Microsoft ex-box

All technology ultimately becomes a toaster

We have officially arrived.

On my way to Paris I caught the Saturday Night Life skit in which Chance the Rapper makes fun of esports. It’s pretty hilarious. All of the usual clichés made their appearance (e.g., gamers are nerdy) and I will happily admit to lolling throughout.

And that is precisely what happens when something has become an unstoppable cultural force. It gets mocked.

One important rule to comedy is that in order to be funny, you must pick on people more powerful than yourself. Taking the piss at someone weaker makes you an a--hole. So let’s take a bow.

It’s important to note that I’m not just talking about esports here. Certainly that’s what the skit was about. But the bigger picture here is that traditional media have started to come to terms that there is a massive shift in audience behaviors and that video gaming, in all its aspects, is now part of the entertainment industrial complex. After watching in awe the hordes of Pokémon GO players and finding themselves puzzled by the immense appetite for the goofiness of Fortnite, traditional media executives are starting to accept the idea that maybe, quite possibly, gaming is for everyone.

A small step for SNL; a big step for media.

On to this week’s update.

NEWS

Microsoft gaming ramps up for next gen

There’s a common concept in media theory that all technology, no matter how fancy, ultimately becomes a toaster. What starts as a disruptive piece of equipment yesterday is quotidian tomorrow. So, too, it seems the days of the physical console as a pinnacle of in-home entertainment are numbered.

Of course, I’m obligated to point out that PC gamers have never been under any impression that consoles were a high-end experience. (Q: Why did the console gamer cross the road?*) Nevertheless, we’re in the final stages of moving away from buying discs, and we already have a discless Xbox.

In a way, consoles have started to emulate mobile phones. The planned obsolescence that dictates that my phone from last year will impress fewer potential mates this season has bled into gaming hardware (although it provides much less sex appeal still). Manufacturers have nevertheless started to update their hardware more frequently, and push out upgraded or slightly differentiated versions of the same console annually rather than twice a decade.

But where console makers traditionally relied on a razor-blade business model, the future is, without a doubt, in service. To that end, it seems, Microsoft announced a reboot of its All Access program this week. It’s essentially a reintroduction of the program it launched in August last year, which was ostensibly successful enough for Xbox to expand to more countries and include a greater variety of options. It focuses on lowering the entry barriers for consumers, for one. At the low end there’s a $20/month option, which basically puts it at double to cost of a PlayStation Now subscription (recently reduced from $20 to $10).

Of course, Microsoft doesn’t run a philanthropy. This extensive service-based approach will serve it in a variety of ways. First, it keeps it momentum during 2020 which will be a transition year. As we reset for the next generation of hardware, service revenue will attract risk-averse consumers that have been putting off getting an Xbox. It also helps build the firm’s re-current revenue, which is the object of desire for every major tech firm today and valued much higher by investors than transaction-based revenue.

Like cell phone manufacturers, console makers are now offering a lease plan that includes the necessary hardware, and gives you different content options. For a two-year long, monthly subscription, you, too, can have the latest and greatest device. Sure enough, if you want to pay an extra three bucks because you’re stuck in the stone age and insist on using CDROMs, knock yourself out, Fred Flinstone. But we know where this is going. Dedicated devices are going to play a much smaller role in the future of gaming, as we move to unlimited data plans, erm, content subscriptions.

It seems then that Microsoft has formally declared the console a toaster, and is going to move away from celebrating how great the hardware is (finally), and focus on content and services. If we are to believe the excitement around cloud gaming, dedicated devices will only live in the cloud. Those ‘consoles’ will still have to be good, of course. But does an average iPhone owner really care about the different components inside? People don’t even know what the numbers on the dial of their toaster means.

For the next generation we can expect a much greater emphasis on each platform’s personality. Having exclusive, first-party content remains critical, of course. But what to say about the character of a system’s offering? Whenever you boot up Netflix, its brand promise is “I bet there’s something here that I can watch right now.” Loading up HBO Go means “I’m looking for a specific show with those famous people from Hollywood.” We can ask then: how do we characterize each of the different gaming platforms?

Xbox is building a broad strategy around interactive content. After poaching Ninja, it now also signed Shroud. It tells you exactly how serious it is about owning relevant talent and content creators in ramping up its games business. Taste makers are incredibly important for consumers in helping them decide what to play and what where to spend their time and money. The gravity point in games is moving away from titles alone, which now have to share the spotlight with live streamers. In 2020, exclusive content in gaming will come to mean people, and much less so, titles.

* To render the buildings on the other side.

League of Legends’ 10 year anniversary blowout

“All I want for my birthday is to become Disney,” is what Riot Games quietly wished after blowing out its candles.

It has come a long way. Riot has been absolutely dominating the MOBA genre this whole time, and that is well-deserved. It has invested heavily in design, infrastructure, and the spectacle around its championships, all of which have contributed to industry observers asking whether MOBA is really a genre if a single title lords over it like LoL does.

Missing from the franchise for a long time was a broad lore that connected all the dots and facilitates a deeper emotional connection of its fanbase to the franchise. Riot has been working on this, and I’m personally excited about its recent introduction of a new champion Senna. Granted, given the criticism on the firm’s corporate culture, a single character with “the features, hair texture and skin color of an African descendent” does not make for diversity. But as the parent of a bi-racial child, it’s a welcome step in the right direction.

From a strategic perspective, the avalanche of announcements that came with its birthday is notable. The MOBA category is large, but it also caters to a specific audience segment. So for its birthday, Riot is treating everyone at once by borrowing a page from firms like Disney or Blizzard, and rolling out a myriad of ways for fans to engage with the LoL universe simultaneously.

One could question, however, whether it makes sense to pool the entire effort like this. Having been about one thing this entire time, rolling out a myriad of ways for fans to engage with the franchise may be, well, confusing. Was Riot unable to decide on a single project and just said: “Fukc it” and greenlit everything?

The broader context is that the monthly active user count for LoL has been declining. And the success of newcomers like Fortnite have both taken a toll and pushed more players to mobile, where Riot will have a harder time to follow. It’s taken the momentum of its birthday to step outside of its comfort zone and try on a few new outfits. LoL is getting ready for a second act: the true mark of legendary artistry is capturing lightning in a bottle twice. Search your feelings. You know this to be true.

EA/Valve are besties again

Instead of competing with Valve, it makes more sense to enter a non-exclusive partnership and broaden its potential audience. It can certainly be read as an admission of defeat, albeit a minor one, considering that EA tried to acquire Valve in 2012 for a paltry $1 billion.

Ego aside, it’s a prudent decision from EA. It clearly isn’t going to establish the same amount of reach on its own, and the growing number of digital storefronts are exacerbating the mounting discovery issues in the marketplace. Partnering up reduces the clutter, especially since Origin and Steam allow for cross-play.

At the same time, I would not discount what this means to Valve either. Epic’s success and relentless competition is something completely new. In its history there has not been a serious attack ever on Fort Newell, but here comes team Sweeney. Making a deal with EA strengthens Valve market position as the Digital Store Wars intensify.

Anyway, here’s another Joost who said it better.

PLAY/PASS

Play. Big wig VC a16z has figured out now, too, that gaming is on the up & up. Get ready for tech bros to tell us what’s next.

Pass. The continued two-day screaming by Fortnite players when it went offline to ready itself for season 2. Parents understand.

Play. This article discussing data around IP-based mobile strategy. Link