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#1: Homa Games to Pursue “Aggressive” Expansion Strategy

Homa Games, flush with its recent $50 million Series A funding, looks set to continue on their acquisition spree, with Jeff Cohen now leading the charge. According to the announcement by Homa Games, Jeff will be building up their M&A strategy and partnership efforts in both mobile gaming and Web3. Prior to this, Cohen was the VP of Strategy of Esports Entertainment Group - an Esports and online gambling company. In his time there, he presided over six acquisitions and multiple partnerships with traditional sports organizations.

Cohen’s appointment is another arrow in Homa Games’ bow as they embark on an aggressive expansion strategy to accomplish their mission, which in their CEO’s words is, “to be the de-facto platform for game developers to find ideas, iterate at a speed never heard of, and distribute their games to a large audience.” With such ambitious goals, it’s worthwhile to look at Homa Games’ current status, what recent moves they’ve made to realize their mission and what deals may be coming in the future.

As it stands, Homa Games are one of the smaller players in the Hypercasual space. This snapshot of downloads for Q1 2022 shows that there is still plenty of room for Homa Games to claw for their slice of the downloads market share pie.

So what can Homa Games do to compete against publishers like Voodoo? To be a successful hypercasual publisher, one needs to have a large funnel of game submissions, quick testing abilities to find potential hits from those submissions, the deal terms offered to various developers sending in their submissions, and finally the knowledge/ability to scale and optimize user acquisition to get the best ROAS (Return on Ad Spend). Let’s take a quick look at how well Homa Games is doing in these areas.

In terms of game submissions, we’ll have to make do with an approximation, as there is no publicly available data regarding the number of game submissions they receive. We’ll use the number of games they’ve released as a comparison point instead, which should roughly map out the number of game submissions they receive.

It is quite clear from the numbers below that Homa Games lags behind Voodoo in game releases, and therefore it is also highly likely that they do not receive the same volume of game submissions as Voodoo:

• Homa: 20 games released in the last 6 months
• Voodoo: 41 games released in the last 6 months

In terms of testing ability and UA knowledge, we can assume that they are generally at market parity, as they have been able to release hits in the past, such as Merge & Fight, and are still one of the top 10 hypercasual publishers in the market. Finally, it is slightly hard to comment on the quality of the game submissions themselves, and deal terms will play a role in that as well. But given how stigmatised this topic is in the hypercasual space and their current market position, we would consider it safe to assume that Homa Games sees it in their best interest to offer competitors comparable deal terms and is doing a good job in making that happen.

So what are they doing to improve and realize their mission? Since their Series A in October 2021, Homa Games appointed Ioana Hreninciuc, former CEO of GameAnalytics, as Chief Product Officer and acquired both Rising High Academy & Ducky Games.

• One of Hreniciuc’s key responsibilities is Homa Labs, their publishing platform.

  • One of the new tools she’ll be bringing on board is N-Testing - essentially, powered-up A/B testing - which will allow devs to quickly test many variations of creatives and even game mechanics.
  • Improving Homa Labs to allow devs to iterate faster will increase the number of games that get tested, which should result in the increase of games that get published.
  • Being able to test many variations of creatives is also key for finding the perfect one for scalable UA campaigns.

• Rising High Academy is an online training platform for hypercasual game developers.

  • This should help increase and improve their developer funnel so they’ll receive more game submissions of a higher quality.

• Ducky Games is a hypercasual game developer.

  • While this may not be directly related to their mission, this could be more of an acqui-hire, as Ducky Games was responsible for the development of Homa Games’ Craft Island, a moderately successful Arcade Idle game.

We can clearly see that Homa Games has taken steps to reduce their gap to the major players of hypercasual, but there will need to be more in order to succeed in their ambitious mission, as their competitors are certainly not standing still.

Here are just some of their rivals’ recent moves

• Voodoo invested in Teskin, a casual mobile game developer.
• Voodoo acquired Bidshake, a UA platform.
• Rollic have been on a hypercasual buying spree, with studios NanoTribe, Uncosoft, ByteTyper, Creasaur Entertainment and ZeroSum all being acquired since Rollic themselves were acquired by Zynga.
• AppLovin, parent company of publisher Lion Studios, acquired mobile ad platform MoPub.

Since it will continue to be hard for Homa Games to compete against the large publishers, this is where Cohen will be instrumental, as according to CEO Daniel Nathan, "His transactional and operational experience and analytical background as an analyst covering the gaming space will serve us well as we embark on our aggressive expansion strategy." So, what next steps could he take to bring the game to the bigger publishers? We’ve already seen moves to increase game submissions and speed up game testing, but the missing piece of the puzzle is further improving UA capabilities and potentially acqui-hiring more (and smaller) hypercasual game development studios. Further, Homa Games might have Web3 ambitions, but fortifying a hypercasual revenue foundation of increased scale first will be critical.

