MMO Money: A Week of Lawsuits and Nintendo Being Awesome

Lawsuits abound this week in the online gaming world with both Activision Blizzard and Epic Games the focus of new lawsuits. Meanwhile, Nintendo gives us a much-needed breath of fresh air with how they treat gamers and their employees. Bidding for Nexon is set to begin in April with the list of bidders reduced to just 5. Find all of this and more in this week’s MMO Money.

 

Nexon Shortlists Five Bidders for the Company

There has been quite a lot of interest in Nexon recently from major companies around the world including Disney, EA, Comcast, Tencent, and many others. But, Nexon has now lowered that list to just 5 bidders. Those five include Tencent and Kakao Corp. along with three private equity firms, Bain Capital, MBK Partners, and an unidentified firm. Quite significantly Netmarble isn’t included in this list. Netmarble had been putting together a consortium of Korean firms to bid together, believing that selling to an overseas company will damage the local games industry. In fact, this may be why we don’t see any Western-based interests in the shortlist. Bidding for the 98.64% share of Nexon that is expected to be worth as much as $13.3 billion is expected to begin in early April.

 

Source: Games Industry

 

Nintendo Asks Mobile Partners to Stop Players From Spending So Much

In a time when it seems like all game companies are after is your money Nintendo comes out and gives you a little bit of faith in the industry once more. The company is concerned with its self-image and has asked some of its mobile game development partners to adjust the microtransactions in their games so players are less likely to overspend. A source at CyberAgent, who owns the developers of Dragalia Lost told the Wall Street Journal, “Nintendo is not interested in making a large amount of revenue from a single smartphone game. If we managed the game alone, we would have made a lot more.”

This also comes less than a week after a recruitment page for Nintendo shed some light on what it’s like working for the company. The average salary is ¥9.03 million, that’s $80,000, employees can potentially get bonuses in June and December plus a pay increase every April. The average workday at Nintendo is seven hours and forty-five minutes long. As if all of that doesn’t already sound amazing full-time employees stay at the company for an average of 13.5 years. Anyone familiar with the games industry in the West will know that developers tend not to stay in one company for very long. If you’re interested in knowing more about that check out this article from Polygon.

From a personal point of view both of these pieces of news make me more likely to look at Nintendo games and support what they’re doing. Their views and the way they treat their employees is a breath of fresh air in the games industry today.

 

Source: Wall Street Journal, Games Industry

 

 

Vivendi Sells Remaining Ubisoft Shares

Ubisoft Joins Forces With Horror Movie Studio

Its been almost a year since Vivendi announced it was going to stop trying to acquire Ubisoft and finally the remaining shares it had in the company have been sold. The remaining shares it had was about 5% of the company, €429 million.

At one point in time, Vivendi owned a 27.3% stake in the company and though its attempts to own the company completely failed they did bring in about €2 billion, a capital gain of €1.2 billion. Though they failed to achieve their original goal you can hardly call the entire thing a failure. I’d love to fail my way to €2 billion, that’s about $2.2 billion USD. Vivendi has stated that they will honor their agreement and not buy shares in Ubisoft for at least 5 years.

Vivendi had previously owned Activision Blizzard but it sold the company to an investment group led by Bobby Kotick and Brian Kelly for $8.2 billion. That deal pushed Vivendi out of the games industry for 3 years until it bought its way back in with a hostile takeover of Gameloft.

 

Source: Games Industry

 

A New Law firm is Encouraging Shareholders to Sue Activision Blizzard Over Bungie Split

Another law firm is inviting shareholders to join in a class action lawsuit against Activision Blizzard, accusing the company of misleading shareholders over the end of its partnership with Bungie. The firm’s loss submission form makes the following claims:

Activision failed to disclose that “the termination of Activision Blizzard and Bungie’s partnership… was imminent”

That this termination “would foreseeably have a significant negative impact on Activision Blizzard’s revenues.”

And as a result “Activision Blizzard’s public statements were materially false and misleading at all times.”

Activision Blizzard previously said that the split from Bungie was because Destiny 2 failed to meet financial expectations. But in a recent SEC filing, the company recognized $164 million in revenue from Destiny for 2018 as a result of the split.

This comes at a time when shareholders for Activision Blizzard aren’t too happy with the company. They’ve had to warn investors that cutting hundreds of jobs (800 in total) may damage the company. They even went so far as to say there can be “no assurance that our business will be more efficient or effective” than it was before this new strategy.

