💩 🧦 Some Background:

For over a decade, people have reverse-engineered servers for EverQuest, the most popular Western first-generation MMO, supporting a small player base who were interested in replaying the game's earlier expansions, often replicating aspects of the game that were removed later in its development. The longest-running and most popular until last year was Project 1999, a group that runs two time-locked progression servers that began with EQ's launch content, update month-for-month through the Velious expansion, EQ's second, and stop. Daybreak offers a similar experience with their progression servers, but don't typically lock the experience to EverQuest circa 1999, bugs and all.

As of 2015, Project 1999 entered into an agreement with Daybreak to be allowed to operate as long as they remained not-for-profit, didn't deviate from the original EQ's systems and content, and made some concessions to avoid big patches during Daybreak's launch windows. P99 has operated along those lines since.

The Heroes Journey and Project Quarm operate differently and without any agreement. THJ is almost an entirely different game, allowing players to "multi-class" up to three different character classes into one character, progress through levels extremely quickly, and trade items that normally weren't allowed to be transferred between other characters. Quarm is less extreme, though they added changes that speeded up spawn times, experience gain, spread loot more evenly, and added instantiated dungeons, which wasn't in the original EQ until much later in the "timeline" than the server operates. Both THJ and Quarm have grown more popular than P99 has been over the past couple years, with THJ pulling in 3-5,000 CCU lately. (P99's servers, in total, usually hit around 1,100 peak CCU nowadays.)

In the court documents, Daybreak names THJ and its operators directly, but asks for the ability to extend cease and desists to any and all servers in operation.

Obviously, THJ is in their sights for a couple reasons:

• THJ is effectively runinng a microtransaction-based business, or at least appear to be.

• THJ is extremely popular, and Daybreak's latest progression server... wasn't. At least among the vocal members of their community.

It'll be interesting to see how things progress for THJ, but I'm also interested to see what this spells for the currently untargeted Quarm and P99.

Luke Plunkett, cofounder of Aftermath and former longtime Kotaku editor, posted an article a few weeks ago called ‘There Are So Few Of Us Left.’

It covers the general decline in the games journalism industry, and paints a bleak picture of the state of the job market for traditional journalists covering games. Another choice quote, from the subhead, is: “I give myself 1-3 years before I'm working in PR or Home Depot.”

Then, last week, Dean Takahashi, venerable games business reporter, spun GamesBeat off from VentureBeat, into an independent entity — the news was positioned well, but part of the story is VentureBeat divesting from coverage of consumer categories, and it’s also part of the story of the transformation and erosion of traditional media.

I started my career in games PR nearly two decades ago, at an agency called TriplePoint, one of the leading endemic media relations firms that reps folks like Blizzard. At the time, getting press could rocket games to success in concrete, undeniable ways.

Media were the chief gatekeepers and tastemakers. They created the news and defined which games would be hot. This was for structural, distribution-oriented reasons. The internet and social media platforms, of course, changed everything in irreversible ways.

The internet is in the midst of late-stage enshittification, traffic has fled from websites to platforms, and the ad revenue model has been effectively obliterated, rendering traditional media outlets unable to carry on.

Content has ‘democratized’, atomized, and niche-ified into a cacophonous ecosystem of millions of content creators — who do not have the same training, ethical standards, or incentive structure as traditional media outlets. The gaming media is now just another influencer in a sea of influencers.

This is not a good outcome. The world needs a strong fourth estate to hold public and private power to account, and people deserve unbiased, ethical coverage of the things they love, like games.

But it is the reality on the ground. So how do we, as game makers and marketers, adapt? And what does journalism look like moving forward?

I’m of the opinion that because of their diminished influence on which games break through, the dwindling number of employed journalists, and the incentive structures they are constrained by, the games media now plays more of a follower and commenter role.

Getting a lot of press is a good signal, but it is almost always correlation — not causation. The media will typically cover stories that already have an audience. As Playstack’s comms director Wout van Halderen put it in his fantastic GDC talk about Balatro’s marketing, “to be popular, you have to be popular.”

They still carry some legitimacy that is outsized compared to their reach, and that can be very powerful. A tidal wave of press coverage undoubtedly drives growth and is a critical brand marketing driver.

But in a vacuum, even fantastic media coverage drives surprisingly little action from players. Take Wombo Games’ Raiders of Blackveil, announced last week. They took a relatively traditional announcement strategy, with a polished video (“hello, gamers” — comments are off) featuring members of the team, lots of nice b-roll of their offices, and a TON of press coverage for a completely new IP without existing community traction - GameSpot, Eurogamer, Game Informer, and more.

And checking GameDiscoverCo Plus, it looks like the game has only amassed a couple thousand wishlists.

Their PR team here did an insanely good job. I know from trying that it is supremely hard to generate press coverage for an unknown studio and IP these days, even if the founders have a track record. But the outcome was virtually no signal for the game itself.

PR, like all marketing, is, in my view, a force multiplier. Great media coverage lends legitimacy and, with a critical mass of coverage, can actually drive growth. But most of the time, B2C PR gets you jack diddly in terms of awareness or conversion.

In my view, the most important things for actual awareness and growth for core games are content, creators, and community. Raiders of Blackveil didn’t have a trailer or any influencer coverage I clocked. The CTA from all the impressive press coverage was “check out this game,” and the Steam page doesn’t have a video asset.

