The Weekly Meta #24

EA Play Reflections, Fortnite Breaks New Records, and Tencent's Top 25 Investments

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Hi everyone,

In case you missed last week’s newsletter, I announced that Abhimanyu Kumar is joining the Master the Meta team, and we’re looking to kickstart our community of contributors. Thank you to everyone who reached out! It’s also not too late to raise your hand. If you’re interested in sharing your insights through essays and want to join an exclusive contributor community, shoot me a message at aaronbush.co@gmail.com or DM me on Twitter

Now, let’s dive in...

📰 News

Humble Fight for Racial Injustice Bundle. If you missed out on Itch.io’s bundle last week, here’s another great opportunity. If you pay $30+, you get access to over $1,000 worth of games (like Baba is You, BioShock Remastered, and NBA 2K20). All proceeds are donated to the NAACP Legal Defense Fund, Race Forward, and The Bail Project. Link

EA Play. You can check out the full video of EA’s latest announcements below or skip straight to my top takeaways. In general, I thought the event was solid:

  • 7 EA games are coming to the Switch in the next 12 months. In other words, the Switch’s player base is officially large enough that “porting isn’t worth the resources” is no longer a valid excuse.

  • Several games — like Apex Legends, Titanfall 2, and Sims 4 — are also coming to Steam. Historically, EA sold its PC games through its proprietary Origin platform, but it must’ve decided that exposure to Steam’s massive user base (close to 100 million MAUs) is worth the cost of revenue sharing. I’m unsure if EA received special terms, but EA is pretty much all in on Steam now. Even EA Access, the company’s subscription service, is coming to Steam this Fall.

  • Apex Legends will finally support cross-play. This will be the standard soon enough.

  • New games teased: Star Wars: Squadrons (could this reignite flight combat esports?), a new Skate game, next-gen BioWare project (barely), next-gen Need for Speed game (barely), Rocket Arena, Lost in Random, and It Takes Two.

  • What didn’t appear: Dragon Quest, Mass Effect, Anthem, mobile news, EA Sports (other than tiny snippets), Battlefront, Battlefield, etc.

Pokemon Presents. Nintendo unveiled Pokemon Smile (a toothbrushing app… classic Nintendo move), Pokemon Cafe Mix (coming to Switch and mobile), Pokemon Snap (there’s a ton of pent up nostalgic demand for this one), and that mega-evolutions are coming to Pokemon Go.

Private market deals:

  • Epic is looking to sell a $750M stake at a $17B post-money valuation. Epic is perhaps the most ambitious gaming company out there, and its multi-pronged ambitions — storefront wars, publishing deals, new creative tools — take a lot of capital to scale up. According to VentureBeat, 2020 revenue and EBITDA is forecasted to be $5B and $1B, respectively, so Fortnite money is certainly propping up the company’s heavy spending/investing, but there’s no harm in padding the balance sheet a bit more. It’s also fair to wonder whether Epic will look to IPO in the next couple years. Link

  • Stillfront raises €113 million in directed share issue. Stillfront, which is based in Sweden, flies under the radar but has created significant value by rolling up different studios (like Storm8 earlier this year) that focus on “long lifecycle games.” With the company having more than tripled in size over the past year — plus having modest net debt — it makes sense that management would want to use this time as an opportunity to raise more capital, which will almost certainly be used for additional acquisitions (reflexivity in action). We’ll keep an eye on this one. Link

  • Admix raises a $7 million Series A. The company is building technology that enables advertisers to programmatically buy non-intrusive in-game ads (like billboards) through ad-buying platforms (and potentially bypass ad agencies). I have no opinion on the team’s capabilities, but just like how The Trade Desk is ushering in programmatic advertising across multiple mediums and geographies, the same is possible within games. Link

The FDA greenlights a therapeutic game for kids with ADHD. People have been talking about the mental benefits of video games for years, and this is the latest evolution. On one hand, it’s bizarre that certain games with potential mental health benefits need regulatory approval, but the company is now in a position where physicians can legally prescribe it (probably in the context of broader treatment plans) and insurers will increasingly pay for it. I don’t think this a huge, game-changing trend but it’s definitely interesting. Link

Fortnite’s “Device Event” breaks records. 12 million gamers participated (it was capped), but another 6.1 million watched on YouTube, and 2.3 million watched on Twitch. Fortnite may not generate the same level of public buzz it used to, but it’s still incredibly relevant.

