Tag Archives: business

Shawn Layden, Head Of PlayStation’s Game Studios, Departs

Photo: Charley Gallay (Getty)

Sony has announced that Shawn Layden, chairman of SIE Worldwide Studios and a mainstay of PlayStation’s E3 press conferences, will be leaving the company. No reason was given for his departure, and a successor has not been named.

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Formerly president and CEO of Sony Computer Entertainment America (until Sony’s regions were brought under one roof in 2018), Layden had been with Sony since 1987, serving in roles like vice president of Sony Computer Entertainment Europe and president of Sony Computer Entertainment Japan.

When Sony consolidated its worldwide PlayStation divisions into a single unit in 2018, Layden was no longer president of Sony Interactive Entertainment America, and the company said he instead would “concentrate his focus” on leading Sony’s game development studios.

Source: Kotaku.com

GameStop Lays Off Dozens Of Regional Managers As It Searches For A Future

Photo: Al Powers/Invision (AP)

On Tuesday, several GameStop employees took to Reddit to report that their regional sales supervisors had been laid off. These anecdotal reports combined with tips to Kotaku about some layoffs, have since been bolstered by an email from GameStop management, whose authenticity Kotaku has confirmed, that surfaced stating more than 50 people had been let go across the company’s regional sales teams.

“As part of our continued GameStop Reboot transformation initiative, a dedicated team, including the Retail Vice Presidents, HR, LP. and the U.S. Store Operations leadership team, have been working diligently to realign our current field regions and districts in an effort to reduce our cost structure and build efficiencies into our field leadership organization so that we can reinvest in the business,” reads an email sent to employees at affected stores on behalf of Gary Riding, the company’s senior VP of US stores.

“Unfortunately, with these changes, there are more than 50 field leaders who have been impacted and will be leaving the GameStop team,” it continues. “This includes regional, district, HR [Human Resources, and LP [Loss Prevention] leaders. These decisions are not easy, but necessary to help us reduce costs to enable investment in revenue-driving initiatives that will help grow the business once again.”

One of the affected employees, who spoke to Kotaku on the condition of anonymity, confirmed the email was real. “It was wide spread. 50-plus DLs [District Leaders], 6 RLs [Regional Leaders], multiple Hr [Human Resources] and Lp [Loss Prevention] staff,” the person said in an email. The individual believed that most of the people targeted in the layoffs were high paid District Leaders, responsible for coordinating several individual stores, as well as under performers.

“Most districts and region are massive now,” the now former employee said. “Dls have 20 plus stores and quality of living I would assume is going to go down.” Prior to the restructuring, they said district leaders oversaw 15 stores or fewer on average. Earlier this year, GameStop reportedly laid off a dozen employees in charge of marketing and website maintenance for ThinkGeek, the toy brand acquired by GameStop in 2015 for $140 million.

The “revenue-driving initiatives” mentioned in the email could be a reference to company plans to pivot to esports. In July, GameStop announced it had partnered with a design firm to drastically change how some of its stores operated including making some that would cater to “home-grown e-Leagues” and others that would be entirely focused on retro games.

In June the company’s share price dropped by 30 percent down to $5.04, its lowest point in over a decade, following an announcement that it would get rid of its quarterly dividend to shareholders in order to save $157 million a year. Nearly two months later its share price sits at $4.02.

At least some part of GameStop’s recent financial troubles, which prevented the company from being able to find a potential buyer earlier this year, likely stem from the shift away from physical games this console cycle. In an June 4 earnings call, CEO George Sherman reported that used game sales had dropped 20.3 percent. And earlier this week, Sony announced in its earnings call that for the first time ever that digital game sales had surpassed 50 percent of all games purchased for the PS4 during the previous quarter.

This week’s layoffs come just ahead of the company’s annual GME business conference for store leaders set to take place at the end of the month in Nashville, Tennessee.

GameStop did not respond to a request for comment.

Source: Kotaku.com

The Video Game Industry Can’t Go On Like This

At about this time next year, we’ll have a pretty good idea of what the next generation of video games will look like. New consoles will likely be shown off, bold new streaming initiatives will begin to launch, and we’ll see all the wonderful kinds of games they will bring us. All these new things will come, and we’ll close the book on a generation that saw the industry that makes games come under greater scrutiny than ever before, as studios shuttered, developers burned out, and toxic work culture fostered environments hostile to marginalized people.

