The Gaming Industry's dirty little Secret explained

Riot Games Naughty Dog Rock Star Bethesda Gearbox  all Studios renowned in gaming all have created   some of the most successful games and franchises  of all time and are all owned by someone else the   shape of the industry has changed the leaders  aren't the best developers but the shrewdest   business people those willing to embrace extend  and extinguish it's not as though these developers   have been completely swallowed up however and  in many cases they remain autonomous entities   functioning in their own means but follow the  parent company chain long enough and you'll   find most Studios you know and love will be holy  or partly owned by one of a handful of Gaming   goliaths these Giants Microsoft Sony T2 embracer  EA tencent have majority and minority stakes in   dozens of Studios making them formidable names in  the gaming landscape other companies like Nintendo   or Ubisoft have made their way to where they  are today through cornering off pockets of the   market or turning independent Studios into their  own satellite offices although their methods May   differ their outcome is consistent these companies  are nothing short of verifiable gaming Empires   so where do we go from here do these Titans keep  battling it out and buying each other until one   remains in a business expansionist Battle  Royale or have the figureheads been set and   will remain seated at the same table plotting each  other's demise like a meeting of Mafia Patriarchs   picture may be uncertain but what  we're more interested in is how   this affects us the consumer and how  we even got here in the first place to really get an idea of how these companies got  to this point let's take a look at a studio we   can all get behind Bandai Namco Publishers  of household names like Pac-Man Tekken and   Dark Souls despite having a repertoire of  big franchises under their belt the company   was only formed in 2005. previously you had  Namco the game developer and Bandai the toy   manufacturer both were pretty huge companies  in their own right Namco had grown to become a   well-respected Japanese developer and Bandai was  one of the top toy manufacturers worldwide yet   despite their size and Status they were worried  that in a world of increasing technological   advancement from other Japanese companies  they would be individually left at the Wayside so the company's merged and with their combined  portfolios they established a reach far greater   than their individual influences ever could and  the ability to take on and create products far   beyond their initial scope which is for  us the consumer only a good thing surely   fast forward to now and Bandai Namco  is one of the highest revenue earning   game companies around and remains as one of the  most profitable toy manufacturers in the world   so being the best at what you do simply isn't  enough there has been a lot of boardroom politics   taking the biggest companies to where they are  today but it's not just a quick overnight Fusion   or rapid takeover job most of these companies  got where they are through a painstaking cruel   of Acquisitions that lasted decades look at  Ubisoft creators of Rainbow Six Assassin's Creed   and most importantly to their success Rayman back  in the 80s they had a similar start to most video   game companies they started small founded by the  five Guillermo Brothers they started out Simply   Distributing games before they opted to dip their  toes in the world of video game production it was   all pretty humble trading back and forth until  they hit it big with Rayman on the PlayStation one   there was a huge gap in the market for a solid  mascot on this young console Ubisoft seized   their opportunity and it paid off handsomely  following this success they raised over 80   million dollars in funds which allowed for  some ambitious albeit risky expansions they   opened four new offices around the world turning  themselves from a tiny little French Game Dev   into a global publicly traded Enterprise albeit  a small one but over the next few decades they   grew into one of the major players but not just in  making games they would produce the games publish   them and distribute them themselves on their own  dedicated storefront away from their competitors   every possible middleman was removed and every  step from initial spark to having the game in   the customers hands was solved internally but  that's just smart business right well their   idea to distribute their games through their own  shop is something that nearly all of the other   big players do these days Sony has the PS Store  Microsoft has its Xbox Store app that's the epic   game store steam origin the eShop etc etc there's  an undeniable reason why these companies want   their own stores and it's nothing to do with  keeping things consistent or staying on brand   imagine you own a shop that sells this  box there's probably going to be a bunch   of other stores that sell a similar if not  identical box so you're gonna have to lower   your prices in line with your competitors if you  want the box to steadily sell now if you were the   only one who sold the Box well then you could  charge whatever you wanted well within reason   no one's going to remortgage their home for  a box but you can sell it at a premium price   now think of Nintendo their consoles have only one  store on them the eShop and the digital versions   of their games are only available on that console  and on that shop they can dictate the price   in most cases they will keep their games at their  debut price until they become obsolete that's one   way to build a gaming Empire by cornering and  cutting off your section of the market but the   opposite also works valve as a game developer a  pretty small sure we all love Half-Life and DOTA   and CS will remain as esport Staples for many a  year to come but that's not where the money comes   from valve's bake ticket item is its distribution  storefront steam it's a go-to for PC purchases   and within a decade of its launch it held a 75  market share over digital game distribution the   vast majority of the 50 000 strong Library are  from developers and Publishers of all shapes   and