Hi everyone — welcome to another issue of Naavik Digest. If you missed our last one, be sure to check out our analysis of the future of Xbox Game Pass now that it looks likely the Activision Blizzard deal will close. 

In this issue, we’re discussing two major changes to the web3 gaming landscape: Google opening the doors to blockchain games on Android and Ripple scoring a victory in its legal fight with the SEC. We also have an in-depth game deconstruction of Bethesda and Alpha Dog Games’ Mighty Doom that analyzes what went wrong in the classic shooter franchise’s mobile debut. 

#1 Mighty DOOMed: How Doom’s Mobile Spinoff Misstepped

By Niek Tuerlings, Naavik Contributor 

Google Game Deconstruction
Source: Alpha Dog Games

This is a preview of a game deconstruction written by contributor Niek Tuerlings as part of Naavik’s Open Gaming Research Initiative. The full deconstruction can be read here.

Alpha Dog Games, a Nova Scotia-based game studio and subsidiary of ZeniMax Media, is the developer behind Mighty Doom, the only mobile-first rendition leveraging the famous DOOM IP, which turns 30 years old later this year. The title is Alpha Dog’s first game within the Bethesda and ZeniMax family — and therefore also within Microsoft, which acquired ZeniMax in 2020 at a time when $7.5 billion was still an “eye-watering” amount of money. But first, let’s discuss the history of one of gaming’s most iconic shooter franchises. 

The History of Doom

Let’s start off this short history lesson of Doom on mobile with a fun fact. Believe it or not, the first mobile iteration of Doom (as discovered a year ago) was an RPG built for cell phones that “might be old enough to vote if it were a person.” But as this game was never officially released, the first actual mobile Doom was a port of the original PC game, which has been available on iOS longer than data.ai exists, showing an interesting graph as the result:

Android players had little to no luck trying to play Doom on their phones for a long time. | Source: data.ai

The spike in 2019 can be attributed to Bethesda re-releasing a proper port as a 25thanniversary celebration with improved controls and framerate. It was also the first official Doom to be released on Android. With nearly 1 million downloads and a little north of $2 million in lifetime revenue (due to the premium price of €5.49), the Doom mobile port has shown that the franchise has remained at least a little bit alive. In the same vein, Doom II mobile was also released at the exact same time but shared only a quarter of its predecessor’s success.

A few months after these two ports were released, ZeniMax/Bethesda acquired the Canadian game studio Alpha Dog, a developer with 27 current employees on LinkedIn and a short yet interesting history.

Alpha Dog’s first indie title, Wraithborne, became one of the victims of Supercell turning the game industry upside down in 2012 with the release of Clash of Clans. After practically closing down the studio, Alpha Dog staged a miraculous revival by releasing their second game, Monstrocity Rampage, in early 2017. That game interestingly enough was adapted into a board game in 2019 and provided enough reason for Bethesda to acquire Alpha Dog for an undisclosed sum shortly after. Monstrosity Rampage has by now been removed from the app stores, but its core gameplay shows similarities with Clash of Clans. 

Google Metro City
Jurassic World / King Kong vibes galore. | Source: Alpha Dog Games on YouTube

After the acquisition, Alpha Dog finished their work on an Atari game called Ninja Golf, after which they started working on a new mobile game using the Doom IP. Fast-forward three years later to the release of Mighty Doom, in which downloads peaked at an impressive 4.5 million players on the game’s first day available on both mobile platforms. But Alpha Doh then failed to capitalize on this initial influx of players.

Google Graph2
Downloads since launch show the wrong kind of hockey stick. | Source: data.ai
Google Graph
Mighty Doom’s revenue curve since launch shows a clear downward trend as well. | Source: data.ai

Now, Alpha Dog is not the only party responsible for this turn of events. Neither Bethesda nor Microsoft have shown how to successfully scale mobile free-to-play games. When looking at Bethesda’s mobile products, it’s painfully obvious that the successful AAA publisher is far from adept at adopting a solid GaaS strategy.

Leveraging one of their most beloved franchises on PC and console, the company released The Elder Scrolls: Legends in 2017, with downloads and revenue graphs looking strikingly similar to Mighty Doom’s, resulting in 5.5 million lifetime downloads and $10 million in revenue, while Mighty Doom’s currently has accumulated 16.9 million downloads and $4.27 million in revenue. Another similar product with the same life cycle was The Elder Scrolls: Blades released in 2019.

Google Graph
2017’s Elder Scrolls Legends’ graph is not worth showing all the way until today. | Source: data.ai

Next to Doom and The Elder Scrolls, Bethesda’s last (but not least) IP is Fallout, which two years ago brought the total valuation for these three franchises to $7 billion. Fallout has by far seen the biggest mobile success of the group. 

