Weekly Gaming Reports Recap: December 18 - December 22 (2023)
Chinese gaming market recovered from 2022 decrease; console sales in Europe in November increased by 59% thanks to PS5; Asia & MENA together will bring $89.4B this year.
Editorials of this week:
[Editorial] Lethal Company: The indie success of the year
Reports of this week:
GSD: Game sales in Europe declined, but console sales soared by 59% in November
Ampere Analysis: PlayStation and Xbox players spent almost 1.5 billion hours in Fortnite in November
The BIG PlayStation leak
Niko Partners: The volume of payments in the largest gaming markets in Asia and MENA in 2023 will amount to $89.4 billion
GameRefinery: Trends in casual and midcore games in November 2023
CGIGC: The Chinese gaming market recovered in 2023
[Editorial] Lethal Company: The indie success of the year
Indie developer Zeekerss surpassed Baldur's Gate 3 in Steam ratings; his game sold 4.5 million copies. Let's delve into the game, who made it, and the results it achieved.
What is Lethal Company
Lethal Company is a cooperative horror game where teams of 4 people must gather loot while simultaneously trying to avoid monsters and traps. The earned money can be spent on various upgrades, as well as the opportunity to travel to other planets with better loot.
The success of the game is largely explained by the abundance of viral (often scary and simultaneously funny) moments. "The game continually has an answer to the question - 'Will this thing kill me?' The answer is positive," - tells one of the reviews on Steam.
In Lethal Company, the rooms are randomly generated (and with a recent update, not only them), making each gaming session unique.
Who made Lethal Company
The game was made by one person - Zeekerss. This is not his first game.
In July 2020, Zeekerss released It Steals - a pixelated single-player horror game (98% positive reviews); in April 2021 - the horror game Dead Seater (92% positive reviews); in March 2022 - the horror game The Upturned (99% positive reviews).
Although none of the games came close to the success of Lethal Company (It Steals sold the best - around 35-40 thousand copies), Zeekerss built a player base familiar with his work over the years. The released games laid the foundation; Lethal Company is not a random "overnight success."
Zeekerss came into game development from Roblox. He joined the platform in November 2011; over 11 million people have played his cards. Now, at 21, Zeekerss has been making games since he was around 10, as the first videos on his YouTube channel date back to 2012.
Game success
Lethal Company currently has a 98% positive review rating on Steam, based on 149.6 thousand reviews. People love the game - the approval level is higher than Baldur's Gate III (95.82% positive reviews).
The game's peak CCU is 240k people (more than The Finals, for example). The average peak CCU per day is around 180k users, and the minimum is 45k users.
Lethal Company was released on October 24 this year - since then, the game has gradually gained popularity. The peak came on December 3, but attention to the game has not waned since.
As of now, Lethal Company is in fourth place on Steam. The game is positioned after Counter-Strike 2; DOTA 2; PUBG: Battlegrounds. It has surpassed the popularity of GTA V; Apex Legends; The Finals; Baldur's Gate III; and Call of Duty: Modern Warfare II/III (Warzone).
According to VG Insights, the game has already sold 5.4 million copies. This translates to $43 million in revenue (excluding Steam commissions and taxes).
The game has excellent potential for streaming platforms. Top streamers choose the game, and the peak number of viewers since the release has reached 190 thousand. The average daily peak viewership for Lethal Company streams is around 70-80 thousand people.
An active community is forming around Lethal Company - on Reddit, for example, in the r/lethalcompany subreddit, there are over 51 thousand members. They create videos about the game, discuss lore, and share creativity - all of which work to the game's advantage.
Zeekerss is actively working on project updates - two major patches have been released since the game's launch.
What explains the success?
To attribute success solely to luck - considering the developer's experience - is not appropriate. To make Lethal Company what it is, Zeekerss needed tens of thousands of hours spent developing various games for Roblox and Steam. Therefore, first and foremost, we must acknowledge persistent hard work and dedication.
