Top News

#1:  Supercell Removes Loot Boxes from Brawl Stars

Brawl Stars, a successful Supercell brawler game that is a mixture of MOBA and action, is officially ditching loot boxes. Given that the game has garnered over 355M downloads and $1.25B in revenue over the past four years, this may be surprising! Why is this big monetization change happening?

Let’s start with the basics. In Brawl Stars, loot boxes were known to players as Brawl Boxes, and they used to be the primary source of brawlers — heroes with different abilities and rarities that players used in the matches, one at a time. They were also a secondary source of power points (that players use to upgrade their brawlers) and coins (used for different purposes, including upgrading heroes). As illustrated below, with the removal of loot boxes, players now receive a higher quantity of coins and power points in places that were already sources of those. A new currency and system have been added for players to unlock brawlers. Additionally, power points that were once specific for each brawler are now universal.

Players now earn credits in the game, which are won in the Starr Road — another vector of progression in the game where players can unlock new brawlers. There is also some degree of choice about which brawlers to unlock first. In addition, while in the past players would spend hard currency (gems) for a chance to unlock a brawler in a loot box, now they can go and spend it directly on the brawler of their choice. The changes add a new layer of progression to the game, and players now have a bit more control over which characters they want to unlock. Also, with universal power points, they have much more control over which characters to upgrade.

With these changes, we expect players to spend less money on unlocking brawlers. Using the values from the previous version of the game, supplied by the game’s fandom, we estimate that the average cost of unlocking a legendary character by buying loot boxes was 7,200 gems, or around $400 (drop rate of 0.11%, 8 gems per box, $99 for 2,000 gems). After removing loot boxes in the game, it now costs players a maximum of 700 gems to buy a legendary brawler from the Starr Road feature — 10 times less than before!

Given that loot boxes are a proven monetization mechanic that worked for Brawl Stars previously — plus the fact that players are now likely to spend less money (and probably time) unlocking brawlers in the new update — why would Supercell make this huge change? Based on what we know so far, we are bit skeptical about whether the game will be able to keep monetization at the same level after the update, but let’s dig into what the reasoning may be.

Are Brawlers Critical to the Game’s Revenue?

The main selling point of brawl boxes was the possibility of earning brawlers. However, two aspects of Brawl Stars should make collecting characters less critical than in other titles. First, players only need one character for each match, and second, as a highly competitive game, there is a limit to how much perceived advantage rarer characters should have in the game. Players have a lower need (than in other games, like team-based gacha RPGs) to collect characters in the game, and they are most likely to stick with a specific set of brawlers with different skills for different battle types.

Changing the way players unlock brawlers in the game is not that bold of a move, and it is a bit similar to what League of Legends has been doing for years. In League of Legends, players spend soft currency to unlock most of the champions in the game, and it is quite easy to get the champion you want. The core of the monetization doesn’t lie in unlocking champions but in the customizations and skins of those champions.

In Brawl Stars, if unlocking characters is easier, not only will players have more characters available and be offered more skins, but they will be more likely to find a character that they care enough about to customize. If iterated on, brawler customizations could become a larger source of spend depth in the game.

Maybe loot boxes were not as valuable in Brawl Stars as in other games, but Supercell could have changed the rewards to skins, for instance, to make them more valuable. Still, it has chosen to remove them altogether. Why?

Is Supercell Preparing for Stricter Regulations?

Maybe there’s a simpler answer as to why Supercell is making this change — there’s been a rising tide of governments questioning loot boxes. A couple of countries, like the Netherlands and Belgium, have already prohibited loot boxes in some way, while others, like Australia and Finland, where Supercell’s HQ is, have recently proposed new restrictions.

Supercell is, of course, paying attention to changes in the market and might be trying to prepare for stricter rules ahead of time. If that’s the case, then implementing the change in Brawl Stars might be less risky than in Clash of Clans, which sees a bigger portion of revenue come from loot boxes, or Clash Royale, where loot boxes are currently key to monetization. It’s possible that the Finnish company could eventually apply the learnings from Brawl Stars to its other titles in the future.

So far, this move has attracted some positive attention to the game, with installs peaking at a level not seen since the start of the year.

However, as brawlers are now less costly, it remains to be seen whether Supercell can make up for any loss of revenue by increasing the purchasing of cosmetics, plus whether it can make up for the faster consumption of content by accelerating the production of new brawlers. Nevertheless, there is likely more to Supercell’s plan than what we know at the moment.

Furthermore, although developers might look at Brawl Stars' future performance as a guideline on whether to ditch loot boxes, we should remember that the role and importance of loot boxes here are very different from other titles in the market. As a result, it will take much more than just an improvement in Brawl Stars’ performance to make gacha RPGs, CCGs, or sports games want to change to another monetization strategy. The path to making it work in other segments will likely look very different.