I really think a lot of developers and even marketers spend far more time and energy chasing press, especially early on in a game’s promotional life, instead of on the things that actually can lead to the headlines you want.

As for the future of games journalism, I wish I had an answer. Part of it is in paid subscriptions like what Aftermath is built on. Part of it will have to live on the very social platforms that enabled the cambrian explosion of content creators that usurped the media’s traditional role.

I do believe there is a class of content creator that will always have a following because they are trustworthy and ethical, known for unbiased reviews, investigative reporting, or insightful analysis. But they will continue to compete with the broader ecosystem of sponcon self-promo hustle grindset influencers.

I guess it’s about ethics in video games journalism after all.

For a while, it felt like everyone (except me, not bitter) with Riot or Blizzard on their resume was getting a check to make a videogame. Since then, most games that have really taken off weren't developed by new studios with VC backing, and as a result we've seen major pullback from traditional investors. Publishers have also followed suit.

The ones that are left are asking for vertical slices of a game to prove a concept, or traction within the market to show early market validation, which begs the question of: If I have those things, why do I need you? They're acting more like banks than early-stage investors.

I think they're making a huge mistake.

The old adage of "when there's blood in the streets, buy" couldn't be more approprate right now. There's not just blood, there's 30,000 corpses forming a highway that runs from Seattle down to San Diego, through Austin over to Europe. There are principal engineers, lead designers, studio heads, entire teams of people out there who have credible pitches and need a lot less than seven figures to get an idea to the prove-it stage.

Instead of pulling back, why not lean in harder? Instead of one big check, write 10-20 small ones to small teams (you can still be picky about who's on them), demand they put something in front of actual players at the end, and decide if they're worth more money after that.

I think this is a safer play than hoping you get a 100x-er from a few huge bets. Here's why.

The hard truth about core videogames is this: good games sell, good marketing helps them sell more, but nobody knows where the next The Witcher or Slay the Spire is coming from. Nobody. You find out what your chances are by putting stuff in front of people, getting their feedback, and ultimately discovering what works - both in what you make and how you sell it.

So get small with this stuff. Go lock in all that talent that's in the wind right now, do stuff like a16z's speedrun but focused specifically on game studios. There's blood in the streets. Buy!

There are a lot of reasons money's harder to come by. Turns out making League of Legends or Roblox is Hard(tm). Picking winners years ahead of a release in a market this saturated can be summed up with: "lol." The financial truisms of software companies don't translate well to a creative field like core games. And the near-0% interest rates that encouraged high-risk investment is gone.

But that doesn't mean there isn't opportunity out there. It just takes a different strategy. I dunno, maybe make it a venture or something.

Today’s Densely Daily Dosage

• Blizzcon. Denied! - After an in-person event last year, Blizzard announced they’re canceling Blizzcon 2024. Instead, they plan to make product announcements at traditional events later in the year, though I’d expect most anything to be centered around their existing titles.

• Death Threat Dipshit Takes A Charge - The absolute winner who sent death threats so concerning it led to the Nintendo Live Tokyo’s cancellation this year has officially been charged by Japanese police. That must have been some serious hate mail.

• Embracer: If the Product’s Bad, Change the Name - Embracer - still not done - is splitting the holding company into three separate entities: Middle-Earth Enterprises and Friends (Crystal Dynamics, Eidos Montreal, et al), Coffee Stain and Friends (Coffee Stain, Ghost Ship Games, and Tarsier), and Asmodee (tabletop games like Ticket to Ride). Let us not forget the classic Wire episode where the Co-Op has bad heroin and realizes it’s cheaper to change its name than address the underlying problem.

• Take Two Triumphs: Tattoo Tort - IP law is really weird, and this case was weirder. LeBron James, best basketball player ever (don’t @ me), has tattoos. Take Two, creators of the NBA 2k series, licensed James’ likeness through their agreement with the NBPA to show him in their games. However, James’ tattoo artist claimed that he held a copyright to James’ tattoos, a claim that was ultimately rejected by a jury this week. However, in 2022 a federal jury ruled in favor of Randy Orton’s tattoo artist for depicting tattoos she created in a WWE game. Clearly, this is a pressing issue that rattles us all to our core.

• I’m posting actually cool game news now because this newsletter is turning into a doom scrolling summary. Here’s a quick roundup:

  • Fortnite Enables Toxic Emote Blocking - Epic now allows players to block toxic emotes like Laugh It Up and Take the L in Fortnite, which players use to taunt enemies. In my day, all we had was teabagging!

  • Fallout 2? Two Seasons, Anyway - Amazon’s Fallout series has officially been greenlit for a second season.

• FTC Bans Noncompetes - The FTC ruled in favor of banning noncompete clauses in contracts across the nation this week. For the game industry, not really a huge thing, since they were already unenforceable in California, but for those of us not in the Golden State, you’re now as free to seek new employment as your employer already was to fire you for pretty much anything.

By The Numbers

• $3.8B - How much Meta lost on VR last quarter.

• 5MM - The number of people playing Fallout games, inspired by the new Amazon series.

Better Know An Indie

Shadows of Doubt is an immersive sandbox detective stealth game set in a fully simulated sci-fi noir city of crime and corruption. Think like a private investigator and take on jobs to earn cash on your path to catching a serial killer. If you don’t catch them - they will kill again…. Grab in on Steam for $19.99.

Have a Great Week

As always, thanks for stopping by. We’ll see you next week!

