Last Friday, Blizzard released the long anticipated mobile title of the Diablo franchise, Diablo Immortal. It marked Diablo’s first foray into the mobile space after significant delays and considerable backlash from franchise fans who were wary that a free-to-play mobile version of their favorite game would dilute the franchise with complex monetization tactics and tedious game progression. Despite the misalignment between Diablo’s core audience on PC and the mobile gaming audience, Diablo Immortal ranked #1 on Google Play and iOS US App Store over its first weekend and saw more than 4M downloads in its first 48 hours according to Sensor Tower. I was one of the fans who downloaded the game as I wanted to get a sense of what this “genre-defining” mobile game was all about and to better understand the headlines decrying the monetization mechanics.

In Diablo Immortal, your character’s power comes from the character’s level, equipment, and the legendary gems imbued in the equipment.

Leveling up is quick out of the gate, and players get in a rhythm of gaining new and more powerful abilities. That is until they hit an “XP-Wall” around level 35 that prevents the player from doing certain quests until they reach a certain level. Enter the Empowered Battle Pass, which at $4.99 for the month-long season gives you several level-up rewards that can help you move beyond the wall. This is how the game monetizes low spenders. The (giga)whale monetization comes in the form of legendary gems.

A character can equip six primary equipment (helmet, shield, etc.) with legendary gems that grant additional power. Each legendary gem is empowered in Elder Rifts using legendary crests and the rarest crests give you a chance at the rarest gems. Can you see where this is going?

You can grind for the occasional legendary crest, but you’ll be doing that for quite some time before you can use those crests to empower a gem, which is ultimately what sockets into your armor to grant you power. Instead of grinding for crests, you can purchase eternal orbs, the premium game currency, which can then be used to buy a loot box of crests. When you visit an Elder Rift, these crests can be used to empower the gems, and the gems are assigned anywhere from 1 to 5-star gems with the higher star gems being highly improbable.

It doesn’t stop there, though; you can socket gems inside of gems to increase their rank. Yes, you can put five five-star gems inside of a five-star gem. And if that wasn’t enough, not all gems are compatible with your character as the powers can be for character-specific skills. This has turned out to be particularly frustrating for those players absolutely determined to max out the power of their characters as quickly as possible.

Player backlash was inevitable

Early this week, a streamer on a quest to gain a 5-star legendary gem spent $10,000 on a live Twitch stream. Another Youtube gamer estimated that it would cost $500,000 to fully max out a character. Diablo Immortal was then review-bombed on Metacritic, receiving a 0.5 score, Blizzard’s lowest score ever. Much of this resentment appeared to be targeted at the amount of money you could spend before you had fully maximized the power of your character. To me, it misses the point that there is an upper limit to how much you could spend in microtransactions,

In my opinion, this backlash was inevitable. Core PC gamers are passionate about the games they love and they disdain pay-to-win monetization mechanics that they perceive to ruin the game experience. That disdain has been building for two years since the mobile title was announced and Diablo Immortal delivered on that unfortunate promise.

Pay-to-win mechanics might be the norm for mobile games, but for Diablo fans it was a clear offense by the publisher. The backlash that Blizzard has been experiencing over the past week is a testament to just how delicate game IP can be and how careful the owners of that IP need to be when chasing growth markets. With that said, I believe that Blizzard could have launched Diablo Immortal without upsetting their fans if they had simply avoided marketing the game directly to core fans — let’s explore Blizzard’s decision further.

Blizzard’s bet

In 2018, executive producer and Blizzard co-founder Allen Adham laid out the company’s goal for Diablo Immortal in an interview with Kotaku: “Our hope is that our existing hardcore fans will play this game and love it, learn new things about the lore, but engage with a similar kind of gameplay that they know and love…But then also bring in a new, broader audience that maybe likes action-RPGs but hasn’t experienced Diablo.”

Additionally, Kotaku reported around the time that Diablo Immortal was originally intended for China. My question is, if Blizzard was seeking to attract a new audience, and anticipated that their fan-base would not be pleased with the announcement, why did they still announce it at BlizzCon?

The obvious answer is they thought their existing fan-base could be further monetized in a F2P mobile experience. Less obvious, however, is that they needed the love of that fan-base to access the new players they wanted to attract. By building hype (or hate) with their existing community, they gave the game the marketing kick it needed, not least of which was landing it at the top of Google Play and iOS app store where new players would see the game and jump-in.

Is it paying off?

Diablo Immortal has grossed $10M in revenue in the first week, according to Sensor Tower, with the U.S. and South Korea making up almost two thirds of the total revenue at 40.2% and 21.6% of revenue respectively. It’s also worth noting that China, the original target market for the game, and other Asia-Pacific countries who according to analysts are more amenable to pay-to-win games, are not included. Diablo Immortal’s release for the region was delayed to June 23.

