GGP Gaming Weekly — January 06


Embracer releases FQ2 2023 earnings report (link)

  • FQ2 2023 Results
    • FQ2 2023
      • Reported FQ2 2023 Net Sales of $899M, representing a 190% increase YoY (35% organic growth) and above consensus of $847M
        • Reported FQ2 2023 Tabletop Games Net Sales of $305M
        • Reported FQ2 2023 PC / Console Games Net Sales of $385M, representing a 107% increase YoY (57% organic growth)
        • Reported FQ2 2023 Mobile Games Net Sales of $135M, representing a 67% increase YoY (8% organic growth)
        • Reported FQ2 2023 Entertainment & Services Net Sales of $74M, representing a 69% increase YoY (-15% organic growth)
      • Reported FQ2 2023 Adj. EBITDA of $287M (32% margin), representing a 135% increase YoY
      • Reported FQ2 2023 Adj. EBIT of $199M (22% margin), representing a 115% increase YoY
      • Reported FQ2 2023 Total Headcount of 15,731, representing a 74% increase YoY
      • Reported FQ2 2023 Total Game Development Projects of 237, representing a 20% increase YoY
    • Guidance
      • Reported FY 2023 Adj. EBIT forecast of $752M – $940M (down from $865M – $1,062M)
      • Reported FY 2024 Adj. EBIT forecast of $968M – $1,278M (unchanged)
    • Mobile KPIs
      • Reported FQ2 2023 Installs of 363M, representing a 106% increase YoY
      • Reported FQ2 2023 MAUs of 300M, representing a 111% increase YoY
      • Reported FQ2 2023 DAUs of 36M, representing a 71% increase YoY
    • Business Highlights
      • Announced the acquisitions of Anime Ltd, VR Group, and the Risk of Rain franchise 
      • Launched a special review to identify potential strategic alternatives to maximize long-term shareholder value, with possibilities including spin-offs and / or IPOs of specific assets

NetEase releases FQ3 2022 earnings report (link)

  • FQ3 2022 Results
    • FQ3 2022
      • Reported Net Revenue of $3.4B, representing a 10% increase YoY
        • Reported Games and Related Value-Added Services Net Revenue of $2.6B, representing a 9% increase YoY
        • Net Revenues from the operation of online games (the primary component of games revenue), accounted for 92.9% of segment revenue, compared to 92.8% and 92.7% for the preceding quarter and FQ3 2021, respectively
        • Net Revenues from Mobile games accounted for 68.6% of net revenues from the operation of online games, compared with 66.1% and 69.2% for the preceding quarter and FQ3 2021, respectively
        • Net Revenues from PC & Console games accounted for ~31% of net revenues from the operation of online games
      • Reported Gross Profit of $1.9B, representing a 16% increase YoY
      • Reported Gross Margin on Games and Related Value-Added Services of 65%, representing an increase from 64.9% in FQ2 2022 and 61.4% in FQ3 2021
    • Portfolio Highlights
      • Extended the longevity of leading franchises and titles including both the Fantasy Westward Journey and Westward Journey Online series, and other hit titles including Identity V and Infinite Lagrange
      • Diablo Immortal, co-developed by NetEase and Blizzard Entertainment, debuted in Chinese mainland, topping the iOS download chart soon after its launch
      • Continued preparations for the roll-out of Harry Potter: Magic Awakened in international markets, which is now expected to be launched globally in 2023

Tencent releases FQ3 2022 earnings report (link)

  • FQ3 2022 Results
    • FQ3 2022
      • Reported Value-added Services Revenue of $10.2B, representing a (3%) decrease YoY
        • Reported Domestic Games Revenue of $4.4B, representing a (7%) decrease YoY
        • Reported International Games Revenue of $1.6B, representing a 3% increase YoY
    • Portfolio Highlights
      • Attributed YoY decrease in Domestic Games Revenue to Chinese regulatory headwinds resulting in lower paying user counts
        • Revenue from Honor of Kings and Peacekeeper Elite decreased due to current minor protection measures
          • Game time among minors was sharply reduced by (92%) YoY in compliance with China’s minor protection program, with resilience shown within the Company’s adult userbase
          • The Company reiterated their focus on extending the longevity of the CrossFire franchise, with multiple planned esports events and cross-media collaborations
      • Attributed YoY increase in International Games Revenue to robust performance of VALORANT, successful launch of Tower of Fantasy, and an expanded game portfolio at Miniclip
        • VALORANT Champions was the most watched esports event in the Tactical Shooter genre, significantly boosting player count
        • Clash of Clans is now the #1 Mobile Strategy title by YTD grossing receipts
    • Outlook
      • The Company is in full compliance with China’s minor protection program and will be focusing on the retention and growth of its domestic adult userbase
      • The Company expects Domestic Games growth to be catalyzed largely by extending the longevity of key franchises such as CrossFire
      • The Company expects VALORANT and Clash of Clans to spearhead growth with respect to internally developed franchises on the international front, with games publishing driven by titles such as Tower of Fantasy