#2: Playtika Lays Off 600 Employees and Shuts Down Three Games

Playtika recently reported that the company is reducing its staff by 15% (approximately 600 employees) and scrapping three games from its pipeline. With the workforce reduction, Playtika seems focused on consolidating its studios and cutting costs, as mentioned in a letter to employees: “We will begin achieving this by balancing teams and redeploying talent, winding down non-core initiatives, and consolidating studios for greater efficiency and a stronger focus on optimization.” The company has also moved the concept evaluation for new games to Wooga.

Playtika didn’t specify which titles were affected by the shutdown, but according to information from TechCrunch (backed by downloads data from data.ai), those games seem to be Ghost Detective, Dice Life, and Merge Stories.

This is yet another cost cut amid a not-so-great year for the company. As we’ve covered previously, Playtika’s stocks plunged earlier in the year, and due to slower organic growth and minimal positive results from its last acquisitions, 250 staff were fired in June and Seriously’s office was closed in October. Given the last quarterly report — continuing a trend of flat revenue growth and shrinking margins — it is also not surprising. Yes, those new games mentioned above never quite clicked, but Casino (the company’s largest revenue-driver) is the biggest culprit here, with a 10% YoY decline in Q3. With the company having a more maintenance-centered approach on its Casino portfolio, we expect to see the Tel Aviv office (Playtika’s Casino HQ) be impacted this time.

The most worrisome bit, though, concerns the shutdown of three games. If we add Switchcraft to this list, then it’s clear that Playtika has killed most, if not all, of the games that it has launched in the last couple of years. As we discussed in a previous issue, as Playtika’s high-revenue titles are relatively mature and are already leaders in their segments, the company’s best bet for growing organically lies in launching new titles. This makes the whole shutdown even more troublesome from a growth standpoint.

In order to keep growing organically, the company will have to squeeze monetization even more in its top-grossing titles, which could end up affecting retention and backfiring. Another alternative is to turn around some of its most recent acquisitions (Seriously and Reworks), although that is looking increasingly too risky, as shown by the revenue chart for Best Fiends and Redecor below.

Playtika can still try to grow inorganically through the acquisition of new studios. However, given its most recent financial difficulties, closure of studios, and its failure to secure a deal with Joffrey Capital, it is yet to be seen whether it will have the capital and the reputation to secure new complete acquisitions or if it's going to spread its capital through minor investments. Also, considering how poor the outcomes of its acquisitions have been — not just on value creation but on employees, new games, and company morale — it’s hard to say which studios would love to join the Playtika umbrella at this time.

All in all, Playtika’s most recent cost-cutting measures should help raise margins in the short-term. However, as Casino revenues keep declining, it is likely that in the long-term pressure on the company will continue to mount unless the core business reaccelerates or certain acquisitions surprise to the upside. Of course, this may not be the end of its saga of cuts.

With Playtika investing in initiatives to automatize operations, like Digital Studio, and recent acquisitions (like Rework’s Redecor) experiencing falling downloads and revenue, it is likely that management will have to take even more steps to set the right course. As always, we’ll keep you posted as more updates drop.

Game Launch Radar

#1: Omega Strikers

• Publisher: Odyssey Interactive
• State: Open Beta (Limited Time)
• Territories:  All territories
• Classification: Arcade

• Quick thoughts:

  • Omega Strikers is a 3v3 multiplayer arcade game with innovative gameplay.

    • Like Rocket League, the game merges soccer with another genre - in this case, action.
    • The sport aspects are very simplified, without any of the rules featured in a regular soccer game besides scoring goals.
    • There are characters with different abilities and special powers that players can use to not only score points in the game but also to attack opponents.
    • You can watch a video of the gameplay here.
    • The game also features cross-progression and will eventually feature crossplay in the PC version.
  • This is Odyssey Interactive’s first game. The company was founded by ex-Riot Games employees and received its series A funding in October.
  • Interestingly enough, the timing of the open beta during the World Cup could be beneficial to Omega Strikers.
  • Overall, Omega Strikers is pretty fun and features an innovative gameplay. However, the game feels more casual and arcade-like than the company might have intended, and it remains to be seen whether it will be able to monetize players with IAP or if it will depend on ads and a larger playerbase.

#2: The Price is Right: Bingo

• Publisher: Clipwire
• State: Hard Launch
• Territories: Worldwide
• Classification:  Casino, Bingo

• Quick thoughts:

  • The Price is Right: Bingo is Clipwire’s second bingo title. The first one, Bingo Story, became the 2nd largest app in bingo but later on succumbed to Bingo Blitz’s rise in market share.
  • The new bingo app builds on top of the IP partnership started with The Price is Right and Bingo Story in a recurrent event.
  • The app features all the must-haves of an F2P mobile bingo game: bet-up, collectibles, multiplayer, and live-ops.

