There’s a Cantonese saying I’ve been looking for an excuse to use in one of these columns for months, and with the year drawing to a close, I’m going to drop it here as a little present to myself.
“Sik see sik zoek dau.”
It means “finding a pea while eating poop,” being in the middle of a distinctly unpleasant task and stumbling onto something that is almost pleasant by comparison.
With the abundance of layoffs and closures around the games industry, I think 2023 definitely qualifies as a heaping helping of poop we’ve had to collectively choke down. But that doesn’t mean there weren’t happy little non-poop surprises along the way, some colorful garnish or an occasional legume to break up our foul task.
So as we say goodbye to 2023 with our usual This Year in Business round-up, I thought it would be good to focus on the positive and find some peas in all this mess.
For instance, 2023 had a bumper crop of great games offering top-notch escapism for those in need. That’s an obvious pea.
We saw new unions at Microsoft/Zenimax, Sega, Avalanche Studios, CD Projekt, and Experis Game Solutions giving those workers additional leverage. That’s a very significant pea already, and it’s likely to look even bigger in the years to come.
In somewhat related news, the US Federal Trade Commission spent the year considering a ban on non-compete clauses, so perhaps the days of that exploitative nonsense are drawing to a close. That’s giving off big pea energy.
And when Bobby Kotick steps down from Activision Blizzard in a few days, there will be about 13,000 fewer people in the world who have Bobby Kotick for a boss.
Absolutely massive pea-ness right there.
See? 2023 had its share of peas; we just need to remind ourselves of them from time to time. The 52 stats and quotes will reflect a bit of everything: the good, the bad, the ugly, the things we think we’ll look back and remember as the events and perspectives that defined 2023.
Barring major (and massively inconsiderate) breaking news, this will be our last day of work for the year. But just in case you need some game-related reading material in the interim, I’m also going to highlight a This Week in Business column from each month that holds up about as well now as it did when it was published. (Editor’s note: No guarantees, your mileage may vary, notice we didn’t actually say they held up well.)
Whatever your situation, we hope you enjoy a fulfilling break here at the end of the year, and we’ll see you in 2024.
JANUARY
QUOTE | “This overall context has triggered a full review of our revenue prospects leading to increased cautiousness over the coming years.” – 11 days into the year, Ubisoft sets the tone with a worrying announcement lowering its financial forecast, cancelling unannounced games, foreshadowing layoffs, and (as has become tradition) delaying Skull & Bones.
QUOTE | “Blockchain has been an object of exhilaration and a source of turmoil, but with that in the rear-view mirror, we hope that blockchain games will transition to a new stage of growth in 2023.” – In his New Year’s Letter, Square Enix president Yosuke Matsuda predicted a bright 2023 for blockchain gaming. He stepped down in March, hopefully sparing us yet another round of “No seriously, this is the year blockchain games takes off for real” New Year’s grift-giving.
STAT | 2 – The PSVR 2’s announced launch window software lineup included just two exclusives out of a list of 37 games. Did you forget the PSVR 2 launched this year? Did Sony?
STAT | 0 – The number of platform holders that would be at E3 2023, after it was reported in January that Nintendo, Sony, and Xbox would be skipping the show organized by GamesIndustry.biz parent ReedPop.
TWIB of the Month: Did you know GamesIndustry.biz started reviewing games this year? Well, we reviewed one game, at least. It was Call of Duty Modern Warfare 2. I gave it a 0 out of 10, and it was for reasons I know for a fact Activision Blizzard would whole-heartedly endorse.
FEBRUARY
QUOTE | “Microsoft and Nintendo have now negotiated and signed a binding ten-year legal agreement to bring Call of Duty to Nintendo players – the same day as Xbox, with full feature and content parity – so they can experience Call of Duty just as Xbox and PlayStation gamers enjoy Call of Duty.” – Microsoft confirmed it would be legally obligated to keep Call of Duty multiplatform if the Activision Blizzard deal went through. (Spoiler: It went through, so maybe we’ll see next year’s Call of Duty arrive on the Switch…)
QUOTE | “[UK Prime Minister] Rishi Sunak has said they’d like to be the Silicon Valley of Europe or of the continent, and if deals like this can’t get through, they’re not going to be Silicon Valley, they’ll be Death Valley.” – In a CNBC interview, Activision Blizzard CEO Bobby Kotick said the UK’s CMA should ignore consumer protection concerns and let the Microsoft acquisition go through so the UK can be attractive to companies with no regard for consumer protection concerns.
