Newzoo forecasts 2020 global games industry will reach $159 billion

Games and esports analytics firm Newzoo released its highly cited annual report on the size and state of the video gaming industry yesterday. The firm is predicting 2020 global game industry revenue from consumers of $159.3 billion, a 9.3% increase year-over-year. Newzoo predicts the market will surpass $200 billion by the end of 2023.

Importantly, the data excludes in-game advertising revenue (which surged +59% during COVID-19 lockdowns, according to Unity) and the market of gaming digital assets traded between consumers. Advertising within games is a meaningful source of revenue for many mobile gaming companies. In-game ads in just the U.S. drove roughly $3 billion in industry revenue last year, according to eMarketer.

To compare with gaming, the global markets for other media and entertainment formats are:

Counting gamers

Of 7.8 billion people on the planet, 4.2 billion (53.6%) of whom have internet connectivity, 2.69 billion will play video games this year, and Newzoo predicts that number to reach three billion in 2023. It broke down the current geographic distribution of gamers as:

  • 1,447 million (54%) in Asia-Pacific
  • 386 million (14%) in Europe
  • 377 million (14%) in Middle East & Africa
  • 266 million (10%) in Latin America
  • 210 million (8%) in North America

EA games on PS4 and Xbox One could be ‘upgraded free’ to next-gen console versions

2020 and 2021 will be one of the periodic transitional eras in gaming as Sony and Microsoft debut their shiny new consoles, the PlayStation 5 and Xbox Series X. To ease the process (and spur adoption of the next generation), EA may make its upcoming titles free to “upgrade” to your chosen console.

On an earnings call last night, EA COO Blake Jorgensen at the end of his remarks noted a possible effect on revenue “from the games we are launching for the current generation of consoles that can also be upgraded free for the next generation.”

EA declined to comment on the comment, but the meaning seems obvious enough. It likely refers to “cross-gen” games that will appear on both existing consoles and those set to debut later in the year. If you buy the next, say, “Battlefield” game on PlayStation 4, you will have the option to transfer it somehow to the PlayStation 5.

Exactly how this would work is not clear — there will almost certainly be some rigmarole involving deactivating the license on your old copy — but the effect is a positive and consumer-friendly one. People can buy a game, from EA anyway, safe in the knowledge that they can continue to play it even if they buy a new console. That hasn’t been the case, in general, before.

In fact, the whole transition is looking to be a relatively easy one: The new consoles will be backward-compatible with many games from the previous generation; services like online access and monthly free games will cross over; some hardware and accessories will be shared; built-in streaming options mean improved portability.

EA’s apparent commitment to cross-gen upgrades is among the first, though some publishers and developers have floated the idea or declared support for it, pending approval from the console makers themselves. The confirmation could trigger an avalanche of announcements as others hurry to assure gamers that they, too, will provide this option.

Sony and Microsoft are the ones left holding the bag here: While a sale is a sale for EA or Ubisoft, the console makers are under tremendous pressure to show their console launches are successful. (Nintendo, as usual, is pursuing its own agenda independent from the cadence of its rivals.)

Part of that strategy is high-profile next-gen exclusives that people save up to buy alongside the new consoles, providing revenue spikes and platform lock-ins. When a large amount of those sales occur earlier in the year, and technically for the previous consoles, it’s not a good look.

These policies have a way of evolving right up to and beyond the moment of release. Sony clowned so devastatingly on Microsoft’s confusing and limited game transfer policies at E3 2013, the outset of this console generation, that it affected the whole zeitgeist, boosting PS4 sales and forcing Microsoft to reconsider. (You can see me in the video of it; I’ve rarely heard a crowd so excited about something.)

It’s better to err on the side of liberality, it turns out. EA, which has routinely erred in the other direction over the last few years, hopes perhaps to curry favor in advance of a gaming market opening up in new directions. We’ll see if other companies follow suit.

Microsoft shares rise after the tech giant posts 15% growth

Today Microsoft reported its third-quarter, fiscal 2020 quarter earnings, the period of time corresponding to Q1 2020 on the regular calendar.

