Welcome back to another issue of Master the Meta by Naavik. Last Sunday's most popular links included: Bankless’s piece on Why Gamers Shouldn’t Hate NFTs, The Diff’s piece on The Factorio Mindset, and Axie’s announcement of their Marketplace Fee Adjustment. With that, let's jump into Wednesday's issue.

Crypto Corner #16: In Conversation with Robby Yung, CEO of Animoca Brands

We recently sat down with Robby Yung, CEO of Animoca Brands, a blockchain-focused game publisher responsible for creating, investing, and distributing titles like The Sandbox, Crazy Kings, and Crazy Defense Heroes. In this conversation, Metacast host Nico Vereecke chats with Robby about the biggest advantages of Blockchain in games, the future of Blockchain Gaming, and Animoca’s strategy & value proposition. Check the full audio and video version of the interview below!

#1: Netflix Buys Next Games for $70M

Netflix Next Games

Source: Netflix

Last week, Netflix announced that it is acquiring the Helsinki-based mobile game studio Next Games. Netflix is offering €2.1 per share in cash, resulting in a price tag of €65 million ($70 million). As Next Games is a publicly listed company, the deal is technically not finalized, but it’s very likely to go through as proposed.

Netflix’s games offering employs a model similar to Apple Arcade. Currently, Netflix subscribers gain access to a library of about a dozen mobile indie games. The games are downloaded through App Store and Google Play, but playing them requires a valid Netflix subscription. Netflix’s success in games has been meager so far, with even the most popular titles hardly breaking one million downloads, whereas Netflix’s streaming service boasts over 200 million paid subscribers.

That said, we are only seeing the very beginning of Netflix's foray into games. Netflix’s current games are either licensed back catalog games (such as Asphalt Xtreme, Knittens) or contracted external productions (such as BonusXP’s retro-inspired Stranger Things titles). Furthermore, this is the streaming giant's second publicized games acquisition after Mike Verdu, a veteran game executive, joined Netflix last summer. The first acquisition was Night School Studio, an indie adventure game developer that Netflix bought last September.

Next Games, on the other hand, is a free-to-play mobile developer that specializes in licensed games. Founded in 2013, the studio’s bread-and-butter business is in their two Walking Dead games, the turn-based strategy game The Walking Dead: No Man’s Land and the location-based The Walking Dead: Our World. The owner of the Walking Dead IP, AMC, is also a shareholder in Next Games. In addition to the zombie games, Next Games has test launched two other licensed free-to-play titles: Blade Runner Nexus and Stranger Things: Puzzle Tales, the latter of which is based on Netflix’s Stranger Things.

Albeit Next Games has maintained a solid track record in shipping games, it has struggled financially. Its two Walking Dead games have sustained a reasonable—if declining—revenue baseline, but the company has failed to turn a profit in years. In fact, the company has suffered cumulative net losses totaling €45 million in the past five years. To avoid liquidity problems, Next Games issued new shares in a private offering in March 2021 (interestingly priced similarly at €2.1 per share) and secured a loan from early investor Jari Ovaskainen later in October.

Considering this, the €65 million exit is a great outcome for Next Games. The share price of €2.1 means not only a 125% premium on top of market value of the stock, but it also equates to a 2.6x revenue multiple; Next made €25.2 million in revenue last year. Of course, everything is relative. Five years ago, amidst high expectations for Next’s future titles, the company’s market cap peaked at well over €200 million.

However, for Netflix, this acquisition is not at all about the numbers. Mike Verdu reiterated Netflix’s approach to games in a statement last week: "With Next Games, we will be able to build a portfolio of world class games with no ads and no in-app purchases". The language is very clear: Next Games will abandon the conventional free-to-play business model. It would be easy to jump to the conclusion that Next Games will start producing one-off indie experiences akin to Netflix's and Apple Arcade's current games. But the Netflix vision could be something else altogether.

The industry has seen a major change from contained single-player experiences sold on a disc to evergreen live games. And regardless of the business model, players have been flocking to these live serviced games. Yet, operating a robust live service successfully without a steady revenue stream is not easy. Admittedly, Netflix’s existing subscription revenue is formidable. However, even a single game can easily beat Netflix’s ability to monetize: successful free-to-play titles can rake in a lot more than $9.99 per monthly active user.

It’s clear that Netflix is looking to bolster its content creation in the gaming space; what remains to be seen is exactly what kind of content. Perhaps Netflix will find a way to deliver live service games without the revenue from game-specific subscriptions, DLCs or in-app purchases. Or perhaps Netflix can afford to swim against the tide, delivering small but delightful indie experiences that merely extend their original series. We’ll surely know more once the first Netflix-era titles from Next Games and Night School Studio hit the market. (Written by Miikka Ahonen)

#2: Analyzing Yu-Gi-Oh! Master Duel

Netflix Master Duel

Source: Konami

The following is an excerpt from a mini-deconstruction on Yu-Gi-Oh Master Duel written by Naavik Contributor Anil Das-Gupta. To read the the full deep dive, click on the button below!