sizes sure valve gets a share of each game's  sale but because most of these games are available   elsewhere they opt to be competitive and offer  games at a lower price than you typically find on   other distribution platforms which attracts users  a whole lot of them huge audience and a gigantic   library of available titles makes the platform a  competitive market of source more so the Nintendo   self-regulated version and provides a clear  passage for smaller developers to get their game   in front of an audience without the rigmarole of  publishing contracts or physical game distribution so due to all the ways these companies have  grown and expanded we have a bunch of different   storefronts of limited availability between  each any PC user looking for the best deal   will know the struggle of booting up and being  hit with half a dozen game launchers the cost   of searching around for the best deal is having  to skip between all these different storefronts   so most users simply don't think about groceries  do you split your shopping by going to a handful   of different shops or do you go to the one  that's the most convenient it gets a bit   more complicated than just shopping for the best  price however as competition and Profit start to   be taken into account why would EA want to give  valve a 30 cut of their profits for having their   titles on Steam rather than just making their  own shop and maximizing their revenue which is   what EA did back in 2011 before returning to SEMA  decade later with new stringent measures in place   however the options are there and each portal  isn't just a place to buy games each company   has souped up their software providing as much  functionality as possible to the consumer game   overlays social features customizable profiles  achievements voice chat automatic updates   they are all constantly evolving and transforming  to offer the best experience for the user which   is great for us right all these improvements  have come about because of competition as each   of these companies strive to be the top dog to be  the best you have to have the best people and the   best technology rather than each competing for  the same developers the same artists creators   and innovators why not just look at the studio  that allowed them to Blossom and buy them out   this bundle buying if you will has been the go-to  of gaming Giants for years at first glance it's   a perfect scenario the parent company gets to  push out higher caliber games while the studio   gets additional resources to create bedroom titles  furthermore the consumers get a renewed interest   in their favorite games with products created more  frequently more abundant high quality games flood   into the stores making a competitive market  and lo and behold the choice is mind-boggling   but the companies aren't satisfied simply with  games there's also the ongoing console war with   Sony and Microsoft going Toe to Toe to offer  the most powerful Advanced and intuitive Home   console a constant back and forth to make their  Flagship piece of Hardware the best on the market   the expansions don't stop at Studios technology  cloud services gaming on demand we're being   provided with options that cut out the process  of installing and updating and in some cases even   buying games take Xbox's Game Pass we can boil it  down to declare it simply as a Netflix for games   one low monthly fee gives you a vast catalog  of games from Microsoft's many subsidiaries   and as Microsoft grew and brought in even more  Studios under that belt bigger deals were made   and more showstopper titles would be added to  this repertoire once Bethesda and blizzard came   under their influence consumers got the likes  of the Elder Scrolls OverWatch Fallout Call of   Duty Warcraft and Diablo each billion dollar  franchises in their own right combined with   Microsoft's other Acquisitions and push into  cloud gaming advancements we can realistically   have a service that allows us to pick up and play  games in an instant a rival to any video streaming   software and unheard of in gaming previously even  Google failed when trying to take on that task of   stadia but then again they didn't have an Empire  of gaming subsidiaries already under their belt   it's something that could change the landscape  of gaming but Microsoft aren't the only ones   that can do it any one of the gaming Giants have  the capital and resources to change the industry   for the better and if the way they formed  into slick well-oiled machines pumping out   titles into a competitive market almost seems  too good to believe well that's because it is   the truth is these companies aren't competing  for your love and loyalty they're competing   for your money and the bigger cut of a market  share they can slice off the better for them Microsoft Sony 10 cent Nintendo embracer  EA T2 valve and Ubisoft male seem too   big to fail now but vast Enterprises  and industries have crumbled before   in fact we were in a similar situation to this  nearly 100 years ago back in the Golden Age of   Cinema the world was getting swept up in a fresh  form of exciting mass media and entertainment the   fledgling so-called film industry quickly cemented  when a few organized Studios rapidly worked out   the means to produce frequent pictures on mass  and deliver them to the public there were eight   players controlling 95 percent of the American  Film market and out of those eight five in   particular took the Lion's Share known as the five  Majors their success wasn't down to the way they   made their movies or even the quality but because  they were in control with every Link in the chain   from development to production through marketing  distribution and exhibition everything was   controlled by the studio and no profits were  being dropped through middlemen along the way   the key to their success however was that they  controlled the cinemas they decided what was   shown and had a clear route to get each of  their many many films in front of the masses   this structure of a company is called vertical  integration no step is outsourced and no outside   help is needed it doesn't sound all that Radical  by this point because we've been talking about