These are not problems that have been resolved, but the wheels of the games industry keep turning, in spite of the strain. So how much bigger can video games get? Video games are only getting more costly, in more ways than one. And it doesn’t seem like they’re sustainable.

There’s the human cost, which Kotaku has chronicled extensively. Contract workers are continually undervalued and taken advantage of, as Call of Duty: Black Ops 4 developer Treyarch is reported to do. Artists who work on gory cinematics integral to games like Mortal Kombat suffer from post-traumatic stress disorder. Unrealistic demands and lofty investor expectations lead to disastrous development cycles for video games like Anthem, which in turn leads to developer crunch. Every week, news breaks about the toll video game development takes on the people who make them, and we carry on as if it’s all going to be fine.

Mortal Kombat 11
Image: NetherRealm Studios (Warner Bros. Interactive Entertainment)

That’s only the start of it. When you adjust for inflation, the retail cost of video games has never been cheaper, and it’s been this way for some time. The $60 price point for a standard big-budget release has held steady for nearly 15 years, unadjusted for inflation even as the cost to make big-budget video games has risen astronomically with player expectations. (Here’s some math that gives you an idea of just how absurdly expensive games are to make.)

Since changing the price point seems to be anathema, we’ve seen the industry attempt to compensate with all manner of alternatives: higher-priced collector’s editions, live service games that offer annual passes or regular expansions a la Destiny, microtransactions, and free-to-play games. Then you have loot boxes, which in many cases boil down to slot machine-style gambling inserted into retail and free-to-play games alike—something that is coming under increased legal scrutiny that might potentially cut off what has quickly become a major source of revenue in the industry.

These aren’t all necessarily responses to thinning profit margins in the face of rising inflation. Game publishers are often publicly-held companies, with investors that need to be shown endlessly increasing profits that are then used to justify ridiculously large executive paychecks. Perhaps that’s a problem that needs solving, too.

Because of all this, $60 is often just the minimum buy-in, the ante in the pot, for some of the biggest releases. If you want every character in a game’s roster, or every map in its playlists, you’ll have to pay more, and increasingly, you have to. Big-budget single-player games that deliver a single-serving experience with minimal strings attached have largely disappeared from the lineups of major third-party publishers.

Sea of Solitude.
Image: Jo-Mei Games (Electronic Arts)

Let’s run down the Big Three. We’re more than halfway through 2019, and Electronic Arts has only published one single-player game, the indie Sea of Solitude. Last year was much the same, with two indies as its only single-player releases: Fe and Unraveled 2. Activision’s portfolio of single-player games looks even thinner: Sekiro: Shadows Die Twice is the only exclusively single-player, non-remake game that the publisher has released since 2015’s Transformers: Devastation—which itself is no longer available, thanks to an expired licensing agreement.

Ubisoft is an exception, regularly releasing entries in single-player game franchises like Far Cry and Assassin’s Creed. But it buttresses them aggressive microtransactions and extensive season pass plans. (And the occasional diversion like Trials Rising and South Park: The Fractured But Whole.) The big-budget single-player experience is now almost entirely the domain of first-party studios making marquee games for console manufacturers, which bankroll games like Spider-Man and God of War. The economics of first-party exclusives are totally different—they’re less about making money by themselves and more about drawing players into the console’s ecosystem.

This is worth considering, because as big publishers prioritize live, service-oriented games, the number of games on their schedules has dropped. If you look at the Wikipedia listings for EA, Ubisoft, and Activision games released by year, you’ll get a stark—if unscientific—picture of how each big publisher’s release slate has thinned out in the last five years, relying on recurring cash cows like sports games and annualized franchises and little else. In 2008, those three publishers released 98 games; in 2018 they released just 28, not including expansions.

Sekiro: Shadows Die Twice
Image: FromSoftware (Activision)

In short, the single-player game was not sustainable. So why should we think the current model is?

The smaller release slates make for a precipitous state of affairs where too much is riding on too little, a shaky foundation for big-budget game development to rest on. Granted, there are other publishers, like those in Japan, that are still very interested in single-player games. Independent games have also filled the single-player void and achieved greater visibility than ever before. But each of these alternatives face their own challenges in a volatile market, one where just five years ago conventional wisdom held the Japanese games industry was dead. Independent developers, meanwhile, continue to fight for the smallest slice of an impossibly crowded market. No matter where you sit on the games industry ladder, stability remains elusive.