I think those of us who work closer to the AAA and venture-backed side of the industry — founders, executives, marketers and press — have a massive blind spot. The truth is, almost without exception, none of these games truly “came out of nowhere.”

More often than not, these games have been marketed for years, building community, validating gameplay through playtesting and a healthy feedback loop with real players, refining marketing strategy by actually marketing the videogame and seeing what works, and ultimately proving product/market fit. Through the process, these games build up a critical mass of hyper-fans sufficient to start a chain reaction at launch. This is the new playbook.

I spend a lot of time crawling steamdb and talking to developers, and there are so many examples of games that are doing the same thing right now, just under the mainstream radar. And when they launch, at least some of them are going to become tomorrow’s surprise left-field hit, and a bunch of people will go, “wow, that’s weird! Guess they just got lucky!”

I think it’s worth studying games that fit this profile earlier in their life cycle, because 1) I very much plan to take credit for my prescience when one of these hits, and 2) they’re probably trying new shit to grow an audience that’s working and hasn’t yet become saturated.

You probably haven’t heard of Paralives.

It’s a life sim game started originally by a solo dev, Alex Massé. In 2019, Massé quit his mobile game development job and began work on the project — and announced it basically immediately. He launched a website, Patreon page and social channels and began sharing regular, consistent updates on the game’s vision and progress.

"I was really inspired by what the Ooblets team did, which is the marketing first approach," Massé explained. "As soon as they had their first screenshot of the game, they posted it on social media. So they were able to know there was interest for the game really quickly and use it to build a community during development." He liked the idea of involving a community, so Patreon appealed more than working with a publisher.

The Sims is, of course, one of the most successful game franchises in history, with well over $5 billion in lifetime revenue (as of 2019 reporting). Because there is a large segment of The Sims audience that feels unheard, underserved and exploited by EA’s offerings, there was a large and hungry golden cohort of lifesim fans who were easy to convert to supporters. Massé focused development (and marketing) initially on low-hanging-fruit differentiators — common player pain points like the inability to create curved walls or split level homes.

By March 2020 (when Patreon data becomes available), the project was already earning $6k/month. In May 2020, they conducted a large press, creator and social media campaign, and quickly boosted the Patreon revenue to nearly $40k/month (🫢), where it’s held steady for almost 4 years. Put a pin in that, because subscription crowdfunding for games is a strategy I am dying to dig into. Anyone have any other good examples of this approach at a meaningful scale?

The game’s ongoing marketing approach includes a steady stream of content, including 4-5 short- and long-form videos per month (showcasing game features, funny bugs, and tying into holidays and trends). The game’s large Patreon and Discord communities receive early previews and additional behind-the-scenes access.

The game’s growth has been steady, with well over a million wishlists - Paralives is currently the 43rd most-wishlisted game on Steam. I’ll see you when they launch into Early Access next year and everyone goes “HUH???”

I also think, however, that we're seeing an extreme shift in the market that's making it even harder for new games and studios to reach profitability.

I've always been a big context guy, so let's paint a picture of the industry right now. 

Newzoo just released their 2023 market report, which says that 48% of all core gaming play time was spent in games that are six years or older, and that Fortnite, Roblox, League, Minecraft, and GTA V comprised 27% of play time all year. Five games are a quarter of all hours played. What's more, players only spent 23% of their time on newer games, and most of that went to Madden and other annual titles. 

Only 8% of play time was dedicated to "new" games like Diablo IV or Baldur's Gate 3. So if you're making a new game, you're competing for 8% of players' time.

That's rough, man. 

What's a new studio, or even an established studio making something new supposed to do? I'm not exactly sure - I don't think anyone truly is - but here are some things I've observed or directly learned since the pandemic:

1. Players don't care who you were. You may have worked on one of those crown jewels, but if you're not at those studios anymore, touting your resume just doesn't move the needle that much. It may actually cause confusion if you're not making the same type of game. That's not to say pedigree isn't valuable - it can get you money, but it's not a fast lane to acquiring customers.

2. Swinging for the fences is dangerous in an industry where strikeouts are the default. If someone gave me $30MM (and it's weird no one has since my DMs have been open all this time), I'd want to spend $20MM of it making and marketing three small games and leave the remaining $10MM as either dry powder to invest in any that take off, or to make another game if none of them do. The more shots on goal you can get, the better. 

3. If your financial model bets on being a lot of people's favorite game, you've probably already lost. I'm looking at you, free-to-play. To make real money in free-to-play, you need to be someone's hobby. Most games are just games; people play them for a while, enjoy them, and move on. Very  few - five, apparently - achieve the rarified height of becoming a standalone hobby for people, and people spend money on hobbies. And those games are all owned by billion-dollar, public companies that spend your game's budget on corporate lunches in a year. It's an elephant you can't eat in one bite.

4. The Grand Reveal is the enemy. The smallish games that do blow up - Lethal Company, Palworld, etc. - didn't make it to the front page of steam off a trailer and years of radio silence. They put their game out there early, playtested with people they didn't know to refine the product and build a community, and didn't shut up about it to anyone who would listen. For new studios and IPs, growth is gradual until it isn't. You need to take every opportunity available to you to generate word of mouth and (puts on Silicon Valley plaid shirt with $290 jeans) network effects. 

5. Be ready to make hay while the sun shines. Unless you become a hobby, even if your game is a hit, it'll make 80% of its revenue in its first month post release. If you're able, be sure to have additional content ready to release within 30 days of your launch - DLC, more maps, more characters, something. Even if it's free, it's another "launch" within your launch window that gets your existing players to re-engage and keep telling their friends about you. 

