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Business of Esports TV: GTA Delays

(Livestream 138)

In this segment, we discuss how GTA VI is being delayed until 2024 or 2025.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full livestream here:

Paul Dawalibi 10:24
And this one, this one’s This one’s a bit of a doozy, but I don’t think is going to surprise anyone. And that is GTA six, could release in 2024 2025. This is the rumor now 11 or 12 year gap between GTA five and GTA six. The article is basically quoting with Tom Henderson video game, industry Insider, that Rockstar basically is not going to have this ready or even cares to have it ready. Maybe until as late as 2025. They talk about shortage of console’s right now also that maybe that’s not the ideal environment to sort of release this new game into. But what do you guys feel about? You know, we’ve we’ve talked, we’ve hit on this subject before on the podcast, and on the live stream, I think, is this will we look back? Let me frame the question this way. Well, we look back at history. Will we be talking five years from now going, take two and Rockstar really messed this up? Right, that they should have? They should have had GTA six, much earlier at the you know, while GTA five is still even sort of interesting. And they should have taken advantage of does anyone think that or? Or you’re aware of the right thing?

Jeff Cohen 11:58
I mean, the way you’re the phrasing, you’re phrasing the question, the premise is basically that GTA won’t be popular in 2024 2009. I mean, at some point, maybe that will be the case. But it seems like this thing just defies gravity and is, you know, if anything more popular than ever before, I mean, if you look at twitch player accounts, it’s just a phenomenon. So there may I mean, we can get into the business model and everything and why it makes sense then to keep milking it. We’ve probably talked about that many, many times. same phenomenon.

William Collis 12:30
You don’t get mad at Tropicana for not replacing orange juice every year. You know, like, I mean, it’s there’s like, we are used to change in the industry. But if the core product is work, because the reality is, who is going to play GTA six, everybody who played GTA five, right? So when is a replacement product? Let’s be honest, right? Like, I find it very doubtful at this stage, like, yeah, there’ll be some new players that come in. But your overlap for GTA six, first, GTA five has got to be massive. So it is a replacement product. If the GTA five game is incredibly popular, which it is, why would you feel the need to replace it? You know, and more to the point, you know, I’d also, you know, flip it the other way and say, Look, like GTA five at this point. It’s just been such a success. Imagine how difficult it is to sequel, right? Isn’t this nice for the games industry, that you have a developer that’s given time to really invest, to build to plan to put all this effort into making the sequel truly exceptional. And it’s a rare moment where financial or financial success of a title has actually created an opportunity for prolonged creativity, rather than just immediate pressure to like, churn out the next version, because we need it. I think this almost is an encouraging alternative model for how mega successful blockbuster games can be treated. Right?

Paul Dawalibi 13:58
I really am. I’m kind of surprised. You’re saying this. Because you were the guy that made I thought the most eloquent case for cyberpunk taking too long. Right? The technology changes, right. Like you were the guy. I felt that made a great argument, though. It took way too long. And this was part of the problem. Oh, yeah. Are you not concerned here that GTA six if it takes this long, may become

William Collis 14:24
Yeah, there certainly is a technological risks at some point, if you’re starting, like, I mean, at this point, 12 years, like what platform did you start development? Like, you know, like, realistically, but, you know, you also have to kind of, you know, so there’s questions about how you manage development cycles meaningfully, that lasts that long, right? Like, what do you actually have teams doing in the early stages of a 12 year development cycle? It might not be coding because the engine will be different, you know, but is it like store you know, there’s real questions. There’s real risks. was very long term projects for sure. Right? And don’t get me wrong, you know, I think GTA five has been such an unusual success that it sort of stretches the norms here like for pretty much any other sequel game, right? This is too long of a period of time, but the underlying title is sustained so well, like it’s the same situation as well. Why don’t we have Wow, two? because well, one still does really well. In fact, while one does so well, the only thing we’re willing to give you is the older version of Wow, one, right? Like that’s how popular it is. It’s almost like you expect GTA five Dylan’s GTA five vanilla edition. Yeah. But um, you know, all joking aside, like, I think, again, like I think, yeah, there’s real questions here. And this is a significant length of time. But again, go back to the core insight, which is this is probably a replacement product. If the core item doesn’t need replacing, isn’t this a good business decision to let the chips ride? Like I, I feel that pretty strongly.

