GameStop's head in the clouds | 10 Years Ago This Month
The retailer knew digital distribution was an existential threat and laid out its plan to get ahead of the problem
The games industry moves pretty fast, and there's a tendency for all involved to look constantly to what's next without so much worrying about what came before. That said, even an industry so entrenched in the now can learn from its past. So to refresh our collective memory and perhaps offer some perspective on our field's history, GamesIndustry.biz runs this monthly feature highlighting happenings in gaming from exactly a decade ago.
Head in the Clouds
Everybody knows cloud gaming is the future, just like everybody knew it was the future a decade ago. (Stay tuned for news on when/if it becomes the present.) Regardless, you might expect the visionary early movers in this space were richly rewarded for their pioneering foresight, yes?
Well, not really. OnLive was first to the party, launching in 2010, laying off its entire workforce in 2012, and shutting down/selling off patents in 2015. Gaikai fared a little better, smartly selling out to Sony for $380 million before it had to go to market with an actual service, and provided the scaffolding for the PlayStation Now service, which we (and Sony, apparently) frequently forget even exists.
There was a third significant player early in the cloud gaming market though: GameStop. Like everyone else in the industry, GameStop had seen how the dawn of digital distribution was going to eat its boxed goods retailer lunch. We covered its doomed strategy to avoid that fate in April's column, but with only a passing mention of its cloud streaming play, which started with the acquisition of start-up cloud streaming developer Spawn Labs.
When GameStop acquired Spawn Labs in April of 2011, it wasn't clear what it would do with cloud gaming, but in November of 2011, it detailed its plans to launch a "game slinging" service taking a page from TV service Slingbox, which let users stream a video feed from their home TV to their smartphones. The retailer's idea was to do the same for games, and it had even started proving out the technology in limited beta tests.
GameStop planned to offer the streaming feature as an up-sell proposition at the point of purchase (as if GameStop employees could be reasonably asked to add yet another question to the mandatory hard sell script at checkout). That would conceivably let the publishers get a cut of the action and give GameStop another function it could serve as a middleman for.
But as was often the case with cloud gaming and new tech in general, the pitch was more than a little muddled and unclear. Game slinging was the heart of the pitch, and GameStop senior VP (and future CEO) Mike Mauler told us GameStop was "not looking at a service where you can just play games in the cloud." But Mauler also said in the same interview that GameStop wanted to offer a number of other features that sound exactly like just playing games in the cloud, like having console demos and full PC games instantly playable on demand.
"Every time we think of something new, five other things pop up," he said. "I don't think anyone at this point knows what the next 3-5 years are going to throw up. It's exciting."
The next 3-5 years threw up a lot, it turns out. GameStop never got game slinging out of beta and shut down Spawn Labs in early 2014, saying: "While cloud-based delivery of video games is innovative and potentially revolutionary, the gaming consumer has not yet demonstrated that it is ready to adopt this type of service to the level that a sustainable business can be created around it."
Its other diversification efforts didn't fare much better, and in 2018 it was back to focusing on its core business.
As for the most relevant player in cloud gaming right now, it was also involved a decade ago, albeit a bit more quietly. In a talk at GDC China, Microsoft cloud evangelist Brian Prince celebrated OnLive and Gaikai for paving the way forward for cloud gaming before promising that Xbox would be doing something cloud-specific in the future.
"These are really gaming platforms as a service," Prince said said. "There are some limitations here, but I really do think this is the distant future of gaming in the cloud."
That tracks very closely with what we've heard from Microsoft on cloud streaming every since the announcement of its Project xCloud service.
The interesting thing about cloud gaming to this point is that it's an indisputably neat technology, but there are questions about just how compelling it is for consumers, or how practical it will be for providers. Stadia has been a mess, PlayStation Now doesn't seem to have the business model or backing of its parent company, and I only referred to Microsoft as "the most relevant player in cloud gaming" above because cloud is one of the key selling points of the fairly compelling Xbox Game Pass push.
Just how many Xbox Game Pass subscribers actually stream games instead of simply downloading them for local play is unclear, and Microsoft hasn't seemed eager to share its data on that point.
Picking on Team Bondi
L.A. Noire developer Team Bondi had its highest highs and lowest lows in 2011. On the one hand, it released its first and only game, the Rockstar-published L.A. Noire, to a strong critical reception. On the other, it only got a few weeks to bask in that glow before being hit by a pair of scandals.
