M&A and Capital Raises

Forte raises $725M for compliant blockchain gaming platform (link)
Forte is a portfolio company of Griffin Gaming Partners

• Forte allows game publishers to easily integrate blockchain technologies into their games, enabling features such as embeddable token wallets, NFT minting and selling, payment rails, and other services built specifically for blockchain token economies
• The Company will use proceeds to expand its suite of products and services and accelerate the onboarding of emerging game and content publishers
• The round was led by Sea Capital and Kora Management, with additional participation from Animoca Brands, Big Bets (Huuuge Games), Overwolf, Playstudios, Warner Music Group, zVentures (Razer), Cosmos, Polygon Studios, Solana Ventures, Griffin Gaming Partners, a16z, and Tiger Global
• In May, our team led Forte’s $185M Series A round at a $1B valuation

Unity acquires VFX platform Weta Digital for $1.6B (link)

• Weta Digital is a creator of visual effects and animations, delivering high-quality characters, objects, and worlds for a wide variety of movies and television shows
• Weta Digital will join Unity’s Create Solutions focused on the continual evolution of Weta Digital’s dozens of proprietary graphics and VFX tools
• Weta Digital’s VFX teams will continue to exist as a standalone entity known as WetaFX and is expected to become Unity’s largest customer in the Media and Entertainment space
• Unity will gain Weta’s pool of 275 staff, as well as dozens of digital design tools, thousands of assets, and Weta’s data platform
• The deal is expected to close in Unity’s FQ4 2021

Tencent acquires majority stake in Wake Up Interactive for ~$44M, according to Bloomberg (link)

• Tencent paid roughly $44M for a 90% stake in Wake Up Interactive, owners of Soleil
• Soleil is best known for its work on the Nintendo Switch exclusive Ninjala, and has also worked on Travis Strikes Again: No More Heroes, Naruto to Boruto: Shinobi Striker, and Devil’s Third
• Soleil announced in October that Ninjala, which launched in June of 2020, had passed 8M downloads worldwide

Sandbox VR raises $37M to prepare for expansion (link)

• Sandbox VR offers multiple VR entertainment locations, which combines VR headsets with full-body motion capture
• The round was led by a16z, with additional participation from Alibaba and Craft

Mod.io raises $26M in Series A funding to support UGC in games (link)

• Mod.io works with studios around the world to enable and support user-generated content across a number of games
• The Company currently lists over 80 titles on its website, including Saber Interactive’s Snow Runner and Keen Software’s Space Engineers
• The Company will use proceeds to work with more developers on implementing mods and UGC across multiple platforms
• The round was led by Tencent, with additional participation from Lego Ventures, and returning investors Makers Fund, PlayVentures, Sequoia Capital India’s Surge, GameTech Ventures, and OIF Ventures

AudioMob raises $14M in Series A funding to expand teams (link)

• AudioMob is an ad service that enables non-intrusive audio ads in mobile games
• The Company will use the proceeds to expand its teams and further develop its products
• The round values AudioMob at $110M, and was led by Makers Fund Lightspeed Venture Partners, with additional participation from Sequoia Capital and Google

Neon raises $10.5M for blockchain-based shooter game Shrapnel (link)
Neon is a portfolio company of Griffin Gaming Partners

• Neon is an independent video game studio and publisher headed by Mark Long, a longtime gaming exec who spun the Company out of HBO
• The round was led by our team, with additional participation from Polychain Capital and Forte, who will also provide technical support

Edgegap raises $7M in Series A funding to provide online support services to game studios (link)

• Edgegap is an edge-computing cloud platform that hosts game components, including servers and relays
• The Company will use the proceeds towards the ongoing development of reducing online gaming latency and streamlining support, as well as expanding its team and providing more services to game studios
• The round was led by Konvoy Ventures, with additional participation from previous pre-seed investor GFR Fund, Liberty Global, and Akami

Hadi raises $5.2M to develop casual mobile games (link)
Hadi is a portfolio company of Griffin Gaming Partners

• Hadi is a mobile developer based in Istanbul, Turkey, and was co-founded by CEO Mark Muller, a former Creative Director at Gram Games
• Hadi’s vision is to drive innovation in full-scale casual mobile titles through the team’s previous learnings in hypercasual game development and publishing
• The round was led by our team

Playtertainment raises $5M in funding round to expand its skill-based gaming platform (link)