The technology giant generated $35 billion in revenue, up 15% from the year-ago period. That top line led to $13 billion in operating income (+25% YoY), and $10.8 billion in net income (+22% YoY). Microsoft saw $1.40 in earnings per share in the quarter.

Investors expected the company to report $1.26 in per-share profit off of revenue of $33.66 billion, according to Yahoo Finance. Right after reporting its results, Microsoft shares were up around 1.5%. The firm rallied 4.5% during regular trading hours on the back of a strong day of trading for technology equities.

Other headlines from the company’s earnings report include Azure (its AWS competitor) growing 59% from its year-ago result, 25% growth in Office 365 commercial incomes, LinkedIn top line growing 21% from the year-ago period and roughly flat results from its Xbox, search and Surface businesses.

However, calendar Q1 (Q3 F2020 for Microsoft) only included a portion of the world’s COVID-19 response. The results reflected that, with the company noting that “COVID-19 had minimal net impact” on revenue in the quarter, boosting cloud usage, lowering some advertising revenue from LinkedIn, raising gaming engagement and slowing search advertising top line. The balance of that appears to be largely a wash.

The company will talk more about the future on its earnings call, but the firm did warn in its own report that “the effects of COVID-19 may not be fully reflected in the financial results until future periods.”

Metrics

In case anyone else is interested in other metrics, we’ve collected the most interesting numbers from Microsoft’s earnings slides for your enjoyment. Here they are:

  • Q3 F2020 aggregate gross margin: 69%, +2% YoY
  • Q3 F2020 aggregate operating margin: 37%, +3% YoY
  • The company’s commercial bookings growth dropped sharply compared to preceding quarters; a portion of this was due to currency changes, which lowered growth in the category from 12% to 7% (YoY). The preceding lowest set of results since Q3 F2019 was that year’s Q4, which saw 22% growth (YoY) and 25% on a currency-adjusted basis.
  • Commercial cloud revenue at Microsoft as $13.3 billion in the quarter, up 39% YoY. Remember when Microsoft wanted to hit a $20 billion run rate for commercial cloud revenue? Good times.
  • LinkedIn got name-checked as a driver of rising operating expenses, which rose 10% to $11.1 billion; the only other category noted was cloud engineers. Which, to be clear, are expensive.
  • Microsoft returned $9.9 billion to shareholders in the quarter, and spent $3.9 billion on capital expenditures. (Why aren’t those flipped?)
  • And finally, operating cash flow at the company was $17.5 billion in the quarter. Chew on that, startups.

On the whole it was a good quarter for the company, which didn’t take too much damage from COVID-19. Of course, its outlook will matter quite a lot when we get it. For now, investors are content.

Microsoft just revealed a ton of new info about the Xbox Series X

There will be no E3 this summer. And quite frankly, the future of just about every conference for the year looks to be in jeopardy, at best. Understandably, Microsoft is releasing most of the Xbox Series X info online in the meantime. A few weeks ago, it offered some key insights into the next-gen console and today it’s because with far and away its deepest dive yet.

A momentary respite, perhaps, from the news of the world, this morning brought four separate blog posts, a hands-on video and a whole lot of information for developers. Bookmark this glossary post in the meantime, if you need to cross reference any of the information referenced here or in the original post.

At very least, it will help you sound a bit smarter when you explain all of this stuff to a loved one.

Okay, let’s start with the spec breakdown:

So, a custom eight-core 8 core AMD Zen 2 CPU and an RDNA 2-class GPU. “Xbox Series X is the biggest generational leap of SOC and API design that we’ve done with Microsoft, and it’s really an honor for AMD to be a trusted Microsoft partner for this endeavor,” says Corporate VP Sebastien Nussbaum in the post.

Per the Digital Foundry deep dive,

[T]he Series X processor is actually capable of running four Xbox One S game sessions simultaneously on the same chip, and contains an new internal video encoder that is six times as fast as the more latent, external encoder used on current xCloud servers.

