Corner of Berkshire & Fairfax Message Board

General Category => General Discussion => Topic started by: Castanza on July 11, 2019, 07:53:15 AM

Title: Video Gaming Industry
Post by: Castanza on July 11, 2019, 07:53:15 AM
Discuss the video game industry as a whole. Consumer/company trends.


Free to play.....meaning loot boxes and other in-game purchases.....further meaning consumers will hate it. Hopefully they think of a solution to this as $EA has been ripped to shreds over this. Not to mention the lawsuits they are incurring. LOTRO already exists and has a good following. Shadow of Middle Earth failed massively this past year. The Lord of the Rings series has been covered extensively across all gaming platforms. I wonder why they still think there is a market for this specific game? Player base seems highly fractured.

Gaming in general is an industry I'm staying out of. Seems highly fractured and consumers are constantly disappointing with AAA releases. Reminds me a bit of 1983 video game crisis where everyone is putting out the next best game. You know there are issues when game makers are struggling to develop new themes and are instead preying on a now slightly older generations nostalgia from the early to mid 2000's for some quick sales. Until there is something truly new in the market I'll park my money elsewhere. But it's Amazon so who knows!

Castanza

Lots of stuff you got wrong in this reply...

Free to play means consumers will hate it? 4 of the top 5 MOST PLAYED games in the US are free-to-play. In fact, only 3 of the top 10 are paid games at all. I see the statement all over this forum that F2P means loot boxes. It doesn't. League of Legends, Fortnite, CS GO, Dota 2 - all F2P and all monetized via cosmetic purchases, not loot boxes. And gamers love that stuff.

Gaming industry seems highly fractured? Over the past ten years it's becoming increasingly consolidated, and likely will continue to consolidate as the gravity of the large publishers sucks in smaller publishers and dev teams. The top 10 publishers have almost 50% of the market share and that number is only increasing.

Consumers are constantly disappointed with AAA releases? Red Dead Redemption 2 sold 24 million copies in like 6 months. God of War sold 10 million copies last year. There are some extremely highly anticipated games, some with new IP, coming in the next year or two (Cyberpunk, Death Stranding, Last of Us 2, etc).

Frankly, sounds like you're just shooting from the hip on this response and haven't really done any work in the space.

Fallout 76
Anthem
The Division 2
Apex (dwindling)
Watchdogs
Starwars Battlefront 2
Destiny 2
Diablo Immortal
Battlefield V
Sea of Thieves
Far Cry: New Dawn
Assasins Creed whatever its called


These games were also highly anticipated. EA has been developing Anthem since 2013 and it was pretty much dead in the water a month after release. EA earnings have been flat for 4 years. You named one or two successful games. You're also completely negating the relationship aspect between companies and consumers and dev teams. How many CEO's of gaming companies have we seen come out in opposition to their consumers the past two years? How many have we seen come out and admit their games were flops etc. How many issues have we seen between internal dev teams (acquired from elsewhere) and the company heads?

Consumers are sick of the cash over quality mindset of the publishers. Releasing games before they are finished and then charging for DLC content that should have been included in the first place. Go On Twitch, YT, Reddit and all you will hear and see is negative sentiment (a bit anecdotal but still important). These platforms are quite important for advertising and generating interest. Yes there are successful games out there. Overwatch, LoL, Dota, etc. But I think you're missing the overall sentiment of the industry (and that's what I'm focusing on). Red Dead 2 launch was great and they sold 24 million copies but how did the stock do? It dropped like 11% on good news. Publishers seem like they are resting on hype of the old standby title names (FIFA is 40% rev for EA 2016). COD sales were pretty good and broke the downward trend we have been seeing since 2011. But that's most likely due to the battle royal approach (how long will that last?). If video game companies are doing so good why are they listing AAA games 50% off months after release? Franchise fatigue is real.

Look at the stocks of these companies. They have been in free fall for awhile now. The question is are you comfortable buying at this level? I'm not.

"Free to play.....meaning loot boxes and other in-game purchases"
Title: Re: Video Gaming Industry
Post by: glorysk87 on July 11, 2019, 08:05:28 AM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.
Title: Re: Video Gaming Industry
Post by: Foreign Tuffett on July 11, 2019, 08:14:27 AM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.

Yeah, I agree with you that Castanza's post is all over the place. It conflates all sorts of different issues and games (Diablo Immortal hasn't even been released yet!) in ways that are not productive.

The ATVI thread has lots of clear thinking on the video game industry in general. If it were up to me (and it's not) I would confine all video game related posts exclusively to that thread.
Title: Re: Video Gaming Industry
Post by: LC on July 11, 2019, 08:53:54 AM
I would look at the e-sports area as well.

There was a blog post a few years back on the favorable economics of businesses which run industry conferences. I think it was in relation to Nielson or Reed Elsevier (now RELX). I forget the exact company.

But the jist was, organizing these trade conferences was a good business as you get paid up front by vendors and attendees, and it's a recurring item.

To that end, if I were to invest here I would invest in the growth of these e-sports event organizers.

