In the corona crisis, computer games are booming like never before

Dusseldorf The World Health Organization (WHO) has just published an unexpected appeal: Those who feel alone due to the exit restrictions during the corona crisis should play computers with friends – connected at a safe distance via the Internet. “Play apart together” is the motto of a campaign through which the authority wants to reach people together with large game manufacturers such as Activision and Riot Games.

This is a huge boost to the industry’s image. Ironically, the WHO, which recognized computer game addiction as a disease last year and has received massive criticism in the scene, recommends games as a remedy for boredom and isolation. This applies above all to multiplayer titles in which many users play together or against each other over the Internet, whether on the virtual soccer field in “Fifa 20” or the battlefield in “Fortnite”.

Not that it needed this recommendation. With millions of people staying at home worldwide in the face of the corona pandemic, the use of computer games is increasing rapidly. At the end of March, the Internet node De-Cix in Frankfurt announced that the number of users of online and cloud games had doubled within a week. According to market researchers, the purchase of software is also growing strongly.

Nevertheless, the mood at many companies is subdued. Some studios are faced with the question of how to keep to schedules, given the exit restrictions – this is particularly important because the new Playstation 5 and Xbox Series X consoles will be launched at the end of the year.

Others fear that with the economic downturn, demand will collapse. According to a survey by the Game Association, almost two thirds (62 percent) of German providers expect that the economic environment will deteriorate.

The game lobby therefore demands support beyond the regular state funding. “At the moment a lot of people are playing, many platforms are setting records. At the same time, however, companies are already threatened with financial difficulties, ”says Felix Falk, chairman of the Game Association.

Always high on Steam

A closer look reveals that the pandemic will have very different effects on the various providers in the game market. In an analysis, the renowned gaming expert Pier Harding-Rolls formulated the expectation that the corona crisis would accelerate the trend from physical gaming media to digital games and game enhancements.

A good barometer for the use of computer games is the Steam platform, through which you can buy titles and play directly – like an app store for smartphones. For many users, it is the most important point of contact for getting new content. Provider Valve reported 24.5 million online users at the same time, of whom 8.2 million were playing – an all-time high. Individual titles such as “Counter Strike: Global Offensive” attracted more than a million at the same time.

Players not only download more titles, they also spend more time doing it. “57 percent of German video gamers state that they spend significantly more time playing video games than they did before Corona,” explains Michael Heina, who heads up e-sports activities in Europe at the market research company Nielsen. The purchase of digital objects within the games has also increased recently. So people use the extra time for games – and also spend money on them.

At the same time, computer game fans are spending more and more time watching e-sports, ie competitions in games such as “League of Legends”, “Counter-Strike: Global Offensive” or “Starcraft 2”. In recent years, worldwide tournament and league operations between professional teams have been established. The live events that operators use to fill entire sports arenas are currently canceled, but millions of people watch online.

Platforms such as Twitch and Youtube are benefiting from an increasing number of viewers, as are providers such as ESL, which organize competitions. “We can also hold the tournaments online without anyone having to travel,” reports the Cologne-based company, which is the world’s largest independent league operator. “We are currently doing this and are achieving record numbers of viewers.”

The company Riot Games, which organizes its own professional leagues for the e-sports top title “League of Legends”, has recently reported a ten percent increase in audience. “People want and need entertainment, new content and a feeling of connectedness more than ever,” explains Alberto Guerrero, head of the European e-sports department. The e-sports are in a unique position to be able to offer this spectator sport without a physical presence.

Market researchers speculate that the corona crisis could benefit virtual sports in the long term. “In the current situation, it would be possible that there is a kind of ‘baby boom’ in e-sports, since the group of gamers is currently growing,” explains Nielsen analyst Heina. In other words: If you are interested in video games, you will increasingly watch them as a spectator in competition format.

As long as the exit restrictions apply and other leisure activities outside the home are not possible, the boom should continue. That should also be true for listed game providers like Activision, Electronic Arts and Take-Two Interactive have a positive effect, as the investment bank Piper wrote in a note for customers – analogous to other companies in the “Stay at Home” category such as Netflix, Zoom or Peloton.

Bottlenecks Nintendo

The corona crisis also brings with it some uncertainties for the games industry. Firstly, this concerns hardware production: in China and other East Asian countries such as Vietnam, the production of electronic products has been idle for weeks. Now, for example, Nintendo has problems supplying fans with the Switch console. Particularly annoying: Many fans of the “Animal Crossing” series are currently trying to buy the hardware in order to be able to play the new episode “New Horizons”.

The competitors Sony and Microsoft emphasize that they will launch their new Playstation 5 and Xbox Series X consoles on time this year despite the production problems. To what extent, however, is not clear. Delivery is important for companies: a new generation of hardware traditionally gives them a boost in sales.

Second, there is the question of how companies program the new software. The providers have had to temporarily close many locations, most of their employees are in their home office – according to a survey by the computer games association Game, 87 percent of companies in Germany use this option. As a result, some titles are delayed, “The Outer Worlds” for the Nintendo Switch comes later, for example, it should be similar for others.