That’s coupled with the the GPU stuff we already knew about, including the promise of 12  teraflops of processing power, equating to double what the Xbox One X could do and eight times the original Xbox One. There’s Variable Rate Shading (VRS), which allows for the system to focus on given effects on screen and DirectX Raytracing for improved lighting, reflections and other fine touches.

“Without hardware acceleration, this work could have been done in the shaders, but would have consumed over 13 TFLOPs alone,” Xbox system architect Andrew Goossen tells the site. “For the Series X, this work is offloaded onto dedicated hardware and the shader can continue to run in parallel with full performance. In other words, Series X can effectively tap the equivalent of well over 25 TFLOPs of performance while ray tracing.”

Today brought some impressive early gaming demos as well. Gears 5 showcased 60 FPS videos in 4K (double the Xbox One X FPS), improved resolution textures and other details like fog and particles.

There’s a solid state drive on board with 1TB of storage, coupled with 16GB of RAM and a 4K Blu-ray drive. Around back, there’s what appears to be an HDMI port, Ethernet port, two standard USB ports and an expansion slot. Here’s the Seagate storage expansion module from the aforementioned hands on video:

The controller, too, is getting an overhaul. It ships with a pair of AA batteries (though you can upgrade to rechargeable). Senior Designer Ryan Whitaker says inclusion was a big part of some of the design changes here, as gaming continues to grow with a mainstream audience,

One key area we’re improving is fitting a wider range of hand sizes, especially smaller hands. By accommodating hands similar to those of an average 8-year-old, we found we could improve accessibility and comfort for hundreds of millions more people without negatively affecting the experience for those with larger hands. We did that by rounding the bumpers, slightly reducing and rounding parts around the triggers, and carefully sculpting the grips.

There’s a Share button on board, in an attempt to make it a more social experience, along with design changes focused on making it easier to play older games via xCloud. Microsoft clearly wants to make game play more platform agnostic, as it moves to more cloud-based experiences.

The Xbox Series X is due out at the end of the year and will go head to head with Sony’s latest offering.

Xbox Series X is Microsoft’s next-gen console, arriving late-2020

If you didn’t watch last night’s Game Awards, you may of missed it. But Xbox Series X is the company’s  next generation console, and will be arriving in late 2020. Thankfully, Microsoft has kindly catalogued all of the images, media and even a little information online. Oh, and we’ll almost certainly be hearing a LOT more about the Xbox Series X before it arrives holidays 2020.

Xbox Head Phil Spencer has a pretty long break down over on the the official blog. But let’s start with the obvious here. The Series X looks…different. Surely the meme makers are already working overtime on this one, but to my mind, it looks a more traditional PC or maybe even a router.

It’s tall (around three times as tall as its predecessor), it’s rectangular, it’s black. It’s fairly minimalist. A lot of people seem to be comparing it to a refrigerator, which, fine. Honestly, I think it’s got that working for it. Surely plenty of people are looking for something that more seamlessly blends in with its surroundings.

The last few generations have found consoles transforming from specialty items into catchall media players, and there’s something to be said for a product that can sit on your shelf, largely undetected. Notably, the blocky design means that the console can be oriented either vertically or horizontally, depending on your spacing needs.

The latest version of the Xbox Wireless Controller arrives alongside the new system, because, well, you’re going to need something to control it with. It’s a bit smaller than the previous version, “refined to accommodate an even wider range of people,” per Spencer.

The buttons are largely in tact, with the addition of a Share button for taking screenshots and game clips. The new controllers ship with the system and will be capable with both the Xbox One and Windows 10 systems.

Speaking of older systems, the Series X is set up to support backward compatibility for all older systems, along with Xbox One accessories. Per Spencer,

Building on our compatibility promise, with Xbox Series X we’re also investing in consumer-friendly pathways to game ownership across generations.

Leading the way with our first-party titles including Halo Infinite in 2020, we’re committed to ensuring that games from Xbox Game Studios support cross-generation entitlements and that your Achievements and game saves are shared across devices.

Spec information is still pretty light for this first pass, but Spencer promises 4K playback at 60FPS (with potentially up to 120FPS) and support for both Variable Refresh Rate (VRR) and 8K capability.