The thing with gaming is, it's a lot like VC investing. Every year get tons of trash games but a few massive hits. It's difficult to know which will be the hits beforehand. But event organizers are getting paid after-the-fact, once these hit games have been established. Takes the speculation out of it.
Title: Re: Video Gaming Industry
Post by: Castanza on July 11, 2019, 09:57:39 AM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.

You're quite unnecessarily snarky when discussing game publishers on this forum.

Ok buddy, you're right and I'm wrong. Good talk.

I haven't claimed to be an authority in the gaming industry. Nor did I say the industry is dying...I said it's in a lull (sentiment and innovation wise).  I think at some point $EA, $TTWO, $ATVI become attractive. But as with most entertainment industries, consumer sentiment does play a big role. I personally don't like investing in companies whos share price is heavily influenced by consumer sentiment. Most of the gaming stocks have been trading at pie in the sky valuations. They are only now approaching proper valuations (IMO) as their share price approaches what fundamentals might indicate. The "hype" is gone and the sentiment is absolutely affecting share price.

Title: Re: Video Gaming Industry
Post by: Castanza on July 11, 2019, 10:04:54 AM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.

Yeah, I agree with you that Castanza's post is all over the place. It conflates all sorts of different issues and games (Diablo Immortal hasn't even been released yet!) in ways that are not productive.

The ATVI thread has lots of clear thinking on the video game industry in general. If it were up to me (and it's not) I would confine all video game related posts exclusively to that thread.

Diablo Immortal is a huge disappointment before launch. They went against their entire player base by choosing to only launch it on mobile. That was my point. I recommend watching the Q&A.

But if I'm wrong then I'm wrong. That's how I view the gaming industry and it's enough to keep me out of it.
Title: Re: Video Gaming Industry
Post by: Foreign Tuffett on July 11, 2019, 11:02:04 AM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.

Yeah, I agree with you that Castanza's post is all over the place. It conflates all sorts of different issues and games (Diablo Immortal hasn't even been released yet!) in ways that are not productive.

The ATVI thread has lots of clear thinking on the video game industry in general. If it were up to me (and it's not) I would confine all video game related posts exclusively to that thread.

Diablo Immortal is a huge disappointment before launch. They went against their entire player base by choosing to only launch it on mobile. That was my point. I recommend watching the Q&A.

But if I'm wrong then I'm wrong. That's how I view the gaming industry and it's enough to keep me out of it.

It's not that your conclusion is necessary wrong, it's that some of what you're posting doesn't make any sense.

In your initial post you listed games that were "highly anticipated", but proved to be disappointing on release. I could quibble with a number of these, but only mentioned one in my earlier post: Diablo Immortal.

Not only was Diablo Immortal not highly anticipated, Blizzard's core fan base didn't even want the game at all. They wanted a Diablo 4 announcement. Also, Diablo Immortal may prove to be a highly successful mobile game. As I mentioned before, it hasn't even launched yet. You seem to recognize most of this on some level, yet you are doubling down on your contention that it was a "highly anticipated" game that disappointed on release.

This will probably be my last response in this thread. I'd rather eat a bucket full of sand than continue this inane and largely pointless conversation.
Title: Re: Video Gaming Industry
Post by: 5xEBITDA on July 11, 2019, 11:38:58 AM
Pricing model is changing, or at the very least the market is anticipating that. AAA titles may very well move to a point where they are structurally unprofitable and the publishers will need to start reinventing their business models.
Title: Re: Video Gaming Industry
Post by: Patmo on July 11, 2019, 01:36:30 PM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.
You're quite unnecessarily snarky when discussing game publishers on this forum.

He just spends his time trying to flex like a 19 year old university freshman, and comes across as a pompous autist instead of the slick videogame industry authority he's trying to position himself as. But I've heard he has 200 million Chinese followers on his twitter, that's pretty impressive.

Title: Re: Video Gaming Industry
Post by: Patmo on July 11, 2019, 04:18:00 PM
You seem to be unable to distinguish between the gaming industry (which has never been better) and the equity prices (which are obviously doing poorly). Just because the stock prices are down doesn't mean the gaming industry is dying, as you heavily allude to.

With that fundamental bias, there's no point in continuing this conversation further.

Yeah, I agree with you that Castanza's post is all over the place. It conflates all sorts of different issues and games (Diablo Immortal hasn't even been released yet!) in ways that are not productive.

The ATVI thread has lots of clear thinking on the video game industry in general. If it were up to me (and it's not) I would confine all video game related posts exclusively to that thread.

Diablo Immortal is a huge disappointment before launch. They went against their entire player base by choosing to only launch it on mobile. That was my point. I recommend watching the Q&A.

But if I'm wrong then I'm wrong. That's how I view the gaming industry and it's enough to keep me out of it.

It's not that your conclusion is necessary wrong, it's that some of what you're posting doesn't make any sense.

In your initial post you listed games that were "highly anticipated", but proved to be disappointing on release. I could quibble with a number of these, but only mentioned one in my earlier post: Diablo Immortal.

Not only was Diablo Immortal not highly anticipated, Blizzard's core fan base didn't even want the game at all. They wanted a Diablo 4 announcement. Also, Diablo Immortal may prove to be a highly successful mobile game. As I mentioned before, it hasn't even launched yet. You seem to recognize most of this on some level, yet you are doubling down on your contention that it was a "highly anticipated" game that disappointed on release.

