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GGP Gaming Weekly – Week 06


PLAYSTUDIOS to become the first publicly listed Mobile games company offering players real-world rewards through its merger with Acies Acquisition Corp. (link)

LionTree served as advisor to PLAYSTUDIOS and PIPE placement agent on the transaction

  • PLAYSTUDIOS has developed a portfolio of top-ranked games that have attracted a loyal following due, in part, to the Company’s playAWARDS Loyalty Program
  • The program lets players earn real-world rewards from a curated collection of over 80 partners and 275 entertainment, retail, travel, leisure, and gaming brands
  • To date, the PLAYSTUDIOS community has used its in-app loyalty points to redeem over 10M rewards with a retail value of nearly $500M
  • The transaction implies an enterprise value for PLAYSTUDIOS of $1.1B, or 2.5x projected 2022 revenue of $435M or 12.3x projected 2022 pro forma Adjusted EBITDA of $90M
  • Consideration to PLAYSTUDIOS will comprise at least 89.1M shares of ACAC common stock and up to $150M in cash
  • In addition, funds and accounts managed by BlackRock, ClearBridge Investments, Neuberger Berman Funds, and MGM Resorts International are leading participants in the $250M PIPE, at a price of $10.00 per share of common stock of Acies immediately prior to the closing of the transaction

Embracer acquires Aspyr Media, Easybrain, and Gearbox Entertainment (link 1) (link 2) (link 3)

  • Embracer Group is the parent company of game businesses with a catalog of over 200 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory, Wreckfest, Insurgency, and World War Z
  • Aspyr Media
    • Aspyr offers system level engineering, platform and store optimization, quality assurance and production, multiplatform publishing, and support, assisting game developers to connect and market their games to targeted audiences. The Company is based in Austin, Texas
    • Most recently, the Company expanded its presence on new platforms, publishing titles such as the Nintendo Switch and PlayStation 4 port of Star Wars Jedi Knight II: Jedi Outcast
    • During 2020, Aspyr generated approximately $40.6M in revenues and $11.4M in EBIT
    • Enterprise Value (up-front): $100M (2.5x EV/Sales, 8.8x EV/EBIT)
  • Easybrain
    • The Company offers infrastructure, procedures, and tools needed to build Mobile games & applications, and offers predictive analytics, modeling tools, and product and marketing intelligence, enabling developers to build robust applications and games. The Company is based in Minsk, Belarus
    • Easybrain’s senior management: Peter Skoromnyi, Matvey Timoshenko, and Oleg Grushevich will jointly become the third-largest shareholder in Embracer
    • Easybrain will become Embracer’s eighth operative group as a wholly-owned subsidiary
    • Easybrain’s revenues in 2020 are expected to be $210M, while its EBIT will be $70M
    • Enterprise Value (up-front): $640M (3.0x EV/Sales, 9.1x EV/EBIT)
  • Gearbox Entertainment
    • The Company develops video games for PC, console, and other platforms, and is based in Frisco, Texas
    • The transaction gives Gearbox access to new capital to help it make more games and become a significant part of the Embracer Group, which has 5,500 employees around the world
    • Over the years, Gearbox has worked on the Borderlands and Brothers in Arms franchises, and helped with the development of Half-Life, Counter-Strike, Tony Hawk’s Pro Skater, 007 James Bond, and Halo
    • Enterprise Value (up-front): $363M (2.2x EV/Sales, 5.5x EV/EBIT)

AppLovin to Acquire Berlin’s Adjust in $1B Deal (link)

  • Mobile apps company AppLovin is acquiring Adjust, a Berlin-based startup that makes tools to measure the performance of apps allowing mobile app developers to track and analyze performance of marketing campaigns. Its users include Yelp Inc. and Foodpanda GmbH
  • The deal values Adjust at close to $1B, according to a person familiar with the matter
  • AppLovin is a game publisher as well as marketplace for other mobile apps. Backed by private equity firm KKR & Co., AppLovin has diversified from gaming through acquisitions

Candivore raises $12M to boost Match Masters puzzle game (link)

