Kinsey Fabrizio (00:00):
The gaming industry is evolving and it has a home at CES. Join our global community of influencers, developers, publishers, and investors that are on the hunt for the latest immersive experiences. From consoles to cloud platforms, wearables to eSports, CES gaming has it all. Reserve your exhibit space today at CES.tech/exhibitor. James Kotecki (00:37):
This is CES Tech Talk. I'm James Kotecki. CES 2024 is January 9th through 12th in Las Vegas and it's time to build the hype, so let's get smart about the world's most influential tech event. Gaming, you love it, your kids love it, your parents love it. We all love it at CES. It's an essential part of every CES conversation. And today we bring out the big guns with not one, not two, but three amazing players. Mike Lucero is the head of product management for gaming at Samsung, Daphne Parot is the chief marketing officer at Blacknut, a cloud gaming service and a Samsung partner, and joining us as a returning guest, and I'll just say a returning champion is Brian Comiskey, who covers tech trends for the Consumer Technology Association, which produces CES and this very podcast. So let's get serious about playing some games. Brian, let's start with you because it seems like everyone is a gamer now, but you actually have some data from your analysis to understand what does that actually mean? What are some top line numbers you can give us to help us understand basically the context of gaming here, middle of 2023 as we're headed towards CES 2024? Brian Comiskey (01:51):
Of course. And I like to categorize how we define this top line in two ways. I think first, let's look at the Consumer Technology Association's forecast numbers from our semi-annual forecast product. The US gaming software and services market is expected to reach 48.6 billion in 2023 per our latest software and services industry forecast. The hardware side is expected to reach 6.9 billion in 2023 per our latest July forecast there. So you already have a market that's growing that is quite large in the billions in terms of expected revenue. But what does it mean on the gamer side? And so by the end of last year, we had done our future of gaming 2022 study, and it found that 73% of the US population ages 13 to 64 play video games weekly. The average gamer in fact plays 24 hours per week, up 50% from 16 hours in 2019. So one, this market is growing, more people of all ages are engaging in it, and it's just an exciting time to be a gamer or an analyst watching the gaming industry to be frank. James Kotecki (03:05):
And so to be clear, that analysis of how much time people spent playing games, is that all firmly in the kind of post pandemic world? Maybe habits that they picked up in the pandemic are sticking? Is that kind of what we can take from that? Brian Comiskey (03:18):
Certainly. I think a really good way to contextualize what happened was an evolution from gaming from being just simply entertainment and fun entertainment at that to really a social media platform in a lot of ways. A lot of people turned to video games as a form of connection in a time when people were apart and realize that this is a great platform and medium to continue doing that post pandemic. So I really think that what you're seeing is just this evolution of what gaming is logically becoming from an entertainment perspective. James Kotecki (03:50):
And speaking of evolution, people probably think of video games, they think of consoles, right? That's maybe the classic understanding of what playing video games is, but Mike, of course, Samsung is changing the definition of what video gaming is with its Samsung Gaming hub. This came out in the middle of 2022, so about a year ago from the moment that we're recording this conversation here. Can you give us a sense of what this is, what it's doing today, and what the Samsung Gaming Hub means about where gaming might go in the future? Mike Lucero (04:20):
Sure, yeah. And super excited, first of all, about the data. It's obviously great to be in a growing market. I've been in the business for quite a while and it continues to grow, which is just really exciting because really the new form of entertainment that surpasses all other forms, because it's so interactive, so social, all those things you mentioned sort of factor into that. So with the Samsung Gaming Hub, which we launched about a year ago, like you said, the idea is that we've basically created what I call a virtual console that brings all sorts of gaming services together in a user interface that feels very natural to gamers. You've got all those great services sitting side by side. So at the end of the day, it's really about choice for gamers and really giving them the best games, the best ways of interacting with them for the game type, and also other forms of gaming entertainment like Twitch or YouTube gaming. So it brings all things gaming together in one place in a very user-friendly environment. We just announced that game streaming is available on 21 million TVs around the world. (05:33):
