Another January. Another CES.
I came all the way to Vegas to learn the princess was in another castle.
Perhaps I’ve grown accustomed to the thrill of the new. Maybe my feeling of wonder around consumer tech is slowly fading. But I wasn’t the only one who felt that this year’s edition was pretty blah. The various journalists I spoke almost unanimously agreed that this was an ‘in-between’ year for CES.
It started with the keynote by Verizon’s CEO, where we were told that 5G was new and exciting, but that we, alas, would have to wait until “next year’s CES” before we got to see any real-world applications. Great. I came all the way to Vegas to learn the princess was in another castle.
Next, walking the show floor there was a noticeable lack of game-related consumer electronics. VR had taken a quiet backseat and seems to be slipping back into the future. The various high-end computer makers were there, sure. NVIDIA and AMD exchanged blows with one calling the other’s performance “lousy” and the other accusing the one of releasing “technology for technology’s sake” with its raytracing announcement. Razer won a bunch of awards but also showcased its first PC monitor priced at $800.
I did see a lot of big physical stuff that filled the digital technology's void. Like the 78ft smart yacht featuring an “AI virtual concierge” named Angel. And the “hex-copter” that despite its six 8ft rotors could still conveniently fit on a 40x40ft helipad. It’s the future for Uber, I’m told, and will allow all of us to travel like the Avengers. (Can you imagine the aerial traffic over Long Island City when all those newly imported Amazon employees simultaneously order their Wholefoods strawberries via Uber Eats Hex-Copter?) Clearly we are in desperate need of a recession.
What was missing for me were the solutions for everyday things and people. Where was the training module and configuration support for all this smart tech making its way in my house. If my fridge is going to be talking to some grocery platform, why am I still so deeply involved in setting this up?
“Alexa, tell Siri or Cortana to tell Angel to turn off the Google VR set I left in my yacht.”
“Yes.”
“Yes.”
“Yes.”
[Sirens start in the distance.]
On to this week’s update.
NEWS
Activision puts on its winter tires
Everyone seemingly rejoiced when Bungie announced having freed its Destiny franchise from the clutches of Activision. But I’m not so sure just yet that this is only a good thing. For one, Activision is a publishing powerhouse, and Bungie now has to oversee the rollout and marketing all on its own. While the game’s first edition did really well, selling $325MM in its first five days, Destiny 2 came in at about half of that. No doubt it’s been profitable despite the alleged $500MM that Activision spent on it. So basically Bungie just got ownership of a franchise that is not showing growth and will cost a sweet fortune to keep going. Yes it’s got a $100MM of NetEase money but will it be enough to support both the Destiny franchise and whatever they’re building for China?
Second, the overall market for shooters is, well, both saturated and changing. Stand-out sci-fi shooters in the same category include the much under-appreciated Warframe, for instance. And if EA is to be believed, it’ll make another run at capturing this market. It would seem that Bungie is fighting a war with two fronts here by both taking on some of the big pubs and the emerging innovators.
Activision may have felt this, too, and seems to be focused on its future instead. Or, more accurately, it’s been shuffling its corporate deck as well as its asset portfolio. A string of senior finance execs have left the company (before bonus season, I might add), and are now off to work at wildly different firms like Netflix and Square. You’d think that the view from the senior suite at one of the biggest publishers in the world would entice some of them to join smaller game companies and bring their expertise, but apparently that is not the case.
Meanwhile, NetEase re-upped with Blizzard to publish their games in China until 2023. That is no surprise given how obviously the recently announced mobile version of Diablo is geared towards the Chinese market. Blizzard has historically seen about half of the audience for its major franchises come from China and South Korea.
More broadly, however, it does look like Activision is having a more difficult time in the public eye, at least, specifically around its relationship with its creatives. Blizzard has been complaining, a lot, and it gives off the impression that Activision is designing its strategies in Excel rather than its dev studios. Maybe it's just getting winter-ready.
Verizon is testing a game streaming service
Already pre-installed on the NVIDIA Shield, the telecom giant is apparently currently running a beta-test. It’s an obvious strategy, certainly, because telco’s love up-selling their customer on data plans, and no one needs more data than gamers. But from the onset this looks like a typical case of a bad idea: short of giving users hardware for free (like phone companies tend to do with handsets), there are really no differentiating characteristics to such an approach. Publishers are unlikely to commit, either exclusively or otherwise, to Verizon as their primary platform, leaving it to become another platform holder with commoditized inventory that excites no one. Link
Netflix sued for unauthorized use of Choose Your Own Adventure
Its recently released Bandersnatch film about a game designer is exactly that: a choose your own adventure video interspersed with decision-making moments every so many minutes. It tells a rather depressing tale in its aspiration to offer an interactive experience. But I couldn’t let go of the fact that this is basically a somber British version of Puss in Book: Trapped in an Epic Tale (launched in 2017). I’m guessing Bandersnatch came about as the almighty algorithms informed Netflix that lots of people picked movies with keywords like ‘interactive,’ ‘nostalgia’, ‘video games’ and that creepy Star Trek episode from Black Mirror. Great marketing though. Link
Both Amazon and NBC start ad-based video streaming services
Everyone is dying to become a platform nowadays. If I just mentioned Verizon, we're now witnessing the start of the ad-based online video platform wars. Amazon is obviously among the more likely winners in this race. NBC's announcement just one day after Amazon's this week, however, suggest the former was quick to not be outdone. According to its release, NBC's service will be a "free, ad-supported product to anyone that subscribes to a pay-TV service." Success in the newspaper business probably served as a proxy here, because publications like the NY Times and WSJ have managed to rebuild their revenue models by offering the digital and print version together. But I'm not sure yet that newspapers and television can use the same business model strategy. Link
Apple takes a hit and sends everyone in a tizzy
Certainly, its iPhone sales have been coming in under expectations. The way Tim Cook sees it, it was his underestimation of “the magnitude of the economic deceleration” in China. Damn BRICs. In addition, another explanation is that unlike everywhere else, in China the iPhone is just another phone that competes with others on device features. Apple simply does not have the same strength in network effects as elsewhere because firms like Tencent and others dominate the chat and media offering.
What should, however, concern execs and investors is the challenge facing Apple’s services offering. Touted as a division that include its App Store it is hoped to add $50 billion in annual revenues to Apple’s bottom line. Today it accounts for 15% of revenues. Its top three contributors are the App Store ($13.2bn), licensing ($8bn), and Apple Care ($5.5bn). Music and iTunes are part of it, too, but obviously have a ways to go before this division will move the needle. Moreover, in this category Apple competes on more equal terms with others. So it looks like it will be a tougher year yet for big A. Link
RIGHT QUICK TIDBITS
Sony has sold 91.7MM units of its PS4
DrDisrespect signs with CAA
Glu Mobile terminates The Swift Life
Amazon likely working on game streaming says journalist. No sh!t
Fortnite was Europe's most played Switch game of 2018