TECHNOLOGY Bloomberg Businessweek August 31, 202016
The pandemic has sent Hollywood into a tailspin,
plunged travel into its deepest funk in memory,
and left restaurant owners on the brink of starva-
tion. And video game makers? They’re thriving.
People stuck at home for months picked up con-
trollers and consoles to ease the lockdown blues
by stealing cars, hunting zombies, and planting
trees in villages full of talking animals. The indus-
try’s second-quarter U.S. sales jumped 30% from
the previous year, to $11.6 billion, according to
researcher NPD Group Inc. Shares of Activision
Blizzard Inc. are up 46% this year, Nintendo Co.’s
profits quintupled from April through June, and
Roblox—a game platform where kids hang out and
teachers sneak lessons into the mix (page 21)—
climbed from 115 million users in February to
150 million in July. Electronic Arts Inc., maker of
games such as Madden NFL and FIFA soccer, says
it added “tens of millions” of new players during
the outbreak. “This is an unprecedented time, and
it was an unprecedented first quarter for our busi-
ness,” Andrew Wilson, EA’s chief executive officer,
told investors on July 30.
The boom has supercharged what was already
an extremely lucrative business. Gaming compa-
nies are developing franchises along the lines of
Hollywood’s endless streams of sequels, but games
can rake in far greater sales than even the biggest
films—with no need to fret about bruising actors’
tender egos. “The biggest video games are much
more profitable over time than any movie that’s
ever been made,” says Matthew Kanterman, an ana-
lyst with Bloomberg Intelligence.
In the lockdown, at least one player has been
emboldened to take on the behemoths of tech.
Epic Games Inc. is battling Apple Inc. and Google
over the 30% cut the companies take from game
sales on their platforms. Epic says the fee—which
has its roots in 1980s Japan and the era of chunky
cartridges and primitive consoles—is outdated and
unfair. Epic’s Fortnite, estimated to generate more
than $1 billion a year from in-game sales of cosmetic
extras, has given players the option to buy add-ons
directly. That cut out Apple and Google, prompt-
ing them to remove Fortnite from their app stores.
Even before the pandemic, 2020 was primed to
be a blockbuster year, with a host of top-line titles
teed up. And this fall, Sony Corp. and Microsoft
Corp. will release their powerful next-generation○ The video game industry
has prospered in the pandemic.
The fun comes at a costTHE BOTTOM LINE Things have never been better for video game
makers, with U.S. second-quarter sales up 30%, but the industry
must address persistent concerns about sexism and fairness.consoles, the PlayStation 5 and Xbox Series X,
heralding richer graphics. For gamers that’s a big
deal, as these generational leaps come around only
about once every seven or eight years, so they’ll
shape the gaming landscape for the next decade.
Sony will continue its strategy of exclusive games
such as The Last of Us Part II, a post-apocalyptic
action thriller with cinematic production values that
has filled the gap left by shuttered movie theaters
(page 24). Microsoft is going all-in on Xbox Game
Pass, a subscription service that’s like the Netflix
of gaming, offering access to hundreds of titles for
$5 to $15 per month (page 19). That’s good for the
software giant, because the next installment of its
Halo franchise has been delayed, leaving the new
Xbox without a flagship attraction. “Microsoft is
aware that the most effective weapon in their arse-
nal is the Xbox Game Pass,” says George Jijiashvili,
an analyst at research company Omdia, who
expects Sony’s new console to outsell the Microsoft
machine. “If they can’t compete on hardware sales,
they need to compete in other areas.”
Yet while the industry is among the most
sought-after places to work these days, many peo-
ple who make games feel exploited and discrim-
inated against. Across the industry, coders and
designers describe a frat-house mentality and
hostility toward women. So-called crunch—toiling
nights and weekends with little or no extra com-
pensation for weeks or months—remains a sys-
temic problem. And the industry still embraces
employing “permatemps,” who work alongside
full-time colleagues but lack benefits and job secu-
rity (page 18).
Although video game makers have undeniably
prospered in the pandemic, it has taken its toll on
productivity and will slow the arrival of titles due
this fall and into 2021. With the shift to working
from home, almost half of developers say they’ve
been spending more time in front of their screens
but getting less done, according to a July survey by
the Game Developers Conference. And a third of
participants said the outbreak had delayed some
titles: In addition to Halo Infinite, dozens of releases
have been postponed. If the delays keep getting
extended and the recession eats into consumer
spending, the buoyant mood might grow more
somber. “The uncertainties and unknowns could
give a Tolstoy novel a run for its money,” says NPD
analyst Mat Piscatella. “We have the pandemic, the
election, unemployment—the list goes on and on.”
—Jason Schreier, with Dina Bass“The biggest
video games
are much more
profitable over
time than any
movie that’s
ever been
made”