"But Joe," you might say. "Maybe we're just in a lull. There's a bunch of new, well-funded studios out there that haven't released anything yet. This stagnation means we're ready for disruption!" And you may be right. I really hope you are. Deep down, my dream from this apocalypse is a bunch of triple-I or double-A studios emerge from it and create new games and genres that pull people away from sequels and remasters and the Big 5, but the playbook to do that has changed. 

As with everything else, what got us here won't get us to where we wanna go.

Today’s Densely Daily Dosage

• Gearbox Gutted - Embracer’s woes have been well documented, but their asset divestment spree apparently came to a conclusion last week, when they sold Gearbox to Take-Two for $460MM, about one-third of what they paid to acquire the studio in 2021. While the news was good for Embracer, it was godawful for the huge swathe of people at Gearbox who were laid off in the acquisition.

• Embracer’s Done, but not Done Done - After the Gearbox sale, Embracer announced they’ve completed their restructuring, and it’s “way too early” to contemplate future acquisitions. Maybe just, um, don’t do that anymore?

  

• Dragon’s Dogma 2 Sells, Then Sells - Dragon’s Dogma 2, the highly anticipated sequel to the cult classic Dragon’s Dogma, screamed out of its release to the tune of 10 million copies sold. Its launch hasn’t been without problems, though; players were surprised to find microtransactions in the game, and weren’t quiet about it.

• SOA Unionizes - Workers at Sega of America formalized a union agreement with the publisher last week, scoring collective bargaining concessions for 150 people, which includes base raises, layoff protection, and a guarantee to support hybrid working. After the year of 10,000 layoffs, it’s great to see members of the industry work together to protect themselves.

• I’m posting actually cool game news now because this newsletter is turning into a doom scrolling summary. Here’s a quick roundup:

  • CDPR a No on Microtransactions in Singleplayer Games - Piotr Nielubowicz, CDPR’s CFO, has said they don’t plan to include microtransactions in their singleplayer games. Given their games release at premium prices, this should be a breath of fresh air to players.

  • Coffee Stain Announces As We Descend - Valheim Publisher Coffee Stain announced As We Descend, a *drumroll* rogue-like deckbuilder created by former devs at Stunlock. Fingers crossed Coffee Stain can strike gold again in an increasingly crowded genre.

  • Some People Are 4060 Tis, Some People are 4090s - According to an article in PLOS ONE, some people see the world at a higher temporal rate - or refresh rate, in gamer terms - which gives them an edge when they need to track motion. I can’t even see a curveball. Which obviously explains why I suck at League of Legends.

By The Numbers

• $2MM - How much Richard Garfield-founded Popularium scored in investment last week.

• $120MM - CDPR’s profit in 2023.

Better Know An Indie

Solium Infernum is a new take on turn-based strategy games. Take the Infernal Throne in this hellish turn-based grand strategy game. The Prince of Darkness has vanished, leaving Archfiends to conspire: muster your legions while intoning dark sorceries, devilish schemes, and machiavellian plots. Who will be the new ruler of Hell and ascend the Throne? Grab it on Steam for $39.99.

Have a Great Week

As always, thanks for stopping by. We’ll see you next week!

At first blush, 133k hours watched on Twitch converting to ~2k wishlists and 336 peak concurrent users on their playtest seems…low. I want to be clear that this is not a critique — it’s entirely possible that this is a super-soft launch intended only to drive a very low target threshold of players for playtesting, and the bulk of the game’s marketing support is being held for a future push. And even if this result is disappointing, it’s just really, really hard to grow an audience out there right now.

Assuming this result is lower than they were hoping, is it because the game simply didn’t have the juice they thought it did when they signed it? Or is it because they aren’t fully committed to its success?

Are creators — like Sodapoppin and the rest of the OTK lineup — truly invested in driving success for their portfolio titles? Or is it simply a hedge, trading the opportunity cost of typical sponsored stream revenue for the upside potential of a game you’re casually betting on.

I think if it’s the former, the model has a good chance of being reliable and successful. But if it’s the latter, it will have the same hitrate of your run-of-the-mill sponsored creator campaign: that is, really, really bad.

Today’s Densely Daily Dosage

• Baldur’s Gate 4 is No More - Larian founder Swen Vincke announced at GDC this week that the studio has no plans to expand upon or release a sequel for Baldur’s Gate 3. He said the studio wants to take on new projects outside the D&D universe, and that porting the 5E system to a videogame wasn’t ideal. Fear not, though, Hasbro has said more D&D games are on the way, just not under Larian’s stewardship.

• Blizzard: No Profit Sharing For You - The Overwatch 2 team didn’t receive any profit sharing payments in August 2023, as reported by Jason Schreier at Bloomberg. Apparently a rare occurrence at Blizzard, it could be an indicator that the game isn’t performing as well as its predecessor.

  

• PS5 Helps Players Help Each Other - Sony is kicking off a program this year that will allow players to automatically upload videos of their gameplay in order to help other players through difficult passages in supported games. The videos will be moderated before they reach genpop, so my immediate plans have been thwarted.

