2021 Perspectives

GGP 2021 Perspectives

In place of this week’s newsletter, we wanted to take the opportunity to reflect. 2020 was unprecedented in so many respects. This was a profoundly challenging year but it also marked a step function change in the gaming market. It ended up being a productive year despite its many trials. We closed 8 advisory transactions in 2020, including Phoenix Lab’s sale to GarenaFoxNext’s sale to ScopelyAppLovin’s acquisition of Machine ZoneSkillz’s SPAC merger with Flying Eagle Acquisition Corp.TSG’s investment in Scopely, and Daybreak’s sale to EG7. We expect the frenzied pace of transaction activity to accelerate further from here.

We co-founded Griffin Gaming Partners with Phil Sanderson and Peter Levin and have some of the world’s largest strategic investors backing the fund. With ~$250 million in assets under management, Griffin is now among the largest venture vehicles focused on gaming and is proud to support some of the most promising companies in the sector. The first fund is over half deployed, having made investments in SkillzDiscordAppLovinTactile Games, Wave, N3TWORKSubspaceFunzySuperSocial, and Spyke, among others. Our objective is to be the definitive resource for companies raising capital at all stages and are excited about the progress we’ve made to that end.

Sitting at the intersection of so much movement, we wanted to share predictions for the coming year from our vantage point.

BROADER PERSPECTIVES: OBSERVATIONS FROM THE PAST DECADE

The last decade has proved a dramatic transformation for gaming companies. Electronic Arts, for example, traded at less than 1x its next year’s estimated revenue and less than 4x its anticipated EBITDA. The reasons were relatively straight forward: many investors believed its performance to be unpredictable and it depended on third-party licenses. Shipping packaged software was a hard business and even more so when one owed royalties for the use of third-party IP.

Margins for the largest Western gaming companies have naturally expanded over the past decade as consumers shifted from purchasing physical copies of software to digital. As EA has diversified, demonstrated a track record of relatively consistent execution in marquee titles like FIFA, and exploited new adjacent opportunities such as Ultimate Team, the market has come to ascribe very different multiples: 6x and 17x 2021 revenues and EBITDA, respectively. EA is not alone in this “re-rating”; Take-Two, Activision Blizzard, and Ubisoft have all grown revenue and earnings but not nearly enough to explain the ~1000% appreciation in their stock prices since 2011.

This has proven to be a wildly sentiment-driven sector. As Activision Blizzard was perceived to be driving a significant proportion of the emerging momentum around eSports, its trading multiples expanded significantly. When EA’s acquired studio Respawn launched Apex Legends, its market cap increased by $5 billion over the next two weeks without much visibility into users, revenues, or profits from the new free-to-play hit franchise. Similarly, Nintendo’s market cap was up 36% in the two days following its announced partnership with mobile game developer DeNA without providing much detail on the specifics of the business terms. These are just a few of countless examples.

IMPLICATIONS FOR MOBILE GAMING COMPANIES TODAY

Mobile games companies have long suffered public perception created by King’s trading post-IPO. King marketed an IPO story centered around its unique approach to game development that produced one of the largest entertainment franchises of all time: Candy Crush. Yet, despite this meteoric success, which pushed King to over 500 million monthly active users at its peak, King failed to produce similar successes outside of the Match-3 genre. Candy Crush and its progeny seemed at the time to many public investors to be on a “decay curve” given low switching cost for users on mobile and resulting churn, which many investors extrapolated asymptotically ad infinitum. As a consequence, King traded as low as 2-3x its EBITDA.

So how is King doing today? Activision Blizzard acquired King in 2015 for $5.9 billion, representing less than 6x its expected EBITDA. Candy Crush users did indeed decay to a nadir of just under 250 million but the user numbers stabilized there.

Let that sink in: King owns and operates an entertainment franchise that a quarter of a billion people interact with each month, generates $2 billion of revenue and approaching $1 billion of operating income annually based on its Q3 2020 run-rate. This dwarfs almost every traditional entertainment franchise on the planet and although buried within Activision Blizzard, we estimate King may account for as much as $20 billion of Activision Blizzard’s $73 billion market cap today. It seems that Activision Blizzard saw something in King others did not.

PUBLIC MARKETS ARE OPENING BACK UP FOR GAME COMPANIES

With King’s lackluster performance and Zynga also trading poorly in the years immediately following its IPO, Western public markets were generally regarded as inhospitable for game companies. In dozens of strategic assignments for clients in the sector, only a very small minority considered a public exit as a serious alternative.

Today, we see euphoric appetite among public investors for the “picks and shovels” of the gaming ecosystem. Unity, for example, offers the most prolific game development software and has 1.5 million developers using its tools on a monthly basis and 2.5 billion monthly active end users who consumed content that was created or operated with Unity solutions.

Unity went public in September at a $16 billion valuation, which represented a 15x multiple of its expected revenues but has traded up dramatically to as high as $55 billion. Unity is only expected to grow sales 26% next year and is unprofitable according to consensus analyst estimates.

Unity is, in our view, among the best positioned companies to execute against the opportunity to bring ad-based monetization to the billions of users that play mobile games but don’t spend on in-app purchases. While approximately a third of all mobile downloads are games, only $3 billion of the $133 billion mobile advertising market is accounted for by in-game advertising. This represents a staggering opportunity but it is also a testament to the market environment to witness the degree to which Unity is credited for its potential future execution against this opportunity (and others) by current trading levels.

Skillz is another extraordinary example of a recent enormously successful IPO. We helped broker a merger with a SPAC at a $3.5 billion valuation just months after it raised capital privately at a significantly lower valuation. Skillz trades today at an $8 billion market cap and commands a 21x multiple of its expected 2021 revenue. Skillz is notably expected to grow revenues next year by 63% and also has profitable unit economics.

While SPAC mergers are extremely complex and require significant negotiation with the nominal acquirer, in this case, we believe it produced a superior outcome relative to a traditional IPO and a much lower cost of capital for Skillz going forward than had it stayed private. It is a sharp example of why we believe SPACs are more than just a flash in the pan, especially for sectors like gaming where public investor sentiment is rapidly evolving.

One interesting note from the process: Skillz was marketed to public investors without reference to mobile gaming companies like Zynga, Glu, or SciPlay given Skillz’s position as a platform. Skillz enables casual eSports tournaments and head-to-head contests with prizes for millions of mobile game players. Only time will tell but this mechanism for monetizing game content may end up rivaling that of in-app purchases, which today represent over 80% of all mobile App Store revenues according to AppAnnie.

IN THIS GOLD RUSH, IT WILL BE GOOD TO BE LOOKING FOR GOLD TOO

There is something incongruous with how public markets require companies like Zynga, Glu, and SciPlay to “show me” before ascribing much credit for potential new games or more importantly, to acquire businesses that accelerate growth and add to scale in a business that will ultimately benefit immensely from it.

In 2021, expect that to fade as a host of both gaming infrastructure and content companies, including Roblox, Playtika, and others that have demonstrated an ability to sustain growth, tap public markets. Many of these businesses, with enhanced cash war chests and a public currency will aggressively pursue acquisitions to accelerate growth much the way Zynga, Stillfront, Embracer, MTGx, and EG7 have.

Mobile gaming has emerged over the past decade as one of the most significant developments in entertainment. A niche business a decade ago has transformed into an $86 billion global market and one of the fastest growing entertainment markets today. One-third of the world’s population plays mobile games according to TechCrunch. With such incredible reach, lightning-in-a-bottle moments like Niantic’s 2016 launch of Pokémon GO are possible and allow for a piece of software to reach a billion users. As mobile screen resolution and compute power increase, and broadband cellular networks proliferate, increasingly immersive and social experiences are being created “mobile-first” in gaming.

Against this incredibly constructive market backdrop, extraordinary competition has emerged. The stakes are so high — billions in revenues and profits for the market leaders — and the cost of entry so low, more than a million mobile games have been created. Predicting those explosive hits like Pokémon GO is possible, we believe, but difficult. At Griffin, we have already evaluated close to a thousand venture financing opportunities since launching the fund.

While the market leaders in China, such as Tencent and NetEase, moved aggressively against the market opportunity for mobile games, and now generate ~80% of their games revenue from mobile, Western leaders have been much slower to increase their exposure to mobile, with such revenues representing only 10% - 30% of their total games revenue with WB Games as a notable exception.

Producing mobile hits is tough business, even for seasoned AAA gaming companies, given how many companies there are launching new games each year. Switching costs for most users are low, producing, as Kevin Chou, formerly Kabam’s CEO, observed, “shark fin” patterns of early success but high churn and rapid decay of user bases. Many of the larger gaming companies have opted to buy instead of build, creating an increasingly constructive market for mobile games businesses to find buyers willing to pay premium multiples.

ACQUIRED GROWTH IS GROWTH -- AND, FOR MANY, SUSTAINABLE

In examining recent consolidation in mobile gaming, Zynga’s history is illuminating. Notwithstanding its choppy start to life as a public company, Zynga has been on a terrific trajectory since Frank Gibeau took the CEO mantle back in 2016. He brought on a seasoned team of operators and set a new strategic vision for the business to focus organic efforts on Zynga’s biggest franchises (i.e., a “fewer, bigger, better” strategy akin to what had worked at EA), reducing costs, and most importantly, with an explicit intention to grow through acquisitions.

If we take the beginning of 2017 as the line of demarcation, at which point, Frank’s credible and compelling strategy had been clearly articulated, there are a number of remarkable dynamics to the next four year’s trading. At that point in time, Zynga’s beta, which takes account of both volatility and the way Zynga’s returns vary with market returns, was 1.3, Today, Zynga’s unlevered beta is an incredibly low 0.19. To distill this down to practical implications: the less volatile the returns and the less those returns move in line with the market returns, the lower the required return should be for an investor to hold the security. An investor who bought Zynga at the beginning of 2017, is up 3.8x, having produced an IRR of 40%. If the expected returns needed only be low double digits and the multiples it trades at today are similar, Zynga must have performed unforeseeably well to explain these anomalously high returns?

Zynga has performed well but not that well. If you drill down into Zynga’s growth, it turns out that nearly the entirety of its tremendous growth has been driven by its acquisitions. It has embarked, just as Frank said he would, on an aggressive string of acquisitions. It bought Peak’s card game assets, Gram Games, Small Giant, the remainder of Peak Games, and Rollic. Each deal has its own nuances, of course, but notably missing is the analogue to Caesar’s acquisition of Playtika in 2011 for ~$100 million. It of course sold the business to a Chinese consortium in 2016 for $4.4 billion.

Zynga, by contrast, has paid relatively full prices for its acquisitions. In the case of Peak Games, Zynga paid $1.8 billion for a company whose two hit titles, Toy Blast and Toon Blast, had category-leading user retention statistics. The business had single digit top line growth and still garnered a reported 15x EBITDA multiple. While almost 3 times the multiple Activision Blizzard paid for King, the market responded quite positively to the deal, with Zynga’s market cap increasing $630 million on the day of announcement. While Zynga has paid up and derived little benefit from synergies thus far, they are, as a package, strong strategic moves. However, in a market so thoroughly fragmented, with so many opportunities to buy, it’s hard to resist concluding that Zynga was mis-priced and materially undervalued back in 2017.

