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Mar 1, 2017

A week of incredible potential, and change, in the Video Game market

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What a week.

One would normally expect the release of a new console platform to dominate gaming news in the days leading up to its launch. This is 2017, however, and it has seemingly become normal to have the sands shift underfoot on a more frequent basis.

Two market moving initiatives were announced this week, one potential game of the year has been released with another on the way Friday and, lest we forget, the Nintendo Switch just happens to be launching as well.

  • Twitch as video game sales engine – Amazon’s purchase of Twitch in 2014 was a bold move with a billion-dollar price tag. Since that time, viewership has grown to 9.7 million daily active users with 106 minutes watched per person per day. The next step for Twitch, selling video games and downloadable content, will potentially allow each of the 2 million Twitch streamers per month (or at least the 17k most popular streamers termed Twitch Partners) to become commissioned salespeople for the games industry. Twitch’s vice president of commerce Matt McCloskey calls this “the idea of social commerce” and it presents both significant opportunity, and change, for the games marketplace.

    I believe the magnitude and potential of this initiative is difficult to overstate. The integration of selling tools into the Twitch streaming service, coupled with incentivized streamers, provides significant incremental selling opportunities. I believe this has the potential to be the most significant change to the games marketplace since the creation of the digital marketplaces themselves. While complete details are yet to be announced, this could be the signal of a significant marketplace shift that changes how content is discovered and sold.
  • Microsoft’s Xbox Game Pass as gaming’s version of Netflix – The service, launching later this spring, promises unlimited access to over 100 Xbox One and backward compatible Xbox 360 games for a $9.99 per month cost. Currently in testing with Xbox Insider Program members, the service will also allow subscribers to purchase games featured in the service at a discount.

    This is not the first subscription program on console. EA Access launched in August of 2014 and now has 43 games in the “Vault” which subscribers can access and play at no additional cost. In addition, subscribers have been allowed early exclusive trials of such games as Battlefield 1, and receive discounts across EA products on the Xbox One store.

    The Xbox Game Pass is not only an interesting proposition for consumers. Publishers can incrementally monetize back catalogs, measure interest and engagement in dormant franchises (potentially allowing for new development investment), and support new releases by allowing players to revisit favorite games in that series prior to the new titles in the franchise launching.

    Sales data suggest that EA Access has had a net positive impact to sales and engagement of EA products on Xbox One. I fully expect the same to be the case with the Xbox Game Pass for participating publishers and titles. I also expect gamer backlogs to swell considerably. Combined, these factors are potentially great news for all involved.
  • Horizon: Zero Dawn and The Legend of Zelda: Breath of the Wild as early GOTY contenders – Getting one potential game of the year in a month is fantastic, getting two in one week is almost unfair.

    Horizon: Zero Dawn, currently rated 88 on opencritic.com, is Guerrilla Games’ latest, an action RPG published by Sony Interactive Entertainment exclusively for the PlayStation 4. Nintendo’s major title launch in support of the Nintendo Switch (and coming to the Wii U) is The Legend of Zelda: Breath of the Wild. While at the time of writing a review embargo is still in place leading to the games’ Friday release, previews have the title widely praised for its scale and depth.

    Review scores are a factor in determining sales potential, although many others play into how a title might ultimately sell. In any case, having two high-profile, critically acclaimed games releasing in the same week is a tremendous positive for gamers and the console segment.
  • Launch of the Nintendo Switch – Finally, this week will see the launch of the Nintendo Switch. I am cautiously optimistic on the platform. The potential of the device is significant, while technical and library challenges are noted by many reviewers.

The Wall Street Journal’s Takashi Mochizuki reported that Nintendo’s worldwide shipment target for launch month was 2 million units. If this report remains the case, the US market could receive an estimated 0.6-0.9 million units of the device in March. While I believe there are certainly enough fans of The Legend of Zelda franchise to snap up these launch units, it will be more interesting to see how sales trend over the summer months leading up to the launch of Super Mario Odyssey this holiday.

There are few weeks in memory that have had as many events take place with as much potential impact to the games industry as this.

Twitch’s selling of games and content, Microsoft’s Xbox Game Pass, the launch of two potential game of the year candidates from Sony and Nintendo and the launch of the latest Nintendo console?

What a week indeed.


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