Hi Everyone. No big update this week. Just a friendly reminder to move MTM from your spam or promotions folder into your main inbox. Doing so helps our email show up to more people.

Also, to the all the new people who joined us since last week, welcome! Let’s dive in…

#1: Making Money in VR Just Got Easier

Last week, Oculus officially enabled developers to sell subscriptions within their VR apps. The fee structure wasn’t disclosed (Oculus typically takes 30%), but it’s an inevitable building block to create a more robust VR platform. The announcement also highlights a few apps that are leading the subscription charge:

• Rec Room — Rec Room Plus (RR+) gives monthly tokens, weekly items, and exclusive access to a new part of their store.

• FitXR — Members receive a new fitness class each day plus access to multiplayer.

• TribeXR — Tribe Plus (an app for DJs) offers more skins, environments, mentors, and lessons.

• TRIPP — The app offers daily meditations that are unique to a VR environment.

• vSpatial — Subscribers unlocks 15-person meeting rooms, virtual video/mic, and more.

In general, subscriptions unlock a win-win-win: developers unlock recurring ways to monetize, power users can get more content, and Oculus benefits from any rising demand. Not every app needs subscriptions and not all subscriptions will succeed, but it’s a positive step for the ecosystem.

Headlines aside, what does it mean for the future of VR and Oculus?

For one, subscriptions have an obvious place in many games, but the above list showcases Oculus’ belief that VR will be universally adopted beyond gamers. Whether that’s true (or its timing) is an open question. Related, it’s also an open question whether VR (or AR or a mix) evolves into the scale of consoles (hundreds of millions of units) or smartphones (billions of units). I’m a long-term optimist, but these are huge questions that no one can answer yet.

Second, adding subscriptions accelerates the ability for more apps to financially succeed, but it doesn’t necessarily turbocharge consumer adoption of VR. In other words, this change is more likely to lead to rising revenue per existing user than drive tens of millions of new Oculus buyers.

Third, similar to the early days of mobile, we may see a wider transition away from paid apps to free apps with more in-app monetization features.

And, lastly, Facebook seems to be following a similar playbook that led to the App Store’s success but also recent complaints. Rolling out subscriptions is “easy,” but establishing rules around what’s allowed is hard. How many apps will make you subscribe elsewhere to bypass Facebook’s fees? How will it treat big companies with cross-platform subscriptions? Will Facebook crack down on certain types of subscriptions? Given VR’s limited scale, these issues aren’t super serious today. That said, today’s rules set precedent for what could become larger issues when VR is 10x-100x larger, especially if Oculus captures significant long-term market share. Again, who knows, but today’s foundation matters.

All in all, Oculus adding subscriptions was inevitable, and it’s one building block of many that will unlock new use cases, financial upside, and moderately help VR gain adoption with both consumers and developers. In a vacuum, it’s impact is limited, but its effect on incentivizing developers, unlocking new consumption methods, moving toward “free-to-download,” establishing platform rules, and more adds up. Whatever the case, we’ll be carefully watching to see how it plays out. (written by Aaron Bush)

#2: Learning About Learning at Lightheart

I usually write about other companies, but this week is an exception: I want to talk about the story of Lightheart Entertainment, the company I co-founded. We just announced our Series A funding led by Makers Fund. This is our second funding round after the Galaxy Interactive-led seed round in early 2020.

We founded the company in the summer of 2019, and we released our first game, Mr Autofire, later that fall. We have been able to grow Mr. Autofire every quarter since, and now we are in the fortunate position to rev up the growth of both the game and our team. I would like to use this opportunity to share some of the foundations that enabled our journey so far.

First, we founded our company on a very clear set of values. We believe that happy, motivated game developers who can make decisions where the magic happens are able to create great games fast. That is why we chose to be fully self-organized from the start. Make no mistake though: self-management may mean zero hierarchy, but it does not mean zero structure. In fact, the structures and rules that allow anyone to make any decision are at the heart of how Lightheart works. In short, we are building a games company where we would like to work ourselves. For those interested, we have found that Reinventing Organizations by Frederic Laloux is a great starting point for self-managing companies.