That’s the present of video games. Let’s talk about the future. The intersecting trends of games-as-a-service and the increased emphasis on streaming mean an increased reliance on off-site computing with data centers and server farms distributed across the globe.

Microsoft’s Project xCloud wants to use the company’s data centers to provide high-end console and PC gaming to anyone with a good enough internet connection. Google Stadia is a service that pitches something similar if not even more wide-reaching, angling for the big-budget video game experience in a web browser. And Sony already offers a streaming service, PlayStation Now, which is likely to expand in the next generation.

A 2016 study from the Department of Energy’s Lawrence Berkeley National Laboratory gives us an idea of the sort of things to consider in this arena. The outlook gives reasons to both be alarmed and also be hopeful.

The foremost takeaway is that while data centers are growing in number, their energy consumption is starting to plateau out of necessity, as the dramatic increase in cloud computing has actually forced tech companies to become more efficient. The biggest companies, according to the Berkeley Lab report, are actually remarkably efficient.

Data center efficiency is measured by power usage effectiveness (PUE) rating. PUE is found by measuring a facility’s total power delivered divided by the power used by its IT equipment. Under this rating, the platonic ideal is a PUE of 1.0: power input and output perfectly balanced. Google, then, is in pretty good shape as far as this standard goes, with the average PUE of all its data centers currently at 1.11.

Efficiency, however, can remain good as power consumption increases, and consumption is going to remain a problem.

Data center energy consumption has been a concern for some time now, particularly in the United States, where data center energy consumption dwarfs that of the rest of the world at 1.8 percent of all energy used in the countrySmaller data centers, which estimates say make up 60 percent of data center energy-use, are inefficient compared to the biggest players, and with no legal standard or universal benchmark, there’s no way to ensure that efficiency gap is closed.

A Google data center in Council Bluffs, Iowa.
Photo: Google

Making this problem even more dire is our current political climate, where developing sources of clean, renewable energy is an idea met with hostility by countries like the United States throwing their weight behind fossil fuels, even outside of its own borders. That doesn’t even account for the ways games contribute to the world’s electronic waste problem. E-waste is toxic, and only 40 percent of it is properly recycled.

And all that is before you even start to think about climate change, and the urgent action needed to avert a major crisis in our lifetime.

Video games cannot do this forever. If any of these things were to collapse—the people who make them, the economy they’re sold in, the ecosystem we’re all a part of—it would be catastrophic. All of them at once? That’s a disaster we need to talk about, openly. Because there are solutions to these problems.

Some of them are small, like making sure you know how to properly dispose of e-waste, should you need to throw out a busted console or peripheral, and doing what you can to live sustainably, even though climate change certainly requires the sort of large-scale action that only governments can enact To that end, you can take more involved action, like calling your local congressperson or government representative and asking if climate change and environmental concerns are on their agenda, and keeping apprised of any legislation up for voting in local elections.

Other solutions are harder to parse. How do we account for the data center sprawl of tech companies and their energy consumption? Is it ethically sound to use a service like Project xCloud or Google Stadia or Playstation Now, knowing all this? Should we push for a global green tech agreement of some kind, so companies that contribute to server sprawl and energy consumption do so in a sustainable way? A carbon tax seems like a good start, but this is a problem in need of many answers, not one.

Some solutions are thankfully, underway. Labor practices have come under scrutiny and developers are beginning to discuss organizing in earnest. Unionization is not going to solve every problem, but it can lead to meaningful progress in a lot of ways that trickle outward into other arenas. More equitable practices can mean the relentless pace of development is slowed down, which could make for fewer, better games and a course correction in supply and demand. Or it might only make things marginally better.

Sony, Microsoft, and Nintendo all have stated sustainability initiatives and reports, but these programs are all buried in corporate sites and paperwork—a better approach would be to make sustainability as big a talking point as load times or ray-tracing. Something we could look at and compare to the previous year, and make note of how better off we are.

These are big, insurmountable seeming problems, but like all incredibly big projects—like, say, game development—they’re things that can be done, slowly, a little bit at a time. We just have to start.