MANY MOBILE FRANCHISES WILL HAVE LONG LIVES

The key risk factor for mobile game developers has always been sustainability of growth. In the lead up to the sale of Kabam, we highlighted to potential buyers an important dynamic among the millions of players in the hit Marvel Contest of Champions game. The metrics for the whole population of players masked what was going on with a subset of players, dubbed Regulars, or players that had played 7 of the past 7 days. Those were players, we argued, that had often formed a sustaining habit. For many, the game had become a way of life. Regular customers, it turned out, monetized more like a subscriber. Cohorts of these users paid a very consistent and high sum each month despite being under no obligation to do so. They also had almost no propensity to churn. In total, Regulars accounted for approximately 80% of the overall game’s revenue.

One runs the risk in data mining of confusing correlation with causation, but we’ve now had ample opportunity to test the hypothesis out of sample. After observing the subsequent performance of Marvel Contest of Champions and countless other games, we’ve found this to be a recurring dynamic.

Many games have huge subsets of their player populations that form daily habits. Their status in these games often matters. They have friends in the games. They sometimes have enemies. They engage for hours every day. They simply don’t churn like the average statistics would predict. In many cases, mobile game developers can come up with new virtual goods and services to offer them. Regulars represent a subset of overall users, but we believe valuing the business opportunity derived from those most highly engaged users should look more like a software-as-a-service company valuation than the historical approach to mobile game company valuations.

Moreover, mobile games are increasingly akin to living organisms which evolve continuously. Pokémon GO has transformed radically since it launched in the summer of 2016. It further altered gameplay specifically in response to the COVID-19 pandemic, which curbed some of its historical outdoor gameplay patterns. As a result, Niantic delivered record revenue and player engagement in 2020.

Just as the market came to appreciate that AAA gaming companies had competitive advantages that would sustain and allow for growth in core franchises, we believe markets will afford increasing credit to mobile gaming leaders. The best executing private mobile game companies have grown dramatically, not only by launching new, unforeseeable hits, but also by scaling existing titles through profitable spend on user acquisition and by acquiring complementary businesses. Market leaders like AppLovin, Jam City, Moon Active, Niantic, Playrix, PlayStudios, Playtika, Scopely, Wildlife, Zynga, and many others are larger (in some cases, dramatically) and more valuable today than they were in 2017.

SCALE WILL INCREASINGLY MATTER IN MOBILE GAMING

Mobile is a market where scale will ultimately matter. The paradox is that scale, at least thus far, has not demonstrated an ability to help companies discover the next big hit. If you look closely at the Among Us examples of explosive success, they are very rarely produced by the largest Western developers. We do expect some change to that dynamic over time. However, sustaining and growing a game is a business that already dramatically favors scaled operators. Most mobile games need to spend significantly to acquire users through paid marketing channels. They also benefit from scale in running in-game events, producing new content for hyper-engaged users, and managing complex virtual economies.

Mobile gaming gives the developer the benefit of the data from every player interaction with the software and ability to track and ultimately model the results. Did a particular game mechanic cause a player to engage more deeply? Did it cause the player to churn? Did it lead to increased monetization?

The very same stimulus may very likely lead to a different result for a different player. The largest mobile game companies are building sophisticated player segmentation tools, which we believe will ultimately allow for customized and nearly individualized player paths through games. This will be an incredible application of machine learning technology for companies to be able to ingest such enormous quantities of data and tune the player experience algorithmically in response. Given the near-infinite variability of virtual economies and that the marginal cost of the virtual goods is close to zero at scale, we expect some extraordinary business results as mobile game companies systematize and automate maximization of lifetime value of players.

MOBILE GAME ADVERTISING WILL PRODUCE BILLIONS IN NEW MARKET VALUE

The last and perhaps more immediate opportunity for mobile game developers is advertising. King is an example to illustrate the point. When King was sold, it received very little if any value for the untapped engagement of non-paying players. At the time of the acquisition, only 3% of King’s users paid for in-app purchases.

The aggregate engagement was astounding. Users played 1.4 billion games per day. As is very common in mobile gaming, which is almost entirely a market of products that are free-to-play, the vast majority of users were “free riders”. Introducing ads in a way that doesn’t cause future payers to churn or allow competitors to pick off your audience is a non-trivial exercise, but it is increasingly being done. As of its last public disclosure, King’s advertising business generated $150 million of incremental net bookings and is the fastest growing segment within King.

There is an astounding amount of un-monetized time spent in mobile games. Users don’t get to “free ride” in Facebook, YouTube, or Snapchat, nor would many expect to. In the next year and beyond, we expect game developers to increasingly avail themselves of this ancillary revenue stream. The mobile game advertising ecosystem is evolving rapidly and stands to benefit many mobile games developers significantly.

CONCLUDING PERSPECTIVES

Although extremely difficult to forecast with precision, we expect public markets to increasingly “price in” the probability of growth in existing franchises, new games, successful acquisitions, and new monetization opportunities for games companies.

As games increasingly facilitate digital interactions, we believe we will see the creation of what pundits have coined the “metaverse”. One of the most reflective CEOs I know, Dave Baszucki, recently said quite artfully: “The Metaverse is arguably as big a shift in online communication as the telephone or the internet. Within the next few decades its applications will exceed our wildest imaginations. Perhaps the greatest opportunity it presents is to bring together people from all walks of life and foster a civil digital society. In 2021, that new society will begin to emerge for real.”

Whether Roblox or Epic will run one Metaverse or there will be a multitude of metaverses that emerge from the incredible engagement and immersion players have with their favorite games remains to be seen but it seems entirely likely that games will continue to consume more and more of our attention and facilitate an increasing proportion of social interactions.

Robert Putnam, in his seminal work Bowling Alone, decries the collapse of community engagement in modern society. We see gaming at the heart of a potential rebirth of social capital. Gaming, in many respects, has evolved in a way that facilitates social interaction, deepens relationships, and provides people around the world a new way to connect with one another. In games, we have the opportunity to “bowl together” at scale and perhaps build even deeper social roots than formed through community activities in the analogue world. For that potential, we are incredibly hopeful around the role gaming can play in bringing our world closer together.

THANK YOU!

Thanks to our clients and friends for all of your support. We hope to repay the kindness with creative ideas on how to support your growth. Feel free to reach out at any point if we can help provide advice or just to chat. Looking forward to the year ahead!

Best,
Nick

P.S. I’d like to thank everyone who contributed to this in one way or another and specifically, my team, Frankie Zhu, Jon Bikoff, and Seth Nutt, as well as Dean Takahashi, who kindly contributed to this directly with his suggested edits and whose work I hyperlink liberally 🙂

GGP Gaming Weekly - Wk 52

GGP Gaming Weekly – Week 52

Highlights

Apple’s China App Store Sheds Videogames as Beijing Tightens Internet Control (link)

  • Apple is removing thousands of gaming apps from the App Store in China as the government is enforcing restrictions on various types of content
  • Earlier in December, Apple warned Chinese game developers that a new wave of paid gaming apps was at risk of removal from its app store and asked developers to submit proof of a government license
  • In 2019, Apple had 272,000 games in its China App Store and has removed at least 94,000 game apps in 2020, far exceeding the 25,000 game apps taken down in 2019

KamaGames hits 150M unique users across its library (link)

  • Social casino games Company KamaGames has hit 150M unique users across its portfolio, with help from its most successful games, Pokerist and BlackJackist
  • The Company’s most recent non-social casino release, Durak, has outperformed expectations with 1.5M downloads after entering soft launch earlier this year

M&A and Capital Raising

Blackstone to make ~$400M majority investment in mobile app marketer Liftoff (link)

  • Blackstone has agreed to invest ~$400M in mobile app marketing optimization platform Liftoff, resulting in a majority stake in the Company
  • California-based Liftoff was founded in 2012 with a focus on mobile app marketing and today delivers more than a billion ads each day to users in 90 countries and across more than 500,000 mobile publishers
  • Roughly half of Liftoff’s business is catered to mobile games

Moon Active acquires Family Island mobile game maker Melsoft (link)

  • Israel-based Moon Active announced the acquisition of Cyprus-based mobile game company Melsoft, the developer of Family Island and MyCafe
  • Melsoft has an annual revenue run-rate of more than $160M
  • Moon Active’s flagship Coin Master game is ranked as the fourth highest-earning mobile game in the world for 2020, and has surpassed $1B in revenue to date

ByteDance is looking to acquire mobile games publisher CMGE, according to Reuters (link)

  • ByteDance is rumored to be in talks to purchase mobile games publisher CMGE Technology Group, according to Reuters
  • ByteDance is allegedly seeking to buy the 27.6% stake in GMGE that is held by Fairview Ridge Investment, which is said to be worth $275M
  • The TikTok parent company has previously stepped into the games industry through the launch of a new mobile games storefront and publishing arm

Mag Interactive acquires Swedish studio Apprope (link)

  • Mobile games specialist Mag Interactive has acquired Swedish studio Apprope for upfront cash consideration of ~$6M with additional consideration of ~$6M depending on profit performance over the next 3 years
  • Apprope is best known for its word-based title Word Bubbles, which has generated ~$12M, and its games have been downloaded 55M times
  • Recently, Apprope released Word Mansion, and has seen a significant increase in sales and downloads

Voodoo acquires Paris-based studio OHM Games (link)

  • French mobile games specialist Voodoo has acquired Paris-based studio OHM Games for an undisclosed transaction value
  • Voodoo and OHM were partners prior to merging and published four titles together in 2020
  • OHM Games is best known for mobile titles including Knock Balls, Push 'em All, Knock 'em All, Bullet Rush and Shortcut Run, with its portfolio of games achieving over 260M downloads to date

Others

Rovio names Alexandre Pelletier-Normand as its new CEO (link)

  • Finnish mobile games specialist Rovio has named current Executive Vice President for Games, Alexandre Pelletier-Normand, as its new CEO
  • Current Rovio CEO, Kati Levoranta, confirmed she would step down from the role in October

Navi esports club launches ‘metaverse’ with DMarket in-game trading platform (link)

  • Esports club Navi, is launching a new gaming portal, or “metaverse,” with the help of blockchain-based game tech company DMarket
  • Navi will launch NaviNation, which lets fans craft, sell, and buy digital assets and receive rewards and gifts from the team and partners
  • The project is powered by the software application Drop, developed by Los Angeles-based DMarket

Gaming Public Multiples

Feature-Image-Template-wk-51

GGP Gaming Weekly – Week 51

Highlights

Roblox Delays IPO Until Next Year (link)

  • The Company has decided to delay its initial public offering until next year, in response to the enthusiastic market reaction for the DoorDash and Airbnb IPOs this past week making it difficult to price shares accurately
  • The Company’s co-founder and chief executive, David Baszucki, announced the decision in a memo to employees on Friday, saying that waiting provided “an opportunity to improve our specific process for employees, shareholders and future investors both big and small.”

