How Will Games of the Future Make Money? Game Developers' Conference Has Some Answers - NBC Bay Area
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How Will Games of the Future Make Money? Game Developers' Conference Has Some Answers

The days of paying big bucks for a physical game disc are fading into the past — and soon, buying power-up items could be history too

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    How Video Games of the Future Will Make Money

    The days of paying big bucks for a physical game disc are fading into the past — and soon, buying power-up items could be history too. Game developers are moving toward new ways to make money that could prove to be easier on players — and their wallets.

    (Published Monday, March 25, 2019)

    What to Know

    • Fortnite is the most successful free-to-play game of all time, with its maker earning $3 billion in profits last year

    • Fortnite makes money by selling in-game items that make your character look cool, but don't give you an edge over your opponents

    • Other games are moving away from selling power-ups, opting for tournaments and elaborate in-game economies to make money

    In a crowded booth at the Game Developers' Conference, Epic Games showed guests the secrets behind how characters in the hit game Fortnite are drawn and animated.

    Those characters — which all have exactly the same abilities, but look wildly different — are one reason Fortnite has become the most successful free-to-play game in history, helping its maker earn $3 billion in profits in 2018, according to TechCrunch.

    "Fortnite, I would say, has transcended just being a game. If you think about entertainment that has really taken shape within the cultural fabric of what we do every day, Fortnite is that game," said Kent Wakeford, a member of the team that grew and sold game studio Kabam for almost a billion dollars.

    Wakeford has moved on to other ventures that all have one thing in common: they represent the future of how games will make money. He's the co-founder of Gen.G eSports, a South Korea-based professional gaming organization that includes the Overwatch League team Seoul Dynasty.

    eSports, says Wakeford, represent a major way the games of the future will earn money — not by selling players upgraded swords and armor, but through TV commercials, athlete sponsorships, events and merchandise.

    Wakeford also sits on the board of a company called Skillz that bills itself as "eSports for everyone." Though the athletes of Seoul Dynasty have playing abilities some might call superhuman, Skillz focuses on casual gamers who want to up the ante with friendly tournaments for cash or prizes.

    "We have these governing algorithms to make sure we're matching players of equal skill," said Skillz chief revenue officer Craig Churchill. "We like to say we match better than Tinder."

    Here, again, the tournament is how game developers make money: If two players enter for 60 cents each, the prize is a dollar. Skillz keeps 10 cents of the entry fees, and the last 10 cents goes to the developer, Churchill said.

    As its name implies, games on the Skillz platform are pure contests of skill: Just like Fortnite, no player can buy items in an online store to gain an advantage over other players. It's also true in the forthcoming game Blankos, from Mythical Games — with a twist: Mythical's new in-game economy will take Fortnite's concept of rare and limited-edition characters and clothing to the next level.

    "Streamers now, and influencers, can have their own items. And maybe they, as an incentive, say, "Hey, the next 100 people who jump into my match are gonna get an item," said Mythical CEO John Linden.

    Under the hood, Mythical's digital economy runs on blockchain technology — the same complex math behind cryptocurrencies like Bitcoin. The idea, says Linden, is to let players create their own characters, skins and game modifications, and then sell them to other players. Any time the item is traded or resold after that, both the creator and the game developer get a small cut. It's aimed at eliminating the "black market" for game items and characters that's existed for years.

    "People farm gold in a game, and they sell it on eBay. And a lot of times, that's against the terms of service, but they find a way to do it," Linden said.

    The new business models are arriving as a major shift happens in the game industry: the advent of game streaming services like Google's Stadia, delivering high-performance graphics to any web browsing device with a suitable internet connection. Wakeford believes Stadia's close integration with YouTube will make the role of game streamers and influencers even more important — and will force Amazon and Microsoft to jump into game streaming in order to compete.

    With YouTube gaining market share behind Amazon-owned Twitch, which remains the dominant platform for live streaming games, Wakeford said, "I think what you'll see is Amazon probably be a little more aggressive in the space, and go head-to-head with Google."

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