It’s unlikely that video games will ever truly go extinct. We’ll probably always have something called “video games,” but what those games will look like is still very much in flux. There’s no guarantee that the way games are currently made will remain viable for another 10 years—games aren’t even made today the same way they were 10 years ago. They will look different. They will change because they can, and because they must. Hopefully, all the ways games change will be on our terms—otherwise disaster will change them for us.

Source: Kotaku.com

Sony, Microsoft, And Nintendo Come Out Against Trump’s Tariffs On Gaming Consoles

Sony, Microsoft, and Nintendo have joined forces to tell the U.S. government that its newly-proposed tariffs on goods imported from China would hurt consumers, put jobs at risk, and stifle innovation, according to a joint letter sent by the companies to the Office of the U.S. Trade Representative.

As part of its ongoing trade war with China, the Trump administration has proposed $300 billion in tariffs, or taxes on foreign goods, on most consumer goods. This would include a 25 percent tariff on video game consoles. “For those purchases that do go forward despite tariffs, consumers would pay $840 million more than they otherwise would have,” the console manufacturers argue, citing a report by the Trade Partnership Worldwide economic group.

In the joint letter dated June 17, the companies say that 96 percent of video game consoles imported by the U.S. are manufactured in China and that due to the custom hardware inside of them, they can’t easily be made elsewhere. “The video game console supply chain has developed in China over many years of investment by our companies and our partners,” the companies say. “It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions.”

They go on:

“Each video game console comprises dozens of complex components sourced from multiple countries. A change in even a single supplier must be vetted carefully to mitigate risks of product quality, unreliability and consumer safety issues. Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.”

The companies don’t speculate what the 25 percent tariff would do the the prices that consumers will pay at the cash register, but they do argue that the effects of the increased costs would be felt throughout the industry, including by companies both big and small who make games.

“Because of the deep interdependence of video game consoles and game software, and due to the price sensitivity of video game console purchasers, tariffs on video game consoles would not only harm our companies, consumers, and retailers, but will also disproportionately harm the thousands of small and medium-sized software and accessory developers in the United States,” the companies say. “Thus, these tariffs would have a ripple effect of harm that extends throughout the video game ecosystem.”

It’s still not completely clear if and when the new round of tariffs will go into effect. Trade talks between the U.S. and China are currently ongoing, and yesterday Bloomberg reported that the new tariffs could be suspended from going into effect if progress is made at the Group of 20 summit taking place in Osaka, Japan this weekend.

Source: Kotaku.com

Microsoft And Sony Announce Vague Cloud Gaming Partnership

Photo: Christian Petersen (Getty Images)

Microsoft said today that it will partner with Sony, its chief rival in the gaming console space, on “new cloud-based solutions for gaming experiences.” It’s unclear what exactly the new collaboration will ultimately lead to, but the move is still a surprising one given that the companies’ Xbox and PlayStation console lines are market competitors.

“Under the memorandum of understanding signed by the parties, the two companies will explore joint development of future cloud solutions in Microsoft Azure to support their respective game and content-streaming services,” Microsoft said in its press release. “In addition, the two companies will explore the use of current Microsoft Azure datacenter-based solutions for Sony’s game and content-streaming services.”

In other words, it’s entirely possible that PlayStation 5 might feature cloud gaming powered by Microsoft Azure, and beyond that, Sony and Microsoft might pool their resources to create a customized streaming solution that would be used by both Xbox and PlayStation.

“Excited about the opportunities ahead with Sony for us to pursue our mutual gaming ambitions and delight players around the world,” the head of Xbox, Phil Spencer, tweeted about the news.

The move comes hot on the heels of Google’s entrance into the game console market with its cloud-only platform Stadia. The move could be prompted by the console business’ entrenched players looking to team up to better defend themselves against Google. (Sony did not immediately respond to a request for comment. A spokesperson for Microsoft declined to provide further comment.)

Beyond that, it’s far from clear what this will mean for gamers. The language of the announcement is vague, and a memorandum of understanding isn’t necessarily legally binding. While it’s a statement of intent, it might not end up leading to anything significant.

Last October, Microsoft announced Project xCloud, a video game streaming service aimed at making Xbox One games playable across computers, phones, and tablets. Meanwhile, Sony already has PlayStation Now, a service that allows people to stream games to a PS4 or PC. It originally seemed like these services would be competitors. That still could be the case. However, this new collaboration also means they could in the future share some of the same technological DNA.