Cyberpunk 2077 has already recouped its development costs (link)

  • The game has already achieved high ratings throughout the Gaming industry, however CD Projekt’s stock traded down ~25% in the week leading up to announcement
  • In a memo issued last week, CD Projekt — the parent company of developer CD Projekt Red — said that its revenue from digital pre-order sales alone exceeds all of Cyberpunk 2077’s production costs and all of the Company’s marketing and promotional costs for the game this year
  • In a series of tweets issued on Thursday, CD Projekt announced that Cyberpunk 2077 had been pre-ordered more than 8M times
  • The Company also announced that sales of Cyberpunk 2077 on Steam crossed the $50M mark “over 2 weeks ago,” meaning that from that point forward, it has been receiving 80% royalties from the platform

Mobile game and app spending will grow 25% to $112B in 2020 (link)

  • Mobile game and app spending will grow 25% to $112B in 2020, according to year-end estimates from mobile data and analytics researcher App Annie
  • $0.65 of every dollar spent went to iOS, spend on Google Play will grow close to 30% in 2020
  • In gaming, the standout successes were Among Us, My Talking Tom Friends, Roblox, and Call of Duty: Mobile. My Talking Tom Friends was one of the few new games to penetrate the top-10 lists
  • Roblox also broke into the top 10 apps by consumer spending in 2020. Call of Duty: Mobile surpassed nearly a billion hours on Android phones in the peak month of its first year (October)

Consoles set new records in November Launch (link)

  • PlayStation 5 and Xbox Series X launched last month, and they helped set a new November record, according to industry-tracking firm The NPD Group
  • Despite performance of the PlayStation 5 and Xbox Series X, Nintendo Switch sales have maintained high numbers, selling more than 1.3M units in November
  • Consumers spent a November record $1.4B on new video game hardware, a 58% increase compared to a year ago
  • Growth was driven by the launches of the PlayStation 5 and Xbox Series X/S. YTD hardware spending reached $4B, 34% higher than a year ago

Minecraft racks up the most views of any game on YouTube in 2020 (link)

  • Mojang's Minecraft was the most-watched game on YouTube this year, with 201B views on the platform in 2020
  • Roblox came in second place with 75B views and Garena Free Fire finished in third with 72B views
  • YouTube Gaming surpassed 100B of hours watched across more than 40M channels dedicated to gaming in 2020

Project xCloud is coming to iOS devices in Spring 2021 (link)

  • Microsoft's Project xCloud, the Company’s cloud gaming service, will enter beta on iOS devices next year
  • Project xCloud was initially available on iOS via the App Store in beta earlier in 2020, but was removed after Apple determined that the application breached App Store policies
  • Microsoft’s cloud gamming service will also enter new markets including Australia, Japan, Brazil, and Mexico in spring 2021

Google releases Stadia in eight European countries, including Poland and Portugal (link)

  • Google has launched its Stadia streaming service in more European countries, including Austria, the Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Switzerland
  • In total, Stadia now works in 22 countries

Control has sold over 2M copies (link)

  • Control debuted in August 2019. It is available for PlayStation 4, Xbox One, Switch, and PC. PlayStation 5 and Xbox Series X/S versions are coming in 2021
  • Bigger has a strong profile, with four casual games that have already been downloaded more than 75M times in the past year. These have already made the company profitable
  • In 2019, 60% of Controls sales were digital. In 2020, that skyrocketed up to 90% as social-distancing gamers were happier staying at home and avoiding brick-and-mortar stores

The Last of Us Part II and Among Us win game of the year  (link)

  • The Last of Us Part 2 won game of the year among other categories, including best game direction, narrative, and action & adventure game
  • Other award winners included Final Fantasy VII Remake for best role-playing game and best score and music, with popular lockdown hit Among Us winning best multiplayer and best mobile game

M&A and Capital Raising

According to Sky News, EA has allegedly entered the race to acquire Codemasters alongside Take-Two (link)

  • Electronic Arts, which already owns a UK racing studio in the form of Need for Speed and Burnout developer Criterion, is expected to be revealed as an interested party
  • Take-Two had had already reached an agreement over the terms of the offer, which valued the publicly owned company at $956M
  • EA and Take-Two are the two biggest sports games publishers in the world, and both will be eyeing Codemasters’ hit F1 racing series, which has expanded into esports in recent years and continues to grow in popularity

Modern Times Group acquires mobile studio Hutch (link)

  • Modern Times Group has acquired racing-focused mobile games developer and publisher Hutch in a deal worth up to $375M, implying a ~5.0x revenue multiple and ~21.1x EBIT multiple
  • Consideration for the deal consists of a $275M upfront cash payment and up to $100M of performance-based payments
  • The acquisition has been made through MTG's new holding company GamingGo, which was announced recently alongside increased investment in German games developer InnoGames

Zynga’s Rollic division buys Onnect game for $6M (link)

  • Zynga recently acquired Turkey’s Rollic for $16M, and now Rollic is turning around and buying the matching game Onnect from Chef Game Studio for $6M
  • Onnect has been acquired in full for a closing payment of $6M and a potential future payment of $1M, based on terms and conditions agreed upon by the parties
  • Onnect is a connection-based pair-matching game with challenging levels

Bigger Games raises $6M as Turkey’s startup market heats up (link)

  • Bigger Games has raised $6M to make mobile games as Turkey’s startup market continues to grow
  • Bigger has a strong profile, with four casual games that have already been downloaded more than 75M times in the past year. These have already made the Company profitable
  • The funding comes from Index Ventures, the backer of Roblox, King, Supercell, and Discord. Play Ventures (who backed the company in the pre-seed round), Unity founder David Helgason, and ex-King chief operating officer Stephane Kurgan also participated in this round

Aglet raises $4.5M to make a mobile game out of sneakers (link)

  • The Company, based in Los Angeles and Dusseldorf, Germany, calls itself the developer of a sneaker and culture-focused spatial commerce experience
  • Aglet has now raised $7M since its founding in late 2019
  • Sapphire Sport led the round, with participation from existing investors Lakestar Ventures and Forecast Ventures. Notable angels Matt Miesnieks (6D.ai, Niantic Labs), Nate Mitchell (co-founder Oculus, Mountaintop Studios), and Greg Castle (Anorak Ventures) also participated in the round

Salad Technologies raises $3.2M (link)

  • Salad hopes this plan will position it to define the future of distributed computing at a time when the industry has a voracious appetite for computing power
  • In the past couple of years, Salad has amassed 250,000 computer users, and that user base has generated 1,000 years of compute time. Carthona Capital led the round with additional participation from Kickstart Seed Fund and Royal Street Ventures

New studio Core Loop secures $2.4M (link)

  • Game developer Core Loop has secured $2.4M in funding to create a cross-platform MMO
  • The round featured participation from Galaxy Digital, 1Up Ventures, Initial Capital, Dune Ventures and Sisu Games
  • Core Loop is led by Vincenzo Alagana and Dan Chao
  • Alagana has gained experience on both console and mobile in a career spanning 20 years, and was once the president and CTO of Game of War developer Machine Zone

ForeVR raises $1.5M and unveils VR bowling title (link)

  • The startup has raised $1.5M, and its first game is a VR bowling title
  • The company was founded by industry vets Marcus Segal and Mike Pagano Doom, who both worked at Zynga. They are developing their first game, which is scheduled to be released in early 2021 on Oculus VR headsets

Bombay secures $1M in funding from Lumikai (link)

  • Bangalore-based developer Bombay Play has secured $1M in seed funding from India-based venture capital fund Lumikai
  • Playco and Zynga co-founder Justin Waldron joined the board of directors for Bombay Play
  • Bombay Play has already seen 10M downloads for its first multiplayer game, Card Party

Wizard Games secures investment from Tencent (link)

  • Chinese games studio Wizard has secured an undisclosed investment from Tencent
  • With the proceeds raised, Wizard plans to build upon its development team, as well as build its portfolio of online games across all platforms
  • The studio’s leading title, Battle Teams, has accumulated 500M users worldwide, with its sequel, Battle Teams 2, expected to be released in 2021
  • Despite its shooter focus Wizard has created a new sandbox title dubbed Sea of Craft, it is scheduled to be released in 2021

Modern Times Group increases its investment in InnoGames (link)

  • Modern Times Group has increased its controlling stake to 68% in mobile games developer InnoGames
  • Modern Times Group can purchase an additional 17% of the company for $128M
  • In November 2019, the German games studio surpassed $1B in lifetime revenue

Others

Pokémon GO’s February 20 event will celebrate beloved Kanto region (link)

  • Pokémon GO‘s next big online event will take place on February 20 as the company celebrates the game’s fifth anniversary with a return to the Kanto region
  • This is another example of how the publisher is shifting to a hybrid status for its location-based game, where players can play individually in physical spaces while gathering in large groups through online play
  • During the 12-hour virtual event, all 150 Pokémon originally discovered in the Kanto region will be available as Shiny Pokémon, some for the first time

World of Warcraft: Shadowlands breaks record for biggest PC game launch (link)

  • Blizzard Entertainment announced today that World of Warcraft’s latest expansion, Shadowlands, sold over 3.7M copies on its launch day, November 23
  • This breaks the record for biggest launch day for any PC game, beating out the 3.5M copies Blizzard’s own Diablo III managed back in 2012
  • World of Warcraft has been gaining players this year as social distancers have looked for a virtual world to escape to

Halo: Infinite is launching next fall (link)

  • Halo: Infinite isn’t coming in the spring or summer. Developer 343 Industries is now aiming to launch the game in the fall 2021, according to a blog post from director Joseph Staten
  • This is the first time that anyone from Microsoft has given a new release window for the game

JJ Abrams’ Bad Robot launches internal game studio headed by Left 4 Dead creator (link)

  • The entertainment Company run by the Star Wars filmmaker has hired Michael Booth, a veteran game creator behind hits such as Valve’s Left 4 Dead
  • The Santa Monica, California-based Bad Robot Games will now have two different businesses that Sweet will manage
  • It will work on co-development deals with external game partners, and it will also make its own games under the studio headed by Booth, who previously worked at Valve, Blizzard Entertainment, Facebook, and Electronic Arts

Left 4 Dead successor Back 4 Blood launches June 22 (link)

  • Developer Turtle Rock announced that Back 4 Blood, the spiritual successor to the Left 4 Dead series, is coming out on June 22
  • An alpha will launch next week, as the studio announced today at The Game Awards
  • Turtle Rock created Left 4 Dead under Valve back in 2008. The game became popular thanks to its four-player cooperative shooting. It had one sequel in 2009, but the series has been dormant since then

Pearl Abyss’ Crimson Desert will debut in the winter of 2021 (link)

  • Pearl Abyss revealed a new gameplay trailer for Crimson Desert at The Game Awards today. The open-world massively multiplayer role-playing game is coming out for PC and consoles in winter 2021

Microsoft Flight Simulator is coming to Xbox Series X/S in summer 2021 (link)

  • This means a new audience will get a chance to experience its realistic flight models and lifelike replication of Earth on Xbox Series X and S
  • Asobo is focusing on Xbox Series X/S. That means no plans for Flight Simulator for the Xbox One have been made yet

The Elder Scrolls Online’s next expansion is Gates of Oblivion (link)