• The Company is best known as the creator of the mobile app Winner Winner, which allows players to operate real claw machines and arcade games via video streaming
• The round was led by SDV Holdings, with additional participation from the founder of Gamesys, the founders of DraftKings, the co-founder of Playtech, Astralis Capital, and Sharp Alpha Advisors

2K acquires Elite3D, rebrands it as 31st Union and Global Services offices (link)

• Platygobian, better known as Elite3D, is a Valencia-based studio specializing in 2D and 3D artwork
• The Elite3D team will rebrand into two separate divisions, one to assist 31^st Union in the development of a new game, and the other to form a new 2K Publishing location to assist the Global Services division

Highlights

Zynga reported FQ3 2021 earnings (link)

• Zynga’s stock traded up 1% during the day and up 7% in after-hours
• Zynga reported record DAUs and MAUs, driven Peak’s Toon Blast and Toy Blast and the hyper-casual portfolio of Rollic
  • Reported FQ3 2021 bookings of $668M, representing a 6% increase YoY, exceeding prior bookings outlook of $660M and in line with consensus of $667M
  • Reported FQ3 2021 international bookings of $262M (39% of total), representing a 9% increase YoY, and US bookings of $406M (61% of total), representing a 5% increase YoY
  • Reported FQ3 2021 adj. EBITDA of $197M ($160M adjusted for deferred revenue), representing a 24% margin on bookings
  • Reported advertising bookings of $134M, representing a 100% increase YoY
• Portfolio Performance & KPIs
  • The topline beat was driven by a strong advertising performance, in particular, another standout quarter from Rollic’s hyper-casual portfolio
  • Mobile Daily Active Users (DAUs) of 38M, representing a 23% increase YoY and a 7% decrease QoQ
  • Mobile Monthly Active Users (MAUs) of 183M, representing a 120% increase YoY and an 11% decrease QoQ
  • Mobile Average Bookings Per Mobile DAU (ABPU) was $0.188 for the period, representing a 12% decrease YoY and a 3% increase QoQ
• Business Updates
  • Launched FarmVille 3 last week and the game has already reached the #1 top free downloaded games position in the U.S. iOS App Store
  • Pirate Evolution! (Gram Games) and Star Blast (Match-3 game) are showing positive signs early in soft launch
  • Star Wars: Hunters will enter soft launch on mobile in select test markets in FQ4

AppLovin reported FQ3 2021 earnings (link)
AppLovin is a portfolio company of Griffin Gaming Partners

• AppLovin’s stock traded down 8% during the day but increased 7% in after-hours
• AppLovin reported significant YoY growth in revenue and EBITDA
  • Reported revenues of $727M, representing a 90% increase YoY and exceeding consensus of $698M by 4%
  • Reported Business Software Platform revenues of $193M, representing a 385% increase YoY, and Apps revenues of $534M representing a 56% increase YoY
  • Reported Adjusted EBITDA of $191M, representing a 126% increase YoY
  • Reported GAAP Net Income of $0.1M, improving from a GAAP Net Loss of $90M in FQ3 2020
• KPIs
  • Reported 325 total enterprise clients, representing a 108% increase YoY
  • Reported $276M of total software transaction value, representing a 343% increase YoY
  • Reported Monthly Active Players of 2.9M, representing a 93% increase YoY
  • Reported average revenue per MAP of $44, representing a 4% decrease YoY
• Acquisition of MoPub
  • Total consideration of $1.05B (100% cash)
  • Transaction expected to close in 2022
  • Expected to deliver annual Software Platform Revenue of $240M-$260M per year
  • Expected $35M-$45M of incremental annual costs based on the expected Q4 2022 run-rate

Roblox reported FQ3 2021 earnings (link)

• Roblox’s stock traded up ~30% in after-hours
• Roblox reported significant YoY growth in bookings
  • Reported bookings of $638M, representing a 28% increase YoY and exceeding consensus of $625M by 2%
  • Reported revenue of $509M, representing a 102% increase YoY
  • Reported adj. EBITDA of $136M, representing a 16% decrease YoY, but exceeding consensus by 2%
  • Reported employee headcount of 1,435, representing a 66% increase YoY
• KPIs
  • Reported average DAUs of 47M, representing a 31% increase YoY
    • 50% of DAUs are over 13 years old, compared to 45% in FQ3 2020
    • APAC region users grew the most, representing a 75% increase YoY, and now accounting for ~20% of total DAUs
  • Total hours engaged of 11.2B, representing a 28% increase YoY
    • 51% of total hours engaged are from users over 13 years old, compared to 41% in the same period two years ago
  • Reported average bookings per DAU of $13.49
• Business Updates
  • Hosted inaugural Roblox Launch Party with the BMG label, which attracted 17M+ visits
  • Hosted second virtual concert with Twenty One Pilots, which attracted 1M+ hours of engagement
  • The Company reached an agreement with the National Music Publishers Association, enabling publishers to pursue creative and commercial opportunities on Roblox