First a number of developers who were laid off or left the studio piped up about being left off the credits, which would have been a black eye enough if it weren't soon followed by one of the industry's first tell-all exposés about a toxic work environment and abusive leadership, in this case Team Bondi president Brendan McNamara.
Oh, and Team Bondi went under soon after as well.
In an interview with Eurogamer 10 years ago this month, McNamara said Team Bondi closed because it couldn't sign another project to work on. When asked why not, McNamara replied: "Mainly, I'd say because we got a lot of bad press about what it was like to work with us and our conditions. That, obviously, didn't come at the right time. To do a deal for a major video game probably takes about a year. We didn't start running around doing that stuff until well after the game was finished."
L.A. Noire released in May of 2011. The bad press started in June. The company entered administration just three months later. So McNamara expected a deal to take about a year and didn't start working on that "until well after the game was finished," when they would have been betting the entire company on a publisher seeing the reception to L.A. Noire and fast-tracking any kind of agreement. I'm sure the bad press didn't help matters any, but I'm much less sure it can be "mainly" blamed for the company going under given management's planning to that point.
Still, there's part of me that feels a little bit for McNamara when reading that interview. He brings up his reputation of "the bully of the games business," which he chalked up to being a direct person and saying what he thinks.
"Maybe that's not the best way to make games," he said. "Probably, it should be more divorced between my directness and the people I work with. But having said that, when I read about Steve Jobs -- I don't know if you're reading the book -- I've never said anything like that to people."
The book is presumably the biography published the previous month, just weeks after about the Apple co-founder's death. McNamara didn't specify any particular anecdote about Jobs treating people poorly, but there were plenty of options.
And comparing McNamara's situation to the games industry specifically, he brings up the example of another AAA developer.
"I remember just before E3, Naughty Dog, there was a story in the LA Times about people working there three days straight, and they were walking around like drunks in the office and people were screaming at each other," McNamara said, referring to a piece with the headline "Big dogs hustle".
"When you've been up for three days you do that. Nobody stayed up for three days making L.A. Noire. I don't even think there was an all-nighter on it. I'm not saying that stuff is good and people should do it anyway. But they were doing that, and they said it was going to be like that crunch until the end of the game. In America, people expect you to work hard to see results."
McNamara's absolutely right in that there are multiple standards in how people and studios have been judged in gaming and far beyond. And the press and public opinion came down hard on McNamara in a way far different than any game developer prior to him, even though -- as he pointed out with Naughty Dog -- there had been no shortage of reporting on ruinous degrees of crunch for years.
The major difference is that in those cases, the crunch was typically glorified like old war stories, an in-the-trenches tale of camaraderie through hardship that either downplayed the horrors around them or attempted to portray them as justified. The Team Bondi exposé was told not from the perspective of the happy few who might volunteer for the nonsense but from the people who don't think they should have to sacrifice all of their time, health, and dignity for a job.
The answer of course isn't to give McNamara's behavior or his stewardship atop a crunch-heavy studio a pass. The answer is to stop giving passes to the Steve Jobs and the Naughty Dogs of the world just because they have enjoyed tremendous commercial success. All the success in the world won't fix the people and families broken by these practices, especially given the damage done can cascade out beyond the individual doing the crunching.
I'm happy to say this is one front we have seen some progress on in the past decade. There are now fewer studios who wear crunch as a badge of honor, and less lionizing of "difficult geniuses" who consider abusive behavior a viable leadership tool. Even Naughty Dog at least pays lip service to cutting down on crunch, even if reading between the lines suggests leadership's appetite to change practices is modest at best.
I for one am eager to see the progress that could be made in another ten years.
Nintendo. Nintendo never changes.
In putting together this column each month, two of the most common thoughts I have are, "Oh wow, that was only 10 years ago? It feels like so much longer!" and "Oh wow, that was 10 whole years ago? It couldn't have been that long!"
This month the former thought came courtesy of the news that Nintendo would soon begin allowing paid downloadable content for 3DS games. It had allowed free add-ons for the DS, but this was the first time the company supported the option to make DLC part of a handheld game's business model.
