AI transcript
0:00:04 The content here is for informational purposes only should not be taken as legal business
0:00:10 tax or investment advice or be used to evaluate any investment or security and is not directed
0:00:14 at any investors or potential investors in any A16Z fund.
0:00:17 For more details, please see a16z.com/disclosures.
0:00:20 Hi, and welcome to the A16Z podcast.
0:00:22 I’m Lauren Murrow.
0:00:26 Since social distancing measures were first put in place, time spent gaming has gone up
0:00:28 75% during peak hours.
0:00:34 In this hallway-style conversation, A16Z partner John Lai joins me to talk about how the stay-at-home
0:00:39 movement is fueling gaming, what we’re playing, and why live streaming is having its moment.
0:00:44 Playtime in general is up massively across every category of gaming.
0:00:49 PC games erupt, steam, the world’s largest marketplace for digital PC games.
0:00:54 Steam has been around for 20 years and it’s never seen this level of user activity.
0:00:59 Average concurrent users online typically hover around 15 million.
0:01:04 It hit an all-time record high this past Saturday, around 22 million concurrent users online.
0:01:07 So that’s a spike of almost 50%.
0:01:09 Console games are up massively as well.
0:01:10 What is driving this spike?
0:01:15 Obviously, we’re all at home more, but what other factors are coming into play?
0:01:20 So I think what’s special about games versus other types of media is that gaming is a
0:01:24 massive activity that a set of friends can engage in at the same time.
0:01:30 There are moments of levity, competition, there are emotional highs and lows over the
0:01:32 course of a typical gaming session.
0:01:36 These are bonding moments for people and they create really deep social relationships.
0:01:40 It seems like smart game studios are also putting measures into place to encourage more
0:01:41 at-home play.
0:01:46 I know Pokemon Go changed its mechanics a bit to make it easier for people to play
0:01:47 from home.
0:01:50 It changed its events to make it easier for people to play alone.
0:01:51 Absolutely.
0:01:54 Blizzard of World of Warcraft, which is one of the largest and longest-running MMOs of
0:01:59 all time, launched a whole series of benefits during quarantine so that if you’re playing
0:02:05 right now, you actually get double experience as a way of incentivizing people to continue
0:02:06 playing the game.
0:02:09 What kinds of games are popular amid this crisis?
0:02:10 Are there particular titles?
0:02:15 One game that I’ll highlight as an example is a fairly recent one, Call of Duty Warzone,
0:02:19 which is a new battle royale game from Activision that just launched March 10th.
0:02:24 It ended up being one of the most successful and fastest growing PC console game launches
0:02:25 in history.
0:02:30 Over the course of three days, it reached 15 million players, and I think it reached
0:02:32 30 million players after two weeks.
0:02:37 I saw Infinity Ward had 6 million players in its first 24 hours.
0:02:41 I think a lot of games that are launching this month are seeing major spikes.
0:02:48 So Xbox Live, which is the multiplayer service for Xbox consoles, has had several outages
0:02:52 twice over the last week as more users logged on than the infrastructure can handle.
0:02:56 And Microsoft has some of the world’s best cloud infrastructure, so if they’re having
0:02:58 trouble with it, it’s got to be a lot of people logging on.
0:03:03 I’ve read of developers experimenting with ways to include a higher player count and
0:03:08 larger squads with all these new users, but that’s also potentially risky.
0:03:12 As you mentioned, Nintendo, Xbox Live, and Discord have all experienced outages within
0:03:13 the last month.
0:03:17 How are game developers responding to this massive influx of players?
0:03:19 Yeah, it’s a double-wed sword.
0:03:24 On one hand, you have unprecedented numbers of users coming to your servers, and you want
0:03:26 to be able to support them.
0:03:31 Increasing the number of users currently in a session is one way to try to minimize the
0:03:37 sheer number of servers or shards that you need to spin up for a game, but at the same
0:03:39 time that comes with its own technical challenges.
0:03:42 And so I think everyone’s just struggling to keep the lights on.
0:03:47 Discord announced that they had increased server capacity by 20% to keep up with demand,
0:03:52 and promptly, right after making that announcement, they had server outages themselves as well.
0:03:55 This isn’t something that’s just specific to games.
0:04:00 Netflix, for example, just cap bit rates over in Europe, so in an effort to sort of keep
0:04:06 bandwidth down, they’re no longer streaming in 4K or HDTV, and it’s clearly an attempt
0:04:10 to contain costs and continue maintaining the quality of the service in the face of
0:04:11 a lot of demand.
0:04:15 Is there anything surprising that you’ve noticed in the types of games you’re seeing played
0:04:18 more amid the coronavirus quarantine?
0:04:25 Online multiplayer games are the ones that are seen the most obvious and largest growth,
0:04:29 which makes sense because they’re fundamentally social games that you play with other people.
0:04:35 I actually think that VR, virtual reality, might be seen as surge in popularity.
0:04:36 How so?