Since Fallout Shelter was released in 2015, it has accrued over 80 million lifetime downloads and more than $100 million in revenue. But in theory, with the Sim Tower(1994)-inspired gameplay and the amount of hype it received after its surprise announcement at Bethesda’s 2015 E3 press conference, the game could potentially have performed even more if Bethesda would have adopted a different free-to-play monetization strategy. Whether this would have been a smart move, given the average PC gamer’s aversion to anything mobile & F2P, is a separate question.

Google Graph
2015’s Fallout Shelter started higher but doesn’t look very different. | Source: data.ai

Nowadays, it’s common to see countless games released each month that ultimately end up sputtering and eventually shutting down. So why spend extra attention on Mighty Doom’s specific case? There are three good reasons:

  1. It’s a high-profile game, from a well-known publisher, with an incredibly strong IP.
  2. In terms of core gameplay, graphics, and sound effects, Mighty Doom had the potential to become the strongest commercially viable top-down arcade shooter on mobile, but Alpha Dog has clearly not capitalized on this potential.
  3. It’s been a while since hybridcasual instigator Archero was released, and it’s still one of the most successful games in its genre. Looking at Mighty Doom —regardless of its lack of success— is a great way to more broadly examine what’s so difficult about replicating Archero’s success and the broader hybridcasual formula. 

In this deconstruction, we’ll make an example of the game by answering the following questions: What exactly has gone wrong in the process of scaling this high-potential product, andis Mighty Doom suffering from a poor audience fit on mobile(or is there more going on under the hood)? In doing so, we’ll shed light on the more general notion of porting notable non-mobile IPs to your “handy,” as they say here in Germany. And lastly, as you, dear reader, are used to, we’ll offer numerous game design takeaways throughout the piece to shed light on aspects of Mighty Doom that do happen to work well.

#2 Google Sees Mobile Blockchain Potential 

By Devin Becker, Naavik Contributor & Consultant

Google android
Source: Android Developer Blog

Earlier this month, Naavik published a deep dive on the state of mobile blockchain games in which the outlook was pessimistically buried in risk and uncertainty around platform and legal regulations. Just a few weeks later, the situation shifted positively in favor of game developers thanks to progress from Google and a court ruling involving crypto company Ripple and the U.S. Securities and Exchange Commission.

After a period of extended deliberation and feedback, Google finally unveiled its Play Store policy concerning NFTs and tokens, collectively termed "tokenized assets,” on the Android Developers Blog. Contrary to Apple, Google's primary focus in permitting blockchain apps on Android appears to be legal compliance rather than securing a share of all revenue. Google has also collaborated with companies like Mythical Games (the developer behind Blankos Block Party, NFL Rivals) and Reddit, both of whom are quoted in the blog post. It remains unclear whether other developers participated in the feedback Google solicited. However, the overall policy decisions do not seem biased toward Mythical or Reddit and instead appear to favor all web3 developers. 

Google structured its policy with the purpose of fostering innovation while ensuring user protection. The first line of defense is the transparency of blockchain usage. Apps and games incorporating blockchain elements must explicitly declare this. While the policy doesn't specify where these declarations must occur, it's implied that the Play Store page details should include a mention, similar to how the Epic Games Store attaches a tag and disclaimer to blockchain-enabled games on its PC launcher. Best practice would likely involve making it clear in the app if an asset is tokenized on the blockchain, perhaps through tutorials, tooltips, or help pages.

In a related aspect of transparency, Google aims to mitigate misleading or predatory practices in play-to-earn marketing by declaring that "developers may not promote or glamorize any potential earnings from playing or trading activities." This does not suggest that players cannot earn from play or trade, but rather it tries to downplay this as a user acquisition strategy, at least regarding Play Store page content.

This is a reasonable policy since promoting "earning" has frequently underpinned Ponzi-like web3 schemes, given that these supposed earnings often come from other players instead of the game developer. Promoting earnings, particularly when associated with upfront costs, shifts the focus toward a return on investment. This exacerbates the legal risks and uncertainties surrounding the uncertain status of tokenized assets as investment securities, which affects both game developers and platforms like the Play Store. To clarify, this particular Google policy does not prevent promoting the ability to trade or emphasize player ownership concepts as long as it's not presented in terms of earning money.

