ATVI - Activision Blizzard

[Foreign Tuffett]

Although I don't care for the use of the terms "shady" and "bubble" in the title, the below article is fascinating.

 

https://kotaku.com/as-esports-grows-experts-fear-its-a-bubble-ready-to-po-1834982843

 

It (rightfully) questions the e sports model that ATVI is pushing: expensive city-based teams with expansive facilities. This is the model that traditional sports teams use, but it's an apples-and-oranges comparison. Traditional sports team owners can usually count on the value of their teams increasing over time due to (a) radical scarcity and exclusivity (b) nominal risk of obsolescence or permanent impairment. Neither of these are true for e sports teams.

 

 

 

 

[Jurgis]

I have a great business idea: Value Investors Championship League. We book the largest sports arena, we invite star investors, and they compete for fabulous prizes. "I buy BRK!", "Oh no, I buy SHLD!", "Oh no, I short SHLD!". The excitement! The drama! This would be huge! We could sell viewing rights, sponsorships, merchandise! You heard it here first!

[rkbabang]

I have a great business idea: Value Investors Championship League. We book the largest sports arena, we invite star investors, and they compete for fabulous prizes. "I buy BRK!", "Oh no, I buy SHLD!", "Oh no, I short SHLD!". The excitement! The drama! This would be huge! We could sell viewing rights, sponsorships, merchandise! You heard it here first!

 

And then we wait 15 years and see who wins!

[glorysk87]

Although I don't care for the use of the terms "shady" and "bubble" in the title, the below article is fascinating.

 

https://kotaku.com/as-esports-grows-experts-fear-its-a-bubble-ready-to-po-1834982843

 

It (rightfully) questions the e sports model that ATVI is pushing: expensive city-based teams with expansive facilities. This is the model that traditional sports teams use, but it's an apples-and-oranges comparison. Traditional sports team owners can usually count on the value of their teams increasing over time due to (a) radical scarcity and exclusivity (b) nominal risk of obsolescence or permanent impairment. Neither of these are true for e sports teams.

 

Why are neither of these true. In my view, it's like any other sport. It's highly likely that the vast majority of these leagues will never hit critical mass and will eventually fizzle out. But I'm confident that at least a few of them will become decent sized sports in their own right. Take Riot Gaming's LCS and LEC - those are highly likely to generate growth for the foreseeable future, and team owners in those leagues will likely see a nice return on their investment.

[BG2008]

I have a great business idea: Value Investors Championship League. We book the largest sports arena, we invite star investors, and they compete for fabulous prizes. "I buy BRK!", "Oh no, I buy SHLD!", "Oh no, I short SHLD!". The excitement! The drama! This would be huge! We could sell viewing rights, sponsorships, merchandise! You heard it here first!

 

Jurgis,

 

You are a total fan boy of this game and you live in the matrix.  You just refuse to philosophically acknowledge that you're partaking in it.  OMG, it sounds all existential and all. 

[Jurgis]

I have a great business idea: Value Investors Championship League. We book the largest sports arena, we invite star investors, and they compete for fabulous prizes. "I buy BRK!", "Oh no, I buy SHLD!", "Oh no, I short SHLD!". The excitement! The drama! This would be huge! We could sell viewing rights, sponsorships, merchandise! You heard it here first!

 

Jurgis,

 

You are a total fan boy of this game and you live in the matrix.  You just refuse to philosophically acknowledge that you're partaking in it.  OMG, it sounds all existential and all.

 

I hereby publicly acknowledge that I live in the Matrix.

 

 

 

 

Where's the woman in red?

[Spekulatius]

Although I don't care for the use of the terms "shady" and "bubble" in the title, the below article is fascinating.

 

https://kotaku.com/as-esports-grows-experts-fear-its-a-bubble-ready-to-po-1834982843

 

It (rightfully) questions the e sports model that ATVI is pushing: expensive city-based teams with expansive facilities. This is the model that traditional sports teams use, but it's an apples-and-oranges comparison. Traditional sports team owners can usually count on the value of their teams increasing over time due to (a) radical scarcity and exclusivity (b) nominal risk of obsolescence or permanent impairment. Neither of these are true for e sports teams.

