IN THE LOOP with kapital k // W42 of 2023
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Week 42 of 2023. Here are the top five headlines and fundraising announcements + a collection of content from independent creators that you missed this week!
Microsoft // Activision Blizzard Deal Finally Closes — link
THOUGHTS: This deal took nearly two years to complete but it's finally completed.
Here are the TL;DRs:
• $69B purchase of Activision Blizzard
• 633 days after Microsoft's bid announcement
• CMA approval came from Ubisoft taking control of cloud gaming rights for Activision Blizzard for the next 15 years (in perpetuity)
• Ubisoft PLus will (soon) carry Activision Blizzard games
• Microsfot signed deals with Nintendo and Sony for CoD and committed to keeping CoD on Steam
• Microsoft has 23 in-house studios
• Activision has 3 gaming divisions (ABK) and 13k employees
• Bobby Kotick (CEO of Activision Blizzard) to step down at the end of 2023
• Microsoft now owns IPs like Call of Duty, Crash Bandicoot, Diablo, Guitar Hero, Hearthstone, Overwatch, Starcraft, Warcraft, Candy Crush Saga, and much much more.
PUBG Mobile // $100 million creator fund for “Wonder Creators Network — link
THOUGHTS: The plan is to spread that $100M over three years through sponsoring competition prizes, incentivizing game creation and support. The World of Wonder is PUBG Mobile's version of Fortnite Islands. This creator tool allows players to create mods and new maps.
We see a divergence in Epic Games' & Krafton's strategy. Epic opted for the direct revenue-share route whereas Krafton pushed for indirect economic support. I think builders would care more for the direct rev share rather than these auxiliary support.
But PUBG did mention it plans to invest 'tens of millions of dollars' into new games. One could argue that receiving that seed investment from Krafton greatly reduces the personal risk. Since we don't know the particular terms of PUBG Mobile's investment, we will have to wait and see. Epic won't invest in your creations and they'll take a piece of your revenue so Krafton's deal may be more attractive to some.
Final bit on UGC is around Discord's new plan to allow developers to monetize their apps. We see that the platformatization trend doesn't limits itself to just games. Discord is the de facto communications application for gaming.
Now is the time to form a team or go solo on creating experience across all of these UGC platforms.
Netflix // Cloud Gaming Service Begins Testing in US — link
THOUGHTS: So I've been using Geforce Now to play Maplestory Global on my mac while being in Korea. This doesn't sound complicated but it was.
Maplestory only runs on PC and if you're in Korea, you have to play Korea Maplestory. I had to overcome the platform mismatch and the geo-block.
I needed Parallels to download Maplestory so that my Steam account would be linked to Maplestory, then I had to use Geforce Now to launch Steam, which then launched Maplestory. All the while I had to keep VPN on. (Oh and every account needs to be created under US-region).
After this experience, I'm a firm believer in cloud gaming. Yes, one could argue that I should just get a PC (and I am). But the larger point is that any gamer should be able to play on any device. The device should fit to the form of the user, not the other way around.
And we see just that with Netflix testing its cloud gaming service in the US. Recall that a few months ago they had launched a gaming controller app on the app store. Now Netflix subscribers could play games on smart TVs and TV-connected devices.
Though Netflix mentioned that this isn't a console-replacement (well since it really couldn't be) but rather a "value-add" to its existing subscribers. But this is an interesting point.
I had to subscribe to GeForce Now. If I had the choice to not pay another subscription and rather just get charged a little more on my Netflix subscription for cloud gaming services, I'd be much more inclined to do so.
Netflix's bundling of its cloud services is something we should pay attention to. No other tech giant has as large a consumer-subscriber base as Netflix does. We've seen the power of bundling before (see Microsoft).
There was another tech giant that rolled out cloud gaming a few months ago. Samsung launched cloud gaming natively on its phones but the distinction is that it would run mobile games. Today's benefit is that it drastically shrinks the funnel and reduces friction. Tomorrow's benefit is that as mobile games become more computationally intensive fewer devices could run the games at full graphics.
And with 78% of gamers play on mobile, with 44% considering mobile as their primary device for gaming, this market is quite large, and growing.
Epic Games // Fortnite Changing Creator Payout Policy — link
THOUGHTS: Show me the incentives and I'll show you the outcome. Fortnite is changing its creator payout economics. This policy update will incentivize creators to stimulate players to spend.
