Top News

#1:  Netflix Accelerates Its Mobile Gaming Push

Netflix’s foray into the games industry has sparked many questions: Can Netflix assemble the right talent? Can it build infrastructure and processes to be good at more than just video? What will the user experience ultimately look like? Is mobile gaming enough? Is not monetizing games at all the correct approach in every instance, region, and tier? What does this mean for the future of transmedia? Do users even want Netflix to focus on games?

These questions are all fair to ask, and the answers to most are still up in the air. But the move is purposeful. Netflix’s management realizes that games are stealing timeshare away from video, especially for younger generations, and video itself has become more competitive. Games are yet another means of engaging users—time spent engaged correlates with retention (and pricing power)—and perhaps one day hosting great games around ever-improving IP will also be a means of attracting new users.

It’s fair to still hold some skepticism—Netflix is pioneering a new approach, still has a clunky gaming UX, top management has no games experience, and it’s unclear whether its IP, processes, and goals are fit for paywalled mega-hits. However, the Netflix team has been moving fast to lay the foundation for rapid learning and expansion, similar to how it did with streaming in the early 2010s. In case you forgot, Netflix hired Mike Verdu (ex-Facebook, EA, and Zynga) to spearhead the company’s gaming ambitions last year, and since then has hired other heavy hitters like Roberto Barrera (ex-PlayStation) as head of gaming strategy, Leanne Loombe (ex-Riot and EA) as head of external games, Amir Rahimi (ex-Scopely) as VP of game studios, and more. Netflix also made early acquisitions of teams like Next Games, Night School Studio, and Boss Fight Entertainment to kickstart its internal development team, mostly around simpler narrative-based titles (that likely can leverage top Netflix IPs).

In particular, we’re writing about Netflix this week because the team has been making another burst of notable announcements.

To start, Marko Lastikka (ex-Zynga, EA, and Digital Chocolate) was hired to build a new Helsinki-based studio for Netflix. This hire makes perfect sense, because Marko has a reputable track record of building new mobile studios for Zynga and EA in Helsinki. It’s also a clear sign that Netflix is now comfortable not just conducting M&A or partnering externally but also building from the ground-up internally—again, similar to its path with video a decade ago.

Netflix also made several new gaming announcements: Oxenfree (Night School Studio), Compass Point West (Next Games), Stranger Things Puzzle Tales (Next Games), Narcos: Cartel Wars Unlimited (Tilting Point), Desta: The Memories Between (Ustwo Games), SpongeBob Squarepants Get Cooking (Tilting Point), and more. You can also see the October games line-up here.

Nothing here will break the internet, but it at least shows an acceleration of activity (and therefore learnings), that its acquired studios are being put to work, and that Netflix is making games around notable IP (its own and others’). Netflix is also still clearly relying on partners to scale up content (at least in the early days). For example, it was announced that Tilting Point will launch three exclusive games with Netflix. Also, in tandem with the announcement of a Netflix Assassin’s Creed show, Ubisoft shared that it will be making three exclusive games for Netflix, one of which will be Assassin’s-Creed-themed. This latter one is most interesting because not only is Assassin’s Creed a AAA gaming brand, but we’ve recently seen how effective Netflix shows can be for bringing life back into games (such as The Witcher a couple years ago and Cyberpunk 2077 recently). If Netflix can bring more components of great IP ecosystems in one place that could be beneficial, then something like an Assassin’s Creed show + mobile gaming could serve as an onramp for getting millions of additional gamers into Assassin’s Creed.

Is Netflix a threat to other gaming businesses? No, not yet at least. But what’s clear is that Netflix is picking up the pace. Whatever you make of its strategy or odds of success, the team continues to make bigger bets—more partnerships, more games, more M&A, more hiring, and more internal studios. The Netflix gaming story—and its effect on how Hollywood will view games as part of its broader entertainment ecosystems (alongside other contenders like Sony)—will be super fun and interesting to watch unfold. Can Netflix build hit games based on its best IPs? Can it build high-functioning studios that rival the best in the world? Can it become a must-have service for fans of certain gaming brands? Will it be a partner that more gaming companies want to work with? Can management be patient, despite the financial stresses of a more competitive video market, and give a large gaming team the time it takes to engineer hits that move the needle?

There’s a lot left to this story, but the fresh news this past couple weeks shows that the most interesting times are yet to come. We’ll be paying close attention and keep you updated as progress unfolds.

Game Launch Radar

#1: Need for Speed Mobile

• Publisher: TiMi Studios/Tencent/Electronic Arts
• State: Private closed beta
• Territories: China
• Classification: Sports & Driving – Driving – Realistic Driving

• Quick thoughts:

  • The last mobile Need for Speed (NFS) game, Need for Speed No Limits, was launched by Electronic Arts back in 2015. Over its lifetime, it has garnered a global total of 264M downloads and $168M in revenue. Not only is it high time for EA to refresh the IP with a new mobile game, but also it looks like it’s doing it with none other than TiMi Studios this time around. That in itself gives us immense confidence in the future of this game. See the leaked gameplay video here.
  • Based on the video, this version of NFS immediately gives off NFS Most Wanted vibes— arguably the best NFS in the entire series. NFS Mobile is currently in a private closed beta, and only in China. The closed beta testing is scheduled to start in October 2022. The game currently features three cars, including McLaren F1, Lamborghini Aventador, and Lamborghini Gallardo.

