Highlights

Breakpoint 2 Summit is tomorrow: Wednesday, February 16^th (link)
Griffin Gaming Partners is a sponsor

• A free, virtual game developer summit featuring talks by industry leaders including Unity, Epic Games, AWS, Google Stadia, Helpshift, and IGDA
• An opportunity to learn from each other, network, share best practices and ideas through technical talks
• Discussions will focus on game quality, testing pipelines, and performance issues
• To register, click here (link) 

Forte’s PTI gets financial transaction licenses for blockchain games (link)
Forte is a portfolio company of Griffin Gaming Partners

• Forte’s Provenance Technologies (PTI) division has received regulatory licenses to enable blockchain gaming transactions around the world
• The division has received both a Money Transmitter License and BitLicense from the New York State Department of Financial Services
• This distinction puts the Company among a select group of financial-services providers that can offer consumers added compliance and protection for blockchain game transactions
• Receiving approval licenses took Forte three years between the application and review process and required the Company to go through all US states and overseas regulatory to get the money transmittal license
• The New York BitLicense is specific to regulating the transmission of value through blockchains and cryptocurrencies and provides validation to international regulators as Forte expands

PS5 and Xbox outsell Nintendo Switch in January 2022, according to NPD (link)

• PlayStation 5 was the best-selling hardware platform of January 2022 in both units and dollars with Xbox ranking second across both measures
• Video game hardware dollar sales increased 22% YoY compared to January 2021, reaching $390M, the highest January total since January 2009
• US game spending was down 2% YoY to $4.7B, with Pokémon Legends: Arceus being the top-selling game in January in the US based on dollar sales

Microsoft promises openness on new app store and seeks approval for Activision deal (link)

• Microsoft executives promised that their new app store for video games would operate by a set of open-market principles
• Microsoft also said the Company would not require developers to use a proprietary payment system, among other steps
• Microsoft had also confirmed that Activision Blizzard will release games on PlayStation beyond existing agreements

Zynga reported FQ4 2021 earnings (link)

• ZNGA stock traded down 0.2% after-hours, and 1.4% up the following day post-earnings
• Zynga Announced Bookings and Adj. EBITDA above previous guidance
  • Reported FQ4 2021 Bookings of $727M, representing a 4% increase YoY, and beating prior Bookings outlook of $715M
  • FY 2021 highest-ever annual revenue of $2,801M, representing a 42% increase YoY
  • FQ4 2021 Adj. EBITDA of $178M (adjusted for the impact of deferred revenue), representing a 24% margin on Bookings
  • All-time best Advertising & other revenue for FQ4 2021 of $161M, representing a 37% increase YoY
• Performance & KPIs
  • Mobile Daily Active Users (DAUs) in FQ4 2021 of 37M, representing a 3% increase YoY and a 3% decrease QoQ
  • Mobile Monthly Active Users (MAUs) in FQ4 2021 of 184M, representing a 38% increase YoY and a 1% increase QoQ
  • Mobile Average Bookings Per Mobile DAU (ABPU) in FQ4 2021 was $0.204, representing a 1% decrease YoY and a 9% increase QoQ
  • Generated operating cash flow of $158M in FQ4 2021, down $48M YoY
• FY 2021 Results
  • FY 2021 Results YoY
    • Bookings of $2,826M, representing an increase of 24% YoY
    • FY 2021 Adj. EBITDA of $666M (adjusted for the impact of deferred revenue), representing an increase of 19% YoY
  • FY 2021 Results vs. Consensus
    • Bookings of $2,826M vs. consensus of $2,819M
    • Adj. EBITDA of $641M (excluding impacts of deferred revenue) vs. consensus of $654M

Krafton reported FQ4 2021 earnings (link)

• The stock traded down ~13% post-earnings
• Q4 2021 Results:
  • Reported Q4 2021 Revenue of $370M, up 26% YoY and falling short of consensus by 18%
  • Reported Q4 2021 PC Revenue of $96M, up 92% YoY and falling short of consensus by 14%
  • Reported Q4 2021 Mobile Revenue of $253M, up 10% YoY and falling short of consensus by 27%
  • Reported Q4 2021 Operating Profit of $36M, down 54% YoY and falling short of consensus by 75%
  • Reported Q4 2021 Net Profit of $5M, down 85% YoY and falling short of consensus by 96%
  • The Company attributed its decline in profitability to higher marketing and labor costs, as well as a weaker-than-expected performance from PUBG: New State, which launched in November 2021
• Portfolio Highlights & KPIs:
  • Reported 180M MAUs across all PUBG IP, globally
  • Reported a 25% increase YoY in Revenue attributed to PUBG IP
  • Reported 2021 Revenue of $334M for PUBG: Battlegrounds, representing 21% of Krafton’s total 2021 Revenue
  • Reported 2021 consumer spending of $1.2B for PUBG Mobile
  • Reported 6.5M new PC / Console players during the first week of the free-to-play release, and a January average of 20M PC / Console MAUs
  • Reported a 2x increase in PUBG PC / Console playtime and a 5x increase in PUBG PlayStation playtime, compared to the week prior
• Other Business Updates:
  • “Project M” by Unknown Worlds is scheduled for early access in 2022
  • The Callisto Protocol by Striking Distance Studios is expected to launch in 2022
  • The Company has Mobile titles Road To Valor: Empires from Dreamotion and Defense Derby from RisingWings in its pipeline
  • The Company announced a partnership with Naver Z and Zepeto to develop a Web 3.0 and NFT based project with the intention of building a NFT metaverse

