The newborn and I just finished watching Squid Game.
It’s the perfect show at 3 am between night feedings. Billed as a South Korean survival drama, the series offers a riff on the battle royale genre (which, BTW, is starting to show its age). In a sinister spectacle for a group of ultra-rich but bored men, 456 desperately poor contestants compete to the death in the hopes of winning a $40 million cash price. The brightly-colored cinematography is set in an infantile universe of ridiculously large playground equipment and belies its grown-up narrative.
Squid Game is also on track to become Netflix’ most popular non-English show ever. According to its co-CEO Sarandos, the South Korean tale is bigger even than Money Heist and Lupin. Speaking at Code Conference this week, Sarandos shared the top ranking series which explains why Netflix has been pushing into games.
I’ve highlighted the relevant titles. Three of the most popular series on Netflix plug into a broader gamer universe. The Witcher, of course, is one of the top-selling role-playing fantasy games of recent years, selling over 50 million copies worldwide. Next, Stranger Things’ entire premise is straight from a Dungeons & Dragons manual. In fact, it has its own. And perhaps you’ll find it somewhat of a stretch to add The Queen’s Gambit, which is a book adaptation, as a meaningful participant in the video game/Hollywood matrix. That doesn’t change the fact that the series triggered a run on chess boards and rejuvenated the game’s popularity. The same can be said for The Witcher which was also a book first.
What matters is the effective cross-play between gaming properties and adjacent entertainment categories. It is not about mutual exclusivity. Instead, game-based adaptations offer a rich tapestry of complementary experiences that are greater than the sum of its parts.
The biggest challenge for Netflix is going to be the jump from discrete assets which can be acquired outright (e.g., a movie) to facilitating rich online game worlds that have to be carefully grown over time. With the acquisition of Night School Studio, Netflix is formulating a strong strategy to differentiate itself around player-driven narratives without exposing itself financially.
Meanwhile, competitor Amazon seems to have accomplished something new. After a string of abject disasters, including putting Crucible back into closed beta because there wasn’t a “healthy, sustainable future,” the release of New World, an open world MMO PC game, managed to get over 700,000 concurrent players. That’s a big deal and, at least for now, a strong start. By comparison, Crucible only managed a peak of 25,000 concurrents on its first day.
Somewhat surprisingly, Amazon’s very own AWS servers gave out due to the demand. That’s both good and bad news. It’s good because such popularity is encouraging and a clear proof point. It is bad because, well, it raises questions on Amazon’s ability to facilitate a successful day 1 launch. If they can’t even keep it together for their own title, what will that look like for anyone else’s?
What follows for Amazon are two hard questions. First, can this sustain? Ideally, New World will bring Amazon the critical acclaim that can serve as an anchor for its broader ambitions in gaming. Nintendo has the Mario and Zelda franchises; Microsoft has Halo, etc. Hopefully Amazon has a fleshed out strategy here to disprove its critics and attract an audience to call its own.
Second, what comes next? Even a wildly successful game isn’t a full deck. To be a credible platform and competitive game service provider, Amazon is going to need to build out a broader, more diverse offering, or it will prove another blind squirrel that happened upon a nut.
Big tech firms are increasingly competing over audience and attention span. Streaming, both video-on-demand and gaming, presents a frantically competitive category because audiences can still only watch one show or play one game at a time.
At some point during last night’s feeding it dawned on me that Squid Game offers an inverted metaphor from the Hunger Games that sit at the center of its narrative universe. After witnessing the gaudy, ultra-rich exhibitionism that we saw on display at the Met Gala, it is perhaps those same enormous and seemingly omnipotent media firms at the intersection of tech and entertainment that are in a desperate struggle to fight, kill, and die for our attention.
I’m stoked for the next season.
On to this week’s update.
NEWS
Roblox settles with music publishers for $200 million
After the National Music Publishers Association (NMPA) sued the firm back in June, Roblox has agreed to pay up to make them shut up. A standard method of establishing an alliance in American business is to first sue someone in order to set “the foundation for future partnerships.”