NetEase is developing a 'Lord of the Rings' mobile strategy game for Warner Bros. Last week we learned that WB Games is likely for sale, so further licensing efforts shouldn’t come as a surprise. WB Games’ mobile efforts have improved over the years but aren’t perfect, so WB’s leaders probably view working with NetEase as a surer, lower cost bet. Assuming the game performs well, it’s a clear win for NetEase, which wishes to expand its non-China gaming revenues. It also adds to NetEase’s broader backlog of co-development games like Diablo Immortals. Expect WB to accelerate its licensing deals and for NetEase to keep scaling up its co-development efforts. Link

Supercell’s Brawl Stars had a great start in China. 4.8 million downloads and $17.5 million in revenue isn’t bad for a first week, and the launch is even stronger than Clash Royale’s, which went on to generate over $200 million from China alone. If it stays on this course, Brawl Stars will become Supercell’s next billion dollar hit. (Even so, the company remains a “victim” of its own success with revenues and cash flows well below its highs.) Link

Tencent is rumored to be considering merging Huya, Douyu, and Penguin Esports. I’ll comment more if something actually happens, but there’s a world in which this transaction makes a lot of sense. Huya and Douyu, in particular, frequently compete not just for eyeballs (demand) but for talent (supply), so combining forces would allow them to not only be more dominant but also more coordinated in their expansion efforts, which would reduce excess spending. Not sure if it would mean merging brands and platforms — likely not immediately, at least — but Tencent has a firm grip on the industry and can likely nudge things forward as it sees fit. A deal like this wouldn’t be great for Bilibili, another prominent (and Tencent-backed) ACG streaming platform, but we’ll wait for confirmation before speculating on any details. Link

A fun, semi-related stat: Tencent’s top 25 investments — a few of which are gaming related — are now worth over $100B (18% of Tencent’s market cap). Link

🖥 Content Worth Consuming

Why Andreessen Horowitz is investing in games. “Andrew Chen, a partner at Andreessen Horowitz, has a lot to do with the firm’s interest in games and consumer products. Along with games specialist Jonathan Lai, Chen and the partners at a16z have put money into such game startups as Singularity6, Forte, SandboxVR, Mainframe, Improbable, Elodie Games, and CodeCombat. Chen writes regularly about gaming and consumer trends, and he balances his enthusiasm for games with interests in the wider tech arena. I spoke with Chen about these trends and why he thinks gaming could be the source of some of the biggest venture returns in the future.” Link

Play like a girl: Key ways to engage one of Asia’s fastest growing gaming audiences. “Using our existing proprietary data and market models, we took a deep dive into Asia’s gaming market to explore the significant growth being driven by female gamers in key markets, which genres and platforms pique their interest, and what top development teams are doing to appeal to a more diverse user base.” Link

The LCS BROADCAST is Broken: Here's how to fix it.

Pandemic Pushes Brazil’s Esports Industry Forward. “Brazil is considered the new epicenter of the COVID-19 pandemic, according to the World Health Organization, and like in other countries, the stay-at-home order is driving a significant increase in the consumption of digital products and businesses, including the country’s esports market.” Link

How Tricia Sugita has reshaped FlyQuest as CEO. “Sugita has been CEO for FlyQuest for under six months. During that time she has spearheaded initiatives to fight climate change, transitioned the team to a new facility, and brought home the best finish for the League of Legends team in the organisation’s history. And she did it all while navigating a global pandemic.” Link

How indie studio Double Stallion partnered with Riot to make a League of Legends game. “Double Stallion is making its game as a third-party developer, working for Riot Forge, a new publishing arm of Riot Games. Riot Forge wants external developers to bring their own style and feel to the Riot universe. It is also a way to lift small game studios to greater prominence by getting them to work on one of the biggest franchises in the world.” Link

This is hilarious:

See you next week!

Aaron Bush (@aaronbush100)

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