Publishers playing politics

Don't get cold feet now that you've got the world's attention.

The games business is growing, going mainstream, and maturing. As a result its main protagonists have taken on a new role, whether they like it or not.

Last Sunday, during a post-match interview, a Hong Kong Hearthstone player Ng "blitzchung" Wai Chung expressed his support for the current protests there. Blizzard immediately cut the feed and punished the player and the two streamers who were interviewing him. (Here's the write-ups from the WSJ and NPR.)

Blizzard explained itself by referring to it clause Section 6.1 (o), which states:

“Engaging in any act that, in Blizzard’s sole discretion, brings you into public disrepute, offends a portion or group of the public, or otherwise damages Blizzard image will result in removal from Grandmasters and reduction of the player’s prize total to $0 USD, in addition to other remedies which may be provided for under the Handbook and Blizzard’s Website Terms.”

This raises a few questions. Certainly this is a very broadly defined clause and it is understandable that Blizzard wants to retain control over the content that is associated with its brands. It is entirely within its right to protect its asset and, having signed the agreement, blitzchung doesn't have a leg to stand on, legally.

But being right from a legal standpoint is subject to time. You'll remember, of course, that it was illegal for women to vote not too long ago. Here, it looks a lot like one of the largest game publishers in the world is preemptively banning players for having an opinion on their current political climate. There haven't even been repercussions from any of its Chinese partners. Perhaps Blizzard decided it didn't need to wait, considering that Tencent dropped broadcasts for NBA team the Houston Rockets after its general manager recently tweeted support for the protests.

Sports have historically played an integral role in breaking down barriers between people. In fact, athletes are key political agents in a myriad of ways. Just last week, Megan Rapinoe won FIFA’s Player of the Year. Ms. Rapinoe has been consistently outspoken and an inspiration for female players everywhere. And what to make of the Emmy that Nike just won for its Colin Kaepernick protest commercial?

So, is Blizzard just going to brush past that? Despite the high expectations that Activision Blizzard has for competitive gaming, does this mean that we should not expect it to break any taboos or introduce any new idols and icons? How is this supposed to inspire an entire generation of consumers? Wouldn't that be any advertisers dream?

Meanwhile, China has been investing in foreign entities all over. Two of the five largest global game companies are Chinese, and their insatiable appetite to grow has resulted in making a string of investments around the world in the hopes of catching the next big hit. As the political climate has started to turn, these giants are forced to stay loyal to the same protectionist market economy that put them there in the first place.

As far as Blizzard is concerned, it all feels a lot like corporate insecurity. I get it. I live there now, too. Despite the glossy veneer of being honest and telling it how it is, you think that it be that way, but it don't. (Yup.) Is ATVI going to play the role as a champion for freedom of speech as it ascends to a global stage of multinational media and entertainment firms that cater to advertisers and investors? Or is it going to pledge fealty to a governmental philosophy that stands in opposition of the values that allowed it to prosper to not miss out on whatever it can earn there after taxes and mandatory fees have been extracted? Seems so.

This was also news to some of its workforce. In the hours that followed, there was apparent dissent among Blizzard employees. And one US senator stated that “no American company should censor calls for freedom to make a quick buck."

You can see how fans may take issue with some of this. What should light up Blizzard’s PR switchboard is the fact that roughly half of its World of Warcraft player base comes from China. If that audience turns against Blizzard, it could really feel the sting. Already creatives and former Blizzard employees are starting to speak out. I don't think it's a stretch to expect Hong Kong protests to start breaking out in World of Warcraft and other Blizzard properties.

It leaves me with the question what other publishers plan to do when they come for them. And they will because every major firm has been desperate to penetrate the Chinese market in search of greater revenue. Games are for playing, yes. But they also communicate ideas and values. Something tells me we haven’t seen the end of this just yet.

On to this week’s update.

NEWS

Sony and Disney expand Vue agreement

On the wings of its recent price cut for PlayStation Now, Sony just inked an extension to its content deal with Disney. It adds the recently acquired networks from 21st Century to the package: ACC Network from ESPN, National Geographic, and FX networks. There’s currently 800,000 subscribers to the service, but after raising the monthly price by $5 last July, I’m not sure how much of a value add these will be. Sony and Disney are clearly establishing an alliance (remember the Spider-Man thing recently?) as the streaming wars intensify. Apparently Disney is now banning Netflix ads, and Sony just removed Facebook integration from its platform.

Microsoft filed a VR floor mat patent

This filing suggests that Microsoft continues to work on bringing virtual reality to the masses. Or at least people outside of New York, because there is absolutely no one here with a living room of that size. Of course, this could also just have gotten stuck in the US patent office’s machinery.

Tencent increases its voting shares in Supercell

The Chinese giant is a majority shareholder, but, like so many firms recently, had agreed to let management operate largely independently. It has just converted a bunch of convertible bonds into consortium shares which means its equity voting rights have increased from 50% to 51.2%. This gives Tencent majority voting power. (On 21 June 2016, Tencent acquired 84.3% of Supercell with $8.6 billion. Japan's SoftBank values Supercell at $10.2 billion.) It comes at an interesting time: Tencent’s gaming revenue is still down following the upheaval around the Chinese government's approval process, and Supercell’s revenue fell -21% in 2018 y/y. Supercell’s 2018 release of Brawl Stars is doing well and is expected to pull numbers back up. It also announced the beta release of Rush Wars in selected markets. Link

Gaming as “addictive as cocaine”

All is fair in love, war, and legal suits, I suppose. But I am skeptical of its merit. If you’ve been reading my newsletter you know I’m a proponent for better parental controls and transparency. I also completely agree with the argument that some game makers are being manipulative in how they engage and monetize audiences. The World Health Organization proposed ‘gaming disorder’ as an addiction recently, too.

Kotaku’s 2017 interview with a psychologist who studies consistent game-playing may be helpful here: “There are many myths such as that games involve dopamine and brain regions similar to substance abuse. There’s a kernel of truth to that but only insofar as any pleasurable activity activates these regions. How gaming involves them is more similar to other fun activities like eating chocolate, having sex, getting a good grade, etc., not heroin or cocaine.”

For me personally, the idea that a 10-year old under my roof would have access to a game they’re not ready for suggests a lack of parental fortitude. If you recall, Fortnite is rated for audiences 13 and up. Oh, and finally, I’m the adult who pays the rent around here and I say no.

RDR2 release on PC

When it first came out, it brought a large part of my team's productivity down to zero. (Note to self: invoice TTWO.) And now we’ve got PC release coming up.

I have two observations here: (1) Take-Two is trying hard to navigate the challenge of maintaining the strength of GTA V without allowing RDR2 to cannibalize its success, and (2) given the swelling criticism around aggressive monetization, I’m unsure what to make of the recent introductions of, basically, casino gaming in its major franchises. One fin bro told me last week that we are at the end of the current hardware cycle and there clearly is no GTA 6 coming any time soon. That means Take-Two has another 12-18 months to squeeze as much cash out of the game as possible before everyone moves on to the PlayStation 5, etc. What drove the success of GTA V was its launch at the end of the 7th hardware generation (when consumers are risk averse and look to buy big hit titles, ideally bundled with a discounted console), and then re-sold it to a bunch of people once they owned a PS4. Not seeing that now. Link

PLAY/PASS

Enough negativity for one week. Here's a triple play on the outro.

Play. This article on fundraising for charities by streamers.

Play. Gamers paved the road for a streaming future. Damn right they did.

Play. Sri Lanka just announced esports as an official sport.