The NMPA also struck a deal with Twitch a week earlier, after a ceaseless barrage of takedown notices under the 1998 Digital Millennium Copyright Act. However, according to the Washington Post, the deal change nothing for the creative talent in live-streaming who are still on the hook to obtain the proper license for the use of copyrighted music.
As online worlds and the imminent metaverse have become popular locales for social interaction and entertainment, we can expect more digital platform holders to buddy up with conventional copyrights holders to at a minimum safeguard itself from DMCA takedowns. It is unclear how any of this makes life easier for the hundreds of thousands of creators who provide the primary content on which the business model for both Roblox and Twitch rests. By contrast, earlier this week, Epic Games invested in a UK startup called Lickd that sets out to make it easier for YouTubers to license commercial music.
Even so, the music industry executives, who seemingly don’t play any instruments themselves at all other than perhaps Microsoft Office, are looking forward to expanding “virtual experiences through music.”
Kotick’s wrist slap
This week Activision Blizzard was fined a whole $160 for cultivating a toxic, decidedly female-unfriendly work environment. That’s how much the fine would have been if Activision Blizzard was an average US household. I’ve personally paid more for illegally riding my bike on the sidewalk.
To a firm that earned $8.06 billion in 2020, the $18 million fine is barely a rounding error. Given that women only make up 20 percent of Activision Blizzard's workforce, we’re roughly talking $10,000 per female employee. And that’s not accounting for time.
The US government has a history of doling out corporate punishment that either misses the mark, or has the opposite effect. When it charged Facebook with a $5 billion fine, which, granted, seems like a lot, its share price actually rose.
Obviously I would not argue for the regulatory environment that Chinese game makers suffer. This is not about exerting power for its own sake. But when industry-leading firms make mistakes, especially the kind that are adversely impact the long-term health and cultural significance of its output, governments could try a little harder.
Wunderman wonders about the metaverse
Due to the high likelihood of losing subscribers, I’ve largely refrained from discussing the metaverse. I’ve incriminated myself enough by writing about crypto. Also, the metaverse currently represents an idealized technological state where all of our dreams and aspirations co-exist in harmony. But technology marches on, and in no small measure because of its ardent advocates.
Wunderman released a 93-page report detailing its vision of what the metaverse can, should, and might be like. It is worth a read but not for the reason you’d think. Despite its length it skews much closer to a puff piece than the research it aspires to be. In that capacity it gives us a barometer to tell us about the dry heat that is about to catch fire and burn out the deadwood to make way for web3. Hopefully it will incinerate Wunderman’s latest neologism, gamevertising, along with it. Wasn’t Matthew Ball a fire fighter in a past life?
Biggest games are experimenting with branded content
It is starting to look a lot like the revenue model for any initial iteration of the metaverse is going to be ad-based.
Deviating from a more conventional idea of ‘designers creating content for consumers’ and finding clever ways to ask for money in return, in-game advertising has been trying to connect the dots for years. Conventional game makers--the type that likes to make cool experiences behind a closed door until they’re ready for release--are not the type to embrace ads. The interim generation of mobile game companies has tried, but here, too, the role of ads has remained limited and is generally considered by Wall Street to be a ‘net zero’ effort. Mobile game makers generate roughly the same amount of revenue on targeted ads as they spend on acquiring new users.
The emergence of large-scale social experiences in which thousands of people are online simultaneously and interacting with each other or participating with some performance or experience is much more suitable for brand advertisers. Fortnite just did a deal with Balenciaga, allowed online denizens to show off their exquisite taste. And Roblox dispatched its VP of brand partnership to pen a piece on how to “make your brand Gen Z-proof.”
No one wants to see logos littering the Last of Us. But showboating my new hoodie online makes a lot more sense.
PLAY/PASS
Pass. Facebook has delayed harvesting our children’s innocence temporarily after catching flack from lawmakers and parent groups. But only after the WSJ exposed the fact that they knew about the detrimental effect on teenagers. This shouldn’t even be up for debate.
Play. Let’s all agree to go see the new Super Mario movie together next year. And let’s first re-watch the one we got in 1993. Let’sa go!