The Metacast by Naavik: Roundtable #35 - Roblox’s Results, 2021 Global Gaming Deals, Nintendo Direct

[Music] other phenomenal numbers to show 2021 roblox finish with almost 540 million in developer payouts to remind our audience developer payouts is the money that roblox pays developer for their share of the total revenue of the platform [Music] hello listeners welcome to the round table 35 of the metacast and today we're joined by yon raz friedman anton gorodeski and david amore welcome everyone today our topics are going to be about roblox earnings we're going to go through invest games gaming deals annual report and nintendo direct so

i don't know we can start with some introductions maybe anton you can go first oh wow um hi everyone it's a pleasure to finally uh be on the part again so i guess now that maria is the host i may hope to you know appear more often because nico's been not very like inviting lately so i'm just kidding yeah um yeah i'm the co-founder of invest game apart from other things um so yeah we're gonna talk a bit about our uh full year uh 2021 report so yeah happy to see everyone yeah good to see you too maybe next we can go on to david sure thanks to nice to be here with you maria we actually met up earlier in the week of pocketgamer a couple of days ago so i met you in real life before i met you here on the pod which is good but yeah my way background i'm a long time game maker i recently jumped into the world

of web 3 blockchain games having fun doing that good to be back first time i've been on the pod with john as well so that's nice yeah great to be here thanks for having me on the pod today maria and welcome to being a host of this wonderful podcast great to be here with anton again i think we did a podcast one time and then first time with david yeah feeling of neutral great to be here again i'm jan i'm uh founder and ceo of supersocial we're uh a developer and publisher of metaverse games and experiences initially focused on the roblox platform and and looking to expand to other platforms in the near future as well um and yeah great to be here again yeah there's even photo proof i was with david oh that's true and and this is now being recorded as video as well so that's we're sort of upping the stakes need to make sure that everyone does their hair on these podcasts and from now on i've embraced wearing bright colors to pop in video perfect

cool i think lemon we'll start talking about roblox um yesterday they reported their fourth quarter and the 2020 on 2021 fiscal year so um jan could you give us a summary of what the report contained yeah so i'll start with a bit of numbers first just in terms of what roblox accomplished in fourth quarter fiscal year full year 2021 and and the highlights of january and then there's a few kind of commentary points that i'd like to double down i have a few notes so i'll i'll and then we can you know jump into kind of an open conversation so just in terms of fourth quarter um roblox revenue increased 83 in the fourth quarter um to almost 570 million dollar um in in revenue which is 83 um over uh year-over-year growth on that quarter the net cash provided from their operating activities um in fourth quarter 122 million with free cash flow

at 77 million uh bookings increased in q4 20 over a year prior um average daily active users at 49.5 million which is an increase of 33 percent uh year over year um they finished fourth quarter with with 10.8 billion hours of engagement an increase of 28 year over year and an average booking per daily active user was and 57 cents so these are the fourth quarter numbers the full year 2021 highlights are revenue increased 108 from 2020 to 1.9 billion uh really incredible growth i mean basically double more than doubling net cash provided by operating activities of around 660 million dollars with free cash flow for the full year at 558 million bookings increased 45 percent uh from 2020 to 2.7 billion in full year 2021 the daily active users as as we said

they finished with 45.5 million which was an increase of 40 from 2020 hours engaged they finished with 41.4 billion which was an increase of 35 percent year-over-year and then the january matrix um showing again really solid growth revenue is going to be between 203 to 206 million dollar which is 65 uh growth year over year from january 2021 daily active users almost 55 million daily active users which is 32 increase from january 2021 so again really solid growth um and we're also seeing the bookings in between 220 million to 223 at a much higher smaller increase of two to three percent year over year um and so again kind of the big numbers that i want to highlight first of all in january they are showing almost 55 million daily active users uh which was a really fantastic increase double digit

increase from the year prior uh also other phenomenal numbers to show 2021 roblox finish with almost 540 million in developer payouts to remind our audience developer payouts is the money that roblox pays developer for their share of the total revenue on the platform that was above the 500 million that was sort of an initial estimate for 2021. uh what's really incredibly is that this is more than five times what roblox paid just two years before to developers and so you see the growth of booking you see the growth of revenue and that ultimately translates to uh the developer payout increase which crossed the half a billion for the first time what i also like to highlight is during 2021 there were almost 2 000 experiences and games on the platform that reached that generated more than one million hours of engagement in q4 2021

they had an average of 12 million monthly payers uh with almost 90 repurchase rate and so that's pretty incredible that's a really high repurchase rate for people who have purchased at least one time so this is also another highlight uh that i'd like to make you know we talked about the daily active users we talked about the hours engaged we talked about the booking um i think roblox have missed on the uh estimates that analysts have had in terms of top line revenue and the earnings per share which is why the the strike the share is declining this morning uh at over 20 percent uh uh decline of the price of the sh of the price of the share uh which is obviously disappointing for uh any shareholders of the company and of course for the company itself but as you listen to roblox they are very long-term company they're building something uh pretty significant with an insanely engaged community of users um and i've heard this morning dave bazuki the founder and ceo talks on cnbc uh outlining that