The current policy pays creators based on:
(1) Player popularity
(2) Player retention
(3) Rewards time played
The new incentives will reward creators when players buys or spends V-Bucks one week before and one week after they've engaged with the creator's experience. For example, if a player bought the new Spiderman game on Epic Games Store, then played an Spider man-themed Fortnite experience then the creator of that Fortnite experience would get some attribution to that sale.
Many platforms are heading this UGC / Creator Economy 2.0 route so we should pay attention to how the current dominating UGC platforms enact their economic policies. Earlier this year we saw Roblox having their own methodology for sales attribution and incentivization.
Another interesting data point Tim Sweeney (CEO of Epic Games) mentioned was that third-party Fornite experiences play time exceeds first-party experiences. That's what a healthy UGC platform looks like.
Niko Partners // SEA-6 Region Will be $7B by 2027 — link
THOUGHTS: I'm bullish on the S.E.A. Region. Niko Partners' latest report, "The SEA-6 Games Market", includes Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. There are 288M gamers in this region.
These markets total a $5.8B (~3% of the global games market) and projected to grow at 5.4% CAGR — reaching $7.2B by 2027. Indonesia dominates as the largest market in terms of revenue, players, and growth rate.
2/3 of the region's revenue comes from mobile and expected to climb to 70% in 2027. Indonesia and Singapore has the fastest revenue growth rate of 9.9% and 8.2%, respectively.
Surprisingly though esports is a key driver for gaming in this region, with teams in Thailand and Malaysia earning the most esports medals. The SEA-6 esports market is about 3% of the global market's.
Not mentioned in the article but I think is important is the customer acquisition cost for SEA players. The unit economics for these players are improving which makes them more attractive in the uber competitive mobile gaming landscape.
Don’t miss out on next week’s IN THE LOOP w/ kapital k.
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GameDiscoverCo // Who’s Top of Steam Next Fest for October? — link
GameDiscoverCo // Steam Deck: Everything You Were Afraid To Ask — link
Brutally Honest // Current Market Situation in China (Cultural Adaptation, App Store Markets, UA, & Creatives — link
Deconstructor of Fun // The Zen Match Case: How a First Mover Fell Behind — link
SuperJoost Playlist // 639 Days Later — link
MobileDevMemo // Can Disney Be A Gaming Company Again? — link
MobileDevMemo // Netflix Q3 Earnings — link
Newzoo // How Different Generations Engage with Video Games — link
GameDevReports // How Children Spend Money In Games — link
GameDevReports // Profitability of Sony’s Gaming Business (~15%) — link
Niko Partners // SEA-6 Games Market Reports — link
Konvoy Ventures // India’s Real Money Gaming Tax — link
Deconstructor of Fun // Untapped India Mobile Opportunity
Mobile Games Playbook // Top 3 Trends in China’s Mobile Market
The AIAS Game Maker’s Notebook // Creating Galactic Ripples with EVE
Deconstructor of Fun // TWIG #254 - Unity & Activision CEO Fantasy Draft
Unboxing // Building The Creator Economy
2 & a half gamers // China Special Breakdown
Game Makers // Building A Startup Game Studios
Level Up+ // Phillip Black | Roblox Lessons On Virtual Economies
Naavik // ESL FACEIT Group: Growing Beyond Play
Quest Portal // $7.6M // Web2 // Tabletop — Subscription for tabletop role-playing games
Investors: Lakestar, Moonfire
One Store // $14.8M // Web2 // Infra — SK Telecom, KT, LG Uplus and Naver's app markets were combined into one back in 2016, marking the start of One Store.
Investors: Krafton
Zeedz.io // $1.0M // Web2 // Casual — climate protection and awareness to allow players to combat global carbon emissions by collecting plant-inspired creatures called Zeedles
Investors: Die Höhle der Löwen, Carsten Maschmeyer, Tillman Schulz, Dagmar Wöhrl
Forge // $11.0M // Web3 // Social — Platform to connect and reward gamers for their achievements.
Investors: Makers Fund, Bitkraft Ventures, Animoca Brands, Hashkey Capital, Polygon Ventures, Formless Capital, Adaverse
Life Byond // $3.5M // Web3 // Sandbox — Open-world sci-fi game where players attempt to build a new civilization powered by NFTs and a tokenized digital economy.
Investors: Gamefi Ventures, London Real Ventures, Citizen Capital, Blocore, Animoca Ventures
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h/t to thecoreloop contributors: @0xkapital_k @chng_raymond @cloudxgmf @wassiecapital @iandaog @playtern @friandoteth @0xconglomerate @itsbambam