• Kotaku Loses EIC Over Content Strategy - Kotaku’s Editor in Chief, Jen Glennon, resigned her post last week in disagreement with the company’s decision to deprioritize gaming news in favor of game guides - some reports claim they expect the staff to produce 50 guides per week. Game guides are an SEO darling for sites struggling to maintain traffic in an increasingly website-agnostic market, but are a significant departure from a site that’s specialized in editorial and breaking news since its inception.

By The Numbers

• 84.5 - Capcom’s average Metacritic score in 2023, earning it top honors on the platform.

• $129.99 - What it’ll cost for the first new Rock Band guitar in yearrrrrrs.

Better Know An Indie

Going Medieval is a city builder in the vein of Rimworld. Stake your claim in this colony building sim and survive a turbulent Medieval age. Construct a multi-storey fortress in a land reclaimed by wilderness, defend against raids, and keep your villagers happy as their lives are shaped by the world around them. Grab it on Steam for $24.99.

Have a Great Week

As always, thanks for stopping by. We’ll see you next week!

Compared to my last GDC in 2019, this was what I'd call a "down year." 2019 was all about ascendance. Esports was on the rise. Google was getting into core games with Stadia. We were gonna be rich forever!

2024 was, uh, not that.

Funding is hard to come by. Job opportunities are scarce. We're in The Dark Times right now. Possibly the darkest I've seen in a career that includes both 2008 and the dot com bust. I saw a lot of tired faces, and since there wasn't an entire wing of the convention center dedicated to hiring this year, a lot of aged ones. (Me included.)

But I also saw resilience amid the apocalypse. Doing the agency/consulting thing, I'm fortunate to be able to meet a lot of different developers at conventions like this, and if I had to count the number of people who said something like "regardless of whether we find [external funding] or not, this game is coming out," I'd run out of fingers. Even in an environment where VCs and publishers are pulling back, there are studios out there trying to make it work.

What drew me to the industry when I got my start were the people that were on fire with ideas they just had to share with other people, trying to do something creative, to share stories, to entertain others. That's still out there, even now.

It's still really hard right now. If you're looking for work or trying to raise money, righteous determination doesn't solve your problems. My sanguine bullshit doesn't feed your family. There are still executives out there that would rather fire 1,000 people than see their share prices dip. I don't know if all these lost jobs are coming back.

This industry isn't the people that fund it. It's so much more than that. We all deserve better than where we are now. But we're down, not out.

Today’s Densely Daily Dosage

• Execs were clearly back from DICE - Last week, Sony laid off 900 people in their PlayStation division. EA cut 5% of its workforce. A bunch of smaller studios joined the party, too - Wildlife Studios, Deck Nine, Radical Forge, and Cloud Imperium also let folks go. Brendan Sinclair has a great writeup diving deep into Sony’s financials, motivations, and helps color how the hell we’re still living in this nightmare.

• Nintendo: No Yuzu for you - The popular Switch emulator Yuzu is no more. Nintendo settled a $2.4MM lawsuit against the developer, who doesn’t actually distribute illegal content, but makes it pretty easy to load up Switch ROMs you totally backed up from your existing library. Nintendo argued that Yuzu’s existence helped over 1 million players play a leaked version of Tears of the Kingdom before its release. Since the lawsuit settled, we won’t see any new legal precedent set when it comes to emulation as it pertains to copyright, which is great because how else am I going to play Uniracers in TYOOL 2024?

• I’m posting actually cool game news now because this newsletter is turning into a doom scrolling summary. Here’s a quick roundup:

  • NASA attacks the darkness - NASA just released a 5E-compatible RPG adventure about rescuing an errant Hubble Space Telescope. Good luck figuring out 5E’s rules for 3D fighting in a 10x10x10 cube!

  • MLB The Show enters the 21st century - MLB The Show 24 will give players the ability to create female players in their popular Road to the Show game mode. RTTS starts players off in AA ball, where they need to develop their skills and improve their performance to work their way up to the Majors.
    

• Helldivers 2 Wins February - Helldivers 2, bringer of galactic democracy at any cost, went full Mission Accomplished by the end of February. The game is Sony’s best-performing Steam title ever, and has gone on to sell around 3 million copies. What’s particularly interesting, according to analyst Mat Piscatella in an IGN interview, is that the game is gaining momentum over time, rather than losing it. He compares its word-of-mouth trajectory to Guitar Hero, which is fantastic company to be in.

• Hang Out With Us at GDC - Chris and I are headed to San Francisco for GDC later this month. We’ll be there the 20th through the 22nd. If you’d like to catch up or grab a drink, respond to this email or hit one of us up on LinkedIn. If you wanna talk shop during business hours, hit up this link here to schedule something.

By The Numbers

• 2025 - When the Switch 2 is expected to launch.

• $1.6B - NetEase’s 2023 revenue.

Better Know An Indie

Orwell is a game where Big Brother has arrived - and it’s you. Investigate the lives of citizens to find those responsible for a series of terror attacks. Information from the internet, personal communications and private files are all accessible to you. But, be warned, the information you supply will have consequences. Grab it on Steam for $9.99.

Have a Great Week

As always, thanks for stopping by. We’ll see you next week!

Today’s Densely Daily Dosage

• Everyone is playing Palworld. Everyone hates Palworld. As of this writing, the open-world monster collection game with a very sardonic bent has been purchased by 8MM people on Steam. Roughly that many people are really, really mad about it, though.
  