really the focus of the company is and continues to be user growth and engagement growth and i think on those two matrix the company continues to make uh headway uh but definitely in the short term they have a lot to prove in terms of uh the financial fundamentals that uh equity investors care about so these are the highlights that um you know we're seeing from the company this morning it's very hard to take in those numbers and how how can they achieve them how how do they go about doing this like what's what's the secret sauce look i think roblox is it's a marketplace right roblox it doesn't build content on their own there are over a million creators and developers that build content on the platform um and it's a completely sort of decentralized development model where people anyone can really build content so roblox relies on on sort of essentially a huge amount of a

community of developers that are building content for the platform that doesn't cost roblox any capital the capital the roblox invest is in the infrastructure in the tools and the cloud services uh etc etc and then on the other hand you have you know 50 plus million daily active users who are engaged at an average i think of something like two plus hours a day of a daily active user spending time of the platform you're probably talking about something more than anywhere between 35 to 45 days a year that people daily active users are spending time on the platform and so the short answer is they they've built an incredible marketplace for 3d games and experiences that are highly engaging for a large audience um globally not just north america but also in international markets um and i think that flywheel more developers means more more content more content more users

more users they invite their friends and so on and so forth i think where roblox needs to prove that they can grow is obviously have a sustainable growth of the revenue or the booking per per daily active user which i think is where a lot of equity investors want to see the continued growth and of course making sure that the international audience can start to monetize way more effectively you're still seeing a big portion of the revenue coming from the north american audience even though it's the smaller portion of the daily active users and so you know that relationship needs to really flip over time and as you all know international audience monetization is is not quite similar to north american audience who are traditionally spending a lot of money on digital products uh and so it's still uh to be seen how uh efficient and effective and scalable the monetization of international users is going to be in the next in the next you know 18 to 24 months uh

john i have a question what what do you think you're close to this world is any of these numbers surprising for you what what are the things that surprised you or surprised the market do you think i'm i'm not surprised actually i think what surprised the market is or not surprised the market is is the fact that you know revenue per booking per daily active users have declined but i think if you think about it it kind of makes it kind of makes sense right user users continue to grow you see more hours of engagement and i think the monetization in international markets is slower than the one in north america and so i think if you factor that international growth if you factor going beyond covid which was incredible accelerated growth if you factor the fact that the platform continued to grow with its daily active users in in really solid growth i mean you're talking about 25 to 30 percent user growth steel um i personally as someone who operates on the platform and keeping a close eye on the on the company i'm not surprised by

by those numbers and i believe that the most important thing to the company at the moment is continue to grow the user base you know they have an ambition of having a billion monthly active users um i think they're probably you know they they're probably at 250 million these are not official numbers but i would assume it's in the 200 to 300 monthly active users and so they want to grow two three four times that over the next few years uh it's really important to keep the eye on the ball which is user growth users will grow with more content that is coming in you want to monetize and incentivize the developers so they can keep producing more content and then i think i wouldn't expect to see um the revenue per the bookings for daily active users becoming the priority of the company at least for the next two to three years that's just my my hypothesis and do you think they're going to grow the users by um targeting more the international market well international market already comprises majority of the users on the

platform i think that the most recent numbers i've seen probably last year is that about 60 you know two-thirds of the audience of roblox today comes from international from non-north america um their biggest markets are brazil and philippines and thailand and russia um and and and i think that international growth will continue the thing is the international audience although it's about two-thirds of the audience of the platform they only account for about a third of the revenue so you have a third of the users come from north america that account for two-thirds of the revenue that needs to start being more balanced over time because the growth of the user in the north american market is slowing down naturally because roblox is already the dominant player when you talk about the younger demographics i do think it's strategic for roblox as well to continue and push for growing the audience of the of the platform in north america in the more older demographics but there you are competing against even more against youtube and tick tock and snapchat um and i haven't seen yet roblox doing

brand marketing uh at a scalable way to attract more people to come into the platform from off platform as you can imagine it's way more expensive to do that because you're competing against all these other social platforms and and gaming platforms and and so on and so forth so i do think international expansion is key especially when it comes to the monetization per user in international markets why do you think oh sorry anton go ahead no no you go sorry um it's okay why do you think the uh non-north american audience doesn't monetize as well what do you think needs to happen to for roblox to see the growth in in their monetization i i think it's a i think it's a great question uh you know first and foremost the international markets when it comes to digital products digital subscriptions spending spending money especially when it comes to young people there is a there is a cultural difference from north america if you look at it if you look at a market like the united kingdom if you look at the