Rovio reported FQ4 2021 earnings (link)

• The stock price traded up 11% post-earnings
• FY 2021 Results:
  • FY 2021 revenue of $326M, a 5% increase YoY
  • FY 2021 Games revenue of $315M, representing a 7% increase YoY
  • FY 2021 Adj. EBITDA of $62M, representing a 9% decrease YoY
  • UA spend increased 31% YoY to $88M, representing 28% of Games revenue
• Q4 Results:
  • FQ4 2021 group revenues of $90M, an increase of 15% YoY
  • Organic revenue (excluding Ruby Games) of $78M, an increase of 9% YoY
  • Gross bookings for games of $84M, an increase of 14% YoY
  • UA spend increased 29% YoY to $23M, representing 27% of FQ4 2021 Games revenue
  • FQ4 2021 Adj. EBITDA of $19M, representing a 35% increase YoY
• FY 2021 Results vs Consensus:
  • FY 2021 revenue of $326M vs. consensus of $320M
  • FY 2021 Adj. EBITDA of $62M vs. consensus of $58M
• FQ4 2021 Results vs Consensus:
  • FQ4 2021 revenue of $90M vs. consensus of $85M
  • FQ4 2021 Adj. EBITDA of $19M vs. consensus of $15M
• KPI and Performance:
  • FQ4 2021 DAUs of 6.5M across all games, representing a 48% increase YoY driven by the acquisition of hyper-casual studio Ruby Games, and 3.2M across Rovio’s top 5 games which is constant YoY
  • FQ4 2021 Monthly Unique Payers of 485k across all games, representing a 4% increase YoY, and 420k across Rovio’s top 5 games, representing a 4% increase YoY
  • FQ4 2021 ARPDAU of $0.14 across all games, representing a 25% decrease YoY, and $0.24 across Rovio’s top 5 games, representing an 11% increase YoY
  • The decrease in ARPDAU across all games is partially due to the acquisition of Ruby Games and its hyper-casual portfolio
• Capital Allocation:
  • The Board is proposing a dividend of $0.14 (2020: $0.14) per share for 2021
  • Based on the shares outstanding at 12/31/2021, the dividends would amount to $10M, representing 26% of net profit excluding items affecting comparability

M&A and Capital Raises

London Stock Exchange SPAC Hiro Metaverse Acquisitions raises £115M ($156M) via IPO (link)

• Hiro Metaverse Acquisitions (HMAI) has raised £115 ($156M) through an Initial Public Offering on the London Stock Exchange
• The SPAC intends to focus on industries including video games, esports, interactive streaming, Gen Z social networks, connected fitness & wellness, and metaverse technologies, across the U.K., Europe, and Israel
• Hiro Capital, the arm under which HMAI operates, backed a number of studios last year, including a $15M investment into Snowprint, Happy Volcano, and Double Loop, and an additional $6M into Twin Suns Corp and publisher Frvr

Mythical Games expands overseas and acquires assets of U.K. game studio Shortround Games (link)

• Mythical Games has acquired tech and staff from Shortround Games, a game studio based in Brighton, England known for titles such as Friendly Fire, Global Outbreak, and Rival Gears
• The tech acquired includes client and server tools to develop and maintain large-scale, socially interactive, and competitive games
• Mythical makes games and provides technology based on blockchain and NFTs, with a focus on enabling people to play and earn rewards at the same time
• According to Pitchbook, Mythical Games has raised $270M in funding to date at a valuation of $1.3B (Nov. 2021), and recently purchased Polystream, an interactive streaming platform, in Jan. 2022

Ethernal Labs raises $20M for its metaverse gaming studio (link)

• Ethernity announced it has raised $20M for its new studio, Ethernal Labs, which is a technology studio and incubator dedicated to helping others launch their own NFTs and tokens and join the metaverse
• Ethernal Labs plans to launch multiple projects over the next year, including a AAA play-to-earn game under the guidance of League of Legends creator Thomas Vu
• The fundraising included Black Edge Capital, Morningstar Ventures, and Polygon Studios, among others