The Gaming market will contract (4.3%) to $184.4B in 2022, according to Newzoo (link)  

  • The downward revision was catalyzed by a slower-than-expected year for Console games, with delayed games and Console shortages increasing industry headwinds
  • Mobile revenues are expected to see a (6.4%) decrease YoY to $92.2B, Console revenues are expected to see a (4.2%) decrease YoY to $51.8B, and PC revenues are expected to increase 0.5% YoY to $40.5B
  • In contrast to decreases / slight increases felt by most Gaming market segments, Newzoo projects a 26.4% YoY increase in VR Gaming revenues (excluding hardware) to $1.8B
  • Despite the overall decrease in year-end estimates, Newzoo states that the games market will grow from $179.1B in 2020 to $211.2B by 2025, representing a 3.4% CAGR 

Asia’s gamers will exceed 1B by 2026, according to Niko Partners (link)

  • A report from Niko Partners forecasts that ten markets in Asia will comprise more than 1B gamers by 2026
  • The report highlights the Indian Gaming market as the region’s fastest-growing geography, at a projected 21% five-year growth rate, with the country accounting for 50.2% of gamers in Asia-10 (Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Chinese Taipei, Japan, Korea, and India)
  • Niko Partners projects that the number of gamers will increase at a much faster rate than revenue, with Asia-10 PC and Mobile gamers totaling 788.7M in 2022 and reaching 1.1B in 2026
  • The report projects the Asia-10 PC and Mobile games market to generate $35.9B in 2022, and $41.4B in 2026

M&A and Capital Raises

Yahaha raises $40M to democratize 3D content creation (link)

  • Yahaha has raised $40M in funding to further develop a platform that facilitates the creation of 3D animations and games for users with non-technical backgrounds
  • Proceeds will be utilized to hire Gaming industry talent, expand the Company’s footprint in the US and APAC regions, and improve the platform, which launched in early alpha in April 2022
  • Temasek and Alibaba led the round, with additional participation from 37 Interactive Entertainment

Immersive Gamebox raises $20M for game room product and receives new patent (link)

  • Immersive Gamebox has raised $20M in funding to develop its game room product, and has secured a new technology patent
  • The Company’s Gamebox product are projection Gaming rooms for 2 to 6 players, with Immersive Gamebox planning to open 250 locations in EMEA over the next 3 years, with 100 locations set to open by the end of 2023
  • Harlan Capital provided the funding via debt financing

Methodical Games raises $15M to create Multiplayer Action-adventure game (link)

  • Methodical Games’ 9-person team has raised $15M to develop a Multiplayer Action-adventure title with an emphasis on close-quarters combat based on an original IP
  • The Company’s founding team leverages experience from Epic Games, Respawn Entertainment, and Infinity Ward, with development experience including Fortnite, Apex Legends, and Call of Duty
  • Lightspeed Venture Partners led the round, with additional participation from Bitkraft Ventures, 1Up Ventures, and Transcend Fund

Heroic Story raises $6M to build tabletop RPG platform for Web3 (link)

  • Heroic Story has raised $6M to build a Web3-enabled Tabletop RPG platform reimagining pen-and-paper tabletop gameplay in a digital format with matchmaking services and story-led digital collectibles
  • The Company is currently developing Legends of Fortunata, an IP created by Heroic Story’s in-house narrative team of novelists and screenwriters
  • Upfront Ventures led the round, with additional participation from Multicoin Capital and Polygon Technology

Noodle Cat raises $4.1M for remote working studio (link)

