Engine

KRAFTON 1Q22 Investor Presentation

KRAFTON’s first-quarter 2022 investor presentation outlines a strategic transition toward a diversified, technology-driven gaming ecosystem while maintaining the core performance of its flagship PUBG intellectual property.

The Lost Ark Has Found Its Way

Lost Ark has established a significant footprint in the Western gaming market, securing 20 million registered users following its February 2022 launch.

• Lost Ark reached 20 million registered users in the Western market following its February 2022 launch.
• Amazon successfully established operational credibility in the MMO sector by removing aggressive pay-to-win mechanics and integrating the game with Twitch and Prime Gaming.
• Daily active users stabilized at 450,000 after an initial launch peak of 1.3 million, proving the viability of importing established Eastern titles to Western audiences.

TWIG #180 Epic Games makes metaverse and crypto moves

Epic Games is strategically pivoting Fortnite toward a user-generated content (UGC) model, positioning the platform as a dominant force in the evolving metaverse landscape.

• Half of all player engagement within Fortnite is now driven by user-generated content rather than Epic-developed assets.
• Epic Games is transitioning Fortnite from a battle royale title into a user-generated content platform to ensure long-term growth over the next decade.
• The upcoming release of the Unreal Editor for Fortnite will provide creators with professional-grade Unreal Engine tools to build complex, multiplayer experiences.

'Rocket League': Scaling for Free to Play

The transition of Rocket League to a free-to-play model necessitated a comprehensive architectural overhaul to accommodate a projected fivefold increase in player traffic.

• Psyonix successfully managed a 5x increase in concurrent player traffic for Rocket League's transition to free-to-play by utilizing accurate load projections and extensive iterative load testing.
• The team utilized Locust, a Python-based load testing framework running on Kubernetes, to simulate client traffic, though they noted that the framework required significant custom orchestration to ensure test accuracy.
• To address database bottlenecks, the team migrated from Google App Engine to Google Kubernetes Engine (GKE) and implemented ProxySQL to manage MySQL read-traffic scaling and dynamic query routing.

Mid-Year Consolidated Financial Report Q1 2022

PCF Group demonstrated robust financial growth during the first quarter of 2022, characterized by a 63% year-over-year increase in sales revenues to PLN 50.4 million and a 78% rise in net profit to PLN 13.9 million.

• PCF Group reported strong Q1 2022 growth with a 63% year-over-year increase in sales revenue to PLN 50.4 million and a 78% rise in net profit to PLN 13.9 million.
• The Work-for-Hire segment remains the company's primary financial driver, contributing PLN 12.88 million to the bottom line.
• As of March 31, 2022, the Group had not received royalties from the title Outriders because net proceeds had not yet recouped the publisher's initial production and distribution costs.

The Making of Genesis Noir with Evan Anthony and Jeremy Abel | 303

The development of Genesis Noir serves as a case study in transitioning from motion graphics and web design into the independent game industry.

• Marketing and promotional efforts should be integrated directly into the game engine workflow, as these activities can consume up to 50% of the total development cycle.
• Securing professional publishing partnerships is essential for managing the logistical complexities of console certification, localization, and multi-platform deployment.
• Independent developers can successfully transition from motion graphics to game development by leveraging vertical slices and detailed pitch decks to secure both crowdfunding and external funding.

Sony's Epic Strategy

Sony is strategically positioning itself at the intersection of interactive entertainment, film, and music through a series of high-profile investments, most notably a recent $1 billion funding round for Epic Games.

• Sony invested $1 billion in Epic Games, bringing its total stake to $1.45 billion and valuing the company at $31.5 billion to secure a 3% share.
• The partnership centers on integrating Sony’s intellectual property into Fortnite and leveraging Unreal Engine 5’s technical features, such as Lumens, Nanite, and MetaHumans, to improve production efficiency.
• Sony is shifting its business model from hardware-dependent sales to a service-based ecosystem, aiming to increase user lifetime value through a diversified portfolio of interrelated properties.

Separate Financial Statement of CD PROJEKT S.A. for 2021

CD PROJEKT S.A. experienced a period of significant financial contraction during the 2021 fiscal year, characterized by a sharp decline in performance compared to the record-setting results of 2020.

• CD PROJEKT S.A. reported a significant revenue decline to 692.2 million PLN in 2021, down from 1.88 billion PLN in 2020.
• Despite the revenue drop, the company remained profitable with a net profit of 240.1 million PLN, bolstered by IP BOX tax relief and 1.04 billion PLN in operating cash flow.
• The company maintains a strong financial position with 1.87 billion PLN in total equity, zero outstanding bank loans, and 345.8 million PLN in year-end cash and cash equivalents.

CD PROJEKT Group FY 2021 Earnings Presentation

The CD PROJEKT Group fiscal year 2021 earnings presentation outlines a period of significant internal restructuring and strategic realignment following the launch of Cyberpunk 2077.

• CD PROJEKT Group experienced a significant financial contraction in 2021, with sales revenues falling 58% to 888 million PLN and net profit declining 82% to 209 million PLN.
• The company implemented the 'RED 2.0' transformation, restructuring into independent, cross-functional teams capable of managing multiple concurrent AAA projects.
• Despite the earnings downturn, the company increased its liquid assets (cash, deposits, and bonds) by 32% year-over-year, ending 2021 with 1.15 billion PLN.

TWIG #175 Bored Ape Yacht Club raises $450M for an MMO 🤯

The global gaming industry is currently navigating a period of significant structural transition, marked by aggressive capital investment, technological shifts, and evolving operational models.

• Yuga Labs secured $450 million for a metaverse project, while FRVR raised $76 million for browser-based gaming, signaling continued investor appetite for large-scale digital ecosystems.
• The removal of IDFA and other tracking identifiers has rendered traditional mobile user acquisition methods ineffective, forcing developers to prioritize organic growth and broader market appeal to combat rising costs.
• Studios are facing significant operational challenges, with skepticism surrounding the ability of teams to manage complex MMO macroeconomics or successfully pivot to live-service models.

BreederDAO: The NFT Factory

BreederDAO functions as an industrial-scale manufacturer of non-fungible tokens (NFTs) designed to address supply-side constraints within the play-to-earn blockchain gaming sector.

• BreederDAO operates as a specialized 'NFT factory' that uses a proprietary 'Breeding & Crafting Optimization Engine' to supply high-utility in-game assets to play-to-earn guilds and players.
• The organization aims to scale its operations to support 5,000 guilds and over 10 million players by providing assets optimized for specific game metas and economies.
• The company utilizes a tech stack comprising market analytics, tokenomics data, and asset pricing models to automate the breeding and crafting process, which currently serves over 10 partner guilds.

Regarding SDGs/ESG FY2021

Koei Tecmo’s fiscal year 2021 strategy emphasizes a commitment to sustainable growth through a materiality matrix focused on environmental stewardship, social responsibility, and robust corporate governance.

• Koei Tecmo achieved a 23% increase in base salaries and maintained a low employee separation rate of 4.2% during FY2021.
• The company successfully transitioned to the Tokyo Stock Exchange Prime Market by utilizing Zero Coupon Convertible Bonds and a strategic tender offer to improve its tradable share ratio.
• Environmental initiatives, including the shift to electronic manuals and cloud-based infrastructure, resulted in the conservation of 49 tons of paper.