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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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Google’s Game Builder turns building multiplayer games into a game

Posted by | cloud gaming, Developer, e-commerce, freeware, Gaming, Google, Javascript, Minecraft, Software, stadia, Steam, video games, video gaming | No Comments

Google’s Area 120 team, the company’s in-house incubator for some of its more experimental projects, today launched Game Builder, a free and easy to use tool for PC and macOS users who want to build their own 3D games without having to know how to code. Game Builder is currently only available through Valve’s Steam platform, so you’ll need an account there to try it.

After a quick download, Game Builder asks you about what screen size you want to work on and then drops you right into the experience after you tell it whether you want to start a new project, work on an existing project or try out some sample projects. These sample projects include a first-person shooter, a platformer and a demo of the tool’s card system for programming more complex interactions.

The menu system and building experience take some getting used to and isn’t immediately intuitive, but after a while, you’ll get the hang of it. By default, the overall design aesthetic clearly draws some inspiration from Minecraft, but you’re pretty free in what kind of game you want to create. It does not strike me as a tool for getting smaller children into game programming since we’re talking about a relatively text-heavy and complex experience.

To build more complex interactions, you use Game Builder’s card-based visual programming system. That’s pretty straightforward, too, but also takes some getting used to. Google says building a 3D level is like playing a game. There’s some truth in that, in that you are building inside the game environment, but it’s not necessarily an easy game either.

One cool feature here is that you can also build multiplayer games and even create games in real time with your friends.

Traditionally, drag-and-drop game builders feel pretty limited. The Area 120 team is trying to overcome this by also letting you use JavaScript to go beyond some of the pre-programmed features. Google is also betting on Poly, its library of 3D objects, to give users lots of options for creating and designing their levels.

It’s no secret that Google is taking games pretty seriously these days, now that it is getting ready to launch its Stadia game streaming service later this year. There doesn’t seem to be a connection between the two just yet, but I wouldn’t be surprised if we saw Game Builder on Stadia, too.

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Destiny 2 goes free to play and gains cross-saving on all platforms

Posted by | Bungie, destiny 2, game streaming, games as a service, Gaming, Google, google stadia, Microsoft, playstation, playstation 3, PS4, Sony, Steam, streaming, Valve, xbox, Xbox One | No Comments

Bungie aims to fortify the popular but flagging Destiny 2 with an expanded free-to-play plan and universal cross-platform saving, the company announced today. It’s an interesting and player-friendly evolution of the “games as a service” model, and other companies should take note.

The base game, which is to say the original campaign and the first year of updates, will be available on PC, Xbox One, PlayStation 4, and Google Stadia. You can play as much as you want, and your progress will be synced to your account, so you can do some easy patrols on console and then switch to your PC’s mouse and keyboard for the more difficult raids.

The PS4 cross-save ability is a surprise, since Sony has resisted this sort of thing in the past and rumors had it before the announcement that they would be left out of the bargain. It’s heartening to see this level of cooperation, if that’s what it is, in the new gaming economy.

Confirmed! https://t.co/WKWtPZ7mtD

— PlayStation (@PlayStation) June 6, 2019

As part of Bungie’s separation from Activision, which published Destiny 2 to begin with, the game is now switching over to Steam on the PC. That’s probably a good thing for most, and you won’t lose any progress. It’s also being renamed “Destiny: New Light,” because why not?

Importantly, no platform will have any content advantage over another — no Xbox-specific guns or PC-specific levels. At a time when consoles are fighting one another on the basis of exclusives, this is a breath of fresh air.

The news was announced in a stream this morning, though players got a sneak peak when a publication I shall not name posted it slightly early. But we also learned more ahead of Bungie’s announcement when Google’s Stadia event showed the game coming to the streaming service in free form.

The developers at Bungie reveal Destiny 2: Shadowkeep.

A new chapter for Destiny 2 and the studio begins this September.

