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Lucrative sector is a difficult market to enter and development requires different infrastructure and talents

A new front has opened in the battle to dominate digital entertainment. Netflix announced earlier this summer that it was venturing into video games. Last month it acquired game developer Night School Studio for an undisclosed sum. Amazon, which has invested hundreds of millions of dollars into gaming, finally had a hit with new online game New World.

The video game industry has become one of the world’s most popular — and lucrative — forms of entertainment. Video games generated nearly $178bn in global revenues last year, according to Newzoo, a market research group. That figure is projected to surpass $200bn by 2023.

For Amazon and Netflix, adding games to their platforms could attract more subscribers. Or at the very least dissuade existing ones from leaving. After a pandemic-induced jump in users, Netflix dropped 430,000 subscribers in the US and Canada in the second quarter. It regained some of these in the third quarter. Netflix has said in the past that in the “attention economy” it competes against video games just as much as rival video streaming services.

But gaming is a difficult market to enter. For every blockbuster such as Minecraft or Fortnite there are thousands of flops. Netflix hopes to leverage the success of shows like Stranger Things into video game hits. But good games need more than recognisable names. Development requires different infrastructure and talents.

Just ask Disney. The entertainment juggernaut shut down its games studio in 2016 and transitioned to a licensing model. Amazon — whose gaming push includes its near-$1bn acquisition of video-streaming service Twitch and the launch of gaming streaming service Luna — cancelled or ended at least four video games before New World.

Established game makers such as Nintendo, Sony, and Microsoft all make money from selling games and consoles. Free-to-play mobile games as in Roblox and Fortnite get users to make in-game purchases. Netflix’s plan is to add games for free and as a loss leader to woo more subscribers.

The sweet spot may not be in making games at all. Apple and Google sell and distribute games from their app stores and take a cut of as much as 30 per cent from each sale. No wonder established game makers are more concerned about middlemen than new entrants.

Bill Gates: Funding clean technology is the way to avoid climate disaster | Free to read

We need to turn lab-proven concepts into ubiquitous products that people want and can afford to buy

Before the last major COP meeting, in Paris in 2015, innovation was barely on the climate agenda. This year in Glasgow it will take centre stage. Shifting the world’s focus to inventing clean technologies was among the greatest successes of the Paris COP. Continuing that trajectory is, perhaps, its biggest opportunity this year, because innovation is the only way the world can cut net greenhouse gas emissions from roughly 51bn tonnes per year to zero by 2050.

There is now significantly more money for basic research and development and more venture capital for clean start-ups in hard-to-decarbonise sectors than ever before. As a result, some important clean technologies — like sustainable aeroplane fuel, green steel and extra-powerful batteries — now exist and are ready to scale up.

If the world is really committed to climate innovation, however, then these breakthroughs must be only the beginning of the story, not the end. At COP26 we need to think about how to turn lab-proven concepts into ubiquitous products that people want and can afford to buy. This will require a massive effort to fund hundreds of commercial demonstration projects of early-stage climate technologies.

It is incredibly challenging for any start-up to commercialise its product, but it is uniquely so for energy companies. When I was starting Microsoft, we didn’t need much infrastructure to write code and, once we’d written it, we could make nearly infinite copies with perfect fidelity for very little money.

Climate-smart technologies are much more difficult to navigate. Once you can make green hydrogen in a lab, you have to prove that it works — safely and reliably — at scale. That means building an enormous physical plant, ironing out engineering, supply chain and distribution issues, repeating them over and over again and steadily cutting costs. Demonstration projects like this are hugely complicated, extremely risky, and extraordinarily expensive — and it’s very hard to finance them.

In clean technology, there is yet another complication. When all that complicated, risky, expensive work is finished, you end up with a product that does more or less the same thing as the one it’s intended to replace — green steel has pretty much the same functionality as today’s steel — but costs more, at least for a while.

Naturally, it’s hard to find buyers, which means banks charge more for loans. The high cost of capital, in turn, increases the price of the products. Because financing is so hard to come by, commercial demonstration can be an excruciatingly slow process. Right now, the key to the climate innovation agenda is making it go faster.

