May 21, 2025 • 27 mins
With 'The Minecraft Movie" in striking distance of the billion-dollar mark at the global box office, there's no better time to check in on the state of the videogame industry, with an emphasis on its intersection with Hollywood. Kaare Eriksen, author of a recent Variety Intelligence Report on these subjects, tackles everything from the shadow Trump-era tactics could cast over Nintendo's Switch 2 console to the shift of "Grand Theft Auto 6" to 2026.
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Episode Transcript
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Speaker 1 (00:07):
Welcome to another episode of Strictly Business, the podcast in
which we speak with some of the brightest minds working
in the media business today. I'm Andrew Wallenstein with Variety
Intelligence Platform. Lots of interesting developments in the video game
business lately, which makes the timing of this month's special
report from Variety Intelligence Platform on the state of the
(00:28):
industry especially good timing. On this episode, we'll talk with
the author of the report, my colleague Corey Erickson, who
will tackle all the biggest issues currently at play in
the world of video games. Stick around and we are
(00:53):
back with Corey Erickson, author of a new report from
Variety Intelligence Platform on the state of the industry. Corey
plenty to get to.
Speaker 2 (01:02):
Uh.
Speaker 1 (01:03):
Given there's been a lot of activity in the past
few months, I would say we'd be remiss in not
starting with some pretty earth shattering news that came in
a few weeks ago with the move of Grand Theft
Auto six. Why does this matter so much?
Speaker 2 (01:19):
This matters so much because this is a game that
has essentially been in the works for over a decade,
you know, from inception to this home stretch last year
of the game's production. It comes from Rockstar, a label
to Take two Interactive and the last iteration of the game.
Grand Theft Auto five, despite being released in twenty thirteen,
is still going strong through its Grand Theft Auto Online mode.
(01:40):
You know, this is a game that is one of
the biggest live services. It's up there with Fortnite, Roadblocks Minecraft,
but it's also as much of a Triple A single
player experience. So this game alone encapsulates, you know, pretty
much every corner of the Triple A console market at
(02:01):
a time when the Triple A industry isn't doing so well.
There's been a tremendous amount of layoffs over the past
two years. Last year alone was more than fourteen thousand,
and it's get taking longer and getting a lot more
expensive to maintain, you know, a fresh pipeline of Triple
A games, while also you know, the price points of
(02:23):
these games are going up, you know, even further than
they have before. We know, Nintendo Switch To is coming
out in June, and you know their flagship Mario Kart
title for that has gone up to eighty dollars as
a price point, which is sort of a new normal
for the industry after going up to seventy dollars four
years ago, So all the speculation about Grand Theft out
(02:44):
of six, you know what it's going to cost, that
still has to be figured out, and the triple A
causal industry is sort of hinging on. You know, this
game finally coming out and you know, bringing some more
energy and hopefully investment back into that space.
Speaker 1 (03:00):
So it moves out of twenty five into twenty six.
What does this mean for the business in twenty five
because you know, this was by all accounts going to
be the Titanic for a dated reference for the video
game business, or maybe Avenger is a better example. This
was going to be the biggest best seller. So what
happens to twenty twenty five in terms of results for
(03:21):
the business lacking this massive hit.
Speaker 2 (03:24):
Well, the immediate upside is, you know, the sheer reality
that now some publishers can breathe a bit easy and
schedule games for the fall that was you know, the
expected timeline for GTA six. So with that gone now
it does get a little bit easier to schedule what
you know there is to schedule. But from a wider
market standpoint, you know, this was a game that was
expected to bring in like two to three billion within
(03:46):
its launch yer, and that's now two to three billion,
you know, off analyst expectations for how well you know,
the global video game industry and especially consoles would do
this year. They're still switched To of course, and Take
two have four titles planned to launch on switch To,
which you know is showing some more third party expansion
into that side of the console industry. But all in all,
(04:09):
you know, this is going to be yet another year
where hopes of you know, a Triple A comeback are
being lessened slightly in light of the fact that GTA
six is you know, now another year away. It's such
a big title too, that it was undoubtedly going to
help sell you know, xboxes and PS fives, especially the
(04:31):
PS five Pro. You know, if there's one game that
was going to be a use case for expensing that
much on you know, a newer PS five model, it
would have been GTA six. So without a year away,
it's going to be a bit harder to sell you know,
the more high end consoles.
Speaker 1 (04:46):
Speaking of which, the other big shoe to drop, although
this dropped as expected, was switched To did come out
this year, the going to come out sorry, and so
in terms of the the emergence of that product, talk
about why that is such a big deal.
Speaker 2 (05:05):
That's a big deal because the Switch in and of
itself was such, you know, a significant redefining moment for
a Nintendo after they hit a snag with the WU
in the wake of the Nintendo We success in the
two thousands, so Switch launched in twenty seventeen really helps
them get back on track. It's both a home and
handheld console, so they were able to sort of tackle too,
(05:28):
aspects of the market that they've always been pretty strong in.
And since then it's you know, been a top selling console.
I believe it's the number three overall in lifetime sales.
So even though you know, eight years in the life
cycle is winding down in favor of the Switch to model,
it's ending on a pretty high note. Because it was
(05:48):
also at a cheaper price point, the Switch was able
to become sort of, you know, a companion console to
PS five and Xbox owners, so it was able to
sort of evade the very tight comp petition between those
two brands by sort of releasing midway through their last
console cycles, as you know, an alternative, easier to afford option.
That however, the Switch to is going to sell for
(06:11):
four fifty, which was a little bit of a point
of controversy. People weren't sure if that was in light
of you know, this complicated tariff situation with the current
presidential administration, and you know, obviously Mario Kart going up
to eighty dollars. This is going to be a more
expensive life cycle for the switch To. So we'll see
if they can really power through that and maintain the
(06:33):
strength they built on the switch.