Midnite raises $16M for Gen Z-focused esports betting apps (link)

• Midnite is a dedicated esports and sports betting platform building a community of engaged esports bettors
• According to Pitchbook, Midnite has raised $35M to date and has a post-money valuation of $75M as of Dec. 2021
• The Company will use the proceeds to help fund growth initiatives as the Company enhances its product platform, including Sportsbook, CashMode, and upcoming product Arcade
• The funding round included participation from investors that were a part of earlier funding rounds

Salad Ventures raises $13.5M to build GuildOS platform for Play-to-Earn gaming (link)

• The Company will use the proceeds to continue building GuildOS, Salad’s upcoming operating system for managing a play-to-earn guild, which it plans to launch in the first half of 2022
• Salad describes the OS as “a secure, web-based platform that allows anyone to start, manage and scale a play-to-earn guild in any blockchain game”
• The funding round included participation from Alameda Research, C2 Ventures, Crossbeam Venture Partners, Foundation Capital, Gemini Frontier Fund, Winklevoss Capital, and Polygon Studios, among others

iCandy acquires 51% stake in mobile game developer Storms (link)

• Founded in 2020 based in Singapore, Storms was created by Singtel, Advanced Info Services, and SK Telecom, the mobile games developer has gone on to release the casual title AZ Run, which has been downloaded nearly 10M times across both iOS and Android in under a year
• iCandy Interactive is an Australian-based company, which develops and publishes mobile games and digital entertainment, including Star Girl Games, Garfield Games, Doraemon Games, Astro Boy Games, Appxplore, Inzen, Joyseed Gametribe, iCandy Digital, and iCandy Games
• According to Pitchbook, iCandy purchased 51% of Storms for $5.7M
• Storms will retain its staff and operate as it has, while iCandy aims to integrate new technology for users
• As part of the transaction, the current shareholders have an option to sell the remaining 49% stake in the company to iCandy Interactive within an agreed period of time

Portals raises $5M to build its city in the metaverse (link)

• Portals offers users the ability to build their own space within a metaverse, whether that be a storefront, an office, or another social space
• The Company will use the proceeds towards building its planned vision of a metaverse metropolis, built on the Solana blockchain
• The funding round was led by Greylock, with additional participation from Multicoin Capital, Solana Ventures, Foundation Capital, Alameda Research, and Sino Global Capital, among others

Strider raises $3M to use blockchain DAOs to enable game creators (link)

• Strider is creating a Web3 platform that lets creators use DAOs to spread membership and ownership of a project across both creators and the players of a game, a decentralized evolution of the crowdfunding model
• The Company will use the proceeds to further scale and develop the Strider platform, which gives users instant and transparent access to teams developing new IP for entertainment and games while allowing them the opportunity to co-create and invest
• The funding round was led by 1kx, with additional participation from Decasonic, Scalar Capital, Sfermion, Metaorient, and Yield Guild Games (YGG)

Zynga and Rollic acquire NanoTribe (link)

• NanoTribe, founded in 2017, specializes in hypercasual titles, and has published several titles with Rollic already, including Arrowfest and Cashier 3D
• Under the acquisition, NanoTribe will fall under the Rollic umbrella alongside the firm’s other studios, and marks the first company outside of Turkey to be managed by Rollic
• The acquisition of NanoTribe follows the previously announced acquisition of Zynga by Take-Two in January

Nacon acquires Edge of Eternity developer Midgar Studio (link)

• Midgar, founded in 2008, specializes in JRPG titles (Japanese Role-Playing Games), as well as outsourcing resources to other studios, including animation, development, and platform porting
• The studio launched Edge of Eternity in 2021, and co-launched 2018 adventure game Hover alongside indie studio Fusty Game
• Nacon’s video games division now contains 15 development studios, 10 of which are also based in France

Apocalypse Studios raises seed funding from Tyr for Deadhaus Sonata Game (link)

• Founded in 2018, Apocalypse Studios is a cloud, metaverse, multiplatform, and metaplayer title
• The Company is beginning production for Deadhaus Sonata, a narrative-driven action RPG built for the cloud from the ground up
• Players can create and monetize content in the game for the rest of the community

Other

Warner Bros. and NetEase will launch Harry Potter: Magic Awakened mobile game in 2022 (link)

• Warner Bros. Games and NetEase announced Harry Potter: Magic Awakened, a free-to-play immersive collectible card game (CCG) and massively multiplayer (MMO) wizard dueling mobile game
• Co-developed and co-published by Warner Bros. Games and NetEase Games, Harry Potter: Magic Awakened will launch globally later this year as the latest title under Portkey Games, which is dedicated to creating new mobile and video game experiences inspired by the Wizarding World