0:04:41 Well, the whole notion of VR is predicated on enabling people to escape the real world
0:04:44 to a virtual reality, right?
0:04:48 And even prior to COVID, there were early indicators that in-home consumer VR may be
0:04:53 turning the corner, so the Oculus Quest was estimated to have sold well over a million
0:04:56 units before it went in backorder.
0:05:01 The Valve Index, which is perhaps the most powerful headset to date, sold out in minutes
0:05:03 upon initial release.
0:05:07 So VR headsets seem to have finally reached a price point and a hardware quality that
0:05:08 has mass market appeal.
0:05:13 And at the same time, you have exclusive AAA games coming to VR for the first time, titles
0:05:21 like Half-Life Alyx, and Half-Life is arguably Valve’s biggest and most exciting IP, a sci-fi
0:05:24 franchise that put them on a map, initially.
0:05:29 It’s famous for ending the franchise essentially on a cliffhanger, and the resolution for the
0:05:35 story is this Half-Life Alyx game, and it’s a VR exclusive, so you can only find out what
0:05:39 happens if you buy a VR headset and you play in VR.
0:05:44 Educational games are actually seeing tremendous growth as well these days.
0:05:47 Teachers in schools are also holding online classes through Discord.
0:05:49 I think that’s an interesting use case.
0:05:55 So rather than platforms like Zoom, some are turning to apps that were traditionally gaming
0:05:57 platforms like Discord or Twitch.
0:06:02 Yeah, I think they’re picking the platform that their audience is already on.
0:06:07 So if you’re an instructor and you’re trying to get kids to come online in order to listen
0:06:13 to AP buyer or whatever subject matter you’re teaching, it’s going to be easier to convince
0:06:17 them to come online if you pick Discord, because chances are they already use Discord to play
0:06:18 their favorite games.
0:06:23 So Discord actually just made a number of moves specifically to help educators come on
0:06:24 the platform.
0:06:29 It’s the user limit on screen change from 10 to 50 users, so you can accommodate larger
0:06:30 class sizes.
0:06:35 And in this case, the actual friction is on teaching the instructors, the teachers themselves
0:06:36 how to use Discord.
0:06:42 One thing in these gaming platforms is that as we’ve seen with video conferencing, the
0:06:45 natural rhythm of the conversation is off.
0:06:49 It’s difficult to respond without interrupting, sometimes it’s difficult to interject.
0:06:57 So when it comes to learning how to have a live interactive conversation online, ironically
0:07:03 I think gamers have received way more training in that area than almost any other demographic.
0:07:09 Because the very nature of playing a game and chatting with someone over Discord or
0:07:14 interacting with a livestream, it’s basically a constant act of juggling foreground versus
0:07:15 background activity.
0:07:19 And so being able to contact switch from okay, I’m listening to the lecture, to now I have
0:07:22 a question and we’re going to talk about this question.
0:07:26 This is something that gamers and then livestreamers in particular have a lot of experience with.
0:07:31 And I think it’s interesting to think about how this might become an increasingly more
0:07:38 critical skill in society as more teams and general folks start working and learning remotely
0:07:40 versus in person traditionally.
0:07:46 So you’re saying gamers may actually be prepared for this future whereas perhaps most of us
0:07:49 who are not gamers may have a steeper learning curve?
0:07:50 That’s right.
0:07:53 John, I want to talk about who is playing.
0:07:57 I think a lot of people have the conception that because schools are canceled in many
0:08:03 places, a lot of it is teens and kids playing more video games.
0:08:09 The average age of a gamer on League of Legends, for example, actually skews fairly old.
0:08:14 I think it’s something in the 20s or the 30s, over time it’s crept up.
0:08:19 And so you have a mix of adults, you have a lot of kids that are definitely playing since
0:08:20 they’re out of school.
0:08:24 And I think one of the neat things is that you have families that are coming together
0:08:28 and playing games potentially for the first time as a sort of quarantine.
0:08:35 Dungeons and Dragons, which is a tabletop fantasy RPG, has actually seen massive growth
0:08:37 as well over the course of quarantine.
0:08:42 In these turbulent times you end up having a lot of folks that are playing D&D together
0:08:44 over Zoom and House Party.
0:08:49 Those broadcast in the live streaming site Twitch is up 34% just in the last week, if
0:08:50 you’re not familiar.
0:08:55 It’s a tabletop game where a group of people role play a story and that story is often
0:08:58 created just by another player of the game.
0:08:59 It’s a giant improv party, essentially.
0:09:04 Yeah, I think it’s important to remember that there’s this whole new audience that is rediscovering
0:09:06 gaming as adults.
0:09:07 Absolutely.
0:09:11 A lot of people are coming back to games as a result of being housebound and they’re
0:09:16 discovering that even though they may not have a console or a gaming PC, they actually
0:09:18 already have an awesome gaming device on them.
0:09:23 PUBG Mobile, which is the mobile version of a player unknown battlegrounds reported increased
0:09:28 revenue of over 50% just in the last week compared to the prior week.