asian markets if you look at brazil and russia the behavior with digital monetization is just very different than north america north america is the epicenter of digital spend um obviously i'm excluding china which is a whole different thing because roblox is not even really active there at the moment uh and china is definitely a country where monetization works and so i think there's just cultural differences i'm sure anton can talk to that to some extent on what it's like for you know under 18 year olds to monetize on digital subscription and digital products and app store monetization in a country like russia um but i think there are cultural differences and i think also i i think it's also about the content right i think it's important that roblox finds a way to encourage and build developer communities that are creating more and more and more content internationally as well because i think there's better chances for local content built for local audiences to potentially monetize better than

content built in north america for a international audience but i don't think that necessarily going to change the cultural differences when it comes to monetization in these countries and the difference between that and north america when it comes to young people spending money um if i may add that apart from cultural differences uh there's just this uh this thing which is uh you know economic sustainability and obviously the us uh and the thing that yon has been talking about that uh the us audience is better monetized comes directly from the fact that the us is just a rich country so um when you talk about expanding globally uh into countries like brazil russia philippines um of course there's lots and lots of uh young audience uh eager to play and to spend their free time there in roblox

or any other competitor but they just do not have money for that uh very often so the question i was about to ask is last year i heard that roblox was thinking about implementing some new monetization mechanics apart from the you know from the basic ones so are there any news on that like does that work already uh if they have already done that and well or they haven't so how are they exactly uh thinking about monetizing that new audience apart from like the basic stuff yeah i i am not aware of what tests the roblox might may have been doing internationally i think there is sort of um definitely on the developer side roblox introduced last year the premium payout the engagement revenue that is actually a pretty significant revenue stream for developers but that

has nothing to do with what the users actually that is directly correlated to the premium subscribers so the the engagement revenue is basically money that roblox makes from people that subscribe to the roblox premium offering so for example i have a premium subscription i pay five dollar a month on the roblox platform roblox takes that pool of money and distribute that in the form of engagement revenue or some of that in the form of engagement revenue for the developers and so i think one of the key things that roblox is focused on i'm certain strategically is increasing the subscriber pool on the platform and again i think anton to your point that still very much applies to the the richer countries right western europe uh north america um less i believe to the emerging economies or the economies developing economies like you know indonesia and philippines and thailand

and brazil uh where the purchase power of the consumer and the household is obviously uh much smaller than the average household in in a country like you know britain or or the us and so i do believe that engagement pay uh the premium subscription is an important strategic vertical of growth of revenue for roblox but i still do believe it applies more effectively to the richer countries to the developed countries um and also it applies more to aged up demographics right above 13. uh people at 15 17 they start to have their own phone their own wallet and are less dependent on their parents than a eight or nine or a ten year old and so to be completely honest i am not certain at this point what is the trajectory of how roblox really expand internationally but i do think there is a difference between a country like the uk and in a country like russia different economies different purchase

power so i do suspect that at least in the coming years roblox's revenue will continue to come primarily from the developed countries us canada uk western europe right places like france germany and so on and so forth and the lesser rev australia new zealand and the lesser revenue the smaller portion of revenue will come from the developing economies because i just think it's a it's just these countries are just not at the same place as the developed countries and their consumers are not there and it's going to take time um and and i think that definitely something roblox will likely need to introduce more revenue opportunities from their core demographics and their core audiences who come from the developed countries at least in the near future i was uh going to dig into that 500 million dollar payout to developers which sounds like a big number it's a big number but you said they were it's interesting first time i heard that number that there's 2 000 popular games

or i don't know quite how that's defined so that's 250 k dollars per uh game per year and in a sense considering there's 50 million people on that platform that feels quite low to me and i wonder whether or not the fact that even if roblox platform are deciding they care more about players than they do about monetization if you're building on that platform and hoping for monetization then that doesn't work for you particularly so it was 250k just doesn't uh if you're running a studio that just doesn't take you very far i know that's something you're deep in young but uh what do you think about that yeah no you're 100 right uh you know definitely that level of revenue is not compelling to a professional company that is coming into the platform it's great for a small developer or a small shop that you know have their own business uh it's definitely not compelling for a venture-backed company like super social that's not what's going to keep us and

allow us to continue and invest in the platform and obviously that's not why we came in uh you know we want to do much much bigger numbers i do believe that that's just the nature of the roblox platform at the moment it's primarily you know it's a younger audience the majority of the audience is under 18. um it doesn't monetize like mobile gaming uh or ios based games all the matrix are just much much much different there is big big volume of people big volume of time spent from the monetization it's it's a it's a it's a it's a less efficient way of making money but also the unit economic is different right to build an experience on the roblox platform in 3d you spend a fraction of the time in the cost of building it in in other platforms like ios or unity or unreal etc etc and so you know when you think about the unit economic of your business you need to take into account not only what revenue you can get as a developer uh but also what is the cost structure of actually building these experiences and you know you need to see how do you build a sustainable business

