$GOOGL: Thread on the future of gaming | Jan 2020


1) The idea that Fortnite is trying to build a metaverse is sexy and correct. Minecraft & Roblox are the other credible threats. I do worry that expectations getting ahead of reality — many problems yet to solve 

2) Roblox, as the only independent of the three most promising potential metaverses, is fascinating. It will explode if its ecosystem can mature along with its audience and Roblox builds the infrastructure to allow creators to make deeper content. 

3) Roblox shouldn’t stay independent for long — if Google is serious about gaming, this is the #1 asset they should be pursuing. Roblox makes a lot of sense for Stadia and it has potential to be a dominant aggregator for gaming content a la youtube given its existing biz model. 

4) No metaverse play today is built on core power progression. Power is viewed as audience limiting. I think this is wrong, and we’ll see a metaverse with a multi-year power progression curve discover a huge audience. Maybe a new game within the Fortnite universe. 

5) Fortnite’s metaverse ambitions today rely on its own content, but can be hard to scale as a walled garden. I would love to see them open up the universe to outside creators/companies in order to become a platform, and there are some hints they will do so this year 

6) I am quite bullish on mobile gaming — it scales user attention like almost no other form of media. Top games that consume 1-2 hours per day per user, with front end of user curve at 2-3 hours+ 

7) Given ability to scale daily play time, monetization is still very reasonable. By my math, even live ops intensive midcore mobile games only monetize at ~$.50-$.80 / hr. This can go higher for all genres. Payer percentages are growing. 

8) We might be finally coming to the end of the Clash Royale clones. Publishers took forever to realize that the audience for this genre is not that big, self-cannibalizes, and these games benefit from massive network effects which make entrance very difficult. 

9) As an aside, this lesson is hard-learned — I suspect we’ll continue to see publishers make the same mistake in battle royale and auto-battlers in console/AAA this year. 

10) A multi-year theme has been the supposed audience decline for AAA single player games. True or not, the audience is definitely on mobile. The big secret is the most successful mobile F2P competitive RPGs are effectively single player core loops with a heavy social layer. 

11) Mobile F2P economics based on gating play via energy or lives only works for legacy games. Newer games unpinch access, rely on positive reinforcement to control session length. 

12) Popular gaming culture would tell you that that the audience for skill-based games is bigger than the audience for progression-based games. The opposite is true, and it’s not even close. This is why pay for progression as a F2P model works so well. 

13) Without massive scale and amazing matchmaking, skill-based games means most people lose a lot. This is antithetical to player motivation. 

14) Skill-based matchmaking is really hard. It’s not the ELO — it’s letting you feel like you can win consistently. Even Fortnite hasn’t really figured it out ign.com/articles/2019/… 

15) For mobile midcore, your biggest spenders often know your game surprisingly poorly. Building hardcore min/max features for this audience is usually a mistake. 

16) The biggest challenge in live-operating mobile mid-core games is inflation management. Some inflation is necessary to create multi-year spend incentives, but its incredibly easy to introduce unintended knock-on effects and change player behavior negatively. 

17) A surprisingly large percentage of mobile gaming session length is “rosterbation” — gazing adoringly at the power you’ve amassed in your roster, town, your vanity items, your achievements, etc. 

18) There is still a ton of room for innovation in mobile midcore. e.g. I would bet there is a massive mobile game to be built marrying the intra-match meta of auto-battlers with inter-match meta from leading mobile RPGs.

19) Asia is building some of the most innovative game experiences in midcore — AFK Arena & Archero are great examples. There are quarter-billion / yr western franchises waiting to be built matching these systems to the right western IPs and social features. 

20) In puzzle, classic match 3 is fairly saturated. Growth will continue to require Homescapes-style meta progression innovations. 

21) For casual/social, there continues massive growth from incorporating mid-core features like competitive leaderboards and events, so long as UX/experience is highly streamlined. 

22) The success of Call of Duty Mobile is a really big deal. Look for more AAA shooters to create a flagship mobile title (Battlefield, Halo, & Titanfall would be solid bets). Personally would love to see a Borderland mobile title.

23) App store discovery in mobile gaming has never been worse. Featuring quality is declining. Apple and Google’s product roadmap supporting game developers is laughable, and there is growing discontent with the platform take rates. Scale players will try to challenge this.

24) Supplier concentration for paid UA is under-appreciated — huge majority of traffic usually comes from FB and Google. Facebook quality is bad and getting worse, but publishers have nowhere else to go that can scale. 

25) IP-licensed mobile games continue to be underrated. Organic uplift for the right IP matched to the right game is critical for top of funnel economics. IP also supports better than expected payback for paid UA velocity. In combination these drive long product lifecycles. 

26) It’s probably understated just how dominant Unity is in mobile, and they are building on that dominance with smart acquisitions. Supposedly 50%+ of games are built on Unity, but I would bet it’s a larger percentage of the market when defined by revenue. 

27) Live operations in console/AAA is effectively 5+ years behind mobile. Adoption of core F2P mechanics and live ops could easily double certain AAA franchise revenue annually. 

28) Goes without saying, but if mobile gaming has room to increase monetization / user hour, than console/AAA has an incredible amount of runway. 

29) Loot box regulation is a bogeyman, other than in certain EU countries — regulators have bigger fish to fry and I believe ecosystem will largely self-regulate. Also very easy to game regulations through system design. 

30) The Half-Life Alyx plan is quintessentially Valve and legitimately courageous. They are probably leaving a billion dollars on the table. Software drives hardware adoption, and this is probably VRs best bet in the next 18 months. 

31) VR is in no-man’s land with too many players. Tech is amazing but the experience is too isolating and still too difficult to have long session lengths. Too many evangelists, not enough core value prop to the user. Average price point of software @ ~$20 is telling. 

32) Much has been made about Microsoft and Sony rolling up exclusive content for the next generation of the console wars. I would bet share doesn’t change much this cycle — backwards compatibility is a powerful psychological crutch. More likely to see rise in users owning both. 

33) Major takeaway from Switch success is the power of IP and the power of mobile. Many, including myself, mis-characterized Switch competition as other consoles. My take now is that Switch took a share from mobile growth. 

34) Accordingly, you’ll continue to see triple AAA console/PC content come to Switch in 2020 and beyond — viewed as incremental, not cannibalistic. 

35) You’re going to see a lot more non-gaming content leveraging gaming IP in the next 3 years. @firstadopter is all over this. Hollywood slowly figuring out how to make this content work. 

36) What happens to esports this year and next is a fascinating question, as it crashes from its recent hype cycle. As a huge Overwatch fan, it’s sad to see the OL die a very public, very slow, and very painful death, given the amount of money that’s been invested in it. 

37) Too many people conflate game streaming with esports — they are to-date TOTALLY different content verticals, with completely different economics. 

38) Game content streaming will continue to explode, as it attracts high caliber entertainment talent. Streaming is hugely synergistic for the industry growth, as it a) creates communities and b) lowers barriers for experiencing games 

39) The talent wars in streaming will benefit streamers financially, to the detriment of the platforms as they fight for audience share. Ultimately my bet would be on the platforms that build tech integrations to allow audiences to interact with the game experience. 

40) This is where esports and streaming could intersect — a huge part of the esports is the connection and communication between the streamer and audience. Esport titles would benefit by creating avenues for audiences to actively interact with the match/content. 

41) The biggest challenge in gaming right now is hiring at the mid/senior level. Fairly difficult to find gamers with business aptitude/relevant experience who want to make the move. DM me if you fit the bill! 🙂 

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