  • Bethesda revealed the next expansion for The Elder Scrolls Online during The Game Awards today, and it’s Gates of Oblivion. It will release in 2021
  • Developer ZeniMax Studios Online also announced that a better look at Gates of Oblivion will happen during a premier event on January 21
  • The Elder Scrolls Online debuted in 2014 and has a dedicated following thanks to the release of constant updates and expansions. The last expansion, Greymoor, came out this May

Rovio has cancelled development of its new turn-based RPG Angry Birds Legends (link)

  • Rovio has cancelled development of its new turn-based RPG Angry Birds Legends
  • Rovio confirmed that the previously soft-launched title was not where they wanted it to be and therefore felt a full release was not warranted
  • The Company similarly halted development of Angry Birds Tennis following an unsuccessful soft-launch period in October 2020

2K launches NBA SuperCard globally as WWE SuperCard crosses 21M installs (link)

  • 2K Games has launched NBA SuperCard, a F2P mobile collectable card battle game, on iOS and Android devices globally
  • NBA SuperCard was developed by Cat Daddy Games, and previously developed WWE SuperCard which has reached 21M global downloads since its August 2014 launch
  • Cat Daddy Games has already utilized its NBA license to create NBA 2K Mobile and MyNBA 2K21

Gaming Public Multiples

Feature-Image-Template-week-50

GGP Gaming Weekly – Week 50

Highlights

Americans of all ages are spending more on video games (link)

  • People across all demographics are playing more games at higher frequencies, especially on mobile, but this trend also includes Nintendo, PlayStation, and Xbox
  • An NPD report found that 4 out of 5 consumers in the US played a game in the last six months, and these consumers are spending 26% more time and 33% more money on games than in the same period last year
  • Spending on video games for Americans 45 years old to 54 years old increased 76% while Americans age 55 to 64 increased their spending 29%

Call of Duty hits $3B in bookings in 2020, and Warzone’s Cold War version has been moved to December 16 (link)

  • According to Activision Blizzard, net bookings for Call of Duty crossed $3B in 2020 and the new Call of Duty: Black Ops — Cold War version of Warzone has been delayed from December 10th to December 16th
  • Year-to-date increases for the Call of Duty franchise include net bookings up over 80% and units sold through up over 40% YoY
  • Over 200M people have played Call of Duty this year

Sony doubled TV ad spend for PlayStation 5 launch (link)

  • Gaming brands have increased their TV ad spend in preparation for the holidays: November saw a 77% increase in estimated outlay, increasing to $50M from October’s $28M
  • Over half of this increase is from PlayStation’s heavy promotion of the PlayStation 5 and Call of Duty: Black Ops — Cold War
  • In total, 14 brands aired 75 spots over 4,900 times, resulting in 1.9B TV ad impressions
  • Behind Sony, top ad spenders include Microsoft, Nintendo, Activision Blizzard, and EA

Animal Crossing: New Horizons becomes the fastest-ever game to sell six million copies in Japan (link)

  • According to Game Data Library, Nintendo's Animal Crossing: New Horizons has surpassed six million sales in Japan and is the fastest game to surpass this barrier
  • Animal Crossing: New Horizons is the only the fifth game to hit this milestone in the Japanese market

Fortnite sees a record 15.3M players at the end of its Marvel event (link)

  • Fortnite experienced a record 15.3M concurrent players during the finale of the battle royale Marvel event with an additional 3.4M tuning in through YouTube and Twitch
  • While the Marvel event is over, Epic Games signaled that Fortnite has years to go with its hero-based storyline

Roblox given the go ahead to enter China (link)

  • As reported by the South Morning China Post, Roblox has received a greenlight to enter the Chinese market
  • Tencent will publish the game in China and received licenses for both Mobile and PC, but no release date has yet been provided

Genshin Impact brings in nearly $400M in first 2 months on mobile (link)

  • According to Sensor Tower, Genshin Impact has brought in an estimated $393M in the first two months after its September 28 launch
  • Genshin Impact was the #2 game in terms of generating revenue in the world, behind Tencent’s Honor of Kings
  • The game’s success is global and signals that mobile players are looking for more substantial RPGs that can rival PC/Console offerings

M&A and Capital Raising

Swedish-based EG7 acquires Daybreak Game Company for $300M (link)
LionTree advised Daybreak Game Company on its sale to EG7

  • Daybreak is a San Diego, CA based leading MMORPG video game developer and publisher
    • The Company possesses globally recognized third-party IPs, combined with valuable original IPs
    • The Company has deep expertise in the free-to-play and games-as-a-service business model, and their games feature a loyal user base comprised of ~178M registered users
  • EG7 is a Sweden-based group of companies that develops, markets, publishes, and distributes video games for PC, Console, and Mobile
    • The Company owns a portfolio of other game developers, ad businesses, and software development companies including Big Blue Bubble, Piranha Games, Sold Out, Antimater Games, and others
  • The transaction represents a large addition to EG7’s portfolio
    • Transaction Value: $300M
      • $260M Up-Front Consideration ($160M cash / $100M stock)
      • $40M Deferred Cash Consideration
      • 9.7x Transaction Value/2020E EBITDA
      • As means to raise additional capital, EG7’s Board of Directors intends to carry out a new issue of shares in EG7 that amount in up to ~$190M through an accelerated bookbuilding procedure
      • Additionally, the Company has secured two debt facilities resulting in ~$110M in available capital
    • The transaction increases the size and profitability of EG7 with Daybreak’s loyal communities for existing IPs
    • Daybreak offers future upside through upcoming content releases, synergies across the group, and a strengthened team to identify and execute further M&A

Gaming platform Roblox acquires Imbellus assets ahead of IPO (link)

  • Imbellus, based in Los Angeles, develops simulation-based tests that measure human thought processes
  • The Company, which was valued at $57.5M in a 2018 private fundraising round, has talked publicly about its application as a substitute for standardized U.S. tests such as the SAT college entrance exam

EG7 acquires MechWarrior creator Piranha for $24M (link)

  • Canadian games studio Piranha has been acquired by EG7 for ~$24M, with consideration of ~$16M in cash and ~$8M in EG7 stock
  • Piranha will remain an independent entity within EG7
  • Piranha’s top game, MechWarrior Online, has generated ~$60M in revenue since its release in 2013

Bigger Games secures $6M in seed funding (link)

  • Istanbul-based mobile studio Bigger Games has raised $6M in seed funding
  • The round was led by Index Ventures with additional participation from Play Ventures, Unity founder David Helgason, and former King COO Stephane Kurgan
  • Bigger Games was founded by three former members of Peak Games and has achieved 75M downloads
  • The Company will use the proceeds for development of additional casual puzzle titles

Microsoft acquires esports events firm Smash.gg (link)

  • Microsoft has acquired esports events platform Smash.gg for an undisclosed amount
  • Smash.gg indicated that current operations will be unaffected and that the platform will benefit from additional resources and support as part of the Microsoft Content Services team

Others

Dauntless studio Phoenix Labs adds new studios, ramps up work on new games (link)

  • Dauntless developer Phoenix Labs keeps growing, as it announced the establishment of new studios in Montreal and Los Angeles
  • The Company added 50 employees during 2020 and expects to have over 250 employees by the end of 2021
  • André Roy, previously at Ubisoft, will lead the team at the Montreal studio and Omar Kendall, previously at Riot Games, will be product director at the Los Angeles studio, while Phoenix Lab’s Jing Wang will serve as general manager

Supercell cancels new casual match-three puzzler Hay Day Pop (link)

  • Supercell has cancelled the development of its previously soft-launched match-three puzzler Hay Day Pop saying that the game did “not meet the standards” of the Company
  • Hay Day Pop, a casual game, is different from the Company’s traditional portfolio of hardcore games

Krafton consolidates Pnix and Delusion Studio to form RisingWings (link)

  • South Korean games firm Krafton has consolidated Pnix Inc. and Delusion Studio into a new mobile-focused studio named RisingWings
  • The newly formed studio will focus on casual and midcore mobile titles while maintaining focus on previously developed titles including Golf King - World Tour and MiniGolf King

Sony teams with Epic to bring Kratos to Fortnite (link)

  • PlayStation has teamed up with Epic Games to bring its iconic character Kratos, from the God of War franchise, to Fortnite
  • The character can now be purchased as an in-game skin across all platforms, with additional Kratos-related content exclusive to PlayStation players

Gaming Public Multiples

GGP Gaming Weekly - Wk 49

GGP Gaming Weekly – Week 49

Highlights

CD Projekt FQ3 2020 Earnings Update (link)

  • CD Projekt traded down 1.3% over the two days following earnings release (Thursday & Friday), likely due to game delays, despite YoY growth and improvements in CD Projekt Red and GOG.com, their two reported operating segments
  • For FQ3 2020 specifically, the company reported $28M in revenues, representing 13% YoY growth, though falling short of consensus ($33M)
    • Gross Profit: $18M (64% margin, increase of 24% YoY)
    • EBITDA: $9.9M (35% margin, increase of 51% YoY)
    • $0.10 Diluted EPS (vs. consensus of $0.09)
  • Revenue growth was primarily attributable to licensing royalties associated with The Witcher 3: Wild Hunt, together with its expansions, Nintendo Switch game sales, and royalties related to digital sales in the framework of GWENT: The Witcher Card Game and Thronebreaker: The Witcher Tales
  • Revenues from digital distribution of videogames licensed from external suppliers on GOG.com, CD Projekt’s digital distribution platform, grew 23% YoY compared to FQ3 2019

Epic Games launches Fortnite Crew subscription (link)

  • Epic Games will launch its new Fortnite Crew subscription for $12/month on December 2, 2020
  • With the subscription, players will get a Battle Pass for Season 5, 1,000 V-Bucks (~$8 worth of V-Bucks) each month to spend on items such as skins, and a Fortnite Crew Pack including an outfit bundle exclusive to subscribers
  • The Battle Pass will exist independently and can be made as a one-time purchase

Roblox partners with Ernest Cline on Ready Player Two event (link)

  • In partnership with Ready Player Two, Roblox is launching a themed treasure hunt with seven user-generated games based on the book inside the Roblox platform
  • Players who complete the treasure hunt will be awarded virtual goods designed specifically for the Ready Player Two event
  • The event will feature a virtual Q&A with author Ernest Cline and Roblox CEO David Baszucki, which will stream inside the event and contain clues for navigating the treasure hunt
  • It’s another example of Roblox’s plans to bring about the metaverse, the universe of virtual worlds that are all interconnected

ByteDance launches mobile games store and publishing arm (link)

  • ByteDance will hope to compete with fellow Chinese companies Tencent and NetEase
  • Last month, ByteDance launched Danjuan Games, a storefront dedicated to mobile titles
  • In November, the firm revealed a new publishing arm, dubbed Pixmain, which currently has five games in development
  • All five titles under Pixmain are expected to be available on mobile devices, with one also available on the Nintendo Switch

M&A and Capital Raising

AppsFlyer raises funding from Salesforce Ventures at $2B valuation (link)

