Monster Hunter Now Starts Strong

When was the last time a Niantic game achieved 5M downloads and $5M net revenue during launch week? After acquiring 3M pre-registrations and launching on September 14th, Monster Hunter Now is already Niantic’s fourth-highest grossing title (approximately $15M lifetime) according to data.ai. It’s poised to surpass Pikmin Bloom’s lifetime revenue of about $20M shortly, marking a significant success for the company after four long years of development in partnership with Capcom, some failed game launches (including Harry Potter: Wizards Unite and NBA All-World), and a recent 25% workforce reduction.

For those unfamiliar, Capcom's Monster Hunter franchise, a fantasy-themed action RPG, began in 2004 with the release of Monster Hunter for the PlayStation 2. It spans six mainline games and 12 spinoffs, and as of June 30th, 2023 (according to Capcom’s Platinum Titles update), the franchise has sold approximately 85M units worldwide, surpassing Street Fighter sales by 2x, but trailing slightly behind Resident Evil's roughly 120M units.

There are three key reasons Monster Hunter Now is starting strong:

High IP-genre fit
Japanese market focus
Staying true to the franchise

High IP-genre fit: Pokémon Go's massive success stems from its strong IP-genre fit. The core Pokémon fantasy of being a trainer who collects and battles Pokémon is precisely delivered in Pokémon Go's location-based format. Similarly, Monster Hunter Nowaligns with the Monster Hunter IP, allowing players to hunt and battle large monsters in various landscapes. The importance of this fit is often overlooked in location-based game design, as seen in Niantic's attempts to force-fit the Harry Potter and NBA core fantasies into this format.

Monster Hunter Now gameplay | Source: YouTube

Japanese market focus: It would’ve been clear to both Niantic and Capcom that most of Monster Hunter Now’s revenue will come from Japan (currently at about 70%). So it's good to see that certain aspects of the game were designed with the Japanese player base in mind from the beginning: The game’s avatar selection screen features Eastern-looking characters, for example.

Monster Hunter Now Eastern Looking Characters — *Source: Monster Hunter Now*

Another example would be Niantic running a monster catching event at Tokyo Game Show on September 24th, which resulted in a huge revenue spike from the region.

*Monster Hunter Now’s monthly revenue (Japan vs Worldwide) | Source: data.ai*

Finally, there’s the light RPG progression systems that get introduced pretty early on in the gameplay. Admittedly, this would also work for a global player base, but consciously deciding to incorporate light RPG progression systems into this game was a good decision by Niantic to help cater to the game’s core market first. Still, Niantic could’ve leaned harder into JRPG mechanics by adding a little more complexity in its progression systems – especially if Japan was always going to be the game’s key market.

Monster Hunter Now gameplay — *Source: Monster Hunter Now*

Staying true to the franchise: Monster Hunter Nowdelivers a location-based game first, and action RPG experience second. This means two things. First, Niantic has played to its strength in location-based games and can reinvest learnings from past titles into Monster Hunter Now. Second, Niantic delivers a more "Diet Coke" Monster Hunter experience that provides enough of the franchise’s flavor — including a light storyline — which is critical for a spinoff. The game could also be a great "top of the funnel" title to introduce the Monster Hunter IP to new audiences. But the key trade-off is that die-hard Monster Hunter fans will probably not enjoy the light action RPG nature of the game, as evidenced by this review:

“What’s missing is the 'hunt' part of Monster Hunter. I don’t have to learn anything about my prey to be successful or master a specific style of fighting, and there’s simply not enough time in a battle for there to be much differentiation between the beasts.”

That’s probably okay, as long as Niantic is able to garner a large enough audience of both old and new players, and monetise them effectively over the long term.

