Electronic Arts

Northzone’s Paul Murphy goes deep on the next era of gaming

Posted by | Amazon, Angry Birds, Candy Crush, Electronic Arts, esports, Gaming, Google, King, league of legends, Media, mobile gaming, Netflix, Nintendo Switch, Paul Murphy, Rovio, Sports, stadia, Startups, Steam, supercell, Talent, TC, Tencent, unity-technologies, Venture Capital, Virtual reality | No Comments

As the gaming market continues to boom, billions of dollars are being invested in new games and new streaming platforms vying to own a piece of the action. Most of the value is accruing to the large incumbents in a space, however, and the entrance of Google and other big tech companies makes it difficult to identify where there are compelling opportunities for entrepreneurs to build new empires.

TechCrunch media analyst Eric Peckham recently sat down with Paul Murphy, Partner at European venture firm Northzone, to discuss Paul’s view of the market and where he is focusing his dollars. Below is the transcript of the conversation (edited for length and clarity):


Eric Peckham: You co-founded the hit mobile game Dots before moving to London and joining Northzone last year. Are you still bullish on investment opportunities in mobile gaming or do you think the market has changed?

Paul Murphy: I’m bullish on mobile gaming–the market is bigger than it has ever been. There’s a whole generation of people that have been trained to play games on mobile phones. So those are things that are very positive.

The challenge is you don’t really have a rising tide moment anymore. The winners have won. And so it’s very, very difficult for someone to enter with new content and build a business that’s as big as Supercell or King, regardless of how good their content is. So while the prize for winning in mobile gaming content big, the likelihood is smaller.

Where I’m spending most of my time is not on content, it’s on components within mobile gaming. We’re looking at infrastructure: different platforms that enable mobile gaming, like Bunch which we invested in.

Their product allows you to do live video and audio on top of mobile games. So we don’t have to take any content risk. We’re betting that this great product will fit into a large inventory ecosystem.

Peckham: New mobile game studios that are launching all seem to fall under the sphere of influence of these bigger companies. They get a strategic investment from Supercell or another company. To your point, it’s tough for a small startup to compete entirely on its own.

Murphy: It’s possible in mobile gaming still but it’s really, really hard now. At the same time, what you’ve seen is the odds of winning are lower. It is hard to reach the same scale when it costs you $5.00 to acquire a user today, whereas when Candy Crush launched, it was $0.05 per user. So it’s almost impossible to achieve King-like scale today.

Therefore, you’re looking at similar content risk with reduced upside, which makes that equation less attractive for venture capital. But it might be perfectly fine for an established company because they don’t need to do the marketing, they have the audience already.

The big gaming companies all struggle with the challenge of how to create the next hit IP. They have this machine that can bring any great game to market efficiently, with a large audience they can cross promote from and capital they can invest to build a big brand quickly. For them, the biggest challenge is getting the best content.

So it’s natural to me that the pendulum has swung towards strategic investors in mobile gaming content. Epic has a fund that they set up with Improbable, Supercell is making direct investments, Tencent has been making investments for years. Even from a content perspective, you’re probably going to see Apple, Google, and Amazon making more content investments in mobile gaming.

Image via Getty Images / aurielaki

Peckham: Does this same market dynamic apply to PC games and console games? Do you see a certain area within gaming where there’s still opportunity for independent startups to create the game itself and find success at a venture scale?

Murphy: The reason we made our investment in Klang Games, which is building an MMO called Seed that people will primarily play through PC, is that while there is content risk–you’re never going to get rid of the possibility that the IP doesn’t fly–if it works, it will be massive…an Earth-shattering level of success. If their vision comes to life, it will be very, very big.

So that one has all the risks that you’d have in any other game studio but the upside is exponentially larger, so the bet makes sense to us. And it so happens that it’s going to be on PC first, where there’s certainly a lot of competition but it’s not as saturated and the monetization methods are healthier than in mobile gaming. In PC, you don’t have to do free-to-play tactics that interfere with the gameplay.