Since we've launched the service, we've had 13 fold increase in the amount of people using the gaming hub so it's definitely taking off. We're seeing all sorts of gamers flocking to the platform as of Summer Game Fest, and we announced Blacknut and Antstream, and welcome Daphne with Blacknut, that we have over 3000 games available. So in less than a year we've surpassed that number, which is really exciting. The beauty of that is it's games of all genre types. We've got sort of Xbox for the more serious gamers, with Blacknut, we've got more family oriented games. Each service has its own unique place in terms of the audience segments, and I know we'll talk about segments in a bit, and there's so much diversity in the gaming community that we're able to serve all those through a single TV. The beauty of this, you can play games directly through the TV, no console required. You can use an Xbox controller, you can use a PlayStation controller, you can play Xbox Games with a PlayStation controller so it's really all about choice and freedom. (06:42):
With the advent of partners like Blacknut, you can also use the remote controller to play some of those games and also some of our partners have mobile remote as well, so you can play with remote. The whole goal is to open it up to as many people as possible on as many form factors as possible and bring the greatest games. Obviously, we're super excited about Starfield coming out later in September. And the fact that you can play it the day it comes out and you don't have to download it, I mean it's going to be a huge game, both hopefully in terms of the impact on the market, but also physically a huge game. And one of the great benefits of game streaming is you don't have to actually download software, you can just play it directly through the cloud. You can just play instantly. So you can actually play games more quickly than if you had the disc in hand, which is pretty cool for gamers and they really like that notion of instant and not having to manage storage and all that kind of stuff. James Kotecki (07:39):
I really want to get into what Blacknut is bringing to this, but one more just kind of clarifying question on the Samsung Gaming Hub. Is the vision here that people are going to ditch their consoles or never need to get a console in the first place or is it kind of additive? Does it fit into a universe where people still want or need consoles for a serious hardcore gaming experience? What's the vision of that? Mike Lucero (08:02):
That's a great question. And our goal is to be additive, not replacement. We love all forms of gaming, so we have basically a row where all the apps live, but also you're right by the console, so you might see a PS5 there, a PS4, an Xbox right alongside Blacknut so we definitely embrace all forms of gaming. What it does is it removes the cost of having to buy a console. So for example, if you're a PlayStation user and you want to play Starfield on September 6th, you can use your PlayStation controller to play Starfield and don't have to actually buy a console so it's a much cheaper form of being able to play that game because at the end of the day, it's about great games. So it's more about accessibility than really removing any experience. But we know there's always going to be hardcore gamers that want to do consoles, there's always going to be hardcore gamers who want to do PCs. It's just a new way to game and just make it easier for more people in the household to do that. James Kotecki (09:04):
And speaking of great games, let's bring Blacknut into the mix. Daphne, my understanding is Blacknut is all about cloud gaming, and so can you just tell me maybe even on a philosophical level, how do you think about the games that you build, how do you think about the audience that you're building it for, and does the fact that it's kind of cloud-based really play into those decisions? Daphné Parot (09:24):
Yeah, I think the data shows where gaming content is gaining more and more audience and affinity. I would say getting to be in the noble kind of entertainment, not only for geeks and not only for people worrying about hardware and the best GPUs, and that is why cloud gaming is such an innovation and such a good thing I think for the content owners also to democratize, open the content to anyone who wants to access it with no difficulties in terms of barrier of technology. It's exactly the same way that before you were going to the cinema to see a movie and now you can have a VOD on your TV, we are exactly in the same spot right now with gaming content, except it's not passive content that you just consume, you are interactive in the way you can interact with the content which is streamed exactly in the same way that the movies are by other platform. Yeah? (10:35):
