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Axios Gaming

Workers at gaming giant Nintendo of America say the company’s reliance on temporary workers is exploitative and that efforts to bring about change have been stymied by fear of reprisal.

Driving the news: Current and former Nintendo contractors have been speaking up over the past three weeks, since Axios first reported a complaint filed with the National Labor Relations Board against Nintendo and a contracting firm.

What they’re saying: “I loved what I did. I hated how I was treated,” a former contractor named Ash, who asked that their last name be kept private, tells Axios.

They worked in Nintendo’s customer service center for several years through 2015. Strict time-off rules for contractors and limited pathways to full-time employment added to stress that contractors could be dropped at any moment. That pressure, they said, aggravated a heart condition.

Ash says their moment of disillusionment came when their grandpa died: “I was told if I went to his funeral, I wouldn’t have a job when I came back.”

State of play: Ash’s story echoed those shared by seven other current and former contractors who spoke with Axios about their time at Nintendo.

Their accounts square with those published by gaming news sites Kotaku and IGN. Those outlets cited interviews with dozens of workers who say Nintendo treats its large contingent of contractors, technically employed by staffing firms, as second-class citizens.

These contractors fume about a status quo they believe was established to avoid violating labor laws: cycles of 10- or 11-month contracts that can be quickly cut short and are followed by two-month breaks, with expectations they’ll come right back. 

They describe employees who log three, five, even 10 years of these cycles, without many of the benefits of full-timers, but are never converted to full-time.

The contractors’ stories center on Nintendo of America, the U.S. subsidiary of the Kyoto-based maker of Mario, Zelda and the Switch. 

NoA, headquartered in Redmond, Washington, has for more than a decade supplemented its full-time labor force with hundreds of contractors, one longtime contractor estimates, who largely work in its customer service and product-testing divisions. 

Even in the company’s vaunted Treehouse, where games are translated from Japanese and localized for America, Nintendo uses contractors for nearly half of its team, two sources say, keeping them in that status for years at a time. 

“It goes up to every level,” one current localization contractor told Axios under the condition of anonymity. “It even affects the people writing the games you love.”

Nintendo hasn’t commented publicly about the uproar from its workforce and did not reply to questions from Axios. A few days after contractors began speaking out, NoA president Doug Bowser sent an internal message to employees regarding “stories appearing in some media today about alleged working conditions at Nintendo.”

“Like many of you, the executive leadership team and I find many of these points troubling, and we are closely reviewing the content,” he wrote. 

The message reiterated Nintendo’s “zero-tolerance for inappropriate conduct, including harassment, discrimination or intimidation.” 

A current contractor in product testing told Axios they found the message disappointing, as it didn’t mention the contractor issue core to so many accounts.

(Kotaku had cited four sources saying the NLRB complaint stemmed from a worker being fired after asking about unionization, which Nintendo, in a public statement, denied.)

Between the lines: Nintendo of America’s use of contractors is somewhat typical of game companies and the wider tech industry.

But contractors are disappointed with Nintendo, a wealthy company that markets its penchant for putting smiles on faces.

“Maybe it’s just because on some level I expected better,” the current testing contractor said. “These companies rely on a contract workforce with no stability.”

Former Nintendo of America president Reggie Fils-Aimé, who worked in senior positions at the company from 2013-19, told Axios that “what’s being described is not the NoA I knew.”

He said the company hired “a significant number” of contractors, or associates, into full-time roles during his tenure but added that he “truly understands” the frustration of those who haven’t been.

He attributed the company’s use of contractors to the seasonality of Nintendo’s business, where it would generate 60% of its annual revenue around the holidays. “You can’t run a business at that scale without utilizing associate labor to get you there.”

Stymied activism: Contractors who spoke to Axios said they and their peers largely avoided pushing back against management, but two recalled a mid-2014 effort when a group of Nintendo customer service workers began meeting offsite to discuss ways to force change and possible unionization.

Those meetings ceased after their management at Nintendo-affiliated Parker Staffing found out about them. Two sources recalled getting an email from a Parker manager encouraging them and their colleagues to think of the company as a family and that organizing wasn’t necessary.