well what you meant you are venture backed and and so therefore what is your strategy is it too uh to oh how to index those though the other people making games there and just having experiences that are uh see more than 250k is it just by bringing more players or is it by monetizing those players better how do you approach that as a professional in the space yeah look our i mean you know i i will say this we are still figuring it out right we're 18 months on the platform and this is a really unique platform in terms of what type of games people like our goal is really to build the most iconic ip um and and build brand franchises not just game and then when you build a brand franchise you're able to monetize that beyond the revenue of the game itself um and you know we're already pursuing some initiative related to that strategy that i can't yet disclose but you know we came into the roblox platform not just

to build gains but also the belief that some of the most amazing brand franchises from the gaming sector uh can be born on a platform like roblox if you think about it you access an extraordinary amount of audience and users who are at a certain demographic and thinking about the possibility of revenue just from the narrow lens of the game is is not our approach and is in my mind not going to be sufficient unless you become a jagger and out of a game uh which is possible but obviously you know it's very hard to build game hits as you all know um if it happens it can generate astronomical revenue on the platform you have games on roblox that generate 10 15 20 million dollar and more a year in revenue it's a small fraction of the developer ecosystem on the platform uh i don't know the percentage but i wouldn't be surprised if 80 to 90 of the revenue on the platform is is is made by you know 10 to 20 of the developers that's pretty much what i

would expect um and so at the end of the day as a venture back company you know our goal is to build the most iconic ip and prove that we can build attractive compelling businesses on top of that ip to the to the point of yon uh roblox does seem like a way longer strategic thing and investment uh opposed to like the quarter or half like half year metrics i mean uh those guys uh the closest to the to the metaverse or whatever right uh to the thing that half of the digital entertainment is now like hyping about and uh it does seem like an investment to the five to ten to fifteen year future right so uh uh what what do you understand uh when john is talking about ips uh it does seem that

uh when you build on roblox you're not there for the like on the spot return on your investment you're playing the long shot game here because you're building some things that um the audience the kids mostly are interacting with uh for the long period of time and so they're gonna come back to it they're gonna get back to it later when they are more economically capable so again it seems like it's mostly about engagement and long-term ip rather than you know getting average revenue uh like the inc the increase of uh average revenue per user uh which you like do seek in mobile games for example and and i think it's really important for the for the company in the long term

to retain the users like one of the i think one of the key success factors in my mind for roblox is being able to retain the users as they age up so when they're 15 18 they don't leave the platform they stay in the platform and i think this is a big ambitious this is a big ambition i think it's possible uh but a lot needs to happen for that uh eventuality especially on the content front uh roblox become needing to become more of a avatar based social network that players want to continue and interact where they make friends and they stay on the platform but i do believe that roblox's long-term success really hinges also on their ability to not only monetize the international audience but also to retain the users that they have in the core countries uh that are being monetized especially in north america it's super critical that they retain that users we've talked on this podcast

at all about the fact that they talk about aging up i always think that's easy to say much harder to really do you know i think if if kids perceive a game as being something you do when you're kids then that's quite hard to reverse i guess on the other hand if you've got friends there particularly friends you don't know in real life and have connections then you know even if it is looked down and considered a little younger then maybe people stick with it i wonder i'd love to know some numbers about whether or not you know how much churn they're seeing and whether or not that increase in dau is new players or whether or not to retain players plus new players or you you know what the maths are of that but i guess we haven't seen that i would love to see those numbers as well i do not believe they publish those numbers but it's a great question uh david it's a great question it almost feels like a chicken in the egg situation where to capture a more mature audience they need different types of games on the platform but then because you don't have that audience

that type of game developer probably won't risk it to develop games on roblox do you think that's maybe why they're investing in creating these brand partnerships and bringing for for example mclaren racing and nfl into the game to attract attract a more mature player segment to the platform i i think these are good uh opportunities for driving awareness to the platform um i don't think that's what's going to keep people on the platform i don't think that an nfl experience is going to keep people on the platform i think it's a great awareness generator ultimately what's going to keep people on the platform i believe as they age up is just exceptional content exceptional games and exceptional opportunities for people to interact and socialize and experience things together on the platform and for that you need amazing content you know as super social as a developer and publisher of content on the platform you know we very much put a lot of focus on these aged up content um

i think roblox is putting a lot of focus on that and they recently launched the game fund which is basically uh provide grants for developers who build aged up content but you know these things take time it doesn't happen overnight and so it doesn't have to be i mean you're alluding into it but it doesn't have to be games right so content could be i'm thinking about fortnite that's doing any other grand uh gigs there that people are showing up for that well then to play the game and the experiences that people go to play fortnite can be pretty varied so i don't think content is really going to be just about games and maybe they do need to lead to lead with that stuff roblox themselves in order to wage it up to give people different reasons to hang out there well they do in their own way and by the way as a side note you know i don't look at super social as a gaming company i've never thought of super social as a gaming company you know we're a metaverse company we're building games and experiences for the metaverse

