Nintendo Knew How

Shahid Kamal Ahmad on the Remaster Podcast, looking back on Reggie Fils-Aimé‘s legacy:

This is a real problem with video games, right. You go into video games as a new person who hasn’t played video games. You play a modern AAA game, and first of all, you have tutorials that are extremely patronizing for the really experienced player. But still bewildering for new players. How do you get those players in? Nintendo knew how.

Nintendo knew that they had to make the controls more accessible, and Reggie knew [those controls] were coming with the Wii. He knew that would be suitable for people who were intimidated by the controller. Personally, I thought that was an absolute genius move.

I’ve had issues with controllers for a long time. Not personally, but in terms of accessibility. There’s been this steady increase in the complexity of a controller. It hasn’t become easier to use; it’s become more complicated to use. Yes, it’s got more features — now you have touchpads; now you have analog buttons; now you have analog sticks; now you have two or three or four more buttons on the thing; now you have pro controllers and elite controllers, £120 controllers. What Nintendo recognized was, “oh, we can do something that does away with all of that and introduce an entirely different type of technology that ‘hey! It’s actually not that expensive to manufacture.’” It was utter genius.

Keying in on the phrase, “I’ve had issues with controllers for a long time”: You and me both, Shahid. You and me both.

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‘But the answer is simpler when it comes to the real money maker for Microsoft’

Chris Plante, Polygon:

But the answer is simpler when it comes to the real money maker for Microsoft: Xbox as a streaming platform available on every app store. Microsoft could bring its streaming service to any smart TV and streaming device without all this backroom dealmaking necessary for Switch, and reach a considerably bigger audience.

I wouldn’t be surprised if we see all of the above. Going off the others’ reporting, it seems Microsoft is certainly trying to bring Xbox Game Pass to Switch, but the real game changer will be if — like Netflix, Hulu, and Amazon — Xbox becomes an app pre-installed on your next TV.

Leave it to Plante to identify the obvious. I’m over here kicking myself that I didn’t think of an Xbox app pre-installed on TV in ‘Activision, Microsoft, and Platforms’. Especially after CES and the growing number of pre-installed services on smart TVs.

If we do see a pre-installed Xbox app, has Microsoft already positioned themselves as the dominant controller manufacturer? In addition to their standard wireless controller, they offer the Elite and classic “Duke” designs as well as the Adaptive Controller, a huge service to those in need of accessibility features.

I personally can not stand the Xbox controller and much prefer Nintendo’s Pro Controller or the PS4 DualShock 4. But if neither of those two options open themselves to an Xbox app — the former due to hardware limitations / lack of foresight, the latter due to some bizarre proprietary lock-in strategy — as an Xbox owner, Microsoft is already poised to be my go-to controller. And with an already broad selection of controllers tailored for the Xbox experience, it makes them the clear winner.

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Rumor: Microsoft Bringing Game Pass And Published Titles To Switch

Imran Kahn, Game Informer:

According to a report from outlet Direct Feed Games, an outlet that has a strong track record for rumors especially centering around Nintendo, Microsoft and Nintendo are about to get together in a big way in the near future. Not only will some Microsoft games find their way to the Switch, but it looks like the entire Game Pass library might arrive via the magic of streaming. 

Oh?

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‘A thin blanket against the cold reality’

Michael Futter, Polygon:

The sad truth is that the die was cast at Activision Blizzard months, if not years, before these layoffs were first hinted. What makes this so exceptionally painful is that there is an understandable mental link between layoffs and poor financial performance. It’s nigh impossible to rationalize or justify 800 people being shown the door as a company reports record sales.

And yet, here we are. Poor planning, a failure to adapt to current market conditions and consumer desires, and too much investment in trends (like toys to life games) has left Activision Blizzard in a place where it needs to make drastic cuts. That’s a thin blanket against the cold reality that executive pay is broken and now hundreds of people are out of work.

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Activision Blizzard cuts hundreds of jobs despite ‘record revenue’ year

Allegra Frank, reporting for Polygon:

Before announcing the layoffs, Activision Blizzard noted that it posted record revenues for the 2018 fiscal year. According to its fourth-quarter earnings report, the company made $7.26B in physical and digital sales, compared to $7.16B in 2017. But CEO Bobby Kotick explained that the numbers failed to meet expectations.