So I would say cloud gaming is this. It opens content access to a larger audience, to more people that don't really care about hardware also, they just want the good content and they don't want to manage the technical part of gaming. We also have the ability through cloud gaming to have a cost device approach of the content. That mean for Blacknut you can start your game on the Samsung TV and then go on holidays and continue on your Samsung mobile or other mobile tablets, PCs, and join your game exactly where you were on another device. This is so great in terms of freedom for the consumer. And also, I would say for the content and the publishers and the content owner and developers, it allows them to reach new audience also worldwide, because some region are not PC very familiar, they are more mobile based consumers. And so now you can play PC games on any device, even a PC, even if the screen is smaller, I will say, the content can be accessible on other device than it was built for. James Kotecki (11:56):
And so then a question to all three of you, do we see in the data that this move towards the cloud makes people more willing to do maybe what they do on Netflix, which is browse a lot, dabble, try something, discard it, try another thing for five minutes, discard it, then find the thing that they're totally obsessed with and play it for days. Do we see that showing up in different ways of consuming that gaming and content just as streaming on Netflix for example, changes the way that we consume that kind of entertainment? Daphné Parot (12:27):
It's true that in the model of Blacknut, it's one subscription and you can consume any games of the library so it's more than 700 games now that you can pick to. And it's true that it's helping also people to discover new content they wouldn't have not buy. Yes? And also the curated way that you can recommend content, associate content with others, on our side, Blacknut, we are also providing some business partners with the service, and we are all now in the cross content recommendation also. I like a movie, I can play the games that is related to it or the query. Yeah? I'm playing one movie, and then I am playing one game, and then I want to see the movie of the same IP, so it's enlarging, I would say, the fan base of an IP and the content in consuming this content in many ways. Yeah. Mike Lucero (13:24):
We've seen the same behavior sort of across the board. There's a segment of users we call the hummingbirds, and like you said, they basically try things until they find the thing they love and then they binge on that, which is very much like you said, the Netflix model. We really do see that transformation happening right now, and that's why consumption is going to continue to go up, because again, it's that friction of time, all those hassles, it's all about convenience and removing those physical barriers of getting those games onto your devices and getting everything hooked up. Removing all that really allows people just to focus on the thing that really matters, which is the great content. Brian Comiskey (14:09):
And I think to contextualize that, I really like this discussion of where gaming as an entertainment has started to converge with other forms of content and entertainment really, right? A stat I read the other day that really solidified how generationally to that shift's occurring is, I think it was called YPulse, 99% of Gen Z males play games, spending more time gaming than watching TV, for example. And you have in 2023, an estimated 540 million eSports viewers, which is an increase of one and a half percent from last year. So really when you're thinking about what that is we watch the evolution with the rise of Netflix and other streaming services move of, well, I want to watch a show and I can pause it from my TV, go right to my phone. As we know that form factor and the preference for smaller screens and more mobile screens worked on video, same thing with gaming. And in fact, you're already starting to see a pivot in terms of how subscription services are being adapted and adopted by US gamers. So 43% of US gamers now pay for a gaming subscription service and a lot of those subscription services, that's how you get the entry into that cloud market and model, which gives them that portability. That's really, when you think about accessibility, it's about portability. James Kotecki (15:34):
And what's so interesting is that psychologically what's going on for the user in their head might be something that they don't necessarily notice the differences in these industries that we like to demarcate in conversations like this. I'm watching eSports, and then I just click over one tab or something in my phone, I switch to a different app really quick, and now I'm playing that same game. So
in the user's mind, they're kind of having maybe one continuous or slightly differentiated experience, but it's not as if feel like they've been been dipping into multiple industries. So I wonder, Mike, is Samsung preparing for a future where movies, TV shows, which increasingly can be based on video games, video games can be based on movies and TV shows. Obviously eSports can go, you watch eSports, you can play the game that the eSport is based on. Is Samsung thinking about this kind of blend, this kind of mashup of all these, what we previously defined as different genres, different industries, all kind of merging into this glob of entertainment customization? Mike Lucero (16:36):