Why can’t you be more like Nintendo?

 

Source: Games Industry

 

Man Sues Epic Games Over Predatory Loot Boxes

While we’re on the topic of lawsuits we should mention that Epic Games is being sued, yet again. This time though it isn’t because they used a dance in their game, instead it’s over allegations that Epic Games has engaged in predatory schemes with loot boxes in Fortnite. They allege that Epic intentionally designed Save the World to hinder player’s progress if they didn’t spend real money. They also say that Epic has “made a fortune on in-game purchases, preying in large part on minors who are especially susceptible to such predatory tactics.” The lawsuit accuses Epic of violating California’s Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law.

What the lawsuit doesn’t mention though is that since January Epic Games now shows the contents of loot llamas in Save the World before they’re purchased with V-Bucks. So it is possible that the lawsuit won’t go anywhere since they’ve already made changes to the areas that the lawsuit covers.

 

Source: Games Industry

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Bungie and Activision Part Ways

If there is one headline you’re going to see quite a lot of today it is that Bungie and Activision part ways seemingly amicably. The two started working together in 2010 and have since created Destiny and Destiny 2, games that have together delivered more than 50 million games and expansions to players around the world.

The announcement of the separation came via the Bungie website which stated “We have enjoyed a successful eight-year run and would like to thank Activision for their partnership on Destiny. Looking ahead, we’re excited to announce plans for Activision to transfer publishing rights for Destiny to Bungie. With our remarkable Destiny community, we are ready to publish on our own, while Activision will increase their focus on owned IP projects.”

There is no date for when Bungie will be fully independent again, thought the announcement does state that they’re already in the early phases of the separation. They also stress that they will be making the transition as seamless as possible for players. This includes service for Destiny 2 on BattleNet where the game will continue to get full support on the client side.

This also comes at a bit of a bad time for Activision. Just yesterday new divisional presidents within Activision were announced. Meanwhile on the Blizzard side of Activision-Blizzard things are looking rather grim. Mike Morhaime, the former President and co-founder of Blizzard is stepping down from his advisory position with the company after having left his position in October. Over the last few months, there have been a number of notable departures from the company along with reports of a massive shift in the culture at Blizzard. All of this leaving fans wondering what is going on at Activision-Blizzard.

As for Bungie, this is seen by many as a good move for them. Back in June, they received a more than $100 million investment from Netease that will allow the company to create new worlds, moving away from Destiny. Bungie has filed a trademark for something called Matter, but so far, whatever that is hasn’t been announced.

What do you think about this move? Does it spell doom for Bungie or is this exactly what the company needed? Let us know in the comments below.

 

Source: Bungie Official Site

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MMO Money: Tencent Gets Budget Cuts and More Quarterly Reports

More quarterly reports have been released in the last few days and it isn’t really very good news. Activision-Blizzard saw a drop in stock price after the release of their quarterly report. While NCSoft is more of a mixed bag. Perhaps one of the biggest stories, however, is that Tencent gets budget cuts to try to reduce the amount they’re losing as the saga with the Chinese government continues.

 

Tencent Gets Budget Cuts

Tencent mobile financials - MMOGames.com - Your source for MMOs & MMORPGs

We’ve been following the Tencent story for a few months now as the company hemorrhages money in the face of China’s ever-increasing crackdown on the gaming industry. The company has spent much of 2018 losing billions of dollars, $190 billion in value as China has continued to step up their efforts to get kids gaming less. Tencent has started to respond to this after months of waiting it out did more harm than good. All games that haven’t made it through China’s licensing process are now being hit with budget cuts.

It is the unlicensed games that are the biggest concern for Tencent. They’ve pours millions into these games that have just been sitting there since this all started in April when the freeze on new licenses was introduced. It was hoped that Tencent would be allowed to continue getting approvals through a special “green channel” but, after months of waiting for that to come to pass China has killed that possibility.

This is, of course, starting to have a knock-on effect on the international games industry. Newzoo actually lowered their global games forecast for the year. It isn’t clear how long this will continue but, some analysts believe it could be March 2019 before the whole Chinese audience problem is worked out.

 

Source: Games Industry

 

NCSoft Quarterly Report Has Ups and Downs

Total sales are down in the third quarter for NCSoft according to their most recent quarterly report. Sales are down 7% quarter on quarter and 44% year on year to KRW 403.8 billion. This meant that the operating profit for the company is also down, 13% quarter on quarter and 58% year on year.