it   all this time let's look back to Sony within  their company they handle the production of   the games they Market them themselves publish  themselves distribute and exhibit on their own   storefront on a platform that they own and have  the rights to restrict their competitors and push   their own products starting to see the parallels  now so why are we even making this comparison   because these major film studios didn't stop  doing this because it proved to be ineffective   quite the opposite it was massively successful  and allowed them to have a Stranglehold on the   market so much so that any potential competition  would either be forced out of business or absorbed   into one of these Empires the studios had all the  power until the court stepped in and shut it down   see when just a few people hold all the power it's  great for them but not so much for everyone else   their practices were deemed as manipulative and  unfair and the Anti-Trust suits brought before the   studios required them to sell off their Cinema  chains cutting the head off of each operation   although there were a few different Studios  running the show it became apparent to the courts   that things could quickly get out of hand and if  one player in the industry became increasingly   Cutthroat they could see a rise of a film Monopoly  you'll see the term Monopoly thrown around quite a   lot when looking at various multi-billion dollar  Industries but what that term actually means is   quite important here a monopoly is essentially  characterized by one company running the show   there is no competition no substitutes and said  company can essentially do whatever they want with   the market in fact the eponymous board game does a  pretty good job of showing how a monopoly Works a   once competitive market devolves until only one  person is having fun everyone else is powerless   to them and no amount of table flipping cursing or  pleading can lead you away from the fact that you   have lost and there is nothing you can do about  him so yeah they're not great and it's no surprise   that courts want to take preventative measures  to avoid an industry getting to that stage on the   other hand there's an oligopoly where a few large  firms rise to the top of the market buying out or   forcing their competitors out of business until  only a few huge companies remain controlling their   own partitions of one market so this is where the  five major Studios ended up and fast forward 100   years and it's where we are now with the video  game industry but you may say times have changed   the video game industry is different It's all  under control and the consumer benefits more today   than they did during the reign of the five major  film studios but is that really true we're seeing   several key factors and similarities between then  and now the studios between them would make around   360 films per year which is a huge amount for the  consumer to take in but the market was saturated   there was too much choice and in between the few  standout pictures most were rushed poorly thought   out and made just to keep a schedule of releases  sound familiar it was a market that was held   completely under a Stranglehold one that video  game companies are emulating and even surpassing   back then mgm's biggest hit and almost certainly  one of the most iconic films of the era was Gone   with the Wind Gone With the Wind right history  a new chapter in film triumphs it grossed a   staggering 200 million dollars at the time which  adjusted for inflation puts it at nearly 4 billion   dollars today Activision Blizzard alone makes  five billion dollars just from microtransactions   in a single year so the numbers have gotten  bigger but companies have become increasingly   powerful but the fact remains that the video  game Market is competitive and cannot go the   way of the major five film studios but again  how true is that really in terms of a market   the ideal is a perfect competitive one a huge  number of Sellers and a huge number of buyers   due to the share scale and choice no one firm can  alter or sway the prices across the market but we   don't have that look at Nintendo through the  success of their IPs and stringent copyrights   they have created an environment where they are  in full control of all the big titles on their   Hardware they dictate the store's economy and  they can drop the price of third-party games   as they please but the games that earn them the  most their own titles will retain their price and   there isn't much any other company can do about  it Sony can't come along and make a Mario game   there are no real substitutions so their slice  of the market is locked down almost impenetrable   so we don't have monopolies in gaming but we  do have monopolistic competition sure there   are several competitors but in many cases their  products aren't in true competition with each   other it's a bleak scene and it does seem like  history is repeating itself but if the court   stepped in against the practices of film studios  what are they doing here well there are measures   in place to some degree in recent years especially  with Studio purchasing getting more and more   rampant these deals are being watched Microsoft  famously made waves in the gaming landscape by   buying one of the other gaming Giants Activision  Blizzard for an eye-watering 68 billion dollars   but the thing is I could all simply unravel if  the FTC the American Federal Trade Commission   has reason to believe that Microsoft are making  moves to directly attack their competitors or   gain an unfair share of the market the deal could  fall apart so all eyes are on Microsoft to not   miss that the burning question during the initial  reports was will Microsoft make active Blizzard's   games XBox exclusive the same question that was  thrown around when they acquired Bethesda the   case was made that they didn't want to shut  out player bases and maybe that was a truly   selfless choice but it could also be the case that  they know they're stepping on eggshells and one   rash move could force the court to intervene  we're always out there looking for people who   we think it would be a good match and teams that  would be a good