MMO Business Report: US Tariff on Game Consoles, Pearl Abyss Quarterly Report, and More

Our MMO Business Report is back once again! This week we have some more quarterly reports, this time from Tencent and Pearl Abyss. We’ll also be taking a look at US tariff on game consoles, and a disappointment in the esports industry.

 

Tencent Quarterly Report is Looking Up

Honour of Kings

Tencent’s online game revenue has increased 8% year on year. This is thanks to the end of China’s freeze on game approvals and because of Honour of Kings which has been a constant, steady earner for the company. Mobile games made the most revenue, $3.2 billion USD which is up 26% from last year, but in the same time period, they saw a decline in PC game revenue of 11% to $1.7 billion USD. Looking back at where Tencent was during Q2 last year  and comparing it to this year, you have to keep in mind that last year they were only able to release one new game in China during all of Q2. In comparison, in Q2 2019 they released 10 mobile games, so it shouldn’t be a surprise that the company is doing well.

 

Source: Tencent Quarterly Report

 

MMO ‘Seed’ Raises $22 Million from Series B Funding

Seed

SpatialOS MMO Seed has raised an additional $22 million in funding. The money came from investment firms Novator, Northzone, Neoteny, firstminute capital, Makers Fund, New Life Ventures, and LEGO. Yes, THE LEGO. When combined with previous funding this brings the total for Seed up to $37.42 million.

“We are thrilled Novator and LEGO Ventures are making this big bet on us and for getting Ragnarsson on as our Chairman – he truly understands the value of single-shard MMOs and brings his amazing experience from CCP to Klang,” said Klang CEO Mundi Vondi. “Partnering with LEGO Ventures, the global phenomenon of emergent gameplay, is fantastic and aligns perfectly with our vision. Finally, we are humbled that our great current investors Neoteny, firstminute Capital, Northzone, and Makers Fund are joining the round as well and couldn’t be more excited to have the fuel to deliver SEED without compromising on its very big vision.”

 

Source: Games Industry

 

Pearl Abyss Quarterly Report Wows

Black Desert Online

Q2 2019 was Pearl Abyss’ best performing quarter in terms of sales with an amazing 266% rise in net profits quarter on quarter. The overseas market (in this case meaning outside of South Korea) makes up 74% of their sales. During the quarterly report, they also talked about upcoming games. EVE: Aether Wars has been given the green light despite originally only being a technical demo. Black Desert Mobile is set to launch in Q4 2019 globally. Project CD is a new AAA RPG that isn’t based on the Black Desert IP and is going to be targeted to a global audience. Project K and Project V are casual shooting games developed using Pearl Abyss’ new engine. No dates yet for the unnamed projects thus far.

 

Source: MMOCulture

 

Gfinity Esports Australia Closing

Gfinity Esports Australia which has been holding esports events across Australia for the last two years, will be closing in November. The company put out a press release that made it clear the company had not seen the return that was forecast when it was launched.
Dominic Remond, CEO of Gfinity Esports Australia said, “We would like to thank all our stakeholders and the Australian esports community for their support over the last few years. This is a very difficult announcement for all our staff. We will continue to meet our obligations to our existing partners, including Supercars with the upcoming Gfinity Supercars Eseries, and deliver outstanding events until we close later this year.”

Ciaran Davis, Chief Executive of HT&E added, “Esports remains an exciting industry with significant global interest and activity and HT&E believes it will become a mainstream and significant content-audience-commercial medium in the long term. But our absolute focus is on our core radio business and the economics of esports in the Australian market are yet to deliver sustainable, positive earnings. It is critical our investments deliver value for shareholders and with esports there is no certainty on when a positive contribution might be achieved.”

 

Source: Esports Insider

 

US Tariff on Game Consoles

New Tariffs on electronic devices made in China were set to go into place on September 1st, however, the United States Trade Representative said they will delay the tariffs until December 15th. The tariffs cover cellphones, laptops, some toys, computer monitors, video game consoles, and some clothes. The tariff was originally announced in May. Since then Apple, Sony, Nintendo, and Microsoft have all sent letters to the USTR stating the tariffs would have an impact on the US economy and force them to raise the prices of their products. What does this mean for consumers? If you’re planning on getting anyone a console for Christmas, buy it now! In fact, Donald Trump even mentioned Christmas while addressing the press.
“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, which, so far, they’ve had virtually none. The only impact has been that we’ve collected almost $60 billion from China – compliments of China. But just in case they might have an impact on people, what we’ve done is we’ve delayed it so that they won’t be relevant for the Christmas shopping season.”

Of course, what Trump said isn’t accurate. The tariffs aren’t being paid by the country they’re coming from or even the countries in that country. They’re a tax on the good being brought into the country by companies that typically end up being passed on to consumers. So don’t be surprised when Christmas is more expensive than usual this year.

Source: Cnet

 

Loot Crate Files for Bankruptcy

Loot Crate has been struggling quite a bit over the last 18 months and has now filed for bankruptcy. However, they’re also claiming they will continue with business as usual. Investor Money Chest LLC has purchased the company’s term-loan and offered $10 million to help keep operations going. Loot Crate said they will continue to pay their employees as usual and overall, from the way they speak of it things seem to be quite smooth.

However, former employees have made claims stating otherwise. Two days before the bankruptcy was announced Loot Crate laid off 50 employees with no severance and no warning. With one of them saying to GamesIndustry.biz, “There’s been a lot of speculation that the reason for that was those who put this layoff together knew the company would be filing bankruptcy, and that they did this knowing former employees couldn’t pursue legal action because of bankruptcy protections. Is this how and why this went down the way it did? I don’t have the ability to say, but I can see the sense in it from those involved in making the decision who likely were apathetic to the employees that would be lost.”

