Fox’ $100MM investment in Caffeine.tv

Build now but syndicate elsewhere later anyway.

Ash is finally a Pokémon Master. That makes him an 11-year old with 22 years of work experience. Getting a job now should be easy.

On to this week’s update.

NEWS

Fashion branded games are the new little black dress

Ever since Coco Chanel introduced the little black dress, it has been a staple in most women’s closets. So, too, fashion brands seem to think, will games. Gucci, Fendi, and Hermes have released (casual) games as part of their mobile app. The rationale is, quite possibly, related to the general stickiness of games that will allow these brands to brag about the long periods of time that people spend on their apps. In fact, there’s a growing history between games and fashion. A company like Square Enix has been working with Prada, Louis Vuitton, and Roen to model their respective clothing lines on characters from the Final Fantasy franchise.

But maybe there’s more going on. What to make of Gucci’s ongoing decline in North America? Hand-in-hand with its sales slump, its clout evaporating on social media. Industries that are disproportionately reliant on marketing via social media assume an enormous risk as sentiment can turn against them (e.g. blackface dress) or because of structural changes to the platforms themselves. Perhaps it is a sign of games having become so mainstream that they necessarily need to be part of a brand’s toolkit in communicating with customers. Who knows. But given the emphasis on buying skins for every aspect of our avatars, in combination with the growing dismay around pay-t0-play monetization, it is only a matter of time before we’ll see more digital frocks we can flaunt. Link

Fox’ $100MM investment in Caffeine.tv

Started by two Apple TV designers, Caffeine is currently in “pre-release” and, apparently, doing well enough for Fox to give it another $100MM in funding on top of the $46MM it raised previously. It’s exciting times in streaming television. Not in the least because I never expected one of the Murdochs to say something like how they’re planning to “deliver compelling experiences in esports, video gaming and entertainment.” It’s a bit on the tardy side, given that Disney Plus is already running a free trial in the Netherlands for its upcoming service, AT&T's WarnerMedia just dropped $500MM on 12 seasons of Big Bang Theory, and Apple TV just stepped up its game. It feels a bit like Fox is doing what Disney did when it acquired BAMTech two years ago.

The strategic question is obvious enough: does it make sense for Fox to go it alone, or will it find out 18 months from now that it should just syndicate its content through a more popular platform?

An important part of the answer will have to do with whether it will it be different enough. Fox does have a lot of live sports, although much of that may already be tied to Fox Sports Live and Fox Go, etc. More generally, we’ve now seen, ad nauseam I might add, the coverage of Apple TV. It is solid, and with a $6bn budget, Apple is clearly committed. It’s also not much of a differentiator, of course. Nowadays everyone has their own SVOD offering. (Much more exciting, then, is to bring new services where there currently are none, aka Apple Arcade, but I digress.)

Another component revolves around the question whether Caffeine can convince the existing audiences for Twitch and YouTube to move over. Just recently we saw Ninja packing up and moving over to Mixer, which worked well for Microsoft and Twitch barely skipped a beat. I believe that the pedigree of Caffeine's leadership will likely result in the most beautiful, most intuitive live streaming interface as one would expect. After hiring Apple TV exec Jen Folse last year, the emphasis so far seems to be on delivering the coolest product. But who's going to watch it? And, most importantly, what are they going to be watching? A bunch of kids live streaming from their bedrooms?

Yes, there are currently around 900MM people that watch gaming video content globally. More so, this audience is an obvious early adopter that will help media companies work out the kinks as they transition away from traditional broadcasting to internet-based television. But that means Caffeine will be competing head-on with YouTube, Twitch, Mixer, and every other streaming widget released by media firms. But here, too, content is king. Fox is investing in a product that is not even live yet while every single one of its competitors has already fleshed out a multi-billion dollar content strategy. I suggest they order themselves a triple shot of espresso, and catch up. Link

UK not taking any chances with loot boxes

As part of a wider investigation into "immersive and addictive technologies,” UK Parliament took aim at loot boxes and Electronic Arts. The report has received plenty of attention so far, and for good reason. It sets the tone for the broader range of conversations that are taking place around whether and how video games should be regulated now that they’re a mainstream form of entertainment. Previously, the emphasis was on corrupting audiences with too much violence. Now it’s about ensuring that especially vulnerable groups like minors (and puzzled parents) don’t end up in trouble. That is an important conversation to have.

A few observations. First, without trying to sugarcoat the obvious menace that “surprise mechanics” present, the reason we’re having this conversation in the first place, I believe, is that games are fantastically more popular today than they were a decade ago. Having moved from the fringes of the entertainment industry to its dead center, the expectations and obligations we have as people part of this business have changed. Games reach what, 2 billion people now, globally? It generates $130 billion in revenue, and competes toe-to-toe with music and film over young audiences. Growing up means having to act your age, and I have no doubt that games industry execs will sort this out.

Second, in my experience the UK is more sensitive on this issue. Mind you, this is a country where you can bet on sports on every corner. As part of the research I’ve done on social casino games, we found that the UK is where the action is. Consequently, it has more seasoned legislators and researchers, and better versed politicians. But the second you start introducing payout mechanics that resemble gambling, you’re going to hear about it. The hope is, of course, that industry and legislation will come together around some ruleset. But not until after EA sits through a storm of criticism. (Really though, reframing loot boxes as “surprise mechanics” was a mistake.)

Third, even so, I’m concerned that financial interests are going to be a problem. The ESA already chimed in and stated that they strongly disagreed with the report. I didn’t read anywhere that the UK is moving to ban them. Rather its report calls to “produce an evidence-based review of the effects of gambling-like game mechanics, including loot boxes and other emerging trends, to provide clarity and advice.” Not sure why the ESA would disagree with that.

Nevertheless, despite repeatedly being called out by name and, frankly, being largely responsible for the entire loot box debate, investors have not yet changed their stance on EA. Since the publication of the report, in fact, EA’s share price has stayed largely the same and even gone up. No ‘dynamic difficulty adjustment’ here.

$17MM funding for Video Game Entertainment and News Network

I met Ariel Horn years ago. As one of the few folks of the Riot Games empire based in New York, it was inevitable, I suppose. At the time esports was taking off like a hot air balloon (long before we brought it back down to earth with data!). Arial offered the sober observation that esports then was merely in its “leather helmet” phase.

Since then watching other people playing games has grown into real-world business. And, in honesty, anyone who had gotten their early has either been acquired or got funding for their own venture. So it comes as no surprise that we’re now starting to see a new generation of content emerging that borrows from traditional production and distribution practices, and contemporary technology. After several years of increasingly professionally produced content on Twitch and YouTube, it is perhaps time for content created by Emmy-award winning producers. Link

Switch theme park integration

According to this source, as part of the plans to build Super Nintendo World, there will be an integration: the park’s magnetic wristbands “interfaces with your game console.” Could be good. Link

PLAY/PASS

Pass. Zynga had a security breach in Draw Something and Words With Friends. No financial data was accessed, but still. Link

Pass. Quite literally Moviepass has passed. Away. Passed by. And over. Moviepast perfect. Whatever, it's done.

Play. Twitch acquires IGDB. An excellent move by team Twitch to make discovery less cumbersome for its audience, and a well-deserved upgrade for the team at IGBD. Congrats!