Cheer for This Year's E3 Lineup — Oh, and New Ways to Distribute and Monetize Games Are Reshaping the Industry's Future

Players consume games. Maybe the subject and the object on either side of "consume" need to swap places.

From a leaky tent at CES to a week-long spectacle at the Los Angeles Convention Center, E3 has reached its twenty-fourth year. Video games, once a party for a small subculture, now take in $121.7 billion a year, leaving the film industry far behind.

Games no longer have to try to fit into mainstream culture. They are already inside it. Fortnite, the viral hit with 125 million players, is itself a mark of what's popular; everything it touches catches fire at once, gets a round of coverage from every major outlet within 24 hours, and is treated in public roughly the way "Trump" is.

Viral games, the global rise of livestreaming platforms and the surge in viewers have all lifted one another; mobile revenue, pulled along by Chinese developers, now accounts for 46% of the industry's total, and its profits have made publishers worldwide sit up; the service model, borrowed from free-to-play mobile games, has spread, and making money over the long haul pays richly. In its culture, its distribution and its business models, an industry that draws both money and eyeballs has been pushed to the center of the world.

With everyone watching, E3 — which shows off the industry's shiniest side — is no longer just the yearly moment for players to let off steam. Investors are looking for business models that earn more without setting off a fierce backlash. More bystanders are starting to follow what games are coming in the next few years (games they can watch in a streamer's channel), and they, too, are the audience for the show publishers are staging. As single-player games turn into online and mobile games, the question of who can win over more of those bystanders — and, in the future some in the industry imagine, where "cloud gaming replaces consoles," who can win over more cloud gamers — has become close to the deciding battle among publishers.

So a show staged for everyone really does concern everyone. If the show needs one keyword, it is probably getting as many people as possible to take part — engagement.

What Happened to Last Year's Buzzwords

This time in 2017, people were talking about games as a service and the monetization that comes with it.

That meant games without end (“We're trying to give consumers what they really want, and more of it, rather than create another game or do something different,” said EA CFO Blake Jorgensen), and loot boxes built to push spending ever higher ("The thinking behind it is that in this world, developers don't want players to consume games — they want games to consume players," said Brandan Sinclair, GamesIndustry.biz's North America editor).

The result was an unprecedented wave of anger from players. EA is still living under the cloud of a botched crisis response, and was crowned the worst of this year's show.

Reworking business models became the focus of the second half of last year. Governments looked hard at loot boxes that resembled gambling; a few passed laws restricting the practice, while most tightened oversight and warned parents. No publisher dared follow EA and make a similar call — they had seen what happens when you cross that line.

None of this means the future of service games and long-term monetization is bleak. It only means players will be led to accept the new reality in gentler, better-packaged ways.

For viewers of the press conferences, the flat stretches came when old games, updated year after year, ate up stage time; people had hoped the conferences would give more of it to new work, not to announcements that "such-and-such game has a new map." For attendees, the show floor felt short on novelty because so much of it went to service games that had launched months or even years earlier — Fortnite, PUBG, Rainbow Six, For Honor and the rest. "The life had been sucked out of it," as one account put it. New products always draw the most attention, but big publishers, driven by capital, can't help thinking about how to squeeze money out of the products they already have, more cleverly and more efficiently.

The core method is already plain: change the mechanics, add more devices, raise engagement, widen the audience, and take up as much of everyone's time as possible.

Forza Horizon 4 is now a service game — every driver you see is a real person. Fallout 76 has become an online game; it won't put a huge crowd in the same wasteland, but it is still "fully online." Assassin's Creed Odyssey is also built around service. The classic single-player game is changing one step at a time, getting players used to being online alongside dozens of others — in the future maybe hundreds, or tens of thousands — in a game that wants far more than 20 hours of your life. Games already known for their multiplayer campaigns lower players' guard by promising "years of continued updates" and "all updates completely free." Whether it's The Division 2 or Battlefield V, they want you to put years into the game, to make it part of your life, and, in turn, your odds of becoming a daily paying customer rise sharply.

Classic single-player franchises are also picking up new users through mobile versions. The mobile demos for Command & Conquer and The Elder Scrolls were hard for some longtime fans to watch, but those fans are not the core audience the developers are after. Turning smartphone users into your own users is always the easiest way to make money. Mobile users aren't so hard to please, the market's earning potential has no ceiling, and publishers can push their brands past the limit they hit when their name was known only inside the player community.

A few other things happened this year, then. Steam launched Steam Link, which pushes games to Android. Epic Games CEO Tim Sweeney kept repeating that Unreal Engine would let mobile games match console blockbusters. And what publishers took from the Switch — a machine you can play anywhere, any time — was not to build handhelds but to move faster toward phones. None of this means game quality will fall across the board as the industry shifts to mobile. It only means publishers are opening new channels for getting users and getting paid.

There's nothing wrong with earning back your costs, but you had better hope they still put as much effort as before into making something new.

Two companies, for now, have not changed course.

