream games as part of that without I mean to buy them. The other version of this is a streaming in which you are buying the games, and so you're still paying regular money for them, but you can stream them from any platforms. And Google, they actually did a beta test a few months ago for their project. They called a project stream, and you could basically download Assassin's Creed Odyssey and play it, or not download it.

You could stream it by playing it on a Google Chrome browser tab, which is incredible. And I tested it out. It works remarkably well as long as you have a good internet connection. So, yeah, I mean, this idea of breaking down those barriers, because right now if you want to play the highest end video games, you need an expensive console. or an expensive PC. And that just is not an option for a lot of people out there, especially people in underdeveloped countries

who might not have the same access to that sort of equipment. So this idea of these companies trying to break down barriers and allow people to play these games even without owning an expensive piece of hardware to do it, I think is really cool and just is absolutely fantastic for video games as a whole. I think Google is going to be one of the biggest players. I think Microsoft has been doing some really interesting,

things in the whole Netflix streaming area. They have a service called Xbox GamePass that is basically closest we have right now to Netflix, even though it doesn't have quite the library you would want from a game service like that, but hopefully it will. And then there are rumors of Verizon jumping in and Amazon, I think, is trying to jump in here too. I'm sure we'll see Sony take their own stab at streaming for their next PlayStation, which a lot of people expect to come out later in 2020. So, yeah, I mean, I think we're going to see a lot of these companies trying to do it.

And TBD, who does the most interesting thing, but we know that we will see Google's platform next month of the Game Developers Conference in San Francisco, where they are coming in full force. I believe the tagline for their big keynote event is something like All Shall Be Revealed or something about revealing everything that they have to offer. and they sure have been spending a lot of money on this initiative. So I'm looking forward to seeing that.

So let me sum up again. So number one, the trend is in the same way that we're no longer buying software and shrink wrap boxes from a store, we're subscribing to Office 365. So essentially, going forward, even in the console paradigm, I will subscribe to get these games and I won't buy them for $60, $70 a pop. whatever it is, right? Yeah, I mean, with some versions of this for sure. Okay, then the other concept being that, and this is part and parcel to a certain extent,

that I can also then game on whatever screen is at hand, which is helped by obviously processors and chips catching up and things. But what about is the technology, how far away, because I always have this thing about, like, will we really get self-driving cars by 2020? Like, how far away is the technology where things like lag and I have to be on the best signal possible? Like, the reality of actually whatever is the screen at hand being able to stream games without having it even downloaded on my device, how close is that technology?

I think it's already here. And I think that the question is how good is your internet, right? The technology is here that if you have a, a good fast internet connection right now, you can do it. We saw that with Project Stream when the beta test happened a few months ago. I mean, Assassin's Creed Odyssey is like one of the best looking games we've ever seen, and it ran tremendously for me in a Google Chrome tab on my MacBook, which like doesn't even have a graphics card to dedicate a graphics card.

So, yeah, the technology is there. The big question is the latency and the lag, as you mentioned, and people's internet connections. And I think one of Google's big pitches, and I think, something we'll hear a lot next month when they do their big keynote thing is that they have data centers all over the place. So if you're close to a Google data center, you can theoretically have more access or closer access to their servers and therefore have a better chance of getting a good connection to what they're offering, even if you don't have the best internet connection. I think it's going to be an issue for people who have limited bandwidth, have

that have internet bandwidth caps and can't necessarily download huge files because I think this will this whole like this whole process will involve downloading and uploading a lot of data. So yeah, it's it's going to be interesting to see. I think that the tech is, it's definitely the thing that is most exciting in video games right now. It's what people are talking about as the future of what video games are going to look like and what future. I think people are more excited about this, about breaking down barriers than about any other sort of technology initiative.

All right, I said if we could squeeze it in, I was going to throw you a curveball out of left field. Yeah, do it. That's a really tortured metaphor. Obviously, we haven't had the missed for VR yet. The game that is so compelling that it almost makes people adopt the technology. because then a Normie like me would have heard of it at least at some point. But just out of curiosity, the state of gaming in VR, like, is it still just a whole collection of like either proofs of concept or gimmicks? Or has there been, is there a game yet for VR where you're like, well, this is the masterpiece of the medium so far?

this is like this is the best VR game yet created well so I think there is but I can't really comment on that because my experience of VR is putting on a headset getting nauseous and then well they just tell us what what people generally consider to be yeah so this game called Astrobot that came out a few months ago from Sony on the PlayStation VR is considered to be really cool and a lot of people have been raving about that people who are into VR there have been other cool things too Tetris effect is a Tetris game that is kind of uh this is kind of uh this this sensory effect thing that is just like stepping into a trans state as you're playing Tetris. And that's really cool in VR, according to people who have played it. But yeah, I mean, just in general, I've never been high on VR. I've never been bullish on VR as a tech because it's still so intrusive. And just putting on a headset still takes over your life in a way that you just don't want it to when you're playing video games, especially if you have a family and you just can't be like totally escaping from the world. in that way.

And yeah, I mean, sort of in the same way that I'm very bullish for streaming. I'm very bearish for VR, and I don't really see the technology being there at all. I think we're a few years from VR ever hitting a mass market and ever being really that appealing to a large number of gamers in the same way that console gaming and PC gaming and phone gaming is today. So, yeah, I mean, we are seeing some really cool stuff on there, according to people who have played it, but I don't know that people are just adopting it in droves, and I don't know that they will be anytime soon, unfortunately.