STAT | 10% – Nintendo increased employee salaries 10% to help them keep up with inflation, which is super weird because the rest of the industry has spent the whole year solemnly telling us the only responsible thing to do in economic headwinds was to jettison as many employees as quickly as possible while talking about what a difficult decision it was to make.
QUOTE | “If you think that executives are making a lot of money and you aren’t, you’re living in a myth.” – Blizzard president Mike Ybarra reportedly defended the company’s decision to cut employee profit-sharing bonuses by half immediately after Blizzard wrapped up one of its best quarters in years by condescendingly insulting their grasp of reality. I wonder if the bit about executives not making a lot of money was a reference to his Blizzard former co-president Jen Oneal, who reportedly resigned because the company wouldn’t pay her as much as a man in the same role with the same title. Specifically her co-president at the time, Mike Ybarra.
TWIB of the Month: The rest of that Ybarra story gave us a fun opportunity to revisit Activision Blizzard’s stated goal of rewarding profit and nothing else (and Bobby Kotick’s first-ballot Terrible Management Hall of Fame quote about taking the fun out of games and psychologically tormenting employees).
MARCH
STAT | 1 – Unity posted the very first non-GAAP operating profit in company history in March. That was probably its high point for the year.
QUOTE | “I’m disappointed that the majority of companies failed to address some of our most urgent questions, including providing us with their policies around extremism, as well as transparency reporting around these topics.” – US Representative Lori Trahan (MA-03) wasn’t happy with the responses she received from major industry players to her inquiries into the rise of extremism in online gaming spaces. It’s not great that these companies decided it was better to keep their mouths shut on the subject and be thought of as negligent than to open them and remove all doubt.
QUOTE | “One thing we know about hot marketing terms is that some advertisers won’t be able to stop themselves from overusing and abusing them.” – The FTC put companies on notice that it will be keeping a close eye on how AI is marketed.
QUOTE | “It’s actually very cost-prohibitive to livestream everything so we needed to focus GDC 2023 on the in-person audience” – GDC’s director of event production Stephanie Hawkins explained to us why the conference dropped the hybrid/virtual elements this year, which was another one of those accessibility wins we had during the pandemic that were later dropped as soon as it was convenient. Or should that be inconvenient? You get what I mean.
QUOTE | “E3 is the industry show. It may belong to the ESA, it may be pulled together by my parent company, but it is an event that was created by the likes of Nintendo, EA, Sony and Sega back in 1995. And it’ll be those same companies, plus a few new ones, who will decide whether it comes back or disappears from view. As of today, the industry’s decision seems pretty clear.” – Our own Chris Dring, who was involved in planning the show with our parent company ReedPop, writes about the formal cancellation of E3 2023.
TWIB of the Month: In the wake of a bunch of layoffs and bad news around the industry, I wrote a piece about how the fundamentals of the business are just fine and much of the carnage we’ve seen has been more a choice than a necessity. If you expected the main write-up of this column to address layoffs as the main story of 2023, the things I said then are basically the same things I’d say today, and the same things I’ve been reminding myself of for the past eight months or so.
APRIL
STAT | $377 million – The worldwide opening weekend box office total for The Super Mario Bros Movie. As of this writing, Box Office Mojo has it down as bringing in $1.36 billion worldwide, second only to Barbie’s $1.44 billion on the worldwide 2023 box office charts.
STAT | €706 million ($776 million) – The amount Sega paid to acquire Rovio, citing a desire to accelerate its expansion into mobile gaming as a reason for the purchase.
STAT | $4.9 billion – The amount Saudi Arabia’s Savvy Games Group paid to acquire Scopely, the same month the company’s big hit Monopoly Go would see its global launch.
QUOTE | “It’s more than just being physically tired and you take a few days off and it goes away. We’re talking about a kind of pervasive, bone-deep, soul-crushing cognitive and emotional weariness that paradoxically interferes with our ability to rest and recover.” – Take This clinical director Dr. Raffael Boccamazzo lays out the basics of occupational burnout in a GDC panel. Has anyone else heard a notably larger than usual number of people describe feeling that sort of weariness this year?
