Game Industry 2021 Vision

See the history of gaming revenue here.

A new year lies ahead of us, and everyone is looking for the year to be a better one than 2020 has been. The pandemic still rages (over 1.8 million deaths worldwide and nearly 350,000 in the US as of this writing) but vaccinations are beginning, and we can see a time when life begins to return to normal later this year. I hope everyone stays safe and has a better year in 2021 than they did in 2020!

First, I’ll look at some stats for the games industry in 2020; then I’ll make some predictions for the games industry in 2021, and finally, I’ll look over my predictions for 2020 and see how well I fared in prognostication. 

Overall, 2020 was a banner year for games due to the pandemic lockdowns, which kept people inside looking for something to do. For many of them, that was gaming. Early forecasts for the games industry were $159.3 billion, but in November Newzoo raised their estimate to $174.9 billion for the entire year, up nearly 20% over 2019. Mobile gaming leads the way with $86.3 billion, followed by console with $51.2 billion and PC games at $36.9 billion (the rest being from miscellaneous categories like XR/AR/VR and cloud gaming).

Where will the industry go from here in 2021? Higher still, but don’t expect the same level of growth. New consoles are off to a strong start, as are the latest PC graphics cards – all are in short supply due to both demand and supply chain issues from the pandemic. Those issues will take months to iron out completely, so it may be a while before you can just buy a new console or one of the latest graphics cards and expect to have it right away.

On to some predictions for the 2021 games industry:

1)      Games industry growth continues, but at a slower pace. I expect we’ll see somewhere around 10-15% growth in revenue, depending on how the pandemic continues. Of course, this won’t be evenly distributed among companies or sectors, but in general it will b a good year for games.

2)      Digital stores will be taking a lower percentage of revenue in general. This has already started with Apple lowering its fee to 15% for publishers whose revenue is less than $1 million annually… which is about 98% of all the app publishers. So far, other digital stores have not followed suit, but I expect Google might. Steam will probably hold out the longest, and I don’t expect them to make a change in 2021 or any time soon after that, unless and until they really start seeing their revenues fall or publishers stop distributing games through them.

3)      Indies will have a good year. Certainly those indies who publish iOS games will be getting twice as much money, which can’t hurt. Also, more attention will be paid to indies through things like Apple Arcade and other game subscription services, which should mean more revenue.

4)      Games subscriptions will continue to grow strongly. Microsoft’s Game Pass is doing well, and represents a strong selling point for the new Xbox Series X and Xbox Series S. Google’s Stadia seems to be getting a bit of traction finally. There are plenty of companies offering a variety of subscriptions: EA, Sony, Utomik, Ubisoft… there’s plenty to choose from, and there will be more.

5)      Game streaming will grow, and evolve. More and more people will watch games being played, and the entire process will continue to change. Already some games are including a “streaming” mode to get around copyright problems with music. More games will be built to take streaming into account, and how streamers interact with their audience will change as well.

6)      AAA games will continue to generate huge revenue, but also big problems for publishers. Look no further than Cyberpunk 2077 to see the future, a massive game with massive problems that was rushed out too soon. They’ll get the problems fixed and the game will end up being one of the biggest sellers in 2021, but it’s emblematic of the problems publishers face. Just trying to implement 4K textures will make development cost more and take longer… and open-world designs cause huge amounts of content generation, and are difficult to debug. These big games will get bigger and more expensive to make, but they will also generate even more revenue… if successful.

7)      User-Generated Content (UGC) will be ever more important in games. Look at how Roblox and Minecraft continue to absorb huge amounts of time, and generate massive revenue. Sure, those are aimed at kids, but now look at Manticore Games’ Core engine, which is providing a wide audience with the tools to make all sorts of gaming experiences. I expect giving users the power to create or modify their games will be even more popular, and lead the way to more industry expansion.

 

So, how’d I do with predicting 2020?

 

1)     The games market will continue to grow. Yeah, that was a gimme, but I really nailed it! 100%.

2)     Both the PS5 and the Xbox Series X will sell, but not in significant enough numbers to be a good market – but that’s not important. They have sold well, but constrained by supply and late in the year – so not very many units are out there. But they’ve helped console game sales grow, and drawn great attention to the segment. 100%.

3)     Esports will continue to provide enjoyment for fans and disappointment for investors. The pandemic helped esports by cancelling much of traditional sports, but it’s still not clear that investors benefitted yet. More ad dollars are flowing into esports, viewership is up, but the ROI is still not quite there yet. 80%.

4)     Streaming games and the streaming game market will continue to underperform. Still not there yet, but getting better – that’s the story of 2020. 100%

5)     Game subscriptions will do well – with the right content and features. Apple hasn’t released figures on Apple Arcade, and none of the other subscription services have either. So it’s really hard to tell how well they are doing. 75%.

6)     4K gaming will be used to sell hardware, but it really won’t be significant – no billion-dollar games will be 4K only. So far there are no 4K exclusives – versions of games optimized for 4K, yes, but they are also on non-4K systems. 100%.

7)     Watching people play games will continue to grow in popularity. Another easy one. 100%.

8)     E3 will continue to shrink, while true consumer-oriented conventions will grow. Missed this one depending on how you count it. E3 2020 was cancelled, and though they claim it will be back, it’s hard to see why. Other game conventions/conferences were cancelled or moved to online-only shows. So E3 shrank to nothingness, while consumer shows shrank. 50%.

Overall Score for 2020 Predictions: 88%.

 

Happy New Year!

Games Industry 2020 Vision

I like to take some time at the end of each year to look ahead for the games industry and predict the important trends. As a bonus feature I’ll go over my predictions for last year.

Some stats for 2019 to chew on: The global games market will likely reach over $152 billion in revenue, with the US being the largest market (at $36.9 billion) and mobile games the largest segment ($68.5 billion worldwide).

What’s going to happen in the games industry in 2020? As you might expect, it will continue to grow. The growth will be uneven, of course, with some companies doing very well and others not so well. The biggest and oldest publishers will find it hard to grow significantly, as they mostly rely on a few proven brands and have very few new titles. The mid-range publishers like Riot Games and Epic Games will have more potential for some breakout hits while their mainstay games will continue to generate immense revenue.

A continuing issue that doesn’t get much open discussion is the difficulty many publishers have in creating games profitably. Notably, a number of companies are shying away from single-player games because they don’t easily lend themselves to microtransactions. Why buy a slick costume for your character if you’re playing a game by yourself? And yet single-player experiences are compelling, and the top games can generate a lot of revenue and attention (see God of War or Death Stranding, for instance).

