I love seeing Microsoft spend the big bucks on such a meaningful product.
OK. Back to cutting onions.
A blockbuster holiday. Lowered expectations. Three pillars of business. Nintendo’s recent earnings report was interesting if nothing else.
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:
Comparison to the Nintendo 3DS looks like this:
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.
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.
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”.
This post comes heavily inspired from a recent GamesIndustry.biz Podcast episode, “What now for Activision”:
Whether part of the ten-year agreement between the two firms or due to a change in strategy, there’s no denying that the break-up leaves a Destiny-shaped hole in Activision’s limited portfolio (NB: We mean Activision specifically, which is left with Call of Duty and the Crash/Spyro remakes — the wider company of Activision Blizzard is doing just fine, as is Bungie).
Matt, Chris and James ponder whether Activision will seek its next billion-dollar franchise from another third-party studio like Bungie or perhaps turn to the many developers it already owns (most of which are working on Call of Duty) to come up with fresh ideas.
To get you up to speed, Activision Blizzard recently announced the departure of a partnership with Bungie and Destiny:
Today, we’re announcing plans for Bungie to assume full publishing rights and responsibilities for the Destiny franchise. Going forward, Bungie will own and develop the franchise, and Activision will increase its focus on owned IP and other projects. Activision and Bungie are committed to a seamless transition for the Destiny franchise and will continue to work closely together during the transition on behalf of the community of Destiny players around the world.
We have enjoyed a successful eight-year run and would like to thank Activision for their partnership on Destiny. Looking ahead, we’re excited to announce plans for Activision to transfer publishing rights for Destiny to Bungie. With our remarkable Destiny community, we are ready to publish on our own, while Activision will increase their focus on owned IP projects.
Activision Blizzard accounts for the following companies (Q3 MAUs for the games companies provided for context):
In 2018, that list looks like this:
There are two notable titles missing from that list, both under the Activision banner.
Now, Activision Blizzard can (and probably should) be looked at as a whole. But as a player of many Activision titles of yore — MechWarrior, Tony Hawk, Guitar Hero (and while not yore, the Teenage Mutant Ninja Turtles franchise, mi amor) to name a few — it’s difficult to separate the name from the reality. It doesn’t help that aside from Nintendo, Blizzard might have been the only recognizable gaming name to me, quality or otherwise, growing up. It’s hard to look past a name.
With only Call of Duty, is Activision still a name? If so, if not, what’s next?
Launched in 2003, Steam boasts 150 million active users and 27,000 games. The sheer number of games is in large part thanks to the Steam Greenlight and Direct developer programs. Steam has traditionally been known as a bastion for indie developers. However, the recent drastic increase in velocity of titles launching on Steam is making it harder and harder for indies to break through the noise. But it remains that Steam is the standard for PC/Mac gaming.
In 2013, Activision Blizzard launched the Battle.Net Launcher — a one-stop-shop to launching Blizzard IP Warcraft, Diablo, StarCraft, and now Hearthstone, Overwatch, and Heroes of the Storm. In 2017, this list expanded to Bungie’s Destiny 2 under the Activision banner. In 2018, Activision’s Call of Duty: Black Ops 4 was added to the launcher. Upon the announcement that Destiny 2 would be arriving on the launcher, Blizzard released a statement that there were no plans to expand to other third-party titles:
Our focus in terms of supporting non-Blizzard games is solely around Destiny 2. Aside from potentially evaluating needs or opportunities for future Activision games, we don’t have any short- or long-term plans to support third-party games with Battle.net. It’s important to us to maintain our quality standards for any experience or service we’re putting in front of our players, which represents a big investment of time and effort on our part, so this is not something we’re jumping into lightly.
With only two launchers to choose from — one with Blizzard exclusives two behemoth franchises Destiny and Call of Duty, one with everything else — it’d make sense to keep the Battle.Net Launcher tightly curated to first-party IP.
2018: Enter the Epic Games Store. Dissatisfied with the 30% cut Steam was taking from sales, Epic decided to compete with Steam by releasing their own store, only taking a 22% cut of DRM-free game sales. While the Epic Games Store is slim pickings now, Epic is home to Fortnite, arguably the biggest video game ever with 200 million accounts. As of this post, Fortnite can still be downloaded independently of the Epic Games Store launcher on Mac/PC, but I imagine in due time the launcher will be required. To add, the Epic Games Store is signing exclusive titles such as Ubisoft’s Tom Clancy’s The Division 2 and Early Access to Supergiant‘s Hades.