“It was union-bustering without technically being union-bustering,” a former contractor recalled.

Current contractors say union talk at the company is rare.

What’s next: Former Nintendo contractors hope recent revelations bring change. “If any change is going to happen, it’s going to have to be a bad publicity thing,” says one current contractor.

Workers have usually only vented more privately, including in a recently shuttered Facebook group called the Nintendo Recovery Center. 

Former contractor Ash, who moderated the group, said it had a few hundred members but that they shut it down out of fear of drawing management’s attention. 

“There’s a really strange and shared trauma between all of us,” they said.

Call of Duty workers say they plan to unionize

Sign up for the new Axios Gaming newsletter here.

A worker reckoning at Nintendo

Contractors are disappointed with company response.

Animated GIF of a fist emerging from a green Super Mario pipe

Video games

Gaming

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Microsoft-owed Bethesda Games is delaying two huge games that were expected to be marquee releases this fall.

Driving the news: Vampire-hunting adventure Redfall and sci-fi role-playing game Starfield will miss their 2022 release windows, sliding to the first half of 2023.

Microsoft and Bethesda announced a Nov. 11, 2022, release date for Starfield last year, an unusually early timeframe to set a date.

What they're saying: "The teams at Arkane Austin (Redfall) and Bethesda Game Studios (Starfield) have incredible ambitions for their games, and we want to ensure that you receive the best, most polished versions of them," Bethesda said in a tweet this morning.

Between the lines: Starfield is the next game from Bethesda's core team, which is responsible for 2011's The Elder Scrolls V: Skyrim, one of the best-reviewed and best-selling role-playing games of all time.

Microsoft completed its $7.5 billion acquisition of Bethesda last year, with the intent to use Bethesda's acclaimed studios to bolster its Game Pass subscription service.

Exclusives like Starfield are available to Game Pass subscribers on release day at no added cost, a competitive difference from PlayStation and Nintendo consoles, which do not offer new releases as part of subscriptions.

The big picture: Delays of big games are common, given the complexities of development.

Nintendo also recently announced a big delay of its own until 2023, postponing its Switch sequel to 2017 blockbuster The Legend of Zelda: Breath of the Wild out of its expected holiday release window.

Xbox's biggest upcoming game, Starfield, delayed to 2023

Concept art showing a futuristic train station

Electronic Arts is planning “three big launches” of mobile games this year, CEO Andrew Wilson has told investors.

Why it matters: After years of plans and hints, some of the biggest franchises in console and PC gaming are coming to phones this year.

The details: EA’s slate includes a mobile version of its runaway battle royale hit Apex Legends, a Lord of the Rings game made by a studio behind a top Star Wars mobile title and Tap Sports Baseball 22.

Waiting in the wings is a mobile version of EA’s Call of Duty rival Battlefield, which Wilson said yesterday could sneak out by the end of next March, if it tests well enough.

Not just EA: Activision Blizzard has a Diablo game coming to mobile in June and a Warcraft mobile game for later in the year.

Ubisoft management emphasized to investors today that it “​​plans to grow our biggest franchises” with “four promising mobile games under development.” It has mobile games tied to Rainbow Six Siege and The Division deep in development.

Between the lines: Mobile gaming is a vast market of more than 3 billion players but that doesn’t mean franchises that have been huge on PC or console will automatically thrive.

Mobile has its own mammoths, like Playrix’s Homescapes and Zynga’s Hair Challenge.

Traditional publishers have literally bought into this in the last several years, paying billions for the makers of so-called casual mobile hits.

Activision bought Candy Crush maker King in 2016, EA grabbed Playdemic and Glu, and Take-Two now prepares to gollop Zynga. All acquired companies made huge so-called casual mobile hits.

Those big publishers are now bringing their own traditional franchises over too with increased intensity, and the confidence that modern phones can create experiences that console and PC players won’t sneer at.

All the big players haven’t figured it out.

Nintendo yesterday reported declining annual mobile revenue and has discontinued more mobile games in recent years than it has announced.

