Level 87: Forests & Poetry
A colorful walk through video games' best nature
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💡 Industry Content
Epic’s Facelift: Earlier this week Epic Games unveiled MetaHumans — a cloud app for Epic’s Unreal Engine focused on creating fully realized digital humans. Early looks at the program seem promising - with diverse tools that allow for everything from body type to hair style. The prospect of a fully realized digital avatar that can be playable in any Unreal Engine game is incredibly exciting. Epic’s Chief Creative Officer, Donald Mustard, has already teased that the company has big plans in store for the tool in the coming years, so don’t be surprised if you hear Ready Player One comparisons in the near future. This is what happens when one company buys 3lateral and Cubic Motion. Link
EA + Glu: Electronic Arts announced that it will acquire Glu Mobile, an 800-person mobile gaming company, for $2.1B. The move comes as the latest step in what is quickly becoming an arms race for IP in gaming, with EA even noting in their press release that the acquisition effectively doubles the size of their mobile business. As companies like Riot and Roblox have shown, developers can maximize the returns on even a single successful title by building monetizable worlds on the backs of their own IP. Expect to see EA and other traditionally console-based developers continue to make moves via M&A in the coming months. Link
IDFA Talk: Mobile Dev Memo founder, Eric Seufert, has been a staunch critic and analyst on the coming IDFA changes for iOS 14. It’s still too early to decide how it will necessarily affect businesses that rely heavily on pinpoint advertisements, though. Facebook shut down its audience network recently, which will undoubtedly hit the top line in the near term (est. 5-7%). In particular, mobile games that rely heavily on quick and cheap customer acquisition will suffer, but Zynga is building out its own ad network and Roblox has its own 1st party advertisements in its marketplace. It’s unclear how (and if) others will adapt. Eric’s Interview with Stratechery’s Ben Thompson | Eric’s Thoughts via Deconstructor of Fun
I don’t think they face an existential threat, but they’re going to face challenges. I think they expect ATT to be rolled out in March. Two, I think a lot of advertisers are going to pull back, they’re going to pull back because a) performance is going to degrade, but b) there’s just uncertainty. So everyone’s advertising models need to be recalibrated and they’re just going to pull back and spend as they do that, I think it could be pretty dramatic. But, at the same time, Facebook’s growing still at a pretty incredible clip, so my sense is that the growth offsets and they said they expected that to sort of straight line out through 2021. So my sense is that the growth offsets the revenue pain and they still are net growing, but I think it will be a challenge — Eric
🎮 Fun & Games
Hackers on the Loose: For video game companies that operate build highly visible IP, cybersecurity should increasingly be a focus. Earlier this week, Cyberpunk 2077 developers CD Projekt Red were hit with a ransomware attack. The hack was accompanied by threats to release internal company HR records, investor documents, and source code for games like Witcher 3 and Cyberpunk if the company did not comply with demands in 48 hours. This comes as the latest event in what has become a string of bad days for the Projekt Red (crunch, bug fixes, etc.). Link
A Costly Ban: Re-Logic CEO Andrew Spinks took to Twitter to announce that he was pulling the plug on the Stadia port of his indie hit Terraria following a ban to his Google account and the company’s subsequent handling of the situation. Spinks noted that the account ban from Google included Terraria’s YouTube account and his personal mobile game library, which totaled nearly $4K in games. With Stadia already on its heels following last week’s announcement around the closure of it’s game studios, cancelling another third party title — that has already sold 30M copies worldwide — isn’t a good look Link
😎 Other Cool Reads
Forests & Poetry: There are a few creators who consistently put out essays, videos, and articles on gaming that are so complex, thoughtful, and interesting that we can’t help but be drawn to their content. Jacob Geller, most well known for his video on a decade-long-search surrounding an easter egg in the mid-2000s hit The Shadow of The Colossus, is definitely one of those creators. In his most recent video, Geller explores the intersection of Tang Dynasty poet Wang Wei and the thousands of ways forests have been depicted in gaming history. If you like long, thoughtful, and artistic gaming content, this is the video for you. Link
Roblox as Social: Julie Young’s M.O is writing deep dives about “Companies No One’s Ever Heard Of”. Except Roblox is one of those companies that everyone’s heard of but still flies under the radar. Julie dives into her explanation of how Roblox expands the TAM of gaming as a “social immersive experiences” company.
Probably the craziest stat from all of this: over half of all children in the United States have a Roblox account!!!! HALF!!!! This is absolutely insane to me. If you look at something like Twitter, for example, only 22% of all US adults use Twitter. When you consider how influential Twitter is in our lives, it gives you an idea of just how important Roblox is to Gen Alpha.
FaZe Clan’s Flywheel: This was an interesting breakdown of gamer culture as seen through and propagated through FaZe Clan. Link
Every time they draft in a new FaZe clan member, which happens through challenges and competitions, such as the recent FaZe5, what they’re looking is not just great gamers, but also those who have existing fan followings (you have to submit all social handles to enter, so they can check you out). Through bringing these new gamers into the fold, they also bring their fanbases into the FaZe orbit too. And once they’re in, the Clan machine goes to work, aggressively growing their new recruits audiences through cross-promotion, cash and content.
⚡ Quick Bytes
“Singtel customers in Singapore can now purchase bundles [5G] that include unlimited data for gameplay and extra in game content”. Link
Zynga crushed its earning expectations, logging 61% growth YoY with its highest ever cash flow position. Successful acquisitions are firing on all cylinders. Link
Bloomberg’s Jason Schreier reported that EA’s Anthem, a 2019 multiplayer title that launched to negative reviews, is receiving an overhaul. The fate of the game will be decided by EA’s executive team in the coming weeks. Link
In the latest anime IP turned video games, the new Demon Slayer game is coming to next-gen consoles and PC. Link
Axie Infinity had someone buy a digital plot of land for $1.5M in Ethereum. Property and identity is being accepted in digital forms. Link
Riot CEO Nico Laurent is under investigation for allegations of gender discrimination and sexual harassment against a previous executive assistant. Link
Venture firm Andreessen Horowitz is looking for a Business Development Partner to join it’s Gaming partnerships team. Link
😍 Our Current Favorites
Fawzi (@fawzitani) & Max (@MaxLowenthal)
Fawzi officially started his new job as a member of the investment team at Forerunner Ventures! Much of the reasoning behind his decision boils down to why we started The Pause Button in the first place: we wanted to spend our time learning more about the video game and interactive entertainment industry. Along with all the excitement and the new job comes a few changes to the newsletter — we’ll likely add a disclaimer or two, and a majority of the start-up related content will be covered by Max moving forward in order to avoid any potential conflicts of interest. We’re still working to figure out the specific nuances of how this may impact the newsletter, but rest assured that we’ll still be curating the best gaming content. If you have questions, concerns or feedback, feel free to reach out directly!
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