Welcome to Master the Meta, the #1 newsletter about the business of video games.
It was a relatively light news week, and we have no major updates. Hopefully you’re all having a wonderful December so far!
Now, here’s your weekly roundup and analysis of what’s happening in the video game industry…
#1: Rival Peak Showcases a New Type of Playing Experience
Rival Peak, created by Pipeworks Studios and Genvid Technologies, is a new type of social-first, cloud gaming experience that’s currently running on Facebook. In a Telltale Games meets Survivor narrative, 12 AI-driven contestants are living, working, and competing 24/7 over the course of 12 weeks. Over the 12 weeks, a narrative unfolds and contestants get voted off until there’s a single winner. What’s interesting is that viewers help collectively determine what the characters do and therefore how the contest ends. Almost everything that unfolds is based on audience engagement. In other words, the game provides a glimpse into what the future of cloud gaming may become.
Now, Rival Peak specifically may not become a huge hit. From what I can tell, engagement isn’t very strong, player retention will be tricky, and interaction is only possible via Facebook on desktop + Android mobile. We shall see, but whatever the case, Rival Peak is fascinating because it directionally points to what cloud gaming can become. As I’ve written previously, what makes cloud gaming interesting is less about playing the same games on new devices or slapping on traditional business models (although it all has a place). Instead, what makes cloud gaming most compelling is how it potentially unlocks entirely new types of playing experiences, especially those that enable massive audiences to collectively “play” together and affect how a game unfolds. Rival Peak is the first real, cloud-native example of this.
The technology behind this experience is also impressive. At its core, the experience is streamed through Facebook’s Instant Games platform, and all AI instances occur in the same data center. Plus, Genvid’s “interactive streaming engine” helps provide multiple different in-game views (in this case 12 different views based on the 12 AI characters), and it allows developers to create new ways that audience interaction can impact the game world. Read more here.
Over the long-term, it’s easy to envision how developers to could build tons of new types of interactive experiences. Communities can band together, viewers can help (or troll) their favorite streamers in competitions, and there’s possibilities no one has thought of yet. It doesn’t mean all other types of games are disrupted — not in the least — but the shift from passive viewing to active viewing is an exciting innovation. There’s significant room for improvement over time, but congrats to everyone behind Rival Peak for pushing the envelope on what’s possible.
#2: Bigger Games Joins the Race for the Next Candy Crush
Last week, Istanbul-based Bigger Games announced its $6 million raise, led by Index Ventures. The highly-competed casual puzzle genre — which represents roughly 10% of the mobile gaming market — continues to attract venture capital, as Bigger Games joins the race for the next big thing.
The casual puzzle market is certainly big and juicy at over $6 billion yearly revenues in in-app-purchases only (note: source numbers have the platform share deducted). Unsurprisingly, it's also the most fiercely competed area within mobile, dominated by the big incumbents Playrix (Gardenscapes), King (Candy Crush Saga), Peak (Toon Blast), and AppLovin (Matchington Mansion).
New entrants to the casual puzzle market will need to best not only the incumbent corporations, but also the several other startups aiming for the same goal. The core team of Bigger Games is from Peak, as is the core team of the fellow Istanbul company Dream Games. The competition does not stop at Turkish companies though. In fact, there's a clear pattern of ex-corporate puzzle veterans going for their own thing and raising sizable early-stage money for it:
Trailmix raised $4.2 million from Supercell in 2018. Trailmix's core team is ex-King.
Redemption Games raised $5 million from Supercell in 2018 and an undisclosed sum in strategic investment from AppLovin this year. The team has key members from Jam City (Cookie Jam).
Luau Games raised $3.8 million from Supercell in 2019. Luau's core team is ex-King.
Dream Games raised $7.5 million in 2019. The round was led by Makers Fund. Similarly to Bigger, Dream Games’ core team is ex-Peak.
To fully realize the upside in these investments, these five companies will need to deliver top notch games that rival the Candy Crushes and Toon Blasts of this world. That said, getting a high-quality game out of the door might not be enough. In order to scale up the user count and revenue for a casual puzzle game one needs both the kick-ass product and the well-oiled marketing machine that churns out ad creative fast and runs direct response campaigns at scale. As their competition is prepared to wait for 12+ months to get their money back from their marketing investment (thus pushing up advertising prices), companies competing in this genre need sizable amounts of capital to grow.