For the five PC games that NCSoft reports on there was a 1.5% growth quarter on quarter. Lineage II, Aion, and Guild Wars 2 all had revenue higher than the second quarter. Lineage and Blade & Soul were both down, though only very slightly.

Mobile gaming, which was so massive for them in Q3 2017 with 551,032 million KRW is down to 216,490 million KRW this quarter. That is up from last quarter, however. That is in part thanks to the resilience of the Lineage M update effect. NCSoft does have a number of mobile games in the works, so once these start releasing we’ll see the sales numbers go up again.

In Taiwan, sales went up 68% quarter on quarter thanks to Aion’s F2P conversion. However, royalty revenue went down 44% quarter on quarter because of the elimination of one-off Lineage M Taiwan revenue. Korea continues to be their biggest market which has always been the case for NCSoft.

In NCSoft’s future, we have several mobile games to look forward to, though none of them have release dates yet. We also know that Wildstar will be shutting down on November 28th.

 

Source: NCSoft Quarterly Report

 

Activision-Blizzard Quarterly Report Causes Stock to Drop

Weaker than expected results in the Activision-Blizzard have caused an 11% drop in share price for the company. This is the second time in a week that this has happened. The first came with the disastrous reveal of Diablo Immortal at Blizzcon.

Analysts suggest that there is pressure for current titles to perform better than they are. This makes sense because Activision-Blizzard doesn’t have a whole lot scheduled for 2019 yet. Another Call of Duty game is expected in Q4 2019. There’s only one other Activision game expected next year at the moment. Blizzard, on the other hand, has both Diablo Immortal which may release in 2019 and WoW Classic which will certainly bring many players back.

What was so bad about the quarterly report? Total revenue was down nearly 7%, Destiny 2 is underperforming, and monthly active users is down. However, PC revenue is up, in part thanks to the launch of Battle for Azeroth, World of Warcraft’s recent expansion.

Activision-Blizzard CEO Bobby Kotick said, “Activision Blizzard’s results for Q3 exceeded our prior outlook as we continue to entertain large audiences, drive deep engagement, and attract significant audience investment across our franchises. Our unique advantage continues to be our ability to create the most compelling interactive and spectator entertainment based on our own franchises, combined with our direct digital connection to hundreds of millions of customers, in over 190 countries. With these competitive advantages we continue to connect and engage the world through epic entertainment.”

But, it would seem that investors aren’t all that convinced. It looks like the rest of 2018 and 2019 might be a difficult time for Activision-Blizzard. But, we’ll just have to wait and see.

 

Source: Games Industry, Quarterly Report

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Activision-Blizzard Stock Takes a Hit after Diablo Immortal Reveal

The negative reaction to the Diablo Immortal reveal has hit the company in the place where it arguably matters the most: the stock market. After the game’s maligned unveiling at BlizzCon, Activision-Blizzard’s shares started to trend downwards by the end of the trading day yesterday.

diablo immortal reveal

By the end of Monday at the NASDAQ stock exchange, ActiBlizz’s shares dropped 7.2%, bringing the company on track for its lowest close since January. The game continues to receive backlash from Diablo fans, yet its reveal has gotten praise from financial analysts, with one quoted as calling the game’s announcement “Blizzard’s first shot on goal into the big global mobile game market.”

Blizzard reps at the floor of BlizzCon appeared ready to press against common player accusations. One such accusation is that Diablo Immortal is a reskinned Crusaders of Light, which was refuted by one rep. “Blizzard, in partnership with NetEase, has built ‘Diablo Immortal’ from the ground up for iOS/Android,” says the rep.

Another response from Blizzard is related to early mutterings that a proper Diablo 4 reveal was on deck to be unveiled at BlizzCon but was removed from the show at the last second — a report that was flatly denied by the company.

“We can say that we didn’t pull any announcements from BlizzCon this year or have plans for other announcements,” reads the official response. “We do continue to have different teams working on multiple unannounced Diablo projects, and we look forward to announcing when the time is right.”

Our Thoughts

We suspect this stock price hit is a correction more than a regular trend, but it’s impossible to ignore that Diablo Immortal has incensed a whole lot of fans. While there are a couple of us that are certainly intrigued by the game, we also have to agree that a mobile title being introduced at Blizzard’s biggest fan convention was, at the absolute least, pretty tone deaf.