  • Candivore has raised $12M to fund growth for the Company’s games such as Match Masters, a mobile match-3 puzzler
  • The title has more than a million monthly active users who play more than five million daily matches
  • The Tel Aviv, Israel-based studio has 25 people, and the funding team came from Funtomic, which operated the Kizi flash game portal, started in 2009

Nerd Street Gamers raises $11.5M for digital esports platform (link)

  • Nerd Street Gamers has raised $11.5M to expand its digital esports platform
  • The investment comes from San Francisco venture capital firm Founders Fund
  • Previously, Nerd Street Gamers raised nearly $12M from Philadelphia discount retailer Five Below (and others) to build esports Localhost facilities that house leagues, training camps, tournaments, and showcases

Anzu.io raises $9M for in-game ad platform (link)

  • Anzu.io has raised $9M in new funding for its platform for a new generation of in-game advertising
  • The Tel Aviv-based Anzu.io claims it can make its platform more intelligent by seamlessly integrating digital ads directly into gameplay, without disrupting the user experience
  • Clients include game publishers Ubisoft, Lion Castle, and Nacon. Brands using it include Pepsico, Samsung, American Eagle, and Vodafone

Oculus cofounder’s Mountaintop raises $5.5M for shooter game (link)

  • Headed by Oculus cofounder Nate Mitchell, Mountaintop has raised $5.5M for a player-vs.-player first-person shooter game
  • The seed round comes from an unidentified group of investors, friends, and family
  • The Company surfaced in June, and now it has nearly 20 full-time employees
  • The Company is not yet saying what the game will be about, and hasn’t announced any platforms, but it is actively hiring people with PC and console experience

Phoenix Games acquires match-three mobile studio SmileyGamer (link)

  • Phoenix Games has acquired Belgian mobile games publisher SmileyGamer for an undisclosed amount
  • The purchase will see SmileyGamer work on new seasonal experiences for the mobile platform, while expanding on its already existing games portfolio via live ops, user acquisition and further ad monetization
  • Founded in 2016 by Jochen De Schepper, the publisher has specialized in match-three titles, finding success with Farm Charm, Easter Egg Match and Shape Matcher

M&A and Capital Raising

Activision Blizzard Reports FQ4 2020 Earnings (link)

  • ATVI reported increased YoY revenue during FQ4 2020, and strong growth in its core franchises
    • Reported FQ4 2020 revenue ex-deferrals of $3,051M representing a 12.7% increase YoY, and exceeding prior revenue outlook of $2,732M
    • The BoD declared a cash dividend of $0.47 per common share, payable on May 6th, 2021 (representing a 15% increase from 2020)
  • ATVI Business Segment Highlights
    • Activision: 128M MAUs in the fourth quarter
      • 2020 was a record year for the Call of Duty franchise, as Activision’s premium and free-to-play experiences, including Call of Duty: Warzone, sustained more than 100M monthly active players, driving ~100% growth in the franchise’s net bookings YoY
      • Call of Duty premium unit sales grew over 40% YoY
      • Call of Duty Mobile delivered its best quarter yet, with the highest level of monthly payers in the West and average spend per payer strongly increasing YoY – the franchise also launched in China in late December, bringing it to a large new market
    • Blizzard: 29M MAUs in the fourth quarter
      • World of Warcraft grew for the full year as the franchise’s net bookings increased 40% YoY, reaching the highest level it has seen in nearly a decade
      • World of Warcraft MAUs grew YoY for the sixth consecutive quarter, contributing significantly to Blizzard’s total MAUs
    • King: 240M MAUs in the fourth quarter
      • In 2020, King achieved its best full year financial performance since Activision Blizzard’s acquisition in 2016
      • In-game net bookings grew by a double-digit percentage YoY, with growth accelerating versus the third quarter
      • Candy Crush, King’s largest franchise, was the top grossing franchise on U.S. app stores, as the game saw double-digit growth YoY in in-game net bookings
      • Advertising net bookings for King grew nearly 50% YoY

EA Reports FQ3 2021 Earnings (link)

