GGP Gaming Weekly – May 2 - Griffin Gaming Partners

GGP Gaming Weekly – May 2

May 2, 2022 Gaming Weekly

Highlights

Activision Blizzard reported FQ1 2022 earnings (link)

Financial Highlights
- Reported FQ1 2022 net bookings of $1,481M, representing a (28.3%) decrease YoY
- Reported FQ1 2022 operating income of $479M, representing a (39.7%) decrease YoY
- Reported FQ1 2022 GAAP operating margin of 27% vs. 35% in FQ1 2021
- Reported overall Activision Blizzard MAUs of 372M vs. 435M in FQ1 2021
- Reported FQ1 2022 digital net revenue of $1,589M, representing a (20.8%) decrease YoY
- Reported FQ1 2022 in-game net bookings of $1,011M, representing a (24.7%) decrease YoY
- The Board of Directors declared a cash dividend of $0.47 per common share, payable on May 6, 2022 to shareholders of record at the close of business on April 15, 2022
Business Segment Highlights
- Activision
  - Activision reported 100M MAUs in FQ1 2022, representing a (33.3%) decrease YoY
  - Call of Duty net bookings on console and PC declined YoY in FQ1 2022, reflecting lower premium sales for Call of Duty: Vanguard versus the previous year’s title and lower engagement in Call of Duty: Warzone. Call of Duty Mobile net bookings were little changed YoY
  - Activision continued to rapidly expand its Call of Duty development resources in FQ1 2022. Its growing teams are focused on delivering even more compelling content to the community on PC and console, as well as expanding Warzone to the mobile platform
- Blizzard
  - Blizzard reported 22M MAUs in FQ1 2022, representing a (18.5%) decrease YoY
  - Diablo Immortal will launch on June 2, 2022 in most regions around the world, with the remaining regions in Asia-Pacific gaining access a few weeks later. Over 30M people have already pre-registered for the game
  - Company-wide internal testing of Diablo 4 is underway, and external testing of the PvP mode of Overwatch 2 begins on April 26, 2022
  - Blizzard’s FQ1 2022 financial results were lower YoY, primarily reflecting product cycle timing for the Warcraft franchise
- King
  - King reported 250M MAUs in FQ1 2022, representing a (3.1%) decrease YoY
  - King’s teams continued to deliver compelling new content, features and events in the first quarter, driving YoY growth in engagement and player investment. King’s in-game net bookings grew 8% YoY, driven by double-digit YoY growth for Candy Crush
  - Candy Crush was the top-grossing game franchise in the U.S. app stores for the 19th consecutive quarter
  - King’s payer numbers again grew by a double-digit percentage YoY, driven by strong execution in Candy’s features and live operations, effective user acquisition, and ongoing optimization of the Candy Crush in-game economy
  - King’s advertising business continued to grow rapidly YoY, fueled by volume growth and ramping relationships with demand partners

Activision Blizzard stockholders approve of Microsoft acquisition deal (link)

During the special meeting, more than 98% of the shares were in favor of the acquisition deal
The transaction is expected to close during Microsoft’s fiscal year ending in June 30, 2023

Modern Times Group reported FQ1 2022 earnings (link)

Financial Highlights
- Reported FQ1 2022 total revenues of $138M, representing a 10% pro forma increase YoY
- Organic sales decreased 9% YoY in FQ1 2022
- Reported FQ1 2022 adjusted EBITDA of $35M, representing an 88% increase YoY
Revenue Breakdown
- 70% of revenue comes from mobile, 21% from browser, and 9% other
- 59% of revenue comes from North America, with 34% from Europe, 6% from Asia Pacific, and 1% from RoW
- 44% of total revenues are generated from top 3 games (compared to 68% at the same time last year)
Capital Allocation
- Cash, cash equivalents, and short-term investments at the end of FQ1 2022 were $91M (excluding proceeds from ESL sale expected to be $875M)
- Will be providing shareholders a share redemption program and share buyback program in June, with a goal to return at least 40% of capital generated through ESL sale to MTG shareholders

Rovio reported FQ1 2022 earnings (link)

Financial Highlights
- Group Revenue of $89M, representing a 27% increase YoY (12% increase YoY at constant FX rate and excluding Ruby Games), and exceeding consensus of $85M by 5%
- Group Adjusted EBITDA of $14M, representing an 11% increase YoY, and exceeding consensus of $7M by 99%
- Group Adjusted EBITDA margin of 16%, compared to 18% in FQ1 2021
- User Acquisition investment of $33M, representing 37% of total games Revenue compared to 26% in FQ1 2021
KPIs
- FQ1 2022 DAUs of 7.3M across all games, representing a 74% increase YoY, and 3.6M across Rovio’s top 5 games, representing a 16% increase YoY
- FQ1 2022 MAUs of 53.3M across all games, representing a 108% increase YoY, and 20.8M across Rovio’s top 5 games, representing a 25% increase YoY
- FQ1 2022 Monthly Unique Payers of 522K across all games, representing a 15% increase YoY, and 464K across Rovio’s top 5 games, representing an 18% increase YoY
- FQ1 2022 ARPDAU of $0.13 across all games and $0.22 across Rovio’s top 5 games

