About five months ago, Dan Olson AKA @foldablehuman AKA Folding Ideas, posted a two-and-a-half hour video about the meme stock movement with the catchy title, "This Is Financial Advice." I won't try to recap the entire thing (although you should definitely watch it if you haven't), but I do want to draw attention to the portion about Bed Bath and Beyond's desperate last-ditch attempt to stay afloat: a financing arrangement known as "death spiral financing."
Very quickly, the arrangement involves a company with more debt than they can repay, not enough revenue to meet operating expenses, and no fat remaining to trim from their operation. This company, BBBY, accepted a financing deal from a private equity firm, with the understanding that they would release shares to the market in order to raise the funds needed to repay them.
The simple fact of such a deal is enough to drive down share prices on its own, and a flood of new shares will also depress the share value, which means that the number of shares needed to repay their PE financiers keeps increasing, in an ever-increasing spiral of share dilution and devaluation that ultimately failed to repay all of their debts, let alone raise enough money to continue operating.
BBBY was forced to file for bankruptcy, was de-listed from NYSE and NASDAQ, and no longer exists. And this was the model that immediately came to mind when I learned of Embracer Group's latest galaxy-brained plan to save themselves from a very similar situation, using a very similar-sounding financing scheme.
That "recent
multiplayer flop" was, of course, Anthem, further development on which was stopped by EA earlier this week. Up until that point, EA had been all in on loot-box-laden "live service" games, with their corporate strategy depending heavily on developing and publishing only "live service" multiplayer games going forward, but after lukewarm reception for Star Wars Battlefront, the PR disaster that was SW:BF2's planned loot box system, and the utter embarrassment that was Anthem's release, it would seem that they're rethinking that strategy.
And, yes, this is a good thing. Here's hoping that other AAA developers follow suit, giving up on forcing free-to-play monetization into full-price games, and return to just making good, feature-complete, finished games again.
Ironically, EA and SW:BF2 will avoid Belgian censure, "since at the time of the survey, EA had temporarily removed microtransactions from the game." MTs have since been added back into SW:BF2, but they're not tied to gambling mechanics anymore, and therefore don't break Belgian law. Which means that EA, having thoroughly shit the loot box bed, have completely ruined the fun for everybody else while dodging the fines and other penalties. Huzzah!
Still, if you were wondering if the loot box furor had died down... it hasn't. At all. And I have a feeling that it will be a long, long time before AAA videogame publishers attempt this particular trick again.
Various videogame blogs and media outlets have been talking about loot boxes for weeks, as the increasingly omnipresent (and increasingly manipulative/abusive) "feature" not only finds its way into every AAA videogame release, but results in games being cancelled, and their studios closed, when they the projects can't be easily reworked to include them. Up until now, the tempest has been entirely confined to the games-media teacup, but that may be starting to change.
Loot boxes aren't strictly new. Similar micro-transaction systems are
a regular feature of smartphone games that are initially
free-to-play. But unlike free-to-play games, where players might chip in
a few dollars for a game they enjoy, loot boxes are being introduced
in games that already sell at a retail price of $80 Cdn.
Gamers have become increasingly critical of highly anticipated new releases — such as Forza Motorsport 7, Middle-Earth: Shadow of War and Star Wars Battlefront II — locking items and features that in previous instalments were free.
Many players have likened it to gambling — and some are even calling for government regulation on the matter.
The piece goes through both sides of the argument pretty thoroughly, and reaches no obvious conclusions, although I personally find the AAA publishers' position (i.e. that they need unrestricted access to casino-business game mechanics because their "business model doesn't allow for growth") to be a very weaksauce rationale for letting them get away with exactly the same shit that we regulate at casinos, but that's not nearly as important, I think, as the fact that the piece exists at all. The outcry against AAA videogame publishers naked greed, and total lack of anything that resembles self-control or scruples, has reached a level of intensity where the non-videogaming world is starting to notice... and wonder if it isn't time to do something.
The EAs and Activisions of the world may yet come to regret having pushed the envelope so hard.
As if Activision's recently-patented process of weaponizing online multiplayer game match-making weren't bad enough, it turns out that there's an even worse level of emotionally abusive bullshit lurking beneath the scummy surface of the videogaming industry, and unlike Activision's, this one has definitely already been deployed against unwitting and willing consumers. Ladies and gentlemen, I give you... Scientific Revenue!
Jim Sterling gets credit for the scoop on this story, and his video piece on the subject is an absolute must-watch for anyone who's ever despaired of finding a decent game in the wasteland of shit that is the mobile gaming market.
