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In This Edition
– Jacob Navok on the future of games
– Roblox launches licensing program
– Subnautica 2 drama continues
– Is AI replacing people at King?
If Perfect Dark was commissioned today, it should probably be assigned to 35-person dev team.
That’s a conclusion that came out of my chat with Jacob Navok on The Game Business Show today. Navok, if you haven’t heard the name before, is the CEO of Genvid, the former director of business for Square Enix, and the author of insightful X posts.
That opening sentence sums up how the video game industry has radically transformed over the past five years. The Perfect Dark reboot, the game that Xbox cancelled just a few weeks ago, was not commissioned today. When Perfect Dark was green lit, we lived in an industry where if you spent big money making a game, you could expect to deliver (assuming you got the positioning, release window, platforms and marketing right) big revenue, which you could then use to commission an even higher quality game. This was the industry model for decades. Each generation the games got prettier, better and deeper, the audiences got bigger, the money went up and the cycle repeated.
Until it stopped. The games kept getting more expensive, prettier and deeper (better is debatable), but the audiences stopped getting bigger and the revenue growth slowed.
How come? The video game industry is still a relatively young business. There are older generations alive today who did not grow up playing games, and still don’t. In theory, with each passing generation, the audience for gaming should be increasing. Navok says that video games have a demand problem, so what’s causing that?
Well, a few things. Firstly, players age out of games, particularly PC and console games. A lot of AAA releases are big, complicated and time intensive. It’s a phenomenon largely unique to games. People don’t generally stop watching TV. But video games haven’t cracked how to entertain time poor adults (outside of mobile anyway).
But the bigger issue, at least according to Navok, is what the younger generations are playing. And that has caused a fundamental shift in the whole industry cycle.
We are talking about ‘Games Without End’, those live-service, forever titles that are part-game, part-social network, part-sport (in some cases). That means the model has moved to… make a hit game that lasts forever, deliver strong revenue, reinvest that revenue into making more content for the same game, attract new players, keep existing players, make even more money, and repeat.
As long as the developers keep doing a good job, these games will just keep going and going, getting stronger and stronger with each year, which keeps people within the ecosystem, and makes it almost impossible to compete with. The big will just keep getting bigger.
It’s called Metcalfe’s Law. Matthew Ball, Jacob Navok and other leading analysts talk about it a lot. The games industry has moved from its ‘content’ era into its ‘network’ era. It’s not going back.
It’s worth pausing here, because while this makes for a good narrative, it’s not as clear cut as all that. The reality is more nuanced.
Video games are not a singular experience. They play different roles. For me, Fortnite is more a competitor to the local bowling alley than it is to God of War. Resident Evil is more directly competing with Netflix’s horror category, as opposed to Call of Duty Warzone.
There are lots of things people want to do with their free time. Sometimes we want to socialise, play and connect with friends, sometimes we want to sit alone with a good story, sometimes we just want something to occupy our brains for a few minutes.
This is to say that the game business is not becoming all about live-service forever games. Single-player experiences, or ‘Games You Can Finish’ (as one exec called them, and I’m stealing it), are highly relevant. And I’d even argue there’s growth to be found here (even if it appears elusive at the moment). I believe that it’s through stories that games can become more ubiquitous and talk to wider audiences. And if we can start to solve the ‘ageing out’ problem on PC and console, then that would be a real boost for these types of solitary experiences.
It was actually the one post I disagreed with Navok on. He wrote about how the Perfect Dark reboot was unlikely to “take any measurable amount of time away from Fortnite, GTA 6 or Call of Duty”. But that was never Perfect Dark’s goal. Perfect Dark is a Blade Runner meets James Bond story game. That’s not to say there isn’t a large contingent of COD fans who might be interested in Perfect Dark, but the two games play different roles for those people.
Xbox, for all its project cancellations, still seem to agree there’s value in these single-player experiences. It’s still investing in games like Keeper, Clockwork Revolution and The Outer Worlds 2, which all received plenty of attention during its Showcase last month. It isn’t just leaning on Minecraft and Call of Duty to do all the growing.
“The video games industry’s protracted, painful journey over the last three years is not a temporary blip. If there’s anyone who thinks things will go back to how they used to be… they won’t”
Having said all of that, ‘Games You Can Finish’ are still fighting a brutal battle for people’s time. Those sticky, social experiences like Fortnite and Roblox (which is more ‘Steam for kids’ than a game, but let’s not get caught up on definitions) are dominating more and more of people’s free hours. And then there are video platforms like TikTok, which are eating up those little in-between moments that mobile games found so much success with.
So, although I believe there might be some growth for ‘Games You Can Finish’, that growth is still very hard to come by. And with costs continuing to rise, that’s a real challenge for businesses, and off-putting to investors.
Therefore, the makers of these experiences must simply scale to the opportunity and budget according. Which takes us back to our opening line… it means making games faster, with smaller teams, and with perhaps fewer bells and whistles.
But that also means lay-offs. If we agree that costs are too high for the market size, and that we need smaller teams making fewer titles, then that means fewer roles. That’s what all these redundancies are about. It’s not, as I keep hearing, because of greedy suits or AI taking people’s jobs. Those concerns are minor compared to the overriding problem: there simply isn’t enough demand for all these video games.