Powered by our custom-designed processor leveraging the latest Zen 2 and next generation RDNA architecture from our partners at AMD, Xbox Series X will deliver hardware accelerated ray tracing and a new level of performance never before seen in a console. Additionally, our patented Variable Rate Shading (VRS) technology will allow developers to get even more out of the Xbox Series X GPU and our next-generation SSD will virtually eliminate load times and bring players into their gaming worlds faster than ever before.

The Series X will also, naturally, have an eye on cloud gaming, in addition to native hardware. Tonight’s unveil also featured a sneak preview of the upcoming Ninja Theory title, Senua’s Saga: Hellblade II.

Logitech accessory kit makes the Xbox Adaptive Controller even more accessible

Microsoft’s Xbox Adaptive Controller was a breath of fresh air in a gaming world that has largely failed to consider the needs of people with disabilities. Now Logitech has joined the effort to empower this diverse population with an expanded set of XAC-compatible buttons and triggers.

Logitech’s $100 Adaptive Gaming Kit comes with a dozen buttons in a variety of sizes, two large analog levers to control the triggers, and a Velcro-style pad to which they can all be securely attached. It’s hopefully the start of a hardware ecosystem that will be at least a significant fraction of the diversity available to the able population.

The visibility of gamers with disabilities has grown both as the communities have organized and communicated their needs, and as gaming itself has moved towards the mainstream. Turns out there are millions of people who, for one reason or another, can’t use a controller or mouse and keyboard the way others can — and they want to play games too.

Always one of the more reliably considerate companies when it comes to accessibility issues, Microsoft began developing the XAC a couple years back — though admittedly after years of, like the rest of the gaming hardware community, failing to accommodate disabled gamers.

Logitech was an unwitting partner, having provided joysticks for the project without being told what they were for. But when the XAC was unveiled, Logitech was stunned and chagrined.

“This is something that, shame on us, we didn’t think about,” said Mark Starrett, Logitech G’s senior global product manager. “We’ve been trying to diversify gaming, like getting more girls to play, but we totally did not think about this. But you see the videos Microsoft put out, how excited the kids are — it’s so motivating to see that, it makes you want to continue that work.”

And to their credit, the team got in contact with Microsoft soon after and said they’d like to collaborate on some accessories for the system.

In some ways this wouldn’t be particularly difficult: The XAC uses 3.5mm headphone jacks as its main input, so it can accept signals from a wide range of devices, from its own buttons and sticks to things like blow tubes, so there’s no worries about proprietary connections, for instance. But when it comes to accessible devices and systems like this, there are often other rigorous standards in place that need to be upheld throughout, so it’s necessary to work closely with both the platform provider (Microsoft) and, naturally, the people who will actually be using them.

“This community, you can’t make anything for them without doing it with them,” said Starrett. “When we design a gaming keyboard or mouse, we engage pros, players, all that stuff, right? So with this, it’s absolutely critical to watch them with every piece.”

“The biggest takeaway is that everybody is so different: every challenge, every setup, everyone we talked to,” he continued. “We had a 70, 80 year old guy who plays Destiny and has arthritis — all we really needed to do was put a block on the back of his controller, because he couldn’t pull the trigger. Then we worked with a girl who has a quadstick, she was playing Madden like a pro with something you just puff and blow on. Another guy played everything with his feet. So we spent a lot of time on the site just watching.”

The final set of buttons they arrived at includes three very large ones, four smaller ones (though still big compared with ordinary controller buttons), four “light touch” buttons that can be easily activated by any contact, and two big triggers. Because they knew different gamers would use the sets differently, there’s a set of labels in the box that can be applied however they like.

Then there are two hook and loop (i.e. Velcro) mats to which the buttons can be attached, one rigid and the other flexible, so it can be draped over a leg, the arm of a couch, etc.

Even the packaging the buttons come in is accessible: A single strip of tape pulls out and causes the whole box to unfold, and then everything is in non-sealed reusable bags. The guide is wordless so it can be used in any country, by any player.

