Top News

#1: Why Supercell Invested $60 million to Grow Trailmix’s Love & Pies

As we recently covered in Naavik Digest, Trailmix, a casual game studio founded by veterans from King, recently announced that Supercell had acquired a majority stake in the company and will be investing $60 million to “hypercharge” its narrative + merge game Love & Pies. In the Digest piece, we noted that the game’s revenue was growing steadily and could be one of the reasons why Supercell decided to invest. Still, a $60 million investment for a game currently ranked 13th for revenue and 29th for downloads in its subgenre (puzzle and decorate) for Q1 2022 seems like a bewildering amount, and it's worth doing a deeper dive into just why Supercell believes in this studio and its flagship game.

Trailmix was founded by veterans Carolin Krenzer and Tristan Clark from King’s London studio. Krenzer, in fact, helped set up the London office and acted as its Head of Studio while Clark was a Game Director, and together they launched Farm Heroes Saga, one of King’s early mobile hits. Their experience and success led to Supercell offering them $4.2 million in a seed round when they founded Trailmix in December 2017.

Fast-forward four years to September 2021, and Trailmix launched its first game Love & Pies to…middling success. With a revenue of $7 million and 2 million downloads over the past 8 months since launch, it's safe to say that Love & Pies is a success for a small team but doesn’t seem anything special, on the surface at least.

Love & Pies is an entrant into a relatively new category of merge game — “casual merge,” as defined in our piece on Merge Mansion. Interestingly, Supercell had also invested heavily into Metacore Games, the studio behind Merge Mansion, with an initial €15 million investment and a €10 million line of credit. Supercell followed that up 8 months later with a €150 million line of credit on the back of Merge Mansion’s success, and Metacore used the funds to push Merge Mansion into its current place as the No.2 merge game by revenue for Q1 2022.

It looks like Supercell is hoping for lightning to strike twice with this investment in Trailmix, and since the games are so similar, it makes sense for us to look at why Supercell believes Love & Pies could be the next Merge Mansion. We’ll be looking at both games based on time since launch to make a fair comparison, as they are in different stages of their lifecycles.

The downloads chart tells us that Merge Mansion has increased its accumulation of users while Love & Pies has remained pretty flat. Although this clearly shows the impact of Supercell’s investment and the ability of Metacore to channel that into UA, it doesn’t necessarily inform us as to why Supercell believes Love & Pies can do the same.

Here is where the comparison gets interesting. When comparing RPD, both games have essentially the same curve, with Love & Pies even coming out ahead slightly.

Now, this chart tells us what we need to know — that Love & Pies has extremely impressive retention numbers, with particularly solid long-term retention, as seen in the D60 numbers. In an article announcing the investment, Trailmix CEO Carolin Krenzer also divulged that Love & Pies has a D120 above 10%, showing just how sticky the game is. Love & Pies compares very well even against the top games in the puzzle & decorate and merge genres, as seen in the chart below (with a little game called Candy Crush Saga as a bonus data point).

Note that while both charts show usage statistics from iOS, the Android numbers follow the same trends, and in fact Love & Pies leads the pack on Android in every segment.

From what we can see, Love & Pies is a game on the precipice of being a smash hit, with the only thing holding it back being a lack of capital to scale up UA — capital it now has thanks to Supercell. Keep your eyes on this game; you’ll be hearing about it much more often.

#2: A Report Condemning Loot Boxes By The Norwegian Consumer Council Is Backed By 18 Countries

In a report titled “Insert Coin,” the Norwegian Consumer Council slams the games industry for exploiting consumers via a range of shady practices, including exploiting cognitive biases, obfuscating real-world monetary costs with layers of virtual currencies, and manipulative practices targeted at kids. Phew!