*Pikmin Bloom’s lifetime monthly revenue | Source: data.ai*

All in all, it’s clear that Monster Hunter Now is off to a great start. It’s too early to look at RPD metrics, and what’s left to prove is long-term revenue growth. That will likely come down to how the progression systems unfold, how the metagame evolves over time, and Live Ops (these will preferably have a Japan-first focus). Niantic‘s track record here goes beyond Pokémon Go, as seen above in Pikmin Bloom’s revenue trajectory since its Q4 2021 launch (lifetime revenue of around $18M over $8M downloads). That definitely makes me optimistic. And beyond that, we shouldn’t forget that burgeoning hits like this still play a critical role in fueling/funding Niantic’s larger vision around the Lightship platform.

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Unity Resets, Epic Stumbles, New Milestones, & Square Enix Criticisms

By Aaron Bush, Naavik Co-Founder

Unity updated its runtime fee(installation-based) policy, and, frankly, the changes are positive:

There’s now no runtime fee for Unity Personal accounts, and the cap increased from $100K to $200K.
There’s now a choice for Pro and Enterprise clients: either pay using the runtime fee model or pay a 2.5% revenue share. These numbers are self-reported, and each month clients will “be billed the lesser amount.”
The runtime fee will only apply to games that run on the next version of Unity, which will ship in 2024. This, in effect, pushes back the start date for studios, providing more time to adapt.
These changes are a clear improvement for studios. Yes, they amount to higher costs in time, but in many ways, Unity is still cheaper than Unreal, and these updates will help Unity inch toward profitability. The larger issue, of course, revolves around both trust, which has been unnecessarily damaged, and poor execution, which starts at the very top of the organization.

It’s a tough week for Epic Games, which now faces layoffs, divestments, and a more general reset.

As reported by Bloomberg, Epic Games is laying off nearly 900 employees, which represents approximately 16% of its workforce. At the time of writing, details are scarce, but most of the layoffs are taking place in areas outside of Epic’s “core development” focus. We also know that Mediatonic, the development team behind Fall Guys, is sadly affected.
The company is also divesting Bandcamp (a music storefront) and SuperAwesome (which creates kid-safety tech), which will lead to another 250 employees departing. Both companies were acquired in recent years, so we suspect this represents a strategic refocus on the areas that are most important and needle-moving to Epic’s future.
As Tim Sweeney put it: “We’ve been spending way more money than we earn.” Decelerating Fortnite revenues and the shift to lower margin creator content doesn’t help. With Epic’s private market valuation having fallen, that doesn’t put Epic in the best position to raise fresh capital at great terms, and if the company wishes to go public, it needs to put its best financial foot forward. Cutting costs is certainly part of the equation; raising prices — such as Fortnite’s V-Bucks price increase in October — may be another. However, little will likely change in Epic’s long-term goal to empower developers through its ever-widening suite of creation tools.

It was a week of milestones. The most noteworthy include:

King’s Candy Crush franchise officially hit $20B in lifetime revenue.
MapleStory M, the mobile edition of the popular MMORPG, has accumulated $600M in lifetime revenue since its 2016 debut. Last month’s launch in China, which has already generated $55M in regional sales, turbocharged this milestone.
Sekiro: Shadows Die Twice, FromSoftware’s action RPG, crossed 10M units sold. This puts the game roughly in line with Dark Souls III, but (naturally) still miles behind Elden Ring’s 20M+ units sold.

Square Enix criticisms mount. Even the market is taking notice, with shares down 30% from its highs. It is trading back where it was in late 2017.

We previously documented how the Japanese publisher recently appointed a new CEO, saw its business decline last year, and is set to miss its near-term goals.
Have the criticisms gone too far, though? In some ways, yes. Sales, in part, are lagging because Final Fantasy XVI, a PS5 exclusive, didn’t sell as well as many imprudently hoped. However, management recently announced that it’ll take future games to more platforms, which will help solve that problem (plus, PS5s are still selling rapidly, which increases the buyer base). Though recent launches like Forspoken underperformed, taking those kinds of shots is still valuable to long-term success, as long as new franchises occasionally hit big.
The company shouldn’t be immune to criticism, however. Production timelines for mainline Final Fantasy games could still improve and its management’s view of crypto as a needle-mover remains questionable.
We’ll be paying close attention, but as with most things — patience will likely see most criticisms resolved.