Jimmy Baratta 16:05
I don’t disagree with you guys. But the comparison I try and draw in my mind is I look at Call of Duty or other franchises with significant following and success. Because if this were, you know, an unheard of publisher, and in their first massive success, yeah, you run into the problem where you need to have a strong follow, otherwise, you might not last. But if you have this following, if you have 70 games under your belt, and in a fan base that’s going to buy every single one of them there, there comes a point where they’re missing out on an opportunity to pump out GTA six, and then seven in this same cycle, and whatever revenue that would bring in potential success. Again, not not withstanding GTA five being this massive, massive, right? Like that’s, that’s kind of the differentiator here, but that’s just where I’m thinking.

William Collis 16:52
The other thing I’ll point out here is by waiting, so long do increase the risk profile, right? So think about Call of Duty, right? Like, if What if one year’s Call of Duty isn’t so good, what’s your maximum risk on that? One year, right? Because then you have another call of duty coming get to try again, you know, it will be great. But for this, you know, and I don’t know, let’s hope this isn’t the world we live in. But imagine DTA six just isn’t that good? Right? The risk there is, you know, it’s pretty catastrophic, right? Because it’s a replacement product. So you’re not losing one or two years of sales, you’re losing 12 years worth of sales. Now granted, the publisher probably rushed to have a, you know, earlier sequel and all that stuff. But fundamentally, if you’re willing to let franchises last for a longer period of time, you are potentially more profitable, because you need to invest arguably in less development, and less equalization, and excuse me, but you’re also riskier, because you have less of an annualized cushion to fall back on. So it’d be really interesting, though, again, I really hope for the industry, GTA six is a big success, because it shows another way you can manage a triple A franchise. And I think we should have more business models around like not every triple A franchise needs to have a yearly release cycle. I firmly believe that, you know, it works for some movies like Marvel, right. But there are other great classics for you know, film that you enjoy that might come out, you know, once and then never again, or maybe get sequel 10 years later, and we’re fine with that, you know, so I like existing here.

Paul Dawalibi 18:32
Sorry, I have a specific question for you. And I just want to read the comments, slightly says but even cod is adopting that consistency, model and Warzone true and in some ways they have the best of both worlds between Warzone and the yearly cod releases. He says I think the new model will be more profitable strategic to make sure they don’t screw it up. Yeah. Again, but the risks are higher. Right. To that point, but longer that they take, Robert, I think good to see you here. Good to see you back here. Cam says no rush. I mean, as I mean, can you say I’m in? I’m in no rush, GTA five still has awesome online content. I hope it comes out when it’s ready. It’s just the expectations are going to be so high is the problem waiting this long. Jeff, my question for you specifically is at what point do does the market like does the street essentially get tired of waiting for GTA six?

Jeff Cohen 19:33
I mean, to some extent never right? They’re buying themselves tie every year around right around their fiscal year end. I mean, you always have some analysts that you know don’t really know the space well enough in there. Oh, GTA is coming next year. But most most people who are invested in tape to understand that GTA is probably several years in the distance and when I say they keep buying themselves time What I mean is, their other games are doing so well plus GTA outline. And I think the thing we have to remember, and this is probably stating the obvious, we’ve talked about it a lot. And cam even mentioned it, you know, it’s not like GTA five is driving units right now by because of the single player. And it’s not like Rockstar finished GTA five and they were like, you know, we’re gonna do like let’s take 10 years off like we’re not working, we’re just hanging out there pumping out content, you know, for GTA Online that is keeping people super super engaged and is making them boatloads of money. So I think that’s the thing to recognize, you know, when you when you think about the sequel, not only they’re gonna have to create a great single player game, because they they will do that, right? That’s what Rockstar does, they pretty much never miss in terms of that. So I don’t think there should be a worry, hey, the single player games not gonna be great. The question, I think, the massive challenge. And really, I would say it’s pretty much unprecedented. Being that user base, they probably have 20 30 million people that are playing either daily or monthly, porting that over to a completely new experience, when the old one has taken 10 years of content to build. It’s, you know, it’s like when Facebook makes a change to the news feed. Everyone’s like, Oh, I want the old one or you know that maybe that was a terrible Boomer example. But pretty much anytime you try to take someone from a product they love to a new product, you automatically one, it costs money to acquire those players. And then there’s friction, because people were like, well, I liked the old GTA Online. I like the controls. I liked all the content that was in there. So you’re kind of going to lose people. And then you create a scenario. Do you have to create content for both? Do you have to port new content to the old one? Do you port the old one to the new one? It’s a really hard challenge. When you’re sitting here printing money, it’s really easy to be like, well, let’s wait a year like what’s a rush? Why do we you know, they got a good thing going it also,