Sources: Bloomberg via PCGamesN, Variety, Venture Beat

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Blizzard CEO Mike Morhaime Steps Down

There’s a changing of the guard over at Blizzard HQ. Blizzard CEO Mike Morhaime, who has been a part of the game developer and publisher for over 27 years, is officially stepping down from his position and entering a new advisory role.

blizzard ceo mike morhaime

The announcement was made on Blizzard’s central site, with some parting words from Mr. Morhaime and confirmation that his duties will be turned over to World of Warcraft’s J. Allen Brack. The announcement also features some words from Brack as he humbly takes his spot in the big chair.

“When we started Blizzard we just wanted to make great games. What we realized is that the games we create are really just a framework for communities and human interaction,” reads Morhaime’s farewell. “You have given me the inspiration and drive to pour my heart and life into what I do. I literally couldn’t have done any of it without you.”

“To be chosen to lead Blizzard into the future is both a huge honor, and a tremendous responsibility,” reads Brack’s statement. “I feel a deep sense of gratitude to Mike. His work on some of our industry’s most iconic games is the reason I came to Blizzard.”

On the subject of Blizzard employees, the company announced that it will be removing the Blizzard Holiday Plan, an end-of-year bonus program that would have seen Morhaime earn over $360k additionally. Instead, participating employees in this bonus program will see their salaries adjusted to reflect the amount this bonus would normally provide. Additionally, a “Morhaime Profit Sharing Plan” is in place that will grant Morhaime a bonus based on Blizzard’s overall profits.

Our Thoughts

So fiscally speaking, Mike will be just fine. Moving away from that, we’d like to thank Mr. Morhaime for his leadership of Blizzard and his hand in seeing the studio’s games come to life. We also would like to congratulate Mr. Brack on his promotion and look forward to seeing where the company goes from here.

Sources: Blizzard website, Gamespot

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MMO Money: Mobile Revenue is Breaking Records

Quarterly report season, it’s exciting and a little bit brain melting. In between it all we’ve got other business news to talk about too including esports betting and more lootbox drama. We also get a real-world example of what can happen to a company’s stock when an embargo is broken and false information is released. There’s one theme that runs throughout this article, mobile revenue is breaking records all over the place. There’s a lot of information to digest in this week’s MMO Money so grab a drink, maybe a snack too and sit back for a wild ride. It all ends with more lootbox talk from Begium, Guild Wars 2’s game director, and everyone’s favorite…EA.

 

PUBG Mobile Revenue Only 1/3 Fornite iOS Revenue

Mobile Revenue is Breaking Records

While PUBG mobile and Fortnite iOS came onto the scene at roughly the same time back in March, PUBG has only started to monetize in the last week. The revenue for that first week isn’t amazing. In fact, it’s one third the revenue Fortnite got in its first week being on iOS only. For those who don’t know, PUBG is available on both Android and iOS. Fortnite generated 3.7 million dollars its first week on mobile compared to PUBG which comes in around $1 million.

The report from Sensor Tower also states that Fortnite beat out PUBG with fewer players, 3.7 million downloads vs 22 million. But it doesn’t show how many of those 22 million downloads since launch are still active PUBG players, so this isn’t really a fair comparison to make. The 3.7 million Fortnite players would have all been active at some point in that week simply because it was the very first week, and not a couple of months later. Randy Nelson, Head of Mobile Insights at Sensor Tower attributes the differences to the means of monetization. “There’s also the possibility that the way Epic Games has structured its purchases may be giving Fortnite a leg up on its biggest competitor,” he said. “It offers limited-time costumes and set daily items that players can purchase outright, as opposed PUBG Mobile’s primary use of loot boxes that produce random (and often duplicate) items when opened by players.”

 

Activision-Blizzard Q1

They’re winning all of the money. End of story.

Overwatch Retribution Event - McCree and Reaper

Kidding…well sort of. They really are winning all the money. Activision-Blizzard had a net revenue of $1.97 billion for Q1, that’s up from $1.73 billion for Q1 2017. Net revenue from digital channels were at an all-time quarterly record of $1.46 billion. In Q1, Activision Blizzard had 374 million monthly active users, 38 million of those coming from Blizzard games. Preorders for WoW’s Battle for Azeroth expansion are ahead of where they had originally forecast.