 

Seems outdated. Most spontaneously formed e-teams don’t care where the members come from. There are geographical limitations due to server ping - a player from Asia probably wont due too well in NA because he has a >300msec ping from time delay, but other than that, the notion to have a team based on geographical location seems outdated. I don’t see why expensive venues are needed either.

[Foreign Tuffett]

In a story that supports my past points in this thread that (1) ATVI's e sports strategy doesn't sense and (2) ATVI has a talent retention problem, the "Global Product Director of Blizzard Esports" is leaving the company after 13 years:

 

https://www.dexerto.com/esports/sources-high-profile-blizzard-staff-leave-morale-problems-678944

 

The "Commissioner" of the Overwatch League is leaving the company as well:

 

https://www.dexerto.com/overwatch/richard-lewis-an-analysis-nate-nanzer-leaving-overwatch-league-664386

[Jurgis]

I think you are totally right about ATVI staff/morale/future issues.

[Patmo]

Although I don't care for the use of the terms "shady" and "bubble" in the title, the below article is fascinating.

 

https://kotaku.com/as-esports-grows-experts-fear-its-a-bubble-ready-to-po-1834982843

 

It (rightfully) questions the e sports model that ATVI is pushing: expensive city-based teams with expansive facilities. This is the model that traditional sports teams use, but it's an apples-and-oranges comparison. Traditional sports team owners can usually count on the value of their teams increasing over time due to (a) radical scarcity and exclusivity (b) nominal risk of obsolescence or permanent impairment. Neither of these are true for e sports teams.

 

Why are neither of these true. In my view, it's like any other sport. It's highly likely that the vast majority of these leagues will never hit critical mass and will eventually fizzle out. But I'm confident that at least a few of them will become decent sized sports in their own right. Take Riot Gaming's LCS and LEC - those are highly likely to generate growth for the foreseeable future, and team owners in those leagues will likely see a nice return on their investment.

 

I'm probably going on a tangent here but there is an additional risk that LCS/LEC franchisees also face. Competitive videogames have a much shorter shelf life than sports. Counter-Strike needed an upgrade about 10 years in, 12 tops, and it's virtually the picture perfect esport. I expect League will need the same pretty soon, the game is 10 years old itself now. Rito will need to deliver, and while it's not a long stretch to expect them to bring the goods, it's not a guarantee. Plus, there's additional uncertainty on continuity for those franchises as well. Eg would they get grandfathered into the new league (and possibly temporarily own a spot in 2 leagues) or do they need to buy a new spot? Rito can't really do them in just like that but it's stuff that needs to be thought through.

 

PS I obsessed over this dumb game for the better part of a decade like the total degenerate that I am, I wish I could say it's nice to see these kids I used to spank routinely are now signing million dollar contracts but I can't help having a little jealousy there  :-\ Tangent over

[Jurgis]

PS I obsessed over this dumb game for the better part of a decade like the total degenerate that I am, I wish I could say it's nice to see these kids I used to spank routinely are now signing million dollar contracts but I can't help having a little jealousy there  :-\ Tangent over

 

I've never been at competitive level in these games, but I can see how it sucks for someone to be at the top of the game and miss the commercialization and hefty contracts. In some ways timing and luck matters.

 

Best.  8)

[glorysk87]

 

I'm probably going on a tangent here but there is an additional risk that LCS/LEC franchisees also face. Competitive videogames have a much shorter shelf life than sports. Counter-Strike needed an upgrade about 10 years in, 12 tops, and it's virtually the picture perfect esport. I expect League will need the same pretty soon, the game is 10 years old itself now. Rito will need to deliver, and while it's not a long stretch to expect them to bring the goods, it's not a guarantee. Plus, there's additional uncertainty on continuity for those franchises as well. Eg would they get grandfathered into the new league (and possibly temporarily own a spot in 2 leagues) or do they need to buy a new spot? Rito can't really do them in just like that but it's stuff that needs to be thought through.

 

PS I obsessed over this dumb game for the better part of a decade like the total degenerate that I am, I wish I could say it's nice to see these kids I used to spank routinely are now signing million dollar contracts but I can't help having a little jealousy there  :-\ Tangent over

 

Riot already upgraded/overhauled the game a few years back. It's highly unlikely that they'll release a "2.0" version that players have to switch over to. Their MO is simply to release extremely frequent incremental updates and large overhauls as needed, but to keep it all within the same original game that was released 10 years ago. It's worked so far, and growth has continued pretty steadily.