i think games and gaming will continue to be a dominant use case in in in platforms like roblox and others and i think that's okay um and and to your last point david yes i think roblox is doing things in that regard like the game fund like these brand partnerships but roblox doesn't develop content on their own all of these things that we're talking about these are experiences that ultimately are built by developers and i think that's the uniqueness of roblox um and why roblox is not a game company it's it's a platform it's a social platform revolving around 3d persistent virtual experiences a lot of it is games but i agree with you and this is why i'm so excited about roblox is doing alongside other companies is that they are building the infrastructure where all sorts of 3d persistent virtual experiences can take place uh fashion and music and sports and games and commerce and i think it will happen it will come to life over the next three to five years which is why again um

keeping a long-term view on what roblox is building and making sure that what's really important in my mind is user growth engagement retaining the users that are aging up and making sure that there is a diversified content portfolio that will help retain those users that will give roblox a better chance of not only monetizing but monetizing more sustainably i believe if you would ask roblox i suspect they would rather have retained users as they age up and then find more ways to monetize them as they age up then optimizing now to get as much money as possible from them while they're on the platform to me the the the former is kind of the more strategic undertaking there is oh sorry i just wanted to say that there

is though uh this maybe not threat but um this thing that if you want to retain your audience your younger audience uh and wait for them to get older and to still be on roblox uh especially if you want to build the metaverse in one way or another you have to provide a certain quality level of experience because the older audiences are more used to you know uh i'm not talking about quality production but anyway to more uh to to you know to those experiences that uh offer um better quality of gaming if we're talking about games or whatever so uh the older the gamer is he prefers to you know to play some other games like call of duty whatever battlefield right

um so if you want to retain users on a platform which roblox is uh you have to provide this level of production or even higher and to me the question is whether they will be able to do that just in time for those uh people who are now uh active on roblox uh to grow up and i also wanted to like ask you there's been recently some news about some you know not so uh no there was some nasty stuff happening on roblox so you have dropped the link earlier so i know this has probably nothing to do with the recent results uh but anyway is there any development on that like maybe some news uh of what roblox is going to do with that well look i think there is a wide issue with regards to internet safety for kids and young people on the internet i don't think it's an exclusive

problem to show looks and so but yes i think the news that came out is obviously disturbing and none of us want to see these type of things happening obviously it's a small fraction it's a it's a fraction of of of what's the activity that is happening on the platform uh i i do know and uh that roblox puts a lot of effort and investment in in safety uh on the platform for kids and things like that are bound to happen i don't know how they're going to completely terminate those type of things from occurring again but again i think there is a bigger issue on how do we build safe digital environments for kids providing access to kids to the the beauty and the possibilities that the internet and technology enables but without putting them a potential harm and these are worrying cases and and uh i don't think it's reflected in it damaged roblox in any way in their results uh in the revenue or the share

price but nonetheless it's a wide internet issue in especially something that the metaverse these kind of large real-time 3d environments will need to address if it's roblox or others and in this case roblox and i think it's important to address it and i'm sure they they are um and so um and we're trying to contribute with the tiny way that we're able to contribute as a company yeah thank you yon so much for summarizing the numbers of the fourth quarter and and the fiscal year that was really interesting discussion um look forward to seeing what the first quarter of 2022 holds for for roblox i think we'll we'll move on to invest games annual report and anton is a co-founder of invest game so who better to talk about the summaries of their findings do you want to go ahead and sure sure i'm i'm just going to go and uh make it

like a shot as possible because we were already talking for quite some time and [Music] i know at least one person who's not a fan of that um anyway yeah we've just released the full year 2021 report uh uh in regards to like all the global gaming deals and that's the second annual report we did so the first one was back in 2020 um and one of the major findings of that is uh 2021 turned out to be another record smashing year for the for the industry we're all working uh with the close deals value surpassing 71 uh billion dollars which is more than a two times year-over-year growth uh and that 71 billion uh dollars happen across the amazing number of 937 deals so that's a 1.4 x year-over-year growth

so uh in 2020 we counted 673 deals so uh the numbers speak for themselves for itself and uh that's for the closed deal so these are the deals that has been announced and closed uh or just closed in 2021 and we also counted uh 30 deals which were announced but not yet closed uh in 2021 so they um add up uh somewhat 30 uh oh no sorry not 30. 30 deals uh uh add up 9.1 billion dollars so anton can i answer the question the uh sure so when you're talking about these investments are these all are these vcs and private equity that that's what you're counting so it's not bigger companies and it's not like activision investing in companies it's yeah the thing is that's interesting the thing is that that's the whole value of m a's vcs and uh public offerings

so and the the amazing thing about the industry about gaming is that january 2022 uh has already like smashed that value because the atvi and uh microsoft deal is as you all know 68 billion dollars with like some something uh add this up to take to nzinga deal and uh sony and bungie and we already the january of 2022 has already smashed the whole 2021 deal value so that's amazing but again it's not like you have this uh scale of the deal every time right no there can't be that many but so you're saying in 2020 what was it there were their amounts you said uh there were 663 deals and the total value was um so if it's a 2.1 x growth from 71 it was something like