Speaker 1 (06:35):
It was interesting to see the name of the switch
emerging in all the coverage of the Trump administration tariffs
in the video game industry in general being impacted by
the tariffs. So walk us through what the impact is
for switch To and the industry at large.
Speaker 2 (06:53):
The impact is, you know the fact that many most
of these consoles, you know, they are put together as
in places like Taiwan. You know, they all depend on
semi conductor chips, which was able to power through you know,
a year's long shortage in the immediate aftermath of the pandemic.
So you know, to get back on track with semiconductors.
(07:14):
Only for this to happen is certainly no help. That said,
you know, switched To their sticking with the four to
fifty price point. There was a little bit of concern
when they backed away from immediate pre orders that they
might raise it even higher, but they stuck to the
price they announced, and we'll see, you know, how consistently
they priced new games at eighty dollars like they are
with this Mario Kart World launch title. What's been a
(07:38):
more i think distressing impact for gamers in the industry
alike is the fact that Xbox actually raised the price
of its consoles in the wake of this tariff situation,
which is pretty unprecedented, especially when you look at how
Xbox Series and PlayStation five launched in twenty twenty, so
that's four or five years into their life cycles. That
(07:59):
one brand is actually making its systems more expensive. So
that paints a pretty clear picture of how, you know,
dependent some of these companies are for overseas production of
their systems. Lots of gaming accessories too, are made overseas,
so that's another aspect of the market that it's likely
to be affected by tariffs.
Speaker 1 (08:17):
And by the way, you know, there used to be
it felt to me more buzz around the notion of
cloud based gaming, So could we potentially be moving into
an era where that becomes more viable.
Speaker 2 (08:30):
It's certainly something to pay attention to. You know, does
this become a bood for cloud gaming. It's hard to say,
just because there's still no definitive clear leader there. I mean,
Amazon has its Luna product, but that's not a product
they've ever pursued all that aggressively. Some a lot of
the online games they develop, you know, they released to
Steam for instance, instead of you know, making anything exclusive
(08:53):
to Luna. Obviously, Google Stadia was around for a few years,
but that winded down in twenty twenty two. If there's
one company I am very curious to see, you know,
how their own gaming operation does in light of all this,
in light of things getting you know, more expensive elsewhere,
it would be Netflix, just because that is a company
(09:13):
with three hundred million built in subscribers. If you know,
one in six Netflix subscribers engages with their games at all,
that's as many subscribers as PlayStation plus as for instance.
So you know, they're company that I think is well
positioned to potentially see a boost in the cloud side
of gaming as they work on you know, further integrating
gaming into you know, their web apps, just as much
(09:38):
as you know, their mobile apps.
Speaker 1 (09:40):
And yet I feel like from what I've heard about
Netflix to date in the gaming business, it's been kind
of a mixed bag changes of leadership, perhaps pivots, and
strategic direction. How would you grade what you've seen so far?
Speaker 2 (09:54):
I've seen so far as Netflix still has a lot
to prove. They got into games in twenty twenty one,
first through you know, their mobile games app. They've managed
to integrate those games a little bit better into you know,
the core Netflix app, so it's not all dependent on
you know, switching apps on your phone. And they're they're
sticking to a strategy where game releases are tied pretty
(10:15):
tightly to their movie and TV releases. For instance, this
new Black Mirror season, they made a game called Thronglets,
which is sort of, you know, an offshoot of one
episode that in and of itself, was a bit of
a sequel to the Bandersnatch interactive experience they did some
years ago. So they're they're keeping strong there. They haven't
(10:35):
been able to evade the situation with layoffs and studio
closures that you've seen through the more traditional side of
the industry. They did, you know, have a Triple A
team working on a multiplayer shooter, and that you know,
was sort of canceled and leadership shuffled around in light
of you know, wanting to not spend too much money
(10:56):
on a gaming experience they weren't even sure was going
to matter to the core subscriber base. They've indicated an
interest more so and really you know, interactive experiences that
are also very accessible for Netflix subscribers. They outline sort
of their vision at GDC in March, and they seem
really interested in trying to find, you know, new ways
(11:17):
to engage you know, groups of people sometimes even like
in the same physical space, you know, all playing a
game on their phones together. So they're looking more to
innovate on that front, so that way they're not sort
of falling into the trap of spending so much on
TRIPAA titles that take years to make.
Speaker 1 (11:35):
We're gonna take a quick break, but we'll be back
right more with Corey Erickson on the state of the
video game industry, and we are back with a discussion
on all things video games with variety intelligence platforms. Corey Ericsson,
(11:58):
he's the analyst to pend the latest I believe the
third or is it fourth edition of this video game
Industry report.
Speaker 2 (12:06):
I believe this is the third.
Speaker 1 (12:08):
Okay, well, make sure to check it out. And the
big focus this year, probably a little different from what
we did in previous years, was really looking at the
intellectual property impact the video game business, which also this
report was so well timed because it was on the
(12:28):
heels of the very successful release of a Minecraft movie.
Put the performance of that movie, which last I checked,
I don't we up to a billion yet? It seemed
like it was at nine hundred million most weeks ago. There.
Speaker 2 (12:41):
Yeah, it's still got a bit of a ways to go. Yeah,
so it's a nine to eleven million worldwide, so hopefully
it can get to a billion. But if it does,
you know, that's still Oppenheimer numbers for video game IP
and so far the only video game IP that has
on over a billion is the Super Mario Bro This
(13:02):
movie in twenty twenty three, which has a sequel out
next year. So we're seeing a pattern, I think, or
a pattern is starting to emerge that the games most
likely to perform that strongly at the box office are
also you know, the few games that have sold hundreds
of millions of units, you know, across their lifetime because
that belongs to i'd say a pretty small club. We
(13:25):
can pull up the numbers here, but you know, if
you actually look at what are by far the biggest
gaming properties by overall lifetime sales, Mario is at the top.
