Listeners:
Top listeners:
Sound Off #55 - Competitive Socializing's Rise, Sportainment Redefined and Tech-Driven Transformations
Stinger Report Brandon Willey December 25, 2024
Further issues regarding XR adoption in the consumer sector have started to appear. There is an opportunity for the consumer VR sector to redefine itself after over eight years in trying to achieve the promises made by the much-hyped technology’s latest incarnation into the consumer electronics market.
The VR/AR market is experiencing significant turbulence, with Meta Reality Labs facing substantial challenges in consumer adoption and market positioning. Despite reporting Quest 3 sales as “outpacing expectations”, Meta is experiencing quarterly revenues of $353 million against a $4 billion loss and has made strategic cuts including closing Read at Dawn Studios, shelving the GTA VR game, and abandoning the Meta Quest Pro 2 development. Competing manufacturers like PICO, DPVR, and Pimax are positioning themselves in the market, while other major players like Sony PlayStation VR 2 and HTC are restructuring their approaches. Apple‘s Vision Pro has not met sales expectations, leading to a potential pause in manufacturing and plans for a lower cost “Apple Vision Lite” in 2025. The overall sector appears to be pivoting from pure VR towards Mixed Reality (MR) experiences, with companies seeking more sustainable business models in a market that remains fundamentally niche.
Investors and executives alike should be aware of the ongoing turmoil in the video game and tech sectors, characterized by significant layoffs and a shift in market dynamics. Major gaming studios like Microsoft and Bungie are laying off employees in response to poor financial performance and restructuring efforts, reflecting a broader trend known as the “Videogames Job Apocalypse,” which has seen over 10,000 job losses this year alone. In contrast, Roblox is capitalizing on its immense popularity, currently boasting 300 million daily users and exploring new monetization strategies, including allowing creators to charge fees on the platform. Despite these bright spots, many legacy gaming companies are struggling, signalling a potential reset in business models amid changing consumer preferences, as seen with acquisitions and closures in the industry. Additionally, the tech sector is facing challenges with significant cuts from companies like Intel and Dell, further indicating a cautious economic outlook. Investors should monitor these trends closely, as they may present both risks and opportunities in a rapidly evolving landscape.
The poster boy for the trend in head mounted devices for AR and VR application, Meta Reality Labs, has attempted to control the narrative regarding the sector, with news items in the media promoting their continued support. Sources were linked to claims for a Meta Quest 4 hardware release in 2026, incorporating hardware innovation. All this and plans to release the Meta Quest 3S low-cost alternative.
Meta Reality Labs’ quarterly revenue was cited as $353m, while also reporting around a $4b loss – this was sidestepped in reporting as a continued “investment” by the corporation into AR and VR. Meanwhile, investors were informed by the chief executive that their Quest 3 sales were “outpacing our expectations”. There is a need to continue to promote a strong sales position to counter claims of slow adoption some 10-months after release. A July SteamVR survey placed the Meta Quest 3 in third place (15-percent) of popular VR headsets, behind the five-year-old Valve Index platform (16-percent). These were beaten by the Meta Quest 2 platform in first place, at 39-percent – using the PC VR content portal owned by Valve and seen as the dominant barometer of VR usage.
The fallout of these conditions and the budget freezes within Meta Reality Labs were illustrated with the news of the closure of the developers Read at Dawn Studios. The highly successful VR game development team was part of the Oculus Studios after being acquired by the Meta division in 2020. The developer is known for the successful VR title ‘Echo Arena’ and ‘Lone Echo’, and the sacked staffers have been advised they can reapply for positions within Oculus Studios. The news came as a shock to the consumer VR community and was reported as being due to Reality Labs budgetary ceiling and not to do with any cost-saving measures. The news sparked an outcry and added to the questions regarding Meta’s continued commitment to supporting the VR games sector, and the fate of other developers they had acquired in their landgrab to control the then-emerging VR sector. The outcry crew louder with the news that Meta had shelved, indefinitely, their development on the GTA VR game – a title that had been hailed by Meta towards helping to sell preorders.