🌑 Watch the full ViDoc: https://t.co/A1dBgdxgMQ pic.twitter.com/nHbAW9CuYA

— Bungie (@Bungie) June 6, 2019

Destiny 2 came out two years ago and has had a number of expansions — and has also been free for limited times or platforms a handful of times. The base game was really a bit threadbare and honestly may not convince new players that it’s worth it to pay. But the price is right and if you like the basic gameplay the expansions, which improved considerably on the game and added a lot of contents, can be bought year by year.

The move is obviously meant to help Destiny 2 compete with other games-as-services, such as the constantly improving Warframe and youth-devouring Fortnite. And it’s a good test bed for the new cross-platform economy that gamers are beginning to demand. You’ll be able to test it out for yourself on September 17, when the switchover is set to take effect — more details should be available well ahead of the relaunch.

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Steam Link now lets you beam Steam games to your iOS devices

Posted by | Gaming, Steam, TC, Valve | No Comments

About a year ago, Valve announced that it was building an application called Steam Link. It’d let you play Steam games built for Mac/Windows/Linux on your iOS or Android devices through the magic of streaming, with a computer on your local network doing all the actual heavy lifting.

Then Valve submitted it to the iOS App Store and… Apple rejected it. At the time, Valve said that Apple pinned the rejection on “business conflicts.”

A year later, it seems said conflicts have finally been resolved. Steam Link for iOS just hit the App Store.

Because there’s no way most PC games would be fun on a touchscreen, you’ll probably want a controller — Valve says that Made for iPhone-certified controllers should work, as will its own Steam-branded controller. The company also notes that for best performance, the computer doing the streaming should be hardwired to your router, and your iOS device should be running on your Wi-Fi network’s 5Ghz band.

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EU goes after Valve for ‘geo-blocking’ Steam activation codes

Posted by | eu, Gaming, Steam, TC, Valve | No Comments

Seemingly the sole government body policing tech platforms, the ol’ European Union, is now taking aim at desktop gaming’s biggest storefront, Steam, and its creator Valve.

The commission sent a “Statements of Objections” to Valve and five other video game publishers, raising a fuss over the companies’ habits of “geo-blocking” purchases, i.e. prohibiting users from using game activation codes purchased outside their country of residence.

Furthermore, the suit takes aim at Bandai Namco, Focus Home, Koch Media and ZeniMax for coming to agreements with game distributors, including Valve, that prevented consumers in some EU member states from being able to download titles that were available in other regions.

The commission claims these companies’ actions are in breach of EU antitrust rules. The letter comes after the EU opened an investigation more than two years ago.

“In a true Digital Single Market, European consumers should have the right to buy and play video games of their choice regardless of where they live in the EU. Consumers should not be prevented from shopping around between Member States to find the best available deal. Valve and the five PC video game publishers now have the chance to respond to our concerns,” Commissioner Margrethe Vestager said in a statement.

As Valve’s multitude of online defenders have noted, there are some reasons why “geo-blocking” might make sense. Pushing regional sales can help game developers find audiences in new markets while keeping bread-and-butter markets paying full price to subsidize the rest. Keeping prices uniform across the globe can leave developers in a tricky position when it comes to finding the ideal price point.

It seems likely that these companies will look to make nice with the EU and keep their practice moving along elsewhere.

We have reached out to Valve for comment.

h/t: Owen Williams

 

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Valve lets you stream Steam games from anywhere

Posted by | Gadgets, Gaming, Steam, Steam Link, Steam Link Anywhere, Valve | No Comments

Valve doesn’t want to miss the cloud gaming bandwagon. As PC Gamer spotted, the company quietly released a beta version of Steam Link Anywhere. As the name suggests, it lets you turn your gaming PC into a cloud gaming server and stream games from… anywhere.

The company’s strategy is a bit puzzling here as Valve recently discontinued its hardware set-top box, the Steam Link. While Valve might be done on the hardware side, the company is still iterating on Steam Link apps.

You can now download the Steam Link app on an Android phone, an Android TV device or a Raspberry Pi. Unfortunately, Valve still hasn’t found a way to release its Steam Link app on the App Store for iOS devices and the Apple TV. You can start Steam on your computer and play demanding PC games on other screens.