Sony is still pushing the exclusive single-player games it takes pride in. It announced no new titles at this year's E3 — reportedly saving them for other events later in the year — but the quality of its four exclusives held high. On the goodwill it has built up, Sony can afford the luxury of "a good game is guaranteed to make money." The industry believes that luxury of big investment, big return and no greed belongs to Sony alone, and that any small studio trying the same road today may be chasing a false hope.

CDPR is the other exception. Cyberpunk 2077, single-player and shown only behind closed doors, drew unanimous praise from the press. The studio even left an Easter egg in the trailer: "w3 134v3 9r33d 2 0th3r21" — we leave greed to others.

What to Expect in This Console Generation's Final Years

In the last stretch of this console cycle, competition has finally come back to the games themselves, rather than the hardware upgrades most players don't need unless they truly need them.

The other benefit of a generation's late stage is that developers try to wring the last of the performance out of current hardware and finish their work before the next machines arrive. So late does not mean decline. It means more good games arriving at once.

Part of the reason this was the richest E3 in years is that Microsoft looks like it wants back in. Since the Xbox One era began, Microsoft has been rolled over on content by its rivals one round after another; after deciding to put serious money into its games division, it has not only become far more visible in the gaming press, with news every week, but has also made real moves. The most important thing at Microsoft's conference was not the roughly 50 game trailers, but the news that it had bought five studios, among them the much-admired Ninja Theory.

This is close to the road Sony took. When Sony couldn't keep up with the Xbox 360 in the PS3 era, it turned to investing in and incubating studios. Those studios have paid it back beyond measure this generation, and Sony's own reputation rose sharply with them. Microsoft's purchases will likewise show little in the short term, but two or three years from now, games carrying the Microsoft first-party label should see a small boom.

For consumers, a market with competition is the best market, because neither side can let its guard down.

Within three years we will also watch another change take shape: do we need more consoles at all? Does exclusivity still mean anything?

The next word to be tied to games as a service will soon be "cross-platform." In the recent Fortnite affair, Sony locked Epic accounts that had been used on a Switch, and would not let accounts used on a PS4 log in on Switch either — and took a beating from players for it. Microsoft, which since last year has been working to erase the effect of "exclusivity" by making most of its formerly console-only games playable on Windows 10 ("We have billions of gamers, but we can't sell billions of consoles. The console business only has a market of a few hundred million people; console games only appeal to players who have a TV at home and want to play games on it," said Phil Spencer), used the moment to voice its disappointment in its rival and its hopes for a cross-platform future.

People who back cross-platform play generally hold that platforms shouldn't be walls, and that players on different devices should have the right to play together in the same game.

That view connects to an older one — that exclusives, which cut down the audience, are bad for the industry — through a technology many think will mature soon: cloud gaming, which runs on remote servers, so the user at the other end needs no download, no installation and no particular hardware, only a connection.

As far back as 2012, Phil Eisler, general manager of Nvidia's GeForce cloud gaming division, argued that the next generation of consoles would be the last, and that the cloud would become the main way people play. It didn't happen this generation, but the idea has successors. EA CEO Andrew Wilson said at his conference that cloud gaming plus paid subscriptions is the future, and that high-end PCs and consoles are unnecessary. Ubisoft's Guillemot said flatly, "one more console generation and we'll all go to the cloud." Spencer thinks along the same lines: Microsoft's games have already broken the line between the Xbox and Windows 10, and PC players are treated as the group most worth watching.

At best, cloud gaming and subscriptions mean anyone can get any game on any device, faster and more easily — nothing like the console era, where you pre-order and then wait for a download or a package before you can start. It also means people will expect to play everything in the cloud, and platform exclusives will look extremely unfriendly, their influence weakened further. Exclusives existed to drive console sales and to reward loyal users. But once people no longer need consoles, and exclusivity is seen as an obstacle, how many studios will still want to build a game for a single platform? The future of exclusives has turned uncertain.

The cloud naturally also means service games become more of a matter of course, and microtransactions more convenient — a point publishers generally leave out when they describe their cloud future to the press. As with other digital subscriptions, the game is no longer something you own; it's a product you rent by the month, and to be able to open it at any moment you must stay a member forever. Its distribution and monetization suit publishers almost perfectly: a low hardware barrier reaches the most people, subscriptions give a steady revenue model, players become lifelong users, and the odds that they keep spending on a single game go up.

That future is still some way off, but people are all but certain it will arrive; they believe that whoever starts building out the cloud first will hold the upper hand in the next generation.

One surprise here is that prophesying the future early has never been popular with players before. In past years they joked that E3 conferences were collections of empty promises: publishers liked to dangle trailer after trailer and logo after logo, and there was little actual gameplay on stage. This year, though, the Sony, Nintendo and Square Enix conferences, which gave most of their time to gameplay, were the ones that got criticized. The public was disappointed not to see trailers and logos for new blockbusters, and didn't care that these companies were spending long minutes demonstrating real games people could play soon. What excited them instead was The Elder Scrolls 6, which no one knows has even entered development, Bethesda's new IP Starfield, or Microsoft's word that it is building a new console. There is plenty here worth being excited about, but getting excited too early over promises that don't yet exist, while overlooking what you can actually play this year, is a restlessness worth worrying about. It's as if all the talk were pulling people's expectations toward a distant future.