The tough task here is to make a single-player game that looks great, plays great, has a depth of story and great polish… and that doesn’t cost far more to create than it seems likely to bring in. This is the reason Telltale Games failed – they made beautiful games that sold pretty well and garnered many awards, but they worked their staff beyond reason and ultimately couldn’t make a profit. I hope the revived company can figure out where and how the costs grew out of control, and figure out how to make story games that will sell and at the same time generate a reasonable profit for the company, all while letting the creative staff leave the office after a mere 8 hours of work.

We’ll continue to see strong brands extended, as that’s a clear path profit. There’s going to continue to be new Call of Duty titles, and you don’t have to see an announcement to know there’ll be a new Call of Duty coming this fall. Now, though, we’re getting Call of Duty on mobile – and it quickly hit a hundred million downloads, which shows the power of a strong brand. Look for other major game brands to be extended into new platforms and game genres. Riot Games, for instance, is extending its powerful League of Legends IP into a number of other genres with the help of other game studios. It’s impossible to say right now how well those games will do in the long run, but the one thing you can be sure of is they’ll see a lot of downloads very quickly because of the massive number of League of Legends fans.

There will probably be some acquisitions during the year, and some surprise hits. Ultimately, though, more gamers will be playing more games and spending more money, and more people will be spending time watching people play games. This cultural force will continue to grow in power and influence.

And now, some specific predictions for the 2020 games industry.

1)     The games market will continue to grow. It’s an easy thing to see, but gaming continues to reach more people worldwide, and the growth shows no signs of stopping yet.

2)     Both the PS5 and the Xbox Series X will sell, but not in significant enough numbers to be a good market – but that’s not important. Why won’t their sales be important? Because both Sony and Microsoft will be making their profit not from the hardware (which likely will, at best, show a small profit, and perhaps lose money on each unit at launch) but from the software – and both the new consoles will be backward compatible. Their launch should get people playing console games more, and buying more console games – and buying more game subscriptions.

3)     Esports will continue to provide enjoyment for fans and disappointment for investors. Not every esport is continuing to grow, and some seem to have plateaued (like Hearthstone). There’s plenty of investment, but it’s going to be a while before big profits arrive – and they won’t be evenly distributed. Changes to games may help strengthen their esports appeal, or they may weaken it. It’s still an open question as to whether any of the current esports will even be played in ten years.

4)     Streaming games and the streaming game market will continue to underperform. Google’s Stadia is still trying to find the right features to appeal to a mass audience, but it’s not clear at all if it ever will. It’s one of those ideas that sounds appealing to executives who don’t know much about the details – but it’s those technical details that have continued to trouble every streaming game service that’s come out, and there have been more than a few.

5)     Game subscriptions will do well – with the right content and features. Apple Arcade is a good example of the right offering in the right market, and it will grow strongly. This service is only $5 a month, and your whole family can use it – and we’ll likely see it get bundled with other Apple services in the future. It’s a great value, and that’s what a subscription game service needs to have if it’s going to succeed.

6)     4K gaming will be used to sell hardware, but it really won’t be significant – no billion-dollar games will be 4K only. We’ll hear a lot of hype about 4K – it will be mentioned in lots of marketing – but still 4K TVs do not have huge market share, and 4K monitor are even less popular due to their pricing. This is all changing, but not as swiftly as some would have you believe.

7)     Watching people play games will continue to grow in popularity. The popularity of game viewing continues to rise, but it’s not all evenly distributed. Top streamers are finding lucrative deals to change platforms, so Twitch has lost some of its top attractions. Meanwhile, Twitch is expanding into non-game areas. Talented streamers will be more sought-after than ever, but growing an audience from zero to ‘big enough to make a living’ will get even more difficult.

8)     E3 will continue to shrink, while true consumer-oriented conventions will grow. Sony’s leaving E3 again this year just underscores how unimportant E3 has become – Sony clearly feels it doesn’t need E3 (and the expense, and the hassle) to have a successful new console launch. And if Sony doesn’t need E3, does anyone else? You can bet that’s the question each exhibitor is asking, along with “if we took the money and time we spend on E3 and spent it elsewhere, would we get a better return?”

Last Year’s Predictions

1)     The market for games gets bigger. Yeah, that was an easy one, but it’s good to start with a win. 100%.

2)     Games will be increasingly scrutinized and regulated by governments around the world. Another fairly easy prediction to make, and we have seen more restrictions on loot boxes and China’s more strict approval process for games. 90%.

3)     The Digital Store Wars get into high gear. Well, there’s still a battle going on, but some of the combatants (like Discord) have stopped fighting. Epic and Steam keep going on, with more effort being put into marketing… but the fighting hasn’t gotten as bloody as it could have. 70%.

4)     Mobile games will continue to grow strongly and innovate. Pretty much true, with more traditional categories like Call of Duty coming to mobile and doing well. Growth is strong but innovation is still underperforming. 70%.

5)     VR/AR/XR will continue to underperform. Yep, we’re all still waiting for this to become a major segment. It didn’t happen in 2019, despite new hardware releases. 100%.

6)     Game streaming will continue to be a vision, not a viable market. Google’s Stadia launched to underwhelming reception, and it’s still limping along. Like VR/AR/XR, lots of interest but not much in the way of revenue or solid market reception. Yet. 90%.

7)     Indies will continue to have difficulty making a living until they put more emphasis on marketing. This will continue to be true, though more frequently an indie game will do very well. 90%.

8)     Games will continue to grow as a cultural force. This is true, as we see series like The Witcher become this due to the game influence, not the novels. 100%.

Overall 2019 grade: 88.75%

Happy New Year!

2020 Implications for Game Design

2020 Implications for Game Design

I was struck by an essay by VC Matthew Ball about 7 reasons why gaming will take over; stop what you're doing and read that essay, if you haven't already. It goes along with some of the things I’ve been thinking about, in particular how to best take advantage of the changes in the games industry and the game-playing audience. What follows are my thoughts on each of his 7 reasons as to why gaming will be taking over media even more in the future. You should go and read that essay, and refer to it as needed while reading this blog post. What I’ve looked at here is how I think his comments translate into actions game developers should consider when designing games. I am already doing this with StoryPHORCE Entertainment, and I’ll be detailing what I’m doing at www.storyphorce.com in the future.