This will probably be my last response in this thread. I'd rather eat a bucket full of sand than continue this inane and largely pointless conversation.

I think his main gripe is how massively the quality of the games is declining. The companies are doing better and better financially, yet the gaming experience is getting crappier and crappier. Everything is devolving into a masquerade for casinos purposefully designed to prey on children. This gripe is shared by virtually everyone who has been a gaming consumer since before that era.

It's great for short sighted investors and managers with annual bonuses, but one would not be a fool to question whether that is a sustainable practice long term. The zeitgeist has already started waking up to it a little. I think the gaming (and esports) industry still has a massive runway for growth, but when the whole casino thing eventually blows up, it's going to be a significant dink.

Personally, I find that even the bait product is becoming bland as hell. At the last E3, 90% of the game trailers looked like they were for the same damn game. No joke. I'm way too young to already be going "Back in my day..." about video games and esports.

But I don't know why I'm even rehashing this stuff that everybody already knows. My opinion is worthless to begin with, after all I've only been hopelessly addicted to, and involved with, competitive gaming for 25 years. That glory guy has done his research, he even googled how many people watched the LoL world championships (hint: as many as his twitter followers. same nationality too. Coincidence?).

He really knows his stuff, we should stop sharing our opinions and viewpoints on things that excite us as would normally happen on a website designed specifically for that purpose. Instead we should ingest everything we can from the Great Guru himself. I bet that Castanza guy, he never played a game in his life. He definitely didn't create this thread because he has an interest in the industry and something to say about it. I bet he purely created this thread hoping to market his name as an expert analyst in the space, like every smart guy such as glory the Great Guru does on cobf. But you see, Castanza DIDN'T EVEN GOOGLE TWITCH VIEWERSHIP NUMBERS! Let's throw him out too, we already have our resident expert on all things related to the gaming industry. Everybody SHUT UP, put glory the Great Guru on the mic. Who's he gonna diss next?
Title: Re: Video Gaming Industry
Post by: Patmo on July 11, 2019, 04:41:37 PM
I would look at the e-sports area as well.

There was a blog post a few years back on the favorable economics of businesses which run industry conferences. I think it was in relation to Nielson or Reed Elsevier (now RELX). I forget the exact company.

But the jist was, organizing these trade conferences was a good business as you get paid up front by vendors and attendees, and it's a recurring item.

To that end, if I were to invest here I would invest in the growth of these e-sports event organizers.

The thing with gaming is, it's a lot like VC investing. Every year get tons of trash games but a few massive hits. It's difficult to know which will be the hits beforehand. But event organizers are getting paid after-the-fact, once these hit games have been established. Takes the speculation out of it.

I'll lay off the sarcasm pipe here and add a bit of empirical/anecdoctal evidence (although I know that is useless and uninteresting, just ask the Great Guru about his research for real, tangible knowledge).

Angel Munoz did so well organizing the CPL (a biannual tournament) years ago that he had to hide where he lived, in fear of community backlash at how nice his (main) residence was compared to the tournament purses. Organizing 2 tournaments a year in some basement was his full time occupation at the time. There was a minor scandal around it when people found out. That was long ago though, other parties may have sharpened up and driven margins down.

Plenty of events go bust though. I wouldn't be surprised that it's one of those things that do really well or really poorly. Certainly no one I've ever talked to who organized tourneys has ever expressed regret, even 15-man doritofests crammed in a single office down in Podunk town, right by Nowhere City.

Anywhoo.
Title: Re: Video Gaming Industry
Post by: Smile on July 12, 2019, 12:34:33 AM
Longtime lurker here to tell you I gained almost no useful information but a lot of laughs from this thread. Stop pulling each otherís ties lads! The hall monitor is coming! Heíll grab you by your lapels, shake you round and hang you up on a coatrack!

So.. which companies are the reliable moneymakers in this industry? I donít know enough to have an opinion.
Title: Re: Video Gaming Industry
Post by: Jurgis on July 12, 2019, 07:50:58 AM
writser wanted a riot on CoBF.

HE GOT IT!

Stop pulling the punches guys. Get your BFGs, grenade launchers, fireballs and nuke each other into smithereens. Preferably live on Twitch. With smack talking.

We want to see your rigs! We want to watch your skillz!

We'll pay some good (in-game) money for that!

Let's Ruuumble! #letsRUMBL
Title: Re: Video Gaming Industry
Post by: Spekulatius on July 13, 2019, 05:15:27 AM
I am not an expert of gaming, but it seem to me that the industry has a lot of tailwinds. The move to digital distribution and having the game essentially in the cloud saves costs, makes them more platform independent and probably over the long haul cheaper to develop. It also increases the game longevity by keeping users engaged with small updates etc. The ubiquity of smartphones allows for more gaming time. EA for example looks like a decent value. They have the FIFA franchise, which has been a money maker forever and probably will continue to be.

I am also curious how GOOG stadia platform works out. This could become a nice subscription based business and also be beneficial to game producers.