I believe we can do this. Hundreds of governments and companies have made net zero commitments, and they have billions of dollars to invest. If we create systems that incentivise them to finance these projects and to commit to buying products such as sustainable aviation fuel and green steel, then we stand a chance of speeding up the innovation cycle. By committing a lot more money to build demonstration projects, recognising these contributions as one of the best ways to meet net zero commitments, and creating a system to measure the impact of these investments, we will give ourselves our best chance to avoid a climate disaster.

When I think about getting to zero, I ask three questions. First, can the world maintain public support for climate action? That depends on making sure the energy transition doesn’t cost so much that people lose patience. Second, can emerging economies like India, Brazil, and South Africa — which have done much less to contribute to climate change than in rich countries but are affected the most — continue to drive down poverty without emitting greenhouse gases? That depends on bringing down the price of green materials, so they don’t face a trade-off between growth and a liveable climate.

And third, what happens in the meantime? Just about everyone alive today will have to adapt to a warmer climate. The effects of higher temperatures — more frequent droughts and floods, the desiccation of farmland, the spread of crop-eating pests — will hit farmers especially hard. These changes will be problematic for farmers in rich countries, but potentially deadly for those in low-income ones. So, in addition to making clean energy cheaper, we need to double down on innovations like improved seeds that will help the poorest farmers grow more food.

At COP26, the world should put scaling up clean technology innovation — both for mitigating the worst impacts of climate and for adapting to the effects that we will already feel — on the agenda in the same way it put R&D on it in 2015.

Gas-rich Gulf state in tie-up with aero-engine group to build science and engineering campus aimed at creating ‘unicorns’

Rolls-Royce is joining forces with Qatar to build a science and engineering campus in the UK to develop green technology start-ups, as the aero-engine group seeks to accelerate its drive towards net zero.

The partnership would see the gas-rich Gulf state invest billions of pounds into the venture over the next 20 years, with the FTSE 100 company providing its manufacturing expertise and testing facilities, according to three people briefed on the talks. It could be unveiled as early as this week’s COP26 climate talks in Glasgow, said one person familiar with the talks.

While the exact details of the partnership still need to be finalised, the ambition is to build five green engineering “unicorns” — start-up companies valued at $1bn or more — by 2030 and up to 20 by 2040. Additional investment will be sought from external investors including venture capital funds.

“The Qataris are willing and able to invest. Given the climate crisis, you have to move at speed,” said the same person, comparing the plan to the government-backed network of catapult centres that link business and academia to develop research.

The commitment from Qatar, which would be through the state’s non-profit Qatar Foundation, would be one of the largest inward investment pledges into the UK since Brexit.

Qatar, the world’s richest nation in per capita terms and its top exporter of liquefied natural gas, is already a large investor in the UK and owns London’s Shard skyscraper, the Harrods department store and a large stake in supermarket chain J Sainsbury. Under the plans, which were first reported by the Sunday Times, Qatar would set up a sister campus in the state.

Rolls-Royce and the Qatar Foundation both declined to comment.

If the project goes ahead, the two partners would launch a feasibility study to find a site in England, most likely in the north-east or north-west. The study would be completed by the middle of next year.

For Rolls-Royce, the partnership is among a number of initiatives being pursued by the group as it seeks to convince investors that it can be one of the winners from the world’s push to combat climate change.

Along with other aerospace companies, decarbonisation is a huge challenge for the group. Before the pandemic, about half of Rolls-Royce’s then £15.4bn in annual underlying revenues came from its civil aerospace division, whose engines power some of the world’s largest aircraft.

The company would look to inject some of its own nascent climate change technologies into the centre with the aim of building them into viable businesses. One option, another person briefed on the matter, would be for Rolls-Royce to use it to accelerate ongoing research into direct air capture technology.

The group recently teamed up with an Australian research organisation to study what could be a cost-effective way of removing carbon dioxide from the atmosphere. The project was among a number selected by the UK government earlier this year to enter a competition to provide funding for developing carbon capture technologies.