Retail isn’t going away – Ubisoft digital head

Chris Early says brick-and-mortar does some things better than digital; Ubi is experimenting with episodic titles

Chris Early

Ubisoft’s VP of digital publishing sees a day when the publisher’s digital revenues will surpass its retail business, but he also sees a limit to how far the balance between the two will tilt. Early discussed the subject with GamesIndustry International at the Electronic Entertainment Expo.

“The underlying question is, ‘Is retail going away?,'” Early said. “No. And maybe that’s funny coming from a digital guy, but I think retail’s a strong part of our industry and it will continue to be so. Over time, when it goes to 50-50 or maybe beyond, will some stores close? Probably, just like some record stores closed. Maybe the store experience will morph. Maybe you’ll see more of an Apple-type experience store where you’re able to do things, but I don’t think it’ll go completely away.”

Early said the reasons for that fall into a few different categories, from consumer behavior to technical limitations to one of the biggest hurdles in the digital world: discoverability.

“The physical store is a well-designed mechanism for discovery,” Early explained. “You have expert help right there, a wide variety of products you can go through relatively quickly. That’s hard to do still on a console or a PC. There’s lots of content, but how do you easily discover what’s the best thing to do? We haven’t solved that.”

Of course, digital has a number of advantages over retail, not the least of which is its ability to support non-traditional business models. One such model is episodic gaming, which saw a breakout success recently with Telltale Games’s Game of the Year-winning series The Walking Dead.

“I will say we’re definitely experimenting down that [episodic] path, but not to necessarily make a half-priced product to start with.

Chris Early

“The episodic model’s been talked about for a long time, but the challenge comes to one of investment,” Early said. “How much do you invest in the structure of the building and only furnish a floor at a time? We’ve still built a 60-story building, and if we only deliver three stories, I still have that infrastructure I built. It’s solvable at some point. Even look at Telltale, that took them several iterations to get to that place, and some games that didn’t work that well helped fund that engine to get to the place they are today.”

As for when Ubisoft might embrace episodic gaming, Early suggested that from a certain perspective, it already has.

“I will say we’re definitely experimenting down that path, but not to necessarily make a half-priced product to start with,” Early said. “Look what we just did with Far Cry 3: Blood Dragon. We took the entire Far Cry 3 engine that we just sold for $60, made a five-hour game and sold it for $15. And it sold like mad. People loved it.”

The rise of digital gaming has also given publishers more ways to monetize players. Whether it’s with free-to-play games or downloadable content for premium titles, the industry focus is shifting such that the number of boxes a company shipped to stores is telling less and less of the overall story. At the same time, average revenue per user (ARPU) has become an increasingly significant metric as publishers realize some players are willing to go far above and beyond the $60 threshold of the retail space.

Ghost Recon Online may be too conservative about monetization, Early suggested.

While Early said Ubisoft pays close attention to ARPU, it has tried to minimize player discontent while doing so. He noted that in the free-to-play Ghost Recon Online, players never need to part with real money to make their way through the game. Those willing to spend money may be able to buy experience boosts and cosmetic changes to their characters, but the developers didn’t want to drum up revenues at the expense of player satisfaction.

“We’ve been very careful to make sure the players don’t feel nickel-and-dimed,” Early said. “And it’s probably resulted in us being a bit conservative on that end.”

As for DLC, Early noted that increasing the ARPU on $60 retail games helps to pay for the costs of AAA game development. That’s a problem Ubisoft is also addressing from the other end of the transaction, as Early said the company works to keep costs down where it can. For example, its multi-studio development process means a number of the developers for a hit franchise like Assassin’s Creed are located in places where they have a lower cost structure than the franchise’s lead developer, Ubisoft Montreal.

“One of our designers said it best when I was talking to him the other night. He said, ‘We respect our players’ gaming time.’ And we do that by delivering strong entertainment value,” Early said.


Japanese devs react to E3, next-gen

Creators at Sega, Capcom, Valhalla give impressions of next-gen potential, lament lacking variety of games on display

Japanese devs react to E3

Reactions to last month’s Electronic Entertainment Expo are still filtering in. Today’s additions to the pile are coming from the latest issue of Japanese gaming magazine Famitsu, as translated by Polygon.

The Xbox One and PlayStation 4 were the focus of the show this year, but excitement for those systems varied. Level-5 president Akihiro Hino was excited for both new consoles, but was particularly surprised by the PS4’s $399 price point.

“I think anyone can look at that and think ‘This is cheap!’ Putting cutting-edge PC specs into a game machine that costs just a few hundred dollars really brings across how serious SCE is about this generation,” Hino said. “I think the Xbox One is pretty cheap considering what you get with it as well, but with this PS4 price point, they’ll have to do something to oppose that. Looking at all the new media, it’s easy to see how console gaming is still the main entertainment space people work in. I can’t wait for the next generation to really spread out into households.”

Meanwhile, Valhalla Games’ Tomonobu Itagaki focused in on the enormity of the challenge facing hardware makers in the current market.

“In a world where our customers now have their attention divided by their PCs, their tablets and their smartphones, simply having consoles expand upon what they previously were isn’t going to work any longer,” Itagaki said. “Having a system that just reads controller input, makes a screen image and outputs it to the TV isn’t going to work, no matter how rich the media it’s producing. It seems like every first party is trying to get a feel for what makes a console truly special…”

Capcom’s Ace Attorney: Dual Destinies producer Motohide Eshiro said he was excited to see the Xbox One and PS4 in action, but expressed reservations with what he saw on the software side of things.