30 something billion dollar thing right right so you can imagine it doubling again in 2022 for sure for sure at least doubly right yeah yeah yeah i mean the market is going crazy and the market there is so much free money and uh there is so much growth uh in gaming and obviously uh platforms like roblox add a lot to that because more and more people are getting engaged there uh uh into the experiences these platforms provide so we're not just talking about like mobile games or console games or pc games but again a lot has been contributed by blockchain and let me just uh check the stats but the funny thing is that uh uh so we divide all these deals into three major categories which is as i have already mentioned uh like exit activity m a's

uh public offerings like ipos and spax and vc uh and corporate private investments and so private investments they doubled in the deal value so 2021 saw 12 billion dollars uh of that 71 uh figure that i mentioned and um uh one of the things that we have noticed in these uh private uh placement sector is that uh a lot has been contributed by the investments into the blockchain gaming so the segment uh occupied 26 of that private investment right so we have 12 billion dollars invested uh by the vc funds by the corporates and so 3.1 billions of that value uh was put into blockchain gaming

ecosystem that's not only games but also like service providers like forte and um you know solana uh all those guys yeah so blockchain gaming had the absolute breakthrough and the total value blasted of 68 uh acts year over year so again just imagine we had 3.1 billion dollars in 2021 and only uh 46 million million dollars in 2020. well i've got a question i'm not debating you're not i'm not doubting your numbers anton you're a stand-up guy however how do you know about investments that don't get announced because i've had invest investors i haven't told you about so sure sure uh uh the thing about uh invest game report is that of course we track uh and we are very much open about it and you may read it uh in the you know in the appendix section of the report that of course we track

we try to track all the deals with the disclosed value so when we count the deals we count all the deals right all the deals that we uh that we have that are publicly available that are available through like capital iq and all the special tools you have for that uh but of course you cannot keep the value for all the deals right because lots of especially lots of corporate deals uh have no disclosed value so but that's just what we have to deal with so uh the actual numbers are of course bigger uh but again the major parts of the deals uh have disclosed values so it like it provides you uh quite um no quite a picture so you you you have more uh than enough to get the idea do you think we're going to continue to see the trend in blockchain investment

absolutely yeah yeah absolutely and one uh special thing about the report is that uh our dear friends from novik you might know them uh especially manu and aaron they ha they are providing uh special analysis of the blockchain blockchain gaming section the uh they've done it for the second time now so the first one was in back in the q1 q3 uh 2021 report and so uh it's a great uh analysis uh it's of course quite short so it's only like two slides of the report it's not as big as the you know special novic reports on the blockchain gaming but still um they do a great job of analyzing the you know the the sector uh the segment and um yeah they have some unique ideas on what exactly brought uh so much investors

attention to the segment and um you may find it uh in the report but i'll just say that um the major deals that have contributed to this amazing growth again 3.1 billion dollars of the disclosed value uh were you know provided uh by like forte's astronomical 910 million uh i believe it was two rounds in 2021 um yeah and also by uh you know sky mavis investments and mythical games 225 million and the sandbox raised additional uh 93 million dollars so the uh focus has shifted a lot i mean 26 of all the private placements uh i believe it speaks for itself so yeah i believe that we're gonna see uh way more investments in the blockchain section

this year but as has been uh greatly put by uh my new in the report back in the report is that 2022 is gonna be the year um of tempering expectations i love this expression by him so uh uh when 2021 was like the booming year i believe that 2022 will still see uh lots and lots of uh vc money and we have just discussed that before the we started recording the podcast but uh 2022 so way more vc funds which are solely concentrated on the blockchain section so i believe that's one of the yeah one of the things that tell us that blockchain is gonna be even gonna attract even more capital but again uh regulation uh game design and uh other issues are gonna

like maybe not stop but maybe influence in some way uh on the uh on the segment yeah i was going to say you can predict how much investment is going to go into games on the blockchain side this year by looking at the funds that have been set up so these are quite close to that world and they speak a lot with those vcs and the the amount of funds being set up exclusively for blockchain and their 100 200 500 million dollar funds that uh that have yet to invest in the game blockchain game sectors but that's the money they've taken is for that that's what they've told their lps so so you even if that hasn't happened yet then it seems uh given that they've taken that money and told people that's what they're going to be doing with it then assuming there's credible businesses to invest in then you're going to see that happen that's almost a certainty absolutely because of the funds that have been set up absolutely and talking about funds uh as i have just said um