“Our mission is to seamlessly evolve [the PlayStation platform] as one that continues to deliver the best and most immersive entertainment experiences, together with a cloud environment that ensures the best possible experience, anytime, anywhere,” Kenichiro Yoshida, president and CEO of Sony, said in the press release. “For many years, Microsoft has been a key business partner for us, though of course the two companies have also been competing in some areas. I believe that our joint development of future cloud solutions will contribute greatly to the advancement of interactive content.”

Source: Kotaku.com

Switch Outsells PS4 In Japan Despite Launching Three Years Later

In just over two years, the Nintendo Switch has sold 8,125,637 units in Japan, according to the latest sales figures reported by Famitsu. That puts it above the current lifetime total of 8,077,756‬ for the PS4.

That’s especially notable given how much longer the PS4 has been around. The latest PlayStation launched on February 22, 2014 in Japan, just over 36 months prior to the Switch, which came out on March 3, 2017 worldwide. While the Switch’s worldwide sales of 34.7 million still lag far behind the PS4, which has sold north of 90 million, it’s impressive what Nintendo’s console has accomplished in such a short time frame. It also speaks to the evolution of video games in Japan, where mobile and portable gaming have completely dominated consoles over the past few years.

About the author

Ethan Gach

Kotaku staff writer. You can reach him at ethan.gach@kotaku.com

Source: Kotaku.com

Nintendo Reveals The 10 Current Best-Selling Indie Games On Switch

Screenshot: Team Cherry (Hollow Knight)

Indie games make up a crucial and vibrant part of the Switch’s great library of games, as evidenced by yesterday’s Nindies showcase. At the Game Developers Conference event today, Nintendo shared which indie games have sold best on Switch up until now. While many of them are familiar faces, like Stardew Valley, a few new games have crept onto the list, including Overcooked 2.

Here, in no particular order, are the Switch’s current all-time best selling indie games:

  • Stardew Valley
  • Hollow Knight
  • Overcooked 2
  • Undertale
  • Dead Cells
  • Enter the Gungeon
  • Graceful Explosion Machine
  • Celeste
  • Golf Story
  • Overcooked

We don’t know how many units each sold, or how they rank relative to one another, but we can compare it to last year’s list and see what changed. In addition to Hollow Knight joining the list, Dead Cells, Graceful Explosion Machine, Overcooked 2, and Undertale also made the cut.

Screenshot: 8-4 (Undertale)

Meanwhile, games that have fallen off the list include Kamiko, Fast RMX, NBA Playgrounds, SteamWorld Dig 2, and Shovel Knight: Treasure Trove. Yacht Club Games announced last April that Shovel Knight had at that point sold 370,000 copies on Switch. In light of that, it’s impressive that Undertale was able to overtake it, making it the oldest game on the list, having first released on PC back in 2015.

It’s also impressive to see indie studio Ghost Town Games snag not just one but two separate spots with its Overcooked series, which, according to Switch owners, is pretty well-done.

At the beginning of the year, GDC released the results of its 2018 survey, part of which showed that over half of respondents who released games on multiple platforms saw those games sell as well or better on Switch as on other platforms. Even if the Switch’s eShop is still a bit of a mess, it’s clear that hasn’t stopped a number of indie games from being able to find a lot of success there.

Source: Kotaku.com

Meet the man keeping 8chan, the world’s most vile website, alive

Elena Scotti/FUSION

Increasingly, the majority of people are content to experience the online world through the warm, blue-white glow of Facebook. But beyond the closed ecosystems of giant tech companies, the open web remains populous, anonymous, strange and sometimes, very unpleasant.

Take 4chan, which launched in the mid-2000s describing itself as “a simple image-based bulletin board where anyone can post comments and share images anonymously.” The site’s sparse moderation and almost-anything-goes policy attracted disaffected teens, video game lovers, internet pranksters, hackers, and a sizable number of virulent racists. Best known as an incubator of memes—think Pepe the Frog or Rickrolling—it came onto the radar of the national media when members of the hacking group Anonymous started gathering there to plan pranks. By 2009 Fox News was (absurdly) referring to 4chan as the home of “the most powerful people on the Internet.”