Yeah, I mean, that's kind of what I described earlier. The fact that yesterday I was watching Twitch on my TV and it was all about Balder's Gate, and then I go back to the Gaming Hub and see that it's on Nvidia, on GeForce NOW, and I buy it. So I mean, A, they cross promote each other, but B, they're all in one place, so that convenience really drives crosspollination. It's a win for Twitch and a win for Balder's Gate and a win for Nvidia. So again, it's creating a place where you can drive awareness and affinity and then drive purchase and just great experiences for the gamer. Another great example is The Witcher. Obviously that's a Netflix series, but again, that's available on GeForce NOW as well. So you can watch the Netflix show and then you can fall in love with the IP there. You may not be a Witcher enthusiast, but then you realize that it's available in 4K, by the way, on Nvidia, and then you can play the game. And then you'll probably be spending a lot more time with it actually as the game. (17:47):
As you mentioned, Brian, people typically spend more time with the games because they're longer journeys, longer experiences, it's a deeper relationship, but it goes back and forth and it's really wonderful how it's like your more of a lean back mode and Last of Us as a great example, you're more in a lean back mode and watch the TV show and really fall in love with the characters, but you want to actually do something, then you can go back to the game, which is what happened when the series came out. Actually, Last of Us gameplay and sales went way up so that's just a great example of all boats rising. James Kotecki (18:26):
I want to make sure we touch on generative AI in this conversation. Brian was actually on the first episode of this season of our podcast talking about AI, and so I want to bring AI back into this conversation thinking about the way that games are made and experienced in potentially new ways. Daphne, how are you and how is your team thinking about the way that generative AI can help create games maybe that you would traditionally create, but you can create them faster, and also maybe new kinds of games, maybe new kinds of customizations or ways of interacting with individual users? I don't know, creating elements of the game in real time or quasi real time, I think it seems like quite an open field of possibilities. Daphné Parot (19:13):
Yeah. Well, there's a lot of way where AI can optimize, I would say the production process, but also provide more personalized experience. For example, the way you talk with PNGs, the game can be more native and really personalized with the question that the user is asking. But on our side, we also have more hidden facts that we need to optimize. For example, on the cloud part, the way the game is streamed, and so adapt also ourselves to the connectivity's fluctuation, optimize the feeds, so the latency is the best for the players. So there's a lot of way where AI is going to create, I would say, optimization in that part. That's true, but they're also in the building of the texture, the creation of
worlds and environments, immersive way to create content and creative backgrounds. So yeah, I strongly believe that there is a powerful tool here for lots of small parts and bigger parts more visible for the player or not, that is going to be productive. Brian Comiskey (20:32):
It's amazing because thinking about generative AI as a future state, but we've already seen how artificial intelligence has impacted games that are out today. I like using examples. So one that jumps to mind is a game like Alien Isolation. So if you're familiar with the Alien franchise, it's a survival horror sci-fi franchise. Well, what they've decided to do is, well, let's take this put in a video game form, because people are craving interactive content. So your goal is to survive against this alien, but what if the alien learned what you did in terms of how you avoided running away from it or obstacles or what you did to prevent it from catching you in the game? There's an AI algorithm powering the learning behind the Alien, which is a very clever, unique way to create content for the gamer. (21:19):