Second, we always strive for the fastest path to learning. We squeeze down development scope to learn from real players as fast as possible. The first version of any given title should be in the app stores already in a matter of months, not years. In addition, we try to be as intellectually honest as possible in all stages of development. We do not look for validation; we look for improvement and red flags. As game makers, we constantly ask ourselves whether the game we are working on is the best use of our time and resources, or whether we should do something else instead. We have found that our core values endorse honesty and critical thinking, and this certainly helps to achieve this goal.

Third, our approach to making games is very simple. We make games that are instantly accessible, yet deep enough to become a hobby. We call this hypercore. The gameplay must make for ad creatives that sell the game within seconds. Playing the game must feel so good that your play tester will not give your device back. The players need to genuinely care about their progression. These building blocks are the foundation of retention and monetization. The approach is not unique to us; it is the combination of our core values and the talented team that enables us to execute on this well.

We have recently started to grow our team. We are both continuing work on Mr Autofire and we have plans to build more games. If you feel like you would be a great fit, do not hesitate to contact us. Lightheart’s journey is just beginning! (written Miikka Ahonen)

Sponsored By Heroic Labs

Lightheart: Hyper-casual at hyper-scale

Heroic Labs builds server technologies that specializes in massively realtime, social, and competitive gameplay across all platforms for studios such as Gram Games, Zynga, Paradox Interactive, and many more.

Heroic Labs’ flagship product is Nakama - the open-source, social and realtime game server.

Read more on what Kalle Kaivola, CEO at Lightheart Entertainment had to say about us:

We chose Nakama as it has a proven track record of success and scalability. The Heroic Labs engineers helped us on-board onto the technology and enabled us to release Mr. Autofire with deep social features to boost engagement and retention. Nakama allows us to build games without limitation for millions of players

#3: The Next Generation of (Digital) Tabletop Gaming

Tabletop games have a digital future. Despite the medium’s traditional reliance on IRL connection, COVID-19 forced old-school classics like Dungeons & Dragons to go remote and catalyzed the growth of multiple digital-native tabletop platforms.

• Mainstays like Roll20, which host several classic games, saw consistent spikes in activation. Roll20 broke 8 million users and 390 million hours played in 2020 alone.

• New platforms like One More Multiverse — which recently announced a $17.5M Series A — are raising money to make new tabletop games digital from the get-go.

• The Last Gameboard removes the need for clunky pieces by building games playable exclusively on tablet.

• StartPlaying helps players find others to run and participate in new tabletop adventures, no matter where they are or how familiar they are with the game.

• Foreteller lets players build immersive experiences through professional voice acting and audio accompaniments for popular tabletop titles.

While the first wave of companies like Roll20 primarily focused on moving the real world online, the second wave of companies (like the rest mentioned above) are designing products that can only exist because they are online in the first place. Second wave tabletop gaming startups take some of the medium’s worst problems — like player discovery or upfront investment in materials — and build around them from the ground up. These companies experienced significant tailwinds thanks to last year’s shelter-in-place lifestyle, but even in a post-COVID world we shouldn't expect the digital tabletop trend to disappear.

Just because players wont be at home all the time doesn’t mean they wont want to forgo boards and figurines in place of tablets and laptops, even when surrounded by other people. StartPlaying, for example, is already integrating its platform into existing conventions and events. Multiverse’s own digital platform isn’t even scheduled to leave Closed Beta until Q3 2021 and their Discord boasts hundreds of active users.