But a couple of years ago, when 4chan decided to ban Gamergate threads because they were being used to post personal information and plan attacks, some of those “powerful people” started leaving. They moved on to 8chan, a site with even looser moderation policies. It became the new digital home for some of the most offensive people on the internet, people who really believe in white-supremacy and the inferiority of women.

A piece of fan art made by a Gamergate supporter showing the exodus of people away from 4chan

You may not have heard of 8chan, but you’ve almost definitely been exposed to their actions. When something horrifying happens online that leads people to say, “the internet is a terrible place,” they are often talking about something that was planned on 8chan. This is the group that made Microsoft’s teen-loving bot Tay turn racist and start praising Hitler. It got a hashtag trending that suggested boycotting Star Wars because it had black and female lead actors. It was delisted from Google’s search results after users posted child pornography. It has a board called /baph/ dedicated to doxing people and attacking other websites. (Disclosure: earlier this year someone tried to sic /baph/ on me for writing about 8chan.)

It’s a cesspool that helps make the rest of the internet a scary place. Almost no one posting on 8chan would hand over their credit card and let their identity be known. Posters thrive on anonymity and the things it enables them to say, endorse, and do. Because it doesn’t have paying users, it would have collapsed under its own weight and died out years ago if it wasn’t bankrolled by a man named Jim Watkins, a 52-year old U.S. Army veteran who has a pig farm in the Philippines.

💻💻💻

Jim Watkins first heard about 8chan from his 28-year old son, who had watched a short Al Jazeera America documentary about its founder, Fredrick Brennan. Brennan had been a 4chan user for years and says he came up with the idea for 8chan while on mushrooms. The documentary followed Brennan for a few days and focused on how he deals with osteogenesis imperfecta, a genetic condition that’s characterized by brittle, deformed bones.

“They showed up at his house in the morning, and he was still in his pajamas, and now he’s famous for his Super Mario Pajamas,” Watkins says of the segment. “[It was] a little bit rude. They made him a little more pathetic than he is.”

A still of Brennan from the Al Jazeera America segment that led to Watkins learning of 8chan.
J.R.Heffelfinger/Vimeo

Brennan, who uses the moniker ‘hotwheels’ online, started 8chan in October 2013—but it didn’t really take off until Gamergate, an online war over sexism and progressivism in the video game industry.

In September 2014, 4chan founder Christopher Poole (a.k.a. “moot”) banned Gamergate threads on 4chan because users kept doxing prominent women in the video game community, posting their personal information, from addresses to social security numbers, and encouraging people to use it to harass them. Brennan started advertising 8chan as a “Free Speech Friendly 4chan Alternative.” Brennan, who did not respond to multiple requests for an interview, previously told Ars Technica that the site “went from around 100 posts per hour to over 4,000 posts per hour” that month.

Brennan started working full-time on 8chan, setting up a Patreon site for donations. Nearly 150 patrons signed up, donating over $1000 a month, but it wasn’t enough to cover his time and server costs. And within three months, Patreon kicked 8chan off its service for violating community guidelines.

8chan kept going offline because it exceeded bandwidth limits or, because of its offensive content, got kicked off various ISPs. Brennan needed stable financial support and a reliable hosting service to keep it alive.

That was when Jim Watkins got involved.

Watkins contacted Brennan, who was then living in New York City, to offer assistance. Despite a roughly 30-year age difference, the two hit it off immediately. Watkins describes Brennan as “a good guy [and] a brave man.” At the end of October 2014, Brennan went with Gamergaters to a strip club in Queens to celebrate 8chan’s first birthday as well as his decision to move to the Philippines to work with Watkins.

According to Tom Riedel, the former president and current secretary of Watkin’s company, N.T. Technology, Brennan and Watkins formed a business partnership.

“N.T. Tech provided the domain name and hardware, [Brennan] is responsible for software and growing the community,” said Riedel by email. “Right now it doesn’t make enough to pay for itself, but hopefully someday it will.”

8chan was created by Brennan, is run by Brennan, but is now owned by Watkins.

Watkins is an American in his 50s who picked up computer skills while in the military. He described himself in his first email to me as “a very boring person.” He wears glasses and a greying beard, though his hair remains brown. He doesn’t have a large online presence, but does maintain a blog on 8chan, where he sporadically posts photos of his family and his animals.

Watkins shares a photo of some of his pigs.