The biggest digital card game in the world right now is Yu Gi Oh Duel Links by Konami, which is slowly but steadily driving incremental revenues on top of an extremely favourable player response. But despite this lofty and enviable position, Konami chose to do something risky — to release a different version of Yu Gi Oh which is more like the tabletop game that inspired a billion dollar multimedia franchise. But why did Konami choose to do this, and how has it turned out for them?

Yu Gi Oh! is a Japanese manga series written and illustrated by Kazuki Takahashi. It was serialized in the Japanese pop culture sensation Weekly Shōnen Jump magazine between September 1996 and March 2004. The plot follows the story of a boy named Yugi Mutou, who solves the ancient “Millennium Puzzle.” Yugi awakens a gambling alter-ego or spirit within his body that solves his conflicts using various games, with battles between characters consisting of epic card duels.

Whether by design or through fortunate coincidence, Yu Gi Oh became a media franchise spawning an anime, movies and most importantly of all a trading card game. Impressively, despite its Japanese origins the series also resonated with audiences worldwide, joining a small list of Japanese IPs that have managed to become worldwide smash hits as well as hits in their country of origin.

The physical trading card game is what really propelled Yu Gi Oh to another level of popularity. As of January 2021, the game is estimated to have sold about 35 billion cards worldwide and has grossed over $9.64 billion.

Prior to Duel Links coming out, Yu Gi Oh games were pretty lucrative for Konami and whilst not as heavy hitting as the rest of the media properties within the IP, helped to consolidate and grow numbers of players interested in and buying the product.

That said, over time even great games start to show their age. For that reason a faster and more mobile friendly version of Yu Gi Oh called Duel Links was released — in tandem with a revised version of the trading card game that was also simpler and faster — whilst retaining the elements of the franchise that made it. This game was so successful that it influenced a new paper format called Speed Duel, which replicates the digital mechanics in tabletop form.

Duel Links is a contender for the most under the radar game on mobile. Since its release, it has surpassed every other card game to become the dominant one, even beating big hitters like Hearthstone and Legends of Runeterra. The game uses a simplified version of both the card pool and ruleset of the existing Yu Gi Oh game to allow for a faster and easier to understand version of the game. Despite initial resistance to the product, the game has become beloved among its own community and is an excellent case study for an established IP modernising itself and catching a new wave of players, something which is not easy to achieve.

📚 Content Worth Consuming

Thetan Arena — the Mobile Game that Combines F2P and P2E (DoF): “Thetan Arena (TA) is a fascinating experiment in the burgeoning blockchain space. The Vietnamese developer WolfFun breathed new life into its top-down MOBA Heroes Strike by relaunching it with blockchain-based play-to-earn mechanics. And importantly, unlike many of the (perhaps too early?) projects in the crypto space, Thetan Arena is a fun game and a well-rounded, complete product.Though we have differing opinions on blockchain games and whether they will revolutionize gaming, we both found Thetan Arena to be a fascinating case study for experienced F2P developers. As many of our peers are considering shifting their games to P2E, the question everyone is asking is whether this new business model can create sustained success, or whether it’s just the latest hype-driven bubble set to burst.“ Link

What’s Real About Crypto Gaming | Ryan Watt (Bankless): “Ryan Wyatt is the CEO of Polygon Studios and former Head of Gaming at Youtube. Ryan is always on the frontier of gaming, having stewarded a new generation of content creators. He's now shifting his focus to Web3, where the next wave of innovation is set to happen. Ryan presents a number of fascinating takes, including his feelings on Anti-NFT sentiment, the future of games, and the growing influence of gaming content.” Link

Why Crypto Gaming is Not the Future (DMT Capital): “My thesis that crypto gaming isn’t the future *can* be proven wrong. By building sustainable games, maybe, just maybe, web3 can bring something good to the gaming industry. But not at all in the way it is doing now. No way. Not everything has to be on-chain. 0x has an off-chain order book for its DEX, but on-chain settlement. The future will have to be a mix of centralised and decentralised. I don’t see what can be decentralised about games except maybe in-game customisations as NFTs (although this is a more inefficient way of doing things currently, maybe it works out because *the culture*), but from a purely technical perspective having blockchains for hosting all in-game data will make games incredibly slow. Gamers hate slow stuff, just like how traders hate latency (hence off-chain order book DEXs). In conclusion, if web3 gaming continues down the path its on, it’s 100% doomed to fail. It might have a better chance by adopting a tad bit of common sense. Maybe centralised games but with governance tokens are the key to unlocking web3 gaming? I have no idea. But Play to Earn gaming definitely isn’t it.” Link

Why Dark Forest Matters: A Good Game, Not a Crypto Game (Omar Mezenner): Dark Forest is a massively multiplayer (MMO) real-time strategy (RTS) game in closed beta. If you like strategy games, you should play it. Anyone who is a fan of games like Sins of a Solar Empire, Factorio, or Civilization should definitely play it. It’s not a game with global appeal like Super Mario Odyssey, but it doesn’t need to be nor try to be. Personally, it's the best new game I’ve played in 2022. When I got off the waitlist I played it for 10 hours straight -- that’s why I’m writing this post. It’s the most exciting strategy game I’ve played since StarCraft 2. It’s the most exciting competitive multiplayer game I’ve played since Valorant. And it’s renewed my optimism for the potential of web3 games.” Link

🔥 Featured Jobs

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

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