All in all, despite high barriers to scale, new competition in a classic genre such as casual puzzle is certainly welcome; any of these teams could be set to upset the bigwigs of puzzle games. Based on the impressive background of these teams, I for one look forward to the games they will put out. (written by Miikka Ahonen)
#3: Unreal Engine’s China Opportunity
Epic Games just unveiled its latest 2020 data for the Unreal Engine, and it’s looking great! Global user count surpassed 10 million, with US and China user counts coming in 1st and 2nd place. Here are some highlights from Chinese game media Youxiputao’s interview with Epic Games China:
Unreal Engine’s monthly active users in China more than doubled year-over-year. At the same time, the number of Chinese gaming clients using Unreal Engine grew by 280%, and mobile game customers skyrocketed 533%.
In the past, the Chinese gaming community was quite conservative with Unreal Engine. Just 3 years ago, successful use cases were sparse, especially in the mobile sector. However, since the release of Peacekeeper Elite (essentially China’s PUBG: Mobile) and other titles, demand from Chinese game companies has seen tremendous growth.
Top tier gaming companies in China understand Unreal Engine’s potential and are increasingly adopting the technology, and mid-size to smaller companies are now starting to give Unreal Engine a go. Although the majority Unreal Engine’s Chinese user base consists of large companies, smaller companies are driving a very significant portion of Unreal Engine’s new user growth.
Most of the large companies are primarily using Unreal Engine for mobile, while mid/small teams are more diverse across mobile, PC, and even console. A great example of this is Black Myth: Wukong, where the developer Game Science is a 30-person indie studio (indie by China standards).
Going forward, Epic Games China’s focus is to increase Unreal Engine’s influence and market share within the mobile gaming sector, as well as non-gaming sectors. Their goal is to double Unreal Engine’s monthly active users in China by the end of 2021.
Based on new data and this interview, Unreal Engine is having a record year in China and is positioned better than ever for the future. It seems that the Chinese game industry is looking to shed its past and enter into a new era of quality, creativity, and global growth. (written by Owen Soh)
🎮 In Other News…
Supercell’s Hay Day Pop is shutting down soon. The company continues to maintain a high bar. Link
Enad Global 7 (EG7) is acquiring Daybreak (behind H1Z1, EverQuest, etc.) for up to $300 million and Pirhana Games for up to $72.7 million. This is big for EG7, and it’s hard to grasp what the company’s broader strategy is. Link
Roblox has been given the all-clear to enter China. Link
Microsoft acquires esports events platform company Smash.gg. Link
GreenPark Sports raised $14 million to build out its virtual sports universe (integrations with the NBA and League of Legends are starting 2021). Link
Mod.io, which owns a cross-platform service that allows developers to launch their own modding communities, raised another $4 million. Link
Researcher predicts that in 2020, 6.4 million VR headsets will be sold, while the spend on VR content will reach $1.1 billion. Link
Activision sues Netflix for poaching former CFO. Link
Call of Duty has brought in $3 billion in net bookings over the past year. Link
🖥 Content Worth Consuming
Learnings from a decade of company building (MAG). “Every day around two million people in over 180 countries across the globe play one of our games. The road to get where we are now was far from obvious or easy, but it turned out that with great people a promising business can turn into a pretty great one. In this article I am sharing some of my thoughts on our journey through these first ten years of game development and company building. I hope you can find a few things to learn from or be inspired by in our story.“ Link
The Economics of Game Streaming. “In this episode of the MDM podcast, I speak with Stephen Ellis, the founder and CEO of Pipeline.gg, about the economics of game streaming and the future of the games streaming landscape.” Link
King president Humam Sakhnini addresses Candy Crush longevity, diversity and utilising Activision IP to bring Crash Bandicoot to mobile. “Everything has changed. If there's one thing that we can all agree on - after living through the torrid time that is 2020 - is that things will never be the same as they once were. There have been unprecedented shifts in the games industry with ripple effects that will undoubtedly be felt for decades to come. Every company far and wide has faced these challenges. For one of the biggest players, King Digital Entertainment, it has also been a year of transition. In August, chairman and long-time CEO Riccardo Zacconi decided to call it quits and leave the company after 17 memorable years. In fact, it's also been the first year that the company has yet to launch a new game since it started making games (debuting with Bubble Witch Saga in 2011), heavily relying on its Candy Crush, Farm Heroes, and Pet Rescue series.“ Link
How Microsoft Flight Simulator Recreated Our Entire Planet | Noclip Documentary. “We talk to Jorg Neumann (Microsoft) and Sebastian Wloch (Asobo) about the bleeding-edge technology that enabled them to recreate the digital twin of planet earth in the latest iteration of Microsoft Flight Simulator.“ Link
Playco charts a course to the billion-player mobile game. “Justin Waldron and Michael Carter lay out a plan to unite the audiences of the big social platforms around the same multiplayer games.“ Link (pairs well with our previous breakdown of Playco)
Thanks for reading, and see you next week! As always, if you have feedback let us know here.