  • EA reported strong top line growth during FQ3 2021
    • Reported FQ3 2021 net bookings of $2,400M representing a 19% increase YoY, exceeded prior net bookings outlook ($2,350M) and exceeding consensus expectations ($2,388M)
    • EA paid its first quarterly dividend of $0.17 per share in FQ3 2021 and announced that it will pay an additional dividend of $0.17 per share in March
  • EA’s marquee franchises have continued to see strong performance
    • EA launched four games during FQ3 2021 (FIFA 21, Medal of Honor: Above and Beyond, Need for Speed Hot Pursuit Remastered, and NHL 21)
    • The Company indicated that it will announce the next Battlefield title in the coming months, with a targeted release date by the 2021 holiday season
    • EA SPORTS franchises have engaged more than 230M people over the past fiscal year
    • FIFA Ultimate Team matches have grown 177% YoY, and experienced a record of nearly 6M daily active players in December
    • Over the last ten fiscal years, FIFA and Madden live services have grown at a CAGR of nearly 50% and 60% respectively
  • EA SPORTS is a focus area for future growth
    • EA announced that it will return to collegiate sports through the development of a college football game that will feature logos, stadiums, uniforms, gameday traditions and more, but will not include student-athlete names, images, and likenesses
    • The Company also announced a multi-year UEFA Club Competition license extension to reinforce EA’s positioning as the leading soccer video game developer
    • The proposed acquisition of racing game developer Codemasters will expand EA SPORTS’ offerings into F1 racing, a high-growth global sport

Nintendo Reports FQ4 2020 Earnings (link)

  • The Company reported a successful holiday quarter, in which Switch sales were higher than ever, and software sales were strong
    • The Company achieved sales of $6,041M compared to consensus of $5,552M, and reported EPS of $13.06 compared to consensus of $10.36
    • 11.57M consoles were sold in total, bringing the device to nearly 80M sold since its launch in 2017
    • Nearly 76M software units were sold, as Mario Kart 8 Deluxe and Animal Crossing: New Horizons both crossed the 30M mark, and The Legend of Zelda: Breath of the Wild and Pokémon Sword/Shield have now sold more than 20M copies each
    • Nintendo has increased its forecast for FY 2021 to 26.5M switch units, also boosting its net profit estimate 33% to $3.82B
    • The Company expects to launch new titles to Switch including Capcom’s Monster Hunter Rise

Sony Reports FQ3 2020 Earnings (link)

  • Overall, Sony reported a strong quarter, achieving sales of $25.656B compared to consensus of $23.904B
    • Game & Network Services increased to $8.42B in Sales and $760M in Operating Income in Q3 ‘20, up 40% and 50% respectively YoY
    • Game & Network Services is expected to generate $25.03B in Sales and $3.24B in Operating Income for FY20, up 33% and 43% respectively compared to FY19
  • Game & Network Services growth was driven by an increase in game software sales including add-on content, and an increase in hardware sales due to the PlayStation 5 launch
    • The Company expects higher-than-expected game software sales, peripheral device, and PS Plus sales to continue
    • The PlayStation 5 achieved 4.5M unit sales in Q3 ’20 (compared to the 17.8M of PS4s sold in FY18 and 13.5M sold in FY19)
    • Game & Network Services revenue mix for Q3 ’20 is comprised of Hardware (27%), Physical Software (6%), Digital Software (20%), Add-on Content (29%), Network Services (11%), and Other (7%)
  • PS Plus subscribers and MAUs on PlayStation Network held steady over the quarter
    • PS Plus subscribers increased ~3% QoQ to 47.4M, representing a 22% increase YoY
    • PS Plus MAUs increased ~5.5% QoQ to 114M
  • PlayStation 5
    • Currently, the Company has achieved 4.5M sell-in units through Q3 ‘20
    • Sony is on track to meet its sales goal for the fiscal year of more than 7.6M units, but has not been able to fully meet the high level of demand from customers
    • Total PlayStation user gameplay time in December was ~30% higher than the same month of the previous fiscal year
    • By the end of 2020, 87% of PS5 users were subscribers to PlayStation Plus
    • First-party game Marvel’s Spider-Man: Miles Morales recorded sell-through of 4.1M units at the end of 2020