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Where top VCs are investing in media, entertainment & gaming

Posted by | Apple, BetaWorks, charles hudson, Electronic Arts, Entertainment, epic games, Eric Hippeau, esports, Facebook, fortnite, founders fund, funding, Fundings & Exits, Gaming, Google, GV, HQ Trivia, instagram, interactive media, lerer hippeau ventures, lightspeed venture partners, Luminary Media, matt hartman, Media, mg siegler, Netflix, new media, precursor ventures, Roblox, scooter braun, sequoia capital, Sports, Spotify, starbucks, Startups, sweet capital, TC, Twitch, Venture Capital, Video, Virtual reality | No Comments

Most of the strategy discussions and news coverage in the media and entertainment industry is concerned with the unfolding corporate mega-mergers and the political implications of social media platforms.

These are important conversations, but they’re largely a story of twentieth-century media (and broader society) finally responding to the dominance Web 2.0 companies have achieved.

To entrepreneurs and VCs, the more pressing focus is on what the next generation of companies to transform entertainment will look like. Like other sectors, the underlying force is advances in artificial intelligence and computing power.

In this context, that results in a merging of gaming and linear storytelling into new interactive media. To highlight the opportunities here, I asked nine top VCs to share where they are putting their money.

Here are the media investment theses of: Cyan Banister (Founders Fund), Alex Taussig (Lightspeed), Matt Hartman (betaworks), Stephanie Zhan (Sequoia), Jordan Fudge (Sinai), Christian Dorffer (Sweet Capital), Charles Hudson (Precursor), MG Siegler (GV), and Eric Hippeau (Lerer Hippeau).

Cyan Banister, Partner at Founders Fund

In 2018 I was obsessed with the idea of how you can bring AI and entertainment together. Having made early investments in Brud, A.I. Foundation, Artie and Fable, it became clear that the missing piece behind most AR experiences was a lack of memory.

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EA lays off 350 people

Posted by | Activision Blizzard, Electronic Arts, Gaming, layoffs, TC | No Comments

Though Apex Legends continues to be a bright spot for EA, the game publisher and the industry as a whole still have hurdles ahead. Today, EA confirmed that it laid off 350 people in marketing, publishing and other departments.

Kotaku obtained an email sent to employees by EA CEO Andrew Wilson, which said that the main focus is increasing the quality of its games. A part of that is “ramping down” the company’s presence in Japan and Russia. Famitsu later confirmed that the Japan office has been closed entirely.

Of the 9,000 global employees at EA, the 350 people laid off represent 3.8 percent of EA’s workforce.

EA isn’t alone. The publisher’s biggest competitor, Activision Blizzard, let go nearly 800 employees, roughly 8 percent of its workforce, in February.

“We have a vision to be the World’s Greatest Games Company,” wrote Wilson in an email obtained and published by Kotaku. “If we’re honest with ourselves, we’re not there right now. We have work to do with our games, our player relationships, and our business. Across the company, teams are already taking action to ensure we are creating higher-quality games and live services, reaching more platforms with our content and subscriptions, improving our Frostbite tools, focusing our network and cloud gaming priorities, and closing the gap between us and our player communities.”

EA sent Kotaku the following statement:

Today we took some important steps as a company to address our challenges and prepare for the opportunities ahead. As we look across a changing world around us, it’s clear that we must change with it. We’re making deliberate moves to better deliver on our commitments, refine our organization and meet the needs of our players. As part of this, we have made changes to our marketing and publishing organization, our operations teams, and we are ramping down our current presence in Japan and Russia as we focus on different ways to serve our players in those markets. In addition to organizational changes, we are deeply focused on increasing quality in our games and services. Great games will continue to be at the core of everything we do, and we are thinking differently about how to amaze and inspire our players.

This is a difficult day. The changes we’re making today will impact about 350 roles in our 9,000-person company. These are important but very hard decisions, and we do not take them lightly. We are friends and colleagues at EA, we appreciate and value everyone’s contributions, and we are doing everything we can to ensure we are looking after our people to help them through this period to find their next opportunity. This is our top priority.

Gaming continues to grow, and record-breaking titles like Fortnite and EA’s own Apex Legends show that there is plenty of money to be made. In fact, Blizzard Activision CEO announced record earnings in 2018, but also said that the company failed to reach its full potential.