[Patmo]

 

I'm probably going on a tangent here but there is an additional risk that LCS/LEC franchisees also face. Competitive videogames have a much shorter shelf life than sports. Counter-Strike needed an upgrade about 10 years in, 12 tops, and it's virtually the picture perfect esport. I expect League will need the same pretty soon, the game is 10 years old itself now. Rito will need to deliver, and while it's not a long stretch to expect them to bring the goods, it's not a guarantee. Plus, there's additional uncertainty on continuity for those franchises as well. Eg would they get grandfathered into the new league (and possibly temporarily own a spot in 2 leagues) or do they need to buy a new spot? Rito can't really do them in just like that but it's stuff that needs to be thought through.

 

PS I obsessed over this dumb game for the better part of a decade like the total degenerate that I am, I wish I could say it's nice to see these kids I used to spank routinely are now signing million dollar contracts but I can't help having a little jealousy there  :-\ Tangent over

 

Riot already upgraded/overhauled the game a few years back. It's highly unlikely that they'll release a "2.0" version that players have to switch over to. Their MO is simply to release extremely frequent incremental updates and large overhauls as needed, but to keep it all within the same original game that was released 10 years ago. It's worked so far, and growth has continued pretty steadily.

 

Good point and they have done a much better job of it than they get credit for, but even with the aggregate effect of all incremental updates and upgrades they have made over the years, the game still looks and feels old. It's a way better product than 10 years ago, but it's still just a new rev of the same product. It remains increasingly at risk of obsolescence (and it is no secret that the "under the hood" stuff is already severely outdated, hell it was subpar when the game came out).

 

I'm pretty sure new player growth has stalled if not reversed, I don't know the facts but I have a strong hunch. Profit growth (which coincidentally has not looked great recently and got tencent in a huff) has come exclusively from increased monetization.

 

Whether pushed as a standalone game or not they'll have to release a major overhaul within the next few years, no getting around it. That said there's talks they're currently developing another game (not 2.0 but a different genre within the same universe) so it's not like they're idle. The company will probably do fine but I'm not as sold on the game itself. Look where Starcraft is today...

[glorysk87]

Good point and they have done a much better job of it than they get credit for, but even with the aggregate effect of all incremental updates and upgrades they have made over the years, the game still looks and feels old. It's a way better product than 10 years ago, but it's still just a new rev of the same product. It remains increasingly at risk of obsolescence (and it is no secret that the "under the hood" stuff is already severely outdated, hell it was subpar when the game came out).

 

I'm pretty sure new player growth has stalled if not reversed, I don't know the facts but I have a strong hunch. Profit growth (which coincidentally has not looked great recently and got tencent in a huff) has come exclusively from increased monetization.

 

Whether pushed as a standalone game or not they'll have to release a major overhaul within the next few years, no getting around it. That said there's talks they're currently developing another game (not 2.0 but a different genre within the same universe) so it's not like they're idle. The company will probably do fine but I'm not as sold on the game itself. Look where Starcraft is today...

 

I don't know what you're talking about. The game looks and feels as modern as Fortnite does. Just because the animation style is more cartoonish than realistic doesn't mean it looks like an old game.

 

In terms of growth - again, not sure what you're talking about. Player count has grown almost every single year through 2017 and since then has remained flat (https://www.lol-smurfs.com/blog/wp-content/uploads/2017/06/LeagueOfLegends-Players-Per-Year.jpg) As of Jan 2019 there were slightly over 120mm players.

 

The 2018 world championship brought in over 205mm concurrent viewers which was an all-time record.

 

Twitchtracker shows viewing and engagement at all time highs (https://twitchtracker.com/games/21779)

 

Revenue was down from 2017 to 2018 but that's more a function of Fortnite taking wallet share, not so much a function of reduced engagement/player time.

 

Overall the game is EXTREMELY healthy. The comparison to starcraft is nonsense. Starcraft never had the recurring revenue component that League has, thus ATVI had no incentive to build a robust ecosystem around the game to keep players engaged. The two simply aren't comparable in any real sense.