If I’m reading the tealeaves correctly, my hunch is that the Epic Games Store is attempting to marry the two models of Steam and Battle.net — loads of third-party content with an attractive revenue model, plus first- and third-party exclusives.
More often than not, it seems like I can play any third-party indie title on the platform of my choosing. Let’s take Celeste as an example. I have the option of playing Celeste on my Mac, PS4, Xbox One, and Switch. I chose the Switch as the benefit of portability outweighs online community or big-screen gaming. The Switch has also become my platform of choice as I’m a big fan of Nintendo’s IP. Having all of the content I care about on a single, portable console is a huge draw. (Cue “put everything on Switch” chant.) The friction of bouncing between consoles or being couch-locked is removed.
But the Switch doesn’t have everything, nor can it. It is underpowered to run a healthy majority of AAA games released on PS4, Xbox One, and — the furthest in the power spectrum — the PC. Where HD Twins PS4 and Xbox One compete on the basis of exclusives and online communities/features, the PC competes on the basis of quantity and power; quantity curated by a slew of game launchers. I’d wager to bet most PC/Mac gamers have installed Steam — the heavyweight PC/Mac games store — Battle.Net Launcher (Blizzard) — the exclusive franchise launcher heavyweight — and, as of December 2018, the Epic Games Store — the home of the heavyweight game Fortnite. Regardless, short of a download and account setup, there is no friction involved open multiple game launchers for different titles on the same hardware platform.
If friction doesn’t exist, what’s the benefit to the user? None. So, what’s the point of a launcher? Other than a marketplace for multiple titles or first-party content, it’s a marketing opportunity. Third-party games have an opportunity to be showcased and sold alongside large exclusives — exclusives which attract a core audience to the launcher — which in turn nets revenue for both the platform and the third-party. Without a subscription service à la Netflix and Hulu, it’s effectively the same à la carte model used by the Nintendo eShop, Playstation Store, and Xbox One Game Store.
However, in the case of Battle.net, the launcher is now being used as a vehicle to attract Blizzard IP players to Activision titles. At the time of this post, the first featured image on Blizzard.com is a trial offer for Call of Duty: Black Ops. This offer is also available through the Battle.net launcher, which on a PC can launch both Call of Duty: Black Ops and Destiny 2.
Does this signaling Activision Blizzard’s next move?
I’m going to recall my previous post “Sometimes Failure Leads to Opportunity” with a little help from Ben Thompson:
On Microsoft’s big acquisitions announcement of studios Ninja Theory (DmC: Devil May Cry, Hellblade: Senua’s Sacrifice), Playground Games (Forza Horizon), Undead Labs (State of Decay), and Compulsion Games (We Happy Few):
The Xbox One originally lagged behind the PS4 this generation due to its misguided focus on the living room (including charging $100 more at launch because of the now-discontinued Kinect that was at the center of that effort), but the bigger problem has been a lack of exclusive titles relative to the PS4. One way to counter that is to simply produce them yourself, and these purchases augment Microsoft’s ability to do just that.
This gets at purchasing many smaller studios to begin bolstering IP.
Meanwhile, Microsoft continues taking strides away from the traditional console wars.
Truth is, as Team Xbox has been signaling for quite some time now, and as we’ve gathered from our own conversations with both people in and outside of the company, Microsoft is no longer interested in competing directly with Sony. That’s a battle it lost as soon as Xbox executives started outlining its original, odd plans for Xbox One in 2013. The PS4 has outperformed the Xbox One so resoundingly, Microsoft stopped providing hardware sales figures.
Instead of licking its wounds and trying to fight Sony yet again next generation, the Xbox division under Phil Spencer has taken a drastically different approach. What Microsoft wants most today is studios that will help boost its impressive Game Pass subscription service, its upcoming streaming platform, and its continued stabs at PC gaming. Developing big Xbox exclusives is no longer a priority for Microsoft, and in fact, the company decided in 2016 that it would release future games on both Xbox and PC. Soon enough, Game Pass will also be available on PC, and it wouldn’t be shocking to see Microsoft embrace Steam—or overhaul the Windows store—as it tries to reach the hundreds of millions of people who play video games on computers.
Microsoft embracing Steam would have been interesting as it may open doors to the Mac audience as well, but the latest signal from Microsoft paints a different picture.