It's sold abound nine hundred million units to day through
you know, decades of releases at this point, and Minecraft
(13:46):
is you know, more around the three hundred million number.
Grand Theft Auto is also a very high performer in
that regard, and there's never been any kind of Grand
Theft Auto adaptation to date. So if there's going to
be any kind of ramifications of a Minecraft movie doing
so well, it is going to be studios obviously, you know,
salivating for the chance to take some ip, whether it's
Grand Theft Auto, whether it's called Duty or even Fortnite
(14:08):
in roadblocks and try to figure out a way to
do movies around those if it means, you know, they
could potentially bring out that big of an audience. Because
with the Minecraft movie, the reviews were not great. Track
tracking wasn't was also you know, below the expectations were
below what the performance actually ended up being, you know,
(14:29):
in the week's leading up to the release. So this
was really a case where the IP just completely was
its own thing and the filmmakers were able to sort
of make a film that was more of a tribute
to the IP than you know trying to do you know,
the Last of Us effect and create like a very
tight story driven experience around it. So it'll be interesting
(14:52):
to see how other studios, if they can get the
gaming companies to work with them in the first place,
are going to tackle sort of you know, the remaining
few that have yet to crossover.
Speaker 1 (15:01):
Yeah, and in terms of what is to still come
on the heels of Minecraft movie, in this report, you
pinpoint some of the projects that are worth noting. So
what's going to be on your radar in terms of
the next big IP adaptations.
Speaker 2 (15:20):
Well, right now, the second season of the Last of
Us is currently airing. It's got a couple of episodes left,
a shorter season this time than season one, and twenty
twenty three, HBO downgraded it from nine episodes to seven episodes,
which is you know, in line with other top shows
on HBO and Max. A similar thing happened with House
at the Dragon, So on the show's side, there is
(15:42):
you know a cost effect that they have to take
into account that I think is you know, going to
make it difficult for these adaptations to have big episode orders.
I believe Peacock's Twisted Metal, which also has a second
season due later this summer, that that is somewhere between
like ten to twelve episodes, although they're they're they're they're
(16:03):
shorter episodes, but that's a PlayStation ip that actually hasn't
been seen for some time on the gaming side, So
the fact that they've you know, been able to sustain
enough interest in that on a service like Peacock to
justify a second season, I think does speak to, you know,
the strength of some games that have been around for
a while, you know, still having some audience that can
(16:24):
be attracted to them. Going a bit further, Uh, it's
going to get busy on the film side again. In
Q four there's a sequels to Mortal Kombat and Five
Nights at Freddy's Mortal Kombat two should be interesting because
that was actually one of the films from Warner Brothers
that was helping to bring people back to theaters in
(16:45):
the first half of twenty twenty one. So if you
look at, you know, the global box office for that
it doesn't seem that impressive, but that was at a
time when you know, theaters were still down, they were
blocking off you know, every other row, So that film
did have enough interest and it's good to see how
a sequel is now going to do in a much
healthier film climate. But of course Five Nights at Freddy's,
(17:06):
as we know, was a big deal in December twenty
twenty three. You know, that made a little bit under
three hundred million, but off a typical, you know, modest
Blumhouse budget, so a very profitable film, uh with a
really young fan based behind it too. And this time
the sequel is going to be exclusive to theaters. It's
not going to do the day and day with Peacock
like the first one did, which is, you know, another
(17:27):
testament to how well that film did in theaters that
you could also watch it at home at Peacock for
free basically if you were a subscriber, and it still
brought lots of people out to theaters. So it's good
to see if these franchises can actually sustain themselves as
other film franchises have, because you know, if you look
at the macroview of you know, film franchises with billion
(17:47):
dollar films to count. There's still no gaming IP there.
Speaker 1 (17:51):
You know.
Speaker 2 (17:51):
The closest shot would be Mario next year. If that
film does as well as the first one, then that'll
be the first gaming IP to account more than one
billion dollar success at the box office. But otherwise there's
still a pretty long road to go there.
Speaker 1 (18:03):
And that movie is dated for April third, twenty twenty six,
next year. Also, I see Resident Evil, which you mentioned
September eighteenth, twenty twenty six, and yeah, as you cite it, also,
you know, still more to come in twenty twenty seven.
I just wonder though, whether the momentum we're seeing in
(18:24):
terms of this genre and its heat could one day
we mirror the arc of the superhero movies in the
sense that running so strong for so long, and yet
you could argue, as many have that by sort of
over exhausting just the sheer volume of content from that genre,
(18:48):
you kind of kill the golden goose.
Speaker 2 (18:51):
Well, I think the industry is viewing gaming IP as
supplemental to you know, the core IP at any given studio,
because they haven't given up on superhero movies at all.
You know, this is this year, We've got three MCU
movies instead of just one last year, and next year
an actual Avengers branded film will be back, so that
(19:12):
train hasn't stopped by any means. However, the studio is
recognized they can't solely depend on Superhero IP anymore. There
have been enough failures over the past few years to
really drive that point home, especially with some of those
movies getting really expensive. So gaming IP is a way
to I think, supplement the slates in a way that
you know isn't going to go super over budget, but
(19:33):
is also going to have some built in fan interest.