#1 The Dominant Attention Medium, Television, Has Peaked and its Time is Being Redistributed

Yes, and gaming is taking a major chunk of that time. Perhaps more insidiously, that attention time may be split among several things – playing a game while keeping an eye on a video on another screen, and texting with friends on social media as well as in-game audio chat. The player’s attention gets focused more when one of these things demands it, but there’s usually a constant background of several things vying for attention.

What does that mean for a game you’re designing? Several things, potentially. You could just ignore that and make the game you have in mind, a perfectly valid choice. You could try to make the game’s experience more intense so it keeps players riveted and less distracted – but that only seems like a good idea if it makes the game more fun, not if it means populating the screen with little things you need to click on constantly just to stay alive. Or you could try to make it easy to share parts of the game with others as you play, letting your game contribute to the larger social context the players are often part of. Or you could make the game easy for other people to casually jump into, so a player could invite a friend in while the game is going on. Of course, many of these things depend on the nature of the game play in your particular game – but it’s worth thinking about in the design phase.

What do all those ideas have in common? You’re thinking about the player experience, their overall experience, and trying to improve it or take advantage of it for your nefarious marketing ends. Sure, when you’re designing a game it’s usually starting at “this is something I think is fun.” At some point, though, you should think about what the players are going to experience, and how you can make things the most fun for the most players. That’s how you get a bigger, happier audience, which should lead to making more money (assuming you’re handling the monetization of your game well).

#2 Gaming is Replicating the TV Package

The core of what he’s saying here is that games need to be more available and accessible to players, in several ways: Technology, cost, complexity, information. Sure, much of the time the game you have in mind creating is bounded by the technology required. Maybe, though, it’s worth examining your game concept and thinking about how it might work on a wider variety of platforms. Mobile? Tabletop? Browser? Is there a value in having a larger audience? Sure. Just look at Fortnite, for example, with $1.8 billion in revenue in 2019. Two-thirds of that revenue came from mobile, where Fortnite is clearly not as good as it is on console or PC. Yet over a billion dollars came from people playing it on mobile – because that’s what they happen to have with them when they wanted to play.

The other value in being on multiple platforms is that it enhances the discovery of your game. People hear about it, then want to try it… and if it’s not on the platform they have, oh well, there’s another game to try. And if you didn’t give them a way to try it for free? There are plenty of other games to try that are free, and there are probably games that sound similar to yours.

The essay points out that game subscriptions are great ways to sample games. Sure, you think, but maybe you won’t get hardly any revenue from your game being part of that subscription plan. You’re not thinking about it the right way – that game you put in Apple Arcade, or that’s in the Xbox Game Pass, that’s a marketing tool. You should have other games that are tied into those games with explicit links, and those games you make good money on. If you can get a game into the Apple Arcade, make it a good one… and then have a game outside of Apple Arcade that extends that experience, or uses the background or characters or essential game play elements in ways that practically demand those players from Apple Arcade get your other game. And maybe that’s for an upfront price, or you have microtransactions you can sell them.

Note also that engagement with games is now variable – many people are just watching others play games, and they’re having fun doing that. Part of the promise of streaming games is that you can get new players to jump in easily – but your game design has to not only allow that, but encourage it. Is there a way to make that happen outside of streaming games? Sure, I can think of ways to design a variety of games that would allow people to jump in and play, whether it’s an RTS or an RPG or a shooter. Think about designing some limited units/characters that are explicitly for people to jump into while play is ongoing. No, they might not have very much control, but they could have fun without the need to learn a complex set of controls. No, it’s not something an experienced player would like – but the idea is to get new players in, ideally in seconds.

#3 Gaming Has Unprecedented Content Leverage

What he’s really talking about here is UGC as well as all the ancillary content for a game. Look, if you’re going to the trouble to create a game, why not create one that can last for many years, and have vast expansion possibilities, and if possible allow users to contribute to the content? Yes, that’s all more work than just cranking out a game; but it’s less work than cranking out two games, and it has at least some potential to be far more lucrative in the long run.

#4 Social Signals, Effects, and Reinforcement

Games are social media… why not internalize that as well as enhance it externally? If your game is fun, people will want to share it with their friends. Make it easy in the game to do that – share clips, images, whatever is fun. Look, social media and messaging comprise 50% of all time spent with mobile devices. Gaming on mobile is about 10% of all the time on mobile – yet it’s about 80% of all the revenue from mobile. I see vast potential here to make money with games on mobile.

#5 Tightest Feedback Loops + Culture

The best games are constantly changing and adding new things, which in turn engages their audience and encourages them to spend more time in that game. Creator tools are important for that, of course, but even beyond that you need to think about how to reinforce the culture of your game. Really successful games these days have their own conventions, where people get together in meatspace to enjoy everything about the game (BlizzCon, MineCon, etc.) You don’t even have to set up your own convention – become part of one of the many conventions already being held that probably include some of your audience, and grow from there.

There should be vibrant online communities, on Facebook or subreddits or wherever, and you need to stoke those fires with good moderators and plenty of new information on a regular basis.

Oh, and your game should consider public data – leaderboards, sharing successful games, showcasing players and competitions, whatever seems to go with the nature of your game and the audience.

#6 Consistent Growth Through New Devices, Categories, Technologies, Content

This is crucial – keep extending your game into new areas. Add a VR version, or maybe for part of the game. No, the market isn’t huge – but if you can do it without great expense, it’s great press (see Half-Life Alyx). Missed opportunity: I though it would have been cool to be playing Star Wars Battlefront on PS4, and have a mission come up where you get into an X-wing using your PSVR and fly the mission in VR, then drop back into the main game – with extra experience, cool badges, recognition for that amazing service you performed.

Cross-game integrations should be explored. Find ways for players to move characters between games, keep DLC, maybe get some perks for having played other games. They don’t even have to be your own games! Do some cross-marketing here with other game companies to expand your potential audience.

Once you start dreaming about where your game could go if you partner with others, there’s no limits.

#7 IP Kiln

The point here is well-taken – generate a lot of material and some of it is bound to be good, and can be the seed for even more successful products. You may be starting with a game, but if you do you world creation properly you can be seeing spinoffs in the future in other media. If there’s UGC involved, you could get an amazing amount of content. (Just be prepared for the future IP considerations when Hollywood comes around; you should have the legalities already dealt with far in advance.)