  • It also brings up some nice touches such as:

    • An onboarding event with unlocking features progression (clearly inspired by Slotomania).
    • A virtual purchase offer for players to get one extra ball after the match is finished (similar to what Bingo Stories used to offer).
    • Launching a bingo game at a time when UA for casino is much more difficult, Bingo Blitz dominates the market, and Playtika is even more reliable on the app stores sounds very risky. However, given what we have seen in The Price is Right: Bingo, it is possible that the new game has reused technology and frameworks from Bingo Story and had a cheaper development. Additionally, the already existing IP partnership could also help mitigate problems in acquiring users with higher organic traffic.

Other Game Announcements

• Crash Bandicoot: On the Run will shut down in February. Link
• Niantic's NBA All-World will launch in 2023. Link
• Eversoul hits 1M pre-registrations in just two weeks. Link
• Vampire Survivors mobile passes 1M downloads in its first week. Link
• FIFA Mobile enjoys a 92% increase in downloads in Southeast Asia. Link
• Summoners War celebrates the festive season with a holiday update. Link
• Netmarble's Ni No Kuni: Cross Worlds sees a seasonal holiday update. Link
• Rogue Company official comes to mobile with Rogue Company: Elite. Link
• Revelation Mobile’s closed beta is confirmed for the Southeast Asia region. Link

Company Announcements

• My.Games is exiting Russia and restructuring its business. Link
• Hutch announced the implementation of a permanent four-day working week. Link
• Voodoo launches casual and midcore games publishing. Link
• Turkish studio Pink Games has a $1.2M valuation after its first investment. Link
• Take-Two’s Private Division marks its fifth anniversary with the unveiling of new development fund. Link
• Blizzard asks World of Warcraft players in China to download game data before its partnership with NetEase ends. Link
• Niantic planted 301K trees throughout 2022. Link
• Developer Jarvi Games raised $2M in seed funding round. Link

Ecosystem Announcements

• Apple is reportedly preparing to allow third-party app stores on the iPhone (with caveats, of course). Link
• Utomik Cloud comes to mobile with an Android release. Link
• China’s Cyberspace Administration plans to confront mobile app "chaos." Link
• Keywords acquires Labcom with an initial $1M cash consideration. Link
• 15 state attorney generals demand Apple and Google to change TikTok’s age rating. Link
• European Parliament calls for better consumer protections in gaming. Link
• German ratings agency USK issued warnings about loot boxes and chat features. Link
• Zynga's Virtual Diversity Platform encourages inclusivity in gaming. Link

Content Worth Consuming

• What genres should hyper-casual game developers pay attention to at the end of 2022 (Azur Games): “To start things off, we’ll first take a look at the situation with competition in general and then move on to individual genres that are popular with players in 2022 and what the developers are releasing in response to that.” Link
• Special Edition: Starting your own game studio (Mastering the Retention Podcast): “Founders of game studios who have "been there and done that" share their top secrets and tricks on how to start your own game studio.” Link
• Understanding Consumer Mobile Gaming Habits & Preferences (Loopme): “As mobile gaming continues to grow in popularity, with the number of gamers reaching 3.2 billion in 2021*, LoopMe is monitoring consumer sentiment in our UK, US, and SG pulse report. Using our proprietary research platform, LoopMe surveyed 5,468 consumers across the UK, 6,192 consumers across the US, and 6,680 consumers across Singapore from October 13th, 2022 to October 17th, 2022.” Link
• In a Privacy-Centric World, Creative is More Important Than Ever (Deconstructor of Fun): “With privacy becoming more important to mobile players and the prevalence of artificial intelligence (AI) in app advertising inventories, the quality of your creatives has never been more important to the success of your games. This was one of the key takeaways from our recent discussion with Sandro Gelashvili, Head of Creative Works at Google, and Rau Dosymbetov, Creative Producer at Nexters, on the Deconstructor of Fun podcast.” Link
• Loot box State of Play 2022: Regulatory and policy research developments (Gamesindustry.biz): “Regulatory and policy research developments that occurred in 2022 are summarized below alongside links to the original sources. These are categorized according to whether they are: a) substantive developments that have changed or highlighted the regulatory environment in a territory, and therefore potentially deserve immediate attention, or b) draft laws and proposed bills that might, but have not yet, become law, and therefore should be noted but do not yet require action.” Link
• Jumpstart your 2023 strategy planning with data.ai’s latest mobile predictions for the year ahead: (data.ai): “We’ve compiled our mobile forecasts for 2023 to help you navigate the mobile economy in the current macroeconomic climate and where leading indicators show it will evolve over the next year.” Link