The impacts of the budget cuts and layoffs started to be felt in earnest. It was announced that the planned successor to the failed Meta Quest Pro (Meta Quest Pro 2) has ceased development, and the company had disbanded the project. The system had been hoped to be a competitor to the Apple Vision Pro, although those plans had been abandoned. However, later reports would say that a second prototype (codenamed ‘Puffin’ internally) had been selected for a 2027 release – the claimed lightweight MR headset design is reportedly more similar to the Apple Vision Pro form factor, with no hand controllers and a separate puck-like battery pack.
At the same time as these developments, Meta announced their ceasing of their AR third-party tool called SPARK. This also saw the ceasing of the apps working on the Quest platforms – leaving many developers unhappy by this last-minute announcement. Meta made a statement regarding the decision that they would be “shifting resources to the next generation of experiences, across new form factors like glasses.” Meta was forced on clearing the decks of all bad news before their live Meta Connect conference, where the new Meta Quest 3S launch plans hope to supersede the Quest 2, and address Quest 3 sales contradictions.
The situation would conclude with Meta stating that the Meta range of Ray Ban AR headsets had been a success, while the VR strategy had pivoted to the MR strategy of the Quest 3 and the new low-cost Quest 3S. Those close to the operation have seen an increase in layoffs in the operation following the previous announcements – although these departures were more focused on restructuring the operation in the AI/AR direction. Sources continued to say that Meta had a VR strategy, although this was seen more to placate concerns from AAA publishers working on VR content.
All this focused on Meta and their VR technology and missed that there were others positioning to carve out a plan of action. In time for GamesCon, the European mega-videogaming event we covered previously, Chinese VR manufacturer PICO promoted their new investment in the scene. The company positioning to launch, internationally, their new Pico 4 Ultra. This system, unlike the Meta alternative, comes with a variant aimed at the commercial sector in the shape of the Pico 4 Ultra Enterprise. The operation is investing in the sector by releasing a new PICO tracker platform to compete with the HTC equivalent in the commercial industry.
Other developers looking to define a position in what is the redefining consumer VR market include the likes of DPVR and Pimax. But there is also the issue of a restructuring sector – having to look at the reality of the business that still seems to be a niche, rather than the promise of mainstream. An example of this restructuring can be seen with the changing position of the Sony PlayStation VR 2 – with a slowing in new game releases, and laying off developers, reflecting the changed conditions. As reported, a pivot to support PC VR through a special adaptor is more a means to clear stock than grow the market.
For many of the consumer VR developers, the option of a commercial/enterprise business model in support of changeable consumer business is not available. HTC is able to build on their enterprise business foundation and still promoted aspirations to grow their consumer operation. The company teased that they would be launching the “future of XR”, with new versions of their headset in the works.
Meanwhile, at the same time, the company engaged in promotions for the September Connect conference to show their new AR glasses. However, the attempt to promote innovation was also linked to internal issues regarding their development path – following layoffs with the move by the company to focus on a third-party approach and their Horizon OS initiative. It was revealed that Meta management had demanded that the new look Meta Reality Labs, split into two groups, would see the Wearable (hardware) side cut spending by 20-percent.
This also came as internal reports suggested that the partnership with Ray-Ban on a previous AR glasses release will not be happening, with the new release scheduled for reveal, and brand owners EssilorLuxottica not wanting to associate their brand with the proposed AR glasses, stating their chunky design was not what they wanted the fashionable Ray-Ban IP associated with. However, it was revealed by Reuters that Meta was in the process of acquiring a 5-percent stake in EssilorLuxottica towards securing their position with the brand. This move is not only to ensure the retention of the Ray-Ban brand for their AR platform, but also to fend off reports that Google are also looking to use the brand in their planned range of AR glasses under development.
Speaking of Google and their AR aspirations, there are further reports about Magic Leap, the turbulent pioneer in the space, who had recently signed a partnership agreement to offer technology and experience to Google for their planned MR headset. Magic Leap announced laying off most of their sales and marketing operation, following this news, stating they needed to better optimize their go-to-market approach and consolidate their business. Sources suggested the layoffs saw 75 departures from the company, although this is expected to not be on the same level as the massive layoffs following the exhaustion of the funding in Magic Leap, and subsequent pivot to enterprise and management departures. This development has sparked new concerns in the business plans for the operation, with some sources suggesting this marks the end of future-plans to build their own AR headsets, and only sell components and firmware from this point.