The Overwatch League has strong viewership globally, reaching millions of people every week. As a result of the league and the upcoming playoffs, this summer there is increased engagement with the franchise. This means more people are playing and watching for longer than previously.

On the mobile side of things, King has had its highest quarterly net bookings in history. That’s money made from merchandising, products sold, licensing fees, and so on. This quarter King also had 2 of the top 10 highest-grossing titles in US mobile app stores for the 18th quarter in a row.

Generally speaking, things are great for Activision-Blizzard, so much so that they’re raising their outlook for the full year.

 

German Mobile Game Revenue Seeing Explosive Growth

Thanks to the many articles we’ve done covering the 2017 games business scene we know that mobile is still growing in a massive way and is already really dominating the gaming industry. But there’s one market in particular that is seeing massive, unexpected growth: Germany.

The German Games Industry Association reported on data from market research company GfK that in 2017, mobile gaming revenue grew faster than all of the German gaming market. Mobile gaming sales rose 21% versus the overall market which saw only 15%. Most of the revenue came from in-app purchases which totaled €481 million ($569 million). Just to put all of this in perspective, in-app purchases have more than doubled since 2014. It also doesn’t look like things are going to slow down any time soon. What this does show is that Germans are a fantastic audience for mobile games, unlike most of Europe who seem to prefer to keep a tight hold on their wallets.

 

Want to learn more about the games industry in 2017 check out these articles:

2017 Online Games Financial Review
2017 Games Industry by the Numbers
2017 Games Industry Revenue

EA Celebrating Record Year

It’s good news for EA, despite all the very public lockbox drama they had throughout the last year. Game sales are actually down, but live services are picking up the slack and now make up 40% of the publisher’s income. For the full year, EA’s net revenue was up 6.2% to $5.15 billion. But the news that most people were really hoping to hear was about Anthem and EA did not disappoint, saying that Anthem is set to ship in the last month of the last quarter of the year, that gives it a launch date in March 2019. During the call, they also talked a bit about lockboxes, but we’ll go into more detail on that in the section dedicated to all things lootbox.

 

Dow Jones Reporting Problem

Dow Jones News Service broke embargo and false information was released ahead of Activision-Blizzard’s quarterly report call. This information caused Activision-Blizzard’s stock to tumble, as well as stock for EA and Take-Two. Activision-Blizzard suffered a 6.3% drop, but within a couple of hours the correct information was published and in the end, Activision-Blizzard closed down 2.3%. Afterward, Dow Jones issued a statement saying, “We regret our error as well as inadvertently breaking the embargo. We have issued a correction and are reviewing our processes.”

 

Tencent Q1

Have you had enough with all the good news yet? Well here’s some more for you. Tencent is reporting a 48% increase in revenue year on year. Most of this has been driven by mobile games and social platforms. Total revenue for the quarter was $11.69 billion with operating profit at $4.88 billion. Smartphone game revenue increased 68%. This includes both mobile games and social games on their social media platforms like QQ, which has 805.5 million active users. Facebook is at 2.2 billion, just in case you’re wondering.

On the PC gaming front, revenue remained fairly flat year on year. But with new titles expected in the coming months, Tencent has said this will change. The company also attributes the lack of significant revenue increase on more and more people making the transition to mobile gaming. Tencent is going to be responsible for releasing PUBG and Fortnite to China, assuming they get government approval. They’re also going to publish Ubisoft mobile and PC games in China. So, the future is looking bright for this monster of a company.

 

Boss Key Saga

By now you’ve almost certainly heard about the saga of Boss Key. The company shut down this week just a month after putting a new game up on Steam Early Access. If you haven’t heard all of the drama, or you haven’t seen the concept art from the games they never got to make there’s an entire article on the Boss Key saga.

 

Pearl Abyss Q1

Pearl Abyss had a record first quarter thanks to mobile games. Are you starting to see the same pattern we are? Net profits are up a massive 82.9% compared with the same period last year. Much of their success is thanks to releasing Black Desert Mobile in Korea. North America and Europe account for 56% of Black Desert Online’s game sales. Coming up, the company is working on MMOFPS Project K, casual mobile MMO Project V, and Black Desert Mobile is going to expand to more regions of the world. You can expect it to reach the West sometime next year.