 

In terms of overhaul, I would be extremely surprised if Riot overhauls the game in any meaningful overarching way in the next few years. There's simply not much that needs to be done in terms of large projects. Performance is great, the graphics are great, the servers are great. They'll focus their attention on continuing to build out the LCS and LEC and releasing incremental content in the form of cosmetics and unique player events.

 

I'll be honest - it sounds like you're just shooting from the hip here without any real sense for the game/industry and without having done any research whatsoever.

[Patmo]

 

I don't know what you're talking about. The game looks and feels as modern as Fortnite does. Just because the animation style is more cartoonish than realistic doesn't mean it looks like an old game.

 

Have you ever played either game? That you say that makes me think you haven't. League looks like an old game, plays like an old game, feels like an old game, because it IS an old game.

 

 

In terms of growth - again, not sure what you're talking about. Player count has grown almost every single year through 2017 and since then has remained flat (https://www.lol-smurfs.com/blog/wp-content/uploads/2017/06/LeagueOfLegends-Players-Per-Year.jpg) As of Jan 2019 there were slightly over 120mm players.

 

So I said (with prior disclaimer stating I didn't know the exact picture, btw) player count growth has slowed, you say there was NO growth, and you pretend to disprove my point after doubling down on it? Plus just what do you think will happen in the next 5 years, a straight line upwards?

 

The game has had a major issue for years with getting new players hooked due to smurfs, toxicity, etc in the lower ranks, and despite a ton of work from Rito this issue is still around today. Try putting your kid in there, see what they feel about the new player experience. Combine that with the legions of old hats like me falling off the wagon, I'd put my house the player base will not grow meaningfully from here, if at all. Certainly not enough to justify your little crusade.

 

The 2018 world championship brought in over 205mm concurrent viewers which was an all-time record.

 

I was one of them, this worlds was very exciting by the way. However your point is completely irrelevant for multiple reasons, but I'll list only one. Your viewer count includes China, and it's flat out useless as numbers are notoriously inflated there and they are the biggest portion of the pie by far.

You could say 100mil or 10bil, it wouldn't matter. Garbage in garbage out. By including it, I can only deduce you were unaware and thus have no clue what you're talking about.

 

https://escharts.com/tournaments/lol/worlds-2018

 

Here, I'm doing what you're doing and quickly googling the first random website that supports my case. 47mil concurrent viewership average, 600k ex-China (lol). Peak 205mil, 2mil ex-China (lol again). This website specifically carves out the China piece just because of how notorious they are about cheating the viewercount.

 

Twitchtracker shows viewing and engagement at all time highs (https://twitchtracker.com/games/21779)

That's just riding off of Twitch growth itself. Without that tailwind the viewership trends would be way different. The largest channels barely draw any more viewers than the largest channels from the beginning of Twitch. HotshotGG drew 20k viewers back then, and that's what tyler1 draws today. Maybe you could google overall twitch viewership trends vs league over the years and prove me wrong. After all, you're a well-researched scientist of the highest order, this man don't shoot from no hip no siree.

 

Revenue was down from 2017 to 2018 but that's more a function of Fortnite taking wallet share, not so much a function of reduced engagement/player time.

Well if that's your excuse. In 2019 it's going to be Unreal Tournament Battle Royale, in 2020 it's going to be Pokemon MMORPG. What will be the next explanation after that?

 

Overall the game is EXTREMELY healthy. The comparison to starcraft is nonsense. Starcraft never had the recurring revenue component that League has, thus ATVI had no incentive to build a robust ecosystem around the game to keep players engaged. The two simply aren't comparable in any real sense.

The game is maybe healthy, but it is still old and getting more tired by the day. Plenty of games have been healthy before dying out (I mean, that's the natural cycle of life itself, so I don't know what's your point here). Better built games than League, better games than League.

 

The point that you don't want to accept is games have a short shelf life. Your thesis that Riot releases frequent patches therefore it will live on forever is naive and wrong.

 

At best, they might be able to delay the inevitable and I'll be wrong by a few years. Every single game in the history of videogames has died out, and 10ish years is, in my estimation, the average amount of time it has historically taken for prime competitive games to start declining. There just doesn't exist a live 20 year old game that hasn't had major upgrades, and a major upgrade by the way has not prevented said decline in all cases.

 

You offered good evidence yourself for League with the player count staying stagnant the past couple years. You didn't like my Starcraft comparison, pick another title among the lot.

