April 27th, 2023: Market Updates

#1: Ten Square Games Shakes Up Strategy, Drops Titles, and Reduces Staff

Ten Square Games, the Polish game developer responsible for the hit title Fishing Clash, is experiencing some significant challenges of late. Last week, the company canceled two titles in development: Undead Clash, a PvE shooting game, and Fishing Master, an idle RPG title. This decision coincides with a broader restructuring of the business, including the termination of 120 staff members, which constitutes 25% of the workforce. In this update, we’ll delve deeper into the challenges facing Ten Square Games and discuss the future outlook of the company.

Ten Square Games’ Financial Struggles

The past year has proven difficult for Ten Square Games, with a 20.7% decrease in bookings from 2021 to 2022 (632 million PLN to 502 million PLN) and a drop in gross margin from 25.6% to 11.8%. The impact of this decline in revenue was most evident in Fishing Clash, which currently represents 70.9% of the company's bookings. The game's poor mid- and long-term retention have made it highly dependent on installs.

Unfortunately, Fishing Clash's niche segment (fishing sports simulation) has made it difficult to target users post-IDFA, leading to a decline in the quality of users acquired. The post-COVID drop in downloads and higher user acquisition costs in the past year have also contributed to the game's struggles, as you can see in the chart below.

The situation for newer games also appears bleak. The cancellations of Undead Clash and Fishing Master bring the total number of cancellations for Ten Square Games to four within the past year alone. In 2022, the company canceled Football Elite, an arcade sports title, and Magic District, an RPG title.

Higher user acquisition costs played a significant role in the cancellation of Football Elite and Undead Clash. According to Ten Square Games, both titles were still several months away from having the necessary features to achieve competitive KPIs within their respective segments, leading the company to halt development early.

Overall, Ten Square Games' situation echoes the challenges faced by Playtika and other free-to-play developers over the past year. The combination of decreased income from their cash cow due to user acquisition headwinds — as well as higher costs facing new game launches and an overall more challenging mobile gaming environment due to ATT and macroeconomic factors — leaves the studio with less room for error. This situation makes it particularly difficult for Ten Square Games to enter new markets and diversify its portfolio, exacerbating its dependence on Fishing Clash.

Future Outlook

In light of the current challenges, it is unsurprising then that Ten Square Games has chosen to restructure. The new approach will see the company being more selective in its future endeavors and doubling down on its efforts to strengthen its current portfolio, especially in its biggest titles (Fishing Clash and Hunting Clash).

Although growth potential for Hunting Clash is limited, as it is already the market leader in the smaller PvE shooting segment, there is space to improve for Fishing Clash. The game’s mid- and long-term retention, as demonstrated below, falls short when compared to industry benchmarks. Enhancing this aspect by adding skill-based mechanics to the extra casual gameplay or other PvP modes and events, would help reduce the game's heavy reliance on new installs.

Additionally, the company plans to scale Wings of Heroes, a promising team deathmatch game with a current RPD of $1.4. This figure is comparable to competitors' performance during similar launch periods.

However, Ten Square Games' path forward is not without obstacles. Revamping Fishing Clash, an aging title, may prove challenging, and the company may need to leverage the brand and overhaul gameplay to create a new and improved experience, a process that comes with its own set of unique challenges.

Furthermore, despite early positive results for Wings of Heroes, the game will face its own set of distinct challenges compared to competitors that launched earlier. High user acquisition costs and increased competition may make it difficult for the game to achieve long-term success.

The leadership situation at Ten Square Games also raises concerns. The recent departure of CEO Maciej Zużałek and the subsequent appointment of COO Adrzej Ilcuk as the new chief executive may not be enough to guarantee a much-needed change in direction and overall execution. Furthermore, the absence of a chief growth officer for several months now could hinder the company's ability to address its dire user acquisition issues.

All in all, Ten Square Games faces a challenging road ahead as it restructures its business and addresses its financial situation. The company's focus on improving its flagship titles and scaling Wings of Heroes may help regain stability and foster growth. However, overcoming the obstacles related to revamping an aging title, scaling a new game, and addressing leadership concerns will be crucial for Ten Square Games to survive and, hopefully, return to growth.

Game Launch Radar

#1: Motorsports Tour

Publisher: Tencent / Playsport Games
State: Soft Launch
Territories: Brazil
Classification: Driving — Arcade Driving
Quick thoughts:
- Motorsports Rival is a new title from Playsports Games that blends elements of Arcade Racing and Social Casual Casino games like Coin Master. While skill is crucial in most racing games, luck is the main driver behind the gameplay in Motorsports Rival.
  - From the beginning, players join a team and collaborate with teammates to secure a high position on the leaderboard. Races occur similarly to slot spins in Coin Master.
  - In each race, players compete against another player and use energy currency to draw three different cards. Depending on their luck, players can earn XP, progress on the race bar, or get a chance to overtake their opponent. Additionally, players can earn shields to block overtake attempts by opponents.
  - Winning a race rewards the player's team with points, contributing to their leaderboard standing during a specific season. The game heavily emphasizes social interaction, allowing players to gift teammates during the race.
- This bold approach aims to innovate within the Arcade Racing genre by incorporating gameplay elements of other successful genres. Considering the overlap between racing players and Coin Master players, which tend to skew male, the combination makes some sense.
  - However, the motivations behind both genres are vastly different. While both rely on players' competitive instincts, racing games typically focus on skill-based mechanics and card-building strategy, and players familiar with the genre won’t likely appreciate the lack of such in Motorsports Tour.