Sony gaming boss Jim Ryan told Axios last June that PlayStation’s expansion into mobile would “see the first fruits of this sooner than you might think,” but hasn’t resulted in much more than mobile division hiring announcements and a WipEout spinoff since.

The bottom line: The phone is the biggest platform for gaming worldwide, and everyone’s drawn into its gravitational pull.

EA, Activision, Ubisoft bet big on mobile games

Battlefield, Diablo, Rainbow Six and more are coming to phones

Photo of a cell phone and the logo for Electronic Arts

Photo Illustration: Thiago Prudêncio/SOPA Images/LightRocket via Getty Images

Nintendo and Sony indicated today that it will remain hard to grab a new Switch or PlayStation 5 well into next year.

Driving the news: In updates to investors, both companies issued lower console forecasts for their current fiscal years, which run through the end of March 2023. 

Nintendo lowered its Switch projections for that 12-month period, to 21 million, lower than last year’s total of 23 million.

Sony hopes to sell 18 million PS5s in that time, but had previously planned to sell over 22 million.

Executives at both companies blamed semiconductor shortages in briefings with investors.

Silver lining: Sony’s forecast is optimistic relative to the past year, when the company sold just 11.5 million PS5s, a few million short of its goal due to supply chain issues pinching manufacturing.

“We do have a good feel about how to procure the components and parts,” CFO Hiroki Totoki said, but he added that further lockdowns in China could impact production.

Demand will still outstrip supply, he safely predicted, meaning PS5s will still be hard to get.

Other highlights from Nintendo and Sony’s financials:

Nintendo and its partners sold 235 million Switch games between April 1, 2021, and March 31, 2022, 5 million more than it did in the Animal Crossing-fueled year before it.

Nintendo’s mobile decline: The company was down $30+ million in revenue from mobile games, amid Nintendo’s cancellation of some of its mobile games and lack of announcements for new ones.

Sony and its partners sold 303 million games between April 1, 2021, and March 31, 2022, 35 million less than it did the year before. Sony cited a drop in third-party game sales.

PS4 at the end of the line: The system sold 1 million units in the past year as it nears the end of its lifecycle.

One fun 3DS fact: Nintendo says the 3DS, the handheld it abandoned a few years ago, got eight new games in the past year from third-party developers, giving the system new games over 12 consecutive years.

That makes it one of Nintendo’s longest-lasting systems, though it’ll be a stretch for it to equal the Wii’s 14 years of support.

Editor’s note: This story has been corrected to show that 23 million was the total of Nintendo Switches sold during the previous fiscal year (not the initial projection of those to be sold this fiscal year). 

Sony, Nintendo say consoles could be hard to find through 2022

The PS5 and Switch could be hard to buy well into early 2023.

Photo: Olly Curtis/Future Publishing via Getty Images

Electronic Arts announced on Tuesday that it would end its partnership with FIFA after this year.

Why it matters: The game, one of the most popular and profitable in the world, won't be named after soccer's global organizing body for the first time since the series debuted nearly 30 years ago.

The deal will run through the Women's World Cup next summer, the New York Times reports.

This year's game will be named FIFA 23, but the next one released after that will be known as EA Sports FC. The game will no longer feature major FIFA-run events like the World Cup.

For its FIFA series, EA Sports has negotiated nearly 300 separate licensing agreements with leagues and international tournaments, all of which will still be active in the new game, the Times notes.

That includes deals with England's Premier League, Spain's La Liga, Germany's Bundesliga, UEFA and South American soccer body CONMEBOL.

During negotiations, FIFA doubled its licensing fee and demanded the ability to attach its name to other video games, according to the New York Times.

Thought bubble, via Axios' Stephen Totilo: EA's game is so popular it doesn't need the FIFA brand and the financial and reputational baggage that comes with the name. But now the race is on to see which competitor will grab the FIFA license for a game of their own.

What they're saying: "Global football has been part of EA Sports for nearly 30 years — and today, we're ensuring that it will be for decades to come," EA Sports executive vice president and general manager Cam Weber said in a statement.