0:09:33 One of the largest mobile games in the world, Tencent’s Honor of Kings grew from an average
0:09:39 baseline of 60 million daily active users to over 100 million plus in February at the
0:09:44 height of quarantine in China, and that’s 60% plus growth, which is pretty amazing given
0:09:46 how large that game was to begin with.
0:09:50 Essentially, you have a lot of new gamers rediscovering that they have a gaming device
0:09:52 and perform at their smartphone.
0:09:55 And some of these newcomers may be traditional sports fans.
0:09:59 As in real life games and sporting events have been canceled, some of these leagues and
0:10:02 teams have been moving online to a digital format.
0:10:07 So about a week ago, the NBA turned one of their canceled games, I think it was Phoenix
0:10:09 versus the Dallas Mavericks.
0:10:14 They took that game and they actually turned it into an NBA 2K game, which is the video
0:10:20 game equivalent of the real NBA, and it was livestreamed on Twitch for everyone to watch.
0:10:26 It’s very trippy for me when I see an NBA star play their virtual persona in a video
0:10:27 game.
0:10:32 Well, and as NBA players have been put in isolation, I think many of them have been
0:10:33 turning to gaming.
0:10:37 There was a Call of Duty tournament for Miami Heat players that was also broadcast on Twitch.
0:10:44 And NASCAR just replaced the canceled races with the first ever eNASCAR series where you
0:10:47 were essentially piloting virtual race cars.
0:10:51 And they brought back a lot of recent legends like Dale Earnhardt Jr. to drive those race
0:10:52 cars.
0:10:57 So professional race car drivers are competing against each other in racing simulation software.
0:10:58 That’s right.
0:11:03 So could eSports be a gateway to turn non-gamers into gamers?
0:11:09 It’s a bit of a hybrid between traditional video games and that live, crowd-driven competitive
0:11:10 event.
0:11:11 It remains to be seen.
0:11:17 I think, yes, from the perspective that you’re having an audience that may have never actually
0:11:24 watched NBA 2K or FIFA, for example, any of these sports video games that are now exposed
0:11:27 to that and might actually think it’s pretty cool.
0:11:32 And it’ll be interesting how many of these NBA players, one, how many of them can build
0:11:38 large eSports followings and then, two, if their eSports followings actually end up being
0:11:42 larger than their real-life following, I think that would be a real success story.
0:11:44 It’s a brave new world.
0:11:46 Let’s turn to live streaming.
0:11:47 Absolutely.
0:11:52 So the analytics site, Sully Nome, actually just released a couple of data insights.
0:11:56 The high-level headline is that Twitch is essentially having the biggest month of its
0:11:57 history.
0:12:02 Livecast hours also grew by 35% over the last week compared to the average of the prior
0:12:03 three weeks.
0:12:10 And Sunday ended up being an all-time record breaker, where 47.7 million hours watched.
0:12:13 Why this rise in live streaming?
0:12:17 Part of that could be due to the fact that you have people that are checking out live
0:12:19 streaming for the first time.
0:12:26 Another interesting nugget was that downloads of the Twitch app increased by about 30% just
0:12:32 in the US alone between the weeks of March 8th and March 15th, so you have a lot of
0:12:34 people that are checking it out for the first time.
0:12:40 I think a second thing is that live streaming is unique as a media format and that it combines
0:12:45 the reach of a public broadcast with the intimacy of a small group community.
0:12:51 And what I mean by that is essentially, as a live streamer, you can reach hundreds of
0:12:53 millions of people with a single live stream.
0:12:59 So it is a public broadcast media just like TV or the radio.
0:13:03 But because of the fact that it’s interactive, your viewers can type at you and you can have
0:13:07 a conversation with them and you can adapt what you’re doing in real time to what your
0:13:09 viewers demand.
0:13:11 It feels like a smaller group conversation.
0:13:14 And you can monetize in real time, right?
0:13:15 That’s right.
0:13:18 People tip in real time if you’re doing something that’s very popular, that if you’ve answered
0:13:24 a request, people can subscribe to your channel and the subscriptions cost money anywhere from
0:13:26 a couple of dollars that way more.
0:13:31 So it’s interesting as both an engagement and a monetization model for influencers these
0:13:32 days.
0:13:39 So it’s kind of a hybrid of YouTube and TikTok in that you can amass this online following,
0:13:42 you can be streaming live, but you can also be monetizing instantly.
0:13:43 That’s right.
0:13:48 On YouTube and TikTok, for example, you produce content and then you upload it in any
0:13:51 way that you have to wait and see what happens and you’re not actually getting that much
0:13:53 in terms of real time feedback.
0:13:59 TikTok is slightly more real time than YouTube, simply because the videos are shorter and
0:14:03 people can like and comment very quickly after you upload something.
0:14:07 But live streaming platforms are unique in the sense that you are literally performing
0:14:12 in real time for a live audience and you’re getting the feedback just as if you’re a stage
0:14:17 performer in real life in real time, given either clapping or throwing tomatoes at you,
0:14:19 or digital tomatoes.