Given the time- and focus-intensive nature of tabletop games like D&D, these fans are some of the world’s most dedicated. Equipping them with fast-moving, high-value technology is like pouring fuel on the fire for their usage: accessibility and cooperative play are the name of the game. As the gap between video games and digital tabletop games shrink, both mediums will undoubtedly begin to occupy similar roles in popular culture. We’re not far away from the day where hopping on D&D with your friends can be just as exciting as a good game of Fortnite or Call of Duty: Warzone. (written by Max Lowenthal)

🎮 In Other News…

💸 Funding:

• Keyword Studios acquired makers of the Silent Hill franchise, Climax Studios, for $52M dollars. Link

• Mighty Kingdom IPO’d at a $46M valuation. Link

• Bytedance doubles down on its investment in China-based Roblox competitor, Reworld with another $15M. Link

• Pragma.gg, a backend game engine for smaller studios and that’s still in beta, raised a $12M Series A. Link

• Play Ventures launched a blockchain-focused fund. Link

📊 Business:

• Last week, Xbox announced that gamers no longer need to pay for Xbox Live Gold to play F2P games. From Xbox's standpoint, this player friendly move incentivizes gamers to stick with the Xbox ecosystem versus pay to play in other platforms. We'll see if PlayStation follows suit. Link

• Jeff Kaplan, Overwatch’s (now) former director, and 19-year company veteran has left Blizzard. Link

• GameStop’s CEO will step down this summer. Link

• Xsolla acquired data analytics company, Slemma. Link

• Discord ended its acquisition conversations with Microsoft. Link

• Sony is testing a PlayStation Plus Film and TV subscription pass. Link

✒️ Game Design:

• OnePlus designed their proprietary gaming triggers that work on any phone. Link

📜 Culture & Games:

• Call of Duty: Warzone reached a 100M player milestone. Link

• EA announced its new Battlefield game, a return to “all-out warfare” that was initially popularized by the Battlefield format. They also plan to release a mobile version. Link

• Amazon, which is producing a Lord of the Rings show in parallel to its game development efforts on the IP, decided to cancel its development of Lord of The Rings MMO. This would’ve been one of the first times IP is released for VOD and games in tandem. Link

• Nickmercs is now a part owner of the FaZe Clan. Link

• Epic Games added Itch.io to its Epic Game Store. Link

👾 Miscellaneous Musings:

• “In 2020, mobile gaming revenues exceeded the entire gaming market of 2013.” Link

• A Deloitte Media Survey ranks video games as the preferred activity for Gen Z. Link

• Ubisoft teams up with Tezos Blockchain to explore blockchain-based gaming opportunities. Link

📚 Content Worth Consuming

Global Video Game Investment Activity Report Q1 2021 (InvestGame): “Q1’21 shows a strong footprint with 2x growth vs. the first half of 2020FY on all frontiers, including private investments ($2.6B vs. $1.4B), public offerings ($8.3B vs. $4.9B), and M&As ($14.3B vs. $4.0B).” Link

The Illusions of Free To Play (Fake Pixels): “Rather than an overly general statement such as “if you’re not paying for it, you’re the product,” this piece aims to clarify the illusions of costlessness by distilling the value exchanges on digitally native platforms by peeling the layers of platform and player psychology. Despite the marginal cost of software production trending to zero as Andersen predicted, the virtual ecosystem still shares the similar properties with cities as a socioeconomic organism. The cost of participating in the new “free-to-play” platforms not only denominated in time and money as traditionally economics understood, but also in emotional satisfaction provided by challenges, social recognition, and self-actualization. The deeper a platform can penetrate the player’s identity needs, the stickier the platform becomes and the higher the switching cost.” Link

Bidding Gaming War Between ByteDance and Tencent (South China Morning Post): “The [Moonton] deal has opened a lot of doors for ByteDance, which previously struggled to impress high-powered game developers as a serious investor, according to the executive. ‘ByteDance has money. What we lack is a demonstrable track record,’ he [Serkan Toto] said. ‘This goes to show the distance ByteDance will go to pay for a gaming company.’“ Link

Thanks for reading, and see you next week! As always, if you have feedback let us know here.