"I can assure you that the only authentic, real game that has the FIFA name will be the best one available for gamers and football fans," FIFA president Gianni Infantino said in a statement on Tuesday. 

"EA Sports is a long-term and valued partner of the Premier League, and we look forward to continuing to work together in the new era of EA Sports FC," Richard Masters, the Premier League's CEO, said.

FIFA and EA Sports end video game partnership after nearly 30 years

The race is on to see which competitor will grab the FIFA license for a game of their own.

FIFA 22 logo with a controller in front of it 

A FIFA 22 logo in front of a PlayStation controller. Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

FIFA Women's World Cup

Shifts in technology and media are changing the way we play, watch and understand sports. Business models are adapting and social change is forcing those in charge of teams and leagues to reconsider decades-old practices.

Sports

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

The New York Times’ decision to change Monday’s Wordle answer is part of a long-running debate about how politically charged games should be.

Why it matters: From online crossword puzzles to Call of Duty, popular games rarely tackle, or even broach, charged topics. Books, music and other sectors of culture are far more likely to confront divisive subjects.

Indie game developers tend to take more risks.

Driving the news: The Times swapped out Monday’s originally planned Wordle answer, “fetus,” noting it unintentionally coincided with the leak of a draft decision to overturn Roe v. Wade.

Or at least the Times tried to remove the word.

According to a note posted this morning, even though the answer was spotted in the game’s queue last week, the current tech behind the game prevented changing the puzzle for all users.

What they’re saying: “At New York Times Games, we take our role seriously as a place to entertain and escape, and we want Wordle to remain distinct from the news,” wrote Everdeen Mason, the Times’ editorial director for games.

Veteran game developer and New York University Game Center chair Naomi Clark called that a “dodge” that “denies an old truth: play and games, even when we think of them as escapism, gain part of their power and meaning from the roots they have in the rest of society and culture.” Retaining the original word, she added, “could have been an opportunity for thoughtful commentary.”

Between the lines: Game makers’ avoidance of content that is viewed as politically controversial is near-constant in big-budget games.

Ubisoft claimed that 2021's Far Cry 6, in which players take the role of a rebel in a Cuba-like country, wasn’t trying to make political statements about current-day Cuba. They later acknowledged games about repression and revolution are inherently political.

Yes, but word games are different, some experts say, and are not presented with the vivid context of a Call of Duty war game that gestures at reality.

“Generally, people play word games such as Wordle as a ritual, hoping to feel a sense of success and control in a world that’s out of control,” Ian Bogost, a veteran game designer and professor at Washington University in St. Louis, tells Axios. “For that reason, any reminder of the news or the uncomfortable world beyond the game might be construed as undesirable.”

Some New York Times crossword puzzle creators say they’ve tried to make their puzzles “apolitical,” a position criticized by puzzle critics as political, according to a January Kotaku report. Terms such as “NRA” have frequently appeared in the Times crossword, while “Donald Trump” rarely has.

What’s next: The Times says it's changing the tech behind Wordle to ensure it has control of the day’s answer for all users.

NYT's Wordle swap is part of an ongoing gaming debate

The Times swapped out Monday’s originally planned Wordle answer.

Photo Illustration: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

Take-Two CEO Strauss Zelnick will remain in charge of the publisher of NBA 2K and Grand Theft Auto into 2029, according to a new contract extension. And more of his pay than ever will be tied to in-game microtransactions, which may include NFTs.

Why it matters: Gaming CEOs’ multimillion-dollar pay packages often include performance incentives that help articulate their company’s priorities. 

Recent notables include goals for the CEOs at Activision and Ubisoft tying some pay to hiring more women and lessening their company’s carbon footprint.

State of play: One of Zelnick’s goals, tied to “recurrent consumer spending,” (RCS) involves player purchases of add-on content, in-game items and virtual currency. The company’s definition shared in an SEC filing yesterday includes all of that and the sale of NFTs.

Take-Two hasn’t hidden the fact that they want players to keep buying more and more things in their games. 