Lootcrate now employs 60 people.

 

Source: Games Industry

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Bernie Sanders Supports Game Developer Unions on Twitter

There has been a lot of talk in recent months about the troubles that game developers are facing in the industry that are leading many to burn out and sometimes leave completely. Now we have more fuel to the fire as presidential hopeful Bernie Sanders supports game developer unions on Twitter.

Archeage

In a tweet yesterday Sanders said, “The video game industry made $43 billion in revenue last year. The workers responsible for that profit deserve to collectively bargain as part of a union. I’m glad to see unions like @IATSE and the broader @GameWorkers movement organizing such workers.” Included with the tweet was a recent article on Time magazine that highlights just some of the issues the industry is currently facing that should be required reading for all gamers.

For those outside of the United States, this may seem like it is coming out of nowhere, but in fact, this is a very well timed tweet from Senator Sanders. As we approach the 2020 Presidential Election the candidates, of which there are 39 at the moment, are all doing their best to stand out by declaring where they stand on various issues. Admittedly, no one expected gaming to be an issue that a Presidential candidate would take a stance on. But, with nearly 70% of Americans playing video games, it really shouldn’t be a surprise that this is a topic that is attracting attention in the political world. In comparison, 47% of America attends church services, and 68% of houses have dogs.

Will we see more presidential hopefuls discussing gaming this election season? It is actually quite likely, especially with the lootbox issue still unresolved. Still, getting out there and being the first was a good move for Sanders, though totally unexpected.

 

 

Source: Twitter

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White Supremacists Recruit in Fortnite, Minecraft, and Other Online Titles

We’ve heard before that white supremacy groups recruit in online games but now thanks to a recent AMA we’ve learned that white supremacists recruit in Fortnite, Minecraft, COD, and other online games. The AMA was with Christian Piccolini, a former member of neo-Nazi groups in the United States. These days Christian is a peace advocate and he decided to take to Reddit to answer questions about the current political environment in America.

In the AMA a question is asked about predatory behavior on poor and disenfranchised youth used to recruit new members. Piccolini said that today they go to depression and mental health forums as well as multiplayer games. When pressed further he explained that they will drop benign hints then ramp things up once they’ve been hooked. The recruiters are mostly from Russia, Eastern Europe, and Poland. He also specifically mentions Fortnite, Minecraft, and COD by name as games that recruiters are active in. But he also adds that they can be found in all multiplayer games. When asked for actual evidence that they’re recruiting through video games Piccolini declines to give it but says that it is easy to find.

Discussion in the thread turns to Elder Scrolls Online where people mention they’ve seen such behavior that was mentioned in the game. Blizzard is also name-dropped in the discussion where the Redditor accuses them of doing nothing when they reported such activity in World of Warcraft, adding that they didn’t do anything that was openly offensive or against the TOS.

a gate in Summerset

While the previously linked article to The Guardian talks about the idea that white supremacists are recruiting in games this AMA is the first time we’ve had anyone concretely come out and say that yes, this is happening. So the next time you see someone say “Make Tamriel Great Again” keep in mind that they may actually be a white supremacist recruiter.

 

Source: Reddit

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Michael Cohen Court Case and Mueller Investigation Tied to Columbus Nova

After what was definitely the whirlwindiest of whirlwind weeks for Columbus Nova and, tangentially, Daybreak Games, there’s yet another thread that ties the company to ongoing legal issues in the US. According to reports, Russian oligarch and Columbus Nova owner Viktor Vekselberg has been questioned about hundreds of thousands of dollars’ worth of payments from his company to President Donald Trump’s attorney Michael Cohen.

columbus nova

Special counsel Robert Mueller’s ongoing investigation into possible Russian meddling in the 2016 US elections has been recently focused on Trump attorney Michael Cohen and his business dealings. These connections include Vekselberg and Columbus Nova, as well as a $300k campaign contribution by Andrew Intrater, who is Columbus Nova’s head and Vekselberg’s American cousin.

Cohen also has paid $130k to adult film star Stormy Daniels to keep quiet about an alleged affair with Trump. Daniels’ attorney Michael Avenatti believes this hush money came from the payment made by Vekselburg, alleging that money from Cohen’s Essential Consultants shell company was the source. Part of this accusation was reported by our colleagues at MMORPG.com, who provided the below quote from Avenatti’s filing:

“Chief among these suspicious financial transactions are approximately $500,000 in payments received from Mr. Viktor Vekselberg, a Russian Oligarch with an estimated net worth of nearly $13 Billion. Mr. Vekselberg and his cousin Mr. Andrew Intrater routed eight payments to Mr. Cohen through a company named Columbus Nova LLC (“Columbus”) beginning in January 2017 and continuing until at least August 2017.”

Columbus Nova attorney Richard Owens provided a statement to CNN about the allegations, bluntly denying the charges. “After the inauguration, the firm hired Michael Cohen as a business consultant regarding potential sources of capital and potential investments in real estate and other ventures,” reads the statement. “Reports today that Viktor Vekselberg used Columbus Nova as a conduit for payments to Michael Cohen are false. The claim that Viktor Vekselberg was involved or provided any funding for Columbus Nova’s engagement of Michael Cohen is patently untrue.”

You’ll recall that when this story tying Columbus Nova to Russian meddling was broken, Daybreak Games outright refuted any affiliation, claiming that Daybreak Games is owned by Jason Epstein in spite of three years’ worth of press releases and other information that links the two companies together.

Our Thoughts

Sheesh, just when we all thought this mire went no deeper, here we go again with another slop into the muck. Of course, if there’s genuinely no links between Columbus Nova’s current scrutiny and Daybreak Games, then this will mean less than nothing for Daybreak’s MMO stable. Time will tell.

Sources: CNN, MMORPG.com

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