 

In terms of overhaul, I would be extremely surprised if Riot overhauls the game in any meaningful overarching way in the next few years. There's simply not much that needs to be done in terms of large projects. Performance is great, the graphics are great, the servers are great. They'll focus their attention on continuing to build out the LCS and LEC and releasing incremental content in the form of cosmetics and unique player events.

They've already started cutting costs on events, what are you talking about with continuing to build out the LCS and LEC? The product has been built already. They've even gone hard on monetizing it recently. "And now let's go to the STATEFARM analyst desk to hear what else Patmo has to say".

 

Performance is great? Are you saying this about the #1 most memed game in the world for its spaghetti code, a monstrosity of bandaids put on bandaids whose foundation was put together by a garage team of go-getting fratbros who won't pass up the chance to fart on their underlings in meetings? Were you straight faced when you wrote this?

 

Cosmetics and unique player events aren't incremental content, they're monetization tactics. New champs, champ updates, these are content. They slowed down the pace considerably on those, coincidentally.

 

They won't release it in the next few years, but in the next few years they sure as hell will announce the start of development of a major upgrade. That is, if they want their flagship title to live on. It'll be a while before they put something out. Maybe the main difference in our viewpoint is you are thinking of the next 2 years like a thoroughblood wall streeter, instead of a longer-term outlook? I would peg you for one, after all you're all "BUY! BUY! BUY!" at the peak before the chart goes south and that's classic wall street.

 

I'll be honest - it sounds like you're just shooting from the hip here without any real sense for the game/industry and without having done any research whatsoever.

 

And I'll be honest, it sounds like you googled a few articles and fancy yourself an authority on the matter. You're the one who has no sense for this industry, to be honest. (I didn't want to go down the insult path, I was just rambling on about my thoughts, but you got the ball rolling). Although I won't make the claim to have "researched"  this industry that courses through my blood, so have at it.

 

As I've shown you're throwing off data and ignoring all the context behind it. Hell in one case you straight up proved my point???

 

I've literally grown up in the esports industry, I competed in tournaments when it was just a bunch of kids hauling CRT's around with their moms to duke it out and see whose got the biggest balls, for prizes that wouldn't add up to gas money. I've seen the growth with my own 2 eyes, interacted with all sorts of people in the industry, lived the occasional behind-the-scenes BS. It's not a stretch for me to claim I have a better pulse on the business side of it than some guy who hits up AskJeeves. I "researched" (aka googled) one thing and showed you how baseless that particular piece of "research" you presented was, maybe I ought to do it again. You're trying to be precise but you're wrong in your call, my call is right but you're trying to call me out because I'm ballparking it.

 

Tell you what, forget everything I just wrote. As is I say this game will not last another 10 years without major decline. If you want to put a little money on the other side, I'm down.

[glorysk87]

Ok buddy, you're right and I'm wrong. Good talk.

[Patmo]

Anytime sport. Let me know if you have any other questions.

[Foreign Tuffett]

Solid results out of EA yesterday. Gosh darn they are weak in mobile, but the Sims 4 keeps chugging along and it looks like Apex Legends will meet or exceed their guidance for the FY.

 

I continue to feel that EA has a (well-deserved) reputation for execution problems.

[merkhet]

Solid results out of EA yesterday. Gosh darn they are weak in mobile, but the Sims 4 keeps chugging along and it looks like Apex Legends will meet or exceed their guidance for the FY.

 

I continue to feel that EA has a (well-deserved) reputation for execution problems.

 

I'm honestly impressed that the Sims franchise has the legs that it does.

 

As for the execution problems, it's also somewhat concerning that they're pretty lackadaisical about the free-to-play & micro-transaction business models. IIRC, when they were asked about that, their response is, "well, you've just got to build games people want to play, that's all..." -- uh, necessary but not sufficient.

[Foreign Tuffett]

Solid results out of EA yesterday. Gosh darn they are weak in mobile, but the Sims 4 keeps chugging along and it looks like Apex Legends will meet or exceed their guidance for the FY.

 

I continue to feel that EA has a (well-deserved) reputation for execution problems.

 

I'm honestly impressed that the Sims franchise has the legs that it does.

