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