Bandai Namco to invest £96M ($130M) into “IP metaverse” (link)

• The Company announced its aim to invest £96M ($130M) into its “IP Axis Strategy”
• The strategy includes building a virtual space to accommodate three goals – connecting with fans, enhancing IP value, and improving its global presence to drive sales outside of Japan

Lord of the Rings and The Hobbit gaming rights up for sale (link)

• Saul Zaentz Co. is about to sell Tolkien holdings that it has owned since 1976, which includes the gaming rights for J.R.R Tolkien’s The Lord of the Rings and The Hobbit
• The auction is also set to include the rights to merchandising, movies, and live events such as theme parks in addition to games

Saudi Arabia’s Public Investment Fund acquires stake in Capcom and Nexon (link)

• According to Bloomberg, the fund took a stake of more than 5% in each publisher, with a combined value of over $1B
• PIF is a $500B fund that also has stakes in Activision Blizzard, EA, and Take-Two, having invested over $3B in the three publishers in Q4 2021

Saudi Arabia’s Neom to build AAA studio with MBC Group (link)

• Saudi Arabia’s aspiring tech hub city-building project Neom announced a joint venture with media company MBC Group to create the “first AAA games development studio in the region”
• Neom indicated the studio is being incubated with developers from all over the world and will centralize itself in Neom’s media hub next year

Call of Duty: Modern Warfare 2019 sequel and Warzone 2 officially announced (link)

• This year’s Call of Duty release will be a sequel to 2019’s Modern Warfare and will be developed alongside a new Warzone release that will be designed simultaneously from the ground up
• Fans can expect an all-new playspace and a new sandbox mode for Warzone 2
• Both the Modern Warfare sequel and Warzone will be powered by a new engine, along with both titles being developed by studio Infinity Ward

Nintendo is developing a new Wii Sports for the Switch (link)

• Nintendo announced that it is bringing back some of its classic Wii Sports games in a new game called Nintendo Switch Sports
• Nintendo Switch Sports is slated to release April 29^th exclusively for the Switch
• The seven games featured include Chambara, Golf, Soccer, Volleyball, Bowling, Tennis, and Badminton

Roblox announces partnerships with the NFL, McLaren, and Alo (link)

• The NFL and Roblox announced the launch of “NFL Tycoon”, a gaming experience that aims to engage the next generation of football fans in the metaverse
• The NFL’s first metaverse experience allows football fans to build, play, and learn in their own NFL-centered world
• McLaren released the new virtual McLaren MCL36 race car to Formula 1 enthusiasts with access to the McLaren F1 Racing Experience on Roblox
• Alo launched inside Roblox a virtual Alo Sanctuary, an immersive wellness space for yoga and meditation

Wildlife opening Playabit studio with Toy Blast developers (link)

• Former Peak Games developers Tugrul Atak, Ayhan Sahin, and Ant Sengelli are starting their own new studio under the Wildlife umbrella
• Playabit will be focused on creating fun and casual games, building upon experiences from past successes
• Playabit is the first new studio from Wildlife this year, following 2021 where the Company started up four new studios (Never Forget Games, SuperWow Games, Foxbear Games, and an unnamed Swedish studio)

New studio Blinkmoon to bridge gap between cinematic experiences and interactive gaming (link)

• VFX career artists Mohsen Mousavi, Hugh Behroozy, and longtime game designer Troy Dunniway announced the formation of their new game development studio Blinkmoon
• The Company said that it aims to bring in a new era of best-in-class entertainment
• CEO Hugh Behroozy has worked on visual effects for films such as Guardians of the Galaxy, Justice League, and Tomb Raider, and COO Mohsen Mousavi has worked on several projects including Game of Thrones, Marvel’s Spiderman, and Independence Day 2

Playing for the Planet membership grew by 33% in 2021 to 39, according to The United Nations’ Playing for Planet Alliance (link)

• The Playing for the Planet Alliance is a group of gaming companies supported by the United Nations, who have made voluntary, ambitious, specific, and time-based commitments for people and the planet
• Seven new gaming companies and seven new trade bodies joined the initiative in 2021, including gaming companies Bandai Namco, Creative Assembly, PerpGames, Pixel Federation, SEGA Europe, TIMI Studio Group, and 37 Interactive Entertainment
• Green Game Jam, a program in which companies with live service games run in-game events themed around conversation and restoration of forests and coral reefs, tripled in size in 2021 to 30 studios, with notable additions including Supercell, Mojanhg, Sony, Ubisoft, and Niantic, and raised nearly $800k in donations for related charities

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