Resident Evil, which you mentioned that in twenty twenty six,
is particularly interesting because that's the second attempt to reboot
Sony's film series Resident Evil. They had six modestly successful
films with Miya Jovovich from you know, the two thousands
to the twenty tens, but then an attempt to reboot
(19:54):
it with this Welcome to Raccoon City film in twenty
twenty one, which is supposed to be you know, a
closer out oftion to the first two games, that didn't
really get off the ground at all. So now they're
rebooting it once again, but going with a sort of
newer director Zach Kreiger, who has some hype on the
horror side with twenty twenty two S Barbarian, which was,
you know, a pretty modest summer success for twentieth century
(20:17):
at the time. So he is the kind of director
where you're seeing studio shifter attitudes where they're not just
assuming an IP is going to work on its own,
they're actually really looking out at the talent pool in
Hollywood and being like this director has a very similar
approach to why people like this game, we should find
a way to you know, bring these together here. And
he also has a horror film called Weapons Out the
(20:39):
Summer for Warner Brothers, so if that film does well,
that'll even you know, better boost Resident Evil's chances of
success for Sony next year. It's also worth mentioning too,
that the second season of Fallout is actually returning as
soon as this December. Everyone was expecting that more for
twenty twenty six, just because you know, that's a hefty
budgeted show, has to spend a lot of time and
(21:00):
post it's a post apocalyptic environment. But Amazon recently announced
that that would be going in December instead, so you
can see even Amazon, which you could argue is in
a position to take its sweet time with all of
its shows because it's Amazon. They saw how well Fallout
did last year and said, you know, we got to
get this out asap.
Speaker 1 (21:21):
Another Franchi I said, maybe isn't necessarily readily associated with gaming,
Harry Potter. How has gaming played a role in rejuvenating
interest in that?
Speaker 2 (21:35):
That comes down to twenty twenty three's Hogwarts Legacy. That
was a game that was in development for Warner Brothers
for a pretty long time from a studio that actually
used to be owned by Disney until you know, Disney,
through Bob Buyger's leadership at the time, sort of divested
all of its video gaming operations because there just wasn't
enough interest within the company in that space. So that
(21:57):
studio Avalanche, they went over to Warner Brothers and it
took them a while, but they got, you know, an
open worlds Harry Potter game out the door, well received,
did tremendously well in the sales front. I think over
twenty million in sales, So the sales were so big
that they actually basically won the year in terms of
(22:17):
you know, the number one best selling game on consoles NBC.
That's a space that is reserved for Call of Duty's
annular releases pretty much every single year since two thousand
and nine. The only publisher that's ever broken that streak
is rock Star with Grand thea thout of five and
twenty thirteen, a red Dead redemption two and twenty eighteen.
So for Licensed Ipe to work its way in there
in twenty twenty three and sort of you know, one
(22:38):
up one of the most you know, powerful performing gaming
brands was pretty significant for Harry Potter, especially a year
after Warner Brothers had decided to wind down the Fantastic
Beasts prequels. They had the third one go in twenty
twenty two. It did not meet their expectations, and they
essentially scrapped two more sequels. So for Hogwarts Legacy to
(23:01):
do as well as it did, it, you know, it
was likely what gave Warner Brothers the confidence to very
quickly after finally greenlight this idea for Harry Potter show
that is now going to air on HBO. That's a
planned seven season show, you know, sort of treating the
source material as you know, one season per book. So
(23:21):
they're going you know, they've already announced casting for that,
but it is essentially a full TV remake of the
Harry Potter films and books. So clearly you can see
how gaming does inform that. But again, you know, it's
a little bit of a mixed bag because a year
after Hogwarts Legacy, Warner Brothers put out Suicide Squad Killed
the Justice League, which did not do well, resulted in
(23:41):
about two hundred million in a two hundred million loss
on their side, and since then they've you know, closed
a few studios at Warner Brothers, and the confidence Hogwarts
Legacy had built with you know, a figure like David's
Osla for instance, no one's really sure if that's much
there or anymore going forward. So, you know, as helpful
as video games can be to you know, an overall
(24:04):
IP situation, it's still a very complex industry, especially for
the Hollywood side of things, where cost cutting is so
top of mind right now.
Speaker 1 (24:12):
Yeah, and you they're probably one of the best parts
of the report you did was breaking down on a
company by company basis, whether they're the leaders in entertainment
or leaders in tech, all the different places where they play,
whether it's developer, publisher, IP license or you mentioned for instance,
you know, Disney's withdrawal. Is there any company, last question,
(24:36):
that you think people need to keep an eye on
in terms of a Hollywood entity that is really pushing
forward in the gaming space.
Speaker 2 (24:44):
Well, I would say, even though there's still technically just
a licenser of their own IP, Disney is one company
to pay attention to, just because given he is currently
in his second ten you're a CEO. You know, there's
tons of speculation as to whether Bob Iygers you know,
final sendoff from Disney will be another key acquisition, this
(25:05):
time on the gaming side. Disney at the start of
twenty twenty four invested one point five billion into Epic
Games purely for IP driven Fortnite experiences. So that's you know,
Fortnite experiences tied to Star Wars characters, Marvel characters, Pixar characters.
So that's been going strong on Fortnite, and you know,
if they're obviously this is purely speculation, you know, no
(25:27):
no inside intella here, but if there is you know,
one acquisition that would put Disney back into gaming in
the way it used to be more so than it
used to be, it would be you know, Epic Games.
If the partnership really is going that strong, so that's
one company you'd keep an eye out for. Another would
be sky Dance. Sky Dance has had its you know,
(25:48):
interactive side for a while, but they also have a
new media division where they are making a few Triple
A games through Amy Hennig, who used to run the
Naughty Dog studio. She's the creator Uncharted, for example. So
they have some pretty high quality games on the horizon,
I'd say, But what makes their gaming studio so interesting
(26:08):
is the fact that, you know, the biggest guidance company
is US finally getting close to you know, nearing the
end of its process to acquire Paramount. So if that
deal does go through, they are going to have you know,
the full store of Paramount IP to potentially figure out
various kinds of games for which could help you know,
(26:29):
them grow their presence in a big way.
Speaker 1 (26:32):
Well, this is just a taste of what is a
much deeper dive into this business in the new report
from Variety Intelligence platform, the State of the Video Game Industry,
third Edition, that just came out in May, and we
are glad to have had time with its author, Corey Ericson.
Thanks for taking the time out, Thank you any.
