Ten years ago, I wrote about the “end of the $60 PC game” on my blog. Despite several shifts in gaming with casual games and smartphone gaming growth, I remained confident in the buy to play console and PC gaming market. This was the same time that EA traded around $20, Activision was around $13, and Take Two around $10. These are not exact, but when you look at today’s stock prices, I think you’ll see that these companies have done well over the last 10 years and gaming has been growing. Take a look at Zynga, which was the king of casual 10 years ago, and a pretty different story is told.
In 2019, the market is facing different changes – some that have been shifting over the last several years. Activision acquired Blizzard in 2013. EA has continued its efforts to gobble up companies. The 2011 purchase of PopCap supported the impact of casual games on the market. The purchase of Respawn Entertainment in 2018 has brought people a AAA free-to-play game developed by the makers of Titanfall 1&2 entitled Apex Legends. They may have opted for free-to-play for numerous reasons. Among them, I would put their experience with the Star Wars Battlefront 2 cash shop and the impact of games like Fortnite. The free-to-play model has also proved itself and everyone is trying to land their big game.
EA has one of the most diversified portfolios in gaming and tries to stay up with market trends. They’re a massive company now and at times they’ve been slow to react, but Apex Legends seems to be indicative of nothing short of perfect execution and timing. Unfortunately, EA has also gained a bit of a reputation due to all of their acquisitions. It’s really just part of being a big and successful player in the market though. There will always be highly vocal groups that complain about certain aspects of a business. It will be interesting to see if their latest offering in Apex Legends will guide them to more free-to-play games in the future.
While re-reading my 10-year-old post, I realized I didn’t really address Free-to-Play. Ten years ago it was only just starting to transform the landscape on mobile in the US. Today consoles are finally starting to build a pretty decent size of Free-To-Play games and consoles continue to be some of the biggest game markets despite PC gaming getting a stronger reputation and continuing to get more approachable.
Meanwhile, companies like Take Two $TTWO (I currently hold a small position) have a good blend of a buy-to-play single player campaign with an online component that’s free to enjoy with in-game micro-transactions. This company makes some amazing games and I really love this model. It’s also important to me to see stability and see a CEO that is confident in the company. I could see them starting something new. Maybe we’ll see a situation where the tables are flipped and a free-to-play online component is released with full single player campaigns offered as in-game purchases. I’m excited for the future of gaming more now than ever. Streaming services for games is slowly becoming a reality as well. It’s been a long road, but it’s clear to me that the days of buying boxes are numbered.