  • While it is too early to say anything significant about the game’s future, there are a few key tailwinds to keep in mind:

    • NFS is one of the best-performing video game franchises of all time (over 150M+ copies sold), and its target audience is ripe for a fresh mobile port. But this also means that audience expectations will be high, which brings us to the next point.
    • Even though NFS Mobile will be TiMi Studios’ second racing game (after QQ Speed), its track record of developing high production quality games in previous unexplored genres is good and should imbue confidence. Further, this is not the first time that the studio will be working on the mobile port of a big IP owned by another big publisher (remember Call of Duty Mobile?), so it’s comfortable with all the collaboration hassles to ensure the essence of the IP is maintained in the product.
    • TiMi Studios is also very well versed in running highly efficient and profitable live operations for various titles. This is probably the key point that will be put to the test when the game goes global. This is because growing revenues through live operations has been a plague amongst F2P racing games that not many have been able to overcome.

#2: Undecember

• Publisher: LINE Games
• State: Preregistration
• Territories: Global
• Classification: Mid-core – RPG – Action RPG

• Quick thoughts:

  • If there are two notable macro-points for this game, they would be: 1) it likely has a huge LINE Games marketing war chest to compete with Diablo Immortal, and 2) it is a high production value Action RPG that is multi-platform from the get-go. The title is developed by Needs Games and serviced by LINE Games, and preregistration is currently open on Google Play. The worldwide release is scheduled for October 12, 2022. Check out the gameplay video here.
  • Probably one of the most interesting aspects of this game is its classless combat system, where players need to create their characters by experimenting with thousands of combinations derived from Gear, Runes, and Zodiac systems. It comes as no surprise that a lot of the gameplay is heavily inspired by Diablo III and Path of Exile.
  • The game has already garnered very significant attention in South Korea (let’s not forget LINE Games is behind this) with 514K downloads and $12.3M in IAP revenue. It will be interesting to see whether the game’s go-to market strategy will result in strong global appeal, especially in the west where Diablo Immortal will provide very stiff competition.

#3: Homeworld Mobile

• Publisher: Gearbox Publishing/Stratosphere Games
• State: Soft-launch
• Territories: Canada, Denmark, Finland, Iceland, Ireland, Norway, Sweden, United Kingdom, Germany
• Classification: Mid-core – Strategy – RTS

• Quick thoughts:

  • For the uninitiated, Homeworld was a RTS set in space, developed by Relic Entertainment back in 1999, and was the highest-rated computer game of that time by Metacritic, even though opinions were divided on the game’s plot and high difficulty. The game sold over 500K copies in its first 6 months and received several awards and nominations for best strategy game of the year. Since then, three more games in the Homeworld series have been produced, and Gearbox Software purchased its rights in 2013. In 2019, Gearbox announced the 5th game in the series, Homeworld 3, which is slated for a 2023 release. Therefore, it is very interesting to see Homeworld Mobile currently hitting soft-launch and being developed by Berlin-based Stratosphere Games, which has some experience building strategy games in the past. See the gameplay video here.

  • While Homeworld Mobile seems to maintain the essence of Homeworld, there are three key questions that come to mind:

    • Why is this game not cross-platform from the get-go? There could be a few possible reasons: 1) Gearbox wasn’t able to or doesn’t want to find one developer that can create a cross-platform experience, 2) Gearbox wasn’t able to or doesn’t want to manage a cross-platform publishing relationship between three different development entities (including itself), or 3) Gearbox believes going cross-platform with this title will actually hurt the business case more than help it. The last point is where the next question becomes important.
    • Why do a mobile RTS of Homeworld? It has been proven time and time again that RTS games fundamentally don’t fit the consumer needs of mobile. For example, RTSs demand very long session lengths, which isn’t a great engagement fit for most mobile audiences. At minimum, the mobile version of Homeworld will capture the hearts (and wallets) of the IP’s core fanbase, but at maximum, it will garner a niche following and potentially bring in a few more new IP fans.
    • Will Stratosphere Games be able to live operate a RTS of this nature and scale? Considering its track record with live operations for F2P games, Stratosphere Games is relatively unproven. It would be safe to assume that Gearbox is just as well unproven.
  • It will be interesting to see whether Gearbox uses the mobile version as a marketing funnel for Homeworld 3, but we’re skeptical of that strategy working given the post-IDFA context (RTS games almost require targeted advertising) and Homeworld being a relatively niche IP.