  • Mobile measurement and marketing company AppsFlyer has raised an undisclosed amount in a new round of funding from Salesforce Ventures at a $2B valuation
  • The Company previously raised $210M at a $1.6B valuation in January 2020
  • The Company has ~1,000 employees globally and more than $200M in ARR
  • AppFlyer’s goal is to accurately measure mobile ad spending and become a “democratizer” of mobile marketing

Kahoot has acquired language learning mobile game maker Drops for up to $50M (link)

  • Norwegian learning platform company Kahoot has acquired Estonian language learning mobile game maker Drops for as much as $50M
  • Kahoot is paying $31M in cash up front, and an additional $19M based on undisclosed performance metrics from 2020 to 2022
  • Drops has seen an increase of 7.5M users in 2020 to a total of 25M users, and recently reached a revenue run rate of $10M
  • The Drops acquisition is part of Kahoot’s strategy to expand into new areas of learning, whether at school, work, or home
TinyBuild invests $3M in Secret Neighbor developer Hologryph (link)
  • The investment gives TinyBuild a majority stake in the studio, with the use of proceeds supporting soon-to-be-announced IP for the PS5 and Xbox Series X/S
  • TinyBuild is driving towards a value-based subscription models with the Hello Neighbor franchise available on Xbox Game Pass
Supercell invests $2.8M in 2Up, a co-op mobile game studio (link)
  • Supercell, developer of Clash Royale and Clash of Clans, is investing $2.8M in New Zealand game studio 2Up Games
  • 2Up Games was created to develop co-op games, which the Company believes will make the world a better place as people struggle with isolation during the pandemic
  • 2Up Games co-founder, Joe Raeburn, previously worked at Space Ape Games, maker of Samurai Siege, before Supercell acquired a majority stake of the company in May 2017

Others

Studio MDHR will delay Cuphead’s The Delicious Last Course DLC (link)
  • Studio MDHR announced that it has delayed the release of its Cuphead downloadable content, named The Delicious Last Course, to an unspecified date
  • The Studio said that the delay is due to challenges it has faced during the pandemic
  • While not specifying a new release date, the Studio said, “[The Delicious Last Course will be released when] we are confident it will delight the Cuphead community the way we feel it should”

Small Giant Games names Jose Saarniniemi as its new CEO (link)

  • Until now, Saarniniemi has been responsible for the finances and operational management of Small Giant Games
  • Saarniniemi initially joined the studio's management team in 2017 and previously worked for Rovio

Esports firm 100 Thieves teams up with Fortnite (link)

  • The partnership will see Epic Games add 100 Thieves’ esports facility, the Cash App Compound, to its Fortnite Creative’s Welcome Hub
  • Players will be able to explore the Compound and complete quests that are linked to members of 100 Thieves, which will unlock new areas of the facility to explore
  • This is another of Fortnite’s many collaborations this year including those with Travis Scott, BTS, and J Balvin

Gaming Public Multiples

GGP Gaming Weekly - Wk 48

GGP Gaming Weekly – Week 48

Highlights

Skillz FQ3 2020 Earnings Update (link)

  • Skillz & Flying Eagle Acquisition Corp. filed a revised S-4, including FQ3 2020 results
  • Highlights
    • FEAC’s stock currently trades at $13.54, which is 35% higher than where SPACs are expected to trade
    • As of September 30, 2020, Skillz operates in 31 states and the District of Columbia, covering ~90% of the U.S. population
    • The Company has continued on their growth trajectory, generating $60M in FQ3 2020
    • The Company noted a sustained boost in the positive engagement trends that arose since the onset of COVID-19
    • In 2020, Skillz expects to power more than 2B tournaments, including 0.5B paid entry tournaments, and facilitate $1.6B in paid entry fees generating $225M in revenue
  • Key Performance Indicators
    • MAUs: 2.7M (+57% YoY and +3.8% QoQ)
    • ARPU: $6.93 (+5.8% YoY)
    • Paying MAU/MAU: 12% (vs. 11% in the same period one year prior)
  • FQ3 2020 YTD Financial Performance
    • Revenue: $162,392 (+91% YoY)
    • Gross Profit: $153,586 (95% Margin, +89% YoY)

Mobile games saw $58.7B in player spending between Q1 and Q3 2020 according to Sensor Tower (link)

  • The impressive number represents a growth of 26% YoY
  • The Apple App Store generated $35.2B between January and September, while Google Play earned $23.5B, a rise of 26.3% YoY
  • Having generated $16.5B in revenue, the US has proven to be the top-spending country in the world. Meanwhile, Japan and China came in at No.2 and No.3 with $13B and $10.6B respectively

Epic Games launches Houseparty video chat in Fortnite (link)

  • Represents a continuation of Epic’s ongoing plan to equip Fortnite with features that will keep players in the game longer, as the company tries to make Fortnite into the metaverse
  • Houseparty video chat is currently available to Fortnite players on PC, PlayStation 5, and PlayStation 4, but players will also need an iOS or Android mobile device with the Houseparty app installed
Pokémon GO gets biggest update with higher level cap and seasons (link)
  • Niantic announced the biggest-ever update to its flagship Pokémon GO location-based mobile game, called GO Beyond
  • Changes include an increase in the level cap from 40 to 50 and new seasons with special content
  • The update is about getting lapsed players to come back and first-timers to come aboard while giving those who have stuck with the game something new to achieve

Amazon launches mobile games capture app for Android (link)

  • Amazon has launched a new app to allow players to capture and share mobile gameplay
  • The new application, GameOn, allows users to not only share clips with friends, but they can also join in on challenges and connect with other mobile players
  • Currently, the app is available on Android devices and allows consumers to record clips between 30 seconds and five minutes
Google Stadia to begin public testing for iOS devices in the coming weeks (link)
  • As the first step in the company's iOS progressive web application, Google will use the feedback of the Stadia player base to improve the service
  • It has been challenging for companies such as Google, Microsoft and Facebook Gaming to get their instant games apps onto the App Store
  • Back in July, Google added 4G and 5G streaming support for its Android Stadia app. Moreover, as of June 2020, the application has been downloaded more than one million times

M&A and Capital Raising

Roblox files for IPO (link)

  • Roblox recent filed for IPO, signifying a major milestone for the Company. Roblox is an online game platform and game creation system that allows users to create games for each other. The Roblox Platform consists of:
    • Roblox Client – The application that allows users to explore 3D digital worlds
    • Roblox Studio – The toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client
    • Roblox Cloud – The services and infrastructure that power the human co-experience platform
  • With an average of 157 minutes of daily time spent on the platform in FQ3 2020 (calculated as hours engaged / DAUs / 92 days in FQ3 2020), Roblox was the highest amongst global gaming companies most popular mobile games including MARVEL Strike Force and Pokémon GO, online content platforms including Spotify and Netflix, and social media platforms including Facebook and Snapchat
  • Key Financial Highlights
    • FY 2019 Bookings: $694M – 39% increase YoY
    • FY 2020 Bookings based on FQ3 2020 YTD Run Rate: $1,654M – 138% increase YoY
    • FY 2019 Developer Exchange Fees: $112M – 56% increase YoY
    • FY 2020 Developer Exchange Fees based on FQ3 2020 YTD Run Rate: $278M – 148% increase YoY
    • FY 2019 EBITDA: $89M
    • FY 2020 EBITDA based on FQ3 2020 YTD Run Rate: $418M
  • Bookings increased at a 47% CAGR from FQ1 2018 to FQ4 2019 (last quarter unaffected by COVID-19). Prior to the pandemic, FQ4 2019 saw a dramatic QoQ increase of 43%, partially due to the end-of-year holiday season. Since the pandemic, Bookings have more than tripled, with a 229% increase YoY in FQ2 2020 and a 200% increase YoY in FQ3 2020
  • DAUs increased steadily at a 42% CAGR from FQ1 2018 to FQ4 2019 (last quarter unaffected by COVID-19). Since the pandemic, DAUs have nearly doubled, with a 95% increase YoY in FQ2 2020 and a 97% increase YoY in FQ3 2020
  • Hours Engaged on Roblox increased steadily at a 47% CAGR from FQ1 2018 to FQ4 2019 (last quarter unaffected by COVID-19). Since the pandemic, Hours Engaged on Roblox have more than doubled with a 164% increase YoY in FQ2 2020 and a 133% increase YoY in FQ3 2020

Gunzilla raises $25M to make triple-A games with ex-Crytek leader (link)

  • Founded earlier this year, Gunzilla will make a “new generation of shooters,” according to co-founder Vlad Korolev
  • Gunzilla is creating a game targeted for the Sony PlayStation 5 and the Microsoft Xbox Series X
  • The funding will help to drive recruitment, with the team expected to grow to more than 200 people by the end of next year

Embracer Group acquires 12 game studios and a PR firm (link)

  • Embracer announced the acquisition of 12 studios across North America and Europe
  • The new studios add at least 1,273 new employees to Embracer Group’s growing ranks, pushing the company over 5,000 workers
  • More acquisitions are likely to come, with CEO Lars Wingefors saying that the company has been actively talking to more than 100 entrepreneurs who “want to be part of the Embracer family”

Lightfox Games raises $3.3M for ‘hypercore’ mobile games (link)

  • Lightfox Games, a Seattle-based mobile game developer and publisher, has raised $3.3M in seed funding to create what they have dubbed “hypercore” games
  • The Lightfox founding team worked together at Z2Live, a Seattle mobile gaming studio that King acquired and then closed in February 2019
  • The funding came from March Gaming, with participation from Hiro Capital and 1UP Ventures
  • Lightfox will use the funding to grow the team and launch their first game, Super Battle League

Genies raises $3M from Bandai Namco for Asia expansion (link)

  • The investment and expansion comes just a month after the company launched a product expansion, extending its focus for its 3D avatars from celebrities to everyday consumers
  • With the investment, Genies has appointed Yasuo Miyakawa, CEO of Bandai Namco Entertainment, as a member of the Genies KK directors
  • Genies rolled out its 3D avatars and SDK so companies like Giphy and Gucci can integrate the SDK into their apps to let consumers create Genie avatars that can wear their merchandise
  • Over time, Genies will expand its SDK partnerships, creating a digital identity ecosystem where consumers can transport their avatar from platform to platform, creating a mini-version of the metaverse

Pllay raises $3M so gamers can wager on duels in popular games (link)

  • Pllay enables gamers to wager on 1-on-1 duels in their favorite games
  • James McGuckin’s Screen Play Ventures led the round, with additional participation from certain angel investors
  • Pllay can monitor a 1-on-1 match on Twitch with AI to determine which of the two players won
  • When someone wins, they get 100% of the funds wagered, as Pllay doesn’t claim a fee, but makes money through advertising and brand partnerships instead

Lila Games raises $2.8M for mobile shooter (link)

  • Lila Games is creating a free-to-play mobile game currently dubbed Project B.L.A.C.K.
  • Founders include Joseph Kim, a former chief product officer at Sega and studio lead at FunPlus and Paul Leydon, a former lead game designer at FunPlus and Machine Zone
  • Bitkraft Ventures led the round with participation from Galaxy Interactive and certain game industry angel investors

Epic acquires facial animation firm Hyprsense (link)

