Protocol Entertainment would like to congratulate you. Your guide to the media and gaming industries. This Tuesday, we’re discussing how vital the mobile market has become to traditional gaming companies like Microsoft, Sony, and Take-Two Interactive. Phil Spencer, Xbox’s chief executive for Call of Duty, also made another commitment to the game and Nibel, the gaming Twitter personality, abruptly left.
Survival requires mobile phones
Last week, Xbox chief Phil Spencer spoke at the WSJ Tech Live conference. This proclamation has become a standard belief among many of the most prominent names in the gaming industry over the past couple years.
“There’s no way that you succeed as a gaming company without access to mobile players,” Spencer said in defending the company’s proposed acquisition of Activision Blizzard. Activision Blizzard earned more revenue through mobile gaming than from console and PC gaming in its last quarter.
Now, as the biggest names in gaming seek new revenue streams and consumers, they’re quickly realizing the largest and most lucrative untapped market is the smartphone.
The console gaming market has reached a plateau. While this isn’t a new phenomenon, it’s rarely said outright. The total combined install base of Sony, Nintendo and Microsoft is approximately 330 millions.
- Yet, to Spencer’s point, many of those console owners own more than one device, while many new buyers of the PS5 and Xbox Series consoles are not fresh customers but returning ones replacing old hardware.
- Spencer said it was “imperative” Microsoft improve its position in the mobile gaming market to better compete with rivals and expand its audience.
- “This opportunity is really about mobile for us,” Spencer said of the Activision deal. “When you think about 3 billion people playing video games, there’s only about 200 million households on console.”
- Mobile gaming, on the other hand, accounts for roughly $100 billion — more than half of all spending on gaming globally, according to market researcher Newzoo.
- Newzoo estimates that mobile will continue to grow at a faster rate than other areas of the business, even though some parts have begun to contract in the wake of the gaming boom.
Microsoft is not the only one. Electronic Arts, Take-Two Interactive and Sony have all made ambitious plans for mobile in the last two years. These plans were often achieved through strategic acquisitions or investments in mobile-first business models.
- “Mobile phones are becoming more powerful and mobile games are becoming more sophisticated,” said Dennis Yeh, the gaming insights lead at mobile analytics firm Sensor Tower.
- Yeh cited two other major developments that have made mobile now impossible to ignore: “Cross-platform or multiplatform play is becoming more viable and desirable,” while at the same time “free-to-play monetization and live [operations] are largely where the industry is moving, and mobile gaming was the original pioneer of those.”
- “In developed markets like the U.S. and Western Europe, overall mobile spend is growing, and consumers are increasingly willing to spend on mobile games,” Yeh said. “In developing markets like Latin America and Southeast Asia, mobile represents access to a wide audience, especially consumers who don’t have the ability to buy a console or PC or don’t have access to stable bandwidth.”
Microsoft’s competition has already made inroads on mobile. Electronic Arts spent nearly $4 billion last year to acquire mobile studios. Take-Two spent nearly $13 billion to acquire Zynga, FarmVille developer.
- “We’re excited that there are 3.5 billion players in our addressable market. It brings accessibility to our brand,” said EA mobile chief Jeff Karp in an interview with Protocol earlier this year.
- “It’s really an opportunity to expand our overall ecosystem for the brand, and it creates practicable recurring revenues,” Karp added. “It also brings the opportunity to bring our games across platforms.”
- “We were already a leader in the console and PC space, and we believe we had already the best collection of intellectual property in the space,” Take-Two CEO Strauss Zelnick told The Wrap this month. “However, mobile is the fastest-growing part of the interactive entertainment business.”
- August was the month that Sony purchased its first mobile studio, Savage Game Studios. It also created a new PlayStation Studios Mobile Division.
- PlayStation Studios chief Hermen Hulst described the move as “additive,” saying it will help Sony provide “more ways for more people to engage with our content.” The goal, Hulst added, will be to “reach new audiences unfamiliar with PlayStation and our games.”
- Jim Ryan, PlayStation’s head of marketing and communications, also mentioned that the company’s growth strategy was centered on mobile. This includes a plan to release 20% more titles on smartphones by 2025.
- “By expanding to PC and mobile, and it must be said … also to live services, we have the opportunity to move from a situation of being present in a very narrow segment of the overall gaming software market to being present pretty much everywhere,” Ryan said back in May.
Mobile isn’t just a money-printing machine. Companies need to have the ability to update quickly and move at a rapid pace. They also need to be able and willingly work with teams and experts.
However, mobile has been a crucial part of survival due to the many opportunities it offers and the need to diversify the ways games make money in an ever-changing sector.
