What's next for Sony's PlayStation.

New revenue models, content, and cloud gaming, sort of.

Sony is sending mixed messages.

Here is a worthwhile interview with Shawn Layden. I’ve spoken with Shawn a few times and, personally, I like him. He wears a suit but has the mind of a creative. I’m still sad his comms team won’t take my calls anymore because of some snafu years ago. But I digress. As the head of studios, Shawn’s job is to provide clarity on Sony’s gaming content strategy. There are at least two strategic points where PlayStation deviates from the Sony mothership.

First, Sony is looking to expand its overall services revenues. As the big incumbent with an install base of 92MM PlayStations worldwide, its obvious next revenue driver will be to make money from services and content sales. Its new CEO is one that emphasizes innovation in the old-fashioned Sony way and it’ll be exciting to see what comes of that. The first rumors about the PlayStation 5 have started to emerge and "industry experts" are expecting it late next year (which is analyst speak for "no idea.") In the meantime, Sony is joining Apple, Xbox, Nintendo, Amazon, and others in expanding their digital content offering to drive service revenues. Here’s what Layden’s comments seem to deviate, as he states:

“As far as games-as-service and esports, or recurring revenue models or whatever – if we can do something interesting and meaningful in those areas, we’ll do it.”

The way he’s phrasing this clearly tells you that it is not a massive priority.

I’ve written previously about the irresistible draw that recurrent subscription-based revenue has on creative firms as it yields them a much higher valuation on the stock market than transaction-based revenue. More so, Jim Ryan, the recently appointed head of Sony Interactive Entertainment, stated in an interview with the Financial Times that

“it makes a big difference if players connect and engage,”

referring to the shift in the industry’s revenue model away from merely pushing units.

Second, following the success of Fortnite and its push to cross-play, the future of gaming seems to be platform-agnostic. There is no reason why you can’t play against any other player on a different device as it lifts all boats. Arguably, Sony isn’t exactly the vanguard in this area and its focus on single-player games is both popular and much-appreciated. Here’s what Layden stated re: cross-play:

“People keep saying, “Why doesn’t Sony allow more people to have it?” We’re open for business on this one. All it takes is for publishers and developers who wish to permission it. As ever, just work with your PlayStation account manager, and they will walk you through the steps that we’ve learned through our partnership with Epic on how this works. I don’t believe right now there is any gating factor on that. I think they’re open to make proposals, because the Fortnite thing worked pretty well.”

Immediately following, however, several studio heads popped up stating that, in fact, Sony had not proven all that open for business. According to Chucklefish’s CEO, which recently released Wargroove:

“We made many requests for cross-play (both through our account manager and directly with higher ups) all the way up until release month. We were told in no uncertain terms that it was not going to happen.”

So, where does that leave us? Well, as the market leader there is no reason to immediately jump on cross-play or service-based revenue, especially if things are going well. It is more likely that Sony will try to keep its walled garden intact as much as possible, rather than sharing with smaller competitors. Platform exclusivity, for one, is a big part of its strategy and success. And perhaps being unclear may be the best strategy yet, because it doesn’t commit Sony or PlayStation to either strategy, giving it time to prepare for the next generation of hardware and what on earth it plans to do about cloud gaming.

On to this week's update.

NEWS

A few thoughts on Apex Legends

After Fortnite ate PUBG’s lunch, the current question at breakfast is whether EA can tap into that same level of success with Apex Legends’ impressive first fortnight. (Never took a single writing class, btw.) Developer Respawn was quick to point out that EA had no hand in the game’s development, which, given what we’ve seen from EA recently, should be no surprise. Let the creatives do the creative part.

What’s promising about the game is the quick rise especially among console gamers. Sure enough the PC crowd has been gung-ho from jump, in particular because all of the favorite streamers are playing it relentlessly. It truly is a ‘gamer’s game’ in that it dispenses with goofiness. For that matter Fortnite is equal parts online multiplayer shooter game and social hangout littered with funny dances and colorful emotes. Apex offers a well-balanced middle-ground between the more serious shooters we all love and a touch of color. However, its true innovation is the team-based battle royale. It takes the edge of riding solo and constantly having to fear being shanked, and allows you to explore just enough collaboration without relying on the 5v5 blueprint.

An obvious downside here is, of course, that it is owned by EA. While I love the publisher for other reasons, the stock market has been unkind, and may very well move senior execs to grab tighter control over the new property. Since it is clear that EA’s management had been somewhere between hesitant and reluctant to release Apex, it is fair to say they are probably not the right folks to run it. Best to leave to Respawn and just pay their rent. If they can do that, Apex has a shot at the really big league.

From what I’ve seen, the new starlet has the makings of two innovative predecessors: World of Tanks and Fortnite. Both proved that the console can be successful at free-to-play just like PC and mobile. These games brought in both existing and new players, and historically prove to be very important for the overall market, regardless of platforms. Let’s hope EA can evolve its thinking.

Konami abandons loot boxes in Belgium

The Japanese firm had already ended its relationship with UEFA which means its Pro Evolution Soccer’s claim to exclusive Champions League rights are water under the bridge. Now it is also joining EA, Valve, and TakeTwo in removing in-game currency from its game in the Belgium. In its earnings report earlier this month it referred to digital as a ‘saving grace’ to the firm’s financials but also already pointed at the stricter regulations in Belgium as an impediment on revenue. Link

Apple looking to charge for news subscriptions

The success of its News app has led Apple to the obvious next step of adding a subscription to the services in exchange for access to major newspapers. It fits entirely in its strategy to generate more services revenue now that hardware alone is losing its sex appeal among investors. The point of controversy here is that unlike movies and games where Apple charges content providers a 30% fee, it intends to only share 50% of revenues with news papers. Which is lame and largely unjustified. Link

Dish Network loses almost a million subscribers

If ever there was a reason to appreciate content providers more, this would be it: in 18Q4 Dish Network lost 386,000 traditional pay TV subscribers for a total of 920,000 for the year. That is roughly four times the amount it lost the year before. A large driver of this decline was the ongoing dispute with HBO and Cinemax which are currently unavailable to Dish Network’s subscribers, in combination with only an additional 50,000 new subs coming from its subsidiary Sling TV. In addition the firm is having difficult getting Univision back on as well. Overall revenue dropped -6% y/y to $3.3bn. Link

Gym teacher fired for playing Fortnite with his students

As a teacher at NYU this is vexing. Here’s a guy trying to get his students motivated and connect with them beyond the mere transfer of information, and he gets cut. According to the Dept. of Education: “School employees shouldn’t interact with students online except for school-related reasons.” Seems like a double standard: schools brag about their computer facilities and how it makes their students literate in digital technology, and I’m pretty sure shooting some hoops doesn’t get teachers fired. Link