Source: Play Store

The policy detail that will likely present the biggest challenge for game developers pertains to Google's classification of loot boxes containing NFTs as real-money gambling. An important detail to note is that this policy only applies if the NFT is obtained through some form of spending. In other words, directly selling a loot box containing an NFT is deemed gambling, while earning a loot box with an NFT through play is not. This determination is grounded in logic: If a player is spending real money to get something of real value (even if through secondary markets) without prior knowledge of their potential earnings, it constitutes gambling.

The upside of this policy is that it allows both the purchase of NFTs with real money, where the exact NFT being purchased is clearly defined, and the purchase of loot boxes containing non-tradable (therefore non-valuable in a monetary sense) NFTs. As previously noted, NFL Rivals would fall under this policy because it has offered packs of random NFT cards for purchase at launch, a practice that would no longer be permitted without satisfying gambling eligibility requirements. Instead, NFL Rivals will likely focus on other means of acquiring NFT cards, such as earning through play or rewards from its Rarity League program.

Google Draft Pack
Source: NFL Rivals

For clarity due to the importance of this policy, here’s how Google words it in full: 

“In line with Google Play’s Real-Money Gambling, Games, and Contests policy, apps that have not met gambling eligibility requirements cannot accept money for a chance to win assets of unknown real-world monetary value, including NFTs. For example, developers should not offer purchases where the value of the NFT users receive is not clear at the time of purchase. This includes, but is not limited to, offering mechanisms to receive randomized blockchain-based items from a purchase such as ‘loot boxes.’”

One substantial advantage of Google's NFT policies over Apple's is the absence of restrictions on the functionality of externally purchased NFTs. Apple's prohibition on NFTs that unlock content or functionality essentially neuters the value of any NFTs that are not solely for display. While Google can still profit from in-app purchases of NFTs via the same 30% fee as Apple, it does not restrict players from purchasing NFTs outside the app through other means and using them in-app without Google taking its cut. A related note in the blog post mentions, "As a next step, we're talking to industry partners about further improving our support of blockchain-based app experiences, including in areas such as secondary markets," suggesting that more details may be forthcoming about secondary markets, although these could be enhancements rather than restrictions.

While some developers may be taken aback by certain restrictions, especially the one concerning gambling, Google had a lot of positive things to say about blockchain tech on mobile. For example, Google stated, "We will continue to engage with developers to understand their challenges and opportunities — and how we can best support them in building sustainable businesses using blockchain technology." The company also wrote, “From reimagining traditional games with user-owned content to boosting user loyalty through unique NFT rewards, we're excited to see creative in-app experiences flourish and help developers expand their businesses." However, a restrictive 2018 policy banning cryptocurrency mining remains in place for good reason: such mining often occurs without proper user consent or understanding and often exists to disproportionately benefit the app developer.

Google Collection
Source: Nitro Nation: World Tour

While no new games have been announced as a direct result of the policy clarifications, Google expressed its intent to collaborate with select developers this summer to test and refine experiences for players, with the full policy rollout expected by December. Mythical also has an upcoming mobile game, Nitro Nation: World Tour, that recently initiated NFT pre-sales, and the company will undoubtedly continue collaborating with Google this year. 

Mobile games usually aim to launch on both Android and iOS to capture more players, but as our recent analysis of past blockchain mobile games showed, favoring Android exclusively can be a feasible strategy given the platform dynamics surrounding web3. Considering our recent analysis of AAA publishers in blockchain gaming focusing heavily on Japan and South Korea, it will be interesting to observe the impact of Google’s new policies. Japan leans heavily towards iOS, while South Korea does the opposite (though blockchain games are still prohibited in the country).

As Google has mainly been citing laws such as those concerning gambling and blockchain regulations as the reason for its restrictions, it's also worth considering the implications of a recent legal victory: Ripple vs. the SEC. The judge ruled that Ripple did not violate federal securities law when selling its XRP token on public exchanges but did when selling to institutional investors. This decision essentially established that the XRP token is not a security, which is likely to be applied more broadly to more tokens in the crypto industry. 

This is a major victory against the SEC, which has been attempting for years to label most tokens and NFTs as securities and therefore subject to its regulatory oversight. This legal clarity has already sparked numerous discussions and considerations about using tokens in games among game developers and game economists. While this could pose challenges for games raising money through token sales, it does potentially open the door for public sales. 

Though the case's outcome may vary on appeal or not apply broadly outside of Ripple, it brings the U.S. one step closer to defining a regulatory framework for tokens. This ruling is generally seen as a massive win for the crypto community, and it directly impacts Android games due to the "local regulations" aspect of Google's token policies. Unfortunately, Apple is unlikely to change its policies in the short term unless it integrates cryptocurrencies into its existing in-app purchase infrastructure or Apple Pay in order to collect its 30% cut. There is always the possibility that banks can better integrate crypto elements, and that may provide a workaround, similar to credit cards that allow crypto purchases by automatically purchasing the required cryptocurrency. 