Other developers of XR hardware are hoping to redefine the consumer business model, moving away from strict VR towards a MR application, with the ability to embrace the pass-through opportunities. One of the biggest investments next to Meta in this direction, has been with Apple and their Vision Pro platform. It was revealed that, following its launch, the Spatial Computing platform has been popular with Influencers, fuelling numerous YouTube videos. However, it has not achieved the sales as expected. Sources would later confirm that manufacturer of the Vision Pro had been paused as the operation looked towards a lower cost “Apple Vision Lite” alternative design for a 2025 reveal. Apple seemed to leave mentioning their Spatial Computing platform during recent tech presentations, although the company has updated their OS to include requested features.
While the consumer Apple Vision Pro seemed to be teetering, a Japanese immersive experience is employing the Spatial Computing platform – the first of its kind. Called ‘Mirrorge Osaka’, the system mixes synthetic digital images rendered by the AVP, and physical elements. It is a free-to-enter attraction, and is claimed to be a MR experience, and the first to use the Apple headset in a commercial LBE deployment – developed by Tyffon Co. (a company with a VR experience operation experience).
While the established AAA videogames industry, comprising the leading publishers and studios, are embroiled in the spiralling “Videogames Job Apocalypse”, the success of those less bloated and popular game releases see growing profits. This begs the question if some publishers have lost their way and lost the respect of their audience.
Roblox held their annual developer conference during this period and revealed the reality of the videogame scene, that successful videogaming was still seeing incredible support from the player-base. The Roblox crew cited in their presentation that they see the global game market as representing some 3.4b gamers, seeing a 4.5-percent increase year on year – and that this market generates, globally, some $187b annually, seeing a 2.1-percent increase year on year. Roblox is currently capturing 300m daily users and looks to grow its business further, looking at 800m daily in the coming months, which they feel is 10-percent of the market’s possibility.
At the same time, Roblox announced they would allow creators on the platform to charge an entry fee and sell assets for real money (up to $50) and were also looking at greater monetization of the platform. It needs to be noted that this is only on the desktop version of the popular creator game platform, the mobile version was excluded due to incurring Apple and Android charges. At the same time at the developers’ conference, the company revealed they would be allowing eCommerce on their platform with brands able to sell physical products for real money via the curated environment. Roblox has surpassed ‘Minecraft’ and ‘Fortnite’ in audience popularity, avidly played by Gen-Alpha – the new emerging audience for videogaming.
Xbox hardware revenue is revealed to be in decline (13-percent during the last financial year). Microsoft countered that growth has driven Xbox content and services, with gaming revenue increased by $6b
This news was followed by leaks that Microsoft intended to lay off another group of their workforce from their Xbox videogames division, with 650 positions being terminated. Executives are quoted to blame these latest redundancies on the merger with Activision Blizzard. This news was on top of January’s 1,900 layoffs. Bungie cut 220 jobs (17-percent of workforce) after exceeding “financial safety margins”, made in a statement by chief executive. This followed the 2022 acquisition of the studio for $3b by Sony. There are reports studio staff will also be relocated to Sony, working previously on a new Bungie IP – this followed the March 900 layoffs by Sony.
Another well-known gaming studio, Armour Games, was also linked to significant layoffs which impacted their publishing operation. However, the exact number of staffers removed was not revealed at the time of going to the wire. Game publisher and development studio Ubisoft announced they intended to lay off over 40 positions from their Californian operation. It is not known if other divisions internationally will be impacted by the current restructurings – California is requiring more open reporting of intended job layoffs.
Moreover, the chip developer Intel announced they were to lay off 15-percent of their global workforce – representing some 15,000 positions. This was the latest move in the corporation’s drive to reduce its costs by some $10b. This follows the reporting of a 1-percent drop in Q2 2024 revenue ($12b). The news of this development caused a freefall of market value for the chip manufacturer, wiping out an estimated $30b in market value (shares falling 30-percent). This heralded the worst day in Intel’s history since it went public in 1980, going from $124b to $89b, and placed the situation into sharp relief when considering the $3t market cap of Nvidia. With the drastic fall in the share price and considerable layoffs, shareholders were reported as demanding, in a lawsuit, answers to accusations that Intel was hiding the true damage done to the corporation, and that their chip manufacturing foundry has been compromised.