In this day and age, a $50 million war chest is not huge and may only enable Homa Games to “keep up with the joneses,” unless Cohen is able to make smart capital allocation plays so they can punch above their hypercasual weight class. In any case, the next year or two will be an interesting period for Homa Games, and the moves they make may very well determine if they grow to be one of the big players of hypercasual or they fall behind and get swallowed up.

#2: Anime-themed games generate 20% of worldwide revenue

A report released by Data.ai has revealed that anime-themed games generate 20% of worldwide revenue even while usage penetration remains low at less than 3%. Before we all drop what we’re doing to make anime games, let’s take a more detailed look at the numbers.

It’s important to note that Data.ai classifies anime-themed games based entirely on their art style. This means that an anime-themed game can encompass many different genres, including those that are not prevalent in the west such as Idol-training Simulators.

The first clarification to make is that impressive “20% share of worldwide revenue” stat. That split equates to $658 million of which 55% comes from Japan. Another 22% comes from China, HK, Taiwan and South Korea. This means that 77% of spend comes from a handful of countries which traditionally have been difficult to penetrate for western publishers.

The good news is that there has been considerable growth in both downloads and revenue of anime games in the West, led by the U.S, which actually spent $2.12 billion on anime games like Genshin Impact and My Hero Academia. This leads us to our next point that, while technically being termed as anime-themed games, the games that are popular are incredibly diverse in gameplay and genre, with differing tastes from region to region. In fact, as you can see in the image of consumer spend below, the only game that shows up in the 4 territories of China, Japan, the US and UK is Genshin Impact, which speaks more to the success of MiHoYo’s open-world RPG than the anime style itself.

Another point to consider is that the anime games that do become popular in the west are mainly games with an established IP like Dragon Ball, Pokemon, Fire Emblem and My Hero Academia (again, excluding Genshin Impact).

In summary, anime-themed games may seem like a great opportunity to diversify a portfolio with an audience of highly motivated players and spenders, but it is important to keep in mind that they over-index in territories that are difficult for western developers to crack, and that the games gaining popularity in the West are bolstered by their strong IP (original or otherwise).

Game Launch Radar

#1: Frostpunk: Beyond the Ice

• Publisher: Netease

• State: Regional Alpha-test
• Territories: Australia, New Zealand, Philippines
• Classification: Midcore - Strategy - 4X

• Quick thoughts:

  • This game is based off the popular PC survival strategy game Frostpunk by 11 bit studios.
  • It contains two modes: Endurance and Beyond the Ice. According to Netease, there are no microtransactions in Endurance Mode. Beyond the Ice, on the other hand, is the “regular experience” and will have microtransactions for cosmetics. See gameplay video here.
  • The PC version of the game was noted for having events with weighty choices and permanent repercussions that stemmed from your earlier decisions. It would have been a brave and risky choice to include such mechanics in a F2P game, as allowing players to fail for choices they make is likely to impact monetization. This may be why they have decided to split the game into two modes: Endurance Mode keeps the same high stakes as the PC game while the main mode, Beyond the Ice, has no game-overs and includes microtransactions

#2: Project Arrival

• Publisher: MMC Society

• State: Closed Beta (April 22 - May 2nd)
• Territories: Canada, UK
• Classification: Midcore - Shooter - 3rd Person Shooter

• Quick thoughts:

  • They’ve actually been running closed beta tests since August 2021. This is the first time they are running in a territory other than Canada.
  • In addition to the limited release in certain territories, they run an interesting “Game Experiencer” system to allow players out of the beta-test regions to experience the game. Application forms are sent through their Discord and a list of successful applicants is posted. This grassroots method of building a community is a good way to build a pool of game evangelists who can spread global excitement and hype when the game finally launches.
  • Project Arrival features extremely high production values, as can be seen in this beta footage.

#3: Just Cause: Mobile

• Publisher: Square Enix

• State: Regional Early Access
• Territories: Singapore, Malaysia, Philippines, Thailand
• Classification: Midcore - Shooter - 3rd Person Shooter

• Quick thoughts:

  • Unlike its console and PC counterparts, the mobile version uses a top-down view instead of a 3rd person view, but keeps the iconic grapple hook, parachute and vehicle use.
  • It’s the first Just Cause to feature multiplayer and will have both co-op and PvP elements.
  • Just Cause follows the release of Hitman Sniper: The Shadows as Square Enix dig into their IP box in search for mobile success out of Japan. Unfortunately, Hitman Sniper has not been performing well since its November 2021 release, with low average ratings and downloads.
  • Square Enix have struggled to find success with their non-JRPG IP. They have not had a hit with any of their western-focused IP such as Hitman, Deus Ex, Lara Croft. From the current low ratings of Just Cause Mobile (with the caveat that it is still in early access), it unfortunately doesn’t look like the game that breaks that streak.