 

Kakao IPO

Black Desert Online

Speaking of Black Desert Online’s performance, we need to talk about Kakao Games, the publisher of BDO in the west. They’re preparing an IPO on the KOSDAQ in Korea. If it passes the screening required, it will most likely go public by the end of this year. According to Samsung Securities, Kakao is worth an estimated $1.4 billion. In addition to BDO, they’re also responsible for publishing PUBG in Korea and developing mobile games.

 

NCSoft Q1

All of NCSoft’s games are down this quarter with the exception of Aion. Guild Wars 2, the company’s most popular game in the west saw a massive, though entirely expected drop. Q4 2017 is where all the revenue for the game’s last expansion Path of Fire was at, so while there was a 32% drop quarter on quarter, year on year there was actually a 66% increase.

During the investor call, NCSoft admitted that Blade & Soul II for mobile has been delayed until 2019 because it didn’t meet expectations. It has a new team and a redesign which is the same thing they did for Lineage Eternal.

 

Nexon Q1

Finally, we’re at the last quarterly report that has been released as of this moment, Nexon. Much like many of the companies already mentioned in this article, Nexon has a strong showing this quarter with $827 million in revenue. That’s up 21% year on year. One thing that really makes them stand out from other companies is that most of its business, 84% of it in fact, was on PC. The vast majority of Nexon’s earnings came from China (67%) and Korea (22%) while North America accounted for just 4%. Later on this year in the west we can expect to see Durango, Maplestory 2, Maplestory M, and Final Fantasy XI mobile.

 

Esports

You can expect to see esports betting blossom thanks to a ruling by the US Supreme Court. They effectively overturned the 1992 Professional and Amateur Sports Protection Act which banned sports betting in all but a few states. The Supreme Court ruled that PAPSA violated the Tenth Amendment. What does this mean for esports betting? It means we’re going to see it a whole lot more. DraftKings have already got plans to move into betting for sports and esports.

In other esports news Quarterback Inc. has raised 2.5 million dollars in its initial seed funding round. The funding will go towards continued development and growth of Quarterback’s esports gaming platform. The seed round was back by Bitkraft Esports, Crest Capital Ventures, Deep Space Ventures, and UpWest Labs.

 

Lootboxes

Finally, we end this article as we always do with a look at what has been going on around the lootbox controversy in the last two weeks. The biggest news has been that the Belgian Gaming Commission released their full report on the controversy. The report itself is 25 pages long and in English, if you want to give it a read, but the most important thing to take from it is that they recommend criminal prosecution being initiated. Another recommendation that they give is age verification and banning the sale of games featuring loot boxes to minors. Wow.

Gamasutra posted an interview with Guild Wars 2 game director Crystin Cox from GDC that touched on the lootbox controversy that is well worth a read as she had a lot to say. She had a hard time defining what an ethical, non-painful lootbox experience might be like and she also said she hopes the government doesn’t get involved in regulation. Guild Wars 2 was specifically mentioned in a recent article here on MMOGames talking about a site that explains microtransactions for games. Guild Wars 2 has frequently been called out by players for their lootbox practices.

Lastly, as promised there is EA news to talk about. EA is adamant that lootboxes aren’t gambling at all. Why? Well, according to EA CEO Andrew Wilson, it’s because players always get a specified number of items and there’s no way to cash the items out or sell them for currency, real or virtual. This argument is a bit like Santa promising you’ll get 5 things for Christmas and on Christmas morning finding out that 3 of them are lumps of coal, one is a gum wrapper, and the other is reindeer droppings. You still got something though!

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2017 Games Industry Revenue

Now that we’ve had a look at who is gaming and what types of games they like it’s time to dive into the market a little bit more. If you’re interested in the two previous articles about the gaming industry in 2017 I recommend having a look at 2017 Online Games Financial Review and 2017 Games Industry by the Numbers. They aren’t required reading for this article, but they do offer more beautiful data for you to consume. With that in mind, let’s start our look at 2017 games industry revenue.

The infographics used in this article were created by NewZoo and Filmora. The data was collected by NewZoo, Business Insider, and a number of esports dedicated sites. To make it easier to read we’ve broken the larger infographics up into individual segments. Not only does this make it easier to look at the data it means we can talk about each part one at a time.

 

Money Spent on Gaming

NewZoo and Filmora have slightly different takes on revenue and spending. Filmora’s graph is how much money will have been and will be spent on games while NewZoo focuses on revenue. While I am including them both and comparing them I would put more faith in NewZoo’s information than Filmora’s.