The computer sector continues to be rocked by layoffs, with the news that Dell Technologies was cutting a massive 12,500 positions from the corporation. This latest development comes 15-months to the day since the company made 13,000 redundant. The corporation is rationalizing its business, looking to emphasise on AI products and streamlining its layers of management. Statements from those impacted by the mass layoffs over the last few months have called the conditions within the corporation a “bloodbath” – the impact of the once-successful computer manufacturer is rocking the company to its core.
The “Videogames Job Apocalypse” continues apace in the sector, and the media side of the business continues to feel the pressure. It was revealed that an unspecified number of journalists and media executives had been jettisoned from Gamurs Group. The operation, at the time of writing, ran some 17 publications covering the consumer videogames market, including Fanboy, Siliconera and Twinfinite. Many of their staffers had been let go, who reported the spate of layoffs. What will be the final situation for these media outlets is still unknown – the latest major layoffs from videogames news media.
Following on from the Microsoft restructuring, and it was announced that the games studio Tango Gameworks, part of the operation, had been sold off to Krafton. This comes as Microsoft had been reported to be shuttering the game studio (along with Alpha Dog Games and Arkane Austin). The sale of the Japan-based Tango Gameworks to the Korea-based videogames publisher Krafton, having received investment from Tencent, known for its successful ‘PUBG Battleground’ title, will see the operation look to expand its international footprint in the market, on the back of record sales of some $1b – growing 40-percent in business year-on-year.
The reality of poor business decisions by some bloated games development houses was brought into sharp relief with the news that Rocksteady studios would be starting a series of layoffs. The corporation had been embroiled in the poor response to their most recent game releases, in particular ‘Suicide Squad: Kill the Justice League’, that failed to sell, generating a reported $200m loss for owner/publisher Warner Bros. The ramifications of the poor releases are expected to continue to be felt across the corporation, although media only had news of sackings in the Q&A side of the business at time of writing.
Developer of mobile games, Tilting Point, announced that it would be starting the process of laying off 20-percent of its workforce. The move is seen to make the company able to continue operating healthily. The company has developed over 150 game titles over its 12-years of operation. The situation seems to indicate the need to address over-staffing undertaken during the lockdown – the operation raised some $235m in 2021 and had aggressively acquired game studios to grow the organization, but the recent announcement now reveals the operation is downsizing across the board.
The confusion and unhappiness in the videogames development sector is best illustrated with the news that the entire staff of Annapurna Interactive, the game publishing division of Annapurna Studios, had resigned en mass. The 25 staff had been embroiled in a dispute with the operation’s owners to spin off the game development arm, the abandonment of negotiations resulting in the walkout, leaving the operation in confusion, unable to complete internal projects. The studio had recently released the successfully received title ‘Stray’.
The M&A conditions of the entertainment sector saw another videogames developer consumed. It was announced that the work-for-hire studio Wushu had been acquired by game service provider Keyword. This is the second UK studio the operation has acquired to expand their business presence in this important sector. No word regarding the amount of the settlement or if restructuring following the amalgamation into the operation will see layoffs.
This was illustrated by the likes of Virtuos, who acquired indie game developer Third Kind Games. The move was reported as part of a drive to enhance Virtuos’ AAA co-development capability. Another shoe dropped in the ongoing collapse of videogaming media, with the news that GameStop had shut down their long running magazine service Game Informer. First published in 1991, the service had a strong following with videogame players of all ages, as one of the longest running periodicals in the genre. The service had been acquired by GameStop in 2000 – all staff would be made redundant with the decision to close the service (roughly 120 employees). This followed the laying off of half of the-then workforce in 2019. The company deleted their archive and digital presence – shuttering the operation overnight
The changing landscape is also reflected in the continued investment in eSports. The drive for eSports seem to be under review, with news from the League of Legends EMEA Championship (LEC) 2024 Season Final, that took place in Germany and saw viewership of some 606,000. This marks a decline on last year’s record number of 654,000. Speculation on the reason for the decline varied across fan sites, while the main criticism seemed to be the lack of excitement from the streamed competition.