“While our financial results for 2018 were the best in our history, we didn’t realize our full potential,” Kotick said in the report. During the Q&A portion of the investor call, he described the layoffs as a “top-five career-difficult moment for me personally.”

Despite the self-proclaimed underwhelming revenues and the layoffs, Activision Blizzard said that it plans to expand its development teams on key, internally owned games (like Call of Duty, Candy Crush, and Overwatch) by 20 percent. Funding this will come through “de-prioritizing initiatives that are not meeting expectations and reducing certain non-development and administrative-related costs across the business,” according to its fourth-quarter fiscal earnings release. Other non-core positions will be eliminated to rededicate resources toward beefing up its development slate, the team said on the call.

This news is awful. No way around it. Record revenue and cutting 800 jobs. Sure, increasing margins, non-core development, loss of Bungie, blah blah. But 800 jobs?! Banking on a single IP (Destiny) and not anticipating what CEO Bobby Kotick called a “top-five career-difficult moment for me personally” is insane. And how is the loss of 800 jobs not number one?

Per Kotaku reporter Jason Schreier, Kotick took home 28+ million in 2017. I get the reasoning behind highly paid executives; I wouldn’t want their jobs. But to say the loss of 800 jobs is “top-five” is an insult. It should be number one, with a bullet.

I feel for the employees. I feel for fans. I don’t see a great outlook for core Blizzard properties outside of World of Warcraft — a recurring revenue behemoth. And that’s sad. I would have loved to see the A/B 800 reallocated to other Blizzard franchises. If the focus is entirely on a Call of Duty, Overwatch, and Candy Crush, I fear the end of Blizzard as we know it.

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Activision-Blizzard Employees Brace For Massive Layoffs

Jason Schreier, reporting for Kotaku:

This news comes after a tumultuous year for the publisher, which consists of two entities, Activision and Blizzard. Both Activision and Blizzard operate autonomously but are governed by the same C-suite of executives, including CEO Bobby Kotick (whose salary in 2017 was roughly $28.6 million). 

At Blizzard, 2018 was a year full of cost-cutting, under chief operating officer Armin Zerza, whose mandate has been to reduce spending and produce more games. (Other than expansions and remasters, Blizzard has not released a new game since Overwatch in May 2016.) Employees all across Blizzard have been told to cut their budgets and spend less money, and there’s general concern about Activision’s creeping influence as the company looks to make more financially-driven decisions. In October, Blizzard CEO Mike Morhaime stepped down, to be replaced by Blizzard veteran J. Allen Brack—not as CEO, but, notably, as president. In December, Blizzard abruptly killed the Heroes of the Storm esports program and cut down the development team for that game, its least successful.

People who work or have worked at Blizzard told me that they expect Tuesday’s layoffs to be primarily in non-game-development departments, such as publishing, marketing, and sales. Some of those jobs and roles may then fall to Activision proper, further reducing Blizzard’s autonomy.

My recent piece Activision, Microsoft, and Platforms amounted to what I’d consider a nothing-burger. I’d considered the question “what now for Activision?” after they ended their partnership with Bungie, and sought an answer. After laying everything out, short of spelling doom, I didn’t really net out with much other than an allusion of the company leveraging Blizzard’s IP to build a paid platform:

This is certainly a “let’s spend Activision Blizzard’s money” post, but short of spelling doom for Activision Blizzard with the rise of Fortnite, departure of Bungie, and Microsoft’s “Netflix of gaming”, Activision Blizzard needs a model that will continue to drive revenue in a PC world without the friction of a hardware platform. If the battle is lost, Activision Blizzard titles join the ranks of third-party titles vying for the top-spot on other launchers and platforms.

This news of layoffs is what I was afraid of, and I think it will extend passed Activision employees.

At this rate, I see the brand “Activision” as an albatross around Blizzard’s neck. Sadly, at the expense of the employees, they should shed the name Activision, divert resources to Blizzard, and focus on Blizzard’s colorful core and new IP.

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Microsoft to Bring Xbox Live to the Switch

Jez Corden, reporting for Windows Central:

At GDC 2019, Microsoft is set to debut a new cross-platform development platform with the goal of bringing Xbox Live support to games on Android, iOS, Nintendo Switch, in addition to PC and Xbox consoles.