In 2017 money spent on mobile gaming was $46.1 billion, that’s 42% of all gaming spending, which was at $108.9 billion. By 2020 it is anticipated that mobile spending will make up 50% of all money spent on gaming globally. The interesting thing that this chart includes is the Browser PC game market. The browser-based gaming scene has been shrinking for a long time now and we can see that currently, it makes up just 4% of the market. This is largely due to the horrible reputation browser games have for being cheap, poorly made money grabs.

 

Meanwhile, NewZoo says that there was $121.7 billion in revenue in 2017, and 46% of that being from mobile games. NewZoo doesn’t account for browser games separately from PC games. NewZoo states that more than half of gaming revenue will come from mobile games starting this year. With both the PC and console share of the market going down slowly over time. By 2021 mobile gaming is going to be a 100 billion dollar market. If you read 2017 Games Industry by the Numbers you might remember that most of that mobile growth will take place in the Asia-Pacific market. With mobile gaming’s strength only continuing to grow it is safe to assume that we will be seeing a whole lot more mobile games coming in the future.

 

Top Companies by Revenue

All of this brings us now to a big question, which companies are making the most money? Leading the pack is the current big spender: Tencent. The company has its fingers all over the gaming industry. It owns a part of Elite Dangerous’ creators Frontier, they’re working with NCSoft for a Blade & Soul Game, and yes, they’re bringing Fortnite to China. Some fantastic business choices along with making games that are beloved in Asia-Pacific region means Tencent is king and by a significant margin. With nearly half the revenue of Tencent, the next on the list is Sony. The biggest surprise of the whole list is Google. Although they’re known for many things, including making the internet run, gaming isn’t one of the things you usually think of.

 

Best Selling Video Games in the World

Tetris was first released in 1984 and since then it has been a cultural cornerstone for the gaming industry. Today it is the best selling video game in the world. Newcomer (at least compared to Tetris) PUBG also makes the top ten best selling video games in the world. The list doesn’t really hold many surprises if you’re familiar with the industry. Unfortunately, because Filmora doesn’t actually explain the data it can be hard to understand what we’re looking at. But a quick Google search shows that Tetris has sold 170 million copies. So that’s what we’re looking at. Minecraft is quickly catching up with Tetris, will it be able to pass it? I honestly couldn’t say. The Minecraft scene is a deep hole I dare not jump down else I may never return. The biggest thing Tetris has going for it is that is a casual game that has stood the test of time. A new Tetris game is released nearly every year at this rate, with many titles usually coming out in one year. But, the last one was released in 2014 its hold on the market will start to slip.

 

Games Market by Device

Finally, just to expand on some information we’ve already talked about, we can look at how the PC and mobile markets break down by device. I’m not entirely sure why NewZoo didn’t do this for console as well, but we’ll work with what we have.

Just 10% of the mobile market is tablet games. That’s still 13.9 billion dollars, but that’s not an amazing number. The vast majority of the market is taken up by smartphones. This isn’t too much of a surprise really as almost everyone, no matter their age has a smartphone, while tablets are a little more niche.

Over on the PC side of the industry NewZoo is saying that browser games make up 3% of the market in 2018. That’s 1% lower than what Filmora said in the previous chart. The rest of the PC market is taken up by boxed and digital sales, because…what else is there? Again, it would have been nice to see the breakdown go even further to include the boxed sales separately.

 

So there we have it, the third installment of the 2017 games business review is done. Tencent is king of the world, mobile gaming is still getting bigger, and things are looking good all around. We have one last article coming out in the next couple of days. The final one will be focused entirely on esports.

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Activision Blizzard’s Record High In Q1 2018 Financials

‘Tis financial season and Activision Blizzard had a big one, widely driven by World of Warcraft, Overwatch, and Candy Crush. Reporting $2 billion in Q1 revenue and 374 million active users across all games, this is a record high for Activision Blizzard in the first quarter of the financial year.

Activision Blizzard's Record High In Q1 2018 Financials

More specifically, Activision made up $92 million of the company’s operating income, mainly on the strength of Call of Duty. Blizzard made up $122 million of the operating income driven by “in-game content” through all of their games, strong Battle for Azeroth pre-sales which are ahead of plans and likely driven by unlockable Allied Races in World of Warcraft, as well as the Overwatch League which has seen huge success this year with “strong and consistent” viewership every week. King then made up $191 million of the operating income, with Candy Crush particularly “reaching its highest net booking since Q4 2013.”

