Yesterday, PC Gamer, along with numerous other outlets, reported on the large-scale layoff at Amazon, the corporation cutting some 14,000 jobs. The PC Gamer angle was to focus on the impact to the gaming division specifically. And I wanted to further pull this industry event apart in conjunction with the statements of yesterday from Satya Nadella, CEO and President of Microsoft. Because I think they are indicative of trends we will see across the gaming landscape here in the next few years and entering into the next generation. This will go in the way of unfurling as few popular narratives in the Twitter gaming community.
Narrative 1: “If Xbox leaves the platform gaming space, we’ll be ok. PlayStation and Nintendo won’t run rampant because another competitor will come to save us.” First thing to level-set is that I think we need to start thinking about the competitive space no longer constrained to just “console”. I think the market is growing in complexity in a way that we need to think about platforms competing, and then at Tier 2 we need to think about content. So I won’t co-mingle mobile with traditional console + PC content. But where there is similar content, I will set platforms against each other (I’ll get to the wobble that mobile content converges on later). From the PC Gamer article:
…former Prime Gaming VP Ethan Evans said earlier this year that “we assumed that size and visibility would be enough to attract customers, but we underestimated the power of existing user habits. We never validated our core assumptions before investing heavily in solutions. The truth is that gamers already had the solution to their problems, and they weren’t going to switch platforms just because a new one was available.”
There is a two-fold problem to narrative 1. The first is that, no, another competitor is not coming to save us because the investment to do so now is so massive that only a member of the trillion-dollar club can mount such an effort. 2 have tried and failed, 1 is still in, 1 is only gaming-curious, 1 is mounting up but will go in as a technology provider only, and the other is going to remain within the bounds of AR/VR. I think we’re tapped out on any of them being the last-minute hero coming out of the portal. There is no “On Your Left” moment. Because, second fold, even when the bigs get in, they cannot rapidly develop the content-talent to make their tech stack enabler strengths part of a viable solution.
Narrative 2: “AAA content will be preserved and a race-to-the-bottom won’t be kicked off because users will always hold the line on quality.” Like literally are you f***ing kidding me? We’ve seen nothing but a slide towards low quality for twenty years now. Yes, we’ve held the line on quality within the confines of a certain volume of the industry. But there is a compartmentalized part of the ridge where users are more than happy to follow the mudslide downhill. That’s how we enabled F2P, that’s how we enabled MTX, that’s how we shifted focus from story & narrative to the grind. Now you need to look at where Amazon Gaming is staying in the pool. With an AI-generated game Courtroom Chaos, starring Snoop Dogg. Because casuals will eat that over Luna delivered via the Cloud to their TV. And so investment dollars will follow that type of content. And you can see a similar movement underway at NetFlix.
And Xbox is following suit. When you string together the comments of Bond, Booty, and Nadella over the last few days they mean one thing. Content made to compete with Tik-Tok and YouTube short format video. Which means it has to be low-cost, delivered in quick iterations, much faster than the current gaming industry norm, and at high-margins. You need look no further than the model of the MiHoYo universe to see what they are talking about. Now combine a pinch of NetEase and dacha-palooza and you see where Xbox IP’s are going to wind up. Also, expect another acquisition to be made while there current US Administration is in office. It’ll start with 18 months of runway at least before Trump is out, will be designed to buff the XBOx IP content pool to enable this Genshin Impact / Honkai Starrail strategy.
When we allow these companies, via poorly enforced regulatory frameworks, to achieve mass consolidation of the industry and enable enshittification by the trillion-dollar club….chokepoint capitalism…this is the race to the bottom that you will get.
The only defense of which is the buyers being willing to support the high-quality content being purveyed by the smaller competitors on the market.
Narrative 3: “Cloud is the way of the future.” I’m not entirely convinced of that. Cloud takes massive infrastructure. Billions of dollars in data-center and infrastructure build-out. Yes, while many companies are undertaking that, I think these efforts will be unfurled by someone answering the challenge of the local personal computing environment. It is a dream we use to call the PAN, or Personal Area Network, and believed it would be enabled by Bluetooth. But that hasn’t panned out, no pun intended. I’ve written some starter material to what I think is actually going to happen once Cloud reaches its apex and maxes out it’s “get gud”. Without our planet going the way of Krypton, depleting our core, and needing to evacuate to Mars. I plan to draw and diagram this concept out in the coming weeks and make some diagrams, but for now I’ll just quote the Twitter posts:
Rounding Off Infinity 