"The industry and the press are too easily drawn to the shiny thing on the far horizon, getting excited about a next generation still years away, and that can throw the industry's economics out of balance... Microsoft's strategy is understandable; its disappointing showing this generation has left it no choice but to fan the flames of the next one first, and third-party developers should be especially careful about reaching for the next generation too soon," GamesIndustry.biz commented. "It's natural to look ahead at E3, but this year the focus tilted from blockbusters you can play within a few months toward a future we know nothing about, and that's a bit out of balance."

This year's E3 won on the strength of what it had to show, and we hope the good work keeps coming. But as one buzzword pops up after another, players are best served by keeping their own judgment.

Society Is Asking More of Games

Raising mainstream participation is a long-term goal, and it brings a challenge with it: the outside world no longer expects games merely to satisfy the desires of young boys, and mainstream demands will count for more every year. One of the most telling of those demands is inclusivity and gender balance. Meeting it is partly a response to some players waking up, and partly a commercial goal, as publishers try to reach and please a wider audience.

People still remember the Assassin's Creed Unity trailer at E3 2014, which drew the fiercest criticism of that year because not one of its four characters was a woman. At the time, the main series' lack of a playable female lead was also part of the record held against it.

Making the protagonist male by habit was not just an Ubisoft trait; it was the norm across the industry at the time. Women in games were designed as "helpers" and "lovers," to be rescued, or to die and move the plot along. Objectification was everywhere: armor with identical stats would be drawn as improbable lingerie, body language was full of sexual suggestion, and the camera — the player's line of sight — was forever drawn to breasts and hips. This straight-male design mindset once ruled the games business. Asked why female leads were so scarce, developers said that "animating female characters is more trouble." Maybe it really is more trouble, but the answer also tells you something else: without outside pressure, the norm rarely changes.

The 2013 Tomb Raider reboot and The Last of Us showed people what a female character treated fairly and normally could do, and Ubisoft, under public-relations pressure, gave the main series its first female lead in Syndicate, along with a new gender-selection system that let players switch between the brother-and-sister protagonists. Female characters had reached a turning point.

Players five years ago would never have guessed how strong the presence of AAA female leads would be at this year's E3. Assassin's Creed Odyssey still has a gender-selection mechanic, except that this time you pick once and live with it. Wolfenstein: Youngblood, about slaughtering Nazis, has two female leads. The one who wipes out the enemy in The Last of Us Part II is Ellie, its only playable female lead — and the first female lead in a AAA game to come out as gay. Lara stays formidable in Shadow of the Tomb Raider. Even Gears of War and Battlefield, once treated as boys-only, are now carried by women.

Some players see this visible progress on gender balance as feminists — and sexual minorities — encroaching on a male-dominated industry ("Feminazis again," "They're ruining games," "Why did she have to be gay?"). To the world outside, though, the progress is still too small.

Feminist Frequency, a feminist blog that tracks how gender is portrayed in pop culture, published a report showing that among the games shown at this year's E3, only 8% had female protagonists, against 24% with male ones. "The share of games at E3 with female leads has hovered between 7-9% for the past several years, with no progress at all this year."

The report carried some other figures too: of the remaining 68%, 50% in fact offered "multiple selectable characters," 5% were "gender-ambiguous" and 13% "gender-irrelevant." So the conclusion can be read another way — "right now there's a 76% chance you can play a game without a male protagonist."

Players are in fact living through an unprecedented freedom of gender choice, and no era has cared as much as this one about gender balance and the writing of female characters. Even in games where gender is optional, the big publishers used female characters in their E3 demos — Odyssey and Anthem, for example. The point of that answer is to break the stereotype this male-dominated industry has left with everyone else.

Just as worth noting: among the developers who came on stage at each company's conference to present their games, women were a small minority — 12 to 1 at Bethesda, 14 to 2 at Ubisoft, 7 to 1 at Microsoft. That matches the share of women working across the games industry as a whole (19%), and actual developers are rarer still, a figure near the bottom of every industry, innovation industries included.

Many historical factors and broader social ones produced this, not simply the "women just aren't interested in games" that people assume. Women expect male-dominated companies won't readily hire them, so they decide not to waste anyone's time applying. Women generally apply for a job only when they believe they are 100% qualified for it, while men apply at 60%. The scarcity of women at the interview stage and in senior roles makes their prospects look thin. And the industry's long history of catering to male players makes women hesitate before joining.

As the player base grows and the industry wakes up to how few women it has, projects are under way to balance the ratio and encourage women who want to work in games to do so — "Putting the G into Gaming," for one. More female developers means women are given a fair chance both on screen and off; and the neutral course mainstream developers are steering suggests a future in which the industry keeps moving toward balance.

This is an unavoidable step in games being accepted by a broader public. To take in an ever-larger audience, the industry has to be ready to drop the traits that defined it for a very long time. "Responsibility" was never part of it, but the word has clearly become part of what the mainstream public now expects of it.

Cover image from Cyberpunk 2077 and Death Stranding.