William Collis 21:44
it also raises a question I point out which is like, what is a sequel? Right? Like, we understand sequels to really in a post in a pre internet world like sequels where like, I could only fit so much in a box. The sequel is the next box I’m sold, right? Whether that’s a game cartridge, or a VHS tape or whatever, if you put GTA five today, up against launched GTA five, I think you think it was a sequel, maybe multiple iterations of a sequel, right? Like, everything about the core game has been enhanced? I mean, sure, maybe the single player story, there’s still some but like, functionally, it The game has been sequels, because all this stuff has gone into it. And again, no one is clamoring for League of Legends to release League of Legends too, because we recognize that the business model for that is consistent incremental upgrades. You know, again, I think it’s a different business model. And it does raise an interesting question of like, I almost wonder if Rockstar would launch GTA six by just saying GTA five is now GTA six. Well, I mean, seriously, like they could charge and

Paul Dawalibi 22:53
this is this is Roberts question here. But wait, says Tron 2.0. But Robert asks, I think the same question you’re asking William, which is, when do we get to a point that the games no longer have an incremental update, but just sustain a title and build additional content to it? In other words, everything becomes Wow,

Jeff Cohen 23:14
there are games, I mean, Destiny’s going towards that model, right? I mean, Warframe has that. But there are plenty of someone mentioned Warzone. And I know what you asked Williams all that you jump in, but like Warzones, basically trying to do that for Call of Duty, like be the storyline that cuts through all the franchises.

William Collis 23:32
Yeah, like, I mean, the best possible case scenario is you stop having to re acquire customers, right? So I think like in a perfect world, like, and this is why I think eSports are so interesting and stand out so much is most of them have this business model where you’re stuck. Like, once you’re in League of Legends, you’re not like you’re not really looking to lead leads are kind of you might have periods where you’re spending more time with the game in periods where you’re spending less, but you’re kind of in league and in that ecosystem. And it’s incredibly de risking for publishers. It’s incredibly lucrative, right? But it also arguably, is sort of a better and more interesting content model. From a, you know, from just an abstract business perspective. You know, the downside to though is, we think this model looks fresh today and appealing, because it’s so very rarely achieved. Like you can count the number of games that have a true, like persistent content model, like probably on two hands, maybe even one hand, right, like, very few games do this well enough to actually sustain and grow over time. And I think as more games get to that state, I wonder if you’d like what the world looks like, because every year it would just be you know, okay, what’s the big gate? Well, it’s a three this year, the new Warzone patch, the new GTA patch, the new league patch like it’s not you do want to mixture of creativity and sparks and new property. So not everything should get on this business model. But I do think when you have a titanic success, you should look at it very closely, because it’s a very appealing world to go on. And if I can say one more thing in sentence ending, Activision Blizzard has been the smartest maybe evolve with this hybridized model, because now they get to double dip. They get Warzone, which is the backbone that has your consistent content, but they haven’t had to walk away from the old annual box model. And I think that’s going to give them some of that protectiveness you get with an annualized title, with some of the flexibility of having a consistent player base to market to so I don’t know, just my two cents.

Paul Dawalibi 25:40
Gabriel here says I think they’re in a loss loss at this point and the time, Gabriel, I’m curious why you think that I would love. I would love if you could expand on that. Because I’m curious, Robert says,

Jeff Cohen 25:52
even feels like more of a win win to me, I would be curious to hear the argument. Yeah.