With Google's progressive mindset and U.S. legal frameworks being tested against the SEC, the opportunity for blockchain gaming to expand on mobile is growing. Games like Axie Infinity Origins, which soft launched on mobile, and Gods Unchained, which has been progressing toward mobile for some time, will have a clearer path toward full release and long-term sustainability starting in the second half of 2023. Existing mobile blockchain games like NFL Rivals, Blast Royale, the Blitz series, and Summoners War: Chronicles — as well as platforms like Arc8, Game Dosi, Iskra, and Gameta — can also begin to explore opportunities to expand their presence on Android with newfound clarity. While there are still numerous obstacles to mobile blockchain gaming, it’s now clear Google does not aim to be one of them.

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#3 Gaming Market Update: July 14th – 21st

By Mario Stefanidis, CFA, Naavik Contributor

Google Data
  • For the week ending July 21st, 2023: The average return for gaming companies tracked by Naavik with a market capitalization exceeding $500 million was flat. The S&P 500 returned 0.7% and the Nasdaq-100 returned -0.4%. Full access to the Naavik Gaming Company universe is available here
  • Stillfront Group rose 13.0% after reporting upbeat FY2023 Q2 results. The company reported record high adjusted EBITDA of MSEK 708 ($68 million) amid flat net revenue compared to last year. Organic revenue fell -5% but was offset by positive FX effects. Monthly paying users continued to stabilize following successive declines throughout 2022. Results were driven by strong performance in fantasy MMORPG Albion Online, specifically the game’s Asia-Pacific server Albion East which launched in March. Also contributing were the company’s mobile game portfolio, including free-to-play mobile board game Ludo Club and life simulation title BitLife.
  • Ubisoft rose 10.7% following its FY2024 Q1 report which exceeded expectations. For the three months ending June 30th, net bookings of €267.7 million were down -9% year-over-year but well above management’s outlook of €240 million. Management also highlighted a strong pipeline for the second half of the year, including a new Assassin’s Creed game, naval warfare title Skull & Bones, and Avatar: Frontiers of Pandora. The company also teased a “large game” that has yet to be announced. In addition to these games, CEO Yves Guillemot highlighted “significant cost reductions” that would result in increased cash flow in the coming years. Note that Ubisoft is not required to publish quarterly reports per EU regulations (only 1H and full-year) and only reports top-line metrics for Q1 and Q3. 

Notable Venture Financings

Google Futureverse
Source: Futureverse
  • Futureverse, an AI and metaverse technology company, has raised $54 million in Series A funding. The round was led by mid- to late-stage growth equity fund 10T Holdings with participation from Ripple. Ripple’s investment comes days after a judge ruled that Ripple’s token XRP is not a security, in a case levied by the SEC in 2020. Futureverse's platform features a suite of proprietary AI content generation tools aimed at enhancing content and assets that will be part of the metaverse. The company relies on blockchain technology, integrated with Ripple's XRP Ledger, and supports the use of XRP as a gas token and the XLS-20 NFT standard.
    • In December 2022, Futureverse rolled up eight Web3 companies to create its collaborative ecosystem. Since then, it has rolled up an additional three. Futureverse aims to become a leader in AI gaming and has already launched AI League, a “smart” soccer game for mobile developed in cooperation with FIFA. The company has also partnered with Muhammad Ali Enterprises to release an AI-powered boxing game titled "Muhammad Ali - The Next Legends."
  • GGWP raised $10 million in venture funding, led by Samsung Ventures and SK Telecom Ventures. This comes about 16 months after the company raised $12 million in seed funding in a round led by BITKRAFT. GGWP operates an AI-based content moderation platform aimed at reducing toxicity in multiplayer games. With this latest funding, GGWP will offer free access to its moderation tools for all developers, with different payment tiers for additional services. The platform uses contextual AI to scan text chat in games for toxic behavior and notifies community moderators for necessary actions, such as player bans. It also detects behaviors like intentional idling, early match leaving, friendly fire, feeding, and more. The platform’s reputation system assigns credibility ratings to user accounts based on validated reports, helping identify good and bad actors.
  • Neopets, the virtual pets platform that paved the way for browser-based gaming in the 2000s, is once again an independent company following $4 million of funding. After being founded in 1999, Neopets changed hands in 2005 after being sold to Viacom for $160 million and again in 2014 when it was sold to JumpStart Games for an undisclosed amount. JumpStart Games closed on June 30th, 2023, leaving Neopets temporarily homeless until management executed a buyout deal using the fresh funding. The team, operating under a new entity called World of Neopia Inc., launched a new homepage on July 20th and plans on bringing back dozens of classic games that were deprecated following the transition of Flash to HTML5. Furthermore, the company’s metaverse and NFT plans will be abandoned in favor of a new mobile “social-life simulation game” called World of Neopets.
  • Polish mobile Web3 publisher Hexacore raised $3.5 million in seed funding in a round led by Dubai-based tech VC Scalo Technologies. The funding aims to expand Hexacore's team and develop new mobile games with hybrid monetization, including in-app purchases, NFT collectibles, and rewarded ads. Hexacore’s games, which include titles like Sushi Roll, Blend It 3D, and Merge Animals have been downloaded over 350 million times. Hexacore co-founder Aleksandr Krivolap said the proceeds will contribute towards the development and publishing of the company’s upcoming “flagship product” Pocket Space, an idle space fantasy game currently in development.