We are in, quite frankly, the early days in all of this, but good momentum and we do have ambitions outside of this which I don’t think we covered particularly today with you all. Some things that I’m really invested in is gaming, and the simple idea there is we have as much of a shot to build a subscription business as anybody else. So we describe it as shorthand, “Netflix for games”, we have a structural position in that we have both a console business as well as a PC business which happens to be in fact bigger than the console business when it comes to gaming and the idea is to aggregate those sockets with a subscription service, we won’t be the only ones, there will be competition just like with other content, there may be a few subscriptions that will be successful, so we are going to go after it. The good news is, we have a huge back catalog, which is we have our own games, we bring not only users, we bring already a social network in Xbox Live, we bring content, and we’re going to go after it. We’re going to go after it with current sockets, and of course streaming is another element to it, because then can you plug in an Xbox controller into even an Android phone and play a Triple A game? We know that’s feasible, now the question is when does the cost curve on it going to be viable. So those are at a high level what we are trying to get done.
If we put this together, not only does Microsoft have a wealth of great back-catalog, they are investing heavily in smaller studios to continue the growth of first-party titles. If they do pull off the “Netflix for games” — like the Netflix model — the back-catalog and new first-party titles should come along with a rich collection of third-party games. I’ll be curious to see if Microsoft would/could bring this “Netflix for games” service to the Switch.
To take a step back, here’s the historical and (potentially) future lay of the land; color indicating first-party, gray indicating third-party, solid border indicating some sort of paywall, dotted border indicating free entry:
Putting aside if it needs to do anything differently, the question of whether or not Activision should do anything differently is nagging at me. If looked at on the whole, even with the departure of Destiny 2, Activision Blizzard accounts for monster franchises Call of Duty, Candy Crush, and all of Blizzard’s franchises. But I’d wager to bet that’s not enough. To me, that looks like a lot of eggs in only a couple of baskets. If I’m in Activision’s shoes, I‘m beginning to ask myself if I should get the jump on a subscription-based service in the Battle.Net Launcher.
If Activision Blizzard were to open a third-party storefront in the Battle.Net Launcher, indie (and potentially AAA) developers would have an opportunity to see their content alongside Blizzard IP. With an attractive revenue model, as much as I’d hate to see Blizzard’s catalog muddied with third-parties and King, Battle.net becomes an attractive service. To keep the water a little less murky, a tightly curated games store would help. To find the middle-ground between Blizzard IP and random third-parties, the utilization of Activision’s existing nine studios and/or the purchase of several indie studios a la Microsoft would bridge the gap. Battle.net would become a launcher for Blizzard’s first-class titles, Activision owned subsidiary titles, and collection of top-tier indies.
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.
The game has been receiving luke warm reviews, but the aesthetic and score are something else entirely. In fact, the Below announcement trailer that debuted at E3 2013 propelled me to (illogically) purchase an Xbox One. The game wouldn’t actually be released until 2018. I still have yet to purchase it.
In any case, these bits from the aforementioned interviews stuck out to me:
A few years ago, he happened upon a series of YouTube tutorials about a studio technique using a four-track cassette recorder. The idea was to record a single, sustained note — hence the EHX Superego — and stack it on top of several similar, harmonic pitches to form a chord.
“You record that drone for one whole side of the tape,” Guthrie says, “so it’s like a 30-minute drone. Then I did that on the other three tracks, so I had four different chords made up of drones. And you basically run all that through a bunch of delay and reverb. You press play on the tape, and then you can essentially play the faders, and just swell the volume up and down really slowly and cycle through different chords. That’s when we hit a mood that was really dark and pretty, and sort of lonely. I managed to get a lot of mileage out of that.”
I noticed that when you’re crafting items in the game, there’s this tonal/harmony thing that happens there. Did you have a hand in that?
Yeah, I don’t know where the idea really came from, but that was super intentional. I made noises that would sort of stack on top of each other and create a chord. I worked with Kris on that. But yeah, we’re always looking for things like that where you’re making music with the game. It wasn’t so subtle. It’s a little happy succession of notes that sort of lead up to a moment when you craft.
This reminded me of a version of Silent Night I’d recorded years ago. I looped single, droning notes performed with an Ebow into a Line 6 DL4 to create chords. These were then recorded into GarageBand and used as samples:
If you’d like to hear more Death Starr, why not check out my cover of The Talk Show with John Gruber’s theme song “Pickin’ Booger’s with John”.
Moments ago, WSJ broke news that WSJ breaking Nintendo news.
Earlier this evening, after seeing reviews for Super Mario Party emerge, it dawned on me the appropriateness of the “super” brand in an era of mid-cycle console refreshes. The Super Nintendo Entertainment System was a next-gen console at the time, but “Super” now feels like a supreme version of an existing console.
My crack-pot hunch is that this new Switch will be named the “Super Switch” (as opposed to “Switch XL”) and will feature a larger display (smaller bezel), richer speakers, better kickstand placement, and Bluetooth headphone support at a minimum. Just a hunch.