In a nutshell, though, what Scientific Revenue does is use "best practice" techniques from other industries (specifically, the "big data" and casino businesses) to build data profiles of consumers, without their knowledge or informed consent, the better to target those with demonstrated propensities for in-game purchases and then extract as much money from each tier of punter with a variable pricing scheme.
Basically, the more addictive your personality, the more likely a "SciRev" (nice one, Jim!) is to target addiction-prone players with microtransactions that are priced higher than the exact same MT offerings as presented to players with less-addictive personalities... the idea being that players who are less likely to buy expensive MTs might pop for cheap ones, while the "whales" that are already well and truly hooked will continue to bankrupt themselves by spending money they can't afford on useless digital tat that they don't actually need, and which they probably wouldn't want if it weren't being presented to them in such an emotionally abusive and psychologically manipulative manner.
SciRev's defense of this slimy bullshit is that they're just applying other industries' "best practices" to mobile games. This is rather interesting since one of the industries involved is obviously the gambling industry (they even use the casino industry's terminology for high-revenue victims customers, i.e. "whales"), a heavily-regulated industry to which the AAA video game business, anxious to avoid having their casino-business bullshit slapped with legislated regulations, has been trying very hard to avoid comparisons.
SciRev's other defenses include comparisons to auctions and surge pricing, comparisons which fail for two obvious reasons:
consumers engaged in an auction do so knowingly (something which SciRev's victims cannot say), and place their bids deliberately and openly, which doesn't happen under SciRev's invisible, black-box process;
surge pricing is applied all consumers equally depending on demand fluctuations, while SciRev's model varies prices invisibly to unfairly target individual purchasers.
Bullshit excuses aside, the most important things to know about Scientific Revenue are a) that it's already in use, and b) that is clearly shows up the most common defense of AAA microtransactions (that they're "optional," and somehow about player choice) as the lie that it has always been. This kind of abusive microtransaction-based business model is not intended to be optional; it's intended to be unavoidable, it deliberately targets the most vulnerable consumers, and it desperately needs to be regulated. There really ought to be a law. Seriously, this microtransaction bullshit needs a legislative remedy.
Incidentally, for those that are keen to see the Nintendo Switch succeed, I'd say that the existence of operations like Scientific Revenue in the smartphone gaming space go a long way to improving Nintendo's chances. Whether you're on Google Play or the iOS App Store, mobile gaming has become a wasteland of shit; Nintendo's actively-curated experience might be full of ports of games that made their mark on other platform, but those are all excellent games, and Nintendo seems to be alone among AAA videogame companies in having absolutely no appetite for this kind of abusive bullshit. Nintendo sees their customers as customers, and not as "whales" waiting to happen, and that could be a powerful selling point for their (superior) mobile gaming platform.
Per a release from the Pac-12, the athletic conference will become the first to run and broadcast officially sanctioned esports competitions. They haven’t picked a game yet, but they say they will pick one soon and broadcast some gaming starting next year:
Intercollegiate competition in egaming is in its initial stages, but Pac-12 universities are increasingly involved through passionate student groups competing in competitions with popular games. Esports is also closely tied to academic departments at Pac-12 universities such as computer science, visual and cinematic arts, engineering and others.
Turner Broadcasting and WME/IMG announced that they were forming an eSports league that would debut on TBS. Amazon-owned Twitch, one of the pioneers in this space, receives over 100 million monthly unique viewers, and 1.7 million monthly unique broadcasters. Users view approximately 422 minutes of programming on Twitch, which is more than YouTube’s 291 monthly minutes, according to TechCrunch.
Yes, it's the new videogame gold rush. In the same way that everyone wanted to be making MMOs (only to discover that there really only was room for one World of WarCraft), and then MOBAs (only to discover that there really is only room for one League of Legends), and then free-to-play games (only to discover that people are only willing to drop so much cash on microtransactions for ostensibly free games), now everyone wants to be in esports.
"eSports we find very interesting," Zelnick said. "It is, however, still more a promotional tool than anything else. And most people see eSports as an opportunity to increase consumer engagement in their titles, and depending on the title, to increase consumer spending within the title."
That more or less matches my thinking on the subject. Riot Games didn't design League of Legends to be an esport -- they were just making a game, that they were hoping players would enjoy enough to support with online purchases. It was always an online multiplayer game, and it always had its competitive elements, but there are a lot of competitive online multiplayer games, and almost none of them have become juggernauts of esports in the same way that LoL has.
The same applies to games like Hearthstone, the popularity of which was something of a surprise to Blizzard; players were organizing their own tournaments long before Blizzard got involved. Even Blizzard's StarCraft and WarCraft III, which basically established the current eSports template when it became a cultural phenomenon in South Korea, were not designed as esport titles. Just as with regular, athletic sporting events, the biggest esports grew organically, from games that people just loved to play.