Other Game Announcements

• Bungie patents hint that Destiny could be coming to mobile. Link
• Supercell is shutting down Everdale at the end of October. Link
• Pokémon Go hit $4.5B in lifetime revenue. Link
• Dragon Nest 2: Evolution, a new MMORPG published by Tencent’s Level Infinite, is now in early access on Android. Link
• Homeworld Mobile, a space-themed RTS MMO, is now available in select regions. Link
• My Fairy Islands: Merge Animal, Loongcheer’s merging simulation game, is now available as open beta on Android. Link
• Summoner’s War: Chronicles, a cross-platform MMORPG by Com2uS, will launch in November. Link
• AFK 2: Journey, a fantasy RPG title by Farlight Games, is now in soft-launch. Link
• Project: Bloodstrike, a new FPS battle royale game from NetEase, is in early access. Link

Company Announcements

• Saudi Arabia’s Savvy Games Group has $13.3B set aside to acquire a major publisher. Link
• Google is shutting down Stadia in early 2023 and refunding all purchases. Link
• VK announces the sale of its international game developer and publisher MY.GAMES to Alexander Chachava, managing partner of LETA Capital, for $642M. Link
• Netflix is launching a new studio in Finland. Link
• Razer brings back its ‘Edge’ branding with a new 5G mobile gaming device. Link
• Nexters reports record high net income for H1 2021 and that its revenue grew 28% year-over-year. Link
• Well-Link, the provider of cloud graphics processing, raises an additional $40M. Link
• Hadean, which is building out scalable metaverse infrastructure technology, raises $30M, including from Epic Games. Link
• Mighty Kingdom, the studio behind Conan Chop Chop, is laying off staff in pursuit of profitability. Link
• FunPlus hires Jacob Krüger as the new user acquisition director. Link
• Tripledot appoints Daniel Freireich as Chief Games Officer. Link

Ecosystem Announcements

• Apple is enabling NFT sales but with its typical 30% take-rate. Link
• Free-to-play games are downloading podcast episodes to phones without consent. Link
• The UK’s Advertising Standards Authority is cracking down on ‘sexist’ mobile ads. Link
• Tenjin releases its Q3 hypercasual games benchmark report. Link
• According to a new report, 50% of Gen Z and Gen Alpha make in-game purchases. Link
• According to StockApps, iPhones recorded more ad-related fraud than Android in Q2. Link

Content Worth Consuming

• SKAdNetwork 4.0: What problems does it solve? (MobileDevMemo): “SKAdNetwork 4.0 represents a dramatic enhancement to the tool’s current state: it’s not an iterative change but a foundational re-imagination of the measurement framework. I’ve called SKAdNetwork dysfunctional: its limitations are so severe and its obfuscating effects so onerous that it is effectively useless for anything other than install accounting… SKAdNetwork 4.0 addresses each of these limitations and restrictions. But in considering the impact that SKAdNetwork 4.0 could potentially have on mobile app advertising—and it’s worth noting that SKAdNetwork is only useful for app install advertising campaigns, not campaigns that lead to web destinations—it’s more helpful to identify the specific problems that the update solves. Below is a survey of what are, to my mind, the three most pernicious of those problems, and how they might be solved with SKAdNetwork 4.0.” Link

• Coin Master is the $3B game no one seems to talk about (MobileGamer.biz): “Coin Master is one of the most popular and lucrative games on the planet, but no one ever seems to talk about it. So let’s talk about it. It’s a slots/builder hybrid game that has run paid promotions with Jennifer Lopez, Khloé Kardashian, Cardi B, the Spice Girls, and David Schwimmer to generate buzz—and it’s been working. Appmagic data suggests that Coin Master is about to hit a couple of big milestones. Developer Moon Active is close to totaling $3B in IAP over its lifetime ($2.993M at the time of writing) with almost 290M downloads to date (289.8M as of today). Appmagic data is based on developer payout, so it does not include the 30% the platforms take; the gross consumer spend is even higher.“ Link
• 11 Tips for Killer User Acquisition Ops (Matej Lancaric): “Here we go again! The previous article was so successful, so I decided to write a follow-up. Keep reading the tips to improve your UA. Simple, practical, and efficient!” Link
• Stellaris Venture Partners on Game Investing in India (GameMakers): “I speak to Rahul Chowdhri, an investor at Stellaris Venture Partners, about the venture capital market in India, the current state of investment here, and his outlook on investments in gaming in India.” Link
• Anna Yukhtenko: “Some tasks that I thought would take me a long time actually require much less time if approached tactically” (PocketGamer.biz): “Back in June, the UK announced that it would be conducting a four-day work week trial in which more than 70 companies were set to take part. The trial means that those involved will be working reduced hours for full pay, but productivity levels are expected to remain high. We have been looking into the four-day work week through the eyes of staff from game development studio Hutch. We asked employees to discuss the trial and how it impacts upon them. In July, we interviewed Charmaine Clavier-St John, and we now follow up by interviewing Anna Yukhtenko, the senior games analyst at Hutch.” Link