Phillip Black

Inflation, ads, and webstores reverse nearly every trend in gaming—and then reverse it again. These aren't rounding errors either—they're GDP-level phenomena (literally), and the inability to account for them is warping our perception of reality in the gaming industry.- Adjusting for inflation completely reverses the growth in mobile spending between 2020 and 2023, from +8% to -9%.- Adjusting for inflation slashes Newzoo's 2026 PC & Console forecast by 39%, from +15% to +9%.- Ads revenue is likely a double-digit percentage of gaming revenue, and all we have to estimate is King's quarterly earnings.- Adjusting for webstores completely reverses the revenue decline in some midcore genres, casting cold water on the "move to the middle" thesis.

Matthew Ball's excellent piece, The Tremendous Yet Troubled State of Gaming in 2024, unpacks a paradox: gaming seems prosperous yet is marred by unprecedented industry layoffs. Ball's findings reveal a simple reality: playtime is down over 20% (3.5 hours per week) from its COVID peak. This decline, further seen in declining inflation-adjusted spending, cements gaming as an entertainment product with a capped growth potential. Without new strategies to reclaim timeshare, gaming's best days are behind it.Despite COVID hangovers, Ball remains optimistic about gaming's prospects, citing opportunities in streaming, in-game advertising, and transmedia. The mid-00s breakthrough of OnLive, Burnout Paradise, and Uwe Boll wasn't enough. But other growth suggestions include "'UGC platform developers' (i.e. Roblox developers) shifting to standalone titles." This resulted in Steam's top-charter, Lethal Company, the product of a former 21-year-old Roblox developer. UGC needs to play a central […]

Ah, web3: a past marked by rug pulls, North Korean heists, and prices more volatile than Gamestop shares. However, for all its misgivings, audiences still capitalize web3, with prices far from zero. Parallel, a new web3 CCG hit a half-billion market cap considering token and NFT prices, and yes, it's pre-launch. Despite flaws, Parallel looks cool, and games like Sipher are turning heads, while Sorare is already established. Chris Heatherly is brewing something with Mystery Society, giving 'Among Us live-service' a jolt. But for all its hopes, web3 has been blocked by distribution and confined to the browser. Epic Game Store, a trusted brand, now carries web3 games, even with an Adults Only rating. Finally, Web3 is playable on mobile, with the compromise of giving Apple 30% and tacking on an equivalent user-facing tax. All this festers into 2024 as […]

After four days, Palworld, an early-access survivor game described as "Pokemon with guns," grossed ~$108M over three days en route to the 2nd highest concurrent player count for a paid title on Steam. It's an outstanding success for Pocket Pair, a 50-person Japanese team with $7m raised. But like early access hits Valhiem, Battlebit, and Temtem before it, an inability to quickly deploy capital hampers compounding return. Instead of these titles having their best days to look forward to, they're in the rear-view mirror, the equivalent of peaking in high school, but this time, you get millions in cash for the ordeal. Teams should follow the Kikta Studio model: prove a trajectory and let someone else build the bow. When founders sell games, they retain control of their destiny and find themselves newly rich with modelable capital, allowing games to […]

Phil Spencer, Microsoft Gaming CEO, named Johanna Faries the new president of Blizzard, closing a pivotal moment in the ATVI-Microsoft merger. Faries faces the challenge of revitalizing Blizzard amidst declining revenue and engagement across its franchises. The situation is dire enough that Faries inherits a needed rebirth of Blizzard. The Blizzard of old is dead, and several causal agents are responsible.The Ship of Theseus is a thought experiment about when a ship remains the same after trading its planks one by one with another ship. The same experiment applies to Blizzard, who has replaced a good deal of its workforce after they left for new start-ups. Over the last decade, venture capital siphoned copious amounts of Blizzard employees into new start-ups, aided by California's law banning non-competes. The VC-backed combination of Dreamhaven (fmr. Blizzard founder), Second Dinner (fmr. Hearthstone team), Magic Soup […]

The Wall Street Journal reports Netflix is considering IAP and ads to monetize the $1B a year it's spending on gaming. So far, they've bought old F2P mobile titles and removed IAP to the tune of fewer than 1% of subscribers their playing games daily. Like Apple Arcade, Netflix gaming is quickly becoming the hospice of F2P; a pivot to IAP and ads is a come-to-Jesus moment that Microsoft, Apple, and Roblox could learn from. Despite a morgue brimming with OnLive, EA Play, UPlay+, Gamefly, Stadia, and GameTap, along with the countless litany of failed individual game subscriptions, gaming executives are keen to ignore the economics of what makes gaming different from all other media. In 2021, Netflix's Chief Product Officer claimed: "We feel our subscription model yields some opportunities to focus on a set of game experiences that are […]

Insomniac leaks reveal Playstation lost 3M MAU over the last three years. At a time when gaming is at its grandest heights, consoles have failed to seize the moment. Sony and Microsoft have forgotten their role as platforms, purchasing dead-end franchises instead of fostering third-party innovation. Meanwhile, Steam gained over 90M users, a ~35% increase over the same period, with Valve founder Gabe Newell downing New Zealand pies as third-party development rakes in billions as Valve barely lifts a finger.Sony's lavish string of single-player blockbuster titles like God of War, Spider-Man, and Zero Horizon Dawn certainly have positive ROI, but another ten years of $300M roulette spins (budgets also leaked) hardly feels digestible. It's a near miracle these titles performed critically well as they have, illustrating why Sony executives rush toward live-service investments. For its part, Microsoft squandered Gears of War and […]

Hypercasual solved a novel problem for all mobile titles: marketing. Like web3, hypercasual always seems to be caught in its drama with recurring reports of death or life on top of wash trading driving genre GDP. But beneath all the bullshit, hypercasual discovered something profound: how to get BILLIONS of players to download games at sub $1 CPIs. In 2022, hypercasual accounted for 29% of ALL app store downloads and cleared over 1 BILLION monthly downloads. The numbers represent real player action - they see something in hypercasual ads they don’t see in others. On a rough click-through basis, players might be 5 to 10 times more likely to tap on hypercasual ads then mid-core ads.Hypercasual’s IP playbook hammers on reducing cognitive complexity; gameplay and art are straightforward to digest. Navigating a medieval fantasy game teeming with knights, dragons, and […]

The reverse-Blizzard thesis has arrived. Firms like Blizzard, Supercell, Valve, and even Apple thrived on popularizing but not inventing mechanics and genres. Blizzard's next fresh franchise, a survival crafting game, draws heavily from predecessors like Ark: Survival Evolved and Rust. Those titles failed to scale to mainstream adoption; if players need a server browser for play, it's not ready for the mainstream. But both Supercell and Blizzard have struggled to scale their studios to meet modern content demands, and that's left them open for a sort of reverse thesis: drop production values and win on the supply side. No game exemplifies this better than Path of Exile. Blizzard's failure to establish and maintain a live-service team for Diablo III gave birth to Path of Exile, a game that recently reached an all-time high of 1.5 million DAU and is nearing […]