QUOTE | “The final decision to prevent the deal comes after Microsoft’s proposed solution failed to effectively address the concerns in the cloud gaming sector, outlined in the Competition and Markets Authority’s (CMA) provisional findings published in February.” – The UK CMA blocks the Microsoft merger of Activision Blizzard, citing concerns about the Xbox maker’s position in the cloud gaming market.
TWIB of the Month: Zynga’s VP of player success Gemma Doyle gave a talk at GDC about the company’s tactics for handling VIPs, also known in the common parlance as whales, and I wrote it up for This Week in Business. One person on social media said they needed a shower after reading the article. Another said they couldn’t keep their lunch down. Are you in the right headspace to receive information that could possibly hurt you?
MAY
STAT | 600 – Unity announced plans to close half its offices and laid off 600 people, its third round of layoffs in under a year. CEO John Riccitiello insisted it was “all about setting ourselves up for higher growth,” so clearly this was all part of the plan and not a sign of an increasingly desperate company about to do something wildly ill-advised…
QUOTE | “We lost the worst generation to lose in the Xbox One generation, where everybody built their digital library of games.” – In an uncharacteristically grim interview after the first-party exclusive Redfall was panned by reviewers, Xbox head Phil Spencer acknowledged Microsoft fumbled its opportunity to compete with Sony or Nintendo head-on, saying even Starfield becoming a massive hit wouldn’t meaningfully move the needle on that front.
QUOTE | “These commitments fully address the competition concerns identified by the Commission and represent a significant improvement for cloud game streaming compared to the current situation” – The European Commission approved Microsoft’s acquisition of Activision Blizzard, leaving the UK and US regulators as the last remaining hurdles.
STAT | $2 billion – The size of the deal Embracer thought it had reached with an unspecified investor before it fell through in May. Embracer would spend the rest of the year laying people off and shutting down studios in drips and drabs.
QUOTE | “Playing games is such a visceral experience. We’re getting to the point that the game itself is able to create its own content in real time. That will be exquisite.” –Activision Blizzard CEO Bobby Kotick openly fantasized about a world where he can stop paying people to make video games.
TWIB of the Month: The way the industry deals with loot boxes is messed up in a dozen different ways. It always has been and it seemingly always will be, which I figure means any column about it is by definition timeless.
JUNE
STAT | $3,499 – The starting price of Apple’s Vision Pro AR headset, which is expected to launch early next year.
STAT | $499 – The starting price of the Meta Quest 3, which launched in October.
Between these and PSVR 2, 2023 was a pretty big year for new VR/AR headsets. Still doesn’t seem like we’ve got that long-awaited breakthrough on our hands though.
STAT | 10 – The number of new games announced during the two-hour Summer Game Fest event, the closest thing to an E3 we had this year.
QUOTE | “We’ve removed Atlas from our @AssetStore as they violated our terms and conditions. We are actively reviewing all verified solutions providers in the AI category as we remain committed to upholding the quality of our ecosystem.” – A day after announcing its AI Asset Marketplace, Unity drops one of its “verified solutions” that had undergone “enhanced vetting” when it was revealed to have just been stealing content posted on SketchFab. Content that was itself stolen from another source.
QUOTE | “Xbox has lost the console wars, and its rivals are positioned to continue to dominate, including by leveraging exclusive content. Xbox has consistently ranked third in consoles behind PlayStation and Nintendo.” – In trying to get FTC approval for its purchase of Activision Blizzard, Microsoft was happy to talk about how unsuccessful it has been.
TWIB of the Month: Emulation has been a “legal gray area” for as long as emulation has been around, so how have we gone decades with platform holders cracking down on it while never getting clarity on what’s legal and what isn’t? We spoke with the lawyer who represented the makers of a PlayStation emulator that Sony sued back in 1999 to find out.
JULY
STAT | 91 – The number of employees at Sega of America who voted in favour of unionisation, thus leading to the creation of the Allied Employees Guild Improving Sega. (In November, Sega reportedly planned to have 80 employees “phased out” with their roles being outsourced, including 40% of the unionized workers.)