0:14:20 That’s right.
0:14:24 And I think that’s one of the things that makes live streaming work so well right now
0:14:26 in COVID times.
0:14:31 It’s because people are actually able to get a sense of community online through live
0:14:35 streaming that may otherwise be hard to find in the real world because we can’t get together
0:14:37 in large groups anymore, right?
0:14:41 Like you can’t go to church, you can’t go to school, you’re not at work.
0:14:45 So a lot of the communities that people are ordinarily members of I think have sort of
0:14:50 fallen by the wayside and Twitch has been able to provide that sense of community for
0:14:51 a lot of its viewers.
0:14:58 As opposed to passively binging Netflix, people want this more interactive way of being social
0:15:00 with their friends and family.
0:15:04 I mean, speaking of relationships, it’s a bit of a personal story, but video games actually
0:15:08 saved my marriage and totally not getting here.
0:15:10 How so?
0:15:15 So when my wife Jen and I first started dating, we were actually long distance for the first
0:15:16 year of our relationship.
0:15:21 I was in San Francisco, she was in New York, so we actually met at a New York City to get
0:15:27 together and then I had to fly out literally two days from afterwards and it was really
0:15:28 tough.
0:15:31 We didn’t know each other that well, but we started playing an online game called League
0:15:35 of Legends together and that completely saved the relationship.
0:15:39 When we didn’t feel like talking about serious things, we could just play the game and there
0:15:45 were enough sort of highs and lows and moments of tension and drama that we also got to know
0:15:47 each other better as we played together.
0:15:48 I love that story.
0:15:51 Yeah, so who says you can’t find love in video games, right?
0:15:53 So you’ve been married 10 years now.
0:15:56 Are you still playing League of Legends together?
0:15:57 We still are.
0:16:02 It’s one of the mainstays of our relationship actually, so a light-hearted way to spend time
0:16:06 and I imagine that’s what a lot of people these days are doing in quarantine as well.
0:16:11 You know, if you’re in a small apartment or a house with members of a larger extended
0:16:16 family, there’s only some sort of conversation you can have before fights start breaking
0:16:22 out, so maybe you break out the Xbox, play some mobile games, play some party games and
0:16:26 it helps generally improve the quality of life in the house.
0:16:29 I think there’s definitely a social dynamic at play.
0:16:35 A lot of people aren’t necessarily comfortable FaceTiming or video chatting and seeing their
0:16:38 own face reflected as they talk to family members.
0:16:41 So I think gaming provides this distraction.
0:16:45 You’re doing something else while you’re connecting with your family or friends.
0:16:50 Yeah, I think one of the best ways I’ve heard it described by a live streamer is actually
0:16:57 that games can switch back and forth between foreground and background activity, so you’re
0:17:01 not really thinking too hard about the game, but you’re actively conversing and you might
0:17:06 actually be talking about something that’s like very serious, but then you can just switch
0:17:09 the game back into the foreground and you both concentrate on the activity.
0:17:15 And so it provides activity to fill in the gaps that are very natural in conversations
0:17:19 and it doesn’t feel like just long periods of silence if you don’t have anything to say
0:17:20 to each other.
0:17:23 Yeah, I think that’s something we’re all familiar with.
0:17:28 The point is social distancing, quarantine, it’s lonely and I think a lot of people are
0:17:31 rediscovering gaming as a way to connect with others.
0:17:36 So after we weather this crisis, what will this mean for the games industry?
0:17:37 What is the bigger picture?
0:17:43 The bigger picture here is that gaming is unique as a media type and that it’s real
0:17:45 time and it’s fundamentally social.
0:17:50 When you’re playing a game, you’re partaking in an immersive activity with someone else.
0:17:54 And so I think that’s one of the reasons why gaming has seen such explosive growth since
0:17:56 the start of coronavirus.
0:18:01 And so I think games and live streaming are offering a lot of the social connections that
0:18:05 people are missing as they’re staying at home these days and I think that will only
0:18:06 continue over time.
0:18:12 So once this crisis is over, do you expect these new gamers to stick around?
0:18:13 I hope so.
0:18:17 It’s easier than ever to get into games today with just so many different platforms that
0:18:18 you can play on.
0:18:22 If you have a console or a gaming PC, that’s great but you don’t need one.
0:18:27 You can also play phenomenal, triple-way quality games in your mobile phones these days.
0:18:32 And so the barrier is the entry for people coming back in the game to discovering games
0:18:34 for the first time is lower than ever.
0:18:35 Great.
0:18:37 Well, John, thank you so much for joining us on the A16Z podcast.
0:18:38 It’s been a pleasure.
0:18:39 Thanks for taking the time.
0:00:10 tax or investment advice or be used to evaluate any investment or security and is not directed
0:00:14 at any investors or potential investors in any A16Z fund.
0:00:17 For more details, please see a16z.com/disclosures.