match with our strategy so we're   definitely not done it's a very delicate line to  tow and one that Microsoft have crossed before   Microsoft's pattern of extending a Laurel  Branch and inviting other companies to join   them or be forced out of business is nothing  new Revelations were made when investigators   uncovered manipulative strategies in play by the  company referred to internally as the eee strategy   Embrace extend and extinguish their aggressive  business play landed them in hot water being hit   with several Anti-Trust suits in the EU amounting  to hundreds of millions of Euros the decision   adopted today imposes a fine of 561 million euros  on Microsoft for these very serious infringement   yet these Anti-Trust suits rarely touch gaming  companies partly down to the fact that there's   a much bigger Target in the public eye big Tech  yep up against the likes of Amazon Google Apple   Microsoft and meta the biggest companies in gaming  are frankly tiny and whilst the gaming industry is   growing at a staggering rate it's still just  targeting a small sect of the General Public   big tech companies have a direct impact on just  about everyone in the Western World so sure the   gaming Market has been manipulatable and we are  seeing the rise of Unstoppable Global players   but the various Silicon Valley Giants have the  power to do so much more change the way we think   tell us what we should buy it can even dictate  the course of politics that's more power than   any Monopoly has ever had an action is being taken  Apple has been hit with Anti-Trust suits in Europe   down to its monopolistic Behavior an aggressive  cut of apps and in-app purchases Google has been   under Fire in the U.S claiming their Play Store  controls the Android app market and favors their   software over their competitors the FTC has their  own meta with a case looking to pry Acquisitions   like Instagram and WhatsApp away from the social  media Titan Amazon has towns and cities lobbying   to get them to build warehouses near them offering  them tax breaks and promising lucrative incentives   remember Gone With The Wind that era defining  film that grossed four billion dollars and then   we learned that Activision Blizzard surpassed  that in a year with micro transactions alone   well Amazon make that in a week Big Tex power has  gone far and above any other typical business to   date yet the company's controlling the gaming  Market are kind of just a micro version of them   they may not have the sway to hold a stake in  geopolitical situations but they can still divide   and conquer a multi-billion dollar industry  it seems as this stature that's allowing some   of their practices to go under the radar we've  seen big moves from Microsoft in the past few   years but compared to Microsoft as a whole as  in computer and Tech conglomerate Microsoft the   Xbox The Game Pass xcloud all their Acquisitions  Bethesda blizzard is still just a tiny sliver of   the company's whole ecosystem likewise with Sony  likewise with tencent they all have vast amounts   of buying power from their parent companies and  could disrupt the balance of the major players   greatly but it seems as though things are steady  is this to not upset the balance or merely to keep   their interests away from investigation these are  the kind of companies that if left unchecked would   have the power to dictate not just the games we  play or the way we play them but multiple facets   of the way we communicate the way we spend by  socialize engage even think how does this all   look for us now gaming has become a complex web  that all comes back to just a few sources it's   mind-boggling sometimes shocking oftentimes  outrageous the status quo is dug in deep but   is there a way to untangle the way things are or  prevent these oligopolies from increasing their   power probably not history may be repeating itself  and while the courts did step in and end the reign   of the bigger Cinema Studios today's Major players  seem to be acting with more caution growing their   Empires while they cover their backs the studios  lost their mind by having their Cinema chains   pried away from them that's a solution that just  doesn't seem plausible today is there anything you   or I can do as an individual to enact some kind of  affirmative change to bring gaming back to a place   that's not so Insidious and scary I'm gonna say  again probably not so what do we do well whilst   there's not a whole lot any one individual can do  a collective change in mindset can enact progress   for years Gamers have played into a sense of  tribalism Xbox versus PlayStation console versus   PC casual versus hardcore but that very tribalism  is that the benefit of the gaming oligopolies   they are dividing up demographics and a content  knowing that fan base will stick with them but we   shouldn't we as the consumer should have the power  if the provider jacks up prices or makes a blunder   we shouldn't excuse but see support facilitate  competitive products competitive prices and a   competitive market don't excuse negligence or  poor games or unfair business practices and   if a company you've given your hard-earned money  to year on year decides to pull the rug out from   under you don't give them the benefit of the doubt  get angry the industry is running a mock you can   either lay down on the happen or you can thrash  out and see what happens progress could occur if   enough of their customers just stop paying for  thinly veiled cash grabs and poorly made games   that could be the first Ripple that causes a  wave the industry May well be too far gone we   may already be in the throes of hyper capitalism  and the gaming Empires that have risen to the   top may keep their brain indefinitely but then  again bigger Industries have crumbled we'll just   have to wait and see whether this demise comes  from the courts their greed or their own fans

Channel: GINX TV

Views: 32,618

Keywords: GINX, GinxTV, Nintendo, Microsoft, Video Essay, Gaming Industry, Tencent, Sony, Bandai Namco, EA, Ubisoft, T2, Embracer Group, Business, Explainer, Documentary, Money, Game Developer, Oligopol

Id: NZKBUFT_yBo

Length: 25min 35sec (1535 seconds)

Published: Sat Oct 08 2022