  • Noodle Cat has raised $4.1M in funding for a remote working studio focused on fostering a positive, flexible work culture with 4-day workweeks
  • The Company, led by CEO David Hunt, is currently in preparation for work on the Company’s first game, an unannounced original IP 
  • Makers Fund led the round, with additional participation from 1Up Ventures and Epyllion

Eschatology Entertainment raises $4M to disrupt Hardcore games (link)

  • Eschatology Entertainment has raised $4M to develop Hardcore and Narrative titles, with their first title planned as a AAA level-based Narrative-driven FPS for PC and Console
  • The Company, with over 44 full-time employees across 8 countries, leverages experience from industry leaders such as Wargaming and Valve
  • The Games Fund and GEM Capital participated in the round 

Walker Labs raises $2M, announces Walker World Multiplayer Metaverse game (link)

  • Walker Labs has raised $2M in funding to support the development of Walker World, an Open-world Multiplayer Third-person Shooter
  • Walker World, built in Unreal Engine and slated for a late 2023 launch, is being built with Metaverse functionality in mind, allowing players to create 3D animated characters that are interoperable between separate titles
  • Citizen X led the round, with additional participation from Futureverse and Altered State Machine, among others

Take-Two’s Rollic acquires German Mobile game studio Popcore (link)

  • Take-Two’s Rollic Hypercasual Gaming division has acquired Popcore, an Indie Mobile developer, for undisclosed consideration
  • Popcore, based in Germany, specializes in the Puzzle genre with titles such as Parking Jam 3D and Pull the Pin!, both of which hit the #1 most downloaded game on the Apple App Store
  • Rollic, based in Istanbul, recently surpassed 2B LTD worldwide downloads with 19 of its titles reaching the top two spots in the US Apple App Store


Mobalytics and Overwolf join forces to expand competitive features (link)

Overwolf is a portfolio company of Griffin Gaming Partners

  • Mobalytics, a coaching and analytics platform, has signed a deal that will bring the Company’s player improvement tools to Overwolf’s in-game platform
  • The Company’s software will be integrated directly into Overwolf’s existing infrastructure including in-game overlays, gaining exposure to Overwolf’s catalog of 1k supported titles
  • Mobalytics currently supports 5 titles pre-partnership with Overwolf, and is seeking to expand support for titles where analytical guides and overlays can add the most value to players

Xbox to release overhauled Discord experience in November dashboard update (link)

Discord is a portfolio company of Griffin Gaming Partners

  • Microsoft has announced a rollout of the Xbox November update, adding the ability to connect to Discord voice channels directly from the console, a new Captures app, and several other improvements
  • The Discord overhaul, which was tested by Microsoft insiders last month, integrates a new menu into the Xbox game overlay allowing players to join Discord calls without having to use their Mobile devices

Aptos partners with South Korea’s Npixel on Web3 Gaming (link)

Aptos is a portfolio company of Griffin Gaming Partners

  • Aptos, developer of a Layer 1 Blockchain, has announced a partnership with South Korean Gaming studio Npixel to bring Web3 technology to its Gaming initiatives platform
  • The Company, who has raised over $400M to-date, will enable Npixel’s multi-million player base to safely own and share assets on Aptos’ upgradable and user-friendly network
  • Npixel, founded in 2017, is known for developing Gran Saga, an MMORPG which became a top-grossing game on the Apple store with over 4M downloads since initial launch in Korea and Japan

Sharon Tal Yguado announces Astrid Entertainment (link)

  • Sharon Tal Yguado has announced the launch of Astrid Entertainment – a new Gaming venture set to build a fantastical lore-driven interactive world
  • Yguado leverages experience from Amazon Studios and Fox Network Group, and has previously worked with franchises such as The Walking Dead, The Boys, and Invincible among others
  • The Company has recently secured a pre-seed investment, with existing investors including NetEase Games, Stardom, and Tower 26

VR games revenue will double by 2024, according to Newzoo (link)

  • A report from Newzoo predicts that VR games revenue could rise to $3.2B by 2024, with as many as 46M active headsets in use
  • Newzoo’s year-end 2022 forecast predicts that the VR market will hit $1.8B in 2022 with 27.7M headsets in use
  • The report indicates that Interactive Entertainment is still the top use case for VR, with 73% of survey respondents highlighting one of their top hobbies as Gaming
  • Popular genres within VR, according to Newzoo, are Adventure, Shooters, and Simulation titles, with popular titles including Walking Dead: Saints and Sinners, No Man’s Sky, Boneworks, and Microsoft Flight Simulator