  The criticism is based around how similar Pals, the little monsters you enslave to build things for you, look compared to Pokemon characters. Which, if you think Nintendo has exclusive IP rights to low-res blobs with big eyes, sure. Palworld has drawn enough attention that Nintendo is “investigating” the game, or at least telling everyone they are so the emails stop. If anything they should be worried about losing their trademark to erosion, since people are calling the game “Pokemon with guns.”
  
  Personally, I don’t buy it. Palworld is filling a gigantic gap that Nintendo has left in the market, largely because they’re always a generation behind everyone else on anything that requires internet connectivity. The only thing Palworld has “stolen” is the idea everyone but Nintendo has had for two decades: A Pokemon MMO.
  
  Chris has more on the sour grapes and other weirdness surrounding Palworld on The Business Website.

• I’m posting actually cool game news now because this newsletter is turning into a doom scrolling summary. Here’s a quick roundup:

  • You’ll get to punch Nazis in the upcoming Indiana Jones game.

  • Avowed, Obsidian’s latest weird-ass thing that will probably be awesome, released a “deep dive” at Xbox Direct.

  • Steam’s running Pirates vs. Ninjas Fest this week. Meme like it’s 2005! But hey, Sea of Thieves is half off.

• Microsoft and Riot looked at the industry and said, “I’ll have what she’s having.” Riot laid off 11% of its workforce - 530 people - this week after parent company Tencent logged $6B in profit last quarter. Microsoft said “hold my beer” and laid off 1,900 from Activision Blizzard and canceled their upcoming survival game after spending $68.7B to buy the company last year.
  
  To Riot’s credit, the severance packages they’re offering are positively European in their generosity. On the Blizzard side, president Mike Ybarra and chief design office Allen Adham are leaving the company.
  
  Also, Black Forest Games, creators of Destroy All Humans and parented by Embracer, let go of 50% of their staff.
  
  I’m outta words, man.

By The Numbers

• 3MM - How many copies of Street Fighter 6 have sold so far. Hadoken.

• $1B - How much money Counter-Strike 2 lootboxes made Valve last year.

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1. I haven’t worked at Riot in six years and have no real insight into its inner workings anymore.

2. Pieces like this are almost always for the benefit of the writer, not the reader.

3. It’s my birthday and there’s way better ways to spend my time as I enter my 40s.

But here I am. Partially because I woke up in the middle of the night thinking about Riot’s layoffs, partially because the ex-Rioters I’ve talked to since the layoffs were announced have all expressed the same emotions - alienation, confusion, and ultimately a resigned sensation of inevitability. So I write this to hopefully answer some questions: Why did this feel so different? Why does this feel worse than my own layoff last year?

Triumph and Trauma

Riot’s culture lends itself very well to nostalgia. A story I’ve told often is when I was interviewing there in 2011, I asked Marc, the president of the company at the time, where all this “player value” shit really ended and people started looking at financial metrics. His answer was it didn’t end; if we make cool shit and listen to players, they’ll reward us. That’s when I decided I wanted the job. It was a rare chance to pick up the blue lightsaber.

That player-focused culture had its intoxicating points. We were on a mission to change the game industry. To prove a company could make money with a free game by putting players' needs first and making the product better every day. And it was working. We were making Cool Shit and players were Rewarding Us. We were the good guys and we were winning.

Nostalgia, though, is a fond remembrance of past pain, and Riot’s darker side caused a lot of pain. The well-documented mistreatment of women at the company. The libertarian entrepreneurial spirit that demonized management so much that at least one career manager had 40 direct reports for an entire year. The divergent, often mercurial accountability structures that protected some horrible people. We were winning at a very high human cost.*

That dichotomy - the triumph and the trauma - is what makes Riot stick to your ribs.

When ex-Rioters get together after a while, there’s a weird bond we share. We all rode a dysfunctional rocket ship together because we all believed that Riot’s mission to be the most player-focused game company in the world was achievable and noble - the trauma just made us all really weird siblings.

I think what made these layoffs hit so hard is it feels like someone fucked with the family.

When 530 people, most of whom I haven’t met, get kicked out of the family due to what leadership admits were their bad decisions, it feels like a betrayal of the people that embarked on that mission and raises some questions: Was it all worth it? Was it all real?

It’s hard to put aside the doublespeak in the announcement. We made some bad calls, so we’re laying off what appears to be primarily junior- and mid-level employees who didn’t contibute to the decisions that got us here. Our parent company made $6B in profit last quarter but the ~$100MM we’d be paying these people over the next year is so unsustainable we’re going to pay ~$75MM to make them all go away now. You’re fucking with the family and the reasoning doesn’t add up.

Saying one thing and doing another isn’t new at Riot or anywhere else in the world, but it makes you view the triumph and the trauma in a new light: Triumph is fleeting, trauma is forever.

If there’s advice I can give to the folks who were let go this week, it’s this: Even if we haven’t met, we’re family. Family takes care of each other. We’ll be here long after Riot isn’t.

-J

*(In the company’s defense there were many attempts made, some successful, to improve this. Over my time there I stopped working 80-hour weeks, had some great managers, and the company kinda settled into a work-life expectation that was at least predictable. On balance I consider my time there to have been rewarding but I’m a cis-het white dude.)

Today’s Densely Daily Dosage

• Second Dinner raises $100MM. The Marvel Snap developers announced they raised nine figures in a Series B round led by Griffin Gaming Partners. Snap, which is a pretty awesome mobile-first game with a lot of white-hat monetization, has drawn $200MM in revenue in the year and a half it’s been live. Even now, that’s gotta put them in $1B+ valuation territory. Is there a Unicorn superhero?