An important factor in the game's success was the existing audience on Steam, which was able to "pick up" the project in its early stages. Most indie developers lack access to marketing tools or the skills to use them, so it is critically important for your audience to become your marketing agents.
With Lethal Company, this happened, in part, because the game incorporates many components of other viral projects. Firstly, the game is cooperative, prompting users to share it with friends. Secondly, Lethal Company is scary, funny, and absurd all at once. This appeals to both players and streamers. Thirdly, the game's locations are randomly generated, making playing the game interesting the first time as well as the hundredth.
Zeekerss spent a whole 11 years working for his "luck." And this is a good lesson for all indie developers. Sometimes success comes quickly, but it is more of an exception than a rule.
GSD: Game sales in Europe declined, but console sales soared by 59% in November
GSD reports only the actual sales figures obtained directly from partners. Major publishers, such as Nintendo, do not share information on sales of digital copies, for example.
Game Sales
In November, 24.6 million copies of games were sold in Europe. This is 20% more than the previous year, but only because November accounted for 5 weeks instead of 4. When comparing 4 weeks, sales declined by 2%.
Call of Duty: Modern Warfare III debuted as the top-selling game. However, the initial sales (for the first month) of the new installment were 33% worse than those of Call of Duty: Modern Warfare II.
EA Sports FC 24 sold 3% better than FIFA 23 during the same period the previous year. The game received significant discounts during Black Friday.
Sales of Hogwarts Legacy during Black Friday soared by 509%—two reasons: the release on Nintendo Switch and discounts. Most likely, by the end of the year, Hogwarts Legacy will only be surpassed by EA Sports FC 24 in Europe.
During Black Friday, 7.8 million games were sold. This is 1% less than the previous year.
Console Sales
1.3 million consoles were sold in Europe in November. This is 59% more than the previous year.
All the growth came from the PlayStation 5. Console sales in November grew by 376% compared to the previous year. Nintendo Switch declined by 35% compared to 2022, and Xbox Series S|X fell by 26%.
2.56 million accessories were sold in November. This is 13.8% more than the previous year. DualSense, as always recently, is the sales leader.
Ampere Analysis: PlayStation and Xbox players spent almost 1.5 billion hours in Fortnite in November
Growth by October was 146%, from 600 million hours to 1.478 billion hours.
Such rapid growth is attributed to an update that brought back the original Fortnite map from the first season.
45% of all Fortnite users in November did not play the game in October. This means that Epic Games managed to bring back a significant number of players even before the release of the Big Bang update.
The closest competitor in November on consoles in terms of hours played is Call of Duty: Modern Warfare III (Warzone 2.0) with just under 600 million hours in total.
Interestingly, the most popular Netflix series, The Night Agent, had 133 million hours of viewing per month in the last half a year. Fortnite had 630 million hours on consoles alone.
The BIG PlayStation leak
Disclaimer: I do not support what hackers did. The guilty party must face its punishment.
However, the information went public. Want it or not, hide it or not, it’s there. And the leak is massive; every gaming website is writing about it. Unfortunately.
My take is that as far as it leaked, we can try to learn from it. The industry learned a lot from the Epic vs. platforms case and the Microsoft x Activision Blizzard process. Numbers here might be helpful for game industry peers from the evaluation, benchmarking, and general business understanding perspectives.
Insomniac Games Financial Results
Throughout its existence, the studio has earned over $1.7 billion. Ratchet & Clank is the only (new) game from Insomniac Games that hasn't yet turned a profit. It sold 2.2 million copies, costing $81 million to develop. Revenue from the project so far is $73 million, with $8 million needed to break even.
The development of Marvel’s Spider-Man 2 cost the studio $315 million (likely including marketing). The company expects to sell 10.5 million copies (a quarter of the plan is already complete) and earn $390 million.
The remaster of Marvel’s Spider-Man cost the studio significantly less - $39 million. The studio sold 4 million copies and made $50 million.