PlayStation 5 vs Xbox Next

Or

A Preview of the Next Console Generation

The signs and portents are showing that a new console generation is heading towards us, sometime in the next year or so. Interestingly, we can already describe the new consoles pretty well, given what’s been going on in the last console generation. The exact details will remain a mystery until launch, but knowing the general outline of the new consoles can help everyone make their plans for the next two years, whether that’s for game development, marketing, or just purchasing a console for personal use.

When will these consoles launch? Probably in time for the 2020 holidays, perhaps even earlier. Look for more hints over the next year, but we probably won't see a complete official announcement until just a few months before a new console ships.

First off, the most clear picture will be for Microsoft and Sony, so I’ll deal with those in this essay. Nintendo and others (Google, Apple, Amazon, and maybe others) will be considered separately.

Let’s start with the features that we can be nearly certain these new consoles from Sony and Microsoft will have, along with the justification for believing in these features. Then we’ll move onto more uncertain features that these consoles may or may not have.

The PlayStation 5 and Xbox Next will be X86-based.

Likely AMD will be supplying customized CPU/GPU combinations to both Sony and Microsoft, which will probably have some technical differences that may or may not make much of a difference to users (though marketers will no doubt play them up). There’s no more custom CPUs for consoles, as game developers are much happier with the ease of supporting PC, PlayStation, and Xbox with essentially the same code base. Developing AAA games is difficult and expensive enough these days without adding in the need to work on a unique CPU. Sony and Microsoft have also saved money by not having to develop a completely new CPU and all the software tools that would go with it. These days, AMD and Nvidia have been pushing the state of the art for GPUs far beyond what Sony or Microsoft could afford to do – so they will stick with what worked for them on the current generation of consoles.

The PS5 and Xbox Next will be 100% backward compatible with their predecessors.

Given that the new consoles will use the same X86 CPU as the current generation, this one’s a no-brainer. Besides, this is of great value to current players – your software library will work just fine on new consoles, and possibly even better. This is important for game publishers, as they will be able to keep selling existing games even after new consoles arrive. Of course, there may be updates for older games to make them look even better on new hardware – an opportunity for game publishers to re-ignite interest in older titles and perhaps make some more money from them.

The PS5 and Xbox Next will be capable of 4K HDR display with 60 frames per second – or better.

The primary selling point of these new consoles will be to fully support the growing market of 4K HDR televisions, showing off the added resolution that people have available. Yes, the Xbox One X can sort of hit this mark, but not consistently. More horsepower is really necessary to take full advantage of what 4K HDR screens have to offer. Of course, it may not be all that much of a difference to the casual observer – but this capability will be heavily touted as an important reason to buy a new console. This is part of why the new console generation may not be a big sales winner, after the initial surge of early adopters – you really aren’t going to see much of a difference over what your old consoles could do.

The PS5 and Xbox Next may have more than one model apiece, with different price points, but regardless the most expensive model will not exceed $599 at retail.

Here we get into the realm of less certainty. Exactly how Sony and Microsoft deal with their current consoles when new ones come out, and whether they introduce more than one new model, is not clear. It’s likely that both companies would want to have hardware at both a lower and a higher price point, the way they do now – but they may see advantages in having three or even more different price points covered. Say, $199, $299, and $399. Maybe they’ll have cost-reduced versions of old consoles, or consoles with more limited storage capacity. This will be interesting to watch.

Game-streaming (inbound and outbound) will be an important part of both the PS5 and the Xbox Next, possibly with specific hardware features designed for that.

Having players stream their games to the world is going to be a more important part of consoles. Being able to take advantage of a streaming-game service, where you don’t even have to download a game, is also part of what console makers (and major game makers!) are dreaming of. The phrase “Netflix for games” makes them visualize large piles of recurring revenue. Now, there are plenty of technical hurdles to overcome, and reasons to be skeptical that game-streaming will finally become a major profit center (since it never has before). But game companies will keep trying, so expect to hear more about that.

What will be more powerful, PlayStation 5 or Xbox Next?

This is anyone’s guess. Really, both Sony and Microsoft can build hardware to any power level – the question is what profit margins will the company allow? Or will either company be willing to entertain a loss on the console hardware in order to gain market share? Either company could decide to sell $600 worth of game hardware for $499. That’s easier for Microsoft than it would be for Sony, since Microsoft has well over $100 billion of cash on hand, and Sony’s still trying to recover from its lean times of a few years ago. Who really, really wants to have the most consoles out there? It’s anyone’s guess. So it’s hard to say which hardware will really be more powerful – it’s not an engineering question, it’s a financial and business decision, in the end. The engineers will design to what the suits at the top decide.

Final Thoughts On Next-Gen Console Wars

Both Sony and Microsoft have done well with current console generation, though Sony clearly came out on top. Both companies will likely do well with new hardware, though it’s not at all clear that new consoles will sell anywhere near as well as the current generation has. Will Nintendo take away the best-seller crown? Or will Google or Apple manage to create something that actually competes?

Microsoft’s Bid for World Domination of Games

Microsoft is getting ready to expand Xbox Live, its gaming network/community, from Xboxes and Windows PCs to include Android, iOS, and Nintendo Switch. This will grow the potential market/community for Xbox live to over 2 billion devices. Notably, this includes pretty much every major gaming platform – except MacOS (the number of MacOS game players is minuscule) and (of course) Sony PlayStation and their network.

It’s a smart move. Once upon a time, the walled gardens of Xbox and PlayStation were enormous compared to any other game audience. Now, single games like Fortnite or League of Legends dwarf the size of those console audiences. Hardware generally is powerful enough to play most games pretty well, perhaps with some graphics compromises that really don’t matter to the majority of players. (Fortnite is doing extremely well on mobile, for instance, despite the differences in controllers and graphics with consoles or PCs.) The gameplaying audience is mostly not concerned with being fans of a particular hardware, as they often were in days gone by – now they want to play a game wherever they are, with whatever hardware is handy.

Microsoft is smart to recognize that, and to attempt to get out in front and be the gamer’s network across all platforms. It’s a smart competitive move, particularly because Microsoft’s rivals aren’t going to go there – can you see Nintendo doing something like that? Or Sony? Sony seems too satisfied with its market leadership, resisting all efforts to open up (Fortnite pried them open a crack, after weeks of fan pressure).

Microsoft wants to gain market leadership, or at least recurring subscription revenue and extensive virtual goods sales. Particularly as the next generation of consoles looms on the horizon. Though once again, it’s unclear whether there may be future console generations beyond this. The biggest games are growing well beyond the platforms they began on. As billions of people now have access to a gameplaying device, the biggest money lies in finding the best games to reach the widest number of people – and the best business models to monetize those people.

