Coda Payments Raises $690M

Hi Everyone. Our goal has always been to continue to find new ways to make you smarter about the business of games and while there’s plenty cooking behind the scenes, we’d also love to hear your feedback directly. That’s why we have a request — let us know how much you enjoy Naavik Digest using the scale below. Have any additional feedback? Feel free to hit reply and let us know your thoughts, we’d love to chat.

Crypto Corner: RSTLS — Digital Identity in Web3

In this week’s Crypto Corner episode, RSTLSS Founder and CEO Charli Cohen joins BITKRAFT Investor Faye Maidment and your host Nico Vereecke to discuss:

Identity & self-expression in Web3
Fashion in the Metaverse
Digital vs. Traditional Fashion

As always, you can find us on Spotify, Apple Podcasts, Google Podcasts, YouTube, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.

Check Out The Episode

How Coda Payments is Globalizing In-Game Purchasing

Modern games-as-a-service products increasingly need to operate on a global scale from day one in order to compete with incumbent chart-toppers. Global behemoths like Garena Free Fire have demonstrated the power of focusing on players in emerging markets, while regions such as Africa and the Indian subcontinent continue to onboard millions of new gamers each year as smartphones proliferate and disposable incomes rise. Yet operating at global scale – meeting players where they are through local payment providers and marketing channels – is incredibly challenging, even for the largest of publishers. That’s why last week’s news that Singapore-based Coda Payments raised $690M caught my attention. It’s worth diving into this company because of the potential they have as a payments infrastructure for games and for their wedge into mobile games (and beyond), enabling them to reach millions of players instantly and seamlessly through key partnerships.

In my experience in the games industry, I know that developing the relationships and infrastructure required to support hundreds of different payment providers worldwide can be messy and time-consuming. Many players’ preferred payment options aren’t available through traditional app stores (e.g. CashApp, e-wallets, cash payments, etc.). In many regions, these players often lack credit cards or traditional bank accounts.

Coda Payments helps to connect publishers to these players by aggregating access to hundreds of payment channels across more than 30 countries through its suite of payment products. These are solutions that larger, legacy companies may have built in-house but that can enable smaller companies to move faster and more nimbly:

Codashop — an alternative app store that allows players to directly top up their accounts in a variety of well-known mobile and PC titles, such as Genshin Impact, PUBG Mobile, Valorant, Roblox, and more.
Codapay — a publisher-facing tool that enables companies to utilize Codashop’s same payment methods on their own websites.
Codacash — a closed-loop e-wallet that can be preloaded and linked to Codashop, giving players access to vouchers, cashback deals, and other promotions.
xShop — a means for publishers to connect their games to other “super app” platforms (e.g. Gojek, Shopee), extending their reach through Coda Payments’ distribution partners.

Because players are purchasing content through Codashop (and outside of the major app stores), game publishers are able to avoid Google’s and Apple’s 30% fees. Codashop connects directly with a game’s API for instant delivery of virtual currency, charging 15% for doing so. Relatedly, and perhaps one of the most significant points in my opinion, is that Coda operates within the flow of funds of a games business in a way that no other company has access. This gives them an opportunity to capitalize on a data play to invest in companies that hit certain milestones, build out a line of credit product on predictable revenue streams, and develop an analytics suite. There are so many other upsell opportunities that lend this company an upside case.

As the walled gardens of established platforms begin to crack, services like these will be in greater demand across the increasingly global games industry. Not only does this allow players to utilize hundreds of convenient local payment providers (including options like Venmo and CashApp), but Coda Payments also simplifies the go-to-market process for game publishers, offering services like localized customer support and advice on tax and regulatory compliance.

Ultimately, the question for publishers considering this service will likely come down to whether the juice is worth the squeeze. Bringing more players into a game is great, but the opportunity costs of integrating and maintaining new SDKs in order to reach markets that are predominantly low ARPDAU in nature can be a difficult proposition for a development team that likely already has a backlog miles long. For smaller publishers, the tradeoffs may not be so palatable until they see international traction.

One thing that surprised me in researching Coda Payments was that none of the articles I came across covering this investment mentioned crypto or web3 gaming at all. Given the increasing financialization of games and game assets via NFTs and cryptocurrencies — particularly in Southeast Asia, where the company has a large presence — one would assume that creating onramps to connect players to web3-native games might be a priority.