0:00:20 Hi, and welcome to the A16Z podcast.
0:00:22 I’m Lauren Murrow.
0:00:26 Since social distancing measures were first put in place, time spent gaming has gone up
0:00:28 75% during peak hours.
0:00:34 In this hallway-style conversation, A16Z partner John Lai joins me to talk about how the stay-at-home
0:00:39 movement is fueling gaming, what we’re playing, and why live streaming is having its moment.
0:00:44 Playtime in general is up massively across every category of gaming.
0:00:49 PC games erupt, steam, the world’s largest marketplace for digital PC games.
0:00:54 Steam has been around for 20 years and it’s never seen this level of user activity.
0:00:59 Average concurrent users online typically hover around 15 million.
0:01:04 It hit an all-time record high this past Saturday, around 22 million concurrent users online.
0:01:07 So that’s a spike of almost 50%.
0:01:09 Console games are up massively as well.
0:01:10 What is driving this spike?
0:01:15 Obviously, we’re all at home more, but what other factors are coming into play?
0:01:20 So I think what’s special about games versus other types of media is that gaming is a
0:01:24 massive activity that a set of friends can engage in at the same time.
0:01:30 There are moments of levity, competition, there are emotional highs and lows over the
0:01:32 course of a typical gaming session.
0:01:36 These are bonding moments for people and they create really deep social relationships.
0:01:40 It seems like smart game studios are also putting measures into place to encourage more
0:01:41 at-home play.
0:01:46 I know Pokemon Go changed its mechanics a bit to make it easier for people to play
0:01:47 from home.
0:01:50 It changed its events to make it easier for people to play alone.
0:01:51 Absolutely.
0:01:54 Blizzard of World of Warcraft, which is one of the largest and longest-running MMOs of
0:01:59 all time, launched a whole series of benefits during quarantine so that if you’re playing
0:02:05 right now, you actually get double experience as a way of incentivizing people to continue
0:02:06 playing the game.
0:02:09 What kinds of games are popular amid this crisis?
0:02:10 Are there particular titles?
0:02:15 One game that I’ll highlight as an example is a fairly recent one, Call of Duty Warzone,
0:02:19 which is a new battle royale game from Activision that just launched March 10th.
0:02:24 It ended up being one of the most successful and fastest growing PC console game launches
0:02:25 in history.
0:02:30 Over the course of three days, it reached 15 million players, and I think it reached
0:02:32 30 million players after two weeks.
0:02:37 I saw Infinity Ward had 6 million players in its first 24 hours.
0:02:41 I think a lot of games that are launching this month are seeing major spikes.
0:02:48 So Xbox Live, which is the multiplayer service for Xbox consoles, has had several outages
0:02:52 twice over the last week as more users logged on than the infrastructure can handle.
0:02:56 And Microsoft has some of the world’s best cloud infrastructure, so if they’re having
0:02:58 trouble with it, it’s got to be a lot of people logging on.
0:03:03 I’ve read of developers experimenting with ways to include a higher player count and
0:03:08 larger squads with all these new users, but that’s also potentially risky.
0:03:12 As you mentioned, Nintendo, Xbox Live, and Discord have all experienced outages within
0:03:13 the last month.
0:03:17 How are game developers responding to this massive influx of players?
0:03:19 Yeah, it’s a double-wed sword.
0:03:24 On one hand, you have unprecedented numbers of users coming to your servers, and you want
0:03:26 to be able to support them.
0:03:31 Increasing the number of users currently in a session is one way to try to minimize the
0:03:37 sheer number of servers or shards that you need to spin up for a game, but at the same
0:03:39 time that comes with its own technical challenges.
0:03:42 And so I think everyone’s just struggling to keep the lights on.
0:03:47 Discord announced that they had increased server capacity by 20% to keep up with demand,
0:03:52 and promptly, right after making that announcement, they had server outages themselves as well.
0:03:55 This isn’t something that’s just specific to games.
0:04:00 Netflix, for example, just cap bit rates over in Europe, so in an effort to sort of keep
0:04:06 bandwidth down, they’re no longer streaming in 4K or HDTV, and it’s clearly an attempt
0:04:10 to contain costs and continue maintaining the quality of the service in the face of
0:04:11 a lot of demand.
0:04:15 Is there anything surprising that you’ve noticed in the types of games you’re seeing played
0:04:18 more amid the coronavirus quarantine?
0:04:25 Online multiplayer games are the ones that are seen the most obvious and largest growth,
0:04:29 which makes sense because they’re fundamentally social games that you play with other people.
0:04:35 I actually think that VR, virtual reality, might be seen as surge in popularity.
0:04:36 How so?
0:04:41 Well, the whole notion of VR is predicated on enabling people to escape the real world
0:04:44 to a virtual reality, right?
0:04:48 And even prior to COVID, there were early indicators that in-home consumer VR may be
0:04:53 turning the corner, so the Oculus Quest was estimated to have sold well over a million
0:04:56 units before it went in backorder.