Speaker 2 (26:56):
Thanks for listening. Be sure to leave us a review
at Apple Podcasts or Amazon Music. We love to hear
from listeners. Please go to Variety dot com and sign
up for the free weekly Strictly Business newsletter, and don't
forget to tune in next week for another episode of
Strictly Business
Welcome to another episode of Strictly Business, the podcast in
which we speak with some of the brightest minds working
in the media business today. I'm Andrew Wallenstein with Variety
Intelligence Platform. Lots of interesting developments in the video game
business lately, which makes the timing of this month's special
report from Variety Intelligence Platform on the state of the
(00:28):
industry especially good timing. On this episode, we'll talk with
the author of the report, my colleague Corey Erickson, who
will tackle all the biggest issues currently at play in
the world of video games. Stick around and we are
(00:53):
back with Corey Erickson, author of a new report from
Variety Intelligence Platform on the state of the industry. Corey
plenty to get to.
Speaker 2 (01:02):
Uh.
Speaker 1 (01:03):
Given there's been a lot of activity in the past
few months, I would say we'd be remiss in not
starting with some pretty earth shattering news that came in
a few weeks ago with the move of Grand Theft
Auto six. Why does this matter so much?
Speaker 2 (01:19):
This matters so much because this is a game that
has essentially been in the works for over a decade,
you know, from inception to this home stretch last year
of the game's production. It comes from Rockstar, a label
to Take two Interactive and the last iteration of the game.
Grand Theft Auto five, despite being released in twenty thirteen,
is still going strong through its Grand Theft Auto Online mode.
(01:40):
You know, this is a game that is one of
the biggest live services. It's up there with Fortnite, Roadblocks Minecraft,
but it's also as much of a Triple A single
player experience. So this game alone encapsulates, you know, pretty
much every corner of the Triple A console market at
(02:01):
a time when the Triple A industry isn't doing so well.
There's been a tremendous amount of layoffs over the past
two years. Last year alone was more than fourteen thousand,
and it's get taking longer and getting a lot more
expensive to maintain, you know, a fresh pipeline of Triple
A games, while also you know, the price points of
(02:23):
these games are going up, you know, even further than
they have before. We know, Nintendo Switch To is coming
out in June, and you know their flagship Mario Kart
title for that has gone up to eighty dollars as
a price point, which is sort of a new normal
for the industry after going up to seventy dollars four
years ago, So all the speculation about Grand Theft out
(02:44):
of six, you know what it's going to cost, that
still has to be figured out, and the triple A
causal industry is sort of hinging on. You know, this
game finally coming out and you know, bringing some more
energy and hopefully investment back into that space.
Speaker 1 (03:00):
So it moves out of twenty five into twenty six.
What does this mean for the business in twenty five
because you know, this was by all accounts going to
be the Titanic for a dated reference for the video
game business, or maybe Avenger is a better example. This
was going to be the biggest best seller. So what
happens to twenty twenty five in terms of results for
(03:21):
the business lacking this massive hit.
Speaker 2 (03:24):
Well, the immediate upside is, you know, the sheer reality
that now some publishers can breathe a bit easy and
schedule games for the fall that was you know, the
expected timeline for GTA six. So with that gone now
it does get a little bit easier to schedule what
you know there is to schedule. But from a wider
market standpoint, you know, this was a game that was
expected to bring in like two to three billion within
(03:46):
its launch yer, and that's now two to three billion,
you know, off analyst expectations for how well you know,
the global video game industry and especially consoles would do
this year. They're still switched To of course, and Take
two have four titles planned to launch on switch To,
which you know is showing some more third party expansion
into that side of the console industry. But all in all,
(04:09):
you know, this is going to be yet another year
where hopes of you know, a Triple A comeback are
being lessened slightly in light of the fact that GTA
six is you know, now another year away. It's such
a big title too, that it was undoubtedly going to
help sell you know, xboxes and PS fives, especially the
(04:31):
PS five Pro. You know, if there's one game that
was going to be a use case for expensing that
much on you know, a newer PS five model, it
would have been GTA six. So without a year away,
it's going to be a bit harder to sell you know,
the more high end consoles.
Speaker 1 (04:46):
Speaking of which, the other big shoe to drop, although
this dropped as expected, was switched To did come out
this year, the going to come out sorry, and so
in terms of the the emergence of that product, talk
about why that is such a big deal.
Speaker 2 (05:05):
That's a big deal because the Switch in and of
itself was such, you know, a significant redefining moment for
a Nintendo after they hit a snag with the WU
in the wake of the Nintendo We success in the
two thousands, so Switch launched in twenty seventeen really helps
them get back on track. It's both a home and
handheld console, so they were able to sort of tackle too,
(05:28):
aspects of the market that they've always been pretty strong in.
And since then it's you know, been a top selling console.
I believe it's the number three overall in lifetime sales.
So even though you know, eight years in the life
cycle is winding down in favor of the Switch to model,
it's ending on a pretty high note. Because it was
(05:48):
also at a cheaper price point, the Switch was able
to become sort of, you know, a companion console to
PS five and Xbox owners, so it was able to
sort of evade the very tight comp petition between those
two brands by sort of releasing midway through their last
console cycles, as you know, an alternative, easier to afford option.
That however, the Switch to is going to sell for
(06:11):
four fifty, which was a little bit of a point
of controversy. People weren't sure if that was in light
of you know, this complicated tariff situation with the current
presidential administration, and you know, obviously Mario Kart going up
to eighty dollars. This is going to be a more
expensive life cycle for the switch To. So we'll see
if they can really power through that and maintain the
(06:33):
strength they built on the switch.
Speaker 1 (06:35):
It was interesting to see the name of the switch
emerging in all the coverage of the Trump administration tariffs
in the video game industry in general being impacted by
the tariffs. So walk us through what the impact is
for switch To and the industry at large.
