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Games Radar Thursday
This industry update provides a multifaceted look at the free-to-play mobile gaming sector as of October 2021, focusing on revenue performance, emerging technology, and corporate strategy.
- The mobile empire simulation RPG 'Game of Sultans' has generated over $270 million in net revenue across 41 million installs, with the majority of its earnings originating from the U.S. market.
- Activision held $6 billion in net cash as of October 2021, prompting industry speculation regarding potential acquisition strategies for the company.
- A survey of industry professionals indicates that the majority believe Amazon’s PC Games Store will capture less than 10% of the market share within five years.
Game Industry Consolidation Report 2021
The global video game industry experienced a period of unprecedented consolidation between 2021 and 2022, characterized by a rapid increase in both the volume and total value of mergers, acquisitions, and private investments.
- The gaming industry experienced a massive surge in deal activity, with total transaction value rising from $71 billion across 844 deals in 2021 to $127 billion across 1,320 deals in 2022, a 78.8% year-over-year increase.
- M&A activity dominated the market in 2022, reaching a total value of $102.3 billion, driven primarily by Microsoft’s $68.9 billion bid for Activision Blizzard and Take-Two’s $12.7 billion acquisition of Zynga.
- The PC and console sector was the most active M&A segment in 2022, accounting for 83 transactions worth a combined $74.9 billion.
Apple’s Gaming Revenue Reportedly Exceeds That of Sony, Microsoft, and Nintendo Combined
Apple’s role as a dominant force in the gaming industry is underscored by its substantial revenue generation through the App Store, which significantly outpaces the earnings of traditional gaming platform holders.
- In fiscal 2019, Apple generated $8.5 billion in gaming revenue, exceeding the combined operating profits of Sony, Nintendo, Microsoft, and Activision for the same period.
- Mobile analytics firm Sensor Tower estimates Apple's 2019 App Store revenue was $15.9 billion, with 69% of that total derived from games.
- Apple does not officially track or disclose specific revenue figures or profitability metrics for games on the App Store.
Odd Future
This analysis examines the integration of non-fungible tokens (NFTs) and blockchain technology into the video game industry as of September 2021.
- The gaming industry is seeing a surge in venture capital investment into blockchain and NFT-based gaming, driven by speculation rather than proven benefits for player communities.
- NFT-based scarcity models, such as the 26-second sell-out of character skins in 'Blankos Block Party', prioritize speculative profit for early adopters and developers over equitable access for players.
- The 'play-to-earn' model risks gamifying labor and introducing the pressures of late-stage capitalism into gaming, potentially worsening existing industry trends toward repetitive, job-like grinding.
Amazon and Netflix Venture Further into Games: Battle Royale for the Streaming Giants
The convergence of streaming media and interactive entertainment is accelerating as major technology firms leverage established intellectual property to capture consumer attention.
- Amazon’s New World MMO reached over 700,000 concurrent players, marking a significant recovery after the failure of Crucible, which peaked at only 25,000 players.
- Netflix is pivoting from a video distributor to a provider of persistent online worlds by acquiring Night School Studio to focus on player-driven narratives based on its existing intellectual property.
- The gaming industry is facing increased regulatory and legal pressure, evidenced by Activision Blizzard’s $18 million workplace culture settlement and Roblox’s $200 million settlement with music publishers.
Crypto Is a Space Race: Buying into Something Better
The current state of the video game industry is characterized by a transition into a new cycle driven by blockchain technology and social-centric digital systems.
- Axie Infinity dominates the gaming NFT market, accounting for 83 percent of all game-related NFT volume with over $2 billion in total sales.
- Investor confidence in blockchain gaming remains high, evidenced by Dapper Labs raising $250 million at a $7.6 billion valuation and Sorare securing $680 million in funding.
- Wizards of the Coast demonstrates that legacy brands can thrive by leveraging evergreen IP like Dungeons & Dragons, reporting $816 million in revenue with high profit margins.
Behind the Curtain
The September 2021 industry analysis examines the implications of a major database leak from Nvidia’s GeForce Now service, which exposed numerous unannounced game titles.