Microsoft sees connecting those game players together as a great way to make money by marketing games, virtual goods, and services to the widest possible audience. If they can get the details right, this looks like they are correct. Grand concepts are one thing, and implementation is another. I look forward to seeing how well Microsoft does at implementing this vision.

What is Bungie's Destiny?

Now that Activision Blizzard and Bungie have parted ways, Bungie took all the rights (and responsibilities) to Destiny. Is that a good thing or a bad thing, for Destiny fans, for Activision Blizzard, for Bungie? There have been numerous opinion pieces on the subject lately, but I think many of them are missing the mark.

Let's start with what we do know from the outside. Activision Blizzard and Bungie had a $500 million contract spanning ten years for Destiny, which initially called for regular releases every couple of years supported by healthy infusions of downloadable content (DLC) that would keep the revenue flowing in-between major releases. Well, it didn't quite work out that way. The initial release sold $325 million worth in its first five days, but then things slowed down. Destiny 2 ended up at about half that level for its initial release. For whatever reason (and fans had many gripes about the game), the game never really caught fire.

Who's to blame for Destiny's below-expectations performance? Some point to game design decisions, which should be squarely in Bungie's lap; others note strong pressure from Activision Blizzard to get new material out there and to generate more revenue, which may have led to decisions about conent that had less-than-optimal results. It's impossible to know for sure where the truth lies, particularly from the outside.

Regardless, we do know that Destiny did not perform at the level that Activision Blizzard desired. One clear inference we can make from the early end to the Destiny publishing agreement is that ultimately Activision Blizzard did not feel that Destiny's prospects were strong enough to warrant fighting over the franchise. So now it's Bungie's property, for better or for worse.

Now, keeping Destiny at its current level is not inexpensive -- and either adding more content, or creating a new game (Destiny 3?) is not going to be cheap. There's a big marketing challenge, too, in convincing people who already made up their minds about Destiny to give the game another try. Putting the Destiny ship into a new, more profitable trajectory is going to be neither easy nor inexpensive. The process will take time, too.

Succeeding in revitalizing Destiny will require a clear-eyed evaluation of what the game's problems have been, and smart decisions about how to fix them. It may be that the game's audience has reached a plateau, given the widespread competition, and changes that could be made with reasonable time and expense might not generate enough additional revenue to make them profitable. It's possible that Bungie might conclude that beyond a certain maintenance level, Destiny is not worth a major upgrade project.

Conversely, Bungie may analyze the situation and determine that some game design changes along with a steady flow of new content and good marketing may put Destiny firmly in the black. I don't know which case is true (though the decision is rarely so clear-cut). I wish Bungie well in making that decision. Whatever Bungie decides, the next decision will be what to tell the Destiny fan base -- and when.

Whatever changes Bungie makes (or doesn't make), you can be sure there will be a number of people who don't like those changes. The company needs to manage expectations and keep the fan base as happy as possible, either for new Destiny content or for a new Bungie franchise.

Meanwhile, Activision Blizzard now has to figure out how to replace the revenue hole Destiny's departure leaves. Spin up a new franchise? That takes a lot of time and money with no guarantee of success. Acquire a profitable game company? Possible, but expensive -- and that can take a long time to negotiate, and maybe even longer to show a profit.

I wish Bungie all the best in their quest. There's a tremendous amount of work that's been put into Destiny, and I hope that they can find a way to continue that world for many years to come.

Unity Makes Improbable's SpatialOS Impossible

The news came seemingly out of nowhere: Improbable, the well-funded UK startup producing the SpatialOS system for running massively multiplayer online games across multiple servers, announced that game development engine company Unity yanked their license to run Unity-based games. An unknown number of developers have been busy creating games for SpatialOS, and it's not clear how many of them were using Unity. What an unpleasant surprise to wake up to!

The news wasn't over for the day, though. At first, Improbable was pleading on their blog to get the whole issue squared away with Unity; apparently the two had been in negotiations over the issue for some time. Unity wasn't having any of it, though, issuing a statement that the whole thing shouldn't have been a surprise to Improbable -- Unity said they told them in person over a year ago that SpatialOS was in violation of Unity's terms of service, and notified them in writing six months ago, and has been negotiating over the issue for months.

That raises the question of why Improbable hadn't mentioned the issue to developers -- well, you can understand why (they wouldn't want to scare people off), but given the outcome some warning would have been nice, don't you think? At least Unity clarified later in the day that SpatialOS projects that were live and in production would still be supported.

Now at the end of the day comes news that Epic Games has stepped in to help Improbable create a $25 million fund to help developers "move to more open engines." Gee, I wonder what engine they could be referring to? This offer is... Unreal, so to speak.

I know there's more to the story that what we've been reading here -- I suspect there's money at the root of it, and Unity wanted some part of Improbable's revenue stream in some way. I hope all parties can resolve this issue without leaving developers feeling whipsawed. Imagine having to try and rework your late-in-development game to an entire new engine... a nightmare scenario.

I think Improbable has a bright future ahead, as there are many interesting game designs I can think of that would benefit from a fast, cloud-based OS like this one that can enable some things we haven't seen before in games. Let's hope they can find a way to play nicely with Unity as well as Unreal.

Activision Blizzard Shakes Up Management

Management has been changing over the last few months at Activision Blizzard. Netflix poached Activision Blizzard's CFO, and then Blizzard's CFO announced she was leaving to become CFO at Square. This follows after longtime Blizzard president Mike Morhaime stepped down last year, as did Activision Blizzard president Eric Hirshberg. Now Activision Blizzard announced that Call of Duty Exec Rob Kostich is the new President for Activision Blizzard; Humam Sakhnini was named president of King Digital; and Dennis Durkin will continue as Activision Blizzard CFO as well as heading up emerging businesses.

Why all the changes? Well, some are no doubt due to a desire to try something different (or just to retire), but one can't help but connect all this management movement with the fact that the stock has dropped 30% in recent months, and that the Q3 results showed a drop of 12% in overall sales. Some of the marquee titles like Destiny and Overwatch seem stagnant. Call of Duty still hasn't regained the sales it reached several years ago, though it's still selling tremendously well.