Speaker 2 (06:53):
The impact is, you know the fact that many most
of these consoles, you know, they are put together as
in places like Taiwan. You know, they all depend on
semi conductor chips, which was able to power through you know,
a year's long shortage in the immediate aftermath of the pandemic.
So you know, to get back on track with semiconductors.
(07:14):
Only for this to happen is certainly no help. That said,
you know, switched To their sticking with the four to
fifty price point. There was a little bit of concern
when they backed away from immediate pre orders that they
might raise it even higher, but they stuck to the
price they announced, and we'll see, you know, how consistently
they priced new games at eighty dollars like they are
with this Mario Kart World launch title. What's been a
(07:38):
more i think distressing impact for gamers in the industry
alike is the fact that Xbox actually raised the price
of its consoles in the wake of this tariff situation,
which is pretty unprecedented, especially when you look at how
Xbox Series and PlayStation five launched in twenty twenty, so
that's four or five years into their life cycles. That
(07:59):
one brand is actually making its systems more expensive. So
that paints a pretty clear picture of how, you know,
dependent some of these companies are for overseas production of
their systems. Lots of gaming accessories too, are made overseas,
so that's another aspect of the market that it's likely
to be affected by tariffs.
Speaker 1 (08:17):
And by the way, you know, there used to be
it felt to me more buzz around the notion of
cloud based gaming, So could we potentially be moving into
an era where that becomes more viable.
Speaker 2 (08:30):
It's certainly something to pay attention to. You know, does
this become a bood for cloud gaming. It's hard to say,
just because there's still no definitive clear leader there. I mean,
Amazon has its Luna product, but that's not a product
they've ever pursued all that aggressively. Some a lot of
the online games they develop, you know, they released to
Steam for instance, instead of you know, making anything exclusive
(08:53):
to Luna. Obviously, Google Stadia was around for a few years,
but that winded down in twenty twenty two. If there's
one company I am very curious to see, you know,
how their own gaming operation does in light of all this,
in light of things getting you know, more expensive elsewhere,
it would be Netflix, just because that is a company
(09:13):
with three hundred million built in subscribers. If you know,
one in six Netflix subscribers engages with their games at all,
that's as many subscribers as PlayStation plus as for instance.
So you know, they're company that I think is well
positioned to potentially see a boost in the cloud side
of gaming as they work on you know, further integrating
gaming into you know, their web apps, just as much
(09:38):
as you know, their mobile apps.
Speaker 1 (09:40):
And yet I feel like from what I've heard about
Netflix to date in the gaming business, it's been kind
of a mixed bag changes of leadership, perhaps pivots, and
strategic direction. How would you grade what you've seen so far?
Speaker 2 (09:54):
I've seen so far as Netflix still has a lot
to prove. They got into games in twenty twenty one,
first through you know, their mobile games app. They've managed
to integrate those games a little bit better into you know,
the core Netflix app, so it's not all dependent on
you know, switching apps on your phone. And they're they're
sticking to a strategy where game releases are tied pretty
(10:15):
tightly to their movie and TV releases. For instance, this
new Black Mirror season, they made a game called Thronglets,
which is sort of, you know, an offshoot of one
episode that in and of itself, was a bit of
a sequel to the Bandersnatch interactive experience they did some
years ago. So they're they're keeping strong there. They haven't
(10:35):
been able to evade the situation with layoffs and studio
closures that you've seen through the more traditional side of
the industry. They did, you know, have a Triple A
team working on a multiplayer shooter, and that you know,
was sort of canceled and leadership shuffled around in light
of you know, wanting to not spend too much money
(10:56):
on a gaming experience they weren't even sure was going
to matter to the core subscriber base. They've indicated an
interest more so and really you know, interactive experiences that
are also very accessible for Netflix subscribers. They outline sort
of their vision at GDC in March, and they seem
really interested in trying to find, you know, new ways
(11:17):
to engage you know, groups of people sometimes even like
in the same physical space, you know, all playing a
game on their phones together. So they're looking more to
innovate on that front, so that way they're not sort
of falling into the trap of spending so much on
TRIPAA titles that take years to make.
Speaker 1 (11:35):
We're gonna take a quick break, but we'll be back
right more with Corey Erickson on the state of the
video game industry, and we are back with a discussion
on all things video games with variety intelligence platforms. Corey Ericsson,
(11:58):
he's the analyst to pend the latest I believe the
third or is it fourth edition of this video game
Industry report.
Speaker 2 (12:06):
I believe this is the third.
Speaker 1 (12:08):
Okay, well, make sure to check it out. And the
big focus this year, probably a little different from what
we did in previous years, was really looking at the
intellectual property impact the video game business, which also this
report was so well timed because it was on the
(12:28):
heels of the very successful release of a Minecraft movie.
Put the performance of that movie, which last I checked,
I don't we up to a billion yet? It seemed
like it was at nine hundred million most weeks ago. There.
Speaker 2 (12:41):
Yeah, it's still got a bit of a ways to go. Yeah,
so it's a nine to eleven million worldwide, so hopefully
it can get to a billion. But if it does,
you know, that's still Oppenheimer numbers for video game IP
and so far the only video game IP that has
on over a billion is the Super Mario Bro This
(13:02):
movie in twenty twenty three, which has a sequel out
next year. So we're seeing a pattern, I think, or
a pattern is starting to emerge that the games most
likely to perform that strongly at the box office are
also you know, the few games that have sold hundreds
of millions of units, you know, across their lifetime because
that belongs to i'd say a pretty small club. We
(13:25):
can pull up the numbers here, but you know, if
you actually look at what are by far the biggest
gaming properties by overall lifetime sales, Mario is at the top.
It's sold abound nine hundred million units to day through
you know, decades of releases at this point, and Minecraft
(13:46):
is you know, more around the three hundred million number.