- The Nvidia GeForce Now database leak revealed numerous unannounced game titles, prompting industry concerns regarding the impact of premature disclosures on development teams and marketing strategies.
- Developer 1047 Games, creator of the early-access title Splitgate, raised $100 million in its third funding round since May 2021, reaching a valuation of $1.5 billion.
- Activision Blizzard faces a new lawsuit from the Communications Workers of America, which accuses the publisher of engaging in worker intimidation and union-busting practices.
Leak: Half-Life 2 Remaster and God of War Mentioned on GeForce NOW Database
The provided text covers two distinct industry developments: a 2021 data leak from the GeForce NOW database and a 2023 expert analysis regarding the classification of cloud gaming in antitrust regulation.
- A 2021 leak from the GeForce NOW database exposed a list of unannounced or potential titles, including a Half-Life 2 remaster, God of War, Gears 6, XCOM 3, and various PlayStation exclusives.
- The leaked database entries, which also included titles like Helldivers 2 and Injustice 3, were described by industry observers as potentially including canceled projects or general internal tracking data rather than confirmed upcoming releases.
- Joost Rietveld, an associate professor at the UCL School of Management, formally argued to the UK’s Competition and Markets Authority (CMA) that cloud gaming should not be classified as a distinct market in antitrust investigations.
Activision Restores Its Logo in Call of Duty Marketing After Previously Omitting It
Activision recently reinstated its corporate logo in the marketing materials for Call of Duty: Vanguard, specifically within the reveal trailer for the game's multiplayer mode.
- The Italian antitrust regulator (AGCM) has launched an investigation into Activision Blizzard regarding potential consumer protection violations in 'Diablo Immortal' and 'Call of Duty: Mobile'.
- Regulators are scrutinizing the games for 'dark patterns' in UI design, specifically questioning the transparency of in-game currency costs and the use of notifications to pressure players into limited-time purchases.
- The investigation includes an assessment of parental control systems, with concerns that default settings may insufficiently protect minors from excessive spending, unlimited playtime, and unmonitored social interactions.
House of Crypto: The FTX Collapse and Impact on Web3 Gaming
The collapse of the cryptocurrency exchange FTX in late 2022 represents a significant setback for the burgeoning Web3 gaming sector.
- The collapse of FTX has jeopardized 148 active gaming projects on the Solana blockchain, which previously served as the preferred platform for 37 percent of crypto-gaming investors.
- FTX’s failure resulted in a valuation drop of over 50 percent for the SOL token, undermining the financial stability of the ecosystem it heavily supported.
- FTX’s aggressive gaming strategy included a $2 billion dedicated investment fund, the acquisition of Good Luck Games, and a record-breaking $210 million esports sponsorship deal with TSM.
Start Rolling for Initiative: Sobering Market Signals Trigger Video Game Industry Reality Check
The video game industry is currently undergoing a significant "reality check" as pandemic-era hypergrowth transitions into a period of market contraction.
- The video game industry is experiencing a global market contraction, with Newzoo revising its 2022 forecast from growth to a 4.3 percent decline and U.S. consumer spending falling 5 percent in 22Q3.
- The Chinese gaming market has recorded its first revenue drop in two decades, signaling a significant cooling in a previously high-growth region.
- Aggressive consolidation strategies are under pressure; The Embracer Group recently cut earnings forecasts and saw a 20 percent share price decline following a period of rapid, multi-billion dollar acquisitions.
Trust Nobody
The release of the Impostors game mode within Fortnite serves as a case study for the growing power imbalance in the video game industry.
- Epic Games released a new Fortnite mode called Impostors that is a direct clone of the game Among Us, which was developed by the small studio Innersloth without any prior collaboration or communication.
- The release of Impostors highlights a power imbalance in the industry where large corporations like Epic Games utilize their scale to replicate the successful mechanics of smaller, independent developers.
- People Can Fly reported that the game Outriders has yet to generate profit for the developer, despite publisher Square Enix reporting 3.5 million launch players and the title's inclusion on Game Pass.