  • Hyprsense is a real-time facial motion capture company that developes and provides software to animate any 3D characters in real-time
  • The Company was founded in 2015 and is based in Burlingame, CA

Kongregate takes over three aging mobile games from Disney (link)

  • Kongregate announced that it is taking over operations of three Disney mobile games: Maleficent Free Fall, Inside Out: Thought Bubbles, and Where’s My Water?
  • According to Kongregate, the three free-to-play games have combined for over 224M downloads
  • Kongregate will continue to develop new content, including in-game events, to keep each title relevant

Others

MunkyFun and Zeeppo accepted into N3twork’s $50M Scale Platform (link)

  • The latest two games to successfully complete their path through N3twork’s $1M pilot fund and gain access to additional funding are Zeeppo’s Chaos Road and MunkyFun’s League of War: Mercenaries
  • Zeeppo is a Brazilian indie developer and its mobile racing shooter has already racked up 5M downloads. During testing, Chaos Road’s UA campaign hit breakeven within 90 days
  • Based in San Francisco, MunkyFun’s League of War game was launched back in 2016 with Japanese publisher GREE and has since demonstrated its ability to retain and monetize a hardcore community through its live events and gacha system
Zynga opens studio in Austin to help with its Star Wars mobile game (link)
  • The Austin outpost will partner with NaturalMotion in the United Kingdom, which has been working for the past couple of years to develop Zynga’s mobile game set in the Star Wars universe
  • Led by game industry veterans Jeff Hickman and Matthew Hemby, the new studio is looking to hire 25 new employees across every role, with a focus on recruiting studio-level leadership

Gaming Public Multiples

GGP Gaming Weekly - Wk 45

GGP Gaming Weekly – Week 45

Highlights

Activision Blizzard reports FQ3 earnings (link)

  • Activision Blizzard reported a strong quarter driven by expanded audience reach, deepened engagement, and increased player investment
  • Reported FQ3 2020 revenues ex-deferrals of $1,954M representing a 52.4% increase YoY, and significantly exceeding prior revenue outlook ($1,800M) and consensus ($1,805M)
  • Call of Duty, World of Warcraft, and Candy Crush are each set to generate over $1B in net bookings in 2020
  • Call of Duty: Modern Warfare and Warzone saw more than 3x as many MAUs as the prior title in Q3 2019 and ~7x increase in PC/Console hours played YoY
  • Activision Blizzard has many highly anticipated releases in FQ4 2020 and beyond
    • Call of Duty: Black Ops Cold War will release on November 13th
    • World of Warcraft: Shadowlands will launch on November 23rd
    • Hearthstone will see the release of a new game mode, a new in-game progression system, and the latest expansion (Madness at the Darkmoon Faire) in November
    • Call of Duty: Mobile continues to get closer to launch in China and has over 50M players pre-registered to date
    • King will bring Activision’s Crash Bandicoot to mobile in Spring 2021 and has ~10M pre-registrations to date

Microsoft reports FQ1 earnings (link)

  • The Personal Computing segment, which includes Xbox content & services, increased 6% to $11.8B
    • This growth was led by a 30% increase in Xbox content & services to $649M, driven by growth in third-party titles, Xbox Game Pass subscriptions, and first-party titles
    • Xbox hardware revenue declined 27%, driven by a decrease in volume of consoles sold ahead of new console launches
  • The addition of EA Play next month, along with Microsoft’s pending acquisition of ZeniMax, will add more franchises to more than 100 high quality games already available on Game Pass
    • Game Pass currently has 15M subscribers 
  • Microsoft expects very strong demand following the launch of the Xbox Series X and S consoles
    • Expected to drive hardware revenue growth of approximately 40%
    • Expecting a negative gross margin impact from console sales this quarter as they invest against the growing lifetime value of the platform
    • Xbox content and services revenue should grow in the low 20% range with strong engagement and continued momentum in Game Pass subscribers
    • These outlooks do not include ZeniMax, which should close in the second half of the fiscal year

Sony reports FQ2 earnings (link)

  • Game & Network Services performed well in Q2 primarily due to Sony’s first-party software title Ghosts of Tsushima becoming a big hit and PlayStation Plus subscribers increasing as a result of stay-at-home demand
  • Sales increased 11% year-on-year with all categories increasing except for hardware, which is anticipating the launch of the PlayStation 5
  • Total PlayStation user game play time in September up approximately 30% compared to the same month of the previous year
    • Sony expects this level of stay-at-home demand to continue in the second half
  • Sony aims to exceed the 7.6M units they sold in the fiscal year of launch of the PlayStation 4, which achieved substantial market share and was a major success
    • Expecting to have more titles than at any launch in Sony’s history, thanks to high-quality, first-party software that is exclusive to the PlayStation, and to collaboration with their publisher partners

Ubisoft reports FQ2 earnings (link)

  • Ubisoft reported increased user engagement and significant growth in total users, despite a slight decrease in YoY net bookings
  • Reported FQ2 2021 net bookings of $402M representing a (0.6%) decrease YoY, though exceeded prior revenue outlook ($336M) and consensus ($365M)
  • Higher than expected performance led by depth of back catalog and strength of live services
    • 100M unique players in H1 2020-2021
    • 65M registered players on Rainbow 6 Siege
    • Just Dance 2020 experienced greater than 100% net bookings growth YoY
    • The Division 2, For Honor, and The Crew 2 experienced double-digit growth YoY
  • Strong momentum of next gen consoles expected to be a material catalyst for Ubisoft games
    • Expecting to launch Watch Dogs: Legion, Assassins Creed: Valhalla, Just Dance: 2021, and Immortals: Fenyx Rising in FQ3
    • New game launches span Amazon Luna, PC, PS4, PS5, Stadia, Xbox One, Xbox Series X/S, and other platforms

Rovio reports FQ3 earnings (link)

  • Rovio reported declining users, both in DAUs and MUPs, and a decrease in YoY revenue
    • Reported FQ3 2020 revenue of $79M representing a (9.2%) decrease YoY, which matched consensus estimates ($79M)
    • Due to new game launches in 2020, Rovio noted that revenue will be lower than 2019 due to lower UA investments
    • 2020 YTD revenue is (6.3%) lower than 2019 revenue through FQ3, with Brand Licensing revenue off by ~50%
  • Rovio has a robust pipeline with 8 games in different development stages
    • 3 games are currently in soft launch: Angry Birds Legends (soft launched in September 2020); Hard Head Squad (soft launched June 2020); Darkfire Heroes (soft launched August 2019)
    • Notably, Rovio announced that it will not pursue the development of Angry Birds Tennis, following a period of soft launch earlier this year (link)
  • In October, Rovio announced that CEO Kati Levoranta will be leaving at the end of the year and that the search for a new CEO is ongoing

Netmarble partners with the NBA and NBPA for new mobile game (link)

  • Netmarble has partnered with the National Basketball Association (NBA) and the National Basketball Players Association (NBPA) to create a new mobile game
  • The new title will feature NBA athletes with easy to pick up gameplay and impressive visuals. It will also mark the first time that the company has developed a game in the West

Facebook Gaming is bringing in new games through cloud streaming (link)

  • As detailed in a blog post, the company has not created a separate cloud gaming service. Rather, the games are accessed in the same manner as other games that are available on Facebook
  • "Cloud gaming is about expanding the types of games we already offer, so we'll start with the format people enjoy playing on Facebook: free-to-play games. That's one of the reasons why we're starting with games typically played on mobile devices," said Facebook vice president of play Jason Rubin
  • Furthermore, the games will only be available on Android or the web

M&A and Capital Raising

Scopely raises $340 million at a $3.3 billion valuation (link)

LionTree acted as exclusive advisor to TSG Consumer Partners

  • Scopely, the publisher of games like Star Trek: Fleet Command and Marvel Strike Force, has raised $340 million to continue its mobile growth plans as players embrace games during the pandemic
  • The deal values Scopely at $3.3 billion, post-money, and it gives the company a war chest so that it can continue to make big acquisitions like the purchase of FoxNext Games last January from Disney
  • The fifth round of funding comes from Wellington Management, NewView Capital, TSG Consumer Partners, CPP Investments, funds managed by BlackRock, D1, Battery Ventures, Eldridge, Declaration Partners, and Moore Strategic Ventures. Additional investors in the round include Greycroft, Baillie Gifford, Sands Capital, Revolution Growth, and Highland Capital Partners

Krafton selects 5 underwriters to seek IPO in 2021 (link)

  • According to the South Korean game company best known for the shooter game PlayerUnknown’s Battlegrounds, Mirae Asset Daewoo is the lead underwriter while co-underwriters include Credit Suisse Securities, Citigroup Global Markets Korea Securities, JP Morgan and NH Investment & Securities
  • “Our goal is to list the company in Korea next year. After selecting underwriters, we will make speed for the process,” a Krafton official said

VSPN raises $100 million in funding round led by Tencent (link)

  • Esports production and tournament organiser Versus Programming Network (VSPN) has raised $100 million through a Series B funding round
  • Chinese tech giant Tencent led the investment. Further investors included Tiantu Capital, Susquehanna International Group and Kuaishou. Meanwhile, the financial investor of the funding round was Lighthouse Capital

Esports Entertainment Group acquires Helix eSports and GGCircuit for $43 million (link)

  • The publicly traded company is amassing a number of properties related to esports, but it is doing so with a unique approach by combining games, tournaments, and gambling
  • With the deal, the company is bringing together an enterprise software business, an analytics platform, and a player-vs.-player skill-based wagering platform. Those businesses will be coupled with Esports Entertainment Group’s overseas gambling business for betting on competitive gaming

Stillfront acquires indie dev Everguild Limited (link)

  • The upfront consideration is around £1.06 million ($1.37 million). However, £540,000 ($701,640) can be paid in new Stillfront shares while the remaining amount will be paid in cash
  • Based in Madrid, Everguild currently has six employees and has a focus on collectable card games. So far, the studio has released two games, across multiple platforms, The Horus Hersey: Legions and Drakenlords

Tilt Five raises $7.5 million for AR goggles for tabletop board games (link)

  • SIP Global Partners led the round, with participation from Bitkraft Ventures, Galaxy Interactive, Logitech, and games industry veteran Ken Birdwell. SIP’s Jeffrey Smith will join Tilt Five’s board of directors

Shotcall raises $2.2 million to build gaming community hubs (link)

  • Initial Capital and New Stack led the round with contributions from Lerer Hippeau

Others

Pokémon GO celebrates Pokémon Journeys: The Series with new in-game event (link)

  • As detailed in a blog update, the Animation Week 2020 event will take place from November 6th to November 12th
  • Throughout the week, trainers will be treated to Pokémon encounters and other content that has a tie to Ash and Goh, the stars of the TV series

Microsoft is shutting down Gears Pop! in April 2021 (link)

  • As detailed in a site update, the game will cease operations on April 26th, 2021, less than two years after its August 2019 launch. However, over the next six months, fan-favourite events will be brought back to the game

Cyberpunk 2077 postponed another 21 days until December 10 (link)

  • CD Projekt Red announced that it has delayed Cyberpunk 2077, one of the most anticipated and ambitious games of the year, by another 21 days until December 10