If you’re reading this, loot boxes are likely to be a part of the games and businesses you are involved in, and you may already have some rebuttals prepared to defend its use. We must recognize, though, that the Eye of Sauron grows ever focused on this monetization technique (a coalition of child advocacy groups has recently requested that the FTC investigate EA for its loot boxes), and the screws will get tighter and tighter, and businesses that ignore the growing calls to regulate loot boxes will get caught unprepared. With that said, let’s dive into the report’s claims and its proposal to curb the “exploitative and predatory” presentation and sale of loot boxes.

The main points the report holds against loot boxes are:

• Deceptive Design. The techniques that the report accuses game developers of abusing range from standard marketing practices like the frequent prompting for purchases, applying time pressure to deals, and showing the most expensive items in a shop first to exploiting cognitive biases like Sunk Cost Fallacy, Gambler’s Fallacy, and Survivorship Bias. The presentation of loot boxes and opening them is described as a virtual casino designed to trigger a dopamine rush in its players, including a significant number of children.
• Opaque Algorithms and Skewed Probabilities. There is a general lack of transparency behind the algorithms of the loot boxes, and even the efforts by some developers to reveal the drop rates of their loot boxes are described as lackluster, as they have not been subject to any regulatory scrutiny. There is also the speculated fear of using machine learning of behavioral data leading to personalized loot drop probabilities.
• Aggressive Marketing. The report cites offending marketing practices such as limited offers triggering FOMO and marketing banners advertising rewards with very low chances to drop as examples of egregious marketing techniques. Another aspect of exploitative marketing developers use is hiring influencers to open loot boxes, in some cases with manipulated odds, as a method to normalize the spending of money to open loot boxes.
• In-game Currencies And Hidden Pricing. The use of virtual currencies abstracts the real-world cost of items in the game, and consumers cannot refund or trade virtual currencies back into real-world money.
• Very High Cost Of Freemium And Endless Grinding. Here, the report condemns how many games start players off with many rewards to entice them to stay, only to turn off the tap once they are invested in the game, triggering Sunk Cost Fallacy. It also highlights how games can force players to grind at repetitive tasks to entice them to pay money to skip ahead.
• Risk Of Losing Content At Any Time. Ownership of digital content in games is governed by complicated licensing agreements, and developers often grant themselves the power to change or revoke content at any time. It gives the example of the shuttering of Niantic’s Harry Potter game, with consumers left with no way of getting a refund or keeping purchased content.

The report then follows with a detailed case study of two games, FIFA 22 and Raid: Shadow Legends, with a deconstruction of their use of loot boxes and the techniques it considers exploitative and deceptive. It also calls out their disclosure of loot box probabilities as misleading. First, the average consumer does not have the in-depth knowledge to understand what those probabilities mean in a real-world context. Furthermore, an additional internal layer of probability is not communicated to the player, which misleads the consumer. For example, the probability in the Prime Gold Players Pack of an 87+ player in FUT is 8.8%, making it seem like you are as likely to get a 94 rated player as an 87 rated player, but this is, in fact, not the case. You are empirically much more likely to get a player from the lower end of the rating range.

So what proposals does the report make for the protection of consumers?

• Ban Deceptive Design. Video game developers must ensure that the design and operation of a game are done in a way that does not detrimentally impact consumer decision-making.
• Use Real-world Currency For In-game Purchases. Consumers should always know how much they are spending in real-world currency. If virtual currencies are used, their real-world equivalent should be displayed.
• Protection Of Minors. Games that are likely to be accessed by minors should not offer loot boxes and pay-to-win mechanisms.
• More Transparency. Researchers and regulators should have access to the algorithms and datasets used in the loot boxes. Consumers must also be informed if any algorithmic decision-making mechanisms are used to influence consumer behavior.
• Better And More Enforcement. Give consumer enforcement agencies resources and expertise to take action against video game companies, and consumer protection authorities should ensure that consumer rights are enforced against video game companies.

My quick thoughts on the report are that most of its allegations are not loot-box-specific. Techniques like aggressive marketing, in-game currencies, grindy freemium, pay-to-win, and lack of permanent ownership of digital items were staples of F2P games even before loot boxes became ubiquitous, and it feels more like a critique of the F2P model than on loot boxes specifically.