The video game giant Ubisoft for example, cannot yet assess the consequences of the pandemic: “Our company has studios at more than 40 locations worldwide, which are affected by exit restrictions one after the other and to different extents,” says Ubisoft manager Ralf Wirsing. 90 percent of the studios would currently work from their home office. “We still cannot say what that means for productivity.”

The market research company Newzoo sees no fundamental problem. “We do not expect the outbreak to have a significant impact on the development of game software,” wrote it in a first analysis at the end of March – even if there could be a slight impairment in efficiency. However, as with so many expert statements, the following applies here: there are few certainties in the corona crisis.

Third, the contact blocks make marketing much more difficult. Several conferences and trade fairs have already been canceled. Gamescom, which was planned for Cologne at the end of August, is to take place exclusively digitally after the ban on major events has been extended.

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However, the organizers already announced at the end of March that they would like to organize Gamescom at least digitally and including the congress over the full duration. What is missing are the back room deals – and the audience.

From the Game’s point of view, a failure is critical, not only because the association itself is the sponsor of the fair: The event is one of the most important dates for the international games industry because the games for the particularly important Christmas business are presented there, says Felix Falk . Many games are playable for the public for the first time. “This makes Gamescom the decisive event for marketing and sales of the games companies in the second half of the year.”

For the game developers, it is not just about sales: they usually find their partners at the trade fair. Therefore, uncertainty spreads. “There are no events, no networking, no trust building,” says Johannes Roth, CEO at the game developer Mimimi Productions.

What will happen to Gamescom?

Fourth, it is unclear how the economic crisis will affect demand. Large companies may get through the crisis well, but independent developers, service providers, specialist media and retailers could face problems – their work is currently less in demand.

The situation is particularly difficult for game developers who have not yet established themselves. For example Michel Wacker from Gentle Troll: He wanted to secure the financing for his new console game Under Down at the “Reboot Develop Blue” conference in Dubrovnik in April and at the “Nordic Game” in Malmö in May.

The problem: The prototype needed to be explained and the promise of partial funding from FFF Bayern was conditional on the fact that he would find another partner by November. “With many publishers, we can now only send in our documents without comment,” says Wacker of the situation. “When you do this for the first time, you easily go under during the move to your home office.” The contact with some publishers was simply broken.

Wacker’s experience confirms the forecasts of expert Pier Harding-Rolls: The cancellation of the game conferences will likely hit smaller game developers and publishers more than big ones. So far, Wacker has hoped for Gamescom, which would have come just in time for him. The future of his game is now more uncertain than ever.

More: Tech companies are reaching their limits due to the home office boom

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Xerox withdraws billion dollar offer for HP

HP headquarters

The hostile takeover of the computer manufacturer was canceled.

(Photo: AFP)

San Francisco The US printer manufacturer Xerox In the middle of the corona virus pandemic, the planned hostile takeover of the computer company HP stops. Xerox described Tuesday night’s move as disappointing, but necessary to focus on addressing the current crisis.

Xerox had $ 35 billion for the much larger one HP offered, which makes about six times as much annual turnover. The group should have largely financed the acquisition through new debt.

Not only the financial uncertainty caused by Corona seems to have made the deal impossible, but also the impact of the pandemic on the business of both companies: Xerox mainly sells large printers that are used in offices and are currently hardly used and least of all are bought. HP, on the other hand, benefits more from the trend towards home office.

The Silicon Valley pioneer makes two thirds of its sales with home computers, and its printers are also aimed at private individuals. In the crisis, Xerox’s business is under more pressure than HP’s.

The value of Xerox stock has halved in the past five weeks, while HP’s share certificates have fallen by around a quarter, about the same as the overall market.
Both papers suffered from the end of the takeover fantasy: Xerox shares fell by more than two percent in morning trading in New York, and HP shares fell by more than nine percent.

Icahn is already moving on

The streak puller behind the deal was the activist investor Carl Icahn, who at least temporarily held larger shares in both companies. Icahn already seems to have shifted his focus: In an interview with CNBC, the billionaire said recently that the shares of some corporations are now being “given away”. He had long considered the stock market overvalued, but now there are stocks of some solid companies to buy cheap.

The withdrawal is considered a victory for HP boss Enrique Lores, who had rejected the takeover offer published for the first time in November as too low. In February, Xerox increased its offer again, whereupon Lores showed unwillingness to talk.

Now the Spaniard, who has only been leading HP since November, is confident that HP can survive the crisis on his own: “We have a healthy cash position and a balance sheet that enables us to tackle unexpected challenges like a pandemic while at the same time being strategic To keep options open for the future. ”

HP has invested heavily in the development of industrial 3D printers in recent years. These were used in the times of Corona in the production of face or respiratory masks.

More: Follow the current developments in the corona crisis in our news blog.

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