0:05:01 The Valve Index, which is perhaps the most powerful headset to date, sold out in minutes
0:05:03 upon initial release.
0:05:07 So VR headsets seem to have finally reached a price point and a hardware quality that
0:05:08 has mass market appeal.
0:05:13 And at the same time, you have exclusive AAA games coming to VR for the first time, titles
0:05:21 like Half-Life Alyx, and Half-Life is arguably Valve’s biggest and most exciting IP, a sci-fi
0:05:24 franchise that put them on a map, initially.
0:05:29 It’s famous for ending the franchise essentially on a cliffhanger, and the resolution for the
0:05:35 story is this Half-Life Alyx game, and it’s a VR exclusive, so you can only find out what
0:05:39 happens if you buy a VR headset and you play in VR.
0:05:44 Educational games are actually seeing tremendous growth as well these days.
0:05:47 Teachers in schools are also holding online classes through Discord.
0:05:49 I think that’s an interesting use case.
0:05:55 So rather than platforms like Zoom, some are turning to apps that were traditionally gaming
0:05:57 platforms like Discord or Twitch.
0:06:02 Yeah, I think they’re picking the platform that their audience is already on.
0:06:07 So if you’re an instructor and you’re trying to get kids to come online in order to listen
0:06:13 to AP buyer or whatever subject matter you’re teaching, it’s going to be easier to convince
0:06:17 them to come online if you pick Discord, because chances are they already use Discord to play
0:06:18 their favorite games.
0:06:23 So Discord actually just made a number of moves specifically to help educators come on
0:06:24 the platform.
0:06:29 It’s the user limit on screen change from 10 to 50 users, so you can accommodate larger
0:06:30 class sizes.
0:06:35 And in this case, the actual friction is on teaching the instructors, the teachers themselves
0:06:36 how to use Discord.
0:06:42 One thing in these gaming platforms is that as we’ve seen with video conferencing, the
0:06:45 natural rhythm of the conversation is off.
0:06:49 It’s difficult to respond without interrupting, sometimes it’s difficult to interject.
0:06:57 So when it comes to learning how to have a live interactive conversation online, ironically
0:07:03 I think gamers have received way more training in that area than almost any other demographic.
0:07:09 Because the very nature of playing a game and chatting with someone over Discord or
0:07:14 interacting with a livestream, it’s basically a constant act of juggling foreground versus
0:07:15 background activity.
0:07:19 And so being able to contact switch from okay, I’m listening to the lecture, to now I have
0:07:22 a question and we’re going to talk about this question.
0:07:26 This is something that gamers and then livestreamers in particular have a lot of experience with.
0:07:31 And I think it’s interesting to think about how this might become an increasingly more
0:07:38 critical skill in society as more teams and general folks start working and learning remotely
0:07:40 versus in person traditionally.
0:07:46 So you’re saying gamers may actually be prepared for this future whereas perhaps most of us
0:07:49 who are not gamers may have a steeper learning curve?
0:07:50 That’s right.
0:07:53 John, I want to talk about who is playing.
0:07:57 I think a lot of people have the conception that because schools are canceled in many
0:08:03 places, a lot of it is teens and kids playing more video games.
0:08:09 The average age of a gamer on League of Legends, for example, actually skews fairly old.
0:08:14 I think it’s something in the 20s or the 30s, over time it’s crept up.
0:08:19 And so you have a mix of adults, you have a lot of kids that are definitely playing since
0:08:20 they’re out of school.
0:08:24 And I think one of the neat things is that you have families that are coming together
0:08:28 and playing games potentially for the first time as a sort of quarantine.
0:08:35 Dungeons and Dragons, which is a tabletop fantasy RPG, has actually seen massive growth
0:08:37 as well over the course of quarantine.
0:08:42 In these turbulent times you end up having a lot of folks that are playing D&D together
0:08:44 over Zoom and House Party.
0:08:49 Those broadcast in the live streaming site Twitch is up 34% just in the last week, if
0:08:50 you’re not familiar.
0:08:55 It’s a tabletop game where a group of people role play a story and that story is often
0:08:58 created just by another player of the game.
0:08:59 It’s a giant improv party, essentially.
0:09:04 Yeah, I think it’s important to remember that there’s this whole new audience that is rediscovering
0:09:06 gaming as adults.
0:09:07 Absolutely.
0:09:11 A lot of people are coming back to games as a result of being housebound and they’re
0:09:16 discovering that even though they may not have a console or a gaming PC, they actually
0:09:18 already have an awesome gaming device on them.
0:09:23 PUBG Mobile, which is the mobile version of a player unknown battlegrounds reported increased
0:09:28 revenue of over 50% just in the last week compared to the prior week.
0:09:33 One of the largest mobile games in the world, Tencent’s Honor of Kings grew from an average
0:09:39 baseline of 60 million daily active users to over 100 million plus in February at the
0:09:44 height of quarantine in China, and that’s 60% plus growth, which is pretty amazing given
0:09:46 how large that game was to begin with.