Steam Link works fine on a local network, especially if you use Ethernet cables between all your devices. With Steam Link Anywhere, your performance will vary depending on your home internet connection. If you don’t have a fiber connection at home, the latency might simply be too high to play any game.

Now let’s see if Valve plans to flip the switch and let you run Steam games on a server in a data center near you. That would turn Steam Link Anywhere into a Shadow competitor.

Microsoft recently showed off Forza Horizon 4 running on an Android phone thanks to Project xCloud. Google also has been teasing its Game Developers Conference to learn more about its gaming projects. It’s clear that everybody wants to turn 2019 into the year of cloud gaming.

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The legendary and indescribable Dwarf Fortress goes non-ASCII and non-free for the first time

Posted by | dwarf fortress, Gaming, indie games, itch.io, Steam | No Comments

Among the growing field of indie games, one truly stands alone: Dwarf Fortress. The unbelievably rich and complex and legendarily user-unfriendly title has been a free staple of awe and frustration for years. But the developers, in a huge shift to the status quo, have announced that the game will not only soon have a paid version on Steam — it’ll have… graphics.

It may be hard for anyone who isn’t already familiar with the game and community to understand how momentous this is. In the decade and a half this game has been in active, continuous development, perhaps the only thing that hasn’t changed about the game is that it is a maze for the eyes, a mess of alphanumerics and ASCII-based art approximating barrels, dwarves, goblins, and dozens of kinds of stone.

You know in The Matrix where they show how the world is made up of a bunch of essentially text characters? It’s basically that, except way more confusing. But you get a feel for it after a few years.

So when developers Tarn and Zach Adams announced on their Patreon account that they were planning on ditching the ASCII for actual sprites in a paid premium version of the game to be made available on Steam and indie marketplace itch.io.. minds were blown. Of all the changes Dwarf Fortress has undergone, this is likely the most surprising. Here are a few screenshots compared with the old ASCII graphics:

Not that you couldn’t get graphics in other ways — gamers aren’t that masochistic. There are “tile packs” available in a variety of sizes and styles that any player can apply to the game to make it easier to follow; in fact, the creators of two popular tilesets, Meph and Mike Mayday, were tapped to help make the “official” one, which by the way looks nice. Kitfox Games (maker of the lovely Shrouded Isle) is helping out as well.

There are plenty of other little mods and improvements made by dedicated players. Many of those will likely be ported over to Steam Workshop and made a cinch to install — another bonus for paying players.

Now, I should note that I in no way find this bothersome. I support Tarn and Zach in whatever they choose to do, and at any rate the original ASCII version will always be free. But what does disturb me is the reason they are doing this. As Tarn wrote on Patreon in a rare non-game update:

We don’t talk about this much, but for many years, Zach has been on expensive medication, which has fortunately been covered by his healthcare. It’s a source of constant concern, as the plan has changed a few times and as the political environment has shifted. We have other family health risks, and as we get older, the precariousness of our situation increases; after Zach’s latest cancer scare, we determined that with my healthcare plan’s copay etc., I’d be wiped out if I had to undergo the same procedures. That said, crowdfunding is by far our main source of income and the reason we’re still here. Your support is still crucial, as the Steam release may or may not bring us the added stability we’re seeking now and it’s some months away.

It’s sad as hell to hear that a pair of developers whose game is as well-loved as this, and who are making a modest sum via Patreon can still be frightened of sudden bankruptcy on account of a chronic medical condition.

This isn’t the place for a political debate, but one would hope that the creators of what amounts to a successful small business like this would not have to worry about such things in the richest country in the world.

That said, they seem comfortable with the move to real graphics and the addition of a more traditional income stream, so the community (myself included) will no doubt see the sunny side of this and continue to support the game in its new form.

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Gaming clips service Medal has bought Donate Bot for direct donations and payments

Posted by | api, bot, computing, discord, e-commerce, freeware, Gaming, M&A, operating systems, Patreon, PayPal, Shopify, social media platforms, Software, Steam, subscription services, TC, Twitter | No Comments

The Los Angeles-based video gaming clipping service Medal has made its first acquisition as it rolls out new features to its user base.

