Probably the most discussed topic this week in the industry. With Visceral being shut down by EA and poor sales for critically praised The Evil Within 2 (+ Prey, Resident Evil VII earlier this year), much has been said about the viability of single player-only experiences going forward. While I do understand the frustration of gamers who are fond of those games (I’m one of them), the mediocre level of sales for these titles is an indictment against them: developers and publishers - just like the vast majority of ventures out there - are in this business to turn a profit. If the market dictates that single-player experiences represent a significant risk of not achieving that goal, it makes sense for those devs/pubs to seek a market, genre and business model that will ensure that they reach profitability.
I’ve been thinking a lot recently about Nintendo’s strategy for network services on the Switch; I have started to wonder if rolling out those services after the release of the console was a bad move after all. I’ll admit that this is an ‘after-the-fact’ type of reflection, but the Switch has been extremely successful so far without a real online infrastructure. Nintendo seemed to have almost adopted a startup approach: release your base product out there and roll out additional features later on. Nintendo will have to bring excellent net services as soon as possible, to bring even more gamers on board. But the success of the Switch so far speaks volume about the appeal of the console and its hybrid proposition.
Out of all the new features announced at TwitchCon, Stream Summary and Achievements really stood up in my opinion. These features enable streamers to not only get data (total viewers, new followers etc) at the end of their streams but also a lot more clarity on what needs to be achieved to become Affiliate or Partner.
The creation of the Affiliate program was a first step to get more aspiring streamers on board. Achievements are a great way to remove some of the uncertainty around progress in the Twitch ecosystem. With YouTube introducing Sponsorships - the equivalent of Twitch Subscriptions - last month, there will be a lot of competition between the two streaming giants to bring more clarity on monetisation for streamers.
Company valuation is often a difficult exercise, as it is largely based on potential future cash flows. But if we consider Forbes’ figures as accurate, I am surprised that Valve is only valued at over $10B (if we assume that Newell’s worth valuation is mostly based on his Valve shares): Steam has a quasi monopoly on PC game online retail with an estimated 70% market share; Steam can boast of 70 million monthly active players - half of them logging in daily - and still has plenty of room to expand in other markets, in particular Asian ones. Estimated revenues (Valve is a private company and doesn’t reveal its financial results) did remain flat between 2015 and 2016 - but they still reach $3.5B which is much higher than some unicorns out there (WeWork valued at $20B with less than $1B in revenues). Valve is also a very profitable company, which is not the case of many prominent startups. Taking all that into account, I would have expected a higher valuation for Valve.
Magic Leap has to be one of the most perplexing startups. With close to $2B in funding, and a $7+ billion valuation, Magic Leap still hasn’t displayed even a prototype of the Augmented Reality HMD it is working on. I’m not the type of person who believe that ‘investors don’t know what they’re doing’. There must be something captivating about Magic Leap technology to command such huge funding rounds. At the same time, while they haven’t released any AR glasses or HMD, Apple, Google and Facebook (I could add Microsoft with Mixed Reality) have made significant progress in AR. They have respectively released ARKit, ARCore and VR Studio which enable developers to create AR experiences. The three giants are also rumoured to be working on their own AR glasses. However great Magic Leap technology may be, there will be tough competition for them when they eventually come out with something.