That potential has to do with a shift from a model that generates revenue once for a single title to something more akin to a content subscription service. In-app purchases and gaming subscriptions are accounting for more and more of game publishers’ revenues. The Financial Times reported in 2017 that, 10 years prior, one-off sales of packaged home-console software accounted for 64 percent of the global gaming market. That number dropped to 30 percent as in-game purchases and subscriptions continue to grow in popularity, as seen with games like Fortnite and Apex Legends.

This more layered revenue structure creates something sticky with consumers, but also runs the risk of alienating them by constantly asking for more money, especially with a game that isn’t free to play.

We’ve reached out to EA and will update if/when we know more.

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Epic Games CEO says Apex Legends hasn’t made a dent in Fortnite

Posted by | apex legends, Electronic Arts, Entertainment, epic games, fortnite, Gaming, Startups, TC | No Comments

In the wake of Apex Legends, which has briskly grown to 50 million players, many have wondered whether Fortnite has felt the impact.

But Epic Games CEO Tim Sweeney told GamesBeat that Apex hasn’t really made a dent. Without being asked about Apex Legends, Sweeney said “an Apex Legends worth” of players have come over to Fortnite.

“We’re very close to hitting 250 million Fortnite players,” said Sweeney. “Since Apex Legends came out, we’ve gained an Apex Legends worth of Fortnite players, which is amazing.”

He went on to say that the only game that noticeably takes Fortnite gamers away from Fortnite is FIFA.

“We hit a Fortnite non-event peak twice after Apex was out,” said Sweeney. “We haven’t seen any visible cut into Fortnite. It’s a funny thing. The only game you can see where its peaks cut into Fortnite playtime is FIFA. It’s another game for everybody, wildly popular around the world.”

On the one hand, Apex only has about one-fifth of the players that Fortnite has. In a world where Netflix sees Fortnite as a greater threat than HBO, the scale of the two games isn’t comparable.

However, Apex is picking up some serious steam. It only took seven days for Apex to hit 25 million users (it took Fortnite 41 days), and one month to hit 50 million users (it took Fortnite more than four months).

As impressive as that is, it’s also to be expected that a game like Apex, a relative latecomer to the Battle Royale genre, would grow faster by reaping the benefits of the entire industry’s years of work and growth. It’s also worth noting that EA paid a pretty penny to successfully launch Apex Legends, with Ninja alone earning $1 million for streaming the game at launch.

“What Apex Legends has done is re-energized a lot of shooter players, people who come in and out of shooters depending on what’s popular,” said Sweeney. “It’s awesome to see other games picking up on battle royale, adding their unique spin to it and advancing the state of the industry.”

Adding a unique spin is exactly what Apex Legends has done. They’ve taken the fundamental building blocks of Battle Royale and the free-to-play model and tweaked them to be, in some ways, better.

Where play is concerned, Apex is a markedly team-oriented game, complete with a beautifully executed non-verbal comms system and a Jumpmaster mechanic to encourage teammates to land and play as a unit. Plus, Apex uses a hero system to give each character their own unique abilities.

This not only makes each fight interesting, but it gives Apex a different way to monetize beyond its recently launched BattlePass. The company just introduced its first new character, which can be unlocked with Apex Coins, the games virtual currency.

Only time will tell if Respawn and EA can build something as sticky as Fortnite, which has truly become a pop culture phenomenon. But there is one clear winner in this epic competition between Fortnite and Apex, and that’s gamers.

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BioWare’s ambitious Anthem is off to a rough start as players bring servers to their knees

Posted by | Anthem, BioWare, ea, Electronic Arts, Gadgets, Gaming, online games, online gaming | No Comments

The gaming world is excited to play Anthem, BioWare’s answer to Destiny and other big-budget online shooters — but an exclusive preview weekend for the mech-flying game has struggled to get off the ground. Of course, it wouldn’t be a game launch these days without a few hiccups to spice things up, but it is a little embarrassing.

The 40-gigabyte demo was made available today to those who had pre-ordered the game, as well as press and other “VIPs.” The game, announced last year at E3, is a loot-focused shooter where you pilot mechs through a huge open world, engage in cooperative combat and exploration and all that.

At least, so they say. Reports immediately came flooding in on forums and social media that not only was Origin, the service on which the demo is offered, failing to function properly, but that the game itself wasn’t connecting to servers, or if it did, wouldn’t load beyond the intro sequence.