Paul Dawalibi 25:57
Robert says why even make a sequel just sees analyze content and make graphics refresh? This is a pending shift in game release cycles. Plus, do you not run the risk of alienating gamers who don’t know? Should they play? SF five or SF six. And my view on this guys, I think, is just I think you lose something when you take out the true sequels. And I’ll give you an example. Like with Wow, specifically, at some point in Wow. And again, this is only anecdotal. But I think it happens to everybody. After Wrath of the Wrath of the Lich King, right? It’s like, you get tired of Wow. And you stop playing it right. And there’s a lot of people who got fatigued with Wow, at that point in time and stop playing it to get that customer back is not obvious, right? Like doing without sequels without a new standalone game, like to get a player back who leaves in this sort of seasonal kind of content, I think is just as hard as getting a brand new customer is my sense

William Collis 27:08
would be because what you’re missing there is I mean, you’re missing a bunch of things, but you’re missing, you know, the tentpole, right, like you’re missing a new marketing message that can pull you back, which is really yeah, again. But you’re also missing what you’re saying is incremental content doesn’t do it for you. Because at the point where you’ve lost interest in a game, a new mount and a new series of quests isn’t enough to reel you back in, you actually need something to be a little more fundamentally different. And sequels are great, because they let you make fundamental changes. And yeah, this is a tricky question. I think sort of what you’re also saying there is, are there game mechanics that are so good, they can last for forever? Right? Like, yeah, like, because it is like, the perfect game, you don’t lose interest in so we never have your problem now.

Paul Dawalibi 27:58
The game doesn’t exist. Yeah, one has made that game.

William Collis 28:01
Yeah, no, I know. But from a theoretical perspective, right. Like, you know, so essentially, I, you know, I’m interested to see at some point, these mega games are going to have to sequel, I think, for the reason you’re describing Paul, right? Like, I think like maybe Wow, is coming to this point in their life, for example, where like, they’re probably gonna, you know, like, I don’t know what their user numbers are, but just been around for so long. And now with bifurcating the player base between wow and wild classic, like at some point, they’re going to need something to bring everybody back together again, right. The question is, how do these brands handle that? Because I don’t think you can really point to anything that has happened previously in the market, where a major Titan decades spanning brand has SQL itself. I don’t think we haven’t. I mean, correct me if I’m wrong, I don’t think there’s been an event like that in games. Right, right.

Paul Dawalibi 28:54
You’re right, you’re absolutely right. I think the second part of it for me also is just, if I’m if I’m, as someone working in the industry, I’m concerned about its future, obviously. Right? I have, I want to make sure the industry succeeds. This this sort of seasonal content and refresh incremental refreshes. And William, you alluded to this, you’re working within the box still have the original game, right? Like you’re still within that a framework that limits you and so what you can do from an innovation standpoint, like you said it yourself Yeah, another mountain a maybe a new raid, but that’s about it. Right? There’s nothing fundamentally different between wild 10 years ago and wild today, right? It plays pretty much the same and yeah, there’s more content but and fortnight’s, I would argue is the same Destiny’s the same and Warzones the same and right. It’s all incremental. But incremental isn’t innovative. By definition.

William Collis 29:51
Yeah, you know, and it’s this is where again, I mean, you know, some of I don’t wanna say some of the but like, all these persistent things in games. I don’t know. See they dampen innovation because I think there’s tons of innovation coming out from all them. And I think some, in some sense, these persistent games are the best and most innovative because they have such talented people working on them, the things they’re doing within the constraints of it has to fit in this box, you know, are really incredible. But like, yeah, it’s again, it’s really cuz like, thing is nobody is saying sports need like, nobody’s asking Where’s baseball? 2.0. Right, like, oh, we’re gonna get real? Well, I think they should do baseball. Like, I struggle so much with like, do we, you know, I always go back to like, do we really need that, but something about me fundamentals is I think we do, because I think our medium has so much entertainment baked into it. And entertainment, you do need like, because the medium of gaming is broader than just sports, because it also encompasses entertainment, and interactivity, and all of these things. It’s actually stronger than sports. But that has a unique challenge, which you don’t you’re you aren’t you do need these phase changes. And yeah, we’re coming up, we’re coming up to phase changes in our industry, like, some of these things are jus for a phase change. And that’s, I think, really scary, because, like, how do you migrate? Like, how do you migrate a customer base to Wow, to seriously? How do you do that? It’s it’s a very difficult problem, uncharted territory. And it’s terrifying, because your most loyal customers have been playing Wow, for so long. How can they possibly like wow, to Wow, must be the perfect game for them. If you played well, for 20 years, you’ve stuck it out the whole time. That is your perfect game. What can Wow, to offer you this other game was good enough to keep you around for 20 years? You know? So like, it’s it’s non trivial problems navigating successes, this massive. Jimmy, you have the last word on this before I move on here?