• Dare you resist… THE CLAW?! - MSI announced a Steam Deck competitor named The Claw at CES this week. It’s using Intel guts to power the machine, and claims a 54Whr battery. Unlike the Steam Deck, it’s using Windows 11 for its OS rather than Valve’s open source linux variant, SteamOS.

  

• Steam says yes to AI. Valve announced this week that they’re allowing games that are developed with AI tools onto the platform. Devs have to report what type of AI they’re using (pre-generated or live-generated) ahead of release, and they’re launching a system that leans on players to report any illegal content in games. 14,000 games launched on Steam last year. If it’s anything like what happened when Amazon allowed AI-written Kindle books on their platform, that number could 10x this year - not that you’d want to play any of them.

• I’m just collapsing these into one layoff bullet. Twitch, (35% of staff), Unity (25%), Google’s AR division (“hundreds”), Discord (17%), Playtika (10%). Stay safe out there. I hear Second Dinner is hiring.

By The Numbers

• 9 - The number of DICE award categories in which Spider-Man 2 received nominations.

• $345K- How much Square Enix donated to the Japanese Red Cross in the wake of the Noto Peninsula earthquake.

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Today’s Densely Daily Dosage

• Nexon eats $9MM in fines over lootbox shenanigans. Korea’s Fair Trade Commission slapped Nexon with an $8.9MM fine for rigging lootboxes without informing their players about the changes. According to the commission, some lootboxes had their reward rates dropped to 0. Which, uh, just makes it a regular box.

• Versus Evil calls it quits. Since we last spoke, indie publisher Versus Evil announced its shutdown after a 10-year run. The founders recently were embroiled in a dispute with its parent company, TinyBuild. VersusEvil published The Banner Saga, Pillars of Eternity 2, among other double-A and triple-I titles.

• NCsoft says Homecoming’s free to run - When players reverse engineer the server technology required to keep a decommissioned game running, they usually operate in legal limbo: they don’t own the IP they’re hosting, but they’re also not using someone else’s source code to do so. Homecoming is a player-run City of Heroes server that began operations after the MMO was officially shut down in 2012. This week, CoH publisher NCsoft granted Homecoming a use license to operate their server, which should remove the legal sword of Damocles that naturally hangs over any unrecognized player-run service.

• Bossa Games lays of a third of its team. Probably the first games business in 2024 to join the layoff party (this party sucks ass), Bossa — known for Surgeon Simulator and other absurdist indie darlings — described the financial circumstances leading to the decision as a “blue moon situation.” The studio is currently working on Lost Skies, an open world survival crafting game that is decidedly less silly than the studio’s library, currently sitting at #454 in wishlists.

• I could never get past level 9. The OG Nintendo Tetris scene is on fire after a 13-year-old reached a level so high the program crashed, effectively beating the game. Recent innovations in controller-holding strategies have catapulted the competitive scene past level 29, the original theoretical human limit where you shouldn’t be able to move pieces across the screen fast enough to place them.

• The Enya albums are still full price. The New Zealand government announced they’re continuing a program that provides games studios a 20% tax rebate inside the country. Maybe Embracer should relocate there.

By The Numbers

• 3MM - Sales that Dave the Diver has enjoyed since its release.

• $15MM - The size of Bobby Kotick’s golden parachute as he leaves Activision.

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1. The layoffs will continue until morale improves. Unfortunately, I don’t believe we’ve hit the nadir in the games industry’s current (over)correction. There’s a defensive, cowardly, uncreative type of momentum at play from executives and boards that exceeds any rational justification for cuts, and I think it’ll take some time before they find they wise up. I hope I’m wrong about this one.

2. Not a single AAA publisher will launch a successful new IP. 2023 was littered with false starts from much-hyped new IPs — Forspoken, Redfall, Immortals Of Aveum, arguably Starfield, the list goes on. I suspect 2024 will bring more of these big-budget games that fizzle at launch.

3. The biggest hits will be from indie teams without big publisher backing, continuing the trend of games like Among Us, Only Up, Battlebit, and Lethal Company. The flood of talent ejected from large studios will surely spawn ambitious, risk-taking studios capable of quickly launching great multiplayer games. At least one of these hits will be venture backed, but with a <$5M check.

4. At least one of these breakout indies will be a UEFN island. Even if this happens, I don’t know if it’ll be common knowledge, as the UGC ecosystems are kind of black boxes — but I bet we’ll see a UEFN island that achieves & sustains CCU that’d be competitive with top Steam games.

5. The web3 gaming renaissance will fail to manifest, as studios working in this space will struggle to produce games compelling enough in their own rights to overcome the headwinds of entrenched crypto skepticism. If one does break out, it'll be because the crypto tech is invisible and just works.

6. An influencer-led game will do numbers — probably from a publisher like Dunkey’s BIGMODE or OTK’s Mad Mushroom, and not from a studio started by a creator.

7. Gaming AI startup investment will continue apace, but the lofty promises about unlocking new types of game experiences won’t manifest. It’ll still be used as an excuse to lay off lots of creatives, but the actual outputs provided by currently available generative AI tech won’t make a dent in the lost productivity of all of that discarded talent.

8. Fewer games will launch free-to-play, with studios learning the lesson that it’s just about impossible to de-risk the outcome of having a game with the retention and growth potential necessary to justify the business model.