Mobile free-to-play games studio Fusebox Games was acquired by Nazara Technologies for a reported $27m. The acquisition is part of a $100m commitment by Nazara towards growing its corporation into being a global gaming company with interest in eSports. It was announced, through several news services lead by Esports Insider, that the North American professional eSports organization Oxygen Esports (OXG) had closed and laid off its entire staff, effective immediately. The direct impact of this closure sees the training teams losing access to the OXG’s Helix facility and their apartments – which will also impact the sponsored teams competing at the Esports World Cup in Saudi Arabia. OXG was formed in 2020 with the combining of several independent eSports teams and sponsors and retaining the Helix eSports tournament facility.
eSports and digital entertainment company NIP Group has announced a large partnership with hospitality company BTG Homeinns, one of China’s leading companies in the space. Together, the two companies will work on the development and operation of eSports-themed hotels in China. NIP Group recently listed on the NASDAQ stock exchange.
The first eSports hotel based on this partnership will open in Q4 of this year. Meanwhile, PGL, eSports tournament league organizers, announced they had acquired from Esportal several assets, including key matchmaking platform elements. This has been achieved to build a global matchmaking service. Assets include the Inferno Online chain that Esportal acquired in 2017.
Some observers are speculating that this current implosion is worse than the 1984 videogames crash. The fallout of job losses across the entertainment industry were also felt, with the news from Paramount Global that some 2,000 positions,15-percent of their US workforce, would be laid off. This comes ahead of the completion of the merger with Skydance. The corporation is restructuring its operation in preparation of combining the workforces. This news was followed by the announcement that Paramount Television Studios would be shutting down, after 11-years of operation, as part of the cost-cutting initiative hoping to make $500m in cuts.
At the same time, it was announced by Paramount Global that they had partnered with retail giant Shinsegae Group to develop a $3.39b international theme park project to open a 4.2m sq.m. park complex outside of Gyeonggi-do, South Korea. Set to be developed to the affiliated Shinsegae Hwaseong operation, the project includes hotel and golf course, along with the theme park, and is expected to attract some 30m guests once open in 2029. The venue will include attractions based on movie and television properties including Star Trek and Sponge Bob.
Restructuring was also seen impacting other Hollywood studios with news that Warner Bros. Discovery would see its videogame division licensing out its tentpole IP to other developers – this on the back of the failure of their developed ‘Suicide Squad’ game. WBD will also be looking to offload other properties as it restructures the operation in attempts to redress the haemorrhaging of revenues. In the face of all this it was reported that WBD was looking to commit to opening a $8b studio operation in Las Vegas. This would complement their Burbank and UK operations, representing the largest producer of film and television – a profitable division.
One aspect of the changing conditions in consumer gaming has been the growth of diversity. The biggest examples are the applications of videogames IP into other sectors, such as seen with movies being launched based on videogames characters and properties. Another IP crossover has been the development of Retailtainment experiences that offer videogames and streaming series a chance to enter the physical realm and generate new revenue streams. An example of the crossover can also be seen with the current condition of retailer GameStop – a 4,000 international chain of stores selling video games and peripherals, most famous for its “MemeStock” status. The corporation recently announced that it would be closing several of its stores, with the slow death of physical media and, in a surprise move, would be launching a redesigned version of existing US stores focused on selling retro video games. Some sources say that these new retro stores will lean heavily on an arcade style layout, though no word if these stores will have pay-to-play elements with classic arcade games. This presents a possible surprise competitor for existing mall arcades.
The brainchild of two location-based experience enthusiasts, Christine Buhr and Brandon Willey, the LBX Collective aims to inform and educate, create opportunities to connect with industry peers, and to spur collaboration, discourse, and cross-pollination of ideas.
Get notified when we drop new episodes of any of our vodcasts and any general updates going on over at The LBX Collective.
Are you sure you want to cancel your subscription? You will lose your Premium access and stored playlists.
✖