I encountered this myself; after eventually getting loaded and logged in, I managed to get into the starting town area where you will, in the full game, upgrade your gear, accept quests and so on. But when I attempted to launch the first mission or otherwise enter the actual game world, the loading bar would stop about 95 percent of the way done and stay there forever (I waited about five minutes and reloaded a couple times to make sure it wasn’t just my aging rig). Those who made it all the way in complained of lag and glitches.

No one really ever expects a major title, especially one with a major online components, to launch even in a limited way without a few speed bumps, but something like this can really put the brakes on a hype train. Publisher EA admitted to the laundry list of issues from a support Twitter account:

Funnily enough EA Help’s own servers were having trouble as well, so not only could people not play Anthem, they couldn’t report that they couldn’t play Anthem.

Patience is a necessary virtue in today’s AAA game launches, but the people hoping to play this weekend aren’t randos but paying customers; this preview demo weekend was supposed to be a pre-order bonus, but the first day is a bust so far. Considering BioWare and EA knew exactly how many players could be trying to connect today — and those numbers are likely far less than those who will try the open beta or connect on launch day — it’s rather odd that they were seemingly caught so off-guard.

Anthem is certainly promising and the developers have gone out of their way to assure players that many of the hated practices of online games these days would not find a home on their platform. But launch problems always jar the confidence of undecided buyers, and there’s almost no question that the game will be better a month or two after its actual debut. Launch numbers could be affected by players not believing the game is ready to play, and therefore not being willing to pay.

I fully anticipate these issues getting resolved at some point soon, however, and will collect my impressions of the game in a separate post when that happens.

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Video game revenue tops $43 billion in 2018, an 18% jump from 2017

Posted by | america, computing, Earnings, Electronic Arts, Entertainment, entertainment software association, esa, fortnite battle royale, Gaming, HBO, Netflix, Reed Hastings, sensor tower, streaming services, TC, video game, YouTube | No Comments

Video game revenue in 2018 reached a new peak of $43.8 billion, up 18 percent from the previous years, surpassing the projected total global box office for the film industry, according to new data released by the Entertainment Software Association and The NPD Group.

Preliminary indicators for global box office revenues published at the end of last year indicated that revenue from ticket sales at box offices around the world would hit $41.7 billion, according to comScore data reported by Deadline Hollywood.

The $43.8 billion tally also surpasses numbers for streaming services, which are estimated to rake in somewhere around $28.8 billion for the year, according to a report in Multichannel News.

Video games and related content have become the new source of entertainment for a generation — and it’s something that has new media moguls like Netflix chief executive Reed Hastings concerned. In the company’s most recent shareholder letter, Netflix said that Fortnite was more of a threat to its business than TimeWarner’s HBO.

“We compete with (and lose to) Fortnite more than HBO,” the company’s shareholder letter stated. “When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time…There are thousands of competitors in this highly fragmented market vying to entertain consumers and low barriers to entry for those with great experiences.”

“The impressive economic growth of the industry announced today parallels the growth of the industry in mainstream American culture,” said acting ESA president and CEO Stanley Pierre-Louis, in a statement. “Across the nation, we count people of all backgrounds and stages of life among our most passionate video game players and fans. Interactive entertainment stands today as the most influential form of entertainment in America.”

Gains came from across the spectrum of the gaming industry. Console and personal computing, mobile gaming, all saw significant growth, according to Mat Piscatella, a video games industry analyst for The NPD Group.

According to the report, hardware and peripherals and software revenue increased from physical and digital sales, in-game purchases and subscriptions.

U.S. Video Game Industry Revenue 2018 2017 Growth Percentage
Hardware, including peripherals $7.5 billion $6.5 billion 15%
Software, including in-game purchases and subscriptions  

$35.8 billion

 

$30.4 billion

18%
Total: $43.3 billion $36.9 billion 18%

Source: The NPD Group, Sensor Tower

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Consolidation is coming to gaming, and Jam City raises $145 million to capitalize on it

Posted by | App Annie, Bank of America, Chris DeWolfe, computing, Disney, Electronic Arts, Europe, Facebook, Gaming, helsinki, jam city, King, Los Angeles, mobile game, Pixar, Recent Funding, silicon valley bank, Software, Startups, TC, toronto, United States, Zynga | No Comments

A slew of banks are coming together to back a new roll-up strategy for the Los Angeles-based mobile gaming studio Jam City and giving the company $145 million in new funding to carry that out.