Other Game Announcements

• Front Mission, the beloved tactical RPG series, is coming to mobile. Square Enix have announced Front Mission 2089: Borderscape for iOS and Android, and it will be developed by Black Jack Studio.
• Apex Legends Mobile hit 10 million pre-registrations since opening it up globally on March 17th. EA unveils new reward tiers at 15 and 25 million pre-registrations. Link
• Rainbow Six Mobile, the recently announced Siege-inspired tactical shooter, is being developed by no less than 11 Ubisoft studios as well as Tencent. Link
• Echoes of Mana, a title from the same lineage as the classic JRPG Secret of Mana, is due to be released on the 27th of April. Link
• Torchlight Infinite, the mobile version of PC ARPG Torchlight, goes into an all-region closed beta test on the 25th of April. You’ll have to register on their TapTap game page to receive the beta download. Link
• Diablo Immortal will be released globally on the 2nd of June. Link
• EA Sports Tactical Football, an all new turn-based football game, opens for pre-registration. Link

Company Announcements

• Lilith Games, makers of AFK Arena, announce the launch of its global publishing brand, Fairlight Games. Based in Singapore, it will be pursuing new game genres to offer fresh new experiences. Link

• Chris Roution, former Head Of Business Development of Skillz, joins Activision Blizzard King as Director of Mobile Partnerships. Link
• Yomi Games raises $2 million in a seed round to pursue mobile-first blockchain games and be the “Zynga of Crypto”. Link
• Tempr raises $5 million for its AI-based user acquisition platform. Link
• Activision Blizzard announce disappointing Q1 results, with a substantial year-over-year decline of over $500 million. The only silver lining was the 8% increase in net booking of their mobile game studio King. Link
• Fusebox Games, creators of Love Island: The Game, are opening up a new studio in LA. It will be headed by Michael J. Cinquemani who was Lead Narrative Designer for Jam City’s Harry Potter: Hogwarts Mystery. Link

Ecosystem Announcements

• According to Drake Star’s Q1 2022 Game Industry Update, there were 28 mobile deals in M&A, which was more than other gaming segments. The deals were worth $12.7 billion and would have dwarfed the other segments if not for Microsoft’s $68 billion acquisition of Activision Blizzard. Link

• Mobile puzzle game players in the US spent $5 billion in April 2022, a 4.2% increase from 2021. Candy Crush Saga, Homescapes and Candy Crush Soda Saga took the top 3 positions. Link
• Four studios, including mobile racing game specialist Hutch Games, that moved to a four-day work week report their results. Link
• Netflix partners with East Side Games to release a premium version of their free-to-play title Dragon Up. Slated for release in May, Dragon Up is an idle game where players hatch and raise dragons. Link

Content Worth Consuming

• Prevent UI/UX F2P Dark Patterns to Gain Consumer Trust (PocketGamer.biz): “Concepts such as additional currencies, social media integration, and in-app purchases are not inherently bad, but when developers use tricks and dark patterns to steer players toward these features, this creates distrust and, ultimately, leads to frustration and a loss of player retention.” Link

• Quest Design and Mobile Gaming (Mastering Retention): “This week on Mastering Retention, Tom speaks with former World of Warcraft game designer, Kurt Sparkuhl (Lead Mobile Game Designer at Amazon Games), about the quest design process and making the switch from working on massive MMO’s to working on mobile gaming.” Link
• Bandai Namco’s new studio sounds almost too good to succeed - here’s why (Deconstructor of Fun): “What makes Bandai Namco’s Barcelona studio unique is that they are trying something different, when it comes to the way they make games. The game team in Barcelona is only 17 people. The team is split into four small groups working on different prototypes, ones they hope will become the next major mobile game IP. The team doesn’t have any hard deadlines, people to manage, presentations to make, or management meetings to worry about. And they work a four-day week.”
• How African giant Carry1st is spending its $20m raise (MobileGamer.biz): “This investment allows us to be aggressive and exploratory,” says Robbin-Coker. “We like casual and midcore games that replicate offline social experiences – so local card and board games and mobile-first sports are a big focus.” Link