Battle Royale Likely Coming to Activision Blizzard Titles

During the earnings call, Activision Blizzard were asked about what they had learned from Fortnite and PUBG‘s success, to which Activision COO Coddy Johnson commended the battle royale genre’s “compelling survivor mechanics and large, in-game player pools” and how they have “brought tens of millions of completely new players into gaming both on traditional platforms like console and PC, but also on newer platforms for the genre like mobile.” CFO Spencer Neumann commented that the battle royale genre is “contributing to the innovation and expansion we’re seeing in the industry”, while CEO Bobby Kotick added, “When we see people innovate in an interesting and impactful way, we are very quick to figure out how to capture inspiration from innovation. When we see things that appeal to our audiences, we are very good at being inspired by those.”

We already know that Call of Duty: Black Ops 4 will come with a battle royale mode, but could there be more inspiration taken from this area within Activision’s vast library?

Destiny 2 Looking Glum But New Content Talked About

There was no denying from Activision Blizzard’s Q1 report or the earnings call that Destiny 2 has not reached the level of success expected of it. Johnson offered a view of where they plan to take the game in the future; “The three things we know we’re going to do and that the community is looking for is: make the player more powerful, provide rewards, and make the endgame more meaningful.”

Activision Blizzard's Record High

Overall, Activision wouldn’t reveal any definitive details on the current status of Destiny 2’s player numbers or profit margins, which doesn’t sound all too promising. However, that may be due to change with Warmind’s release next week, also Johnson did make sure to tease a fall expansion bringing many gameplay innovations including one game mode that “introduces a whole new style of play for first-person shooter gaming generally and certainly for the shooter space that Destiny created.” While we don’t have any concrete details on this game mode or the fall expansion for Destiny 2 itself just yet, we get expect to hear more on this during next month’s E3.

 

Our Thoughts

There’s always a lot to take in following this quarterly financial reports, but it seems fairly clear what Activision Blizzard’s record high in this first quarter means for their games. World of Warcraft is recovering nicely with promising sales for Battle for Azeroth, the Overwatch League has been a resounding success, people still spend too much on mobile games, battle royale continues to soar whether we like it or not, and Destiny 2 has some serious work to do if it wants to pull itself back to where it should have been from the beginning. Here’s hoping.

Source: Activision Blizzard Q1 2018 Presentation, GamesIndustry, VG247

 

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Blizzard Alludes to Expanded Mobile Development for its IPs

So, during the Activision Blizzard earnings call, there was lots of good news for people who make money off of investing in the company and for the top brass. Not terribly shocking, all things considered. What is perhaps surprising is during said call CEO Mike Morhaime referenced the company’s work on expanding its games into the mobile gaming market.

activision blizzard earnings call

A transcribed statement from Morhaime during the call states that Blizzard is finding an “exciting opportunity” in taking its PC and console franchises and bringing them to mobile. “The technology we feel has advanced to a point where we feel there is a mobile platform now that can fulfill the requirements of our core IP,” said Morhaime. “Mobile gaming is of course now very much at scale, large and growing with billions of people around the world who essentially have a mini console or PC in a pocket.”

Blizzard appears to be eyeballing the Asian market specifically in the move, which remarks on how some of the most popular mobile games in Asia started life as PC titles. “We think there is an opportunity for us as well over time to explore our IP on mobile in that region,” said Morhaime.

A timeline for when these Blizzard games will arrive was not provided, but Morhaime did state the company’s intention to “get it right” and to provide quality games for their fans. That said, he expects “early results” from mobile investments this year and a “meaningful impact” in 2019. Morhaime promised more details further down the road as work continues.

This comes as another piece of confirmation to Blizzard’s moves into the mobile gaming sector, as job postings made last year saw openings for an FX artist for a Warcraft mobile title in May and a senior client engineer posting for a mobile MMORTS in September.

Our Thoughts

We’re not terribly surprised that Blizzard wanted to wait and see where mobile gaming development went in terms of tech and quality before making the leap. If this company is good at nothing else, it’s waiting to see how other people do something, then taking that something and refining it to an absolute mirror finish to the point where they become mistaken as inventors of the original thing.

Source: Massively Overpowered

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