Microsoft Reported FQ2 2022 Earnings (link)

Financial Highlights
- Gaming Revenue of $3,740M, representing an increase of 6% YoY (8% in constant currency)
- Hardware sales grew 14% YoY and Xbox content and services revenue grew 4% and 6% in constant currency
- Segment gross margin dollars increased 10% and 13% in constant currency
Business Highlights
- To date, more than 10M people have streamed games through Xbox Cloud Gaming
- Billions of hours have been played by subscribers over the past 12 months, up 45% YoY

91% of App Store apps follow opt-in tracking rule (link)

After Apple’s 2021 launch of the App Tracking Transparency update, 91% of mobile games now provide consumers the policy prompt
The change requires that mobile apps now have to ask for permission from users to gather tracking data
For example, casual genre games see more than half of its users opt-in a minute into the game title when prompted

Netflix Games roster will include almost 50 titles by the end of 2022 (link)

The Company currently offers 17 titles, including Stranger Things: 1984, Card Blast, and Wonderputt Forever
Netflix’s mobile games can be found in the Apple App Store for iOS users and the Google Play Store for Android users, though only Netflix subscribers can access the games

M&A and Capital Raises

Embracer Group to acquire Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal for $300M (link)

The catalog of IPs include Tomb Raider, Deus Ex, Thief, Legacy of Kain, and more than 50 back-catalogue games from Square Enix
In total, the acquisition includes ~1,100 employees across three studios and eight global locations. The total purchase price amounts to $300M on a cash and debt free basis, to be paid in full at closing
Embracer has secured additional long-term debt funding commitments for this and other transactions in the pipeline

Venly raises $23M for blockchain-agnostic services for games and ecommerce (link)

The Company provides wallet, NFT, and marketplace services regardless of the type of blockchain used
The Company will use the proceeds to develop products centered around new benefits to Web3 users, with a close focus on gaming as well as ecommerce
Courtside Ventures led the round with additional participation from Transcend Fund, Coinbase Ventures, Tioga Capital, High-Tech Gründerfonds, Fortino, Plug and Play, Leadblock Partners, Imec Istart, Powerhouse, and Alpaca VC

Playmint raises $4M for Web3 MMOs (link)

Playmint is on a mission to build category-defining games for the Web3 era. The team has contributed to top games such as Dungeon Keeper 2, Lego Star Wars Battles, and Fall Guys
The Company will use the proceeds to scale Playmint’s team of artists, game designers, and engineers in order to continue releasing new chapters of its game, The Crypt, every month
Bitkraft Ventures led the round with additional participation from 1kx, Cherry Ventures, Ethereal Ventures, and Play Ventures’ Play Future Fund

Room 8 to acquire PUGA Studios (link)

Based-out of Brazil, PUGA Studios has offered production services for companies such as Gearbox software, Jam City, and Kwalee
With the acquisition Room 8 says that it intends to continue expanding into global markets
Last month the company purchased art studio Massive Black and during the month of February it opened new office locations in Spain, Romania, Poland, and Serbia

Virtuos invests in Umanaïa Interactive (link)

The investment is expected to further enable Virtuos’ partnership with the brightest local talent in the creation of games and IPs
Umanaïa will create and develop modern and innovative live games, with a goal of publishing the first title in the years to come
In January of this year, Virtuos acquired art production firm Volmi Games. Back in September of 2021, it secured a $150M investment, which it said would use to fuel growth

Other

Catalyst Black launching on May 25, says Super Evil Megacorp (link)

The new battleground shooter from the developers of Vainglory will be a competitive multiplayer title for mobile gamers
The game will be built on the Company’s E.V.I.L. engine and the gameplay is fairly typical of a top-down battleground title

Gameloft unveils Disney Dreamlight Valley adventure game (link)

Gameloft unveiled Disney Dreamlight Valley, a new life simulation adventure game for PC, Mac, and consoles
The game will offer more than a 1,000 items that users could buy and user’s avatar will have 17 different points of customization
Players can be the first to experience Disney Dreamlight Valley this summer as part of early access with the purchase of a Founders Pack or by being an Xbox Game Pass member ahead of the game’s launch in 2023

Mattel launches He-Man game on Roblox (link)

Developed by Gamefam, the title is a free-to-play RPG available through Roblox on Xbox One, PC, and mobile for players of all ages
The game is the second Mattel brand to join the Roblox, in addition to Hot Wheels Open World

Diablo Immortal launches on June 2 for mobile and PC (link)

Blizzard also revealed that Immortal is also coming out to PC, with cross-play and cross-progression, on that same day
Diablo Immortal, which Blizzard is creating in partnership with NetEase, was announced back in 2018

Nintendo and Illumination delay Mario movie into 2023 (link)

Originally expected to hit silver screens around Christmas 2022, the movie has now been pushed to Spring 2023
The Mario movie is now slated to debut on April 7, 2023 in North America and April 28 in Japan

Lilith Games launches publishing brand Farlight Games (link)

Lilith Games said that Farlight Games will help the Company deliver its titles worldwide
The publishing division is set to release upcoming releases of Dislyte, Farlight 84, Boom Party, and an unannounced title
Farlight Games will serve as a publishing platform to both Lilith Games and other creators