Now, generative AI in that long term, what it looks like for the future state, that's on the developer side, when reviewing the trends, where's that going? Because what we've really seen is how gaming development cycles are getting longer and longer because the games are getting larger in scale, they're getting more immersive, which is one of the most important goals with any gaming experience. And so with generative AI, you might be able to create a whole new realm of tools, platforms, and assets that can quickly replicate an environment so that way a human's only coming in for what's called the polishing part, the smoothing for the end state for that user, especially when you think about how many consoles and platforms they have to develop for now. Mike, you mentioned Balder's Gate, and I love that you dig because I'm very excited for that game on the Xbox, which is the console that I own, but it came out on PC yesterday. It's coming out on PlayStation in a few weeks, and there's no release date for Xbox because they're trying to figure out how to reconcile the visuals for the Series S model versus the Series X model. They have to make sure that there's console parity. (22:25):
So in that regard, a generative AI tool theoretically can make some of this porting, what's called porting or bringing it to other consoles and environments a lot easier. And that's where I'm excited for things like the gaming hub that we're talking about today, because that also is a solution to what's quickly becoming a challenge of I want a seamless ability to play games across platform at any time. Mike Lucero (22:46):
And that's a great example because obviously Balder's Gate is on Nvidia, that's the PC version. You have access to more versions of games depending on which platform they come out on. So again, it gives you more choices in terms of where you can purchase that content. It opens up and basically your TV becomes the window into more gaming platforms than individual platforms. Daphné Parot (23:13):
In the meantime that we solve the problem of hardware, you can always stream the games on any device like we do at Blacknut, so you solve the hardware issue to wait for it. James Kotecki (23:25):
We can't have a game in conversation without touching on the latest and the visions that we see in virtual reality, augmented reality, haptic technology. That would obviously be an entirely separate
episode, and we could have a great conversation with these three folks, I'm sure about that. But Mike, just real quick, as we're headed towards CES 2024, what is the latest state of the gear that we're going to be able to use to experience horrifying aliens or mystical fantasy realms with increased realism around our entire bodies? Mike Lucero (23:56):
What I'll say is just in terms of haptics, we support rumble in our controllers, several of our services support the existing haptics as well as voice chat and all that. So we have sort of met the bar of current immersive experiences, and again, with things like 4K and being in the biggest TV and the house, that is obviously a very immersive experience as well. In terms of actually what I'll call NextGen experiences like VR, I think Daphne might have even more insights on that because she's closer to this and the publishers that are doing stuff there. Daphné Parot (24:37):
Yeah. Well, I'm a big fan of VR. I actually have three headsets at home. The technology is there to have a good experience. I had very nice experience with some games built for that in a good way. I love, for example, the Moss game that was like a fairytale. But I think the content is not already yet enough produced to engage user in a bigger way, in a massive way. The publisher part for now, we're not completely focusing on VR for cloud gaming on our platform because we are more targeting family, people that doesn't want to invest in hardware, so this is not our priority right now. Also, it will mean a lot of power to stream both screen because you have two screen, one for each eyes, yes? In a very large scale and resolution, I think it will be difficult from the internet part to support VR by cloud gaming. Yet on the 2D wide screen experience, we already have done pilot on it. That means projecting the games on the cinema inside a VR environment as to have the bigger experience, bigger screen, [inaudible 00:25:56] inside a headset. But to stream VR in cloud gaming has got to be yet a bit touchy in the short term. James Kotecki (26:06):
Yeah, yeah. Mike Lucero (26:06):
Yeah, and I think it's a- James Kotecki (26:10):
Not at all trivial. Mike Lucero (26:12):
It's not a big secret that one of the biggest challenges in cloud streaming or game streaming is still the cost of delivery. I mean, costs are coming down really rapidly and that's making all that more feasible, but at the end of the day, it's going to become a business decision around the cost of streaming. And there's an audience thing too, so it's going to take time, but I think we're all excited. When it gets there, it's going to be some... Like Daphne, I've had the PlayStation VR back when it came out, and there's some really amazing immersive experiences. The user experience has gotten so much better lately. I had one with all the wires and I was tripping over myself, and now with the Oculus and some of the other, obviously the new Apple device- Daphné Parot (26:56):
Actually, we are- Mike Lucero (26:57):
It's much more seamless. Daphné Parot (26:57):
We already doing some tests with some of the R&D teams of some of the biggest VR headset builders, but we are more looking into the 2D wide screen experience in the first step as to enjoy the game, like in cinema. Yeah? James Kotecki (27:15):