Notable Strategic Investments

Google Corsair
Source: Corsair
  • American gaming peripheral and accessory company Corsair purchased Drop for an undisclosed amount. Formerly known as Massdrop, Drop leveraged community insights to stock products from existing manufacturers at discounted prices, via bulk buying arrangements. Popular products included headphones, mechanical keyboards, and headphone amps.
    • In recent years, Drop has operated as a storefront primarily selling products developed or co-developed internally, with keyboards remaining the main focus. Drop also introduced a custom keyboard builder in 2021, an asset that Corsair is particularly interested in. In a statement, CEO Andy Paul said, “Personalized Keyboards that can be modified by the consumer is one of the fastest growing trends in the gaming peripheral space.” 
    • Corsair plans to keep Drop as a separate brand similar to its subsidiaries Elgato and Scuf Gaming. As for the non-keyboard assets, a spokesperson for the company said it would evaluate those aspects of the business over time, though no immediate changes were planned. According to Crunchbase, Drop has raised $92.5 million to date, with its last equity financing round occurring in 2019. 

Notable Studio Updates & Partnerships 

Google Activision Blizzard
Source: Esports Insider
  • Activision Blizzard laid off around 50 employees in its esports division, shortly after releasing its second quarter earnings report last week. The report revealed that at the conclusion of the current Overwatch League season, teams could either continue participating in the league under a new operating agreement or receive a $6 million termination fee. Given the Overwatch League lost all of its sponsors last year after the sexual harassment controversy at Activision Blizzard, most teams will likely choose to receive the $6 million, despite some franchises buying in for $20 million or more in 2017. Many teams still owed Activision money after payments were postponed following the Covid pandemic, but their debts were absolved in June of this year as the company saw little likelihood of recouping the funds. Overwatch represents one of two major esports leagues with franchise models for the gaming giant in addition to Call of Duty, which follows a similar structure. 
  • Microsoft and Sony have entered a binding agreement to keep Call of Duty on PlayStation for 10 years. This comes after Microsoft won its preliminary injunction case against the FTC, signaling that closure of its Activision Blizzard purchase is imminent. Microsoft has already inked 10-year deals with a number of partners, though Sony held out as it found the terms of the deal to be unacceptable. While the original olive branch extended to PlayStation’s parent included other Activision Blizzard titles as well, this deal is a notable downgrade as it only includes the single franchise. Microsoft seems poised to finalize its acquisition in the U.S., though still needs to convince the U.K.’s CMA that the terms are acceptable. Last week, the CMA’s investigation was formally paused as Microsoft appears geared to submit a revised proposal to the regulator. 
  • Six veterans of Bungie, EA, and Kongregate formed a new studio called Look North World. The studio will be headed by Alex Seropian, Bungie’s initial founder, president, and CEO. Seropian was employed at Bungie from 1991 and 2004 and was responsible for the studio’s sale to Microsoft in 2000. Since then, he has founded Wideload Games, which was sold to Disney in 2009, and Industrial Toys, which was sold to EA in 2018; both have since been shuttered. Look North World is currently developing several games. Its first will be Outlaw Corral, a Wild West-inspired shooter developed with Unreal Editor for Fortnite (UEFN). According to Seropian, developing in UEFN “opens a whole new world of opportunities” for the team. Players of the studio’s first game will be able to shape its production by providing feedback on Discord.

You can view our entire job board — all of the open roles, as well as the ability to post new roles — below. We've made the job board free for a limited period, so as to help the industry during this period of layoffs. Every job post garners ~50K impressions over the 45-day time period.

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