Far Cry 6 and Rainbow Six: Quarantine delayed past Q1 2021 (link)

  • Far Cry 6 had a release date of February 18, 2021, but Ubisoft now plans to release the open-world adventure during its next fiscal year. That begins April 2021 and ends March 2022. The unfortunately named Rainbow Six: Quarantine is also still coming, but the publisher is scheduling for that same period

ByteBrew introduces their new free platform for mobile gaming (link)

  • Built by game developers for game developers, ByteBrew was created to be the all-in-one platform for growing mobile games by giving developers access to the analytic tools large publishers utilise to scale their games
  • ByteBrew’s centralised dashboard shakes up the mobile game industry by removing the implementation of multiple costly services by connecting all of ByteBrew’s platform technology in one lightweight SDK - for free without monthly fees or conversion charges

Gaming Public Multiples

gaming-weekly-wk-44

GGP Gaming Weekly – Week 44

Highlights

Nintendo breaks record as it remains the best-selling console for 22 months (link)

  • The Nintendo Switch has continued to be the best-selling console for 22 consecutive months, a new record

  • The Japanese hardware has officially surpassed the dominance of the Xbox 360, which held the record for seven years having been the top-selling console from August 2011 to April 2013

According to Sensor Tower, ROBLOX surpasses $2 billion in player spending on mobile (link)

  • Revenue generated by the US-based company has soared this year, as ROBLOX mobile crossed $1.5 billion in player spending in May, taking seven months to rack up $500 million. The world-building platform has taken just five months to bring in an additional $500 million

Niantic partners with Verizon for US exclusive Pokémon GO content (link)

  • As detailed in a blog post, the telecommunications firm will soon enhance gameplay through the sponsoring of in-game gyms, Pokéstops and gifts

  • However, as of October 20th, Pokémon GO players, who have a mobile plan with Verizon, are able to get a ticket to an exclusive event. Tickets are limited to one per trainer account and can be grabbed until the day of the event on November 7th

Call of Duty: Mobile shoots amasses over 300 million downloads (link)

  • Activision Blizzard took to Twitter to share news of the milestone. The first-person mobile shooter was released on October 1st 2019, meaning the game racked up 300 million downloads in just over a year

Cloud9 launches first all-women esports team for Valorant (link)

  • Esports organization Cloud9 will field its first all-women esports team in Riot Games’ Valorant esports tournaments

  • Los Angeles-based Cloud9, which runs a number of esports teams for games such as League of Legends and Fortnite, will partner with AT&T in creating more opportunities for women and making esports more inclusive. The team will debut at Riot’s First Strike tournament qualifiers starting on Monday October 26

Amazon Luna launches into early access for invitees only (link)

  • Amazon’s cloud-gaming service Luna is available now to select gamers in the United States. The company launched the platform in early access. As part of this program, you can pay $6 per month to subscribe to the Luna+ Game Channel that starts with a library of 50 games

  • In a blog post, Amazon’s Marc Whitten explained that Luna is going to start small. His team plans to invite only a fraction of the “hundreds of thousands of requests.” The idea is to use this beta to improve Luna for its eventual full launch, according to Whitten

M&A and Capital Raising

Scopely acquires match-three developer Genjoy (link)

  • Genjoy's first game, Tuscany Villa, was launched in April 2020. Together with Scopely, the studio will continue to work on its match-three puzzler

  • Around 150 employees will become part of Scopely's Spanish presence. Currently, the US firm has two offices in Barcelona. Last year, the publisher expanded its operations both Barcelona and Dublin

Frost Giant Studios raises $4.7 million for real-time strategy game revival (link)

Frost Giant is a Griffin Gaming Partners portfolio company

  • Frost Giant Studios, a new game studio formed by Blizzard Entertainment veterans, has raised $4.7 million to make its first real-time strategy game
  • The company will use the money to grow the team, build a prototype for gameplay, conduct consumer research, and expand operations. Morten said the Irvine, California-based team has eight employees — all who once worked at Blizzard

Alliance Entertainment acquires US games rental service GameFly (link)

  • Alliance Entertainment has acquired US games rent-by-mail firm GameFly

  • As reported by GamesIndustry.biz, the rental service will continue to operate independently. However, Alliance CEO and co-owner Jeff Walker will take on those same roles for GameFly

Venn raises $26 million series A for its streaming TV network for games and culture (link)

  • The company announced that it has raised a $26 million series A, bringing its total raised to $43 million. Seed round investor Bitkraft led the round alongside new funder Nexstar Media Group, with participation from seed investors Eldridge, Wise Ventures, Alumni Ventures Group, and Josh Kroenke

  • Venn's business is about putting its shows on TV, streaming devices like Roku, and platforms like Plex — it doesn't look at Twitch as its main distribution platform. With this funding, Nexstar will become the exclusive local TV broadcaster for Venn and have a member on its board

EVOS Esports raises $12 million in Series B funding (link)

  • Korea Investment Partners led the investment. There was further participation from Mirae Asset Ventures, Indogen Capital, Woowa Brother and a range of family offices found across Japan and Southeast Asia. Furthermore, existing investor Insignia Ventures Partners also took part

Others

Riot Games welcomes Jason Bunge as its first-ever CMO (link)

  • Bunge has over 20 years of experience within the games and tech industries. Most recently, he was Electronic Art's senior vice president of brand management and marketing. During that time, he aided in the launch of battle royale Apex Legends

Unity promises initial OpenXR platform support by the end of 2020 (link)

  • When the Khronos Group released OpenXR — a royalty-free standard designed to make cross-platform VR and AR app development easier, supporting multiple platforms — it was backed by many of the mixed reality industry’s biggest names, including Epic Games, Microsoft, Oculus, and Valve, to name just a few

  • Unity confirmed that its eponymous 3D engine will start supporting some OpenXR platforms by the end of 2020, with a focus on “providing the best developer experience on Unity supported platforms.”

Rally unveils digital currency with soccer star Keisuke Honda, esports team Gen.G (link)

  • Rally recently launched a cryptocurrency dubbed Creator Coin that will help influencers, content creators, and streamers run their own virtual economies. It also is announcing that international soccer star Keisuke Honda, esports organization Gen.G, and crypto influencer Joon Ian Wong are partners

  • All these entities have big followings and they’re adopting what Rally calls its Brand Coin, a cryptocurrency (dubbed a social token) that fans purchase and use to gain access to things like special events

  • Honda’s fans, for instance, can pay whatever they believe the coin is worth and use it to gain access to videos of him, on and off the field, said Rally CEO Kevin Chou, in an interview with VentureBeat. Chou hopes that Rally’s concepts, if they catch on, could bring the next 100 million people into cryptocurrency

Language learning game Drops hits 25 million users (link)

  • In 2020, the Talinn, Estonia-based company has seen an increase of 7.5 million users and is forecasted to hit 30 million in total by the end of the year, CEO Daniel Farkas said in an interview with GamesBeat. By the end of this year, annual revenue should hit $10 million, up 13 times from $719,000 in 2017

Gaming Public Multiples

Week 42

GGP Gaming Weekly – Week 42

Highlights

Consumer spending on mobile games hit $20 billion in Q3 2020 (link)

  • Mobile consumers spent $20 billion on games throughout Q3 2020 according to data provided by App Annie

  • Both the App Store and Google Play experienced great growth, given consumer spending on games was up 5% quarter-on-quarter. In terms of genre, RPGs proved to be the most lucrative, as did the strategy category

  • More specifically, Pokemon Go led the charge for RPGs – unsurprising given it is nearing $4 billion in lifetime revenue – while Strategy was led by Rise of Kingdoms. Meanwhile, the sports genre and core simulation led by Professional Baseball Spirits A and Disney: Twisted-Wonderland, respectively

September is 2020’s biggest month so far for game industry TV ad spend(link)

  • The TV advertising spree for gaming brands continued in September with a 76.35% increase in estimated spend, up to $39.5 million from August’s $22.4 million

  • PlayStation commanded nearly 46% of the industry’s budget. Overall, 13 brands aired 51 spots over 6,500 times, generating nearly 1.6 billion TV ad impressions. Sports, and in particular the NFL and NBA, were big drivers of impressions for gaming brands

Newzoo downgrades esports 2020 revenue forecast for third time to $950.3 million (link)

  • The revision is only slightly down from the previous forecast of $973.9 million, which Newzoo predicted back in July. In April, it revised its earlier estimate to $1.059 billion, and back in February — before the pandemic — the forecast was $1.1 billion for 2020 revenues

  • In past years, physical venue revenues, from such streams as event ticket sales and merchandise, were a big part of esports revenues. And while digital events produced huge viewer numbers, the revenues associated with digital events tended to be smaller

Epic Games and Apple are heading to court in May 2021 (link)

  • The legal battle between Epic Games and Apple will go to court in May 2021

  • As detailed in the case scheduling and pretrial order, there are several reasons that the selected date was chosen

  • Namely, the backlog that has been created by the ongoing coronavirus pandemic. However, the fact that both Epic and Apple chose to have a bench trial, rather than a trial by jury also impacted the date that the companies would appear in court

  • Epic loses court bid to force Apple to reinstate Fortnite in the App Store (link)

Microsoft is looking at a web-based xCloud app for iOS devices (link)

  • As reported by Business Insider, Xbox's Phil Spencer told his staff that the company is currently looking at a "direct browser-based solution" to get its cloud gaming service on to Apple devices
  • Should Microsoft pursue the web-based route, it would be totally separate from the App Store which prevents it from breaching any rules and regulations set for the storefront

N3twork launches Funko Pop! Blitz on Android and iOS (link)

  • The match-three puzzler was published and developed through a collaboration with Tic Toc Games and features the Funk Pop! versions of different characters from a variety of franchises

  • At launch, the game will feature Back to the Future, E.T. the Extra-Terrestrial, Jurassic Park and Jurassic World. Furthermore, various characters from DreamWorks will also feature. Namely, those found in Shrek, Kung Fu Panda and How to Train Your Dragon

Voodoo's titles are launching in China through The9 (link)

  • Two of Voodoo's titles launch in China via Shanghai-based developer and publisher The9

  • The Chinese firm has purchased two licenses to bring Voodoo's games to China, with potential for a third, though it is currently unknown as to which titles it will release

  • Currently, The9 runs and operates a variety of games in China, including Planetside 2 and Ragnarok Online 2

IBM teams up with Activision Blizzard to manage tech for the Overwatch League (link)

  • In a multi-year deal, IBM is teaming up with Activision Blizzard, one of the biggest players in the game industry

  • IBM will provide cloud, Watson AI, and machine learning for the Overwatch League and become a presenting partner of the Overwatch League Grand Finals

  • The technology company will help run interactive and analytical content for the league, which is one of the powerhouses of the $950 million esports industry

Xbox Game Studios has a record year heading into console launch (link)

  • Microsoft said its Xbox Game Studios has so far enjoyed a record year in terms of the number of games it has launched ahead of the November debut of the Xbox Series X and Series S consoles