The company has acquired the Discord -based donations and payments service Donate Bot to enable direct payments and other types of transactions directly on its site.

Now, the company is rolling out a service to any Medal user with more than 100 followers, allowing them to accept donations, subscriptions and payments directly from their clips on mobile, web, desktop and through embedded clips, according to a blog post from company founder Pim De Witte.

For now, and for at least the next year, the service will be free to Medal users — meaning the company won’t take a dime of any users’ revenue made through payments on the platform.

For users who already have a storefront up with Patreon, Shopify, Paypal.me, Streamlabs or ko-fi, Medal won’t wreck the channel — integrating with those and other payment processing systems.

Through the Donate Bot service any user with a discord server can generate a donation link, which can be customized to become more of a customer acquisition funnel for teams or gamers that sell their own merchandise.

Webhooks API gives users a way to add donors to various list or subscription services or stream overlays, and the Donate Bot is directly linked with Discord Bot List and Discord Server List as well, so you can accept donations without having to set up a website.

In addition, the company updated its social features, so clips made on Medal can ultimately be shared on social media platforms like Twitter and Discord — and the company is also integrated with Discord, Twitter and Steam in a way to encourage easier signups.

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Steam fights for future of game stores and streaming

Posted by | Gaming, Steam, TC, Virtual reality | No Comments

For more than 15 years, Steam has been the dominant digital distribution platform for PC video games. While its success has spawned several competitors, including some online stores from game publishers, none have made a significant dent in its vice-like grip on the market.

Cracks, though, are seemingly starting to appear in Steam’s armor, and at least one notable challenger has stepped up, with potentially bigger ones on the horizon. They threaten to make Steam the digital equivalent of GameStop — a once unassailable retail giant whose future became questionable when it didn’t successfully change with the times.

The epic launch of an Epic Store

Photo by Neilson Barnard/Getty Images for Ubisoft

Epic Games has, in a remarkably short period of time, positioned itself as the successor to Steam. In December, the creator of the billion-dollar Fortnite franchise announced it was getting into the game retail business with the Epic Games store. Less than two months later, it had landed limited exclusivity deals with two publishers that chose to bypass Steam as they launch upcoming titles.

First up was Ubisoft, which announced the PC version of Tom Clancy’s The Division 2, a highly anticipated action game, would be semi-exclusive to the Epic Games store (it will also be available on Ubisoft’s digital storefront). Ubisoft also said that “additional select titles” would be coming to Epic’s store in later months.

“We’re giving game developers and publishers the store business model that we’ve always wanted as developers ourselves,” said Tim Sweeney, founder and CEO of Epic Games. “Ubisoft supports our model and trusts us to deliver a smooth journey for players, from pre-purchase to the game’s release.”

Three weeks later, publisher Deep Silver abruptly discontinued pre-sales of its survival shooter Metro Exodus on Steam and announced the game would be available moving forward solely through the Epic Games store (previous Steam orders will be honored).

Steam’s past success is hitting new blocks

To be clear, Steam is hardly struggling. Last October at Melbourne Games Week, Steam announced it had 90 million monthly active users, compared to 67 million in 2017. Daily active users, it said, had grown from 33 million to 47 million.

Much of that growth came from China, where players are looking to circumvent the government’s crackdown on games. Domestic numbers, though, have been trending down, according to SteamSpy, a third-party tracking service.

Valve Software, which owns Steam, did not reply to requests for comment on this story. It did, however, post a statement on the Metro Exodus Steam page soon after Deep Silver announced its partnership with Epic, saying, “We think the decision to remove the game is unfair to Steam customers, especially after a long pre-sale period. We apologize to Steam customers that were expecting it to be available for sale through the February 15th release date, but we were only recently informed of the decision and given limited time to let everyone know.”

