Hi Everyone. Welcome to another issue of Naavik Digest! If you missed last Sunday’s issue, be sure to check out our deep dive into ACG aesthetics in gaming.
As a friendly reminder: Naavik will be co-hosting a VIP party in partnership with Leanplum on March 23rd, 8:00pm - 9:30pm in San Francisco for GDC. We’d love to see you there, so please RSVP below if you can make it!
Voodoo’s Ongoing Evolution & The New York Times Games Strategy
Alvaro Duarte: Voodoo’s Ongoing Evolution. In this episode, Alvaro Duarte – VP of Casual Games at Voodoo – joins Naavik co-founder Aaron Bush to discuss if hypercasual is dead. The duo explores the changes Voodoo’s seen in its own business and dig into why the company is shifting its focus to (hybrid)casual. Alvaro discusses why Voodoo’s entrance into casual shouldn’t be underestimated and why the team is thinking about web3. He also shares how Voodoo’s culture is designed for it to move fast, try many things, and support several internal and external teams Website | YouTube | Spotify | Apple Podcast | Google Podcast.
Jonathan Knight: The New York Times Games Strategy The New York Times is one of the world’s most recognized and respected newspapers, and has been in circulation since 1851. With almost 10 million subscribers (of which 8.6 million are digital-only), the Times has a huge audience and an even larger cultural impact. But the Gray Lady isn’t content to just rest on her laurels and focus on news — other verticals in which the Times operates are product reviews (The Wirecutter), sports (through their 2022 acquisition of The Athletic), cooking and, of course, games. In addition to their 7 home-grown casual titles, the Times of course famously acquired viral sensation Wordle for “7 figures” in early 2022. To talk more about the Times’ games strategy, your host Niko Vuori talks with Jonathan Knight, Head of Games at The New York Times. Website | YouTube | Spotify | Apple Podcast | Google Podcast.
#1: Is Marvel Snap’s Monetization Too Modest?
This week, hit collectible card game Marvel Snap surpassed $50 million in revenue after five months in market, achieving this milestone much quicker than Blizzard’s Hearthstone. While far from the heights of some of its top-earning free-to-play peers, Marvel Snap has proven to be a fascinating test case for whether developer Second Dinner’s more modest monetization can still yield strong results and potential long-term viability in the fiercely competitive mobile market.
As an avid player myself, I thought this would be a good time to check in on the game’s current monetization struggles (something I admit is flawed despite loving the game), how it has evolved since launch, and where developer Second Dinner can go from here if it wants to achieve co-founder Ben Brode’s goal of becoming “the biggest card game of all time.”
Unlike some of the highest-grossing F2P titles and many top competitors in the CCG scene, Marvel Snap eschews loot boxes, gacha design elements, and more aggressive monetization tactics. Instead, Second Dinner relies on a more generous system in which in-app purchases feed into a complex progression mechanic that balances players interested in spending heavily and those that choose not to spend at all.
This, combined with the game’s excellent design and use of Marvel IP, has helped Marvel Snap achieve a U.S. RPD on iOS metric surpassing that of many of its chief Western rivals, including Magic: The Gathering Arena and Yu-Gi-Oh! Master Duel. (Many CCGs catering to more spend-heavy markets in Asia and elsewhere have far higher RPD metrics, but they’re virtually nonexistent in the U.S., which is Marvel Snap’s largest and more lucrative market. Marvel Snap is not currently available in China, for instance.)
In fact, Marvel Snap has achieved revenue levels higher than a good chunk of its most competitive peers did at launch, trailing behind only Yu-Gi-Oh! Master Duel and Shadowverse after its first six months. That gives further credence to Brode’s assertion that the game has the potential to surpass other CCGs in the Western market, if Second Dinner is able to maintain momentum.
But it’s not all good news for Marvel Snap. The game is suffering from a decline in downloads as it exits its launch period and enters the more challenging mid-life cycle that will truly test its long-term viability as a live service product. It should be noted that although this decline in downloads for CCGs is expected, Marvel Snap should rightly be held to slightly different standard due to the strength of Marvel IP, which should theoretically be driving a thick organic installs baseline and function as a strong UA lever in a post-IDFA world. In other words, the current installs baseline doesn’t look like either of those is really playing out in the way most would normally think.
Because Marvel Snap exists in a smaller niche than, say, a battle royale shooter on one end or a match-3 puzzle game on the other, the game is unlikely to ever achieve the type of scale it needs to convert and monetize a sizable enough chunk of its player base on just season passes and the occasional cosmetic purchase, as it does today.