The same applies to almost every big, athletic, sports league. Soccer (or Football, for readers outside NA) was a game long before FIFA became a sporting juggernaut. Football (or gridiron football, for readers outside NA), was organized into the massively profitable NFL long after its popularity as a game had helped it to spread. Baseball is big business, but that's because it was everywhere in the USA at the start of the 20th Century, and not because some corporation decided that their strategy called for a strong position in pastoral past-times.
Conversely, more recent attempts to manufacture new sports have largely flopped. Do you remember when Roller Derby was huge? Do you also remember watching moon landings on TV as a kid? Roller Derby is still around, and experiencing something of a renaissance in the last two years, but it's a long way from being the pop cultural touchstone that it briefly became, back in the 1970s.
Even attempts to popularize already-existing but lesser-known sports, like Lacrosse (yes, there's a pro Lacrosse league) have met with only moderate success; and other contenders only meet with fleeting success before fading into obscurity, living on like zombies in the wasteland of daytime weekday ESPN. Meanwhile, Professional Darts has gone from daytime ESPN broadcasts out of croweded pubs to packing good-sized arenas, much like esports... again, I think, because it was already a popular game.
I have a feeling that esports are here to stay, but even absolutely dominant titles like LoL can only remain on top for so long; it's the nature of the medium, for new games to eventually supplant older ones at the top of gaming's zeitgeist. But companies that are revamping their entire business models around chasing esports gold? I have a feeling that even the even the AAA prospectors might end up with more fools' gold, than real stuff.
I just read this bit of revisionist history on HuffPost Tech, courtesy of Reuters:
Consumers liked Kinect, but it never lived up to its full potential, in part because it spawned no blockbuster games. Microsoft failed to persuade top gaming studios to invest seriously in Kinect, developers say, and by 2014 it was no longer being included with Xbox consoles.
That's a lovely story. Just one problem... that's not what happened.
Critics and reviewers liked the Kinect, yes. Some of them even liked the XBox One version, which was on all the time and reporting what it saw and heard back to Microsoft even when your XBOne was "off," praising it's camera quality and fast response time, among other things. But consumers didn't take to the Kinect, either on the XB360 or the XBOne. That's why the AAA studios weren't making games for the thing... there were no users to whom they could've sold those games, even if they'd made some.
That may have been partly why Microsoft were so keen to bundle the Kinect with the XBOne, back when they were still selling XBOne as the device which was going to take over your living room, and control all your devices, while downplaying games as the main use of the device... a disastrous marketing strategy which Sony capitalised on, allowing them to clean XBox's clock in this console generation, outselling them two to one.
Prior to Xbox One's launch, privacy concerns were raised over the new Kinect; critics showed concerns the device could be used for surveillance, stemming from the originally announced requirements that Xbox One's Kinect be plugged in at all times, plus the initial always-on DRM system that required the console to be connected to the internet to ensure continued functionality. Privacy advocates contended that the increased amount of data which could be collected with the new Kinect (such as a person's eye movements, heart rate, and mood) could be used for targeted advertising.
Reports also surfaced regarding recent Microsoft patents involving Kinect, such as a DRM system based on detecting the number of viewers in a room, and tracking viewing habits by awarding achievements for watching television programs and advertising. While Microsoft stated that its privacy policy "prohibit[s] the collection, storage, or use of Kinect data for the purpose of advertising", critics did not rule out the possibility that these policies could be changed prior to the release of the console.
Concerns were also raised that the device could also record conversations, as its microphone remains active at all times. In response to the criticism, a Microsoft spokesperson stated that users are "in control of when Kinect sensing is On, Off or Paused", will be provided with key privacy information and settings during the console's initial setup, and that user-generated content such as photos and videos "will not leave your Xbox One without your explicit permission."[19][20][21][22] Microsoft ultimately decided to reverse its decision to require Kinect usage on Xbox One, but the console still shipped with the device upon its launch in November 2013.[9]
The decision to still ship XBOne with Kinect added $150 to the price tag, for a device that consumers had never taken to, and which now came with a freight of Orwellian PR, a combination which sunk the platform; Microsoft would eventually backtrack on their claim that Kinect was "essential" to the XBOne experience, and ship a SKU with no Kinect in the box, but the damage was done: PlayStation 4 was already well ahead, and Microsoft would never get close to Sony again in console unit sales.
And yet, Reuters is still claiming that consumers "liked Kinect," in spite of the fact that Microsoft has released it twice, only to have consumers refuse, en masse, to buy the thing. No. Just.... no.