Their top titles, including NBA 2K and GTA Online, are famous  — and notorious  — for being loaded with microtransactions that some users say make them feel nickel-and-dimed.

But many players buy in. Take-Two generated $548 million in RCS in the last three months of 2021, more than it made from the sale of full games.

The details: Zelnick’s RCS goal, along with other incentives, can net him millions of dollars of stock each year. 

The incentive isn’t new, just tweaked, with RCS growth weighted more heavily than it used to be.

And it’s been lucrative. Last year, Zelnick and company president Karl Slatoff together netted over $31 million in stock in performance incentives.

If they’d missed the RCS target, they’d have gotten about $3.9 million less.

Take-Two CEO's big microtransaction bonus

Take-Two hasn’t hidden the fact that they want players to keep buying more and more things in their games.

Photo of a man in a dark suit and white shirt, smiling at the camera

Strauss Zelnick. Photo: Patrick T. Fallon/Bloomberg via Getty Images

Former Nintendo of America president Reggie Fils-Aimé urges people like him who feel like outsiders to the organizations they join to see “advantage to your uniqueness.”

Driving the news: The longtime head of Nintendo’s business in the Americas is opening up this week in interviews with Axios and others, as he promotes a business memoir, "Disrupting the Game," that focuses on lessons from his 16-year run at Nintendo.

From 2003-19, through the launches of the Wii and Switch, Fils-Aimé became the most prominent non-Japanese leader at the house of Mario and a celebrity to millions of gamers.

What they’re saying: “I celebrate that I am a Black man that had success not only in the video game industry, which is not dominated by Black men, but that I succeeded at Nintendo as a Black American,” Fils-Aimé said.

The executive rarely made reference to race during his run at the company but knows he stood out in a field in which the people running game companies are either Japanese or white.

“The reason I was able to be successful is that I brought my whole self to the role,” Fils-Aimé said. “I advocated strongly for what I believed in, and I leveraged my personal experiences in life and in business to push points of view. And, fortunately for me, those points of view not only were more often adopted than not, but more often than not they worked in the marketplace.”

Fils-Aimé noted that for diverse workers to succeed, it’s essential that leaders create a culture that makes people who are different feel valued.

Fils-Aimé bonded with Satoru Iwata, the late president of Nintendo who, he writes, saw himself as an outsider to Nintendo, in his own way. 

Both men joined the company deep into their careers and were newcomers compared to the lifers around them. 

Fils-Aime never learned much Japanese, though he tried to understand the culture he was joining.

“I was told that I would be much better off investing my time and my effort on marketing related issues, cultural related issues, all of the big things that we need to do.”

Instead, he cultivated relationships with bilingual staff in the U.S. and Japan and with Iwata, who spoke English fluently.

“I learned how to say sake,” he quipped.

Among Fils-Aimé and his team’s achievements, aside from blockbuster launches, was better representation in the company’s games.

“We pushed for all levels of diversity,” he said, referring to the American team’s communications with Nintendo developers in Japan.

Fils-Aimé remembers his team pushing for more hairstyles associated with people of color for the avatar-like Miis on the Wii, for same-sex relationships in a sword-and-sorcery Fire Emblem game.

“It was a constant push to drive, an acknowledgment that in games where you had human representation, we needed to have much more diversity and enable the player to make choices that they felt they should be able to make.”

He described the process as “an education” and is proud of the results.

Former Nintendo president saw his differences as strengths

"I celebrate that I...succeeded at Nintendo as a Black American."

Headshot of Reggie Fils-Aime in sport jacket and crewneck shirt

Reggie Fils-Aimé. Photo: David Ryder/Bloomberg via Getty Images

Activision CEO Bobby Kotick rushed to secure a takeover bid from Microsoft to escape liability for misconduct at the company, a new lawsuit from New York City officials alleges.

Driving the news: The suit was filed in Delaware on April 26 by New York City Employees’ Retirement System and pension funds for the city’s teachers, police and firefighters. The groups own Activision stock and believe actions by the gaming giant's management hurt the company’s value. 

The office of NYC’s comptroller shared a public version of the suit with Axios on May 3.