If photos and video of him online are any indicator, he almost always wears shorts and a graphic tee. He splits his time between Manila and the pig farm he owns outside the city. But his main business is web hosting and advertising.

Brennan and Watkins in 2015.
8chan.co/Youtube

Watkins told me on the phone that he wanted to protect 8chan because he’s seen “all these other sites that have big potential and then they go away.” As for concern about or responsibility for the actions of his digital tenants, he argues that it’s all just free speech.

“As long as they are not making imminent threats of harm against someone, their speech is protected political speech,” he told me. “No different than Trump or Clinton or Mr. Smith or or anyone else.”

Watkins isn’t the first message board owner to strike this stance. Reddit’s founders famously held a strong free speech position initially as did 4chan’s Poole. But they all backed off over time. Reddit now bans revenge porn and hate speech. Poole eventually told Rolling Stone that 4chan never had free speech “in the absolutely sense.”

The only free speech Watkins rejects concerns copyright violations, which would result in large fines for the site thanks to the Digital Millennium Copyright Act or DMCA. Over all, Watkins holds a hodgepodge of expediently adopted political ideals in service to one very clear motivation: extracting cash from the internet.

8chan is far from the only online community of bad actors that are underwritten by people like Watkins. Financial backers usually remain insulated from any attention or consequences for owning the sites they do. It’s no secret that Watkins owns 8chan, but much of the reporting on the site has, understandably, focused on its users or Brennan. However, Watkins is the site’s foundation, and has been since late 2014, and I wanted to know why he plays the role he does.

💻💻💻

Jim Watkins was raised on a family farm in Mukilteo, Washington, about an hour north of Seattle. His mother worked for Boeing and his father worked for the local phone company. He has one sibling and several half-siblings. Karen Sansaver, his elder sister, has kept the books for N.T. Tech since 2001.

Watkins says that he joined the U.S. Army when he was 18, first serving as a helicopter mechanic and then a recruiter. He emphasized to me, unprompted, that he didn’t work for the CIA though he’s “noticed some people guessing that.”

In 1987, the U.S. Army set Watkins on his path to becoming a financial backer of the web’s underbelly by sending him to computing school in Virginia. After that, in the mid-90s, while still serving in the military, increasingly working with computers, he co-founded a porn site called “The Asian Bikini Bar” and formed a company called N.T. Technology Inc. (He insists that the “N.T.” doesn’t stand for anything.) He says he told the Army he was starting an online business but didn’t tell them it was erotica.

“He really came in on the ground floor of the porn industry,” said Sansaver.

The company made money by selling advertising and eventually expanded to web hosting services. In particular, it helped skirt regulation, hosting Japanese adult sites that couldn’t be hosted in Japan because of the country’s anti-obscenity laws which were quite strict in the late 90s.

“They figured out a loophole in Japanese censorship rules,” Riedel explained in an email. “Adult material in Japan has to be censored, but…Japanese people could access content that resides outside of Japan. Bingo. The work we did in the following years was really just marketing uncensored Japanese content to users in Japan.”

Riedel has been an employee since the early days of N.T. Tech. He met Watkins in 1997 at age 19, while he was an art student living in Pittsburgh.

“One day in the summer of 1997, my roommates ran in and told me they met the ‘king of porn’ in the park, walking his poodle,” said Riedel. Watkins was looking for artists to design banner ads, and gave Riedel and his roommate some freelance work. “After that I started working full time, and the next summer I drove with him and his family across country to Seattle where we set up an office.”

They moved when Watkins left the army in 1998, after 16 years. He was only a few years shy of being eligible for a pension, but he wanted to focus on his web business. The tech world was booming, with dot-coms attracting massive funding and IPOs. “It was an adult website,” said Watkins. “Probably the army was happy to see me go.”

In 2004, after the tech boom turned bust, Watkins moved to the Philippines, a place to which he and his family had vacationed.

Watkins is blasé about those who are concerned about the type of content and behavior that 8chan encourages, but he insists he doesn’t hold the racist views espoused there. He explained this to me by way of a bizarre comparison between the lives of black Americans in the 20th century and his living situation in the Philippines.

“I am obviously not a white supremacist. I go for days without seeing another white face,” he told me. “I put up with racial problems similar to that of colored people in the 1960s, the black people of the 1970s, the African Americans of the 1980s, the people of color of the 1990s, and I am not sure what the politically correct term in the 21st century is…. I have lived here in the same place longer than anywhere else in my adult life. I love my home. As I am sure those people did in the 1960s. I don’t have a problem with white supremacists talking on 8chan. They have reasons for their beliefs. I don’t need to justify their reasons.”