“Overseas developers showed off a lot of FPSes and third-person shooters that pursued photorealism and endless detail, but as for the gameplay, I felt there wasn’t much innovative,” Eshiro said. “I feel that I need to keep watching how trends unfold overseas, but continue developing games with an eye for what a Japanese person would see as fun and bring that to the world marketplace.”

Likewise, Sonic the Hedgehog series director Takashi Iizuka was disappointed with the games on display, particularly in how few of them were aimed toward young audiences.

“Games targeted toward the core audience are important, of course, but being at the show made me really feel like I wanted to continue making games that kids would be interested in,” Iizuka said.

Iizuka’s fellow Sega creator Toshihiro Nagoshi makes games like the Yakuza series for that core audience, but he too felt the games on display were lacking.

“The show floor seemed flooded with all of these franchise titles, and as a result nothing left that much of an impression on me,” Nagoshi said. “The Western market has continued to mature in a way, but personally I felt like it’s definitely about to face a transition period.”



E3 still vital to industry, says ESA

Trade group exec says attendees overwhelmingly pleased with the show, confirms it will return to LACC through 2016


For Rich Taylor, there’s been at least one constant throughout all the turmoil the gaming industry has faced in recent years. As the Entertainment Software Association senior vice president of communications and industry affairs explained to GamesIndustry International, that steadfast rock of certainty has been that people will question whether the Electronic Entertainment Expo is still relevant.

“It’s interesting. I’ve been at ESA now for six years, and that question has come up pretty much every year,” Taylor said. “I think the show answers the question itself both through the level of attendance and participation, from the news that comes out of it, and it remains extraordinarily… not just relevant, but vital to the industry, and vital to those who want to share news through the billions of impressions that come out of it. When we convene this show, all the attendant eyeballs and ears are pointed toward Los Angeles to see the news that comes out.”

“I think people really are fairly thrilled about what we have now and the model we have now, the size we have now, the timing we have now”

Rich Taylor

Despite the questions from industry watchers, Taylor said the E3 feedback from attendees, exhibitors, and ESA member companies hasn’t reflected those concerns.

“Right now, the overwhelming finding is where we are now is a really positive sweet spot,” Taylor said. “Folks feel good about the room they have for their exhibit space, meeting room options, the number of attendees is still large enough to get all the principal folks that people hope to encounter during the show into the LACC, but also not so overwhelming that you can’t actually play and experience the games themselves, which is of course a key part of the show… I think people really are fairly thrilled about what we have now and the model we have now, the size we have now, the timing we have now. That seems to be where the model will sit for the foreseeable future.”

One part of the model that will stay the same is the show’s home, as the ESA has recently committed to running E3 out of the Los Angeles Convention Center through 2016. While there were concerns last year that construction of an NFL football stadium next to the LACC could limit the building’s available space for the show, Taylor said the plan for the stadium construction has encountered setbacks. Combined with assurances from the LACC and AEG to minimize any impact on E3, that means the possible new stadium is at this point “a bit of a non-issue” for E3, Taylor said.

While the general format of the show is set for the near future, Taylor said the ESA is still adapting to keep up with the changing industry, specifically the growing mobile market. In response to a cry for better coverage of that sector, Taylor said this year’s E3 will feature an Online Mobile Gaming Pavilion where gaming for handheld devices will have its own dedicated space, “perhaps more conducive to the experience of playing those games.”



Nintendo won’t have a press conference at E3 2013

The company decides that the Nintendo Direct approach is better

No press conference at E3 2013 for Nintendo

In its financial results briefing, Nintendo president Satoru Iwata announced that the company will not have the traditional press conference event at this year’s Electronic Entertainment Expo. Instead, the company will be hosting two closed, software-focused events for press and distributors.

“We have decided not to host a large-scale presentation targeted at everyone in the international audience where we announce new information as we did in the past,” said Iwata in a transcript of the briefing. “Instead, at the E3 show this year, we are planning to host a few smaller events that are specifically focused on our software lineup for the U.S. market. There will be one closed event for American distributors, and we will hold another closed hands-on experience event, for mainly the Western gaming media.”

“During the E3 period, we will utilize our direct communication tools, such as Nintendo Direct, to deliver information to our Japanese audience, including those who are at this financial briefing, mainly focusing on the software that we are going to launch in Japan, and we will take the same approach outside Japan for the overseas fans as well.”

Iwata explained that Nintendo found that the broad conference event was not efficient, since it wasn’t specifically tailored to a certain audience.

“As video game fans are looking for information about games, it seems that they are less interested in sales figures that investors and analysts on the other hand attach much greater importance to, and distribution partners are looking for information on how we are going to market our products in the immediate future,” said Iwata.

“Given that we now have an established method such as Nintendo Direct, we feel that we will be able to deliver our messages more appropriately and effectively by doing so individually based on the various needs of different groups of people.”

This year’s E3 is looking to be a software-focused event overall. Sony already announced the PlayStation 4 console, leaving a software slate, final hardware design, and retail price for a potential E3 reveal. Microsoft just announced that its next Xbox event will take place on May 21, weeks before E3. The company later confirmed that software for the next Xbox would be showcased at E3 itself. And now Nintendo follows suit, leaving us with what should be a different E3 2013.