Perhaps some of this is due to Fortnite taking some of the oxygen away. The market for hardcore players is only so big, after all, and it's hard to expand your audience when you're already one of the market leaders. Investors are wondering where the growth will come from in the future. Esports? Perhaps, though it's not clear exactly how that segment will evolve over time. Mobile? Activision Blizzard's King is doing quite well with Candy Crush, but it seems to have trouble coming up with a new hit of that size.

Of course, Activision Blizzard is not alone in its doldrums. Electronic Arts is facing similar questions about where future growth is coming from. Market leadership makes it difficult to rack up strong growth numbers year after year. Just ask Apple.

What should these giants do? Perhaps look at some acquisitions; picking up a company with proven properties in key market segments should be good for growth, if you can make the right picks. (King Digital has certainly performed well for Activision Blizzard.) Mining the back catalog to bring back the hits of the past could be lucrative as well, if you carry it off properly. (Command & Conquer? Tony Hawk?) Both of these companies have many great hits in their past, some of which might be dusted off and brought back to great acclaim.

It will be interesting to see what happens over the course of 2019.

Update: The first big news has already dropped, as Bungie splits away from Activision Blizzard to put Destiny completely under Bungie's control. The game hasn't been performing as well as Activision Blizzard had hoped, clearly, and Bungie will see if they can do better. However, Activision Blizzard is now down two key franchises (Destiny and Skylanders) which had been major contributors to revenue in the past few years. What will replace them? It's not clear what, and certainly creating a franchise that can perform on the scale Activision Blizzard would like (hundreds of millions in revenue per year; ideally a billion or more) is an expensive, time-consuming gamble. Unless you buy one that's already doing well... I expect this will put even more pressure on Activision Blizzard to find something like that.

What this also says, pretty clearly, is that Activision Blizzard has lost faith in the ability of Destiny to grow to the size they need. The game could still be a good performer for Bungie, which doesn't necessarily need such huge numbers. Still, I wouldn't be too surprised to see Destiny go free-to-play at some point in an attempt to grow the user base significantly. That's easy to say, but remarkably difficult to pull off -- you need to have a game design that works well with monetization and can retain customers for the long haul, and it's not clear Destiny has that.

Buckle up, this may be a bumpy ride.

2019: What Lies Ahead in Games

2018 was a banner year for gaming, with the overall market size growing to somewhere north of $130 billion worldwide. Mobile games became the largest single segment of gaming, and China was the world's largest market for games -- with Tencent the world's largest game company. What's in store for 2019?

The market for games gets bigger.
Let's start with an easy one: the global market for games will continue to grow. Despite China holding back Tencent from introducing new games; I expect that will only be a temporary setback. (I also expect we'll never know the real story behind the Chinese government's throttling of Tencent in 2018. Too bad, it's no doubt fascinating.) The overall market will crack $140 billion, and may end up closer to $150 billion. Mobile games will retain their leadership as the biggest single segment.

Games will be increasingly scrutinized and regulated by governments around the world.
It's not just loot boxes, though those will continue to cause problems for game companies. The lines are getting blurred between gaming and gambling, and that brings oversight. Publishers will continue to push the boundaries because there's a lot of money at stake. Laws will be passed in Europe and Asia putting more restrictions on games. The USA will lag behind in this regard, mostly because other political issues will continue to dominate legislative time and attention. Major industry players will continue to deny there's a problem, though they may get closer to that point.

The Digital Store Wars get into high gear.
Prior to 2018, Valve's Steam store had some competition, but nothing particularly large or well-funded -- or very effective at competing with Steam. For 2019, there's plenty of competition: Discord, Epic, Robot Cache, and others. Moreover, some of that competition has billions of dollars to spend, or a user base larger than Steam's, or technological advantages. Epic is offering developers a much larger revenue share -- 88% of sales instead of 70%. Valve, after years of not paying attention and just raking in money, will have to wake up and start working if they want to maintain market share. The competition will be good for developers and consumers.

Mobile games will continue to grow strongly and innovate.
We've seen multiple billion-dollar mobile games this year, and new innovative game play on mobile (Fortnite and HQ Trivia are good examples). I expect there's plenty more innovation to come, in game design, business models, and marketing, for mobile games.

VR/AR/XR will continue to underperform.
Despite new hardware and software releases, a mass market for various alterations of reality does not yet exist. While games seem like an obvious choice for new hardware, we have yet to see really compelling game play (except at some location-based entertainment spots, like the Star Wars experience). The hardware is still clunky and expensive, and we have yet to see games that people want to play for tens of hours let alone the hundreds of hours top games are played on other popular platforms. Someday the market will appear... but it won't be in 2019.

Game streaming will continue to be a vision, not a viable market.
Despite attention from companies like Google, Microsoft, Sony, and Electronic Arts, game streaming will not become a major market. Why not? The technical issues are difficult and ongoing; hardware requirements are a problem (not the display, the controllers and the network and the back end); and the market of people who want to play console-style gaming with complicated controllers isn't really all that large, not compared to mobile games. Here's my main example of why streaming isn't needed: Fortnite on mobile. Epic rethought the interface, and it's good enough and fun enough -- and you don't need a new piece of hardware or a finicky connection or a subscription. If Epic can do it, so can others -- and they won't need some expensive and clunky arrangement with a big company to make it happen.

Indies will continue to have difficulty making a living until they put more emphasis on marketing.
The fundamental problem in the game industry is no longer making a game that works -- it's making a game that makes you money. Building games is easier than ever before, but building an audience for a game (and one that monetizes well!) is harder than ever. Most indies focus almost entirely on game design and execution, and only turn to thinking about marketing when their game has failed to become an instant mega-hit. Smart indies would think first about how they will build an audience for a new game, then start designing a game that works with that vision. Sadly, more indies will struggle without understanding this.

Games will continue to grow as a cultural force.
As the number of game players around the world continues to grow (over two billion by some estimates!) the influence of games on popular culture (TV, movies, books, social media, etc.) will continue to grow. For those of us in the industry, I hope we can work towards making games a force for good in the world, and fight against the negative effects. In particular, let's try to make trolls into an endangered species.

Happy New Year!

Magic Leap: A Long Way From Real Money

Now that Magic Leap has finally been unveiled, and had a convention to promote its launch, people have had a chance to use their Mixed Reality device and see a variety of apps that are available or in the works. So far the response has been that some people are excited about the future, and some less so… but right now, the product really doesn’t look like something that will sell millions of units and transform society.