The development of Marvel’s Wolverine will cost the studio $305 million, with plans to release the game in 2026.
Marvel License Terms (X-Men)
Insomniac Games commits to spending at least $120 million on developing each licensed game, with an additional $30 million for marketing.
All projects must be released by 2035. Until December 2035, Marvel cannot release separate X-Men universe games, but characters can appear in Marvel games, children's projects, and some games from the 1990s.
Marvel will receive 9 to 18% of net sales from digital versions of IP games; 19-26% of net sales of physical copies and DLC; 35-50% of the wholesale cost of the physical bundle.
If PlayStation doesn't sell a total of 6 million copies of the IP game on PC and consoles in the first year, the contract may be terminated. If termination is initiated by PlayStation, it must pay a $9 million penalty and all unpaid guarantees. If termination is initiated by Marvel, PlayStation retains the right to operate games released before termination.
Insomniac Games Plans
The company plans to release a Venom spin-off in 2025.
Marvel’s Wolverine is set to release in 2026, with 173 people working on the game and resources from friendly studios being utilized.
The studio is already prepared to develop Marvel’s Spider-Man 3, scheduled for the end of 2028.
Despite the previous part's unsuccessful sales, there are plans to release Ratchet & Clank in 2029.
Marvel’s X-Men is planned for release in 2030. Although several roadmaps have leaked online, one of which includes a release in 2029 - and without a new Ratchet & Clank.
The company plans to release several new IPs.
Marvel’s Spider-Man: A Great Web, a multiplayer project in the universe, was in development, described by developers as “Marvel’s Spider-Man meets GTA Online.” The project's development seems to be on hold.
However, the company is not abandoning multiplayer ambitions. Multiplayer modes are expected in Marvel's Spider-Man 2, Marvel's Wolverine, and Marvel's X-Men.
PlayStation Game Sales
FY’21 ended in late March 2022; FY’20 ended in late March 2021.
Cumulative sales of Bloodborne exceeded 7.4 million copies, with 41% of sales coming from digital versions.
The Last of Us: Part II sold 10.3 million copies in FY’21, worse than Marvel’s Spider-Man: Miles Morales. 39% of the game's sales were digital, bringing in $447 million.
Ghost of Tsushima sold 7.6 million copies in FY’21, with 49% being digital, earning the company $397 million.
Marvel’s Spider-Man at the end of FY’20 was Sony's best-selling game, with almost 22.7 million copies sold and $827 million in revenue.
Close behind were the first God of War (21 million copies - $597 million revenue), Horizon: Zero Dawn (19.3 million copies - $481 million revenue), and Uncharted 4: A Thief’s End (18.6 million copies - $585 million revenue).
PlayStation Games sales on Steam
Data is current as of February 2023.
Horizon: Zero Dawn is the top-selling game on PC, with over 3.3 million sales.
God of War performed well (2.5 million), along with Days Gone (1.7 million) and Marvel’s Spider-Man Remastered (1.3 million - but in just six months).
Sackboy: A Big Adventure is the main disappointment among all PlayStation games on PC, with only 62.9 thousand copies sold.
The leak claims that Sony approves PC ports via email, with the condition that porting should cost less than $30 million.
PlayStation and the Industry vision
The company sees significant risks in the deal between Microsoft and Activision Blizzard. They believe the deal will help Microsoft grow its influence in the GAAS segment on PC & Console, mobile devices, and compete with Apple and Google in the mobile store market.
Sony is seriously considering the threats posed by the Microsoft and Activision Blizzard deal. The key concern is losing Call of Duty and impacting the PS+ audience, which brings in approximately $1.5 billion annually.
Sony acknowledges that Microsoft is far ahead in mobile and PC directions, with Japanese company having nothing to counter competitors.
Sony doesn't believe that AAA games in a subscription model can cover development costs and considers this business model unsustainable.