Unity Reports FQ4 2020 Earnings (link)

  • Unity reported solid results for FQ4 2020 and for its full year, which included its first few months as a public company, though the Company traded down ~11% in after-market trading after reporting earnings due to lower forecasted growth, and perceived headwinds as a result of Apple’s impending changes to IDFA
    • Reported total revenue for FQ4 and FY 2020 of $220M and $772M, representing a 39% and 43% YoY increase respectively
    • On a per share basis, Unity’s FQ4 and full year non-GAAP net loss was ($0.10) and ($0.39), respectively, vs. consensus of ($0.14) and ($0.37)
  • Key drivers of FQ4 and FY 2020 results
    • Unity grew its customers who are >$100k 7.3% QoQ and 32% YoY
    • Games made with Unity accounted for 71% of the top 1,000 mobile games in FQ4
    • MAUs who consumed content created or operated with Unity reached on average 2.7B per month in FQ4, up 63% YoY
    • Applications built with Unity were downloaded on average 5B times per month in FQ4, up 41% YoY
  • Segment Performance
    • Create Solutions
      • Revenue in FQ4 increased 39% YoY to $67M
      • Revenue for the full year grew 37% YoY to $231
    • Operate Solutions
      • Revenue in FQ4 increased 55% YoY to $134M
      • Revenue for the full year grew 61% YoY to $471
    • ​​​​​​​Strategic Partnerships and Other Revenue
      • Revenue in FQ4 decreased 19% YoY to $19M
      • Revenue for the full year decreased 12% YoY to $70M

Skillz and the NFL to Launch Contest for Branded Mobile Multiplayer Games (link)

  • The NFL is one of a handful of the world’s most valuable sports leagues, with perhaps 500M people familiar with the brand
  • The league announced a partnership with newly public game-platform operator Skillz for a contest to develop a league-branded multiplayer Mobile title
  • Contest winners will get the NFL brand attached to their title, which Skillz CEO Andrew Paradise said in an interview could be a potentially hugely valuable differentiator

Google stops Stadia game development and closes its studios (link)

  • Just slightly over a year after launching its Stadia platform, Google is starting to scale back its gaming ventures
  • The Company is closing its two game development studios and cancelling its projects aside from “any near-term planned games”, as reported by Kotaku
  • Google started the Stadia Games and Entertainment division in March of 2019

Blizzard confirms “multiple” free-to-play World of Warcraft games are on the way (link)

  • Activision Blizzard has revealed that it has “multiple” free-to-play World of Warcraft games in development for Mobile
  • The unannounced titles were confirmed by CEO Bobby Kotick during the Company’s latest earnings call, noting that both classic and modern games have seen a rejuvenated interest throughout 2020
  • Additionally, Blizzard was reportedly working on a Pokémon GO-styled World of Warcraft spin-off for the platform in November 2018


Apex Legends on Nintendo Switch launches March 9 (link)

  • The studio is announcing the release date for season 8 of its battle royale shooter, and that may include the release date for the game on Nintendo’s hybrid home/handheld console
  • Apex Legends hits Switch on March 9, according to a press release posted by a Japanese gaming news site
  • Developer Panic Button is overseeing development of the Switch port of Apex Legends

Wildlife Studios opens Never Forget Games studio in San Francisco (link)

  • Never Forget Games is the first game studio that Wildlife Studios has set up beyond its core company, which has employees working on both games and publishing infrastructure
  • Wildlife Studios recently raised $120M at a $3B valuation on the strength of its mobile games such as Sniper 3D, Zooba, Tennis Clash, and War Machines
  • Over nine years, Wildlife has launched more than 60 games, and has grown to more than 850 employees
  • Wildlife CEO Victor Lazarte said in an interview with GamesBeat that Ray Mazza and Michael Duke will lead the new studio in San Francisco

Overwatch 2 and Diablo IV won’t release until 2022 (link)

  • Activision Blizzard, the developer of the two games announced that it does not expect either game to be a part of its 2021 financials
  • The Company noted that Blizzard will be releasing new projects during 2022

Gaming Public Multiples

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