Let’s start with the price tag: $2,295 for a pair of goggles that connect to a box you wear on your belt. The field of vision is small (the same complaint held out against Microsoft’s Holovision goggles. The images are not great, especially when you move around and things get chopped up or look low res. Text is blurry and white screens look harsh, so look at standard desktop apps is not easy. This review by Brian Merchant lays out a number of the problems.

It’s clear that there’s no immediate, obvious use that’s going to drive sales of a device that costs $2,295 and has plenty of limitations. Ah, but in the future… there’s plenty of interesting visions put forth with lots of hand-waving. Some of them may even come to pass. But between here and there lie many years of improving the hardware, figuring out useful software, and hoping that hardware and software companies can keep going until the time comes for a robust, profitable market. That may be the hardest point of all to reach.

To me, this feels much like Virtual Reality (VR) which underwent a flurry of excitement for a couple of years, then fell back into the steady grind of improvement and search for a killer app or three to boost sales. The VR hardware is getting better and less expensive, but we still don’t have an app that’s going to generate a billion dollars in revenue in a year. Nothing that even looks like that, either – such an app would have people spending hundreds of hours with it, or at least dozens, and there’s nothing on VR like that.

While Magic Leap works on improving their hardware and getting developers to create apps, other companies like Apple and Google are working towards AR/XR hardware. Who’ll find a market first? I don’t know, but ultimately being first isn’t critical. It’s being able to exploit the market with the right hardware, software, and business model. Apple’s iPod wasn’t the first MP3 player, but they found the right combination of features at the right price point to sell hundreds of millions.

Now, I do think VR/AR/XR has a future – maybe even one that might surpass smartphones eventually. But someone will have to come up with some killer uses for the right hardware that doesn’t cost too much – and I think we’re some years away from that point.

Now, if you could show me a way to play Fortnite on Magic Leap that would give you a big advantage over other players – or be a lot more fun – then you’d have something that would sell hardware, even at $2,295 each. Good luck with that…

Why Telltale Games Died

Before I begin, it's important to note that I have no inside knowledge of Telltale Games, other than what has been published. My opinions are just based on observation of the company and the game market. Keep that in mind as you read this -- there may be factors at play I know nothing about.

I was saddened to hear about the fall of Telltale Games. The company isn't quite dead yet, maintaining a crew of 25, but it seems the end is near from their public statements. Apparently the suddenness of the demise was due to a failed investment round. When that fell through, the company didn't have the revenues to go forward. Still, though, either the CEO shouldn't have been playing hardball in the negotiations, or should have had a viable plan B for the employee's sake if things fell through. The company must have been in bad shape financially for some time, and had to keep the employees on board in order to land the investment (who would invest if the staff was gone?) -- so couldn't give the staff any warning of potential impending doom. I understand why that was the thinking, but that puts the employee's welfare completely out of strategy entirely, which is obviously wrong. Or it should be obvious, anyway.

The bottom line is that Telltale should have been aware of its problems and trying to fix them years earlier. There were plenty of warning signs.

First of all, I'll point out the widespread stories that Telltale apparently operated in continuous crunch mode, demanding employees work 50, 60, 70 hours a week or more to complete episodes on time. That essentially says you don't have enough people on the project. And when you do that for every project, all the time, you're not properly allocating resources. Your budget for the project says $X on paper, but your really spending much more than $X... so the product is going to be that much less profitable.

According to some of the press reports, only Game of Thrones and Minecraft were profitable for Telltale, among their recent games. The conclusion is clear -- either they needed to create larger audiences for their games, or reduce the cost to create them, or find more ways to generate revenue from those games.

Part of the problem is inherent in the design of the games. Basically, they are stories with some branching. There's no opportunity there for multiple players or character customization (since your character is part of the story and can't be changed), which means there's no reason for virtual goods. Why customize your character's look if no one else sees it -- and it really isn't your unique character, anyway? Taking away virtual item sales means foregoing a major source of revenue in this day and age.

Another problem for Telltale was licensing. Their whole portfolio of games is built on licensed properties -- they have no company-owned IP. Now, licenses, properly used, can be great. A well-chosen license can get you a vast audience at a low acquisition cost, though of course you now have licensing costs on top of your usual costs. The trick is to find ways to profit from that new audience. Usually, the obvious thing is to create a game using in-house IP that can sell well to the audience you gathered for the licensed game. (Note that many publishers use this strategy, like Jam City, Electronic Arts, Activision, and others.)

For instance, if you've sold millions of a Game of Thrones game, why not create your own fantasy setting and build interactive stories for that? Sure, the audience would be smaller than for Game of Thrones... but you wouldn't have the licensing costs. But Telltale never used this obvious strategy.

I suppose that makes sense when your games weren't profitable anyway. This points to what they should have been doing -- finding a way to either sell their games to a bigger audience (through better marketing), or change the game design to be less expensive to produce and have more opportunities for profit (a design that made virtual items a reasonable thing to create).

All that said, I think interactive stories are fun, and Telltale had plenty of great ones (their numerous awards can testify to that). Telltale just hadn't figured out how to make them profitably. That's an important lesson for any game company. Yes, you have to create a fun experience for players -- but you have to make sure you have a way to make a profit, too.

Update: A lawsuit has just been filed against Telltale for breaking laws in its abrupt layoffs.

Further Information: More than just the problems I outlined above, Telltale had basic problems with its engine that it never solved, as detailed in this article.

Crowd Marketing

ArenaNet, the studio that develops Guild Wars, just fired two employees because of a furor that erupted in social media. The Verge covered it well; essentially, an ArenaNet narrative designer was tweeting about how she writes narratives in Guild Wars, and a streamer politely offered some commentary about how he’d like to see things done – and then the whole thing exploded as the narrative designer got angry at this, heated messages were exchanged, the issue became popular on Reddit, and then the designer was brought in to talk to the CEO of ArenaNet who fired her. He also fired another long-time developer who had come to her defense. Now the issue has become politically charged, and while outrage is spread around and amplified some important lessons from this incident may get lost.

The issue is much more complex than that simple summary above, of course. If you’re interested check out the articles on the incident, and especially read through the tweets that precipitated everything, and form your own opinions. I’m not sure if there’s clearcut right and wrong here, but there are important things marketers and game developers should learn, and that’s what I’m going to focus on.

Stepping back a bit, it’s certainly true that many companies expect or encourage or even require developers to interact with the community. Sometimes those interactions don’t go so well, which shouldn’t be a surprising outcome for people whose expertise does not lie in public speaking or community management. Community management is extremely important – it helps keep the audience engaged with your game, it’s a way to learn from the audience, and it’s a good way to try and deal with problems that occur. Like all tools, though, community management can be harmful in direct proportion to its power and utility.

