Wednesday, August 22, 2012


Data points.

1. GameStop, Without the Games
In an effort to avoid the fate of Blockbuster, Circuit City, and others in the remainder bin of failed retailers, GameStop (GME) has embarked on a daring, if inglorious, strategy: refashioning itself from a console game purveyor into a repairer and reseller of Apple (AAPL) gadgets, betting that its retail visibility will prove an advantage.

2. Electronic Arts For Sale? EA 'Quietly Exploring' Private Equity Interest
Electronic Arts Inc. (Nasdaq:EA) is "quietly exploring" opportunities for it to be sold to private equity firms, according to a report by the New York Post.

The Redwood City, Calif.-based video game industry giant is talking to two private equity companies, according to the Post, which cited persons familiar with the matter.

3. OnLive undergoing buyout in wake of dire financials, laying off 'at least 50 percent' of staff
...a meeting was held at OnLive's offices at 10AM this morning, wherein the company's CEO announced a massive staff layoff -- at least 50 percent of the staff, according to our source's numbers. The layoffs come as part of across the board cuts to the company, and all those out of a job will have their key cards deactivated as of 4PM local time today. The source was understandably baffled by the abruptness of the news, along with the added blow that no severance will be offered and stock holdings are essentially worth nothing.

Further: OnLive officially announces asset acquisition, notes that its newly formed company will keep OnLive name.

4. PopCap, THQ and Funcom hit with layoffs

These data points don't stack, but they are complimentary. Gamestop sees the writing on the wall in terms of console games, seemingly. EA may finally have recognized that they're just not going to climb out of the five-year funk. OnLive turned out to be a business model without revenue, essentially, based on their expenses and their peak concurrent user figures (1,800). They were just burning through cash, hoping for a big offer, and instead ran out of time. Finally, I could find a dozen more layoff stories from the last eight weeks, or more.

Then you have this idiot: Guillemot: As many PC players pay for F2P as boxed product. Ah, Ubisoft. Just read this:
It's a way to get closer to your customers, to make sure you have a revenue. On PC it's only around five to seven per cent of the players who pay for F2P, but normally on PC it's only about five to seven per cent who pay anyway, the rest is pirated. It's around a 93-95 per cent piracy rate, so it ends up at about the same percentage. The revenue we get from the people who play is more long term, so we can continue to bring content.

Wait--Ubisoft implemented always-on, must-always-be-connected-to-the-Internet DRM to combat piracy, and he's claiming that the piracy rate is >90%? Whose ass is he pulling these numbers out of, anyway?

So there are two problems here: the fundamentals of the gaming industry are changing very rapidly, and most of the people in charge of the big gaming companies are too stupid to to ensure the survival of their companies.

However, while Guillemot might be quite the fool when discussing piracy--at least, when discussing the alleged rate of piracy--the idea of essentially going totally F2P is quite interesting.

So in a future where most mobile games are freemium, and many, many PC games will be the same, how exactly do next-gen consoles resist this trend and continue to charge $60 (Plus--plus!--DLC) for their products?

I don't see how they can.

I'm not sure we should care, either. Good grief, big gaming companies have been whining non-stop about used game resale for years while they sold us early/late betas for $60 and told us to like it. Sorry, but payback's a bitch.

Freemium is just the hedge solution to both piracy and trade-ins. What's impossible to steal? A free game. What value does a free game have as a trade-in? Nothing.

If it's free-to-play, and the publisher drives me batshit insane with in-app come-ons to buy things, then I stop playing the game. If the appeals are reasonable, then I'll spend some money. And I didn't lose any money up front.

That doesn't seem unfair.

Plus, the best part: not all the big companies will fail. Bethesda is still releasing terrific, "traditional" games for PC and console, and "Dishonored" is the one new I.P. this fall that I'm genuinely excited about. There are still an absolute ton of terrific games to play--even though I have almost no time to play them, unfortunately--so it's not like gaming is dying. Not even close.

There will just be quite a few casualties.

Site Meter