And in this era of network games, and increasingly sticky online experiences, success has never been greater, and failure has never been more brutal. There was a time when you would release a game and it would sell something. Even failures reached an audience of some description. Today, it’s possible your game might not reach anyone. Concord didn’t just do badly, it generated nothing. The game made no return for anyone, whether that’s the corporates that financed it or the people who gave up years of their life making it. Such a thing was unthinkable even five years ago. No wonder investors are spooked.
I realise I’m telling a pretty grim story here. And that’s even without touching upon the potential earthquake that AI may bring.
But I go back to what I said before (and what I was trying to say on today’s episode of the Show), video games are so broad now. They fit into our lives in a myriad of different ways. Yes, there isn’t enough time for everything. In order for your game to succeed, something, somewhere (video game or not) has to suffer. It’s very much a ‘red ocean’ in that regard. But I think back to a line from my interview with Zynga CEO Frank Gibeau: “mobile games is a red ocean, but that’s ok if you’re a shark”. You can actually apply that sentence more broadly. Yes, entertainment is a bit of a red ocean, but video games is a shark.
So, we have to fight harder. Work smarter. Look at the smaller growth opportunities and attack them. One came up this week when Roblox announced its licensing platform. IP holders can now offer up their brands to Roblox creators to use. Netflix is offering up Squid Game and Stranger Things, Lionsgate is making Saw and Twilight available, while Sega has signed-up with its Like A Dragon IP.
(Is it right for all these typically adult IPs to be included in a platform largely used by kids? That’s a debate for another day)
For IP owners, this is an opportunity to reach new audiences, promote their brands, and make a bit of money, with very little cost. As Navok said on the Show, game companies should be jumping at the opportunity.
It’s things like that that video game companies should be looking at. The industry today is about knowing your audience, knowing how big that is, being targeted, but also trying out new ideas and exploring different opportunities. In that sense, the job of video game companies hasn’t really changed.
But make no mistake, the video games industry’s protracted, painful journey over the last three years is not a temporary blip. If there’s anyone who thinks things will go back to how they used to be… they won’t. The industry that green lit Perfect Dark does not exist anymore.
As Navok argues, the rise of network games has fundamentally changed the business. For those of us still able to work within it, it’s now about understanding how to thrive in this new world.
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As mentioned above, Roblox has launched a licensing platform, where IP holders can offer up brands for Roblox creators to use in a simplified way. Sega, Netflix and Lionsgate are amongst the early adopters with franchises such as Stranger Things, Like A Dragon and Twilight. IP holders can state their terms in how the IP is used and set revenue share, too.
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Ubisoft has named Christophe Derennes and Charlie Guillemot as the co-CEOs of its new spinoff subsidiary with Tencent, which operates major IP including Assassin’s Creed, Far Cry and Rainbow Six. Charlie is the son of Ubisoft CEO Yves Guillemot. Ubisoft said in a statement: “With complementary backgrounds, Christophe and Charlie bring strong industry expertise, deep knowledge of the Ubisoft ecosystem, and a shared culture of innovation.”
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Nintendo has announced its Zelda and Link for the upcoming 2027 movie. Bo Bragason will play the famous princess, while Benjamin Evan Ainsworth will play the hero Link. The film is being distributed by Sony Pictures, and is being produced by Nintendo’s Shigeru Miyamoto and Spider-Man veteran Avi Arad. Kingdom of the Planet of the Apes’ Wes Ball is attached to direct. The movie releases on May 7, 2027.
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The drama between Krafton and the former leadership of its studio Unknown Worlds continues. Krafton fired the studio leaders, including Edward Gill, Charlie Cleveland and Adam McGuire, earlier in the month after saying it was disappointed in the progress made on Subnautica 2, which was due in Early Access this year. The Early Access launch was subsequently delayed until 2026. The ousted leaders disputed this and accused Krafton of orchestrating a delay to avoid paying a $250 million bonus. Krafton refutes this and is reportedly extending the bonus regardless. Now Gill, Cleveland and McGuire have filed a lawsuit against Krafton over the incident, and insist the game is ready to release in 2025.
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Recently laid-off staff at King have claimed that their roles are being replaced with the AI tools that they helped to create. MobileGamer.biz reports that over half of the Farm Heroes Saga team have been laid-off, and staff morale is (unsurprisingly) at an all-time low. King has invested heavily in AI, and has been using the technology to test levels in games such as Candy Crush.
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Gamescom reports an 11% increase in exhibitors for the 2025 show, which takes place in Cologne next month. Major exhibiting companies include 2K, Bandai Namco, Bethesda, Blizzard, Capcom, CD Projekt, Disney, EA, Konami, Krafton, LEGO, Meta, Netflix, Nintendo, Paramount, Roblox, Sega, Tencent, The Pokemon Company, Ubisoft and Xbox. The Game Business is also signed-up as a media partner, and will be producing shows and newsletters from Cologne.
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Make-A-Wish UK has launched a charity video game sale. The Wish 200 Week Charity Sale features a selection of Steam games, with a portion of each sale going directly to enabling life-changing wishes for critically ill children in the UK. Featured games includes Thank Goodness You’re Here, Heaven’s Vault, Vampire Survivors, Let’s Build A Zoo and Bassmaster Fishing.
That’s it for today. Join us next week for more news, analysis and interviews.