QUOTE | “The introduction of AI can sometimes make it harder to show a developer has sufficient rights in using AI to create assets, including images, text, and music. In particular, there is some legal uncertainty relating to data used to train AI models.” – Valve explains why it’s requiring developers using AI tools to prove that they own all the relevant material used to train the AI before it allows their games onto the Steam storefront.
STAT | 2.5 years – Yuji Naka’s sentence after he was found guilty of insider trading while at Square Enix. The sentence was suspended, so he can avoid serving time if he makes it through four years of probation without issue.
STAT | 40 million – The PS5 pushed its lifetime installed base to 40 million systems worldwide. It obviously didn’t stop there, and earlier this week, Sony announced the PS5 has hit 50 million sold.
TWIB of the Month: A number of companies have been fined by the FTC for the way they handle kids’ personal information, so the ESRB and SuperAwesome (then-subsidiary of one of those fined companies, Epic Games) asked the FTC to make it easier for parents to give consent to collect and share their kids’ personal information with whomever they want. We took a closer look at the facial age estimation tech in question, its limitations, and how it does nothing to serve the interest of protecting kids’ privacy in any way.
AUGUST
STAT | 65% – The number of smelters and refiners in Microsoft’s supply chain that had passed a third-party audit to ensure they weren’t financing militias and human rights abuses in or around the Democratic Republic of Congo. That figure has been sliding since 2019, when it was 99.6%. Our annual report on conflict minerals in the games industry found companies getting worse on the subject almost across the board.
STAT | 3 – The number of new games shown during the two-plus hours of the Gamescom Opening Night Live showcase event. Are we sure some of the same factors that scuttled E3 aren’t hitting the rest of the summer game reveal events as well?
STAT | 15 years – Microsoft sold Ubisoft the streaming rights to all Activision Blizzard games and any it makes for the next 15 years as part of a deal to address the UK CMA’s concerns about the acquisition.
QUOTE | “It has been an honour working with Charles to help bring Mario to life for so many years and we want to thank and celebrate him.” – Nintendo announces that iconic Mario voice actor Charles Martinet will no longer voice the character.
TWIB of the Month: After the conflict minerals report discussed problems in the supply chain, we spoke with iFixit director of sustainability Elizabeth Chamberlain to talk about how companies aggravate those issues with planned obsolescence, paired parts, and lobbying against right-to-repair legislation.
SEPTEMBER
QUOTE | “With no path to a turnaround and the inevitable migration of physical software sales to digital downloads, we think Mr. Cohen’s appointment ensures GameStop’s demise.” – In a note to investors, Wedbush analyst Michael Pachter said GameStop’s appointment of board chairman Ryan Cohen to the position of CEO after months of the role being left vacant is a bad sign that “the company could not convince any competent replacements to jump onto the sinking ship.”
QUOTE | “We chose this because each time a game is downloaded, the Unity Runtime is also installed. Also we believe that an initial install-based fee allows creators to keep the ongoing financial gains from player engagement, unlike a revenue share.” – Unity explains why it is adding a Runtime Fee for each time a game is installed and unilaterally changing the fundamental nature of its deal with every game developer that ever used the engine.
QUOTE | “[EA Sports FC] could very well double in the next five years without too much work from us…” – Electronic Arts CEO Andrew Wilson is very optimistic about how the company’s flagship game will fare in its post-FIFA era.
QUOTE | “One of the saddest things that happened during the period of loose money was that investors encouraged – sometimes even pushed – a lot of previously self-sufficient studios into expanding their team and budget too much, to the point where budget outpaced market potential and the studios were no longer sustainable without investor support. When money became tight again, investors pulled their support, and the studios had to downsize or even shut down. This damage could have been avoided with the more cautious approach people are starting to adopt now.” – In a panel on the state of investment in games right now, Hooded Horse president and CFO Snow Rui explained a fair bit of what’s been going on.
TWIB of the Month: It was serendipitous that the two big third-party engine makers hit the rocks in spectacular fashion at basically the same time and for similar reasons. That let us kill two birds with one column about Unity and Epic suddenly deciding they had to worry about sustainability after years of running without guardrails.
OCTOBER
STAT | 633 – Microsoft’s acquisition of Activision Blizzard was finally finalized in October, 633 days after it was originally announced.