0:09:50 Essentially, you have a lot of new gamers rediscovering that they have a gaming device
0:09:52 and perform at their smartphone.
0:09:55 And some of these newcomers may be traditional sports fans.
0:09:59 As in real life games and sporting events have been canceled, some of these leagues and
0:10:02 teams have been moving online to a digital format.
0:10:07 So about a week ago, the NBA turned one of their canceled games, I think it was Phoenix
0:10:09 versus the Dallas Mavericks.
0:10:14 They took that game and they actually turned it into an NBA 2K game, which is the video
0:10:20 game equivalent of the real NBA, and it was livestreamed on Twitch for everyone to watch.
0:10:26 It’s very trippy for me when I see an NBA star play their virtual persona in a video
0:10:27 game.
0:10:32 Well, and as NBA players have been put in isolation, I think many of them have been
0:10:33 turning to gaming.
0:10:37 There was a Call of Duty tournament for Miami Heat players that was also broadcast on Twitch.
0:10:44 And NASCAR just replaced the canceled races with the first ever eNASCAR series where you
0:10:47 were essentially piloting virtual race cars.
0:10:51 And they brought back a lot of recent legends like Dale Earnhardt Jr. to drive those race
0:10:52 cars.
0:10:57 So professional race car drivers are competing against each other in racing simulation software.
0:10:58 That’s right.
0:11:03 So could eSports be a gateway to turn non-gamers into gamers?
0:11:09 It’s a bit of a hybrid between traditional video games and that live, crowd-driven competitive
0:11:10 event.
0:11:11 It remains to be seen.
0:11:17 I think, yes, from the perspective that you’re having an audience that may have never actually
0:11:24 watched NBA 2K or FIFA, for example, any of these sports video games that are now exposed
0:11:27 to that and might actually think it’s pretty cool.
0:11:32 And it’ll be interesting how many of these NBA players, one, how many of them can build
0:11:38 large eSports followings and then, two, if their eSports followings actually end up being
0:11:42 larger than their real-life following, I think that would be a real success story.
0:11:44 It’s a brave new world.
0:11:46 Let’s turn to live streaming.
0:11:47 Absolutely.
0:11:52 So the analytics site, Sully Nome, actually just released a couple of data insights.
0:11:56 The high-level headline is that Twitch is essentially having the biggest month of its
0:11:57 history.
0:12:02 Livecast hours also grew by 35% over the last week compared to the average of the prior
0:12:03 three weeks.
0:12:10 And Sunday ended up being an all-time record breaker, where 47.7 million hours watched.
0:12:13 Why this rise in live streaming?
0:12:17 Part of that could be due to the fact that you have people that are checking out live
0:12:19 streaming for the first time.
0:12:26 Another interesting nugget was that downloads of the Twitch app increased by about 30% just
0:12:32 in the US alone between the weeks of March 8th and March 15th, so you have a lot of
0:12:34 people that are checking it out for the first time.
0:12:40 I think a second thing is that live streaming is unique as a media format and that it combines
0:12:45 the reach of a public broadcast with the intimacy of a small group community.
0:12:51 And what I mean by that is essentially, as a live streamer, you can reach hundreds of
0:12:53 millions of people with a single live stream.
0:12:59 So it is a public broadcast media just like TV or the radio.
0:13:03 But because of the fact that it’s interactive, your viewers can type at you and you can have
0:13:07 a conversation with them and you can adapt what you’re doing in real time to what your
0:13:09 viewers demand.
0:13:11 It feels like a smaller group conversation.
0:13:14 And you can monetize in real time, right?
0:13:15 That’s right.
0:13:18 People tip in real time if you’re doing something that’s very popular, that if you’ve answered
0:13:24 a request, people can subscribe to your channel and the subscriptions cost money anywhere from
0:13:26 a couple of dollars that way more.
0:13:31 So it’s interesting as both an engagement and a monetization model for influencers these
0:13:32 days.
0:13:39 So it’s kind of a hybrid of YouTube and TikTok in that you can amass this online following,
0:13:42 you can be streaming live, but you can also be monetizing instantly.
0:13:43 That’s right.
0:13:48 On YouTube and TikTok, for example, you produce content and then you upload it in any
0:13:51 way that you have to wait and see what happens and you’re not actually getting that much
0:13:53 in terms of real time feedback.
0:13:59 TikTok is slightly more real time than YouTube, simply because the videos are shorter and
0:14:03 people can like and comment very quickly after you upload something.
0:14:07 But live streaming platforms are unique in the sense that you are literally performing
0:14:12 in real time for a live audience and you’re getting the feedback just as if you’re a stage
0:14:17 performer in real life in real time, given either clapping or throwing tomatoes at you,
0:14:19 or digital tomatoes.
0:14:20 That’s right.
0:14:24 And I think that’s one of the things that makes live streaming work so well right now
0:14:26 in COVID times.