On the loot box side, I agree that declaring probabilities doesn’t work because most consumers have difficulty understanding the actual outcomes. In the Brawl Stars example below, how can we expect the average person to understand a 0.1018% chance of getting a Legendary Brawler? Perhaps a solution would be to convert the probability into a more readable format, such as “On average, 1 in 982 Big Boxes contain a Legendary Brawler.”

Some of the proposals the report makes are also vague and cannot be meaningfully enforced at this point in time. Who decides what deceptive design is? What is the threshold for a game “likely” to be accessed by minors? What defines pay-to-win mechanisms? There have been attempts to better define some of these terms in the European Consumer Organization report on dark patterns, but these are still not legally recognized.

These issues and more could be up for scrutiny as the European Commission is performing a digital fairness fitness check and is now calling for evidence. According to the report, this fitness check is particularly relevant to F2P and loot boxes, as it includes “the analysis of several key concepts particularly relevant for the protection of consumers in the video games area, such as the concept of vulnerability, deceptive design, price personalization.” Depending on the result of the fitness check, a proposal for regulatory changes to the EU consumer law could come as soon as 2024.

Whatever your stance on loot boxes, it's undeniable that consumer groups worldwide are targeting this monetization technique. While I don’t believe that an outright banning of loot boxes is in the cards, developers may find that they will have to reveal a lot more information than they had to previously, including information that may reveal proprietary technology or techniques. The times, they are a-changin’.

Game Launch Radar

#1: Diablo Immortal

• Publisher: Blizzard Entertainment, Inc.
• State: Global Launch
• Territories: Worldwide except for South East Asia (launching June 22nd). It will not be released in Belgium and the Netherlands.
• Classification: Midcore - RPG - Action RPG

• Quick thoughts:

  • Blizzard has managed to capture the Diablo feel very well, and all the hallmarks of a Diablo game — good controls, cool powers with flashy effects, and the “juicy” feel when you kill monsters are all present.
  • It has quickly gained the #1 spot in the US app store as well as more than 40 other regions, proving how strong the IP is.
  • Unfortunately, there is a growing tide of negative sentiment against its perceived pay-to-win characteristics, particularly for the endgame. A Reddit post on the cost of fully leveling up a character was covered by YouTube channel Bellular News, which has since gone viral and the game is now suffering from a massive backlash in the form of user review bombing on Metacritic.

#2: Subway Surfers Match

• Publisher: SYBO Games
• State: Early Access
• Territories: Philippines, Indonesia
• Classification: Casual - Puzzle - Match3 Puzzle

• Quick thoughts:

  • It’s essentially the Royal Match playbook given a Subway Surfers coat of paint. It looks subjectively less attractive and gameplay is less “juicy” than Royal Match. The visual payoff for Subway Surfers Match’s (SSM) decoration aspect is not very satisfying. It has you complete street art on a wall that is only a small part of the screen, and each decoration step is underwhelming.
  • Unlike Royal Match, where a player aims to decorate and build up the kingdom, SSM has you completing street art in various locations. I feel that the lack of continuity and a sense of building up something more significant than the sum of its parts may be detrimental to SSM’s long-term retention. Part of the appeal of the puzzle & decorate genre is the sense of ownership players get from transforming a house / mansion / kingdom, and completing street art in a work-for-hire manner doesn’t sell that fantasy.

#3: Godfather: City Wars

• Publisher: Playside
• State: Soft Launch
• Territories: Philippines
• Classification: Casual - Simulation - Idler

• Quick thoughts:

  • With an official license from the movies, the game features characters like Vito and Michael Corleone.
  • Along with the idle build mechanics, the game also has a light tactical shooting mini-game where you can trigger an agent’s perks in a shootout.
  • It's been 60 years since The Godfather was released in theaters, and while it was a cultural phenomenon, I wonder how relevant it is to today’s generation?

