Hi Everyone, and welcome to the 100th issue of Master the Meta! I (Aaron, here) just want to say thank you for being a part of this journey. When I started Master the Meta a couple years ago, there were no grand plans. My goal was simply to learn and write about an industry that I was super passionate about. I never foresaw meeting Manyu, growing an amazing team, meeting several of you, and building a mission-focused business out of it. But here we serendipitously are! I’m filled with so much gratitude, and I can't wait to check back after the next 100 issues, because even though that'll only take a year to achieve, I expect we'll experience far more change over the next year than the past two combined. Helping all of you master the business of gaming continues to be our north star, and I can't wait to see where everything goes.

Now, let’s dive in to today’s issue…

From The Archives: NoPixel + A Conversation with Mod.io’s CEO

This week we have two great exclusives for you - both centered around the modding space:

A few months ago, Naavik content consultant Matt Dion explored why NoPixel — a mod-driven role-play server for Grand Theft Auto V — is not only a wildly successful project, but also a pioneering step in the next evolution of user-generated content (UGC). In this blast from the past, check out Matt’s essay as he walks through modding’s key evolutions and dissects what’s next as trends like the creator economy, improved modding tools, and decentralized autonomous organizations (DAOs) begin to come together.

Second - we’ve released the full audio version of our conversation with mod.io CEO and Co-Founder, Scott Reismanis. Mod.io is building a platform that gives studios fully integrated and cross-platform mod solutions for their games. In this conversation from May 2021, we sit down with Scott to discuss why modding has failed to cross the chasm, why and how that might change, and how mod.io will be part of the solution. Check it out!

#1: Homa Games Raises $50M

Source: Homa Games

After Homa Games’ monster $50M Series A, I was curious to learn more. What does this company actually do? What inflection point did they hit to warrant this new funding round only seven months after their seed round? What distinguishes the company from other hypercasual publishers? And why choose hypercasual as a genre?

The quick description is that Homa Games is a publisher for hypercasual games and related subgenres. But what makes the company interesting is that they’re also building the tech to empower developers to build highly scalable games efficiently and on a quick turnaround. Their product suite is indicative of a robust tech-enabled platform:

  • Homa Labs – optimizes the ideation to publishing funnel and analyzes a game’s potential (market intelligence)

  • Homa Belly – a no-code SDK to improve metrics (real-time A/B testing)

  • Homa Data – user acquisition and monetization

Homa Games’ goal is to help enable smaller developers to compete with larger publishing houses. They’ve also built a way to pump out games much faster than the average studio. In that way, Homa Games has become a tech-enabled publishing house that can presumably produce games faster and more efficiently than even the largest competitors. All this is done with a (more or less) self-service platform. The company’s track record speaks for itself. Since the $15M raise back in February, they’ve managed to double their downloads from 250M to 500M (getting to 250M took ~2.5 years). Here are some of their featured games:

  • Nerf Epic Pranks: 50M installs

  • Sky Roller: 150M installs

  • Idle World: 11M installs

  • Tower Colors: 10M installs

In a field of increased consolidation among large players to mitigate ad costs (and other players buying ad monetization tools), Homa Games has essentially figured out a way to help small developers build, market, and scale their games profitably. And they can do it without necessarily leaning heavily on the marked-up valuations associated with studio acquisition. To date, they’ve helped develop 40 games, with 20 more in pipeline by EOY 2021. Their biggest bottleneck seems to be on the supply-side, partnerships with studios and game developers. With their new capital infusion, one of the company’s fixes to this top of funnel problem will be geographic expansion, establishing relationships with developers in new markets.

Ultimately what the Homa Games model demonstrates is that developing in the hypercasual genre is a game of economies of scale. That is, the more games you can deploy in market and across platforms, the cheaper it is to achieve and improve holistic metrics. In a world where ARPUs are low and CACs are increasing, Homa Games provides an elegant solution: building the tech to develop games faster as a way to increase efficiency of development.

Source: SensorTower

Hypercasual may very much well be a genre of declining acceleration given difficulty of monetization and decreasing downloads. 2018-2020 saw rapid growth in part due to COVID tailwinds, but as seen in the chart above, download QoQ growth has only slightly improved. Could Homa Games be the dark horse for this genre? In a largely overlooked segment, the company aims to shorten and improve development cycles to create a new resurgence. Perhaps they’ll be leading the charge for a new wave of hypercasual. (Written by Fawzi Itani)

#2: Magic Leap’s Raise; A Look at XR

Source: The Verge

Ever since the inception of modern mixed reality (XR) in 2012, there have been predictions that a Ready Player One future is nearing. Despite the optimism in one of gaming’s most exciting new frontiers, XR’s initial implementation has taken much longer than anticipated.

Source: Ecorys

However, it seems that COVID has driven renewed interest in the technology. Work-from-home has certainly grown demand for more immersive digital environments in both work and play beyond a laptop screen. Amidst hype for the “creator economy” and “metaverse”, leading industry analysts like Matthew Ball have identified XR as a crucial component to build on. Facebook, Apple, Nvidia, Snap, Google, Niantic, and Microsoft are leading the charge on the big tech side and VC interest has also followed suit.

In most recent news, The perennial XR hardware company Magic Leap (traditionally a poster child for the technology) announced a $500M funding round at a post-money valuation of $2B to continue building out its enterprise use cases. Some history: the company was founded in 2010 to develop a line of XR-enabled headsets. However, it struggled to gain traction during the 2010’s, leading to a reorganization in 2020 that saw the departure of its CEO and a pivot to enterprise use cases. With the recent funding round, the company has now taken more VC money than its valuation and underperformed expectations compared to its $7B valuation in 2019. However, some believe that its new product offering, coupled with more favorable market conditions, might be enough to finally find a user base. What is the landscape for investments now and is Magic Leap representative of the next XR players?

