Hi Everyone. It’s a light news week, and so we’re announcing a new initiative today. Through all our content efforts, we increasingly strive towards shaping Naavik into becoming a platform for games industry professionals to showcase their thoughts, opinions and analysis with the wider industry.

As a next step towards that goal, we’re announcing our first-ever essay contest! This will run from September 18th to October 17th, and we’ll feature the top three essays and any honorable mentions in the newsletter and on our website. Additionally, there are cash prizes: 1st place, $1000; 2nd place, $500; 3rd place, $250. And members of the Naavik team will not only act as judges, but will also provide the finalists hands-on support and feedback to get their essays ready for publishing.

Why participate? Well, our past and current writers have experienced the following upsides:

• Growing your personal brand by writing and learning in public
• Working with our team to level up your work, and reinvesting those learnings into your current job and future pieces of work
• Opening up more opportunities to get involved with Naavik, while creating new opportunities to accelerate your games industry career

Whether you’re hoping to dip your toes in games analysis for the first time or are an experienced writer, we’d love for you to participate and are excited to read your work. You can submit your interest here and please be sure to check out the contest guidelines here. We’ll send out reminders periodically in the newsletter to keep you on pace. Good luck!

This Week on The Metacast 

Strategy Case Studies: Mobile Clones, IP Ecosystem, UGC — In this Metacast episode, Aaron Bush, Anil Das-Gupta and Sebastian Park join your Maria Gillies to discuss:

• Scopely acquires Stumble Guys: What is behind the success of a Fall Guys clone?
• Ubisoft’s Growth Strategy: How can a AAA behemoth unlock long-term growth?
• Roblox & User-Generated Platforms: Is Roblox pursuing the most valuable bets?

You can find us on YouTube, Spotify, Apple Podcasts, Google Podcasts, YouTube, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.

Reviewing Japanese Gaming’s Latest Headlines

The last few weeks have been a constant flurry of news from Japan’s largest game developers. The combination of a new Nintendo Direct, Playstation State of Play and The Tokyo Game Show have captured my attention, filling my feed with announcements and trailers. The events provide an ideal opportunity to evaluate the state of each company’s performance after an earnings season that largely has been filled with less than ideal outcomes. Let’s explore a bit further:

Nintendo Direct

Nintendo Directs seem to always draw consumer attention, and this week’s showcase was no different. Filled with a combination of first and third-party news, the headlines from the event can be broken down into three categories:

• Core IP: The biggest money-maker for Nintendo, the Direct included announcements for Pikmin 4 and the latest entry into the Fire Emblem franchise. It also included a title & announcement date for the latest Zelda game
• Ports, and DLC: Nintendo has a history of porting games that have landed well on other platforms in an attempt to bolster the Switch’s library. Tunic, Factorio, and It Takes Two are the latest to receive the treatment after being announced this week. The company also continued to push its DLC model with new content for Mario Kart 8 Deluxe, Mario Strikers, Nintendo Switch Sports, and Xenoblade Chronicles 3.
• Everything Else: The remainder of the event was punctuated with a mix of JRPGs, farming simulators and remasters. Titles like Octopath Traveler II, Bayonetta 3, and Mario + Rabbids headlined the group.

When I covered Nintendo’s earnings earlier this year, I wrote that the company’s investment into non-video game revenue streams was a step in the right direction. While I still feel that Nintendo’s over-reliance on first-party titles can only take them so far, revisiting the numbers a few months later has yielded impressive results. Splatoon 3, which was released last week, has already become the fastest selling game in Nintendo’s history in the Japanese market. Meanwhile, the company continues to dominate in both hardware and software in Japan, as compared to Sony.

It's encouraging to see that the company is still setting new highs with a six year old console despite the slow clip at which they release new games and a 22.9% decrease in console sales this quarter. Even if it might not be a core focus, the success of game like Splatoon 3 illustrates the opportunity ahead for Nintendo with third-party IP. Meanwhile, investments in mobile games, merchandise, theme parks and movies (each of which were brought up during the Direct) continue to grow. It's clear the Nintendo competitive advantage is alive and well — let’s see if any of the company’s newer bets will pay off.

Playstation State of Play

On the other side of the coin, Sony has taken a different approach to its on-demand game showcases, foregoing the Nintendo style laundry list in favor of a smaller selection of news. This week’s event was no exception, and included a few bits of noteworthy info:

• The Heavy Hitters: Unsurprisingly, fans were treated to new trailers for games like Hogwarts Legacy and God of War: Ragnarok.
• New Games: New titles like Tekken 8 and Team Ninja’s next game, Rise of Ronin, supplemented the event’s jazzier trailers and generated a bit of excitement. The show also had announcements for new games from Ironwood Studio and Shift Up Corp.
• Playstation Stars: Perhaps most intriguing a first look at Playstation Stars, the company’s digital collectables (not NFTs) rewards program. The first round of rewards are planned to be digital models of old school Sony systems and characters.

It has been interesting to examine Playstation’s strategy following Microsoft’s acquisition spree over the last few years. The company is clearly feeling the pressure of Game Pass and is taking steps to mitigate any risk, including increasing their output of PC ports, launching a subscription offer, and starting to allow cross play. They’ve also been aggressive in trying to slow down progress in the Microsoft-Activision Blizzard deal. Statements from Playstation CEO Jim Ryan calling Microsoft’s exclusivity offers “inadequate” and an ongoing custody battle to define how essential Call of Duty is to a console are just the latest in a series of roadblocks.