How do you prevent a situation like this one from developing? By hiring good community managers and making them responsible for interactions with the audience, and by preventing anyone in the company from posting to social media or forums on behalf of the company. Employees (and contractors) need to put a disclaimer on their social media profiles and on the email signatures – Opinions expressed by me are not those of the company (there’s better language out there, but this is the gist of it). This is true even of small developers – if you only have a couple of people, figure out who’s better at talking to the public and have that person do it.

It’s great if you want to have other members of the team interact with the community, but the community manager should help with such interactions and oversee them. The community manager can then step in if things get out of hand on either side of the interaction. Here, it looks like the narrative designer got angry out of proportion to the commenter, and then matters escalated from there. (At least, that’s what it looks like from a distance – I’m sure there’s more to the story.) If a good community manager had been overseeing this, the escalation could likely have been defused before really bad things happened (like people getting fired, and large numbers of people getting upset with ArenaNet).

Was the CEO’s response appropriate? Perhaps, but I’d want to know the full story (including the company’s policies, if any, and what had been said before to the employee) before rendering a judgment on the CEO’s actions. Certainly the heated response to a polite inquiry seemed far out of proportion – and the continuing explosion of the developer was unnecessary and reflected badly on the company.

What’s important for other companies is to learn from this and try to set things up so it never happens to them. Marketers (and developers) need to realize that marketing isn’t entirely under their control now – and that’s a good thing. When you’ve got a strong message, an audience can help spread that if they’re treated right. But don’t delegate that responsibility to people that aren’t ready for it. Establish policies for employees about communicating with the public or the press. Have someone skilled at community relations and public relations available to step in and help as needed (even a small developer should know some PR-savvy person they can call in to help when the situation gets nasty).

Keeping your audience engaged with your content and your company is important, but leave it to people who are skilled at dealing with an audience – and who can keep their cool when provoked. Sure, sometimes you will get complete trolls attacking, but that’s when you really need to know how to deal with people like that. Pouring gasoline on them and setting it afire may be emotionally satisfying in the short term, but it’s probably not the best way to win the hearts and minds of the largest audience for your games.

VR, AR, and the Market That's Still Virtual

Last week saw the Augmented World Expo in Santa Clara, bringing together a number of companies and people interested in XR (the catchall term that covers Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR)). While there were big companies like Microsoft exhibiting, there was a distinct lack of companies aiming at the consumer space -- like Oculus, Vive, or Magic Leap. The two companies with the current largest market of AR-capable devices -- Apple and Google -- were nowhere to be found. This show was not focused on consumers.

Overall, the AWE show continues to draw a good crowd and some interesting speakers; the XR market for hardware and software, though, doesn’t seem to be growing much. The AWE show, judging from the exhibitors and the various sessions, is mostly about the various verticals that constitute the enterprise market. That actually seems like a smart decision to me, because the consumer market for XR is pretty much going nowhere fast. VR headset sales have consistently underperformed, and the installed base of even the largest is still just a few million. AR is in the hands of hundreds of millions of people, between ARKit and ARCore, yet almost nobody is using it – even in one of the poster children for AR, Pokemon GO. (That app is a good touchstone for how smart someone is about AR – ask them how important Pokemon GO is. Sure, it’s done very well for Niantic, and helped generate press for AR, but the use of AR in the game is completely cosmetic and can be toggled off easily; it adds nothing to the experience or the gameplay.)

At least on the hardware side, there’s good progress. The hardware continues to get better – faster processing, better displays, lighter, and cheaper – but it’s still hard to see what software is going to drive hardware sales. It’s the classic market development problem for hardware and software – the hardware doesn’t sell without the software, and no one writes the software unless there’s a good hardware base.We are getting to the point (still a couple of years away) where a good pair of AR glasses will be like slipping on sunglasses – at which point the market could explode, if the price was right and there was software people really saw a critical need for.

Digi-Capital's Tim Merel said he thought Google’s AR assistance for Google Maps walking directions was the first really critical use for AR he’d seen for consumers. I’d also nominate furniture placement, like Ikea’s app – I spoke with one of the guys doing that app, and they have plans to make it even more useful. So we are making progress towards useful consumer software for XR, but it’s slow.

Major companies exhibiting at the show included Microsoft, Qualcomm, and Sony. Interestingly Sony was not showing PSVR, but instead some enterprise stuff so unmemorable I can’t even recall what it was. Microsoft was focused on HoloLens and commercial uses. Yeah, who’s going to drop $3,000 for a cool way to play Minecraft? A handful of people, maybe, but not more than that.

One of the potential big players in XR is Magic Leap... but at AWE, it was Magic Leap who? They had no presence at the show, and no mind share in the conversations I was in. Regardless of what miracles can be pulled off with their hardware, they need to have compelling software… at least one thing that people will pay a lot to use regularly. That’s needed to grow VR, AR, MR, whatever kind of reality you’re planning. And I’ve yet to see it. I think it will happen, but the time frame is indeterminate. Magic Leap did show a little bit of what their hardware looks like, but we still don't know the price or the release data -- nor have we seen what you can actually do with it. Apparently their demos have been impressive enough to get over a billion dollars in financing, so you can't count them out. But don't count them in until you know the price, and get details on how the hardware works -- and see some reviews from users.

As for games, which many people seem to suppose are the killer VR app, and a huge potential market on AR or MR, I think that most people are barking up the wrong tree. Sure, games could be cool, but people aren’t looking at the right kinds of features or genres so far in XR games. Worse, no one seems to be building a game for XR that has billion-dollar potential. I think for a game to make $1 billion or more, it has to have a couple of things: A large enough installed base of hardware that can run it (A hundred million at least) and some aspect of play that keeps people coming back for hundreds of hours of game play. Now, that can be in 5 or 10 minute chunks like Candy Crush, or 5 hour chunks like Minecraft or World of Warcraft – but the game has have that sort of innate attraction (and ideally ways to build revenue over time). Nobody seems to be making games with that sort of potential yet for XR.

I do think that with Apple's ARKit and Google's ARCore making AR easier on hundreds of millions of smartphones, that will provide an easy on-ramp for developers to try out ideas. That will make future AR wearables more likely to get adopted faster. Those developers who are learning how to build AR and VR apps now will be in a good position when that market finally arrives. The only trick is to have your development business survive until the larger market arrives...