Sony believes there is no unified approach to development on PC, consoles, and mobile devices. Differences in form factor and computer power prevent using the same approaches.
The company plans to continue focusing on the development of paid AAA games, considering it the main factor in its strategy.
Also
It appears that 40% of the budget for Horizon: Forbidden West went to outsourcing. In the case of Horizon: The Burning Shores, this is 21%, assuming the slide is read correctly.
Niko Partners: The volume of payments in the largest gaming markets in Asia and MENA in 2023 will amount to $89.4 billion
The company considers the markets of China, India, Chinese Taipei, Japan, South Korea, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam (Asia); Egypt, Saudi Arabia, and the UAE (MENA-3).
$78.5 billion in revenue in the mentioned regions comes from in-app purchases (IAP payments). This accounts for 87.8% of the total volume.
Sales of games distributed through the Premium model brought in $7.8 billion in 2023. Subscriptions contributed an additional $3.1 billion.
❗️ Niko Partners does not account for advertising in the overall revenue.
Price is the biggest barrier for players from Asian and Middle Eastern countries. 39.3% of non-paying users on mobile devices and 44.3% of non-paying PC users identified this factor as key.
62.3% of players from the considered countries bought a game on one of the platforms in the last 12 months.
30% of users in Asia and the Middle East purchased a monthly subscription in the game. If considering offers within other services (such as Twitch Prime), the percentage of users increases to 51%.
30% of mobile gamers in Asian and MENA countries named in-game advertising as the worst aspect of the games they spend time on.
In India, 7 out of 10 people play Real Money Gaming (RMG) projects. These are games where you can play for real money.
GameRefinery: Trends in casual and midcore games in November 2023
Casual Game Trends
GameRefinery notes the growing popularity of the Social Win Streak mechanic. Users are grouped into large teams (usually around 100 people) and given several tasks to be completed consecutively. If a task is not completed, the player is eliminated from the competition (but can return after some time). This is a casual interpretation of the Battle Royale concept.
The second popular mechanic is the Digging Minigame. Through the main game, the user gains access to a pickaxe (or equivalent) to dig up the game field. The minigame first appeared in June in Royal Match; in November, the mechanic was borrowed by Monopoly GO! (Egyptian Treasures) and Chrome Valley Customs (Crusher Carnage).
Midcore Game Trends
Paywall events. In Garena Free Fire, the Luminous Pass has been launched. Its concept is to take hard currency from the user (100 diamonds), in exchange for which the player receives 7 days of login rewards, exclusive daily tasks, and the opportunity to spin the wheel of fortune after each match.
A similar mechanic was applied by the State of Survival in collaboration with Resident Evil. To access new content, players need to unlock Chris Redfield through the gacha system. One attempt per day is free, but the balance is set up in a way that you won't get anything for free. You need to purchase hard currency.
The latest example of locking part of the content in F2P is in Last Fortress: Underground. The Pin for Fun event is only available to those who have purchased the Chillout Bar building (which is sold in a bundle for $79.99).
Not a trend but a noteworthy event: in League of Legends: Wild Rift, a new 2v2 mode has been released. Four teams of two compete on the field, each with a limited number of respawns. The roster is also limited.
CGIGC: The Chinese gaming market recovered in 2023
The revenue of the Chinese gaming market for the year 2023 is expected to reach 303 billion yuan ($42.6 billion). This is 13% higher than the previous year, as reported by the CGIGC association.
This marks the first year in China's history where the revenue exceeded 300 billion yuan.
The number of gamers in China increased by 0.61% to reach 668 million people.
Local developers earned 256 billion yuan in China, which is 15% more than the previous year. And 84.4% of the entire gaming market is covered by local companies, which makes it challenging for projects from other countries to compete, not only due to licensing difficulties.
However, the revenue of Chinese companies abroad fell by 5.65% to $16.3 billion. One of the reasons is the increased regulatory measures in countries like India.