Ultimately, I do expect the deal to go through and see Sony’s efforts as largely performative, the company’s statements over the last few months indicate a level of vulnerability in Sony’s console-selling strategy that we haven’t seen before. I plan to continue buying my favorite AAA games for Playstation, but there’s a lot to prove out on the newer bets that to convince me that Sony is back on top.

Tokyo Game Show 

This week’s Tokyo Game Show (TGS) line-up was stacked with some of the country’s other best developers. I like to think of this as the proving ground for Japanese developers other than Sony or Nintendo. The event included presentations from Capcom, Sega, Square Enix, Konami, 505 Games and even an appearance from Xbox. Amidst the flurry of news, a few of showcases that caught my eye:

• Capcom: Coming out swinging, Capcom dropped news for five major IPs. New updates for Monster Hunter and Resident Evil games are also coming shortly. We also got more info on mech/dinosaur crossover Exoprimal and a new Mega Man collection. The star of the event was Street Fighter 6, which previewed new content in the run up to launch.
• Sega + Atlus: All eyes were on Sonic Frontiers as Sega showcased new trailers for the game coming this fall. In addition, the company covered a variety of partner titles and teased Persona 3, 4 and 5s cross-console releases
• Xbox: While the show brought nothing groundbreaking from Microsoft, the company did highlight an increased focused in Asia-based developers and creators. The introduction of games like Ni No Kuni and Danganronpa show that Xbox is trying to be more global, but I believe gaining market share in such a competitive region will be tough.

Reviewing coverage throughout the week, I was reminded of how impressively well equipped Capcom is. With IP that includes Street Fighter, Mega Man, Devil May Cry, Monster Hunter, and Resident Evil, I find myself constantly looking for some reason not to be optimistic about the company’s long-term outlook. And despite a reported 48% decline in net sales during last quarter’s earnings, it’s not hard for me to imagine a Nintendo-esque approach to IP on the horizon (especially given news around the new Resident Evil TV show).

The one area that does give me pause, however, is Capcom’s non-gaming revenue, and specifically its investment's in arcades and gambling. The businesses generate nearly $30M per year for the company despite being unique to Japan. However, while the businesses continue to be a nice income stream, further analysis has me concerned that the company could be facing headwinds in the near future. Japan has lost nearly 10,000 arcades over the last few decades, and international expansion for both investments is off the table due to varying levels of interest and logistical difficulties. If there’s an achilles heel to Capcom, it’s these areas. I’ll be curious to see how the company continues to leverage its IP to offset the long-tail of revenue being generated from other areas. The one missing area for Japan is clearly a mobile showcase — we’ll need one of those next time. (Written by Max Lowenthal)

This Week in Naavik Pro

Enjoyed today's issue and hungry for more? It was a jampacked week of analysis on Naavik Pro! We currently cover Blockchain and F2P games, and here are the highlights.

On the Blockchain gaming side:

• We launched our August '22 monthly market update. Even though the past month featured a continued struggle for the blockchain games industry, there were a few exciting signs of life, including the month’s big release - Trickshot Blitz from Joyride Games.
• We also analysed Crypto Unicorns' plans for 4 new games, and took a look at Xterio's raise plus its broader ecosystem plans.
• Lastly, we rounded up the week's top game announcements, funding news, ecosystem updates and free reads, listens and watches to level up your blockchain gaming muscle.

On the F2P gaming side:

• Our deconstruction of the much anticipated Kingdom Maker went live. We explore the state of mobile 4X, walk through what Kingdom Maker is trying to do differently, and discuss whether it works and what’s next.
• We also analysed XD Inc's +15.6% YoY increase in revenue, and followed it up with our thoughts on Scopely acquiring Kitka Games' Stumble Guys.
• And we wrap things up with a quick look at Netease's Lost Light and VNG's King of Nations in our Game Launch Radar, in addition to rounding up the week's top game, company and ecosystem announcements, and free reads, listens and watches to sharpen your F2P gaming knife.

🎮In Other News…

💸Funding & Acquisitions: 

• Zynga completed the acquisition of StoreMaven, an App Store optimization technology. Link
• Ruckus Game Studio raised $5.5M led by Transcend Fund. Link
• The Sandbox invested in Cosmo Media Labs. Link

📊Business:

• Splatoon 3 sold 3.45M units in Japan on opening week, the biggest debut for a Switch game. Link
• EA and Koei Temco partnered to develop a new AAA IP. Link

🕹Culture & Games:  

• Game announcements: Nintendo Direct | Sony State of Play | Tokyo Game Showcase
• The Sims base game will be free next month. Link
• Discord is now available to everyone on Xbox. Link

👾Miscellaneous Musings:  

• Nintendo has no need for CoD on its platforms. Link
• Relatedly, Nintendo hardware sales far outpace Sony’s in Japan (see the change over time). Link
• How to succeed across alternative app stores. Link

🔥Featured Jobs

• Guerrilla Games: Technical Animation Manager (Amsterdam, Netherlands)
• Manticore: Head of HR and Recruiting (Remote)
• Disney: Investment Team Analyst (Remote)
• a16z: Business Games Analyst (Remote)
• Naavik: Content Contributor (Remote)
• Naavik: Games Industry Consultant (Remote)