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Kliuless #14: Game->Platform of Thrones
Each week I compile a gaming industry insights newsletter that I share with other Rioters, including Riot’s senior leadership. This edition is the public version that I publish broadly every week as well. Opinions are mine.
5 Min Read
Kliuless? Gaming Industry ICYMI #14
Hi, my name is Kenny Liu, and I work in Revenue Strategy at Riot Games. Each week I compile a gaming industry insights newsletter that I share with other Rioters, including Riot’s senior leadership. This edition is the public version that I publish broadly every week as well. Opinions are mine.
See more or subscribe at: https://tinyletter.com/kliuless
Game Platform of Thrones
Last Friday, Valve adjusted its revenue share model from a standard 70/30 split to a tiered system, with more revenue going to developers of games that earned over certain thresholds
"Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam, the revenue share for that application will adjust to 75%/25% on earnings beyond $10M. At $50 million, the revenue share will adjust to 80%/20% on earnings beyond $50M"
Because this system primarily favors AAA developers, indie developers are unhappy with Steam's new revenue sharing tiers
Earlier in September, I had written: "Epic, now with the biggest game in the West, should parlay its high user traffic, successful Android self-distribution, and of course its powerful Unreal engine into an all-too-sweet packaged deal for developers"
Yesterday, this prediction was realized with Epic announcing the opening of its Epic Games Store, a digital distribution platform that eschews Steam's economics to give developers 88% of the revenue their games bring in​​. The store is launching on PC and Mac in 2018, and Android later in 2019
Aside from the more favorable revenue split, Epic is also doing the following to make its store more attractive for developers:
"Epic's Support-A-Creator program is key to helping developers reach gamers. Content creators, such as YouTube video makers, Twitch streamers, cosplayers, community builders, and bloggers have become key influencers in gaming. Previously, most creators were not compensated by game developers for their work and instead had to rely on donations. By matchmaking creators with developers, the Epic Games Store makes it easier for players to discover games, and rewards content creators for their efforts"
Related: Matchmade raised $4.8mm for its platform to match influencers with brands and game companies that want to market their products
"We also provide developers with direct access to their customers, through the newsfeed in the launcher and, if users agree, directly by email. Direct access to customers is critically important for developers, for sharing information about updates and new features, and for reaching those customers with subsequent game releases. One of the critical reasons Epic exited single-player, retail game development in 2013 was that each new release required a very costly new marketing campaign to reach buyers of our previous games"
Epic will also "sometimes fund developers to release games exclusively through the store"
Sounds almost too good to be true, so what's the catch? For developers, there are two main areas of risk:
If you build it, will they (i.e., gamers) come?
This risk is largely mitigated because, to attract consumers to its new store, Epic has committed to "feature one free game every two weeks throughout 2019," and fund these free releases
Also, Epic's platform already enjoys a high amount of baseline traffic thanks to Fortnite's popularity
If you build it, will Epic copy it?
I believe this risk to be the greater concern because Epic already came under fire earlier this year for "copying" rival game PUBG
What is also troubling is that Epic's Director of Publishing Strategy, Sergey Galyonkin aka the "Steam Spy," has had a history of mining data in creative ways from games on Steam to estimate sales figures and project trends
Though Epic's offer may not be ideal, its entrance as another much-needed competitor in the digital distribution space (like Discord's) should ultimately be a huge boon for both developers and gamers alike in the long run
[KL: For further reading from a more abstracted perspective of thinking, would highly recommend Statechery's recent post on Aggregators and Jobs-to-be-Done]
Design
Artifact and the Five Currencies
Red Dead Redemption 2: A deep dive into Rockstar’s game design
Breaking the Loop: A Look at the Cinematic Music of Breath of the Wild
"Post-Platform"
Vainglory: "Announcing our Post-Platform Vision"
"In the coming 10 years, we believe that it will not be VR, AR, wearables or some other specific new platform that will be the primary driver of the game industry. We believe instead that the next big evolutionary leap will rather be driven by us as game creators figuring out how to make awesome experiences that everyone can play together regardless of their native device or control input. This doesn’t just mean enabling cross platform play technically. It also means tackling hard problems around parity of control input design, UI design, business model design, social systems design and elevate game design as a whole to a level where we can offer truly delightful, crafted, responsive experiences that feel fun to play together, that feel native to your device, and whose business model is fair and understandable across the broadest set of devices"
BitTorrent owner Tron will invest $100 million in blockchain games
Fortnite sandbox Creative Mode revealed in leak
Mobile
‘PUBG Mobile’ Revenue Surpasses ‘Fortnite’ for First Time on iOS Platform
App Annie claims mobile games will snap up 60% of global gaming revenue next year
Blog: How to Game the App Store
XR: AR/MR/VR
Asia
Four ways games are changed for China due to government approval
Xiao Hong Shu (aka RED in English) has captured the hearts and wallets of the young and vain in China as a social shopping platform that combines features from Instagram, Pinterest, YouTube and Taobao
What kinds of Western games have taken off in Japan?
Overtime
New Yorker: The Best Video Games of 2018
60 Indie Games To Get Excited About In 2019
Supercell clashes games skill shortage with free new coding school
HBR: Is Employee Engagement Just a Reflection of Personality?
“Mystery” toys that kids peel open and cast aside speak volumes about consumer culture
See more or subscribe at: https://tinyletter.com/kliuless
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