Love & Pies: A Masterful Pivot to Merge2
By Niek Tuerlings, Naavik Contributor
It’s summer 2017, and after developing and growing Farm Heroes Saga into a $1B hit, King VP Carolin Krenzer and Game Director Tristan Clark leave the company to explore other ventures. Six months later, Trailmix emerges. The startup has an ambitious vision: “To make experiences with richness and depth, while remaining accessible, long-lasting and built to fit into a player’s daily life. All while combining great storytelling with the best in free-to-play mobile.”
This story is about how a two-person startup evolved into a Supercell-backed, 30-strong team with a mobile hit so wholesome that it won TIGA’s Best Casual Game award in 2021. Like any success story, though, it’s not without struggle. The studio’s casual merge hit Love & Pies was in development for three years before launching mid-2021, and for most of that time, it was not even a merge game.
Trailmix has partnered with Supercell since its $4.2M seed round in February 2018, after which the London-based team started scaling up slowly but surely. You can check out the company’s website for a more detailed timeline on how Trailmix brought Love & Pies to life.
Before diving into the details, let’s distinguish the casual-merge core from the rest of the merge market segment. Traditional Merge3 gameplay, popularized by Merge Dragons in 2017, inspired casual game developers like Metacore to create a more accessible gameplay variation based on a Merge2 mechanic, as in 2020’s Merge Mansion, which is still top dog in its genre. Merge Mansion’s sudden success led to a gold rush in 2021, with everyone jumping in to take advantage of this fresh core mechanic’s high retention rates. Interestingly, the only thing Love & Pies and Merge Mansion had in common when the latter came out was its metagame, classified either as ‘puzzle & decorate’ or ‘invest & express’, depending on who you ask.
During the merge craze in 2021, lower-fidelity games like Merge Villa and Merge Life, which use hypercasual, ad-driven monetization, started popping up and raked in a good share of downloads (and therefore revenue). After the mania cooled off at the start of 2022, a select few casual merge games managed to achieve some ROI on their user acquisition spend. For example, Mergedom: Home Design, which uses a hybrid monetization model and the option to remove ads through an IAP, has seen some traction. Love & Pies also falls in the mid-section of the market in terms of downloads, together with other perseverant competitors like DesignVille, Merge Inn, and Travel Town.
From a revenue perspective, not much has changed in the casual-merge segment throughout 2022, as Merge Mansion is still the game to beat. In fact, the only two other games that have been able to meaningfully capitalize in terms of IAPs are Love & Pies and Travel Town. Both games are currently earning more than $1M in monthly revenue, which is a solid achievement for studios with under 50 people. For the sake of comparison, though, Merge Mansion will most likely hit the $10M monthly revenue mark for the first time come September or October 2022.
In May 2022, Supercell drew a similar conclusion regarding Love & Pies’ achievements, which led to another $60M(majority stake) investment in Trailmix to grow the game. Since Metacore’s Merge Mansion isn’t that much of a competitor for Trailmix — they are both funded by Supercell and therefore perhaps knowledge-share — Love & Pies is in a pretty good spot.
To me as a game designer, the most interesting part of the Love & Pies story so far is the bold pivot Trailmix undertook to transform it into a less risky product. How did the company change course so dramatically? To answer this question, we’ll also have a look into the game’s old mechanic, its innovation and pitfalls, because as Trailmix has proven, it’s never too late to pivot your core mechanic.
To truly understand Love & Pies’ ins and outs, this essay will reflect on:
- The level-based puzzler Trailmix switched from before the game became casual Merge2.
- Deconstructing its core gameplay strategy, metagame, Live-Ops, narrative, board balancing, end of content, and monetization.
- What aspects of the game drive its strong retention.
- How Supercell’s investment is being spent and how the revenue is being returned.
- What the game is still lacking and what improvements could be made.