In other words, Marvel Snap’s current approach to monetization will not result in increasing RPDs in perpetuity and at increased scale, as players churn and ongoing UA struggles make it even more difficult to maintain steady download levels well into the future. It will need more, both on the monetization depth and UA fronts, if the game is to continue its pace and achieve long-term sustainability.
Now, nearly six months since release, a central question is whether Second Dinner can continue to layer on monetization in a fair and balanced way to maintain its modest monetization approach, or if it’s been leaving money on the table in a quest to attract a more mainstream but potentially more fickle audience that might abandon the game down the line?
And while the developer is showing improvements in this department, the risk is apparent: if Marvel Snap continues to wane in popularity and struggle with UA in the long term, the studio may have to resort to increasingly aggressive monetization to keep the game afloat. In turn, that could alienate some of its more mainstream player base, creating a snowball effect that could undermine Marvel Snap’s future.
Marvel Snap’s Monetization Explained
As far as monetization goes, Marvel Snap features a personalized direct purchase shop, which sells random alternative card designs known as variants for a paid currency called gold. Snap also uses an in-game credits system, with which players can upgrade the cosmetic rarity of their cards in exchange for so-called collection level (CL) points. Increasing CL unlocks new cards in addition to more credits, gold, and other cosmetic items at set intervals, though with an element of randomness injected once you reach a high enough level.
A month after its launch, Second Dinner added a new feature called the token shop, in which a player can save up a separate, third currency known as tokens to purchase a card not yet in a collection. The token shop is individualized to each player and rotates several times throughout the day, with the option to pin a card to keep it available indefinitely until enough tokens have been amassed. The only other steady revenue driver for Marvel Snap is its season pass, which features a brand-new card every four weeks for $9.99. This card cannot be purchased with gold.
Devoid of any ability to directly purchase cards or tokens — and without even the option to purchase variants unless they’re rotated into your personalized shop one per day — Marvel Snap has been both hailed for its fairness and also criticized for the lack of spend depth, as we’ve discussed here at Naavik. You can purchase gold and then spend that gold on credits to increase CL and eventually unlock more cards, but Second Dinner limits a player’s ability to do so to a set number of credit purchases per day.
Outside of purchasing every variant the game has to offer, there are a few other avenues to spend large amounts of money (this is no doubt a purposeful decision after Second Dinner ran into backlash during closed beta last year for its Nexus Events experiment that was ultimately scrapped). Second Dinner has dialed up monetization in card bundles, which offer a variety of cosmetic items like variants and profile avatars in combination with the highly sought-after tokens. If a player is desperate for more tokens to unlock a rare new card, they have to purchase the entire bundles. Some bundles have been sold for gold, which means players who've saved up the earned currency can avoid spending real money (or at least without having to purchase it at full price), while some other bundles are available only as a real money IAP.
Notably, these bundles (some of which have been priced at more than $100 worth of gold) have begun to push the envelope with fans who are less familiar with more aggressive mobile F2P monetization. “Marvel Snap's Monetization Has Become Just Hilariously Stupid,” read one headline from Forbes, while some of the game’s fan community on Discord and Reddit have begun making more noise about the creeping level of aggressive monetization being injected into the game’s economy.
Despite the complaints, we can see the benefits of Second Dinner’s more heavy-handed monetization by looking at the revenue growth around season launches at the beginning of each month. This correlates with the game’s improving RPD as well, suggesting that even as downloads are declining the game has improved its spend depth, and a path does exist to keep payers paying.
Second Dinner’s Struggle
By far the biggest complaint is Second Dinner’s system for adding new cards, which outside the season pass involves dropping new additions to the roster into the highest rarity level (known as Series 5). That means only players with high collection levels can either unlock the new cards by leveling up or afford them through token shop purchases —only when they have unlocked several other tiers of cards does the game start rewarding with a higher volume of tokens.
It’s now a regular occurrence to find lengthy threads and debates over whether the game has tilted into pay-to-win territory. Second Dinner has tried to address the issue with more affordable token bundles and series drops (in which it lowers the rarity of newer cards in set batches). Yet, criticism has become louder and will likely continue to grow.
All of this to say that even despite Marvel Snaps’ more modest approach to monetization, the game is inevitably running into a problem of mismatched expectations. By catering to the type of player that might not normally play a free-to-play mobile title or CCG, Second Dinner now finds itself in a tricky situation. On one hand, it’s trying to balance the more mainstream players’ ideas of what is and isn’t fair. At the same time, however, they are trying to find ways to monetize its more IAP-comfortable base without resorting to gacha mechanics, loot boxes, or other methods.