It’s nice to see such consideration at work, and no doubt the players who will benefit from these products will be happy to have a variety of options to choose from. I was starting to think I could use a couple of these buttons myself.

Starrett seemed very happy with the results, and also proud that the work had started something new at Logitech.

“The groups we talked to brought a lot of different things to mind for us,” he said. “We’re always updating things, but now we’re updating everything with an eye to accessibility. It’s helped Logitech as a company to learn about this stuff.”

You can pick up Logitech’s Adaptive Gaming kit here for $100.

Microsoft announces its xCloud streaming service and a truckload of new games are coming in 2020

Microsoft has announced a vague intention to launch its xCloud game streaming service sometime in 2020, and dropped a double handful of new titles that will arrive on it and the existing Game Pass subscription. It seems that next year will indeed be the opening battle in the streaming wars to come.

The announcements came at XO19, the company’s Xbox-focused event, which is taking place in London. They seem calculated to take the wind out of Google’s sails; the opening lineup of Stadia, Google’s entry in the game streaming world, was finalized earlier this week and is rather barebones. Microsoft is hoping Google’s first-mover advantage will be nullified by the expected confusion around payments, features, titles, and other issues Stadia is still working out.

Game Pass is currently in a preview period on PC. Although Microsoft did not supply a hard release date, saying only that 2020 is the plan. That year will also bring Windows 10 support, PC game streaming, and potentially an expansion beyond Android for mobile streaming.

The price too is TBA — Google’s proposition is remarkably complicated, and it will take time for consumers to figure out what they’re willing to pay for, what the real costs are, and so on. So Microsoft is probably going to wait and see here.

But what is known about xCloud is that gamers will get access to all the games currently available on Microsoft’s Game Pass subscription — well over a hundred PC and console titles right now, with more being added regularly. That makes it easier to commit to for a lot of gamers.

New controllers will be supported soon, including Sony’s DualShock 4, which comes with the PlayStation 4; that’s a real olive branch to Microsoft’s arch-rival. And new countries will be brought into the fold soon as well: Canada, India, Japan, and “Western Europe.”

Game Pass will also be receiving dozens of titles old and new throughout 2020, including Final Fantasy 7 through 15, Darksiders 3, Flight Simulator, and a bunch of newly announced games as well, such as Obsidian’s new “Honey, I Shrunk the Survival Game” title, “Grounded.”

Several brand new properties and gameplay for known but unreleased games were also teased at XO19. Check them out below:

Everwild is a new IP from Rare that appears to involve a lot of sneaking around a lush forest and either avoiding or interacting with fantastical animals. It’s still early days, but the team wants to create “new ways to play in a natural and magical world.” I’m just here for the solar-powered dino-deer.

Tell Me Why is a new one from Dontnod, makers of Life is Strange starring a pair of twins with some kind of paranormal connection. Notably one of the twins is transgender, not common among game protagonists, and the company worked with GLAAD to make sure the representation of the character is genuine.

Age of Empires 4 got an only slightly satisfying gameplay reveal. Real-time strategy buffs will want more than this, but no doubt they’re excited to see this venerable franchise getting a modern sequel.

You can catch up on the rest over at the Xbox official blog post.

Xbox Live is down for many

If you were trying to sneak in a quick game on Xbox Live during your Friday afternoon lunch break and found that you can’t get online: don’t worry, you’re not alone.

While Microsoft’s Xbox Live Status page still says all things are good to go (Update: Microsoft’s status page has now caught up with the outage, and says that it’s impacting sign-ins, account creations, and searches), reports are pouring in of an outage keeping many users from logging in.

Microsoft acknowledged the problem on Twitter, saying that they’re “looking into it now”

Story developing…

Spotify aims to turn podcast fans into podcast creators with ‘Create podcast’ test

Spotify is testing a new ‘Create podcast’ feature that shows up atop a user’s list of their subscribed podcasts in the app interface, as first uncovered by Jane Manchung Wong (@wongmjane) (via Engadget). The button then provides a takeover promotion directing users to download Anchor, the podcast creation app that Spotify acquired in February.