Unity reported FQ3 2021 earnings (link)

• Unity’s stock traded up 5% during the day but decreased 7% in after-hours
• Unity reported significant YoY growth in revenue
  • Reported revenue of $286M, representing a 43% increase YoY and exceeding consensus of $266M and guidance of $260M-$265M
  • Reported an operating loss of ($127M) against consensus of ($116M) and compared to an operating loss of ($142M) in Q3 2020
• KPIs
  • 973 customers each generated more than $100,000 of revenue in the trailing 12 months as of Q3 2021, compared to 739 as of Q3 2020
  • Dollar-based net expansion rate as of Q3 2021 was 142%, compared to 144% as of Q3 2020
• Business Updates
  • Officially announced that they are launching Metacast, Unity’s first real-time 3D sports platform (launched in partnership with the UFC)
  • Unity announced it has entered into a definitive agreement to acquire Weta Digital’s tools, pipeline, technology, and engineering talent, for $1.6B in a combination of cash and stock

Tencent reported FQ3 2021 earnings (link)

• Tencent’s stock traded up 4% during the day
• Tencent reported significant gaming revenues growth
  • Reported International Games revenues of $1.8B, representing a 20% increase YoY, driven by Valorant and Clash of Clans
  • Reported Domestic Games revenues of $5.3B, representing a 5% increase YoY, driven by Honour of Kings, Call of Duty Mobile, and Moonlight Blade Mobile
  • Reported Social Networks revenues of $4.8B, representing a 7% increase YoY, driven by video and music subscription services, and live streaming and in-game item sales
• Business Updates
  • Starting in September 2021, the Company is implementing new measures to fully comply with the latest regulations on restricting game time for minors in China
  • New games in development include the mobile version of Valorant (Riot), three flash-based games (Supercell), Path of Exile 2 (Grinding Gear Games), and Darktide (Fatshark)

Nexon reported FQ3 2021 earnings (link)

• Nexon’s stock traded flat during the day
• Nexon reported YoY decrease in games revenue
  • Reported Q3 2021 total revenues of $673M, representing a 4% decrease YoY and exceeding consensus of $623M by 8%
  • Reported mobile game revenues of $165M, representing a 44% decrease YoY
  • Reported PC game revenues of $507M, representing a 24% increase YoY, accounting for more than 75% of the Company’s earnings
  • Reported Q3 2021 net income of $337M, representing a 132% increase YoY
  • Sales were driven by Dungeon & Fighter, MapleStory, FIFA Online 4, and The Kingdom of the Winds: Yeon
• KPIs
  • MAU and paying users increased QoQ, driven by positive impacts from successful updates in June and July
  • ARPPU increased YoY due to improved user engagement
• Business Updates
  • Nexon plans to focus on building a solid foundation for long-term growth in China, rather than aiming to make profits n the short-term
  • The company plans to launch mobile Dungeon & Fighter in Korea in 2022 and has three projects in process with Embark Studios

Playstudios reported FQ3 2021 earnings (link)

• Playstudios’ stock traded down 5% during the day and down 3% in after-hours
• Playstudios reported slight YoY growth in revenue
  • Reported revenues of $71M, representing a 1% increase YoY and below consensus of $72M
  • Reported net income of $11M, representing a 10% increase YoY, and above consensus of net loss of ($1M)
• KPIs
  • Average DAU of 1.17M, representing a 16% decrease YoY
  • Average MAU of 3.57M, representing a 13% decrease YoY
  • Average DPUs of 33k, representing a 3% decrease YoY
  • Average daily payer conversion of 2.8%, representing a 2.4% increase YoY
  • ARPDAU of $0.65, representing a 20% increase YoY
• Business Updates
  • Following the expansion of the Company’s rewards platform with Bowlero Bowling and Amusement Centers, the Company launched Bowl-A-Palooza, a series of festival-like bowling parties
  • Upon entering the casual gaming market with the global launch of myVEGAS Bingo, the Company enlisted the award-winning Hollywood actress Jane Lynch
  • Continued to expand the Company’s teams and resources in Belgrade and Vietnam