Jimmy Baratta 31:49
No, I don’t want to just because I was going to introduce two other games that I thought would have been interesting comparisons, and it would take the full hour to, and I know, I can leave it for the audience. I don’t know if he’s are directly on par. But I wanted to introduce Assassin’s Creed, which introduced a new fighting engine around the Egyptian version and then Odyssey. And then I also wanted to introduce Bethesda with Elder Scrolls Online as well as Fallout 76. But we’ll just leave that for your audience’s imagination.

Paul Dawalibi 32:19
I just want to catch up on comments here. Gabriel says they can’t make everyone happy. How many will go over to 6000? Stay on five. That’s I think the challenge Gabriel that we’re alluding to here that it’s it’s not obvious that all everyone will just move over? That’s that’s not instant.

William Collis 32:33
Yeah. And like, I’ve talked a lot, but like, look at Smash Brothers ultimate, correct me if I’m wrong, but it literally has every character in every Smash Brothers game ever. Right? They didn’t miss a single one. Right? Am I right about that they got every single character to come over. I think every single stage, I think they have like pretty much every single like literally, they took the approach of ultimate, all the content plus new content. And there are still people like nah, the N 64 version that’s, you know, like, it’s just really hard.

Paul Dawalibi 33:08
Slightly says fortnight basically released its sequel with chapter two, but brought everything over. Yeah, that these. This is live service. This is not sequel, right? Not in the sense of, you know, one a new box. Cam says like the destiny fatigue new content, but it’s the same engine world. Yeah. And I think these live services, this fatigue is going to become a real real thing. I think we’re starting to see it. Kim says think sports games would ever go live service or continue cashing in every year. sports games, I mean, every year, if anything, sports games make maybe more sense No, as a live service? Well,

Jeff Cohen 33:44
you’ve answered your own question cam. I mean, I think with with sports games, one, I think they’d be really good at subscriptions, actually, because there are, you know, I think there was a stat EA would always give like 70% of people basically who buy Fiji or bought it the previous year. So it’s all you know, that’s a pretty decent subscription retention rate. If you think about it that way, reason why they wouldn’t do it as live service is because of the Ultimate Team model of these, they make so much money selling you these card packs in these players. And every year, they want to be able to refresh your progress. It’s a lot harder to make the argument of where did all my players go? You know, if it’s a live service, but when you buy a new game, people kind of understand, hey, I’m starting fresh, otherwise, just kind of doesn’t work.

William Collis 34:30
And that’s why you’re just more broadly, right. Like, some of these things are useful for psychological consumer benchmarks, right, like, consumers understand certain products to behave a certain way. And yeah, this is like live services, there’s an expectation of continuity. So you know, it’s, it’s like a really thorny puzzle. I don’t know guys, I think the more you unpack it, sorry, I should we should start I was, you know, this is like, I can go on about this, but there’s gonna be like three hours, I could point out the lens, more things for

Jeff Cohen 34:58
us and you could write a whole book gotten this I mean, this

William Collis 35:02
is like a really fundamental question though I agree with you actually. Like it’s like there’s there’s a lot to unpack here

Paul Dawalibi 35:09
slightly says the the model only works if the developers can actually support the game hashtag save Apex ranked as someone who plays who used to play a lot of Apex ranked like even there supporting the game new content, like there’s you still get fatigue, even if the games going well, and making new content. If it’s not, you definitely get fatigued, but I think it’s, it’s unavoidable. Basically. Chris says, as GTA gets more detail in their respective cities, each new iteration will have a longer lifespan, because there’s so much to explore. I’m tired of playing in LA, bring on Liberty City in the 70s. Yeah, I mean, this is one reason why it has this five has had such a long lifespan. That means the next game could go like 20 years. That’s the case. Gabriel says, Wow, is so much older than me.

William Collis 35:58
How did I get it? Right? It’s like 20 years, like how old is well?

Paul Dawalibi 36:02
It’s a little bit less than that. Right? I think 2004?

William Collis 36:07
I don’t know. Yeah.

Jimmy Baratta 36:09
November 23 2004. Yeah,

William Collis 36:11
I remember buying my box copy, by the way, like, back then for an online service game you had you still had to get a box copy.

Paul Dawalibi 36:21
Kim says $80 reset plus roster updates. That’s exactly what it is. Another way to cash in.

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