QUOTE | “I am confident that Unity is well-positioned to continue enhancing its platform, strengthening its community of customers, developers, and partners, and focusing on its growth and profitability goals.” – James M. Whitehurst, upon taking the interim CEO role at Unity after John Riccitiello retired amid backlash to the Runtime Fee policy. Unity laid off hundreds more a month later.
STAT | $18.5 million – Esports and gaming lifestyle brand Faze Clan’s value when it sold to GameSquare. That’s a significant drop from the $725 million valuation it held when it first went public a little over a year earlier.
STAT | $11.5 billion – The operating losses of Meta’s Reality Labs AR/VR division through the first nine months of its fiscal year. Since 2019 the division has lost a total of $46.5 billion.
TWIB of the Month: I’m going to link to one specific section in a column here because I think the thing it deals with, venture capital firm Andreesen Horowitz’s “Techno-Optimist Manifesto,” is an alarming admission of the philosophy driving much of the investment in tech and gaming. As laid out clearly in the manifesto, that philosophy holds infinite growth as the only thing worth pursuing, and explicitly names trust and safety as the enemy.
NOVEMBER
QUOTE | “Every word in Ascension was written by real people, many of whom have long-running careers in writing including Telltale titles, Pixar titles, [God of War] Ragnarok, Resident Evil Village and more.” – Genvid CEO Jacob Navok responding to accusations that the Silent Hill: Ascension developer used AI tools to write dialogue in the game.
QUOTE | “I think we have to come to terms with the fact that this is now a mature industry. The larger any industry grows in absolute terms, the slower it is likely to continue growing in relative terms.” – Midia Research analyst Karol Severin warned that the industry’s growth pace has peaked, with growth in the low-to-mid-single digits through 2030. I’m sure the Andreesen Horowitzes of the world will take this in stride…
QUOTE | “It’s kind of like a snake that gets bigger and then regurgitates, gets bigger and then regurgitates, and just goes back and forth. It’s been that cycle forever. And I don’t see that changing. That’s just human nature meets capitalism and a combination of long-term and short-term planning from larger companies.” – Jordan Weisman, who has started and sold a handful of companies including FASA Interactive and Harebrained Schemes, believes the industry will always go through periods of fattening up and slimming down.
QUOTE | “There still is plenty of cash, plenty of interest, and plenty of willingness to do deals on the part of not only strategic buyers that we all know, but also private equity companies and other large financial institutions that want to get exposure to games.” – In a panel at the Montreal International Games Summit, Agnitio Capital founder Shum Singh said companies are taking longer and being more careful about their mergers and acquisitions these days, but there are still buyers in the market.
TWIB of the Month: I know the month for scary stories is traditionally October instead of November, but what happened with Bold Spirit Game Studio’s attempt to remake a student game as a commercial product on Steam is the sort of thing that should be read with a flashlight held up to your chin.
DECEMBER
STAT | 28 – The Electronic Entertainment Expo was a fixture in the games industry for 28 years before the ESA officially killed it earlier this month. Even when it wasn’t in the LACC, even in the years when it wasn’t held at all, E3 was a focal point of the industry.
QUOTE | “Today’s verdict is a win for all app developers and consumers around the world. It proves that Google’s app store practices were illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation.” – Epic Games responds to a jury siding with it on every count in its lawsuit against Google over anti-competitive practices and its mandatory 30% cut of revenues from apps distributed through Google Play.
STAT | $55 million – The proposed amount Activision Blizzard will pay to settle the lawsuit the California Civil Rights Department filed against it in 2021, because this December in particular has a real “series finale needs to tie up all the loose ends” feel to it.
QUOTE | “Personally I feel sometime this quarter we’ll hit the low point and then really start coming back and growing again as an industry and get past that.” – Hi-Rez Ventures president Stewart Chisam offers a bit of optimism for the industry in an interview about what’s happening with live service games.
TWIB of the Month: Why does Amazon get to make a bunch of money off pirating games but small-time unlicensed t-shirt sellers get stuck with $100,000 judgments and frozen accounts? We talked to a couple lawyers for insight into why the rules don’t seem to apply to everyone.
And with that, we’re finally done. Thanks for reading, right to the bitter end.
So long, 2023. Bring on 2024.