#2: Tetris World Tour

Publisher: Playstudios
State: Soft Launch
Territories: Philippines
Classification: Puzzle - Other Puzzle
Quick thoughts:
- Tetris World Tour represents another effort by Playstudios to integrate Tetris into the same realm as Match-3 and Blast games. The game draws significant inspiration from popular puzzle titles like Toon Blast and Royal Match. The primary gameplay, which you can watch here, is infused with obstacles, boosters, and power-ups.
- The game also includes a light decoration meta, akin to Royal Match, allowing players to use stars earned in Tetris puzzles to adorn the environment in the main menu. With a theme centered around world travel, players have the opportunity to embellish various global tourist attractions.
- Although the game is still in its early stages, there are indications of future features. One such feature resembles a postcard and may represent Playstudios' attempt to bring classic Casino album collections to the Puzzle genre.
- This is not Playstudios' first attempt at leveraging the gameplay of the Tetris title they acquired in 2021. In December, we covered another one of their games, Tetris Story. At that time, the title lacked a meta and any additional features, so it seems Tetris World Tour already represents a step forward in comparison to the prior entry.

Other Game Announcements

Rainbow Six Mobile announces second closed beta test starting from June 6th (Link)
Seven Six is NetEase’s new action RPG title for China (Link)
Racing Master is gearing up for another beta test in China starting next week (Link)
Watcher of Realms begins pre-registration on Android and iOS (Link)
Mystic Abyss: Lost Seas is open for pre-registrations on iOS (Link)
Tarisland, Tencent’s upcoming fantasy MMORPG is announced for Android and iOS (Link)
Omega Strikers unveils cinematic opening trailer ahead of global launch (Link)
Racing Master is gearing up for another beta test in China starting next week (Link)
Legally Blonde: The Game: MGM and PlaySide Studios bring April 2023 update (Link)
Torchlight: Infinite to launch globally this May 9, 2023 (Link)

Company Announcements

Epic Games snaps up Horizon Chase maker Aquiris (Link)
TreesPlease Games gets $8m in seed funding, reveals debut game Longleaf Valley (Link)
Ten Square Games nominates Andrzej Ilczuk as new CEO (Link)
My.Games to partner with Amazon and Google for Game Drive Program (Link)
NetDragon to merge and spin-off education business (Link)
Activision, ESL Faceit Group sign 2-year deal for Call of Duty: Mobile esports (Link)
My.Games will relaunch and rename Warface shooter after Russian exit (Link)
King, Seriously and Next veterans Cosmic Lounge land €4m in seed funding (Link)

Ecosystem Announcements

Google Play to open up alternative billing in UK by October — but it’ll keep most of its 30% (Link)
Facebook makes Messenger more alluring with games during your calls (Link)
Netflix underpins commitment to games but says 'no' to in-game ads in Q1 2023 investor call (Link)
CEO Mikkel Weider leaves Nordisk (Link)
China's game regulator approves 86 new games including Mobile Legends: Bang Bang (Link)
The top VC firm for Q1, Bitkraft Ventures, expands to Asia (Link)
Over-50s are top mobile players, but feel "overlooked" (Link)
PhonePe set to challenge Google Play’s market dominance in India (Link)

Content Worth Consuming

Monopoly Go: Pass 'go' Or Fall Flat? (Nikita Tolokonnikov): “The game's launch coincides with the recent announcement of Scopely being acquired by Savvy Games Group, part of the Saudi government's Public Investment Fund, for a whopping $4.9 billion. This makes it the 6th biggest gaming company acquisition (assuming the Microsoft & Activision Blizzard deal goes through). The questions on my mind are: Will Monopoly Go be another hit in Scopely's portfolio? Can Monopoly Go maintain its position on top of the grossing charts?” (Link)
2023 Casual Gaming Apps Report (Liftoff): “To get the best value from ad spend, gaming marketers need to meet their audience where they are. This year, in addition to our annual breakdown of cost and ad revenue benchmarks, Liftoff’s 2023 Casual Gaming Apps Report takes an inside look at which mobile gaming genres and subgenres are driving installs and the casual gaming trends that are making a splash.” (Link)
Ep 112: Understanding Player Needs (Mastering Retention): “In this episode of the Mastering Retention Podcast, host Tom Hammond speaks with Antanina Livingston, a product manager and liveops extraordinaire! Antanina shares her insights on how to approach feature and event planning, the importance of understanding player needs, and how to manage burnout in the liveops team. She also discusses the challenges of managing burnout and the importance of understanding different cultures and languages in the gaming industry.” (Link)
8 Must-haves before the post-IDFA Soft Launch (Matej Lancaric): “You must complete a few key steps before running ads for mobile app installs and tracking app installs, which takes some time. This should be kept in mind, and today we will discuss the „must haves“ that must be done before we start the first campaign. Let’s check the eight steps that need to be done before you launch a campaign on a specific network.” (Link)
The evolution of hyper-casual marketing in 2023 (Azur Games): “Earlier this year, Azur Games and Google Ads joined up to discuss the development and monetization of the popular hypercasual games model. During the meetup, Google’s industry manager Anatasia Selchuk gave a presentation focused on present and future marketing of hypercausal.” (Link)
Making the leap from 100 players to 10 million (Game Analytics): “Anime Dimensions had Roblox’s best-rated launch in the platform’s history. We spoke to the founder and key developer of Albatross Games to discover how they managed to make such a monumental leap in just 60 days.” (Link)
Live Service Layered Cake — Part II (IronSource Level Up): “Before we get into the nitty-gritty of the monetization design we need to take a look at some fundamental notions. Actually, I hate the term monetization. It is a neologism coined in the last twenty years in California. It is actually quite unclear to me why it was even introduced. What we are doing here is nothing but good old sales. User acquisition is about marketing. Monetization is about selling. There is no way of overstating this. Above all, monetization is about creating value for your players. It is about presenting this value to the player. (Link)