Gaming hardware sales and consumer spending trended down in October, according to The NPD Group (link)

  • A recent report from The NPD Group states that Gaming hardware sales and consumer spending have trended down slightly in October, totaling $4.3B during October 2022
  • Growth in digital sales and subscriptions for console and PC video game content, driven in large part by the release of Call of Duty: Modern Warfare 2, was offset by declines in Mobile content and hardware sales
  • October’s best-selling titles in the US include Call of Duty: Modern Warfare 2, Gotham Knights, FIFA 23, and Madden NFL 23

Epic Games launches Unreal Engine 5.1 (link

  • Epic Games has released a major update for the Unreal Engine, denoted 5.1
  • The new update is aimed at making Unreal Engine 5 faster for 3D content creation, with the Company adding a range of stress-tested new features and improvements to make the engine more robust and efficient for creators across all industries
  • According to Epic Games, over half of all announced next-gen titles are being created in Unreal Engine

Tencent to expand Honor of Kings into a content universe (link

  • Tencent has announced that Honor of Kings will be expanded to a content universe centered around the mainline title
  • Honor of Kings became China’s most profitable Mobile title in January 2022, surpassing PUBG Mobile, which was also developed by Tencent
  • The Company’s expansions to the Honor of Kings lore are currently set to come in the form of three games and a movie, with no publicly announced release date

Blizzard suspends service in China as NetEase agreement ends (link

  • Blizzard has announced that it will be suspending game services in China starting in early 2023
  • The Company has attributed the suspension to the expiry and non-renewal of a licensing agreement with NetEase set to terminate on January 23, 2023
  • The partnership expiry will see a cessation of support for World of Warcraft, Warcraft III, Hearthstone, Overwatch 2, Starcraft, Heroes of the Storm and Diablo III, but will not affect the co-development and publishing of Diablo Immortal, which is covered by a separate long-term agreement 

Digital fashion brand House of Blueberry launches on Sims 4 (link

  • House of Blueberry, a digital fashion brand, has announced the launch of a clothing line in The Sims 4
  • The launch was enabled by EA’s partnership with the Overwolf platform, and will see over 200 digital assets integrated into The Sims 4, which went F2P last month
  • Players and creators can submit ideas for additional in-game-content to Overwolf’s CurseForge, which offers a single location for players to discover mods and other UGC

The Game Awards returns as a hybrid online show and physical event on December 8 (link

  • The Game Awards is set to debut on December 8 as an online and physical show that is meant to be as close to the 2019 pre-pandemic event as possible, per host Geoff Keighley
  • The Game Awards has opened its tickets for sale to the public, in contrast to the previous year whose crowd only consisted of private invitees and award candidates
  • This year’s event will be held at the Microsoft Theatre in Los Angeles, and is set to be broadcasted across multiple digital outlets including Instagram Live

Backbone launches an Android version of its Mobile Gaming controller (link

  • Backbone has released an Android version of its Mobile Gaming controller alongside an Android OS-compatible version of their companion app
  • The Backbone is a plug-and-play controller allowing users to experience console-like functionality on Mobile devices
  • The Android version is priced identically to its iPhone equivalent at $99, with earliest product shipments slated for Christmas

Polycade teams up with Atari to launch Web3 games and art collaboration (link

  • Polycade has announced the launch of a new arcade machine in addition to an accompanying Web3 art collaboration in partnership with Atari, dubbed Polycade Limiteds
  • Polycade Limiteds will feature 12 artist collaborations, each of which redesigning a classic Atari game such as Asteroids, Pong, Centipede, Missile Command and Breakout released as limited editions of digital cartridges
  • Digital cartridge owners will be able to play on the Polycade website, downloadable software, and on any physical Polycade arcade machine

Samsung Gaming Hub rolls out game streaming to 2021 TVs (link

  • Samsung has announced that it will be rolling out support for its Gaming Hub platform on 2021 models of Samsung Smart TVs
  • Owners of the older Smart TV line will now be able to access multiple Cloud Gaming services via the Gaming Hub, including Xbox Cloud Gaming, Amazon Luna, Utomik, and Nvidia’s GeForce Now

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