Grand Theft Auto is also a very high performer in
that regard, and there's never been any kind of Grand
Theft Auto adaptation to date. So if there's going to
be any kind of ramifications of a Minecraft movie doing
so well, it is going to be studios obviously, you know,
salivating for the chance to take some ip, whether it's
Grand Theft Auto, whether it's called Duty or even Fortnite
(14:08):
in roadblocks and try to figure out a way to
do movies around those if it means, you know, they
could potentially bring out that big of an audience. Because
with the Minecraft movie, the reviews were not great. Track
tracking wasn't was also you know, below the expectations were
below what the performance actually ended up being, you know,
(14:29):
in the week's leading up to the release. So this
was really a case where the IP just completely was
its own thing and the filmmakers were able to sort
of make a film that was more of a tribute
to the IP than you know trying to do you know,
the Last of Us effect and create like a very
tight story driven experience around it. So it'll be interesting
(14:52):
to see how other studios, if they can get the
gaming companies to work with them in the first place,
are going to tackle sort of you know, the remaining
few that have yet to crossover.
Speaker 1 (15:01):
Yeah, and in terms of what is to still come
on the heels of Minecraft movie, in this report, you
pinpoint some of the projects that are worth noting. So
what's going to be on your radar in terms of
the next big IP adaptations.
Speaker 2 (15:20):
Well, right now, the second season of the Last of
Us is currently airing. It's got a couple of episodes left,
a shorter season this time than season one, and twenty
twenty three, HBO downgraded it from nine episodes to seven episodes,
which is you know, in line with other top shows
on HBO and Max. A similar thing happened with House
at the Dragon, So on the show's side, there is
(15:42):
you know a cost effect that they have to take
into account that I think is you know, going to
make it difficult for these adaptations to have big episode orders.
I believe Peacock's Twisted Metal, which also has a second
season due later this summer, that that is somewhere between
like ten to twelve episodes, although they're they're they're they're
(16:03):
shorter episodes, but that's a PlayStation ip that actually hasn't
been seen for some time on the gaming side, So
the fact that they've you know, been able to sustain
enough interest in that on a service like Peacock to
justify a second season, I think does speak to, you know,
the strength of some games that have been around for
a while, you know, still having some audience that can
(16:24):
be attracted to them. Going a bit further, Uh, it's
going to get busy on the film side again. In
Q four there's a sequels to Mortal Kombat and Five
Nights at Freddy's Mortal Kombat two should be interesting because
that was actually one of the films from Warner Brothers
that was helping to bring people back to theaters in
(16:45):
the first half of twenty twenty one. So if you
look at, you know, the global box office for that
it doesn't seem that impressive, but that was at a
time when you know, theaters were still down, they were
blocking off you know, every other row, So that film
did have enough interest and it's good to see how
a sequel is now going to do in a much
healthier film climate. But of course Five Nights at Freddy's,
(17:06):
as we know, was a big deal in December twenty
twenty three. You know, that made a little bit under
three hundred million, but off a typical, you know, modest
Blumhouse budget, so a very profitable film, uh with a
really young fan based behind it too. And this time
the sequel is going to be exclusive to theaters. It's
not going to do the day and day with Peacock
like the first one did, which is, you know, another
(17:27):
testament to how well that film did in theaters that
you could also watch it at home at Peacock for
free basically if you were a subscriber, and it still
brought lots of people out to theaters. So it's good
to see if these franchises can actually sustain themselves as
other film franchises have, because you know, if you look
at the macroview of you know, film franchises with billion
(17:47):
dollar films to count. There's still no gaming IP there.
Speaker 1 (17:51):
You know.
Speaker 2 (17:51):
The closest shot would be Mario next year. If that
film does as well as the first one, then that'll
be the first gaming IP to account more than one
billion dollar success at the box office. But otherwise there's
still a pretty long road to go there.
Speaker 1 (18:03):
And that movie is dated for April third, twenty twenty six,
next year. Also, I see Resident Evil, which you mentioned
September eighteenth, twenty twenty six, and yeah, as you cite it, also,
you know, still more to come in twenty twenty seven.
I just wonder though, whether the momentum we're seeing in
(18:24):
terms of this genre and its heat could one day
we mirror the arc of the superhero movies in the
sense that running so strong for so long, and yet
you could argue, as many have that by sort of
over exhausting just the sheer volume of content from that genre,
(18:48):
you kind of kill the golden goose.
Speaker 2 (18:51):
Well, I think the industry is viewing gaming IP as
supplemental to you know, the core IP at any given studio,
because they haven't given up on superhero movies at all.
You know, this is this year, We've got three MCU
movies instead of just one last year, and next year
an actual Avengers branded film will be back, so that
(19:12):
train hasn't stopped by any means. However, the studio is
recognized they can't solely depend on Superhero IP anymore. There
have been enough failures over the past few years to
really drive that point home, especially with some of those
movies getting really expensive. So gaming IP is a way
to I think, supplement the slates in a way that
you know isn't going to go super over budget, but
(19:33):
is also going to have some built in fan interest.
Resident Evil, which you mentioned that in twenty twenty six,
is particularly interesting because that's the second attempt to reboot
Sony's film series Resident Evil. They had six modestly successful
films with Miya Jovovich from you know, the two thousands
to the twenty tens, but then an attempt to reboot
(19:54):
it with this Welcome to Raccoon City film in twenty
twenty one, which is supposed to be you know, a
closer out oftion to the first two games, that didn't
really get off the ground at all. So now they're
rebooting it once again, but going with a sort of
newer director Zach Kreiger, who has some hype on the
horror side with twenty twenty two S Barbarian, which was,
you know, a pretty modest summer success for twentieth century
(20:17):
at the time. So he is the kind of director
where you're seeing studio shifter attitudes where they're not just
assuming an IP is going to work on its own,
they're actually really looking out at the talent pool in
Hollywood and being like this director has a very similar
approach to why people like this game, we should find
a way to you know, bring these together here. And
he also has a horror film called Weapons Out the
(20:39):
Summer for Warner Brothers, so if that film does well,
that'll even you know, better boost Resident Evil's chances of
success for Sony next year. It's also worth mentioning too,
that the second season of Fallout is actually returning as
soon as this December. Everyone was expecting that more for
twenty twenty six, just because you know, that's a hefty
budgeted show, has to spend a lot of time and
(21:00):
post it's a post apocalyptic environment. But Amazon recently announced
that that would be going in December instead, so you
can see even Amazon, which you could argue is in
a position to take its sweet time with all of
its shows because it's Amazon. They saw how well Fallout
did last year and said, you know, we got to
get this out asap.