VentureBeat hosted its GamesBeat Summit Next conference (link)

• Speakers included Griffin Gaming Partners Managing Director and LionTree Head of Gaming Nicholas Tuosto, Take-Two CEO Strauss Zelnick, Niantic’s John Hanke, and Xbox’s Sarah Bond among others
• The event covered innovative gaming technologies that could expand the industry beyond its natural borders
• Discussions included:
  • How Blockchain Gaming is Going to Change Everything (link)
  • Adapting to the Boom in Gaming (link)
  • The Game Investment Boom (link)

VR is projected to be a $51B market by 2030, according to GlobalData (link)

• Enterprise applications projected to grow the VR sector from last year’s estimated total of $5B worldwide
• GlobalData attributes the expected VR boost in the coming years to enterprise applications
• GlobalData cites latency, high prices, and privacy concerns as key issues preventing adoption

Netflix launches games to iPhone and iPad users worldwide (link)

• Netflix released its games to users on iOS after debuting on Android devices
• The games will be delivered to iOS users the same way they were for Android users
• Netflix users on Android have their own dedicated “Games” tab in the app’s navigation, but iOS users will not; instead, iPhone members will only see a dedicated games row in the app where they can select any game to download

Apple denied delay on App Store changes (link)

• U.S. District Judge Yvonne Gonzales Rogers has denied Apple the right to delay the implementation of third-party payment systems for apps downloaded on its App Store
• The Company had asked for the change to be delayed while the appeals in the Epic v. Apple trial were being resolved
• Third-party payment systems will have to be implemented on the App Store starting on December 9^th

Other

Niantic opens Lightship augmented reality platform to all developers (link)

• The Lightship Augmented Reality Developer Kit (ARDK) will feature several of the tools used in Niantic’s games, such as real-time mapping, understanding (which helps AR objects interact with real-world places), and multiplayer sharing features
• In addition to the global launch, Niantic has also created Niantic Ventures, with $20M to invest, to invest in AR projects
• Niantic’s brand partnerships on the Lightship ARDK, who all participated in a private beta, include Coachella, Historic Royal Palaces, Science Museum Group, Shueisha, Softbank, Universal Pictures, and Warner Music Group. Developer partnerships include Curiosity, Designium, Heavy.io, Preloaded, Nexus Studios, Trigger Global, and T&S

Subspace aims to enable the real-time metaverse (link)
Subspace is a portfolio company of Griffin Gaming Partners

• Subspace is launching its parallel and real-time internet service for gaming and the metaverse on November 18. The network lets developers, such as the makers of real-time games, deliver real-time connectivity for their users
• The Company has built out its parallel network using its own networks and hardware as well as partnerships with providers of dark fiber, or some of the excess capacity for the internet
• Subspace’s network platform deploys, operates, and AI optimizes and scales the highest performing proxy services for a real-time application

Mobile developer Nifty Games brings big sports content to small screens (link)

• Focused entirely on mobile gaming, Nifty has official NBA and NFL licensing. The Company’s NFL Clash and NBA Clash are accessible from both Android and iOS
• The Company aims to deliver fast, on-demand gaming experiences with the authenticity of the sports licensing

Xbox provides further commentary on its acquisition strategy (link)

• Microsoft reiterated its commitment to M&A within gaming as the Company believes the sector is undervalued
• The Company will pursue acquisition based on a fit that can generate value to both sides
• Microsoft has shooters (Halo and Gears of War) and RPG (Bethesda, Obsidian, and InXile) genres covered and it may look for acquisitions elsewhere

Nintendo Switch outsells Xbox and PlayStation, according to NPD (link)

• Nintendo Switch outsold both the Xbox and PlayStation thanks to the introduction of Nintendo’s slick and more expensive OLED Edition
• October video game hardware dollar sales increased 82% when compared to October 2020, to $472M
• YTD hardware spending has increased 53% when compared to the same period a year ago, reaching $3.9B

Back 4 Blood posts robust sales regardless of day-one Xbox Game Pass launch, according to NPD (link)

• Cooperative zombie shooter Back 4 Blood was the No. 2 best-selling game on both PlayStation and Xbox platform
• Back in April, Square Enix’s multiplayer online shooter Outriders debuted on Xbox and PlayStation and0 was ranked No. 3 best-selling game on Xbox
• The unexpected relationship between sales from games simultaneously launches on Xbox Game Pass might prove a strong catalyst for the subscription service in the future