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Top Movers & Deals
By Mario Stefanidis, CFA, Naavik Contributor
Gaming Market Update: September 30th - October 6th
- For the week ending October 6th, 2023: The average return for gaming companies tracked by Naavik with a market capitalization exceeding $500M was -1.8%. The S&P 500 returned 0.5% and the Nasdaq-100 returned 1.8%. Full access to the Naavik Gaming Company universe is available here.
- CD Projekt (WSE: CDR) continued to decline, tumbling -14.1% after falling -16.4% a week prior. This is a result of concerns that it will not recoup its development and marketing spend on Cyberpunk 2077 DLC Phantom Liberty, which came out on September 26th. Bloomberg reported that total costs for the DLC amounted to $85M, which exceeded analyst expectations. In addition, its next major game – a new Witcher installment – isn’t expected until 2026. This means there will be a nearly three-year hiatus between releases, a time frame which calls into question whether CD Projekt’s back catalog will be able to sustain operations over the period. Thus far, Phantom Liberty has sold 3M copies and can expect to continue selling well, albeit at lower rates given the front-loaded nature of unit sales.
- Roblox (NYSE: RBLX) rose 5.2% after Walmart debuted a new virtual experience on the platform, called Walmart Discovered. This follows last year’s pair of experiences, Walmart Land and Universe of Play, which launched around the same time. The retailer’s Chief Marketing Officer William White said the new venture will “spotlight 300+ community creators, from digital fashion designers to experience developers, over the next four months.” These creators can earn from the sale of their virtual items using Robux. Within the virtual space, users can explore its sports, pets, racing, and beauty departments, with more sections and events coming later in the year. Players can save, customize, and revisit items and experiences, and can also level up, gaining the ability to enhance their in-game companion, "My Cart," inspired by Walmart's shopping carts.
Notable Venture Financing Deals
- Sad Cat Studios raised $5M in seed funding from Cyprus-based VC GEM Capital. This follows a 2022 pre-seed round when Sad Cat raised funding from Kolas Ventures. The funds will be used for the development of future games, mainly cinematic action-platformer Replaced, as well as a buyout of shares from the studio's angel investors. Replaced is set in a retro-futuristic vision of ‘80s America and combines fast-paced combat, old-school pixel art, and modern visual effects. It debuted at E3 2021 during Microsoft’s Xbox Showcase, and later Xbox boss Phil Spencer wrote on X that Replaced "is something unique and different" and that he was "proud to have it in the show."
Sad Cat Studios was founded in 2018 in Minsk, Belarus, by game developers Yura Zhdanovich and Igor Gritsay. Since then, the studio has partnered with publisher Coatsink and relocated its headquarters to Limassol, Cyprus. It now operates from offices in both Limassol and Gdansk, Poland. With a team of over 30 game developers, the studio is gearing up for Replaced’s 2024 release on PC and Xbox.
- Studio Sai announced a $7M funding round, led by PUBG publisher Krafton. The studio was founded in 2020 by Jae Hyun Yoo, a former senior VFX artist at Riot Games and Blizzard. Prior to the funding, Sai was a one-man operation. Its first title, Eternights, was released for PC, PS4, and PS5 on September 12th. The game is a blend of dating sim and action-RPG, and has a post-apocalyptic setting in which players scavenge for supplies, explore dungeons, and go on dates, while engaging in combat. It received mixed reviews from critics but good reviews from users – it currently has a Very Positive rating on Steam with 89% recommending the game. The new funding will be used to develop the studio’s second title, as well as to expand the team.
While Eternights was developed with Unity, Yoo stated that the second game will be developed with Unreal Engine 5, yet another reaction to Unity’s new and controversial pricing policies. While the most egregious changes have largely been revoked, the loss of goodwill among developers remains. At the same time, Epic Games laid off 16% of its staff in September, including many employees working on Unreal Engine. It is yet to be seen whether these layoffs will affect anticipated UE market share gains resulting from Unity’s blunder.
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