Games That Made Us

[Music] headlines. I thought this was a little bit interesting. You know, okay, boomers, it's time to remember games from our childhood or for many of the listeners, games that they've only seen really, you know, funny memes about. So, four more games have been inducted into the World Video Game Hall of Fame. It's called the Strong National Museum of Play. They announced on Thursday Williams Electronics Defender, Rar's Golden Eye 007, ID Softwar's Quake, and Bandai's Tamagotchi. These are the four games that made it in. They were judged on four metrics: Icon status, longevity, geographical reach, and influence. I guess they started this in 2015. 49 games have been inducted to the Hall of Fame. Last year it was Asteroids, Mist, Resident Evil, Ultima, and Sim City. I was in the toy industry actually when the Tamagotchi came out. And I mean, it was such an incredible fad. And I think it was the game that actually created

the appointment mechanics. If you remember, you like had to go and get this thing and feed your little Tamagotchi or it would literally die and this whole thing that you bought would just be a waste. And so years and years after I was rushing home to harvest my strawberries in Farmville. So I don't know. I think this might have been the first one. Do you guys have a favorite among the bunch of Tamagotchis? No. Like of the group of the group. I mean Crest I think you were at EA as I was, you know, around the Golden Eye time when people were like, "Oh, Golden Eye." It's like all anyone could talk about at EA. Is there a favorite among the bunch for you guys? See, for me, like Golden Eye was definitely a marquee moment for the industry, but the game itself was [ __ ] hard. It was like it wasn't fun, right? It was like it was a shooter on console, but it was still like they didn't have the dual analog. For me personally, Quake has always been like the the de facto. That's what got me into shooters in the beginning. Yeah, obviously Doom, but then Quake was just

like that [ __ ] visceral like just insane like Twitch 101 706. I think it was 101 at the time I came around. That was an amazing game. It was the Brown game. Like I remember they was so brown and quite I think I love Sim City. I remember probably playing Sim City first on NES. I think that was Yeah. But the Resident Evil was another one. I remember being like [ __ ] like seven or eight year old. We were so afraid with my friend just playing like the two of us. We're like do a head shot. Do this and then when the dog comes through the window that kind of stuff. So there are definitely some memories around that. So yeah. Yeah. Yeah. Doom and Wolfenstein were my college buddies would do a lot of that and then I had friends you know that did land parties when I was in high school like it was really I don't know like all the way back and then you know like I had my little Apple 2 plus and I was like oo ooh look at wizardry. Hopefully wizardry will make it in there one day. All right so Mishka you want to take triple dot?

Chris can take it. He's uh Oh, all right. This deal is closed. Triple Dot has acquired Apploven's the entire mobile game business for 800 million bucks. They basically get 10 studios including Project Makeover, Hexasort, Wordscapes, and then obviously the Machine Zone stuff under the umbrella, a pending regulatory rule, but that should not be an issue. So, to reiterate my point here, again, I don't want to beat them up any more than I already have, is that this is a lot of company for Triple Dot to absorb. I mean, Triple Dot is a ad company that has games, right? Uh, this is 10 relatively large studios all over the [ __ ] world that do live ops and inapp purchases and things that Triple Dot does not do and they have no experience really managing. So strategically it makes sense if they want to scale up and justify their valuation as a company they need to get bigger and do actual inapp purchase stuff improve their margins and get you

know financially viable and financially this thing is a steal right like it's like I don't know 6 but you're going to talk about this 6 yeah 6x revenue which is a [ __ ] terrible multiple for mobile in general but this is a special circumstance so I don't think it's indicative of valuations And the critical part of this deal, as in any M&A deal, is [ __ ] execution, right? And this is not going to be easy. So, let's hope they pull it off. I mean, I'm sure we'll be covering it over time in terms of what it needs, what what happens with this asset. He's going to talk about the structure and stuff, which is really weird [ __ ] structure, too, right? So, yeah. Feels like this deal was done with, you know, somebody spit in their hand and did a handshake. This is this is a this is not out of Chris Petrovvic's M&A playbook. So this is I mean the deal terms as you said 0.6 revenue multiple. The eBida multiple was it like three and a half I think which is also observed because typical gaming

studio eB multiples is between four and six at the moment which is very low because if you consider subscription based app it's between 6 to 10 transactional adbased apps you know blanking anyways they're between four and seven and marketplace apps like gig economy Ubers there are like 6 to 10 revenue not even ebida so this is like the lowest possible valuation and then going back to these terms. It was originally 900 and then they gave another $100 million away, you know, between friends, who are we asking? And then two years ago, I was at an event at a banker event. So, and somebody was asking me, you think somebody would buy app like he was looking for buyers for this and who do you think could buy Apploavin's gaming portfolio? And I said, how much? I think I remember this correctly, but he said 2.6 billion. This was this was two years ago. But that foots, right? Two to two and a half times revenue, right? That makes

sense, you know. So, this is just trying to explain how dirt cheap this was. And then it's not that it's $800 million of cash. It's no that would be too much. It's well, give me 400 million in cash. Give me 150 now. And then promisory notes of 250 million sometimes. And then 400 million out of that I'll take in your shares because your valuation is now 2 billion. This was Chris. Oh my god. They're just giving this thing away. This exactly. This is We should have bought this. This is a testimony to what this actual asset was worth. They were trying to sell this for the last few years. So no one wanted it for good reason. It's so [ __ ] complicated. There's so many thing companies. There's so many studios. They're all over the world. It is not an easy thing to manage. Everybody looked at this is the thing, but no one wanted it, right? And so,

good luck, Triple Dot. Like, this is a [ __ ] hand grenade, you know? But, and on the best possible terms, right? It's still a hand grenade that they have to manage. So, I mean, it's going to be not it's not going to be easy. I remember back in the day when one game studio would come into EA and it was like oh my god it was like the it was like you know everyone's hair was on fire and like culture and it was so difficult to have that like merging and acquisition and now you've got I don't even know how many studios or like you said around the world and languages and cultures and 10 studios and I think it was um and 23 cities. Oh wow. Uh and and so this is like glue would have acquired EA. This is exact. You know what? We'll start doing HD games. Who cares? It's like how hard can it be? Because this is the same type of situation. So if we look at it from AppLoving side, of course it makes sense. They cleaned up their margin. And Jen, if you want to show the image that shows applo financials for their apps

and their advertising financial, it it really shows the story. So on the top you see the revenue from their app business which is like over 2 billion then it goes to 1.8 then it goes to 1.4 and it stays between 1.4 4 and 1.5 after 2023 and you know healthy ebidal of about 250 260 million hund00 million a year and then when you look at their advertising financials they're just booming. So every year massive growth and we're talking about a ebelf of almost three billion so they're essentially cleaning this away this asset that is kind of bringing the averages down and focusing on where they're getting their money from. And then if we're being like very positive and looking at from the triple dot perspective, there's two things that you're getting from here. So one is scale. So now they are have 25 million DAOU. That's a [ __ ] a lot. And um they got $2 billion in revenue. They got 2500 people. I don't remember how many

they had. I think they had a couple hundred in London, but yeah, there are 2500 right now. And 23 cities that they're operating from. So everything from Cypress to Shanghai to London to South. I'm getting an anxiety attack just thinking about this. I'm just like, "Oh my god." Can you imagine that? Like, you know, you know, C CEOs typically go and they show up at, you know, Phil Spencer went down the Blizzard and took his pictures. Can you imagine the world tour that has to happen of a leadership team to go welcome the new teams in? They just lost lost their two key execs, too, right? Oh, really? Look, I think Yeah. Yeah. I think this is it seems folly to me, but good luck, you know. [Music]