Other Game Announcements

• Fullmetal Alchemist Mobile, a tactical RPG set in the world of the hugely popular anime, is open for pre-registration in Japan. Link
• Uma Musume Pretty Derby to expand past Japan into Taiwan. Link
• Diablo Immortal gains #1 spot on the US App Store. Link
• A new merge game from Netmarble, Merge Kuya Island, is coming soon on Android. Link
• Warhammer 40,000: Tacticus is a new top-down tactics game open for pre-registration. Link
• PUBG Mobile collaborates with The Boys in Super Spree event. Link
• Ironhide Game Studios, developer of the Kingdom Rush series, announced a sequel to its game Iron Marines. Link
• Avalon Games announced Smashing Star, a splatoon-inspired top-down shooter where territory is controlled by painting graffiti. Link
• COD Warzone Mobile gameplay footage is leaked. Link

Company Announcements

• Turkish mobile game developer Cypher Games raised $3.2 million in a seed round from Play Ventures. Link
• Playtika is closing three studios and laying off 250 employees. Link
• Hutch begins a trial of a four-day work week. Link
• Homa Games appointed Brice Vinocour as VP of marketing and communications. Link
• Mobile developer and publisher Gismart is moving to a remote-first work culture. Link
• Gameloft and CK Hutchison launch a mobile game subscription service. Link
• Mighty Kingdom and Lion Studios are partnering to develop a new title. Link
• Playstack acquires mobile game developer Magic Fuel Games. Link

Ecosystem Announcements

• Android games make $50 million from alternative app stores. Link
• Two senior members of Apple’s Arcade team are moving on. Link
• Gucci follows Spotify with a permanent presence in Roblox named Gucci Town. Link
• The downloads needed for a game to reach No.1 on the app store have decreased by 46% since 2019. Link
• Africa will be a 500 million user market by 2030, according to Olivier Madiba, CEO of Cameroon’s Kiro'o Games. Link
• 85% of Tenjin’s surveyed mobile advertisers are optimistic that marketing will be easier in 2022. Link
• Sanlo, a funding platform for games and apps, raised $10 million in its Series A funding round. Link

Content Worth Consuming

• How Super Evil Megacorp took everything it learned from Vainglory and put it into Catalyst Black (MobileGamer.biz): “Segerstrale cites taking the big – and expensive – decision to develop its own engine as one that proved to be right. With the tech under its control rather than at the whims of Unity or Unreal, he says it has made content creation for Catalyst Black much quicker and more flexible.” Link
• Zynga’s Dr Vijay Pendakur: “It’s nice to think about diversity. It’s better to change your behavior.” (PocketGamer.biz): “Zynga has moved into a metric-driven approach when thinking about diversity, rather than operating on anecdotes – ‘we think our employees are happy and psychologically safe’. That doesn’t produce data and insight to drive targeted tactics and campaigns.” Under Pendakur, Zynga issued a global inclusion survey to measure “eight different inclusion factors across the company” to measure variables including psychological safety, trust in decision making, and perception of diversity. He continued: “These factors are key drivers for the kinds of cultures and flywheel effects that companies desire but don’t know how to produce.” Link
• How Puzzle Combat's playable ads bridge the gap between puzzle and RPG fans (PocketGamer.biz): “RPG games, by design, have significantly more expensive CPI as they lack the widespread appeal of hypercasual and casual games, and typically use niche art styles that do not have a ubiquitous appeal. But I want to take a look at an ad network video with playable ads for Puzzle Combat as an example of high execution and clearly demonstrating the strengths of the RPG genre.” Link
• ZiMAD explains: How to launch a game in China: Pitfalls and peculiarities of working on the Chinese Market (Mobidictum.biz): “Competitions are very popular in China, so simply solving a puzzle won’t be enough to satisfy the Asian audience. That’s why ZiMAD’s project, Magic Jigsaw Puzzles, showed utterly different metrics compared to the western market. If you seriously intend to enter the Chinese market, you should be ready to change any aspect of the product: from game mechanics to the meta of the game.” Link