There is little doubt Second Dinner could have followed the path of other digital card games and F2P mobile hits by selling randomized card packs or injecting more prevalent gacha design, and I suspect such a strategy would result in higher revenues. But at the same time, Marvel Snap has garnered critical acclaim — it won both Best Mobile Game at the Game Awards in December and Mobile Game of the Year at the DICE Awards last month — by striking a moderate balance between its design and business model. Another factor we cannot ignore is the influence of Marvel itself, which may not have a direct hand in the game’s systems but, as a licensee with leverage, may exert influence over how far and to what extent it charges players money.
So far, Second Dinner has been walking a careful line and its latest seasons and more frequent bundles illustrate its success at monetizing existing users. However, growing complaints from one side of the aisle and a lack of monetization flexibility from the other are causing cracks in its foundation.
The company’s shared developer roadmap points to some potential solutions in the short term to help with player retention, like new unranked and competitive modes that may help boost engagement and reduce player burnout. But many of the farther-out concepts — collectible emotes, card emojis, so-called mythic card variants, and a proper in-game live events strategy — are vital to expand the game’s monetization layers, and we don’t have a good idea of when those will arrive and if they’ll do so fully baked and achieving the desired result.
That said, Second Dinner will have crucial decisions to make about Marvel Snap’s future, both in the coming months and into next year and beyond, that will determine whether the game stands as a shining example of middle-of-the-road monetization — or a cautionary tale against trying too hard to please everyone all at once. (Written by Nick Statt)
#2: Playtika Q4 2022: A Precarious Position
This piece is a preview of an earnings report written by Enes Ertekin for Naavik Pro’s Financial Markets subscription. To read the full piece, along with our other Naavik Pro content, request a trial now.
Playtika, one of the world's largest standalone pure-play mobile game companies, reported Q4 F2022 earnings last week. Let’s jump into the details, but first, a bit of a primer on Playtika and where it stands in the industry.
Founded in 2010 and headquartered in Israel, Playtika initially focused on casino games before expanding into casual gaming through strategic acquisitions in the late 2010s. The company went public in January 2021 at a time when the gaming industry was experiencing record earnings and high engagement levels, with an initial share price of $27.
However, as COVID's impact declined, excitement over game valuations also faded, while Apple‘s ATT privacy changes began to impact the mobile advertising market. Playtika's stock, like many other gaming and technology companies, experienced a sharp correction in 2022, plummeting to its current trading price of $9.60 a share, representing a decline of approximately 65% from its IPO price.
Although Playtika is a major player in the social casino segment, its growth has stagnated, with core titles showing their age and in active decline. Despite some modest success in diversifying its portfolio with casual games, the company has not been able to make up for its lack of growth. Nevertheless, Playtika continues to invest in growing its casual portfolio, yet with inconsistent results. We will discuss these investments in more detail below.
Despite the company’s efficiency and pragmatic business practices, Playtika is a company with a growing list of issues, and we fear the latest earning report foreshadows a potentially more troubling future ahead.
Content Worth Consuming
How Zynga Built a Multi-Billion Dollar Culture of Failure, Freedom, and Competition (a16z Games): “In this week's episode we sit down with Scott Koenigsberg, Chief Product Officer at Zynga, the multi-billion dollar behemoth in Gaming. Scott shares his insights into building unprecedented team culture, killer features (and killing features), and the birth of ‘Live Operations’”. Link
How Duolingo Reignited User Growth (Lenny’s Newsletter): “In this post I’ll cover some of our early failures and then our first big wins that helped us turn around growth, including launching leaderboards, refocusing on push notifications, and optimizing the “streak” feature. These, together with several other efforts across Product and Marketing, helped us grow DAU by 4.5x over four years. Robust organic user growth supercharged Duolingo toward its 2021 IPO.” Link
UGC Playbook (Metaverse Marcom): “How are UGC gaming platforms like Roblox, Minecraft (Microsoft), Fortnite Creative (Epic Games) investing their resources to win over game developers, players and brands? David Taylor (Naavik) shares how UGC gaming platforms strive to create a powerful flywheel driven by great gaming content.” Link
The Rise Of The Video Game Union (Polygon): “The Rise of the Video Game Union is an all-in-one explainer on why game workers are unionizing and the specific steps that future organizers may take.” Link
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