Even prior to COVID, the market had settled into a structure reminiscent of the early console space in gaming. Major players like Microsoft and Facebook alongside other hardware manufacturers provided annual hardware improvements in weight (ensuring user comfort and portability) and capability (e.g., graphics and computing power) alongside first-party and third-party applications to draw users in.

However, the VR industry has consistently struggled with two key issues (alongside the typical legal and regulatory topics that come with any new tech). First, no true “killer app” emerged. For consumers, while an AR game like Pokemon GO achieved substantial success, it didn’t truly utilize any next-gen hardware that could fully show off the tech’s capabilities. Moreover, in my opinion it didn’t show the high double-digit growth you’d expect of a true breakout or create any novel IP. The enterprise segment’s experience was analogous: despite positive proof-of-concepts, there was little urgency behind wide-scale adoption.

Second, the hardware still wasn’t at an attractive price point for consumers: even mid-range VR headsets cost as much as an Xbox or Playstation. Enterprise price points (although working with bigger wallet sizes) were even worse.

Source: Ecorys

Further, content depth on the platform still wasn’t there yet (besides just lacking a killer app). From a volume and quality perspective, the overall consumer experience has paled to that found on traditional consoles. Facebook has been a good example of building out the Oculus ecosystem, making strategic game studio acquisitions to build a top-of-funnel for its platform.

Source: UploadVR, scraped in 2020 from Oculus store

As previously mentioned, COVID has been a massive boon for the XR industry at large, giving some companies a second lease on life. Hardware has continued to improve, the content library has grown, and there are enterprise use cases abound. Perhaps this renewed optimism is what’s driving interest in Magic Leap (or maybe it’s just too much capital to deploy by VCs and favorable terms). The company has struggled since its founding in 2010, including a massive re-org, customer pivot, and CEO departure. But despite all its historical headwinds, market conditions have allowed the historically underperforming company a chance to potentially find a user base.

Are things truly different this time around for Magic Leap? I’m pessimistic: any company trying to win in cutting-edge hardware against well-funded competitors seems like a moot proposition but perhaps their enterprise opportunity presents a case for some optimism. I do think that the growing interest in the world of XR is very real. It wouldn’t be surprising to see the industry see a cinderella story in a few years, making the jump to becoming a foundation in the gaming industry. Maybe we’ll all be in the metaverse sooner than we think. (Written by Naman Gupta, Senior Analyst at 2K Games)

📚 Content Worth Consuming

Press F To Review Bomb (Chaoyang Trap): “China’s relationship with video games is complex. On the regulatory side, there are strict restrictions on what games are released domestically and who gets to publish them; authorities have also enforced real-name policies in online games and prevented minors from gaming on weekdays. Yet it’s also home to the world’s largest gaming market and major game publishers. Beneath the headlines, gaming and indie game development is...thriving. Like elsewhere, video games are frequent targets of societal moral panics here, but these come with teeth. Recent waves of regulatory tut-tutting and “guidance” towards the games industry suggest a strong desire to reign in the wilder side of Chinese games culture—controlling not just what games are available, but what these games say.” Link

Ultima Online, NFTs, and Player-Run Economies (Mobildevmemo): “So how can NFTs be natively, deliberately, and meaningfully implemented into games to stimulate player-led economies? In this article, I propose that Ultima Online, the 24-year-old MMORPG developed by Origin Systems, provides a helpful framework to use in considering the use of NFTs to bolster a truly player-led game economy. Note that Ultima Online has changed appreciably since it was launched in 1997, and I use my own anecdotal history with the game to depict the state in which it existED in the early years after its first launch. Ultima Online is considered one of the most complex and player-driven MMORPGs to have ever been released, and while some might argue that it doesn’t serve as the best example of a player-operated economy, it’s the one I know best as a former avid player.” Link

Discussing Decentralization’s Core Purpose, Trade-Offs, Declining Marginal Utility and DAO Decision-Making (Delphi Podcast): “The Delphi Podcast Host and GP of Delphi Ventures Tom Shaughnessy sits down with Haseeb Querishi, managing partner at Dragonfly Capital, a cross-border crypto venture fund. The two have a philosophical discussion on the topic of decentralization, covering its core purpose, the costly trade-offs, the declining marginal utility of pursuing decentralization and much more!” These takeaways are applicable to those wanting to build blockchain games.” Link
The Video Game Review Process Is Broken (Launcher): “The overwhelming majority of video game reviews are written in a burst, immediately following a marathon session with the game. For every prestige, 5,000-word review that lands a week after a game’s release, 25 more are cobbled together in a frenzy with the goal of hitting the embargo date, which is the same for every outlet. Vanishingly few reviewers command an audience that will treat their work as appointment reading. As such, most writers are at the mercy of Google’s search engine, and time their work to the peaks at which people are seeking out reviews. Take an extra day to polish your prose, and you’ve given up pageviews to your competitors. Google’s search engine takes a lot of factors into account, but I doubt it has any perspective on the artfulness of a much-agonized-over introductory paragraph. The system rewards speed.” Link

🔥 Featured Jobs

You can view our entire job board — all of the open roles, as well as the ability to post new roles — below.

Thanks for reading, and see you next week! As always, if you have feedback let us know here.

Don’t miss our next issue!

Sign up to receive the #1 games industry newsletter, straight in your inbox.