While it’s no Genshin Impact, raking in $60M in its first week, let’s put that $10 million Diablo Immortal revenue into context: We know Blizzard sold at least 30 million copies, and if we assume a conservative $20-$30 average sales price, that would put the game at $600-$900M in revenue. If Diablo Immortal’s net revenue trend line sustains over the coming weeks above $2M per day, it certainly starts to appear like a worthy pursuit. In order to do so, Blizzard/NetEase will need a strong live service to keep acquired players retained and spending over the weeks to come. We also don’t know Blizzard’s customer acquisition cost, but Blizzard’s relatively stoic stance may be the best indication that things are looking good. Furthermore, they likely want to see how revenue grows when the rest of Asia-Pacific gains access and how it sustains into the next month with whatever new content Season 2 brings.

So was it worth the brand risk? We won’t know for at least a few more weeks as to whether players continue to pour money into Diablo Immortal and what the Asia-Pacific market drives in revenue. Core fans hate it as expected, but receiving 4.6 stars and 74k reviews on the iOS store suggests that there is a large majority enjoying it. Furthermore, if this mobile launch introduces a whole new audience to the Diablo franchise, that could mean additional revenue from new-to-franchise players on Diablo IV, slated to release in 2023. If Blizzard can deliver a Diablo IV that players love, the distaste for Diablo Immortal can stay a distant memory for its fanbase. If Diablo IV doesn’t deliver, there will be hell to pay. (Written by David Taylor)

#2: Assessing Blockchain Gaming's Environmental Impact — and What Can Be Done About It Today

If you follow the crypto space even remotely, you may have seen one particular topic come up a lot in recent months: the environment. Though cryptocurrencies are no strangers to ecological controversy, the sudden rise of NFTs and the attempt of a number of gaming publishers to implement them inside their properties have brought new grist to the mill of the crypto-skeptic crowd.

Reports upon reports aim to remind us that crypto is following an environmentally worrying path. As the historical pioneer and the coin with the largest market cap today, Bitcoin remains the main culprit. In 2018, the network’s consumption was "roughly the same as Ireland's." In 2021, it was said to be around 91 terawatt-hours, more than is used by Finland. In 2022, it could reach 138 terawatt-hours, “more than a country like Norway.” You get the gist: Bitcoin is energy-intensive, and increasingly so. The global distribution of the industry complicates things even more, as the negligence of a few bad students undermines the efforts of a well-meaning majority.

Some of these concerns do have some weight to them. Critics often put forth the industry standard of “energy consumed per transaction,” a metric that would appear to put Bitcoin at a clear disadvantage (which we will evaluate later in the article) considering the relatively low number of transactions it’s able to handle despite its aggregate energy consumption.

Still, the outcry seems unwarranted. Last year, New York Digital Investment Group (NYDIG) compared Bitcoin’s energy consumption with that of other innovations and found it to be considerably lower. Overall, Bitcoin mining represents an estimated 0.1% of global carbon emissions and could still contribute to only 0.9% of emissions by 2030. As the World Economic Forum writes:

There has not been any sort of moral debate regarding the energy impact of household refrigeration or tumble driers, because they fulfill useful functions in our lives. The difference is that crypto has not yet become a socially-accepted tool performing an essential function [...] The majority of those who write or speak to the crypto-energy debate from a privileged market perspective are not users of this technology and do not understand its inherent purpose.

We tend to agree with this statement. Indeed, both Naavik and BITKRAFT have been proponents of blockchain technology and what it can bring to gaming, from enabling cross-IP interoperability to coordinating communities. As such, we’d like to showcase what are some of the most promising responses to the technology’s overblown environmental impact, including Proof of Stake, scaling solutions, greener energy sources, and offset partnerships. We believe that, combined, these solutions can do a lot to mitigate current concerns.

In Other News…

Funding & Acquisitions:

• In its latest string of investment(s), Saudi’s public investment fund acquired an 8% stake in Embracer Group for $1B. Link
• Solana Ventures announced a $100M specifically to invest in Korea. Link
• Tatsumeeko, a web3 game developer and maker of viral Discord bot Tastu.gg, raised a $7.5M seed round from a suite of investors. Link
• Ancient8 raised $6M in a round led by Makers Fund and C2 Ventures. Link
• Oxalis Games raised $4.5M from BLOCORE, Supercell (first web3 investment), and Animoca Brands. Link
• Turkey-based Cypher Games raised $3.2M. Link

Business: 

• China issued 60 new game licenses (but none for foreign titles). Link
• PlayVS no longer has exclusivity for high school LoL tournaments. Link
• Cloud Gaming is coming to Smart TVs. Link

Culture & Games: 

• Axios had a great roundup of ESA’s latest report. TLDR gaming hours and participation has net increased since the pandemic with slight declines in 2022. Link
• Frost Giant Games teased its debut game, Stormgate. Link
• Honor of Kings is getting a global release (despite the already localized Arena of Valor). Link
• Gala Games is launching a game on the Epic Game Store. Link
• Top 10 Steam Deck games by playtime. Link
• Netflix’s Geeked Week. Link

Miscellaneous Musings:  

• Everything announced about gaming at WWDC. Link
• It costs a lot of money to fully upgrade in Diablo Immortal. Link
• Some tips on Summer Game Fest showcases. Link

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• Soba Studios: Crypto Games Analyst Intern (Remote)
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