While blockchain games are certainly not the primary focus of the business today (you’ll find no mention of cryptocurrency on the company’s homepage), the company has historically been early to web3. Coda Payments partnered with BitX to enable Bitcoin payments as early as 2015, and currently (as of Saturday, 4/16) has job openings for Product Managers to “explore new and arising opportunities and innovative integrations, including cryptocurrencies, NFTs and GameFi”.

Clearly, this is an area of interest for the company moving forward, and likely a growth category in the global gaming infrastructure space. We have already seen some of Coda Payments’ games industry competitors like Xsolla explore similar cryptocurrency integrations. Furthermore, emerging web3 games infrastructure companies such as Forte and Fractal will undoubtedly present future challenges in the payments sphere. Finally, we haven’t even mentioned all of the non-gaming payments companies piling into web3 (Stripe, PayPal, and Block, to name just a few noteworthy firms). Web3 payments is an increasingly crowded space for both gaming and non-gaming ventures alike, so Coda Payments is fortunate to have a profitable, growing web2 business to sustain it in the long term while it tests the waters of blockchain gaming.

I expect we will continue to hear more from this company in the future as it relates to potential exit activities. Bloomberg had previously reported in November that Coda was “working with Goldman Sachs Group Inc. on a strategic review of options including a potential sale of the business, an initial public offering and a private round”. At the time, the company was said to be targeting a valuation of at least $4B, which is quite a bit higher than the latest valuation (which has been variously reported as either $2.3B or $2.5B). For me, the big question lies in how Coda can evolve its strategy to meet these emerging markets, and to exploit a market opportunity (30% tax) and moment. Only time will tell if they are able to tap into that additional value, but I will certainly be keeping a close eye on this space in the coming months. (Written by Matt Dion)

📚 Content Worth Consuming

Strategies for Successful Studios ft. Miikka Ahonen (Masting Retention): "So, your new game has taken the world by storm? What do you do next? How do you maintain momentum and how do you replicate your previous success? This week on “Mastering Retention,” Miikka Ahonen Co-founder of Lightheart Entertainment, creator of Mr. Autofire, joins Tom to discuss building and running a company, building successful games, as well as strategies for release and, of course, retention.” Link

Raph Koster and Jon Radoff talk about the Metaverse, Online Worlds, MMOs and Virtual Societies (Building the Metaverse): "The inaugural fireside chat from Building the Metaverse, where I'll be speaking with thought-leaders, game-makers and metaverse-builders. Here, I spend over an hour with the legendary Raph Koster. Raph is a veteran game designer, entrepreneur and world builder. He was responsible for some of the most groundbreaking titles in online game history, from Ultima Online to Star Wars Galaxies to some of the earliest social network games. We talk about what the metaverse is, its origins, the future of virtual societies, distributed autonomous organizations (DAOs), interoperability and some of the key concepts that go all the way back to early multiuser dungeons (MUDs). We talk about Roblox, Minecraft, early virtual worlds like Second Life and everything in between... and do a bit of a slam against the "Ready Player One" version of the metaverse." Link

Seven Ways To Take Battle Passes To The Next Level (GameRefinery): “Battle passes have grown more and more popular since they started trending heavily in 2019, as different genres outside of first-person shooters with cosmetic monetization started implementing them. Nowadays, it’s a feature that you don’t only associate with the likes of PUBG and Fortnite. Battle passes can be found in everything from casual games like Project Makeover and Hay Day to midcore strategies and RPGs such as Rise of Kingdoms and Genshin Impact, and even in a large number of top-grossing sports & driving and casino games. Battle passes have quickly become one of the most differentiating features when comparing the top-grossing games to other mobile titles and can be almost seen as one of the core elements for a successful free-to-play title. In this post, we’ll quickly explore some high-level data and the benefits of the Battle Pass but focus primarily on more unique and innovative ways to tailor the feature for specific cases and make it even more engaging for your players.” Link

The 8-Year Process Behind Playdate’s Glorious Crank (Polygon): “Since the introduction of portable gaming, each new handheld has been designed to stand out from the crowd — which has often meant more power, but also unique features that some might consider gimmicks. The Microvision introduced swappable cartridges. The Game & Watch kept track of time. The Game Gear featured color visuals and drained six AA batteries in a matter of hours. And while impressive new features haven’t always resulted in outstanding sales, the world of handheld gaming has continued to leap forward with selling points like touch panels, microphones, and stereoscopic 3D effects. Prior to a few years ago, little did players know one of the strangest was yet to come.” Link