so private investments saw uh uh like a double x growth in terms of the value right so it was 20 uh 12 billion dollars in 2021 against uh 5.9 billion dollars back in 2020. so uh we have the special rating of the top vcs and uh it's top 15 and so it's uh the number one place is always uh reserved for bitcraft uh ventures so i believe you guys know about the fund and uh well of course it's not reserved they deserve that uh and with their with with the number of deals and the number of lead deals they do and the uh the the deal value they provide uh and we have calculated that in 2021 all these vc funds they have raised nearly 900 million dollars right of new money to invest and i do not know uh to be honest how much of that money is

going to be spent directly to blockchain but i believe a significant part of that is going to be uh directed to the segment so yeah uh i totally agree with you and the number of funds and the the amount of money they raise definitely tells us that blockchain gaming is going to see even more investments yeah well i think it holds an exciting year ahead of us i can't wait to see what i wonder whether or not uh you know does that matter with the amount of people is the that great that growth that deal growth that you're describing does it correlate with the amount of people playing games so more people play games year one year you know two and a half three billion people but it is um increasing faster is it i think it's probably increasing faster than the amount of people that are getting into games so i just wonder whether that means is there correlation to the fact that people are spending more money in games because those deals are getting

bigger despite the fact that the quantity of people is not increasing at that rate is there any correlation there have you ever think about that all right that's uh first that's a very good observation and second uh i believe that at least partially that's definitely correlated right because gaming has been has got a lot of hype back in 2020 when the pandemic started and uh oh well 2021 showed that gaming was uh pandemic proof right uh is what they call it because uh one of the one of the industries one of the sectors that uh managed to not only uh get way more money in 2020 but also keep that money right uh lots of lots of major players managed to meet expectations in 2021 and so gaming turns out to be a very uh well not maybe very but a secure way to keep your money uh and to

you know to you know to increase the amount of money you you have um so yeah i'm not that sure that the growth the audience growth of the global gaming uh provides like way more money uh for the gaming companies because as we have discussed with roblox all these new audiences are uh very much uh they do appear in like the developing countries right right like india and uh there's been lots of news about india and africa recently and their investment what do you call it they investment climate uh and of course they have lots of people who are ready to play who want to play and they they are now starting to get uh devices and gadgets for gaming but that does not necessarily mean that they have money enough to you

know to continue boosting the the industry so uh back to your point i do think that the rise of the audience numbers partially influences the amount of money which is poured into the gaming industry but that's not the sole reason because obviously that's the investment for future that's uh the long shot the long shot uh game and uh i'm not like i do not think that uh all the vc funds and all the corporate players are expecting returns immediately yeah when i was reading through through the report what was going through my mind um i was thinking what does all this mean for people who work in the industry that don't directly aren't are not directly involved in these in these deals david you've been in the industry for for a long time i was wondering i do think we're going to see changes in behavior of what people expect from their salary

package so that they can benefit more when their company gets acquired um or has private investment well yeah i mean there's a correlation that i'd never seen i mean you would you would hope would you wouldn't you that the salary was it would increase with the line of the value of the industry but i don't think i i think well certainly it's a good business to be in um if you work in the industry i don't think that correlation between what people are seeing in their pay packet if they work in it versus how successful the industry is that's maybe not there uh i would say that it's allowed many more it's much employs that many more people uh i think uh there's certainly people that like the people everybody that works in the company that i run it sees some some equity in so when if there is an exit in in the future for our company then they would benefit from that and i can well imagine a scenario where the the money they receive from that

equity will end up being more than the salaries that they've taken in the time that they've worked here so i do think it can be real it has been in things i've done in the past um so i i suppose that's uh an exciting thing to think about if you're working at a company where you get to see some equity of that company yeah and to add to add to that i i i will probably say that uh again the you know all this influx of new money uh does not necessarily mean that like all the people who work there are gonna get paid more right because that's not exactly how you know the business side of it works uh but again uh some at least some part of that investment money is going to new startups right like to new studios that uh are emerging all over the place like where the the russian gaming industry has never seen so much money and so many new studios as in 2021 and 2020 and i believe this is uh the

same for like for other regions as well right like turkey finland uh so many new studios right so but again if you start up a new gaming studio whatever blockchain or not blockchain or mobile or pc whatever uh you start hiring and when you hire uh these new people it does not necessarily mean that they're gonna get paid more they're gonna they're gonna get paid uh uh like they're gonna have some market uh salary not exactly uh more than they did but there are some other benefits to it right and of course another thing that uh we've been witnessing recently is that more and more people inside big companies are starting to get uh concerned with the with the you know with the uh with the salaries and with the benefits they get and with the working

environment of the companies and we see way more news about strikes and all that um [Music] you know unions uh being organized in the industry and i actually believe that this hype around gaming and uh this investment capital that uh that as the industry has seen recently uh has indirectly influenced that as well because people are seeing all these uh new rounds of money and uh these quarterly reports by activision and electronic arts and take two and they are starting to ask themselves these questions right so they are they are thinking about improving the working environment and just today there was this news about ubisoft uh people like uh you know launching some initiative uh with a 200 days um yeah so i believe