There’s no word on whether the new money is in equity or debt, but what is certain is that JPMorgan Chase Bank, Bank of America Merrill Lynch and syndicate partners, including Silicon Valley Bank, SunTrust Bank and CIT Bank, are all involved in the deal.

“In a global mobile games market that is consolidating, Jam City could not be more proud to be working with JPMorgan, Bank of America Merrill Lynch, Silicon Valley Bank, SunTrust Bank and CIT Group to strategically support the financing of our acquisition and growth plans,” said Chris DeWolfe, co-founder and CEO of Jam City. “This $145 million in new financing empowers Jam City to further our position as a global industry consolidator. As we grow our global business, we are honored to be working alongside such prestigious advisers who share Jam City’s mission of delivering joy to people everywhere through unique and deeply engaging mobile games.”

The new money comes after a few years of speculation on whether Jam City would be the next big Los Angeles-based startup company to file for an initial public offering. It also follows a new agreement with Disney to develop mobile games based on intellectual property coming from all corners of the mouse house — a sweet cache of intellectual property ranging from Pixar, to Marvel, to traditional Disney characters.

Jam City is coming off a strong year of company growth. The Harry Potter: Hogwarts Mystery game, which launched last year, became the company’s fastest title to hit $100 million in revenue.

Add that to the company’s expansion into new markets with strategic acquisitions to fuel development and growth in Toronto and Bogota and it’s clear that the company is looking to make more moves in 2019.

Jam City already holds intellectual property for a new game built on Disney’s “Frozen 2,” the company’s newly acquired Fox Studio assets like “Family Guy” and the Harry Potter property. Add that to its own Cookie Jam and Panda Pop properties and it seems like the company is ready to make moves.

Meanwhile, games are quickly becoming the go-to revenue driver for the entertainment industry. According to data collected by Newzoo, mobile games revenue reached a record $63.2 billion worldwide in 2018, representing roughly 47 percent of the total revenue for the gaming industry in the year. That number could reach $81.3 billion by 2020, the Newzoo data suggests.

Roughly half of the U.S. plays mobile games, and they’re spending significant dollars on those games in app stores. App Annie suggests that roughly 75 percent of the money spent in app stores over the past decade has been spent on mobile games. And consumers are expected to spend roughly $129 billion in app stores over the next year. The data and analytics firm suggests that mobile gaming will capture some 60 percent of the overall gaming market in 2019, as well.

All of that bodes well for the industry as a whole, and points to why Jam City is looking to consolidate. And the company isn’t the only mobile games studio making moves.

The publicly traded games studio Zynga, which rose to fame initially on the back of Facebook’s gaming platform, recently expanded its European footprint with the late-December acquisition of the Helsinki-based gaming studio Small Giant Games.

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Jam City is setting up a Toronto shop by buying Bingo Pop from Uken Games

Posted by | 20th Century Fox, bingo, buenos aires, Chris DeWolfe, computing, Disney, Electronic Arts, Entertainment, entertainment software association, Gaming, harry potter, jam city, Los Angeles, MySpace, san diego, San Francisco, toronto | No Comments
The Los Angeles game development studio Jam City is setting up a shop in Toronto with the acquisition of Bingo Pop from Uken Games.

Terms of the deal weren’t disclosed.

The deal is part of a broader effort to expand the Jam City portfolio of games and geographic footprint. In recent months the company has inked agreements with Disney — taking over development duties on some of the company’s games like Disney Emoji Blitz and signing on to develop new ones — and launching new games in conjunction with other famous franchises like Harry Potter.

The Bingo Pop acquisition will bring a gambling game into the casual game developer’s stable of titles that pulled in roughly $700,000 in revenue through October, according to data from SensorTower.

“We are so proud to be continuing Jam City’s rapid global expansion with the acquisition of one of the most popular bingo titles, and its highly talented team,” said Chris DeWolfe, co-founder and CEO of Jam City, in a statement. “This acquisition provides Jam City with access to leading creative talent in one of the fastest growing and most exciting tech markets in the world. We look forward to working with the talented Jam City team in Toronto as we supercharge the live operations of Bingo Pop and develop innovative new titles and mobile entertainment experiences.”