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8chan is not the only anonymous, messaging board owned by N.T. Tech. In 2000, it added a client to its hosting roster that would turn out to be one of its most profitable as well as its most tumultuous: 2channel.

Created in 1999 by Hiroyuki Nishimura, 2channel (also called 2ch) was a text-only web board that became a hub of Japanese web culture by allowing users to express themselves anonymously, candidly and sometimes rudely with little fear of consequence. In 2008, Wired said the “ugly, lo-res site [got] about 500 million pageviews a month.”

It sounds familiar because 2channel is the forebear of all the other “chan” sites. It inspired a similarly-named imageboard called 2chan, that in turn inspired a 15-year old Poole to create 4chan in 2003. And then 4chan gave birth to 8chan. Such is the way of the internet: easily copied ideas and constant, but shallow, innovation.

Nishimura was said to be making a million dollars a year off of 2channel in 2008, both from ads and from members who subscribed to the site’s premium service, which let them browse its archives. “The only person who gets money from 2channel is me,” Nishimura told Wired. “Well, I guess I pay for the servers.”

Those servers were N.T. Tech’s.

Things have since gone sour. In 2013, the site had a data breach that exposed the credit cards of more than 30,000 otherwise anonymous users. In 2014, N.T. Tech, which was already hosting 2channel on its servers, took control of the site and the domain, because, according to Riedel, the 2013 data breach meant that the revenue that paid for 2channel’s hosting was gone. Regardless of the breach, 2channel remains popular: In September of last year Watkins said it received “between 15 and 16 million unique visitors a day.”

Nishimura is now suing Watkins and N.T. Tech, alleging they stole the site from him. He, unsurprisingly, had nothing positive to say about Watkins. “All his businesses have failed,” Nishimura told me by email. “Even his hosting service was not good.”

Nishimura remains in the message board business: when Christopher Poole, who is now at Google, sold 4chan late last year, the buyer was Nishimura.

The world of irreverent, anonymous message boards is an incestuous one.

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You might expect some procedural difficulties to result from owning free-wheeling sites like 2channel and 8chan: Law enforcement requests, DMCAs, annoyed posters, and so on. But when I asked Watkins about the major difficulties he’s faced as the owner of 8chan his first complaint was about so-called Social Justice Warriors.

“They call them SJWs… they troll me by email,” he said. “They try to embarrass you into turning off the channel. It’s like ‘oh there’s a horrible post here.’ Well great, report the post and we’ll delete it…Then they send it to ICANN, and the FBI, and all of these people. And it’s like, come on.”

Watkins, of course, is the owner of a site whose members regularly engage in swatting (using false reports to send SWAT teams after victims) and other forms of law enforcement-involved harassment. If the irony of his complaining about fruitless emails to the FBI occurred to him, he didn’t show it.

He also suggested that those who complain to him are creating the posts they’re upset about. There’s no evidence of this sort of sock-puppet account creation, though it is a tactic used by 8chan and 4chan’s right-wing groups.

I asked whether he feels any obligation to victims of harassment campaigns organized in part on 8chan.

“I am not sure what this is,” he responded. “If we have a DMCA request we comply.”

Watkins lives an ocean away from many of 8chan’s users and their targets, and it seems he doesn’t fully understand the effects it has on them. Or, even worse, he’s fully aware of what the hordes on his site are up to, and simply doesn’t care as long as it doesn’t violate the DMCA.

A note on the site admits that 8chan has yet to make a profit, but it’s clear that Watkins hopes it will. That hope and his friendship with Brennan are keeping the site alive.

Watkins is still hopeful and eager that 8chan’s advertising business will take off. As we got off the phone, he half-jokingly tried to sell me on buying ads there, in order to boost Fusion’s profile.

“Buy some advertising on 8chan. It’s only 5 dollars” he said, briefly adopting a mock accent and pronouncing his Ls as Rs: “Five dollar! five dollar!”

Ethan Chiel is a reporter for Fusion, writing mostly about the internet and technology. You can (and should) email him at ethan.chiel@fusion.net

Source: Kotaku.com