  • Games marketing general manager Aaron Greenberg said in a blog that Microsoft’s internal game studios have launched 15 games so far this year, 10 of which are brand-new titles
  • Including Bethesda, Microsoft has 23 game studios, with close to 5,000 developers, compared to 15 studios before the acquisition

M&A and Capital Raising

Tilting Point acquires TerraGenesis, a sim game from Edgeworks Entertainment (link)

  • Tilting Point has acquired the popular terraforming simulator TerraGenesis from Edgeworks Entertainment, continuing a strategy of acquiring popular games and making them even bigger through user acquisition techniques
  • Terms of the deal weren’t disclosed, but Tilting Point president Samir El Agili said in an interview with GamesBeat that the company paid multiple millions of dollars to buy the game from Edgeworks

My.Games buys control of Deus Craft for up to $49.1 million (link)

  • The deal gives My.Games, the gaming division of Russia’s Mail.ru Group, control of 51.1% shares of Deus Craft. It includes an upfront, payment of $14.1 million and a deferred payment of up to $35 million payable in April 2021
  • The payout will go through only if the studio reaches monthly revenue of $15 million by the end of the first quarter of 2021, but the transaction is expected to be completed this month

Thunderful Group acquires Shadow Point developer Coatsink (link)

  • The Sunderland-based indie games specialist has been purchased for £23 million ($29.8 million). However, £11.5 million ($14.9 million) will be provided in cash, while the remaining £11.5 ($14.9 million) million will come in the form of Thunderful shares
  • However, there is also an earn-out component to the deal, which makes it worth up to £65.5 million ($85 million). At a cap of £42.5 million ($55.1 million), the consideration is subject to Coatsink's financial performances in 2021 and 2022
  • Currently, the developer has five announced and unannounced projects, including Jurassic World Aftermath and Transformers Battlegrounds. Coatsink will continue to operate as an independent studio

JetSynthesys acquires Real Cricket developer Nautilus Mobile (link)

  • Based in Pune, India, Nautilus is best known for its Real Cricket franchise, which has racked up more than 100 million downloads and 10 million monthly active users

Donut Lab raises $1.6 million for Kids vs Zombies mobile game (link)

  • Game studio Donut Lab has raised $1.6 million to finish making its Kids vs Zombies multiplayer shooter mobile game. The game is an example of taking something potentially violent and serious and transforming it with cartoon art so that it’s suitable for young folks to play

Others

Call of Duty: Mobile nears $500 million in revenue (link)

  • Activision's Call of Duty: Mobile has generated around $480 million in revenue within its first year of release, according to Sensor Tower

  • Given the shooter is already an established franchise with a healthy player base on PC and console, it was bound to be popular on mobile devices. This was proven to be true very early on, as Call of Duty: Mobile accumulated 100 million downloads, which after eight months, increased to 250 million installs

Jam City is the first mobile games firm to partner with McDonalds (link)

  • The partnership is with the Canadian chain of the fast-food giant, and will involve prizes being given as part of the monopoly game across more than 1,400 restaurants

  • The game developer will give away over $300,000 through virtual giveaways for its match-3 puzzler Cookie Jam, which has racked up more than 150 million downloads

Mortal Kombat 11 gets its first next-gen blood November 17 with Rambo (link)

  • Mortal Kombat 11 is one of the most successful fighting games in recent history, and Warner Bros. Games has announced Mortal Kombat XI Ultimate, which is coming to PlayStation 5 and Xbox Series X on November 17
  • Mortal Kombat 11 Ultimate is also coming to Switch, PlayStation 4, Xbox One, Stadia, and PC on November 17

Gaming Public Multiples

Gaming Weekly-41

GGP Gaming Weekly – Week 41

Highlights

Google to better enforce Play Store in-app purchase policies, ease use of third-party app stores (link)

  • Under threat of regulation, Google announced it’s updating its Google Play billing policies to better clarify which types of transactions will be subject to Google’s commissions on in-app purchases
  • While the more detailed language doesn’t actually change the earlier policy’s intention, it will impact a percentage of developers who don’t currently use Google Play’s billing system when selling digital goods in their app.
  • In addition, the company announced it will make changes in Android 12 that will make it easier for users to install and use third-party app stores as an alternative to Google Play
  • The company says that its current billing policies only apply to less than 3% of apps on Google Play. Of those apps, 97% already use Google Play’s billing library

Twitch viewership will grow by 26.2% this year, faster than previously forecast (link)

  • Time spent watching gaming content on Twitch increased by 50% between just March and April 2020, according to StreamElements and Arsenal.gg
  • Previously, it was expected that Twitch would to reach 37.5 million viewers in the US this year, but considering the recent spike in viewing hours, the figure has been updated to 41.5 million, representing a 26.2% increase from the 32.9 million US viewers the platform had last year
  • This growth is driven in part by the pandemic-related proliferation of non-gaming streams

Krafton to merge with PUBG Corp later this year (link)

  • The merger will take place later this year, and will see the support and publishing teams from PUBG Corp become one with Krafton's. Meanwhile, the development team behind popular battle royale PlayerUnknown's Battlegrounds will join Krafton's line of studios, though it will maintain its independence

  • "In order to create premier gameplay experiences, we believe that each of our studios should build their own unique creative identity," said Krafton CEO Kim Chang-han

  • "The announced consolidation will allow Krafton to create sustainable environments where each of our studios can focus on what they do best: development. With a gameplay-first mentality, we are confident that this system will lead to sustainable growth and the ability to develop distinguished products within particular genres."

Zynga to shut down the original FarmVille at the end Of 2020 (link)

  • As detailed in a site update, one of the reasons for the decision is that Facebook will stop supporting flash games after December 31st, 2020. The reason being that Adobe will stop distributing and updating flash player across all web browsers

  • "Following an incredible 11 years since its initial launch back in 2009, we are officially announcing the closure of the original FarmVille game on Facebook," said Zynga

IronSource expands LevelPlay to help mobile game and app developers in ad monetization (link)

  • Launched a year ago, LevelPlay is an in-app bidding tool that is now automatically enabled and available for any developer, giving them instant access to all bidding networks. Only the biggest publishers previously had access to LevelPlay as the company refined the technology for automating monetization

  • IronSource is expanding access to LevelPlay as a broadly available tool to help smaller mobile game and app developers generate higher revenues from advertising

Microsoft is launching a new Xbox app with remote play on iOS (link)

  • As reported by The Verge, the new updated Xbox app on the App Store will let iOS consumers use remote play, which will enable Xbox One players to stream their games to mobile devices

Gameloft increases downloads by seven-fold on Huawei's AppGallery store (link)

  • Gameloft has seen its mobile downloads increase seven-fold within its first three months of being a part of Huawei's AppGallery

  • Huawei has put this impressive growth down to not only the reach of the store, but also the wealth of capabilities provided by its Huawei Mobile Service (HMS) Core that allows developers to add to their games in a number of impressive ways

Niantic is removing various Pokémon GO COVID-19 changes (link)

  • Niantic will roll back on various changes that were made to Pokémon GO as a result of the COVID-19 outbreak

  • "Over the past few months, we've been making temporary changes to Pokémon GO to adapt to the changing global environment," said Niantic

  • "Some of these changes will remain implemented for the foreseeable future, such as the ability to raid remotely, changes to the GO Battle League, and the increased distance at which you can spin Photo Discs at Gyms and PokéStops."

Glu Mobile launches real-life e-commerce store Design Home Inspired (link)

  • The new store, Design Home Inspired, allows players to shop for real-life home décor accessories

  • "With Design Home Inspired, we are introducing a new way to express your style, shop and live the life of an interior designer, all while playing a game," said Glu Mobile Executive Vice President and Design Home lead Mark van Ryswyk

Call of Duty: Mobile has more than 46 million pre-registrations in China (link)

  • After having been approved on August 6th by the country's games regulator, a final test will be held on October 20th for Android devices
  • "The game is a deep collaboration between Tencent's TiMi studios, the developer, and Activision Blizzard, the IP holder," said Ahmad (Niko Partners senior Analyst)

Among Us surge in popularity sees 655% rise in downloads, tops 120 million installs globally (link)

  • InnerSloth's social deduction Twitch hit Among Us has reached 120.8 million lifetime downloads on mobile, according to Sensor Tower

  • Among Us accumulated 94.5 million downloads or 78% of its total installs during the months of August and September 2020

M&A and Capital Raising

U.S. gaming platform ROBLOX prepares to go public according to CNBC (link)

  • According to CNBC, ROBLOX is working with investment banks to prepare for a U.S. stock market listing that could come early next year
  • The online gaming platform expects could double its recent $4 billion valuation, people familiar with the matter said
  • ROBLOX is weighing whether to go public through a traditional initial public offering or a direct listing

Sumo Group acquires co-development specialist Pipeworks in a $100 million deal (link)

  • The agreement will have an initial consideration of $59.5 million, of which $35 million will be given in cash while the remaining $24.5 will be through equity in Sumo Group
  • Pipeworks was founded in 1999 and is known for its co-development portfolio, as well as its work with live operations. Since being founded, the US-based company has worked on nearly 100 games

The Walking Dead: Onslaught creator Survios raises $16.7 million for VR games (link)

  • Survios has raised $16.7 million to continue building virtual reality games such as the just-launched The Walking Dead: Onslaught
  • This is the company’s fourth funding round and is particularly important as the VR industry approaches a new hardware cycle

Others

Netflix is releasing a Resident Evil TV show in 2021 (link)

  • The Japanese publishing giant Capcom revealed that a new Resident Evil TV show – Infinite Darkness – will be debuting on the streaming platform

  • The series is set to be rolled out in 2021 and stars Leon Kennedy and Claire Redfield of Resident Evil 2 fame. This is also separate from the previously-announced live-action Resident Evil TV show that Netflix also has in the works

Super Smash Bros. Ultimate adds Minecraft characters (link)

  • Nintendo revealed Minecraft characters Steve, Alex, Zombie, and Enderman as the newest fighters for Super Smash Bros. Ultimate, the hit fighting game on Switch

Pokémon GO and Pokémon Home will have a link by the end of the year (link)

  • As confirmed in the Pokémon presentation, Pokémon that have been caught within Niantic's Augmented reality title, can be transferred to Pokémon Home, which in turn will allow those specific Pokémon to be used in the Switch games, Sword and Shield

Apex Legends goes cross-play on PC, PS4, and Xbox One on October 6 (link)

  • Respawn Entertainment will enable cross-platform play in a beta test for its popular Apex Legends battle royale shooter on October 6. Players on PlayStation, Xbox, and Origin (EA Desktop App on the PC) may join cross-play or continue on platform-exclusive servers

Huuuge Group welcomes Grzegorz Kania as its new CFO (link)

  • Grzegorz has more than 20 years experience within the media and technology industries, having most recently served as the CFO for Agora SA, the publisher of the Polish newspaper Gazeta Wyborcza

  • Before Agora, Grzegorz worked for another newspaper and magazine publisher, Axel Springer Polska, where he also held the CFO role

Osmo launches self-paced kids math games for pandemic learning (link)

  • Osmo is launching its Math Wizard educational games series, which lets kids learn math at their own pace and helps parents augment pandemic schooling

Gaming Public Multiples