“If you take a long-term bet, which we’re doing, that we will be able to get access to players on the largest platforms that people play on … we want to be in a position with content and players and storefront capability to take advantage of it. Gaming is the largest form of monetization on mobile, and we’re a gaming company.”
— Nick Statt
Continue reading: For gaming’s old guard, mobile is necessary for survival
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“We’re not taking Call of Duty from PlayStation. I know that’s not exactly what you asked, but just to punch that one in the nose — that’s not our intent. Our intent is not to do that … as long as there’s a PlayStation out there to ship to, our intent is that we continue to ship Call of Duty on PlayStation. Similar to what we’ve done with Minecraft since we’ve owned that.” — Xbox chief Phil Spencer reiterates the company’s position on Call of Duty in an interview on the Same Brain podcast as Microsoft’s regulatory feud with Sony in the U.K. rages on.
“There is that misperception or the thought, maybe, that certain IP would be off limits … We don’t view it that way at all. Dlala is a great example, because there’s no more precious IP at this company than Mickey. That’s a great illustration that we really aren’t married to a certain size of companies to warrant certain IP. We think that the right creator is worthy regardless of the size of their studio.” — Sean Shoptaw, senior vice president of global games at Walt Disney Company, talked to Gamesindustry.biz about its growing ambitions to license Disney characters and stories to indie game developers.
In other news
Three new games are being developed by Electronic Arts and Marvel. The FIFA publisher will create three new Marvel titles, beginning with the Iron Man game by Motive Studio.
Marvel Snap explodes in the mobile world. Marvel’s new digital card game, published by ByteDance-owned Nuverse, earned more than $2 million in its first week, according to AppMagic data.
Meta sold 470,000 Quest headsets during Q3. Based on Meta’s Q3 earnings report, AR Insider did some napkin math to arrive at likely sales numbers for the VR headset.
Netflix purchases its sixth video game studio. Spry Fox, a mobile company known for creating games such as Triple Town and Alphabear, was acquired by the company.
Target sets a very important date with Sony Street. The retailer began selling Santa Monica Studio’s God of War: Ragnarök two weeks early, leading to spoilers pouring out on social media. Cory Barlog, Studio’s creative director, rebuked Target with a series of annoyed tweets.
Comcast lost 561,000 TV viewers in Q3. That’s up from 408,000 cord cutters during the same quarter last year.
Ralph Lauren joins our metaverse The Fortnite collaboration will be launched tomorrow by the clothing brand with a completely new logo, virtual clothes and items in-game, and real-life merchandise drops.
China’s gaming market will decline this year. According to Niko Partners the market’s first contraction in 20 years will be 2.5% for the mobile Chinese gaming sector.
PlayStation London Studio has a new chapter. The U.K. game studio known for projects using cameras, microphones, and VR is shifting focus to a PS5 title that will be its “most ambitious game to date,” the studio told GamesIndustry.biz.
Gaming Twitter loses one its most important names
The Twitter account @Nibellion went inactive Monday. The account owner, a prominent but anonymous video game news aggregator known as Nibel, stated that they were done with the platform.
Nibel mentioned a failure in monetization the account’s nearly half a million followers and a lack of faith in Twitter leadership under new owner Elon Musk.
- “I have miscalculated the value of my Twitter activity and realize that it is nothing worth supporting by itself for the vast majority of people,” Nibel wrote on their Patreon page, which went live in September asking for $1 or $3 pledges.
- “It is not me who is popular, but it is that work that is useful. It is not valuable by itself, but a comfortable timesaver, and I get that now,” they added. “I was unable to create a reliable revenue stream, but I’m still happy I gave it a shot.”
- Nibel had close to 500,000 followers. But Twitter has a history failing to court and retain creators, helping them monetize what they do on the platform. (See the death of Vine.
Nibel also said the tumultuous first days of Musk’s tenure As a Twitter owner, you contributed to their decision.
- “I do not trust the platform. Musk and his seeming incomprehensible immaturity are reasons I don’t trust them. I do not think Twitter will fall apart instantly but that it could die a slow death,” they wrote. “Why waste more time?”
- This was bad news for gaming enthusiasts. Nibel was a consistent leader among growing numbers of gamers on Twitter, being one of the most reliable and fastest gaming aggregators.
- Even though they didn’t create journalism themselves, Nibel was very often supporting original sources and celebrating other writers.
- Numerous industry figures have posted messages of support for Nibel since then and grieved the loss in their voices within the community.
— Nick Statt
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Thoughts, questions, tips? Send them to [email protected] Enjoy your day, and we will see you Thursday.