Technical Disruption and a New Golden Era of Games
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Faced with technical disruption, games companies are poised to return to what they do best: focus on high-quality gameplay and entertainment. Speech delivered at the Opening Summit of the International Games Week on April 21, 2015.
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Technical Disruption and a New Golden Era of Games
- 1. James Gwertzman, CEO (@gwertz) www.playfab.com @playfabnetwork
- 2. Growing revenue from live games $- $20 $40 $60 $80 $100 $120 $140 $160 2008 2014 2020 GlobalMarketSpend($B) Packaged Games Live Games 30% 80% Source: PWC, Gartner, Newzoo 2
- 3. Build game Build backend LaunchBuild tools for ops team Segment & target customers Deploy servers Business intelligence Offers & Promotions Update content Host in-game events Customer service Sunset mode User Acquisition Live game life cycle
- 4. “We’re a technology company. We’re not really a game company.” -- Gabe Leydon, Machine Zone Bloomberg Business, March 2015
- 6. Technology is not a competitive advantage for game companies.
- 7. We’re at the start of a golden age of gaming.
- 10. Changing field of backend services Multiplayer Analytics Marketing Commerce Cloud logic Attribution
- 11. + Live ops tools and dashboards (mission control for the whole team) Back-end services (cross-platform, one-stop shop) + Integration with other partners (building out the full ecosystem) and many more coming... Powering the future of games.
- 12. 0 100 200 300 400 500 600 700 800 900 1000 Jan-04 May-05 Oct-06 Feb-08 Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 May-16 New Features Added in Unity Releases Unity 1.0 Unity 2.0 Unity 3.0 Unity 4.0 Unity 5.0
- 16. 2015 Independent Game Festival Winners
- 17. James Gwertzman, CEO (@gwertz) www.playfab.com @playfabnetwork
Editor's Notes
- Good afternoon. I’ve worked in the game industry for more than 15 years, and like all of you, have witnessed some massive changes in that time. The biggest change of all is happening now: The evolution of games from stand-alone goods — a game in a box — to games-as-a-service.
- When I first entered gaming, only PC games were online, but smart phones have changed that. Today more than 30% of all revenue is from live games. By 2020 we think virtually all games will be run as a service -- mobile, PC, console, VR --- more than $100b of revenue a year.
- Success in this space is hard. Operating a live game has a lot in common with running an e-commerce site: You need to track customer relationships, sell merchandise, manage ad campaigns — and of course analyze massive amounts of data.
- Very few game studios do this well currently, and those that do tend to look more like technology companies than game companies. Some even boast about this fact, such as this quote from Machine Zone CEO Gabe Leydon.
- Whenever complexity goes up, so does risk — and when risk goes up, it often seems that creativity and innovation come down. For every massively successful Clash of Clans, there seem to be thousands of lightly-reskinned Clash of Clan clones. Given all this, what I’m about to say may strike some of you as heretical, but I’d like to propose the following two ideas about where our industry is headed:
- First: Technology is not a competitive advantage. Technology is not a competitive advantage. At least not for long enough to matter. But I’ll come back to that.
- Second heretical thought: I think we’re on the brink of a new golden era of games. Seriously. Oh … and these ideas are linked, of course. Let me explain.
- 20 years ago, game studios with any ambition coded everything for their games themselves. They had to. They had no other options, and as a result they were valued as much for their technology as for their games. Then this began to change: Bink for video. Havok for physics. FaceFX. SpeedTree. Games like Quake and Unreal turned into engines. It didn’t matter if your game had a great proprietary physics engine anymore, because everyone else was just using Havok and saving themselves 12 months of dev time.
- This trend has culminated in the juggernaut that is Unity and a slew of other newer alternative engines. Virtually no one is coding their engine from scratch anymore — unless it’s as a hobby. Look at the backend of these live games, however, and it’s a different story. The backend technology of virtually all of today’s top games was built from scratch. Why? Because it had to be. There was no other choice.
- But just as before, that’s changing. First to go was server hosting -- more and more developers are using cloud services, because it’s far more efficient. Much better to invest your capital in developing new games than buying servers. Next we saw solutions for specific problems like monetization, analytics, and ads. Those areas, at least, developers didn’t have to recreate.
- And finally, companies like mine, PlayFab, and others, are racing to deliver entire game operations platforms as a single integrated solution. This is all great news for most developers, because it means that once again, the field is leveling. You don’t need to spend a year building backend technology to launch a great game, anymore than you need to spend a year building animation tools. It’s possible now to build the next Candy Crush saga, or Age of War, without hiring a single server engineer. And that brings me back to my point: In a world where game technology continues to advance, any in-house technology you build will only give you a competitive advantage for a very short time.
- Look at the evolution of Unity: Working with thousands of games and thousands of developers, shared technology will always evolve more quickly than proprietary tech. Can any single game studio keep up with this level of engine investment? Would you want to? Even if you’re a big company with a huge investment in your own technology, consider this: If you took all those engineers building and supporting that technology, and you could convert them all into game programmers, how many more games could you build? How many more creative risks could you afford to take? How much more quickly could you roll out updates to your existing games?
- Meanwhile… out there right now… maybe right here in Berlin… there are small game developers, tiny game developers, building NONE of this technology themselves. They are putting 100% of their resources to work making the best games they can. And not all of these studios will stay small. And that brings me to the second point I made. Why I think we’re poised for a new golden age of gaming. I think the very fact that technology is no longer a competitive advantage means that content is about to become more important than ever. Look what happened to the TV industry.
- About 8 years ago, the rise of YouTube and other online video outlets had a lot of people worried. With the technical barrier to creating and distributing video so low, was the future of TV simply cat videos? Well, we’re in that future and we know what happened: Faced with massive technical disruption, entertainment companies went back to what they knew best: content. Audiences, it turned out, didn’t care that much how or where they watched TV, as long as it was good.
- The result has been an explosion of innovative, high-quality TV shows on all kinds of platforms, from all kinds of providers, and with all kinds of distribution models. Amazon and Netflix have started winning Golden Globes. And it’s not just the shows at the top that have benefited. In the U.S. alone, counting broadcast, cable and online platforms, there were 352 new scripted primetime TV shows last year. Cable TV alone has more than doubled the number of shows it produces in just 5 years. U.S. critics have dubbed this a “new golden age” of television.
- I believe the games industry is on the brink of a similar renaissance: Faced with technical disruption, games companies will return to what they do best as well: Content. Making games fun. Remember fun? Consider these winners of this year’s Independent Game Festival. These were all super creative, original games, built by small teams but at an incredible level of quality. Games like these, from indie studios, was unthinkable a decade ago. And that’s why I think we’re entering a new golden era for games — one where the focus will be on high-quality gameplay and entertainment. It’s a very exciting time. Technology isn’t your competitive advantage, content is.
- Thank you for your time. Danke fürs Zuhören.