9. Crowdfunding will make a (modest) comeback, with more digital games receiving funding from Kickstarter, Patreon, or other platforms than in recent years.

10. Embracer’s death spiral will continue, with at least three more studio closures. Some new, damning detail about the Savvy deal’s collapse will emerge, pissing everyone off.

Today’s Densely Daily Dosage

• Tim Epic wins a battle against Sundar Google Play Store. Epic won a huge antitrust victory against Google this week, where a jury unanimously agreed that Google had an unfair monopoly with its Play store. GamesIndustry has a great recap of the whole situation that’s worth your time.

• I come to bury E3, not to praise it. It seems like the ESA finally decided to end the will-they won’t-they around E3, and have officially canceled it forever. The venerable gaming show was probably the first gaming show you went to, at least if you’re old like me. But as new competitors like PAX came online, E3 just didn’t evolve fast enough to maintain its relevance. Our own Chris shared his thoughts on the matter, a nostalgic take on the show during its heyday.

  

• Like the vaporware of old. FNTASTIC, developers of The Day Before, announced that they were shutting down the studio four days after the top-wishlisted game launched to dismal reviews. Their announcement on Twitter painted a picture of a studio that reached too high and too far, and weren’t able to meet their own ambitions. From a marketing perspective, theirs is a story of over-promising and under-delivering in a major, major way. Pro-tip: don’t do that.

• How much does it cost to get Wishlists from the Game Awards? The Game Awards came and went since we last spoke, and aside from the fanfare of the show itself, a question lingers: Just how effective are those announcements that studios pay so much for? The answer: it depends. Simon Carless over at gamediscoverco put together an awesome spreadsheet that details the impact the show had on studios launching trailers. Chris did some math and found that the least successful games likely paid over $20 per wishlist. The big winners? Under a buck.
  

• And another one. This one’s real bad. Hasbro announced over 1,000 layoffs just ahead of the holiday season. The reasoning? “It’s lever we must pull to keep Hasbro healthy.” Word is the layoffs hit every part of the business, including profitable ones like WotC. Pretty sure whoever pulled that lever is gonna get a visit from Krampus.

By The Numbers

• 1 - Days until you probably have the rest of the year off, at least if you’re at a big studio.

• 33 - The dollars-per-wishlist figure we estimate the lowest-performing studio paid to feature their game at The Game Awards.

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Today’s Densely Daily Dosage

• Some game about cars I think is coming out. Yeah GTA 6 is a thing. It’s gonna be out in 2025. The trailer, which you’ve seen, is pretty badass.

• Publisher does not enjoy paying creators. Creators get mad. Mike Rose, founder of indie publisher No More Robots, found himself on the receiving end of the internet’s ire after sharing his opinion on paying YouTubers for coverage: “It feels weird and icky and disingenuous, and I just can't do it.” It’s a microcosm of the weird, profoundly commodified content creator ecosystem, and our cofounder Chris gave it some in-depth analysis over on the business website. Be sure to like, share & subscribe!

• Crawl, walk, and run your way to a not-dead game. In talks with clients & friends recently, we’ve often found ourselves theorycrafting about how publishing can best help early stage studios validate their game’s 1,000-hour potential. And oh, do we have thoughts on the subject.

• The chrome’s all burned out. Cyberpunk 2077 received its last major update, version 2.1, since we last spoke. It marks a capstone on one of the few good stories in games this year: CDPR rebounded from a disastrous console launch, slowly improved the game, and release a huge free update before Phantom Liberty that arguably delivered on the game’s promise almost a full three years after I bought a 3080 to be able to play at launch. It was a very good game that became a great one.

• Starfield: It’s the players who are wrong! Bethesda took to the Steam reviews section to argue with players who said the game feels shallow and repetitive. A lot of the developer responses looked like canned answers to common complaints, and likely didn’t win hearts and minds. As of this writing, more people on Steam are playing Skyrim than Starfield, which isn’t an apples-to-apples comparison, but still not a comparison anyone expected to see just a few months after the game’s massive launch.
  

  

• Twitch leaves Korea. Citing extremely high networking costs, Twitch announced they’re exiting the Korean market beginning February 2024. The company claims it will help streamers move to alternative sources, but I haven’t seen further details on what that means.

By The Numbers

• $50MM - The size of Riot’s social impact fund.

• 51,662 - The number of years players have spent in Baldur’s Gate 3. So far.

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Today’s Densely Daily Dosage

• The layoffs will continue until morale improves. Getting real tired of talking about this, but it’s really anybody’s guess whether or not the end is in sight. This week, Amazon laid off 180 people, Unity said more are coming despite increased revenue, and Digital Extremes is closing its 30-person publishing division.

  

• Finally somebody said it. Rob Fahey at Gamesindustry.biz did a deep dive on Embracer’s fall from grace this week. The lede: “In the absence of the low-interest economic climate that created it, the recklessness and unsustainability of Embracer Group’s aggressive acquisition strategy is laid bare.” Definitely worth your time.

• I owe my soul to Dr. Robotnik. Workers at Sega have accused the publisher of unfair labor practices by attempting to fire workers pursuing unionization in the United States. Man, I just want to talk about videogames.

By The Numbers

• 2 - The number of days it took for the PlayStation Portal handheld to sell out.

• 900 - The number of people Embracer has laid off during a “strong quarter.”

• 6 - The version of Unity releasing next year.

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