So you put on the VR goggles, but it's to enjoy effectively a very wide screen experience in a 2D format? Yeah. Daphné Parot (27:23):
Exactly, that's our first step in what we're looking to. Brian Comiskey (27:26):
And the thing I'll quickly add is as the experience has improved and the technology is improving interest is there. That's the last thing I want to highlight too from our future of gaming study at CTA. 41% of gamers are interested in gaming experiences on a VR headset and 29% plan to purchase a VR headset in the next 12 months. So the interest and the want is also there now, so that's that convergence of interest, tech, experience, and just how is that going to shape the future landscape of immersive gaming. James Kotecki (27:58):
Well, this is such a rich conversation. We could easily have doubled it in length, but unfortunately we're about to wrap up. So I want to just go around our virtual table and just get one sentence, one phrase from each of you. What is a gaming thing that our audience can be excited about for CES 2024? You can be as specific as possible. If you need to be a little bit more general because you don't want to give away any secrets, that's fine. But a gaming thing to be excited about at CES 2024, we'll start with you, Mike. We'll go to Daphne, and end with you, Brian. Mike Lucero (28:28):
Right now it's all about more great content, more great partners. We're going to continue to double down on more great content. So yeah, I would expect more amazing games. At the end of the day, it's an entertainment business around content so that's where we're putting a lot of our energy right now. James Kotecki (28:46):
Daphne? Daphné Parot (28:47):
On our side, in Blacknut, we continue to develop the more screen compatible we can for the content to be accessible. So it's our roadmap to continue integrating with all the manufacturer of device wider. But we are very, very excited about our new product, which is an SDK for media platform to do the cross content opportunities that we talked in before. It is a recommendation between movies and gaming and all, and working with our partners of distribution in that way, bringing gaming inside media platform is our focus right now. James Kotecki (29:29):
So SDK, just to define it, software development kit. So basically allowing software developers to build those kind of recommendations into their own systems. Daphné Parot (29:36):
Exactly. To integrate the game's accessibility and playability directly inside other existing platform. Yeah. James Kotecki (29:44):
And Brian? Brian Comiskey (29:46):
I'm excited about a pair of things at CES 2024 when it comes to gaming. The first is, I don't think it's a coincidence that we keep talking about TV and movies alongside gaming. There's 45 film and TV adaptations currently in development on video game franchises now. So at places like C Space at CES, I'm really looking forward to seeing what the announcements will be from some of these large entertainment companies and what partnerships they might announce with gaming around these franchises. So that's the first one. Secondly, when you go to a place like Central Hall where you'll see the gaming and metaverse exhibitors together, I'm really excited about what immersive gaming looks like. There's a reason at the end we got really excited talking about VR headsets and haptics and could make a whole episode. Well, I think we're going to see that continued evolution of some of those exhibitors that are providing just advanced haptic vests that make you feel like you're in the game, those headsets that give you that multisensory experience beyond just sight and sound, but we're seeing smell and taste being incorporated into virtual reality now so how does that impact gaming? Those are the two probably gaming mega trends that I'm most excited about. James Kotecki (30:55):
Thank you, Brian. And thanks for the Plug for C space where I will actually be having conversations, many of them probably a lot like this one with entertainment and media and tech and marketing leaders about the future of all of their industries. I'm sure we'll be talking about gaming there as part of the C Space studio for now. That wraps up this episode of CES Tech Talk. Mike Lucero at Samsung, Daphne Parot at Blacknut, and Brian Comiskey at the Consumer Technology Association. Thank you all so much for joining us today. Daphné Parot (31:24):
Thank you, James. Mike Lucero (31:26):
Thank you. Brian Comiskey (31:27):
Thank you, James. James Kotecki (31:28):
And hey, that's our show for now, but there's always more tech to talk about, so please subscribe to this podcast so you don't miss a moment, and you can get even more CES and prepare for Vegas at CES.tech. That's C-E-S dot T-E-C-H. Our show today is produced by Nicole Vidovich and Mason Manuel, recorded by Andrew Lin and edited by Third Spoon. I'm James Kotecki, talking tech on CES Tech Talk.