Founded in Los Angeles in 2009 by DeWolfe, who previously helped create and launch Myspace, and 20th Century Fox exec Josh Yguado, Jam City rose to prominence on the back of its Cookie Jam and Panda Pop games. Now, the company has expanded through licensing deals with Harry Potter, Family Guy, Marvel and now Disney. Jam City has offices in Los Angeles, San Francisco, San Diego, Bogota and Buenos Aires.

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GameFly to shutter streaming service this month

Posted by | closing, ea, Electronic Arts, Entertainment, gamefly, Gaming, streaming | No Comments

GameFly, the video game rental company, will be shutting down its streaming service at the end of the month, Variety reported earlier this week. This closure comes just over three years after the streaming service launched in 2015.

GameFly, the no-console streaming service for gamers, offered packages for $7 and $10 per month that gave users unlimited access to titles — as long as they had a smart TV like an Amazon Fire or Samsung Smart TV, in addition to a controller and access to the internet. Just as GameFly’s original snail-mail rental service for games mimicked Netflix’s from days of yore, many touted the streaming service as the Netflix of gaming.

Support for the service will be maintained through the end of August and accounts will not be charged for the service after that date, according to Variety. But people can still rent physical games (and movies) from the company for $9.50 per month (one rental at a time) or $13.50 per month (two rentals at a time.)

This news comes about three months after EA acquired the technology and team members from GameFly’s cloud gaming division — a division that helped make it possible to save your progress to the cloud while gaming on the streaming service. But the acquisition did not include GameFly’s streaming service.

“We acquired the team in Israel and the technology they’ve developed, we did not acquire the Gamefly streaming service,” an EA spokesperson told Variety. “We have not been involved in any decisions around the service.”

TechCrunch reached out to GameFly for comment but the company did not respond by the time of publication regarding the reasons behind this closure.

Meanwhile, the world of streaming games appears to be continuing on just fine. Sony’s PlayStation Now continues to add titles to its service, French startup Blade’s streaming service is expanding availability this week in the U.S. and EA itself announced at E3 this summer plans to start work on its own streaming service.

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EA launches premium subscription with latest Battlefield and Fifa

Posted by | ea, Electronic Arts, Gaming | No Comments

Video game company EA is slowly switching its business model to recurring subscriptions. The company just launched Origin Access Premier for $15 per month or $100 per year. This subscription is only available on PC.

This isn’t EA’s first subscription. The company first launched EA Access on the Xbox One. For $5 per month or $30 per year, you can download and play old EA games as part of your subscription.

EA Access doesn’t include the most recent games. But you can play the latest Fifa, Madden and Battlefield games a few months after their initial releases. Usually, EA Access games don’t include any DLC or extra content.

In addition to full games, EA Access lets you try new EA games for 10 hours. You also get 10 percent off on EA digital purchases.

In 2016, EA launched a similar service on PC for the same price. In addition to a collection of EA games, the company partnered with Warner Bros. Interactive Entertainment and other game companies. You can find indie hits, such as The Witness, Oxenfree and Trine 2.

And now, EA is launching a more expensive subscription tier. With Origin Access Premier, you get new EA titles a few days before launch day. For instance, you’ll be able to download and play Madden NFL 19, Fifa 19, Battlefield V and Anthem when they launch in the coming months.

Subscribers won’t have to pay for DLCs, or at least not as many. Games included in the subscription are deluxe editions (Fifa Ultimate Edition, Battlefield V Deluxe, etc.).

In order to convince people to subscribe right away, EA is adding deluxe editions of Battlefront II, Fifa 18, Unravel Two, Fe or The Sims 4 right away.

Other companies have launched subscription services, such as Microsoft with the Xbox Game Pass and Sony’s PlayStation Now. This is an interesting shift as game companies are getting ready for cloud computing.

While many people still buy games on DVDs and play on gaming consoles, the industry is slowly going to switch to cloud gaming. You will launch a game on a server in a data center near you and stream the video feed to the device in front of you.

It doesn’t make as much sense to own a game if you don’t even run it on your console in your living room. By creating recurring subscriptions and putting together gaming libraries, companies can increase recurring revenue.tt

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