So what’s the draw for game makers to sell via the Epic Games store? It is, of course, a combination of factors, but chief among those is financial. To convince publishers and developers to utilize their system, Epic only takes a 12 percent cut of game-sale revenues. That’s significantly lower than the 30 percent taken by Valve on Steam (or the amounts taken by Apple or Google in their app stores).

To woo developers who use its Unreal graphics engine, Epic also waives all royalty fees for sales generated through the store. (Developers who use Unreal in their games typically pay a 5 percent royalty on all sales.)

The reason for those notably lower commissions, perhaps not surprisingly, ties back to Fortnite.

“While running Fortnite we learned a lot about the cost of running a digital store on PC,” says Sweeney. “The math is simple: we pay around 2.5 percent for payment processing for major payment methods, less than 1.5 percent for CDN [content delivery network] costs (assuming all games are updated as often as Fortnite), and between 1 percent and 2 percent for variable operating and customer support costs. Because we operate Fortnite on the Epic Games launcher on such a large scale, it has enabled us to build the store, run it at a low cost and pass those savings onto developers.”

Owning the game customer

Photo by Andy Cross/The Denver Post via Getty Images

Higher commissions are just one of the issues developers and publishers have with Steam. While none were willing to go on the record, for fear of retribution from Valve or because they were not authorized to officially speak on their company’s behalf, the complaints generally echoed each other.

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Fortnite-maker aims for Steam’s head with Epic Games Store

Posted by | epic games, fortnite, Gaming, Steam, Valve | No Comments

Fortnite-maker Epic Games is capping off their insanely successful 2018 with an even more ambitious product launch: a desktop games store built to take on Valve’s Steam Store.

The store, which is “launching soon” on PC and Mac, is going to be an attractive proposition to game developers with a revenue split that leaves them taking 88 percent of revenues on the store.

“As a developer ourselves, we have always wanted a platform with great economics that connects us directly with our players,” Epic Games CEO Tim Sweeney said in an emailed statement. “Thanks to the success of Fortnite, we now have this and are ready to share it with other developers.”

Valve’s Steam Store is by far the most dominant presence in online PC game sales; they’ve enjoyed years of prosperity with rather light rivalry from competing stores that haven’t been able to match the scale of Steam. Valve, in a very conveniently timed announcement yesterday, announced that it was rehashing its revenue split with developers in a bid that they hope will keep higher-earning developers on the platform. While Valve will continue to take an App Store-like 30 percent from sales of game makers with less than 10 million in revenue, that figure drops to 25 percent until they hit 50 million revenue, from which point the slice drops to 20 percent.

It’s a more complicated revenue split that obviously benefits successful game makers more so than indies. For Valve, holding onto big-game publishers is mission critical. Epic Games already has the benefit of a close working relationship with many major PC game developers that are using the company’s Unreal Engine to build their titles.

Epic Games earns money with their Unreal Engine by taking a slice of revenues from game makers. Generally that share is 5 percent after the title is released, though Epic also does deals with developers for higher upfront costs with a lower royalty rate. Publishers like EA, Sony Interactive, Microsoft Studios, Activision and Nintendo have titles out that are built on the Unreal Engine.

A big sell for developers using Epic’s game engine is that the company says it will forego that Unreal revenue cut for any sales of the titles in the Epic Games Store. Depending on the early success of the game store, this could be a big threat to other game engines like Unity.

A 12 percent overall revenue slice for Epic Games is incredibly competitive and could have left a lot of big developers grumbling about the 30 percent cut they were missing out on because of Steam’s take.

Epic Games has notably eschewed storefront revenue splits on Fortnite wherever they can. The app isn’t on Steam for starters, but even on Android, users are forced to download it directly from the Epic Games site as well. This kind of highlights the sway that big studios hold in the market. This year that studio happens to be Epic Games, but in the future that will be some other studio and Valve likely doesn’t want the next blockbuster side-stepping their storefront.

Valve still has a lot going for them. Their store is a massive presence, and die-hard users already have a library of titles built up with little incentive to switch unless their favorite game makers are the ones to decide to shift their allegiances.

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