Paid DLC was still a novelty when Microsoft released a pair of downloadable Halo 2 maps on the original Xbox for $6 back in April of 2005, but by 2011 it was practically a default for any big game, partly because publishers had been giving it away with the purchase of a new game to undermine the second-hand market.
Nintendo has historically been late to the online parties (and rarely adheres to the dress code), but even so it's equal parts odd and impressive that it made it through the rhythm game heyday and three Guitar Hero: On Tour releases for the DS without supporting paid DLC.
That stubbornness can be frustrating at times, but it definitely has upside as well. For example, in announcing the paid DLC change, Nintendo of America president Reggie Fils-Aime was also clear that this was a concession made for third-party developers rather than something Nintendo was planning to take advantage of to any great degree, because the platform holder's developers prefer to sell consumers a complete experience up front.
"If we want to make other things available, great, and we'll look at that," Fils-Aime said. "But we're unwilling to sell a piece of a game upfront and, if you will, force a consumer to buy more later. I think the consumer wants to get, for their money, a complete experience, and then we have opportunities to provide more on top of that."
That's a fairly straight-forward explanation of a corporate strategy that could be easily shamed with a single counter-example, which is in many ways the lifeblood of a column like this one. And even though Nintendo has warmed up to paid DLC in recent years, I'm struggling to think of a clear example of the company falling short of the standard Fils-Aime embraced.
Even Super Smash Bros. Ultimate, the game featuring Nintendo's most aggressive DLC effort to date with a years-long drip feed of a dozen new fighters, can hardly be considered as having an incomplete base experience given its massive initial roster of 69 characters covered every previous Smash Bros. fighter to date.
Good Call, Bad Call
GOOD CALLS: Score a few wins for the wisdom of the crowd, as a survey of London Games Conference attendees overwhelmingly found that THQ was doomed (check), as were dedicated gaming handhelds (check) and PlayStation Home (check). They also correctly took a dim view of the prospects of subscription-based MMOs, which we discussed previously. Their calls on Gaikai and Amazon succeeding while Zynga would wither are a little more debateable, but aren't entirely off base either depending on the time frame you want to look at.
BAD CALL: Zynga for telling some early employees they would be fired if they didn't give up unvested stock options that convinced them to join the start-up in the first place. Heading into its IPO, the company was worried that some early hires hadn't earned the compensation Zynga had agreed to give them, so it was just taking it back in the name of meritocracy.
Start-ups love stories about the Google chef who became a multimillionaire when they're recruiting people to work burnout hours for a below-market salary with the promise of a huge payoff later, but less so when that huge payoff might actually happen.
WORSE CALL: People defending that decision as "morally acceptable business as usual" because employees have so few rights Zynga could have just fired the supposedly under-performing people and kept the unvested stock options anyway. Doing the bad thing instead of the absolute worst thing does not magically make the thing morally acceptable.
PARTLY GOOD CALL: Ian Livingstone told the Launch Conference in Birmingham that "Hardware manufacturers will finally realise the fact that manufacturing hardware is a mug's game. It's all about intellectual property and I think you'll see IP moving across all platforms and all devices. Walled gardens will one day disappear."
Walled gardens are certainly still around, and if anything we've got more companies making hardware platforms today than a decade ago, but IP has definitely been moving across platforms. Mario and Pokémon are on mobile phones, Microsoft publishes Minecraft everywhere and even brought titles like Cuphead and Ori and the Blind Forest to Switch, and Sony released its first Xbox game with MLB The Show 21 while bringing some PlayStation exclusives to PC.
BAD CALL: Sony's decision to make proprietary PlayStation Vita memory cards, and then to price them exorbitantly. Whether Sony realized that on its own or the reaction to articles like that one changed their minds, the finals prices were slightly lower. The cheapest option at launch was a 4GB card for $20, which itself seems sub-optimal considering the day one system-seller (such as it was) Uncharted: Golden Abyss could eat that almost single-handedly as a 3.5GB download.
FACTUALLY WRONG CALL: Ubisoft CEO Yves Guillemot expressing continued support for Nintendo platforms because "Today, the Wii is 45% of our business." In the company's second quarter earnings release that same week, it reported that Wii accounted for 31% of sales. For the first quarter it was just 27%.
It's like the guy doesn't even know what's going on in his own company or something.