This is yet another example of the investment that Spotify is making in podcasts – both their consumption and their creation. The subscription streaming company also unveiled a new analytics dashboard for podcasts earlier this year, and released it to all creators earlier in August. Because the company is also primarily a music streaming service, these insights include showing podcast creators what artists their listeners primarily gravitate towards.

Spotify has also launched a personalized playlist that mixes music with podcasts, opened up its podcast submission tool to all creators, and redesigned its navigation in-app to put podcasts on more equal footing with music, all in 2019 alone. The company is clearly doubling down on podcasts as a key element of its overall platform, building on a number of acquisitions on both the content and creation side.

Podcasts represent a way for Spotify to both diversify its revenue and open up a new line of business wherein it can own more of the upside, since its current licensing relationships with music labels mean it gets very little of the money paid from subscribers to its service based on their streams of songs. Especially via selling ads to creators and advertisers, Spotify stands to be able to make more from podcasts in terms of profit if it can continue to increase usage among listeners.

Earbuds lets audiences stream the playlists of athletes, entertainers and each other

Earbuds, a new startup from Austin founded by former Detroit Lions lineman Jason Fox, wants to bring the power of social media to your eardrums.

The company is one of a growing number of startups trying to rejuvenate the music streaming market by combining it with social networking so that audiences can listen to the playlists of their favorite athletes and entertainers… and their friends.

For Fox, the idea for Earbuds sprung from his experiences in the NFL, watching how other players interacted with crowds and hearing about the things fans wanted to know about their favorite players’ routines.

“We were playing Caroline in the first game of the season and Cam Newton was warming up right next to me,” Fox recalled. “He was jamming. Getting the crowd into it. And I was thinking there’re 85,000 people here and millions of more people watching at home…  And I thought… how many people would love to be in his headphones right now?”

Jason Fox TC

Earbuds founder Jason Fox

It wasn’t just Cam Newton who received attention. Fox said at every press conference one or two questions would be about what songs teammates played before games. On social media, players would take screenshots of their playlists and post them to platforms like Twitter or Instagram, Fox said.

The company has been out in the market in a beta version since February and has focused on lining up potential Earbuds devotees from among Fox’s friends in the NFL and entertainers from music and media.

“We made a decision to tweak something and make it very very heavily around influencers because that’s what’s really driving traffic for us,” Fox says. 

Screen Shot 2019 08 07 at 5.44.50 PM

Image courtesy of Earbuds

At its core, the app is just about making music more social, according to Fox. “There’s a social platform for everything, but in the days of terrestrial media distribution music has remain isolated,” he says. 

Logging on is easy. Users can create a login for the app or use their Google or Facebook accounts. One more step to link the Earbuds app with Spotify or Apple Music (the company offers one month free of the premium versions of either service to new users) and then a user can look for friends or browse popular playlists.

A leaderboard indicates which users on the app have streamed the most music and users can create their own streams by adding songs from their libraries to build in-app playlists.

Earbuds isn’t the first company to take a shot at socializing the music listening experience. The olds may remember services like Turntable.fm, which took a stab at making music social but shut down back in 2013. Newer services, like Playlist, are also combining social networking features with music streaming. That site focuses on connecting people with similar musical tastes.

Fox thinks that the ability to attract entertainers like Nelly (who’s on the app) and athletes could be transformative for listeners. Basically these artists and athletes can become their own online radio station, he says.

Fox spent nearly a year meeting with streaming services, music labels, athletes, artists and college students (the app’s initial target market) before even working with developers on a single line of code. The initial work was done out of Los Angeles, but after a year Fox moved the company down to Austin and rebuilt the app from the ground up to focus more on the user experience.

Early partnerships with Burton on an activation had snowboarders streaming their music as they rode a halfpipe proved that there was an audience, Fox said. Now the company is working on integrations across different sports and even esports.

Fox raised a small friends and family round of $630,000 before putting together a $1.5 million seed to get the app out into the market. Now the company is looking for $3 million to scale even more as it looks to integrations with sports teams and other streaming services like Twitch (to capture the gaming audience).

The company currently has seven employees.

Earbuds is available on iOS.

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