Microsoft already has a few games with Xbox Live support across mobile devices, most notably via Minecraft, which requires an Xbox Live login on Android, iOS, and Nintendo Switch. Until now, Microsoft reserved Xbox Live support on those platforms for its own games, but now now, Microsoft is aiming to bring Xbox Live cross-platform play to even more titles. Developers will be able to bake cross-platform Xbox Live achievements, social systems, and multiplayer, into games built for mobile devices and Nintendo Switch, as part of its division-wide effort to grow Xbox Live’s userbase.

Oh?

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Real World Playbook

Jean Case, early AOL exec, on Recode Decode hosted by Kara Swisher:

I see remarkable female founders. I’ve been mentoring one for a long time. She has a startup in New York called Real World Playbook. She says it’s the Warby Parker for adulthood.

She realizes she’s a privileged person. She went to Princeton. She got a JD MBA from Georgetown. And when she got out of school, she didn’t really know what to do about her taxes. She didn’t know how to pick a healthcare plan. No one had ever really taught her that.

So, she’s got this really great platform that universities all of the United States are embracing and putting their kids through — to teach them how to go into adulthood. I mean, who would thing we’d have to disrupt that industry?

Good idea, but it’s a shame it’s needed. It’s silly that we don’t provide these tools in high school. Add in technology basics (backups, privacy, etc.) and it sounds a lot like Home Economics 2.0.

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Microsoft’s Super Bowl Ad

I love seeing Microsoft spend the big bucks on such a meaningful product.

OK. Back to cutting onions.

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Nintendo FY18 Q3 Earnings

A blockbuster holiday. Lowered expectations. Three pillars of business. Nintendo’s recent earnings report was interesting if nothing else.

Brian Crecente at Variety gave a tight business side recap:

Despite a strong holiday, Nintendo on Thursday lowered how many Nintendo Switch it believes it can sell for the fiscal year, dropping the goal by three million, down to a new target of 17 million, the company announced in its latest earnings report.

The company also increased its Nintendo Switch game sales forecast by 10 million, saying it will sell 110 million copies of games for the system in the fiscal year, which ends in March. Finally, the company nearly halved its estimates for the sales of the portable 3DS systems, down from 4 million to 2.6 million.

The following are pulled from the presentation:

On Switch sales:

And cumulative global sell-through, including sales outside of the major markets you saw on the previous slides, has surpassed 30 million units as of the end of January, and the Nintendo Switch business is on a trajectory for further growth. Also, all of the new titles released in succession during the holiday season also showed exceptional sales.

Comparison to PS4 and Xbox One sell-through looks like this:

console-sales-19-01-31

Comparison to the Nintendo 3DS looks like this:

switch-vs-3ds-19-01-31

On games:

Super Smash Bros. Ultimate has achieved a sell-through of over 10 million units. The title has continued to show explosive growth after its release, with the fastest start for any title on any Nintendo home console ever.

Right in-line with NPD’s numbers.

Continued:

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This chart shows the combined sell-through in Japan, the US, and Europe since April of 2018 for the four titles you see here. All four were released in the year before last, 2017. Sell-through of each title continued at a reasonable pace, then spiked upward toward the end of the year. As the spread of Nintendo Switch progresses, the number of new consumers is increasing. And to consumers who just purchased Nintendo Switch hardware, every existing title seems new.

One of Nintendo’s strengths is how easy it is for consumers with past experience playing Nintendo games to become interested in new Nintendo-brand titles. And if the steady sales of our evergreen titles can reliably support our overall software sales, we believe that will help fill any gaps between releases of new titles.

Mario Kart 8 Deluxe is the top selling title for the Nintendo Switch at 15.02 million units. Super Mario Odyssey is second at 13.76 million units. I still wouldn’t call Mario Kart 8 Deluxe a system seller, but certainly a must-have. Electrodome Boogaloo, indeed.

On third-party titles:

Titles from other software publishers are also seeing a steady rise alongside Nintendo Switch. Nintendo’s revenue related to software from other software publishers was more than twofold during April through December of 2018.

The idea that Microsoft would put games on Switch doesn’t seem so crazy.

On strategy:

Based on our basic strategy, we’ve organized the company’s initiatives into three pillars of business. The three pillars are the dedicated video game platform business, the mobile business, and the IP expansion business.

Each pillar has a different purpose and a different scale. They are each considered critical to the company, and we intend to grow them according to their unique traits and potential for growth. Let me explain each of these businesses in order.

Executives have made mention of IP expansion, but I don’t think I’ve ever seen it as core a pillar spelled out next to “video games”.

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