Speaker 1 (21:21):
Another Franchi I said, maybe isn't necessarily readily associated with gaming,
Harry Potter. How has gaming played a role in rejuvenating
interest in that?
Speaker 2 (21:35):
That comes down to twenty twenty three's Hogwarts Legacy. That
was a game that was in development for Warner Brothers
for a pretty long time from a studio that actually
used to be owned by Disney until you know, Disney,
through Bob Buyger's leadership at the time, sort of divested
all of its video gaming operations because there just wasn't
enough interest within the company in that space. So that
(21:57):
studio Avalanche, they went over to Warner Brothers and it
took them a while, but they got, you know, an
open worlds Harry Potter game out the door, well received,
did tremendously well in the sales front. I think over
twenty million in sales, So the sales were so big
that they actually basically won the year in terms of
(22:17):
you know, the number one best selling game on consoles NBC.
That's a space that is reserved for Call of Duty's
annular releases pretty much every single year since two thousand
and nine. The only publisher that's ever broken that streak
is rock Star with Grand thea thout of five and
twenty thirteen, a red Dead redemption two and twenty eighteen.
So for Licensed Ipe to work its way in there
in twenty twenty three and sort of you know, one
(22:38):
up one of the most you know, powerful performing gaming
brands was pretty significant for Harry Potter, especially a year
after Warner Brothers had decided to wind down the Fantastic
Beasts prequels. They had the third one go in twenty
twenty two. It did not meet their expectations, and they
essentially scrapped two more sequels. So for Hogwarts Legacy to
(23:01):
do as well as it did, it, you know, it
was likely what gave Warner Brothers the confidence to very
quickly after finally greenlight this idea for Harry Potter show
that is now going to air on HBO. That's a
planned seven season show, you know, sort of treating the
source material as you know, one season per book. So
(23:21):
they're going you know, they've already announced casting for that,
but it is essentially a full TV remake of the
Harry Potter films and books. So clearly you can see
how gaming does inform that. But again, you know, it's
a little bit of a mixed bag because a year
after Hogwarts Legacy, Warner Brothers put out Suicide Squad Killed
the Justice League, which did not do well, resulted in
(23:41):
about two hundred million in a two hundred million loss
on their side, and since then they've you know, closed
a few studios at Warner Brothers, and the confidence Hogwarts
Legacy had built with you know, a figure like David's
Osla for instance, no one's really sure if that's much
there or anymore going forward. So, you know, as helpful
as video games can be to you know, an overall
(24:04):
IP situation, it's still a very complex industry, especially for
the Hollywood side of things, where cost cutting is so
top of mind right now.
Speaker 1 (24:12):
Yeah, and you they're probably one of the best parts
of the report you did was breaking down on a
company by company basis, whether they're the leaders in entertainment
or leaders in tech, all the different places where they play,
whether it's developer, publisher, IP license or you mentioned for instance,
you know, Disney's withdrawal. Is there any company, last question,
(24:36):
that you think people need to keep an eye on
in terms of a Hollywood entity that is really pushing
forward in the gaming space.
Speaker 2 (24:44):
Well, I would say, even though there's still technically just
a licenser of their own IP, Disney is one company
to pay attention to, just because given he is currently
in his second ten you're a CEO. You know, there's
tons of speculation as to whether Bob Iygers you know,
final sendoff from Disney will be another key acquisition, this
(25:05):
time on the gaming side. Disney at the start of
twenty twenty four invested one point five billion into Epic
Games purely for IP driven Fortnite experiences. So that's you know,
Fortnite experiences tied to Star Wars characters, Marvel characters, Pixar characters.
So that's been going strong on Fortnite, and you know,
if they're obviously this is purely speculation, you know, no
(25:27):
no inside intella here, but if there is you know,
one acquisition that would put Disney back into gaming in
the way it used to be more so than it
used to be, it would be you know, Epic Games.
If the partnership really is going that strong, so that's
one company you'd keep an eye out for. Another would
be sky Dance. Sky Dance has had its you know,
(25:48):
interactive side for a while, but they also have a
new media division where they are making a few Triple
A games through Amy Hennig, who used to run the
Naughty Dog studio. She's the creator Uncharted, for example. So
they have some pretty high quality games on the horizon,
I'd say, But what makes their gaming studio so interesting
(26:08):
is the fact that, you know, the biggest guidance company
is US finally getting close to you know, nearing the
end of its process to acquire Paramount. So if that
deal does go through, they are going to have you know,
the full store of Paramount IP to potentially figure out
various kinds of games for which could help you know,
(26:29):
them grow their presence in a big way.
Speaker 1 (26:32):
Well, this is just a taste of what is a
much deeper dive into this business in the new report
from Variety Intelligence platform, the State of the Video Game Industry,
third Edition, that just came out in May, and we
are glad to have had time with its author, Corey Ericson.
Thanks for taking the time out, Thank you any.
Speaker 2 (26:56):
Thanks for listening. Be sure to leave us a review
at Apple Podcasts or Amazon Music. We love to hear
from listeners. Please go to Variety dot com and sign
up for the free weekly Strictly Business newsletter, and don't
forget to tune in next week for another episode of
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