0:14:31 It’s because people are actually able to get a sense of community online through live
0:14:35 streaming that may otherwise be hard to find in the real world because we can’t get together
0:14:37 in large groups anymore, right?
0:14:41 Like you can’t go to church, you can’t go to school, you’re not at work.
0:14:45 So a lot of the communities that people are ordinarily members of I think have sort of
0:14:50 fallen by the wayside and Twitch has been able to provide that sense of community for
0:14:51 a lot of its viewers.
0:14:58 As opposed to passively binging Netflix, people want this more interactive way of being social
0:15:00 with their friends and family.
0:15:04 I mean, speaking of relationships, it’s a bit of a personal story, but video games actually
0:15:08 saved my marriage and totally not getting here.
0:15:10 How so?
0:15:15 So when my wife Jen and I first started dating, we were actually long distance for the first
0:15:16 year of our relationship.
0:15:21 I was in San Francisco, she was in New York, so we actually met at a New York City to get
0:15:27 together and then I had to fly out literally two days from afterwards and it was really
0:15:28 tough.
0:15:31 We didn’t know each other that well, but we started playing an online game called League
0:15:35 of Legends together and that completely saved the relationship.
0:15:39 When we didn’t feel like talking about serious things, we could just play the game and there
0:15:45 were enough sort of highs and lows and moments of tension and drama that we also got to know
0:15:47 each other better as we played together.
0:15:48 I love that story.
0:15:51 Yeah, so who says you can’t find love in video games, right?
0:15:53 So you’ve been married 10 years now.
0:15:56 Are you still playing League of Legends together?
0:15:57 We still are.
0:16:02 It’s one of the mainstays of our relationship actually, so a light-hearted way to spend time
0:16:06 and I imagine that’s what a lot of people these days are doing in quarantine as well.
0:16:11 You know, if you’re in a small apartment or a house with members of a larger extended
0:16:16 family, there’s only some sort of conversation you can have before fights start breaking
0:16:22 out, so maybe you break out the Xbox, play some mobile games, play some party games and
0:16:26 it helps generally improve the quality of life in the house.
0:16:29 I think there’s definitely a social dynamic at play.
0:16:35 A lot of people aren’t necessarily comfortable FaceTiming or video chatting and seeing their
0:16:38 own face reflected as they talk to family members.
0:16:41 So I think gaming provides this distraction.
0:16:45 You’re doing something else while you’re connecting with your family or friends.
0:16:50 Yeah, I think one of the best ways I’ve heard it described by a live streamer is actually
0:16:57 that games can switch back and forth between foreground and background activity, so you’re
0:17:01 not really thinking too hard about the game, but you’re actively conversing and you might
0:17:06 actually be talking about something that’s like very serious, but then you can just switch
0:17:09 the game back into the foreground and you both concentrate on the activity.
0:17:15 And so it provides activity to fill in the gaps that are very natural in conversations
0:17:19 and it doesn’t feel like just long periods of silence if you don’t have anything to say
0:17:20 to each other.
0:17:23 Yeah, I think that’s something we’re all familiar with.
0:17:28 The point is social distancing, quarantine, it’s lonely and I think a lot of people are
0:17:31 rediscovering gaming as a way to connect with others.
0:17:36 So after we weather this crisis, what will this mean for the games industry?
0:17:37 What is the bigger picture?
0:17:43 The bigger picture here is that gaming is unique as a media type and that it’s real
0:17:45 time and it’s fundamentally social.
0:17:50 When you’re playing a game, you’re partaking in an immersive activity with someone else.
0:17:54 And so I think that’s one of the reasons why gaming has seen such explosive growth since
0:17:56 the start of coronavirus.
0:18:01 And so I think games and live streaming are offering a lot of the social connections that
0:18:05 people are missing as they’re staying at home these days and I think that will only
0:18:06 continue over time.
0:18:12 So once this crisis is over, do you expect these new gamers to stick around?
0:18:13 I hope so.
0:18:17 It’s easier than ever to get into games today with just so many different platforms that
0:18:18 you can play on.
0:18:22 If you have a console or a gaming PC, that’s great but you don’t need one.
0:18:27 You can also play phenomenal, triple-way quality games in your mobile phones these days.
0:18:32 And so the barrier is the entry for people coming back in the game to discovering games
0:18:34 for the first time is lower than ever.
0:18:35 Great.
0:18:37 Well, John, thank you so much for joining us on the A16Z podcast.
0:18:38 It’s been a pleasure.
0:18:39 Thanks for taking the time.
Since social distancing measures were first put in place, time spent gaming has gone up—way up. According to a recent report by Verizon, video game usage in the U.S. has risen 75 percent during peak hours. The “stay at home” movement has given way to an upswell of new and returning gamers—as well as new challenges, as online platforms struggle to keep up with the surge.
In this episode, a16z partner Jon Lai joins host Lauren Murrow to talk about how game developers are grappling with skyrocketing numbers, why this may be an inflection point for VR, the surprising transition of professional sports into esports, and why live-streaming is having its moment.