The details: The lawsuit is an action in Delaware’s Court of Chancery (technically a “220 complaint”) that allows stockholders to press companies to open their books and potentially expose wrongdoing.

New York City is demanding Activision provide a long list of documents, including material related to the Microsoft deal, info on five possible buyers cited in Activision’s official description of the sale talks, board memos and more.

The city has been pressing Activision for internal documents since the fall, originally to find out what CEO Bobby Kotick knew of sexual misconduct at the company. (That misconduct had been the subject of lawsuits and news reports since the summer.)

As laid out in the complaint, New York sought access to Activison’s books as a basis to sue Kotick and board members for allegedly costing the company value. It expresses frustration that Kotick, already under fire, headed up rapid negotiations in late 2021 to sell the company to Microsoft.

What they’re saying: “Given Kotick’s personal responsibility and liability for Activision’s broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company,” the suit says. “But it wasn’t.”

New York says the Microsoft deal, which is pending regulator approval, allows “Kotick and his fellow directors a means to escape liability for their egregious breaches of fiduciary duty.”

It also says Microsoft’s $95/share offer undervalues the company, which was trading at close to that before Activision’s public scandals began last summer.

A November investigation by the Wall Street Journal stated that Kotick knew of misconduct at the company, though an Activision spokesperson said he would not have been aware of all employee complaints.

Kotick told the WSJ at the time that he was “committed to making sure we have the most welcoming, most inclusive workplace in the industry.” 

An Activision rep declined to address the claims in the suit.

The big picture: Activision has been facing an avalanche of lawsuits and investigations since last summer, as tallied in the company’s latest quarterly filing, issued yesterday:

1 federal harassment suit (settled, though facing appeals)

4 shareholder lawsuits (consolidated to two)

8 lawsuits over the Microsoft merger (four voluntarily dismissed)

2 “220 complaints,” including the one from NYC

Plus: An SEC investigation and insider trading inquiries from the SEC and Department of Justice

New York Activision Complaint

New York City sues Activision, targeting CEO Bobby Kotick

The suit alleges a rushed takeover deal with Microsoft to escape liability

Bobby Kotick in 2019. Photo: Patrick T. Fallon/Bloomberg via Getty Images

Axios Pro Rata

Warren Buffett raised eyebrows, and share prices, when he said over the weekend that Berkshire Hathaway has increased its Activision Blizzard ownership stake to 9.5%, in a merger arbitrage play.

Why it matters: Buffett is betting that antitrust regulators won't use Microsoft-Activision to quench their thirst for a Big Tech block. Or that, if they do swing, they'll miss.

Other investors aren't so sanguine, as Activision shares continue to trade at more than a 17% discount to the $95 per share that Microsoft agreed to pay (although it was 20%+ before Buffett's disclosure). Thus the arbitrage.

The bull case for Buffett is that Microsoft has largely escaped the U.S. antitrust scrutiny faced by peers Apple, Amazon, Google and Meta. It's almost like, "Been there, done that."

Plus, Microsoft under Satya Nadella has a proven track record of getting big deals over the finish line, and this particular acquisition wouldn't trip monopoly lines as traditionally defined.

Plus, defining the gaming market share (or submarket share) is tricky. If the DOJ or FTC are going to go out on a limb, this feels like a particularly tenuous branch.

The bear case for Buffett is that the FTC under Lina Kahn does need to go after a Big Tech deal, if only so she can look herself in the mirror each morning. And soon she'll have a Democratic majority, unlike the current stalemate that helped enable Amazon to get its MGM merger.

Yes, Berkshire is a long-term investor that could wait out a protracted legal battle. But at best it would be a slog, and court confidence can be sorely challenged by a novel legal theory. And that doesn't even begin to account for possible antitrust issues outside the U.S.

Plus, Activision needs Microsoft more than Microsoft needs Activision; particularly given the video game giant's numerous scandals.

Warren Buffett makes big bet on antitrust inaction

The legendary investor stakes out a claim on Microsoft's deal for Activision Blizzard

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