 

As for the execution problems, it's also somewhat concerning that they're pretty lackadaisical about the free-to-play & micro-transaction business models. IIRC, when they were asked about that, their response is, "well, you've just got to build games people want to play, that's all..." -- uh, necessary but not sufficient.

 

Yeah, if you exclude the smaller Japanese publishers, EA's management might be the worst in the space. I would rather have any of Zelnick, Kotick, Kiciński / Iwiński, than Andrew Wilson. Battlefield V and Anthem should have been delayed instead of released broken and incomplete.

[elliott]

When this thread was created 7 years ago, the decline of the traditional video games industry was already being announced. Today its still the case - there are many articles writing about the death of AAA titles and the raise of the new "models", the dominance of the indie studios (who is still calling them indie, anyway), and what not.

I dont have revenue figures, but just looking at the shares of Activision I see the price has increased x4 since 7 years ago, and this after a recent 40% or 50% drop.

 

Bogle come and see humans making forecasts.

 

EDIT: 7 years ago, not 5 as I had originally written

[Foreign Tuffett]

ATVI up strongly today on WOW Classic release (player interest, Twitch #s, etc). How long will the game sustain player interest? Also, is ATVI monetizing it in any way besides the regular WOW subscription?

 

Quote from WOW Game Director yesterday: "“We are fairly sure — we can't know for sure without being fortune tellers, but most of them align — there will be a fairly steep drop off compared to that day one interest"

 

https://www.forbes.com/sites/hnewman/2019/08/26/warcraft-classic-layering-and-realm-queues-ion-hazzikostas-explains-why-youre-waiting-to-log-in/#38f1cdac7e45

[Jurgis]

Personally, I am quite skeptical about nostalgia driven "classic" releases. People tend to remember their first/old favorite MMO through rose colored glasses. The grass was greener, the monsters were bigger and the clan/guild friendships were brighter. Most of this cannot be captured by classic releases. You go to your old favorites and they feel dated since game mechanics/interface/etc is moving on.

 

I assume Blizzard did not just roll out the old code/graphics, since that would likely be big disaster. Assuming they tried to adjust for the "classic" content and modern game features, the big question is whether they struck a right balance.

 

Disclosure: I played WoW beta and danced when world ended. I did not play WoW after that. Played DAoC, GW, GW2, LOTRO, Age of Conan, Neverwinter, Blade and Soul, and some others. Just started playing Destiny 2. Still playing Warframe.

[merkhet]

Personally, I am quite skeptical about nostalgia driven "classic" releases. People tend to remember their first/old favorite MMO through rose colored glasses. The grass was greener, the monsters were bigger and the clan/guild friendships were brighter. Most of this cannot be captured by classic releases. You go to your old favorites and they feel dated since game mechanics/interface/etc is moving on.

 

I assume Blizzard did not just roll out the old code/graphics, since that would likely be big disaster. Assuming they tried to adjust for the "classic" content and modern game features, the big question is whether they struck a right balance.

 

Disclosure: I played WoW beta and danced when world ended. I did not play WoW after that. Played DAoC, GW, GW2, LOTRO, Age of Conan, Neverwinter, Blade and Soul, and some others. Just started playing Destiny 2. Still playing Warframe.

 

I miss Neverwinter. Great game.

[Jurgis]

Personally, I am quite skeptical about nostalgia driven "classic" releases. People tend to remember their first/old favorite MMO through rose colored glasses. The grass was greener, the monsters were bigger and the clan/guild friendships were brighter. Most of this cannot be captured by classic releases. You go to your old favorites and they feel dated since game mechanics/interface/etc is moving on.

 

I assume Blizzard did not just roll out the old code/graphics, since that would likely be big disaster. Assuming they tried to adjust for the "classic" content and modern game features, the big question is whether they struck a right balance.

 

Disclosure: I played WoW beta and danced when world ended. I did not play WoW after that. Played DAoC, GW, GW2, LOTRO, Age of Conan, Neverwinter, Blade and Soul, and some others. Just started playing Destiny 2. Still playing Warframe.

 

I miss Neverwinter. Great game.

 

https://en.wikipedia.org/wiki/Neverwinter_(video_game)

We stopped playing somewhere between Curse of Icewind Dale and Tyranny of Dragons modules I think. There were way too many and too frequent FoTM items without which you could not compete.