there there is an indirect influence to that okay yeah that that makes a lot of sense i'm yeah i'm personally keen to see how how that impacts the future because i was speaking with a friend who worked at a company that was a gaming company that was acquired by microsoft a long time ago and she was saying that the first question going around when the news broke out was whether they could keep using their macbooks and then no one was able to concentrate for the rest of the day yes even small things like that can potentially impact the the productivity of the company and it's certainly an industry that's driven now because you're seeing an investment if if you get take investments from a venture capitalist then the nature of the that business is the that venture capitalist doesn't take any money along the way you know maybe a different kind of business if you run a shoe shop then you've invested in a shoe shop and you would

expect to see year one year some sort of dividend from that company that's not the way investment works in the games industry the only time that they see a return is when the company sells historically and so the whole thing is geared for sale so any any company that takes venture capital is expected to sell at some point later down the line and and i think you know to your point i think maria i think it'd be great to i'd like to think that every company is making sure that in that scenario when that happens then uh teams that have really made that happen uh remunerated accordingly certainly i would hope that somebody joining that company that says i'd imagine we're on this trajectory therefore what's in it for me when that day comes and and i i think it would be difficult to hire great people without being able to offer something that benefits from them them in that scenario well we're reaching the one hour mark so i don't think we're going to be able to

talk about nintendo direct because we had an excellent longer conversation about roblox but that you know the sad thing about that is all we've talked about in this podcast is numbers and you know the nintendo direct is pure joy from beginning to end just a beautiful set of games that are all about fun and we just like like a bunch of business people just talked about boring numbers what a shame did you watch nintendo doesn't deserve to be shoved into a 10 minute window at the end of the podcast that's a good way of putting it i suppose you know what were you going to say maria oh did you watch the the announcements were there any games that captured your your interest oh you know which one i mean there was no new zelda that was a shame i guess i like the look of kirby that seems like it's shaken up well shaping up well what else did i like there fire emblem i thought look solid oh advanced wars i love advanced wars and it seems like a good version of that on switch uh i mean there was just i i love you

know if you cut me i bleed nintendo and there's so many great games that they showed is like such a uh such a strong announcement to me are you guys like sorry are you guys like uh like long time nintendo fans or not because i just got my switch like last month so i'm a super newbie to that and uh to be quite honest i did not watch the latest nintendo direct and the only thing that i've played the two things that i've uh played in on new on nintendo is um uh this russian rpg which is called black book and i highly recommend it because it's uh it's been localized into english and it's a uh it's like the russian witcher but way way low budget but it's great it's a cod based rpg uh so you should try that out it's black book and another thing is uh the what what's that uh zoom game uh

about detectives what do you call it like the narrative based uh thing i'm gonna anton all the best games look here's my recommendation if you just bought a switch then start with nintendo first party and then uh specifically nintendo japan first party ncl and work your way up from there and you won't go far wrong and that will keep you busy for like 10 years i would think right it's called disco elysium this girl is them you should oh right yeah yeah yeah so i just these are the two games that i've played um yeah and of course i know about zelda and i know about mario and i know all about that but it just didn't happen yet and so when you're talking about nintendo direct and all those kirby and uh xenoblade and whatnot and i'm like yeah okay you're late to the party were there some highlights for you i love xenoblade chronicles for you how

it looked i unfortunately no longer have my switch because i got a playstation 5 and i couldn't i couldn't maintain my time but now i'm ah why did i sell it i should have kept it and then nintendo system there's always games yeah i know i'm just it's just me um i found kirby so adorable with the what was it called a mouthful mode or something like that like inhaling the traffic cones and the car i just couldn't get over it i squirmed it was too cute it's so fun yeah and look at this all light up you see our inner child comes out when we start to talk about these uh these great games from nintendo oh and out that's right you know there's some great games from a lot of people in there press conference yeah it was lovely to have you three on the on the podcast i think it was the first time you were all together yeah yeah very good uh nice to be here let's uh let's make sure let's mix up

some of these games topics in amongst the numbers because it's a sea of numbers i get lost sometimes so let's be sure to do that but great to get a lot of detail on it they're very big numbers as well to take in well if um oh sorry no i just want to say that uh if uh the next time uh i'm on the podcast uh it's it and it's not about the report another one then uh we maybe there may be less numbers david so hey let me give let me give you a plug and on where where would people get that report uh i believe the link is gonna be at the description but i can i've also dropped the link to the slack uh thing we have and i can send it to you directly if you want or i can just send you the pdf uh so to skip the all the registration thing yeah i mean for the for the listeners

is my point yeah the the link to the website will be in the show notes and the metacast is brought to you by navic and i know we didn't have time to talk about nintendo direct but if you want to talk about it you can join navic's discord we're there and we can continue the conversation then and please do let us know your your feedback you have my email in the show notes and i'd love to hear from you so i think we'll wrap up and thank you for joining look forward to talking to you next week thank you bye thank you guys [Music] you